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Applegreen plc H1 2016 Interim Results Presentation 6 th September - - PowerPoint PPT Presentation
Applegreen plc H1 2016 Interim Results Presentation 6 th September - - PowerPoint PPT Presentation
Applegreen plc H1 2016 Interim Results Presentation 6 th September 2016 Private and Confidential Disclaimer This document, which is personal to the recipient and has been issued by Applegreen plc (the Company), comprises written
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This document, which is personal to the recipient and has been issued by Applegreen plc (the “Company”), comprises written materials/slides for an investor
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the Company. Nothing contained herein shall form the basis of any contract or commitment whatsoever. No reliance may be placed for any purposes whatsoever on the information contained in this document or on its completeness. No representation or warranty, express or implied, is given by or on behalf of the Company or any of its directors, officers or employees, any of its advisers or any other person as to the accuracy or completeness of the information or opinions contained in this document and no responsibility or liability whatsoever is accepted by the Company or any of its members, directors, officers or employees, any of its advisers nor any other person for any loss howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connection therewith. The Company is under no obligation to update or keep current the information contained in this presentation, to correct any inaccuracies which may become apparent, or to announce publicly the result of any revision to the statements made herein except to the extent they would be required to do so under applicable law or regulation, and any opinions expressed herein, in any related materials or given at the presentation are subject to change without notice. Any dealing or encouraging others to deal on the basis of such information may amount to insider dealing under the Criminal Justice Act 1993 and/or market abuse under FSMA and/or insider dealing or market abuse under the Market Abuse (Directive 2003/6/EC) Regulations and the Companies Act 2014, each of Ireland and the EU Market Abuse Regulation (596/2014). The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. This document is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident in any jurisdiction where such distribution or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. Certain information contained herein constitutes "forward-looking statements", which can be identified by the use of forward-looking terminology such as “anticipates”, “believes”, “estimates”, “expects”, “intends”, “may”, “plans”, “projects”, “should” or “will”, or, in each case, their negative or other variations
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and liquidity, prospects, growth, strategies and expectations and the development of the markets and the industry in which the Company operates may differ materially from those described in, or suggested by, the forward-looking statements contained in this document. No statement in this document is intended to be or may be construed as a profit forecast. A number of factors could cause results and developments of the Company to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, industry trends, competition, changes in regulation, currency fluctuations, changes in its business strategy, political and economic uncertainty and other factors. The Company does not undertake to update or supplement any forward looking statement in this document. By attending the presentation and/or accepting this document you agree to be bound by the foregoing limitations and conditions and, in particular, will be taken to have represented, warranted and undertaken that: (a) you are a relevant person or qualified investor or if you are located in or registered in the United States, a QIB (as defined above) and that you are not based in a jurisdiction where possession or distribution of this document contravenes any securities legislation or any other applicable laws; (b) you have read and agree to comply with the contents of this notice including, without limitation, the
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Disclaimer
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Introduction & Highlights Development Review Financial Review Outlook Q&A
Agenda 1 2 3 4 5
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Introduction & Highlights
1
5 €7.5m €11.3m €13.0m €0.0 €2.0 €4.0 €6.0 €8.0 €10.0 €12.0 €14.0 H1 2014 H1 2015 H1 2016 Millions
20% increase in gross profit on H1 2015 (22% in constant currency)
Adjusted EBITDA1 increased 15% from €11.3m in H1 2015 to €13.0m in H1 2016, adjusting for FX gains and losses growth was 24%
Key factors:
- Continued expansion of the estate
- Strong LFL performance in Ireland
- Softer consumer demand in UK in H1
Further expansion in estate which has grown from 200 sites at 31 Dec 2015 to 220 at 30 Jun 2016
Continued investment in the development of the network with net capex of €31.4m in H1 2016 (H1 2015 €27.8m)
New franchise relationships developed with Freshii and 7-Eleven and 17 new food outlets opened
Net debt position at 30 Jun 2016 of €24m
Highlights
(1) EBITDA is defined as earnings before interest, tax, depreciation, amortisation and impairment charges. Adjusted EBITDA refers to normalised trading EBITDA, being EBITDA adjusted for share based payments & non-recurring items
- Adj. EBITDA Growth
Site Growth
70 77 78 54 60 65 18 25 29 8 33 42 2 5 6 50 100 150 200 250 Dec-14 Dec-15 Jun-16 Republic of Ireland PFS UK PFS Service Areas Dealer USA 152 200 220
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Applegreen
Distinctive convenience retail offering in the forecourt sector
“Low Fuel Prices Always” price promise “Low Fuel Prices Always” price promise “Better Value Always” tailored retail offer “Better Value Always” tailored retail offer Food and beverage focus
- mix of own and
international brands
- tailored to suit location,
time of day and customer types
Food and beverage focus
- mix of own and
international brands
- tailored to suit location,
time of day and customer types
49 16 10 6 9 3
Number of Food Offers at 30 June 2016
1
7
Developments Review
2
8
Service Areas
Service Area Sites fulfil at least 2 of the following 3 criteria:
Located on a motorway or trunk road
A seating area of at least 400 sq. ft.
