May Gurney, whose business model is based on providing services to local authorities, says that its business can only benefit from public spending cuts as councils will look to outsource more work.
The contractor and support services company today reports record turnover and profits in its preliminary results for the year ended 31 March 2010, its eleventh successive year of growth.
Revenues were up 3% to £483.1 million while pre-tax profit reached £18.4 million, up from £5.2 million the previous year.
EBITDA (earnings before interest, taxation, depreciation and amortisation) was up 6% to £28.8 million.
The company also reports a strong balance sheet with net cash increasing to £29.2 million from £18.6 million and no long-term debt.
The order book value of £1.7 billion is also a record for the company, up 36% on March 2009. Public sector contracts account for 59% of revenue and a further 41% comes from the regulated sector such as public utilities.
Commenting on the results, chief executive Philip Fellowes-Prynne said: "We are delighted to report record turnover and profits for the eleventh year in succession, together with a strong cash position, significant business wins, an enlarged forward order book of more than £1.7 billion (excluding potential extensions) and a healthy pipeline of sales opportunities in our core markets.
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"The essential nature of what we do and our collaborative approach to delivering a wide range of integrated front-line services has resulted in more than £1.1 billion in renewals, contract extensions and new business this year, all under long-term contracts, and their successful mobilisation will be a key focus in the coming year.
"A key factor in our success is the continued commitment and passion of our 4,300 people. They are at the forefront of service delivery, helping more than 18.5 million people across the UK to go about their everyday lives, safely and easily.
"May Gurney remains well positioned in all of its core markets to provide clients with outsourced solutions which implement change, restructure services and achieve efficiency savings. The resilience of our target markets, coupled with our consistent operational performance, excellent visibility of earnings, focused strategy and strong balance sheet leaves us confident in the Group's future success."
The company attributes its strong financial position to its strategy of focusing on developing long-term relationships with clients in the public and regulated sectors, which continue to prove resilient and provide predictable income streams despite the economic downturn. Core maintenance services include waste collection, road surface repairs and mechanical & electrical maintenance work.
May Gurney’s preliminary results statement was optimistic about the impact public spending cuts on its business. “In the run-up to the general election there was speculation about the scale of potential future cuts in public sector spending and uncertainty as to which areas will be most affected. Having conducted a review of the likely impact on our business and our target markets, we remain confident that the majority of May Gurney's activities will continue to experience growing spending profiles as clients seek to address the increasing demand for core front-line services. May Gurney remains well positioned as a result of the early action taken in reducing the Company's operational gearing.
"We believe that the combination of spending cuts and increased demand for local services will drive local authorities to seek increasingly innovative solutions. May Gurney's ability to deliver greater value for clients by developing and implementing front-line service solutions, means that we are ideally placed to support them through their budget challenges. Our recent landmark contract win with Torbay Council, where we are generating cost and efficiency savings by delivering a wide range of bundled services from pothole maintenance to recycling collections and beach cleaning, and the increasing demand throughout the country for MaGOS (our unique environmental services kerb-side sort solution), are prime examples of this trend.”
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