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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Rotala Plc | LSE:ROL | London | Ordinary Share | GB00B1Z2MP60 | ORD 25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 63.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMROL
RNS Number : 8622B
Rotala PLC
06 April 2017
7 April 2017
Rotala plc
("Rotala" or "the company" or "the group")
Final audited results for the year ended 30 November 2016
Rotala plc (AIM:ROL), a provider of transport solutions across the UK, is pleased to announce its audited results for the year ended 30 November 2016
Highlights
-- Turnover of GBP55.0 million (2015: GBP50.9 million), up 8 % year on year
-- Profit before taxation, mark to market provision and other exceptional items up 9% to GBP2.68 million (2015: GBP2.46 million)
-- Cash flows from operating activities (before changes in working capital and provisions) up to GBP6.46 million up 54% (2015: GBP4.20 million)
-- Basic earnings per share 5.49p per share (2015: 1.74p) -- Adjusted basic earnings per share up 6% to 5.51p per share (2015: 5.19p)
-- Three acquisitions completed during the year, expanding on operations in Heathrow and the North West
-- Fuel requirement largely hedged through to end 2018 -- Buses Bill will receive Royal Assent in summer 2017: beneficial impact anticipated
CHAIRMAN'S STATEMENT AND REVIEW OF OPERATIONS
Chairman's Statement and Review of Operations
I am pleased to be able to make this report to the shareholders of Rotala Plc for the year ended 30 November 2016. The company has continued to make good progress in 2016. We were able to make one significant acquisition in the year and two small ones. The first and largest acquisition, for our Heathrow depot, considerably increased our presence in this key market. The two smaller acquisitions were aimed at the coach charter market in the North West, in which we have now established a useful foothold. The aims of the Government's Buses Bill have become much clearer in the last year. The effects of the Bill look to be very positive for your company, as I explain in more detail below, though it will inevitably be the cause of continuing instability in the UK bus market.
Results and review of trading
Revenues for the group as a whole for the year ended 30 November 2016 were GBP55.0 million. This represents an increase of 8% on the revenues of GBP50.9 million achieved in the previous year. Gross margins dipped slightly to 18.3% (2015:18.7%), as the acquisitions of the year were bedded in. I am also pleased to report that pre- tax profits before exceptional items rose by a further 9% to GBP2.68 million (2015: GBP2.46 million), which replicated the advance we saw in 2015 over the results achieved in 2014.
-- Contracted Services
Revenues in Contracted Services rose overall by 25% to GBP19.7 million (2015: GBP15.8 million). Contracted Services comprised 36% of group revenues in 2016, compared to 31% in 2015. The OFJ acquisition was the principal reason for this increase. OFJ was acquired in January 2016, as described in more detail below and is a business positioned largely in the corporate sector of the market. The acquisition thus formed a welcome boost to our exposure to this part of the transport market. Corporate contractual income is now the largest component of our Contracted Services division. At the same time it should be remembered that the comparative figure for revenue in 2015 contains a three month contribution from the British Airways contract which did not finally finish until the end of the first quarter of that year.
The other major contribution to revenues in Contracted Services comes from Local Authority bus contracts. Overall the contribution to group revenues from this source fell slightly and now forms about 15% of group turnover. However there was no uniform pattern across the group. In the Manchester area our contracted bus income continued to increase, whilst in the rest of Lancashire local authorities cut back their transport budgets and this had a commensurate impact on the turnover of the group. We continue to believe that Manchester offers attractive possibilities for further expansion off the base which we acquired in 2015. In the West Midlands there is always a considerable churn in contracts because of the twice-yearly tendering system used by Transport for the West Midlands ("TfWM") and our revenues from this source fell a little in this area. However this slight fall in income is easily surpassed by the award of GBP866,000 in new tendered services from TfWM which we announced recently. In the South West, aggressive actions by First Group in registering some services as commercial, which had formerly been tendered, forced local authorities to terminate certain contracts with us.
Given the continuing pressures on Local Authority budgets (away from the major conurbations, like Greater Manchester and Bristol, which are benefitting from separate government initiatives), we do not believe that revenue from tendered Local Authority bus services is likely to grow in size in the foreseeable future. But we do believe that, as I shall explain later, the Buses Bill will offer us the opportunity to bid for significant market shares in the major conurbations in which we are represented. This means that Contracted Services revenues will form an increasingly important and growing share of group revenues in the medium term.
-- Commercial Services
Commercial Services comprised 60% of group revenues in 2016, compared to 65% in 2015. The reason for this fall in the share of group revenues was the OFJ acquisition to which I have already referred. Revenues in Commercial Services, at GBP32.9 million for the year, showed a very slight fall on the 2015 total of GBP33.2 million. Once again the picture across the group was mixed. Where a contracted service obliges the bus operator to take an element of revenue risk (the proportion of which can vary considerably), we classify the variable element of the revenue under the heading of Commercial Services. The reduction in contracted income in the South West, to which I have already referred, had a knock-on effect on Commercial revenues for this reason. The same effect was felt in the West Midlands from the usual churn in tendered bus contracts, but I should add that, when we sold the Long Acre depot in December 2015, which was otherwise surplus to requirements, we did deliberately relinquish a small number of commercial bus services to the north east of the Birmingham conurbation because we could not economically service them from our main Tividale depot.
