Maxol Group profits slump 70% as pension scheme is closed in the North

Profits at The Maxol Group of petrol stations took a 70% hit last year as the company wound up its defined benefit pension scheme in Northern Ireland.

Accounts filed with the Companies Registration Office (CRO) for McMullan Bros Ltd, the company controlled by Maxol’s owners, the McMullan family, show the company made after-tax profits of €1.18m in 2014.

This is in contrast to profits of €3.99m over the previous 12 months.

Turnover dipped slightly, by €18.6m, to €641m while the company’s cost of sales fell by €20.6m to €604m.

The company’s directors state that the decline in profitability is “entirely attributable” to the wind down of its Northern Irish defined benefit scheme, following on from a similar move in the Republic in 2011.

Pension settlements as a result of the closure of the pension scheme totalled €8.49m in 2014 wiping out much of the group’s operating profit before exceptional items.

Despite the hit to profitability last year, the company says it expects the closure of the scheme to be beneficial in the long-run.

“It is expected that it will be ‘washed through’ the accounts within a period of four years , at which stage the longer-term benefit will be very evident,” the directors’ report states.

The report also says that despite the large once-off cost of closing the scheme and a significantly increased level of investment in its forecourt network, the company ended the year in a very strong financial position with no bank debt and substantial committed bank facilities.

The company appears to have banked on receiving a boost from impending lower rates of corporation tax in Northern Ireland which encouraged it to close the pension scheme.

The directors state that the decision was considered timely given the prospect of lower corporate tax liabilities in the North.

An updated agreement struck by Northern Ireland’s political parties yesterday will see a 12.5% rate of corporate tax from April 2018.

The agreement, which pushes its introduction back a year from that first mooted, has been heralded by business groups in the North as an economic game changer.