Bottom Line: Dawsongroup's rise

SINCE Dawsongroup, the lorry rental company, skidded off the road in 1990 turnover has grown by a little over 10 per cent.

But such is its exposure to operational gearing that in the same period annual profits have soared from nothing to pounds 7.9m.

The trend continues. In the six months to 30 June profits growth was 42 per cent, outstripping the 13 per cent advance in turnover.

Dawsongroup has won handsome rewards as increased economic activity meant it found more customers for its trucks.

Cautious businessmen prefer to take the short-term rental route rather than encumber their company's balance sheets with expensive hardware paid for out of hard-earned cash flow.

No less important to Dawsongroup's recovery has been the fall in interest rates since 1990. In common with many leasing firms Dawsongroup's debt is high - financial gearing is almost always over 100 per cent.

In four years its interest charges have fallen from nearly pounds 7m to under pounds 5m and interest cover has increased from less than one to 3.5 times.

In the same four years the shares have risen from 50p to 385p. Forecast profits for the full year suggest a market average p/e of 15.5 times.

The best news may well be behind Dawsongroup.