However in the North West, in the Manchester and Preston areas combined, our Commercial Services revenues grew by more than 10% overall. This resulted from revenue increases in commercial, concessionary and network card categories and so was widely based. The acquisition of OFJ also brought with it a small but worthwhile source of commercial revenue. The recently announced gain of tendered services in the West Midlands will bring with it in a full year the addition of approximately GBP740,000 in the variable element of contracted revenue to this category of our turnover.
-- Charter Services
Charter Services comprised 4.4% of group revenues in 2016, compared to 3.77% in 2015. Revenues in Charter Services rose by 25% compared to the previous year to GBP2.4 million (2015: GBP1.9 million). The underlying rise, allowing for the revenue which represented the tail of the British Airways contract in 2015, is however much greater than this and is more like 45%. This rise in revenues reflects both a full year contribution from the Wings business, which was acquired half way through 2015, and a smaller contribution from the Elite and Wigan Coachways businesses which we acquired during the second half of 2016, as described in detail below. We are very pleased with the contributions which all three of these acquisitions are making to the service capabilities and financial results of the group. This contribution strongly underpins the rationale for making the acquisitions in the first place.
Strategy and the Buses Bill
In the last year the Buses Bill has begun its progress through Parliament and new regional authorities have been created to take advantage of the anticipated powers. The Bill, as expected, covers the re-franchising of bus networks in major cities. We have a presence in three of those conurbations, Greater Manchester, the South West and the West Midlands. The approach of the new transport authorities in each of these regions is however different. In both the South West and Greater Manchester it is clearly envisaged that the local authorities will use the legislation to achieve complete control over local bus networks by the franchise process. But in the West Midlands a more collaborative approach using bus alliances is favoured by the local authority.
From our perspective both lines of approach offer the prospect of considerably increasing the market shares we can achieve to a level to which we could not possibly have aspired under the existing structure of the bus markets in these locations. In the South West and Greater Manchester the existing bus markets are dominated by a very small number of bus companies which possess extremely large market shares. If the London model is employed these dominating market shares will not be allowed to subsist but will be eroded over time by new entrants to the market. With key presences in Bristol/Bath (where we are the clear number two bus operator) and Greater Manchester (where our overall market share is very small), Rotala has therefore good prospects of
significantly raising its market share. In the West Midlands, though our overall market share is again relatively small in a market completely dominated by one very large operator, our business is focused on the western and southern sides of Birmingham and in these particular localities we have substantial market shares. Thus the alternative Bus Alliance route being followed in the West Midlands also offers good prospects of being able to enhance our market share in certain parts of the West Midlands market and thereby improve loadings and operational efficiencies.
Therefore we cannot see a downside for the Rotala business in the Buses Bill, indeed quite the reverse.
Acquisitions
In January 2016, we were able to acquire, from OFJ Connections Limited ("OFJ"), that part of its business which was conducted in and around Heathrow airport. This business has a long-established presence in the Heathrow area. Its principal activity is the movement of crew for a large number of airlines from their aircraft to their hotels and other destinations, including Gatwick airport. Other work is carried out for local educational institutions and for a number of private clients. The revenue of the business in a full year at the time of acquisition was estimated at about GBP5.5 million. Most of this business revenue falls within our Contracted Services division. All of these activities dovetail well with our existing work at Heathrow and enhance our market presence in important parts of this market like private hire and airside and landside passenger transportation. The acquisition also brought with it a large leasehold depot well-positioned on the Heathrow perimeter road. This gives us ample room for further expansion in this key market. The consideration for the acquisition was GBP1.3 million. As part of the acquisition we acquired a vehicle fleet with a fair value of GBP0.45 million. The OFJ acquisition took time to integrate with our pre-existing activities in and around Heathrow airport, but this phase is now over. We are confident that our Heathrow division is well placed to make a substantial contribution to group revenues and profits in its new and expanded form.
In the second half of the year we made two small acquisitions in the North West. The aim of these two acquisitions was to improve our coverage of contracted and private hire services in the Blackpool area (to the west of Preston) and the Wigan area on the western side of Manchester. Up to now we have had little or no penetration in private hire in particular in these localities and we were keen to enhance the reach of the North West hub of our business which is run from the Preston depot in close alliance with the depot we have at Atherton. First, in northern Manchester, in early July 2016 we acquired from Elite Minibus and Coach Services Limited ("Elite") its entire business and 6-strong vehicle fleet for a cash consideration of GBP200,000. The Elite business had annual revenues of approximately GBP500,000. Elite is a well-established operator of contracted services for local authorities and schools in the Blackpool area. It also has a successful private hire arm. This business, with its small number of existing staff, has been integrated into the outstation which Rotala already operated in Blackpool. Then at the beginning of August 2016 we acquired from Rojay Services Limited ("Wigan Coachways") its entire business and 8-strong vehicle fleet for a cash consideration of GBP213,000. This business also had annual revenues of about GBP500,000, but with a slightly different emphasis. It has a considerable private hire arm in the Wigan area. The business has been transferred to and integrated with our existing business at our Atherton depot.
