MAY Gurney Share Discussion Threads

[pugugly] 07/9/2012 14:48

Directors purchases - such a low level gives a message of No confidence to me, orelse they are very much lacking in funds - (imo) Read what you like into the figure.

[salpara111] 07/9/2012 11:28

read post 316 and DYOR

[monis] 07/9/2012 11:08

salpara- where does it say that, link please.

[salpara111] 07/9/2012 10:49

The reason I won't get in at the moment is the fact that they are delaying paying suppliers. Businesses don't go bankrupt due to loss of profitability, they fail due to lack of cashflow and delaying paying your suppliers is a very clear indication that cash flow is in trouble.

[targatarga] 07/9/2012 10:13

Their now widening the spread trapping yesterdays traders....

[monis] 07/9/2012 10:01

I think the drop is overdone imo dyor.

[pugugly] 07/9/2012 09:18

Bones:> Good find - especially re extended payment - I can see some subbies will be in BIG trouble as a result - Possible knock on effects on quality of work -

I have been sitting on the fence but after these finds am going to continue sitting on the buying finger as the share price seems to be building negative momentum - I suspect not yet a Mouchel but Mr Market may well panic on the possiblity it might become one. Once cash flow becomes a problem the banks usually rush to protect their own interests ahead of all other stakeholders. [imo & dyor]

[palwing] 07/9/2012 08:15

A friend of mine used to work for them in Norfolk ((3-4 years ago) on the Quality Assurance side of the business. From what I heard, May Gurney always sounded a very professional and highly regarded outfit to me. They will come back from this, just a matter of time scales.

[monis] 07/9/2012 08:03

moving higher this morning...

[muckshifter] 06/9/2012 20:56

At the half year they appeared to owe their suppliers / subbies £30m more than they were owed, and held approx £30m cash with net cash after deducting overdraft of just £11m - hence the delaying of payment to subbies etc. Not so good at the moment, but MG is a long established company, very strong in its region, and will eventually recover I would think.
Regards.

[salpara111] 06/9/2012 20:24

Well at least they don't carry any debt on their balance sheet. Having said that it is never a good sign to see them delaying supplier payment.

[bones] 06/9/2012 18:48

Of more concern to shareholders is another article in Construction News. It is a subscriber service so only the headline fact is available but basically MAYG have announced an extension to 60 days in the time they pay suppliers. Cashflow seems to be an issue:



May Gurney extends supplier payment periods to 60 days

6 September, 2012 | By Luke Cross

May Gurney has extended payment periods across its 1,200 materials suppliers to 60 days, to the dismay of some smaller firms.

[bones] 06/9/2012 18:36

More in-depth analysis from the trade:



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

6 September, 2012 | By Luke Cross

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 Fellowe-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 sub contracted 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 curb-side 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.

[bones] 06/9/2012 16:00

Good luck azioni2. Don't forget to sell while you have a profit though. Falling knives can be painful :)

[azioni2] 06/9/2012 15:02

So this company last night was worth £155M and today is worth £88.5M

Even considering the news, a drop of £66.5M looks a bit overdone,

so I bought in this morning @ 1.21

[muckshifter] 06/9/2012 14:17

"Net cash" in a contractor's accounts usually almost all belongs to sub-contractors who are paid a month behind the main contractor (if they are lucky!). Best have a good look at the accounts.
Regards.

[muangsing] 06/9/2012 13:33

charo

liquidity problem?

at 31 march they had gross cash of 31 million and short term borrowings of 20m.

In fact since floating they have always had net cash

[charo] 06/9/2012 12:59

has a real liqudity problem,stuffed with goodwill.agree the sacking of the ceo and manner suggests a degree of ,if not panic, extreme urgency.all of these businesses rely on continuing new contracts via the public sector not a grear sector to be in.terms are opaque and profits booking arbitrary.more bad news is certain to follow.

[bones] 06/9/2012 11:14

First of all, I do not hold these nor have done in the past, so am just passing comment. This is not a gloating post.

IMO, the immediate sacking of the CEO suggests a serious review and nasty discovery was had. Or vice versa. Take your pick. Either way it is hard to like it. There wasn't even a thanks to the departing director for all his hard work in the past which is the usual form when someone leaves after a setback. They seem clearly annoyed at him!

Secondly you either believe the board when it says the write down provisions deal with the matter, or you fear it is papering over cracks. When a new CEO finally comes in, or when the interim guy takes a look, the possibility of more remedial action must be real. Further impairments look inevitable as they have said.

Circumstances may well be different from Mouchel but I well remember the denial flying off that BB. At the time, it was still over £1 after a profit warning had halved the share price but people insisted it was cheap as chips with a strong underlying business, regardless of the debt overhang. Ultimately the heavy debt killed it completely and shareholders got nothing. This was after the directors turned down predators who came sniffing around the wounded animal. Watch out for these signs of denial by the board of directors if bidders appear.

Even so, like the Mouchel case after its major warning, IMO, a realistic share price target for May Gurney is well south of £1 as there is nothing positive in today's statement apart from the usual "rest of business is in line, etc". Trouble is that management time will be diverted by the crisis so will not have their eyes fully focussed on the rest of the business.

I wish anyone good luck if they are staying in this share. I guess a white knight bid could be the best outcome. If so, will the directors be man enough to accept the loss of pride (unlike Mouchel)?

[jonwig] 06/9/2012 10:27

@ Doc R - you can say that again!

@ mctmt - buy decent European shares, maybe? Via sterling ETFs such as EUE, IDVY for example.

[doc robinson] 06/9/2012 10:06

must be a takeover taget now fundemental business sound