25 Apr 2014 07:00
25 April 2014
Rotala plc
("Rotala" or 'the Company')
Final audited results for the year ended 30 November 2013
Highlights
· Turnover £53.3 million (2012: £54.8 million)
· Gross profit margin up to 17.1% (2012: 16.5%)
· Profit before taxation (before exceptional items) up 5% to £2.19 million (2012: £2.09 million)
· Basic earnings per share 5.42 pence (2012: 5.29 pence)
· Final proposed dividend of 1.05 pence per share (2012: 0.90 pence), making 1.60 pence for the year, a rise of 14%
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) |
CHAIRMAN'S STATEMENT AND REVIEW OF OPERATIONS
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 2013.
Review of trading
Rotala continues to hold a leading market position in Preston and be the number two bus operator in Bristol and Bath. In the West Midlands (the second largest bus market in the country after London), where we are also the number two bus operator, the addition of depots in Kidderminster and Redditch, acquired from First Group Plc ("First") in the year, undoubtedly strengthened our position in the region. We are furthermore one of the leading providers of private bus networks in the country, especially to the aviation industry around Heathrow.
· Contracted Services
Revenues in Contracted Services overall fell by 8.5% to £20.6 million (2012: £22.5 million). The cause of almost all of this reduction in revenue was the loss in April 2013 of the two route diagrams we operated up to that time for National Express Limited ("NEL"). In our view NEL breached their contract with us by their actions. Therefore we have commenced legal proceedings against NEL to recover our losses. This case is expected to come to trial in the last quarter of 2014. In these accounts we have written off as an exceptional item £364,000 of our losses, which form part of our claim against NEL. Looking beyond this exceptional event, we experienced continuing strong growth in our private bus networks business. Revenues from these contracts have increased by some 50% over the last two years and we remain positive about this part of our activities. As might be expected from the drive of government policy, local authority transport budgets have continued to be under pressure. Revenues from the local authorities we deal with in the South West and West Midlands have therefore declined when compared to those of 2012, though we have not yet seen any similar pattern in Preston. The overall effect of these market changes over the last few years has been to re-position our Contracted Services business away from such a considerable exposure to the ebbs and flows of local government finance to be more focused on privately contracted bus services with major corporate customers.
· Commercial Services
Revenues in Commercial Services rose by 1.2% to £29.9 million (2012: £29.6 million). Part of the reason for this rise is the contribution of the Redditch and Kidderminster depots which we acquired from First on 3 March 2013. It is however impossible to say what exactly that contribution has been in 2013, because the acquired businesses were immediately folded into our existing operations in those localities and so ceased to have a separate existence. I would estimate however that the acquired revenue was between £1 million and £2 million. Thus the acquisition of this business from First masked to some degree the full effect of the actions we took in 2012 to cut route mileage and pull out of services which we felt were unlikely to be economic in the longer term. The reduction in the reimbursement rates for concessionary fares is also a significant contributory factor in this area of business. Against that we continue to experience strong growth from the continuing wider introduction of our own network cards. Revenues from this source have increased by 70% in the last two years. Revenues from Centro's own Network Card also made an increased contribution to our revenues. During the year Centro introduced an updated multi-operator card with a lower fare premium relative to single operator tickets and better zonal coverage. We believe that this new card is slowly having an effect on our business and opens out, both to ourselves and other competing smaller operators in the West Midlands, the opportunity to achieve better penetration of the available market share.
CHAIRMAN'S STATEMENT AND REVIEW OF OPERATIONS (continued)
· Charter Services
Revenues in Charter Services were much the same as they were in 2012 at £2.8 million. In line with group policy we have progressively reduced the exposure of the group to this area of business in recent years. Airline related chauffeur car services (which we sub-contract in their entirety) saw some increase in movements and revenues when compared to those of 2012 but revenues from private hire work were very little different from those of the previous year.
