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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 0.0% 22.50 22.00 23.00 22.50 22.50 22.50 11,154 01:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Travel & Leisure 67.5 2.6 4.0 5.6 11

Rotala PLC Half-year Report

15/09/2020 7:00am

UK Regulatory (RNS & others)


Rotala (LSE:ROL)
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From Aug 2020 to Oct 2020

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TIDMROL

RNS Number : 9566Y

Rotala PLC

15 September 2020

15 September 2020

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Rotala Plc

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

Unaudited Interim Results

Rotala plc (AIM:ROL), a provider of transport solutions across the UK, announces its unaudited interim results for the six months to 31 May 2020.

Highlights

-- Operating profit before exceptional items for first half 2020 of GBP0.37m (H1 2019: GBP2.3m), despite impact of COVID-19

   --      Passenger volumes gradually increasing as Government restrictions eased 

-- Operating well within extended overdraft facility put in place by the Company's bankers HSBC

   --      Bus services continue to be well supported by Government 
   --      No necessity for Company to utilise any of the Government loan schemes 
   --      Post-crisis opportunities for both organic growth and growth by acquisition 

For further information please contact:

 
 Rotala Plc                                  0121 322 2222 
 John Gunn, Chairman 
 Simon Dunn, Chief Executive 
 Kim Taylor, Group Finance Director 
 
 Nominated Adviser & Joint Broker: 
  Cenkos Securities plc                        020 7397 8900 
 Stephen Keys/Callum Davidson (Corporate 
  Finance) 
  Michael Johnson/Julian Morse (Corporate 
  Broking) 
 

Chairman's Statement

I am pleased to present this interim report to shareholders in respect of the six months ended 31 May 2020. Up until the COVID-19 pandemic triggered the "lockdown" phase of the Government's response in late March 2020, the Group was trading in line with budget and was well on course to achieve its best ever first half results. All that progress was halted however when the Government introduced severe restrictions on travel for all but essential workers on 23(rd) March 2020.

In line with the announcement dated 9 April 2020, the Company has continued over the intervening period to align bus services with local requirements, reduce commensurately the costs of operation and conserve cash. Cash flow, both at EBITDA level and net of all debt, interest and other payments, was quickly stabilised and since the beginning of May 2020 has been positive. As highlighted in the same 9 April 2020 announcement, the bankers to the Company, HSBC Bank Plc, responded to the COVID-19 crisis by increasing the Company's overdraft facility to GBP6.6 million. The Company has operated well within that facility in the intervening period and, whilst it has benefited from the grants Government is providing to the bus sector, it has not taken up any of the options offered under the various Government-supported loan schemes, and at the current time sees no requirement to do so. Besides the response of HSBC Bank Plc outlined above, the Company benefited from a moratorium of between three and six months declared by the majority of hire purchase finance providers.

In the announcement of 9 April 2020 we set out the Group's response to the restrictions placed upon it by Government action. In brief we consulted closely with the Local Authorities in whose areas we operate (as we were directed to do by Government), reconfigured timetables to meet the likely new passenger levels and reduced driver rosters to match the new levels of service provision. All other employees not rostered to work were placed into the Coronavirus Job Retention Scheme. At the beginning of the crisis passenger loadings fell to under 15% of expected levels on a like for like basis but since then passenger volumes have slowly recovered as the crisis has eased and the Government has lifted many of the initial restrictions.

At the time of writing passenger volumes are rising steadily as schools have returned and the holiday season has ended. On a like for like basis passenger volumes now stand at about 54% of the same period in the previous year. We expect this upward trend to continue. To match these increases bus service frequencies have been gradually returned to pre-crisis levels. We are now running at roughly the level we were at before the Coronavirus crisis hit. We are also playing our full part in the Home to School transport initiative being funded by the Department of Education. Staff have accordingly gradually been brought back from furlough. At one time just under 50% of staff were on furlough but this proportion has fallen steadily and, bearing in mind that between 5% and 10% of staff are always on holiday, almost all of our staff are now back at work.

Throughout this period the support of Government at local and national level has been key to sustaining our operations. As we highlighted in the announcement of 9 April 2020, as soon as the "lockdown" phase of the Coronavirus pandemic began, the UK Government designated bus operation to be an essential service. Government also took steps, through specific direction provided by the Cabinet Office to all arms of the State at both national and local level and through the Department for Transport, to ensure that bus companies had sufficient cash flow to support the operations that they were being asked to run. These measures encompassed a specific COVID-19 Bus Service Support Grant (now renamed "CBSSG Restart") and the maintenance of Bus Services Operator's Grant, concessionary fares re-imbursements and payments for contracted bus services broadly at their pre-crisis levels. These support measures continue to be in place at the current time. We remain grateful to Government for recognising early that bus operation was indeed an essential public service and for putting in place the support measures that were necessary to keep services running in very adverse circumstances.

