Final results for the year ended 30 November 2021
15/03/2022 07:00
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RNS Number : 7527E Rotala PLC 15 March 2022
15 March 2022
Rotala plc
("Rotala", the "Company" or the "Group")
Final results for the year ended 30 November 2021
Rotala plc (AIM:ROL), a provider of transport solutions across the UK, is
pleased to announce its audited final results for the year ended 30 November
2021.
Highlights
· Small Profit after tax for the year
· DfT support continues - Bus Recovery Grant extended
· Repaid £8.6m of RCF in the year
· Substantial CBSSG/BRG receipts post year end
· New banking facilities
· New £17m Revolving Commercial Facility completely undrawn
· Post-crisis opportunities for both organic growth and growth by
acquisition
· Special interim dividend of 1.0p per share
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 / Michael McGloin (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, Hallmark Connections Ltd and Preston Bus Ltd.
CHAIRMAN'S STATEMENT AND REVIEW OF OPERATIONS
Chairman's Statement and Review of Operations
I am pleased to be able to make this report to the shareholders of Rotala Plc
for the year ended 30 November 2021. The COVID-19 pandemic began in March
2020, about one third of the way through the accounting period prior to the
one upon which I am now reporting to you. Thus, during the whole of the year
ended 30 November 2021, the operation of bus services was conducted under a
variety of restrictions imposed by the Government to combat the COVID-19
pandemic. These restrictions, as they were tightened or relaxed during the
year under report, to a greater or lesser degree affected the normal
commercial operation of bus services, but the financial effects of these steps
were counterbalanced throughout the year by the package of grants and
subsidies provided by the Department for Transport ("DfT") and Local
Authorities. In return for this support, we were required by the DfT to work
closely with those Local Authorities in whose areas we operate. Bus service
levels have thus varied considerably in the year in response to changes in
Government policy and to the resultant requirements of Local Authorities.
These are the key factors to be borne in mind when considering the trading
performance of the group in 2021, the comparison with the previous year, and
the overall position of the group at the balance sheet date.
Passenger numbers
In the lockdown phase at the very beginning of the financial year passenger
numbers fell to about 25% of those seen in the period of normal bus operation
before the COVID-19 pandemic commenced in March 2020. Subsequently passenger
numbers rose steadily through the spring and summer of 2021 and stabilised at
about 60% to 65% of normal levels. The relaxation of the remaining COVID - 19
related restrictions in the late summer, combined with the beginning of the
new school year in September 2021, saw passenger numbers resume their upward
ascent and by the end of the year they stood at about 80% of the levels seen
in the pre-pandemic era. After dipping sharply in the lockdown period in
December 2021, passenger numbers rebounded strongly and remain at
approximately the same 80% level.
Operational conditions
As a consequence of the variability of passenger numbers in response to
Government policy, but in accordance with its desire to see bus service
provision maintained at pre-pandemic levels, the Government throughout the
year sought to support the financial and operational performance of the bus
industry with a variety of financial measures at local and national level.
Initially the Government grant package was delivered principally through a
specific grant ("CBSSG"), combined with the maintenance of the Bus Services
Operator's Grant, concessionary fares re-imbursements and payments for
contracted bus services broadly at their pre-COVID-19 levels. CBSSG was a
grant which was designed to offset any losses incurred by a bus operator in
running the services desired by central and local government. The effect of
these measures was that bus operators were guaranteed to make neither a profit
nor a loss at the normalised statutory pre-tax profit line for as long as the
support package was in place.
CBSSG ended on 31 August 2021 and was replaced by a fresh support package
called Bus Recovery Grant ("BRG"). In contrast to CBSSG, BRG is designed to
compensate bus operators for the absence of revenue whilst passenger numbers
continue their recovery back to pre-pandemic levels. BRG was initially planned
to cover the period from 1 September 2021 to the end of the Government
financial year in early April 2022 but has recently been extended by a further
six months to October 2022. In addition, from April 2022 the new investment
contained within the Government's National Bus Strategy will begin to flow.
Under this strategy all local authorities have been required to write Bus
Service Improvement Plans ("BSIPs") and submit them to the DfT. In essence
BSIPs are bids for allocations of the new investment presently available under
the National Bus Strategy. At the current time the allocation of the new
investment money has yet to be announced. However, from the beginning of April
2022 concessionary fares re-imbursement levels will slowly be adjusted to
reflect actual travel patterns such that by the end of 2022 the
re-imbursements received should represent actual concessionary passenger
usage.
Financial results
2021 2020 2019
Revenue £96.5 million £78.1 million £67.5 million
Operating profit/(loss) £3.4 million (£2.6 million) £4.2 million
Profit/(loss) before tax £0.3 million (£4.8 million) £2.6 million
For the year ended 30 November 2021 group revenues were £96.5 million (2020:
£78.1 million). As already stated, actual bus service volumes varied
considerably during 2021 and 2020, in accordance with the directions received
from Government and in response to varying passenger numbers. Consequently,
the revenues set out above reflect the various packages of grants and
subsidies put in place by the DfT and Local Authorities to ensure that bus
service provision continued at the levels desired by these two arms of
Government. Grants and subsidies totalled £47.9 million in 2021 and £29.4
million in 2020. In addition, as part of its response to the COVID-19
pandemic, the Department for Education at a number of points in the year
contracted for specific home-to-school transportation. Furthermore, the
changes in market conditions brought on by the pandemic caused some smaller
operators to withdraw from the market and larger operators to reshape their
service coverage. These developments gave us the opportunity to expand our
presence in the local authority tendered market and in services for other
governmental institutions. Finally, one of the new initiatives under the
Government's National Bus Strategy, further details of which are set out
below, is for Demand Responsive Transport. This is not a new idea, but modern
technology has transformed the feasibility of such services and trial
contracts, in which we are participating, have commenced in several of the
local authority areas in which we operate.
