May Gurney bosses have insisted the departure of chief executive Philip Fellowes-Prynne would not see a change of direction for the group amid warnings that profits were set to dip by �5m to about �25m.

In a surprise move, the firm, whose headquarters is in Trowse, near Norwich, yesterday announced the departure of Mr Fellowes-Prynne by mutual consent in the wake of an interim statement in which it said that on-going difficulties with its Scottish Utilities business and 'serious operational issues' with two long-term contracts, linked to its MaGos environmental services and kerbside recycling business, and the run-down of its facility services division led the board to the conclusion that the group will 'significantly under-perform its original expectations for the current year'.

Non-executive director Willie MacDiarmid will step in on an interim basis while the search for a new chief executive takes place. And it revealed it had set aside �10m to ensure it had enough cash available to complete outstanding Building Schools for the Future work in Lambeth and Lincolnshire.

Mark Hazelwood, finance director, said the firm had been hit by a decision by Scotia Gas to scale back work with the Turriff Group, the Scottish utility infrastructure company bought by May Gurney for �12.6m last year following proposals by the Scottish Parliament removing the need for a blanket gas mains replacement programme north of the border in favour of a 'risk assessed approach'.

That saw Scotia activate a break clause in the Turriff contract next April to secure work for its own in-house staff after assessing it only needed to carry out half the work previously thought. He said chairman Baroness Ford is to lobby the Scottish Parliament urging them to rethink the red tape shake-up amid fears jobs among Turriffs' 550 staff could be at risk.

In April Mr Fellowes-Prynne, who became CEO in 2008, told the EDP that the next 12 months would be one of consolidation for the group as it beds in acquisitions including Turriff Group, and vehicle supplier company TransLinc amid ambitious plans to double the group's turnover to �1bn a year as well as increasing its profit margins to more than 5pc.

But Mr Hazelwood, said the problems would not see any change of strategy for the group, which remained focused on providing essential support services to councils and regulated businesses such as water and utility companies.

'It's absolutely beyond our control,' Mr Hazelwood said. 'Clearly we are going to have to do some work re-scaling that business. But we do not give up easily. Willie is with Scotia and our chairman Baroness Ford is keen to talk to members of the Scottish Parliament. Our direction of travel and strategy are absolutely constant.'

John Lawson, an analyst with Investec, said: 'It's a bit of a shock. We feel it's a really steady Eddie type of business with a few issues, but these seem to have magnified in the past few months.'