TIDMROL

RNS Number : 9773T

Rotala PLC

28 July 2022

28 July 2022

Rotala Plc

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

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 2022.

Highlights

   --      Passenger numbers recovering slowly but steadily 
   --      Profit after tax of GBP2.1m (2021: GBP0.8m) 
   --      Basic earnings per share of 4.17p (2021: 1.61p) 
   --      Interim dividend declared of 0.5p per share (2021: nil) 
   --      Net debt at 31 May 2022 of GBP44m (2021: GBP64m) 

Simon Dunn, Chief Executive said: "During the COVID-19 pandemic, we decided to focus on cash conservation and debt reduction with the objective of emerging from the pandemic with a robust balance sheet, fit for renewed commercial operation. We believe that we have achieved these objectives.

"As the bus industry recovers from the effects of COVID-19, bus networks are being reviewed and rationalised and this is causing a good deal of turbulence in the industry which should bring a continuing flow of acquisition opportunities to Rotala, much like the acquisitions made in the first half of FY 2022. We are well placed to take advantage of these opportunities as they arise. "

For further information please contact:

 
Rotala Plc                                        0121 322 2222 
John Gunn, Chairman 
 Simon Dunn, Chief Executive 
 Kim Taylor, Group Finance Director 
 
  Shore Capital                                     020 7408 4090 
Tom Griffiths/James Thomas (Corporate Advisory) 
 Henry Willcocks (Corporate Broking) 
 

Chairman's Statement

I am pleased to be able to make this report to the shareholders of Rotala Plc in respect of trading for the six months ended 31 May 2022.

After a period of two years in which bus operation and service levels had been to a great extent determined by the objectives of the Department for Transport ("DfT") and local authorities, in the first half of the current financial year, ending 30 November 2022 ("FY 2022"), bus operations returned to more or less normal, though still underpinned by grants and subsidies provided by the DfT and local authorities.

Government support

The DfT's Bus Recovery Grant ("BRG") scheme, which was originally due to expire in early April 2022, covers the period up to October 2022. However, at the same time, concessionary fares re-imbursement levels, which are controlled by local authorities, are being gradually adjusted to reflect actual travel patterns such that by the end of calendar 2022 the re-imbursements received will represent actual concessionary passenger usage. Thus, broadly, DfT and local authority support is being tapered as passenger numbers slowly recover from the impact of COVID-19.

Passenger numbers

At 30 November 2021, the end of the Company's most recent financial year, passenger numbers overall were ranging between 80% and 85% of pre- COVID-19 levels. In FY 2022, they have continued to grow slowly but steadily towards the upper end of that range. In some areas, sharper rises in activity levels have been observed: for example, usage of the "Hoppa" services around Heathrow Airport has increased considerably since the start of the calendar year in response to much improved volumes of airline travel. However, recent industry reports have made it clear that, unlike rail, where the issue is the reduction in commuter traffic, it is in the concessionary card holder segment of bus passengers (largely pensioners) where passenger levels have not yet recovered to pre-pandemic levels. This reluctance to travel seems to have its root in an aversion to the risk of exposure to current variants of COVID-19. Full recovery in bus passenger numbers will therefore depend on concessionary card holders regaining their former confidence in travelling by bus. Reflecting these underlying trends, the Board expects passenger numbers to continue to grow slowly but steadily for the remainder of FY 2022, but not to recover fully to pre-pandemic levels until 2023.

Revenues

 
 GBPm                    Six months   Six months   Six months     Year ended 
                           ended 31     ended 30     ended 31    30 November 
                           May 2022     November     May 2021           2021 
                                            2021 
 Commercial                    24.7         19.3         12.4           31.7 
 Contracted                     9.0          8.8          7.4           16.2 
 Charter                        0.5          0.2          0.5            0.7 
 Grants and subsidies           4.8         20.9         27.0           47.9 
                        -----------  -----------  -----------  ------------- 
 Total                         39.0         49.2         47.3           96.5 
                        -----------  -----------  -----------  ------------- 
 

The factors set out above are the key drivers of total revenues in the above table. As grants and subsidies from the various arms of the Government have tapered as passenger numbers recovered and bus service levels ceased to be mandated by the Government, so total revenues have fallen back. It can be seen that the peak of Government support for the bus industry was reached in the first half of 2021 and that it then fell slowly in the second half of that year, but has declined substantially in the first half of FY 2022. At the same time, as the various COVID restrictions were lifted, commercial revenue has recovered strongly. Contracted revenue, largely derived from tendered bus contracts operated for local authorities, was much less sensitive to COVID restrictions, but has shown some recent growth. Charter revenue, which is ad hoc by nature, is always highly variable.