Strategy and acquisitions
At the beginning of March 2013 we acquired from First certain of their bus operations in Worcestershire. For a cash consideration of £1.6 million, we bought two freehold depots, one in Kidderminster and the other in Redditch, 36 vehicles, and various items of plant and equipment. These depot acquisitions added about 100 staff to our workforce. Initially the Office of Fair Trading opened an enquiry into the acquisition but finally announced on 23 August 2013 that this enquiry was at an end and that there would be no reference of the acquisition to the Competition Commission.
The Kidderminster depot comprises a site of some two acres and was purpose built in 2001. It can accommodate up to 60 vehicles. The Redditch depot, built about 35 years ago, has a slightly smaller useable area and can accommodate about 50 vehicles. The two depots enable us to extend our existing route networks on the western side of the Birmingham conurbation.
The integration of these depots into our current depot network was quickly completed and some benefits were felt in 2013. I am sure that in 2014 the positive impact of the acquisition will become fully visible. Since making the acquisition we have in Redditch deployed 20 replacement vehicles, some brand new, some from our existing fleet, in order to be able to take out of service the non-low floor and step entrance vehicles which not only did not comply with the provisions of the Disability Discrimination Act which begin to come into force in 2014, but also produced, in our view, unacceptably high emission levels for a town service. A certain amount of further investment will be required in replacement vehicles and depot resources to complete the work that is required.
Fuel prices and fuel usage
Fuel cost remains a significant factor to the business. The policy of the board is to take out fuel hedges or obtain fuel fixes whenever it seems prudent to do so. At the current time, using that combination of fuel fixes and fuel hedges via derivative instruments, we have covered all of the fuel requirements of the group for the whole of 2014 and 2015 at a combined rate of about 110p per litre. This control over the remaining variable cost in the business gives considerable certainty to the board when it considers its budgets and forecasts over the foreseeable future.
At the same time board policies in other areas have aided the reduction in overall levels of fuel consumption. Over the last two years I have drawn your attention to two areas of policy in this regard. First we have taken advantage of government initiatives under the heading of the Green Bus Fund to acquire a total of 23 hybrid diesel-electric vehicles. These have certainly performed well in service and have all achieved or exceeded the targeted 30% fuel saving, when compared to a similar diesel bus. Second we are steadily deploying throughout the fleet the "EcoManager" fuel saving software which I described to you in detail last year. The roll-out of this system is further helping to reduce the fuel demands of the existing fleet, and so reduce costs. Finally, when acquiring any vehicle new to the fleet we are acutely conscious of its relative fuel consumption and certainly favour those marques which have demonstrable advantages in this regard. Whilst this is not a completely like for like statistic the board has noted that, where once our annualised consumption of diesel reached a maximum of about 12 million litres, this figure has now fallen to about 10 million litres.
CHAIRMAN'S STATEMENT AND REVIEW OF OPERATIONS (continued)
Fleet management
Over the year we have replaced vehicles in the operating fleet as and when we thought appropriate so that by the end of the year the average age of the fleet stood at 7.64 years, slightly below the average fleet age at the end of 2012. This figure is low in industry terms. In the current year we foresee very little need to replace vehicles unless specific requirements are issued by new contract customers or existing customers request upgrades, which would of course carry with them the requisite price increases. We believe that having a modern and efficient bus fleet is a key aspect of customer service. Older vehicles also emit a greater level of emissions and we are keen to minimise this aspect of bus operation.
The board monitors each vehicle in the fleet for relative fuel consumption, reliability and maintenance cost. Those vehicles that fall outside of acceptable parameters are designated for disposal. As a result of this policy about 10% of the vehicle fleet was replaced in the year. These
replacements are a judicious mix of the new and the second hand, chosen so as to meet the criteria which we have set. The objective, to possess an efficient and effective fleet of the right age profile, continues to be met.
Banking facilities and finance
No new banking facilities were arranged in the year. The existing facilities of the group were used to finance both the acquisition of the freehold of the depot at Avonmouth, Bristol in January 2013 and the acquisition of the Redditch and Kidderminster depots of First in March 2013. At 30 November 2013 we have undrawn about £2.5 million of our available £11 million facility with our principal bankers, RBS/NatWest. In addition we possess unused vehicle financing facilities totalling approximately £10 million. In the opinion of the board these facilities are ample for the current needs of the group.
