May Gurney wins council contract

published 11 January 2012

May Gurney, a support services company, has been awarded Harrow Council's highways maintenance contract, valued at up to £50m.

The contract, which starts in April 2012, has an initial contract period of five years with an option to extend for a further two years.

The contract has been awarded in three "bundled services" lots and includes maintenance of the council's key infrastructure assets.

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May Gurney's current forward order book stands at £1.5bn and it has a strong pipeline of bidding opportunities and potential contract extensions worth in excess of £4bn in May Gurney's core markets.

Peel Hunt commented on the news, saying: "We regard this as another important win and demonstrates the positive momentum across the group."

The broker left its earnings estimates unchanged, however, though it reiterated its "buy" recommendation, saying: "May Gurney continues to demonstrate its 'defensive' growth and cash characteristics, arising from its focus on non-discretionary services."

Northland Capital Partners was also positive: "May Gurney continues to make steady progress in both revenue and earnings and remains debt free. The on-going public sector cuts in the UK should offer further outsourcing opportunities and the scale of the order book provides a degree of reassurance and visibility," the broker said.

The shares trade on a multiple of 10 times Northland's projected earnings per share for May Gurney in fiscal 2012, underpinning the broker's "buy" recommendation.

The share price rose 0.87% to 290p by 12:51.