Dividend
As the company matures I expect the dividend to be progressive. The board is conscious of the importance of dividend flows to shareholders and has set a target dividend cover of 2.5 times earnings, to match underlying earnings and free cash flows.
The company paid an interim dividend of 0.80 pence per share in December 2016. The board will recommend to the forthcoming Annual General Meeting a final dividend in respect of 2016 of 1.50 pence per share making a total of 2.30 pence for the year (2015: 2.10 pence). The dividend will be paid, subject to shareholder approval at the Annual General Meeting, on 30 June 2017 to all shareholders on the register on 9 June 2017.
Depots
Through an acquisition in 2013 the group gained much additional freehold depot capacity in the West Midlands area. This enabled us to undertake a review of depot locations and the capacities we required. As a result of this review the board decided to dispose of the group's 4 acre depot in Long Acre, Birmingham, since it could be seen from the review that the depot was surplus to requirements. This sale was completed in late 2015, just after the start of the accounting period, at a price of GBP2.5 million, which approximated to the net book value of the property. At the same time we were able to take advantage of the opportunity to acquire an additional 3 acres of land on a site adjacent to our existing large depot in Tividale, West Midlands. This land acquisition gives the group a combined 6.7 acre freehold site for its operations there. The consideration for this site was GBP380,000 and it brought with it a substantial building suitable for conversion into our centre of bus operations for the whole West Midlands division of our business. We intend to invest about GBP600,000 in demolishing part of the building, converting the remainder, and making the whole site suitable for bus operation. This investment, for which planning permission has been received and the planning conditions now satisfied, will enable us to more than double the number of buses we can operate from this depot. The Buses Bill, as outlined above, is expected to bring us considerably greater opportunities in the West Midlands area and this investment will enable us to take full advantage of these.
Placing of New Shares
In June 2016, the company raised approximately GBP2.24 million (net of expenses) by way of a placing of 3,872,581 ordinary shares with new and existing investors at a price of 62 pence per share. The net proceeds from the placing will be used to improve our key bus depots in the West Midlands, as described above, and provide funds for future bolt-on acquisitions, as with the two we subsequently made in the second half of 2016.
Board changes
In May 2016 we were delighted to welcome a new non-executive director to the board, Graham Spooner. Graham brings with him a wealth of experience, particularly in the transport sector. Shortly afterwards Geoffrey Flight decided to step down from the board. Geoff had joined us very soon after Rotala was established 10 years ago. We are grateful for his contribution to the development of Rotala over the years and wish him well for the future.
Fuel hedging
The fuel hedge position is little changed over the last year. Given the uncertain direction of oil prices during 2016, the board has decided not to consider fuel hedging again until later in 2017 or until the market uncertainty has been satisfactorily resolved. In summary the group has the following fuel hedges in place:
-- For 2017 about 83% of the fuel requirement is covered at an average price of 95p a litre; -- For 2018 about 85% of the fuel requirement is covered at an average price of 91p a litre.
Fleet management
The focus of our fleet management activity in this accounting period was on the integration of the vehicles acquired with the three acquisitions we made during the year and then shaping the combined fleet to fit the on-going group requirements. We thus disposed of a number of vehicles deemed to be surplus to forecast capacity. At the same time in the year we acquired 20 new single deck buses, since these were available at an advantageous price and we could forecast a need for them in 2016 and 2017. Overall the average age of the fleet was relatively constant, at 8.45 years (2015: 8.24 years), a figure which remains very competitive in industry terms. We do not see the need for a significant number of new vehicles in the remainder of 2017 unless customer requirements change, but new vehicles in these circumstances would be matched by significant additional revenues and so make commercial sense. We continue to manage the fleet actively in accordance with our policies and this will no doubt result in some continuing level of vehicle acquisition and disposal.
When acquiring any vehicle new to the fleet we are acutely conscious of its emission standards and relative fuel consumption. We believe that having a modern and efficient bus fleet is a key aspect of customer service. The board monitors each vehicle in the fleet for relative fuel consumption, reliability and maintenance cost. Older vehicles also produce a greater level of emissions and we are keen to minimise this aspect of bus operation. Those vehicles that fall outside of acceptable parameters are designated for disposal.
Financial review
Income statement
The Consolidated Income Statement is set out on below. This section of the review addresses the results before the mark to market provision for fuel derivatives and other exceptional items. Revenues for the year rose by 8% compared to those of 2015. This increase was principally driven by the acquisitions made in the year. Cost of Sales also rose by 9%. Gross Profits therefore increased by 6%, whilst the gross profit margin fell slightly to 18.3% (2015: 18.7%) as the new acquisitions were integrated into the rest of the group. Administrative expenses increased by 3.6% as a result of the addition of a major new depot in the Heathrow area with the acquisition made there, and also the disposal of a surplus depot in the West Midlands. The Profit from Operations at GBP3.95 million (2015: GBP3.61 million) was 9% up on that achieved in the previous year. Finance expense however rose by 9% as borrowings were made to facilitate acquisitions and more vehicles were financed through hire purchase agreements. Profit before taxation therefore rose by 9% when compared to the previous year to GBP2.68 million (2015: GBP2.46 million) and is 18% up on the profits of GBP2.26 million achieved in 2014. The net contribution represented by the mark to market provision and other exceptional items was very small (but is analysed in detail in note 3 below), so that Profit from Operations and Profit before Taxation including all these items were not materially different. Basic earnings per share in 2016, after taking into account the mark to market provision and
other exceptional items, were 5.49p per share (2015: 1.74p). However, the impact of the mark to market provisions and the other exceptional items make the basic earnings per share numbers very difficult to understand. A better guide to true comparability is to consider the adjusted basic earnings per share numbers. Adjusted basic earnings per share (before the mark to market provision and other exceptional items) were then 5.51p in 2016 (2015: 5.19p), making an increase of 6% in the year and 11% since 2014.
