Rotala PLC Trading Statement (1813O)

TIDMROL

RNS Number : 1813O

Rotala PLC

03 November 2016

3 November 2016

Rotala plc

("Rotala" or "the Company" or "the Group")

Trading Statement

Rotala today provides an update on trading.

The Group has made good progress during the year and the longer term trading outlook remains in line with market expectations. Growth has been achieved this year predominantly through acquisition, with the Company making three acquisitions during the year. Two of these, Elite Minibus and Wigan Coachways increased the scale of our operations in the North West. The more substantial acquisition of the Heathrow business of OFJ Connections Limited ("OFJ") in January brought a considerable expansion of our business at Heathrow Airport.

The integration of Elite Minibus and Wigan Coachways has gone well, considerably broadening the services we can offer in the North West of the country. We expect these acquisitions to provide a positive contribution to the Group's profits in FY 2017. The completion of the integration of OFJ in the Heathrow area was, as anticipated and as stated at the time of the acquisition, to require the whole of the remainder of FY 2016. Integration has proceeded on schedule, although higher than anticipated levels of temporary staffing during the period have resulted in some additional non-recurring costs being taken in FY 2016, with a minor impact on profit before tax expected this year. The desired level of permanent staffing has now been achieved and the integration will be completed by the end of FY2016, with a positive contribution to profits expected in 2017.

In the South West, where we provide many bus services linked to the universities in Bristol and Bath, passenger numbers remain consistent. We have however seen a shift in the buying habits of the passenger in the region, such that purchases of weekly or daily ticket products are increasingly more favoured over the longer dated pass products. This change in preference of ticket product is expected to defer a small amount of revenue anticipated to crystallise in 2016 into 2017 instead.

Looking ahead, there have been a number of positive developments which are expected to underpin our trading prospects for 2017.

In the West Midlands it is encouraging that we have been noticeably more successful at winning local bus contracts offered by Transport for West Midlands ("TfWM"), the successor body to Centro, in its last contract round.

TfWM is also making progress on its plan to take the Bus Alliance route, rather than waiting for the Buses Bill to deliver the ability to adopt full bus franchising. We are in active negotiation with TfWM to introduce a bus alliance on a key West Midlands bus corridor and we expect this to commence in early 2017. Such bus alliances will bring significant benefits to the passenger, as well as to bus operators.

We have also seen a significant pick up in our private bus networks business where the new contracts which we have won considerably outweigh the contracts lost through the usual rotation.

As we look ahead to 2017 and beyond, we remain confident that we are well placed to take advantage of the opportunities which are being presented by the continuing state of change in the bus industry, a state of change which will be further reinforced by the Buses Bill. Our strategy will continue to focus on maintaining the Company's strong balance sheet and geographic spread, whilst striving to improve our position, wherever we can, by organic growth or by acquisition.

For further information please contact:

 
 Rotala Plc                       0121 322 2222 
 John Gunn, Chairman 
 Simon Dunn, Chief Executive 
  Officer 
 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) 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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November 03, 2016 03:00 ET (07:00 GMT)