Profits

 
 GBPm                                   Six months   Six months     Year ended 
                                          ended 31     ended 31    30 November 
                                          May 2022     May 2021           2021 
 Profit/(loss) before tax before 
  exceptional items                            0.0        (0.1)          (1.3) 
 Profit before tax after exceptional 
  items (see note 3)                           3.0          1.1            0.3 
 

One of the key requirements of Government support, which was prevalent throughout most of FY 2021, was that a bus company should, in return for the package of grants and subsidies, make neither a profit nor a loss at the normalised pre-tax profit line. This is not a requirement of the current BRG regime, but, at the moment, the key factor in returning to profitability is the return of passenger numbers to their pre-COVID levels. As set out above, the Board does not expect this to happen until FY 2023 and so the results for the first six months of FY 2022 were in line with budget and the Board's expectations.

Profit before tax after exceptional items fluctuates principally as a result of the marking to market of the Group's fuel derivative position (profit of GBP2.4m in 2022 and GBP1.2m in 2021). Note 3 to this statement contains a full analysis of the make up of exceptional items. In addition, in this reporting period, a profit of GBP0.6 million was recorded on the sale of a surplus leasehold property.

It is worth noting that the way that the fuel derivative is accounted for anticipates profits (and losses as in FY 2020) but serves to protect pre-tax profits for the year as a whole from any further increase in fuel prices.

Working capital and debt

 
 Working capital (GBPm)         At 31 May   At 31 May   At 30 November 
                                     2022        2021             2021 
 Inventories                          1.2         2.5              1.1 
 Trade and other receivables         10.1        20.5             21.8 
 Trade and other payables             7.4         5.7              6.2 
                               ----------  ----------  --------------- 
 Total working capital                3.9        17.3             16.7 
                               ----------  ----------  --------------- 
 

The Group's trade and other receivables were inflated during 2021, as they had been the previous year, by the amounts receivable from the DfT under BRG and its predecessor programmes. During the first half of FY 2022, the reconciliation processes governing the release of these grants were completed. The receipt of the grants in cash facilitated the substantial reduction in working capital which can be seen in the above table, given that the other components of working capital remained within their normal ranges.

 
 Net debt (GBPm)                  At 31 May   At 31 May   At 30 November 
                                       2022        2021             2021 
 Revolving commercial facility 
  drawn                                 1.3        14.7              7.6 
 Mortgage debt                          5.6         6.1              5.9 
 Overdraft (net of cash)                0.0         2.5              3.2 
                                 ----------  ----------  --------------- 
 Total net debt                         6.9        23.3             16.7 
                                 ----------  ----------  --------------- 
 

The release of working capital in the first half of FY 2022 occasioned by the receipt of the grants and subsidies described above enabled the Group to significantly reduce its drawings on its revolving commercial facility ("RCF"). In March 2022, the Company also announced that it had signed new banking facilities with its principal bankers, HSBC Bank plc; these facilities include an RCF of up to GBP17 million, of which only GBP1.3 million was drawn as at 31 May 2022. This leaves ample resources to fund future organic growth and acquisitions.

The release of working capital should ensure that net debt (including hire purchase debt, details of which are set out in the table below) is under GBP40 million by 30 November 2022, in line with the Board's plans and expectations. This target would need to be modified if any further acquisitions were made by the Company in the second half of FY 2022, but this is the only circumstance which would occasion such a modification.

Hire purchase debt and fleet management

 
 GBPm                   At 31 May    At 31 May   At 30 November 
                             2022         2021             2021 
 Hire purchase debt          36.3         39.1             39.9 
 Average fleet age     7.52 years   7.59 years       7.56 years 
 

As stated at the time of the publication of the FY 2021 results, the Board did not foresee any requirement, unless for specific new business, for new vehicles in FY 2022. Capital expenditure in the first half of FY 2022 therefore totalled only GBP451,000 and was mostly covered by asset disposals, including that of the surplus leasehold property. No new hire purchase finance was taken out in the period. Therefore, the Board is confident that its forecast that hire purchase debt will be approximately GBP34 million by 30 November 2022 will be met.

The continuing disposal of older vehicles ensured that the average fleet age remained closely comparable to previous periods.

Dividend

In April 2022, the Company, as it resumed dividend payments post the pandemic, paid a special interim dividend of 1.0p per share. At the same time, the Board stated its intention to return to its former policy of maintaining 2.5 times earnings cover for any future dividend payments. While dividends will therefore now reflect the Group's current profitability, the Board will adopt a progressive dividend policy, as before the onset of the COVID-19 crisis, recognising the importance of dividend flows to shareholders. The Board therefore has declared an interim dividend of 0.5p per share which will be paid on 9 September 2022 to shareholders on the register on 19 August 2022 .

It is anticipated that future dividends will be paid in the pattern of September (interim) and June (final), in the proportion of one third at the interim dividend stage and two thirds for the final.

Share Buy Back programme

On 23 March 2022 the Company announced that it would commence a Share Buy Back programme in accordance with the AGM resolution then in force. This resolution was renewed at the AGM held on 19 May 2022. So far under this programme the Company has acquired 921,316 ordinary shares at a total cost of GBP273,000. In accordance with accounting standards, the cost of shares acquired in this manner is written off to reserves. A total of 1,721,316 shares is now held in treasury.