More than one food offering
Service Area Sites
Overview
Birdhill, M7 Paulstown Motorway Service Area/M9
Other Service Areas Motorway service Areas (MSA’s)
High end stores with attractive ambiance
Café environment with 1-3 food and beverage offerings – Subway, Burger King, Chopstix
Typically brown / green field developments
On motorway with large facilities and extensive parking
At least 3 food and beverage offerings – Own brand (Bakewell & aCafé), Costa Coffee, Burger King, Subway, Greggs, Chopstix and Lavazza.
Freshii added in 2016
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Service Area Developments
Four service areas in UK including two MSAs both in Northern Ireland
Award winning Lisburn site opened in March on M1 heading south of Belfast
Ballymena service area opened in January
Currently on site on MSA on M1 heading North towards Belfast, scheduled to open Q1 2017
Satisfactory development of pipeline in mainland GB of both MSAs and Other Service Areas
25 service areas in ROI including 9 MSA’s, 6 under 25 year licence from Republic of Ireland government
Opened Wicklow Service Area (M11) and Birdhill (M7) in 2014 as first company owned MSAs
Latest MSA opened at Paulstown (M9) in December 2015
Two new service areas opened in ROI during H1 2016,
- ne additional service area opened since
Good pipeline of service areas in planning process Republic of Ireland UK
€5.2m €5.1m €7.0m €5.8m €0.0 €1.0 €2.0 €3.0 €4.0 €5.0 €6.0 €7.0 €8.0 H1 2015 H1 2016 Millions
Cap Ex - Service Areas
ROI UK 10 11 15 18 5 10 15 20 25 30 35 Dec-15 Jun-16
Site Numbers - Service Areas
Motorway Service Areas Other Service Areas 29 25
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M1 Lisburn – NACS Convenience Retailer of the Year Award
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Traditional forecourt and store offer
Food to go either own brand / Subway
Relevant retail proposition built to reflect local demographic
Value offer in store built on own brand and promotion
Further rebrand / facility development opportunities
Petrol Filling Stations
Republic of Ireland
Ballinteer (ROI)
Tight retail proposition with focus on relevant product offer
- Limited grocery
- Alcohol a significant feature
Continuing rollout of food offer (mainly Subway / Greggs) delivering strong incremental contribution
Ongoing rebrand / facility development opportunities UK
Plainview (US) Ipswich (UK)
U.S.