In summary then the group, before exceptional items, recorded an overall
Operating Profit of £1.78 million for the year to 30 November 2021 (2020:
£1.42 million). For the same period the group made an exceptional profit of
£1.6 million (2020: loss of £4.0 million). This exceptional profit resulted
largely from the marking to market price of the group's fuel derivative
position; in 2020 the majority of the exceptional loss also came from the same
source. The result for the year, after exceptional items, was a profit before
tax of £295,000 (2020: loss of £4.8 million). In contrast to the loss after
tax sustained in 2020 of £4.05 million, a small profit after tax of £66,000
was achieved.
Net debt (excluding hire purchase debt)
Net debt 2021 2020 2019
Revolving commercial facility drawn £7.6 million £16.2 million £16.2 million
Mortgage debt £5.9 million £6.3 million £6.5 million
Overdraft (net of cash) £3.2 million £3.3 million £2.0 million
Total net debt £16.7 million £25.8 million £24.7 million
From the commencement of the COVID-19 pandemic the company has concentrated on
the conservation and management of the group's cashflow. As a consequence,
cash flow, both at EBITDA level and net of all debt, interest and other
payments, has been positive since very shortly after the pandemic began. Net
debt (excluding hire purchase debt) therefore declined gradually over the year
and, as at 30 November 2021, stood at £16.7 million (30 November 2020: £25.8
million), down 35% during the year. The amounts drawn on the company's
revolving commercial facility at 30 November 2021 amounted to £7.6 million
(30 November 2020: £16.2 million); mortgage debt at 30 November 2021 was
£5.9 million (30 November 2020: £6.3 million); and drawings on the company's
£4.5 million overdraft facility were £3.16 million (30 November 2020: £3.3
million). As a consequence of the close management of its cashflow, the
company has not at any stage of the COVID-19 crisis needed to avail itself of
a loan under the various Government-backed loan schemes that were available.
New banking facilities
On 14 March 2022, the company signed a new banking facilities agreement with
its principal bankers, HSBC Bank plc. These facilities comprise a Revolving
Commercial Facility ("RCF") of up to £17 million and a Mortgage Facility of
£5.8 million. The RCF has an initial term of three years, expiring on 13
March 2025, with the option to extend it for up to a further two years. It is
completely undrawn at this time. The Mortgage Facility commenced in 2017 and
was originally of £8.0 million. Since that time repayments have reduced the
amounts outstanding to £5.8 million. It remains on a term of up to twenty
years expiring in December 2037. In addition, the company has an Overdraft
Facility of up to £3 million with the same bank, renewed annually.
The board took the decision to refresh its banking facilities at this time in
order to equip the company with the resources necessary to take advantage of
any opportunities that arise out of continuing bus industry developments.
Since the Revolving Commercial Facility is currently completely undrawn, the
board believes that the company possesses ample unused facilities to further
its ambitions.
Working capital
Working capital 2021 2020 2019
Inventories £1.1 million £3.5 million £4.3 million
Trade and other receivables £21.8 million £22.3 million £18.3 million
Trade and other payables £6.2 million £8.3 million £7.6 million
Total working capital £16.7 million £17.5 million £15.0 million
Before the advent of the COVID-19 pandemic, new systems to control parts
stocks and digitalise engineering and maintenance spend had begun to be
implemented. These new systems are now in full use and have made a major
contribution to the reduction of £2.4 million in the working capital invested
in inventories. The group's trade and other receivables of approximately
£21.8 million at 30 November 2021 (30 November 2020: £22.3 million) were, as
at the end of the previous year, inflated by the amounts receivable from the
DfT under the CBSSG and BRG programmes set out above, which are the subject of
lengthy reconciliation exercises. Since the year end the majority of the
receipts due from these exercises have been received. This has enabled the
company to be in a position at the time of writing where the Revolving
Commercial Facility is completely undrawn.
This release of working capital, combined with disposals of surplus property
and other asset realisations, should ensure that net debt (including hire
purchase debt, details of which are set out in the table below) is under £40
million by 30 November 2022 (2021: £57 million), in line with the board's
plans and expectations.
Hire purchase debt and fleet management
2021 2020 2019
Hire purchase debt £39.9 million £37.1 million £20.2 million
Average fleet age 7.56 years 7.95 years 8.65 years
The COVID-19 pandemic delayed the delivery of the replacement buses ordered in
August 2019 as part of the plan drawn up at the time of the acquisition of the
Bolton depot from First Group plc. The remainder of the vehicles ordered were
delivered during the financial year. Following the completion of this planned
re-equipment the board does not foresee any requirement, unless for specific
new business, to acquire any further vehicles until the year ending 30
November 2023. Therefore, hire purchase debt, totalling £39.9 million at 30
November 2021 (30 November 2020: £37.1 million), stood at its peak at that
date and will reduce substantially over the next year such that, by 30
November 2022, hire purchase debt levels are forecast to be approximately
£34.0 million.
When acquiring any vehicle new to the fleet, the board is always acutely
conscious of its emission standards. At the same time the capability of buses
driven by non-diesel propulsion systems has continued to improve and their
operating costs to become increasingly attractive when compared to their
diesel predecessors. Part of the Government's National Bus Strategy includes
the subsidised introduction of 4,000 new zero-emission vehicles. Consequently
the board believes that it is unlikely that the group will buy new
full-size diesel buses in preference to battery-electric buses or buses
propelled by other fuels. Diesel driven vehicles will therefore gradually
disappear from the fleet such that, in a decade or so, none of the buses in
service will possess diesel engines.
