19 Apr 2011 07:00
Rotala plc
("Rotala" or "the Group")
Preliminary Results for the financial year ended 30 November 2010
Rotala (ROL.LN) is pleased to announce its final results for the year ended 30 November 2010.
Highlights
·; Growth in revenue of 10.0 per cent. to £44.6 million (2009: £40.6 million)
·; Profit from operations before intangible asset expenses, share based payments and debt finance costs was £3.58 million (2009: £3.53 million)
·; Profit before taxation before intangible asset expenses, share based payments increased to £1.90 million (2009: £1.88 million)
·; Net assets at year end up 8.5 per cent. to £19.1 million (2009: £17.6 million)
·; Net cash flow from operating activities up 99.0 per cent. to £5.51 million (2009: £2.77 million)
·; Vehicle fleet at year end up to 480 vehicles (570 vehicles with the addition of Preston Bus Limited, acquired in January 2011)
·; Final dividend proposed of 0.6 pence per share (2009: nil) making 0.9 pence per share for the year as a whole
·; Trading in 2011 is in line with expectations
For further information please contact:
Rotala Plc | |
John Gunn, Chairman | 020 7602 7500 |
Simon Dunn Chief Executive | 07825-808525 0121-322-2222
|
Kim Taylor, Group Finance Director | 07825- 808529 0121-322-2222 |
Charles Stanley Securities - Nominated Advisor and Broker | 020 7149 6000 |
Mark Taylor / Marc Milmo |
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 2010.
Review of trading
The Group continued to make good progress in the year. Revenues rose by 10%, when compared to those of 2009, to a total of £44.6 million. This rise in revenue was well distributed amongst our various business streams and reflects the nature of the investment made in both 2009 and 2010. The increases are also wholly organic since there were no acquisitions made in the year. Rotala is now the number two bus operator by market share in both the West Midlands (the second largest bus market in the country after London) and Bristol. We are moreover one of the leading providers of private bus networks in the country, especially to the aviation industry in the South East.
Contracted Services
Revenues in Contracted Services rose by 7.6% to a total of £18.8 million. The Group enjoyed a full year's contribution from the business generated by the new depots opened in 2009 in both Bath and Worcester. Both these depots were underpinned by new contracted work obtained from the relevant local authorities throughout the period after they were opened. In addition the full effect was felt in the West Midlands of the contracted work successfully tendered for in 2009 under the Diamond brand. These successes more than compensated for some reductions in local authority work in the Bristol area and a reduction in contracted revenues from aviation work in and around Heathrow airport as a result of a change in the requirements from a major customer. There is no doubt that the recession and the Government's Spending Review, taken together, made for poor conditions in which to be seeking to expand business in this area. In 2010, in contrast to previous years, we were able to add new contracts in the private sector at about half the growth rate that had been our prior experience. There are good indications that this phase is now over. The market for new tenders seems to have returned and towards the end of the year we were able to secure a small number of new customer contracts. In the public sector, our experience was varied. Some local authorities are faced with difficult decisions of prioritisation whereas others have felt themselves better placed and more able to enter into longer term contracts. Our largest customer in this business stream, Centro, the government organisation responsible for transport policy and planning in the West Midlands, has had the advantage of the absence of conflicts of prioritisation, since it is a single purpose authority confined to that one objective of transport provision in its region.
Commercial Services
Revenues in Commercial Services showed strong growth in the year with an increase of 12.3% to a total of £21.8 million. Once again the sources of these revenue increases were well spread. In the West Midlands much effort has been made to invest in new commercial bus routes, particularly in any gaps left by the withdrawal of services by our larger rivals. Whilst this investment is still in its early stages and, as with any commercial bus initiative, will take time to become established, the increases in patronage and revenues are most encouraging. The new routes have made a considerable local impact, often using high specification vehicles, which have attracted much public attention and generated all-important political support.
The expansion of services that became possible through the establishment of the depots in Worcester and Bath mentioned above also had a beneficial effect on revenues. New routes were registered in both these areas and showed strong growth. In Bristol there was also a sharp rise in commercial revenues which far outstripped the reduction in payments from contracts. In contrast to Contracted Services, Commercial Services suffered from no external brake to their expansion as a result of the recessionary conditions.
