ROL.L Regulatory News (ROL)

30 Aug 2006 07:02

Rotala PLC30 August 2006 Press Release 30 August 2006 Rotala plc ("Rotala" or 'the Company') Unaudited Interim Results for the six months to 31 May 2006 Chairman's Statement Results for the period I am pleased to be able to present this interim report to shareholders inrespect of the six month period ended 31 May 2006. In the period the Board continued to focus on turning round the fortunes ofthe Company both by the reduction of costs and cessation of unprofitableactivities inherited from the previous management of the business. These actionsincluded not only eliminating unnecessary expenditure but also discardingunprofitable contracts and replacing it with profitable revenue from newcontracts. Since the acquisition of the Flights group of companies in August2005, new and profitable revenues of more than £3.3 million per annum have morethan replaced the unprofitable revenues discarded of approximately £2.5 million.Cost reductions achieved to date amount to more than £1.1 million per annum(compared to the cost base at the time of the acquisition of the businesses) andit is anticipated that plans already put in place will see this figure rise toan annualised value of more than £2.5 million by the end of 2007. The initialsuccess of these measures is reflected in the recording of a gross profit forthe group of £746,119 in the period to 31 May 2006, compared to the gross lossof £259,431 for the period to 30 November 2005. In view of the continuingsuccess of efforts to reduce costs and to add profitable turnover, the Directorsconsider that the Company is moving steadily towards profitability in the mediumterm. Provision for leases The Board has undertaken a full review of the unsatisfactory and uneconomicvehicle leasing arrangements which it inherited with the acquisition of theFlights group. Negotiations to terminate or vary these contracts have commencedbut no agreements have yet been reached. The acquired businesses continue toincur underlying losses because of these contracts; the adverse economic effectsof these contracts will continue until they can be ended or re-negotiated. Theunderlying losses, though declining, will continue in the current year and willnot finally be eradicated until 2007. These losses were provided for in thegroup accounts for the period ended 30 November 2005 and they will not have animpact on the profit and loss account in subsequent years. However, untilnegotiations are concluded, the existence of the contracts will continue to havean adverse impact on the cash flow of the group. Increase of share capital As a result of the increasing turnover of the Company, the continuing lossesand the diversion of effort caused by the problems inherited from the vendor ofthe Flights group, the Directors considered that it was prudent to augment thecapital of the Company. The Board determined that new equity funding should beraised to increase the Company's capital resources and a placing of £1,625,000was completed in April 2006. One of the principal objectives of the placing wasalso to raise funds to acquire the freehold of the Company's 4.5 acre depot inBirmingham for £2 million. This step was successfully achieved. A commercialmortgage of £1.5 million was obtained on the property to assist in financing theacquisition. Now that the Company has secured a sizeable freehold base, it willseek opportunities to increase substantially its operations in the Birminghamarea. Prospects The Board remains of the view that the transport sector offers opportunitiesfor growth for the Company. The Directors believe that government policy on suchissues as congestion and pollution, combined with increasing customer demand forthe specialist transport solutions that the group can offer, create an expandingmarketplace for the group's services. Furthermore, the Board is still of theopinion that the many small and marginal businesses in the sector offer greatopportunities to a consolidator such as Rotala. These two forces, increasingdemand and opportunities to act as a consolidator, offer attractive growthprospects to the Company in the longer term; these were the original plansbehind the Company's foundation and the Board sees no reason to deviate fromthis strategy. These plans do however require a strong operational and financialbase and the directors anticipate that additional finance will be raised shortlyto realise both these plans and to fund expected organic growth. I am confident that we have created a sound infrastructure for the Flightsbusiness since we acquired it and that, using the strategy I have outlinedabove, we are well on the way to building a successful and profitable group. John GunnChairman 30 August, 2006 Contacts:John Gunn 020 7236 6236Kim Taylor 07918 883796 Notes to Editors: The Company was admitted to trading on AIM on March 29 2005, having beenincorporated on January 21 2005 to invest in the transportation sector. In thetransport sector, the Board anticipated that opportunities would arise in theprovision of bus services, chauffeur-drive services, and integrated groundtransportation. In the Company's admission document dated March 11 2005 theBoard stated its intention to complete the Company's first acquisition withinsix months of Admission and in August 2005 it agreed the acquisition of theFlights Group of companies. The Flights Group comprises three companies: Flights Hallmark, Flights CorporateTransfers and FH Transport. Flights Hallmark is a mature coach and bus businessformed through the acquisition and amalgamation of a number of businesses. Itsmain activities include the provision of dedicated transport solutions for arange of corporate customers, the operation of various shuttle bus services anda substantial coach hire business. Flights Corporate Transfers operateschauffeur driven cars, particularly relating to transport to and from UKairports, for a range of airlines and airline-related customers. The thirdcompany, FH Transport, does not trade. Consolidated profit and loss account Notes Six months ended Period ended Period ended 31 May 2006 31 May 2005 30 November 2005 (unaudited) (unaudited) (audited) £ £ £ Turnover 8,026,749 - 3,960,795Cost of sales (7,280,630) - (4,220,226) __________ __________Gross profit/(loss) 746,119 - (259,431) Administrative expenses (1,821,308) (43,499) (931,258)(Including goodwill amortisation of £259,285,£nil and £115,086 respectively) __________ _________ __________Operating Loss (1,075,189) (43,499) (1,190,689) Interest receivable 1,284 27,538 67,429 Interest payable (45,208) - (25,223) __________ _________ __________ Loss on ordinary activities before taxation (1,119,113) (15,961) (1,148,483)Tax on loss from ordinary activities - - - __________ _________ __________Loss on ordinary activities after taxation (1,119,113) (15,961) (1,148,483)Retained loss brought forward (1,148,483) - - __________ _________ __________Accumulated loss carried forward (2,267,596) (15,961) (1,148,483) __________ _________ __________Loss per share - basic and diluted 3 (0.54p) (0.03p) (1.33p) Consolidated Balance Sheet Notes At 31 May 2006 At 31 May 2005 At 30 November (unaudited) (unaudited) 2005 (audited) £ £ £Fixed assets Intangible assets 8,313,431 - 8,322,717 Tangible assets 3,727,190 - 1,496,333 __________ _________ __________ 12,040,621 - 9,819,050Current assets Stocks 118,274 - 141,690 Debtors 2,464,942 314,241 3,752,080 Cash at bank and in hand 42,634 3,004,891 1,000,000 __________ _________ __________ 2,625,850 3,319,132 4,893,770Creditors: amounts falling due within one year (3,308,995) (25,388) (5,160,631) __________ _________ __________Net current (liabilities)/assets (683,145) 3,293,744 (266,861) __________ _________ __________Total assets less current liabilities 11,357,476 3,293,744 9,552,189 Creditors: amounts falling due after more than (3,505,946) - (1,769,868)one yearProvisions (1,224,124) - (1,547,000) __________ _________ __________ 6,627,406 3,293,744 6,235,321 __________ _________ __________Capital and reserves Called up share capital 2,803,077 1,070,000 1,719,744 Share Premium Account 3,525,258 2,239,705 3,097,393 Merger reserve 2,566,667 - 2,566,667 Profit and loss account (deficit) (2,267,596) (15,961) (1,148,483) __________ _________ __________Shareholders' funds 6,627,406 3,293,744 6,235,321 __________ _________ __________ Consolidated cash flow statement Notes Six months ended Period ended Period ended 30 31st May 2006 31st May 2005 November 2005 (unaudited) (unaudited) (audited) £ £ £ Net cash outflow from operating activities 4 (1,113,100) (329,662) (3,095,171) Returns on investments and servicing of finance Interest received 1,284 24,848 67,429 Interest paid (35,715) - (25,223) __________ _________ __________Net cash (outflow)/inflow from returns on (34,431) 24,848 42,206investments and servicing of finance __________ _________ __________ Capital expenditure and financial investment Payment to acquire intangible fixed assets (250,000) - - Payments to acquire tangible fixed assets (2,072,271) - (57,607) Sale of tangible fixed assets 11,190 - 3,894 __________ _________ __________Net cash outflow from capital expenditure (2,311,081) - (53,713)and financial investment __________ _________ __________Acquisitions Expenses incurred in making the acquisitions - - (603,835) Bank overdraft acquired with acquisitions - - (149,912) __________ _________ __________Cash outflow from acquisitions - - (753,747) __________ _________ __________Cash outflow before use of liquid resources and (3,458,612) (304,814) (3,860,425)financing Management of liquid resourcesDecrease/(increase) in deposits with banks 1,000,000 (2,851,812) (1,000,000) Financing Issue of ordinary share capital 1,625,000 3,470,000 4,660,001 Issue costs (113,801) (160,295) (309,530) Mortgage raised 1,500,000 - - __________ _________ __________Cash inflow from financing 3,011,199 3,309,705 4,350,471 __________ _________ __________Increase/(Decrease) in cash for the period 552,587 153,079 (509,954) __________ _________ __________ Notes to the unaudited interim statement for the period ended 31st May 2006 1 Basis of Preparation: The financial information for the period hasnot been audited or reviewed. Rotala plc acquired the Flights Group ofcompanies on 30 August 2005. The results for the period to 31 May 2005 thereforerepresent those of the Company only for that period. The results for the periodended 30 November 2005 include those of the Flights Group only for the threemonths ended on that date. 2 Accounting policies: the accounting policies used in this statementare the same as those which were used for the preparation of the auditedaccounts for the period ended 30 November 2005. 3 Loss per share: loss per share has been calculated in a manner basedupon the weighted average number of shares in issue in the period of 208,283,884(May 2005: 56,603,124; November 2005: 86,060,538). The share options outstandingat the period ends were not dilutive. 4 Reconciliation of Operating Loss to Net Cash Outflow: Reconciliation of Operating Loss to Net Six months Period ended Period endedCash Outflow from Operating Activities ended 31st 31st May 2005 30th November May 2006 2005 £ £ £Operating Loss (1,075,189) (43,499) (1,190,689)Amortisation of goodwill 259,286 - 115,086Depreciation of tangible fixed assets 74,854 - 132,618Decrease/(increase) in debtors 1,287,138 (311,551) (413,342)(Decrease)/increase in creditors (1,362,515) 25,388 (1,603,491)Decrease in stock 23,416 - 26,396Loss/(profit) on disposal of fixed assets 2,786 - (516)Movement on provisions (322,876) - (161,233) _________ _________ _________Net Cash Outflow from Operating Activities (1,113,100) (329,662) (3,095,171) _________ _________ _________ 5 Additional Information: this Interim Report does not constitutestatutory accounts within the meaning of s.240 of the Companies Act 1985.Accounts for the period ended 30 November 2005 have been audited and theauditors' report thereon was unqualified. These accounts have been filed withthe Registrar of Companies. 6 Other: copies of this Interim Report can be obtained by request fromthe company's registered office at 46, Cannon Street, London, EC4N 6JJ. This information is provided by RNS The company news service from the London Stock Exchange