6 forecourts in Long Island including 1 added in H1 2016
Contract signed with Cross America Partners to lease 9 sites in Massachusetts
Four of these have been taken over since 30 June
Franchise relationship signed with 7-Eleven, development underway on one Long Island site, due to open in October
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Three new PFS sites in ROI in H1 2016, one existing PFS converted to Service Area
Healthy pipeline for the remainder of 2016
69% of estate in ROI now branded Applegreen
Five rebrands completed during H1
Petrol Filling Station Developments and rebrands
Republic of Ireland
Five new PFS sites in UK in H1 2016
Seven new sites since 30 June 2016, strong pipeline
34% of the UK estate now branded Applegreen
Four rebrands completed during H1 UK
17 22 43 43 10 20 30 40 50 60 70 Dec-15 Jun-16
Site Brands - UK PFS
Other Applegreen
65 60
€0.7m €6.4m €0.7m €2.6m €0.0 €1.0 €2.0 €3.0 €4.0 €5.0 €6.0 €7.0 H1 2015 H1 2016
Millions
Cap Ex - ROI PFS
New Sites Rebrands €3.2m €4.2m €0.9m €1.4m €0.0 €1.0 €2.0 €3.0 €4.0 €5.0 H1 2015 H1 2016
Millions
Cap Ex - UK PFS
New Sites Rebrands 50 54 27 24 20 40 60 80 100 Dec-15 Jun-16
Site Brands - ROI PFS
Other Applegreen
78 77
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Typically 5 year fuel supply agreements
Fixed margin per litre to dealer
Applegreen sets pump price
Increases the Applegreen footprint nationwide
Now accounts for 15% of ROI fuel volumes
3 new sites opened since 30 June
Dealer & Fuelcard
Dealer Fuelcard
Targeting commercial customers using greater than 500 litres per month
Most competitive fuel card on the market – no card fees / hidden charges
Online account management tool / Support team
Now accounts for 6% of ROI fuel volumes
Positive and growing earnings. Card extended to UK
33 42 5 10 15 20 25 30 35 40 45 Dec-15 Jun-16
Number of Dealers - ROI
Dealers
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Financial Performance
3
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Profit and Loss Account
20% growth in gross profit leading to 15% growth in adjusted EBITDA (24% before FX gains and losses)
Growth in S&D reflects growth in scale of business plus minimum / living wage rate increases
Finance costs a positive number due to FX gain on Sterling loan
Increase in admin reflects €900k variance yoy on FX gains and losses and also increase in development costs (on potential future developments)
Tax increase driven by increased deferred tax charge
H1 2016 H1 2015 €m €m % Var Revenue 556.0 517.5 7.4% Gross Profit 68.5 56.9 20.4% Selling & Distribution Costs (45.5) (37.7) Administrative Expenses (10.5) (8.3) Other income 0.5 0.4 Adjusted EBITDA 13.0 11.3 15.0% Depreciation & Amortisation (5.7) (3.6) Impairment (0.1) 0.0 Finance Costs, net 0.9 (1.9) Adjusted PBT 8.1 5.8 39.7% Tax (1.0) (0.3) Adjusted PAT 7.1 5.5 29.1% Adjusted EBITDA 13.0 11.3 15.0% Share Based Payments (0.5) (2.2) Non-recurring charges 0.0 (0.6) Reported EBITDA 12.5 8.5 47.1% H1 2016 Results
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Revenue and Gross Profit Analysis
Total gross profit of €68.5m reflecting growth of 20.4% from prior year
LFL gross profit growth at constant currency of 5.5%
Strong growth in food gross profit at 31.0% and continued strong LFL performance
Food GP % impacted by scheduled increase in % charged by Irish Transport authority
- n revenues in their six MSA sites.
