GAP Group, the Glasgow-based plant and tool hire company, has achieved a 61 per cent hike in annual profits to a record £13.5 million on the back of a surge in turnover through the £100 million mark.
The family company is now planning a major expansion in central London, with the opening of a dozen depots from which it expects to derive annual turnover of about £25 million within five years.
Gap Group, which is providing temporary fencing for Commonwealth Games venues and the athletes' village and 38 miles of crowd-control barriers for road events, was aided by better economic conditions in the year to March 31.
Loading article content
It also reaped the benefits of diversification of its product range, with a strong performance from standalone divisions which hire out lifting kit and "non-mechanical" equipment including safety fencing and crowd-control barriers. These non-mechanical and lifting divisions, created in 2010 and 2011 respectively, together contributed about 20 per cent of profits in the year to March 31.
Gap Group joint managing director Douglas Anderson also cited the benefits of economies of scale.
The 61 per cent leap in profits at Gap Group, which is chaired by former Britannic Asset Management chief executive Danny O'Neil, was achieved on a 21 per cent rise in turnover to a fresh record of £118.4 million. The 12 months to March was the first year in which Gap Group's turnover has topped £100 million.
Asked about the reasons for the jump in profits. Mr Anderson replied: "It is a bit of everything. There is no golden bullet. Once you reach a level and your costs are covered, if you can do more revenue and keep your costs under control, a huge proportion of it drops to the bottom line."
Gap Group is aiming for further double-digit-percentage growth in turnover and profits in the current financial year. It has embarked on further diversification, setting up divisions specialising in survey and safety kit, welfare services, including the hire of portable toilets, and the supply of equipment for events.
The company, in which Douglas and his brother Iain Anderson each have a 40 per cent stake, increased its workforce from 995 to 1102 in the year to March 31.
Douglas Anderson, who estimates that Gap Group is the fifth-largest player in its sector in the UK with a market share of about four per cent, noted the workforce had since climbed to nearly 1200, and he expects it to continue to expand.
Mr Anderson said: "It is going to grow by anywhere between 100 and 150-a-year."
Spelling out Gap Group's ambitions to expand in the UK capital, which will be supported by its sponsorship of rugby club London Irish, he declared: "We are going to have a serious push over the next 18 months to open another dozen, predominantly tool-hire depots in central London and give London a bit of a fright. There is just so much happening down there - so much business."
While noting Gap Group had depots around London, and had a footprint extending as far as Portsmouth and Bournemouth on the south coast, Mr Anderson said it had only two depots in central London at the moment, at Kentish Town and Tower Bridge.
Flagging the scale of the opportunities in central London, he added: "If we get those dozen depots up and running, in four or five years that should be turning over £25 million."
Mr O'Neil said the majority of Gap Group's business was derived from the public sector, utilities and water companies. However, he also acknowledged a boost from the recent rise in housebuilding and other private sector construction activity.
Gap Group's previous record pre-tax profit had been £8.8 million, achieved in the year to March 2008.
The company stayed in the black throughout the downturn, although its pre-tax profits fell to about £200,000 in the year to March 2010.
In his statement on Gap Group's latest accounts, Mr O'Neil notes the number of trading premises from which the company operates has increased to more than 90, from 67 a year ago.
Mr O'Neil said: "The year to 31 March 2014 has seen a much stronger economic environment than has been the case for the last five years, albeit there are still many uncertainties as witnessed by the continuation of 0.5 per cent base rates. The UK constructon sector was one of the hardest hit by the recession and it is therefore reassuring to see it emerge from the doldrums."
About 300 of Gap Group's workforce are based in Scotland, around 120 of them at the company's head office.
Gap Group was founded by Douglas and Iain Anderson's father, Gordon Anderson, in 1969. The brothers have been running the business since 1988.
Douglas's son, Mark Anderson, works for the business as commercial director. Karen Smith, daughter of Douglas and Iain's sister, Maureen, is a division director in the lifting equipment operation.
Maureen Smith owns about 20 per cent of Gap Group.