Government has confirmed that CBSSG Restart and all other support measures will continue in place for the time being. Government has stated that, if it decides to terminate CBSSG Restart, it will give eight weeks' notice of termination. This should give ample time for us to make any service changes which might be necessary following the withdrawal of the grant.

Results and review of trading

For the six months ended 31 May 2020 group revenues were GBP35.5 million (2019: GBP30.5 million). However, as should be apparent from my words above, there is no comparability between the two accounting periods and therefore little meaningful to be said, except to point out that the 2020 figures include the results of the Bolton acquisition made in August 2019, but that the results for the period ended 31 May 2019 obviously do not include any such contribution. In the period to 31 May 2020 the grant and subsidy regime described above contributed GBP7.1 million to total revenues (which are broken down in detail in note 3 to this statement).

Despite the adverse operating conditions, before exceptional items, the Group recorded an Operating Profit of GBP373,000 for the six months to 31 May 2020 overall (2019: GBP2,330,000). For the same period the Group incurred a charge of GBP4.1 million for exceptional items, largely brought about by the COVID-19 crisis. The charge is analysed in detail in Note 4 to this statement and is the main cause of the loss before tax of GBP4.9 million (2019: profit before tax GBP1.1 million). The principal components of that charge are as follows:

-- As the COVID-19 crisis took hold it rapidly became clear to the Board that the oldest vehicles in the bus fleet (retained mainly to increase the flexibility of service operation) were very unlikely ever to see service again. Accordingly the Board concluded that it would be more beneficial to group cash flow to sell these seventy one vehicles for scrap and take a one-off charge to the profit and loss account of GBP913,000. The group's cash flow will be improved by about GBP300,000 by the combined effect of the sale of the buses and the release back into the tyre pool of the tyres used by these vehicles;

-- In order to hedge its requirement for diesel fuel, the Group enters, as a matter of course, into diesel commodity forward contracts. These agreements do not meet the definition of hedging transactions under IAS 39 "Financial Instruments: Recognition and Measurement". Accordingly they are accounted for as a derivative and are recorded at fair value through profit and loss in any accounting period. This means that the group's entire fuel derivative exposure is marked to the market price at the end of any reporting period. Therefore the profit and loss account for the six months ended 31 May 2020 recognises the charge of GBP2,877,000 required to reflect the full potential loss to the Company of all its remaining fuel derivative contracts at the price prevailing at that date. Since 31 May 2020 the market prices and exchange rate underlying this provision have changed considerably and as at 31 August 2020 the provision required was GBP1,626,000, GBP1,258,000 as a current liability and GBP368,000 as a non-current liability. The cash flow impact of the mark to market provision on the fuel derivative exposure, if realized wholly into cash, would arise evenly over the eighteen months to 30 November 2021.

Financial review

The Board believes that the Company will be able to sustain its activities for the foreseeable future under current operating conditions. Therefore it is considered to be appropriate to draw up these financial statements on the going concern basis.

Income statement

Trading conditions for the six months ended 31 May 2020 were abnormal and not directly comparable with preceding accounting periods. The restrictions on trading prompted by the COVID-19 pandemic caused gross profits to fall by 14% compared to the same period in 2019 and the gross profit percentage to fall to 14.2% (2019: 19%). Administrative expenses rose to GBP4.7m (2019: GBP3.5 million) reflecting the addition of the large depot at Bolton in the second half of 2019. Consequently Profit from Operations before exceptional items fell to GBP373,000 (2019: GBP2,330,000) and, after interest and tax, a loss before exceptional items of GBP644,000 was recorded (2019: profit GBP1,269,000). T he loss per share was 1.29 pence (2019: profit per share of 2.64 pence).

The composition of the charge for exceptional items of GBP4.1 million has already been analysed above. The Loss from Operations after exceptional items was GBP3.8 million (2019: Profit of GBP1.9 million) and, on the same basis, the Loss before Tax was GBP4.9 million (2019: Profit before Tax of GBP1.1 million). The loss per share for the period was therefore 7.61 pence (2019: profit per share of 1.75 pence).

Balance sheet

The balance sheet as at 31 May 2020 was relatively static when compared to that pertaining at 30 November 2019. Note 6 should be consulted for a detailed analysis of property, plant and equipment. In accordance with IFRS 16 - Leases (see note 2) right of use assets were recognised in the opening balance sheet using the modified retrospective approach. Some additions were made to the vehicle fleet in the period but, given that deliveries of new buses for the Bolton re-equipment were delayed by the pandemic, they were outweighed by depreciation, disposals and the decision, as above, to scrap 71 older vehicles. The liabilities side of the balance sheet encompasses for the first time the lease obligations calculated under IFRS 16, as both current and non-current liabilities. Otherwise the only item of note is that, making use of the increased overdraft facility provided by HSBC Bank Plc as part of their response to the COVID-19 crisis, net bank debt increased from GBP24.6 million at 30 November 2019 to GBP26.5 million as at 31 May 2020. No new bank borrowings were taken out in the period under review and indeed a small repayment of mortgage borrowings was made in the period.

