connecting people to places
Annual Report
For year ended 30 November 2012
Rotala Plc
Beacon House, Long Acre, Birmingham B7 5JJ
Telephone: 08458 382 382
Website: www.rotalaplc.com
This document was designed by Alison Webber, Graphic Designer for the Rotala Group.
Contents
Rotala at a Glance
Directors, Secretary & Advisers
Financial Highlights
Strategy & Organisation
Review of Operations
& Statutory Reports
Chairman’s Statement & Review of Operations
Directors’ Report
Auditors’ Report
Financial Statements
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Company Balance Sheet
Notes to the Company Financial Statements
Shareholder Information
Notice of Annual General Meeting
Notes to Members
Explanatory Notes to Notice of Annual General Meeting
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02 ROTALA PLC // ANNUAL REPORT 2012
Directors, Secretary & Advisers
Country of incorporation of parent company
England and Wales
Company registration number
5338907
Legal form
Directors
Registered Office
Public Limited Company
John Gunn (Non Executive - Chairman)
Simon Dunn (Chief Executive)
Robert Dunn (Executive Director)
Geoffrey Flight (Non-Executive Director)
Kim Taylor (Group Finance Director)
Beacon House
Long Acre
Birmingham
B7 5JJ
Telephone: 0121 322 2222
Fax: 0121 322 2718
Company Secretary
Kim Taylor
Nominated Adviser and Broker
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
Auditor
Solicitors
Registrars
Bankers
London
EC4M 7LT
Grant Thornton UK LLP
Chartered Accountants
Registered Auditor
Colmore Plaza
20 Colmore Circus
Birmingham B4 6AT
Shakespeares Legal LLP
Park House
Friar Lane
Nottingham
NG1 6DN
Capita Registrars Limited
34 Beckenham Road
Beckenham BR3 4TU
RBS/Natwest
1 St. Philips Place
Birmingham B3 2PP
ROTALA AT A GLANCE // DIRECTORS, SECRETARY & ADVISERS & FINANCIAL HIGHLIGHTS
03
Financial Highlights
A glance at the highlights of the financial year ended
30 November 2012.
Revenue
£54,813,000
2.3%
Profit before Taxation
£2,076,000
10.5%
Dividend
1.40p
16.7%
2012
£54,813,000
2012
£2,076,000
2011
£56,077,000
2011
£1,878,000
2012
2011
1.40p
1.20p
2010
£44,644,000
2010
£1,650,000
2010
0.90p
2009 £40,561,000
2009
£1,528,000
2009
0.00p
Contracted Revenue
£22.5m
2.7%
Commercial Revenue
£29.6m
4.2%
Charter Revenue
£2.7m
18.2%
2012
£22.5m
2012
£29.6m
2012 £2.7m
2011
£21.9m
2011
£30.9m
2011
£3.3m
2010
£18.8m
2010
£21.8m
2009 £17.5m
2009 £19.4m
2010
2009
£4.0m
£3.6m
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04 ROTALA PLC // ANNUAL REPORT 2012
Strategy and Organisation
Rotala Plc is an AIM listed company operating commercial and
subsidised bus routes for businesses, local authorities, the
public and private individuals.
Rotala was formed in 2005 and has grown through the acquisition and amalgamation of local coach and bus
operations and is now one of the largest operators in its chosen geographical locations.
Rotala aims to develop sustainable revenue streams through the expansion of its commercial bus and contracted
activities and by being an active participator in transport business trends in the UK. Our transport management
expertise has taken us throughout the country, organising and delivering turn-key solutions to events and areas
requiring many different types and capacities of transport.
