Final Results

Applegreen plc

Preliminary Statement of Results for the year ended 31 December 2016

Dublin, London, 14 March 2017: Applegreen plc ('Applegreen' or 'the Group'), a major petrol forecourt retailer in the Republic of Ireland with growing operations in the United Kingdom and the United States, announces its preliminary results for the year ended 31 December 2016.

Financial highlights:

· 16% increase in gross profit on FY 2016 (20% in constant currency)

· Adjusted EBITDA increased by 11% from €28.9m in FY 2015 to €32.0m in FY 2016 (14% on a constant currency basis)

· Like for like growth in non-fuel gross profit (food and store) at constant currency of 9%

· Revenue up 9% to €1,178m

· Net debt position at 31 December 2016 of €19.4m

· Maiden final dividend proposed of 1.25 cent per share

Operational highlights:

· Grew estate to 243 sites as at 31 December 2016 (2015: 200)

· Continued investment in the development of the network with capex for the year of €60.3m

· Opened 32 new food outlets including the launch of a new food offering - Freshii

· Site expansion with Cross America and 7-Eleven franchise underpinning USA development

· Continued like for like growth in food across the estate

· Strong consumer sentiment in Ireland while UK volumes positive in H2

· Announced the proposed acquisition of 50% of the Joint Fuels Terminal in Dublin port

Key figures: 

 1. Adjusted for share based payments and non-recurring charges. Refer to glossary of terms for further information.

Commenting on the results, Bob Etchingham, CEO said: "We are pleased to report another strong set of results for the business. Our food and store sales were particularly strong in the Republic of Ireland during the year while the UK had a good performance in the second six months. Fuel margin was impacted by the rising oil price and in Ireland by the rising proportion of fuel card of the total fuel volume. The UK's decision to exit the EU has resulted in a weaker sterling which has impacted on the consolidated euro results for the company. To date this decision has had no further impact on the business."

"The business maintained its rate of expansion during 2016 growing the network by 28 company owned sites and 15 dealer sites. Apart from dealer sites, the main area of network expansion has been the UK with fifteen additional sites including two service areas, one Motorway Service Area ('MSA') and one Trunk Road Service Area ('TRSA'). In addition, two Petrol Filling Stations ('PFSs') were upgraded to TRSAs. In Ireland, eight sites were added comprising three TRSAs and five PFSs while one PFS was disposed of and one PFS was upgraded to a TRSA. In the USA, an additional site was added in Long Island while five sites were taken over in New England as part of a nine site deal with CrossAmerica Partners. We also added Freshii and, in the USA, 7-Eleven as franchise partners during the year further enhancing our retail and food to go offer."

"We are delighted that the quality of our sites has received strong industry recognition during the year earning several awards including the prestigious NACS Insight 2016 International Convenience Retailer of the Year Award for our Lisburn site on the M1 south of Belfast." 

"We are pleased to announce the introduction of a maiden dividend of 1.25c per share subject to approval at our AGM. We committed to a prudent dividend policy at the time of our IPO and our financial performance since then warrants this move to deliver further shareholder value."

"We continue to see opportunities for growth across our markets and have added 12 sites since the start of the year. Our core Irish market is delivering good growth in non-fuel sales in particular while fuel margin experience has been in line with 2016. The UK has also begun the year positively and whilst mindful of the uncertainties created by the Brexit process we expect to continue to grow our operations during the year."

About Applegreen

Established in 1992, Applegreen is a major petrol forecourt retailer in the Republic of Ireland with a significant and growing presence in the United Kingdom, and an evolving presence in the USA. As at 31 December 2016, the business employed c. 3,400 people, and operated 243 forecourt sites across the UK, Ireland and the USA.

Applegreen is the number one Motorway Service Area operator in the Republic of Ireland while occupying a leading position in the Irish petrol forecourt sector. The Group offers a distinctive convenience retail offering in the forecourt space with three key elements:

· A "low fuel prices, always" price promise to drive footfall to the stores

· A "Better Value Always" tailored retail offer, and

· A strong food and beverage focus aiming to offer premium products and service to the customer.