Aside from the action taken on the fleet inherited with the Bolton
acquisition, we have continued to be active in reshaping the group's bus fleet
to match changing needs. In the last year we have sold more than 120 vehicles.
Consequently, the average age of the fleet has fallen to approximately 7.56
years (2020: 7.95 years) and more than half of the bus fleet is now at EURO 6
emissions standard or better.
Group Strategy
Before the COVID-19 crisis took hold in March 2020, the Government had
announced an ambitious package of new funding to overhaul bus provision in
every English region outside London. In March 2021, it published a detailed
National Bus Strategy paper, "Bus Back Better", which lays out a comprehensive
plan of reform and promises up to £3 billion of new Government investment.
New Enhanced Partnerships, combined with subsidies for 4,000 zero emission
vehicles, are designed to re-invigorate the bus market all over England and
increase bus usage. The group already has extensive experience of operating
routes in statutory partnerships in the West Midlands. We welcome this policy
change and look forward to working closely with local and national Government
in making a success of these new initiatives.
At a more detailed level the National Bus Strategy paper also sets out targets
for next stop information, on bus CCTV, and cross-operator fare capping. A
significant number of the group's buses are equipped with next stop systems
and 90% of our bus fleet has on-board CCTV which can be remotely accessed from
the depot. The group already has fare-capping architecture installed which can
be used to deliver "Tap on/ Tap off" cross-operator capping, which is a
desired feature of the National Bus Strategy. Therefore, the board believes
that the group already has extensive experience of implementing and using
these advanced systems which underlie the targets the Government has set and
which are designed to smooth the travel experience of customers and enhance
their perception of safety and security.
Franchising in Greater Manchester
In late March 2021 the Mayor of Greater Manchester made the formal decision to
franchise the bus market in the Greater Manchester region. The company made an
immediate court claim to subject to judicial review the process by which the
franchising consultation was continued by Greater Manchester Combined
Authority ("GMCA") whilst the COVID-19 pandemic persisted, and the decision of
the Mayor. Judgement in this claim was announced on 9 March 2022, when the
judge in the case dismissed our claim.
Throughout the company's court claim, the board has remained confident that
both these decisions were irrational and/or unlawful. The board still believes
these decisions to be irrational and/or unlawful and is in the process of
applying for permission to appeal the decision to the Court of Appeal.
As an operator in Greater Manchester, the Company has acted to attempt to
protect its business from a decision that is not only detrimental to Rotala's
future prospects, but also potentially detrimental to the citizens of Greater
Manchester in imposing upon them the financial burden of a franchising scheme
that the board believes has not been properly assessed in line with the
relevant legislation.
The company remains committed to providing a high level of service to bus
users in Greater Manchester and remains willing to enter into a statutory
partnership with Transport for Greater Manchester and the other bus operators
in Greater Manchester. The board is still of the view that the partnership
approach would not only be just as effective as a franchising scheme, and be
done at less risk to the public purse, but also could be implemented far more
quickly than the full franchising scheme.
However, should the company be unsuccessful in its legal case and the
franchising scheme is implemented, it will potentially be required to sell its
Bolton depot and the bus assets based there to GMCA. The Board believes that
the Bolton depot has first class facilities and is the most modern and
up-to-date bus depot operating in Greater Manchester. The bus fleet based
there is also the most modern of any of the large operators in that region.
The board is therefore confident that the values which might potentially be
realised from the sale of these assets under the mechanisms which the GMCA has
already announced will at a minimum realise their book values and be more than
sufficient to pay off the mortgage on the Bolton depot and the hire purchase
debt associated with the bus assets based there. As a result, any sale of this
nature would have no negative effect on the group's balance sheet and its
leverage would fall to very low levels. In this scenario, the capital which
the group currently has invested in its Bolton operation would be realised
into cash and be available for re-investment or redeployment elsewhere in the
group.
Dividend
The company last paid a dividend in December 2019 in relation to the six-month
period ended 31 May 2019. One of the terms of CBSSG was that bus companies
were not permitted to pay dividends for as long as the grant regime was in
place. As set out above CBSSG was replaced by BRG from 1 September 2021. BRG
contains no such stipulation about restriction of dividend payments. Since
therefore there is no longer any bar to dividends the board will pay on 29
April 2022 a special interim dividend of 1.0p per share to shareholders on the
register on 1 April 2022. Thereafter, the company will return to its former
policy of maintaining 2.5 times cover for any future dividend payments.
Dividends will therefore be reset to reflect current profitability, but it is
the board's intention to adopt a progressive approach to dividends, as before
the onset of the COVID-19 crisis, recognising the importance of dividend flows
to shareholders. 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.
Issue of share options
In order to incentivise management as the group recovers from COVID-19, the
Remuneration Committee of the board has decided to issue a fresh package of
share options to the executive directors to match those issued to senior
management during 2021. Under the company's long-established share option
scheme, share options may be issued up to 13.47% of the current number of
issued ordinary shares. The share options now to be issued will take the share
options in issue up to 11.95% of the current number of issued ordinary shares.
The existing share options, which were issued more than seven years ago, have
hurdle rates of up to 95 pence per share. The new share options, exercisable
at par or the current market price, if higher, have hurdle rates of between 56
pence and 62 pence per share and contain a stipulation that the hurdle share
price must be maintained for at least 20 consecutive trading days in order
that the share options may become exercisable.
