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'No sell-off' at May Gurney as shares fall 40 per cent

May Gurney’s finance director says his company is not planning to wind down or sell off any parts of its business after a profit warning and the departure of its chief executive today.

Asked why CEO Philip Fellowes-Prynne had left, FD Mark Hazlewood told CN it was a result of a conversation with the board about “how far he has taken the business”, along with Mr Fellowes-Prynne’s own plans for the future.

When asked if the contractor’s operational performance played a part in the CEO’s departure, he added: “I would not say it is unrelated. But these things come to a natural point.”

In response, Mr Fellowes-Prynne told CN he will be looking for a new position from next month.“I’m required to say no more,” he said.

May Gurney will now go through a full external recruitment process.

Mr Fellowes-Prynne’s departure “by mutual consent” was announced along with a profit warning this morning.

May Gurney’s share price dropped more than 40 per cent today, while analysts suggested the firm could face consolidation in the future as they revised their profit forecasts for the next two years. May Gurney saw a 17 per cent rise in underlying profits in the year to March 2012.

Mr Hazlewood, who joined May Gurney earlier this year, said there were no intentions to sell off parts of the business and declined to comment on whether May Gurney would be an acquisition target.

He told CN: “There are no plans to dispose of any parts of the company. In terms of the rest of the business, everything else is performing strongly.

Asked if any part of the group is facing redundancy or restructuring, he added:  “No, the underlying business is performing strongly.” He said the company has “plenty of head room” for credit, with a £35m bank facility and £15m overdraft.

The profit warning came after the closure of the non-core facilities division, which was set up to take on Building Schools for the Future work and was axed by the government in 2010. The division is worth around 7 per cent of May Gurney’s £695m revenue and is being wound down at a cost of £10m.

The company saw 100 job losses last year, mainly in senior management roles, along with a restructure of divisions. Mr Hazelwood did not expect to hear much from clients as May Gurney continues to meet key performance indicators on other contracts.

Mr Hazlewood said the facilities division subcontracted construction work, so had a small workforce which is being redeployed into other parts of the company. The trend of companies outsourcing or bringing services back in-house is “patchy”, he said.

In addition to winding down its facilities business, May Gurney has endured problems with two bin collection contracts, dubbed MaGOS, and a Scottish piping contract. However, Mr Hazlewood highlighted the decision by Scottish utilities firm Scotia Gas Networks to take its pipe improvement work in-house. 

He explained that problems with the two MaGOS refuse contracts relate to an inefficient curbside bin collection process and that the firm is “working hard to sort that problem out”. The MaGOS contracts “are two contracts out of five”, he added.

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