Structural Systems (ASX:STS) provides update during AGM

A few pieces of news have come up during the AGM held on Thursday 24th November.

The main noteworthy item is the NPAT forecast of $4.5m - $4.9m (EPS 7.0 - 7.7cps) for the first half of FY12. Although the company is in line to double last year's bottom line earnings, it's tracking behind my full year's guesstimate of a $13.2m or 20.7c EPS. Of course it's very difficult to judge at this stage. It's only one half of the year, the business is still in the process of returning Meridian, the concreting business, back to profitability and seasonalities have not been taken into account.. The second half may very well improve.

Management has also decided to move the losses incurred from the previous formwork division from discontinued to continuing operations "given the passage on time that has past since the sale". I don't have a real opinion on this, though it does reduce visibility on the losses incurred. Hopefully management will clarify this matter by providing some splits or commentary when the half yearly comes around.

With a bit of cash coming in now, the company has decided to embark on a share buyback. With the mandate to buy up to 10% (6.39m or ~$5.1m) of the outstanding issue starting from 12th December for a year. With the stock price trading less than a P/E of 6, the price is right and now is a good time as any. Can't really fault this decision at all.

Overall the news is a bit mixed and the closure of the final formwork project (Eastern Treatment Plant) is still an ongoing concern. Otherwise the company is trucking along and starting to bear fruits after a few difficult years. The cash coming into the coffers will be put to use in a share buyback which is a positive in the current circumstances.

Share price closed yesterday at $0.80.