28-annual-report-of-may-gurney-integrated-services ... - Kier Group

Annual Report 2012 

To the changing 

demands of our clients, 

to the growing needs of 

local communities and 

to more than 24 million 

people across the UK...

Financial highlights 

Overview 

Strategy report 

Corporate social responsibility review 

Performance report 

Governance report 

Financial statements 

Contents 

...May Gurney is essential. 

We work with our clients in the public and 

regulated sectors to design and deliver a wide 

range of essential front-line services that reach 

over 24 million people every day. Put simply, 

the services we deliver keep the country running. 

All of our contracts are long-term and are delivered 

locally. This means that we have deep relationships 

with local communities and make a significant and 

sustainable contribution to the local economies 

where we work. Our strong local presence means 

that where we offer multiple services to multiple 

clients in one place then we can deliver them 

together, so that they’re more effective and more 

efficient for everyone. And we translate the learning 

from one geography or service to another. This is 

the essence of our unique ‘place-based’ approach 

to integrated service delivery. 

Revenue £m 

+22% on 2011 

437.0 

Underlying EPS² pence 

+19% on 2011 

18.5 

470.3 483.1 

20.5 21.9 

24.8 

29.5 

2007/08 2008/09 2009/10 2010/11 2011/12 

£28.4m 

Underlying PBT 3 up by 17% 

£4.0bn 

Pipeline of bidding opportunities 

in core markets 

571.4 

Business highlights 

695.3 

2007/08 2008/09 2009/10 2010/11 2011/12 

£11.0m 

Net cash 4 

Strong organic growth: 

More than £400 million in new contracts, 

renewals and extensions secured in the year 

Since the period end, we have secured a two-year 

extension to our Omnibus contract with British 

Waterways, valued at up to £40 million 

Successful acquisition of TransLinc: 

Secured our entry into the fleet and passenger 

services market 

Since the acquisition, three significant contract 

extensions have been secured and a new five-year 

contract with West Lancashire Borough Council 

for fully-outsourced fleet management services 

has been won 

EBITA¹ £m 

+20% on 2011 

17.6 

£400m 

More than £400 million in new 

contracts, renewals and extensions 

secured during the year 

20.5 

22.1 

25.1 

30.1 

2007/08 2008/09 2009/10 2010/11 2011/12 

Group order book £m 

£1.5bn 

520 335 

40 

480 

35 

300 

265 

25 

240 

Framework 

Secured 

420 

420 

2012/13 2013/14 2014/15 2016+ 

100+% 

Cash generation represents over 

100% conversion of EBITA 

8.42p 

Recommended final dividend of 

5.63 pence per share, resulting in a 

total for the year of 8.42 pence per 

share, up 28% (2011: 6.60 pence) 

Client-aligned management reorganisation 

completed: 

Completed a review and restructuring of our 

operations aligning services more closely to 

clients and reinforcing our capabilities to deliver 

place-based services 

Operations consolidated into two client-facing 

divisions – Public Sector Services & Regulated 

Sector Services 

Significantly strengthened and enhanced the skills 

and capabilities of senior management teams 

Overview 

02 Our business 

04 Our structure 

06 Chairman’s introduction 

08 Chief Executive’s review 


12 Market overview 

16 Our business model 

18 Our strategy 

20 Corporate assurance and risk management 

22 Our KPIs 

23 Case studies 


30 People 

32 Health & safety 

33 Community investment 

36 Sustainability & environment 


39 Public Sector Services division 

42 Regulated Sector Services division 

46 Financial review 


48 Board of Directors 

50 Report of the Directors 

53 Corporate governance 

56 Directors’ Remuneration Report 


62 Independent auditor’s report 

63 Group income statement 

64 Group statement of comprehensive income 

65 Group statement of changes in equity 

66 Company statement of changes in equity 

67 Group statement of financial position 

68 Company statement of financial position 

69 Group statement of cash flows 

70 Company statement of cash flows 

71 Accounting policies 

76 Notes to the report and accounts 

107 Corporate directory 

108 Useful information for shareholders 

1 

EBITA is Group operating profit before amortisation and 

non-recurring costs after writing off bidding and mobilisation 

costs as incurred 

2 

Underlying EPS is defined in Note 10 

3 

Underlying PBT is profit before tax, amortisation and 

non-recurring costs 

4 

Excluding finance leases and including short-term bank loans 

1

Overview 

Our business 

Overview 






Who we are 

May Gurney is a support services 

company. We are committed to 

helping our clients in the public and 

regulated sectors deliver sustainable 

improvements to front-line essential 

services across the UK. 

Our services are delivered locally through two 

client-aligned business divisions – Public Sector 

Services and Regulated Sector Services. 

For more information see pages 4 and 5. 

Percentage of Group Revenue 

Percentage of EBITA 

£12.5bn 

Annual value of public 

sector markets 

Public Sector Services 

60% 

Regulated Sector Services 

40% 


59% 


41% 

£11.6bn 

Annual value of regulated 


Who we work with 

Markets 

Our target markets in the public and regulated 

sectors are significant and offer continued 

opportunities for us to move our business 

forward. Their combined annual value is 

estimated at £24.1 billion. 

New long-term business 

We have maintained our work-winning 

momentum with new contracts, renewals and 

extensions totalling more than £400 million 

– all through long-term relationships. These 

include: waste collection, street cleansing and 

winter maintenance for Bristol City; waste and 

recycling for Cheshire West & Chester (CWaC); 

highways maintenance for East Sussex and 

Harrow; street lighting for Richmond upon 

Thames and Torbay; a new framework with 

BRB Residuary; a new BCDP framework with 

Network Rail; MEICA for British Waterways; 

and new framework contracts with Fulcrum 

and Welsh Water. 

Since the period end, we have secured a 

two-year extension to our Omnibus contract 

with British Waterways valued at up to 

£40 million; and a new five-year contract 

with West Lancashire Borough Council 

valued at £4 million for Fleet & Passenger 

Services (TransLinc). 

The Company’s order book stands at £1.5 billion 

(including framework contracts) with potential 

contract extensions of a further £1.1 billion. 

The bidding pipeline of more than £4 billion in 

our core markets, reflects the very significant 

opportunities for growth. 

Our clients include: 

Anglian Water, Bournemouth Borough Council, 

Bridgend County Borough Council, Bristol 

City Council, Bristol Water, British Waterways, 

Cheshire East Council, Cheshire West & Chester 

Council, East Lindsey District Council, East 

Sussex Council, the Environment Agency, Essex 

County Council, Essex & Suffolk Water, Fulcrum, 

Harrow Council, Lincolnshire County Council, 

Medway Council, Network Rail, Nexus, Norfolk 

County Council, North East Derbyshire District 

Council, Northamptonshire County Council, 

North Somerset Council, North Yorkshire County 

Council, Norwich City Council, Rolls-Royce, 

Rotherham Metropolitan Borough Council, Scotia 

Gas, Scottish Water, Severn Trent Water, Smarte 

East (a regional partnership formed by Essex, 

Hertfordshire and Suffolk County Councils for 

the procurement of capital works), Solutions SK, 

the Somerset Waste Partnership (comprising 

five district councils – South Somerset, Taunton 

Dean, Sedgemoor, West Somerset & Mendip, 

and Somerset County Council), South West 

Water, Sunderland City Council, Surrey County 

Council, Torbay Council, Welsh Water, Wessex 

Water, West Lancashire Borough Council, West 

Oxfordshire District Council, and the London 

Boroughs of Barking & Dagenham, Barnet, 

Bexley, Bromley, Hackney, Havering, Kingston, 

Lambeth, Merton, Redbridge, Richmond, 

Sutton, Tower Hamlets and Waltham Forest. 

Why we’re different 

Our vision is to be the leading support services 

business in the UK in our chosen sectors. 

Put simply, the services we deliver keep the 

country running. 

All of our contracts are long-term and are 

delivered locally. This means that we have deep 

relationships with local communities and make 

a significant and sustainable contribution to the 

local economies where we work. Our strong local 

presence means that where we offer multiple 

services to multiple clients in one place then we 

can deliver them together, so that they’re more 

effective and more efficient for everyone. And 

we translate the learning from one geography 

or service to another. This is the essence of our 

unique ‘place-based’ approach to integrated 

service delivery. 

Where we work 

Our 6,000 people work at more than 230 

locations across the UK, delivering essential 

services to local communities. Our Group 

office is in Norwich. Every day, our services 

touch more than 24 million people. 

6,000 

May Gurney employees 

230+ 

Locations across the UK 

24 million 

People are touched by our 

services every day 

Torbay case study 

(See page 24-25) 

Intensity of colour represents 

the number of services we 

deliver to local communities. 

Lincolnshire case study 

(See page 26-27) 

Norwich 

Group office 

Norfolk case study 

(see page 28-29) 

2 May Gurney Integrated Services plc 

May Gurney Integrated Services plc 

3 

Annual Report and Accounts 2012 

Annual Report and Accounts 2012

Our structure 

Overview 








Highway Services 

Environmental Services 

Fleet & Passenger Services 

Utility Services 

Rail Services 

Waterways Services 

May Gurney is a leading highways maintenance 

services provider for local authorities. We 

maintain almost 35,000 kilometres of roads 1 and 

more than 500,000 street lights and illuminated 

road signs across the UK. We deliver highway 

services to 20 local authorities – all under 

long-term contracts. Our core services include 

highways maintenance, street lighting and road 

surface dressing. 

Markets 

The market for local authority highways 

maintenance in England is worth just under 

£3 billion per annum 2 and our estimated share 

is 12%. The markets in Scotland and Wales are 

worth an additional £570 million per annum 3 . 

The local authority street lighting market is worth 

around £780 million per annum 4 , of which 

May Gurney has an estimated market share of 

8% in England and 30% in London. 

May Gurney is the fourth largest provider of 

municipal waste collection services in the UK 5 , 

covering 2.2 million households. We work with 

19 local authorities to develop better waste 

collection strategies to extract the maximum 

value from recycled materials and reduce the 

amount of waste going to landfill. Our core 

services include kerbside recycling (MaGOS) 6 , 

refuse collections, street cleansing and the 

management of household waste recycling 

centres (HWRCs). 

Markets 

The environmental services market is worth in the 

region of £3.1 billion per annum, complemented 

by the street cleansing market at £900 million 

per annum 7 – which is becoming increasingly 

integrated within collection contracts. May 

Gurney has estimated market shares of 10% of 

the outsourced municipal collections market and 

9% of the HWRC market. Key market drivers 

are the increase in landfill tax and local authority 

recycling targets. 

May Gurney is the UK’s leading provider of 

end-to-end fleet management and passenger 

services to local authorities. We manage over 

6,000 specialist vehicles across 146 locations 

and carry more than 5,000 passengers a day 

(home-to-school, social services, demand 

response and corporate shuttle). The specialist 

vehicles we supply and manage include waste 

and recycling trucks, snowploughs/gritters, street 

sweeping and cleaning vehicles and HGVs. 

Markets 

May Gurney is the UK leader in the local 

authority outsourced fleet services market with 

an estimated share of 8%. This market is worth 

£730 million per annum, and remains highly 

fragmented 8 . In the £3.1 billion local authority 

outsourced passenger services market, we are 

number five in the UK 9 . Outsourcing rates in 

these markets currently stand at 50% to 60%, 

offering good opportunities for growth. 

May Gurney delivers utility maintenance and 

asset enhancement services in water, gas, 

power and telecommunications across the 

UK. Our core services include clean and waste 

water improvements, asset and infrastructure 

maintenance, multi-utility services, mechanical 

and electrical (M&E) design and maintenance, 

inspection and maintenance for bridges and 

masts, and design. 

Markets 

Ofwat’s Final Determinations for the AMP5 

period (2010-2015) allows for average 

expenditure of £4.4 billion per annum across 

England and Wales, an increase of 32% on 

AMP4 levels 10 , and there is a further £1.2 billion 

per annum in Scotland 11 . There is a continued 

emphasis on capital maintenance, especially 

with the recent transfer of private drains and 

sewers (PDaS) to the water companies. The 

gas distribution market is worth £1.8 billion per 

annum 12 . The new regulatory period, RIIO- 

GD1, starts in April 2013 and will be eight years 

long with Ofgem’s focus on efficiency, safety, 

customer satisfaction and environmental issues. 

We work in long-term partnership with our 

client, Network Rail, to deliver maintenance 

and refurbishment works on rail structures, rail 

property and in signalling. In addition, we work 

with Nexus (the Tyne & Wear Metro). We have 

a solid safety record and have won numerous 

awards for the quality of our delivery. 

Markets 

Planned expenditure by Network Rail over 

Control Period 4 (2009-2014) is worth on 

average over £1 billion per annum. This is 

supplemented by enhancements expenditure, 

worth on average £2.3 billion per annum 13 . 

Following the appointment of David Higgins, the 

release of the Value for Money Study by Sir Roy 

McNulty and the subsequent Command Paper, 

we continue to change to meet new demands. 

The industry drivers of increased collaboration, 

greater passenger influence and whole-life asset 

management play to our core strengths. Our Rail 

capability will continue to evolve in this changing 

environment, founded on our core values and 

reputation. 

May Gurney continues to play an essential 

role in the regeneration, maintenance and 

renaissance of the UK’s waterways network. 

We deliver maintenance services, including 

mechanical, civil and electrical engineering for 

British Waterways (‘Glandwr Cymru’ in Wales) 

across the national canal and river network 

infrastructure and are its sole contractor. We also 

work closely with the Environment Agency in 

order to protect communities from coastal and 

river flooding by constructing and maintaining 

flood protection assets. 

Markets 

We deliver over £20 million of work per annum 

for British Waterways (and its private partners). 

Government expenditure to improve flood 

defence and coastal management assets, 

through the Environment Agency, now accounts 

for £830 million per annum 14 . 

£418.2m 


60% of Group revenues 

£17.8m 


59% of EBITA 

1 

Surveyor, The Surveyor Highway Maintenance Yearbook 

2011 (June 2011) 

2 

Department for Communities and Local Government, Local 

Government Finance Statistics England 2011 (May 2011) 

3 

Scottish Government, Scottish Local Government Finance 

Statistics 2010-11 (February 2012); Statistics for Wales, 

Welsh Local Government Finance Statistics 2011 

(September 2011) 

4 



5 

Up from fifth position in 2011 

6 

May Gurney’s Kerbside Sort Solution 

7 



8 

Credo, Report on the Fleet Services and Passenger Services 

markets (June 2011) commissioned by May Gurney 

9 



£277.1m 


40% of Group revenues 

£12.3m 


41% of EBITA 

10 

Ofwat, Future Water and Sewerage Charges 2010-15: Final 

Determinations (November 2009) 

11 

Scottish Water, Delivery Plan 2010-15 (March 2010) 

12 

Ofgem, Gas Distribution Price Control Review Final Proposals 

(Dec 2007) 

13 

Network Rail, Control Period 4 Delivery Plan (March 2009) 

14 

DEFRA, Annual Report and Accounts 2010-11 (July 2011) 



5 



Chairman’s introduction 

Overview 






I am pleased to report a strong performance, 

with continued year-on-year growth and 

cash generation, in a challenging economic 

environment. We have achieved a high level 

of new business wins and entry into the 

fleet and passenger services market through 

the acquisition of TransLinc. We have also 

undertaken a major operational review to 

reposition May Gurney for the next stage 

of its corporate development in delivering 

‘place-based’ services. 

Baroness Margaret Ford 

Non-Executive Chairman 

£695.3m 

Revenues up by 22% 

£30.1m 

EBITA up by 20% 

28% 

Recommended total dividend for 

the year of 8.42 pence per share, 

up 28% 

Financial performance 

Group revenue has grown by 22% to 

£695.3 million (2011: £571.4 million) and 

EBITA has increased by 20% to £30.1 million 

(2011: £25.1 million), representing an operating 

margin of 4.3% (2011: 4.4%), after maintaining 

our policy of prudently writing off bidding and 

mobilisation costs as incurred. May Gurney 

remains a highly cash-generative business. 

Cash generated from operations was 

£42.4 million (2011: £28.6 million), 

representing more than 100% of EBITA. 

Our Public Sector Services division, which 

accounts for 60% of Group revenues and 

59% of Group EBITA, delivered a good overall 

performance, with an 11% increase in revenues 

and a 3% increase in EBITA compared to 

2010/11. This was against the background of 

newly-won environmental services contracts 

taking longer to reach their expected margins 

and disappointing results from our Facility 

Services activities. 

Our Regulated Sector Services division, which 

accounts for 40% of Group revenues and 41% 

of Group EBITA, delivered a strong operational 

performance primarily driven by mechanical and 

electrical (M&E) and repair and maintenance 

(R&M) activities. The division generated a 42% 

increase in revenues and a 58% increase in 

EBITA. In Scotland, we faced some issues with 

a small number of under-performing projects 

which have now been discontinued. 

Strategy 

Our five-point growth strategy remains consistent: 

to target resilient maintenance-focused revenue 

streams for essential services in the public and 

regulated sectors through developing longterm 

client relationships; to deliver contract 

performance by managing and executing 

front-line services consistently, successfully 

and efficiently; to enhance margins through 

ensuring operational efficiencies and delivering 

a wider range of services; to grow organically 

through winning new business and contract 

expansions by understanding our clients and 

tailoring our services to achieve their outcomes; 

and to consider strategic earnings-enhancing 

acquisitions. Whilst we continue to evaluate 

acquisition opportunities, our focus over the 

coming year is on the first four elements of our 

growth strategy. 

Dividend 

The continued strong performance of the 

Group and our confidence in our prospects has 

enabled the Board to continue its progressive 

dividend policy and to recommend a final 

dividend of 5.63 pence per share, resulting 

in a total for the year of 8.42 pence per share, 

up 28% compared to 2011. 

Board changes 

As part of the planned evolution of our Board, 

I was appointed as a Non-Executive Director on 

20 May 2011 and succeeded David Sterry as 

Chairman at the Company’s AGM on 6 July 2011. 

David Sterry OBE, who was appointed Chairman 

in 2008, was formerly Chief Executive of May 

Gurney and led an MBO of the business in 2001 

and its flotation on AIM in June 2006. David has 

made an invaluable contribution to May Gurney 

and was the prime architect behind our strategic 

move towards focusing on long-term essential 

maintenance activities. The Board would like to 

thank David and to wish him well for the future. 

On 14 March 2012, Mark Hazlewood was 

appointed as Group Finance Director. Mark 

joined May Gurney in November 2010 as Group 

Corporate Development Director. He has also held 

interim responsibility as Finance Director of the 

Company’s Regulated Sector Services division. 

His extensive experience in the support services 

sector and deep operational knowledge of 

May Gurney will prove invaluable as our 

Company continues to grow. As previously 

announced, Matt Stevens, on the appointment 

of Mark Hazlewood, resigned from the Board. 

I am delighted to welcome Willie MacDiarmid 

who was appointed as a Non-Executive Director 

on 1 June 2012. Willie has had a long and 

distinguished business career, most recently 

as an adviser to utilities organisations in Europe 

and Africa. From 2009 to 2011 he was Chief 

Operating Officer at the energy services company 

Eaga Plc. From 1990, he held senior positions at 

FTSE 100 company, Scottish Power – latterly as 

Director of Energy Retail – where he successfully 

led the division through the deregulation of the 

energy market and its subsequent integration 

post the Iberdrola merger. During his tenure 

in this role, he oversaw a 50% increase in 

customers and increased customer satisfaction 

statistics into the upper decile, winning two JD 

Power Customer Service Awards. 

In addition to strong credentials in the utilities 

sector, Willie has gained UK Government 

relations experience, spearheading the Warm 

Front programme at Eaga as well as the BBC 

Digital rollout. From 2007 to 2009 Willie was 

Chairman of the Energy Retail Association. 

Tim Ross, Senior Independent Non-Executive 

Director of the Company, who joined the Board 

in 2002, has announced his intention to retire 

from the Board at the Company’s AGM in July. 

He was Non-Executive Chairman of May Gurney 

from January 2005 to July 2008, and as 

Chairman oversaw the flotation of the business 

on AIM in June 2006. It is proposed that Ishbel 

Macpherson will succeed Tim as Senior 

Independent Non-Executive Director on his 

retirement from the Board. Tim has made an 

invaluable contribution to May Gurney over the 

past ten years and the Board would like to thank 

him for his valuable and incisive contribution 

and to wish him all the best for the future. 

People 

Our 6,000 people deliver essential front-line 

services to local communities across the UK. 

They are the people that keep the country 

running so that everyone can go about their 

daily lives safely and easily. 

I would particularly like to welcome our new 

employees from TransLinc and new contract 

mobilisations. On behalf of the Board, I would like 

to thank all of our employees for the contributions 

they have made to May Gurney’s achievements 

in the year. 

Our work has been recognised with 42 industry 

awards this year and I would like to highlight five 

of these for special mention: the RoSPA Gold 

Award for health and safety, for the eighth year 

in succession; the IIP Bronze Award (under 

the new guidelines); the BITC Community 

Impact Award for the work of the May Gurney 

Foundation; AIM Company of the Year 2011; 

and Tim Cartwright, from our rail services 

business, who was the overall winner in May 

Gurney’s ‘Be the Best’ Awards. 

Since 2007, we have enabled our people to 

share in the success of the business through 

our Sharesave Scheme. In 2011 we also 

introduced a Share Incentive Plan (SIP). 

Both programmes will be rolled out again 

during the coming year. This year, we also 

launched MGPlus, a shopping discount 

scheme for all May Gurney employees. 

Outlook 

May Gurney continues to benefit from long-term 

visibility of revenues. Our order book stands at 

£1.5 billion, with a further £1.1 billion in potential 

contract extensions, and our bidding pipeline is 

£4 billion in our core markets. More than 95% 

of our business is delivering long-term essential 

services to the public and regulated sectors. 

Our strategy of targeting resilient, maintenancefocused 

revenue streams has proved successful 

against the background of a challenging 

economic environment. Whilst we continue to 

bid intelligently, our approach has always been 

to pursue value over volume, especially as our 

markets become increasingly competitive. 

Therefore, we remain selective and focus on 

profitable work where added value, service 

innovation, collaborative working and customer 

service are the primary drivers. 

We continue to deliver market-leading solutions 

that are underpinned by our proprietary 

methodologies for service delivery and our 

client-oriented approach. We completed our 

internal reorganisation, made further investment 

in our systems and addressed some operational 

challenges. This positions us well to concentrate 

on enhancing margins on our newly-won 

services contracts, providing greater value to 

our clients and driving continued organic growth 

through new contract wins and cross-selling 

opportunities. 

We are confident, given the start to the new 

financial year, that our deep long-term client 

and community relationships, diverse portfolio 

of integrated essential services, strong order 

book and substantial bidding pipeline will ensure 

continued growth and success. 


Chairman 



7 



Chief Executive’s review 

Overview 






Our vision is to be the leading support 

services business in the UK in our chosen 

sectors. We work with our long-term 

clients in the public and regulated sectors 

to design and deliver a wide range of 

essential front-line services that reach 

over 24 million people every day. 

Put simply, the services we deliver 

keep the country running. 

Philip Fellowes-Prynne 

Chief Executive 

All of our contracts are long-term and 

are delivered locally. This means that 

we have deep relationships with local 

communities and make a significant 

and sustainable contribution to the 

local economies where we work. 

Our strong local presence means that 

where we offer multiple services to 

multiple clients in one place, we can 

deliver them together, so that they are 

more effective and more efficient for 

everyone. Importantly, we also translate 

the learning from one geography or 

service to another. This is the essence 

of our unique ‘place-based’ approach 

to integrated service delivery. 

Operational performance 

During a very busy year, we have secured more 

than £400 million in new contracts, renewals and 

extensions, acquired TransLinc and successfully 

completed a review and restructuring of our 

operations to align our services more closely to our 

clients. During the process, we have significantly 

strengthened and enhanced the skills and 

capabilities of our senior management teams. 

The Regulated business had a strong year, 

and performed particularly well in the water 

mechanical & electrical (M&E) and repair & 

maintenance (R&M) sectors and our first gas 

contract in England is underway – for Southern 

Gas Networks – leveraging our existing highways 

infrastructure in East Sussex. The Highways 

business also had a strong performance in the 

year, driven by clients’ need to maintain existing 

assets due to limited availability of capital. 

This was balanced by newly-won environmental 

services contracts taking longer to reach their 

expected margins, whilst achieving recycling 

rates in excess of client targets, and a small 

number of under-performing projects in Scotland 

which have been discontinued. 

Also, performance within the Facility Services 

business, which represents £46.6 million (7%) 

of the Company’s turnover, proved disappointing. 

This is a non-core division and the Company is 

planning to fulfil its existing client obligations. 


We have maintained our work-winning 

momentum with new contracts, contract 

renewals, and extensions totalling more than 

£400 million – all through long-term relationships 

(see chart below). 


two-year extension to our Omnibus contract 

with British Waterways, valued at up to £40 

million and for Fleet & Passenger Services 

(TransLinc), a new five-year contract with West 

Lancashire Borough Council valued at £4 million. 

The Company’s order book stands at £1.5 billion 

(including framework contracts) with potential 

contract extensions of a further £1.1 billion. 

The bidding pipeline, at more than £4 billion in 

our core markets, reflects the very significant 



The sales process, through the growing 

popularity of ‘competitive dialogue’, is becoming 

longer and more collaborative. Both of these 

factors mean that bids are becoming more 

complex and that the cost of bidding continues 

to be high although this plays to May Gurney’s 

proven expertise at developing deep long-term 

client relationships. 

Our market place 

Our target markets in the public and regulated 

sectors are significant and offer continued 

opportunities for us to move our business forward. 

The total annual value of these markets is 

in excess of £24 billion. Although there are 

constraints on public sector spending and the 

general economic climate remains challenging, 

the services we provide will always be essential. 

It is expected that there will be further cuts in 

public spending and we believe that the impact 

of the next Comprehensive Spending Review 

(CSR) will drive further outsourcing of services 

which are currently in-house – like highways, 

transport and environmental services – 

to address the imperative to reduce costs 

whilst maintaining front-line essential services 

to local communities. 

Customer Activities Value 

Duration 

(years) 

Bristol City 

Waste collection, street cleansing c. £96 million 7 + 7 

& winter maintenance 

Cheshire West & Chester Waste & recycling Up to £126 million 14 + 7 

East Sussex Highways maintenance Up to £60 million 3 year extension 

Harrow Council Highways maintenance Up to £50 million 5 + 2 

Richmond upon Thames Street lighting Up to £5 million 5 

Torbay Council Street lighting Up to £5 million 5 + 3 

Network Rail BCDP, property & maintenance Framework 3 + 2 

BRB Residuary Property maintenance Framework 3 

British Waterways MEICA Framework 3 

Fulcrum Gas connections & pipe laying Framework 3 

Welsh Water Civil engineering Framework 4+2 

This will lead the market to explore more options 

for ‘bundling’ outsourcing arrangements for 

essential services which, together with the 

increasing importance of developing thriving 

local economies and communities, play to 

May Gurney’s unique geographical footprint 

and ‘place-based’ philosophy. 

Whilst we continue to bid intelligently, 

our approach has always been to pursue 

value over volume, especially as our markets 

become increasingly competitive. Therefore, 

we remain selective and focus on profitable 

work where added value, service innovation, 

collaborative working and customer service 

are the primary drivers. 

Group order book £m 

£1.5bn 

520 335 

40 

480 

35 

300 

£400m 

New long-term business won 

£4bn 

265 

25 

240 

Pipeline of bidding opportunities 

£24.1bn 

Size of our target markets 

Framework 

Secured 

420 

420 

2012/13 2013/14 2014/15 2016+ 



9 



Chief Executive’s review 

Overview 






The Executive Management Team (left to right): 

Michael Thompson (Managing Director, Regulated 

Sector Services); Philip Fellowes-Prynne (Chief 

Executive); John Wilkinson (Managing Director, Public 

Sector Services); Mike Baldwin (Managing Director, 

Group Services); Mark Hazlewood (Group Finance 

Director); Greg Michael (Group Strategy & Business 

Development Director); and David Billingham 

(Group HR Director) 

The Executive Management Team (EMT) meets 

to deal with all executive business of the Group, not 

specifically reserved to the Board or its committees. 

The Director of Safety, Health, Environment & 

Assurance acts as an adviser to the Chief Executive 

and the Company Secretary acts as secretary to the 

EMT. Other senior managers of the Company also 

attend meetings of the EMT by invitation. 

In the regulated market, as we approach the 

AMP6 regulatory period, the twin pressures to 

achieve excellent levels of customer service 

and deliver operational efficiencies continue to 

drive our clients’ strategies, with an emphasis 

on capital maintenance. These needs are 

aligned with May Gurney’s core capabilities – 

for example, our customer service expertise 

has helped Anglian Water to achieve record 

satisfaction scores and our proven skills in M&E 

and R&M continue to drive our strong operational 

performance in the sector and to propel us 

further up the ‘value chain’. 

The new regulatory period for gas (known as 

RIIO-GD1) will be eight years in duration, starting 

in April 2013, and is Ofgem’s new approach to 

regulating the gas network companies. Along with 

efficiency and safety, which are both currently 

crucial considerations, the new period will place 

an enhanced emphasis on customer satisfaction 

and environmental issues. 

Acquisition and integration 

of TransLinc 

TransLinc, which was acquired in November 

2011, delivers essential front-line services to 

local communities through long-term contracts 

and, with more than 90% of its clients in the 

public sector, represents an excellent fit with 

May Gurney’s established strategy and 

business model. 

The acquisition has strengthened May 

Gurney’s market-leading positions in highways 

maintenance and environmental services. In 

addition, it has provided entry into the local 

authority passenger services market, extended 

May Gurney’s national coverage and client base, 

and offers significant cross-selling opportunities. 

TransLinc has also augmented our existing plant 

management expertise and positioned us well for 

new business opportunities – the provision and 

maintenance of vehicles is increasingly being 

included in ‘bundled’ tenders. For example, we 

are already delivering passenger services to one 

of our long-term highways clients and see further 

cross-selling opportunities emerging. 

The integration has proceeded to plan. During 

the period, the Company has secured three 

significant contract extensions and, since the 

year end, a new contract for fleet management 

services with West Lancashire Borough Council. 

In the local authority sector, the Company is 

now the UK’s market leader in the £730 million 

outsourced fleet services market, and number 

five in the UK’s £3.1 billion passenger services 

market. Exceptional costs in the year, relating 

to the acquisition, including transaction and 

integration costs, amounted to £2 million, 

in line with expectations. 

TransLinc has been renamed ‘Fleet & Passenger 

Services’ and is included in our Public Sector 

Services division. 

Review and restructuring of operations 

In line with our stated strategy to align our 

services more closely with clients and focus on 

quality of earnings, the Company completed 

an extensive review and restructuring of 

its operations. We have consolidated our 

operations into two market-facing divisions 

– Public Sector Services & Regulated Sector 

Services – and significantly strengthened and 

enhanced the skills and capabilities of our 

senior management teams. 

This review and restructuring puts May Gurney 

on a stronger footing, enabling the business 

to deliver continuing year-on-year growth, 

operational efficiencies and reinforcing our 

capabilities to deliver ‘place-based’ services. 

This review resulted in an exceptional cost of 

£2.9 million in the year, largely comprised of 

redundancy and termination costs. 

Health & safety 

The health and safety of our workforce, and 

the communities where we work, remains our 

priority. Our goal is to make sure that everyone 

goes home safely – being safe is one of our core 

Company values. 

More than 100 of May Gurney’s senior managers 

attended our annual Health & Safety conference 

to preview the evolution of our award-winning 

behavioural change programme, MAD (Making 

a Difference). The re-energised programme will 

roll-out across the Group over the coming year. 

We provide occupational health benefits for all 

May Gurney employees and during 2011/12 we 

carried out over 1,800 health surveillance and 

wellbeing assessments for our people as part of 

our occupational health programme. 

To further improve our governance and to ensure 

that our Vision and Values are incorporated 

into our operations, we have developed a 

framework of 12 Core Principles underpinning 

our values. Each of these principles has a 

subset of performance principles that are used 

when developing Group Standard Operating 

Procedures (GSOPs). In essence this means that 

we live our values through operational excellence. 

Our AFR 1 is 0.53, a 15% improvement from last 

year (2010/11: 0.62) 2 . We have set key objectives 

and management plans in order to reduce this 

further in 2012/13, and going forward. 

Community investment 

The May Gurney Foundation was set up in 2009 

to support charities and good causes which help 

young people and the long-term unemployed get 

back into work, specifically focused on the local 

communities where we operate. 

The aim is to improve opportunities, including 

education, self-help, health and wellbeing, as 

well as supporting environmental issues. During 

the year the Foundation has supported 17 local 

community groups in East Anglia, Scotland, 

Surrey and Wales with grants, together with 

match-funding for 45 May Gurney employees. 

Our ongoing community investment programmes 

include a partnership with HM Prisons (HMP) 

to offer low risk offenders the opportunity to gain 

work experience on a day release basis; and 

sponsorship of ‘Coast Along for Water Aid 2011’ 

and outdoor free events (MG Free) at the Norfolk 

& Norwich Festival. 

Sustainability & environment 

May Gurney has continued with its goal of 

embedding sustainable thinking throughout 

its business management systems. We have 

developed a sustainability and environmental 

risk management strategy which controls 

our improvement programme throughout 

the organisation. We have also integrated 

sustainability into our business development 

process and it forms a core element of our 

innovative ‘place-based’ service offering. 

May Gurney is in its fourth year of having 

a focused programme to manage carbon 

emissions and we have been accredited 

by CEMARS since 2009 for our carbon 

management systems. 

Our carbon emissions relative to turnover fell from 

77.3 tonnes/£m in 2010/11 to 74.8 tonnes/£m 

in 2011/12 (estimated). Due to the growth of our 

business and new contract mobilisations, our 

absolute CO 2 emissions in the year rose to an 

estimated 49,741 tonnes (compared to 44,325 

tonnes in 2010/11). These figures compare 

well with our baseline year of 2008/9, which had 

CO 2 emissions of 42,746 tonnes and an intensity 

of 90.89 TCO 2e/£m. 

1 

AFR (Accident Frequency Rate) defined by the Health & 

Safety Executive as the number of RIDDOR accidents in 

a 12-month period x 100,000, divided by the total hours 

worked in that same 12-month period 

2 

In our 2011 Annual Report we quoted the AFR as 0.60. 

Following an operational review, this was revised to 0.62 



11 




Market overview 

Overview 






The overall total 

annual value of our 

Public and Regulated 

Sector markets is 

£24.1 billion 1 

1 

The growth in last year’s figure is mainly due to entry into 

the Fleet Maintenance market (£730m) and the Passenger 

Service market (£3.1bn), via the acquisition of TransLinc, 

and also the addition of Wales as an addressable market 

(£375m). This has more than offset the reduction incurred 

because of the removal of the school estate capital 

maintenance market (£2.2bn) 

2 



3 

Surveyor, The Surveyor Highway Maintenance Yearbook 

2011 (June 2011) – statistics amended to reflect our 

contract win in Harrow, whilst taking off West Sussex and 

half of the road network in Essex as these contracts have 

now ended. Finance Statistics 2009-10 (February 2011). 

4 



Welsh Local Government Finance 

5 



6 



Welsh Local Government Finance Statistics 

2011 (September 2011) 


Our Public Sector Services division works 

across three main areas, each with a number 

of service lines: highways maintenance, 

environmental services and fleet and passenger 

services. Combined, the addressable markets 

are worth £12.5 billion per annum to May 

Gurney. Our strong capabilities in delivering 

such a wide range of local authority services, 

and strong geographical presence across the 

UK, means that we are well positioned to 

benefit from new developments in outsourcing 

and increasingly integrated contracts that 

incorporate a number of our service delivery 

areas and fit with our unique approach to 

‘place-based’ working. 