Acquisitions and DfT Policy

In the period under review the Company made two small acquisitions in the West Midlands. The first was the bus business of Claribel Coaches Limited ("Claribel") which completed on 22 April 2022. Claribel is a bus operator, in the eastern part of Birmingham. Through its Diamond Bus subsidiary, Rotala acquired the business and 18 vehicles for a total cash consideration of GBP339,000. The Group did not assume any liabilities. On completion, the acquired business was immediately transferred to, and integrated within, the Group's existing depot infrastructure in the West Midlands. No goodwill arose on the transaction.

The second occurred on 29 May 2022, when the Group completed, through its Diamond Bus subsidiary, its acquisition of the bus business of J ohnsons (Henley) Limited ("Johnsons"), together with 20 vehicles, for a total cash consideration of GBP936,000. Johnsons is a well-established operator of commercial and contracted bus services in Warwickshire and the southern West Midlands. The Group did not assume any liabilities. Since acquisition, the acquired business has been suitably rationalised and integrated within, the Group's existing depot infrastructure in the West Midlands. No goodwill arose on the transaction.

The DfT recently announced awards under its Bus Service Improvement Plan ("BSIP") scheme, which is part of the Government's National Bus Strategy. A number of the local authorities in which the Group operates were awarded funds under this scheme, including Greater Manchester, the West Midlands and Lancashire. The next stage is that the local authorities concerned must develop, with the support of bus operators, detailed schemes for further submission to the DfT. While the effect of these awards on Rotala's businesses cannot yet be known in detail, the overall position is clearly positive.

Franchising in Greater Manchester

On 26 March 2021, the Company announced that the Mayor of Greater Manchester (the "Mayor") had made the formal decision to franchise the bus market in the Greater Manchester region. The Company made an immediate claim to the High Court of Manchester to judicially review a number of aspects of the consultation process carried out by the Greater Manchester Combined Authority ("GMCA"') which led to the decision of the Mayor to franchise the bus network.

On 9 March 2022, Mr Justice Julian Knowles rejected these arguments, dismissed the claim and refused to give leave to appeal. The Company applied to seek permission to appeal the decision to the Court of Appeal and was granted leave to appeal. The appeal hearing took place on 12 July 2022. The Court of Appeal released its judgement on 25 July 2022: it dismissed the Company's appeal. The Company has considered the Court of Appeal's judgment in its claim against GMCA and the Mayor and, whilst disappointed with the result, it respects the decision of the Court and has resolved to take no further steps in this legal process.

GMCA has already announced mechanisms which cover the acquisition of bus depots and bus fleets under its franchising proposals. The Board has reviewed these mechanisms and is confident that, should it decide to place the Bolton depot and its associated bus fleet assets under these mechanisms, the values which would be realised from the sale of the Bolton depot and its related bus fleet should meet or exceed their respective book values. These amounts should also be more than sufficient to pay off the existing mortgage on the Bolton depot and the hire purchase debt associated with the bus assets based there. As a result, the sale of these assets to GMCA, should it take place, would have no negative effect on the Group's balance sheet and its leverage would fall to very low levels. The capital which the Group currently has invested in its Bolton operation would therefore be realised into cash and be available for re-investment or redeployment elsewhere in the Group.

Fuel hedging

Fuel represents about 12% of total costs and approximately 54% of the Group's fuel requirement for the remainder of 2022 is covered by hedging contracts, at an average price of 82p per litre. These prices should be compared to the current spot price for diesel (excluding VAT) of 140p per litre.

The Board will continue to monitor market conditions closely and take out such further fuel hedges as it deems are appropriate to meet its objective of reducing volatility in its costs and creating business certainty.

Financial review

Income statement

The Consolidated Income Statement is set out below. The factors governing the levels of revenue have been dealt with earlier in this statement in the section on total revenue. As normal commercial operation has returned, costs of sales have also fallen in line with total revenues and the gross profit margin has remained stable at approximately 14%. Administrative expenses rose during the pandemic because of the extra requirements covering such items as general legal and professional advice, health & safety, risk assessment, recording and logging systems for COVID-19 purposes, medical advice and staff training, but as these demands have receded so administrative expenses have returned to the levels experienced before the COVID-19 pandemic struck. Profit from operations (setting aside exceptional items) has remained a similar proportion of total revenue as in the prior period and year, but finance expense has fallen as the Group's total net debt has fallen for the reasons explained above in the section on net debt. Thus, at the normalised profit before tax line, the Group broke even in line with budget and the Board's expectations. Profit before tax (including exceptional items) rose considerably when compared to the prior period for reasons which have already been stated above in the section on profits. Note 3 to this statement sets out a full analysis of exceptional items.