North West Trading Brands
M6
Blackpool
Wigan
M6
M1
M6
Midlands Trading Brands
Wolverhampton
Walsall
M42
West Bromwich
Leicester
Stourbridge
Ludlow
Solihull
M42
Coventry
Worcester
Warwick
M5
Stratford
-upon-Avon
Evesham
M40
Northampton
M1
A1(M)
M11
Wooton-under-Edge
M4
Chipping Sodbury
Kingswood
Bath
Bristol
M5
Radstock
M25
M4
M25
M20
M3
London Trading Brands
South West Trading Brands
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Key
Operational Depot
Places of Operation
(Not all are shown at this scale)
Motorways
Country Border
M4
ROTALA AT A GLANCE // STRATEGY AND ORGANISATION
05
Our Goals
Rotala Plc pursues three key strategic goals:
Deliver sustainable shareholder growth
Continually improve the operational capability of the company
Deliver a consistent quality of service
Our Core Values
Our commitment is to conduct business in an ethical manner; our Core Values convey our
organisational beliefs:
Professional - approach to business; expert presence
Innovative - creating new solutions
Agile - quick to respond and make decisions
Collaborative - working together with all stakeholders
Commercially orientated - delivering what clients require
Results focused - focus on the delivery of value and the job in hand
Risk aware - assessing options for alternative strategies
Our brands signify consistency, reliability and employee commitment.
Our Mission
The commitment is to the delivery of a consistent quality of service in accordance with
the service level requirements of all stakeholders. Continuous improvement is sought;
close monitoring of service levels identifies areas for improvement. Well-planned, clearly
focused training supports an improved quality of service.
Rotala aims to become the first choice supplier for
bus operations in its target regions:
Having grown through acquisition in key areas, Rotala has put itself into a position
from which it can take advantage of future developments in the transport industry. The
possession of substantial operations in the North West, the West Midlands, the South
West and Heathrow areas ensures that the company is well positioned for future contract
wins and organic commercial growth.
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06 ROTALA PLC // ANNUAL REPORT 2012
Strategy and Organisation
(Continued)
Rotala is committed to providing service excellence to
stakeholders, by offering value for money and continuous
improvement without compromising on the quality of service.
Rotala prides itself on offering value for money on its services in each of its
areas. By working closely with other businesses, councils and educational
institutions, we ensure that flexibility and proactive management are key
strengths in which Rotala invests. Our commitment to all stakeholders
makes it possible to offer value to all sizes of organisation from the largest
corporate to the smallest individual daily user.
The focus of the business has been to build profitable, sustainable
revenue. The business is composed largely of contracted or predictable
revenue streams which equate to more than 90% of current revenue levels.
To deliver this level of predictability the business has needed to focus
on the development of its three principal revenue streams: contract,
commercial and charter.
ROTALA AT A GLANCE // STRATEGY AND ORGANISATION
07
Contract
The key aspect of Contracted Operations is that the service is delivered under contract, to specified
standards, with the price for the service determined by the contract alone. Contracted operations
service two types of customer:
Individual organisations: these can have specific transport needs. Private bus networks are
designed on a bespoke basis around these needs. We have contracts of this type with British
Airways and National Grid. One of the key factors which drives this customer need comes from
the increasing prevalence of planning restrictions on new developments. These restrict car usage
and available car parking facilities. There has been much growth in this area of business in recent
years and government policy continues to drive change.
Local authorities: since bus denationalisation in 1986 the bus market has evolved and the dominant
operators are now more focused on creating profitable route networks, in contrast to the pre-1986
approach when size and breadth of service were the sole concerns. Thus commercial bus groups
have, over time, either curtailed or withdrawn services and Local Authorities have made decisions
that there is a social need to subsidise the on-going provision of bus services to locations which
would not support a commercial bus route. Contracts for these subsidised services operate on a
variety of different bases but the contracted element of the revenue is included under this heading.
Major examples of these types of services during this accounting year were operated under
contract to Centro, Bristol City Council, Worcestershire County Council, South Gloucestershire
County Council, and Bath and North East Somerset Council together with many smaller entities.
Commercial
On a purely commercial bus service, the company takes all the risk of operation. Where a
contracted service obliges the operator to take an element of revenue risk (the proportion of which
can vary considerably), the variable element of the revenue is also included under this heading.
