Topaz expects operating profit of €20m for year

IRISH-OWNED fuel supplier Topaz expects to generate an operating profit of over €20 million for the year to the end of March 2010, The Irish Timeshas learned.

This will mark a significant turnaround for the business over fiscal 2009, when it slipped into the red following a €17 million hit relating to volatile oil prices and a major investment in rebranding its service stations. Accounts just filed with the companies office show Topaz made an operating loss of €500,000 in the year to the end of March 2009. This compared with a surplus of €28.6 million in the previous 12 months.

Ireland’s biggest fuel group made interest payments of €19.1 million on its debt last year, which was offset by interest received of just over €1 million.

Topaz closed the financial year with an after-tax loss of €18.9 million and accumulated losses of €62.4 million. It had made an after-tax profit of €1.5 million in fiscal 2008. Significantly, Topaz’s revenues topped €3 billion for the first time last year.

Topaz expects its earnings before interest, tax, depreciation and amortisation (Ebitda) to be about €40 million for the current financial year. This would restore its earnings close to 2008 levels.

Its Ebitda in the year to the end of March 2009 was €14.4 million.

The accounts state the “unprecedented collapse in the value of oil in August 2008 resulted in a one-off stock loss of approximately €17 million”. Oil prices peaked at that time at $147 a barrel but fell by 38 per cent within 10 weeks.

Topaz said it has since tightened its buying practices and was more proactive with its hedging policies. “We’ve changed the way we manage our fuel supply and have adopted a more clinical, ‘micro-management’ approach,” said chairman Neil O’Leary.

The group has also successfully revised its debt and banking arrangements, primarily with Anglo Irish Bank. Its repayment schedule has been extended from December 2013 to March 2016, and €60 million payable within one year has been pushed out beyond that time frame.

Topaz now has senior debt of €155 million, of which two-thirds is payable within five years. This includes €16 million due within one year. It also secured “working capital headroom” of €18 million to give it “maximum flexibility”. Directors’ remuneration last year rose to €1.4 million from €1.1 million in the previous period.

Topaz was formed in the past five years though the acquisition of the Shell and Statoil forecourt and distribution businesses.

The deals were put together by Ion Equity with entrepreneurs Denis O’Brien and Gerry Barrett providing financial backing. No dividend was paid last year.

Mr O’Leary said Topaz would look to “explore” potential acquisitions. “We expect some consolidation in the marketplace in the coming year-and-a-half or so.”