Although spend in the public sector is under 

pressure, the essential nature of the work we 

deliver ensures it will remain sustainable over 

the long-term, evidenced by the healthy flow of 

opportunities which are still coming to market. 

Our proven ability to deliver innovative solutions 

and increase efficiencies enables us to work 

with and help clients through the challenges 

they face during this period of austerity. 

Highways Maintenance Services 



£3 billion per annum 2 . Although budget cuts 

during the current CSR period to 2014/15 

means that spending across all local government 

services has inevitably come under threat, 

expenditure in this market for the most part 

remains sustainable. 

The pressure on budgets is producing trends 

which are working in May Gurney’s favour. 

Firstly, clients appear more open to change, 

new ideas, and radical solutions. This plays 

to May Gurney’s strength in transformational 

service design and delivery, allowing us to create 

further value for clients by working with them on 

their key strategic issues. 

This positioning is especially important since 

evidence suggests that competitors may be 

willing to accept reduced margins in order to 

win work. Secondly, the need for innovation to 

increase efficiency means there is an increased 

openness to further outsourcing by councils who 

carry out this work in-house. With only 75% of 

the English market outsourced, and 3% and 

7% in Scotland and Wales respectively, there 

is the potential for a significant increase in our 

addressable market. 

During the year, May Gurney secured another 

new client, Harrow Council, giving us a platform 

for growth in the London highways maintenance 

market, complementing our already extensive 

presence here through our street lighting and 

environmental services contracts. We are the 

second largest provider in the local authority 

highways maintenance market with a share 

of 12%, maintaining nearly 35,000km of the 

285,000km of road across England 3 . We also 

continue to explore ways in which we can expand 

our service offering in local authority highways 

maintenance to Scotland and Wales, markets 

potentially worth £370 million and £200 million 

per annum respectively 4 . 

The local authority highways maintenance market 

is complemented by the street lighting market, 

which remains stable at around £780 million per 

annum 5 . Our street lighting business, Cartledge, 

is the third largest provider in England with a total 

market share of 8%, and 30% of the London 

market. Expenditure by clients is being sustained 

in order to meet challenges regarding both an 

exposure to rising energy prices and pressures 

to reduce their carbon footprint. Additionally, the 

fact that PFI has fallen out of favour as a way of 

procuring street lighting contracts is also working 

to our advantage, given that this part of the 

market had not previously been considered an 

addressable area of spend by May Gurney. The 

street lighting markets in Scotland and Wales are 

potentially worth an additional £75 million and 

£35 million respectively 6 . 


The environmental services market is now worth 

in the region of £3.1 billion per annum, with 

£1.3 billion spent on waste collection and the 

remainder on downstream operations, including 

household waste recycling centres (HWRCs). 

In addition, the market for street cleansing, 

which is often included within environmental 

services contracts, is worth around £900 million 

per annum 7 . Budget pressures are increasing 

occurrences with which street cleansing, 

grounds maintenance or other related services, 

are being bundled with collection contracts. 

This is leading to the procurement of larger, more 

complex environmental services contracts, which 

May Gurney is well placed to deliver. Future 

growth in the recycling market is anticipated 

to continue as recycling rates increase, driven 

by increases in landfill tax and local authority 

recycling targets. 

In the outsourced municipal collection market in 

England and Wales, May Gurney has increased 

its share to 10% off the back of recent successes 

with Bristol City Council and Cheshire West and 

Chester Council (CWaC). This means we are 

now the fourth largest operator in this area, up 

one place from 2010/11. The success of our 

award winning MaGOS solution continues, 

with evidence suggesting that the balance of 

opinion is moving in favour of the kerbside sort 

method of collection. Indeed, research carried 

out by consultancy 4R Environmental noted that 

where the choice of collection system is left open 

to competition by a procuring local authority, 

59% will end up implementing kerbside sort 

as the method of collection, as opposed to just 

10% who will opt for single-stream commingled 8 . 

This follows on from previous studies published 

by WRAP, including ‘Kerbside Recycling: 

Indicative Costs and Performance’ and ‘Kerbside 

Collections Options: Wales’, which also both 

suggested that kerbside sort systems will 

outperform single-stream commingled systems 

on cost 9 . 

Although we are beginning to see early signs 

of increased levels of first-time outsourcing in 

the market, the level of penetration by private 

providers here still remains much lower than 

more mature blue collar managed service areas, 

such as local authority highways maintenance. 

With just over half of the market still in the hands 

of local authority Direct Service Organisations 

(DSOs), this means there is good scope for 

growth in our addressable market through future 

outsourcing 10 . Given the increasing pressures 

being placed upon local authorities to hit 

their recycling targets whilst cutting costs and 

increasing efficiencies, many are looking to the 

private sector for answers and May Gurney has 

the capability and track record to answer this call. 

Our presence in Wales, through our Bridgend 

contract, offers good potential for future growth 

of our business in this region, to take advantage 

of the £140 million market here 11 . Indications 

are that the Welsh Assembly Government favour 

a kerbside sort collection method, following the 

aforementioned study by WRAP which they 

commissioned, and which concluded that 

kerbside sort recycling costs less in financial 

and environmental terms compared to 

commingled or two-stream collection systems. 

Our presence in Scotland also allows us 

access to the £225 million spend on our core 

environmental services offering, and we are 

encouraged by indications that the market 

here could open up to outsourcing 12 . 

Within the HWRC market, our market share 

remains stable at 9%. We continue to work 

successfully with existing clients in order to help 

them drive down costs and increase efficiencies, 

including the consolidation of their sites and other 

innovative working practices. Our experience of 

operating multiple HWRC sites on behalf of our 

clients, and achieving high recycling rates, means 

we are well positioned to take advantage of the 

healthy future pipeline of opportunities in 

a market with very high levels of outsourcing. 

35,000km 

of roads 

May Gurney is a leading supplier 

of highways maintenance 

services to local authorities. 

We also maintain more than 

500,000 street lights 

£3bn 

Annual value of the highways 

maintenance market in England 

£3.1bn 

Annual value of the 

environmental services market 

7 



8 

4R Environmental Research (April 2012) 

9 

WRAP, Kerbside Recycling: Indicative Costs and 

Performance (June 2008); WRAP, Kerbside Collections 

Options: Wales Report (January 2011) 

10 

Internal research Finance Statistics 2009-10 (February 2011). 

11 

Statistics for Wales, Welsh Local Government Finance 

Statistics 2011 (September 2011) 

12 


Statistics 2010-11 (February 2012) 



13 



Market overview 

Overview 






£730 million 

May Gurney is the UK leader in the local 

authority outsourced fleet services market 

with a share of 8% 

£3.1bn 

Annual value of the passenger 

services market 


During the year we established a market-leading 

position in the local authority fleet maintenance 

market through the acquisition of TransLinc, 

gaining an overall share of 8% of the outsourced 

market. This market is worth £730 million 

per annum and remains highly fragmented, 

typically characterised by a limited number of 

scale players and a long tail of local firms 13 . 

Our leading position is most pronounced in the 

fully-outsourced market, where we take on the 

hire and full maintenance of a client’s entire 

fleet. This is a part of the market open only to 

the largest providers. Here, we hold six fully 

outsourced contracts and have a market share 

of around 50%, giving us a strong platform from 

which to grow further. Over 50% of the total 

market is still in-house and spending cuts are 

expected to drive more outsourcing by local 

authorities. Along with having the broadest range 

of fleet services, we are also the only leading 

firm in the market to offer passenger services as 

well as fleet maintenance. Combined with our 

significant position in the local authority highways 

maintenance market, we are well positioned to 

deliver any variation of contract a local authority 

may wish to procure. 

The acquisition of TransLinc has also given 

May Gurney entry into the £3.1 billion passenger 

services market, with a client base of both local 

authorities and Primary Care Trusts (PCTs) 13 . 

Although our market share is just 0.5%, the 

extremely fragmented nature of this market 

means that we are the fifth largest supplier in 

the market. This is a very immature market 

and there is a real opportunity for May Gurney 

to provide innovative solutions that deliver 

substantial savings to clients whilst maintaining 

or improving service levels. Outsourcing rates 

in the market currently stand at 60%, meaning 

there is also good scope for future outsourcing 

to result in increases in the size of our 

addressable market. 

Regulated Sector 

Services 

Our Regulated Sector Services division includes 

Utility Services, Rail Services and Waterways 

Services. Combined, the directly addressable 

markets are worth around £11.6 billion per 

annum, with recent periodic spending reviews 

in the rail and water sectors securing significant 

increases in expenditure in two of our key markets. 


Ofwat’s Final Determinations for the AMP5 period 

(2010-2015) allows for average expenditure of 

£4.4 billion per annum over the five years by 

the water companies across England and Wales 

(£22.1 billion in total), a substantial increase of 

32% on AMP4 (2005-2010) levels 14 . 2012/13 

will see expenditure in the year remain at an 

above-average level for the AMP5 period of 

around £5 billion, with a continued emphasis 

on capital maintenance, which accounts for 

over half of this expenditure and is where 

our main capabilities are focused. The rising 

level of expenditure on maintenance is 

expected to continue, driven by the transfer 

of the private drains and sewers (PDaS) to the 

water companies towards the end of 2011, 

substantially increasing the length of sewer 

under their ownership. 

Many of our key clients across the water sector 

are benefiting from the increased expenditure in 

comparison to AMP4 levels. Customer service 

levels are now at the forefront of every water 

company’s strategy, and climate change is 

driving the thinking in AMP6, with clients forced 

to pay ever increasing attention to the changing 

weather patterns. zIn addition, efficient solutions 

are being demanded from suppliers in order to 

drive efficiencies and enable our clients to reduce 

costs and hit stringent targets. May Gurney’s 

approach to customer service and service 

development means that we are well placed to 

help clients achieve these objectives. 

Following the acquisition of Turriff last year, we 

have consolidated our place in the £1.8 billion 

per annum Gas Distribution Networks market 15 . 

Given that the current regulatory period comes 

to an end in March 2013, we are preparing 

ourselves for expansion in this market, one which 

is characterised by a particularly secure and high 

value work stream due to the safety-critical nature 

of the works carried out under the gas mains 

replacement programme. The programme, which 

began in 2003 and accounts for the majority of 

the expenditure within the market, has a total 

estimated value of £24 billion over 30 years, 

and is driven by the Health and Safety Executive 

(HSE) that has an ultimate aim of replacing over 

91,000km of iron gas mains. 

The new regulatory period (known as RIIO-GD1) 

will be eight years in duration and is Ofgem’s 

new approach to regulating the gas network 

companies. Along with efficiency and safety, 

which are both currently crucial considerations, 

the new period will place an enhanced emphasis 

on customer satisfaction and environmental 

issues. This mirrors the recent developments in 

the water market and means our experience in 

delivering on these issues for our existing clients, 

combined with our excellent safety record and 

experience in delivering efficiency savings, 

will put us in a very strong position to secure 

additional work in the new regulatory period. 

Since the acquisition of Turriff, we have also 

expanded our relationship with Scottish Water. 

Expenditure in the Scottish water market over the 

period 2010-15 averages £1.2 billion per annum, 

which is in addition to the £4.4 billion market in 

England and Wales 16 . 

Rail Services 

The move towards a route-orientated industry 

and a greater degree of collaboration and 

partnering, driven both by the appointment of 

David Higgins and the Value for Money Study by 

Sir Roy McNulty, is also driving change in the rail 

market. Both these moves are seen as positive by 

May Gurney, as they play to our core strengths. 

We continue to help Network Rail to deliver its 

programme of investment on renewing structures, 

property and signalling. Planned expenditure by 

Network Rail over Control Period 4 (2009-2014) 

increased by 17% on Control Period 3 (2004- 

2009) levels, with the areas directly addressed by 

May Gurney now worth on average over £1 billion 

per annum across this period. This is further 


worth on average £2.3 billion per annum across 

Control Period 4 17 . Our track record of delivering 

programmes on-time and on-budget positions 

us well to benefit from the increasing spend by 

Network Rail in this area. 

We have adapted well to the recent 

transformation of our core contracts, as the 

new BCDP framework we secured with Network 

Rail in the year merged our property and civil 

engineering frameworks. Direct competitive 

bidding operates alongside this framework and 

has allowed the business to expand its tendering 

capability throughout the whole of the UK. 

We have had considerable success in the year, 

winning work both under the newly formed BCDP 

framework and also through tendered works 

outside the framework. This highlights not only 

our experience of winning work in the rail market, 

but also our flexibility in successfully adapting as 

Network Rail changes their requirements and 

procurement methods. This agility will enable us 

to increase our market share further. 


In the waterways market, we continue to work 

with British Waterways as its national contractor, 

maintaining the extensive network of canals and 

associated assets, delivering over £20 million 

of work per annum. We also work on behalf 

of the Environment Agency to improve flood 

defence and coastal management assets, which 

now accounts for £830 million of Government 

expenditure per annum 18 . Our work here is 

essential in both the regeneration of the UK’s 

water network and ensuring the protection 

of communities from flooding, underlying its 

essential and sustainable nature. 

£11.6bn 

Annual value of the regulated 


£1.8bn 

Annual value of the Gas Distribution 

Networks market 

13 



14 

Ofwat, Future Water and Sewerage Charges 2010-15: 

Final Determinations (November 2009) 

15 

Ofgem, Gas Distribution Price Control Review Final Proposals 

(Dec 2007) 

16 

Scottish Water, Delivery Plan 2010-15 (March 2010) 

17 

Network Rail, Control Period 4 Delivery Plan (March 2009) 

18 

DEFRA, Annual Report and Accounts 2010-11 (July 2011) 



15 



Our business model 

Overview 






Our business model is centred 

on long-term relationships with 

clients in the public and regulated 

sectors, and our offer is built around 

the delivery of essential frontline 

services for their customers. 

These target markets, which are 

characterised by statutory and 

regulatory drivers, are resilient, and 

worth over £24 billion per annum. 

Our Service Delivery capabilities, Solutions 

& Outcomes focus and Client Engagement 

expertise is complemented by our operational 

scale and geographical footprint. Surrounding 

this is a strong framework of people management, 

change and project management, risk 

management, governance, customer service 

and community engagement, all underpinned 

by our core company values, which ensure the 

sustainability of our business model. 

1Service Delivery 

Our two client-aligned business divisions – 

Public Sector Services and Regulated Sector Services 

– are focused on assured operational delivery and 

continuous improvement. Operational excellence is 

essential to ensuring our clients’ trust and developing 

future growth opportunities with them. Where we offer 

multiple services to multiple clients in one place, we can 

deliver them together, so that they’re more effective and 

more efficient. This is the essence of our unique ‘placebased’ 

approach to integrated service delivery. 

3Client Engagement 

Long-term client relationships and long-term service 

agreements are central to our business. This is supported 

by the strong local knowledge we have throughout the 

UK, gained through a geographically diverse client base, 

over 6,000 people at more than 230 locations and a 

strong network of supply partners. Excellent client service 

capabilities are essential to ensure that we grow our 

existing relationships, through delivering wider services 

and innovative service solutions and developing new 

opportunities. Our ability to build and develop long-term 

relationships has been a key feature of the business for more 

than 85 years and gives us competitive edge. 

Customer service 

Change & project management 

Service Delivery 

Community engagement 

Risk management 

Long-term 

client & community 

relationships 

Client Engagement 

Solutions & Outcomes 

Company values 

Governance 

People management 

2Solutions & Outcomes 

Our service solutions are carefully 

tailored, in collaboration with clients 

such that they meet their strategic 

priorities, regulatory drivers and the 

needs of local communities. Our 

extensive experience of designing and 

developing transformational services 

across the UK means that we’re able 

to transfer the learning from one 

geography to another, enabling us to 

engage at a strategic level and take a 

proactive approach to solving our clients’ 

problems. Our ‘control hub’ solution 

is a good example of this innovation 

and operational excellence. This is 

underpinned by our core information 

systems expertise and strong delivery 

capabilities and experience. 



17 



Our strategy 

Overview 






Our vision is to be the leading support 

services business in the UK in our 

chosen sectors. We are committed to 

helping our long-term clients in the 

public and regulated sectors transform 

the delivery of essential front-line 

services to local communities. 

Our established strategy for growth 

has five key objectives: 

Target 

Deliver 

Enhance 

Grow 

Acquisitions 

Target resilient maintenancefocused 

revenue streams for 

essential services in the public 

and regulated sectors through 

developing long-term client 

relationships 

More than 95% of May Gurney’s business is in 

delivering essential services to the public and 

regulated sectors through long-term contracts, 

up from 77% in 2007. Our target markets are 

large – over £21 billion – offering significant 

opportunities for growth and resilient revenue 

streams. Establishing and developing long-term 

client and community relationships has been 

one of May Gurney’s core strengths since the 

Company was founded in 1926. 

Deliver contract performance by 

managing and executing front-line 

services consistently, successfully 

and efficiently 

The key elements at the start of a contract 

are innovative service design, a dedicated 

mobilisation team, scaleable systems, leveraging 

regional resources, and engaging with the 

TUPE workforce, enabling us to raise skills and 

standards. Through working collaboratively to 

achieve contract KPIs, we cement long-term 

client and community relationships that position 

us to extend our service offering and add value. 

Enhance margins through 

operational efficiencies and 

delivering a wider range of services 

Our Group-wide Business Improvement 

strategy utilises LEAN methodology, sustainable 

efficiency, end-to-end process mapping, shared 

services and regional cost-base management to 

deliver improved processes, improved service 

delivery, improved employee skills, improved 

customer service and improved margins. This 

consistent approach also ensures that we 

maximise the benefits of ‘place-based’ working 

and translate the learning from one geography 

(or place) to another. 

Grow organically through winning 

new business and contract 

expansions by understanding 

our clients and tailoring our 

services to achieve their outcomes 

In 2012, we have maintained our work-winning 

momentum with new contracts, contract 

renewals, and extensions totalling more than 

£400 million – all through long-term relationships. 

Since the period end, we have secured a further 

£50 million. The Company’s order book stands 

at £1.5 billion (including framework contracts) 

and potential contract extensions of a further 

£1.1 billion. The bidding pipeline at more than 

£4 billion in our core markets, reflects the very 

significant opportunities for growth. 

Consider strategic earningsenhancing 

acquisitions 

Whilst we continue to evaluate acquisition 

opportunities, our focus over the coming year 

is on points 1-4 of our growth strategy. The 

acquisition of TransLinc has strengthened May 

Gurney’s market-leading positions in highways 

maintenance and environmental services. 

In addition, it has provided entry to the local 

authority passenger services market, extended 

May Gurney’s national coverage and client base, 

offered significant cross-selling opportunities, and 

provided a broadened service offering to existing 

clients. TransLinc has been renamed ‘Fleet & 

Passenger Services’ and is included in our Public 

Sector Services division. 



19 



Corporate assurance 

and risk management 

Overview 






Risk area Description of risk Risk mitigation 

Health, safety 

and environment 

Operational 

Serious injury or death of an 

employee, a contractor, client or 

a member of the public 

Environmental pollution leading to 

financial penalties or loss of reputation 

Inability to deliver services to plan and 

programme and associated financial 

impact 

Our management has the foremost responsibility for health and safety within our 

operations and are given the necessary tools (training, equipment and resources) to 

enable them to deliver a healthy, safe and environmentally friendly workplace 

Group Standard Operating Procedures for health, safety, sustainability and 

environmental risk management sit at the core of operations, which are 

developed, adopted, reviewed and audited against known standards both 

internally and externally 

Safety, Health, Environment & Assurance Director leads a dedicated team 

that audits against Group Standard Operating Procedures (GSOPs) to ensure 

compliance for legal requirements is complied with and that best practice is adopted 

Health & safety and environmental performance indicators are reviewed monthly 

Continued focus on MAD (Make a Difference), our behavioural change programme 

Contract environmental audits 

Extensive external and internal audits are undertaken throughout the Group that 

verify compliance with legal requirements 

Monthly reviews by the Board on key operational performance indicators covering: 

health, safety and environment; employee statistics; sustainability targets; financial 

and commercial performance; business development and pipeline; sector and 

contract risks; and customer satisfaction 

Authority levels and spending controls are monitored and enforced 

Risk area Description of risk Risk mitigation 

Acquisitions 

Business 

organisation 

and people 

Government 

policy 

Inflation 

Failure to deliver on financial targets 

Inappropriate culture in acquired 

business 

Shortage of skilled and experienced 

people 

Poor employee retention 

Loss of May Gurney culture through 

dilution of new people 

Public spending decisions 

Legislative changes 

Increased commodity and resource 

costs 

Board review and sign-off to ensure it fits with the culture and financial objectives 

of the Group 

Rigorous multi-disciplined due diligence process 

Clear and comprehensive integration planning 

Corporate and business sector induction programmes for all new employees 

All employees have a Personal Development Plan that is reviewed on a six-monthly 

basis 

Management development and engagement programmes 

Mentoring of key employees by members of the senior management team is 

important in support of the coaching and management used in the business 

A flexible resource-base is utilised to allow appropriate resource planning to be 

implemented 

External advice and intelligence is utilised to forward plan for known changes 

Appropriate contract provisions adopted to ensure protection 

Internal training and awareness courses introduced 

Appropriate inflation mechanism incorporated into tender submissions 

Forward ordering of commodities with supply chain 

Financial 

Bidding processes 

Contract 

mobilisation 

Failure to achieve financial plans and 

budgets 

Insufficient credit facilities inhibit 

operations and growth of the business 

Failure to deliver on financial targets 

Poor market intelligence 

Weak client relationships 

Inappropriate contract risk profile 

Insufficient understanding of service 

scope 

Insufficient knowledge of contract 

requirements 

TUPE process 

Failure to deliver services 

Business plans are prepared annually and performance monitored regularly 

Financial performance, both profit and loss and cash, is monitored monthly against 

the budget 

CapEx controls are in place 

The Group maintains and manages its credit facilities to ensure that it has sufficient 

funding for its growth 

Senior management team approve all major bids 

Key contract terms are assessed for alignment with Group policy and strategic 

objectives 

Rigorous tendering strategy, pricing and review 

Comprehensive risk assessment to ensure key risks are identified and mitigated 

All contracts scrutinised to ensure that they align with the Company’s tender strategy 

Rigorous competition analysis and compliance training 

Integrated and comprehensive mobilisation plans put in place 

Dedicated support staff provided to cover key risk areas such as: new and existing 

employee transfers; health and safety management; plant; equipment and vehicle 

use; commercial and financial management and information systems and technology 

Financial management and planning 

Employee induction and training programmes 

Effective communication plans established 

Information 

systems 

Reputation 

Procurement 

Failure of Group information systems 

leads to an inability to deliver services, 

monitor financial performance, pay 

creditors or collect cash from debtors 

Failure to determine information 

technology requirements for new 

contracts 

Resilience 

Exclusion from new bidding 

opportunities limits business growth 

Investor perception damaged 

Recruitment and retention of staff 

impacted 

Lack of continuity of supply results 

in failure to deliver services or has a 

financial impact 

Collusion or anti-competitive 

behaviour with suppliers 

Group IT Director and dedicated IT team monitor the performance of all information 

systems 

New systems fully user-tested before deployment 

Information systems personnel fully integrated into new contract mobilisation teams 

Servers remotely located at specialist facilities 

Monthly review of performance and identification if senior management intervention 

is required 

Training programmes for existing staff and induction programmes for new staff 

to reinforce May Gurney culture and behaviours 

Watching brief on press coverage and proactive reputation management 

Supply chain management processes in place 

Compliance training given to all procurement staff 

Training and induction programmes reinforce May Gurney culture and behaviours 



21 



Our KPIs 

We measure our business 

performance against seven key 

performance indicators (KPIs). 

These KPIs are reviewed each 

month by the Board against 

targets established at the 

beginning of the year. 

Group profit margin 

4.3% 

2011 

4.4% 

Profitability of the Group and of each delivery sector is a key 

measure of overall performance. We measure EBITA as a 

percentage of external turnover year to date, as a variance to 

the Budget. Our target is Budget or better. 

Value of long-term public sector 

and regulated sector work 

Employee satisfaction 

67% 

2011 

65% 

Our people are at the front-line of the delivery of essential 

services which means that their overall levels of satisfaction and 

engagement are a key factor in our ability to deliver a great service 

for our clients. We measure satisfaction through our annual 

employee survey – ‘Have Your Say’. 

2010 

4.6% 

95% 

2011 2010 

95% 95% 

Our business strategy is focused on developing long-term client 

relationships. We measure the value of long-term public and 

regulated sector work as a percentage of our total revenues. 

Our target is 90% or more. 

2010 

65% 

Group net cash 

£11.0m 

2011 

£36.2m 

Cash collection and cash balances are key indicators of 

financial stability and performance. For net cash, our target 

is Budget or better. 

Group order book 

Safety 

2010 

£43.4m 

£1.5bn 

2011 2010 

£1.4bn £1.7bn 

The order book measure is impacted by the full value of contract wins, 

losses and delays, reflects the deferment of some client procurement 

processes and provides us with a long-term perspective. It’s measured 

as a variance to the business plan. Our target is business plan or better. 

Employee retention 

9% 

2011 2010 

7% 9% 

Our goal is to reduce employee turnover in order to maintain 

appropriate levels of competence, experience, service delivery, cultural 

alignment, teamwork and stability. It’s calculated using the employee 

turnover figure less redundancies, TUPE, seasonal workers, fixed-term 

contracts, retirements and dismissals. Our target is 17% or less. 

0.53 

2011 2010 

0.62 1 0.31 

Our goal is to reduce accidents and injuries at work. It’s measured 

using the AFR (Accident Frequency Rate) defined by the HSE 

(Health & Safety Executive) as the number of RIDDOR accidents 

in a 12-month period x 100,000, divided by the total hours worked 

in that same 12-month period. Our target is 0.43 or less. 

Overview 






Delivering essential ‘place-based’ 

services to communities and 

people across the country, 

day and night, every day 

We work with our clients in the public and regulated sectors 

to design and deliver a wide range of essential front-line 

services that reach over 24 million people every day. Put 

simply, the services we deliver keep the country running. 

All of our contracts are long-term and are delivered locally. 

This means that we have deep relationships with local 

communities and make a significant and sustainable 

contribution to the local economies where we work. 

Our strong local presence means that where we offer multiple 

services to multiple clients in one place then we can deliver 

them together, so that they’re more effective and more 

efficient for everyone. And we translate the learning from one 

geography or service to another. This is the essence of our 

unique ‘place-based’ approach to integrated service delivery. 

Over the following six pages we describe the work we deliver 

for three local communities – in Torbay, Lincolnshire and 

Norfolk – as examples of our ‘place-based’ approach. 

22 



1 





23

Integrating service delivery & maximising effectiveness 

Translating the learning from one place to another 

Delivering better outcomes for local communities 

Overview 






Torbay 

7.30am 

Maintaining Torbay’s reputation 

for tourism, by looking after 3km 

of beaches and 65 open spaces 

12.00pm 

Keeping Torbay’s traffic 

moving by maintaining 

530km of roads 

9.00am 

Reducing Torbay’s 

contribution to landfill by 

kerbside sort recycling for 

60,000 homes 

3.00pm 

Keeping the South West’s water 

flowing by completing over 

91,000 reactive and planned 

utility maintenance works 

8.30pm 

Lighting the way in Torbay 

by maintaining nearly 

17,000 streetlights 

We work with our clients Torbay Council, South 

West Water and Western Power Distribution to 

deliver more than 40 essential front-line services 

that reach Torbay’s 134,200 residents every day. 

We have been delivering maintenance and 

enhancement services in the South West for 

many years. We are currently working with 

South West Water in a long-term contract to 

provide reliable, efficient, high quality drinking 

water and waste water services throughout 

Devon and Cornwall and in small areas of 

Dorset and Somerset. We are also working with 

Western Power Distribution to enhance service 

delivery for electricity consumers in the region. 

In 2010 we extended this range of services 

through the creation of TOR2, a groundbreaking 

joint venture company between Torbay 

Council and May Gurney. TOR2 delivers waste 

and recycling collections; the maintenance of 

highways, grounds, parks, car parks, buildings 

and the Council’s vehicle fleet; street and beach 

cleansing; and out-of-hours call centre support. 

We have also been awarded a new long-term 

maintenance contract by Torbay Council, with 

our specialist street lighting business, Cartledge. 

In total we now employ nearly 300 people from 

Torbay to deliver these services. 

Our ‘place-based’ approach has provided a hub 

for skills and training in the area, and has enabled 

us to work with other organisations including 

South Hams District Council, Torbay NHS Care 

Trust, South Devon Healthcare, NHS Foundation, 

Torbay Development Agency, Tor Bay Harbour 

Authority and the Torbay Town Centres Company. 

We also work with local schools and many 

community-based organisations and good 

causes to improve the local environment 

and help young people and the long-term 

unemployed get back into work. 

A good example of this is the initiative we 

set up with HMP Channings Wood and local 

charity RideOn, a charity that provides cycling 

proficiency lessons and tests to children from 

less affluent backgrounds. We have helped 

to establish a workshop in the prison, which 

we supply with old bikes from the Household 

Waste Recycling Centre that we manage. The 

prisoners learn transferable skills by refurbishing 

the bikes, which are then passed onto RideOn. 

The children are provided with the refurbished 

bikes to learn to ride on and when they pass their 

cycling test they are able to keep the bike. 

40+ 

Delivering more than 40 essential services 

across Torbay 

14 

Working with 14 clients in the South West 

as a whole, and three in Torbay 

1,000+ 

Employing over 1,000 people in the 

South West and nearly 300 in Torbay 

200+ 

We work with more than 200 local 

suppliers in the South West 

TOR2 has been 

shortlisted for three 

National Recycling 

Awards in 2011 

and 2012 

We won a 2011 

Green Apple award 

for the recycling 

services we deliver 

to Torbay residents 

All six of the beaches 

we maintain were 

awarded the 2011 

Blue Flag Award by 

Keep Britain Tidy 

The 65 parks and gardens 

spaces we care for gained 

top Green Flag status in 

Torbay in 2011 



25 






Overview 






Lincolnshire 

7.00am 

Keeping the water flowing in 

Lincolnshire by carrying out 

over 500 mechanical and civils 

works on sewerage treatment 

and potable water works a year 

10.00am 

Maintaining vehicle efficiency 

and safety in Lincolnshire by 

managing over 500 specialist 

vehicles across nine locations 

2.00pm 

Operating 24 hours a 

day, seven days a week to 

complete vital bridge repairs 

5.00pm 

Keeping the traffic moving in 

Lincolnshire by maintaining 

9,000 km of highways and 

supporting major projects like 

Teal Park – whatever the weather 

12.30pm 

Moving people around in 

Lincolnshire by carrying 2,000 

passengers a day from home 

to school, social services, 

demand responsive and 

corporate shuttle 

We work with our clients Lincolnshire County 

Council (plus four district councils: Boston, 

East Lindsey, North Kesteven and West 

Lindsey) Anglian Water, British Waterways, The 

Environment Agency and Network Rail to design 

and deliver more than 30 essential front-line 

services that reach the 673,530 residents of 

Lincolnshire every day. 

In April 2010, we took over responsibility for 

Lincolnshire County Council’s highways term 

maintenance contract to provide more than ten 

maintenance and enhancement services for the 

county’s highways and footways. 

Working under a separate contract we are also 

supporting the Lincolnshire Major Projects 

Framework team to deliver Teal Park, a business 

site six miles from Lincoln city centre that will help 

to create employment and business opportunities 

in Lincoln. 

Early in 2011, we were awarded The Anglian 

Water Programme Partner Civil and MEICA 

contracts that cover the whole Anglian Water 

region and include activities associated with 

asset upgrade, maintenance and enhancement 

of water treatment and waste water treatment 

facilities. 

Through our Fleet and Passenger Services 

business we provide a bespoke end-to-end 

service for the residents of Lincolnshire. 

In total we now employ over 600 people from 

the region to deliver these services. 

Our ‘place-based’ approach in Lincolnshire 

means we are heavily involved with the local 

community. In particular we provide home to 

school, social care and demand responsive 

passenger services to enable the isolated, 

vulnerable, disabled and older people to 

become more mobile. 

We are also working on a new initiative with 

Lincolnshire County Council Social Services 

that helps adults with learning difficulties in the 

region. We collate any redundant wooden pallets 

from our depots on a regular basis and supply 

them to the scheme, which recycles them by 

turning them into kindling and firewood. 

So far over 50 pallets have been donated to 

the scheme and this also helps to reduce 

waste disposal costs for the county. 

30+ 


across Lincolnshire 

9 

Working with nine clients in Lincolnshire 

600+ 

Employing over 600 people across 

Lincolnshire 

60+ 

We work with more than 60 local suppliers 

in Lincolnshire 

In our partnership with 

Engage North Lincolnshire we 

have received a Considerate 

Constructors Scheme award for 

the first new build school to open 

in the region for more than 50 

years – Melior Community College 

We undertake a variety 

of works to ensure that 

Lincolnshire’s beautiful 

countryside remains 

accessible 

We work in partnership with 

Lincolnshire County Council 

to operate the award winning 

CallConnect demand responsive 

services that make a real difference 

to the county’s residents. 



27 






Overview 






Norfolk 

9.00am 

Keeping it clean in Norfolk by 

handling more than 60,000 

tonnes of waste through a 

network of 18 HWRC sites 

11.30am 

Conserving resources in 

Norfolk by fitting nearly 

14,500 water meters 

3.30pm 

Keeping the roads safe in 

Norfolk by maintaining more 

than 10,000km of roads 

10.00am 

Making a sustainable 

difference by pioneering and 

managing six re-use centres 

across Norfolk 

2.00pm 

Regulating the sea in King’s Lynn 

by completing a three-year, 

£1.9m refurbishment of a major 

tidal sluice structure 

We work with our clients Norfolk County 

Council, Anglian Water, Network Rail and 

The Environment Agency to deliver more 

than 20 essential front-line services that 

reach Norfolk’s 829,000 residents every day. 

As part of the Norfolk Strategic Partnership 

(NSP), a long-term partnership contract with 

Norfolk County Council, we deliver more than 

ten maintenance and enhancement services 

covering the county’s highways and footways. 

Under a separate long-term contract with the 

Council, we also provide a seven-day a week 

service to enable people living in Norfolk to 

recycle domestic household and garden waste 

at the county’s recycling centres (HWRCs). 

In addition we also install water meters and 

repair and maintain water infrastructure assets 

on behalf of Anglian Water and carry out flood 

defence schemes, infrastructure enhancements 

and maintenance services on behalf of the 

Environment Agency. 

In total, we employ nearly 800 people from 

the region to deliver these essential services. 

We are always looking at ways to bring our 

services and the community together. In Norfolk, 

a great example of this is the re-use shops we 

have pioneered and set up at six of the HWRCs 

we manage. These shops sell good quality 

household items and bric-a-brac salvaged from 

the recycling to the general public. Any money 

generated from sales goes into the May Gurney 

Environmental Services Fund providing grants 

for local community projects that encourage 

people to reduce, re-use and recycle. 

In addition, 12 Norfolk-based charities have 

benefited from grants from the May Gurney 

Foundation. We are also supporting a pilot 

scheme called ‘Making Ground’, which gives 

low-risk offenders the opportunity to gain work 

experience at May Gurney while completing 

their prison sentence. The aim is to restore 

self-esteem and provide training to help 

prisoners find full-time employment on 

release as well as reduce the re-offending rate. 

The scheme started in June 2011 and we are 

currently working with seven prisons, though 

in time we plan to roll it out nationally. To date, 

16 inmates have gone through the scheme in 

Norfolk and we have offered five individuals a 

fixed-term contract. 