The executive directors have been awarded the following share options:
· Simon Dunn (Chief Executive) 2,000,000 share options;
· Robert Dunn (Managing Director North West) 800,000 share options;
· Kim Taylor (Group Finance Director) 400,000 share options.
Share buyback
In connection with the issue of share options set out above the company also
intends to institute a share buy-back programme with the aim of covering the
share options which have been awarded. At the current time the company holds
800,000 ordinary shares in treasury. Therefore, the company will seek to
acquire up to a further 4.25 million ordinary shares for treasury, provided
that such shares are available at suitable market prices and within the
mandate given to the board by the relevant AGM resolution. This programme will
potentially take the number of shares in treasury up to the statutory maximum
of ordinary shares held in treasury of 10% of the company's issued share
capital.
Fuel hedging
When opportunities arose before the pandemic to hedge the fuel requirements of
the group the board in accordance with its usual practice took out fuel
hedges, using diesel derivatives. The group's forecasts anticipate fuel usage
of about 14 million litres in 2022. Approximately 54% of this fuel usage is
covered by hedging contracts, at an average price of 87p per litre. For
reference the market price of fuel at the date of this report (excluding VAT)
is 142.5p 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, where possible, creating business
certainty.
Financial review
Income statement
The Consolidated Income Statement is set out below. As set out above in the
section headed Financial Results, national and local Government continued
throughout the year to provide a grant and subsidy support package to the bus
industry in response to the prolongation of the COVID-19 pandemic. Note 2 of
this announcement should be consulted for the breakdown of group revenues. The
support package in turn enabled the group to provide the service levels
requested by the DfT and those Local Authorities in whose areas the group
operates. As stated above these service levels varied, and passenger volumes
increased and decreased, in response to the changes in restrictions brought in
by the Government in its own response to the path of the pandemic. Therefore,
given the variability of operations in both 2021 and 2020, there is no useful
comparison or comment to be made about the levels of Revenue, Cost of Sales,
Gross Profit, Gross Profit Margin, Profit or Loss from Operations and Profit
or Loss before Taxation except to highlight that the broad intention of the
Government in providing its package of grants and subsidies was that a group
such as Rotala should make neither a profit nor a loss while the grant and
subsidy package was in place, and that this was more or less the outcome for
the year.
Administrative expenses before exceptional items increased from £10.7 million
in 2020 to £12.3 million in 2021. This increase largely reflected the needs
of the business for the continuing much enhanced level of legal and specific
technical advice in the complex and challenging operating environment which
resulted from the existence of the COVID-19 pandemic throughout the whole
year.
Finance expense rose to £3.1 million (2020: £2.2 million). This increase was
caused by the interest arising on the new hire purchase agreements which have
been entered into in the last two years to finance the replacement of the bus
fleet at the Bolton depot acquired in August 2019.
The analysis of the exceptional items is set out below. In 2021 a profit of
£1.6 million was recorded in this caption, compared to the loss of £4.0
million suffered in 2020. As in 2020 the principal component of this line was
the marking to market of the group's fuel derivative position. However, in
2021 the outcome was a profit of £1.8 million, compared to a loss of £2.5
million in 2020, as diesel prices rebounded strongly. The other exceptional
cost in 2021 resulted from the fire at the group's Heathrow depot in February
2021, which was announced at the time.
There were no share issues in the year. As a result of all the factors set out
above basic earnings per share in 2021, after all exceptional items, were
0.13p (2020: loss per share of 8.08p).
Balance sheet
The gross assets of the group fell slightly from £108.7 million in 2020 to
£104.5 million as at 30 November 2021. The book value of property, plant and
equipment declined by £4.3 million as depreciation in the year exceeded
additions to the same caption. Almost all the additions were to passenger
carrying vehicles and comprised the remaining third of the vehicles ordered to
replace those leased from First Group plc when the Bolton depot was acquired
in 2019. The net asset represented by the defined benefit pension scheme grew
considerably to reach £4.25 million by the end of the year (2020: £1.44
million). The value of the scheme's investments rose by 9% to stand at £21.5
million (2020: £19.7 million). At the same time the present value of the
scheme's defined benefit obligation fell by 6%. These changes produced the
strong position of the scheme as at 30 November 2021.
Group stocks of parts, tyres and fuel fell further in 2021 as the new systems
to control parts stocks and purchasing had their full effect. Trade and Other
Receivables, although slightly down on the total seen in 2020, continue at a
high level. This results from the nature of the grants provided by the DfT to
support the bus industry during the COVID-19 pandemic. The grants are subject
to a complex series of submissions and reconciliations which inevitably
considerably elongate the timing of the actual receipt of the income in cash.
Since the year end the majority of the outstanding reconciliations have been
agreed and the related receipts received in cash. Finally, as has been pointed
out under exceptional items, the fuel derivative swung from a net liability in
2020 to an asset in 2021.
One of the avenues of business support devised by the Government early in the
pandemic was a delay to the payment of PAYE and NHI liabilities; the group
took advantage of this facility in 2020 but brought all such payments up to
date during 2021. This caused trade and other payables to fall year on year.
