I agree with Oilnut's calculations by sector, but the bottom...

I agree with Oilnut's calculations by sector, but the bottom line is the underlying earnings FELL from $4.5 million in 1H to only $2.5 million in 2H and so nearly halved. Cash flow was even worse falling from $3.8 million to $1.8 million. This is despite having 2 quarters from JSW in the second half rather than one quarter.

Oilnut's calculation that JSW profit improved by $0.2 million between the half years is thus misleading as it earned $0.9 million from only one quarter in the first half and $1.1 from 2 quarters in second half. The claim profits would rise from JSW as delayed contracts got underway did not happen. More worrying was that JSW earned $10 million in the second quarter and only $25 million in the second half and thus had almost no improvement even in revenue, while the profit margin fell.

I also note it is not clear that the contract Reichdrill had to supply 8 C550 rigs to Mincon by June 2014 actually took place, as only 6 C550 sales are mentioned in the profit report as taking place to unspecified customers. If so it was not profitable as there was a loss in the second half.

I worry the company is not generating enough cash to pay down hire purchase debt as planned. It is also a worry that in mid-May the company said revenue would be $106 million in 2013-14 and it was only $90 million. The shortfalls were $8.3 million from East Coast, $4.9 million from JSW and $2.2 million from Reichdrill. Every division was short. How could this happen? It could be some revenue was delayed into July. Trade receivables at June 30 2014 doubled compared with the previous year, but then trade payables more than doubled. Not a good sign.

The company has a lot of explaining to do, but is not returning calls. The profit announcement had a lot of sector detail, but did not explain the rapid profit and cash flow deterioration between the half years, or whether it was temporary.

Hughes took on a lot of debt with JSW and JSW still does not appear to be generating much cash. We need the company to announce first quarter profit, cash flow and net debt numbers and provide a fuller outlook in the annual report, otherwise it will be a long wait for reassurance. Without that I will sell.