Exclusive: Gilder moves up a gear as it goes on the acquisition trail

The Audi and Volkswagen trader, which bought an East Midlands motor trader earlier this year, is also interested in making more acquisitions and said it can quickly convert assets to cash if necessary.

Gilder grew on a like-for-like basis last year as the car market began to recover from the turmoil which accompanied Britain’s plunge into recession in 2008, although the slow pace of house sales means the firm is waiting on its development plans in South Yorkshire.

It saw turnover from continuing operations rise to £176.31m in 2010, up nearly a sixth from £154.35m in 2009. Operating profit dipped slightly to £2.62m, compared to £2.77m the previous year, after re-stating its cost of sales for 2009.

Finance director Peter Williams said: “The robustness of the market continues to be surprising. That may be because we sell very good brands. If we were selling Peugeots and Fords I might feel differently.

“We were very happy with the results... It is a bit difficult on the Volkswagen side but the Audi is going from strength to strength.”

He said the new car market had strengthened from a poor position and he had more confidence in it than he had previously.

“Audi is doing exceptionally well... The only restriction is supplying the product in time. The order times are quite long. We are suffering a bit of that from Volkswagen (as well).

“If we had a ready supply of vehicles then we would be more comfortable but Volkswagen is still an excellent brand.”

Mr Williams said the used car market is “more difficult” but refused to pin the blame on the Government’s steep spending cuts, saying no single factor could explain the constraints on consumer spending.

Gilder’s pre-tax profit for 2010 was £1.97m, down from £4.77m, but the 2009 figure was heavily inflated by the sale of Audi dealerships in Hull and York and a sale-and-leaseback on the group’s Bochum Parkway base in south Sheffield. The group‘s ambitious plans to move into the food market and redevelop land for houses – revealed in the Yorkshire Post last year – have been hit by the chill in the property market.

It has won planning permission to build an upmarket food hall, bar, restaurant and 14 homes on Ecclesall Road, Sheffield, and also for an 80-house scheme on the site of its Volkswagen dealership in Middlewood Road in the Hillsborough area of the city.

Mr Williams said they were “looking at all the options” for the Ecclesall Road site and the cash flow produced by a development but he expected the smaller number of houses to “progress”.

When asked about the plans for the Hillsborough site he said, however: “We are much cooler on that. We have invested in that site and its showroom... We are not in a rush to shut it down and build houses. There is not much moving on the housing market.”

Gilder, entirely owned by Garry Scotting after a buyout in 2002, could however purchase more dealerships. It snapped up Heron Newark’s two Volkswagen sites early in January and Mr Williams said they will continue to look at opportunities to buy within two hours’ travelling time from Sheffield. They are also able to realise some of their assets, if needed, having cleared all their debt apart from one small mortgage.

“We are quite open to acquisitions – if the right thing comes across geographically we will look at it but we are not talking to our neighbours (and) saying, ‘are you looking to sell’?

“We have got the ability to have finance available. We have got almost zero gearing across the group and we own a lot of property so we have the ability to invest if the opportunity arises. We don’t have a pile of cash (however).”

Mr Scotting has previously spoken about the importance of not making acquisitions purely for quick growth.

“We don’t just want anything if it is cheap – we are interested in quality brands of two or three sites that gives us an opportunity.”

The directors’ report for 2010 states: “The success of the businesses is reliant on consumer confidence.

“Whilst the economic downturn had a significant impact on our performance in 2009, various government sponsored stimuli such as VAT reduction and the car scrappage scheme along with stronger used car values have resulted in improved performance during 2010.”

First on the Beetle drive

Gilder Group was one of the first two VW dealers in the UK after Major Jack Gilder found and repaired a Beetle in Germany during World War Two.

It has nine sites today around the region, including in Sheffield, Rotherham, Doncaster, Chesterfield and Newark. The group is owned entirely by Garry Scotting, the managing director, after a buyout in 2002.

Last year it switched its banker from Nat West to Lloyds Banking Group. Mr Scotting has previously spoken about having to “fend off” Nat West parent company the Royal Bank of Scotland while the business was under pressure during the 2008 motor industry slump.