Financial review
The Consolidated Income Statement is set out on page 7. This section of the review addresses the results before the gain on acquisition, acquisition expenses and exceptional items. I have already highlighted the 3% decrease in revenues year on year and the reasons for this variance. Cost of Sales also fell by 3%; the principal business reasons for this have been described above. Gross Profits were almost exactly the same when compared to the previous year, but the gross profit margin improved somewhat to 17.1% from the 16.5% of 2012, as gross profits increased but revenues declined slightly. Administrative Expenses were a little lower than those of the previous year, mostly because the Avonmouth property moved from being rented to owned. The Profit from Operations at £3.56 million was therefore some 5% higher than that seen in 2012. Finance expense was overall much the same as in the previous year. Hire purchase debt fell by some 16% year on year and so did the associated interest expense. But, since the acquisitions of freeholds and of the business from First were financed by debt, debt levels overall rose by some 9%, and interest on bank borrowings rose commensurately. Profit before taxation therefore rose by 5% when compared to the previous year to £2.19 million (2012: £2.09 million).
Basic earnings per share in 2013, after taking into account the gain on acquisition, acquisition expenses and exceptional items, at 5.42p, benefited from a low tax charge, as in 2012. The low tax charge resulted from a number of prior year adjustments, just as in the previous year. Basic earnings for 2012 were 5.29p per share.
CHAIRMAN'S STATEMENT AND REVIEW OF OPERATIONS (continued)
Financial review (continued)
The gross assets of the group stood at £50.8 million at 30 November 2013 (2012: £48.2 million). Holdings of Property, Plant and Equipment rose largely as a result of the business acquisition from First and the acquisition of the freehold of the Avonmouth depot. Trade Receivables fell in the year as management focused on this aspect of working capital but there was a compensating rise in Other Receivables. The movement in the Green Bus Grant debtor and creditor affected both receivables and payables in equal measure. The increase in Trade Payables explains the rest of the movement in Trade and Other Payables overall. The gross loans and borrowings of the group increased by £1.7 million largely because of acquisitions described above; HP obligations fell by £1.8 million year on year to £9.1 million (2012: £10.9 million). Finally there was a positive movement in the Preston pension fund as at 30 November 2013 as the funding outlook for the Scheme improved on an accounting basis. The gross liabilities of the group therefore stood slightly higher than the previous year at £27.3 million at 30 November 2013 (2012: £26.3 million). Net assets reached £23.6 million at the year end (2012: £21.9 million).
Cash flows from operating activities before changes in working capital, at £5.8 million (2012: £6.3 million), were a little down on those generated in the previous year. However, instead of the heavy absorption of working capital seen in 2012, there was a small release, and so Cash Generated from Operations was greatly improved, at £6.0 million (2012: £2.3 million). Investment in property, plant and equipment rose this year to £2.6 million (2012: £1.6 million), but the bulk of this (£2.0 million) was represented by the freehold of the Avonmouth depot. Sale of vehicles, after taking account of the related hire purchase settlements, produced £1.2 million for the group (2012: £3.1 million). The acquisition of the business from First (£1.7 million) and the Avonmouth purchase accounted for almost all of the draw downs in bank loans. In addition the capital element of payments on hire purchase agreements was somewhat lower in 2013 at £4.5 million (2012: £5.0 million). After taking account of rising dividends and bank interest payments, the group benefited from a positive cash inflow of £196,000 for the year, and so a closing overdraft, net of cash and cash equivalents, of £1,214,000 at the end of 2013, in line with management's plans and expectations.
Dividend
The company paid an interim dividend of 0.55 pence per share in December 2012. At the forthcoming Annual General Meeting the board will recommend a final dividend in respect of 2013 of 1.05p per share, making 1.60p for the year as a whole. The dividend will be paid, subject to shareholder approval at the Annual General Meeting, on 27 June 2014 to all shareholders on the register on 6 June 2014.