20+ 


across Norfolk 

4 

Working with four clients in Norfolk 

800+ 

Employing over 800 people across Norfolk 

180+ 

We work with more than 180 local suppliers 

in Norfolk 

We have sponsored the 

May Gurney free events 

at the Norfolk and Norwich 

Festival for five successive 

years which attracts nearly 

300,000 people 

We have supported 12 Norfolk 

based charities through the 

May Gurney Foundation 

We have provided work experience 

for 16 low-risk offenders from HMP 

Norwich and HMP Wayland and 

have offered five individuals 

a fixed-term contract 

28 May Gurney Integrated Services plc 


29 




Overview 






May Gurney delivers essential 

front-line services that make a real 

difference to the quality of life. Our 

business model is therefore closely 

tied to delivering positive outcomes 

for local communities across the UK. 

Our approach to Corporate Social Responsibility 

(CSR) covers four core areas: People; Health & 

Safety; Community Investment; and Sustainability 

& Environment. 

Four core values continue 

to underpin everything we do: 

Safe 

Innovative 

Honest 

Collaborative 

We make sure everyone 

goes home safely 

We think and act 

differently 

We do the right thing 

We work together to 

get things done 

People 

We are committed to ensuring that May 

Gurney is the best place to work. Our goal is 

to attract and retain the best talent by creating 

an environment where people can flourish and 

take great pride in doing the right thing for their 

colleagues and our clients. 

Our 6,000 people deliver essential front-line 

services to local communities across the UK. 

They are the people that keep the country 

running so that everyone can go about their daily 

lives safely and easily. Therefore, it is crucial that 

they are motivated and engaged with our vision to 

be the best support services business in the UK. 

This is why we continue to invest in their training, 

development and safety. 

Our employee numbers are growing – by a net 

1,300 people (2011: 4,700). We welcomed 

453 new employees through the acquisition 

of TransLinc and a further 1,232 through new 

contract mobilisations. As part of our restructuring 

programme and as a result of contracts reaching 

their planned conclusion, we also made 615 TUPE 

transfers and redundancies during the year. 

Training & development 

The development of people at the start of their 

careers is an essential part of our commitment 

to the future and we increased the number of 

apprentices, trainees and graduates on our 

‘Starting Out’ programme. 

The scheme aims to deliver benefit to society 

through helping recruits into new careers. 

To be eligible, candidates should: be new to the 

world of work or the industry; have potential to be 

fast-tracked within the company; be preparing 

for a specific change of career or have recently 

changed career. 

Apprentices are employed to undertake front-line 

operative roles with the view of developing through 

the ganger, supervisor route. Our apprenticeships 

are a qualification framework that includes: 

key skills (English, Maths and IT); a Technical 

Certificate (Diploma); and an NVQ level 2/3. 

Apprenticeships can be completed on either a 

block-release or day-release basis in a number 

of different disciplines. 

To ensure the scheme meets the evolving needs 

of our business, our Starting Out team work 

closely with stakeholders in the business and 

external providers to source and develop suitable 

qualifications. May Gurney has been involved in the 

development and launch of a new apprenticeship 

in Sustainable Resource Management and, 

during 2011, played an active part in developing 

a new MSc in Highways Maintenance, which 

will be delivered by The University of Brighton. 

The new course, the first of its kind in the UK, 

was developed as part of the SE7 Local Authority 

Initiative. The SE7 is a group of local authorities 

across south east England, including East Sussex, 

West Sussex, Kent, Hampshire, Surrey, Medway 

and Brighton & Hove. The SE7 looks at how these 

authorities can work together to save money and 

generate improvements. 

We have ensured the continuing development 

of our staff with an average of 3.3 training days 

delivered per person (2011: 3.3 days). We 

have continued delivery of the management 

and leadership programmes launched in 2010, 

building on our capability to ensure the future 

growth of the business. We continue to develop 

this platform for leadership excellence with 

further activity planned during 2012/13. 

Awards & recognition 

At the HEA Awards (formerly known as the 

ASLEC/HEMSA Awards), employee Ben Cartledge 

was named Trainee of the Year. Ben follows in the 

footsteps of employees Jack Emmett Hall, who 

won the award in 2010 and Matthew Fortune 

who won in 2009. Daniel Dyke was a finalist in the 

Experienced Operative category. 

Two May Gurney apprentices were nominated 

for a prestigious award in the 2011 National 

Construction College Awards, with Edd Bell being 

named Highways Maintenance Apprentice of the 

Year. Edd is the fourth May Gurney apprentice in 

the past seven years to win this award. 

The ‘Be the Best Awards’ – our employee 

recognition scheme – are given to those who 

act in a way that demonstrates that they are 

Safe, Honest, Innovative or Collaborative (our 

core values). Employees can be nominated 

by their peers, manager, clients or suppliers. 

The overall winner for 2011 was Tim Cartwright 

(Rail Services), who excelled in the ‘Safe’ 

category. The runners up were Richard Allen 

(Environmental Services), Liz Bond (Group 

Services), Ian Fawcus (Utility Services) and 

Leo Plant (Highway Services). 

Our Long Service Award recognises 25 years’ 

service and this year 24 of our employees 

were recognised. 

May Gurney has long been an Investor in 

People and in 2011 achieved Bronze standard 

under the new framework guidelines. Work is 

being undertaken to build on this and generate 

further improvements to the way in which we 

manage and develop our staff, with a structured 

framework of capabilities and behaviours that 

reflect our vision and values. 

Communication & engagement 

We have an established internal communications 

strategy to ensure that our people have 

opportunities to make a contribution and 

influence change in the business. These include 

Employee Forums (organised at a local and 

national level); a monthly face-to-face Team Brief 

cascaded to everyone at May Gurney; weekly 

news updates; a quarterly employee newsletter, 

the MaG (available in print and online); intranet 

forums; tool-box talks and an annual Chief 

Executive’s Roadshow. 

The Chief Executive’s Roadshow took place in 

Exeter, Falkirk, Norwich, Stevenage and York 

during April and May where Philip Fellowes- 

Prynne and other members of the senior 

management team met with more than 250 

managers from across the Group. The aim of 

the roadshow is to communicate the Company’s 

vision and to allow managers the opportunity to 

discuss key issues from around the business 

and then to cascade these to their teams. The 

feedback from participants has been very 

positive, with more than 98% of delegates saying 

that they had a clear understanding of our plans 

and priorities for the future, and were engaged 

and motivated by our vision. 

The results of our annual ‘Have Your Say’ 

employee survey were very positive with 

scores the same or better in 29 of the 30 areas 

measured, compared to 2011. The overall 

response rate was 67% (2011: 70%). 

Since 2007, we have enabled our people to 

share in the success of the business through 

our Sharesave Scheme, which is available to 

employees who have been with the Company 

for a period of six months. In the year we 

also introduced a Share Incentive Plan. 

Both programmes will be rolled out again 

during the coming year. We also launched 

MGPlus, a shopping discount scheme for all 

May Gurney employees. 

Be the Best Award winner Tim Cartwright 

(right, pictured with Philip Fellowes-Prynne, CE). 

When an elderly lady accidentally drove onto the train 

tracks at Hingham Station in Suffolk, Tim acted quickly 

to stop trains in both directions, thus preventing a 

serious collision 

We have long been an Investor In People and in 

2011 achieved Bronze standard under the new 

framework guidelines 

Highways Maintenance Apprentice of the Year, 

Edd Bell (left), received his award from 

Geoff Miller, ex-England cricketer 



31 




Overview 






RoSPA Gold Medal Award 

The health and safety of our workforce, and the 

communities where we work, is our priority. For 

the eighth year in succession, we have received a 

RoSPA Occupational Health & Safety Gold Award, 

a significant achievement for everyone 

Making sure everyone goes home safely 





a Difference) 

1,800 

Health surveillance and wellbeing 

assessments carried out in 2011/12 

Equality & diversity 

Our goal is to create a working culture that 

respects the value of differences among 

colleagues and encourages individuals to 

contribute their best. We strive to ensure 

equality of access, process and outcomes 

within an environment that is inclusive, 

open, flexible and fair. 

Our 60 Diversity Ambassadors continue to 

embed best practice across the business – 

building on the training programme delivered 

to our managers. We also deploy a Work Life 

Balance Policy incorporating flexible working for 

all employees, together with a Sabbatical Policy 

for taking unpaid leave. 

From our workforce of 6,108 (at 31st March 

2012) 89% are men (2011: 90%) and 11% 

women (2011: 10%) – slightly less than the 

industry average. From declared data, 71% 

are white and 29% non-white. 

Health & safety 

The health and safety of our workforce, and 

the communities where we work, is our priority. 

Our goal is to make sure that everyone goes 

home safely – being safe is one of our core 

Company values: 

We aim to achieve zero health, safety and 

environmental incidents 

We take responsibility for the safety of the 

communities and environments where 

we work 

We train, coach and equip our employees 

to ensure their personal health and safety 

Our Health and Safety management systems set 

out our vision for the protection of our workforce 

and those affected by our operations. Our 

systems are both internally and externally audited 

and conform to international and domestic 

standards (BS 18001, ISO 9001 and 14001). 

To ensure our commitment to health, safety 

and the environment, our Group Safety, Health, 

Environment and Assurance Director reports to 

the Chief Executive and advises the Board. 

Performance measures are detailed throughout 

the organisation for health and safety, ensuring 

that all levels of management understand 

their role, responsibilities and accountabilities, 

therefore promoting best practice. 

Occupational health 

In partnership with our occupational health 

provider, we provide occupational health 

benefits for all May Gurney employees covering 

confidential health and wellbeing medicals and 

support and advice on healthy living. Through 

supporting our employees our goal is to reduce 

absence rates, ensure that best practice and 

legal compliance is maintained and to provide 

clear and timely advice to our managers. 

During 2011/12 we carried out over 1,800 

health surveillance and wellbeing assessments 

for our people as part of this occupational health 

programme. 

May Gurney has also launched ‘Health Matters’. 

It provides access to information, support and 

advice on a range of topics such as eating well, 

lowering your cholesterol, looking after your back, 

exercising and outdoor activities and preventing 

aches and pains whilst sitting at a desk in work. 

Awards 

For the eighth year in succession, May Gurney 

has received a RoSPA Occupational Health 

& Safety Gold Award, which is a significant 

achievement for our people. Founded in 1956, 

the RoSPA Occupational Health and Safety 

Awards scheme is the largest and longest 

running programme of its kind in the UK. It 

recognises commitment to accident and ill 

health prevention and is open to businesses and 

organisations of all types and sizes from across 

the UK and overseas. The scheme does not 

simply look at accident records, but also entrants’ 

overarching health and safety management 

systems, including important practices such as 

strong leadership and workforce involvement. 

Innovation 





a Difference). MAD, which was developed 

in-house, was launched in 2007 and has played 

a key role in driving behavioural change in health 

and safety across May Gurney. The re-energised 

programme will roll-out across the Group over the 

coming year. 

In order to create a safer working environment, 

we are working closely with one of our key 

supply chain partners, to develop a behavioural 

based drama called ‘Your Call’, specifically 

addressing the type of work we do and designed 

to engage our people. The play is based upon 

excavation works and describes an emergency 

response to a mains water-pipe leak. It depicts 

the conversations and behaviours of those 

undertaking the work, those managing the works 

and the systems and procedures that were either 

followed or not followed. 

Group Business Assurance Manual 

(GBAM) 

To further improve our governance and to ensure 

that our Vision and Values are incorporated into 

our operations, we have developed a framework 

document creating a set of 12 Core Principles 

underpinning our values. Each of these principles 

has a subset of performance principles that are 

used when developing Group Standard Operating 

Procedures (GSOPs). In essence this means that 

we live our values through operational excellence. 

Accident Frequency Rate (AFR) 

Our AFR is 0.53, a 15% improvement from last 

year (2010/11: 0.62) 1 . We have set key objectives 

and management plans in order to reduce this 

further in 2012/13 and going forward. 

Community investment 

Community impact is a key consideration for 

May Gurney because we deliver services directly 

to the public, which means that customer service 

and brand reputation are essential. These factors 

are also essential elements in our ‘place-based’ 

approach to service delivery. 

The May Gurney Foundation 

The May Gurney Foundation (the ‘Foundation’ 

www.mgfoundation.co.uk) was set up in 2009 

to support local community-based charities 

and good causes which help young people and 

the long-term unemployed get back into work, 

specifically focused on the local communities 

where we operate. The aim is to improve 

opportunities, including education, self-help, 

health and wellbeing, as well as supporting 

environmental issues. 

The work of the Foundation was formally 

recognised with the Community Impact Award 

at the Business in the Community (BITC) East of 

England 2011 Awards for Excellence. The Award 

recognises ‘outstanding commitment to having 

a positive impact on society, the environment 

and the business through responsible business 

practice across the four disciplines of community, 

environment, marketplace and workplace’. 

During the year the Foundation has supported 17 

local community groups in East Anglia, Scotland, 

Surrey and Wales with grants, together with 

match-funding for 45 May Gurney employees. 

Kickstart Norfolk 

The May Gurney Foundation grant is used to provide 

equipment and training for people renting a scooter 

in rural areas of Norfolk to access work or training 

The work of the May Gurney Foundation was 

formally recognised with a Community Impact 

Award from Business in the Community (BITC) 

1 





33 




Overview 






Rag Tag ’n Textile Collective, Scotland 

The May Gurney Foundation grant is used to provide 

support, training and entry to employment for people 

recovering from mental illness – through training, work 

experience and volunteer placements 

24% 

In May Gurney’s Community Pride Index 2012, 

police officers were voted as Britain’s ‘Town 

Hall Heroes’ by 24 % of those polled saying 

that they provided the most valuable service in 

their community. They were followed by refuse 

collectors and local councillors (both with 12% 

of the vote) and school teachers (11%) 1 

Examples of grants awarded to local 

community groups 

Kickstart Norfolk provides motor scooters, 

equipment and training to help people of all 

ages living in rural areas to overcome their 

transport difficulties and access work-based 

training. The Foundation grant will be used to 

help 10 unemployed people, typically young 

and disadvantaged. 

The Hebron Trust provides specialist residential 

care for women with a life-threatening 

addiction to drugs or alcohol, to help them 

overcome that addiction. The Foundation grant 

will help fund the aftercare programme which 

helps them stay rehabilitated. 

The St John’s Housing Trust provides support 

and resettlement services for people who 

are vulnerable as a result of homelessness. 

The grant will be used to offer a programme 

of voluntary work experience placements 

to boost employability and skills in Thetford 

(Norfolk) and a 19-week entry to employment 

programme for people who are long-term 

unemployed in Waveney (Suffolk). 

Workwise Suffolk rehabilitates and trains 

adults with short and long-term mental health 

problems in a genuine business environment 

and encourages self-esteem and personal 

development. The Foundation grant will be 

used to train two members of staff to become 

GOALS trainers to deliver the programme as 

part of their work placement, and also to other 

organisations working with marginalised adults, 

thereby motivating people on the path of 

employment. 

The Haverhill Volunteer Centre in Suffolk 

recruits, supports, and trains people of all ages 

and abilities to volunteer in the community 

and work with charitable groups and statutory 

organisations to raise awareness of the benefits 

of volunteering. The Foundation grant will be 

used to help unemployed people gain work 

experience through volunteering in Haverhill 

and the surrounding area, thereby improving 

their chances of securing new employment. 

The Suffolk Befriending Scheme provides help 

and support to adults with learning disabilities, 

mental health problems and other vulnerable 

groups across the county. The Foundation 

grant will be used to provide four laptop 

computers to be used at the scheme’s APT 

(A Place to Talk) centres in Haverhill and 

Ipswich, thereby enabling them to offer job 

clubs and IT training for people wishing to 

move into employment. 

Fly Cup Catering in Inverurie, Aberdeenshire, 

provides catering training, accredited NVQ 

qualifications and employment placements 

for adults with learning difficulties. Fly Cup’s 

main aim is to reduce social exclusion by 

providing people with transferable skills that 

will aid their trainees into work and more 

independent living. The Foundation grant is 

being put towards expanding and refurbishing 

the kitchen at their training facility, enabling 

them to help more people. 

Kirkshaws Neighbourhood Centre, in 

Coatbridge, North Lanarkshire is a 

community-based centre open six days a 

week offering a wide variety of activities for 

local residents including cookery classes, IT 

training and a Work Club programme aimed 

at the young and long-term unemployed. 

The Foundation grant will be used to provide 

a Work Club for more than 200 people, with 

training sessions covering basic computer 

and job search skills, confidence building, 

self esteem, job interview skills and CV writing. 

The St Peter’s House Project in Redhill, 

provides guidance, advice and a variety of 

support services for people living with HIV, 

including health advice, advocacy, benefit 

advice, employment advice, counselling, 

drop-in services and peer support groups. 

The Foundation grant will be used to provide a 

‘Back to Education, Training and Employment’ 

(BETE) programme for people who are living 

with HIV. 

Surrey Care Trust’s vision is to transform the 

life chances and aspirations of local people. 

The Trust runs Social Training and Education 

Programmes in Surrey (STEPS) for underachieving 

young people. The Foundation 

grant will be used to fund a STEPS Ahead 

Programme – personal development, 

functional skills and vocational learning for 

unemployed young adults. 

SATRO (Science and Technology Regional 

Organisation) aims to engage and enthuse 

young people about all the opportunities in 

the world of work; providing them with the 

skills they will need to reach their full potential. 

The grant will be used to provide accredited 

training in construction, building services and 

engineering. 

SHIFA is a community group supporting Asian 

women in Woking, which organises activities 

to improve members’ self-confidence and 

develop skills. The Foundation grant will be 

used to provide sewing courses for an Asian 

women’s support group. 

The Construction Youth Trust in Cardiff 

works with young people to help them 

access training, education and employment 

opportunities. The Foundation grant will be 

used to fund ‘taster sessions’ targeting NEET 

(Not in Education, Employment or Training) 

people in deprived communities in Cardiff. 

The project aims to engage with those 

furthest from the workplace, many of 

whom are third-generation unemployed. 

Care and Repair, in Port Talbot, supports 

older and disabled people through the 

sometimes difficult and complex process of 

repairing, improving or adapting their homes. 

The service helps to overcome health and 

social care problems arising from inadequate 

housing. The Foundation grant will help 

deliver training for young people to learn the 

skills required for a minor maintenance and 

gardening scheme to help older and disabled 

people and their carers. 

Llamau, in South Glamorgan, delivers services 

to vulnerable, socially excluded young people 

who are in danger of becoming homeless in 

South East Wales. The charity currently works 

in ten local authority areas in Wales, giving 

advice and support to help people build a more 

independent and sustainable way of life. The 

Foundation grant will fund an ongoing training 

project for young people who have struggled in 

educational environments to gain basic skills 

and accreditation. 

Employee match-funding 

In addition, the Foundation also supports 

May Gurney employees through an ongoing 

programme of match-funding. During the year 

the Foundation supported 45 employees from 

our operations across the UK to raise funds 

for a wide range of good causes including the 

Big C Appeal, Railway Children, Race for Life, 

Air Ambulance (in East Anglia, Lincolnshire 

and Nottinghamshire) and Leeds Mind. 

Ongoing community investment 

programmes 

May Gurney is working in partnership with 

HM Prisons (HMP) to develop a scheme 

called ‘Making Ground’ which offers low-risk 

offenders the opportunity to gain work 

experience on a day release basis. We are 

currently working with seven prisons 

(in Norfolk. Suffolk, Lincolnshire and Torbay), 

with more planned in the coming year. 

The ‘Making Ground’ scheme gives offenders 

work experience in a real work place 

environment, something that does not happen 

whilst in custody. It also helps to bring back a 

level of self esteem that may well have been 

eroded since the start of their sentence. 

The scheme is in its early stages, but has already 

shown how successful it can be. We have given 

work experience to 22 prisoners and fixed 

contracts to five. 

Air Ambulance 

Employees this year raised £800 for the East Anglian Air 

Ambulance charity, this was match-funded by the May 

Gurney Foundation which brought the total to £1,600 

Kenya Cycle Challenge 

Employees Nichola Burr and Maria Wilson 

successfully completed the gruelling challenge 

and raised the staggering sum of £11,430 with 

help from the May Gurney Foundation 

1 

The ‘May Gurney Community Pride Index 2012’. 

ICM polled British adults aged 18+ using an online 

methodology. The research was conducted in May 2012. 



35 




Overview 






14.8m 

The May Gurney Community Pride Index 2012 

reveals that the UK now has a volunteer army of 

more than 14.8 million people who donate an 

average of 20 hours a month each to help run 

services in their local communities 1 

We have sponsored the May Gurney free 

events at the Norfolk and Norwich Festival 

for five successive years which attract more 

than 32,000 people 

Our support for the Norfolk & Norwich Festival 

(NNF), continues to be a key part of our local 

community investment programme in East 

Anglia. This is the fifth year we have sponsored 

the NNF’s outdoor free events programme 

– branded as ‘MG Free’ – which we have 

developed to attract and engage people of all 

ages and from every part of the local community. 

The NNF is the fourth largest arts festival in the 

UK and this year our MG Free events attracted 

more than 32,000 people. 

Once again, May Gurney was the main sponsor 

of Coast Along for Water Aid 2011 with two teams 

from the Company taking part – from Utility 

Services (Exeter) and Highway Services (East 

Sussex). More than 1,100 people took part, 

walking almost 250 coastal paths in Scotland, 

England and Wales. 

Sustainability 

& environment 

May Gurney has continued with its goal of 

embedding sustainable thinking throughout 

its business management systems. We have 

developed a sustainability and environmental 

risk management policy and strategy which 

controls our improvement programme 

throughout the organisation. 

This strategy has three key action themes: 

delivering sustainable business growth; 

delivering sustainable efficiency; and improving 

environmental risk management. Key elements 

of the strategy have been delivered this year, 

including the overhauling of our governance 

of sustainability and strengthening the linkage 

between decision making and our grass-roots 

activities. We have also combined our systems 

for environmental risk management and 

sustainability, giving us an efficient and seamless 

process for delivering compliance and moving 

forward into deeper efficiency and sustainability. 

An important part of our strategy is to work more 

closely with our supply chain through improving 

sustainability processes and knowledge within 

our procurement function. Correspondingly, our 

procurement team is helping to streamline flows 

of data from our own suppliers to assist us in 

measuring our sustainability results. 

Currently, our environmental sustainability 

programme measures two key indicators 

– CO 2 and CO 2 per £m turnover. We have 

a goal to report other sustainability indicators 

specified within the Global Reporting Index 

(GRI) framework and a plan for achieving this 

level of reporting detail by the end of 2014. 

Our sustainability programme covers seven 

areas: carbon measurement and reduction, 

waste measurement and diversion, fuel and 

energy efficiency, renewable energy, sustainable 

resources, resource efficiency and supply chain 

sustainability, climate change adaptation and 

biodiversity and society. 

Carbon measurement and reduction 

May Gurney is in its fourth year of having a 

focused programme to manage its carbon 

emissions. We have been accredited by CEMARS 

since 2009 for our carbon management systems. 

Our carbon emissions relative to turnover fell from 

77.3 tonnes/£m in 2010/11 to 74.8 tonnes/£m 

in 2011/12 (estimated). Due to the growth of 

our business and new contract mobilisations 

our absolute CO 2 emissions rose year-on-year 

to an estimated 49,741 tonnes (44,325 tonnes 

in 2010/11). These figures compare well with 

our baseline year of 2008/9, which had CO 2 

emissions of 42,746 tonnes and an intensity 

of 90.89 TCO 2e/£m. 

 

Waste measurement and diversion 

May Gurney is committed to optimising its use 

of materials within the waste hierarchy and a 

key element of this is bringing our end disposal 

of waste under better control, diverting more of 

this material into internal re-use and external 

recycling. 

We have delivered significant improvements in 

waste at several of our contracts, transforming 

operations at depots in our new Lincolnshire 

operations and starting to achieve similar results 

within our Surrey contract. We have achieved our 

goal which was to have developed a system to 

measure directly (rather than estimate), all of 

May Gurney’s operational waste by early 2012 

and will deploy that system over the next year. 

Fuel and energy efficiency 

As our vehicle fleet accounts for over 90% of our 

corporate carbon footprint, we have continued 

to focus on reducing our fleet CO 2. Based on 

work to update May Gurney’s innovative ‘SLIM 

UR CO 2’ programme, in 2012 we will launch an 

integrated programme to improve fuel efficiency 

and cut mileage within our commercial vehicle 

and company car fleets. 

In addition to improving fuel efficiency, we also 

aim to reduce the number of miles driven per 

unit of value delivered to our stakeholders. 

The transformative processes necessary for 

this are being spearheaded by our Business 

Improvement Teams. Our innovative work in 

Lincolnshire has enabled us to reduce our 

mileage per work crew by 10% in one year, 

thereby reducing CO 2 by around 133 tonnes, 

improving productivity and delivering more 

value for our client. 

There are also opportunities linked to the 

buildings and offices across our operations. 

Our Sustainability Steering Group has developed 

a ‘Sustainable Office Toolkit’ which will highlight 

improvement opportunities and give best practice 

advice on reducing office and building energy. 

Renewable energy 

The area of renewables where May Gurney 

can make the biggest impact is in assisting our 

clients with the installation of renewable power 

generation plant, particularly in the Water 

Utilities market. 

To date we have installed seven new technology 

micro-hydro turbines for South West Water and 

we are developing an entirely new approach 

to hydro power which will open up new 

opportunities for low carbon power, but with 

significantly reduced capital investment. 

In fact the May Gurney technology promises 

to reduce the investment cost per tonne of 

CO 2 saved by over 60% compared with the 

current market solution. We have also installed 

solar power systems in the West Country and 

we are investigating other opportunities in 

renewable power. 

In terms of May Gurney’s own energy demand, 

we currently procure renewable power for Groupwide 

operations. We recognise that this power is 

not carbon-free but we are publicising this activity 

to raise awareness of the importance of support 

for the renewable energy market in the UK. 

Cemars 

May Gurney’s carbon footprint is third-party certified 

by the Achilles carbon reduction programme to 

the CEMARS standard (for the past four years). 

CEMARS is the world’s first internationally accredited 

greenhouse gas certification scheme to ISO 14065 

In 2012 we will launch an integrated 

programme to improve fuel efficiency and 

cut mileage within our commercial vehicle 

and company car fleets. This will build on our 

previous innovative ‘SLIM UR CO 2’ programme. 

1 






37 





Overview 






Environmental champions 

This year we enjoyed triple success in the 

Green Apple Awards which recognise and reward 

environmental best practice around the world 

Our waste collection contract in Bristol has saved 

around 1,900 tonnes of plastic through recycling old 

wheelie bins as it replaces them with new ones 

Sustainable resources, resource 

efficiency and supply chain 

sustainability 

May Gurney continues to work with its clients and 

the supply chain to reduce the demand for virgin 

materials and to reduce the quantity of material 

that goes to waste. 

Our Highways and Utilities businesses are 

developing new processes for re-using existing 

on-site materials in the jobs they carry out. This 

exciting concept offers the ultimate in resource 

efficiency and sustainable resources, essentially 

closing the loop and minimising the need for 

virgin materials. Our Highways contracts are 

trialling in-situ reconstitution of excavated 

footways, reducing the need for transport of 

fresh, hot material from quarries and depots. 

Meanwhile, our contract to deliver an improved 

water supply pipeline for South West Water 

employed Early Contractor Involvement and 

innovative planning to recycle excavated 

materials back into the project, saving over 

37,000 tonnes of primary aggregates, 

1,100m 3 of concrete and cutting over 

156,000km of lorry journeys. The financial 

savings allowed the project to invest in 

enhancing the local environment and 

protect biodiversity in the River Plym. 

Our waste collection contract in Bristol has 

saved around 1,900 tonnes of plastic through 

recycling old wheelie bins as it replaces them 

with new bins. Most of this plastic saved will itself 

end up back on the streets as bins elsewhere in 

the country and we are talking with our suppliers 

to further develop this concept. 

We are also working hard within our waste 

collection contracts to improve the quality 

and range of materials that we collect and 

recycle from the households that we serve. Our 

contracts deliver recycling rates in the top 10% 

of UK performance, playing a significant role in 

delivering our national targets in this vital area. 

Climate change adaptation 

We are working across all of our contracts 

to ensure that they are prepared for climate 

variability and have appropriate plans agreed with 

our clients. This process is being carried out in 

accordance with international best practice. 

Biodiversity & society 

Our integrated sustainability and environmental 

risk management system allows us to identify 

risks and opportunities, delivering works which 

have lower impact on the local environment and 

the communities within which we work. This year 

we have developed and are deploying improved 

survey tools at site level and better training. 

These are helping our delivery teams to manage 

the habitats and organisms which are at risk 

of disruption during any works and to manage 

nuisance to local residents and communities. 

Our newest contract offerings are integrating local 

community benefits, SMEs and the third sector 

to embed our delivery of sustainability down into 

local communities and the local economy. 

For example, we are exploring how we could 

assist communities in delivering and augmenting 

services that are aligned with our own, improving 

local quality of life. 

Public Sector 

Services division 

Our Public Sector Services division includes 

Highway Services, Environmental Services, 

Fleet & Passenger Services and Facility Services. 

Public Sector Services generated 60% of 

Group revenues and 59% of EBITA in the year. 

Revenues have increased to £418.2 million 

(2011: £376.3 million), representing growth of 

11.1%. Divisional EBITA stands at £17.8 million 

(2011: £17.3 million) with margins at 4.3% 

(2011: 4.6%) due to a high level of bidding 

and mobilisation costs, together with some 

operational challenges on the new Environmental 

Services contracts and in the Facility Services 

business, as previously announced. 

The addressable market is worth £12.5 billion 

per annum. Of this, around 38% is currently 

in-house, with pressures on public spending 

offering good opportunities for increased 

outsourcing. May Gurney is a leading player 

across the public sector, with a significant 

market share and working with more than 

80 local authorities. 

Highway Services 

May Gurney is a leading highways maintenance 

services provider for local authorities. We 

maintain almost 35,000 kilometres of roads and 

more than 500,000 street lights and illuminated 

road signs across the UK. We deliver highway 

services to 20 local authorities – all under 

long-term contracts. Our core services include 

highways maintenance, street lighting and road 

surface dressing. 



£3.0 billion per annum and our estimated share 

is 12%. The markets in Scotland and Wales are 

worth an additional £570 million per annum. 

The local authority street lighting market is worth 

around £780 million per annum, of which 

May Gurney has an estimated market share 

of 8% in England and 30% in London. 

As expected, the maintenance-focused 

activities provided by May Gurney have proved 

resilient in the face of a reduction in overall 

local authority highways spending, while 

capital projects – to which May Gurney is not 

exposed – have suffered a significant reduction 

in activity. Although we expect this trend to 

continue, the business is well positioned to 

react appropriately in the event of changes in 

our target markets. 

Performance 

Highway Services has delivered a good 

performance during the year, underpinned by its 

essential maintenance-based income streams, 

primarily driven by an increase in highways 

maintenance on the back of extra Government 

funding, a higher than anticipated additional 

spend by local authority clients and our clients’ 

need to maintain existing assets due to reduced 

availability of capital. 

We have successfully completed the mobilisation 

of our new highways maintenance contracts with 

Surrey County Council, which have a combined 

value of up to £93 million over a six-year period 

(plus a possible four-year extension). We have 

resurfaced or repaired almost 300 miles of road 

– equivalent to the driving distance between 

London and Land’s End. Surrey’s roads are 

the fourth busiest in Britain and our contract 

with the Council saves taxpayers £4.1 million 

a year whilst providing faster and higher quality 

road improvements. Furthermore, in partnership 

with Surrey, we are exploring the benefits of 

developing an expanded programme of roads’ 

maintenance. 

East Sussex County Council has awarded an 

extension to its contract with May Gurney for 

a further three years, to August 2015, valued 

at up to £60 million. The contract has been 

remodelled, using new technology and working 

practices, to provide further cost savings and 

boost efficiency. 

Control Hub 

We have successfully mobilised our new highways 

maintenance contract with Surrey County Council 

which is saving taxpayers £4.1m a year 



39 




Overview 






41% 

In May Gurney’s Community Pride Index 2012, 

the majority of people we polled said that ‘roads’ 

is the council service that most needs improving 

– more than any other local authority service 

area. This was followed by services for old 

people and hospitals and medical services 1 

Hot box vehicle 

The ‘hot box’ vehicle carries permanent hot 

material that can be used to carry out pot-hole 

repairs throughout the day 

During the year, May Gurney was awarded 

Harrow Council’s highways maintenance 

contract, valued at up to £50 million. Starting 

in April 2012, the initial contract period is for 

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 – highways, carriageways, footways, 

streetlights, gullies and watercourses. As part 

of the contract, May Gurney will also undertake 

maintenance of highways infrastructure 

assets belonging to London Underground and 

Overground, as well as watercourses belonging 

to the Environment Agency. 

In Lincolnshire, May Gurney is carrying out a 

range of trials to help improve the efficiency and 

effectiveness of network repairs. New materials, 

equipment and operational processes are all 

being trialled and evaluated to ensure that they 

provide a durable repair, offer a cost benefit over 

traditional methods and improve the image of 

the highways maintenance service among the 

county’s residents. In addition, May Gurney’s 

established Lincolnshire highways operations 

are supporting a highways improvement scheme 

being delivered under the Lincolnshire Major 

Projects Framework which will help to create 

employment and business opportunities through 

improving access to Teal Business Park. The 

scheme also covers improvements to the A46. 

May Gurney’s specialist street lighting business, 

Cartledge, has been awarded a new long-term 

maintenance contract by our existing long-term 

client, Torbay Council. Cartledge, the UK’s third 

largest street lighting contractor, has been working 

in long-term partnerships with local authorities 

for more than 40 years. The contract with Torbay 

Council started on 1 April 2012 and is for an 

initial period of five years with a possible threeyear 

extension. It covers 17,000 street lighting 

units and is valued at between £4 million and 

£5 million. 

At the 2011 Highway Electrical Association 

Awards, (the street lighting industry ‘Oscars’) 

Cartledge won Large Contractor of the Year Award 

and Trainee of the Year. Cartledge was also highly 

commended in the Safety award, and a finalist in 

the Experienced Operative category. 

In Northamptonshire, MGWSP (a partnership 

between May Gurney and WSP) was named 

‘most innovative’ at the Council’s Celebrating 

Success Awards, voted for by council employees 

and anyone who lives and works in the County. 

MGWSP’s award was for the Northamptonshire 

Highways Maintenance Initiative, which has 

changed the way the partnership works and 

improved customer satisfaction and perception. 

During the year, as expected, we have 

de-mobilised our contracts with Essex County 

Council and West Sussex County Council. 

The effect of which has been largely offset by 

increased activity in other areas – specifically, 

in Lincolnshire, Surrey and Harrow. 


May Gurney is the fourth largest provider of 

municipal waste collection services in the UK, 

covering 2.2 million households. We work with 

19 local authorities to develop better waste 

collection strategies to extract the maximum 

value from recycled materials and reduce the 

amount of waste going to landfill. Our core 

services include kerbside recycling (MaGOS), 

refuse collections, street cleansing and the 

management of household waste recycling 

centres (HWRCs). 

The environmental services market is worth 

in the region of £3.1 billion per annum, 

complemented by the street cleansing market 

at £900 million per annum – which is becoming 

increasingly integrated within collection 

contracts. May Gurney has estimated market 

shares of 10% of the outsourced municipal 

collections market and 9% of the HWRC market. 

Key market drivers are the increase in landfill tax 

and local authority recycling targets. 

Our senior management and operational teams 

have moved swiftly to address the operational 

challenges on some of our newly-won contracts. 

