GAP Group, the Glasgow-based plant and tool hire company, hiked profits by more than one-third in its latest financial year, defying tough market conditions, as turnover surged 14% to a record level of nearly £100 million on market share gains.
The company, in which joint managing directors and brothers Douglas and Iain Anderson each have stakes of about 40%, raised pre-tax profits by about 36% to £8.4 million in the year to March 31, from £6.2m in the prior 12 months.
This rise in profit was achieved on the back of a jump in turnover from £85.4m to £97.6m.
GAP Group is budgeting for pre-tax profits of £9.3m on turnover of £107m for the current financial year to next March, as it builds on its recent move into hire of "non-mechanical" equipment such as temporary fencing and crowd-control barriers, and lifting kit.
Douglas Anderson said: "We are in the fortunate position that we are still growing. Most of our competitors are either declining in scale, or flat-lining, or growing at a much smaller scale than we are. It is much more difficult managing downsizing a company, rather than upsizing it."
In his statement on the latest accounts, chairman Danny O'Neil highlights GAP Group's focus on contracts with utilities and the public sector.
Scottish Water is among the major customers of GAP Group.
Mr O'Neil, who was formerly chief executive of Glasgow investment house Britannic Asset Management (now Ignis), also highlights the fact that GAP Group achieved a record level of turnover in the year to March.
He noted that the profit figure was slightly behind the corresponding figure of £8.8m for the year to March 2008.
However, Mr O'Neil highlighted GAP Group's progress since the year to March 2010, during which turnover fell from £81m to £67.7m and underlying pre-tax profits dropped to about £200,000 from £1.2m.
Mr O'Neil expressed hopes that GAP Group's non-mechanical and lifting divisions, which have their own standalone depots, would deliver about 15% of GAP Group's profits in the current financial year and lead to an improvement in the company's overall margin.
Mr Anderson highlighted plans by GAP to target events business as it continued to diversify its business.
He highlighted the fact that most of the business so far for the non-mechanical and lifting divisions had come from existing customers of GAP Group's plant and tool hire business, which offers kit ranging from saws and dumpers to drills and excavators.
GAP Group now employs about 1030 people, around 325 of them in Scotland.
Mr Anderson said: "It is a reasonable number of people employed in Scotland."
The accounts show that the company's overall workforce had fallen to 769 at March 31, 2011, having been significantly higher ahead of the Great Recession of 2008/09.
The company now operates from about 67 separate locations, with plans for further significant expansion.
Mr Anderson said: "I think we went into the recession in reasonable shape, and we came out the other side in reasonable shape.
"From our peak in 2008 to our trough in 2010, ever since then it has been a steady improvement. We are now well in excess of the pre-recession turnover levels, with a similar number of staff.
"We are growing, and growing faster than pretty much all of our competitors."
He added: "The only way we are doing that in a static market is we are taking market share.
"We are not taking market share on pricing all the time. We are taking it on service, which is pleasing."
Contemplating the overall outlook for GAP Group, which counts construction companies Balfour Beatty and Morrison as major customers, Mr O'Neil said: "We are well placed. We will lose some clients, we will win some clients. I think we will win market share."
Mr Anderson highlighted the strength of the GAP Group brand and the company's presence throughout Great Britain, and declared it was one of only about five players in the sector, which could service national contracts.
And he looked forward to further significant growth in the business.
He said: "It has taken us 25 years to get to £100m turnover. It won't take us another 25 (years) to get to £200m."
Mr Anderson noted the company was growing at 12% to 14% per annum.
Mr O'Neil and Mr Anderson highlighted a move by GAP Group in recent years to reduce the autonomy which had previously been given to salespeople to negotiate contracts, to ensure a focus on profit margins on new business.
Mr O'Neil said the tendering process had been "quite soft" ahead of the financial crisis, but now involved "very intense negotiations" with customers.
Mr Anderson declared that the banking crisis had "to some degree" helped GAP Group, in terms of supporting its business with the construction sector.
He said: "We are providing balance-sheet funding for contractors because, if they don't hire it (equipment), they have got to buy it."
GAP Group was founded by Douglas and Iain Anderson's father, Gordon Anderson, in 1969.
The brothers have been running the business since 1988, and the third-generation of the family is now working for GAP Group.
Douglas's son, Mark Anderson, works for the business as commercial director.
And Karen Smith, daughter of Douglas and Iain's sister, Maureen, is employed as lifting operations manager.
Maureen Smith owns about 20% of GAP Group.
During the year to March 31, GAP Group chose Royal Bank of Scotland as its "banking partner", having been with Clydesdale Bank for decades. Mr O'Neil noted in his chairman's statement that GAP Group chose a three-year, asset-based lending commitment of up to £70m with RBS Invoice Finance, which he said was substantially in excess of GAP Group's current borrowing levels. He highlighted the subdued economic environment and "extremely competitive " sector conditions.
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