The rate of taxation is higher than expected in the period ended 31 May 2022 because, in anticipation of the rise in the basic rate of corporation tax in April 2023 from 19% to 25%, a charge of GBP500,000 has been taken to cover those deferred tax items which are expected to reverse after the date of the change in the corporation tax rate.

As a result of all the factors set out above, basic earnings per share for the six months ended 31 May 2022, after all exceptional items, were 4.17p (2021: 1.61p).

Balance sheet

The gross assets of the Group as at 31 May 2022 declined to GBP91.1 million (2021: GBP104.4 million). This resulted to a degree from a fall in the book values of property, plant and equipment (which are fully analysed in note 6) as depreciation exceeded new additions. But the principal factor was the decline in trade and other receivables, the reason for which is set out above in the section on working capital. These reductions were offset to some extent by the rise in the value of the Group's fuel derivative at 31 May 2022, driven as it was by the fuel price at that date.

Current liabilities fell principally because of the reduction in loans and borrowings, the reasons for which have been set out above in the section on net debt. The full analysis of loans and borrowings at period ends is set out in note 7 below. Total obligations under hire purchase contracts fell as repayments were made but no new contracts were taken out. Note 9 contains a full analysis of the profile of hire purchase obligations. Non-current liabilities were little changed from those seen at the end of 2021 and/or the prior period.

The result of the movements outlined above, combined with the profit after tax of GBP2.1 million (2021: GBP0.8 million) was that the net assets of the Group grew somewhat to GBP34.1 million (2021: GBP31.5 million).

Cash flow statement

Cash flows from operating activities (before changes in working capital and provisions) fell when compared to 2021 to GBP7.7 million (2021: GBP9.6 million). The principal reason for this was a fall in depreciation, offset by higher profitability. Cash flows from changes in working capital and provisions increased markedly as working capital was released for the reasons set out above in the relevant section on this item. Cash generated from operations therefore reached GBP17.2 million for the period (2021: GBP7.8 million). Interest paid on lease liabilities fell slightly as no new hire purchase contracts were entered into. Purchases of property, plant and equipment, at GBP0.45 million, were lower than the prior period (GBP0.96 million) and consisted in the main in vehicles for new business. The cash outflow for the acquisition of businesses was in respect of the Claribel and Johnsons businesses described earlier in this statement.

Within financing activities, the Company paid a special interim dividend in April 2022 and commenced its share buy back programme as previously announced. Repayment of bank borrowings includes a net reduction of GBP6.3 million in the Group's drawings on its Revolving Commercial Facility. Bank interest fell as bank borrowings fell.

Thus, given cash flows from operating activities of GBP16.4 million, GBP1.8 million of cash used in investing activities, and cash used in financing activities of GBP11.4 million, there was an overall increase in cash of GBP3.2 million in the period (2021: increase of GBP0.8 million). In summary, the net cash position of the Group stood at GBP30,000 at 31 May 2022, compared to liabilities of GBP2.5 million at 31 May 2021 and GBP3.2 million at 30 November 2021.

Outlook

The Group continues to trade in line with budget for FY 22. The Board's base assumption for the year is that the slow upward trend in passenger numbers described above will continue and that full recovery will not take place until FY 2023.

The Group has at present no hedging cover in place for FY2023. However, recognising that fuel prices may rise further, but also bearing in mind that fuel represents only some 12% of the total costs of operation, the Board has been taking active steps to re-align bus service operations so that it remains sustainable in any future period of still higher fuel prices. This has been effected through such actions as disposing of vehicles with unacceptable fuel consumption and planning fare increases where necessary.

During the COVID-19 pandemic, the Board decided to focus on cash conservation and debt reduction with the objective of emerging from the pandemic with a robust balance sheet, fit for renewed commercial operation. The Board believes that these objectives have been successfully achieved. The continued large-scale investment by the Government under the banner of its National Bus Strategy is also positive for the industry in the medium term. The acquisition, actual and prospective, of two of the UK's largest bus groups (Stagecoach Group plc and The Go Ahead Group plc) by new groups of investors is also, the Board believes, an important statement about the positive direction of the bus industry as a whole.

The bus industry is now in a prolonged post-pandemic recovery phase which is likely to involve the general overhaul of bus networks and rationalisation amongst bus operators. This will undoubtedly produce continued turbulence in the bus industry which should bring a healthy flow of opportunities to Rotala, much like the acquisitions made in the first half of FY 2022, for both organic growth and acquisitions. For all these reasons, I am therefore very confident about Rotala's prospects.