We are confident that we have complete visibility 

of the issues and plans have been put in place 

to address them. As with our other long-term 

contracts, mobilisation costs are written off as 

incurred and the impact of this, together with the 

fact that we are implementing transformational 

service change, means that margins improve as 

contracts mature. 

Performance 

In September, we secured Cheshire West & 

Chester Council’s new waste and recycling 

contract, which is valued at up to £126 million 

for a 14-year period, with the potential for an 

extension of a further seven years. The contract 

will enable the Council to harmonise collection 

arrangements across the new unitary borough, as 

well as maximising recycling volumes, minimising 

carbon emissions and reducing costs ahead of 

the Council’s original target of 15% per annum. 

The contract is currently in mobilisation, with 

full-service roll-out scheduled for the summer. 

Bridgend County Borough Council (‘BCBC’) 

appointed May Gurney in April 2010 to deliver a 

new and improved waste and recycling service 

for local residents. In less than a year, Bridgend 

went from being the second worst performer for 

recycling among Wales’ 22 local authority areas to 

one of the best. BCBC was named Wales’ council 

recycling champion at the annual Cylch Awards 

and has also won a Gold Green Apple Award. 

Our long-term bundled services contract for 

Torbay – through TOR2, a joint venture between 

Torbay Council and May Gurney – continues to 

deliver on client expectations. By April 2011, 

just eight months after the new service was 

introduced, Torbay’s recycling rate had increased 

by 9%, representing a 25% improvement in 

performance. This puts Torbay well on the way 

to achieving the Government’s national recycling 

target of 50% in 2012 – a full eight years ahead 

of schedule. 

Our new contract for Bristol City Council’s 

waste collection, street cleansing and winter 

maintenance contract, which is valued at around 

£96 million over seven years, with a potential 

seven-year extension, is currently in the later 

stages of mobilisation, with full-service roll-out 

later in the year. The new service is expected 

to save the council around £2.5 million a year 

and help contribute towards the council’s goal 

of sending zero untreated waste to landfill within 

three years. 

North Somerset has the best recycling rate in the 

South West and the second best in the country, 

according to new Government figures – during 

the first quarter of 2011/12 North Somerset 

recycled almost 59% of its waste. Working under 

a seven-year contract, May Gurney took over 

responsibility for North Somerset Council’s waste 

and recycling contract in March 2010. Since 

then, the authority has seen a 58% increase 

in the amount of waste recycled or composted. 

A survey of residents has also shown that most 

are happy with the new waste regime, with 92% 

happy with the household collections and 94% 

of people satisfied with the recycling service. 

91% of residents are happy with the food waste 

collection service, while 95% welcome the 

garden waste service. The national average 

satisfaction rate is 78% for these services. 


May Gurney is the UK’s leading provider of 

end-to-end fleet management and passenger 

services to local authorities. We manage over 

6,000 specialist vehicles across 146 locations 

and carry more than 5,000 passengers a day 

(home to school, social services, demand 

response and corporate shuttle). The specialist 

vehicles we supply and manage include waste 

and recycling trucks, snow ploughs/gritters, street 

sweeping and cleaning vehicles, and HGVs. 

May Gurney is the UK leader in the local authority 

outsourced fleet services market with a share 

of 8%. This market is worth £730 million per 

annum, and remains highly fragmented. In the 

£3.1 billion local authority outsourced passenger 

services market, we are number five in the UK. 

Outsourcing rates in these markets currently 

stand at 50 to 60% respectively, offering good 


Torbay recycling service 

Eight months after the new service was introduced, 

Torbay’s recycling rate had increased by 9%, 

representing a 25% improvement in performance 

94% 

94% of North Somerset’s residents 

are happy with the recycling service 

1 






41 




Overview 






58% 

The Regulated Sector Services division 

delivered a 58% increase in EBITA 

Copeland Borough Council 

Under a ten-year fleet management contract we 

have helped Copeland Borough Council to become 

the first local authority in the country to introduce 

quieter and more environmentally-friendly refuse 

collection vehicles 

Performance 

The integration of TransLinc, which the Company 

acquired in November 2011, is proceeding 

to plan. During the period the Company has 

secured three significant contract extensions with 

a combined value of £8 million with Solutions SK, 

Trafford and Rotherham. 

This confirms our clients’ confidence in the 

extended capabilities of the combined Group. 

Since the year end, we have secured a new 

six-year contract with West Lancashire Borough 

Council for fully outsourced fleet management 

services valued at £4 million. 

Under a ten-year fleet management contract we 

have helped Copeland Borough Council to become 

the first local authority in the country to introduce 

quieter and more environmentally-friendly refuse 

collection vehicles. In trials, fuel reductions of up 

to 14% per vehicle were achieved – and there is 

also the promise of significant reductions in carbon 

emissions. In addition to the new refuse vehicles, 

we have also supplied five new tippers for the street 

cleansing service. 

In addition, we are benefiting from the integration 

of TransLinc’s operations with May Gurney’s 

existing plant and transport operations, 

specifically through the use of acquired fleet 

management systems and a strengthened 

management team. 

Facility Services 

May Gurney delivers facility services under 

long-term contracts for local authorities with a 

specific focus on the education sector (non-PFI) 

and regional frameworks. 

The performance within the Facility Services 

business, which represents £46.6 million (7%) 

of the Company’s turnover, proved disappointing. 

The business suffered certain supplier issues and 

steps are being taken to rectify this. As previously 

announced, this is a non-core activity and the 

Company is planning to fulfil its existing client 

obligations. 

Facility Services has ongoing work with the Smarte 

East framework, North Lincolnshire County 

Council and the London Borough of Lambeth. 

Regulated Sector 

Services division 

The Regulated Sector Services division generated 

40% of Group revenues and 41% of EBITA 

in the year. A strong operational performance 

has delivered a 58% increase in EBITA to 

£12.3 million (2011: £7.8 million). Divisional 

revenues increased by 42% to £277.1 million 

(2011: £195.1 million) with margins increasing 

to 4.4% (2011: 4.0%). This reflects a strong 

operational performance as AMP5 contracts have 

become fully operational, the integration of Turriff 

has been completed and there has been more 

work from British Waterways. Our Regulated 

Services division includes Utility Services, Rail 

Services and Waterways Services. 

This strong operational performance – particularly 

in M&E and R&M activities – was balanced by a 

small number of under-performing contracts in 

Scotland which have, as previously announced, 

been discontinued. 

The regulated services market is worth 

approximately £11.6 billion per annum, 

with periodic spending reviews in the rail and 

water sectors securing significant increases in 

expenditure. The primary market drivers are 

twofold: ambitious targets for excellent customer 

service and the need for increased operational 

efficiencies. 


May Gurney delivers utility maintenance and 

asset enhancement services in water, gas, 

power and telecommunications across the 

UK. Our core services include clean and waste 

water improvements, asset and infrastructure 

maintenance, multi-utility services, mechanical 

and electrical (M&E) design and maintenance, 

inspection and maintenance for bridges and 

masts, and design. 

Ofwat’s Final Determinations for the AMP5 

period (2010-2015) allows for average 

expenditure of £4.4 billion per annum across 

England and Wales, an increase of 32% on 

AMP4 levels, and there is a further £1.2 billion 

per annum in Scotland. There is a continued 

emphasis on capital maintenance, especially 

with the recent transfer of private drains and 

sewers (PDaS) to the water companies. The 

gas distribution market is worth £1.8 billion per 

annum. The new regulatory period, RIIO-GD1, 

starts in April 2013 and will be eight-years 

long with Ofgem’s focus on efficiency, safety, 

customer satisfaction and environmental issues. 

Performance 

We continue to see an excellent performance 

from our core water network and M&E teams, 

driven by the shift towards on-going R&M 

activities. 

The first half saw an increased workflow 

from the AMP5 contracts and the successful 

mobilisation of the Sewerage Services East 

Region maintenance contract for Severn 

Trent Water. In addition, responsibility for 

PDaS passed to the water companies, offering 

potential new revenue opportunities. May 

Gurney is well placed in this new market, 

given its existing experience of community 

engagement and focus on customer service. 

The integration of Turriff is now complete, 

consolidating our position in water and gaining 

entry to the UK’s £1.8 billion gas market and 

Scotland’s £2.4 billion support services market. 

We have completed the mobilisation of the 

Scottish Water contract and are working in 

England for Southern Gas Networks, leveraging 

the resources of our utility services and highway 

services teams. 

We have successfully completed a high profile 

gas mains replacement project in the heart of 

Edinburgh. The project is part of Scotland Gas 

Networks’ policy replacement programme to 

replace all metallic gas pipes within 30 metres 

of property over 30 years. The project team 

utilised specialist equipment and techniques 

(provided by May Gurney’s underground moling 

services) including suction excavators, horizontal 

directional drilling and under-pressure drilling. 

Our first gas contract in England, for Southern 

Gas Networks, is underway. Working in East 

Sussex, we have been able to leverage our 

existing highways presence in the county to 

ensure better use of resources and more effective 

delivery on the ground. This is an excellent case 

study showcasing the benefits of our ‘placebased’ 

approach. 

May Gurney was short listed for three of the six 

categories in the 2011 National Joint Utilities 

Group (NJUG) Awards, which recognise best 

practice in the street-works sector. We also 

secured the ‘Best Scheme Award’ in the 2011 

Anglian Water ‘We Love What You Do’ Awards 

and two of our employees received South West 

Water Pure Awards in recognition of service and 

consideration for the environment. 

May Gurney is becoming increasingly involved 

in the development of hydro-power generation 

for its clients in the water sector, where there 

are significant targets for generating renewable 

electricity. We have designed and installed 

hydro-generation turbines at five South 

West Water sites and are currently looking at 

additional sites. These are the first of many 

hydro-generation sites which will be released 

for tendering by UK water utility companies. 

Working on behalf of Wessex Water, May Gurney 

has successfully completed an impressive 

operation to construct a 620 cubic metre 

reservoir base in a single 13-hour concrete pour. 

The project team working on the gas mains 

replacement in the heart of Edinburgh utilised 

specialist equipment and techniques including 

suction excavators, horizontal directional drilling 

and under-pressure drilling. 

Having been nominated for two awards, we 

picked up the ‘Best Scheme Award’ in the 2011 

Anglian Water ‘We Love What You Do Awards’ 



43 




Overview 






We have recently completed a major scheme of 

works to extend the life of the existing structural 

steel platform canopies at Finsbury Park station in 

North London. The station has a footfall in excess 

of two million people per year and remained fully 

operational throughout our works 

The refurbishment and replacement of the roof at 

Victoria Station in central London has been completed 

May Gurney is one of two framework partners 

delivering civil and MEICA (mechanical, 

electrical, instrumentation, control and 

automation) works for the £180 million 

Water Supply Grid, the largest project Wessex 

Water has ever undertaken. The reservoir will 

provide additional storage to allow for effective 

maintenance of Wessex Water’s existing assets 

without risk to supply and will support the 

operation of the new Grid Network. 

During the year, we were appointed to Welsh 

Water’s (‘Dwr Cymru’) £170 million major civil 

engineering framework. The contract started 

on 1 February 2012 and is for a period of four 

years with the option to extend annually for a 

further two years. A number of outsourcing 

partners are included within the framework, 

with work awarded subject to mini-tender 

processes amongst the framework participants. 

The work will comprise civil engineering works, 

maintenance, improvement and design services 

across Welsh Water’s clean water and waste 

water assets. 

Rail Services 

We work in long-term partnership with our 

client, Network Rail, to deliver maintenance 

and refurbishment works on rail structures, rail 

property and in signalling. In addition, we work 

with Nexus (the Tyne & Wear Metro). We have 

a solid safety record and have won numerous 

awards for the quality of our delivery. 

Planned expenditure by Network Rail over 

Control Period 4 (2009-2014) is worth on 

average over £1 billion per annum. This is 


worth on average £2.3 billion per annum. 

Following the appointment of David Higgins, 

the release of the Value for Money Study by 

Sir Roy McNulty and the subsequent Command 

Paper, we continue to change to meet new 

demands. The industry drivers of increased 

collaboration, greater passenger influence and 

whole-life asset management play to our core 

strengths. Our rail capability will continue to 

evolve in this changing environment, founded 

on our core values and reputation. 

Performance 

Our long-term commitment to the Rail Industry 

is delivered through zero-value frameworks: 

Network Rail (NR) Building and Civil Delivery 

Partnerships; NR Type C Signalling Framework; 

Nexus Frameworks; and the British Railways 

Board (BRB) Frameworks. By forecasting 

changes in the client we have very successfully 

developed a competitive tendering capability and 

won several key projects, including an element of 

the high-profile collaborative Network Rail project 

on the GN/GE (Great Northern/Great Eastern) 

Joint Line between Peterborough and Doncaster. 

The refurbishment and replacement of the 

roof at Victoria Station in central London has 

been completed. In addition, May Gurney has 

successfully completed a project to provide stepfree 

access to all platforms at Haymarket Station, 

Scotland’s third busiest railway station and the 

refurbishment of the Arnside Viaduct, a 52-span 

viaduct that was replaced in half the time of an 

identical project 5 years ago. 

Our work for Network Rail at Bishop’s Grange 

won the ‘Major Civil Engineering Award’ at the 

2011 National Rail Awards. The scheme was 

delivered ahead of schedule and is believed to be 

the fastest mainline bridge reconstruction carried 

out in the LNE (London & North East) area. 

May Gurney has started work under a new 

£6.5 million contract to replace 12 rail bridges 

located in the LNE region between Peterborough 

and Doncaster, on behalf of Network Rail, due for 

completion by the end of 2013. There is also the 

possibility of a number of additional structures 

being added to the contract. 

Working on behalf of Network Rail, May Gurney 

has recently completed a major scheme of 

works to extend the life of the existing structural 

steel platform canopies at Finsbury Park station 

in North London. Finsbury Park is a major 

interchange with the London Underground and 

has an annual footfall in excess of two million 

people, with thousands of passengers passing 

through at peak times. The station remained 

fully operational throughout our works. 

The £3 million project, which started in 

January 2011, comprised the renewal of all 

existing canopy cladding systems, including 

waterproofing, drainage and lighting. 

May Gurney has been awarded a new framework 

contract to maintain redundant structures 

across the rail network in northern England and 

Scotland. The Major & Minor Works contract 

has been awarded by BRB Residuary Ltd, 

which is Government owned and falls under the 

jurisdiction of the Department for Transport. The 

framework is for a three-year period starting from 

April 2012, and is likely to be worth in the region 

of £3 million per annum. It covers all works north 

of a line drawn between the Humber and the 

Mersey, including Scotland. 

May Gurney is at the midway point of a 

£4.1 million project to refurbish one of the 

busiest stations on the Tyne & Wear Metro. 

May Gurney was appointed to the three-year 

Surface Stations’ Refurbishment Framework in 

2010, by Nexus, the Tyne and Wear Passenger 

Transport Executive. The current project 

involves the demolition and rebuilding of North 

Shields Metro Station, an important interchange 

providing bus, ferry and taxi links to other parts 

of the region. It is the sixth busiest commuter 

station in the north east, with more than two 

million people passing through every year. 


May Gurney continues to play an essential 

role in the regeneration, maintenance and 

renaissance of the UK’s waterways network. 

We deliver maintenance services, including 

mechanical, civil and electrical engineering for 

British Waterways (‘Glandwr Cymru’ in Wales) 

across the national canal and river network 

infrastructure and are its sole contractor. 

We also work closely with the Environment 

Agency in order to protect communities from 

coastal and river flooding by constructing and 

maintaining flood protection assets. 

We deliver over £20 million of work per annum 

for British Waterways (and its private partners). 

Government expenditure to improve flood 

defence and coastal management assets, 

through the Environment Agency, now accounts 

for £830 million per annum. 

Performance 

May Gurney has been awarded the MEICA 

framework for the northern and southern regions 

of England and Wales by British Waterways. This 

new contract is in addition to May Gurney’s 

existing £25 million per annum Omnibus 

contract with the same client. The framework, 

which started on 1 April 2012, will run for three 

years and is worth approximately 

£1 million per annum. It covers the 

maintenance, repair and emergency repair of 

MEICA equipment on mechanised and manually 

operated assets located throughout the British 

Waterways network. These are typically powered 

or manually operated bridges and locks, although 

a number of bespoke assets and overhead 

cranes are included. 


two-year extension to our Omnibus contract with 

British Waterways, valued at up to £40 million. 

Working on behalf of the Environment Agency, 

May Gurney has successfully completed a 

£1.9 million refurbishment project at King’s Lynn 

in Norfolk. The ‘Tail Sluice’ project started in April 

2009 and ran for three years during non-flooding 

times. The works, carried out in three annual 

phases, comprised refurbishment of a major 

tidal sluice structure. All three phases were 

completed on budget and years two and three 

were completed ahead of programme. 

Working on behalf of British Waterways, May Gurney 

is undertaking a number of projects funded or partfunded 

by the ODA (Olympic Delivery Authority) in 

preparation for the London 2012 Olympic Games 

We have successfully completed a £1.9m 

‘Tail Sluice’ project which was completed 

ahead of time and on budget 



45 



Financial review 

Overview 






May Gurney has delivered another strong 

result for the year, continuing the Group’s 

track record of profitable growth, excellent 

cash generation and improved dividends. 

Mark Hazlewood 

Group Finance Director 

Dividend (pence per share) 

Five-year compound annual growth rate 

16.2% 

4.6 

5.1 

5.5 

6.6 

8.4 

2007/08 2008/09 2009/10 2010/11 2011/12 

Underlying EPS (pence per share) 

Five-year compound annual growth rate 

12.4% 

18.5 

20.5 21.9 

24.8 

29.5 

2007/08 2008/09 2009/10 2010/11 2011/12 

Total revenues grew by 22% to £695.3 million 

(2011: £571.4 million), with EBITA 1 up 20% 

to £30.1 million (2011: £25.1 million) and 

underlying earnings per share (EPS 2 ) increasing 

by 19% to 29.47 pence (2011: 24.77 pence). 

Adjusting for the acquisition of TransLinc in 

November 2011, underlying revenue and 

EBITA increased year-on-year by 19% and 

12% respectively. 

The Group has continued its track record 

of delivering excellent cash generation, with 

£42.4 million of cash generated from operations, 

equivalent to more than 100% of EBITA. 

The Group ended the year with gross cash 

of £31.0 million (2011: £36.2 million), 

short-term debt of £20.0 million and contractbacked 

finance leases of £60.2 million 

(2011: £25.3 million). We have no long-term debt. 

The year has seen substantial bid levels across 

the Group and we have increased the order book 

to £1.5 billion (including framework agreements) 

with potential contract extensions of a further 

£1.1 billion. 

We continue to enjoy long-term revenue 

visibility, with 76% of consensus 2012/13 

revenues covered by the order book. This 

has fallen from 90% at the same time last year, 

reflecting Network Rail’s change in procurement 

policy to mini-bids and the growth of M&E 

zero-value frameworks. 

The continued strong performance of the 

Group and our confidence in our prospects, 

has enabled the Board to continue its 

progressive dividend policy and to recommend 

a final dividend for the year of 5.63 pence per 

share, resulting in a total for the year of 8.42 

pence per share, up 28% compared to 2011. 

Turnover 

The Group’s revenue for the year was £695.3 

million (2011: £571.4 million), an increase 

of 22%. Revenue before the inclusion of the 

acquired TransLinc revenues was £681.7 million, 

giving an underlying increase of 19%. 

This growth has been primarily driven by the full 

year effect of the acquisition of Turriff (completed 

in January 2011); strong performances in the 

long-term utility contracts, notably in M&E 

and R&M activities; the ramp-up of the new 

Environmental Services contracts; and increased 

local authority highways maintenance. 

Margins 

EBITA increased by 20% to £30.1 million (2011: 

£25.1 million) at a margin of 4.3% (2011: 4.4%). 

EBITA before the inclusion of TransLinc was 

£28.0 million, an underlying increase of 12% 

and a margin of 4.0%. 

The margin was affected in the year by the newly 

won Environmental Services contracts taking longer 

to reach their expected margins, a disappointing 

performance from Facility Services and a small 

number of under-performing contracts in Scotland 

(which have been discontinued). 

We have maintained our level of spend on 

bidding and contract mobilisations and continue 

to prudently write off these costs as they are 

incurred. This approach, combined with the 

need to transition contracts to our improved 

processes, means that margins for the first 

year of a contract are typically lower, with 

improvements flowing in subsequent years. 

Our recent Environmental Services contracts 

with Bristol City and Cheshire West & Chester 

are still in the early stages of mobilisation. 

As previously announced, the speed in achieving 

expected margins in the newly-won Environmental 

Services contracts is being actively addressed by 

our operational teams. We continue to achieve 

recycling rates above client expectations and the 

corrective actions put in place mean that we are 

confident that we will see margin improvements 

to these long-term contracts. 

Public Sector Services EBITA margin was 4.3% 

(2011: 4.6%), the reduction being due to the high 

level of bidding and mobilisation costs incurred 

in the year, a higher proportion of new contracts 

and the challenges on the Environmental Services 

contracts. Public Sector services also includes 

the Facility Services business activity, which is 

no longer core to May Gurney, and where the 

financial performance has been disappointing. 

Regulated Sector Services EBITA margin was 

4.4% (2011: 4.0%) due to a strong operational 

performance – particularly in M&E and R&M 

activities – slightly offset by a small number of 

under-performing contracts in Scotland which 

have been discontinued. 

Profit before tax 

Underlying profit before tax 3 has risen by 

17% to £28.4 million (2011: £24.3 million). 

Underlying profit before tax and before the 

inclusion of TransLinc was £26.7 million. 

The Group had a net interest charge for the year 

of £1.7 million (2011: £0.8 million), primarily 

representing the cost of borrowings to complete 

the TransLinc acquisition and interest charges 

on additional finance leased assets used within 

the business. 

Profit before tax for the year increased by 

3% to £19.3 million (2011: £18.8 million). 

Earnings per share 

Underlying earnings per share (EPS) has 

increased by 19% to 29.47 pence (2011: 

24.77 pence). Underlying EPS is calculated by 

adding back shares held by employee trusts to 

the weighted average number of shares and by 

excluding amortisation and non-recurring costs. 

Cash 

The Group’s cash generation remains strong with 

cash generated in the year from operations of 

£42.4 million (2011: £28.6 million), representing 

a conversion of more than 100% of EBITA. 

The Group ended the year with gross cash 

of £31.0 million (2011: £36.2 million) after 

funding the acquisition of TransLinc. Set 

against this was short-term debt of £20 million, 

giving a net cash 4 balance of £11.0 million 

(2011: £36.2 million). 

The business also employs finance leases to 

fund vehicles and plant dedicated for use within 

client contracts. The obligation to repay the 

capital and interest related to this asset financing 

is contained within the contracts where the 

assets are utilised. Therefore, we do not carry 

a repayment risk. As at March 2012, the total 

outstanding obligations under finance leases 

were £60.2 million, of which £28.3 million relates 

to assets within the acquired TransLinc business. 

Balance sheet 

The Group’s balance sheet remains strong 

at the year end, with net assets of £93 million 

(2011: £84 million). At the year end, we had 

short-term borrowings of £20 million, which were 

used to part-fund the acquisition of TransLinc. 

Investment in fixed assets in the year was £22.8 

million, primarily in our Environmental Services 

business on the back of the implementation of 

new long-term contracts. Investment in these 

assets is secured against long-term contract 

revenue streams and the assets are matched 

with appropriate finance leases. 

At the time of the TransLinc acquisition, the 

Company increased its debt facilities to provide 

additional headroom and flexibility. In line with its 

strategy, the Group has no long-term debt. 

The Group’s IAS 19 pension fund deficit has 

been maintained at £0.4 million at 31 March 

2012 (2011: £0.4 million). A full (triennial) 

actuarial valuation as at 31 March 2011 has been 

completed. The defined benefit pension scheme 

acquired with the TransLinc acquisition shows 

an IAS 19 accounting surplus of £2.9 million 

as at March 2012. This surplus has not been 

consolidated onto the Group’s balance sheet. 

Dividends 

The Group’s progressive dividend policy, adopted 

in 2010, will be maintained. A final dividend of 

5.63 pence per share (2011: 4.52 pence per 

share) is proposed and, if approved at the 

AGM, will be paid on 31 July 2012 to those 

on the register at 22 June 2012. This brings 

the total dividend for the year to 8.42 pence 

(2011: 6.60 pence), up 28% on 2011. 

Cost management & business investment 

In line with its stated strategy to align its services 

more closely with clients and focus on quality of 

earnings, the Company has completed a review 

and restructuring of its operations, which started 

in May 2011. It has consolidated its operations 

into two market-facing divisions – Public Sector 

Services and Regulated Sector Services. 

Exceptional costs 

In the year, £4.9 million of exceptional costs were 

incurred. This included the £2.9 million invested 

in the business reorganisation described above, 

comprising largely of redundancy and termination 

costs. At the year end, £1.5 million of this had 

been paid in cash. The majority of the benefit 

derived to date from this, has been reinvested in 

the business. A further £2.0 million in exceptional 

costs has been expensed for fees and integration 

costs associated with the TransLinc acquisition. 

Accounting policies 

All our policies are IFRS compliant and remain 

consistent with the previous year. 

Employee Share Ownership Trusts 

The business operates an Employee Share 

Ownership Trust (ESOT) and an Employee Benefit 

Trust (EBT). Shares owned by the ESOT and by 

the EBT are shown as a reduction in reserves. 

1 

EBITA is Group operating profit before amortisation and 

non-recurring costs after writing off bidding and mobilisation 

3 

Profit before tax, amortisation and non-recurring costs 



costs as incurred 

2 

Underlying EPS is defined in Note 10 

4 

Excluding finance leases and including short-term bank loans 



47


Board of Directors 

Overview 












Ishbel Macpherson 

Non-Executive Director 

Tim Ross 

Senior Independent 


Andrew Walker 


Willie MacDiarmid 


Simon Howell 

Company Secretary 



Appointment: Margaret Ford, the 

Baroness Ford of Cunninghame, 

was appointed to the Board as a 

Non-Executive Director in May 2011 

and as Non-Executive Chairman of 

the Company in July 2011. 

Experience: Margaret was 

appointed a Working Peer in 2006 

and has extensive public company 

and public sector experience. Prior 

to joining May Gurney Margaret 

was Senior Independent Director of 

Serco plc. Age 54. 

Committee membership: Chairman 

of May Gurney’s Nomination 

Committee and member of the 

Remuneration Committee. 

External appointments: 

Non-Executive Director of 

Grainger Trust plc and Chairman 

of Barchester Healthcare Limited. 



Appointment: Philip was appointed 

as a Director of May Gurney in April 

2008 and as Chief Executive of May 

Gurney in July 2008. 

Experience: Philip has a wealth of 

experience in the infrastructure and 

support services sectors and prior 

to joining May Gurney he was Chief 

Executive of Accord plc. Age 50. 

Committee membership: 

Chairman of the Executive 

Management Team. As well 

as overall responsibility for the 

operational and commercial 

performance and strategic 

development of the Company, 

Philip also has Board responsibility 

for human resources and health 

and safety. 

External appointments: None. 



Appointment: Mark was appointed 

as a Director and Group Finance 

Director in March 2012. 

Experience: Mark joined May 

Gurney in November 2010 as 

Group Corporate Development 

Director. Mark is a chartered 

accountant and began his career 

at Coopers & Lybrand. Mark 

has extensive experience of the 

regulated and support services 

sectors having held senior positions 

at South Staffordshire Water, 

Homeserve Emergency Services 

and Anglian Home Improvements 

Group. Age 45. 

Committee membership: 

Member of the Executive 

Management Team. Mark has 

overall Board responsibility for all 

financial functions of the Group, 

including corporate finance. 




Appointment: Ishbel was appointed 

to the Board as a Non-Executive 

Director in April 2010. 

Experience: Ishbel has extensive 

City experience, specialising in UK 

mid-market corporate finance, 

and was a Head of UK Emerging 

Companies Corporate Finance at 

Dresdner Kleinwort Wasserstein 

from 1999 to 2005. Age 51. 


of May Gurney’s Audit Committee 

and a member of the Nomination 

and Remuneration Committees. 

Ishbel will succeed Tim Ross as 

Senior Independent Non-Executive 

Director in July 2012. 


Non-Executive Chairman of Speedy 

Hire plc, senior Non-Executive 

Director of Hydrogen Group plc and 

a Non-Executive Director of Dignity 

plc and Yule Catto & Co plc. 

Tim Ross 

Senior Independent 


Appointment: Tim was appointed 

to the Board in 2002 and was Non- 

Executive Chairman of May Gurney 

from January 2005 to July 2008. 

Experience: Tim is a solicitor and 

past Director of George Wimpey 

plc and has extensive board and 

general management experience, 

having served on various company 

boards for many years. Age 63. 

Committee membership: Member 

of the Remuneration, Nomination 

and Audit Committees. Tim will 

retire from the Board at the 

Company’s Annual General 

Meeting in July 2012. 


Non-Executive Chairman of 

Hargreaves Services plc and 

Superglass Holdings plc, in addition 

to board positions with a number of 

private and venture capital-backed 

companies. Chairman of the council 

of Clifton College and a member 

of the governing council of the 

University of Bristol. 

Andrew Walker 


Appointment: Andrew was 

appointed as a Non-Executive 

Director of May Gurney in 

January 2009. 

Experience: Andrew is an engineer 

with wide public company 

experience and was formerly Chief 

Executive of South Wales Electricity 

plc and McKechnie plc. Age 60. 


of May Gurney’s Remuneration 

Committee and a member of the 

Audit and Nomination Committees. 

External appointments: Non- 

Executive Chairman of Metalrax 

Group plc and holds Non-Executive 

Directorships at API Group plc, 

Manganese Bronze Holdings plc, 

Plastics Capital plc and Porvair plc. 



Appointment: Willie MacDiarmid 

was appointed to the Board as 

a Non-Executive Director in 

June 2012. 

Experience: Willie has had a long 

and successful business career 

and has extensive experience of 

the regulated sector market. From 

2009 to 2011 Willie served as Chief 

Operating Officer and main Board 

Director of Eaga plc. Prior to that 

Willie held a number of senior 

roles at Scottish Power, including 

as Managing Director of its 

Retail Division. Age 51. 

Committee membership: Member 

of May Gurney’s Audit, Nomination 



Simon Howell 


Appointment: Simon was appointed 

Group Company Secretary of 

May Gurney in January 2009. 

Experience: Prior to joining May 

Gurney, Simon was Company 

Secretary of the AIM-listed company 

UBC Media Group plc. He is a 

Fellow of the Institute of Chartered 

Secretaries. Age 50. 

Committee membership: Secretary 

to the Board and all Committees 

of the Board. Secretary to the 

Executive Management Team. 




49 



Report of the Directors 

Overview 






The Directors present their report and 

the audited financial statements for 

the year ended 31 March 2012. 

Business review and principal 

activities 

Details of the Group’s performance and activities 

during the year are contained in the overview 

and performance sections on pages 2 to 47. 

The principal activities of the Group during the 

year were infrastructure support services. 

The purpose of the Annual Report is to provide 

information to the members of the Company. 

The Annual Report contains certain forwardlooking 

statements with respect to the operation, 

performance and financial position of the 

Company. By their nature, these statements 

involve risk and uncertainty, since future events 

and circumstances can cause results and 

developments to differ from those anticipated 

and nothing in this Annual Report should be 

construed as a profit forecast. 

Results 

The results for the year and the Group’s financial 

position at the end of the year are shown in the 

attached financial statements. 

Future developments 

An indication of future developments is contained 

in the overview and performance sections on 

pages 2 to 47. 

Going concern 

Detailed cash flow forecasts are prepared and 

regularly reviewed by the Board to assess the 

Group’s financial position. The business is 

forecast to remain cash generative and to have 

adequate resources to meet its future obligations. 

The Group’s resources are supported by the 

strong order book at £1.5 billion. 

The Directors have a reasonable expectation that 

the Group has adequate resources to continue 

operating for the foreseeable future. On these 

grounds the Board has continued to adopt the 

going concern basis for the preparation of the 

financial statements. 

Dividends 

The Directors recommend a final dividend on 

ordinary shares of 5.63 pence per share, making, 

with the interim dividend of 2.79 pence per 

share, a total dividend of 8.42 pence per share. 

Directors and their interests 

in the shares of the Company 

The Directors who held office during the year 

were as follows: 

Margaret Ford (non-executive) 



Ishbel Macpherson (non-executive) 

Tim Ross (non-executive) 

David Sterry (non-executive) 

Matt Stevens 

Andrew Walker (non-executive) 

On 20 May 2011 Margaret Ford was appointed 

as a Non-Executive Director of the Company. 

Mark Hazlewood was appointed as a Director of 

the Company on 14 March 2012. 

Willie MacDiarmid was appointed as a 

Non-Executive Director of the Company on 

1 June 2012. 

David Sterry retired as a Director of the Company 

on 6 July 2011 and Matt Stevens resigned as a 

Director of the Company on 14 March 2012. 

Details of the Directors’ interests in shares in the 

Company appear in the Directors’ Remuneration 

Report on pages 56 to 61. 

Directors’ liability insurance 

The Company maintains liability insurance for the 

Directors and officers of all Group companies. 

The Directors and officers have also been 

granted a qualifying third party provision under 

the Companies Act 2006. Neither the Group’s 

indemnity nor insurance provides cover in the 

event that a Director or Officer is proved to have 

acted fraudulently or dishonestly. 

Substantial interests 

As at 21 May 2012, the following interests in 3% 

or more of the Company’s ordinary share capital 

had been notified to the Company: 

Number Percentage 

of shares held 

David Sterry OBE 6,758,800 9.62 

& Mrs Wendy Sterry 

Chase Nominees 4,992,004 7.11 

Limited 

Europe Nominees 3,534,148 5.03 

Limited 

The Bank of New York 3,422,022 4.87 

(Nominees) Limited 

Robert Ian Findlater 2,950,000 4.20 

& Mrs Gillian Findlater 

Octopus Investments 2,614,734 3.72 

Nominees Limited 

BBHISL Nominees 2,400,000 3.42 

Limited 

State Street Nominees 2,312,869 3.29 

Limited 

Re-election of Directors 

In accordance with the Articles of Association 

Philip Fellowes-Prynne and Ishbel Macpherson 

will retire by rotation at the Company’s Annual 

General Meeting and, being eligible, offer 

themselves for re-election. Mark Hazlewood 

was appointed as a Director on 14 March 2012 

and Willie MacDiarmid was appointed as a 

Non-Executive Director on 1 June 2012 and 

therefore, being eligible, offer themselves for 

election at the Annual General Meeting. The 

Board has considered the requirements of the 

Combined Code in respect of these matters and 

believes that these members continue to be 

effective and to demonstrate their commitment 

to their roles, the Board and the Group. Tim 

Ross is retiring as a Director at the Company’s 

Annual General Meeting on 24 July 2012. 

Brief particulars of all Directors can be found 

on page 48 and 49. 

Fixed assets 

In the opinion of the Directors the market value 

of the freehold land and buildings does not 

differ substantially from the carrying value in the 

financial statements. 

Employee involvement 

The Group places considerable value on the 

involvement of its employees and encourages 

the development of employee involvement in 

each of its operating companies through formal 

and informal meetings. It is the Group’s policy 

to ensure that all employees are made aware of 

significant matters affecting the performance of 

the Group through the operation of employee 

forums, information bulletins, informal meetings, 

team briefings, internal newsletters and the 

Group’s website and intranet. 

Employment policy 

The Group is an Equal Opportunity Employer 

and its policy is to ensure that all employees and 

job applicants will be given equal opportunity, 

irrespective of their sex, race, ethnic origin, 

disability, age, marital status, sexual orientation or 

religious affiliation in all aspects of employment 

and training, and that no such person is placed 

at a disadvantage by requirements or conditions 

which cannot be shown to be justified. 