Balance sheet
The gross assets of the group grew by 13% in the year and stood at GBP63.5 million at 30 November 2016 (2015: GBP56.2 million). Goodwill rose by just over GBP1 million as a result of the three acquisitions made during the year. Holdings of freehold property increased following the acquisition of 3 more acres of land adjacent to the Oldbury depot. The bulk of the investment in plant and machinery was represented by new ticket machinery and an inspection pit for the Manchester depot, and the re-equipment of the workshops for the additional Heathrow depot acquired with the business in that region. The book value of the vehicle fleet also increased, in the main because of the acquisitions made in the year but also because of the normal cycle of fleet replacement described above. Stocks of parts, tyres and fuel were all higher at the period end reflecting the increased size of the business compared to 2015. Trade Receivables for the same reason also rose, compounded by the fact that much of the new business of the year is delivered by contract, rather than being commercial income. These changes in the shape of the business also drove the increases in prepayments and accrued income, where the bulk of the increase was accounted for by amounts receivable in Bus Services Operators' Grant, concessionary fares schemes and local authority run fares collection systems. Trade and Other Payables however remained at much the same levels as the previous year. The gross loans and borrowings of the group rose slightly over the year to GBP16.0 million (2015: GBP15.1 million) as the drawings on the group's revolving facility to finance acquisitions were largely counteracted by the repayment made following the sale of the surplus West Midlands depot and the normal process of mortgage amortisation. Obligations under hire purchase contracts however rose to a present value of GBP11.3 million from the GBP8.5 million seen at the end of 2015. This change arose both from the new vehicles acquired in the year and a number of hire purchase refinancing transactions. The rise in the oil price in 2016 combined with the plunge in sterling against the dollar following the decision to exit the European Union served to reverse completely the mark to market provision held in respect of the group's fuel derivative position and resulted in a small overall surplus at the period end. The pension obligations of the group did increase year on year, but this movement reflects the actuarial valuation of 2013, which is about to be superseded. The draft actuarial deficit shown by the March 2016 valuation which is currently underway shows that the pension scheme is 94% funded. Upward movements in equity and bond markets also flowing out of the decision to exit the European Union will have closed that gap still further even allowing for falls in applicable discount rates. The gross liabilities of the group were therefore 14% higher than the previous year at GBP35.7 million (2015: GBP31.2 million). Reflecting the new share issue of GBP2.24 million in June 2016 in addition to the positive factors described above, the net assets rose to GBP27.8 million at the end of the year, compared to GBP25.0 million at the end of 2015, a rise of 11% year on year.
Cash flow statement
Cash flows from operating activities (before changes in working capital and provisions) grew strongly in the year, reaching GBP6.46 million (2015: GBP4.20 million), an increase of 54% compared to the previous year. However the increased size of the group and the fact that the businesses acquired were largely in the contracted services sector where revenues are billed by invoice rather than being collected at delivery in cash, as with commercial bus services, had as its consequence an absorption of working capital, rather than the release seen in 2015. Interest paid on HP agreements was very similar to the previous year. Net cash flows from operating activities were therefore much lower than in 2015 at GBP1.45 million (2015: GBP4.63 million).
However the cash requirements for investing and financing activities were also much reduced in 2016 compared to the previous year. Investment in property, plant and equipment was roughly comparable to that seen in 2015 at GBP2.57 million but was considerably outweighed by the sale proceeds of GBP3.5 million derived from the sale of the Long Acre depot and the usual sales of surplus vehicles. With acquisition spend of GBP1.87 million on the three acquisitions made in the year, cash used in investing activities fell from GBP4.15 million in 2015 to GBP0.93 million in 2016.
The placing of new shares in June 2016 brought in GBP2.2 million of fresh capital. In addition some share options were exercised. Dividends paid reflect both an increase in the dividend per share and the number of shares in issue. The share buy-back programme continued, but at a much lower level and GBP367,000 was expended on this activity in the year (2015: GBP771,000). Whilst the group's revolving credit facility was used to finance the acquisitions made, the sale of the Long Acre depot facilitated the repayment of GBP2 million of the facility. In addition the property mortgages were amortised by the normal GBP700,000 in the year. Advantage was also taken of the unencumbered value represented by the vehicle fleet. By refinancing these vehicles with new hire purchase arrangements GBP2.5 million of capital was released to invest in the business. The capital element of payments on hire purchase agreements fell somewhat in the year to GBP3.37 million (2015: GBP3.55 million). The cash absorbed by financing activities therefore fell in 2016 to GBP0.27 million compared to GBP0.96 million in 2015. There was therefore an overall increase in cash and cash equivalents for the year of GBP256,000 compared to a decrease of GBP489,000 in the prior year. The closing overdraft, net of cash and cash equivalents, of GBP342,000 at the end of 2016 (2015: GBP598,000 overdraft), was in line with management's plans and expectations.
