Motorway services and forecourt operator Applegreen has decided to keep its non-core UK hotels business, saying a sale is "not the right thing".
The company said, earlier this year, that it would review the division and assess a number of options regarding its future ownership. Applegreen inherited 31 hotels as part of its 2018 €362m takeover of UK motorway services operator Welcome Break.
The company now plans to retain the hotels and invest in their improvement. It will also either expand or seek alternative usage - such as forecourt drive-thru or truck parking facilities - for 23 of the properties which are co-located with existing motorway services operations.
Applegreen shares surged by nearly 10% on the back of a strong set of financial results for the first half of the year; largely driven by Welcome Break's contribution. Group revenue rose, year-on-year, by 73% to €1.5bn, with gross profit surging to €268m.
Pre-tax profit increased from €9.13m at the halfway point of last year to just over €10.2m.
The company said that its underlying core business also showed strong growth during the first half, with food and fuel margins and volumes performing well. Applegreen's non-fuel gross profit rose 6%, while its fuel gross profits were up 14%.
First half revenue in its three geographies - Ireland, the UK and the US - rose by 14%, 127% and 117% respectively. A total of 46 new sites were acquired in the US during the six months, with 11 added to the portfolio across the UK and Ireland. Applegreen also recently acquired a minority stake in the Connecticut Service Plazas business in the US.
Management said it sees enough future opportunities within its existing geographies to not have to look at new territories at this time and will continue to seek purchases, albeit a small number of larger sites.
"We have a good pipeline of further developments - of both service area sites and petrol filling stations - across our markets," the company said.
Applegreen generates 70% of its profits from just 20% of its sites and in the first half of the year 75% of its gross profit came from non-fuel revenues.
The company said costs of a temporary closure of one of its Dublin forecourts due to a vermin scare is not material and that public safety is the priority. Applegreen also said that it is well prepared for Brexit.
"The underlying Applegreen business continues to grow at a satisfactory rate and, whilst there is currently no certainty around the timing and impact of Brexit, the resilient nature of our business and our 'self help' initiatives should help protect us from potential downsides. We, therefore, remain confident in the prospects for the business for 2019 and beyond," management said.