The loans and borrowings of the group shown under Current Liabilities also
fell from £20.8 million in 2020 to £11.6 million in 2021. The principal
cause of this fall was the reduction in drawings under the group's Revolving
Commercial Facility, which fell from £16.2 million in 2020 to £7.6 million
at the balance sheet date. Obligations under hire purchase contracts under
both Current Liabilities and Non-Current Liabilities increased as a result of
the remaining new vehicle deliveries for the Bolton fleet already mentioned
above. The item for deferred income arose from the receipt in the year of a
grant of £690,000 for the conversion from diesel to electric propulsion of
five vehicles; this grant is being amortised to the profit and loss account
over the remaining lives of these assets. Provisions for liabilities increased
as a result of the prudent view taken by the board of insurance incidents
occurring during 2021. The gross liabilities of the group therefore fell to
£71.5 million (2020: £78.1 million), a decrease of 8%.
Overall, the net assets of the group increased to £33.03 million at 30
November 2021, compared to £30.67 million at 30 November 2020.
Cash flow statement
Cash flows from operating activities (before changes in working capital and
provisions) recovered sharply in 2021 to reach £18.3 million (2020: £6.35
million), as a result both of the swing to a small profit from the
considerable loss incurred in 2020 and of the increased depreciation charge
occurring in the year when compared to the year before. Overall in 2021
working capital was released rather than absorbed, as it was in 2020. The
decrease in inventories was more or less matched by the decrease in trade and
other payables and the increase in provisions was only a little greater than
the movement on derivative financial instruments. The outcome of these various
factors was that cash generated from operations, at £19.7 million (2020:
£5.59 million), more than tripled. Interest paid on lease liabilities
increased because of the new hire purchase agreements entered into over the
last two years to give effect to the Bolton fleet renewal. Cash flows from
operating activities therefore increased to £17.8 million (2020: £4.6
million). The sale of surplus vehicles served to offset to a great extent the
cash expended on the purchase of property, plant and equipment this year,
which also benefited from the receipt of the grant already referred to. Thus,
a small amount of cash was generated in 2021 in this caption, compared to the
sum of £292,000 used in 2020.
Financing activities reflect the changes to loans and borrowings already
described. Drawings on the group's revolving commercial facility fell by £8.6
million in the year and so bank interest paid was little changed from the
previous year overall. In 2020, as with other borrowings of a similar nature,
the capital paid on lease liabilities benefited for a substantial part of the
year from a moratorium instituted by finance providers as a response to the
COVID-19 pandemic; no such moratorium prevailed in 2021 and thus, combined
with the increased size of hire purchase repayments resulting from the Bolton
fleet re-equipment, capital paid on lease liabilities rose to £6.9 million
(2020: £3.8 million). Overall, £17.8 million was used in financing
activities in 2021 compared to £5.6 million in 2020.
Cash and cash equivalents therefore increased by £84,000, net of all the
movements set out above but in particular the reduction of £8.6 million in
the drawings on the group's Revolving Commercial Facility, compared to a
decrease of £1.29 million in cash and cash equivalents in the previous year.
The board regards this outcome for the year as very satisfactory and in line
with its plans and expectations.
Outlook
In making its forecasts for going concern testing purposes the board has
assumed that passenger volumes will continue to be negatively affected
throughout 2022 and that true recovery will not occur until the 2023 financial
year. However, the board does expect passenger numbers to continue to rise as
2022 progresses. As this happens, and the new Government investment
initiatives start to have effect, the company expects to return to commercial
profitability, albeit initially at lower than pre-pandemic levels. The company
intends to use the same assumptions in giving guidance to the market about its
forecast future performance.
The Government's new National Bus Strategy promises new investment in bus
transport on a large scale. The shape and scope of this investment will become
clearer in the next few months when the DfT announces the outcome of its
review of the BSIP's submitted by every local authority in the latter part of
2021. The Government is promising to provide up to £3 billion in new
investment over the next few years. This must be beneficial for the bus
industry as a whole and Rotala in particular. At the same time, I believe
that, as the bus industry emerges from the protection afforded by the CBSSG
regime and commercial reality returns, opportunities for organic growth and
acquisitions are likely to arise once more. Already one of the largest UK bus
operators, Stagecoach Group plc, has attracted considerable bid interest. I
believe that this transaction could be a pre-cursor of many others in the bus
industry, at both large and small levels, in the short to medium term.
During the COVID-19 pandemic Rotala deliberately concentrated on improving its
business efficiency, software systems and use of working capital and on
reducing its unsecured debt. If acquisition opportunities do arise, we will
therefore be able to draw on large unused facilities to support our ambitions.
Accordingly, I continue to believe that the company is very well placed, with
excellent prospects in a bus industry which will see extensive and exciting
changes in the foreseeable future.