John Gunn

Non-Executive Chairman

Date: 27 July 2022

 
 
 
 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 2022        31 May      May 2022     May 2021        31 May       May 2021 
                                                     2022                                     2021 
 
                                       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                    2           38,973             -      38,973         47,281             -      47,281 
 
 Cost of sales                        (33,466)             -    (33,466)       (40,410)             -    (40,410) 
 
 Gross profit                            5,507             -       5,507          6,871             -       6,871 
 
   Administrative 
   expenses                            (4,367)         3,002     (1,365)        (5,476)         1,230     (4,246) 
 
 Profit from operations                  1,140         3,002       4,142          1,395         1,230       2,625 
 
   Finance expense                     (1,136)             -     (1,136)        (1,518)             -     (1,518) 
                                 -------------  ------------  ----------  -------------  ------------  ---------- 
 
   Profit/(loss) 
   before taxation           3               4         3,002       3,006          (123)         1,230       1,107 
 
 Tax (expense)/credit       4              (1)         (924)       (925)           (66)         (234)       (300) 
 
 Profit for the 
  period attributable 
  to the equity 
  holders of the 
  parent                                     3         2,078       2,081          (189)           996         807 
 
 Earnings per 
  share for profit 
  attributable 
  to the equity 
  holders of the 
  parent for the 
  period: 
 Basic (pence)              5             0.01                      4.17         (0.38)                      1.61 
 
 Diluted (pence)            5             0.01                      4.17         (0.38)                      1.61 
 
 
 
 
 
 
 
 Condensed consolidated                             Note                  Audited        Audited        Audited 
  income statement                                                     Year ended     Year ended     Year ended 
                                                                      30 November    30 November    30 November 
                                                                             2021           2021           2021 
 
                                                                   Results           Exceptional          Results 
                                                                    before                 items          for the 
                                                                 exceptional                                 year 
                                                                    items 
                                                                          GBP'000        GBP'000          GBP'000 
 
 Revenue                                   2                               96,543              -           96,543 
 
 Cost of sales                                                           (82,429)              -         (82,429) 
 
 Gross profit                                                              14,114              -           14,114 
 
   Administrative expenses                                               (12,334)          1,592         (10,742) 
                                                           ----------------------  -------------  --------------- 
 
   Profit from operations                   3                               1,780          1,592            3,372 
 
   Finance income                                                              19              -               19 
 
   Finance expense                                                        (3,096)              -          (3,096) 
 
 (Loss)/profit before 
  taxation                                                                (1,297)          1,592              295 
 Tax credit                                                                   247          (476)            (229) 
                                                           ----------------------  -------------  --------------- 
 Loss for the year 
  attributable 
  to the equity holders of 
  the parent                                                              (1,050)          1,116               66 
 
 Earnings per share for 
 loss 
 attributable to the equity 
 holders of the parent 
 during 
 the year: 
 Basic (pence)                             5                               (2.10)                            0.13 
                                                           ----------------------  -------------  --------------- 
 
 Diluted (pence)                           5                              (2.10)                             0.13 
                                                           ----------------------  -------------  --------------- 
 
 
 
 
 
 Condensed consolidated statement           Note      Unaudited      Unaudited        Audited 
  of comprehensive income                           6 months ended    6 months     Year ended 
                                                     31 May 2022      ended 31    30 November 
                                                                      May 2021           2021 
                                                       GBP'000        GBP'000         GBP'000 
 
 Profit for the period                                  2,081           807                66 
                                                  ----------------  ----------  ------------- 
 
   Other comprehensive income/(expense): 
 Actuarial gain on defined 
  benefit pension scheme                                  -              -              2,821 
 
 Deferred tax on actuarial 
  gains on defined benefit 
  pension scheme                             4          (250)            -              (536) 
                                                  ---------------- 
 
 Other comprehensive (expense)/income 
  for the period (net of tax)                           (250)            -              2,285 
 
 Total comprehensive income 
  for the period attributable 
  to the equity holders of 
  the parent                                            1,831           807             2,351 
                                                  ================  ==========  ============= 
 
 
 Condensed consolidated           Notes   Unaudited   Unaudited   Audited 
  statement of financial                   As at 31    As at 31    As at 30 
  position                                 May 2022    May 2021    November 2021 
                                          GBP'000     GBP'000     GBP'000 
 Assets 
 Non-current assets 
 Property, plant and 
  equipment                       6       58,038      63,994      61,091 
 Defined benefit pension 
  asset                                   4,253       1,441       4,253 
 Goodwill and other intangible 
  assets                                  14,907      14,907      14,907 
                                          _____       _____       _____ 
 Total non-current assets                 77,198      80,342      80,251 
 
 Current assets 
 Inventories                              1,184       2,491       1,090 
 Trade and other receivables              10,067      20,544      21,796 
 Derivative financial 
  instruments                             2,308       644         958 
 Cash and cash equivalents                365         346         442 
                                          _____       _____       _____ 
 Total current assets                     13,924      24,025      24,286 
                                          _____       _____       _____ 
 Total assets                             91,122      104,367     104.537 
 