The Group encourages, where practicable, the 

employment of disabled people and the retention 

of those who become disabled during their 

employment with the Group. 

A number of employees are shareholders of 

May Gurney Integrated Services plc. The Group 

also operates an Employee Share Ownership 

Trust and an Employee Benefit Trust. Within 

the bounds of commercial confidentiality, 

management disseminates information to 

all levels of staff about matters that affect the 

progress of the Group and are of interest and 

concern to them as employees. 

Corporate responsibility policy 

The Group’s business impacts on the lives of 

everyone who lives in, or uses, the communities 

it serves – now and in the future. Therefore, its 

corporate responsibility is to deliver social and 

environmental sustainability in everything it does. 

At May Gurney, corporate responsibility is much 

more than just a set of policies, it is delivered on 

the ground, every day through its operational 

teams working in partnership with its clients, their 

customers, supply chain and local communities. 

The Group creates value in five key areas, 

closely aligned to its stakeholders’ social and 

environmental sustainability agendas. These are: 

Climate Change (carbon reduction); Sustainable 

Resources (using resources responsibly); 

Community Investment (changing behaviours 

and helping to create a better society); Waste 

Minimisation (addressing the need to reduce 

waste); and Biodiversity & Ecosystems 

(developing a holistic approach to 

environmental management). 

The Group recognises the benefits of 

sustainability and protecting the environment 

whilst delivering its services and associated 

activities. All Group activities are carried out 

in a way that manages environmental impact, 

fulfils opportunities to enhance the environment, 

prevents pollution, minimises waste, controls 

noise, uses materials and resources efficiently, 

and protects wildlife. 

The Group complies with environmental 

legislation and environmental codes of practice 

applicable to its industry. 

Health and safety policy 

It is Group policy to fulfil its duties under the 

Health and Safety at Work Act 1974 and all other 

associated acts and legal obligations applicable 

to the business. In order to achieve the standards 

required, line management aim to provide 

suitable and sufficient resources and properly 

trained supervision to ensure all work places can 

carry out their activities in a safe manner. 

It is the responsibility of the Group’s management 

at all levels to be conversant with the contents 

of the policy and to plan work such that 

foreseeable risks are identified and reduced to 

an acceptable level through the implementation 

of risk assessments. All employees must take 

care of the health and safety of themselves and 

actively participate and co-operate with the Group 

to enable the Group to discharge its statutory 

responsibilities and fulfil its desire for continual 

improvement in all safety, health and welfare 

matters. 

The Bribery Act 2010 

The Bribery Act 2010 came into effect on 1 July 

2011. The objectives and provisions of the Act 

accord with the values May Gurney applies in all 

its business dealings and which are reflected in 

its policies and procedures already in place. 

As part of its compliance with the provisions of 

The Bribery Act the Company’s policies and 

procedures were reviewed and appropriate 

information and training was provided to staff, 

with a view to ensuring ongoing compliance with 

the standards of the Act. 

Supplier payment policy 

The Group applies a policy of agreeing and 

clearly communicating terms and conditions 

for business transactions with its suppliers. 

Payment is then made in accordance with 

these terms, subject to terms and conditions 

being oup had 51 (2011: 58) days of purchases 

in trade payables. 



51 



Report of the Directors 

Corporate governance 

Overview 






Key Performance Indicators 

Details of the Group’s Key Performance 

Indicators can be found on page 22. 

Risks and uncertainties 

Details of the risks and uncertainties faced by 

the Group can be found in the business review 

on pages 20 and 21. 

Treasury 

The Group’s financial instruments, other 

than derivatives, comprise cash and liquid 

investments and borrowings. The Group enters 

into derivatives transactions, namely forward 

foreign currency contracts, albeit infrequently, 

to manage the currency risks arising from the 

Group’s operations and its sources of finance. 

The Group’s foreign currency risk is minimal as 

the volume of foreign currency transactions is not 

significant. The Group currently has no derivative 

instruments and sees no immediate requirement 

for any. 

It is the Group’s policy that no speculative trading 

in financial instruments shall be undertaken. The 

use of financial instruments exposes the Group 

to a number of risks, the main ones being credit 

risk, finance and liquidity risk, currency risk and 

interest rate risk. The Board reviews and agrees 

policies for managing each of these risks and 

they are summarised below. 

Credit risk 

The Group’s principal credit risk relates to 

recovery of amounts due under contracts. 

This risk is mitigated by regular application for, 

and certification of, works completed under 

contracted arrangements. 

Finance and liquidity risk 

The Group’s cash and liquid investments 

comprise cash and term deposits. 

Surplus cash resources are placed on deposit 

to maximise returns to the Group, whilst 

maintaining flexibility to meet day-to-day 

working capital requirements. 

Currency risk 

The Group is not exposed to currency risk. 

Interest rate risk 

The Group has fixed and floating rate finance 

lease commitments. In addition, the Group has 

a revolving credit facility with Lloyds Banking 

Group which was put in place at the time of 

the Company’s acquisition of Senturion Group 

Limited. Further information on exposure to 

interest rate risk is provided in Note 20. 

Donations 

The Group made charitable donations in the year 

of £176,444 (2011: £135,809). May Gurney 

has established an independent charitable 

foundation, The May Gurney Foundation, 

through which the Group channels much of its 

charitable donations. Further information on the 

activities of The May Gurney Foundation can be 

found in the corporate and social responsibility 

review on pages 30 to 38. The Group made no 

political donations during the year. 

Auditors 

The auditors, Grant Thornton UK LLP, have 

indicated their willingness under section 489 of 

the Companies Act 2006 to continue in office 

and a resolution that they be re-appointed will be 

proposed at the Annual General Meeting. 

Directors’ responsibilities for the 

financial statements 

The Directors are responsible for preparing the 

Annual Report and the financial statements in 

accordance with applicable law and regulations. 

Company law requires the Directors to prepare 

financial statements for each financial year. 

Under that law the Directors have to prepare 

financial statements in accordance with 

International Financial Reporting Standards 

as adopted by the European Union (IFRSs). 

The financial statements are required by law 

to give a true and fair view of the state of affairs 

of the Company and of the profit or loss of the 

Company for that period. 

In preparing these financial statements, 

the Directors are required to prepare the financial 

statements on the going concern basis unless it 

is inappropriate to presume that the Group will 

continue in business. 

The Directors are responsible for maintaining 

proper accounting records that disclose with 

reasonable accuracy at any time the financial 

position of the Company and enable them to 

ensure that the financial statements comply 

with the Companies Act 2006. They are also 

responsible for safeguarding the assets of the 

Company and hence for taking reasonable steps 

for the prevention and detection of fraud and 

other irregularities. 

In so far as the Directors are aware: 

u there is no relevant audit information of which 

the Company’s auditors are unaware; and 

u the Directors have taken all steps that they 

ought to have taken to make themselves 

aware of any relevant audit information and 

to establish that the auditor is aware of that 

information. 

The Directors are responsible for the 

maintenance and integrity of the corporate 

and financial information included in the 

Company’s website. Legislation in the United 

Kingdom governing the preparation and 

dissemination of financial statements may 

differ from legislation in other jurisdictions. 

By order of the Board 

Simon Howell 


11 June 2012 

Corporate Governance Code 

Compliance 

The Board is committed to maintaining high 

standards of corporate governance. Whilst the 

Company is not bound by the provisions of the 

UK Corporate Governance Code, the Board 

endeavours, so far as practical, to comply with 

the Code. 

The Board 

The Board comprises seven Directors, five 

of whom, including the Chairman, are Non- 

Executive Directors. The Directors believe that 

the Board continues to include an appropriate 

balance of skills and has the ability to provide 

effective leadership for the Group. Brief 

biographical details of the Directors are given 

on pages 48 and 49. 

Margaret Ford was appointed as a Director of 

the Company on 20 May 2011 and became 

Non-Executive Chairman of the Company on 

6 July 2011. Mark Hazlewood was appointed 

as a Director of the Company on 14 March 

2012 and Willie MacDiarmid was appointed 

as a Director on 1 June 2012. 

David Sterry retired as Non-Executive Chairman 

and as a Director of the Company on 6 July 2011 

and Matt Stevens resigned as a Director on 

14 March 2012. 

Tim Ross is to retire from the Board at the 

Company’s Annual General Meeting on 

24 July 2012. 

The role of the Board 

The Board’s principal responsibility is to deliver 

shareholder value and provide an overall vision 

and leadership for the Group. It also has an 

oversight role, monitoring operational plans and 

ensuring internal controls and risk management 

are effective. There is a formal schedule of 

matters reserved for the Board, which provides a 

framework for the Board to oversee the control of 

the Group’s direction and affairs. These include the 

approval of the financial statements and dividends, 

strategy, acquisitions and disposals, major 

projects, contracts, delegated authorities, major 

capital expenditure, risk management strategies, 

health and safety and succession planning. Whilst 

the Board is responsible for the overall strategy of 

the Group and regularly reviews strategy and the 

future of the business, the implementation of the 

strategy is delegated to the Chief Executive. 

Board processes 

All Directors have access to the advice and 

services of the Company Secretary and there is 

a procedure for Directors to seek independent 

professional advice, in furtherance of their 

duties, at the Company’s expense. The Company 

Secretary is responsible for ensuring the Board 

procedures and applicable rules and regulations 

are followed. The Company Secretary, in 

consultation with the Chairman, ensures that the 

information presented to the Board is not only 

timely but of sufficient quality to enable members 

to make an informed decision. 

Board and Committee attendance 

In the year to 31 March 2012 the Board met 

eight times, including an off-site meeting solely to 

discuss strategy. The Board and its committees 

also meets as required on an ad hoc basis to 

deal with urgent business, including in the case 

of the Board, the consideration and approval of 

transactions. The table below lists the Directors’ 

attendance at Board meetings and Committee 

meetings during the year to 31 March 2012. 

Re-election of Directors 

All Directors are subject to election by 

shareholders at the first AGM following 

appointment. In addition, all Directors are 

submitted for re-election at regular intervals of 

not more than three years at the Annual General 

Meeting subject to continued satisfactory 

performance. At the Annual General Meeting in 

2011 Andrew Walker and Philip Fellowes-Prynne 

were re-elected to the Board and Margaret 

Ford was elected to the Board. Philip Fellowes- 

Prynne and Ishbel Macpherson are proposed 

for re-election and Mark Hazlewood and Willie 

MacDiarmid are proposed for election at the 

forthcoming AGM. 

The Company has adopted the Model Code 

for Directors’ dealings as applicable to AIM 

companies. 

Audit Remuneration Nomination 

Board Committee Committee Committee 

Executive Directors 

Philip Fellowes-Prynne 8 – – – 

Matt Stevens* 7 – – – 

Mark Hazlewood** 1 – – – 

Non-Executive Directors 

Margaret Ford*** 6 – 1 1 

Ishbel Macpherson 8 3 2 – 

Tim Ross 8 3 2 1 

Andrew Walker 7 3 1 1 

David Sterry**** 3 – 1 – 

Willie MacDiarmid***** – – – – 

* Matt Stevens resigned as a Director on 14 March 2012 

** Mark Hazlewood was appointed as a Director on 14 March 2012 

*** Margaret Ford was appointed as a Director on 20 May 2011 

**** David Sterry retired as a Director on 6 July 2011 

***** Willie MacDiarmid was appointed as a Director on 1 June 2012 



53 



Corporate governance 

Overview 






Board performance and evaluation 

The Board is committed to evaluating its own 

performance. Each year the Board undertakes a 

formal evaluation of its own performance and that 

of its committees and individual Directors. The 

evaluation process is led by the Chairman and is 

used constructively as a mechanism to improve 

Board effectiveness, maximise strengths and 

tackle weaknesses. 

Committees of the Board 

The Board has established three committees, 

being the Audit Committee, the Remuneration 

Committee and the Nomination Committee, 

each of which operate within defined terms of 

reference. The terms of reference were reviewed 

during the year for compliance with best practice. 

Membership of these committees as at the date 

of this report is shown below. 

Audit Committee 

The purpose of the Audit Committee is to 

provide formal and transparent arrangements for 

considering how to apply the financial reporting 

and internal control principles set out in the Code, 

and to maintain an appropriate relationship with 

the Company’s auditors. 

The Audit Committee consists of Ishbel 

Macpherson, as chairman, Tim Ross, Andrew 

Walker and Willie MacDiarmid. The Chairman 

and Group Finance Director and other senior 

management also attend committee 

meetings by invitation. 

The terms of reference for the Audit Committee, 

which are available at the Company’s website 

www.maygurney.co.uk, give the committee 

responsibility for: 

u Monitoring the integrity of the financial 

statements of the Company, and any 

formal announcements relating to financial 

performance; 

u Reviewing significant financial reporting 

judgements and accounting policies; 

u Reviewing the effectiveness of the Company’s 

financial reporting and internal control systems; 

u Considering, and making recommendations 

to the Board in relation to the appointment, 

reappointment and removal of the Company’s 

auditors; 

u Monitoring the external auditor’s independence 

and effectiveness; and 

u Considering the requirements of the AIM rules. 

The Audit Committee has responsibility for 

monitoring the independence of the Company’s 

auditors, Grant Thornton UK LLP (‘Grant Thornton’). 

In accordance with auditing standards, Grant 

Thornton has advised the Company in writing 

that the firm is independent within the meaning 

of regulatory and professional requirements and 

that the objectivity of the engagement partner 

and audit staff is not impaired. Having reviewed 

that opinion, the Board believes that the 

continuing provision to the Group of audit service 

has not compromised the independence of the 

auditors in relation to their audit of the affairs of 

the Company and the Group. 

Audit Remuneration Nomination 

Committee Committee Committee 

Non-Executive Directors 

Margaret Ford – Member Chairman 

Willie MacDiarmid Member Member Member 

Ishbel Macpherson Chairman Member Member 

Tim Ross Member Member Member 

Andrew Walker Member Chairman Member 

Executive Directors 

Philip Fellowes-Prynne – – – 

Mark Hazlewood – – – 

Sums payable to Grant Thornton in relation to 

the 2012 audit were £168,000 and in relation 

to non-audit services provided in the year were 

£141,500. Non-audit services comprised the 

purchase of the Vendor Due Diligence work for 

Senturion Group Limited in connection with its 

acquisition by the Group. 

During the year the Audit Committee reviewed 

the terms of reference of the Committee and 

agreed a number of changes, including that the 

external auditor may not undertake non-audit 

work for the Company exceeding £30,000 

except with the prior consent of the Chairman of 

the Audit Committee, and the Audit Committee 

must approve in advance any appointment of 

the external auditor to undertake non-audit work 

which cumulatively exceeds 75% of the audit fee. 

Ernst & Young LLP have been appointed to 

advise the Company on non-audit matters, 

such as tax compliance and tax planning, and 

to provide advice to the Company on financial 

assurance and risk management. 

Internal audit 

The Company undertakes a regular review of 

the audit and risk review processes that are 

in place across the Group. In May 2011 the 

Audit Committee considered recommendations 

arising from a review undertaken by Ernst & 

Young on the Company’s financial assurance 

arrangements. Following the Audit Committee’s 

review the Company has expanded its internal 

audit and financial assurance procedures. 

Nomination Committee 

The purpose of the Nomination Committee is 

to establish a formal, rigorous and transparent 

procedure for the appointment of new Directors 

to the Board. 

The committee comprises Margaret Ford, as 

chairman, Ishbel Macpherson, Tim Ross, Andrew 

Walker and Willie MacDiarmid and the committee 

meets formally as necessary and at least once 

each year. Margaret Ford was appointed as 

Chairman of the Nomination Committee on 

25 May 2012, succeeding Tim Ross. 

The terms of reference for the Nomination 

Committee, which are available at the Company’s 

website www.maygurney.co.uk, give the 

committee responsibility for: 

u Evaluating the structure, size and composition 

(including the skills, knowledge and 

experience) of the Board and, as appropriate, 

preparing a description of the role and 

capabilities required; 

u Identifying, and nominating for approval by the 

Board, candidates to fill Board vacancies as 

and when they arise; 

u Reviewing the leadership needs of the Company, 

both executive and non-executive, with a view to 

ensuring the ability of the Company to complete 

effectively in the market; 

u Considering succession planning; and 

u Making recommendations to the Board 

concerning the composition of the audit 


Remuneration Committee 

The purpose of the Remuneration Committee is 

to establish a formal and transparent procedure 

for developing policy on executive remuneration 

and to set the remuneration packages for 

individual Directors. The Remuneration 

Committee comprises Andrew Walker, as 

chairman, Margaret Ford, Ishbel Macpherson, 

Tim Ross and Willie MacDiarmid. Andrew Walker 

was appointed as Chairman of the Remuneration 

Committee on 11 January 2012, succeeding 

Tim Ross. The committee’s report on Directors’ 

remuneration may be found on pages 56 to 61. 

In addition to the Executive Directors’ 

remuneration, the Remuneration Committee’s 

terms of reference, which are available at the 

Company’s website, www.maygurney.co.uk, 

also extend to the top tier of senior management 

below the Board. 

Board balance and independence 

The Non-Executive Directors are appointed by the 

Board, on the recommendation of the Nomination 

Committee, for specified terms. They are subject 

to periodic reappointment by shareholders and 

statutory provisions regarding removal. 

Currently there are, in addition to the Chairman, 

four Non-Executive Directors on the Board. The 

Non-Executive Directors have significant external 

commercial experience and bring expert advice 

and strong judgement to the Board. 

The Board believes that the Non-Executive 

Directors are independent of management and 

have no business or other relationships which 

could materially interfere with the exercise of their 

independent judgement and that the relatively 

low value of shares held by Non-Executive 

Directors does not impair their independence. 

The roles of the Chairman and Chief Executive 

are separate and clearly defined. 

The Senior Independent Non-Executive Director 

is Tim Ross, who is available to meet with 

shareholders to address any concerns that 

cannot be dealt with through the Chief Executive 

or Chairman. Tim Ross has indicated his 

intention to retire as a Director at the Company’s 

Annual General Meeting on 24 July 2012. It is 

proposed to appoint Ishbel Macpherson as Senior 

Independent Non-Executive Director following the 

retirement of Tim Ross. 

The remuneration of the Non-Executive Directors 

and the Chairman is detailed in the Directors’ 

Remuneration Report. 

Internal control and risk management 

The Board is responsible for establishing, 

reviewing and maintaining the Group’s systems 

of internal control and risk management and 

ensuring that these systems are effective for 

managing the business risk within the Group. 

The Group has established a framework for 

identifying, evaluating and managing significant 

risks faced by the Group. The Group’s internal 

control and risk management system is designed 

to safeguard shareholders’ investments and 

the Group’s assets whilst ensuring that proper 

accounting records are maintained. The Group 

annually reviews the effectiveness of the risk 

management system and its internal controls. 

It is the responsibility of the management to 

ensure that the controls and procedures that 

operate within the framework are followed and 

that the Board is kept fully appraised of any risks 

and control issues, both operational and financial. 

The Board recognises that any system of internal 

control exists to minimise the risk of failure rather 

than eliminate it, and that any system of internal 

control can only provide reasonable, not absolute, 

assurance against material misstatement or loss. 

The risk management of joint ventures and 

strategic partnerships is agreed between the parties 

and periodic reviews carried out where appropriate. 

Executive Management Team 

The Executive Directors, Philip Fellowes-Prynne 

and Mark Hazlewood, the Managing Directors 

of the Public Sector Services, Regulated Sector 

Services and Group Services divisions, the Group 

Strategy & Business Development Director, 

the Group Human Resources Director and the 

Company Secretary comprise the Executive 

Management Team which meets to deal with all 

executive business of the Group not specifically 

reserved to the Board or its other committees. 

The Director of Safety, Health, Environment 

and Assurance acts as an adviser to the 

Chief Executive. Other senior managers 

of the Company also attend the Executive 

Management Team by invitation. 

Relations with shareholders 

The Board is committed to a continuing dialogue 

with its shareholders. Following the announcement 

and presentation of the interim and year-end results, 

there are a series of formal meetings with institutional 

shareholders. These meetings enable the Executive 

Directors to appraise the investors of the Group’s 

business and future plans and the shareholders 

can communicate any concerns they may have. 

The Company’s brokers and financial PR advisers 

provide feedback from the shareholder and analyst 

meetings and present the results to the Board. 

The Company responds formally to all queries 

and requests for information from existing 

and prospective shareholders. In addition, 

the Chairman and Senior Independent Non- 

Executive Director are available to shareholders 

to ensure that any potential concerns can be 

raised directly. The Group’s investor relations 

section on its website contains information on the 

Group’s financial results and its stock exchange 

announcements. Additionally, the Annual 

General Meeting provides a useful interface 

with shareholders. All shareholders are invited 

to attend the Annual General Meeting and all 

members of the Board will be available at the 

meeting to answer questions. Full interim and 

annual reports are sent to all shareholders. 

This report has been approved by the Board and 

has been signed on behalf of the Board by: 

Simon Howell 


11 June 2012 



55 



Directors’ Remuneration Report 

Overview 






This report sets out the Company’s Remuneration 

Policy for Directors. It provides details of the 

Remuneration Committee and its duties 

relating to remuneration, a description of the 

Remuneration Policy of the Company and details 

of the remuneration of all Executive Directors 

and Non-Executive Directors for the year ended 

31 March 2012. 

An Ordinary Resolution to approve this report will 

be put to members at this year’s Annual General 

Meeting, but the Directors’ remuneration is not 

conditional upon the resolution being passed. 

Members of the Remuneration 

Committee 

The current members of the Remuneration 

Committee are: 

Andrew Walker (Chairman) 

Margaret Ford 



Tim Ross 

David Sterry retired as a member of the 

Remuneration Committee on 6 July 2011 

when he retired from the Board. 

Willie MacDiarmid was appointed as a member 

of the Remuneration Committee on 1 June 2012. 

Andrew Walker was appointed as Chairman of 

the Remuneration Committee on 11 January 

2012, succeeding Tim Ross, who has indicated 

his intention to retire from the Board at the 

Company’s Annual General Meeting on 

24 July 2012. 

The terms of reference for the Remuneration 

Committee are available on the May Gurney 

website (www.maygurney.co.uk). 

Executive Directors’ 

Remuneration Policy 

The Remuneration Committee determines the 

overall remuneration package for each Executive 

Director, with the aim of attracting, motivating and 

retaining Executive Directors of a high calibre. 

To this end, the Remuneration Committee takes 

external independent advice where it considers it 

is appropriate to do so. 

Basic salary 

The salary of each Executive Director is 

determined by the committee, taking into 

account their personal performance and giving 

appropriate weight to the prevailing rates in the 

employment market for executives of comparable 

status, responsibility, skill, and position in other 

relevant companies. When determining Directors’ 

salaries the committee is sensitive to pay and 

employment conditions throughout the Company. 

Executive Bonus Scheme 

Each of the Executive Directors participates in an 

annual bonus scheme. The payment of any such 

bonus is dependent upon the extent to which 

certain financial and non-financial targets and 

objectives of the Group are met, or exceeded. 

Such targets and objectives are determined by 

the Remuneration Committee in relation to each 

Director at the beginning of the financial year. 

Any such bonus is paid in the financial year 

following the period during which the targets and 

objectives have been met. 

Executive Directors are required to take onethird 

of any bonus in the form of an award over 

deferred shares under the terms of the May 

Gurney Deferred Share Bonus Plan (‘DSBP’). 

The DSBP is designed to aid retention, with the 

award vesting on the second anniversary of grant. 

Awards under the DSBP are subject to forfeiture 

on resignation within two years of grant. There 

are no further performance conditions once the 

award has been made. There is no dividend 

equivalent entitlement over the deferred period. 

The May Gurney Long-Term Incentive Plan 

(‘LTIP’) 

The Company operates a long-term incentive 

plan for Executive Directors and senior managers. 

The scheme is intended to align the interests 

of participating managers with shareholders by 

setting earnings per share targets measured over 

a three-year period. 

Awards take the form of nil cost options with 

an exercise price set at zero. The awards are 

granted by the trustee of the Employee Share 

Ownership Trust, upon recommendation by the 

Remuneration Committee. 

No employee is entitled to receive an award 

under the LTIP in any financial year if the market 

value of the ordinary shares subject to that award, 

when aggregated with the market value of the 

ordinary shares subject to all or any other awards 

made under the LTIP to that person in the same 

year, would exceed 100% of their annual salary. 

For the purpose of calculating this limit, the 

market value of ordinary shares subject to any 

award shall be taken to be their market value as 

at the date of grant of the award in question. 

The exercise of awards granted under the LTIP 

will in normal circumstances be conditional upon 

the achievement of objective performance targets 

set at the time of grant. Such performance targets 

shall be measured over a performance period 

(determined by the Remuneration Committee at 

the time of grant, but which shall not be less than 

three years) (the ‘Performance Period’). In 2011 

the Remuneration Committee undertook a review 

and consultation with regard to the performance 

conditions applying to awards. Following this 

review, the performance target applying to the 

grant of initial awards will be as follows: 

u In normal circumstances, an award cannot 

be exercised unless the average annual 

percentage growth in adjusted earnings per 

share over the Performance Period is equal 

to the average annual percentage growth 

in the retail price index plus 3% over the 

Performance Period. 

u If the average annual percentage growth 

in adjusted earnings per share over the 

Performance Period is equal to the average 

annual percentage growth in the retail price 

index plus 3% over the Performance Period 

(the ‘Lower Target’), the award may be 

exercised as to 10% of the ordinary shares 

subject to the award (rounded down to the 

nearest whole number of ordinary shares). 

u If the average annual percentage growth 

in adjusted earnings per share over the 

Performance Period is equal to or greater 

than the average annual percentage growth 

in the retail price index plus 15% over the 

Performance Period (the ‘Upper Target’), the 

award may be exercised as to 100% of the 

ordinary shares subject to the award. 

u Where the average annual percentage growth 

in adjusted earnings per share falls between 

the Lower Target and the Upper Target, the 

number of ordinary shares over which an 

award may be capable of exercise shall be 

determined on a straight-line basis between 

10% and 100% of the ordinary shares subject 

to the award. 

For these purposes adjusted earnings per share 

shall be the earnings per share as shown in the 

consolidated audited accounts of the Company, 

subject to any adjustments as the Remuneration 

Committee, in its discretion considers reasonable 

including adjustments for exceptional profits or 

losses generated by the sale of fixed assets. If 

events occur which cause the Remuneration 

Committee to reasonably consider that a different 

or amended target would be a fairer measure of 

performance, the Remuneration Committee may 

recommend that the Trustee waives or amends 

the original performance target provided that any 

such amended target is not more difficult or easier 

to achieve than the original performance target. 

May Gurney Integrated Services plc Company 

Share Option Plan (‘CSOP’) 

All employees of the Company and any of its 

subsidiaries may be granted options over ordinary 

shares under the CSOP provided that they are not 

prohibited under the relevant legislation relating 

to HMRC approved company share option plans 

from being granted an option by virtue of having a 

material interest in the Company. 

The Remuneration Committee has absolute 

discretion to select the persons to whom options 

are to be granted and subject to certain limits set 

by HMRC in determining the number of shares 

subject to each option. No consideration is 

payable for the grant of an option. 

Each employee’s participation is limited so that 

the aggregate market value of shares subject to 

all options held by that individual and granted 

under the CSOP and any other HMRC approved 

company share option plan operated by the 

Company shall not exceed £30,000. 

The exercise price of an option is determined by 

the Remuneration Committee at the time of grant 

but may not be less than the greater of (a) the 

market value of the shares as agreed with HMRC 

and (b) the nominal value of a share. 

The exercise of options granted under the CSOP 

will be conditional upon the achievement of an 

objective performance target set at the time of 

grant. The performance period will be three-years 

long from the first day of the financial year in 

which the option is granted and the performance 

target will be an earnings per share target. In 

2011 the Remuneration Committee undertook 

a review and consultation with regard to the 

performance conditions applying to awards. 

Following this review, the option will not be 

capable of exercise unless the average annual 

percentage growth in earnings per share over 

the performance period is equal to the average 

annual percentage growth in retail price index 

plus 3% over the performance period. 


Savings Related Share Option Scheme 

(‘Sharesave Scheme’) 

Participation in the Sharesave Scheme operated 

by the Company is offered to all employees of 

the Company and participating subsidiaries who 

have been employed for a continuous period 

which is determined by the Board of Directors. 

Under the Sharesave contract participating 

employees will save a regular sum each month 

for three years, of not less than £5 or more than 

£250/month. Employees who complete the threeyear 

savings contract may be entitled to a bonus 

from the building society or bank who is acting 

as the savings carrier. The bonus is fixed at the 

inception of the contract. 

An option to acquire ordinary shares in the 

capital of the Company will be granted to each 

eligible employee who enters into a Sharesave 

contract. The number of ordinary shares subject 

to such an option will be that number of ordinary 

shares which have an aggregate option price 

not exceeding the projected proceeds of the 

Sharesave contract including the bonus. 

No consideration is payable for the grant 

of an option. 

The option price per ordinary share will not be 

less than 80% of the market value of an ordinary 

share on the day on which invitations to apply for 

options are issued. Whilst the ordinary shares are 

traded on AIM, the market value of an ordinary 

share shall be agreed with HM Revenue & 

Customs (‘HMRC’) prior to the date of invitation. 

No option will be granted if as a result the 

aggregate nominal value of ordinary shares 

issued or issuable pursuant to options granted 

during the previous ten years under the 

Sharesave Scheme or any other employees share 

scheme or profit sharing scheme or employee 

share ownership plan adopted by the Company 

would require the issue of more than 10% of 

the nominal value of the share capital of the 

Company in issue at that date. 



57 




Overview 






For the purposes of this limit, shares issued or 

then capable of issue pursuant to any options or 

other rights obtained on or prior to the date that 

the Company’s shares were first admitted to AIM 

and any share subject to an option which has 

lapsed or been surrendered will not be taken into 

account. 

The Sharesave Scheme provides the facility for 

the exercise of options to be satisfied by either the 

issue of ordinary shares, the transfer of ordinary 

shares held by trustees of an employee benefit 

trust or by the transfer of ordinary shares held 

in treasury. Until options are exercised, option 

holders have no voting or other rights in relation 

to the ordinary shares subject to those options. 

The Sharesave Scheme may be terminated at 

any time by resolution of the Board and shall in 

any event terminate on the tenth anniversary of 

its adoption. 


Share Incentive Plan (‘SIP’) 

Participation in the SIP operated by the Company 

is offered to all employees of the Company 

and participating subsidiaries who have been 

employed for a continuous period which is 

determined by the Board of Directors. The SIP 

is an HMRC approved plan which is operated 

in conjunction with a UK resident trust that 

complies with the relevant HMRC legislation. The 

SIP provides a facility for employees to purchase 

ordinary shares in the Capital of the Company 

from their pre-tax salary (‘partnership shares’). 

In addition to partnership shares, the rules of the 

SIP also permit free shares and matching shares 

to be awarded to eligible employees. 

Defined Contribution Pension Scheme 

Philip Fellowes-Prynne and Mark Hazlewood 

are members of the May Gurney Defined 

Contribution Pension Scheme (the ‘Defined 

Contribution Scheme’). Philip Fellowes-Prynne 

and Mark Hazlewood are each entitled under 

their terms of engagement to an annual pension 

allowance of 15% of their basic salary. The 

Company contributes the pension allowance to 

the Friends Life Stakeholder Pension Scheme. 

The Company contributed a sum £46,000 and 

£2,000 towards Philip Fellowes-Prynne’s and 

Mark Hazlewood’s pension provision during 

the year, respectively. Life assurance cover of 

four times basic salary is provided through a life 

assurance policy with Norwich Union (Aviva). 

Matt Stevens resigned as a Director of the 

Company on 14 March 2012, on which date the 

Company ceased contributions on his behalf to 

the May Gurney Defined Contribution Pension 

Scheme. 

Defined Benefit Pension Scheme 

David Sterry, who retired as a Director of the 

Company on 6 July 2011, is a member of the May 

Gurney Defined Benefit Pensions Scheme (the 

‘Defined Benefit Scheme’) (further information 

is given in Note 28 of the financial statements). 

David Sterry ceased to be an active member of 

the Defined Benefit Pension Scheme on 4 August 

2008 when he retired as a full-time Executive of 

the Company. 

Other Benefits 

Each of the Executive Directors is provided by 

the Group with a car for their use, or received 

an annual cash sum in lieu of such provision. 

Each of the Executive Directors may elect to 

have the Company make the benefits of private 

health insurance available for themselves and, if 

they choose, their spouse and/or children. The 

Company contributes to the relocation costs of 

Directors where it considers this to be necessary 

to procure their services. 

Non-Executive Directors’ 

Remuneration Policy 

The Chairman’s remuneration is determined 

by the Remuneration Committee and other 

Non-Executive Directors’ remuneration 

is determined by the Board. The level of 

remuneration reflects the time commitment 

and responsibilities of the roles. During the 

year, the Board undertook a review of 

Non-Executive Directors’ remuneration and 

adjusted them accordingly. 

Service Contracts 

Details of the Directors’ service agreements or letters of appointment are set out below: 

Date of Unexpired Notice period Notice period 

Directors agreement term by Company by Director 

Executive 

Philip Fellowes-Prynne 14 April 2008 – 12 months 6 months 

Mark Hazlewood (appointed 14 March 2012) 14 March 2012 – 12 months 12 months 

Matt Stevens (resigned 14 March 2012) 9 December 2009 – 12 months 6 months 

Non-Executive 

Margaret Ford (appointed 20 May 2011) 20 May 2011 11 months 3 months 3 months 

David Sterry (resigned 6 July 2011) 4 August 2008 – 3 months 3 months 

Willie MacDiarmid (appointed 1 June 2012) 1 June 2012 11 months 3 months 3 months 

Ishbel Macpherson 20 April 2010 10 months 3 months 3 months 

Tim Ross 4 August 2008 2 months 3 months 3 months 

Andrew Walker 22 December 2008 6 months 3 months 3 months 

Directors’ emoluments 

Salary/fees Bonus scheme Pension Other benefits Total 2012 Total 2011 

Directors £000 £000 £000 £000 £000 £000 

Executive 

Philip Fellowes-Prynne 305 100 46 13 464 410 

Mark Hazlewood (appointed 14 March 2012) 11 – 2 – 13 – 

Matt Stevens (resigned 14 March 2012) 201 67 30 11 309 249 

Ian Findlater (resigned 7 May 2010) – – – – – 63 

Non-Executive 

Margaret Ford (appointed 20 May 2011) 78 – – – 78 – 

Tim Ross 40 – – – 40 40 

Willie MacDiarmid (appointed 1 June 2012) – – – – – – 

Ishbel Macpherson (appointed 20 April 2010) 39 – – – 39 32 

Andrew Walker 35 – – – 35 30 

David Sterry (resigned 6 July 2011) 16 – – – 16 60 

David Galloway (resigned 7 July 2010) – – – – – 9 

Total 725 167 78 24 994 893 

The bonus figures above relate to payments received during the year ended 31 March 2012. It is not proposed to pay any bonuses under the Executive Bonus Scheme in 

connection with performance in the year ended 31 March 2012. 



