A very good result I believe, and in line with the forecasts I...

A very good result I believe, and in line with the forecasts I made a couple of months ago (NPAT from Continuing Operations of $9.5mm with a 2.5cps dividend).

Key points I see are:

* Work on hand has increased even further since the last update to $211mm. This is now in line with levels seen when SP was around $3. More importantly, Rock has very good levels - with a number of longer term contracts. Also a brief mention of other recent wins in announcement (Bridge Work) which historically carries a good margin. Remedial division performing very strongly, with indications of further improvement in next year having secured largest project to date in Q4.

* Annual dividend now 4cps - a yield of 5.3% at current prices. I believe we will see the annual dividend increase to around 5.5 cps in next 12 months.

* Continuing losses are disappointing however the amounts included in the full year results are in line with what was previously advised so no surprises there. However, until this project is complete it will act as a drag on SP.

* To clarify on previous posts, only Framework division was sold. Meridian (which was purchased only a couple of years ago for a high price) is still being held by STS. Again, the losses in this division are also acting as a drag on SP.

* Cash flow very healthy. Net increase of $5mm even after repayment of $5.9mm of borrowings.

* STS at current price of 75p is sitting on a PE ratio of 5 (at continuing operations level which I believe is the best indicator of future prospects). Given the growth rates seen in the mining and remedial divisions, and expected return to profitability of Meredian I believe STS is still significantly undervalued (reinforced by the fact the Net Tangible Asset per share of 80 cents exceeds the current share price).

I will be increasing my holding at these prices.