Since its foundation Rotala has considerably expanded the number of commercial services it
operates in the West Midlands and South West. Furthermore early in 2011 the group acquired
Preston Bus Limited, setting up a new hub of commercial bus operations in the North West.
Charter
Besides the main business streams above, Rotala also provides a transport management service to
a variety of customers. Typically this covers business or service disruption and bespoke large event
management.
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08 ROTALA PLC // ANNUAL REPORT 2012
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 2012.
Revenue
£54,813,000
2.3%
2012
2011
£54,813,000
£56,077,000
2010
£44,644,000
2009
£40,561,000
Revenue by Stream
41.1% Contracted
54.0% Commercial
4.9% Charter
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, we strengthened our position shortly after
the year end with the acquisition from First Group Plc (“First”) of their
depots in Kidderminster and Redditch. I shall return to this acquisition
later in my statement. We are furthermore one of the leading providers
of private bus networks in the country, especially to the aviation industry
around Heathrow.
The 2012 financial year was one of profound and continuing change for
the bus industry. Against the background of an economy, at the very least,
showing no signs of recovery, the industry has been obliged to confront
and deal with the challenges put in its way by a number of changes in
government policy. These changes stem from the austerity measures
which the Government has introduced since its election in 2010. In April
2012 the 20% reduction in the fuel tax rebate inherent in the Bus Services
Operators’ Grant took effect. For Rotala this cut in rebate amounted to
approximately £1 million. This increase in the effective cost of fuel came
on top of progressive reductions in concessionary fares reimbursement
rates and the fall in local authority transport budgets. These measures
made and make for a challenging operating environment. In this we are no
different from our competitors, large and small, but difficult choices have
to be made in these circumstances. Bus fares can only rise so far before
volumes begin to fall. There is a limit in the operating efficiencies which
can be obtained. Therefore your board has taken a number of measures
during the year to safeguard margins and profitability. These have been
successful, as is borne out in the group results on page 26. Bus fares have
been raised where possible, but where this was not a viable option, route
mileage has been cut back to that which remains profitable. We have also
not been drawn in to submitting unrealistic bids for local authority tenders
and have thus deliberately relinquished some business in this area. For the
group as a whole therefore, excluding the fall in Charter Revenue (which
is ad hoc by nature) revenues fell by only 4% when compared to 2011, to a
total of £54.8 million.
REVIEW OF OPERATIONS & STATUTORY REPORTS // CHAIRMAN’S STATEMENT & REVIEW OF OPERATIONS
09
Contracted Revenue
£22.5m
2.7%
2012
2011
£22.5m
£21.9m
2010
£18.8m
2009 £17.5m
Commercial Revenue
£29.6m
4.2%
2012
2011
£29.6m
£30.9m
2010
£21.8m
2009
£19.4m
Charter Revenue
£2.7m
18.2%
2012 £2.7m
2011
£3.3m
2010
2009
£4.0m
£3.6m
Contracted Services
Revenues in Contracted Services overall rose by 3% to £22.5 million (2011:
£21.9 million). Reductions in revenue resulted from further cutbacks in
transport budgets in Worcestershire and to a certain extent in the Bristol
area, following the withdrawal of some subsidised services. In addition
the group lost a number of marginally profitable subsidised contracts in
the Centro operating area, in circumstances where we refused to match
unrealistic tender bids made by certain competitors. We had closed our
small Gatwick depot at the end of 2011 and moved some of the business
to our Heathrow depot, relinquishing the rest. We took this step because
we did not consider that we stood any realistic prospect of significant
expansion in our business around Gatwick and because we felt that our
capital invested there would be better utilised elsewhere in the group. But
in contrast to this our revenues from corporate customers grew strongly in
the year and more than compensated for the reductions in local authority
business and the closure of the Gatwick depot.