Outlook
The group performed well in 2016 and trading for the current year has begun in line with budget. Following the three acquisitions which were made in 2016, together with the more recent announcements of new business, turnover in the current year should show further significant growth. The group benefits from strong banking and broking relationships which will provide the finance for future acquisitions. Rotala has grown predominantly through acquisition and we continue to be actively engaged in looking for attractive acquisition opportunities.
The group also possesses a strong and very experienced management team which has demonstrated over the last decade that it has the right strategy and the skills to implement it. With its excellent base of operating facilities and tangible property and vehicle assets, the group is well placed to take advantage of the continuing developmental change in the bus industry. As I have stated above the Buses Bill offers many new and exciting possibilities for the group. We are well positioned in the key conurbations targeted by this Bill. The Bill will enable us to increase our market shares significantly in areas where such ambitions would previously have been impracticable and unattainable. These encouraging developments make us confident about the prospects of the group and excited about the possibility of expanding it considerably in the years ahead.
John Gunn
Non-Executive Chairman
Date: 6 April 2017
CONSOLIDATED INCOME STATEMENT FOR THE YEARED 30 NOVEMBER 2016
Hot Features
Premium
Note 2016 2016 2016 2015 2015 2015
Results Results
before Mark to before Mark
mark market mark to market
to market provision to market provision
provision and other provision and other
and other exceptional Results and other exceptional Results
exceptional items for the exceptional items for the
items (note year items (note year
3) 3)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 2 54,975 - 54,975 50,889 - 50,889
Cost of
sales (44,895) - (44,895) (41,358) - (41,358)
Gross
profit 10,080 - 10,080 9,531 - 9,531
Administrative
expenses (6,133) 8 (6,125) (5,922) (1,719) (7,641)
Profit
from operations 3,947 8 3,955 3,609 (1,719) 1,890
Finance
income 14 - 14 12 - 12
Finance
expense (1,281) - (1,281) (1,160) - (1,160) Profit before taxation 3 2,680 8 2,688 2,461 (1,719) 742 Tax expense 4 (468) (14) (482) (474) 399 (75) Profit for the year attributable to the equity holders of the parent 2,212 (6) 2,206 1,987 (1,320) 667 Earnings per share for profit attributable to the equity holders of the parent during the year: Basic (pence) 5 5.51 5.49 5.19 1.74 Diluted (pence) 5 5.46 5.44 5.16 1.74
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED
30 NOVEMBER 2016
2016 2015
GBP'000 GBP'000
Profit for the year 2,206 667
Other comprehensive income:
Items that will not subsequently
be reclassified to profit or loss:
Actuarial loss on defined benefit
pension scheme (860) (362)
Deferred tax on actuarial loss
on defined benefit pension scheme 163 72
Other comprehensive loss for the
year (net of tax) (697) (290)
Total comprehensive income for
the year attributable to the equity
holders of the parent 1,509 377
-------- --------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 NOVEMBER 2016
Share
Share premium Merger Shares Retained
capital reserve reserve in treasury earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 December
2014 9,794 8,603 2,567 (380) 5,022 25,606
Profit for
the year - - - - 667 667
Other comprehensive
expense - - - - (290) (290)
---------- --------- ---------- -------------- ----------- ----------
Total comprehensive
income - - - - 377 377
---------- --------- ---------- -------------- ----------- ----------
Transactions
with owners:
Dividends
paid - - - - (713) (713)
Share based
payment - - - - 16 16
Purchase of
own shares - - - (242) - (242)
Transactions
with owners - - - (242) (697) (939)
---------- --------- ---------- -------------- ----------- ----------
At 30 November
2015 9,794 8,603 2,567 (622) 4,702 25,044
Profit for
the year - - - - 2,206 2,206
Other comprehensive
expense - - - - (697) (697)
---------- --------- ---------- -------------- ----------- ----------
Total comprehensive
income - - - - 1,509 1,509
Transactions
with owners:
Dividends
paid - - - - (803) (803)
Share based
payment - - - - 16 16
Shares issued 968 1,272 - - - 2,240
Purchase of
own shares - - - (195) - (195)
Transactions
with owners 968 1,272 - (195) (787) 1,258
---------- --------- ---------- -------------- ----------- ----------
At 30 November
2016 10,762 9,875 2,567 (817) 5,424 27,811
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 NOVEMBER 2016
Note 2016 2015
GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 34,876 31,798
Goodwill and other intangible assets 12,033 10,581
Total non-current assets 46,909 42,379
-------- --------
Current assets
Inventories 2,855 2,355
Trade and other receivables 11,235 7,905
Held for sale assets - 2,479
Derivative financial instruments - due in more than one year 327 -
Cash and cash equivalents 2,159 1,118
-------- --------
Total current assets 16,576 13,857
-------- --------
Total assets 63,485 56,236
-------- --------
Liabilities
Current liabilities
Trade and other payables 5,195 5,370
Loans and borrowings 6 11,096 9,536
Obligations under hire purchase contracts 7 3,034 3,107
Derivative financial instruments 285 502
Total current liabilities 19,610 18,515
-------- --------
Non-current liabilities
Loans and borrowings 6 4,900 5,600
Obligations under hire purchase contracts 7 8,256 5,406
Derivative financial instruments - 1,257
Provision for liabilities 1,653 -
Defined benefit pension obligation 800 278
Deferred taxation 455 136
Total non-current liabilities 16,064 12,677
-------- --------
Total liabilities 35,674 31,192
-------- --------
TOTAL NET ASSETS 27,811 25,044
Shareholders' funds
Share capital 10,762 9,794
Share premium reserve 9,875 8,603
Merger reserve 2,567 2,567
Shares in treasury (817) (622)
Retained earnings 5,424 4,702
-------- --------
TOTAL EQUITY 27,811 25,044
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 NOVEMBER 2016
2016 2015
GBP'000 GBP'000
Cash flows from operating activities
Profit before taxation 2,688 742
Adjustments for:
Depreciation 3,050 3,025
Acquisition expenses 125 46
Finance expense (net) 1,267 1,148
Gain on sale of property, plant and
equipment (342) (440)
Contribution to defined benefit pension scheme (350) (350)
Notional expense of defined benefit pension scheme 7 8
Equity settled share-based payment
expense 16 16
-------- --------
Cash flows from operating activities before changes in working capital and provisions 6,461 4,195
-------- --------
(Increase)/decrease in inventories (500) (94)
(Increase)/decrease in trade and other receivables (3,330) (299)
(Decrease)/increase in trade and other payables (339) 106
Movement in provisions (364) 1,193
(4,533) 906
Cash generated from operations 1,928 5,101
Interest paid on hire purchase agreements (474) (476)
Net cash flows from operating activities carried forward 1,454 4,625
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 NOVEMBER 2016 (Continued)
2016 2015
GBP'000 GBP'000
Cash flows from operating activities brought forward 1,454 4,625
Investing activities
Purchases of property, plant and
equipment (2,558) (2,403)
Acquisition of businesses (1,871) (2,431)
Sale of assets held for sale as at 30 November 2015 2,479 -
Sale of property, plant and equipment 1,023 680
Net cash (used in) investing activities (927) (4,154)
Financing activities
Shares issued 2,412 95
Dividends paid (803) (713)
Own shares purchased (367) (771)
Proceeds of mortgage and other bank loans 2,775 4,970
Repayment of bank and other borrowings (2,700) (1,163)
Bank interest paid (744) (684)
Hire purchase refinancing receipts 2,522 1,152
Capital settlement payments on vehicles sold - (301)
Capital element of lease payments (3,366) (3,545)
Net cash used in financing activities (271) (960)
Net increase/(decrease) in cash and cash equivalents 256 (489)
Cash and cash equivalents at beginning of year (598) (109)
Cash and cash equivalents at end of year (342) (598)
Notes to the Preliminary Announcement of results for the year ended 30 November 2016
1. Basis of preparation:
The accounting policies used in the preparation of this financial information are those that have been used in the preparation of the annual statutory financial statements of the company for the year ended 30 November 2016. These policies are in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRSs) as endorsed by the European Union.
2. Turnover:
Revenue represents sales to external customers excluding value added tax. Passenger revenue is recognised when payment is received in cash. Subsidy revenue from local authorities is recognised on an accruals basis, based on actual passenger numbers. Revenues delivered under contract are recognised as services are delivered, based on agreed contract rates.
All of the activities of the Group are conducted in the United Kingdom within the operating segment of provision of bus services. The Group has three main revenue streams: contracted, commercial and charter, and management monitors revenue across these there streams. All streams operate within a single operating segment, that is the provision of bus services. The activities of each revenue stream are as described in the Chairman's Statement.
