Pre-close trading statement

RNS Number : 7073D

Rotala PLC

02 February 2018

 

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

RNS

2 February 2018

Rotala Plc

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

Pre-close trading statement

Further acquisition in the West Midlands

Rotala is pleased to announce the following update on trading for the year ended 30 November 2017 ("FY 17"), the prospects for the current year ending 30 November 2018 ("FY 18") and a further acquisition in the West Midlands area.

FY 17 trading

The Company announces that trading during FY 17 was in line with market expectations. During the financial year, the Group continued to achieve further growth through the completion of three acquisitions, as it had done in the previous financial year. At the end of July 2017 the Company acquired Hansons (Wordsley) Limited, an independent bus company operating in Stourbridge, West Midlands; in September the Group acquired a bus business in Eccles, Manchester and at the end of the financial year the Group acquired the Hotel Hoppa bus business in and around Heathrow airport. These acquisitions were made in accordance with the Group's declared strategy of acquisitive growth and have considerably strengthened its business in the geographical locations in which these acquisitions occurred.

Acquisition

Rotala is pleased to announce a further acquisition, from CEN Group Limited trading as Central Buses ("Central"), of its entire bus business, bus brand and 31-strong vehicle fleet for a total cash consideration of £1.95 million, funded from the Company's existing debt facilities.  Rotala estimates that the Central business has annual revenues of approximately £2.8 million and that its vehicle fleet has a fair value of approximately £1.5 million. Rotala will not assume any other assets or liabilities of any materiality on acquisition. On this basis the acquisition is expected to generate about £0.45 million of positive goodwill on consolidation. No additional overheads are expected to be required as a result of the acquisition. The Directors believe that, following the completion of the acquisition, the Company will benefit from an additional EBITDA contribution of approximately £0.45 million in a full year. Central Buses is a well-established operator of commercial and contracted bus services in the northern part of the West Midlands area. This business, with its staff, will be integrated into the existing depot infrastructure which Rotala already possesses in the West Midlands. The acquisition will extend the Group's network of bus services in the northern part of Birmingham, particularly in the Perry Barr area.

Completion of the Business Purchase Agreement is expected to occur in late February 2018, following compliance by CEN Group Limited with its obligations under the Transfer of Undertakings (Protection of Employment) Regulations 2006.

Banking facilities

Just after its year end, the Company changed its banking relationship and entered into new facilities to replace its existing banking facilities on generally more favourable terms. The new facilities comprise a term loan of £5.5m, a revolving facility of £15.5m and an overdraft facility of £3.5m, with a maturity date for all these facilities of 5 December 2021. Taking into account these new facilities and parallel asset finance facilities, the Company has approximately £10 million of headroom with which it can finance further potential acquisitions. The Group's net debt position was unaffected by this change in banking relationship and currently stands at approximately £27 million.

Disposals

As part of the acquisition of Hansons (Wordsley) Limited referred to above, the Group inherited a freehold property in Stourbridge, West Midlands. The Company announces that the sale of this property for a price of £320,000 has been completed.

Dividend

The Company expects to maintain its progressive dividend policy and accordingly will be announcing details of a final dividend payment in due course.

FY 18 outlook

Trading for the current year has begun in line with budget. Following the four acquisitions which have been made since July 2017, the Group's turnover in FY 18 is expected to grow considerably. In the view of the Directors the Bus Services Act 2017 will continue to create uncertainty and drive change in the bus industry. Accordingly the Board remains focused on identifying suitable acquisitions which will enhance and expand the services of the Group. At the same time the Group possesses ample financial facilities to undertake further acquisitions.

The Group performed well in 2017, and, with a strong management team and large network of operating facilities, is well placed to take advantage of these continuing developments in the bus industry. Such uncertainty brings opportunity to groups like Rotala and the Group is well placed to take advantage of any opportunities that may arise.

Rotala Plc	0121 322 2222
John Gunn, Chairman Simon Dunn, Chief Executive Kim Taylor, Group Finance Director
Nominated Adviser & Joint Broker: Cenkos Securities plc	020 7397 8900
Stephen Keys/Mark Connelly/Callum Davidson (Corporate Finance) Michael Johnson/Julian Morse (Corporate Broking)
Joint Broker: Dowgate Capital Stockbrokers Ltd	0203 903 7715
David Poutney/James Serjeant (Corporate Broking)

 

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