Commercial Services
Revenues in Commercial Services fell by some 4% to £29.6 million (2011:
£30.9 million). There was a mixture of reasons for this fall. The reduction
in the reimbursement rates for concessionary fares was a significant
factor. Revenues also fell as the result of decisions to cease operations on
all or part of routes, where we felt that economic running was no longer
profitable. In addition the variable revenue element attached to local
authority contracts is classified in this sector of business and, as certain
local authority contracts were not renewed, the associated commercial
income also fell away. Nevertheless, taking into account compensating
positive variances in a number of areas, including a significant rise in
income from our own network cards, the overall reduction in revenue
was slight. Encouragingly there was a continuing large rise in sales of the
Centro Network Card. I mentioned this trend last year; it bodes well for the
full introduction of the electronic multi-operator pass card by Centro later
in 2013.
Charter Services
In line with group policy we have progressively reduced the exposure
of the group to this area of business in recent years. We have done this
consciously because we judged the return on capital in this sector to be
too low to justify continued investment. We also cut back the number of
coaches we have available for private hire work as we considered that, in
the current economic environment, the risks in speculative private hire
work were too high. Thus Charter Revenues fell by 18% to £2.7 million
(2011: £3.3 million). Airline related chauffeur car services (which we sub-
contract in their entirety) also saw fewer movements in the year and this
had some impact on year on year revenues.
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10 ROTALA PLC // ANNUAL REPORT 2012
Chairman’s Statement and
Review of Operations (continued)
Diamond Bus outside the newly acquired
Kidderminster depot.
REVIEW OF OPERATIONS & STATUTORY REPORTS // CHAIRMAN’S STATEMENT & REVIEW OF OPERATIONS
11
Strategy and acquisitions
At the end of January 2013 we were able to announce the acquisition from First of certain of their bus operations
in Worcestershire. This deal was completed at the beginning of March 2013. We acquired, for a cash consideration
of £1.5 million, 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 108 staff to our workforce. On the basis of the
information available at present the acquisition is expected to generate a small amount of negative goodwill.
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. In the year ended 31 March 2012, these depots reported combined revenues of
approximately £5.2 million and an operating loss of about £0.27 million.
In essence the two depots bring bus routes which are complementary to our existing route network in
Worcestershire. There was very little overlap between our operations and those of First: indeed we competed
on only one route. The acquisition therefore enables us to expand and consolidate our position in those areas of
Worcestershire which are contiguous to our main areas of operation in and around the Birmingham conurbation.
By integrating these acquired depots into our current depot network, the Company will in time be able to take
advantage of the operating efficiencies that will be generated. The acquisition is not expected to have a material
impact on earnings in 2013. It will take time to integrate fully the two route networks and workforces. Inevitably a
certain amount of investment is required. The 36 vehicles we did acquire from First did not comprise the whole of
their fleet at these two depots. We immediately brought in more than 20 vehicles from our existing fleet in order
to bring the fleet numbers up to those required for efficient operations. Furthermore, many of the vehicles do
not comply with the requirements of the Disability Discrimination Act which begin to come into force in 2014. We
will thus need to replace most of these vehicles in due course, and in certain cases have done this already. Once
the integration of operations and overheads has been fully implemented, the acquisition is expected to have a
beneficial effect on earnings in the following years.
Fuel prices
In the earlier part of 2012 the price of fuel was volatile and an average price of about 113p per litre was paid. This
gave rise to an adverse variance in that period against the budgeted cost of fuel. However in the middle of the year
we were able to take advantage of the dip in diesel prices at that time to fix some 75% of the group’s diesel needs
out to July 2013. These fuel fixes ensured that the average price of three quarters of the group’s fuel supply was
108p a litre for the rest of the year. This was slightly below the figure at which we had budgeted for that period.
The board is keen to fix fuel prices as far out as possible and so will take advantage of any further opportunities to
eliminate fuel price exposures as and when they arise.