Charter Services
In the main this is a business stream which builds on our extensive experience and contacts to provide a service tailored to particular customer needs. Charter Services enjoyed an increase in revenue of some 10% when compared to the previous year. Demand for chauffeur car services in the aviation sector (which we sub-contract in their entirety) fell in 2010. But in contrast there was a welcome increase in one-off private hire work, an area which had suffered from the effects of recession. However the major contributor to the increase in revenues came from disruption work. This was occasioned both by the severe winter weather and a number of strikes in various parts of the transport infrastructure where we were called upon to organise alternative services. Thus this was an excellent overall result, particularly in the light of the fact that in 2009 revenues of £1.1m were generated by the transportation contract for the Rotary International meeting in Birmingham that year, which was a one-off event.
Fleet Modernisation
The Group has continued to modernise its fleet and in the year under review about 20% of the vehicle fleet was replaced. This programme of replacement included some 50 new vehicles. One important facet of this initiative is the desire to improve the passenger experience: there is no doubt that a modern, clean and comfortable bus is a factor which attracts and retains patronage. In some cases we have invested in such features as leather seats and Wi-Fi (in Solihull and West Bromwich for example) on high frequency commuter routes. This helps ensure that we retain customers and changes the customer perception of bus travel.
The programme also ensures that Rotala continues to possess one of the youngest fleets in the industry with an average age of about 7.5 years. Older vehicles emit a greater level of emissions and we are keen to minimise this aspect of bus operation. The attention we have shown over the years to the profile of the fleet means furthermore that 98% of it already complies with the requirements of the Disability Discrimination Act. This Act sets compliance standards which must be met from 2014 onwards. Given the foresight which has been employed by your board in building up our bus fleet, you can see from the statistic mentioned that we anticipate no problems at all in meeting the deadlines set by law.
More recently we have ordered our first batch of hybrid power buses from the Optare Group. We were fortunate to receive an allocation of £2.9 million late in 2009 from the Government's first Green Bus Fund. We are using £1.6m of this allocation in an order for 15 hybrid vehicles. These vehicles will be deployed principally on routes in Solihull, but a number will also go to Bath and to our new operation in Preston, to which I shall refer later in this statement.
Diesel Prices
Fuel is a significant cost to Rotala's business. In the period under review we have seen further increases in the price of diesel and this trend persists. As a relatively small user of diesel (in industry terms) at about 10 million litres a year, it has been very difficult for the company to obtain a hedge at economic prices. Rotala has therefore remained without a hedge against fuel price increases. In 2010 the diesel fuel used cost about £1 million more than in 2009 on the same basis of operations. The volatility of the fuel price did therefore reduce our margins during the year. In mitigation we were able to increase fares and contract prices but there is no doubt that fares for the whole bus industry will have to continue to increase in response to such large changes in the price of a material input cost.
Spending Review
In its Spending Review, the Government decided to reduce by 20% from April 2012 the grant by which it shields bus operators from about 80% of the duty contained within fuel prices. Rotala, like all other bus operators, will be obliged to review its fare structures in 2012 for this increase in fuel costs. It is anticipated currently that fare increases of about 5% will be required. Approximately one quarter of Rotala's turnover is not supported by this grant in any event and so is unaffected. Another spending reduction, commissioned by the previous government, involves a change in concessionary fares arrangements. However it is not expected that the new fare calculations will have a material effect on Rotala's operations. Inevitably bus fares will have to rise in order to compensate for these reductions in revenues, but it will be the same for all operators in any particular locality. We do expect that some of the more marginal routes may be relinquished by the larger, higher cost operators and so there will be opportunities to gain market share where this is on an economically sound basis.
Strategy and acquisitions
The strategy of the Group remains focused on the areas in which we have invested so far. Rotala is the number two operator in both the West Midlands and the South West and one of the leading operators in the Heathrow area. Shortly after the year end we took the opportunity to establish a new hub for the business by acquiring Preston Bus Limited ("PBL") from Stagecoach Group plc. PBL's services are operated largely on a commercial basis in a deregulated market, with some contracted services in addition carried out for the local authority and other public bodies.
