Gap plans expansion as profits soar 170%

Deputy Business Editor

Monday 23 July 2012

GAP Group, the plant and tool hire firm, is planning to open several specialist depots in the next two years after reporting a near 170% rise in pre-tax profit.

DriVINg FORWARD: Douglas Anderson said the company is planning to open up another 20 depots in the coming year. Picture: Steve Cox

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GREIG CAMERON DEPUTY BUSINESS EDITOR

The company will still have its core plant and tool hire business but will accelerate the opening of specialist lifting equipment sites, with 20 more pencilled in by the end of 2013 in a move which will create dozens of jobs.

It also expects to add a small number of non-mechanical outlets, which stock things such as fence panels and crowd control barriers, and is planning a further specialist division, which will focus on surveying equipment hire.Douglas Anderson, joint managing director, is considering opening up other specialist divisions and would consider acquisitions to do so.He said: "If you have done much of what you can in the general market then it is natural to look at specialist areas."One of our competitors decided it would stop doing its specialist lifting service during the recession but the customers didn't like it so it became clear we should be doing something. "We started in January 2011 and wanted to hit it quite hard so we opened a depot in six regions. "By the end of 2011, we had another six, which took us to 12. This year we are opening another 10 and next year it will another 10. "Eventually we will go to be about 34. It is going quite well. We are probably at £3 million turn-over and it should grow over the next five years to £20m. "We have the locations and the brand anyway so it is easier than building up our plant tool depots. 80% of the business in lifting is coming from existing customers so we are pushing at an open door."The non-mechanical division has six outlets at the moment with two more scheduled to be added.Mr Anderson said: "We did non-mechanical hire before but we didn't do it well. We didn't buy, store or repair it well and thought we could do it so much better. "The revenue we are generating is far in excess of what we did previously when it was part of plant and tools and 90% of the business is coming from existing customers."We are looking at a further three specialist divisions which are fairly low cost entry and will be of interest to existing customers."I think we now have a brand which is recognised throughout the country and respected so we can add things on and customers will come with us." Danny O'Neil, chairman, said: "On a five-year basis, we hope we will make half of our profits from non-plant and tools."The ambitious expansion plans come as the Glasgow firm reported a surge in profits and turnover for the 12 months to March 31, 2012.According to accounts being filed at Companies House, turnover increased from £74.3m to £84.5m, while pre-tax profits before exceptional items soared from £2.3m to £6.2m.Capital expenditure also increased from £28m to £37m, while bank borrowings rose from £22.7m to £29.5m although that is still well below the £54.7m reported in 2008.Mr O'Neil said the company has deliberately targeted more exposure to the utility and infrastructure sectors in recent years due to the difficulties in construction.He said: "Over the last two years, we have not increased prices so it has been about making sure the plant is much more heavily utilised."Our market share has gone up. It is not a nice thing but some of the smaller players have gone out of business and we have been a beneficiary of that." Mr Anderson said: "It is not just one thing we have done but it is attacking every single facet and working more intelligently and harder with less people."Employee numbers have increased from 769 to 849, which is close to the pre-financial crisis figure of 875 reported in the 2008 accounts.That pushed up staff costs from £19.4m in 2011 to £21.9m in the most recent financial year. Directors' emoluments declined from £869,000 to £834,000, although the highest paid received an increase from £310,000 to £356,000.An interim dividend of £935,000 was paid during the year.

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Gap plans expansion as profits soar 170%

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