Applegreen has a number of strategic partnerships with international brands including Burger King, Subway, Costa Coffee, Greggs, Lavazza, Chopstix, Freshii and 7-Eleven. The business also has its own food offer through the aCafé and Bakewell café brands.

Applegreen's growth strategy is focused on acquiring and developing new sites in the markets in which it operates and on upgrading and rebranding existing sites.

Conference call details - analysts and institutional investors

Applegreen plc will host a conference call for analysts and institutional investors today, 14 March, 2017 at 08.30 GMT. Presentation will be available on www.applegreenstores.com. Dial in details are as follows:

Ireland Telephone Number: +353 (0)1 2465621

UK Telephone Number: + 44 (0)330 336 9411

Passcode: 9487979

For further enquiries, please contact:

Applegreen

Bob Etchingham, CEO / Paul Lynch CFO +353 (0) 1 512 4800

Drury Porter Novelli:

Paddy Hughes +353 (0) 1 260 5000

Shore Capital

Stephane Auton +44 (0) 20 7408 4090

Patrick Castle

Goodbody

Joe Gill +353 (0) 1 667 0420

Siobhan Wall

Applegreen FY 2016 Performance Overview and Outlook

2016 was another successful year of growth for the Group driven by strong like for like growth in food and store and additional contribution from new sites across the Group's portfolio.

Our upgrade and rebranding activity, together with an improving economic backdrop, saw like for like food and store sales grow by 7.1% on a constant currency basis, with related gross profit up by 8.9%.

The increasing proportion of fuel cards of total fuel volume together with increasing oil prices throughout the period had a negative impact on fuel margin in Ireland although the fuel card volume would have been positive for the strong non-fuel sales.

During the period we expanded our portfolio with 43 new sites, including 22 in the ROI, 15 in the UK and six in the USA. 28 of these were company owned sites, including five Service Areas and 23 petrol filling stations and 15 were dealer sites. The dealer business provides fuel to independent operators. The canopy and pumps on these dealer locations are branded Applegreen while the non-fuel revenue remains under the control of the operator of the site.

We continued our rebranding and upgrade programme with 19 sites completed in 2016, adding one or more new food outlets at each site. We also expanded our range of food outlets by 32 introducing a new food offer - Freshii as well as launching the 7-Eleven franchise in the USA. This added to our existing portfolio of own brands and international brands including Subway, Costa Coffee, Burger King, Lavazza, Chopstix and Greggs.

Republic of Ireland

In the twelve months to 31 December 2016, revenue in the Republic of Ireland increased by 11.4% and gross profit increased by 15.0%. Like for like food and store sales increased year on year by 9.3% and related gross profit grew by 10.2%. Total fuel gross profit increased by 8.0% compared to 2015 but on a like for like basis declined by 4.8%. This reflected the impact of the rising oil price throughout the year as well as the growth of fuel card volume, which has a lower margin than retail fuel. The rise in fuel card volume did help drive the strong non-fuel performance.

During the year, we expanded our Republic of Ireland estate by 22 including 15 dealer sites.

We opened four new TRSAs including the upgrade of an existing PFS in Birr, Co. Offaly. The other TRSAs were in Meath, Louth and Tullamore, Co. Offaly. We added 5 petrol filling stations, two in Dublin with the remainder in the southern half of the country.

The addition of 15 new dealer sites during the period brings our total dealer portfolio to 48 by the end of the year. The dealer business now accounts for 16% of the total ROI fuel volumes.

During the year, 11 sites were rebranded and upgraded incorporating at least one new food offer in all cases. 70% of the ROI Company owned estate is now branded Applegreen.

Our fuel card volumes more than doubled and now account for 7% of ROI fuel volumes.

