May Gurney Integrated Services

Infrastructure support services star May Gurney, whose activities span everything from waste collection to road repairs, is a defensive growth business going from strength to strength.

Despite prevailing economic uncertainties, Norwich-based May Gurney’s resilience stems from the fact more than 95% of its business is in long-term deals that entail delivery of essential maintenance and enhancement services to the public and regulated sectors.

Annual numbers to March, unveiled by CEO Philip Fellowes-Prynne, showcased an eleventh successive year of record sales and profits, with revenues up 3% at £483m and underlying pre-tax profits pushing 7% higher to £21.6m. Reporting significantly improved net cash of £29.2m (2008: £18.6m), ahead of analysts' forecasts, May Gurney confidently upped the total dividend 7% to 5.5p.

May Gurney successfully clinched new contract wins, renewals and expansions totalling more than £1.1bn last year, among them a new value-for-money, ‘bundled’ services joint venture with Torbay Council and a raft of wins and renewals in the water sector. Its order book now stands at a record £1.7bn plus.

Bulls believe May Gurney, in spite of the budgetary challenges facing local authority clients, is especially well placed for profitable long-term growth in maintenance markets worth £19bn per annum. Their argument is that spending cuts combined with growing demand for local services will drive local authorities, with which May Gurney has fostered strong ties, towards its efficiency-delivering outsourced solutions.

Robust of balance sheet and boasting formidable long-term earnings visibility, May Gurney, first backed by Growth Company Investor at 307.5p back in 2007, represents a compelling investment on every level and its recent share price fall looks overdone. Strong buy.