As the company matures I expect the dividend to be progressive. The board is conscious of the importance of dividend flows to shareholders and has set a target dividend cover of 2.5 times earnings, to which it will move as underlying earnings and free cash flows improve.
CHAIRMAN'S STATEMENT AND REVIEW OF OPERATIONS (continued)
Outlook
The acquisition of the Redditch and Kidderminster depots from First has expanded the commercial bus revenues of the group in line with our stated strategy. But, as I remarked last year, the bus industry is still going through a period of considerable change. The reduction of government financial support for transportation by bus over the last four years is a continuing issue. The government, whether at local or national level, has reduced the funding for subsidised services, reimbursements for concessionary fares and the levels of rebate available to bus operators on fuel taxes. At the same time more onerous mandatory specifications for new buses continue to be introduced and are the cause of the increasing cost of new vehicles. These policies, unless halted or reversed, will lead inevitably to a steep drop in the provision of bus services in many of the less populated areas of the country away from the major urban conurbations. This is in turn putting a great deal of pressure on all bus service providers but particularly on the operators rather smaller than ourselves, who are finding continued existence a considerable struggle.
For all operators the discontinuities and inconsistencies in government transport policy make long term planning difficult, but the main effect on our business is that the great technological improvements being made in reducing costs or improving operating efficiencies (for example with vehicle tracking and mobile phone apps) are not flowing through to you as shareholders. Instead these gains are in effect being used in their totality to plug the financial gaps created by the changes in the government's transport policy. Despite these, and other, headwinds, we have continued to improve our services, our vehicle fleet and our financial results. Thus we remain confident that our strong management team will continue to increase the value of the business, albeit at a slower pace than we would have wished. Our dividend policy reflects this confidence and will enable shareholders to share in our financial success as we move forward.
John Gunn
Non-Executive Chairman
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 NOVEMBER 2013
Note | 2013 | 2013 | 2013 | 2012 | 2012 | 2012 | |
Results before gain on acquisition, acquisition expenses and exceptional items
| Gain on acquisition, acquisition expenses and exceptional items (note 3) | Results for the year | Results before gain on acquisition, acquisition expenses and exceptional items | Gain on acquisition, acquisition expenses and exceptional items (note 3) | Results for the year | ||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
Revenue | 2 | 53,303 | - | 53,303 | 54,813 | - | 54,813 |
Cost of sales | (44,210) | - | (44,210) | (45,790) | - | (45,790) | |
Gross profit | 9,093 | - | 9,093 | 9,023 | - | 9,023 | |
Administrative expenses | (5,536) | (132) | (5,668) | (5,631) | - | (5,631) | |
Profit from operations | 3,557 | (132) | 3,425 | 3,392 | - | 3,392 | |
Finance income | 44 | - | 44 | 15 | - | 15 | |
Finance expense | (1,411) | - | (1,411) | (1,321) | (10) | (1,331) | |
Profit before taxation | 3 | 2,190 | (132) | 2,058 | 2,086 | (10) | 2,076 |
Tax expense | 4 | (264) | 119 | (145) | (210) | - | (210) |
Profit for the year attributable to the equity holders of the parent | 1,926 | (13) | 1,913 | 1,876 | (10) | 1,866 | |
Earnings per share for profit attributable to the equity | |||||||
holders of the parent during the year: | |||||||
Basic (pence) | 5 | 5.42 | 5.29 | ||||
Diluted (pence) | 5 | 5.17 | 5.18 | ||||
|
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED
30 NOVEMBER 2013
2013 | 2012 | ||
£'000 | £'000 | ||
Profit for the year | 1,913 | 1,866 | |
Other comprehensive income: | |||