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. PBL will operate 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.
Board change
On 30 June 2010, we announced that Michael Samuel had decided to step down from the Board to give himself more time to pursue his other business interests. We are grateful for the time that Michael gave to the group and the insights and experience which his presence brought to the board table.
Competition Commission
We have had considerable dialogue with the Competition Commission as their investigation into local bus services has progressed. Whatever the outcome of the Commission's deliberations, we cannot see that these can be to the detriment of the smaller operator like ourselves. The review will undoubtedly look to enhance competition in the bus market in various ways. We would expect benefits to flow to our operations both in the West Midlands and in South West England whatever the tenor of the Commission's report. Their initial findings are expected to be published in April 2011.
Financial review
Revenue increased by 10 per cent to £44.6 million (2009: £40.6 million). Gross profit increased by 5.0 per cent to £8.2 million as cost of sales increased by 11 per cent. partly as a result of increased fuel costs. Gross profit margin however declined slightly from 19% to 18%.
Profit from operations before intangible asset expenses, share based payments and finance costs were £3.6 million (2009: £3.5 million). Administrative expenses were some 8% higher than those seen in 2009 at £4.6 million principally due to the full year costs of the new depots in Worcester and Bath opened in the latter part of 2009. Finance expense was little changed overall but the hire purchase component of this figure continued to fall and profit before taxation therefore showed a slight increase over that recorded in 2009 at £1.9 million.
Basic earnings per share were 5.00 pence per share (2009: 5.74 pence) as a result of the increased number of shares in issue and the adjusted basic earnings per share also fell from 7.06p in 2009 to 5.77p in 2010.
The gross assets of the Group stood at £44.3 million at 30 November 2010 (2009: £44.2 million). The vehicle fleet continued to grow: at the year end it stood at some 480 vehicles (2009: 450 vehicles). With the addition of PBL the fleet has now reached 570 vehicles. Whilst the book value of property and vehicle assets increased, debtors fell. The loans and borrowings of the Group, including its obligations under hire purchase contracts, also fell by 7%, from £21.9 million at the end of 2009 to £20.5 million by 30 November 2010. The was despite the fact that a number of significant additions to the vehicle fleet, financed by new hire purchase contracts, were made in the last quarter of the year. Net assets increased to £19.1 million at the year end (2009: £17.6m).
The improvement in the operating performance of the Group resulted in a 99% increase in net cash flows from operating activities to £5.5 million (2009: £2.8 million). Investment in property, plant and equipment (net of settlements paid on vehicles disposed of) totalled £0.9 million (2009: £1.3m). All property mortgages were refinanced and consolidated in the year as detailed below. The capital element of payments on HP agreements totalled £3.8 million in 2010 (2009: £3.4m). After dividend and interest payments the closing figure for cash and cash equivalents at the end of the year, was virtually unchanged at £1.1 million (2009: £1.15 million).
Banking facilities and finance
As part of our planning to sustain the expansion of the Group, the Royal Bank of Scotland ("RBS") has been appointed as Rotala's new clearing bankers. This move enabled us to discontinue the use of sales finance as a means of funding working capital and so reduce the effective rate of interest on these borrowings which were replaced by a £2.0 million conventional overdraft arrangement. At the same time all existing property mortgages, totalling £1.9 million, (at the time with three different lenders) have been consolidated and re-financed with RBS. Through their Lombard arm, RBS too is able to increase the amount of vehicle finance facilities available to the Group. This addition, together with other existing vehicle finance providers, gives us unused facilities in excess of £2.3 million and thus underpins our plans for further growth in the Group's businesses.