Cash flow statement

Despite the loss before tax of GBP4.9 million for the period, major components of that loss were formed from non-cash items. Thus the Group was able to record a positive cash flow generated from operations of GBP1,235,000 (2019: GBP1,456,000) and positive net cash flow from operating activities of GBP668,000 (2019: GBP1,070,000).

The sale proceeds of the disposal of the Atherton depot in May 2020 outweighed purchases of property, plant and equipment and the interim dividend was paid in December 2019, well before the COVID-19 crisis was upon us, but no final dividend was declared and paid.

The mortgage repayment of GBP1 million of the previous year was directly connected to the sale of a property and so was not repeated this year. The capital payments under HP agreements benefited somewhat from the moratorium already mentioned but otherwise the pattern of payments and receipts under financing activities was very similar to the comparative period. Cash used in financing activities therefore totalled GBP3.1 million (2019: GBP3.2 million) and the net decrease in cash and cash equivalents at this stage of the year was actually lower than in the comparative period at GBP2.1 million (2019: GBP2.6 million).

New vehicles

The delayed delivery of the new buses for the Bolton depot, to replace the buses presently leased from First Group plc in accordance with the terms of the acquisition in August 2019, means that a large batch of these vehicles will arrive in close order in the second half of the year and cause the book value of passenger service vehicles and the hire purchase debt financing them to increase by about GBP17 million by 30 November 2020. The remainder of the vehicles on order, with a value of some GBP11 million, almost all destined for Bolton, will arrive throughout 2021. In cash flow terms these acquisitions will be cash neutral as the current leasing costs are equivalent to the capital repayments on the new vehicles. In addition the replacement vehicles are far more fuel efficient and have much lower maintenance costs. Furthermore, given the change in circumstances since these orders were placed last year, we do not foresee any requirement, unless for completely new business, to acquire any vehicles for the following two years. In a normal year we would expect to invest about GBP4m in the natural cycle of fleet replacement, so, after the initial large increase in the size of the outstanding HP debt, that increase will be temporary and reduce rapidly so that, when the next re-equipment cycle begins HP debt levels will be comparable to where they were as at 31 May 2020.

Dividends

Because of the onset of the lockdown under the COVID-19 crisis the directors were unable to recommend to the Annual General Meeting in May 2020 a final dividend in respect of the year ended 30 November 2019. One of the terms of the CBSSG Restart scheme is that no dividends can be paid to shareholders. However, once the CBSSG Restart grant period has ended, the Board will consider whether it is possible to reinstate dividend payments.

Fuel hedging update

The normal annual fuel requirement of the Group is approximately 14.0 million litres . In drawing up its budget for 2020 and beyond the Board originally targeted an average fuel price of about 100p a litre . The board continued to hedge this fuel requirement until early in 2020. By that stage about 77% of the group's fuel requirement for 2020 was covered by hedging contracts and about 87% of the fuel requirement for 2021. Actual fuel usage during the COVID-19 crisis has of course been well below expected levels and full provision has been made in these financial statements against the fuel derivative exposure as at 31 May 2020 at the then market prices.

Outlook

For the foreseeable future the Group will continue to work closely with the Department for Transport and relevant Local Authorities and be in receipt of the various elements of Government support in the form of the grants and subsidies already described. In these abnormal circumstances it is not possible, while the CBSSG Restart regime remains in place, to give any guidance to the market as to expected financial performance.

The Board does expect the steadily increasing trend in passenger volumes to continue until normal trading conditions can be re-established, although it is of course impossible to forecast exactly when that will be. The Board however does believe that the Company will be well placed after the pandemic has passed to take advantage of opportunities in the bus market. Even before the onset of the COVID-19 crisis it was evident that the likelihood of major opportunities in our markets was increasing. Since then a number of small and medium sized competitors in our areas of operation have either collapsed or withdrawn from the market and the factors causing stress to several of our larger competitors have not diminished. Therefore the Board expects there to be increased opportunities in the future both for organic growth and for sizeable acquisitions.

In addition the Board believes that the Group, its management and its employees have met the stress test posed by extraordinary and unprecedented circumstances and come through them with flying colours. We have seen service delivery and reliability improve throughout the crisis, management learn to be quicker on its feet, and the increased investment in systems infrastructure continue to produce discernible benefits. We are therefore very confident that, operationally, the Group is in good shape, fitter and leaner to meet the challenges that lie beyond the end of the COVID-19 crisis.