John Gunn
Non-Executive Chairman
Date: 14 March 2022
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 NOVEMBER 2021
Note 2021 2021 2021 2020 2020 2020
Exceptional Results Exceptional Results
Results items for the Results items for the
before (note 3) year before (note 3) year
exceptional items exceptional
items
£'000 £'000 £'000 £'000 £'000 £'000
Continuing operations
Revenue 2 96,543 - 96,543 78,115 - 78,115
Cost of sales (82,429) - (82,429) (66,010) - (66,010)
Gross profit 14,114 14,114 12,105 12,105
Administrative expenses
(12,334) 1,592 (10,742) (10,683) (3,999) (14,682)
Profit/(loss) from operations
3 1,780 1,592 3,372 1,422 (3,999) (2,577)
Finance income 19 - 19 43 - 43
Finance expense (3,096) - (3,096) (2,247) - (2,247)
(Loss)/profit before taxation (1,297) 1,592 295 (782) (3,999) (4,781)
Tax credit/(expense) 4 247 (476) (229) 149 585 734
(Loss)/profit for the year attributable to the equity holders of the parent
(1,050) 1,116 66 (633) (3,414) (4,047)
(Loss)/earnings per share for (loss)/profit attributable to the equity
holders of the parent during the year:
Basic (pence) 5 (2.10) 0.13 (1.26) (8.08)
Diluted (pence) 5 (2.10) 0.13 (1.26) (8.08)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED
30 NOVEMBER 2021
2021 2020
£'000 £'000
Profit/(loss) for the year 66 (4,047)
Other comprehensive income:
Items that will not subsequently be reclassified to profit or loss:
Actuarial gain/(loss) on defined benefit pension scheme 2,821 (890)
Deferred tax on actuarial gain/(loss) on defined benefit pension scheme (536) 169
Other comprehensive profit/(loss) for the year (net of tax) 2,285 (721)
Total comprehensive income/(loss) for the year attributable to the equity
holders of the parent
2,351 (4,768)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 NOVEMBER 2021
Note 2021 2020
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 6 61,091 65,392
Defined benefit pension asset 4,253 1,441
Goodwill and other intangible assets 14,907 14,907
Total non-current assets 80,251 81,740
Current assets
Inventories 1,090 3,489
Trade and other receivables 21,796 22,299
Derivative financial instruments 958 165
Cash and cash equivalents 442 1,035
Total current assets 24,286 26,988
Total assets 104,537 108,728
Liabilities
Current liabilities
Trade and other payables 6,217 8,338
Loans and borrowings 7 11,615 20,842
Lease liabilities 8 7,319 6,340
Derivative financial instruments - 1,267
Total current liabilities 25,151 36,787
Non-current liabilities
Deferred income 640 -
Loans and borrowings 7 5,445 5,881
Lease liabilities 8 34,485 33,195
Provisions for liabilities 3,414 579
Net deferred taxation 2,377 1,612
Total non-current liabilities 46,361 41,267
Total liabilities 71,512 78,054
TOTAL NET ASSETS 33,025 30,674
Shareholders' funds
Share capital 12,731 12,731
Share premium reserve 12,369 12,369
Merger reserve 2,567 2,567
Shares in treasury (806) (806)
Retained earnings 6,164 3,813
TOTAL EQUITY 33,025 30,674
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 NOVEMBER 2021
Share
Share premium Merger Shares in treasury Retained
capital reserve reserve £'000 earnings Total
£'000 £'000 £'000 £'000 £'000
At 1 December 2019 12,731 12,369 2,567 (806) 9,749 36,610
Change in accounting policy - IFRS 16 leases - - - - (1,168) (1,168)
Loss for the year - - - - (4,047) (4,047)
Other comprehensive loss (721) (721)
Total comprehensive loss - - - - (5,936) (5,936)
Transactions with owners:
Dividends paid and accrued - - - - - -
Transactions with owners - - - - - -
At 30 November 2020 12,731 12,369 2,567 (806) 3,813 30,674
Profit for the year - - - - 66 66
Other comprehensive income - - - - 2,285 2,285
Total comprehensive income - - - - 2,351 2,351
Transactions with owners:
Dividends paid - - - - - -
Transactions with owners - - - - - -
At 30 November 2021 12,731 12,369 2,567 (806) 6,164 33,025
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 NOVEMBER 2021
2021 2020
£'000 £'000
Cash flows from operating activities
Profit/(loss) before taxation 295 (4,781)
Adjustments for:
Depreciation 14,906 7,765
Finance expense (net) 3,077 2,204
Loss on sale of property, plant and 3 793
equipment
Contribution to defined benefit pension scheme - -
Intangible asset amortisation - 339
Amortisation of grants received (50) -
Notional expense of defined benefit pension scheme 28 31
Cash flows from operating activities before changes in working capital and 18,259 6,351
provisions
Decrease in inventories 2,398 821
Decrease/(increase) in trade and other receivables 503 (4,024)
(Decrease)/increase in trade and other payables (2,232) 962
Movement in deferred income and provisions 2,834 345
Movement on derivative financial instruments (2,060) 1,135
1,443 (761)
Cash generated from operations 19,702 5,590
Interest paid on lease liabilities (1,920) (1,000)
Net cash flows from operating activities carried forward 17,782 4,590
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 NOVEMBER 2021 (Continued)
2021 2020
£'000 £'000
Cash flows from operating activities brought forward 17,782 4,590
Investing activities
Purchases of property, plant and (1,883) (878)
equipment
Grants received thereon 690 -
Sale of property, plant and equipment 1,268 586
Net cash from/(used in) investing activities 75 (292)
Financing activities
Dividends paid - (476)
Repayment of bank and other borrowings (8,987) (243)
Bank and other interest paid (1,124) (1,069)
Hire purchase refinancing receipts - 185
Capital settlement payments on vehicles sold (719) (228)
Capital paid on lease liabilities (6,943) (3,753)
Net cash used in financing activities (17,773) (5,584)
Net increase/(decrease) in cash and cash equivalents 84 (1,286)
Cash and cash equivalents at beginning of year (3,245) (1,959)
Cash and cash equivalents at end of year (3,161) (3,245)
Notes to the Preliminary Announcement of results for the year ended 30
November 2021
1. Basis of preparation:
The accounting policies used in the preparation of this financial information
are those that have been used in the preparation of the annual statutory
financial statements of the Company for the year ended 30 November 2021. These
policies are in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006.
2. Turnover:
Revenue represents sales to external customers excluding value added tax.