Following the recent acquisition of the Kidderminster and Redditch depots of First, the group will use about 12
million litres of diesel fuel in a full year.
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12 ROTALA PLC // ANNUAL REPORT 2012
Chairman’s Statement and
Review of Operations (continued)
Fleet improvement
During the year we have received the remainder of our initial batch of 15 hybrid-power buses from the Optare
Group. These have performed well in service and have achieved the targeted 30% fuel saving, when compared to
a similar diesel bus. We were also awarded a grant of £683,000 in the third round of the Government’s Green Bus
funding. This is in respect of a further eight hybrid-power vehicles, this time from the Wright group using the Volvo
chassis and hybrid drive system. These vehicles were all in service by the time of writing this report. Their initial
performance has been excellent and they have been very well received by customers.
Under a separate programme, we have embarked upon the installation of “EcoManager” fuel-saving software in
the existing conventionally powered fleet. The aim of this software is to give the driver visual indication not only if he
or she is driving in a manner which is comfortable for the passenger but also in a manner which is economical and
efficient. So far about 23% of the vehicle fleet has been equipped with this software. A further 50% of the fleet will
be fitted with this equipment by the end of the year. Thus, by that date, almost three quarters of the fleet will have
been equipped with fuel saving systems which should be delivering significant cost reductions. To date EcoManager
has shown a like for like fuel saving of a minimum of 11% of fuel usage. We are confident that further fuel efficiency
gains will be achieved once drivers are fully attuned to what is needed from them and the software is optimised for
individual route characteristics.
Robert Dunn, Managing Director of Preston Bus
Limited and an Executive Director of Rotala Plc,
pictured with the Volvo Hybrid buses.
REVIEW OF OPERATIONS & STATUTORY REPORTS // CHAIRMAN’S STATEMENT & REVIEW OF OPERATIONS
13
The Optare Hybrid buses have performed well in service and
have achieved the targeted 30% fuel saving, when compared to a
similar diesel bus.
The board continues to target an average fleet age of about 7.5 years. Even with the addition of the relatively old
vehicles which we acquired recently with the purchase of the Redditch and Kidderminster depots from First,
the average fleet age stands at 7.7 years. As we continue to replace vehicles this average will certainly fall. This
figure is low in industry terms. We believe that having a modern and efficient bus fleet is a key aspect of customer
service and that running one of the youngest fleets compared to its peers gives the group an important competitive
advantage. 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 25%
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, was successfully achieved.
Banking facilities and finance
At the end of the year we entered into a revised suite of banking facilities with our principal bankers RBS/NatWest.
The new facilities, totalling £11m, increased our existing facilities. First we obtained an enlarged mortgage facility
of approximately £4 million. This enabled us in January 2013 to acquire the freehold of our depot at Avonmouth,
Bristol, which up to now we had been leasing. We bought this very attractive 2.6 acre site for a consideration of £1.8
million. We have been at this depot since the middle of 2011 and have invested heavily in the plant and facilities
there. At the same time we were able to reduce our ordinary overdraft facility with the bank from £3 million to £2
million because we obtained a new revolving credit facility of up to £5 million, of which £1.5 million had been drawn
down at the end of the year. We can use this facility both for working capital finance and acquisition finance. Indeed
the £1.5 million purchase price of the First depots described earlier in this statement was provided by this facility.
These enhanced facilities will support our aim of continuing to grow both organically and by acquisition.
In addition to these facilities we had at the year’s end available but unused vehicle financing facilities of
approximately £10 million. Thus we believe that the group has been provided with sufficient working capital and
financing facilities to continue its growth, whether by acquisition or otherwise, for the foreseeable future.