 Liabilities 
 Current liabilities 
 Trade and other payables                 (7,395)     (5,731)     (6,217) 
 Loans and borrowings             7       (2,027)     (17,884)    (11,615) 
 Lease liabilities                8       (7,187)     (7,697)     (7,319) 
 Derivative financial                      -          (103)       - 
  instruments 
                                          ______      ______      _____ 
 Total current liabilities                (16,609)    (31,415)    (25,151) 
 
 Non-current liabilities 
 Loans and borrowings             7       (5,233)     (5,651)     (5,445) 
 Lease liabilities                8       (29,899)    (33,534)    (34,485) 
 Provision for liabilities                (1,202)     (374)       (3,414) 
 Deferred income                          (525)       -           (640) 
 Net deferred taxation                    (3,552)     (1,912)     (2,377) 
                                          ______      ______      ______ 
 Total non-current liabilities            (40,411)    (41,471)    (46,361) 
                                          ______      ______      ______ 
 Total liabilities                        (57,020)    (72,886)    (71,512) 
                                          _____       _____       _____ 
 Net assets                               34,102      31,481      33,025 
                                          ======      ======      ===== 
 
 
 Condensed consolidated      Unaudited   Unaudited   Audited 
  statement of financial      As at 31    As at 31    As at 30 
  position                    May 2022    May 2021    November 2021 
                             GBP'000     GBP'000     GBP'000 
 
 
 Equity attributable 
  to equity holders 
  of parent 
 Called up share capital     12,731      12,731      12,731 
 Share premium reserve       12,369      12,369      12,369 
 Merger reserve              2,567       2,567       2,567 
 Shares in treasury          (1,069)     (806)       (806) 
 Retained earnings           7,504       4,620       6,164 
                             ______      ______      _____ 
 Total equity                34,102      31,481      33,025 
                             =====       =====       ==== 
 
 
 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 2020         12,731      12,369     2,567        (806)         3,813       30,674 
                          ----------  ---------  ---------  -------------  ----------  ------------ 
 
 Profit for the period         -          -          -            -            807          807 
 Other comprehensive           -          -          -            -             -            - 
  income 
 Total comprehensive 
  income                       -          -          -            -            807          807 
 Transactions with 
  owners: 
 Dividends paid                -          -          -            -             -            - 
 Transactions with             -          -          -            -             -            - 
  owners 
 
 At 31 May 2021             12,731      12,369     2,567        (806)         4,620       31,481 
 
 Loss for the period           -          -          -            -           (741)        (741) 
 Other comprehensive 
  income                       -          -          -            -           2,285        2,285 
 Total comprehensive 
  income                       -          -          -            -           1,544        1,544 
 Transactions with 
  owners: 
 Dividends paid                -          -          -            -             -            - 
 Transactions with             -          -          -            -             -            - 
  owners 
 
 At 30 November 2021        12,731      12,369     2,567        (806)         6,164       33,025 
                          ----------  ---------  ---------  -------------  ----------  ------------ 
 
 Profit for the period         -          -          -            -           2,081        2,081 
 Other comprehensive 
  expense                      -          -          -            -           (250)        (250) 
 Total comprehensive 
  income                       -          -          -            -           1,831        1,831 
 Transactions with 
  owners: 
 Share based payment           -          -          -            10            5           15 
 Purchase of own 
  shares                       -          -          -          (273)           -          (273) 
 Dividends paid                -          -          -            -           (496)        (496) 
 Transactions with 
  owners                       -          -          -          (263)         (491)        (754) 
 
 At 31 May 2022             12,731      12,369     2,567       (1,069)        7,504       34,102 
 
 
 
 Condensed consolidated cash             Unaudited       Unaudited       Audited 
  flow statement                          6 months        6 months      Year ended 
                                        ended 31 May    ended 31 May    30 November 
                                            2022            2021           2021 
                                          GBP'000         GBP'000        GBP'000 
 Cash flows from operating 
  activities 
 Profit for the period before 
  tax                                      3,006           1,107           295 
 Finance expense (net)                     1,136           1,518          3,077 
 Depreciation                              4,235           6,946          14,906 
 (Gain)/loss on sale of property, 
  plant and equipment                      (620)             -              3 
 Acquisition expenses                       37               -              - 
 Amortisation of grants received           (115)                           (50) 
 Share based payment                        15               -              - 
 Notional expense of defined 
  benefit pension scheme                     -               -              28 
                                           ____            ____            ____ 
 Cash flows from operating 
  activities before changes 
  in working capital and provisions        7,694           9,571          18,259 
 
 Decrease/(increase) in trade 
  and other receivables                   12,078           1,755           503 
 (Decrease)/increase in trade 
  and other payables                       1,115          (2,678)        (2,232) 
 Decrease/(increase) in inventories        (94)             998           2,398 
 Movement on deferred income 
  and provisions                          (2,211)          (205)          2,834 
 Movement on derivative financial 
  instruments                             (1,350)         (1,642)        (2,060) 
                                           ____            ____            ____ 
                                           9,538          (1,772)         1,443 
                                           ____            ____            ____ 
 Cash generated from operations           17,232           7,799          19,702 
 