John Gunn

Non-Executive Chairman

15 September 2020

 
 
 
 Condensed consolidated     Note    Unaudited      Unaudited    Unaudited    Unaudited      Unaudited     Unaudited 
  income statement                   6 months       6 months     6 months     6 months       6 months      6 months 
                                     ended 31        ended       ended 31     ended 31        ended        ended 31 
                                     May 2020        31 May      May 2020     May 2019        31 May       May 2019 
                                                      2020                                     2019 
 
                                        Results   Exceptional     Results        Results   Exceptional       Results 
                                         before         items     for the         before         items       for the 
                                    exceptional                    period    exceptional                      period 
                                          items                                    items 
                                        GBP'000       GBP'000     GBP'000        GBP'000       GBP'000     GBP'000 
 
 Revenue                     3           35,495             -      35,495         30,523             -      30,523 
 
 Cost of sales                         (30,460)             -    (30,460)       (24,698)             -    (24,698) 
 
 Gross profit                             5,035             -       5,035          5,825             -       5,825 
 
   Administrative 
   expenses                             (4,662)       (4,129)     (8,791)        (3,495)         (386)     (3,881) 
 
 Profit/(loss) 
  from operations                           373       (4,129)     (3,756)          2,330         (386)       1,944 
 
   Finance expense                      (1,168)             -     (1,168)          (801)             -       (801) 
                                  -------------  ------------  ----------  -------------  ------------  ---------- 
 
   (Loss)/profit 
   before taxation            4           (795)       (4,129)     (4,924)          1,529         (386)       1,143 
 
 Tax credit/(expense)                       151           963       1,114          (260)          (41)       (301) 
 
 (Loss)/profit 
  for the period 
  attributable 
  to the equity 
  holders of the 
  parent                                  (644)      (3,166))     (3,810)          1,269         (427)         842 
 
 Earnings per 
  share for (loss)/profit 
  attributable 
  to the equity 
  holders of the 
  parent for the 
  period: 
 Basic (pence)               5           (1.29)                    (7.61)           2.64                      1.75 
 
 Diluted (pence)             5           (1.29)                    (7.61)           2.64                      1.75 
 
 
 
 
 
 
 
 Condensed consolidated                                   Note         Audited   Audited year   Audited year 
  income statement                                                  year ended       ended 30       ended 30 
                                                                   30 November       November       November 
                                                                          2019           2019           2019 
 
                                                                    Results       Exceptional          Results 
                                                                     before             items          for the 
                                                                   exceptional                            year 
                                                                      items 
                                                                       GBP'000        GBP'000          GBP'000 
 
 Revenue                                         3                      67,533              -           67,533 
 
 Cost of sales                                                        (53,917)              -         (53,917) 
 
 Gross profit                                                           13,616              -           13,616 
 
   Administrative expenses                                             (7,563)        (1,806)          (9,369) 
                                                                 -------------  -------------  --------------- 
 
   Profit from operations                                                6,053        (1,806)            4,247 
 
   Finance income                                                           53              -               53 
 
   Finance expense                                                     (1,688)              -          (1,688) 
 
 Profit before taxation                                                  4,418        (1,806)            2,612 
 Tax expense                                                             (840)            175            (665) 
                                                                 -------------  -------------  --------------- 
 Profit for the year attributable 
  to the equity holders of 
  the parent                                                             3,578        (1,631)            1,947 
 
 Earnings per share for profit 
  attributable to the equity 
  holders of the parent during 
  the year: 
 Basic (pence)                                   5                        7.35                            4.00 
                                                                 -------------  -------------  --------------- 
 
 Diluted (pence)                                 5                        7.35                            4.00 
                                                                 -------------  -------------  --------------- 
 
 
 
 
 
 Condensed consolidated statement         Unaudited 6    Unaudited   Audited year 
  of comprehensive income                 months ended    6 months       ended 30 
                                          31 May 2020     ended 31       November 
                                                          May 2019           2019 
                                            GBP'000       GBP'000         GBP'000 
 
 (Loss)/profit for the period               (3,810)         842             1,947 
                                        --------------  ----------  ------------- 
 
   Other comprehensive income: 
 Actuarial gain on defined 
  benefit pension scheme                       -             -                527 
 
 Deferred tax on actuarial 
  gain on defined benefit pension 
  scheme                                       -             -              (100) 
                                        -------------- 
 
 Other comprehensive income 
  for the period (net of tax)                  -             -                427 
 
 Total comprehensive (expense)/income 
  for the period attributable 
  to the equity holders of 
  the parent                                (3,810)         842             2,374 
                                        ==============  ==========  ============= 
 