Items that will not subsequently be reclassified to profit or loss:
| |||
Actuarial gain/( loss) on defined benefit pension scheme | 355 | (1,009) | |
Deferred tax on actuarial gain/(loss) on defined benefit pension scheme | (75) | 242 | |
Other comprehensive income for the year (net of tax) | 280 | (767) | |
Total comprehensive income for the year attributable to the equity holders of the parent | 2,193 | 1,099 | |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 NOVEMBER 2013
Share capital £'000 | Share premium reserve £'000 |
Merger reserve £'000 |
Warrant reserve £'000 |
Retained earnings £'000 |
Total £'000 | |
At 1 December 2011 | 8,818 | 7,828 | 2,567 | 245 | 1,600 | 21,058 |
Profit for the year | - | - | - | - | 1,866 | 1,866 |
Other comprehensive income |
- |
- |
- |
- |
(767) |
(767) |
Total comprehensive income |
- |
- |
- |
- |
1,099 |
1,099 |
Transactions with owners: | ||||||
Dividends paid or declared |
- |
- |
- |
- |
(283) |
(283) |
Share based payment | - | - | - | - | 2 | 2 |
Release of warrant reserve to retained earnings |
- |
- |
- |
(245) |
245 |
- |
Transactions with owners |
- |
- |
- |
(245) |
(36) |
(281) |
At 30 November 2012 | 8,818 | 7,828 | 2,567 | - | 2,663 | 21,876 |
Profit for the year | - | - | - | - | 1,913 | 1,913 |
Other comprehensive income | - | - | - | - | 280 | 280 |
Total comprehensive income | - | - | - | - | 2,193 | 2,193 |
Transactions with owners: | ||||||
Dividends paid or declared | - | - | - | - | (494) | (494) |
Share based payment | - | - | - | - | 9 | 9 |
Transactions with owners | - | - | - | - | (485) | (485) |
At 30 November 2013 | 8,818 | 7,828 | 2,567 | - | 4,371 | 23,584 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 NOVEMBER 2013
| Note | 2013 | 2012 |
| £'000 | £'000 | |
Assets | |||
Non-current assets | |||
Property, plant and equipment | 6 | 30,930 | 27,509 |
Goodwill and other intangible assets | 9,482 | 9,482 | |
Deferred taxation | 424 | 521 | |
Total non-current assets | 40,836 | 37,512 | |
Current assets | |||
Inventories | 1,826 | 1,892 | |
Trade and other receivables | 7,863 | 8,454 | |
Derivative financial instruments | 3 | - | |
Cash and cash equivalents | 317 | 351 | |
Total current assets | 10,009 | 10,697 | |
Total assets | 50,845 | 48,209 | |
Liabilities | |||
Current liabilities | |||
Trade and other payables | 6,304 | 6,228 | |
Loans and borrowings | 7 | 5,462 | 3,550 |
Obligations under hire purchase contracts | 8 | 3,318 | 3,931 |
Total current liabilities | 15,084 | 13,709 | |
Non-current liabilities | |||
Loans and borrowings | 7 | 5,712 | 4,216 |
Obligations under hire purchase contracts | 8 | 5,793 | 6,945 |
Defined benefit pension obligation | 672 | 1,463 | |
Total non-current liabilities | 12,177 | 12,624 | |
Total liabilities | 27,261 | 26,333 | |
TOTAL NET ASSETS | 23,584 | 21,876 | |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 NOVEMBER 2013 (Continued)
2013 | 2012 | ||
£'000 | £'000 | ||
Shareholders' funds | |||
Share capital | 8,818 | 8,818 | |
Share premium reserve | 7,828 | 7,828 | |
Merger reserve | 2,567 | 2,567 | |
Retained earnings | 4,371 | 2,663 | |
TOTAL EQUITY | 23,584 | 21,876 | |
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 NOVEMBER 2013
2013 | 2012 | ||
£'000 | £'000 | ||
Cash flows from operating activities | |||
Profit before taxation | 2,058 | 2,076 | |
Adjustments for: | |||
Depreciation | 3,253 | 3,742 | |
Gain on acquisition | (387) | - | |
Acquisition expenses | 155 | - | |
Finance expense | 1,367 | 1,316 | |
Gain on sale of property, plant and equipment | (283) | (417) | |
Contribution to defined benefit pension scheme | (333) | (400) | |
Equity settled share-based payment expense | 9 | 2 | |
Cash flows from operating activities before changes in working capital and provisions | 5,839 | 6,319 | |
Increase in trade and other receivables | (95) | (2,663) | |
Decrease/(increase) in inventories | 66 | (620) | |
Increase/(decrease) in trade and other payables | 147 | (721) | |
118 | (4,004) | ||
Cash generated from operations | 5,957 | 2,315 | |