Excluding that, LFL constant currency increase in food GP was 14.3%
Store revenue growth reflects strong LFL growth in ROI
Fuel gross profit increased by 3.5% on a LFL constant currency basis
L4L Growth Jun-16 Jun-15 @ const curr. €m €m Growth % % Fuel Revenue 442.2 423.5 4.4% (10.5%) Food Revenue 40.1 30.2 32.6% 13.4% Store Revenue 73.7 63.8 15.5% 2.6% Total Revenue 556.0 517.5 7.4% (7.5%) Fuel Gross Profit 24.5 21.1 16.1% 3.5% Food Gross Profit 22.0 16.8 31.0% 10.8% Store Gross Profit 22.0 19.0 15.8% 3.2% Total Gross Profit 68.5 56.9 20.4% 5.5%
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31% 31% 36% 37% 33% 32% 10 20 30 40 50 60 H1 2015 H1 2016 Store Food Fuel €40.8m €49.1m
Geographical Revenue and Gross profit mix
UK as a region accounts for 27% of total gross margin for the period
Continued evolution of mix of gross profit
Food accounts for 32% of gross profit
- 37% in ROI up from 36% in H1 2015
- 22% in the UK compared to 13% in H1
2015
Gross Profit Mix - ROI Gross Profit Mix - UK H1 2016 Revenue and Gross Profit by geography
60% 72% 39% 27% 1% 1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Revenue Gross Profit US UK Ireland 53% 47% 13% 22% 34% 31% 2 4 6 8 10 12 14 16 18 20 H1 2015 H1 2016 Store Food Fuel €15.6m €18.4m
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Gross profit- Fuel
Continued volatility in oil prices creates challenges but net impact on margins is limited
Oil price changes passed through to consumer
Relative UK and ROI LFL gross profit performance explained by:
- Weak 2015 comparison in ROI
- Pricing position of UK supermarkets in Q1 2016
No major changes in competitive fuel environment in UK or Ireland Ireland 20.6% 6.9% UK 4.9% (1.1%) Total 16.1% 3.5% Gross Profit Growth % Gross Profit L4L Growth @ const.
- curr. %
€12.6m €8.2m €15.2m €8.6m €0.0 €2.0 €4.0 €6.0 €8.0 €10.0 €12.0 €14.0 €16.0 IRL UK Millions
Fuel Margin
H1 2015 H1 2016
19 H1 2016 H1 2015 €m €m Profit Before Tax 7.5 3.0 Non - cash Adjustments 5.7 7.6 Working Capital Movement 3.7 14.6 Taxes Paid (0.7) (1.4) Cash flows from Operating Activities 16.2 23.8 Capital Expenditure (34.0) (29.6) Proceeds from the issue of Shares 0.6 69.3 Capital Contributions / Option Proceeds Long-Term Borrowings (1.6) 9.6 Net Finance Leasing (0.6) (0.5) Net Interest Paid (1.0) (1.6) Redemption of Share Capital 0.0 (1.9) Cash Flows from Financing Activities (2.6) 74.9 Net increase in cash and cash equivalents (20.3) 69.1 Opening Cash & Cash Equivalents 47.2 12.3 Exchange Gains/(losses) (2.2) 0.2 Closing Cash & Cash Equivalents 24.7 81.6 Cash Conversion 129% 229%
Cashflow Summary
Continued strong cash conversion
- f 129%, lower than comparative
period due to impact of fuel price rise in H1 2015
Growth in negative working capital reflects volume growth driven by expansion
(1)
(1) Cash Conversion is calculated using Adjusted EBITDA, Adjusted EBITDA refers to normalised trading EBITDA, being EBITDA adjusted for share based payments & non-recurring items
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Balance Sheet Summary
Capital Expenditure Analysis
Net debt position of €24.0m at 30 Jun 2016
30-Jun-16 31-Dec-15 €m €m Non-Current Assets 205.8 187.1 Current Assets 45.7 39.5 Current Liabilities 114.5 113.3 Working Capital (68.8) (73.8) Cash and Cash Equivalents 25.6 49.3 Total Debt 49.6 54.0 Non Current Liabilities 10.2 10.3 Net Assets 102.8 98.3 Share Capital & Share Premium 144.3 143.3 Capital Reserves (65.4) (65.4) Retained Earnings 23.9 20.4 Equity 102.8 98.3 H1 2016 H1 2015 €m €m Service Areas 10.9 12.2 PFS 10.6 3.9 Rebrands 4.1 1.7 Dealer 0.9 0.7 USA 0.3 1.8 Development sites 0.0 5.7 Other 4.6 1.8 Total 31.4 27.8
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Outlook
4
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Outlook
Upgrades / Rebrands
9 rebrands/upgrades completed in H1 2016 and a further 6 completed since 30 June
Programme ongoing PFS Network expansion
8 sites added across ROI and UK in H1 2016
7 further sites opened in the UK since 30 June, good pipeline for the rest of 2016 in both regions
US estate expanded by 1 during H1 2016 with four additional sites since period end Service Area development
4 additional service areas in H1 2016 (2 UK, 2 ROI)
1 additional Service Area in ROI trading since 30 June, further sites being developed
A number of UK Service Areas in the planning process Trading has been strong in July and August particularly in the Irish Service Areas and volumes in the UK were positive in the aftermath of the Brexit vote. Apart from the impact of the sterling weakness on our UK earnings we expect our 2016 financial performance to be in line with expectations.