At the beginning of 2017, we entered into a conditional agreement to acquire a 50% share in the Joint Fuels Terminal in Dublin port from the Topaz Energy Group for a consideration of €15.7m. The acquisition is subject to the satisfaction of a number of conditions including the approval of the Competition and Consumer Protection Commission and is expected to complete in Q2 2017. This transaction should enhance the competitiveness of our supply and provide further scope for the development of our Irish fuel business.

United Kingdom

Revenue increased by 17.1% and gross profit by 28.8% on a constant currency basis largely due to the continued expansion of the UK estate. Combined food and store sales and gross profit rose year on year on a constant currency basis by 32.9% and 42.1% respectively. On a like for like constant currency basis non-fuel sales were flat while related gross profit grew by 3.9% reflecting strong growth in food and better margins in store.

Like for like (constant currency) fuel gross profit for the year was down 0.6% (-1.1% in H1) reflecting an improving competitive environment in the second half of the year.

There was a strong focus by the Group on expansion within the United Kingdom in 2016 with a total capex spend of €26.0m.

Four new Service Area sites were opened in the UK including a new MSA heading south of Belfast, a new TRSA in Ballymena Northern Ireland and the conversion of two of our existing PFSs to TRSAs. We were very pleased that our Lisburn forecourt, on the M1 South of Belfast, was awarded the prestigious NACS Insight 2016 International Convenience Retailer of the Year Award.

We are building a good pipeline of TRSAs and MSAs in the UK, which are at various stages of planning.

We have also developed our relationship with Costa Coffee in the UK and opened our first Costa Coffee café as part of a site upgrade to TRSA in December 2016. The second such café opened in February 2017.

13 new PFSs were opened in the UK with a further seven existing stations being rebranded and expanded through the addition of new food offerings. 35% of our UK estate is now branded Applegreen.

USA

During the year the Group added 1 new forecourt in Long Island. We also signed an agreement with CrossAmerica Partners to lease nine sites in the New England area. Five of these sites were taken over in 2016. This now brings the total number of trading forecourts in the USA to 11. In addition, we signed a franchise agreement with 7-Eleven. Our store in Hempstead, Long Island has been redeveloped in 2016 and is now trading as 7-Eleven.

We have confidence that the USA market represents a viable region for further development noting an ample supply of expansion opportunities and an under developed retail model in some regions.

We are continuing to invest in the USA with a capex spend of €1.0m in 2016 and are strengthening the organisational structure in the USA to ensure ongoing support for further growth and expansion.

Costs

Selling and distribution expenses rose by 20.8% year on year. This is broadly in line with the 43 site additions in the year which resulted in a 21.5% increase in total site numbers. Administrative expenses, excluding share based payment expense, non-recurring costs and depreciation, grew by 8.7% reflecting an increase in development spend and increased resource in the UK market in particular.

Dividend

The Board has proposed a maiden final dividend, subject to approval at the Company's AGM, of 1.25 cent per share (€1.0m) which will be paid on 29 June 2017 to shareholders on the register on 9 June 2017.

Outlook

We continue to develop our network in 2017 adding 12 sites in the year to date. In the Republic of Ireland we have opened a new service area in Waterford and added a petrol filling station in Dublin. In the UK we have opened a new MSA in Lisburn heading north to Belfast and have also added three petrol filling stations as well as converting another of our petrol filling stations to a TRSA. In the US we acquired two further sites as well as adding four new dealer sites.

We have a strong pipeline of further developments of both Service Area sites and petrol filling stations across our markets.

We are confident of making further progress during 2017. Our core Irish market is delivering good growth in non-fuel sales in particular while fuel margin experience has been in line with 2016. The UK has also begun the year positively and while aware of the uncertainties created by the Brexit process we expect to continue to experience growth across our operations during the year.