2016 2015
GBP'000 GBP'000
Commercial 32,873 33,155
Contracted 19,707 15,816
Charter 2,395 1,918
--------- ---------
Total Revenue 54,975 50,889
========= =========
3. Profit before taxation:
Profit before taxation includes the following mark to market provisions and other exceptional items:
2016 2015
GBP'000 GBP'000
Mark to market profit/(provision)
on fuel derivatives 684 (1,608)
Acquisition costs (125) (46)
Abortive acquisition costs - (48)
Provision against onerous leases (310) -
resulting from acquisition
Redundancy costs (225) -
Share based payment expense (16) (17)
Profit/(loss) within profit before
taxation 8 (1,719)
======== ========
4. Tax expense:
Tax expense includes the following:
2016 2015
GBP'000 GBP'000
Current tax
Current tax on profits for the year - -
_______ _______
Total current tax - -
_______ _______
Deferred tax
Origination and reversal of temporary
differences 483 74
Prior year adjustments 13 -
Change in rate of tax (14) 1
_______ _______
Total deferred tax 482 75
_______ _______
Income tax expense 482 75
_______ _______
The tax assessed for the year is different to the standard rate of corporation tax in the U.K. for the following reasons:
2016 2015
GBP'000 GBP'000
Profit before taxation 2,688 742
_______ _______
Profit at the standard rate of corporation
tax in the UK of 20% (2015: 20%) 538 148
Non-taxable items (15) (74)
Adjustments in respect of prior
periods 13 1
Impact of change in tax rates (54) -
_______ _______
Total tax expense 482 75
_______ _______
5. Earnings per share:
Basic 2016 2015
GBP'000 GBP'000
Profit attributable to ordinary shareholders 2,206 667
Weighted average number of ordinary shares in issue 40,164,072 38,310,257
Basic earnings per share 5.49p 1.74p
=========== ===========
The calculation of the basic and diluted earnings per share is based on the earnings attributable to the ordinary shareholders divided by the weighted average number of shares in issue during the year.
Basic 2016 2015
Adjusted basic before mark to market provision and other exceptional items GBP'000 GBP'000
Profit before exceptional items attributable to ordinary shareholders 2,212 1,987
Weighted average number of ordinary shares in issue 40,164,072 38,310,257
Basic before exceptional items earnings per share 5.51p 5.19p
=========== ===========
Diluted Diluted
2016 2015
GBP'000 GBP'000
Profit attributable to ordinary
share holders 2,206 667
Interest expense of convertible
loan notes - 5
Profit for the purposes of diluted
earnings per share 2,206 672
----------- -----------
Weighted average number of shares
in issue 40,164,072 38,310,257
Adjustments for:
- exercise of options 369,473 328,914
----------- -----------
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 40,533,545 38,639,171
----------- -----------
Diluted earnings per share 5.44p 1.74p
=========== ===========
5. Earnings per share (continued):
Diluted Diluted
2016 2015
Adjusted diluted before mark to GBP'000 GBP'000
market provision and other exceptional
items
Profit attributable to ordinary
share holders 2,212 1,987
Interest expense of convertible
loan notes - 5
Profit for the purposes of diluted
earnings per share 2,212 1,992
----------- -----------
Weighted average number of shares
in issue 40,164,072 38,310,257
Adjustments for:
- exercise of options 369,473 328,914
----------- -----------
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 40,533,545 38,639,171
----------- -----------
Adjusted diluted earnings per share 5.46p 5.16p
=========== ===========
In order to arrive at the diluted earnings per share, the weighted average number of ordinary shares has been adjusted on the assumption of conversion of all dilutive potential ordinary shares. The potential ordinary shares take the form of share options. A calculation has been carried out to determine the number of shares, at the average annual market price of the company's shares, which could have been acquired, based on the monetary value of the rights attached to those shares. This number has then been subtracted from the number of shares that could be issued on the assumption of full exercise of the outstanding options, in order to compute the necessary adjustments in the above table.
6. Loans and borrowings:
2016 2015
GBP'000 GBP'000
Current:
Overdrafts 2,501 1,716
Bank loans 8,595 7,820
_______ _______
11,096 9,536
_______ _______
Non-current:
Bank loans 4,900 5,600
_______ _______
4,900 5,600
_______ _______
7. Obligations under hire purchase contracts:
Future lease payments are due as follows:
Minimum
lease Present
payments Interest value
2016 2016 2016
GBP'000 GBP'000 GBP'000
Not later than one year 3,448 414 3,034
More than one year but less
than two years 3,165 272 2,893
More than two years but less
than five years 4,679 261 4,418
Later than five years 974 29 945
12,266 976 11,290
========== =========== ==========
Minimum
lease Present
payments Interest value
2015 2015 2015
GBP'000 GBP'000 GBP'000
Not later than one year 3,465 358 3,107
More than one year but less
than two years 2,412 203 2,209
More than two years but less
than five years 3,012 166 2,846
Later than five years 360 9 351
9,249 736 8,513
========== =========== ==========
The present value of future lease payments are analysed as:
2016 2015
GBP'000 GBP'000
Current liabilities 3,034 3,107
Non-current liabilities 8,256 5,406
11,290 8,513
======== ========
8. Acquisitions:
(a) Business of OFJ Connections
As set out in the Chairman's Statement, in January 2016 the group acquired the Heathrow business of OFJ Connections Limited, together with certain vehicle assets. The Chairman's Statement describes the details of and the reasons for the acquisition, and should be consulted for a detailed description of all the relevant factors. The consideration for the acquisition (excluding acquisition costs) was GBP1.3 million in cash. The book values of the assets acquired are set out below.