Interest paid on hire purchase agreements | (671) | (862) | |
Net cash flows from operating activities carried forward | 5,286 | 1,453 | |
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 NOVEMBER 2013 (Continued)
2013 | 2012 | ||
£'000 | £'000 | ||
Cash flows from operating activities brought forward | 5,286 | 1,453 | |
Investing activities | |||
Purchases of property, plant and equipment | (2,564) | (1,562) | |
Acquisition of business (note 9) | (1,714) | - | |
Sale of public service vehicles | 1,941 | 5,656 | |
Net cash (used in)/from investing activities | (2,337) | 4,094 | |
Financing activities | |||
Dividends paid | (494) | (423) | |
Proceeds of mortgage and other bank loans | 3,927 | 3,735 | |
Loan stock repaid | - | (1,337) | |
Repayment of bank and other borrowings | (289) | (1,756) | |
Loan stock and bank loan interest paid | (706) | (501) | |
Capital settlement payments on vehicles sold | (702) | (2,535) | |
Capital element of lease payments | (4,489) | (5,009) | |
Net cash used in financing activities | (2,753) | (7,826) | |
Net increase/(decrease) in cash and cash equivalents | 196 | (2,279) | |
Cash and cash equivalents at beginning of year | (1,410) | 869 | |
Cash and cash equivalents at end of year | (1,214) | (1,410) | |
Notes to the Preliminary Announcement of results for the year ended 30 November 2013
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 2013. 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. The group has three main revenue streams: contracted, commercial and charter, and management monitors revenue across these there streams. All streams operate within a single operating segment, that is the provision of bus services. The activities of each revenue stream are as described in the Chairman's Statement.
| 2013 | 2012 |
| £'000 | £'000 |
Contracted | 20,602 | 22,513 |
Commercial | 29,937 | 29,569 |
Charter | 2,764 | 2,731 |
Total Revenue | 53,303 | 54,813 |
Notes to the Preliminary Announcement of results for the year ended 30 November 2013 (continued)
3. Profit before taxation:
Profit before taxation includes the following:
Gain arising on acquisition, acquisition expenses and exceptional items
| Gain arising on acquisition, acquisition expenses and exceptional items
| |
2013 | 2012 | |
£'000 | £'000 | |
Acquisition costs (note 9) | (155) | - |
Gain arising on acquisition (note 9) | 387 | - |
Contract exit costs | (364) | - |
Loss within profit from operations | (132) | - |
Finance expense - amortisation of debt component of convertible debt | - | (10) |
Loss within profit before taxation | (132) | (10) |
4. Tax expense:
Tax expense includes the following:
2013 | 2012 | |
£'000 | £'000 | |
Current tax | ||
Current tax on profits for the year | - | - |
_______ | _______ | |
Total current tax | - | - |
_______ | _______ | |
Deferred tax | ||
Origination and reversal of temporary differences | 448 | 451 |
Change in rate of tax | 22 | 26 |
Adjustments in respect of prior periods | (325) | (267) |
_______ | _______ | |
Total deferred tax | 145 | 210 |
_______ | _______ | |
Income tax expense | 145 | 210 |
_______ | _______ |
Notes to the Preliminary Announcement of results for the year ended 30 November 2013 (continued)
4. Tax expense (continued):
The tax assessed for the year is different to the standard rate of corporation tax in the U.K. for the following reasons:
2013 | 2012 | |
£'000 | £'000 | |
Profit before taxation | 2,058 | 2,076 |
_______ | _______ | |
Profit at the standard rate of corporation tax in the UK of 23% (2012: 24%) | 473 | 498 |
Expenses not taxable | (25) | (47) |
Adjustments in respect of prior periods | (303) | (241) |
_______ | _______ | |
Total tax expense | 145 | 210 |
_______ | _______ |
5. Earnings per share:
Basic | 2013 | 2012 | |
£'000 | £'000 | ||
Profit attributable to ordinary shareholders | 1,913 | 1,866 | |
Weighted average number of ordinary shares in issue | 35,270,888 | 35,270,888 | |
Basic earnings per share | 5.42p | 5.29p | |
The calculation of the 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.