UNAUDITED CONSOLIDATED INCOME STATEMENT

YEAR ENDED 31 DECEMBER 2016

Earnings per share from continuing operations attributable to the owners of the parent company during the year

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 31 DECEMBER 2016

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2016

UNAUDITED Consolidated statement of changes in equity

AS AT 31 DECEMBER 2016

UNAUDITED Consolidated statement of cash flows

YEAR ENDED 31 DECEMBER 2016

Notes to the unaudited consolidated financial information

1. General information and basis of preparation

Applegreen plc ('the Company') is a company incorporated in the Republic of Ireland. The Unaudited Consolidated Financial Information of the Company for the year ended 31 December 2016 (the 'Financial Information') include the Company and its subsidiaries (together referred to as the 'Group'). The company is incorporated and tax resident in Ireland. The address of its registered office is Block 17, Joyce Way, Parkwest, Dublin 12.

The Consolidated Financial Statements of the Group are prepared in accordance with Irish law and International Financial Reporting Standards ('IFRS') and their interpretations issued by the International Accounting Standards Board ('IASB') and adopted by the European Union ('EU'). The financial information in this report has been prepared in accordance with the Group's accounting policies. Full details of the accounting policies adopted by the Group are contained in the Consolidated Financial Statements included in the Group's annual report for the year ended 31 December 2015 which is available on the Group's website; http://applegreenstores.com.

The accounting policies and methods of computation and presentation adopted in the preparation of the Financial Information are consistent with those described and applied in the annual report for the year ended 31 December 2015 except as explained in Note 2 below. There are no new IFRSs or interpretations effective from 01 January 2016 which have had a material effect on the financial information included in this report.

The financial information presented in this report does not represent full statutory accounts. The preliminary release was approved by the Board of Directors. The annual report and accounts will be approved by the Board of Directors and reported on by the auditors in due course. Accordingly, the financial information is unaudited. Full statutory accounts for the year ended 31 December 2015 have been filed with the Irish Registrar of Companies. The audit report on those statutory accounts was unqualified.

The Financial Information is presented in Euro, rounded to the nearest thousand, which is the functional currency of the parent company and also the presentation currency of the Group.

The preparation of the Financial Information requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results could differ materially from these estimates. In preparing the Financial Information, the critical judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2015 as set out on pages 59 to 67 in those financial statements.

Notes to the unaudited consolidated financial information

2. Significant accounting policies

The accounting policies applied in the Financial Information are consistent with those applied in the consolidated financial statements as at and for the year ended 31 December 2015, and are described in those financial statements on pages 59 to 66, except for the impact of the standard described below.

Following a review of the intercompany balances within the Group, a number of loans were identified as an extension of Applegreen plc's net investment in foreign operations. As there was and continues to be no intention for these loans to be repaid in the foreseeable future, these loans were considered quasi equity.

In accordance with IAS 21, foreign exchange gains and losses arising on the retranslation of 'quasi equity' loans are recorded in the Consolidated Statement of Comprehensive Income rather than the Consolidated Income Statement. This has increased the charge in the Consolidated Statement of Comprehensive Income by €3.2m for the year ended 31 December 2016.

3. Segmental analysis

Applegreen plc is a forecourt retail business headquartered in Dublin, Ireland. Operating segments are reported in a manner consistent with internal reporting provided to the Chief Operating Decision Maker (CODM). The CODM has been identified as the Board of Executive Directors.

The board considers the business from both a geographic and product perspective. Geographically, management considers the performance in Ireland, the UK and the USA. From a product perspective, management separately considers retail activities in respect of the sale of fuel, food and other groceries within Ireland and the UK and fuel and other grocery in the USA.

The Group is organised into the following operating segments:

Retail Ireland - Involves the sale of fuel, food and store within the Republic of Ireland.

Retail UK - Involves the sale of fuel, food and store within the United Kingdom.

Retail USA - Involves the sale of fuel and store within the United States of America.

The CODM monitors Revenue and Gross Profit of segments separately in order to allocate resources between segments and to assess performance.

