News blog

GNE

  • BY: Andrew Hore |
  • POSTED: 02/05/2008 |

Petrol stations operator GNE almost doubled its profits in 2007.

Revenues fell slightly to £167m because the disposal of poorly performing sites offset the rises in fuel prices. Profits increased from £532,000 to £1.03m, helped by lower interest charges and a reduction in overheads. Exceptional gains flattered both years. If these are removed then profits jumped from £21,000 to £728,000.

GNE used to be Phil Edmonds’ Middlesex Group. It owns Petrol Express, which operates 63 petrol retailing sites – 54 of which are freehold. They operate under three petrol brands – Texaco, BP and Esso. There is also a fuel cards business.

Net debt was £10.9m at the end of 2007. The rising price of petrol means that stocks are higher and this has used up much of the cash generated from operations.

This is a business with a net tangible asset value of 156p a share but the profit it makes from these assets is still relatively modest. GNE wants to continue to grow through acquisition and improve the quality of its sites. The asset value is based on existing use and there is scope to redevelop some of the sites into mixed retail and residential developments and trigger an increase in their value. GNE could sell these or enter into a joint venture with a developer.

The weak residential property market isn’t helping, though. One recent redevelopment is finding it tougher than expected to sell the flats on the site. Even taking the current market into account there is a strong asset base which can be further enhanced.

The company has switched its forecourt stores from Costcutter to Londis. The full benefits of that will come through this year. There will also be a full contribution from last year’s acquisitions and the redevelopment of an existing site.

The shares rose 2p to 132p – 50% higher than six months ago. That is mainly down to last month’s announcement of bid talks. There is no new news on these talks. The shares are trading at a 15% discount to net tangible assets.

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