By Scott Wright
BALMORAL Group Holdings, the Aberdeen-based conglomerate founded by Sir Jim Milne in 1980, highlighted the impact of supply-chain disruption, project award delays and raw material cost inflation as it reported a fall in operating profits for the year ended March 31, 2022.
However, the company declared it has seen a “significant uplift in activity levels” since year-end, leading to a record level of order backlogs.
Balmoral, which has interests in engineering solutions for the offshore sector, water storage, and property development, saw turnover fall by 11 per cent to £113.26m from £127.1m, new accounts at Companies House show. It posted a loss before tax of £1.3m after it incurred losses on the disposal of shares in ACE Winches, which designs and manufactures winches and machine deck machinery. Balmoral sold its shareholding to a company led by ACE founder Alfie Cheyne in November 2021.
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Balmoral Group employs 575 people across three companies, including Balmoral Comtec, which supplies buoyancy systems, subsea protection and thermal insulation products to the oil and gas and renewables industries.
Writing in the accounts, Sir Jim said: “The results for the year ended 31 March 2022 reflect a continuation of the challenging trading conditions being experienced across the Balmoral Group of companies. The global pandemic continued to cause supply chain disruption, project award delays and we also saw significant raw material cost inflation.
“Notwithstanding the difficult operating conditions, I am pleased to report that turnover of £113m was down only 11% on the previous year, with turnover from continuing operations virtually flat on the previous year. However, the impacts of increasing costs on longer term contracts resulted in decreased margins with operating profits before exceptional items reducing to £2.9m (2021: £9.6m). Operating profit for the year was £2.6m (2021: £8.9m).”
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Despite the “difficult trading environment” over the period, Sir Jim, who was knighted for services to business and charity in 2022, said the company continued to “make substantial investment” across the group. He stated that Balmoral Comtec had “continued to build momentum in securing renewable energy projects which allows us to transition our vast experience in oil and gas into the renewables sector.” He added: “We are developing further products for this exciting market will see significant investment in the decade ahead.”
Sir Jim noted that Balmoral’s water tanks business had “emerged from the pandemic strongly with an improving order book and a profitable finish to the financial year.”
And he signalled that the fortunes of the Balmoral Group had improved since year-end.
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Sir Jim said: “The past couple of years have undoubtedly been challenging for our group. We are hugely encouraged by the significant uplift in activity levels across our businesses since the year-end which has resulted in order backlogs now being at record levels. Balmoral Comtec continues to benefit from the substantial investment being made in energy transition and energy security which has given our customers increasing confidence to make contract awards. Our Tanks business has also won significant export contacts which has resulted in improved profitability and a strong platform for future growth.”
Balmoral invested in ACE Winches in 2017 and 2019. The sale of its shareholding in ACE led to an exceptional cash inflow of £9m. But Sir Jim said the reversal of equity and goodwill, alongside related costs, resulted in a loss of £3.2m on the sale. Balmoral said losses on the ACE deal resulted in the company making a loss of £1.3m for the period. However, stripping out the impact of the ACE sale, the group made a small profit from continuing operations.
The accounts show Balmoral employed 576 people on average over the period, down from 758. Payroll costs fell to £23.3m from £33.6m.
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