Acquisition
03/08/2022 13:37
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RNS Number : 8147U Rotala PLC 03 August 2022
RNS
3 August 2022
Rotala Plc
("Rotala", the "Company" or the "Group")
Acquisition of Midland Classic Limited and extension of services in the East
Midlands
Rotala (AIM: ROL.L), an operator of bus routes in the UK for businesses, local
authorities and the general public, is pleased to announce the acquisition of
the entire issued share capital of Midland Classic Limited ("Midland"), the
principal bus operator in Burton-upon-Trent (the "Acquisition"). Midland has
been acquired for a total cash consideration of £2 million. In addition, on
completion, Rotala has paid approximately £577,000 in cash to one of
Midland's shareholders to repay an existing loan of the same sum.
In the year ended 31 July 2021, the most recent financial year for which
figures are available, Midland had unaudited revenues of approximately £5.6
million (2020: £5.2 million) and a profit before tax of £2,000 (2020:
£621,000). At 31 July 2021, Midland had unaudited net assets of approximately
£1.3 million (31 July 2020: £1.3 million), including a freehold property
with a net book value of £956,000 and a passenger carrying vehicle fleet with
a net book value of £2.1 million. Hire purchase debt of approximately
£900,000 was being used to finance this vehicle fleet, which Rotala has
assumed on completion of the Acquisition. On this basis, the Acquisition is
expected to generate approximately £750,000 of positive goodwill, including
stamp duty and transaction costs.
Midland operates 60 vehicles from its freehold depot in Burton-upon-Trent and
employs approximately 110 staff. It is the principal bus operator in
Burton-upon-Trent, from where it provides bus services to other nearby towns
such as Uttoxeter, Ashby-de-la-Zouch and Lichfield. The Acquisition represents
an extension of the Group's business to a new territory in the East Midlands
from which further growth will be targeted. Operationally, Midland (which will
immediately be renamed Diamond Bus (East Midlands) Limited) will be part of
Rotala's Midlands division and will be controlled from the Company's
headquarters at Tividale, Oldbury.
The Board does not expect that the Acquisition will have a material impact on
earnings in the Company's current financial year ending 30 November 2022. The
consideration was funded using the Group's existing debt facilities. As with
the other acquisitions which the Company has made recently, Midland will adopt
the Group's centralised IT systems covering such matters as accounting,
purchasing, stock control and payroll. These integration steps are expected to
have been fully implemented by 30 November 2022. The Directors believe that,
following these steps and the continuing slow, but steady recovery in bus
passenger numbers throughout England, the Acquisition will have a beneficial
effect on the Company's future earnings.
Simon Dunn, Chief Executive of Rotala, commented: -
"Midland Classic is a sizeable well-established business in an attractive bus
territory. It represents the entry by Rotala into the East Midlands which is a
new market for the Group. However, at the same time, geographically it is
adjacent to our existing operations in the West Midlands and so easily managed
from there. The business also has its own freehold depot from which we will
look to further expand Rotala's services as the recovery in passenger numbers
post-COVID continues."
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)
About the business
Rotala provides a range of transport solutions, ranging from local bus
services under contract to local authorities, through to commercial bus
routes. Rotala has operations at Heathrow Airport, in the West Midlands and in
the North West. Operating companies are Diamond Bus Ltd, Diamond Bus (North
West) Ltd, Diamond Bus (East Midlands) Ltd, Hallmark Connections Ltd and
Preston Bus Ltd.
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