May Gurney unveils contract extension in trading update

May Gurney, a support services company, has traded in line with its expectations during the six months ended September 30th and announced a seven-year contract extension with the Somerset Waste Partnership (SWP).

The contract is for the on-going provision of recycling and refuse collection services, valued at up to £100m.

In the first five months, the company won a total of £126m of new work and £150m of contract extensions. The order book remains solid at £1.5bn.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The firm also said that the issues it highlighted in early September, namely operational issues within two long-term MaGos contracts and the planned run-down of its Facility Services division, have been ring-fenced and addressed.

Cash conversion has remained robust at over 100% of earnings before interest, tax, and amortisation. At the period end the group has gross cash of £20m and debt of £23m, with total borrowing facilities of £48m.

Interim Chief Executive Willie MacDiarmid, said: "I am pleased to state that following my recent appointment, plans are in place to address the issues we highlighted in September and we are taking steps to reinforce the good work already started to give a clear focus on commercial disciplines.

"I have also been very encouraged by positive conversations with our clients, and by our business wins in the first five months, totalling more than £276m. With robust operational improvements and efficiencies being driven forward, May Gurney is focused on delivering a solid future performance."

The firm also added that the integration of TransLinc, which it acquired last year, is moving ahead of schedule and continues to deliver a strong performance, with levels of fleet renewals from local authority clients exceeding the company's expectations.

The share price rose 7.11% to 135.50p by 08:54.

NR