Information regarding the results of each reportable segment is included within this note. Segment performance measures are revenue and gross profit as included in the internal management reports that are reviewed by the executive directors. These measures are used to monitor performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. The CODM also reviews adjusted EBITDA on a consolidated basis. Assets and liabilities are reviewed by the CODM for the Group in its entirety and as such segment information is not provided for these items.

Notes to the unaudited consolidated financial information

3. Segmental analysis (continued)

Reconciliation of profit before income tax to earnings before interest, tax, depreciation and amortisation (EBITDA), share based payments and other non-recurring charges (Adjusted EBITDA)

Notes to the unaudited consolidated financial information

4. Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares which comprise share options issued under the share incentive plan.

Notes to the unaudited consolidated financial information

5. Expenses

Profit before tax is stated after charging/(crediting):

(1) From 01 January 2016, licensee staff have become employees of the Group. As a result their payroll costs have included in employee benefits above.

(2) Included in the charge of €1.4m for share based payments is a charge of €0.5m in respect of share options granted during the year under a new share option scheme.

(3) Non-recurring charges for the year ended 31 December 2015 comprise provision in respect of uncertain payroll tax positions with Revenue authorities and a one off payment made by the Group's principal shareholders to employees subsequent to the Group's IPO.

6. Finance costs and income

* The foreign exchange gains of €1.7m arises primarily in respect of non-Euro denominated debt.

Notes to the unaudited consolidated financial information

7. Taxation

The total tax expense can be reconciled to accounting profit as follows:

8. Intangible assets

Notes to the unaudited consolidated financial information

9. Property, plant and equipment

Assets under construction as at 31 December 2016 includes the following significant projects; five service stations in the Republic of Ireland (€8.4m), two motorway services areas in Northern Ireland (€6.3m) and one service station in the UK (€0.5m). The remaining amounts relate to several other developments across all regions.

Notes to the unaudited consolidated financial information

10. Inventories

The cost of inventories recognised as an expense and included in 'cost of sales' amounted to €1,011m (2015: €941m).

11. Trade and other receivables

Current trade and other receivables are non-interest bearing and are generally less than 30 day credit terms. Non-current debtors relates to loans advanced to our dealer network. The fair values of non-current trade and other receivables is equivalent to their carrying value. The fair value has been determined on the basis of discounted cash flows.

Notes to the unaudited consolidated financial information

12. Cash and cash equivalents

Cash and cash equivalents included in the Consolidated Statement of Financial Position and Consolidated Statement of Cash Flows are analysed as follows:

Cash and cash equivalents include the following for the purposes of the statement of cash flows:

13. Borrowings

In March 2015, the Group entered into new banking arrangements with its senior lenders, Allied Irish Bank plc and Ulster Bank Ireland. These new agreements extend the maturity of the Group's debt and make additional facilities available to the Group.

Notes to the unaudited consolidated financial information

14. Trade and other payables

15. Share capital

850,000 share options with an exercise price of €1.00 were exercised. Share premium of €841,500 was recorded on these shares.

16. Post period end events

Since the year end, the Group has added one new service area, one petrol filling station and four new dealer sites in the Republic of Ireland, one new service area in Northern Ireland, three petrol filling stations in the UK and two in the USA. The Group will continue to pursue new developments to enhance shareholder value, through a combination of organic growth, acquisitions and development opportunities.

The Group also entered into a conditional agreement to acquire a 50% share in the Joint Fuels Terminal in Dublin port from the Topaz Energy Group for a consideration of approximately €15.7m which will be funded from existing resources. The acquisition is subject to the satisfaction of a number of conditions including the approval of the Competition and Consumer Protection Commission.

The Directors have proposed a dividend in respect of the 2016 financial year of 1.25 cent per ordinary share, €1m in total. This dividend has not been provided for in the Group balance sheet as there was no present obligation to pay the dividend at the year end. The final dividend is subject to approval by the Company's shareholders at the Annual General Meeting.

Glossary of financial terms

The key financial terms used by the Group in this report are as follows: