May Gurney Integrated Services

Infrastructure services concern May Gurney (MAYG) should please investors with its 2010/11 results as it seeks acquisitions in power and renewables.The Norwich-based company, whose recent £13.6m takeover of Aberdeen-based Turiff group has taken it into the gas market and the Scottish utility field and brought it more regulated private sector business, lifted pre-tax profits 35% to £11.5m in the six months to December on revenues up 21% to £289m and ended the year to March with a contracted new business pipeline of £1.4bn, as well as £800m for extensions of existing cantracts.

Chief executive Philip Fellowes-Prynne argues AIM-quoted May Gurney is well placed in today's tough public spending environment because of its emphasis on maintenance, of roads and other facilities, while the severest cuts are likely to come in capital spending. With a contract bid-to-win ratio of one in 2.5 to three, he argues the company scores by efficient contract execution and delivery and its ability, as a relatively small player, to send in its big guns, such as himself, to push its contract bids, as with a recent Kent deal.

According to Fellowes-Prynne, May Gurney, which ended March with no long-term debt (though it has assumed Turiff's £9.25m debt), is investing in data collection and systems to improve efficiency further - 'more potholes per pound'. The company, which has paid an initial £3.6m for Turiff with another £5m payable over three years if certain targets are met and says integrating the business is going well.

May Gurney aims to lift margins from 4.5% to 5%, as it scouts for potential acquisitions broadening its 'portfolio' in the power and renewables areas. Fellowes-Prynne says the company is changing from four to three times earnings cover for its dividends, which augurs well for the 2.1% historic yield on the shares at 259p.

That is 23% up on Growth Company Investor's October recommendation at 210p. There should be scope for further gains.