On 31 December 2011 the convertible unsecured loan stock issued in 2008 is due for repayment or conversion. The latter option looks unlikely at current share prices. At the same time a number of loan stock holders have approached the company to ask if the company would consider extending the life of the note. Since this request seemed to be in the company's interest, the board conducted a survey of note holders and established thereby that just over 50% of them wished to hold the debt for a further three years until 31 December 2014. In due course the company will be writing to each note holder to confirm these arrangements. The cash flow projections of the Group show that repayment of the remaining holders can be financed through the existing facilities of the Group. Shortly after the year end the company also took the opportunity to repay at par £475,000 of the loan stock, thus saving interest of £54,000 that would otherwise have accrued on this tranche.
Dividend
The Company paid an interim dividend of 0.30 pence per share in December 2010. At the forthcoming Annual General Meeting the Board will recommend a final dividend in respect of 2010 of 0.60 pence per share, making 0.90 pence per share for the year as a whole. The dividend will be paid, subject to shareholder approval at the AGM, on 23 June 2011 to shareholders on the register on 27 May 2011.
As the company matures I expect the dividend to be progressive. The Board is conscious of the importance of dividend flows to shareholders and intends that dividends should grow in line with the growth in underlying earnings and free cash flows.
Outlook
With the acquisition of Preston Bus, the proportion of the Group's revenues derived from commercial services will rise to some 60 per cent. We intend to continue to expand these services in all areas of our business. Our largest competitors in the West Midlands and in the South West have also concentrated this year on trimming their operations and optimising their own performance. This has enabled us to operate on new routes as the incumbent operators have retreated. I believe that this trend will provide us in the short and medium term with many attractive opportunities to continue the expansion of our commercial services. With our inherently lower cost base we are well positioned to take on routes in our areas of operation which to the larger operators may seem marginal. The high cost of motoring may also encourage car commuters to try the bus instead in the major conurbations in which we have the majority of our bus operations.
Given the pressure on local authority budgets, it is difficult to envisage expansion of any significance in this type of contracted business. Indeed certain local authorities may find it necessary to cut their transport budgets even more in years to come. However I do believe that the focus of government on the reduction of pollution and congestion will help to provide further opportunities for growth in contracted private sector business. In addition many tenders derive from the drive by the private sector to outsource those activities (like transport) which lie outside their core areas of expertise. We can only benefit from this trend. For these reasons the board remains confident that the organic growth of the Group can be sustained. In addition, the board will continue to look for earnings enhancing acquisition opportunities to expand the Group.
The bus industry is in a period of considerable change at this time. Some of these changes are driven by government policy or action (for example via the Competition Commission). Other changes are driven by the commercial decisions of the larger bus groups. I believe that Rotala is well positioned to take advantage of any opportunities that come our way from these changes. We have created a credible bus group which has a high profile in the bus industry. We can build with confidence on this solid base.
John Gunn
Non-Executive Chairman
18 April 2011
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 NOVEMBER 2010
Note | 2010 | 2010 | 2010 | 2009 | 2009 | 2009 | |
