26 January 2012
Rotala plc
("Rotala" or "the Company" or "the Group")
Pre-close statement
Rotala is pleased to announce the following update about trading for the year ended 30 November 2011 and prospects for the current year ending 30 November 2012.
· Full results for the year ended 30 November 2011 are expected to be broadly in line with management expectations. These results will be released in March 2012.
· Trading for the current year has started well and is in line with budget.
Whilst, as anticipated in our half year announcement, local authority transport budgets have continued to be under pressure, we are encouraged by the developments in our commercial bus operations so far this year. Much activity is also taking place in the private bus network market at this time. In this type of business we are one of the leading operators in the country and the Company expects to continue to win appreciable new business in this area.
There are also a number of other significant developments which should be drawn to the attention of shareholders:
1. Balance sheet
As outlined in the announcement made on 31 August 2011, the majority of the holders of the Convertible Unsecured Loan Stock ("CULS") in the Company had committed themselves well before the end of 2011 to the extension of the life of the CULS until 31 December 2014. This agreement covers £2,315, 850 of Loan Stock. The remainder of the CULS outstanding at 30 November 2011, totalling £1,571,650, was redeemed as at 31 December 2011 in accordance with the wishes of the holders. The reduction of the amount of CULS over the last twelve months from its original total of £4,662,500, with the corresponding reduction of the associated interest, has significantly improved the debt/equity and debt/EBITDA ratios enjoyed by the Company.
2. Competition Commission
Just before the end of 2011 the Competition Commission produced its final report on its investigation into local bus services. Rotala has participated fully in all the stages of this investigation and is pleased to note that many of its recommendations are reflected in the Commission's final proposals. The board sees nothing detrimental to the Company in the changes that have been proposed by the Competition Commission. Indeed, in the longer term, the final report of the Commission has reinforced the board's view that smaller operators like Rotala will see benefits to its business.
The proposals now lie with various central and local government bodies for their consideration and implementation. The recommendations are complex and will require the Company to have a continuing dialogue with central and local government in order to ensure that its interests are properly represented. The board has retained specialist competition and regulatory law advisers to help it with this stage of the process. The changes which are likely to be needed in the West Midlands in particular, whilst they make take some time to implement in full, should bring discernible benefit to our commercial bus operations.
3. New Vehicles
In accordance with previous announcements the Group has recently taken delivery of its first four hybrid power buses as a result of its participation in the government's Green Bus Fund. These vehicles have been deployed in our Preston operation to much local acclaim. These vehicles, although at this stage early in their service lives, show an improvement in fuel consumption, depending on route served, of up to 50%.The remaining eleven that we currently have on order are due to be delivered by the end of the first quarter of 2012. The government has also announced a third round of Green Bus funding; the Company intends to make a bid for further hybrid buses in this funding round.
4. Fare Increases
Along with all other bus operators, the Group will suffer a reduction in the level of fuel duty rebate it obtains when the government implements its cut in Bus Services Operators' Grant ("BSOG") in April this year. As a consequence bus operators all over the country have been reviewing their fares in recognition of the substantial rise in operating costs which results from this change. Bus fares in the West Midlands have already risen by 5.6% from the beginning of 2012, as have fares in Worcestershire. Fares in Preston will be reviewed again in April 2012; elsewhere in our operations, where fares were increased in the latter part of 2011, fare reviews will be conducted on the anniversary of the previous change. As a result of likely fare increases and those already effected the board does not anticipate that any material impact on its financial results will arise from this reduction in BSOG by the government.
For further information please contact:
Rotala Plc |
|
John Gunn, Chairman | 020 7602 7500 |
Simon Dunn, Chief Executive | 07825 808 525 |
Kim Taylor, Group Finance Director | 07825 808 529 |
|
|
Numis Securities Limited | 020 7260 1000 |
David Poutney (Corporate Broker); Stuart Skinner/Richard Thomas (Nominated Adviser) |
|