59 




Overview 






Long-Term Incentive Plan 

Directors held awards over ordinary shares under the May Gurney Long-Term Incentive Plan as follows: 

Date of Market value at Earliest Awarded at Awarded at 

Directors award date of award vesting date 1 April 2011 Granted in year Vested in year Lapsed in year 31 March 2012 

Philip Fellowes-Prynne 8 July 2008 236.00p 8 July 2011 126,984 – – 126,984 – 

8 July 2009 160.05p 8 July 2012 186,915 – – – 186,915 

8 July 2010 192.00p 8 July 2013 156,250 – – – 156,250 

8 July 2011 282.00p 8 July 2014 – 108,510 – – 108,510 

Matt Stevens 15 December 2009 252.25p 15 December 2012 79,286 – – 79,286 – 

(resigned 14 March 2012) 8 July 2010 192.00p 8 July 2013 104,166 – – 104,166 – 

8 July 2011 282.00p 8 July 2014 – 76,241 – 76,241 – 

Company Share Option Plan 

Directors held awards over ordinary shares under the May Gurney Company Share Option Plan as follows: 




(appointed 14 March 2012) 8 July 2011 282.00p 8 July 2014 – 3,546 – – 3,546 

Deferred Bonus 

Directors held awards over ordinary shares under the May Gurney Deferred Bonus Scheme as follows: 



Philip Fellowes-Prynne 8 July 2010 192.00p 8 July 2012 13,020 – – – 13,020 

8 July 2011 282.00p 8 July 2013 – 17,730 – – 17,730 

Matt Stevens 8 July 2010 192.00p 8 July 2012 2,187 – – 2,187 – 

(resigned 14 March 2012) 8 July 2011 282.00p 8 July 2013 – 11,702 – 11,702 – 

Savings Related Share Option Scheme 

Directors held awards over ordinary shares under the May Gurney Savings Related Share Option Scheme as follows: 



Matt Stevens 

(resigned 14 March 2012) 30 July 2010 159.00p 1 October 2013 5,660 – – 5,660 – 


(appointed 14 March 2012) 30 July 2011 219.00p 1 October 2014 – 4,121 – – 4,121 

Share Incentive Plan 

Directors held ordinary shares under the May Gurney Integrated Services plc Share Incentive Plan (SIP) as follows: 

Date of Market value at Awarded at Awarded at 

Directors award date of award 1 April 2011 Granted in year Vested in year Lapsed in year 31 March 2012 

Philip Fellowes-Prynne 30 July 2011 282.00p 

– 31 March 2012 – 299.90p – 259 – – 259 

Directors’ interests in shares 

The interests of the Directors (including their spouses’ interests) in the shares of the Company at 31 March 2012 were as follows: 

5p ordinary shares 

5p ordinary shares 

Directors at 31 March 2012 at 31 March 2011 

Beneficial 

Philip Fellowes-Prynne 1 29,759 29,500 

Mark Hazlewood – – 

Margaret Ford 18,165 – 

Tim Ross 100,000 200,000 

Ishbel Macpherson 21,900 5,000 

Andrew Walker 7,500 7,500 

Willie MacDiarmid who was appointed as a Director on 1 June 2012 has no interest in the ordinary shares of the Company. 

1 

Philip Fellowes-Prynne’s interest in the shares of the Company at 31 March 2012 includes 259 shares held under the May Gurney Integrated Services plc Share Incentive Plan. 



61 




Independent auditor’s report to the members 

of May Gurney Integrated Services plc 

Group income statement 

Overview 






We have audited the financial statements of 

May Gurney Integrated Services plc for the 

year ended 31 March 2012 which comprise 

the Group income statement, the Group 

statement of comprehensive income, the Group 

and Parent Company statements of changes 

in equity, the Group and Parent Company 

statements of financial position, the Group 

and Parent Company statements of cash flows 

and the related notes. The financial reporting 

framework that has been applied in their 

preparation is applicable law and International 

Financial Reporting Standards (IFRSs) as 

adopted by the European Union and as regards 

the Parent Company financial statements, as 

applied in accordance with the provisions of the 

Companies Act 2006. 

This report is made solely to the Company’s 

members, as a body, in accordance with Chapter 

3 of Part 16 of the Companies Act 2006. Our 

audit work has been undertaken so that we might 

state to the Company’s members those matters 

we are required to state to them in an auditor’s 

report and for no other purpose. To the fullest 

extent permitted by law, we do not accept or 

assume responsibility to anyone other than the 

Company and the Company’s members as a 

body, for our audit work, for this report, or for the 

opinions we have formed. 

Respective responsibilities of Directors 

and auditors 

As explained more fully in the Directors’ 

Responsibilities Statement set out on page 52, 

the Directors are responsible for the preparation 

of the financial statements and for being 

satisfied that they give a true and fair view. Our 

responsibility is to audit and express an opinion 

on the financial statements in accordance with 

applicable law and International Standards on 

Auditing (UK and Ireland). Those standards 

require us to comply with the Auditing Practices 

Board’s (APB’s) Ethical Standards for Auditors. 

Scope of the audit of the financial 

statements 

A description of the scope of an audit of financial 

statements is provided on the APB’s website at 

www.frc.org.uk/apb/scope/private.cfm. 

Opinion on financial statements 

In our opinion: 

u the financial statements give a true and fair 

view of the state of the Group’s and of the 

Parent Company’s affairs as at 31 March 2012 

and of the Group’s profit for the year then 

ended; 

u the Group financial statements have been 

properly prepared in accordance with IFRS as 

adopted by the European Union; 

u the Parent Company financial statements have 

been properly prepared in accordance with 

IFRS as adopted by the European Union and 

as applied in accordance with the provisions of 

the Companies Act 2006; and 

u the financial statements have been prepared 

in accordance with the requirements of the 

Companies Act 2006. 

Opinion on other matter prescribed 

by the Companies Act 2006 

In our opinion the information given in the 

Directors’ Report for the financial year for 

which the financial statements are prepared is 

consistent with the financial statements. 

Matters on which we are required 

to report by exception 

We have nothing to report in respect of the 

following matters where the Companies Act 2006 

requires us to report to you if, in our opinion: 

u adequate accounting records have not been 

kept by the Parent Company, or returns 

adequate for our audit have not been received 

from branches not visited by us; or 

u the Parent Company financial statements are 

not in agreement with the accounting records 

and returns; or 

u certain disclosures of Directors’ remuneration 

specified by law are not made; or 

u we have not received all the information and 

explanations we require for our audit. 

Philip Westerman 

Senior Statutory Auditor 

for and on behalf of Grant Thornton UK LLP 

Statutory Auditor, Chartered Accountants 

London, United Kingdom 

11 June 2012 

for the year ended 31 March 2012 

Note 

2012 

Before 

non-recurring 

items and 

amortisation 

£m 

2012 

Non-recurring 

items and 

amortisation 

£m 

2012 

Total 

£m 

2011 

Before 

non-recurring 

items and 

amortisation 

£m 

2011 

Non-recurring 

items and 

amortisation 

£m 

Group revenue 4 695.3 – 695.3 571.4 – 571.4 

Cost of sales (625.2) – (625.2) (513.4) – (513.4) 

Gross profit 70.1 – 70.1 58.0 – 58.0 

Administrative expenses (40.0) – (40.0) (32.9) – (32.9) 

Group operating profit before 

amortisation and non-recurring items 2 30.1 – 30.1 25.1 – 25.1 

– Intangible assets amortisation 13 – (4.2) (4.2) – (2.1) (2.1) 

– Other non-recurring costs 3 – (4.9) (4.9) – (3.4) (3.4) 

Operating profit 30.1 (9.1) 21.0 25.1 (5.5) 19.6 

Finance income 5 0.3 – 0.3 0.4 – 0.4 

Finance costs 5 (2.0) – (2.0) (1.2) – (1.2) 

Profit before taxation 28.4 (9.1) 19.3 24.3 (5.5) 18.8 

Taxation 8 (7.7) 2.2 (5.5) (6.9) 1.4 (5.5) 

Profit for the year from continuing operations 

attributable to the equity holders of the Parent Company 20.7 (6.9) 13.8 17.4 (4.1) 13.3 

Earnings per share (in pence) 10 

Total and from continuing operations 

Basic earnings per share 20.52p 19.82p 

Diluted earnings per share 19.91p 19.34p 

Underlying earnings per share 29.47p 24.77p 

2011 

Total 

£m 



63 



Group statement 

of comprehensive income 


of changes in equity 

Overview 






2012 2011 

for the year ended 31 March 2012 Note £m £m 

Profit for the year 13.8 13.3 

Actuarial gains on defined benefit pension schemes 28 – 0.9 

Tax on actuarial gains on defined benefit pension schemes – (0.2) 

Other comprehensive income for the year – 0.7 

Total comprehensive income for the year attributable to equity holders of the Parent Company 13.8 14.0 


Share 

capital 

£m 

Share 

premium 

account 

£m 

Merger 

relief 

reserve 

£m 

Other 

reserves 

£m 

Retained 

earnings 

£m 

Balance at 31 March 2010 and 1 April 2010 3.5 13.2 1.9 1.4 53.4 73.4 

Profit for the year – – – – 13.3 13.3 

Other comprehensive income: 

Actuarial gains on defined benefit pension schemes – – – – 0.9 0.9 

Tax on actuarial gains on defined benefit pension schemes – – – – (0.2) (0.2) 

Total 

equity 

£m 

Total comprehensive income for the year – – – – 14.0 14.0 

Transactions with owners: 

Share-based payments – income statement charge – – – – 0.3 0.3 

Share-based payments – deferred tax relief on future exercise – – – – 0.3 0.3 

Dividends paid – – – – (3.9) (3.9) 




Actuarial gains on defined benefit pension schemes – – – – – – 

Tax on actuarial gains on defined benefit pension schemes – – – – – – 



Share-based payments – income statement charge – – – – – – 

Share-based payments – deferred tax relief on future exercise – – – – (0.4) (0.4) 


Balance at 31 March 2012 3.5 13.2 1.9 1.4 72.6 92.6 



65 



Company statement 

of changes in equity 


of financial position 

Overview 







Share 

capital 

£m 

Share 

premium 

account 

£m 

Merger 

relief 

reserve 

£m 

Other 

reserves 

£m 

Retained 

earnings 

£m 




Actuarial gains on defined benefit pension schemes – – – – 0.9 0.9 

Tax on actuarial gains on defined benefit pension schemes – – – – (0.2) (0.2) 







Actuarial gains on defined benefit pension schemes – – – – – – 

Tax on actuarial gains on defined benefit pension schemes – – – – – – 



Share-based payments – income statement charge – – – – 0.2 0.2 

Share-based payments – deferred tax relief on future exercise – – – – (0.3) (0.3) 


Balance at 31 March 2012 3.5 13.2 1.9 1.4 14.4 34.4 

Total 

equity 

£m 

at 31 March 2012 

Non-current assets 

Property, plant and equipment 11 92.4 39.2 

Goodwill 12 60.3 42.1 

Other intangible assets 13 18.8 11.4 

Deferred tax asset 15 – 0.9 

171.5 93.6 

Current assets 

Inventories 16 4.5 4.4 

Trade and other receivables 17 112.2 110.4 

Cash and cash equivalents 18 31.0 36.2 

Note 

2012 

£m 

2011 

£m 

147.7 151.0 

Total assets 319.2 244.6 

Current liabilities 

Trade and other payables 19 (141.2) (132.7) 

Current tax liabilities (3.1) (2.0) 

Borrowings 21 (20.0) – 

Obligations under finance leases 21 (16.9) (7.3) 

(181.2) (142.0) 

Non-current liabilities 

Retirement benefit obligations 28 (0.4) (0.4) 

Obligations under finance leases 21 (43.3) (18.0) 

Deferred tax liability 15 (1.7) – 

Provisions 22 – (0.1) 

(45.4) (18.5) 

Total liabilities (226.6) (160.5) 

Net assets 92.6 84.1 

Equity 

Share capital 23 3.5 3.5 

Share premium account 25 13.2 13.2 

Merger relief reserve 25 1.9 1.9 

Other reserves 25 1.4 1.4 

Retained earnings 25 72.6 64.1 

Total equity 92.6 84.1 

These financial statements were approved by the Board of Directors on 11 June 2012. 


Director 

Company registration number 4321657 



67 




of financial position 


of cash flows 

Overview 






at 31 March 2012 

Non-current assets 

Investments 14 20.3 20.3 

Deferred tax asset 15 0.5 0.7 

20.8 21.0 

Current assets 

Trade and other receivables 17 11.8 2.9 

Current tax recoverable 0.5 0.4 

Cash and cash equivalents 18 3.1 8.6 

Note 

2012 

£m 

2011 

£m 

15.4 11.9 

Total assets 36.2 32.9 

Current liabilities 

Trade and other payables 19 (1.4) (1.4) 

Non-current liabilities 

Retirement benefit obligations 28 (0.4) (0.4) 

Total liabilities (1.8) (1.8) 

Net assets 34.4 31.1 

Equity 

Share capital 23 3.5 3.5 

Share premium account 25 13.2 13.2 

Merger relief reserve 25 1.9 1.9 

Other reserves 25 1.4 1.4 

Retained earnings 25 14.4 11.1 

Total equity 34.4 31.1 

These financial statements were approved by the Board of Directors on 11 June 2012. 


Director 

Company registration number 4321657 


Cash flows from operating activities 

Group operating profit before amortisation and non-recurring costs 30.1 25.1 

Depreciation and non-cash items 16.0 9.2 

Working capital movement (3.7) (5.7) 

Cash generated from operations 31 42.4 28.6 

Non-recurring costs (3.5) (1.5) 

Corporation tax paid (6.4) (5.2) 

Interest received 0.3 0.4 

Interest paid (2.0) (1.2) 

Net cash received from operating activities 30.8 21.1 

Cash flows from investing activities 

Purchase of property, plant and equipment 11 (22.8) (16.8) 

Proceeds from sale of property, plant and equipment 1.4 1.4 

Payments to acquire intangible assets 13 (0.5) (2.9) 

Acquisition of subsidiaries and overdraft acquired (18.6) (15.9) 

Net cash used in investing activities (40.5) (34.2) 

Cash flows from financing activities 

Ordinary dividends paid 9 (4.9) (3.9) 

New finance leases 17.6 16.7 

Payment of finance lease obligations (11.0) (6.9) 

Loan received 20.0 – 

Loans repaid (17.2) – 

Net cash received from financing activities 4.5 5.9 

Decrease in cash and cash equivalents (5.2) (7.2) 

Opening cash and cash equivalents 36.2 43.4 

Closing cash and cash equivalents 31.0 36.2 

Reconciliation of net cash flow to movement in net (debt)/funds 


Increase in finance leases (6.6) (9.8) 

Acquired debt (28.3) (1.3) 

Note 

2012 

£m 

2011 

£m 

Decrease in net funds in the year (40.1) (18.3) 

Opening net funds 10.9 29.2 

Closing net (debt)/funds (29.2) 10.9 



69 




of cash flows 


Overview 







Cash flows from operating activities 

Company operating loss (2.3) (2.2) 

Non-cash items 0.1 0.2 

Working capital movement 6.1 (1.6) 

Cash used in operations 31 3.9 (3.6) 

Interest received 0.1 0.2 

Interest paid (0.2) – 

Net cash used in operating activities 3.8 (3.4) 

Cash flows from investing activities 

Investment funds paid to subsidiaries (4.4) (9.8) 

Net cash used in investing activities (4.4) (9.8) 

Cash flows from financing activities 

Ordinary dividends paid 9 (4.9) (3.9) 

Net cash used in financing activities (4.9) (3.9) 


Opening cash and cash equivalents 8.6 25.7 

Closing cash and cash equivalents 3.1 8.6 

Reconciliation of net cash flow to movement in net funds 

Decrease in net funds in the year (5.5) (17.1) 

Opening net funds 8.6 25.7 

Closing net funds 3.1 8.6 

Note 

2012 

£m 

2011 

£m 

Nature of operations 

The principal activities of the Group during the 

year were infrastructure support services. The 

Group is incorporated and domiciled in the 

United Kingdom and is listed on the Alternative 

Investment Market. The registered office is at 

the Group office in Trowse, Norwich, UK. The 

presentation currency used is GB Pound Sterling 

and figures are quoted in millions, rounded to the 

nearest £100,000. 

The principal accounting policies adopted in the 

presentation of these consolidated and Company 

financial statements are set out below. These 

policies have been consistently applied to the 

periods presented unless otherwise stated. 

Basis of preparation 

The financial statements have been prepared 

in accordance with International Financial 

Reporting Standards as adopted by the European 

Union and with parts of the Companies Act 2006 

applicable to companies reporting under IFRS. 

The financial statements have been prepared 

on the historical cost basis, with the exception 

of certain financial instruments, which are 

recognised using accounting policies as set out 

below and applied consistently. 

Adoption of new and revised 

International Financial Reporting 

Standards 

In the current year, the Group has adopted 

all of the new and revised Standards and 

Interpretations issued by the International 

Accounting Standards Board (IASB) and the 

International Financial Reporting Interpretations 

Committee (IFRIC) of the IASB that are relevant 

to its operations and effective for accounting 

periods beginning on 1 April 2011. 

Changes in accounting policy 

The following standards and interpretations came 

into effect and were adopted in the current period 

but had no effect on the financial statements: 

IFRS 1 (amended) First-time adoption of IFRS 

– limited exemption from comparative IFRS 7 

disclosures; 

IAS 24 Related party disclosures (revised 2009); 

IAS 32 (amendment) Financial instruments: 

Presentation; 

IAS 34 (amendment) Interim financial reporting; 

and 

IFRIC 19 Extinguishing financial liabilities with 

equity instruments. 

At the date of authorisation of these financial 

statements the following standards and 

interpretations were in issue but not yet effective 

and therefore have not been applied in these 

financial statements: 

IFRS 1 (amended) Severe hyperinflation and 

Removal of fixed dates for first-time adopters; 

IFRS 7 (amended) Financial instruments: 

disclosures; 

IFRS 9 Financial instruments – classification and 

measurement; 

IFRS 10 Consolidated financial statements; 

IFRS 11 Joint arrangements; 

IFRS 12 Disclosure of interests in other entities; 

IFRS 13 Fair value measurement; 

IAS 1 Presentation of financial statements – items 

in other comprehensive income; 

IAS 12 (amended) Income taxes – deferred tax 

recovery of underlying assets; 

IAS 19 (amended) Employee benefits; 

IAS 27 Separate financial statements; and 

IAS 28 Investments in associates and joint 

ventures. 

The Directors anticipate that the adoption of 

these standards and interpretations in future 

periods will have no material impact on the 

financial statements of the Group. 

Consolidation 

(a) Subsidiaries 

Subsidiaries are consolidated from the date on 

which control is transferred to the Group and 

deconsolidated from the date at which control 

ceases. 

The acquisition method of accounting is used to 

account for the acquisition of subsidiaries by the 

Group. The cost of an acquisition is measured at 

the fair value of the consideration. The assets and 

liabilities of a subsidiary are measured at their 

fair values at the date of acquisition. Any excess 

of the cost of acquisition over the fair values of 

the identifiable assets and liabilities acquired is 

recognised as goodwill. 

The Group financial statements consolidate 

those of the Parent Company and all of its 

subsidiary undertakings drawn up to 31 March 

2012. Subsidiaries are all entities over which 

the Group has the power to control the financial 

and operating policies. The Group obtains and 

exercises control through more than half of the 

voting rights. 

All transactions and balances between Group 

companies are eliminated on consolidation, 

including unrealised gains and losses on 

transactions between Group companies. Where 

unrealised losses on intra-group asset sales 

are reversed on consolidation, the underlying 

asset is also tested for impairment from a Group 

perspective. Amounts reported in the financial 

statements of subsidiaries have been adjusted 

where necessary to ensure consistency with 

the accounting policies adopted by the Group. 

Profit or loss and other comprehensive income 

of subsidiaries acquired or disposed of during 

the year are recognised from the effective date of 

acquisition, or up to the effective date of disposal, 

as applicable. 

Non-controlling interests, presented as part of 

equity, represent the portion of a subsidiary’s 

profit or loss and net assets that is not held by the 

Group. The Group attributes total comprehensive 

income or loss of subsidiaries between the 

owners of the Parent Company and the noncontrolling 

interests based on their respective 

ownership interests. 



71 




Overview 






(b) Jointly-controlled operations 

The Group has certain contractual operations with 

other participants to engage in joint operations 

that do not create an entity carrying on a trade or 

business of its own. The Group includes its share 

of assets, liabilities and cash flows in such jointly 

controlled operations, measured in accordance 

with the terms of each operation, which is usually 

pro-rata to the Group’s interest in the risks in the 

jointly-controlled operation. 

(c) Jointly-controlled entities 

A jointly-controlled entity is an entity in which the 

Group holds a long-term interest and which is 

jointly controlled by the Group and one or more 

other venturers under a contractual arrangement. 

Investments in jointly-controlled entities are 

accounted for using the equity method of 

accounting and are initially recognised at cost. 

The Group’s share of post acquisition profits or 

losses is recognised in the income statement. 

The cumulative post acquisition movements 

are adjusted against the carrying amount of 

the investment. Due to the amounts involved 

not being significant, they are not separately 

disclosed. 

Inter-company transactions, balances and 

unrealised gains on transactions between Group 

companies have been eliminated on consolidation. 

A separate income statement has not been 

presented for May Gurney Integrated Services plc 

as exempted by Section 408 of the Companies 

Act 2006. The profit after tax of the Company in 

the year was £8.3m (2011: £3.6m). 

The Group has taken advantage of the exemption 

under regulation 7 of the Partnerships (Accounts) 

Regulations 2008 that members of a qualifying 

partnership do not have to publish partnership 

accounts if the partnership is dealt with on a 

consolidated basis in Group accounts prepared 

by a parent undertaking of the member. 

May Gurney WSP JV partnership has been 

consolidated within these Group accounts. 

Goodwill and other intangible assets 

Goodwill arising on consolidation represents the 

excess of the fair value of the cost of acquisition 

over the Group’s interest in the fair value of the 

identifiable assets and liabilities of a subsidiary or 

jointly controlled entity at the date of acquisition. 

Goodwill is recognised as an intangible asset and 

is reviewed for impairment annually. It is carried 

at cost less accumulated impairment losses. 

Gains and losses on the disposal of an entity 

include the carrying amount of goodwill relating 

to the entity sold. 

Goodwill is allocated to cash generating units 

for the purpose of impairment testing along the 

lines of the Group’s operating segments. Any 

impairment is recognised immediately in the 

income statement. 

Other intangible assets, which consist of an 

acquired order book, customer relationships, 

trademarks and software development costs, 

are stated at cost less accumulated amortisation 

and impairment losses. Amortisation is based 

on cost and the useful economic lives of these 

assets. Details of these useful economic lives are 

included in Note 13. 

Costs associated with developing or maintaining 

computer software are recognised as an expense 

as incurred. Costs that are directly associated 

with the development of identifiable and unique 

software products controlled by the Group, and 

that will probably generate economic benefits 

beyond one year, are recognised as intangible 

assets. Computer software development costs 

recognised as assets are amortised over their 

estimated useful life. The MGConnect TM costs 

capitalised in the year are amortised over a 

period of four years. 

Impairment 

Assets that have an indefinite useful life are 

not subject to amortisation and are reviewed 

for impairment annually and when there 

are indications that the carrying value may 

not be recoverable. Assets that are subject 

to amortisation are reviewed for impairment 

wherever events or changes in circumstances 

indicate that the carrying amount may not be 

recoverable. An impairment loss is recognised 

for the amount by which the carrying amount 

of the asset exceeds its recoverable amount. 

The recoverable amount is the higher of the 

fair value less costs to sell and value in use. 

For the purposes of assessing impairment, 

assets are grouped at the lowest levels for 

which there are separately identifiable cash 

flows (cash-generating units). 

Company investments in subsidiary 

undertakings 

Company investments are included at cost. 

Provision is made for any impairment in value. 

Revenue recognition 

Revenue is measured at the fair value of the 

consideration received or receivable and 

represents amounts receivable for goods and 

services provided in the normal course of 

business net of Value Added Tax. 

Sales of goods are recognised when goods are 

delivered and title has passed. 

Contract revenue reflects the contract activity 

during the year and is measured at the fair value 

of consideration received or receivable. When 

the outcome can be assessed reliably, contract 

revenue and associated costs are recognised as 

revenue and expenses respectively by reference 

to the stage of completion of the contract activity 

at the reporting date. The stage of completion 

is measured by reference to the contract costs 

incurred up to the reporting date as a percentage 

of total estimated costs for each contract. 

Provision is made in full for estimated losses, 

if the costs of fulfilling the contract exceed the 

recoverable amount. Revenue is only recognised 

to the extent that it is probable that it will be 

recoverable. Where the outcome of a long-term 

contract cannot be estimated reliably revenue 

is recognised only to the extent of contract costs 

incurred that it is probable will be recoverable, 

and contract costs are recognised as an expense 

in the period in which they are incurred. 

In the case of a cost plus contract, the outcome 

of a contract can be estimated reliably when it is 

probable that the economic benefits associated 

with the contract will flow to the Group, and 

the contract costs attributable to the contract, 

whether or not specifically reimbursable, can be 

clearly identified and measured reliably. 

Revenue from the provision of fleet and 

passenger services represents amounts 

receivable for vehicle hire, maintenance work 

and passenger services (excluding VAT) carried 

out in the accounting period. Income received 

in respect of future periods is deferred until the 

service is provided. 

Maintenance-related income in primary lease 

periods is recognised so as to match the revenue 

against the expected cost of maintenance based 

on estimation techniques which use current 

experience. 

Property, plant and equipment 

Property, plant and equipment is stated at 

historic cost to the Group, being its purchase 

cost together with any incidental expenses of 

acquisition. 

Depreciation of property, plant and equipment is 

calculated so as to write off their cost over their 

expected economic lives, residual values are 

reassessed on an annual basis. The principal 

annual rates of depreciation are as follows: 

Freehold land – not depreciated 

Freehold buildings – between 5 and 50 years 

straight line 

Short leasehold – 10% straight line 

property 

or life of lease if shorter 

Plant, vehicles – between 10% and 33% 

and equipment straight line 

Inventories and work in progress on 

construction contracts 

Inventories are valued at the lower of cost and 

net realisable value. The cost of purchase is 

determined by means of the weighted average 

cost formula. 

Contract work in progress is valued at cost 

plus attributable profit less foreseeable losses. 

Attributable profit is included when the outcome 

of a contract can be assessed with reasonable 

certainty. The excess of book value over amounts 

received on individual contracts is included in 

current trade receivables and payments received 

in excess of book value are included in current 

trade payables. 

Non-recurring items 

Material and non-recurring items of income and 

expense are disclosed in the income statement 

as ‘Non-recurring items’. Examples of items 

which may give rise to disclosure as ‘Nonrecurring’ 

include inter alia gains or losses on the 

disposal of businesses, investments and property, 

plant and equipment, costs of restructuring and 

reorganisation of existing businesses and asset 

impairments. 

Taxation 

The tax expense represents the sum of the tax 

currently payable and deferred tax. 

The tax payable in respect of the year is based 

on taxable profit for the year. Taxable profit 

differs from net profit as reported in the income 

statement because it excludes items of income 

or expense that are taxable or deductible in other 

years and it further excludes items that are never 

taxable or deductible. The Group’s liability for 

current tax is calculated using tax rates and laws 

that have been enacted or substantially enacted 

by the reporting date. 

Deferred tax is the tax expected to be payable 

or recoverable on differences between the 

carrying amounts of assets and liabilities in the 

financial statements and the corresponding tax 

bases used in the computation of taxable profit, 

and is accounted for using the statement of 

financial position liability method. Deferred tax 

liabilities are generally recognised for all taxable 

temporary differences and deferred tax assets 

are recognised to the extent that it is probable 

that taxable profits will be available against 

which deductible temporary differences can 

be utilised. Such assets and liabilities are not 

recognised if the temporary difference arises 

from initial recognition of goodwill or from the 

initial recognition of other assets and liabilities 

(other than in a business combination) in a 

transaction that affects neither the tax profit nor 

the accounting profit. 

Deferred tax liabilities are recognised for taxable 

temporary differences arising on investments 

in subsidiaries, associates, and interests in joint 

ventures, except where the Group is able to 

control the reversal of the temporary difference 

and it is probable that the temporary difference 

will not reverse in the foreseeable future. 

The carrying amount of deferred tax assets is 

reviewed at each reporting date. 

Deferred tax is calculated based on the laws 

enacted or substantially enacted by the reporting 

date and at the tax rates that are expected to 

apply in the period when the liability is settled or 

the asset is realised. Deferred tax is charged or 

credited in the income statement except when 

it relates to items charged or credited directly to 

equity, in which case the deferred tax is also dealt 

with in equity. 

Financial instruments 

The financial instruments used by the Group 

comprise net funds, trade receivables and trade 

payables. 

(a) Loans and receivables do not carry any 

interest and are initially stated at their fair value 

and subsequently measured at amortised cost as 

reduced by appropriate allowance for estimated 

irrecoverable amounts. 

(b) Cash and cash equivalents comprise cash 

on hand and demand deposits and other 

short-term highly-liquid investments that are 

readily convertible to a known amount of cash 

and are subject to an insignificant risk of 

changes in value. 

(c) Trade payables are not interest bearing 

and are initially stated at their fair value and 

subsequently measured at amortised cost. 

(d) Loans are raised for support of long-term 

funding of the Group’s operations. They are 

recognised at fair value on inception. Finance 

charges, including premiums payable on 

settlement or redemption, and direct issue costs 

are charged to the income statement using an 

effective interest method. 

(e) Financial liabilities and equity instruments 

are classified according to the substance of 

the contractual arrangements entered into. An 

equity instrument is any contract that evidences 

a residual interest in the assets of the Group after 

deducting all its liabilities. 

(f) Equity instruments issued by the Company are 

recorded at the proceeds received, net of direct 

issue costs. 

(g) The Group has a policy of not trading in 

financial instruments and thus the only risks 

arising, in the normal course of business, are 

interest rates and liquidity. The Group’s foreign 

currency risk is minimal as the volume of foreign 

currency transactions is not significant. The 

Group currently has no derivative instruments 

and sees no immediate requirement for any. 



73 




Overview 






Accounting for financial assets 

Financial assets consist of receivables, along with 

cash and cash equivalents. 

An assessment of whether a financial asset 

is impaired is made at least at each reporting 

date. For receivables, this is based on the 

latest credit information available, i.e. recent 

counterparty defaults and external credit ratings. 

Financial assets that are substantially past due 

are also considered for impairment. All income 

and expense relating to financial assets are 

recognised in the income statement line item 

‘Finance costs’ or ‘Finance income,’ respectively. 

Receivables are non-derivative financial assets 

with fixed or determinable payments that 

are not quoted in an active market. They are 

subsequently measured at amortised cost using 

the effective interest method, less provision 

for impairment. Any change in their value is 

recognised in profit or loss. The Group’s trade 

and other receivables fall into this category of 

financial instruments. 

Individual receivables are considered for 

impairment when they are past due at the 

reporting date or when objective evidence is 

received that a specific counterparty will default. 

All other receivables are reviewed for impairment 

in groups, which are determined by reference 

to the industry of a counterparty. The percentage 

of the write down is then based on recent 

historical counterparty default rates for each 

identified group. 

Accounting for financial liabilities 

The Group’s financial liabilities include borrowings, 

trade and other payables (including finance lease 

liabilities), which are measured at amortised cost 

using the effective interest rate method. 

Financial liabilities are recognised when the 

Group becomes a party to the contractual 

agreements of the instrument. All interestrelated 

charges and, if applicable, changes in an 

instrument’s fair value that are reported in profit 

or loss are included in the income statement line 

items ‘Finance costs’ or ‘Finance income’. 

For business combinations, any changes to the 

consideration transferred, including contingent 

consideration, resulting from events after the date 

of the acquisition are recognised in the income 

statement. 

Leases 

In accordance with IAS 17, the economic 

ownership of a leased asset is transferred to 

the lessee if the lessee bears substantially all 

the risks and rewards related to the ownership 

of the leased asset. Assets held under finance 

leases are recognised as assets of the Group 

at the lower of their fair value or the present 

value of the minimum lease payments and 

the capital elements of the commitments are 

shown as obligations under finance leases. 

Payments are treated as consisting of capital 

and interest elements. The capital element is 

applied to reduce the outstanding obligations 

and the interest element is charged against profit 

in proportion to the reducing capital element 

outstanding. Assets held under finance leases 

are depreciated over the shorter of the lease 

terms and their useful lives. 

All other leases are regarded as operating leases 

and the related payments are charged to the 

income statement on a straight-line basis over the 

lease term. 

Share-based payments 

All share-based payment arrangements granted 

after 7 November 2002 that had not vested prior 

to 1 January 2005 are recognised in the financial 

statements. 

All goods and services received in exchange 

for the grant of any share-based payment are 

measured at their fair values. Where employees 

are rewarded using share-based payments, the 

fair value of employees’ services are determined 

indirectly by reference to the fair value of the 

instrument granted to the employee. This fair 

value is appraised at the grant date and excludes 

the impact of certain non-market vesting 

conditions (for example, profitability and sales 

growth targets). 

All equity-settled share-based payments are 

ultimately recognised as an expense in the income 

statement with a corresponding credit to equity. 

If vesting periods or other non-market vesting 

conditions apply, the expense is allocated over 

the vesting period, based on the best available 

estimate of the number of share options expected 

to vest. Estimates are subsequently revised if 

there is any indication that the number of share 

options expected to vest differs from previous 

estimates. Any cumulative adjustment prior to 

vesting is recognised in the current period. 

No adjustment is made to any expense 

recognised in prior periods if share options 

ultimately exercised are different to that estimated 

on vesting. 

Upon exercise of share options the proceeds 

received net of attributable transaction costs are 

credited to share capital, and where appropriate 

share premium. 

Employee benefits 

The Group and Company contribute to eight 

defined contribution pension schemes and two 

defined benefit pension schemes, the assets 

of which are held separately from those of the 

Group and are invested in managed funds. 

In respect of the defined benefit pension 

scheme, the cost of providing benefits is 

determined using the projected unit method, 

with actuarial valuations being carried out at each 

reporting date. Hence actuarial gains and losses 

are recognised in full in the period in which they 

occur through the statement of comprehensive 

income. The liability recognised in the statement 

of financial position is the present value of the 

defined benefit obligations less the fair value 

of plan assets. Associated interest credits are 

included within finance income and charges 

within finance costs. The current service cost 

incurred during the year to provide retirement 

benefits to employees is charged to operating 

profit. Pension scheme surpluses, to the 

extent that they are recoverable from future 

contributions, or deficits are recognised in full 

and presented on the face of the Statement of 

Financial Position net of related deferred tax. 

In respect of the defined contribution pension 

schemes, the contributions paid by the Group, 

Company and the employees are invested within 

the individual funds in the month following the 

month of deduction. The employer contribution 

rates are determined by reference to an age, 

service or grade related scale or are at a fixed, 

level percentage. The amounts contributed by 

the Group and Company are charged to the 

income statement as the contributions fall due. 

Certain contracts require that employees transfer 

with protected pension rights and the Group and 

Company are responsible for the pension liability 

that exists. 

May Gurney Group Limited Employee 

Share Ownership Trust (‘ESOT’) and 

Employee Benefit Trust (‘EBT’) 

On 28 March 2008, May Gurney Group Trustees 

Limited acting in its capacity as trustee of the 

ESOT transferred 1,783,324 ordinary shares by 

way of a gift for £nil consideration to Lloyds TSB 

Offshore Trust Company Limited acting in its 

capacity as trustee of the May Gurney Integrated 

Services plc Employee Benefit Trust (EBT), an 

offshore trust. 

Shares in the Company held by the ESOT and 

EBT are shown as a deduction in arriving at 

equity funds. Where the purchase of shares by 

the ESOT/EBT is financed by external bank loans, 

these loans are shown within current trade and 

other payables. Other current assets, liabilities 

and reserves of the ESOT/EBT are included 

within the statutory headings to which they relate. 

