Belfast Telegraph

Sunday 20 April 2014

Company Snapshot: Balcas Ltd

Balcas is the Fermanagh-based parent company holding the shares of a group of subsidiaries all involved in the manufacture and sale of timber products, locally and in eastern Europe. Ernest Kidney is the managing director.

Balcas is the Fermanagh-based parent company holding the shares of a group of subsidiaries all involved in the manufacture and sale of timber products, locally and in eastern Europe. Ernest Kidney is the managing director.

In the 52-week year, ended on January 29, the group of companies was sharply affected by the results of a difficult year caused in the main by the global economic downturn. The decrease in turnover has been adjusted for the previous 53-week year.

Trading was affected by the combination of depressed sales levels, leading to reduced production, and the fall in revenue could not be matched by a comparable fall in unit costs. For a period the group temporarily curtailed its operations in Estonia and Russia.

A one-off feature, which affected the profit and loss account, was a stock valuation adjustment of £2.2m which added to the emerging operating loss which became the worst of recent years following a smaller trading loss in 1997.

The group is partly financed by loans from its banker which at the end of the financial year rose to over £26m — up nearly £8m on a year earlier. Net interest payments, despite a fall in market rates, fell by only £300,000 and the cost in 2008-9 was £1.8m. In addition, a £2m increase in the allocation of preference shares has been excluded here from the value of shareholders funds.

The group has ambitious committed plans to develop a new CHP plant in Scotland which, by the end of January 2009, had cost £20m and there are further estimated costs of £11.9m to complete the project.

The annual report by the group offers a confident opinion from the directors on future prospects. The Scottish project has been assessed as worth more than its completion costs and the business anticipates an increase in production in the plants in Estonia and Russia.

Since the end of the last financial year, the group has been negotiating that adequate bank facilities will be renewed and extended. In a parallel move the shareholders have agreed to introduce additional funds in proportion to the increased finance available from the bankers.

The group forecasts that, with reduced costs and higher revenue, its operating loss will reduce in 2009 and it will move into profit again in 2010. Employment in the group, in both Northern Ireland and other locations, decreased in 2008-9 by 106 people to 446; the lowest average for just over 10 years.