 
 Condensed consolidated           Notes   Unaudited   Unaudited   Audited as at 
  statement of financial                   as at 31    as at 31    30 November 2019 
  position                                 May 2020    May 2019 
                                          GBP'000     GBP'000     GBP'000 
 Assets 
 Non-current assets 
 Property, plant and 
  equipment                       6       51,427      41,518      51,698 
 Defined benefit pension 
  asset                                   2,319       1,737       2,319 
 Goodwill and other intangible 
  assets                                  15,060      14,620      15,246 
                                          _____       _____       _____ 
 Total non-current assets                 68,806      57,875      69,263 
 
 Current assets 
 Inventories                              4,324       3,916       4,310 
 Trade and other receivables              19,403      19,396      18,275 
 Derivative financial 
  instruments                             -           152         36 
 Cash and cash equivalents                1,371       482         746 
                                          _____       _____       _____ 
 Total current assets                     25,098      23,946      23,367 
                                          _____       _____       _____ 
 Total assets                             93,904      81,821      92,630 
 
 Liabilities 
 Current liabilities 
 Trade and other payables                 (7,086)     (8,167)     (7,648) 
 Loans and borrowings             7       (22,009)    (16,152)    (19,267) 
 Obligations under hire 
  purchase agreements             8       (4,188)     (3,951)     (4,295) 
 Other lease obligations          9       (731)       -           - 
 Derivative financial 
  instruments                             (1,710)     (20)        (3) 
                                          ______      ______      _____ 
 Total current liabilities                (35,724)    (28,290)    (31,213) 
 
 Non-current liabilities 
 Loans and borrowings             7       (5,946)     (3,982)     (6,124) 
 Obligations under hire 
  purchase agreements             8       (16,262)    (11,861)    (15,934) 
 Other lease obligations          9       (1,889)     -           - 
 Provision for liabilities                (109)       (334)       (234) 
 Derivative financial                     (655)       -           - 
  instruments 
 Net deferred taxation                    (1,401)     (2,058)     (2,515) 
                                          ______      ______      ______ 
 Total non-current liabilities            (26,262)    (18,235)    (24,807) 
                                          ______      ______      ______ 
 Total liabilities                        (61,986)    (46,525)    (56,020) 
                                          _____       _____       _____ 
 Net assets                               31,918      35,296      36,610 
                                          ======      ======      ===== 
 
 
 Condensed consolidated      Unaudited   Unaudited   Audited as at 
  statement of financial      as at 31    as at 31    30 November 2019 
  position                    May 2020    May 2019 
                             GBP'000     GBP'000     GBP'000 
 
 
 Equity attributable 
  to equity holders 
  of parent 
 Called up share capital     12,731      12,220      12,731 
 Share premium reserve       12,369      11,779      12,369 
 Merger reserve              2,567       2,567       2,567 
 Shares in treasury          (806)       (817)       (806) 
 Retained earnings           5,057       9,547       9,749 
                             ______      ______      _____ 
 Total equity                31,918      35,296      36,610 
                             =====       =====       ==== 
 
 
 Condensed consolidated    Called      Share      Merger     Shares         Retained        Total 
  Statement of Changes      up share    premium    reserve    in treasury    earnings 
  in Equity                 capital     account 
                            GBP'000    GBP'000    GBP'000      GBP'000       GBP'000        GBP'000 
 
 At 1 December 2018         12,220      11,779     2,567        (817)         9,146       34,895 
                          ----------  ---------  ---------  -------------  ----------  ------------ 
 
 Profit for the period         -          -          -            -            842          842 
 Other comprehensive           -          -          -            -             -            - 
  income 
 Total comprehensive 
  income                       -          -          -            -            842          842 
 Transactions with 
  owners: 
 Dividends paid                -          -          -            -           (441)        (441) 
 Transactions with 
  owners                       -          -          -            -           (441)        (441) 
 
 At 31 May 2019             12,220      11,779     2,567        (817)         9,547       35,296 
                          ----------  ---------  ---------  -------------  ----------  ------------ 
 
 Profit for the period         -          -          -            -           1,105        1,105 
 Other comprehensive 
  income                       -          -          -            -            427          427 
 Total comprehensive 
  income                       -          -          -            -           1,532        1,532 
 Transactions with 
  owners: 
 Share based payment           -          -          -            -             2            2 
 Shares issued                511        590         -            11            -          1,112 
 Dividends paid and 
  accrued                      -          -          -            -          (1,332)      (1,332) 
 Transactions with 
  owners                      511        590         -            11         (1,330)       (218) 
 
 At 30 November 2019        12,731      12,369     2,567        (806)         9,749       36,610 
                          ----------  ---------  ---------  -------------  ----------  ------------ 
 
