ROL.L Regulatory News (ROL)

RNS

11 January 2021

Rotala Plc

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

Trading Update

Rotala plc (AIM:ROL), an operator of bus routes in the UK for businesses, local authorities and the general public, announces the following trading update on its results for the year ended 30 November 2020 ("FY 20").

In its announcement dated 16 November 2020, the Company stated that it expected that its FY 20 results were likely to be broadly the same at the normalised profit/loss before tax line as its unaudited half year results to 31 May 2020, which were announced on 15 September 2020 ("H1 results"). The Company can now confirm that this was indeed the outturn for the year and that it expects, subject to audit, to announce a small loss before tax of approximately £1.0 million (2019: profit £3.6 million). It also expects, subject to audit, to report turnover of approximately £76.0 million (2019: £67.5 million), up c. 13% year on year.

Bus operation continues to be regarded by the UK Government as an essential service. Since mid-March 2020, the Company has concentrated on aligning bus services with local requirements, reducing the costs of operation where possible and conserving cash. As previously announced, the Group's cash flow, both at EBITDA level and net of all debt, interest and other payments, has been positive since the beginning of May 2020 and is expected to remain so for the foreseeable future.

Net debt (excluding hire purchase debt) continues to decline gradually from the level of £26.6 million set out in the H1 results, and as at 30 November 2020 was approximately £25.7 million, down 3%. The amounts drawn on the Company's revolving commercial facility at 30 November 2020 stood at £16.2 million, unchanged from the position at 31 May 2020. Mortgage debt at 30 November 2020 was £6.27 million (31 May 2020: £6.3 million) and continues to fall slightly as repayments are made. Drawings on the Company's £6.6 million overdraft facility fluctuate according to the precise timing of the receipt of instalments in the Government grant package described below. As at 30 November 2020, the Company had drawn £3.3 million (31 May 2020: £4.1 million) of this overdraft facility. The amounts due to the Company at 30 November 2020 under the Government grant package exceeded the Company's drawings on its overdraft facility at this date. As previously announced, and as a consequence of these factors, the Company has not needed to take up any of the options available under the various Government-supported loan schemes and does not currently foresee any requirement to do so.

The financial and operational performance of the Company throughout the COVID-19 crisis has been underpinned by the key support of Government at local and national level, for which the Company remains very grateful. Currently, the Government grant package encompasses a specific grant ("CBSSG Restart") and the maintenance of the Bus Services Operator's Grant as well as concessionary fares re-imbursements and payments for contracted bus services broadly at their pre-COVID-19 levels. The effect of these measures is that UK bus operators are guaranteed to make neither a profit nor a loss at the normalised statutory pre-tax profit line for as long as the support package is in place.

The Government has confirmed that CBSSG Restart and all other support measures will continue in place for the foreseeable future. Furthermore, it has stated that it will give eight weeks' notice in the event of termination of CBSSG Restart, which should give ample time for the Company to make any necessary service changes following the withdrawal of the grant.

Passenger numbers

Passenger numbers rose steadily throughout the summer of 2020, reaching a peak in early October of approximately 60% of the levels seen in the same period of 2019, before falling back again to about 45% of those levels in the November 2020 lockdown period. Early indications from the latest lockdown period put in place by the UK Government on 4 January 2021 are that passenger numbers have fallen to about 25% of normal levels, though it remains to be seen if they stabilise at this point. However, the CBSSG Restart scheme, referred to above, contains a ratchet mechanism which ensures that, as passenger numbers decline, grant support increases, maintaining the no profit/no loss position for a bus operator.

Current trading and prospects for FY21

The commencement of the COVID-19 crisis led the Company to withdraw its previous market guidance for FY20 and beyond. As set out above, the provisions of CBSSG Restart and the associated UK Government measures have been designed to ensure that the Company makes neither a profit nor a loss at the normalised level for as long as this package of measures is in place. Therefore, results for FY21 can be expected to conform to these stipulations unless and until CBSSG and its associated measures are terminated. Further announcements will be made as appropriate.

Commenting, Simon Dunn, Chief Executive of Rotala, said: -

"Government support under the CBSSG Restart scheme continues to enable us to provide the bus services needed by key workers and the general public to go about their essential business.

"The Government's vaccination programme promises to provide the means to exit from the COVID-19 restrictions later in the year. In the view of the Board, the COVID-19 crisis has in no way halted the winds of change sweeping through the bus industry. Therefore, once the crisis has passed, the Board expects further growth opportunities to arise, both organic and by acquisition, and is confident that the Group will be well placed to take advantage of such opportunities."

About the business 

Rotala provides a range of transport solutions, ranging from local bus services under contract to local authorities, through to commercial bus routes. Rotala has operations at Heathrow Airport, in the West Midlands and in the North West. Operating companies are Diamond Bus Ltd, Diamond Bus (North West) Ltd, Hallmark Connections Ltd and Preston Bus Ltd.