04/06/2008
Support and construction services group May Gurney offers investors excellent long-term earnings visibility, via its exposure to essential services spend in the public sector and ring-fenced spend in regulated markets.
Providing maintenance and enhancement services to infrastructure markets and sectors ranging from highways to waste and rail, the group has just delivered record sales and underlying profits for the ninth year in a row. Annual figures to March showed 15% pre-tax profit growth to £18.7m, on revenues increased 7.5% at £437m. Investors were also treated to news of a 48% final dividend increase to 3.1p, whilst year-end net cash was robust at £21m, even after acquisitive spend.
The May Gurney strategy is twin-track, centring on the development of long-term links with customers and driving organic growth through the widening of the range of services it can offer them, whilst also securing new contracts. Earnings-enhancing acquisitions, of which there were three last year – mobile telecommunications maintenance firm FDT, gas maintenance group Willows Plant and household waste recycler Southern EWC – add extra growth spice.
Alongside results, May Gurney announced the acquisition of ECT Recycling, focused on waste collection and household waste recycling through long-term local government contracts, in a deal that transforms its municipal waste business and strengthens its presence in the local government services market.
Claiming an order book (including framework contracts) in excess of £1bn, and with more than 80% of the business based around long-term maintenance and enhancement deals, May Gurney, profiled by Growth Company Investor at 307.5p, remains a compelling investment. Buy/hold.
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| Market cap: | £196.66m |
| PE Forecast: | 13.4 |
| Share price: | 280p |
| AIM | £123.09m |
175.25p
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-2.75p
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| Other company articles: |
| 03/11/2008 |
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