 Change in accounting 
  policy - IFRS 16 
  "Leases"                     -          -          -            -           (882)        (882) 
 Loss for the period           -          -          -            -          (3,810)      (3,810) 
 Other comprehensive           -          -          -            -             -            - 
  income 
 Total comprehensive 
  expense                      -          -          -            -          (4,692)      (4,692) 
 Transactions with 
  owners: 
 Dividends paid                -          -          -            -             -            - 
 Transactions with             -          -          -            -             -            - 
  owners 
 
 At 31 May 2020             12,731      12,369     2,567        (806)         5,057       31,918 
 
 
 
 Condensed consolidated cash              Unaudited         Unaudited         Audited year 
  flow statement                        6 months ended    6 months ended    ended 30 November 
                                         31 May 2020       31 May 2019            2019 
                                           GBP'000           GBP'000            GBP'000 
 Cash flows from operating 
  activities 
 (Loss)/profit for the period 
  before tax                               (4,924)            1,143              2,612 
 Finance expense (net)                      1,168              801               1,635 
 Depreciation                               4,138             2,090              4,361 
 Gain on sale of property, 
  plant and equipment                       (331)             (31)                (4) 
 Acquisition expenses                         -                 -                 578 
 Contribution to defined benefit 
  pension scheme                              -               (129)              (190) 
 Amortisation of intangibles                 187               257                501 
 Notional expense of defined 
  benefit pension scheme                      -                 -                  5 
                                            ____              ____                ____ 
 Cash flows from operating 
  activities before changes 
  in working capital and provisions          238              4,131              9,498 
 
 Increase in trade and other 
  receivables                              (1,129)           (3,501)            (2,377) 
 (Decrease)/increase in trade 
  and other payables                        (132)             1,792               (79) 
 Increase in inventories                    (15)              (391)              (590) 
 Movement on provisions                     (125)             (406)              (506) 
 Movement on derivative financial 
  instruments                               2,398             (169)               (71) 
                                            ____              ____                ____ 
                                             997             (2,675)            (3,623) 
                                            ____              ____                ____ 
 Cash generated from operations             1,235             1,456              5,875 
 
 Interest paid on hire purchase 
  agreements and other lease 
  obligations                               (567)             (386)              (664) 
                                            ____              ____                ____ 
 Net cash flows from operating 
  activities                                 668              1,070              5,211 
 
 
 
 Condensed consolidated cash               Unaudited         Unaudited         Audited year 
  flow statement                         6 months ended    6 months ended    ended 30 November 
                                          31 May 2020       31 May 2019            2019 
                                            GBP'000           GBP'000            GBP'000 
 Cash flows from investing 
  activities 
 Acquisitions of businesses                    -                 -               (5,992) 
 Purchases of property, plant 
  and equipment                              (464)             (589)             (1,325) 
 Sale of property, plant and 
  equipment                                   729               113                 96 
                                             _____             _____              _____ 
 Net cash flows derived from/(used 
  in) investing activities                    265              (476)             (7,221) 
 
 Cash flow from financing activities 
 Shares issued                                 -                 -                1,112 
 Dividends paid                              (476)             (441)             (1,297) 
 Proceeds of mortgage and other 
  bank loans                                   -                750               6,750 
 Repayment of bank and other 
  borrowings                                 (176)            (1,139)            (1,283) 
 Bank interest paid                          (517)             (507)             (1,037) 
 Hire purchase refinancing 
  receipts                                    185               354                353 
 Capital settlement payments 
  on vehicles sold                             -               (115)              (117) 
 Capital element of obligations 
  under hire purchase agreements            (1,607)           (2,086)            (4,199) 
 Other lease obligations under               (459)               -                  - 
  IFRS 16 
                                             _____             _____               ____ 
 Net cash (used in)/generated 
  from financing activities                 (3,050)           (3,184)              282 
 
 Net decrease in cash and cash 
  equivalents                               (2,117)           (2,590)            (1,728) 
 
 Cash and cash equivalents 
  at start of period                        (1,959)            (231)              (231) 
                                             _____             _____              _____ 
 Cash and cash equivalents 
  at end of period                          (4,076)           (2,821)            (1,959) 
                                            ======             =====               ==== 
 

Notes to the Unaudited Consolidated Interim Financial Statements for the six months ended 31 May 2020

   1.     Basis of preparation: 

The unaudited condensed consolidated interim financial statements have been prepared using the accounting policies set out in the group's 2019 statutory financial statements. However for the year ending 30 November 2020 the group is required to adopt IFRS 16 - Leases (see note 2).

The financial statements of the group for the full year are prepared in accordance with IFRS's as adopted by the European Union and these interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting". The interim financial statements have been prepared on a going concern basis.