Revenue is recognised at a point in time upon satisfaction of the relevant
performance obligations for the various revenue streams:
· Passenger revenue is recognised when the service is delivered;
· Subsidy revenue from local authorities is recognised on an
accruals basis, based on actual passenger numbers when services are
provided;
· Contracted and charter services revenues are recognised when
services are delivered, based on agreed contract rates.
· Grants and subsidies provided by the Department for Transport and
Local Authorities to support bus services run at their behest under COVID-19
conditions have been taken directly to income. Grant income is recognised on
submission of a claim as there are no unfulfilled conditions at this point in
time.
All of the activities of the Group are conducted in the United Kingdom within
the operating segment of provision of bus services. The Group has three main
revenue streams: contracted, commercial and charter, and management monitors
revenue across these three streams. All streams operate within the operating
segment of the provision of bus services.
2021 2020
£'000 £'000
Commercial 31,684 31,596
Contracted 16,179 16,501
Charter 734 665
Grants and subsidies 47,946 29,353
Total Revenue 96,543 78,115
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 for
Transport and Local Authorities.
3. Profit before taxation:
Profit before taxation includes the following mark to market provisions and
other exceptional items:
2021 2020
£'000 £'000
Mark to market profit/(loss) on fuel derivatives 1,779 (2,511)
Loss resulting from Heathrow depot fire (187) -
Loss on disposal of vehicles scrapped - (913)
Amortisation of intangible assets - (339)
Redundancy and reorganisation costs and costs of integration of acquisitions - (236)
Profit/(loss) within profit before taxation 1,592 (3,999)
4. Tax expense:
Tax expense includes the following:
2021 2020
£'000 £'000
Current tax
Current tax on profits for the year - -
_______ _______
Total current tax - -
_______ _______
Deferred tax
Origination and reversal of temporary differences (150) 871
Prior year adjustments (79) (137)
Change in rate of tax - -
_______ _______
Total deferred tax (229) 734
_______ _______
Income tax credit/(expense) (229) 734
_______ _______
The tax assessed for the year is different to the standard rate of corporation
tax in the U.K. for the following reasons:
2021 2020
£'000 £'000
Profit/(loss) before taxation 295 (4,781)
_______ _______
Profit/(loss) at the standard rate of corporation tax in the UK of 19% (2020: (56) 908
19%)
Non-taxable items (94) (37)
Adjustments in respect of prior periods (79) (137)
Impact of change in tax rates - -
_______ _______
Total tax (expense)/credit (229) 734
_______ _______
Deferred tax has been measured at the average tax rates that are expected to
apply in the accounting periods in which the timing differences are expected
to reverse, based on the tax rates and laws which have been enacted or
substantively enacted at the balance sheet date.
On 24 May 2021 the Finance Bill 2021 was substantively enacted with the
consequence that the main rate of corporation tax will increase from 19% to
25% with effect from 1 April 2023, with a corresponding effect on deferred tax
balances arising after that date.
5. Earnings per share:
(a) Basic earnings per share
Basic Basic
2021 2020
£'000 £'000
Profit/(loss) attributable to ordinary share holders 66 (4,047)
Weighted average number of shares in issue 50,091,109 50,091,109
Basic earnings/(loss) per share 0.13p (8.08p)
The calculation of the basic earnings per share is based on the earnings
attributable to the ordinary shareholders divided by the weighted average
number of shares in issue during the year.
(b) Basic diluted earnings per share
Diluted Diluted
2021 2020
£'000 £'000
Profit/(loss) attributable to ordinary share holders 66 (4,047)
Profit/(loss) for the purposes of diluted earnings per share 66 (4,047)
Weighted average number of shares in issue 50,091,109 50,091,109
Adjustment for exercise of options - -
Weighted average number of ordinary shares for the purposes of diluted 50,091,109 50,091,109
earnings per share
Diluted earnings/(loss) per share 0.13p (8.08p)
In order to arrive at the diluted earnings per share, the weighted average
number of ordinary shares has been adjusted on the assumption of conversion of
all dilutive potential ordinary shares. The potential ordinary shares take the
form of share options. A calculation has been carried out to determine the
number of shares, at the average annual market price of the Company's shares,
which could have been acquired, based on the monetary value of the rights
attached to those shares. This number has then been subtracted from the number
of shares that could be issued on the assumption of full exercise of the
outstanding options, in order to compute the necessary adjustments in the
above table.
(c) Adjusted basic earnings per share (adjusted before mark to market
provision and other exceptional items):
Basic Basic
2021 2020
£'000 £'000
(Loss)/profit attributable to ordinary share holders (1,050) (633)
Weighted average number of shares in issue 50,091,109 50,091,109
Adjusted basic (loss)/earnings per share (2.10p) (1.26p)
The calculation of the adjusted basic earnings per share is based on the
earnings attributable to the ordinary shareholders divided by the weighted
average number of shares in issue during the year.
(d) Adjusted diluted earnings per share:
Diluted Diluted
2021 2020
£'000 £'000
(Loss)/profit attributable to ordinary share holders (1,050) (633)
(Loss)/profit for the purposes of diluted earnings per share (1,050) (633)
Weighted average number of shares in issue 50,091,109 50,091,109
Adjustment for exercise of options - -
Weighted average number of ordinary shares for the purposes of diluted 50,091,109 50,091,109
(loss)/earnings per share
Adjusted diluted (loss)/earnings per share (2.10p) (1.26p)
In order to arrive at the diluted earnings per share, the weighted average
number of ordinary shares has been adjusted on the assumption of conversion of
all dilutive potential ordinary shares. The potential ordinary shares take the
form of share options. A calculation has been carried out to determine the
number of shares, at the average annual market price of the Company's shares,
which could have been acquired, based on the monetary value of the rights
attached to those shares. This number has then been subtracted from the number
of shares that could be issued on the assumption of full exercise of the
outstanding options, in order to compute the necessary adjustments in the
above table.