The ESOT/EBT are included within the Company 

financial statements. The ESOT/EBT have been 

accounted for in line with the requirements of 

SIC 12 which states that the Company should 

consolidate all Special Purpose Entities of which 

the ESOT/EBT are classified as such. 

Dividends 

Dividends are recognised in the financial 

statements in the period in which they are 

approved by the Company’s shareholders. 

Interim dividends are recognised in the period in 

which they are approved and paid. 

Provisions 

A provision is recognised in the statement of 

financial position when the Group has a present 

legal or constructive obligation as a result of a 

past event, and it is probable that an outflow of 

economic benefits will be required to settle the 

obligation. When recognising and measuring a 

provision, events occurring after the reporting 

date, and before authorisation for issue, are 

considered to determine whether such events 

provide additional evidence of conditions that 

existed at the reporting date and should therefore 

be adjusted for. 

If the effect is material, provisions are determined 

by discounting the expected future cash flows 

at a pre-tax rate that reflects current market 

assessments of the time value of money and, 

where appropriate, the risks specific to the 

liability. 

Significant accounting estimates 

and judgements 

To be able to prepare accounts according to 

generally accepted accounting principles, 

management must make estimates and 

assumptions that affect the asset and liability 

items and revenue and expense amounts 

recorded in the financial statements. These 

estimates are based on historical experience 

and various other assumptions that management 

and the Board of Directors believe are reasonable 

under the circumstances. The results of this 

form the basis for making judgements about the 

carrying value of assets and liabilities that are not 

readily available from other sources. 

Areas requiring estimates that may significantly 

impact on the Group’s earnings and financial 

position are as follows: 

Estimated impairment of goodwill 

The Group tests annually whether goodwill has 

suffered any impairment, in accordance with 

the accounting policy previously stated. The 

recoverable amounts of cash-generating units 

have been determined based on value-in-use 

calculations. These calculations require the use 

of estimates. Further details of the estimates used 

are set out in Note 12. 

Areas requiring critical judgement that may 

significantly impact on the Group’s earnings 

and financial position are as follows: 

(a) Revenue recognition 

The Group uses the percentage-of-completion 

method to determine the appropriate amount 

to recognise in a given period. The stage of 

completion is measured by reference to the 

contract costs incurred up to the reporting date 

as a percentage of total estimated costs for each 

contract. 

(b) Pension benefits 

The present value of the pension obligations 

depends on a number of factors that are 

determined on an actuarial basis using a number 

of assumptions. The assumptions used in 

determining the net cost/income for pensions 

include the discount rate. Any changes in these 

assumptions will impact the carrying amount of 

pension obligations. 

The Group determines the appropriate discount 

rate at the end of each year. This is the interest 

rate that should be used to determine the present 

value of estimated future cash flows expected to 

be required to settle the pension obligations. In 

determining the appropriate discount rate, the 

Group considers the interest rates of high-quality 

corporate bonds that are denominated in the 

currency in which the benefits will be paid, and 

that have terms to maturity approximating the 

terms of the related pension liability. 

Other key assumptions for pension obligations 

are based in part on current market conditions. 

Additional information is disclosed in Note 28. 

(c) Share-based payments 

The weighted average fair value of options 

granted during the period was determined using 

the Trinomial pricing model. The assumptions 

used are detailed in Note 24. 

(d) Intangible assets 

The Group recognises certain intangible assets 

on acquisition. Judgements in respect of useful 

lives, discount rates and valuation methods affect 

the carrying value and amortisation charges in 

respect of these assets. These judgements are 

shown in Note 13. 

(e) Impairment of work in progress 

In assessing whether work in progress is 

impaired, estimates are made of future sales 

revenue, timing and build costs. The Group has 

controls in place to ensure that estimates of sales 

revenue are consistent, and external valuations 

are used where appropriate. 



75 



Notes to the report and accounts 

1. Segmental analysis 

For management purposes, the Group is currently organised into three segments – Public Sector Services (Highways Services, Environmental Services, Facility Services and 

Fleet & Passenger Services), Regulated Sector Services (Utility Services, Rail Services and Waterways Services) and Property. The three segments noted are those that are 

regularly reviewed by the Group’s Chief Operating Decision Maker (CODM) Philip Fellowes-Prynne (Chief Executive). Revenue is mostly derived from contract work. 

The identification of these reportable segments has come about due to the Group’s aim of aligning services more closely with the needs of its long-term clients 

and the nature of the work the Group delivers for them, namely delivering essential front-line maintenance and enhancement services. 


Public 


£m 

Regulated 


£m 

Property 

£m 

Revenue 

Total revenue 418.9 279.2 – 698.1 

Less: between segments (0.7) (2.1) – (2.8) 

External revenue 418.2 277.1 – 695.3 

Sales between segments are charged at prevailing market prices. 

Result per management information reviewed by the CODM 

Group operating profit before amortisation and non-recurring costs 17.8 12.3 – 30.1 

Intangible assets amortisation (2.3) (1.9) – (4.2) 

Non-recurring costs (3.7) (1.2) – (4.9) 

Finance income 0.3 

Finance costs (2.0) 

Profit before taxation 19.3 

Taxation (5.7) 

Profit for the year per management information 13.6 

Taxation adjustment 0.2 

Profit for the year per statutory accounts 13.8 

Segment assets and liabilities 

Total assets 

Segments 196.0 107.0 12.0 315.0 

Not allocated to segments 4.2 

Total liabilities 

Segments (146.9) (73.0) (0.5) (220.4) 

Not allocated to segments (6.2) 

Group 

£m 

319.2 

(226.6) 

1. Segmental analysis (continued) 


Public 


£m 

Regulated 


£m 

Property 

£m 

Revenue 

Total revenue 377.7 196.6 – 574.3 

Less: between segments (1.4) (1.5) – (2.9) 

External revenue 376.3 195.1 – 571.4 

Sales between segments are charged at prevailing market prices. 

Result per management information reviewed by the CODM 

Group operating profit before amortisation and non-recurring costs 17.3 7.8 – 25.1 

Intangible assets amortisation (1.4) (0.7) – (2.1) 

Non-recurring costs – (3.4) – (3.4) 

Finance income 0.4 

Finance costs (1.2) 

Profit before taxation 18.8 

Taxation (5.7) 

Profit for the year per management information 13.1 

Taxation adjustment 0.2 

Profit for the year per statutory accounts 13.3 

Segment assets and liabilities 

Total assets 

Segments 117.7 105.1 11.8 234.6 

Not allocated to segments 10.0 

Total liabilities 

Segments (86.7) (63.6) (0.6) (150.9) 

Not allocated to segments (9.6) 

Other Information 

Capital expenditure including acquisitions 15.8 7.8 – 23.6 

Depreciation 7.2 1.6 – 8.8 

As the Group’s activities are almost entirely domestic, no geographical segmental analysis is required. 

Overview 







£m 

244.6 

(160.5) 

Other Information 

Capital expenditure including acquisitions 68.0 2.4 – 70.4 

Depreciation 12.3 4.0 0.1 16.4 

As the Group’s activities are almost entirely domestic, no geographical segmental analysis is required. No customers (2011: one) in the Regulated Sector Services segment 

accounted for over 10% of total revenue (2011: 12%). 



77 




Overview 






2. Group operating profit before amortisation and non-recurring items 

Group operating profit before amortisation and non-recurring items is stated after charging/(crediting): 

4. Revenue 

The following significant categories of revenue were recognised in the year. 


Depreciation (Note 11) – owned 6.5 3.9 

– finance lease and hire purchase 9.9 4.9 

Profit on sale of plant and machinery (0.5) (0.2) 

(Profit)/loss on sale of freehold land and buildings (0.1) 0.1 

Directors’ emoluments (Note 7) 1.0 0.9 

Share-based payments 0.1 (0.3) 

Fees payable to the Company’s auditor for the audit of the annual accounts – – 

Fees payable to the Company’s auditor and its associates for other services 

– audit of the Company’s subsidiaries 0.1 0.1 

– tax advisory and compliance services – – 

– corporate finance services – – 

Amounts payable under operating leases 

– land and buildings 2.7 2.5 

– plant and machinery 5.6 6.2 

Included within ‘other non-recurring costs’ is an amount of £0.1m which the Group paid to its auditors for vendor due diligence work for Senturion Group Limited, 

in connection with its acquisition by May Gurney Limited. 

3. Other non-recurring costs 


Internal reorganisation costs 2.9 – 

Senturion acquisition and integration costs 2.0 – 

Geotechnical business closure costs – 1.6 

Rail fabrication business closure costs – 0.3 

Turriff acquisition costs – 1.5 

2012 

£m 

2012 

£m 

2011 

£m 

2011 

£m 


Revenue arising from: 

Sale of goods 4.5 5.0 

Contract revenue 690.8 566.4 

5. Finance income and costs 


2012 

£m 

2011 

£m 

695.3 571.4 

Finance income 

Interest receivable from short-term bank deposits 0.2 0.3 

Other interest – 0.1 

Finance income in relation to defined benefit pension scheme 0.1 – 

2012 

£m 

2011 

£m 

0.3 0.4 

Finance costs 

Finance charges payable under finance leases (1.5) (1.0) 

Finance cost in relation to the change in value of financial assets (0.1) (0.1) 

Other interest (0.4) (0.1) 

(2.0) (1.2) 

4.9 3.4 

During the year, the Group consolidated its trading operations into two divisions, Public Sector Services and Regulated Services. Internal reorganisation costs of £2.9m 

were incurred in the year in relation to redundancy and consultancy related expenditure. 

On 9 November 2011, the Group acquired 100% of the issued share capital of Senturion Group Limited, trading as TransLinc, a market-leading provider of specialist 

fleet and passenger services to UK local authorities (Note 27). 

During the prior year, the Board reached a decision to close the Group’s non-core geotechnical and rail fabrication businesses in line with its stated strategy to focus 

on long-term contracts with clients in the public and regulated sectors. 

On 21 January 2011, the Group acquired 100% of the issued share capital of Turriff Group Limited, one of Scotland’s largest utility infrastructure maintenance companies. 



79 




Overview 






6. Staff numbers and costs 

The average number of people (including Directors) employed by the Group during the year, categorised by segment, was as follows: 

8. Taxation 

(a) Analysis of tax charge: 


No of 

employees 

2012 

No of 

employees 

2011 

Public Sector Services 3,684 3,045 

Regulated Sector Services 1,978 1,443 

Group and Shared Services 261 220 

The aggregate payroll costs of these employees were: 


5,923 4,708 

Wages and salaries 150.9 128.3 

Social security costs 15.2 12.6 

Group pension costs (Note 28) 1.0 1.1 

Other pension costs (Note 28) 6.9 4.0 

2012 

£m 

2011 

£m 

174.0 146.0 

The average number of people (including Directors) employed by the Company during the year was 13 (2011: 8), with an aggregate payroll cost of £1.3m (2011: £1.1m). 

Key management remuneration has been disclosed in Note 32. 

7. Emoluments of Directors 


Directors’ emoluments 1.0 0.9 

An analysis of Directors’ emoluments and pension entitlements (including those of the highest paid Director) and their interests in the share capital of the Company is contained 

in the Directors’ Remuneration Report on pages 56 to 61. 

2012 

£m 

2011 

£m 


Current tax 

Corporation tax on profits for the year 6.1 6.2 

Under provision in respect of prior years 0.6 0.1 

Total current tax 6.7 6.3 

Deferred tax 

Origination and reversal of temporary differences 0.5 0.4 

Tax effect of intangible assets amortisation (1.0) (0.6) 

Over provision in respect of prior years (0.7) (0.6) 

Total deferred tax (1.2) (0.8) 

Total tax charge for the year 5.5 5.5 

(b) Factors affecting the tax charge: 

The taxation assessed for the year is higher than the standard rate of corporation tax in the UK (26%). 

The charge is affected by a number of factors in addition to the standard UK rate. The differences are explained as follows: 


Profit before tax 19.3 18.8 

Profit before tax multiplied by standard rate of corporation tax in the UK of 26% 

– expected charge 5.0 5.3 

Effects of: 

Expenses not deductible for tax purposes 0.7 0.6 

Change in future tax rate (0.1) 0.1 

Adjustments to tax charge in respect of previous year (current and deferred) (0.1) (0.5) 

Total tax charge for year (Note 8(a)) 5.5 5.5 

2012 

£m 

2012 

£m 

2011 

£m 

2011 

£m 

The effective tax rate, excluding the impact of non-recurring items, for the year is 27.2% (2011: 28.4%). 

The Finance Act 2011 included legislation reducing the main rate of corporation tax from 26% to 25% with effect from 1 April 2012. Subsequently, the Finance (No 4) Bill 

2010-2012 published on 28 March 2012, included a further reduction in the corporation tax rate from 25% to 24% which was passed by a House of Commons resolution on 

26 March 2012 (to have effect under the provisions of the Provisional Collection of Taxes Act 1968). The effect of the change in the rate of corporation tax was to reduce the net 

deferred tax liability provided at 31 March 2012 by £0.1m, with a corresponding increase in profit for the year but with no effect on other comprehensive income. 

Proposed further reductions to the main rate of corporation tax by 1% per annum to 22% by 1 April 2014 are expected to be enacted separately each year. As these had not 

been enacted at the balance sheet date, the effect of these proposed reductions has not been included in these financial statements. The overall effect of the proposed further 

rate changes from 24% to 22%, if applied to the net deferred tax balance at 31 March 2012, would be to reduce the net deferred tax liability by approximately £0.1m. 



81 




Overview 






9. Dividends 


Amounts recognised as distributions to equity holders in the period: 

Final dividend paid for the year ended 31 March 2011 of 4.52 pence per share 3.0 2.5 

Interim dividend paid for the year ended 31 March 2012 of 2.79 pence per share 1.9 1.4 

2012 

£m 

2011 

£m 

4.9 3.9 

The proposed final dividend of 5.63 pence per share had not been approved at the reporting date and so has not been included as a liability in these financial statements. 

If approved by the shareholders, the dividend will be paid on 31 July 2012 to holders of ordinary shares on the register at the close of business on 22 June 2012. 

The Trustee of the May Gurney Group Limited Employee Share Ownership Trust has waived its right to receive any dividends in respect of shares held in the Trust. 

10. Earnings per share 


Profit for the year 13.8 13.3 

Basic/diluted earnings 13.8 13.3 

Adjustments to basic earnings 

Intangible assets amortisation 4.2 2.1 

Other non-recurring costs 4.9 3.4 

Tax on non-recurring items (2.2) (1.4) 

Underlying earnings 20.7 17.4 

Number of shares Number Number 

Weighted average number of ordinary shares for the purposes of basic earnings per share 67,246,350 67,114,100 

Effect of dilutive potential ordinary shares 2,050,704 1,652,921 

Weighted average number of ordinary shares for the purposes of diluted earnings per share 69,297,054 68,767,021 

Weighted average number of ordinary shares for the purposes of underlying earnings per share 70,236,016 70,236,016 

2012 

£m 

2011 

£m 

11. Property, plant and equipment 



Freehold 

land and 

buildings 

£m 

Short 

leasehold 

property 

£m 

Plant, 

vehicles and 

equipment 

£m 

Cost 

At 1 April 2010 2.5 0.5 48.7 51.7 

Acquisition of subsidiary undertakings – – 6.7 6.7 

Additions – 1.2 15.7 16.9 

Disposals (0.2) – (5.6) (5.8) 

At 1 April 2011 2.3 1.7 65.5 69.5 

Acquisition of subsidiary undertakings (Note 27) 1.4 – 46.2 47.6 

Inter-Group transfers 1.4 – (1.4) – 

Additions – 0.8 22.0 22.8 

Disposals – – (10.5) (10.5) 

At 31 March 2012 5.1 2.5 121.8 129.4 

Depreciation 

At 1 April 2010 0.9 0.4 24.7 26.0 

Charge for year – 0.1 8.7 8.8 

Disposals – – (4.5) (4.5) 

At 1 April 2011 0.9 0.5 28.9 30.3 

Charge for year 0.1 0.1 16.2 16.4 

Disposals – – (9.7) (9.7) 

At 31 March 2012 1.0 0.6 35.4 37.0 

Net book value at 31 March 2012 4.1 1.9 86.4 92.4 

Net book value at 31 March 2011 1.4 1.2 36.6 39.2 

Included in the total net book value of plant, vehicles and equipment is £54.9m (2011: £19.8m) in respect of assets acquired under finance leases and hire purchase 

agreements. Depreciation for the year on these assets was £9.9m (2011: £4.9m). 

Total 

£m 

pence 

pence 

Underlying earnings per share 29.47 24.77 

Basic earnings per share 20.52 19.82 

Diluted earnings per share 19.91 19.34 

Underlying earnings per share, before non-recurring items, has been disclosed to give a clearer understanding of the Group’s underlying trading performance. It has been 

calculated using the underlying earnings figures above and an adjusted weighted average number of ordinary shares which includes those shares held by the Group Employee 

Share Ownership Trust. 

Diluted earnings per share is the basic earnings per share after allowing for the dilutive effect of the conversion into ordinary shares of the number of options outstanding during 

the year (see Note 24). 



83 




Overview 






12. Goodwill 

13. Other intangible assets 


Total 

£m 


Total 

£m 



Cost and net book value 

At 1 April 2010 35.2 

Acquisition of subsidiary 6.9 

At 1 April 2011 42.1 

Acquisition of subsidiary (Note 27) 18.2 

At 31 March 2012 60.3 

The carrying value of goodwill has been allocated by operating segment as follows: 



Public Sector Services 35.2 17.0 

Regulated Sector Services 25.1 25.1 

2012 

£m 

2011 

£m 

60.3 42.1 

The carrying values of the Group’s goodwill are reassessed at least annually or whenever events or changes in circumstances indicate that the carrying value may not be 

recoverable. If analysis indicates that the carrying value is too high, then this is reduced to its recoverable amount which is the higher of fair value less costs to sell and its 

value in use. 

Value in use is calculated using pre-tax cash flow projections based on financial budgets and business plans covering a four year period, which take into account historical 

trends and market conditions, and which have been approved by the Board. The cash flow forecasts are adjusted by an appropriate discount rate derived from our cost of 

capital plus a reasonable risk premium at the date of valuation. 

The key assumptions are: operating margin (4%-5%); average annual growth rate (0%-7%); and pre-tax discount rate (10%). The average growth rates used are consistent 

with forecasts included in industry reports. 

The Group’s impairment review is sensitive to changes in the key assumptions used, in particular the growth rate and discount rate. However, based on the Group’s sensitivity 

analysis, a reasonable change in a single assumption will not cause impairment in any of the Group’s cash generating units. 

Valuation 

At 1 April 2010 19.9 

Internal development 2.9 

Additions – acquisition of subsidiary 5.0 

At 1 April 2011 27.8 

Internal development 0.5 

Additions – acquisition of subsidiary (Note 27) 11.1 

At 31 March 2012 39.4 

Amortisation 

At 1 April 2010 14.3 

Charge for year 2.1 

At 1 April 2011 16.4 

Charge for year 4.2 

At 31 March 2012 20.6 

Net book value at 31 March 2012 18.8 

Net book value at 1 April 2011 11.4 



85 




Overview 






13. Other intangible assets (continued) 

Other intangible assets valuation comprises: 

Year 

acquired 

Carrying value 

£m 

Valuation 

£m 

TJ Brent Order book 1 2005 – 2.1 2 

TJ Brent Customer relationships 1 2005 0.4 6.4 10 

AC Chesters Order book 1 2007 – 1.2 3 

AC Chesters Customer relationships 1 2007 0.1 0.3 8 

FDT Order book 1 2008 – 0.6 3 

FDT Customer relationships 1 2008 – 0.5 5 

Willows Order book 1 2008 – 0.3 1.5 

Willows Customer relationships 1 2008 – 1.0 4 

SHWRC Business Order book 2 2008 1.0 3.7 8.5 

ECT Order book 2 2009 0.8 3.3 7 

ECT Customer relationships 2 2009 – 0.5 7 

MGConnect TM software development 2011 2.8 3.4 4 

Turriff Order book 1 2011 0.6 1.7 3 

Turriff Customer relationships 1 2011 2.7 3.1 5 

Turriff Trademark 1 2011 0.1 0.2 1 

TransLinc Order book 2 2012 5.0 5.7 7 

TransLinc Customer relationships 2 2012 5.3 5.4 12 

18.8 39.4 

In the current and prior year the Group incurred costs in developing software for the MGConnect TM project which is the Group’s integrated web-enabled technology platform 

that covers all areas of the Group’s activities. 

For the valuations above the purchase price allocation method was used, which required identification and fair value estimation of the individual intangible assets acquired. 

In order to arrive at an estimate of fair value, the income approach was used which values the cash flows that the asset might reasonably be expected to generate. 

The TransLinc valuations completed in the year were based on financial projections prepared at the time of acquisition and a weighted average cost of capital of 13.9%. 

1 

Regulated Sector Services operating segment 

2 

Public Sector Services operating segment 

* UEL = Original Useful Economic Life 

14. Investments 

UEL* 

yearsl 

15. Deferred tax (liability)/asset 


2012 


£m 

2012 

Company 

£m 

2011 


£m 

2011 

Company 

£m 

At beginning of year 0.9 0.7 1.1 0.9 

Effect of reduction in future tax rate to 24% (2011: 26%) 0.1 – (0.1) – 

Acquisition of subsidiaries (3.6) – (1.0) – 

Debited direct to equity (0.3) (0.3) – (0.2) 

Income statement credit 1.2 0.1 0.9 – 

At end of year (1.7) 0.5 0.9 0.7 

Deferred taxation at 24% (2011: 26%) is in respect of: 


2012 


£m 

2012 

Company 

£m 

2011 


£m 

2011 

Company 

£m 

Depreciation in excess of capital allowances 0.2 – 0.1 – 

Other temporary differences – – 0.9 – 

Intangible assets acquired (3.9) – (2.3) – 

Share-based payments 1.8 0.3 2.1 0.6 

Defined benefit pension scheme 0.2 0.2 0.1 0.1 

Deferred tax (liability)/asset (1.7) 0.5 0.9 0.7 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred taxes relate to 

the same fiscal authority. 

16. Inventories 


Raw materials and consumables 0.4 0.3 

Finished goods and goods for resale 4.1 4.1 

2012 


£m 

2011 


£m 

Company 

Shares in 

subsidiary 

undertakings 

£m 

2012 

Total 

£m 

2011 

Total 

£m 

During the year £11.5m (2011: £9.1m) of inventories was recognised as an expense. 

4.5 4.4 

Cost and net book value 

At beginning and end of year 20.3 20.3 20.3 

Refer to Note 30 for the list of subsidiary entities. 



87 




Overview 






17. Trade and other receivables 


2012 


£m 

2012 

Company 

£m 

2011 


£m 

2011 

Company 

£m 

Trade receivables 95.1 – 91.0 – 

Amounts due from contract customers 5.9 – 7.9 – 

Amounts owed by subsidiary undertakings – 11.4 – 2.8 

Other receivables 2.1 0.3 4.6 – 

Prepayments and accrued income 9.1 0.1 6.9 0.1 

112.2 11.8 110.4 2.9 

Trade and other receivables are initially stated at their fair value and subsequently measured at amortised cost as reduced by appropriate allowance for estimated irrecoverable 

amounts. The Directors consider that the carrying values of current trade and other receivables approximate their fair values. 

Amounts due from contract customers relates to value in excess of cash received recognised on long-term contracts. At 31 March 2012 there were three contracts being 

accounted for as a long-term contract (2011: three). 

Trade and other receivables have been reviewed for indicators of impairment. Certain trade receivables were found to be potentially impaired and a provision of £0.7m 

(2011: £0.5m) has been recorded accordingly. 

In addition, some of the unimpaired trade receivables are past due as at the reporting date. The age of financial assets past due but not impaired is as follows: 


2012 


£m 

2012 

Company 

£m 

2011 


£m 

2011 

Company 

£m 

Not more than 3 months 7.7 – 3.9 – 

More than 3 months but not more than 6 months 0.8 – 0.8 – 

The movement in the provision for impairment of trade receivables is as follows: 


8.5 – 4.7 – 

2012 


£m 

2012 

Company 

£m 

2011 


£m 

2011 

Company 

£m 

Balance at 1 April 2011 0.5 – 0.4 – 

Credited to the income statement 

– additional provisions 0.5 – 0.4 – 

– unused amounts reversed (0.3) – (0.3) – 

Balance at 31 March 2012 0.7 – 0.5 – 

17. Trade and other receivables (continued) 

The ageing of the impaired receivables is as follows: 


2012 


£m 

2012 

Company 

£m 

2011 


£m 

2011 

Company 

£m 

Six to nine months 0.3 – 0.2 – 

Nine to twelve months 0.2 – 0.1 – 

Over twelve months 0.2 – 0.2 – 

Exposure to credit risk is disclosed in Note 20. 

18. Cash and cash equivalents 


0.7 – 0.5 – 

2012 


£m 

2012 

Company 

£m 

2011 


£m 

2011 

Company 

£m 

Cash at bank and in hand 30.5 3.0 20.9 3.5 

Short-term bank deposits 0.5 0.1 15.3 5.1 

The carrying amount of cash and cash equivalents approximates their fair value. 

19. Trade and other payables 


31.0 3.1 36.2 8.6 

2012 


£m 

2012 

Company 

£m 

2011 


£m 

2011 

Company 

£m 

Amounts due to contract customers 6.0 – 3.9 – 

Trade payables 89.7 0.1 80.2 – 

Contingent consideration 5.0 – 6.0 – 

Other tax and social security 17.8 0.8 14.8 1.0 

Other payables 8.8 0.1 16.3 0.2 

Accruals and deferred income 13.9 0.4 11.5 0.2 

141.2 1.4 132.7 1.4 

Trade and other payables are initially stated at their fair value and subsequently measured at amortised cost. The Directors consider that the carrying values of current trade 

and other payables approximate their fair values. 

Amounts due to contract customers relates to cash received in excess of value recognised. 

During the year, the Group agreed with the vendor of Turriff Group Limited in respect of the £1 million contingent consideration which was payable on determination of the 

completion EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) for the year ended 31 December 2010 for Turriff Group. 



89 




Overview 






20. Financial instruments 

Capital risk management 

The Group manages its capital to ensure its ability to continue as a going concern and to maintain an optimal capital structure to reduce the cost of capital. 

The capital structure of the Group comprises equity attributable to equity holders of May Gurney Integrated Services plc consisting of issued ordinary share capital, reserves 

and retained earnings as disclosed in Notes 23 and 25 and cash and cash equivalents as disclosed in Note 18. 

The Group maintains or adjusts its capital structure through the payment of dividends to shareholders. The Group’s policy is to carry no significant long-term debt, other than 

finance leases. 

The Group’s overall capital risk management strategy remains unchanged from 2011. 

Financial risk management 

Financial risk management is an integral part of the way the Group is managed. In the course of its business, the Group is exposed primarily to interest rate risk, credit risk and 

liquidity risk. The overall aim of the Group’s financial risk management policies is to minimise potential adverse effects on financial performance and net assets. 

The Group’s finance department manages the principal financial risks within policies and operating parameters approved by the Board of Directors. 

Interest rate risk 

Interest rate risk arises on the Group’s obligations under finance leases as some interest rates are fixed at the start of the lease and some are floating. A 1% increase/decrease 

in the floating rate would lead to a £0.3m increase/decrease in the Group’s finance costs. 

Interest rate risk arises on the Group’s cash and cash equivalents. A 1% increase/decrease in the Bank of England base rate would lead to a £0.3m (2011: £0.4m) increase/ 

decrease in the Group’s finance income. 

Credit risk 

Exposure to credit risk is limited to the carrying amount of financial assets recognised at the reporting date, namely cash and cash equivalents and trade and other receivables. 

The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group, and incorporates this information into its credit risk 

controls. Where available at reasonable cost, external credit ratings and/or reports on customers and other counterparties are obtained and used. The Group’s policy is to deal 

only with creditworthy counterparties. 

The Group’s management considers that all financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that are 

past due. An analysis of amounts that are past due but not impaired is shown in Note 17. 

None of the Group’s financial assets are secured by collateral or other credit enhancements. 

The credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are reputable banks with high quality external credit ratings. 

The Group has no significant concentration of credit risk in respect of amounts due from contract customers or trade receivable balances at the reporting date, with exposure 

spread over a number of customers and across the Group’s operating segments. 

Liquidity risk 

The Group manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term financial liabilities as well as cash outflows due in day-to-day 

business. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling 30-day projection. 

The Group maintains cash to meet its liquidity requirements for up to 30-day periods. Funding in regards to long-term liquidity needs is additionally secured by an adequate 

amount of committed credit facilities. 

Commodity Price Risk 

Through its environmental services contracts the Group has some exposure to fluctuations in recyclable commodity prices. Where possible the Group seeks to mitigate the risk 

by passing on the risk and reward of price fluctuations to clients and through the use of cap and collar agreements with buyers of recyclable commodities. The fair value of such 

contracts is not considered material as a limited amount of recyclable material is held at the end of the year and as such is not recognised in the statement of financial position. 

Foreign currency risk 

The Group does not have significant foreign currency transactions and exposure to foreign currency risk is therefore minimal. Accordingly, these financial statements do not 

include any sensitivity analysis in respect of currency risk. 

Price risk 

The Directors do not consider there to be any price risk relating to equity instruments and hence no need for any related disclosures. 

20. Financial instruments (continued) 

Categories of financial instruments 


2012 

Loans and 

receivables 

£m 

2012 

Non-financial 

assets 

£m 

2012 

Financial 

liabilities at 

amortised cost 

£m 

2012 

Non-financial 

liabilities 

£m 

2011 

Loans and 

receivables 

£m 

2011 

Non-financial 

assets 

£m 

2011 

Financial 



£m 

2011 

Non-financial 

liabilities 

£m 

Financial assets 

Cash at bank 31.0 – – – 36.2 – – – 

Trade receivables – current 95.1 – – – 91.0 – – – 

Other receivables – current 8.0 – – – 12.5 – – – 

Prepayments – 9.1 – – – 6.9 – – 

Total 134.1 9.1 – – 139.7 6.9 – – 

Financial liabilities 

Trade payables – – (89.7) – – – (80.2) – 

Other liabilities – current – – (14.8) – – – (20.2) – 

Other liabilities – non-current – – – – – – – (0.1) 

Accruals – – (13.9) – – – (11.5) – 

VAT and taxation payables – – – (20.9) – – – (16.8) 

Contingent consideration – – (5.0) – – – (6.0) – 

Borrowings – current – – (20.0) – – – – – 

Total – – (143.4) (20.9) – – (117.9) (16.9) 

Net 134.1 9.1 (143.4) (20.9) 139.7 6.9 (117.9) (16.9) 

Company 

2012 

Loans and 

receivables 

£m 

2012 

Non-financial 

assets 

£m 

2012 

Financial 



£m 

2012 

Non-financial 

liabilities 

£m 

2011 

Loans and 

receivables 

£m 

2011 

Non-financial 

assets 

£m 

2011 

Financial 



£m 

2011 

Non-financial 

liabilities 

£m 

Financial assets 

Cash at bank 3.1 – – – 8.6 – – – 

Other receivables 0.3 – – – – – – – 

Prepayments – 0.1 – – – 0.1 – – 

VAT and taxation receivables – 0.5 – – – 0.4 – – 

Investments in subsidiaries – 20.3 – – – 20.3 – – 

Total 3.4 20.9 – – 8.6 20.8 – – 

Financial liabilities 

Trade payables – – (0.1) – – – – – 

Other liabilities – current – – (0.1) – – – (0.2) – 

Accruals – – (0.4) – – – (0.2) – 

VAT and taxation payables – – – (0.8) – – – (1.0) 

Total – – (0.6) (0.8) – – (0.4) (1.0) 

Net 3.4 20.9 (0.6) (0.8) 8.6 20.8 (0.4) (1.0) 



91 




Overview 






20. Financial instruments (continued) 

2012 

Trade and 

other payables 

£m 

2012 

Finance leases 

& borrowings 

£m 

2012 

Total 

£m 

2011 

Trade and 

other payables 

£m 

2011 

Finance 

leases 

£m 

Due within one year 118.4 37.9 156.3 111.9 8.3 120.2 

Due within one to two years – 15.2 15.2 – 5.9 5.9 

Due within two to five years – 26.4 26.4 – 13.8 13.8 

Due after five years – 3.3 3.3 – – – 

2011 

Total 

£m 

118.4 82.8 201.2 111.9 28.0 139.9 

The above contractural maturities reflect the gross cash flows which may differ to the carrying values of the liabilities at the reporting date. 

21. Obligations under finance leases and borrowings 


Finance lease and hire purchase obligations 

Repayable: within one year 16.9 7.3 

Repayable: between two and five years 40.0 18.0 

Repayable: after more than five years 3.3 – 

2012 


£m 

2011 


£m 

60.2 25.3 

The net obligations under finance lease and hire purchase agreements of £60.2m (2011: £25.3m) are secured on the assets acquired. The Directors consider that there is 

no material difference between the carrying value and the fair value of finance lease obligations. 

The gross obligations under finance lease and hire purchase agreements are £62.8m (2011: £28.0m). 

During the year, finance lease obligations totalling £28.3m (2011: £1.3m) were acquired with the new subsidiary undertakings. 


Borrowings – bank loan 

Repayable: within one year 20.0 – 

Repayable: between two and five years – – 

Repayable: after more than five years – – 

During the year the Group entered into a revolving-loan facility in connection with the acquisition of Senturion Group. 

2012 


£m 

2011 


£m 

20.0 – 

22. Provisions and other liabilities 


At beginning of year 0.1 0.1 

Credit for the year (0.1) – 

At end of year – 0.1 

The above provisions comprise £nil (2011: £0.1m) in respect of site reinstatement obligations where the Group was formerly engaged in the excavation of sand and aggregates 

and other site reinstatement obligations. 

23. Share capital 


Authorised 

Equity shares 

Ordinary 5 pence shares 6.8 6.8 

Issued and fully paid 

Equity shares 

Ordinary 5 pence shares 3.5 3.5 

Authorised ordinary 5 pence shares 135,000,000 135,000,000 

Issued ordinary 5 pence shares 70,236,016 70,236,016 

24. Share-based payments 

The following expense was charged in respect of the Group’s share-based incentive schemes: 


LTIP – 0.1 

Sharesave – 0.3 

CSOP & other schemes 0.1 (0.1) 

Total 0.1 0.3 

2012 


£m 

2012 

£m 

Number 

2012 


£m 

2011 


£m 

2011 

£m 

Number 

2011 


£m 



93 




Overview 






24. Share-based payments (continued) 

For options granted post-flotation (June 2006), independent valuations have been used to determine the fair values for share-based payments. 

The fair values and assumptions used were as follows: 

LTIP 09 LTIP 10 LTIP 11 CSOP 09 CSOP 10 CSOP 11 

Deferred 

bonus 10 

Deferred 

bonus 11 

Sharesave 

09 

Sharesave 

10 

Sharesave 

11 

Stand 

alone 

option 06 

Stand 

alone 

option 07 


The May Gurney Long-Term Incentive Plan (‘LTIP’) 

The LTIP scheme is a long-term incentive plan for Executive Directors and senior managers. The exercise of awards granted under the LTIP will in normal circumstances be 

conditional upon the achievement of objective performance targets set at the time of grant. Such performance targets shall be measured over a performance period. Options 

granted under the LTIP Scheme will normally lapse in the event an option holder ceases to remain an employee or officer of the Company or any of the Company’s subsidiaries. 