Results before intangible asset expenses, share based payments and debt finance costs | Intangible asset expenses, share based payments and debt finance costs | Results for the year | Results before intangible asset expenses, share based payments and debt finance costs | Intangible asset expenses, share based payments and debt finance costs | Results for the year | ||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
Revenue | 2 | 44,644 | - | 44,644 | 40,561 | - | 40,561 |
Cost of sales | (36,430) | - | (36,430) | (32,735) | - | (32,735) | |
--------- | --------- | --------- | --------- | --------- | --------- | ||
Gross profit | 8,214 | - | 8,214 | 7,826 | - | 7,826 | |
Administrative expenses | (4,637) | (128) | (4,765) | (4,294) | (226) | (4,520) | |
--------- | --------- | --------- | --------- | --------- | --------- | ||
Profit from operations | 3 | 3,577 | (128) | 3,449 | 3,532 | (226) | 3,306 |
Finance expense | (1,673) | (126) | (1,799) | (1,652) | (126) | (1,778) | |
--------- | --------- | --------- | --------- | --------- | --------- | ||
Profit before taxation | 3 | 1,904 | (254) | 1,650 | 1,880 | (352) | 1,528 |
Tax expense | - | - | - | - | - | - | |
--------- | --------- | --------- | --------- | --------- | --------- | ||
Profit for the year attributable to the equity holders | 1,904 | (254) | 1,650 | 1,880 | (352) | 1,528 | |
of the parent | |||||||
--------- | --------- | --------- | --------- | --------- | --------- | ||
Other comprehensive income | - | - | - | - | - | - | |
Total comprehensive income for the year | 1,904 | (254) | 1,650 | 1,880 | (352) | 1,528 | |
===== | ===== | ===== | ===== | ===== | ===== | ||
Earnings per share for profit attributable to the equity | |||||||
holders of the parent during the year: | |||||||
Basic (pence) | 4 | 5.00 | 5.74 | ||||
Diluted (pence) | 4 | 4.98 | 5.73 | ||||
===== | ===== | ===== | ===== | ===== | ===== |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 NOVEMBER 2010
Called up share capital £'000 | Share premium reserve £'000 |
Merger reserve £'000 |
Warrant reserve £'000 |
Retained earnings £'000 |
Total £'000 | |
At 1 December 2008 | 5,254 | 6,208 | 2,567 | 370 | (2,938) | 11,461 |
Profit for the year and total comprehensive income | - | - | - | - | 1,528 | 1,528 |
--------- | --------- | --------- | --------- | --------- | --------- | |
Transactions with owners: | ||||||
Issue of share capital | 2,984 | 1,769 | - | - | - | 4,753 |
Costs of issue of share | - | (226) | - | - | - | (226) |
capital | ||||||
Share based payment | - | - | - | - | 84 | 84 |
--------- | --------- | --------- | --------- | --------- | --------- | |
Transactions with owners | 2,984 | 1,543 | - | - | 84 | 4,611 |
--------- | --------- | --------- | --------- | --------- | --------- | |
At 30 November 2009 | 8,238 | 7,751 | 2,567 | 370 | (1,326) | 17,600 |
Profit for the year and total comprehensive income | - | - | - | - | 1,650 | 1,650 |
--------- | --------- | --------- | --------- | --------- | --------- | |
Transactions with owners: | ||||||
Issue of share capital | 27 | 11 | - | - | - | 38 |
Dividends paid or declared | - | - | - | - | (248) | (248) |
Share based payment | - | - | - | - | 64 | 64 |
--------- | --------- | --------- | --------- | --------- | --------- | |
Transactions with owners | 27 | 11 | - | - | (184) | (146) |
--------- | --------- | --------- | --------- | --------- | --------- | |
At 30 November 2010 | 8,265 | 7,762 | 2,567 | 370 | 140 | 19,104 |
===== | ===== | ===== | ===== | ===== | ===== |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 NOVEMBER 2010
| 2010 | 2009 | ||
| £'000 | £'000 | ||
Assets | ||||
Non-current assets | ||||
Property, plant and equipment | 28,256 | 26,381 | ||
Goodwill and other intangible assets | 9,597 | 9,661 | ||
Deferred taxation | 23 | 23 | ||
--------- | --------- | |||
Total non-current assets | 37,876 | 36,065 | ||
Current assets | ||||
Inventories | 779 | 603 | ||
Trade and other receivables | 4,536 | 5,647 | ||
Cash and cash equivalents | 1,128 | 1,927 | ||
--------- | --------- | |||
Total current assets | 6,443 | 8,177 | ||
--------- | --------- | |||
Total assets | 44,319 | 44,242 | ||
--------- | --------- | |||
Liabilities | ||||
Current liabilities | ||||
Trade and other payables | 4,716 | 4,750 | ||
Loans and borrowings | 127 | 1,938 | ||
Obligations under hire purchase | 4,004 | 4,219 | ||
--------- | --------- | |||