 Interest paid on lease liabilities        (868)           (957)         (1,920) 
                                           ____            ____            ____ 
 Net cash flows from operating 
  activities                              16,364           6,842          17,782 
 
 
 
 Condensed consolidated cash            Unaudited       Unaudited       Audited 
  flow statement                         6 months        6 months      Year ended 
                                       ended 31 May    ended 31 May    30 November 
                                           2022            2021           2021 
                                         GBP'000         GBP'000        GBP'000 
 Cash flows from investing 
  activities 
 Purchases of property, plant 
  and equipment                           (451)           (958)         (1,883) 
 Grants received thereon                    -               -             690 
 Sale of property, plant and 
  equipment                                47              776           1,268 
 Acquisition of businesses               (1,391)            -              - 
                                          _____           _____          _____ 
 Net cash flows (used in)/derived 
  from investing activities              (1,795)          (182)            75 
 
 Cash flow from financing 
  activities 
 Dividends paid                           (496)             -              - 
 Purchase of own shares                   (273)             -              - 
 Repayment of bank and other 
  borrowings                             (6,531)         (1,706)        (8,987) 
 Bank interest paid                       (263)           (550)         (1,124) 
 Capital settlement payments 
  on vehicles sold                        (213)           (318)          (719) 
 Capital paid on lease liabilities       (3,602)         (3,293)        (6,943) 
                                          _____           _____           ____ 
 Net cash used in financing 
  activities                            (11,378)         (5,867)        (17,773) 
 
 Net increase /(decrease) in 
  cash and cash equivalents               3,191            793             84 
 
 Cash and cash equivalents 
  at start of period                     (3,161)         (3,245)        (3,245) 
                                          _____           _____          _____ 
 Cash and cash equivalents 
  at end of period                         30            (2,452)        (3,161) 
                                         ======           =====           ==== 
 

Notes to the Unaudited condensed Consolidated Interim Financial Statements for the six months ended 31 May 2022

   1.    Basis of preparation: 

The unaudited condensed consolidated interim financial statements for the six months ended 31 May 2022 have been prepared using the accounting policies set out in the Group's 2021 statutory financial statements.

The financial statements of the Group for the full year are prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 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.    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.

 
 
                                        Unaudited 
                          Unaudited     Six months     Unaudited      Audited 
                          Six months       ended       Six months    Year ended 
                           ended 31     30 November     ended 31     30 November 
                           May 2022        2021         May 2021        2021 
 
                           GBP'000       GBP'000        GBP'000       GBP'000 
 Commercial                24,708         19,301        12,383         31,684 
 Contracted                 8,947         8,779          7,400         16,179 
 Charter                     532           259            475           734 
 Grants and subsidies       4,786         20,923        27,023         47,946 
 Total                     38,973         49,262        47,281         96,543 
                        ============  =============  ============  ============= 
 

As set out in the Chairman's Statement, the Group has been the beneficiary of extensive support from the Department for Transport and local authorities.

   3.    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 
                                  6 months    6 months     Year ended 
                                  ended 31    ended 31    30 November 
                                  May 2022    May 2021           2021 
                                   GBP'000     GBP'000        GBP'000 
 
 Mark to market profit 
  on fuel derivatives                2,442       1,230          1,779 
 Profit on sale of leasehold           602           -              - 
  property (note 6) 
 Acquisition expenses                 (37)           -              - 
 Loss resulting from Heathrow 
  depot fire                             -           -          (187) 
 Share based payment                   (5)           -              - 
 
 
 Profit within profit 
  before taxation                    3,002       1,230          1,592 
                                ==========  ==========  ============= 
 
   4.    Taxation: 

The main rate of corporation tax will increase from 19% to 25% from April 2023. The tax charge in the condensed consolidated income statement for the period ended 31 May 2022 has therefore been increased by GBP500,000 to reflect the estimated effect of the reversal of deferred tax items after April 2023.

For the same reason, the deferred tax liability arising on the gross pension scheme asset has been increased by GBP250,000 and this charge has been reflected in the condensed consolidated statement of comprehensive income.

   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 49,947,223 (31 May 2021: 50,091,109; 30 November 2021: 50,091,109). 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 49,947,223 (31 May 2021: 50,091,109; 30 November 2021: 50,091,109).