   2.     IFRS 16 - Leases: 

Under this standard the group, as a lessee, is required to recognize on-balance sheet its right to use all leased assets, except short term leases and leases of low value items, and the corresponding lease liability, being the obligation to make lease payments. In applying IFRS 16 the group has adopted the modified retrospective approach. This approach requires that the cumulative profit and loss account effect of the adoption of the accounting standard is recognised as an adjustment to opening reserves. Furthermore the value of the right of use assets should be recognised at the commencement date together with the corresponding lease liabilities. Comparative figures are, under this approach, not required to be adjusted and have not been so adjusted.

Therefore as at 1 December 2019 (the commencement date) the group recognised :

-- as an asset the carrying value of right of use assets at a gross value of GBP4,161,000 (see note 6);

   --      accumulated depreciation on those assets of GBP2,293,000 (see note 6); 

-- as a liability the present value of the minimum lease payments on right of use assets of GBP2,750,000;

-- an adjustment to opening reserves of GBP882,000 (see the Condensed Consolidated Statement of Equity).

The group had already recognized as an asset a leasehold interest at its fair value at the date of acquisition in 2006, which has now been reclassified as a right of use asset. Accounting standards at that time did not require the recognition of a corresponding right of use liability, which is therefore now included within the above calculation for the present value of the minimum lease payments.

The adoption of this standard has had and will have no material impact on the profit and loss account of the group in the current accounting period.

   3.     Turnover: 

Revenue represents sales to external customers excluding value added tax. All of the activities of the group are conducted in the United Kingdom within the operating segment of provision of bus services. Management monitors revenue across the following business streams: contracted services, commercial services and charter services.

 
 
                         Six months   Six months    Year ended 
                          ended 31     ended 31     30 November 
                          May 2020     May 2019        2019 
 
                          GBP'000      GBP'000       GBP'000 
 Commercial                19,385       19,175        45,842 
 Contracted                8,789        10,566        20,223 
 Charter                    209          782          1,468 
 Grants and subsidies      7,112          -             - 
 Total                     35,495       30,523        67,533 
                        ===========  ===========  ============= 
 

As set out in the Chairman's Statement the group has been the beneficiary of extensive support in the current accounting period from the Department of Transport and Local Authorities. The principal component parts of the income from grants and subsidies in the period were:

-- Concessionary fares income received but not matched by the carriage of a passenger - GBP2,660,000;

   --      Bus Services Operator's Grant not matched by actual kilometres driven - GBP597,000; 
   --      COVID-19 Bus Services Support Grant - GBP3,623,000. 
   4.     Profit before taxation: 

Profit before taxation includes the following items which the directors consider to be outside of the normal trading transactions of the group and are therefore to be regarded as exceptional in nature:

 
 
                                     Unaudited   Unaudited   Audited year 
                                      6 months    6 months       ended 30 
                                      ended 31    ended 31       November 
                                      May 2020    May 2019           2019 
                                       GBP'000     GBP'000        GBP'000 
 
 
 Depreciation charge for                 (913)           -              - 
  vehicles scrapped 
 Mark to market provision 
  on fuel derivatives                  (2,877)         325             58 
 Amortisation of intangible 
  assets                                 (187)       (257)          (501) 
 Professional fees and                    (29)           -              - 
  re-organisation expense 
  related to COVID-19 
 Other transaction costs                 (123)        (57)           (67) 
 Acquisition costs                           -       (397)          (578) 
 Costs of reorganisation 
  and integration of acquisitions            -           -          (717) 
 Share based payment expense                 -           -            (1) 
 
 
 (Loss)/profit within 
  profit before taxation               (4,129)       (386)        (1,806) 
                                    ==========  ==========  ============= 
 

The principal elements of the charge for exceptional items in the period consist of the following items described in detail in the Chairman's Statement:

-- Depreciation charge for vehicles scrapped: the oldest vehicles in the bus fleet (retained mainly to increase the flexibility of service operation) are unlikely ever to see service again. Accordingly the board concluded that it would be more beneficial to group cash flow to sell these seventy one vehicles for scrap and take a charge to the profit and loss account of GBP913,000;

-- Mark to market provision on fuel derivatives: the profit and loss account for the six months ended 31 May 2020 recognises the charge required to reflect the full potential loss to the Company on all its remaining fuel derivative contracts at the price prevailing at that date.

   5.     Earnings per share: 

Basic earnings per share have been calculated on the basis of profit after taxation and the weighted average number of shares in issue for the period of 50,091,109 (May 2019: 48,026,580; November 2019: 48,673,701). Diluted earnings per share have been calculated on the basis of profit after taxation and the weighted average number of shares in issue (including such potential issues as are dilutive) for the period of 50,091,109 (May 2019: 48,026,580; November 2019: 48,673,701).

