May Gurney Integrated Services

ADD

09/11/2011 Robert Tyerman

Infrastructure services provider May Gurney (MAYG) has bought market-leading local authority fleet and passenger services concern TransLinc.

The Norwich-based AIM company paid £34.9m cash for TransLinc, originally part of Lincolnshire County Council and now manager of 2,800 specialist vehicles from 20 locations.

May Gurney is also to assume TransLinc's £30.7m customer contract-backed vehicle fleet financing obligations in a deal that takes the company into the local authority specialist fleet and passenger service markets, reckoned by May Gurney to be worth £730m and £3bn respectively. The takeover will add TransLinc's £85m order book to May Gurney's existing £1.5bn of forward orders.

Philip Fellowes-Prynne, May Gurney's chief executive, argues that the deal should be 'earnings-enhancing in the first year'. TransLinc chalked up earnings before interest, tax, depreciation and amortisation of £17.6m on £34.7m revenues in the year to February, while May Gurney pushed its own EBITDA up 18% to £34m in the year to March.

Following an upbeat recent trading statement from May Gurney, the City has been expecting the company to hoist pre-tax profits 45% to some £27.3m for the year to next March on turnover up 14% to £654m. Recommended by Growth Company Investor last year at 210p and again at 259p in April, May Gurney shares now trade at 299.75p, buttressed by a 2.5% yield and a progressive dividend policy.

They could have further to go.