Further details of the Scheme are included in the Directors’ Remuneration Report. Options granted, exercised and forfeited under the Scheme were as follows: 

Pricing model Trinomial Trinomial Trinomial Trinomial Trinomial Trinomial Trinomial Trinomial Trinomial Trinomial Trinomial Trinomial Trinomial 

Grant date 8 Jul 09 8 Jul 10 7 Jul 11 8 Jul 09 8 Jul 10 7 Jul 11 8 Jul 10 7 Jul 11 12 Aug 09 6 Aug 10 6 Aug 11 12 Mar 07 25 Jul 07 

Share price at grant 161.00p 192.00p 282.00p 161.00p 192.00p 282.00p 192.00p 282.00p 175.00p 198.00p 273.00p 330.00p 335.50p 

Exercise price Nil Nil Nil 161.00p 192.00p 282.00p Nil Nil 139.00p 159.00p 219.00p 330.00p 335.50p 

Option life 10 years 10 years 10 years 10 years 10 years 10 years 3 years 3 years 3.6 years 3.6 years 3.6 years 10 years 10 years 

Expected vesting life 3 years 3 years 3 years 3 years 3 years 3 years 2 years 2 years 3.1 years 3.1 years 3.1 years 2 years 3 years 

Risk free rate 3.73% 3.22% 3.30% 3.73% 3.22% 3.30% 1.16% 1.13% 3.03% 1.98% 1.42% 4.80% 5.30% 

Expected volatility 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 25% 25% 

Expected dividend yield 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 2% 2% 

Value per option 147.00p 175.00p 264.00p 52.00p 63.00p 103.00p 180.00p 272.00p 36.00p 39.00p 90.00p 87.06p 95.40p 

For 2003 Scheme options, which were granted prior to flotation, the fair values of services received in return for share-based payments were measured by the fair value of 

shares received and options granted. Owing to the absence of a market for the Company’s shares at the time of grant, the Company used share valuation methodology which 

looks at comparator listed companies and adjusts for the lack of an active market by means of discounting their quoted price earnings ratios. The risk free rate of return was 

assumed to be 5%. 

May Gurney Integrated Services Unapproved Share Option Scheme (the ‘2003 Scheme’) 

The 2003 Scheme was adopted in 2003 and ceased issuing new options on the flotation of the Company. Under the Scheme, options were granted to Executive Directors 

and to senior and middle management. The exercise of some of the options granted under the 2003 Scheme was conditional upon the achievement of objective performance 

targets set by the Trustee of the ESOT at the time of grant. Options granted under the 2003 Scheme will normally lapse in the event an option holder ceases to remain an 

employee or officer of the Company or any of the Company’s subsidiaries. Further details of the Scheme are included in the Directors’ Remuneration Report. 

Options granted, exercised and forfeited under the Scheme were as follows: 

2012 

Number 

2012 

Weighted 

average 

exercise price 

2011 

Number 

2011 

Weighted 

average 


Outstanding at beginning of year 376,500 13.58p 596,500 26.01p 

Granted – – – – 

Exercised – – (29,000) 13.58p 

Lapsed – – (200,000) 50.64p 

Outstanding at end of year 367,500 13.58p 376,500 13.58p 

Exercisable at the end of the year 367,500 13.58p 367,500 13.58p 

2012 

Number 

2012 

Weighted 

average 


2011 

Number 

2011 

Weighted 

average 


Outstanding at beginning of year 1,409,212 – 949,826 – 

Granted 446,146 – 689,402 – 

Exercised – – – – 

Lapsed (1,053,957) – (230,016) – 

Outstanding at end of year 801,401 – 1,409,212 – 

Exercisable at the end of the year – – – – 

The May Gurney Savings Related Share Option Scheme (‘Sharesave’) 

The Sharesave Scheme was established in July 2007. Participation is offered to all employees of the Group who have been employed for a continuous period which is 

determined by the Board of Directors. Under the Sharesave contract participating employees save a regular sum each month for three years of not less than £5 nor more than 

£250 per month. 

Options to acquire ordinary shares in the capital of the Company will be granted to eligible employees who enter into a Sharesave contract. The number of options will be that 

number of shares which have an aggregate option price not exceeding the projected proceeds of the Sharesave contract including any bonus. The option price per share will 

not be less than 80% of the market value of an ordinary share on the day on which invitations to apply for options are issued. 

The requirement to make regular saving contributions under the Scheme are non-vesting conditions. When an employee chooses whether to meet a non-vesting condition, 

and fails to do so, such a failure is treated as a cancellation and therefore an acceleration of the share-based payment charge. 

Options granted under the Sharesave Scheme will normally lapse in the event an option holder ceases to remain an employee or officer of the Company or any of the 

Company’s subsidiaries. Further details of the Scheme are included in the Directors’ Remuneration Report. Options granted, exercised and forfeited under the Scheme 

were as follows: 

2012 

Number 

2012 

Weighted 

average 


2011 

Number 

2011 

Weighted 

average 


Outstanding at beginning of year 2,347,251 173.51p 1,891,561 179.05p 

Granted 688,673 219.00p 852,739 159.00p 

Exercised (391,950) 189.34p (6,572) 155.90p 

Lapsed (717,815) 212.69p (390,477) 169.23p 

Outstanding at end of year 1,926,159 171.96p 2,347,251 173.51p 


No options were exercised in the year. The weighted average share price at date of exercise in 2011 was 203p. 



95 




Overview 







25. Reserves 

The May Gurney Company Share Ownership Plan (‘CSOP’) 

The CSOP Scheme is a long-term incentive plan for senior managers. The exercise of awards granted under the CSOP will, in normal circumstances, be conditional upon the 

achievement of objective performance targets set at the time of grant. Such performance targets shall be measured over a performance period. Options granted under the 

CSOP Scheme will normally lapse in the event an option holder ceases to remain an employee or officer of the Company or any of the Company’s subsidiaries. Options granted, 

exercised and forfeited under the Scheme were as follows: 


Share premium account 

2012 


£m 

2012 

Company 

£m 

2011 


£m 

2011 

Company 

£m 

2012 

Number 

2012 

Weighted 

average 


2011 

Number 

2011 

Weighted 

average 


Outstanding at beginning of year 314,887 208.13p 259,881 257.46p 

Granted 63,828 282.00p 72,912 192.00p 


Forfeited (121,288) 204.63p (17,906) 223.38p 

Outstanding at end of year 257,427 285.57p 314,887 208.13p 


The May Gurney Deferred Share Bonus Plan (‘Deferred Bonus’) 

The Deferred Bonus Scheme is a long-term incentive plan for Executive Directors and senior managers, whereby one third of the option holders’ profit share bonus in 2010 

and 2011 was converted into share options. Options granted under the Deferred Bonus Scheme will normally lapse in the event an option holder ceases to remain an employee 

or officer of the Company or any of the Company’s subsidiaries. Options granted, exercised and forfeited under the Scheme were as follows: 

2012 

Number 

2012 

Weighted 

average 


2011 

Number 

2011 

Weighted 

average 


Outstanding at beginning of year 38,111 – – – 

Granted 60,635 – 45,500 – 


Forfeited (15,662) – (7,389) – 

Outstanding at end of year 83,084 – 38,111 – 


Other schemes 

Options granted, exercised and forfeited under other schemes were as follows: 

Date of award 

Market value at 

date of award 

Earliest 

vesting date 

Awarded at 

1 Apr 11 

Granted 

in year 

Vested 

in year 

Lapsed 

in year 

Awarded at 

31 Mar 12 

12 Mar 07 330.0p 12 Mar 09 151,515 – – – 151,515 

25 Jul 07 335.5p 25 Jul 10 5,961 – – – 5,961 

At beginning and end of year 13.2 13.2 13.2 13.2 

Merger relief reserve 

At beginning and end of year 1.9 1.9 1.9 1.9 

Retained earnings 

At beginning of year 64.1 11.1 53.4 10.7 

Retained profit for the year 13.8 8.3 13.3 3.6 

Dividends (4.9) (4.9) (3.9) (3.9) 

Items charged direct to equity – – 0.7 0.7 

Movements relating to share-based payments (0.4) (0.1) 0.6 – 

At end of year 72.6 14.4 64.1 11.1 

Merger relief reserve 

On 8 June 2004, the Company issued 21,715 ordinary shares of £1 each at a premium amounting to £1.9m. The shares were issued as part consideration for the acquisition 

of the whole of the issued share capital of TJ Brent Limited, accounted for using the purchase method of accounting. The premium over the nominal value of the shares issued 

was previously credited to a merger relief reserve as allowed under Section 612 of the Companies Act 2006. 

Other reserves 

Other reserves in the Group and Company statements of financial position are made up as follows: 


Capital 

redemption 

reserve 

£m 

Group and Company 

At beginning and end of year 2.9 (1.5) 1.4 1.4 

Capital redemption reserve 

The capital redemption reserve arose on the redemption of the May Gurney Integrated Services plc cumulative convertible redeemable £1 preference shares in September 2004. 

ESOT reserve 

As at 31 March 2012 the ESOT held 1,434,378 (2011: 1,434,378) ordinary 5 pence shares in the Company. 

The maximum number of 5 pence ordinary shares held in the Company by the ESOT during the year was 1,434,378 (2011: 1,434,378). 

The ordinary shares in the Company held by the ESOT represent 2.0% (2011: 2.0%) of the ordinary share capital of the Company. 

On 28 March 2008, May Gurney Group Trustees Limited acting in its capacity as trustee of the ESOT transferred 1,783,324 ordinary shares by way of a gift for nil consideration 

to Lloyds TSB Offshore Trust Company Limited acting in its capacity as trustee of the May Gurney Integrated Services plc Employee Benefit Trust (EBT), an offshore trust. The 

ordinary shares in the Company held by the EBT represent 2.4% of the ordinary share capital of the Company. At 31 March 2012 the EBT held 1,305,108 (2011: 1,675,134) 

ordinary shares. 

ESOT 

reserve 

£m 

2012 

Total 

£m 

2011 

Total 

£m 



97 




Overview 






26. Commitments 


(i) Operating lease commitments 

Total commitments due under operating leases: 

Land and buildings 

Within one year 2.5 2.5 

Between two and five years 6.3 4.5 

More than five years 1.4 1.3 

2012 


£m 

2011 


£m 

10.2 8.3 

Other 

Within one year 5.4 6.2 

Between two and five years 6.3 9.0 

More than five years – – 

(ii) Property, plant and equipment 

Future capital expenditure authorised by the Directors but not provided 

for in these financial statements is as follows: 

11.7 15.2 

Contracts placed 20.6 2.3 

27. Business combinations 

On 9 November 2011, the Group acquired 100% of the issued share capital of Senturion Group Limited, trading as TransLinc, a market-leading provider 

of specialist fleet and passenger services to UK local authorities. This transaction has been accounted for by the acquisition method of accounting. 

The net assets acquired in the transaction, and the goodwill arising, are as follows: 

Acquiree's 

carrying 

amount before 

combination 

£m 

Provisional 

fair value 

adjustments 

£m 

Fair value 

£m 

Net assets acquired: 

Property, plant and equipment 48.1 (0.5) 47.6 

Intangible assets – 11.1 11.1 

Inventories 0.1 – 0.1 

Trade receivables 4.9 – 4.9 

Cash and cash equivalents 4.5 – 4.5 

Trade payables (13.9) (0.6) (14.5) 

Taxation payables (0.6) – (0.6) 

Debt (17.2) – (17.2) 

Finance leases (28.3) – (28.3) 

Deferred tax (1.1) (2.5) (3.6) 

(3.5) 7.5 4.0 

Goodwill 18.2 

Total consideration 22.2 

Purchase consideration: 

Cash paid 22.2 

Net cash outflow arising on acquisition: 

Cash consideration paid (22.2) 

Bank balance acquired 4.5 

Acquisition and integration costs (1.2) 

Bank loans and loan notes repaid (17.2) 

Provisional fair value adjustments have been made to Property, plant and equipment and Trade payables in order to align the acquiree’s accounting policies with those of the Group. 

The intangible asset recognised on acquisition relates to the fair value of the order book and customer relationships acquired. Further details are disclosed in Note 13. 

The acquisition and integration costs of £1.2 million above have been paid during the year, with a further £0.8 million of costs included in Accruals and deferred income. 

The goodwill arising on the acquisition of Senturion Group Limited is attributable to the anticipated profitability of the Group’s services in the new markets. 

Senturion Group Limited contributed £13.6 million revenue and £1.7 million profit to the Group’s profit before tax for the period between the date of acquisition and the 

financial reporting date. 

If the acquisition had been completed on 1 April 2011, total Group revenue for the year would have been £729.4 million, and profit for the period would have been £16.3 million. 

22.2 

(36.1) 



99 




Overview 






28. Employee benefits 

Defined contribution pension schemes 

The Group operates eight defined contribution pension schemes (2011: eight) and contributions during the year amounted to £6.9m (2011: £4.0m). The schemes are the May 

Gurney Defined Contribution Pension Scheme, TJ Brent Limited Group Personal Pension Plan, T Cartledge Limited Group Personal Pension Plan, AC Chesters & Son Limited 

Staff Pension Scheme, FDT Executive Pension Plan, FDT Group Personal Pension Plan, FDT Stakeholder Pension and Willows Plant Limited Group Personal Pension Plan. 

The Group also makes contributions to local government defined benefit pension schemes in respect of certain employees who have transferred to the Group under TUPE 

transfer arrangements. The Group is unable to identify its share of the underlying assets and liabilities in the Scheme on a consistent and reasonable basis and consequently 

the pension costs for these schemes are treated as if they were defined contribution schemes. 

Defined benefit pension scheme 

The Group operates two defined benefit pension schemes, the May Gurney Defined Benefit Pension Scheme (the ‘May Gurney Scheme’) and the TransLinc Pension Scheme 

(the ‘TransLinc Scheme’). The assets of the schemes are held separately from those of the Group and are invested in managed funds. 

The most recent full triennial valuation of the May Gurney Scheme was carried out at 31 March 2011. The ongoing valuation assumed, in assessing pension costs, that the 

return on the May Gurney Scheme’s pre-retirement investments would exceed by 2.5% the rate at which wages and salaries would increase. Future pensions that are due to 

increase by the maximum of inflation and 5% each year were assumed to increase at the rate of 3.2% per annum. The employer’s contribution rate as recommended by the 

actuary was 11.8% of Pensionable Salary per annum in respect of future accrual of benefits, 1.0% of Pensionable Salary per annum in respect of death in service benefits, 

plus May Gurney Scheme expenses (including levies). The May Gurney Scheme’s assets were less than the May Gurney Scheme’s technical provisions at the valuation date, 

and therefore a recovery plan was agreed which was expected to remove the shortfall by 31 March 2018, if assumptions were borne out in practice. The average contribution 

rate by the employees is 6.6%. 

The most recent full triennial valuation of the TransLinc Scheme was carried out at 28 February 2011. The ongoing valuation assumed, in assessing pension costs, that the 

return on the Scheme’s pre-retirement investments would exceed by 1.4% the rate of future expected Retail Prices Index (‘RPI’) inflation. Future pensions that are due to 

increase by the maximum of inflation and 5% each year were assumed to increase at the rate of 3.45% per annum. The TransLinc Scheme’s assets were greater than the 

technical provisions at the valuation date, and therefore a recovery plan was not required, but annual Company contributions of £145,000 were agreed. 

The pension cost relating to the schemes is assessed in accordance with the advice of a qualified actuary on the basis of valuations at each reporting date using the projected 

unit costing method. The pension charge for the year was £1.0m (2011: £1.1m). 

The schemes are both closed to new members. The Group expects to pay contributions of £1.1m in 2013, plus scheme expenses and levies as they fall due. 

The Company has opted to recognise all actuarial gains and losses immediately as Other Comprehensive Income. 

A full actuarial valuation of the May Gurney Scheme was carried out as at 31 March 2011 and the TransLinc Scheme as at 28 February 2011, and have been updated 

to 31 March 2012 by a qualified independent actuary. The major assumptions used by the actuary were (in nominal terms) as follows: 

Discount rate 4.66 5.55 

Inflation assumption (RPI) 3.00 3.40 

Inflation assumption (CPI) 2.00 2.65 

Rate of increase in salaries 3.75 4.15 

Rate of increase in pensions in payment – pre-1997 Nil Nil 

– post-1997 2.90 3.20 

– post-2006 2.00 2.10 

– TransLinc 2.90 N/A 

2012 

% 

2011 

% 

28. Employee benefits 

The mortality assumptions used as at 31 March 2012 are based on standard tables produced by the actuarial profession, adjusted for scheme experience 

2012 2011 

Death in service/deferment AXC00 AXC00 

Death after retirement S1PXA qx 100%(m) 101%(f). CMI_2010_(0.5%) projections from 2004 PXCA00 

Life expectancy at 65: 

Male currently 65 21 21 

Male currently 45 22 22 

Female currently 65 23 23 

Female currently 45 24 24 

The scheme’s net pension liability and expected rate of return on its investments as at 31 March 2012 and as at 31 March 2011 are as follows: 

The assets in the Scheme and the expected rates of return were: 

Long-term 

expected rate 

of return 

(pa)% 

2012 

Scheme 

fair value 

£m 

2012 

TransLinc 

Scheme 

fair value 

£m 

2012 

Consolidated 

fair value 

£m 

Long-term 

expected 

rate of return 

(pa)% 

2011 

Fair value 

£m 

Equities 7.25 17.4 N/A 17.4 7.25 16.9 

Bonds – Corporate 4.66 14.4 N/A 14.4 5.55 12.9 

Bonds – Government 3.29 20.9 N/A 20.9 4.35 17.4 

Cash and other 0.50 0.4 0.1 0.5 0.50 0.4 

Property 6.00 3.8 N/A 3.8 6.00 3.6 

Annuities 4.66 1.0 N/A 1.0 5.55 0.7 

Investment fund 6.29 N/A 7.1 7.1 N/A – 

Matching fund 3.29 N/A 4.9 4.9 N/A – 

Total assets before adjustment for asset ceiling limitations 57.9 12.1 70.0 51.9 

Adjustment in respect of asset ceiling limitations – (2.9) (2.9) – 

Total assets after adjustment for asset ceiling limitations 57.9 9.2 67.1 51.9 

Present value of funded retirement benefit obligation (58.3) (9.2) (67.5) (52.3) 

Deficit in the Scheme (0.4) – (0.4) (0.4) 

Less: Related deferred tax liability 0.1 – 0.1 0.1 

Net pension liability (0.3) – (0.3) (0.3) 

Actual return on plan assets over the period 6.8 0.6 7.4 3.1 

The expected rate of return on scheme assets was determined as the weighted average of the expected returns on the assets held by the Scheme on 31 March 2012. 

The rates of return for each class were determined as follows: 

– equities and property: the rate adopted is consistent with the median assumption used in the actuary’s asset modelling work as at 31 March 2007. 

– bonds: the overall rate has been set to reflect the yields available on the gilts and Grade AA corporate bond holdings held at 31 March 2012. 

– matching fund: the rate is set to reflect the yield on Government bonds. 

– investment fund: the rate is set to reflect the yield on the matching fund, plus 3.0% per annum. 



101 




Overview 






28. Employee benefits (continued) 

Reconciliation of opening and closing balances of the fair value of scheme assets 

Change in the fair value of scheme assets 

Fair value at the beginning of the year 51.9 49.0 

Expected return on scheme assets 3.2 2.8 

Contributions by employers 0.9 0.9 

Contributions by members 0.4 0.5 

Benefits paid (2.2) (1.6) 

Actuarial gain 4.2 0.3 

Business combinations 9.2 – 

Adjustment in respect of asset ceiling limitations (0.5) – 

Fair value of scheme assets at the end of the year 67.1 51.9 

Reconciliation of opening and closing balances of the present value of the defined benefit obligation 

Change in the present value of the defined benefit obligation 

Present value of the obligation at the beginning of the year (52.3) (50.1) 

Company’s service cost (1.0) (1.1) 

Interest cost (3.1) (2.8) 

Contributions by members (0.4) (0.5) 

Benefits paid 2.2 1.6 

Actuarial (loss)/gain (3.7) 0.6 

Business combinations (9.2) – 

Present value of the obligation at the end of the year (67.5) (52.3) 

The amount charged to earnings before interest and tax, and included within cost of sales and administration costs, is: 

Current service cost, less employee contributions (1.0) (1.1) 

Total charge (1.0) (1.1) 

Other finance costs are: 

Expected return on pension scheme assets 3.2 2.8 

Interest on pension scheme liabilities (3.1) (2.8) 

Net income 0.1 – 

2012 

£m 

2012 

£m 

2012 

£m 

2012 

£m 

2011 

£m 

2011 

£m 

2011 

£m 

2011 

£m 

28. Employee benefits (continued) 

The amount recognised in the statement of comprehensive income is: 

Actuarial gains and (losses) to be shown 

in Other Comprehensive Income: 

Actual return less expected return on pension scheme assets 4.2 0.3 

Changes in the assumptions underlying the present value of the Scheme liabilities (3.7) 0.6 

Actuarial gain recognised in comprehensive income 0.5 0.9 

The cumulative actuarial losses recognised in the statement of comprehensive income were £4.2m (2011: £4.7m) 

Total gains to be shown in Other Comprehensive Income: 

Actuarial gains 0.5 0.9 


2012 

£m 

2012 

£m 

2012 

£m 

2011 

£m 

2011 

£m 

– 0.9 

Deficit in scheme at beginning of year (0.4) (1.1) 

Movement in year: 

Current service cost (1.0) (1.1) 

Contributions by employers 0.9 0.9 

Other finance expense 0.1 – 

Net actuarial gains 0.5 0.9 


Deficit in scheme at end of year (0.4) (0.4) 

History of experience gains and (losses) are: 

Fair value of scheme assets 67.1 51.9 49.0 40.4 43.4 

Present value of the defined benefit obligation after asset ceiling adjustment (67.5) (52.3) (50.1) (40.3) (42.6) 

Net (deficit)/surplus (0.4) (0.4) (1.1) 0.1 0.8 

Difference between expected and actual return on scheme assets 

Amount (£m) 4.2 0.3 7.6 (7.1) (1.9) 

Percentage of scheme assets 6.3% 0.6% 15.5% (17.6%) (4.4%) 

Experience (losses)/gains arising on liabilities 

Amount (£m) – – – (1.2) 1.8 

Percentage of scheme liabilities 0% 0% 0% (3.0%) 4.2% 

Total actuarial gains/(losses) recognised in comprehensive income 

Amount (£m) – 0.9 (1.3) (1.0) – 

Percentage of scheme assets 0% 1.7% (2.7%) (2.5%) 0% 

2012 

£m 

2011 

£m 

2010 

£m 

2009 

£m 

2011 

£m 

2008 

£m 



103 




Overview 






29. Contingent liabilities 

(i) The Company has given an unlimited guarantee, secured by fixed and floating charges over the Company’s assets in respect of the facilities from Bank of 

Scotland, of all Group companies. At 31 March 2012, the net indebtedness of all other Group companies amounted to £20.0m (2011: £Nil). 

(ii) The Company has given joint and several guarantees securing indemnities given by other Group companies in respect of performance bonds which have 

been put in place to provide security for clients. These performance bonds are not exercisable on demand. At 31 March 2012, indemnities outstanding for 

other Group companies amounted to £11.1m (2011: £8.8m). 

30. Group undertakings 

The Group undertakings, all of which are included within the Group financial statements, at 31 March 2012: 

Activity 

Percentage of 

equity owned 

Subsidiary undertakings 

May Gurney Group Limited – Dormant intermediate holding company 100% 

May Gurney Limited – Infrastructure support services • 100% 

May Gurney Estates Limited – Property holding and development • 100% 

May Gurney Recycling CIC – Collection and sale of recyclable materials * 100% 

North Lincolnshire Learning Partnership (PSP) Limited – Dormant intermediate holding company * 52% 

Engage North Lincolnshire Limited – Facility services for the education sector **** 80% 

Turriff Group Limited – Provision of contracting services to utility markets * 100% 

Turriff Contractors Limited – Provision of contracting services to utility markets ***** 100% 

Underground Moling Services Limited – Provision of contracting services to utility markets ***** 90% 

Turriff Smart Services Limited – Provision of contracting services to utility markets ***** 100% 

TOR2 Limited – Waste, recycling collections and highways maintenance * 80% 

Lambeth Learning Partnership (PSP) Limited – Dormant intermediate holding company * 65% 

Engage Lambeth Limited – Facility services for the education sector ****** 80% 

Senturion Group Limited – Dormant * 100% 

Senturion (MidCo) Limited – Dormant † 100% 

Senturion (BidCo) Limited – Dormant †† 100% 

Senturion Trustees Limited – Dormant † 100% 

May Gurney Fleet and Passenger Services Limited – Provider of specialist fleet and passenger services ††† 100% 

MGWSP Essex Limited – Dormant * 100% 

ECT Engineering Limited – Dormant * 100% 

May Gurney Building Limited – Dormant * 100% 

AC Chesters & Son Limited – Dormant * 100% 

FDT (Holdings) Limited – Dormant * 100% 

FDT Associates Limited – Dormant ** 100% 

FDT Contracts Limited – Dormant ** 100% 

Norfolk Community Recycling Services Limited – Dormant * 100% 

T Cartledge Limited – Dormant * 100% 

TJ Brent Limited – Dormant * 100% 

Ayton Asphalte Company Limited – Dormant • 100% 

May Gurney (Regional) Limited – Dormant • 100% 

May Gurney (Technical Services) Limited – Dormant • 100% 

May Gurney Group Trustees Limited – Dormant • 100% 

Michco 210 Limited – Dormant * 100% 

Engineered Products Limited – Dormant * 100% 

30. Group undertakings (continued) 

Activity 

Percentage of 

equity owned 

Associated undertakings 

Resource Environmental Limited – Non trading *** 50% 

Jointly controlled entities 

DAWN Environmental Limited – Non trading *** 50% 

Monmouthshire Community Recycling Limited – Non trading *** 50% 

Jointly controlled operations 

May Gurney WSP JV – Highways maintenance * 50% 

Lafarge Contracting/May Gurney JV – Civil Engineering * 50% 

* held by May Gurney Limited • held by May Gurney Group Limited 

** held by FDT (Holdings) Limited † held by Senturion Group Limited 

*** held by May Gurney Recycling CIC †† held by Senturion (Midco) Limited 

**** held by North Lincolnshire Learning Partnership (PSP) Limited ††† held by Senturion (Bidco) Limited 

***** held by Turriff Group Limited 

****** held by Lambeth Learning Partnership (PSP) Limited 

During the year TransLinc Limited changed its name to May Gurney Fleet and Passenger Services Limited. 

The shareholdings in subsidiaries, associates and jointly controlled entities all relate to ordinary share capital and are equivalent to the percentages of voting 

rights held by the Group. 

The percentages quoted in respect of the jointly controlled operations are the Group’s interests under the joint operation contracts. The joint operations’ 

principal places of business are: 

MGWSP, Riverside House, Northampton, Northamptonshire; 

Lafarge Contracting/May Gurney, Bradgate House, Groby, Leicester. 

31. Reconciliation of operating profit before amortisation and non-recurring costs to cash generated from operations 


2012 


£m 

2012 

Company 

£m 

2011 


£m 

2011 

Company 

£m 

Operating profit/(loss) before amortisation and non-recurring costs 30.1 (2.3) 25.1 (2.2) 

Depreciation 16.4 – 8.8 – 

Profit on sale of property, plant and equipment (0.6) – (0.1) – 

Debit in respect of retirement and benefit costs 0.1 0.1 0.2 0.2 

Charge in respect of share-based payments in the period 0.1 – 0.3 – 

Increase in inventories (0.1) – (1.6) – 

Decrease/(increase) in trade and other receivables 3.1 1.0 (20.1) 2.3 

(Decrease)/increase in trade and other payables (6.7) 5.1 16.0 (3.9) 

Cash received by/(used in) operations 42.4 3.9 28.6 (3.6) 

Cash and cash equivalents (which are presented as a single class of assets on the face of the statement of financial position) comprise cash at bank and other short-term highly 

liquid investments with a maturity of three months or less. 



105 




Corporate directory 

Overview 






32. Related Party Transactions 

Key management remuneration 


Short-term employee benefits 2.6 2.1 

Post-employment benefits 0.1 0.1 

Share-based payments 0.4 0.2 

2012 


£m 

2011 


£m 

3.1 2.4 

Transactions with subsidiary undertakings 

Included within trade and other receivables are amounts owed by 100% subsidiary undertakings of the Company of £11.4m (2011: £2.8m). 

During the year ended 31 March 2012 there were transactions totalling £0.9m between the Parent Company and its subsidiary undertakings (2011: £0.9m). All of these 

transactions, and the year end reporting amounts arising from these transactions were conducted on an arms-length basis and on normal commercial terms. In addition the 

Company paid £4.4m (2011: £9.8m) net to its subsidiary undertakings from investments in short-term bank deposits. 

Transactions with jointly controlled entities and jointly controlled operations 

During the year the Group made sales to and purchases from its jointly controlled entities and arrangements. These were normal trading transactions, conducted on an armslength 

basis and on normal commercial terms. The amounts involved individually and in aggregate are not considered to be material either financially or generally to users of 

these financial statements. 

Other related party transactions 

Ishbel Macpherson, Non-Executive Director of the Company, was also a Non-Executive Director of Speedy Hire plc. The Group makes purchases from Speedy Hire companies 

on an arms-length basis in the normal course of business. During the year, the value of purchases from Speedy Hire companies was £1.8m (2011: £1.8m) and a balance of 

£0.2m (2011: £0.1m) was owed at the end of the year. 

Company registration number 

4321657 

Directors 

Margaret Ford, The Baroness Ford of Cunninghame 

(Non-Executive Chairman) 

Philip Fellowes-Prynne (Chief Executive) 

Mark Hazlewood (Group Finance Director) 

Willie MacDiarmid (Non-Executive Director) 

Ishbel Macpherson (Non-Executive Director) 

Tim Ross (Senior Independent Non-Executive Director) 

Andrew Walker (Non-Executive Director) 

Secretary 

Simon Howell 

Registered office 

Trowse 

Norwich 

Norfolk 

NR14 8SZ 

Auditors 

Grant Thornton UK LLP 

Registered Auditors 

Chartered Accountants 

Grant Thornton House 

Melton Street 

Euston Square 

London 

NW1 2EP 

Bankers 

Bank of Scotland plc 

Endeavour House 

Chivers Way 

Histon 

Cambridge 

CB24 9ZR 

Legal advisers to the Company 

Eversheds LLP 

One Wood Street 

London 

EC2V 7WS 

Wragge & Co LLP 

55 Colmore Row 

Birmingham 

B3 2AS 

Nominated adviser and broker 

Peel Hunt LLP 

Moor House 

120 London Wall 

London 

EC2Y 5ET 

Registrars 

Capita Registrars 

The Registry 

34 Beckenham Road 

Beckenham 

Kent 

BR3 4TU 

Group office 

Trowse 

Norwich 

NR14 8SZ 

Telephone: 01603 727272 

Fax: 01603 727400 

www.maygurney.co.uk 



107 



Useful information for shareholders 

Shareholder enquiries 

Shareholders who have questions relating to May 

Gurney’s business or who wish to receive further 

copies of annual or interim reports should contact 

the Marketing Team on 01603 727272 or email 

investorrelations@maygurney.co.uk 

If you have any queries about your shareholding 

please contact the Company’s registrar, Capita 

Registrars, at the address below. 

Capita Registrars 

The Registry 

34 Beckenham Road 

Beckenham 

Kent 

BR3 4TU 

Tel: 0871 664 0300 (calls cost 10p plus network 

extras; lines are open 8:30am-5:30pm, Mon-Fri), 

overseas +44 20 8639 3399. 

email: ssd@capitaregistrars.com 

Share portal 

Through the website of the registrar, Capita 

Registrars, shareholders are able to manage 

their shareholding online by registering for the 

Share Portal, a free, secure, online access to their 

shareholding. Facilities include the following: 

Account enquiry 

This allows shareholders to access their personal 

shareholding, including share transaction history, 

dividend payment history and to obtain an up-todate 

shareholding valuation. 

Amendment of standing data 

This allows shareholders to change their 

registered postal address and add, change or 

delete dividend mandate instructions. 

Shareholders can also download from this site 

forms such as change of address, stock transfer 

and dividend mandate forms as well as buy and 

sell shares in the Company. 

Further details are available at 

www.capitashareportal.com or by 

contacting the Capita Share Portal helpline on 

0871 664 0391 (calls cost 10p plus network 

extras, lines are open 9:00am-5.30pm, Mon-Fri), 

overseas +44 20 8639 3367, or by email at 

shareportal@capita.co.uk 

ShareGift 

Shareholders may donate their shares to charity 

free of charge through ShareGift. Further details 

are available at www.sharegift.org.uk or by 

telephoning 020 7930 3737. 

Share dealing 

A quick and easy share dealing service is 

available for existing May Gurney shareholders to 

either sell or buy more May Gurney shares online 

or by telephone. Further details are available at 

www.capitadeal.com or by telephoning 0871 664 

0445 (calls cost 10p plus network extras; lines 

open 8.00am-4:30pm, Mon-Fri). 

Warning to shareholders 

Share fraud includes scams where investors are 

called out of the blue and offered shares that 

often turn out to be worthless or non-existent, or 

an inflated price for shares they own. These calls 

come from fraudsters operating in ‘boiler rooms’ 

that are mostly based abroad. While high profits 

are promised, those who buy or sell shares in 

this way usually lose their money. The Financial 

Services Authority (FSA) has found most share 

fraud victims are experienced investors who lose 

an average of £20,000, with around £200m lost 

in the UK each year. 

If you are offered unsolicited investment advice, 

discounted shares, a premium price for shares 

you own, or free company or research reports, 

you should take these steps before handing 

over any money: 

u Get the name of the person and 

organisation contacting you. 

u Check the FSA Register at 

www.fsa.gov.uk/fsaregister 

to ensure they are authorised. 

u Use the details on the FSA Register 

to contact the firm. 

u Call the FSA Consumer Helpline on 

0845 606 1234 if there are no contact 

details on the Register or you are told 

they are out of date. 

u Search our list of unauthorised firms and 

individuals to avoid doing business with. 

u Remember: if it sounds too good to be true, 

it probably is! 

If you use an unauthorised firm to buy or sell 

shares or other investments, you will not have 

access to the Financial Ombudsman Service 

or Financial Services Compensation Scheme 

(FSCS) if things go wrong. 

If you are approached about a share scam 

you should tell the FSA using the share fraud 

reporting form at www.fsa.gov.uk/scams, where 

you can find out about the latest investment 

scams. You can also call the Consumer Helpline 

on 0845 606 1234. If you have already paid 

money to share fraudsters you should contact 

Action Fraud on 0300 123 2040. 

Financial calendar 

Annual General Meeting 

24 July 2012 at 3pm. 

Venue: 

The Top of the City 

Norwich City Football Club 

Carrow Road 

Norwich 

Norfolk NR1 1JE 

Final dividend payment 

31 July 2012 

Printed by Park Communications on FSC ® 

certified paper. 

Park is an EMAS certified CarbonNeutral ® 

Company and its Environmental Management 

System is certified to ISO14001. 

100% of the inks used are vegetable oil based, 

95% of press chemicals are recycled for 

further use and, on average 99% of any waste 

associated with this production will be recycled. 

This document is printed on Revive 100 Offset, 

a paper containing 100% post consumer 

recycled fibre certified by the FSC ® . The pulp 

used in this product is bleached using a totally 

chlorine free (TCF) process. 

This annual report is available at 

www.maygurney.co.uk 

Designed and produced by Lloyd Northover 

www.lloydnorthover.com 

108 




Trowse, Norwich, Norfolk NR14 8SZ 

T: 01603 727272 F: 01603 727400 

www.maygurney.co.uk

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