Notes to the Preliminary Announcement of results for the year ended 30 November 2013 (continued)
5. Earnings per share (continued):
|
Diluted |
Diluted |
2013 | 2012 | |
£'000 | £'000 | |
Profit attributable to ordinary share holders | 1,913 | 1,866 |
Interest expense of convertible loan notes | 185 | 229 |
Profit for the purposes of diluted earnings per share | 2,098 | 2,095 |
Weighted average number of shares in issue | 35,270,888 | 35,270,888 |
Adjustments for: | ||
- assumed conversion of convertible loan notes | 5,146,333 | 5,146,333 |
- exercise of options | 162,362 | 49,331 |
Weighted average number of ordinary shares for the purposes of diluted earnings per share | 40,579,583 | 40,466,552 |
Basic diluted earnings per share | 5.17p | 5.18p |
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 two sources of potential ordinary shares: convertible loan notes 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 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, in order to compute the necessary adjustments in the above table.
Notes to the Preliminary Announcement of results for the year ended 30 November 2013 (continued)
6. Property, plant and equipment:
Freehold land and buildings | Short leasehold property | Plant and machinery | Public service vehicles | Fixtures and fittings | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Cost: | ||||||
At 1 December 2011 | 5,046 | 1,087 | 1,727 | 36,717 | 784 | 45,361 |
Additions | 43 | - | 946 | 5,779 | 32 | 6,800 |
Transfers | 185 | (185) | - | - | - | - |
Disposals | - | - | (17) | (8,929) | - | (8,946) |
At 30 November 2012 | 5,274 | 902 | 2,656 | 33,567 | 816 | 43,215 |
Acquisition | 1,939 | - | 61 | 342 | - | 2,342 |
Additions | 1,996 | - | 463 | 3,474 | 56 | 5,989 |
Transfers | (283) | (2) | 285 | - | - | - |
Disposals | - | - | (1,336) | (3,765) | (582) | (5,683) |
At 30 November 2013 | 8,926 | 900 | 2,129 | 33,618 | 290 | 45,863 |
Depreciation: | ||||||
At 1 December 2011 | 245 | 147 | 1,196 | 13,544 | 539 | 15,671 |
Charge for the year | 132 | 13 | 273 | 3,225 | 99 | 3,742 |
Transfers | 54 | (54) | - | - | - | - |
Disposals | - | - | - | (3,707) | - | (3,707) |
At 30 November 2012 | 431 | 106 | 1,469 | 13,062 | 638 | 15,706 |
Charge for the period | 95 | 21 | 316 | 2,726 | 95 | 3,253 |
Transfers | (107) | - | 107 | - | - | - |
Disposals | - | - | (1,336) | (2,108) | (582) | (4,026) |
At 30 November 2013 | 419 | 127 | 556 | 13,680 | 151 | 14,933 |
Net book value: | ||||||
At 30 November 2013 | 8,507 | 773 | 1,573 | 19,938 | 139 | 30,930 |
At 30 November 2012 | 4,843 | 796 | 1,187 | 20,505 | 178 | 27,509 |
Notes to the Preliminary Announcement of results for the year ended 30 November 2013 (continued)
7. Loans and borrowings:
| 2013 | 2012 |
£'000 | £'000 | |
Current: | ||
Overdrafts | 1,531 | 1,761 |
Bank loans | 3,931 | 1,789 |
_______ | _______ | |
5,462 | 3,550 | |
_______ | _______ | |
Non-current: | ||
Convertible loan stock | 2,316 | 2,316 |
Bank loans | 3,396 | 1,900 |
_______ | _______ | |
5,712 | 4,216 | |
_______ | _______ |
Notes to the Preliminary Announcement of results for the year ended 30 November 2013 (continued)
8. Obligations under hire purchase contracts:
Future lease payments are due as follows:
Minimum lease payments 2013 | Interest 2013 | Present value 2013 | |
£'000 | £'000 | £'000 | |
Not later than one year | 3,776 | 458 | 3,318 |
More than one year but less than two years | 3,420 | 231 | 3,189 |
More than two years but less than five years | 2,614 | 132 | 2,482 |
Later than five years | 125 | 3 | 122 |
9,935 | 824 | 9,111 | |
