Applegreen reviewing newly-acquired hotel operation
Leading forecourt retailer Applegreen, which currently operates six sites in NI, is reviewing its newly-acquired hotel operation in the UK.
2018 was another strong year of growth for the business which was driven by positive contribution from our continued expansion with both current year and prior year acquisitions delivering solid performance. This was supplemented by good levels of like for like growth in both revenue and gross profit.
Applegreen’s service area focus has been given significant momentum in 2018 with the acquisition of a majority stake in Welcome Break which completed on 31 October 2018. Welcome Break is the second largest Motorway Service Area provider on the UK strategic road network. This transformational acquisition gives the company a substantial footprint from which to drive further growth in our business. The Welcome Break estate is comprised of 34 Motorway Service Areas, three Trunk Road Service Areas and incorporates 29 hotels, six of which are stand-alone hotels.
Welcome Break has traded in line with management’s expectations during 2018 and the integration of that business is progressing as planned. They have made a number of management changes and are confident in delivering significant synergies from this acquisition.
The hotel operations are a particular area of focus for Applegreen and there is a strategic review of this business underway currently. They have successfully transferred several Applegreen UK service areas to Welcome Break and there is a strong pipeline of MSA and TRSA opportunities to deliver further expansion.
Commenting on the results of another successful year in 2018, CEO Bob Etchingham said: “We are delighted to announce another strong set of results for Applegreen. The performance was driven by ongoing expansion of our estate, positive like for like growth despite weather related disruption and strong fuel margin performance, particularly in the fourth quarter of the year.
“The acquisition of the second largest UK Motorway Service Area operator, Welcome Break, is transformational for our business. It gives us an excellent platform to develop our Service Area business in the UK market.
“The Applegreen business continued to expand in each of our three markets as we increased our estate by 130 sites to a total of 472 locations. We opened 16 new sites in the Republic of Ireland, 61 in the UK (including 43 acquired Welcome Break sites) and 53 in the US in FY2018.
“Trading conditions remain generally good despite uncertainty caused by macro events. We anticipate another year of robust growth for the business. Our primary focus will be on the integration of Welcome Break and further reducing leverage but we will also continue to evaluate new opportunities to further expand the business in the future.”
In the year ended 31 December 2018, revenue in the Republic of Ireland increased by 11.6 percent and gross profit increased by 12.9 percent.
Total fuel gross profit increased by 17.1 percent compared to 2017 and increased by 9.7 percent on a like for like basis. This reflected the impact of an additional contribution from the Joint Fuel Terminal acquisition in Dublin which was acquired in mid-2017.
Like for like food and store sales and gross profit increased year on year by 3.3 percent and 2.0 percent, respectively, despite the adverse winter weather impact in March and the summer heatwave conditions.
Additionally, dealer and fuel card volumes have continued to grow and now account for 32 percent of RoI fuel volumes on a combined basis.
During the year, Applegreen expanded their Republic of Ireland estate by 16 sites which included three Service Area sites, four Petrol Filling Station sites and nine dealer sites. 89% of the RoI estate is branded Applegreen (2017: 88%). There were a total of 193 sites trading at the end of the year.
Since the year end, the Group has added one new petrol filling station in the Republic of Ireland and one new petrol filling station in the UK. The Group will continue to pursue new developments to enhance shareholder value, through a combination of organic growth, acquisitions and development opportunities.
The Directors have proposed a final dividend in respect of the 2018 financial year of 0.91 cent per ordinary share, €1.1 million in total.