ROL.L Regulatory News (ROL)

31 May 2006 07:02

Rotala PLC31 May 2006 ROTALA PLC PRELIMINARY RESULTS FOR THE PERIOD ENDED 30 NOVEMBER 2005 CHAIRMAN'S STATEMENT AND REVIEW OF OPERATIONS I am pleased to be able to make this first report to the shareholders of Rotalaplc ("Rotala" or "the Company"). During the period under review, the mainactivity of the Company was the identification of its first acquisition target,the Flights Group (comprising Flights Hallmark Limited, Flights CorporateTransfers Limited and FH Transport Limited), and the acquisition of thesecompanies on August 30th 2005. Announcements made by the Company on September 26th and November 25th 2005described the background to potential claims by Central Parking System of UKLimited ("CPS") in respect of the Flights Group acquired by the Company and theclaims that the Company had against S.J. Lawrenson (the vendor of the FlightsGroup) under the acquisition agreement. CPS had commenced legal proceedingsagainst S. J. Lawrenson and others. However, as set out in the announcement made by the Company on December 30th 2005, the Company, the Flights Group, Central Parking Corporation ("CPC") and its subsidiary, CPS, agreed a finalsettlement between them, and with S. J. Lawrenson. The resolution of this issue was a major focus for management for many months.In addition, it had become clear that, with the acquisition, the Company hadinherited a number of unsatisfactory and uneconomic commercial arrangementswhich were problematic. The Board continues to review these arrangements andappropriate provision has been made in these accounts for those that areonerous. The acquired businesses continue to incur larger underlying losses than originally anticipated because of these contracts and the adverse effectsof these uneconomic arrangements will continue until they can be ended orre-negotiated. These underlying losses, though declining, will continue into the year ending November 30th 2006 and will not finally be eradicated until 2007. To the extent that these losses are provided for in the group accounts for the period ended 30th November 2005, they will not have an impact on the group results in subsequent years. The Board has also been working hard to reduce costs and eliminate unprofitableactivities inherited from the previous management. These actions include notonly the elimination of unnecessary costs but also the active discarding ofunprofitable revenue and its replacement by profitable revenue from othersources. New revenues (the majority of which are within the airline sector) ofmore than £2.5 million per annum have more than replaced the revenues discardedof a little less than this figure. Taken together with the continuing successfulefforts to win other new contracts, reduce costs and build profitable turnover,the Directors consider that the Company is now moving towards profitability inthe longer term. As a result of the increased turnover of the Company, the continuing losses andthe diversion of effort resultant upon the problems with S. J. Lawrenson andCPC, the Directors considered that it was prudent to augment the capital of theCompany. The opportunities for organic and acquisitive growth have notdiminished and the Company has been successful in negotiating improved bankingfacilities to cover working capital requirements, leasing finance and thepotential acquisition of new contracts. The Board determined that new equityfunding should be raised to augment these facilities and a placing of £1,625,000was completed in April 2006. One of the objectives of this placing, funds was toraise the funds to acquire the freehold of the company's 4.5 acre depot inBirmingham for £2 million. A commercial mortgage of £1.5 million has beenobtained on the property to finance the acquisition. This step will enable theCompany to increase its operations in the Birmingham area substantially from anattractive, sizeable and secure base. The Board remains determined to pursue the objectives in the transport sectorset out in the admission document dated March 11th 2005 and the re-admissiondocument dated August 9th 2005. The Board remains convinced that theopportunities for growth in the sector, set out in those documents, still exist.Indeed there is much more recent evidence to reinforce the views set out inthose documents. These plans require a strong operational and financial base,from which the Board aims to achieve these objectives in the future. The Boardlooks forward to creating an integrated, specialist transport group and believesit is well positioned to do so from the platform provided by the Flights Group. In conclusion, I would like to take this opportunity to express my thanks to ourmanagement team and all the staff, whose enthusiasm and commitment has made itpossible revive the fortunes of the Flights Group and who are the basis of myoptimism for the future of Rotala. John GunnNon-Executive Chairman 26 May 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE PERIOD ENDED 30 NOVEMBER 2005 Note 2005 £ Turnover - acquired business 2 3,960,795 ---------Cost of sales - acquired business (4,220,226) --------- Gross loss (259,431) ---------Administrative expenses - continuing business (292,667) - acquired business (638,591) --------- (931,258) ---------Operating (loss)/profit - continuing business (292,667) - acquired business (including goodwill amortisation of £115,086) (898,022) --------- Operating Loss (1,190,689) Interest receivable 67,429Interest payable and similar charges (25,223) ---------Loss on ordinary activities before taxation 3 (1,148,483) Taxation on loss on ordinary activities - _________ --------- Loss on ordinary activities after taxation and loss carriedforward (1,148,483) _________ Loss per share (basic and diluted) 4 (1.33p) All amounts relate to continuing activities.All recognised gains and losses in the current period are included in the profitand loss account.Movements in shareholders' funds in the current period are shown in note 5. CONSOLIDATED BALANCE SHEET AS AT 30 NOVEMBER 2005 Note 2005 2005 £ £Fixed assets Intangible assets 8,322,717 Tangible assets 1,496,333 _________ 9,819,050Current assets Stocks 141,690 Debtors due within one year 3,422,031 Debtors due after one year 330,049 3,752,080 Cash at bank and in hand 1,000,000 4,893,770 Creditors: amounts falling due within one year (5,160,631) Net current liabilities (266,861) Total assets less current liabilities 9,552,189Creditors: amounts falling due after more (1,769,868)than one year Provision for liabilities and charges (1,547,000) (3,316,868) --------- 6,235,321 --------- Capital and reserves Called up share capital 1,719,744 Share premium account 3,097,393 Merger reserve 2,566,667 Profit and loss account (1,148,483) ---------Shareholders' funds 6,235,321 --------- CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED 30 NOVEMBER 2005 Period ended 30 Period ended November 2005 30 November Note 2005 £ £Net cash outflow from operatingactivities Returns on investments 6 (3,095,171)and servicing of finance Interest received 67,429 Interest paid (16,324) Interest element of finance lease payments Paid (8,899) _________Net cash inflow from returns oninvestments and servicing of finance 42,206 Capital expenditure and financial investment Payments to acquire Tangible fixed assets (57,607)Sale of tangible fixed assets 3,894 _________Net cash outflow from capital expenditure and financial investment (53,713) AcquisitionsExpenses incurred in making the acquisitions (603,835)Bank overdraft acquired with the acquisitions (149,912) _________ Cash outflow from acquisitions (753,747) ________Cash outflow before use of liquidresources and financing (3,860,425) Management of liquid resourcesIncrease in deposits with banks (1,000,000) FinancingIssue of ordinary share capital 4,660,001Issue costs (309,530) _________ 4,350,471 _________ Decrease in cash for the period (509,954) _________ 1. Basis of preparation and consolidation The financial statements have been prepared in accordance with accounting standards applicable in the United Kingdom at the balance sheet date. The consolidated financial statements represent the accounts of Rotala only from 21 January 2005 (the date of incorporation) until 30 November 2005 (the "Continuing Business") and the results of the Flights Group of companies from 30 August 2005(the date of acquisition) to 30 November 2005 (the "Acquired Business"). The financial statements have been prepared under the historical cost convention. Under section 230(4) of the Companies Act 1985 the Company is exempt from the requirement to present its own profit and loss account. 2. Turnover Turnover represents sales to external customers at invoiced amounts less value added tax. All of the activities of the group are conducted in the United Kingdom and all are within the transport sector. 3. Losses attributable to Rotala Plc The company has taken advantage of the exemption allowed under section 230 of the Companies Act 1985 and has not presented its own profit and loss account in these financial statements. The Group loss for the year includes a loss after tax of £168,585 which is dealt with in the financial statements of the parent company. 4. Earnings (loss) per share The calculation of the basic and diluted loss 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. The effect of all potential ordinary shares is not dilutive. The weighted average number of equity shares in issue is 86,060,538 and the earnings, being a loss after tax, are £1,148,483. 