6. Property, plant and equipment:
Freehold Right of use assets under IFRS16 Passenger carrying Total
and leasehold land and buildings Plant and vehicles
machinery
£'000 £'000 £'000 £'000 £'000
Cost:
At 1 December 2019 11,970 - 6,310 58,668 76,948
Right of use assets recognised under IFRS 16 - 4,159 - - 4,159
Reclassifications (904) 904 17 (17) -
Additions 10 259 281 20,454 21,004
Disposals (169) (508) (341) (7,713) (8,731)
At 30 November 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
Depreciation:
At 1 December 2019 567 - 1,769 22,914 25,250
Depreciation on right of use assets recognised under IFRS 16 - 2,293 - - 2,293
Reclassification (254) 254 9 (9) -
Charge for the year 47 790 598 6,330 7,765
Disposals (16) (478) (183) (6,643) (7,320)
At 30 November 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
Net book value:
At 30 November 2021 10,051 1,445 1,728 47,867 61,091
At 30 November 2020 10,563 1,955 4,074 48,800 65,392
7. Loans and borrowings:
2021 2020
£'000 £'000
Current:
Overdrafts 3,603 4,280
Bank loans 8,012 16,562
_______ _______
11,615 20,842
_______ _______
Non-current:
Bank loans 5,445 5,881
_______ _______
17,060 26,723
_______ _______
In 2017 HSBC Bank plc became the principal bankers to the group. The Senior
Facilities Agreement as at 30 November 2021 provided for a revolving facility
of up to £15.4 million and a mortgage facility, originally of £8.0 million
but, after repayments since its inception, standing at £5.8 million with a
corresponding overdraft facility of up to £4.5 million. The group has entered
into a cross-guarantee and floating charge agreement covering these
facilities. At the balance sheet date these facilities were scheduled to
expire on 5 December 2022, by which time the revolving facility would have
amortised down to £13.2 million by equal quarterly rests. Subsequent to the
balance sheet date these facilities were revised and renewed.
The bank loans are secured on the group's freehold property. The annual
mortgage repayments are calculated such that the mortgage facilities amortise
in a straight line over a term of 20 years which is considered to give a
reasonable approximation to the effective interest rate.
8. Lease liabilities:
Current liabilities 2021 2020
£'000 £'000
Obligations under hire purchase agreements (see note 9(a)) 6,897 5,788
Other lease liabilities (see note 9(b)) 422 552
Total current liabilities 7,319 6,340
Non - current liabilities 2021 2020
£'000 £'000
Obligations under hire purchase agreements (see note 9(a)) 33,025 31,309
Other lease liabilities (see note 9(b)) 1,460 1,886
Total non - current liabilities 34,485 33,195
The Group's obligations under hire purchase agreements are secured by the
lessors' rights over the leased assets. Other lease liabilities are long term
operating lease agreements.
9. Obligations under hire purchase agreements and other lease liabilities:
(a) Obligations under hire purchase agreements
The present values of future lease payments are analysed as:
2021 2020
£'000 £'000
Current liabilities 6,897 5,788
Non-current liabilities 33,025 31,309
39,922 37,097
Minimum
lease Present
payments Interest value
2021 2021 2021
£'000 £'000 £'000
Not later than one year 8,426 1,529 6,897
More than one year but less than two years 9,718 1,657 8,061
More than two years but less than five years 17,954 1,518 16,436
Later than five years 8,800 272 8,528
44,898 4,976 39,922
Minimum
lease Present
payments Interest value
2020 2020 2020
£'000 £'000 £'000
Not later than one year 7,404 1,616 5,788
More than one year but less than two years 6,962 1,106 5,856
More than two years but less than five years 18,715 1,722 16,993
Later than five years 8,984 524 8,460
42,065 4,968 37,097
(b) 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
ownership of the asset leased are as follows:
The present values of future lease payments are analysed as:
Minimum lease payments
2021 Present
Interest value
2021 2021
£'000 £'000 £'000
Not later than one year 561 139 422
More than one year but less than two years 523 91 432
More than two years but less than five years 364 163 201
Later than five years 1,514 687 827
2,962 1,080 1,882
Minimum lease payments
2020 Present
Interest value
2020 2020
£'000 £'000 £'000
Not later than one year 757 205 552
More than one year but less than two years 565 139 426
More than two years but less than five years 818 203 615
Later than five years 1,583 738 845
3,723 1,285 2,438
10. Financial Information:
The Financial Statements for the year ended 30 November 2021 were approved by
the Board of Directors on 14 March 2022. The financial information in this
announcement does not constitute statutory accounts within the meaning of
section 434 of the Companies Act 2006. Statutory accounts for 2021 will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting. The auditors have reported on the 2021 accounts; the auditors'
opinion is unqualified and does not include a statement under section 498 of
the Companies Act 2006.
11. Further Information:
The Company's Annual Report and Accounts for the year ended 30 November 2021
are expected to be posted to shareholders in April 2022 and will also be
available to view on the Company's website at the following link:
http://www.rotalaplc.com (http://www.rotalaplc.com)
Copies of this statement are available from the registered office of the
Company at Cross Quays Business Park, Hallbridge Way, Tipton, Oldbury, West
Midlands, B69 3HW and/or on the Company's website at the following link:
http://www.rotalaplc.com (http://www.rotalaplc.com)
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