ROL.L Regulatory News (ROL)

Rotala plc

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

Acquisition of Preston Bus Limited

Creation of a New Hub of Operations

 Rotala is pleased to announce that it has today acquired Preston Bus Limited ("PBL") for a consideration of £3.2 million. The directors believe that this acquisition will be earnings enhancing in the current financial year.

Following the Competition Commission's investigation of the acquisition by Stagecoach Group plc ("Stagecoach") of PBL, Stagecoach undertook to offer PBL for sale. Rotala has emerged as the successful bidder in this sale process, which is a most pleasing outcome for the Company.

PBL runs a fleet of some 85 vehicles, operating in and around Preston and adjacent areas. These services are predominately local, providing about 10 million passenger journeys a year. PBL has about 240 employees and operates from a freehold operating and engineering depot in Deepdale Road, Preston, approximately two miles north of the town centre. The services are largely operated on a commercial basis in a deregulated market. PBL also carries out a number of tendered services, including school contracts, on behalf of local authorities and other public bodies.

The offer for PBL was made on a debt free basis. The Board of Rotala estimates that the net book value of the assets being acquired is approximately £3 million, with the principal operating assets being comprised of a freehold property and the vehicle fleet. For the year ended 30 April 2010, the last date for which accounts have been audited and filed at Companies House, PBL's turnover was £7.75 million and the loss before taxation was £132,000. For the year ending 30 April 2011, the management of PBL had forecast revenue of £9.5 million. For the unaudited 7 month period to 30 November 2010, PBL generated turnover of £5.6 million.

The acquisition is being financed by a hire purchase facility, secured on the vehicles owned by PBL, of £2.4 million, a bridging loan from the Group's bankers of £617,500 and the remainder from the existing banking facilities of the Group. The bridging loan is repayable in two tranches, one of £460,000 by 28 February 2011 and one of £157,500 by 28 May 2011.

Pursuant to the authorities granted to the Board at the last AGM, the Company will raise these funds firstly by way of a placing of 1,648,020 ordinary shares (equivalent approximately to 5% of the existing ordinary share capital of the Company) at a price of 28p per ordinary share. This placing will raise £461,000 and be used to repay the first tranche of the bridging loan. John Gunn, the Chairman of the Company, has committed to subscribe £107,150 in this placing.

Secondly the Company will as usual seek at its next AGM, which is expected to be held in May 2011, authority to raise up to 5% of its issued ordinary share capital. If such authority is granted at the AGM, the Board anticipates that the Company will have sufficient headroom to issue a further 562,500 ordinary shares at 28p per share equivalent to the £157,500 necessary to repay the second tranche of the bridging loan. However in the interim Simon Dunn (the Chief Executive), Robert Dunn (Simon's father and a board member) and John Gunn have committed in aggregate to make a loan to the Company of £157,500, which will bear an interest rate of 3% per annum and will convert into ordinary shares of the Company at 28p per share once the resolution which allows the authority to raise up to 5% of the Company's share capital has been approved by shareholders.

The acquisition of PBL provides Rotala with a significant expansion of its activities into a new geographical area. This area is approximately the same distance from Birmingham as the existing activities of the Company to the south west of Bristol and creates a new hub for the operations of the group. The Board is confident that the existing management and operations of PBL can be quickly integrated within the Group's existing structure. PBL will operate just like any current depot in the group network, with all central administrative and support services provided by the Birmingham headquarters of the Group. Preston sits in a region which has a historically high level of bus usage. In addition plans have recently been announced to build a major new shopping centre in Preston; a requirement for a new bus station was outlined some time before the announcement of the new shopping centre and thus the need has become more pressing. These improvements will add considerably to the attractiveness of Preston as a place to live and work, and are expected to create more bus passenger journeys. The Board of Rotala therefore regards the future development of the Preston hub with optimism.

John Gunn, Chairman of Rotala, said: "This acquisition represents an exciting new phase in the development of the Rotala group. The extension of our network up the M6 to Preston will bring us a presence in a wholly new area of operation where the development potential is considerable. I am confident that this acquisition will much enlarge the activities of the Company and deliver further increases in shareholder value in due course."

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