Londis to spend €20m on acquiring property

ADM Londis, the wholesaler and convenience store operator, expects to spend about €20 million this year to "acquire sites of strategic value" across the country.

Stephen O'Riordan, joint chief executive of Londis, said the group had already acquired a leasehold property in Celbridge and was in advanced negotiations for a site in the west of Ireland.

He said the purchases would be completed through a combination of bank debt and by using some of its €14 million in shareholders' funds.

In all, he expects Londis to buy about five sites this year. They will be acquired through a wholly-owned subsidiary called ADM Londis Investments, which was recently established.

This is a departure for the group. Retailers normally own the properties that they trade from but Mr O'Riordan said that rising property prices meant it was important for the group to pool its resources if it was to secure sites at prime locations.

"With property values being what they are, it's important for us to compete to secure important sites that we can then lease to Londis retailers," Mr O'Riordan said.

Londis is also spending €6 million on a new corporate head office in Johnstown, Co Kildare, and extending its warehousing and distribution facility there.

The retailer will move to the new base in October, leaving its current offices at the Sunshine Industrial Estate in Crumlin, Co Dublin. This 10,000sq ft building is owned by Londis. Mr O'Riordan said the group would rent out the property. "We're going to hold on to it," he said. "We think that over time it will increase in value substantially."

Londis published its 2006 results yesterday. Its pre-tax profits rose by 12 per cent to €5.1 million while its wholesale turnover increased by 6 per cent to €355 million.

The group added 44 new Londis stores to its network last year, bringing the total to 360. These had a combined retail turnover of €723 million, up from €677 million in 2005.

About one-third of its revenues growth was attributable to new stores, Mr O'Riordan said. Londis expects to add 40 stores to its network this year.

Mr O'Riordan said 17 stores left the network in 2006, either for property development purposes or to rival symbol groups.

Londis operates as an unlisted plc and a revaluation carried out by BDO Simpson Xavier at the end of last year placed a value of about €49 million on the retailer.

Shares are now valued at €79.53 each, an increase of 27 per cent on 12 months earlier. The revaluation was based on the trading performance of the company and the sales of shares among retailers.

"Since April 2005, group shareholders have enjoyed a 65 per cent increase in the value of their investment," a statement from Londis said.

Londis has 110 shareholders, who between them own 613,500 shares. The retailer expects to employ more than 8,000 staff by the end of this year.