APPLEGREEN PLC 2019 ANNUAL REPORT + FINANCIAL STATEMENTS Applegreen Spalding, UK 2 APPLEGREEN PLC ANNUAL REPORT and FINANCIAL STATEMENTS 2019 3
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APPLEGREEN PLC 2019 ANNUAL REPORT + FINANCIAL STATEMENTS Applegreen Spalding, UK 2 APPLEGREEN PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2019 3 A YEAR OF GROWTH Revenue Non-Fuel Gross Profit €4bn €3.1bn €430.6m €500m €3bn €2.0bn €0.9bn €400m €247.8m €1.4bn €2bn €0.1bn €300m €186.2m €1.1bn €1.2bn €113.6m €2.2bn €200m €92.8m €1.9bn €76.9m €36.6m €1bn €182.8m €100m €149.7m FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 APGN WB APGN WB Adjusted EBITDA Site Numbers (pre-IFRS 16) €140.4m 556 €150.0 600 472 €120.0 45 500 342 43 €90.0 €82.7m 400 €58.1m 243 200 511 €60.0 €39.8m 300 429 €28.9m €32.0m €10.3m 200 €30.0 €47.8m €57.7m 100 €0.0 0 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 APGN WB APGN WB Welcome Break refers to the assets acquired as part of the Welcome Break transaction in 2018 4 APPLEGREEN PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2019 5 OVERVIEW Applegreen plc is a high growth roadside convenience retail business operating in Ireland, the United Kingdom and North America 556 SITES/ Since the company’s foundation in 1992 with We have now established a large Petrol Filling one site in Dublin, we have always aimed to Station (PFS) footprint in the US and our aim 660 QUALITY provide a superior customer experience and is to expand our presence as a recognised value for money. operator of large Service Area sites on strategic Applegreen is the number one Motorway Service road networks in that market. Area (MSA) operator in the Republic of Ireland BRAND OFFERINGS/ and the number two Motorway Service Area Operator in the United Kingdom. MSA sites are strategic infrastructure assets that have high barriers to entry due to long development lead times and government legislation. There will be 11,500+ increased focus on larger service area growth in these regions. EMPLOYEES/ 109 SERVICE AREA SITES/ 2,090 HOTEL BEDROOMS Applegreen Barrington, USA 6 APPLEGREEN PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2019 7 CONTENTS Highlights 03 Overview 04 Strategic Report Our Story 10 Our Locations 16 Our Business Model 22 Chairman’s Statement 28 Chief Executive’s Review 30 Corporate Social Responsibility 46 Sustainability Review 52 Our People and Culture 60 Business Ethics Review 66 Financial Review 70 Corporate Governance Board of Directors 84 Directors’ Report 86 Corporate Governance Statement 96 Audit Committee Report 102 Nomination Committee Report 106 Remuneration Committee Report 110 Statement of Directors’ Responsibilities 116 Financial Statements Independent Auditors’ Report 120 Consolidated Income Statement 129 Consolidated Statement of Comprehensive Income 130 Consolidated Statement of Financial Position 131 Consolidated Statement of Changes in Equity 132 Consolidated Statement of Cash Flows 134 Notes to the Consolidated Financial Statements 135 Company Statement of Financial Position 208 Company Statement of Changes in Equity 209 Company Statement of Cash Flows 210 Notes to the Company Financial Statements 211 Information Glossary of Financial Terms 220 Directors and Other Information 222 Applegreen Spaldwick, UK 8 APPLEGREEN PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2019 9 STRATEGIC REPORT Our Story 10 Our Locations 16 Our Business Model 22 Chairman’s Statement 28 Chief Executive’s Review 30 Corporate Social Responsibility 46 Sustainability Review 52 Our People and Culture 60 Business Ethics Review 66 Financial Review 70 10 APPLEGREEN PLC 11 OUR STORY Applegreen considers economic, environmental and social responsibility as an integral part of The Group was founded in 1992 by its corporate philosophy and understand the Bob Etchingham (Chief Executive Officer) following the acquisition contribution Applegreen can make to a more of its first site in Dublin and he was sustainable development joined in the business a year later by Joe Barrett (Chief Operating Officer). Together they have led the growth and development of the business in the intervening period. While the initial years of the Group saw gradual growth (with the number of sites increasing to 24 by the end of 2005), from the outset the focus was always on the development of the retail proposition and the establishment of a quality food offering on its forecourt sites. Applegreen Santry, Ireland 12 APPLEGREEN PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2019 STRATEGIC REPORT 13 2015 2017 2019 – Applegreen completes – Applegreen acquires: – 500th site opens successful IPO • Joint Fuel Terminal, – Launch of Growth Highlights & launches on the Dublin Port airline refuelling Irish & London Stock • Brandi Group, business Exchanges South Carolina in Ireland • Carsley Group, UK The Applegreen brand was successfully launched Site numbers reached 75 by the end of 2010 and – Applegreen partners – 10th anniversary in 2005 and the Group has subsequently 556 by 31 December 2019. with new brands: of the Irish expanded at a rapid rate. Charitable Fund • ROI & UK – There were 14 sites added to the ROI and which has raised The acquisition of a controlling interest in Welcome UK estate in 2019 (4 PFS, 2 MSA, 7 Dealer and 1 Hotel) €3.3million Break in 2018 provided a step change in the • US – The group also added 70 sites in the US throughout the growth and development of the Group, enlarging which comprised 46 sites in the US Mid-West in years its footprint in the United Kingdom, increasing its September 2019; the acquisition of a 40% minority food and beverage business and brand portfolio, stake in 23 Service Areas in Connecticut in October and further reducing the Group’s reliance on fuel and a further three new openings in the North-East. dependent revenue streams. We also exited from two stores in the US which we had leased under flexible terms from CrossAmerica Partners LP (“CAP”) 500 Sites 472 Sites 1992 2008 2010 2013 – Applegreen opens – Applegreen – First 6 Motorway – 4 Motorway first site in Dublin, expands into Service Areas Service Areas Ireland the UK 342 open in Ireland open in Northern Sites – Applegreen Ireland partners with new – Applegreen brands: launches own brand food offer, 243 The Bakewell Sites 200 Sites 152 Sites 119 Sites 81 2014 2016 2018 75 Sites – Applegreen – Applegreen – Applegreen acquires 64 Sites expands into extends brand WELCOME BREAK including 53 Sites the US partnerships 37 sites and 29 hotels Sites – Fuel card & – Award winning 24 Dealer offers Lisburn site opens Sites launch 1 Site 2005 2009 2011 – Petrogas launches – Distribution Centre opens – Loyalty card the Applegreen brand – The Applegreen programme Charitable Fund launches launches in Ireland 14 APPLEGREEN PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2019 STRATEGIC REPORT 15 283 16 APPLEGREEN PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2019 STRATEGIC REPORT 17 OUR LOCATIONS The Group’s site categories can be described as follows: Service Area Sites (‘SA’) Petrol Filling Stations (‘PFS’) Hotels The Group operates two types of Service Area The Group operates both company-owned and The Group operates 30 hotels, 29 of which Sites – Motorway Service Areas and Trunk Road dealer PFS sites. As of 31 December 2019, the were acquired as part of the Welcome Break Service Areas. Motorway Service Areas (‘MSA’) are Group operated 440 sites categorised as Petrol transaction in 2018. One new hotel opened the Group’s largest sites situated on motorways Filling Stations of which 166 were located in the in 2019 which was a contractual obligation that, alongside a retail proposition, operate three Republic of Ireland (90 company owned PFS committed to prior to the Welcome Break or more food and beverage offerings from a sites and 76 dealer PFS sites), 106 in the United acquisition. 23 of the hotels are co-located combination of its own food brand, Bakewell, Kingdom and 168 in the United States. Almost half on Service Area sites while the remaining seven and international brands including Burger King, of the Group’s current company-owned PFS estate are stand-alone. The hotels are operated under Starbucks, KFC, Subway, Waitrose, WH Smith, is operated under the Applegreen brand name. the Ramada and Days Inn brands. Costa Coffee, Chopstix, Pizza Express, Harry Applegreen branded sites have received significant Ramsden and Greggs. In addition, the Group investment, in particular where there is a high operates Trunk Road Service Areas (‘TRSA’), quality food proposition based around its own which are located on major roads. These are large food brand, Bakewell, and/or an international sites close to heavily trafficked or urban routes brand such as Subway. The retail proposition that have a big plot size and ample parking and is built to reflect the local demographic. toilets. The sites contain high end stores with an attractive ambience. They have a relevant retail offering with Applegreen brand produce and a limited chilled/ambient grocery offering Ireland UK alongside a cafe environment with one to three food and beverage offerings. As of 31 December 2019, the Group operated a total of 109 Service Area sites (including 69 MSA sites), of which 23 were located in the United States, 36 were located in the Republic of Ireland and 50 in the United Kingdom. Six of our MSA sites in the Republic of Ireland are operated under 25 year licences from Transport Infrastructure Ireland (‘TII’). Service Area Sites as at 31 December 2019 PFS sites as at 31 December 2019 Stand Alone Hotels at 31 December 2019 18 APPLEGREEN PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2019 STRATEGIC REPORT 19 1 2 USA 3 4 1. Mid West 2. North East MAINE VERMONT 46 NEW HAMPSHIRE MICHIGAN NEW YORK NEW SITES IN MINNESOTA MASSACHUSETTS WISCONSIN CONNECTICUT MID-WEST USA RHODE ISLAND COMPLETED SEPTEMBER 3.