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24th November 2011
Positive news from one of the few support services groups which is both thriving and increasingly acquisitive, should emerge on Thursday, December 1st when Aim-listed May Gurney Integrated Services reports its first half results.
May Gurney's success in bucking the recession is reflected in figures compiled by construction information specialist Glenigan which show that it has been involved with projects which started on site worth £1 billion so far in 2011, which compares with £662.4 million for all of 2010.
Glenigan figures also highlight the significance of the utilities sector for support services firms. They show that May Gurney has won utility projects worth £408.3 million so far in 2011, out of total projects won worth £997.8 million. By contrast Glenigan data records May Gurney winning new infrastructure projects worth just £53 million so far this year.
Glenigan figures also show that May Gurney has joined its league table of the top 50 contractors - which measures the success of the major firms in winning new projects worth over £500,000. During the year to October 2011, Glenigan recorded that May Gurney won 12 traditional contracts worth £138.5 million, ranking the Norwich-based firm 41st in the league table.
Amongst other quoted contractors with a bias toward support services in the top 50 league table, Carillion won 21 contracts worth £331 million and Interserve won 83 contracts worth £891 million, during the year.
Last month, May Gurney said trading in the first half had been strong as its performance has been driven by new Government spending on highways maintenance, work on AMP-5 water contracts and the successful integration of Turriff, a Scottish utility maintenance business it acquired in January. Earlier this month, May Gurney completed a second major deal when it acquired TransLinc, which provides specialist fleet & passenger services to UK local authorities, for £35 million.
May Gurney said it expected to perform ahead of market expectations in the year to March 2012. Its forward order book has increased to £1.5 billion and it has a pipeline of sales opportunities worth over £4 billion.
City analysts expect May Gurney to report underlying pre-tax profits of £28 million for the full year to March 2012, up from £24.3 million previously. Full year revenues are expected to have increased to £662 million year from £571.4 million. At the interim stage last year, the group reported underlying pre-tax profits of £12 million on revenues of £288.9 million.
May Gurney has recently made headway on new long-term contracts for local authorities. It has been named preferred bidder for Bristol City Council's waste collection, street cleaning and winter maintenance contract worth around £96 million over seven years. The firm is also preferred bidder on Cheshire West and Cheshire Council's waste and recycling contract worth £126 million over 14 years.
The support services market remains competitive as local authority clients seek better value and more innovative ways of outsourcing. The group's underlying margin dipped to 4.4% last year from 4.6% previously. But May Gurney believes it is well-placed to help meet a growing trend for clients to work together to deliver shared services across the public and regulated sectors.
May Gurney acquired Turriff Group, one of Scotland's largest utility infrastructure maintenance companies, for up to £13.6 million (plus debt of £9.4 million) in January. The deal gives it an entry to Scotland's £2.4 billion support services market with opportunities particularly in local government and rail.
Aberdeen-based Turriff also gives the group access to the UK's growing regulated £1.7 billion gas market which should provide long-term income streams. Turriff, whose long-term clients include Scotia Gas, Scottish Water and Scottish & Southern Energy, came with an order book worth £90 million and available extensions worth up to £70 million.
May Gurney's most recent acquisition, TransLinc, is a leader in the UK's £730 million pa local authority specialist fleet services and £3 billion local authority passenger services markets. It has an order book of £85 million.
The deal should strengthen May Gurney's positions in highways maintenance and environmental services and give it scope for cross-selling as the maintenance of vehicles is increasingly included in 'bundled' tenders.
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