Minimum lease payments 2012 | Interest 2012 | Present value 2012 | |
£'000 | £'000 | £'000 | |
Not later than one year | 4,525 | 594 | 3,931 |
More than one year but less than two years | 3,373 | 342 | 3,031 |
More than two years but less than five years | 4,100 | 186 | 3,914 |
Later than five years | - | - | - |
11,998 | 1,122 | 10,876 | |
The present value of future lease payments are analysed as:
2013 | 2012 | |
£'000 | £'000 | |
Current liabilities | 3,318 | 3,931 |
Non-current liabilities | 5,793 | 6,945 |
9,111 | 10,876 | |
Obligations under hire purchase contracts are secured on the assets to which they relate.
Notes to the Preliminary Announcement of results for the year ended 30 November 2013 (continued)
9. Acquisition
As set out in the Chairman's Statement, on 3 March 2013 the group acquired certain businesses and assets in Kidderminster and Redditch from First Group plc. The Chairman's Statement describes the reasons for the acquisition and should be consulted for a detailed description of all the relevant factors. The consideration for the acquisition was £1.559 million in cash. The book value and fair value of the assets acquired are set out below.
Book value | Fair value adjustment | Fair value on acquisition | |
£'000 | £'000 | £'000 | |
Fixed assets | |||
Vehicles | 250 | 92 | 342 |
Freehold land and buildings | 1,248 | 691 | 1,939 |
Other fixed assets | 61 | - | 61 |
Total fixed assets | 1,559 | 783 | 2,342 |
Current assets | |||
Deferred taxation | - | 123 | 123 |
Current liabilities | |||
Creditors due within one year | - | (519) | (519) |
- | |||
- | (396) | (396) | |
Gain on acquisition (note 3) | (387) | ||
Acquisition costs (note 3) | 155 | ||
1,714 | |||
Total cash consideration paid | 1,714 | ||
Because the acquired business was immediately folded in to the existing operations of the group in the same localities, it is not possible to distinguish revenues and profits for the acquired business in the period to 30 November 2013.
The fair value adjustments relate to the buses and freehold properties acquired, together with the liabilities assumed with the business purchase. The deferred taxation asset arises from the purchased goodwill, emanating from the acquisition of the business, recorded in the subsidiary undertaking which acquired that business.
Pre-acquisition book values were determined based on applicable IFRS, immediately prior to the acquisition. The values of assets recognised on acquisition are their estimated fair values. For the buses acquired this is based on the directors' assessment of the age and condition of each of the vehicles and their knowledge of disposal values for equivalent vehicles. The buildings were valued by professional valuers on an existing use basis. The fair value of liabilities brings the accounting policies in line with those of the group for items such as claims.
The acquisition expenses incurred by the group amounted to £155,000 and have been expensed in the Consolidated Income Statement in Administrative Expenses.
Notes to the Preliminary Announcement of results for the year ended 30 November 2013 (continued)
10. Financial Information:
The Financial Statements for the year ended 30 November 2013 were approved by the Board of Directors on 24 April 2014. 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 2013 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditors have reported on the 2013 accounts; the auditors' opinion is unqualified and does not include a statement under section 496 of the Companies Act 2006.
11. 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.