5. Movement in shareholders' funds: Group 2005 £ Loss for the year (1,148,483) Issue of shares 7,693,334 Expenses of share issues (309,530) ________ Net addition to shareholders' funds 6,235,321 Opening shareholders' funds Nil ________ Closing shareholders' funds 6,235,321 ________ 6. Reconciliation of operating loss to net cash outflow from operating activities Period ended 30 November 2005 £ Operating loss (1,190,689)Depreciation of tangible fixed assets 132,618Amortisation of goodwill 115,086Decrease/(increase) in debtors (413,342)(Decrease)/Increase in creditors (1,603,491)Decrease in stock 26,396Profit on disposal of fixed assets (516)Movement on provisions (161,233) ________ (3,095,171) ________ ________ 7. Summarised balance sheet of the acquisitions Book value Fair Value Total Adjustments £ £ £ Fixed assets:Tangible 554,486 - 554,486 Current assets:Stocks 168,086 - 168,086 Debtors 3,338,738 - 3,338,738 _________ _______ _________ Total assets 4,061,310 - 4,061,310 Creditors:Due within one year (6,353,712) - (6,353,712) Provisions for liabilities and charges - (1,708,233)(1,708,233) _________ ________ _________ Net liabilities (2,292,402) (1,708,233)(4,000,635) _________ ________ _________ The fair value adjustment arose as a result of a review by the directors ofleases entered into by the previous management of the companies acquired whichled the directors to conclude that the leases are onerous. 8. Post balance sheet events On 30 December 2005 the company announced that a settlement had been reached in connection the potential claims by Central Parking System of UK Limited ("CPS") in respect of the Flights Group acquired by Rotala on 30 August 2005 and the claims that Rotala had against S. J. Lawrenson under the acquisition agreement relating to the Flights Group. S.J. Lawrenson had been the UK Managing Director of CPS until shortly before the date of the latter agreement. The key terms of the settlement were as follows: The full and final settlement of all claims and complaints between the parties arising out of the disputed matters once the conditions in the settlement agreement were satisfied; • No admission by any of the parties in relation to any allegations made; • S. J. Lawrenson and Spritto Nominees ("Spritto") (a company controlled by the former) gave up any deferred share consideration which would otherwise have become payable under the original acquisition and the loan note issued as part of the initial consideration was no longer payable by Rotala; • S. J. Lawrenson gave up his entitlement to 3,700,000 share options which were granted to him under the acquisition agreement on 30 August 2005. M.B. Tackley and P. R.Churchman, two other former employees of CPS, also gave up their entitlements, of 3,500,000 and 3,500,000 share options in Rotala respectively, granted to them under the acquisition agreement; • Rotala would effect, and S.J. Lawrenson (acting through Spritto) agreed to, a sale of Spritto's 46,666,667 ordinary shares in Rotala. The board of Rotala completed this sale in January 2006; • The parties agreed that the net proceeds of such a sale were transferred to CPS or its parent undertaking, Central Parking Corporation ("CPC"). This step was also completed in January 2006; • Rotala issued loan notes to CPS/CPC to the value of £800,000, repayable in annual instalments between 31 December 2006 and 31 December 2010; • Rotala granted to CPS/CPC a warrant over 15,000,000 ordinary shares in Rotala at an exercise price of 1.5 pence per share, exercisable for a five year period; • The Flights Group would settle the amount owing to CPS of £920,000 in respect of goods and services supplied by that company. Of this amount, £650,000 was paid on 23 December 2005 and the balance paid on 5 April 2006; • S.J. Lawrenson would pay CPS the sum of £70,000 and a further sum of £60,000 within a year; M. B. Tackley and P. R. Churchman would each pay CPS the sum of £10,000; • S. J. Lawrenson would resign as a director of Rotala and this he did on 19 January 2006. Following this settlement, neither S. J. Lawrenson, P.R.Churchman nor M. B. Tackley had any further connections in any capacity with Rotala or any of its subsidiaries. On 30 March 2006 the Company raised £1,625,000 by way of a placing of a further 108,333,333 shares at 1.5p per share. On 27 April 2006, the Rotala group acquired the freehold to its 4.5 acre depot in Birmingham, at a price of £2 million. Finance for this acquisition was provided by a commercial mortgage of £1.5m on the site. 9. Financial Information The financial information set out above does not constitute the Company's statutory accounts, within the meaning of section 240 of the Companies Act 1985, for the period ended 30 November 2005 (but is extracted from those accounts). Statutory accounts for 2005 have not yet been delivered to the Registrar of Companies but will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985. 10. Report and Accounts Copies of the Report and Accounts for the period ended 30 November 2005 are being sent to shareholders in due course. Further copies will be available from the Company's registered office at 46 Cannon Street, London, EC4N 6JJ. For further information, please contact M:CommunicationsNick Fox 020 7153 1530 This information is provided by RNS The company news service from the London Stock Exchange