March,Good to hear from you. I was beginning to think I was...

March,

Good to hear from you. I was beginning to think I was talking to myself.

I am not close to the company in any way so your guess is as good as mine but it doesn't seem unreasonable to assume that the $7.5m loss they incurred on Formworks in 2009/2010 is behind then now. Without that loss they would have made $9m or 14c a share in 2009/2010.

Alternatively their profit in the second half appears to be $4.13 m given they lost $2.63m in the first half and are now declaring a profit of $1.5m for the full year. So if you assume they can repeat that second half figure for both halves of 2010/2011 you end up with earnings of around 13c a share. Mind you, both estimates ignore the increased tax on those profits. Reading between the lines though this second half does include some of the losses from Formworks so without them it would have been higher.

I guess we have to wait until we see the full accounts but in the meantime neither assumption seems unreasonable and put them on a future price earning ratio of around 4.

They should be able to focus much better now on their strengths and they have indicated in previous releases that two of the other divisions, Meridian and Post Tensioning were effected financially by the problems at Formworks.

So putting it all together your suggestion of 16c earnings seems good to me.

GPASAS