Roadside Real Estate PLC

Beyond the Pumps : Roadside’s Buy-and-build Strategy Starts to Scale

Roadside Real Estate has been shortlisted for two awards at this year’s AIM Awards, including Transaction of the Year and Chief executive Charles Dickson believes the nomination is likely to recognise the company’s acquisition programme as a whole, ‘rather than one individual deal.

That is understandable. Since the end of February, Roadside has completed a series of significant transactions, including the £17.5m Gardner retail acquisition, the £28.6m Hoch acquisition, the DA Roberts Fuels and Ross Road acquisitions. It’s also raised just under £21m through an equity placing and secured a £25m HSBC revolving credit facility, with a further £10m accordion.

For Dickson, however, this is considerably more than simply getting bigger.

The acquired businesses brought in just under £8m of cumulative cash-generating earnings, while Roadside now has run-rate revenues of around £180m. At the start of the year revenue was zero. Management is beginning to identify economies of scale in purchasing, fuel and retail, with further margin improvements expected as the businesses become integrated.

And the opportunity extends well beyond petrol.

Around half of earnings currently come from fuel, with the remainder generated by shops and ancillary services including car washes, parcel lockers, ATMs, coffee and food-to-go. At some larger sites there is scope for expanded retail space, EV charging and drive-through facilities. And as the company gets bigger Dickson underlines the improvements in the company’s buying power as it renegotiates with its suppliers.

It is an ambitious buy-and-build strategy. Roadside is targeting 40 sites a year for the next three years, while simultaneously considering larger transformational acquisitions and smaller individual sites.

The financial position is also worth watching. Twenty of the group’s 21 locations are freehold, with property valued at more than £70m. Dickson says the business remains “very, very lowly levered.”

So what ultimately proves whether the strategy is working? For the chief executive the answer is simple: cash flow – and ultimately total shareholder return.

Perhaps the strongest signal of management’s conviction comes from Dickson himself. He now owns “about 40 odd percent of the company”, and explains that he continues to buy because he sees “really significant growth” over the next two or three years.

As Charles explains to Sarah Lowther in this video interview, his message to shareholders is clear: 2026 has been a hive of activity and about building the platform and as for the years to come? “The opportunity before us is significant.”