Total current liabilities | 8,847 | 10,907 | ||
Non-current liabilities | ||||
Loans and borrowings | 6,254 | 6,261 | ||
Obligations under hire purchase | 10,114 | 9,474 | ||
--------- | --------- | |||
Total non-current liabilities | 16,368 | 15,735 | ||
Total liabilities | 25,215 | 26,642 | ||
--------- | --------- | |||
TOTAL NET ASSETS | 19,104 | 17,600 | ||
===== | ===== |
2010 | 2010 | 2009 | 2009 | ||
£'000 | £'000 | £'000 | £'000 | ||
Shareholders' funds | |||||
Share capital | 8,265 | 8,238 | |||
Share premium reserve | 7,762 | 7,751 | |||
Merger reserve | 2,567 | 2,567 | |||
Warrant reserve | 370 | 370 | |||
Retained earnings | 140 | (1,326) | |||
--------- | --------- | ||||
--------- | --------- | ||||
TOTAL EQUITY | 19,104 | 17,600 | |||
===== | ===== |
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 NOVEMBER 2010
2010 | 2009 | |||
£'000 | £'000 | |||
Cash flows from operating activities | ||||
Profit for the year | 1,650 | 1,528 | ||
Adjustments for: | ||||
Depreciation | 2,721 | 2,481 | ||
Amortisation | 64 | 142 | ||
Finance expense | 1,799 | 1,778 | ||
Gain on sale of property, plant and equipment | (455) | (254) | ||
Equity settled share-based payment expense | 64 | 84 | ||
--------- | --------- | |||
Cash flows from operating activities before changes in working capital and provisions | 5,843 | 5,759 | ||
--------- | --------- | |||
Decrease/(increase) in trade and other receivables | 1,111 | (567) | ||
(Increase)/decrease in inventories | (176) | 91 | ||
Decrease in trade and other payables | (134) | (1,109) | ||
Decrease in provisions | - | (105) | ||
--------- | --------- | |||
801 | (1,690) | |||
--------- | --------- | |||
Cash generated from operations | 6,644 | 4,069 | ||
Interest paid on hire purchase agreements and invoice discounting arrangements | (1,136) | (1,298) | ||
--------- | --------- | |||
Net cash flows from operating activities carried forward | 5,508 | 2,771 | ||
===== | ===== | |||
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 NOVEMBER 2010 (Continued)
2010 | 2009 | ||||
£'000 | £'000 | ||||
--------- | --------- | ||||
Cash flows from operating activities brought forward | 5,508 | 2,771 | |||
--------- | --------- | ||||
Investing activities | |||||
Purchases of property, plant and equipment | (1,201) | (1,622) | |||
Sale of public service vehicles | 2,391 | 1,245 | |||
--------- | --------- | ||||
Net cash from/ (used in) investing activities | 1,190 | (377) | |||
--------- | --------- | ||||
Financing activities | |||||
Issue of ordinary shares | 38 | 3,825 | |||
Dividends paid | (149) | - | |||
Proceeds of hire purchase refinancing agreement | 933 | - | |||
Proceeds of mortgage and other loans | 1,900 | 1,650 | |||
Loan stock and notes repaid | - | (1,415) | |||
Repayment of other loan | (1,000) | - | |||
Repayment of bank and other borrowings | (2,064) | (486) | |||
Loan stock and bank loan interest paid | (538) | (355) | |||
Capital settlement payments on vehicles sold | (2,073) | (968) | |||
Capital element of lease payments | (3,765) | (3,440) | |||
--------- | --------- | ||||
Net cash used in financing activities | (6,718) | (1,189) | |||
--------- | --------- | ||||
Net (decrease)/ increase in cash and cash equivalents | (20) | 1,205 | |||
Cash and cash equivalents at beginning of year | 1,148 | (57) | |||
--------- | --------- | ||||
Cash and cash equivalents at end of year | 1,128 | 1,148 | |||
===== | ===== | ||||
Notes to the Preliminary Announcement of results for the year ended 30 November 2010
1. Basis of preparation:
The accounting policies used in the preparation of these financial statements are those that have been used in the preparation of the annual statutory financial statements of the company for the year ended 30 November 2010. These policies are in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRSs) as endorsed by the European Union.
2. Turnover
Revenue represents sales to external customers excluding value added tax. Passenger revenue is recognised when payment is received in cash. Subsidy revenue from local authorities is recognised on an accruals basis, based on actual passenger numbers. Revenues delivered under contract are recognised as services are delivered based on agreed contract rates.