Book value Fair value Fair value
adjustments on acquisition
GBP'000 GBP'000 GBP'000
Fixed assets
Vehicles 653 (195) 458
Total fixed assets 653 (195) 458
----------- ------------- ----------------
Current liabilities
Other payables and accruals (110) - (110)
(110) - (110)
----------- ------------- ----------------
Non-current liabilities
Provision for onerous
vehicle lease contracts (217) - (217)
(217) - (217)
----------- ------------- ----------------
Net assets 131
Goodwill 1,201
Acquisition costs (note
10) 77
----------------
Total cash consideration
paid 1,409
================
Because the acquired business was immediately folded into the existing operations of the group in the relevant locality, it is not possible to distinguish revenues and profits for the acquired business in the period to 30 November 2016. Pre-acquisition book values were determined based on applicable IFRS, immediately prior to the acquisition. The values of assets recognised on acquisition are their estimated fair values. For the vehicles acquired this is based on the directors' assessment of the age and condition of each of the vehicles and their knowledge of disposal values for equivalent vehicles. Certain of the existing operating lease commitments of the acquired business at the date of acquisition were assessed by the directors as being at non-market rates and accordingly appropriate provision was made.
The directors have made an assessment of whether there are any intangible assets acquired with the business. The OFJ brand name was not acquired. No licenses were acquired with the business. The sales and purchase agreement includes a standard non-compete clause; however, the sellers had no intention of re-entering the respective markets at the acquisition date and so there could be no value attributable to this clause. Where there were contracts in place, there was no evidence that these contracts produced any immediately identifiable profits or positive cash flows in the hands of the previous owners. On these bases no separate intangible assets have been identified. The goodwill generated by the acquisition arose from the benefit of synergies with the existing business of the group in the respective location. As stated above the business acquired includes a vehicle fleet and these vehicles were immediately subsumed into existing operations following acquisition. The acquisition expenses incurred by the group amounted to GBP77,000 and have been expensed in the Consolidated Income Statement in Administrative Expenses.
(b) Businesses of Elite Minibus and Coach Services and Wigan Coachways
As set out in the Chairman's Statement, in July and August 2016 the group acquired the much smaller businesses and vehicle fleets of Elite Minibus and Coach Services Limited and Rojay Services Limited (trading as "Wigan Coachways"). The Chairman's Statement describes the details of and the reasons for the acquisitions, and should be consulted for a detailed description of all the relevant factors. The aggregate consideration for the acquisitions was GBP0.4 million in cash. The book values of the assets acquired are set out below.
Book value Fair value Fair value
adjustments on acquisition
GBP'000 GBP'000 GBP'000
Fixed assets
Vehicles 205 (33) 172
Total fixed assets 205 (33) 172
----------- ------------- ----------------
Current liabilities
Other payables and accruals (9) - (9)
(9) - (9)
----------- ------------- ----------------
Net assets 163
Goodwill 251
Acquisition costs (note
10) 48
----------------
Total cash consideration
paid 462
================
Because the acquired businesses were immediately folded into the existing operations of the group in the relevant localities, it is not possible to distinguish revenues and profits for the acquired businesses in the period to 30 November 2016. Pre-acquisition book values were determined based on applicable IFRS, immediately prior to the acquisition. The values of assets recognised on acquisition are their estimated fair values. For the vehicles acquired this is based on the directors' assessment of the age and condition of each of the vehicles and their knowledge of disposal values for equivalent vehicles.
The directors have made an assessment of whether there are any intangible assets acquired with the businesses. The directors do not consider that the brand names have any separable values in the private hire markets. No licenses were acquired with the businesses. The sales and purchase agreements include standard non-compete clauses; however, the sellers had no intention of re-entering the respective markets at the acquisition date and so there could be no value attributable to these clauses. Where there were contracts in place, there was no evidence that these contracts produced any immediately identifiable profits or positive cash flows in the hands of the previous owners. On these bases no separate intangible assets have been identified. The goodwill generated by the acquisitions arose from the benefit of synergies with the existing businesses of the group in their respective locations. As stated above the businesses acquired include vehicle fleets and these vehicles were immediately subsumed into existing operations following acquisition. The acquisition expenses incurred by the group amounted to GBP48,000 and have been expensed in the Consolidated Income Statement in Administrative Expenses.
9. Financial Information:
The Financial Statements for the year ended 30 November 2016 were approved by the Board of Directors on 6 April 2017. The financial information in this announcement does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for 2016 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditors have reported on the 2016 accounts; the auditors' opinion is unqualified and does not include a statement under section 498 of the Companies Act 2006.
10. Further Information:
The Company's Annual Report and Accounts for the year ended 30 November 2016 are expected to be posted to shareholders on 4 May 2017 and will also be available to view on the Company's website at the following link: http://www.rotalaplc.com
Copies of this statement are available from the registered office of the Company at Cross Quays Business Park, Hallbridge Way, Tipton, Oldbury, West Midlands, B69 3HW or the Company's website at the following link: http://www.rotalaplc.com
For further information please contact:
Rotala Plc 0121 322 2222 John Gunn, Chairman Simon Dunn, Chief Executive Kim Taylor, Group Finance Director Nominated Adviser & Broker: Cenkos Securities plc 020 7397 8900 Stephen Keys/Callum Davidson (Corporate Finance)
Michael Johnson/Julian Morse (Corporate Broking)
About the business:
Rotala provides a range of transport solutions, from local bus services under contract to local authorities, to commercial bus routes. Rotala has operations at Heathrow Airport, in the West Midlands, the North West and South West of England.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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April 07, 2017 02:00 ET (06:00 GMT)
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