Basic adjusted and diluted adjusted earnings per share before exceptional items have been calculated using the same weighted average numbers of shares in issue, but on the basis of profits after tax and before any exceptional items. This is done in order to aid comparability between the accounting periods.

   6.     Property, plant and equipment 
 
                                    Freehold      Right                    Public 
                               and leasehold     of use         Plant     service 
                                    land and     assets           and    vehicles     Total 
                                   buildings      under     machinery 
                                                IFRS 16 
                                     GBP'000    GBP'000       GBP'000     GBP'000   GBP'000 
 Cost: 
 At 1 December 2018                    7,103          -         5,238      50,954    63,295 
 Acquisition                           4,692          -           500           -     5,192 
 Additions                               186          -           895      10,435    11,516 
 Disposals                              (11)          -         (323)     (2,721)   (3,055) 
 
 
 At 30 November 2019                  11,970          -         6,310      58,668    76,948 
 
 
 Right of use assets 
  recognised under IFRS 
  16                                       -      4,161             -           -     4,161 
 Reclassifications                     (913)        913             -           -         - 
 Additions                                 3        322           194       1,877     2,396 
 Disposals                             (168)          -         (159)     (4,194)   (4,521) 
 
 
 At 31 May 2020                       10,892      5,396         6,345      56,351    78,984 
 
 
 Depreciation: 
 At 1 December 2018                      503          -         1,604      21,744    23,851 
 Charge for the year                      75          -           486       3,800     4,361 
 Disposals                              (11)          -         (321)     (2,630)   (2,962) 
 
 
 At 30 November 2019                     567          -         1,769      22,914    25,250 
 
 
 Depreciation on right 
  of use assets recognised 
  under IFRS 16                            -      2,293             -           -     2,293 
 Reclassifications                     (255)        255             -           -         - 
 Charge for the period                    24        452           270       3,391     4,137 
 Disposals                              (17)          -           (8)     (4,098)   (4,123) 
 
 
 At 31 May 2020                          319      3,000         2,031      22,207    27,557 
 
 Net book value: 
 At 31 May 2020                       10,573      2,396         4,314      34,144    51,427 
 
 
 At 30 November 2019                  11,403          -         4,541      35,754    51,698 
 
 
   7.     Loans and borrowings: 

Secured bank loans are mortgage-type loans secured by reference to the group's freehold property.

 
                           At 31 May   At 31 May   At 30 November 
                              2020        2019          2019 
                            GBP'000     GBP'000       GBP'000 
 Current: 
 Overdrafts                  5,447       3,303         2,705 
 Bank loans (secured)         387         224           387 
 Bank loans (unsecured)     16,175      12,625         16,175 
 
                            22,009      16,152         19,267 
 
 
 Non- current: 
 Bank loans (secured)        5,946       3,982         6,124 
 
 Total loans and 
  borrowings                27,955      20,134         25,391 
 
 
 
   8.     Obligations under hire purchase agreements: 

All finance leases are secured by the lessors' rights over the respective leased assets which consist principally of passenger service vehicles.

 
 Obligations under hire    At 31 May   At 31 May   At 30 November 
  purchase agreements         2020        2019          2019 
                            GBP'000     GBP'000       GBP'000 
 Present value: 
 Not later than one 
  year                       4,188       3,951         4,295 
 More than one but less 
  than two years             3,863       3,182         3,840 
 More than two but less 
  than five years            7,978       6,609         8,051 
 Later than five years       4,421       2,070         4,043 
                          ----------  ----------  --------------- 
                            20,450      15,812         20,229 
 
 
 

Other lease obligations:

Other lease obligations consist of those obligations created by the adoption in the current accounting period, for the first time, of the provisions of IFRS 16 - Leases (see note 2).

10. Dividends:

On 13 December 2019 the company paid an interim dividend of 0.95 pence per share in respect of the year ended 30 November 2019; the directors were unable to recommend the payment of a final dividend in respect of that year because of the advent of the COVID-19 pandemic. All dividends are payable in cash only.

11. Additional information:

The unaudited Consolidated Interim Report was approved by the Board of Directors on 14 September 2020. The consolidated interim financial information for the six months ended 31 May 2020 and for the six months ended 31 May 2019 is unaudited. The financial information in this interim announcement does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The statutory accounts of Rotala Plc for the year ended 30 November 2019 have been reported on by the company's auditors and have been delivered to the Registrar of Companies. The report of the auditors on these accounts was unqualified, did not contain an emphasis of matter and did not include a statement under section 498 of the Companies Act 2006.

 
 
 

12. Copies of this statement are available from the registered office of the company at Rotala Group Headquarters, Cross Quays Business Park, Hallbridge Way, Tividale , Oldbury , West Midlands, B69 3HW or the Company's website www.rotalaplc.com .

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END

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