All of the activities of the Group are conducted in the United Kingdom within the operating segment of provision of bus services. Management monitors revenue across the following business streams: contracted services, commercial services and charter services.
Contract | Commercial | Charter | Total | ||||||
2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | ||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
Revenue | 18,834 | 17,505 | 21,832 | 19,441 | 3,978 | 3,615 | 44,644 | 40,561 | |
===== | ===== | ===== | ===== | ===== | ===== | ===== | ===== | ||
3. Profit before tax
Profit before taxation includes the following:
Intangible asset expenses, share based payments and debt finance costs | Intangible asset expenses, share based payments and debt finance costs | |
2010 | 2009 | |
£'000 | £'000 | |
Amortisation of intangible assets | (64) | (142) |
Share based payment expense | (64) | (84) |
--------- | --------- | |
Loss within profit from operations | (128) | (226) |
--------- | --------- | |
Finance expense - amortisation of debt component of convertible debt | (126) | (126) |
--------- | --------- | |
Loss within profit before taxation | (254) | (352) |
===== | ===== |
4. Earnings per share
Basic | 2010 | 2009 | |||||
£'000 | £'000 | ||||||
Profit attributable to ordinary shareholders | 1,650 | 1,528 | |||||
Weighted average number of ordinary shares in issue | 33,019,625 | 26,610,256 | |||||
Basic earnings per share | 5.00p | 5.74p | |||||
===== | ===== | ||||||
Adjusted basic | |||||||
Profit attributable to ordinary shareholders | 1,904 | 1,880 | |||||
Weighted average number of ordinary shares in issue | 33,019,625 | 26,610,256 | |||||
Adjusted basic earnings per share | 5.77p | 7.06p | |||||
===== | ===== | ||||||
The calculation of the basic, adjusted basic and diluted 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.
| Adjusted diluted |
Diluted | Adjusted diluted |
Diluted |
2010 | 2010 | 2009 | 2009 | |
£'000 | £'000 | £'000 | £'000 | |
Profit attributable to ordinary share holders | 1,904 | 1,650 | 1,880 | 1,528 |
Interest expense of convertible loan notes | 373 | - | 373 | - |
--------- | --------- | --------- | --------- | |
Profit for the purposes of diluted earnings per share | 2,277 | 1,650 | 2,253 | 1,528 |
--------- | --------- | --------- | --------- | |
Weighted average number of shares in issue | 33,019,625 | 33,019,625 | 26,610,256 | 26,610,256 |
Adjustments for: | ||||
- assumed conversion of convertible loan notes | 6,907,396 | - | 6,907,396 | - |
- exercise of warrants | 29,882 | 29,882 | 12,500 | 12,500 |
- exercise of options | 96,206 | 96,206 | 32,500 | 32,500 |
--------- | --------- | --------- | --------- | |
Weighted average number of ordinary shares for the purposes of diluted earnings per share | 40,053,109 | 33,145,713 | 33,562,652 | 26,655,256 |
--------- | --------- | --------- | --------- | |
Adjusted diluted/ basic diluted earnings per share | 5.69p | 4.98p | 6.71p | 5.73p |
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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 company has in issue three sources of potential ordinary shares: convertible loan notes, share warrants and share options. The convertible loan notes are assumed to have been converted into ordinary shares (where dilutive), but the associated interest expense has been added back to the profit attributable to shareholders. In respect of the options and warrants 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 and warrants, in order to compute the necessary adjustments in the above table.
In order to arrive at adjusted earnings per share a similar approach has been taken, except that the profit attributable to ordinary shareholders is that profit which is shown in the columns headed "Results before intangible asset expenses, share based payments and debt finance costs".
5. Financial Information:
The Financial Statements for the year ended 30 November 2010 were approved by the Board of Directors on 18 April 2011. 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 2010 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditors have reported on the 2010 accounts; the auditors' opinion is unqualified and does not include a statement under section 498 of the Companies Act 2006.
6. Further Information
Copies of this statement are available from the registered office of the Company at Beacon House, Long Acre, Birmingham, B7 5JJ or the Company's website at www.rotalaplc.co.uk.