Applegreen, the Irish forecourt fuel supplier, plans to benefit from the “grim” reputation of motorway service stations in Britain as it announced a €70m placing of shares and detailed its expansion plans.
In its first placing of new and existing shares, Applegreen’s co-founders Bob Etchingham and Joe Barrett said they would sell about a quarter of the company to institutions and other investors. They plan to use most of the proceeds form the listings on London’s AIM and Dublin’s Enterprise Securities Market to upgrade existing forecourts and drive their expansion plans.
In time, they hope that acquisitions in Britain will transform the dowdy reputation of existing British motorway service stations which have long attracted criticism from consumer groups there.
But its expansion plans are first focused in Ireland, where it plans to open at least three more service stations in the North, including developing a further site on the northern M2 near Templepatrick in Co Antrim and by opening two further forecourts on the northern sections of the M1/A1 road.
With 12% of the Irish fuel market, Applegreen trails by some margin the market share commanded by rival Topaz. It estimates Topaz will grow its 25% share to 35% when the acquisition of the Esso filling stations is completed. Topaz is waiting for clearance from the Competition and Consumer Protection Commission for that deal.
At the end of last year, Applegreen had a total of 152 sites, including 96 sites in the Republic, one in the North, 53 in Britain and two in Long Island in the US, but has since acquired 13 more sites. Last year it had over €937m in sales and EBITDA earnings of €22.8m. Its net debt stood at €51m.
Expansion is focused in the north and Britain, and the Long Island stations are an early testing of the market and are “not a large part” of its expansion plans, the company said in a briefing yesterday.
Fuel accounts for the bulk of its sales, but its profit margin is boosted significantly by the food outlets it operates at its stations, said Mr Etchingham. It features its own food brand, aCafe, as well as Subway, Costa Coffee, Burger King, Greggs, Chopstix, and Lavazza on the Irish and British forecourts.
Mr Etchingham said the business had demonstrated its ability to grow during the recession. Acquisition plans are based on buying out individual operators, who cannot upgrade to food services, rather than acquiring large portfolios from existing service outlets, he said.
Its sales prospectus says the company offers a “low fuel price always” guarantee, by which the company says it means it won’t be matched for price in any of the local areas it operates.
Mr Etchingham said that the prices Applegreen charged for unleaded petrol at its forecourts in the republic yesterday ranged from the “high €1.30s” to €1.45 a litre.
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