A bigger presence in petrol retailing and on-site convenience stores is at the heart of a continuing strategy of growth and consolidation announced last month by Dennis Woods, chief executive of Petrol Express, part of the GNE Group plc.

Petrol Express currently owns and operates 64 petrol filing stations. It also operates a fuel card business for commercial vehicle operators and develops non-core sites for alternate use. However, while the company continues to focus on improving margins, profitability and services at each site, it has also put the feelers out for any opportunities to add to its network of sites.

"When you’ve got a large number of private individuals/investors owning sites, family businesses and smaller groups as exists in the petrol retailing sector, there’s always going to be a natural turnover - so it’s a healthy market for sites coming up. We’re out there and the agents know we’re out there.

"We’re interested in acquiring more sites and we’re in a strong position to do so, because Petrol Express being backed by GNE - which is listed - means we can go to the market for funds, whereas other people may struggle to get the banks to fund them - it’s not exactly a good period of time at the moment for bank borrowing!

"Our bank is very supportive. At the same time we can go to our shareholders and either issue paper for buying businesses or ask our shareholders to invest more money and use their cash.

"One of the big things we have as an advantage for anybody wishing to sell up, is that they could dispose of their businesses to us for paper and take shares in GNE - currently our share price is sitting at the £1 mark. We are very well asset backed - they could take paper at £1 and it’s worth £1.60."

GNE has been quoted on the London Stock Exchange for a number of years, dropping down to AIM more recently. Dennis Woods joined the company initially when he sold part of his business into Petrol Express - he ran and operated British Benzol for 30 years, and he sold the fuel card business into GNE. He sold the balance of British Benzol to the Smith family, then joined the board of GNE and took over as chief executive of Petrol Express.

At the same time chairman David Port - the former CEO of British Fuels - had already been a director of Petrol Express (set up in 1998 by Rikki Hunt), which was owned by Alchemy. He became non-executive chairman when GNE bought the business from Alchemy in 2001, and both he and Dennis joined the board of GNE.

At that stage GNE owned only 49.9% of the business. The other half was owned by an Eastern European investment fund backed by some Russian investors. Within a year or so GNE had acquired the majority stake (just over 50%) in Petrol Express. Ron Haacke - who previously worked at Thames Rico Service Stations, which became a wholly owned subsidiary of Petrol Express - joined in 2002. He runs the day-to-day operations, with all the staff reporting to him.

"We have a lot of petrol retailing background and experience within the group both at the top (David with British Fuels and myself with British Benzol) and within Petrol Express itself," confirms Dennis. "And with such a strong team in place the next stage was to dispose of a number of closed sites we’d inherited, and acquire new sites.

"Over the years we’ve bought five sites from the Copes Group in the Midlands; four sites from the Save Group; and another 15 from Texaco. In the past year we acquired two from from the Taurus Group in the north east; and most recently acquired the Bond Hamill Group which gave us another eight.

"We’re also very keen to expand what we have and improve our existing sites. We feel quite confident about the c-store market. We’re selling about £119 for every 1,000 litres that goes through our shops, but we’ve seen figures from other companies that are higher than that. We have a deal now with Costcutter who have put a full-time executive with us to deal with our account and help us grow the business. We were formerly with Londis but that deal ends in March.

"We’ve also employed RPS (Retail Performance Specialists). They’ve worked with M&S and other big brands and are there to train staff to get better turnover in the store - it covers a bit of everything, better customer service, better merchandising and training them to talk to the customer and get a better value sale by making them aware of offers or other services available. We’re trying to make it a fun event rather than bashing them with a big stick."

Petrol Express directly employs 555 staff, and invests in their career development which helps to contribute to a high level of loyalty.

"We also give managers specific responsibility relevant to the whole group, ie one person handles all incidences of ’no means of payment’, so the job gets done well. The same goes for insurance claims, dip losses and so on, which gives us huge savings, and for each manager it is seen to enhance his career."

Other investment is being made in rebuilding sites in the Petrol Express network - with budgets of up to £4-500,000 depending on the site. Some innovation is being employed here with the premises on one site, for example, being designed as a two-storey building.

With seemingly all their ducks in a row, the management team at Petrol Express are very confident about the future, seeing lots of opportunity in the current market, and the means both financially and in terms of expertise, to take full advantage of it.

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=== ABOUT PETROL EXPRESS ===

l Owns and operates 64 UK petrol filling stations

l Current property portfolio value of circa: £32m

l Volumes (average litres per sites per annum): 2.9m

l Volumes (total in litres per annum): 167m

l Average annual shop turnover per site: £304,000

l Average shop sales per ’000 litres: £119

l Total shop gross contribution per annum: £4.7m

l Brands: BP, Esso, Texaco, Londis, Costcutter

l Number of staff: 555

l Fuel margin: 3.9ppl

l Shop margin: 23.1%

l Shop floor space: 38,200sq ft

l Net assets: £22.7m