ROL.L Regulatory News (ROL)

RNS Reach

29 April 2022

Rotala Plc

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

Acquisition of established bus operator in Warwickshire and the West Midlands

Rotala plc (AIM:ROL) is pleased to announce the acquisition from Johnsons (Henley) Limited of its entire bus business and 20-strong fleet, for a cash consideration of £936,000 payable on completion (the "Acquisition"). The business being acquired is a well-established operator of commercial and contracted bus services in Warwickshire and the southern West Midlands. The Acquisition is expected to be earnings enhancing from completion.

Rotala estimates that the assets being acquired have annual revenues of approximately £3.5 million and that the vehicle fleet has a fair value which approximates to the cash consideration being paid. Rotala will not assume any other assets or liabilities of any materiality on acquisition. On this basis, the Acquisition is not expected to generate any goodwill.

The Directors believe that, following completion, the Acquisition will generate EBITDA of approximately £200,000 per annum for the Group. No additional overheads are expected to be required as a result of the Acquisition.

Following completion, the business, trading at present under the "Excelbus" brand, will be subsumed into the Company's Diamond Bus business operating out of its existing Redditch depot and the buses will be rebranded into Diamond Bus livery. Approximately 60 employees are expected to transfer to Diamond Bus with the business. The Acquisition will extend the Group's network of bus services in Warwickshire and the West Midlands and make more efficient use of the capacity of the Company's Redditch depot.

Completion of the Acquisition is expected to occur on 29 May 2022, after giving due time for the necessary consultation with the transferring employees under the Transfer of Undertakings (Protection of Employment) Regulations 2006.

Simon Dunn, Chief Executive of Rotala, said: "In our recently published Annual Report, we highlighted our belief that the Group was very well placed to take advantage of the acquisition opportunities that were likely to arise as commercial reality returned to the bus industry after COVID 19. The Acquisition is an example of such a transaction and we continue to look for others.

The Acquisition also fits in with a key part of the Group's strategy in seeking to consolidate smaller businesses in our existing areas of operation so that we make better use of our current depot capacity and so spread overheads over a larger business, with a corresponding increase in business efficiency."

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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.