1 2 3
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Appendices
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Key elements of customer proposition
Applegreen Customer Proposition
“Low Fuel Prices Always” price promise “Low Fuel Prices Always” price promise “Better Value Always” in store “Better Value Always” in store Food and beverage offering is high quality Food and beverage offering is high quality Entrepreneurial culture Entrepreneurial culture ‘Giving back’ embedded in company culture Charitable fund – circa €1m in 5 years ‘Giving back’ embedded in company culture Charitable fund – circa €1m in 5 years
Branding strategy
25
International brands complement Applegreen’s own offer
Food & Beverage
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Warehouse near Dublin: 60,000 sq ft with 10,000 sq ft Chilled/Frozen Area
Fully integrated IT systems with voice picking & automatic order generation by sites
Tri temperature trucks – Ambient, Chilled and Frozen combined
Single delivery for sites for majority of product in Republic of Ireland
Facilitates own brand products – 136 stock keeping units
- Ambient - water; motor accessories
- Chilled milk; chilled foods
- Sandwiches; Food to go
Enables delivery of value to consumer and enhanced margin for company
Greater control and flexibility for retail proposition
Irish Retail Supply chain
Distribution Centre
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Ireland locations – Company Owned Sites
Applegreen estate
Site Numbers at 30th June 2016
28
GB locations
Applegreen estate
Site Numbers at 30th June 2016
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Howard Millar Independent Non-Executive Director Martin Southgate Independent Non-Executive Director Danny Kitchen Independent Non-Executive Chairman Eugene Moore Developments Director Michael O’Loughlin Managing Director UK Paul Lynch Chief Financial Officer Bob Etchingham Chief Executive Officer
Management Board Members
Chairman of Hibernia REIT plc
Non-Executive Chairman of Workspace Group plc and Non-Executive Director of LXB Retail Properties plc
Previously Finance Director of Green Property plc and Government appointed chairman of Irish Nationwide Building Society
Founded the business in 1992
30+ years in fuel industry
Strategic vision on Applegreen’s position in the forecourt sector
Led aggressive growth in footprint capitalising
- n opportunities presented by the downturn
Joined the business in its 2nd year of
- peration
Co-owner with Bob Etchingham
Background in retail and fmcg
Key responsibility for management and development of retail proposition
Delivered strong partnerships with international food brands
A chartered accountant with extensive corporate finance and management experience across a number of sectors
Served as a Director of an Irish plc for 5 years
Worked with Applegreen on the delivery of their refinance in 2013 and joined as Finance Director in July 2014
Having led the Irish operations moved to the UK in 2008 to lead the development in that market
Opened 64th site in June 2016
Highly regarded in UK forecourt sector
Former Managing Director of JTI UK & Ireland (Global tobacco company – B&H, Silk Cut, Camel etc.)
Director of Gallaher Pensions Ltd
London Philharmonic Concert Orchestra – Advisory Council Member
Wide ranging general management experience
Deputy Chief Executive and CFO of Ryanair until he stepped down from that post in December 2014
Non executive director of Ryanair as well as Irelandia (Ryan family investment company)
Senior partner in Phelan Prescott & Company, a long established Dublin accounting firm
Director of Get Cover & Company and QYouTV International
Founding Director of The Little Museum of Dublin
Chartered Accountant (Fellow of Chartered Accountants Ireland)
Joined Applegreen in 2011 having previously served as a Director of Bennett Construction.
Also served as a non executive director of the National Roads Authority
Leads development activity for Applegreen with responsibility for the in-house construction team responsible for recently
- pened MSAs and TRSAs
Key management and board members
Joe Barrett Chief Operating Officer Brian Geraghty Independent Non-Executive Director
Proven management team supported by a highly experienced board