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                 Passenger 
                                land     of use         Plant    carrying 
                                 and     assets           and    vehicles      Total 
                           buildings      under     machinery 
                                        IFRS 16 
                             GBP'000    GBP'000       GBP'000     GBP'000    GBP'000 
 Cost: 
 At 1 December 2020           10,907      4,814         6,267      71,392     93,380 
 Additions                         -          -             -      11,905     11,905 
 Disposals                         -    (1,751)         (239)    (15,115)   (17,105) 
 
 
 At 30 November 2021          10,907      3,063         6,028      68,182     88,180 
 
 
 Additions                         -          -            56         395        451 
 Acquisitions                      -          -           111       1,243      1,354 
 Disposals                         -    (1,136)           (9)     (1,041)    (2,186) 
 
 
 At 31 May 2022               10,907      1,927         6,186      68,779     87,799 
 
 
 Depreciation: 
 At 1 December 2020              344      2,859         2,193      22,592     27,988 
 Charge for the year             512        481         2,210      11,703     14,906 
 Disposals                         -    (1,722)         (103)    (13,980)   (15,805) 
 
 
 At 30 November 2021             856      1,618         4,300      20,315     27,089 
 
 
 Charge for the period            56        202           424       3,553      4,235 
 Disposals                         -      (542)           (1)     (1,020)    (1,563) 
 
 
 At 31 May 2021                  912      1,278         4,723      22,848     29,761 
 
 Net book value: 
 At 31 May 2022                9,995        649         1,463      45,931     58,038 
 
 
 At 30 November 2021          10,051      1,445         1,728      47,867     61,091 
 
 

The Group signed an unconditional contract to sell a surplus leasehold property before the period end, but the transaction was completed just after the period end. Accordingly, in these unaudited condensed consolidated interim financial statements, the transaction has been treated as an adjusting event.

   7.    Loans and borrowings: 

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

 
 
                             Unaudited     Unaudited        Audited 
                             At 31 May     At 31 May     At 30 November 
                               2022          2021             2021 
                             GBP'000       GBP'000         GBP'000 
 Current: 
 Overdrafts (unsecured)        336          2,798           3,603 
 Bank loans (secured)          415           411             412 
 Bank loans (unsecured)       1,276        14,675           7,600 
 
                              2,027        17,884           11,615 
 
 
 Non- current: 
 Bank loans (secured)         5,233         5,651           5,445 
 
 Total loans and 
  borrowings                  7,260        23,535           17,060 
 
 
 
   8.    Lease liabilities: 
 
 Current:                     Unaudited     Unaudited              Audited 
                               At 31 May    At 31 May       At 30 November 
                                 2022            2021                 2021 
                                 GBP'000      GBP'000           GBP'000 
 
 Obligations under hire 
  purchase agreements (see 
  note 9)                          6,779        7,280             6,897 
 Other lease liabilities 
  (see note 10)                      408          417               422 
 
 Total current liabilities         7,187        7,697             7,319 
                             ===========  ===========  ================ 
 
 
 
 
 
 Non - current:                     Unaudited    Unaudited           Audited 
                                        At 31    At 31 May    At 30 November 
                                     May 2022         2021              2021 
                                      GBP'000      GBP'000           GBP'000 
 
 Obligations under hire 
  purchase agreements (see 
  note 9)                              29,540       31,866            33,025 
 Other lease liabilities 
  (see note 10)                           359        1,668             1,460 
 
 Total non - current liabilities       29,899       33,534            34,485 
                                   ==========  ===========  ================ 
 
   9.    Hire purchase agreements: 

The Group's obligations under hire purchase agreements are secured by the lessors' rights over the leased assets.

 
                           Unaudited    Unaudited        Audited 
                            At 31 May    At 31 May    At 30 November 
                              2022         2021            2021 
                            GBP'000      GBP'000         GBP'000 
 Present value: 
 Not later than one 
  year                       6,779        7,280           6,897 
 More than one but less 
  than two years             8,159        6,185           8,061 
 More than two but less 
  than five years            14,854       17,726         16,436 
 Later than five years       6,527        7,955           8,528 
                          -----------  -----------  ---------------- 
                             36,319       39,146         39,922 
 
 
 

10. Other lease liabilities:

Future lease payments for leases treated as finance leases under IFRS 16 but which take the legal form of rental agreements, without the legal right of ultimate ownership of the asset leased, are as follows:

 
                           Unaudited    Unaudited        Audited 
                            At 31 May    At 31 May    At 30 November 
                              2022         2021            2021 
                            GBP'000      GBP'000         GBP'000 
 Present value: 
 Not later than one 
  year                        408          417             422 
 More than one but less 
  than two years              327          423             432 
 More than two but less 
  than five years              32          408             201 
 Later than five years         -           837             827 
                          -----------  -----------  ---------------- 
                              767         2,085           1,882 
 
 
 

11. Dividends:

The Company paid a special interim dividend of 1.0p per share in April 2022 in relation to the six months ended

31 May 2022.   All dividends are payable in cash only. 

12. Additional information:

The unaudited Consolidated Interim Report was approved by the Board of Directors on 27 July 2022. The consolidated interim financial information for the six months ended 31 May 2022 and for the six months ended 31 May 2021 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 2021 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. Copies of the financial statements 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 and the Company's website www.rotalaplc.com .

 
 
 

13. 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 and the Company's website www.rotalaplc.com .

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END

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July 28, 2022 02:00 ET (06:00 GMT)

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