Financial review
The Consolidated Income Statement is set out on page 26. I have already highlighted the slight decrease in
revenues year on year and the reasons for this variance. Cost of Sales 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 16.5% from the 15.6% of 2011. This rise resulted from all
the measures we took to focus on profitable business and operational efficiencies. Administrative Expenses were
7% higher than those of the previous year. The principal reason for this increase was the inclusion for a full year
of the Avonmouth depot which was only in use for part of 2011. The Profit from Operations at £3.4 million was also
much the same as that recorded in 2011. Finance expense was down overall by about 19%. Partly this resulted from
a fall of about 17% in hire purchase debt year on year. The retirement of some 40% of the convertible loan stock at
the beginning of the calendar year also made a significant contribution as the effective rate of interest on this debt
was about 11%. Profit before taxation therefore rose by 10.5% when compared to the previous year to £2.08 million
(2011: £1.88 million). In 2011 basic earnings per share, at 6.22p, benefited from a one-off tax credit; there is no real
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14 ROTALA PLC // ANNUAL REPORT 2012
Chairman’s Statement and
Review of Operations (continued)
Financial review (continued)
comparison possible with this figure in 2012, where there was a tax charge of £210,000 instead of the prior year’s
tax credit of £279,000. Basic earnings for 2012 were 5.29p per share.
The gross assets of the group stood at £48.2 million at 30 November 2012 (2011: £48.4 million). Holdings of
Property, Plant and Equipment fell by about 7% largely because of the changes made in the vehicle fleet in the
year which I have described in a separate paragraph. The ever rising cost of fuel and the switch from rented to
owned tyres is reflected in the value of Inventories; the working capital devoted to Trade and Other Receivables
rose as well as more business was derived from contracted income where payment periods tend to be longer.
The swing from a cash asset of £869,000 to a net overdraft of £1,410,000 is analysed below but is another reason
for the change in the make up of gross assets. The bulk of the change in Trade and Other Payables results from
the movement in Green Bus Grant creditor compared to the previous year. The gross loans and borrowings of the
group increased by some £2.2 million very largely because of the use of the new banking facilities described above,
but in contrast HP obligations fell by £2.3 million year on year to £10.9 million (2011: £13.2 million). The amount
outstanding on the convertible unsecured loan stock also fell from £3.9 million in 2011, to £2.3 million in these
financial statements, as a significant proportion of the loan stock was retired on 31 December 2011. There was
finally an adverse movement in the Preston pension fund as at 30 November 2012. The gross liabilities of the group
therefore stood slightly down on the previous year at £26.3 million at 30 November 2012 (2011: £27.3 million). Net
assets reached £21.9 million at the year end (2011: £21.1 million).
Cash flows from operating activities before changes in working capital, at £6.3 million, were little changed
from those generated in the previous year. Working capital was absorbed by a number of factors. I have already
mentioned the rise in fuel and tyre stocks. The switch to a tyre contract will ensure that this working capital is
released in 2013. Trade receivables rose by some £0.7 million in reflection of the changing nature of the group’s
business. Prepayments, accruals and deferred income absorbed significant amounts of working capital as the
result of the inception of new contracts, a swing to a net recoverable in Bus Services Operators’ Grant and a
higher level of insurance claims recoverable from third parties than the previous year. Many of these increases in
working capital will reverse in the current year and some have already done so. Investment in property, plant and
equipment rose this year to £1.6 million (2011: £0.6 million), representing a considerable investment in new ticket
machinery as well as vehicles. Sale of vehicles, after taking account of the related hire purchase settlements,
produced £3.1 million for the group (2011: £0.7 million). As related above, new banking facilities were agreed before
the year’s end. Almost all bank loans were thus repaid and then drawn anew. Fresh bank borrowings amounted to
some £2 million net of repayments. During the year a total of £1,337,000 of the convertible unsecured loan stock
was also repaid; in addition the capital element of payments on hire purchase agreements reached £5.0 million
(2011: £4.5 million). After taking account of rising dividend but falling interest payments, the group swung from
a cash and cash equivalents asset at the end of 2011 to an overdraft of £1,410,000 at the end of 2012, in line with
management’s plans and expectations.
Dividend
The Company paid an interim dividend of 0.50 pence per share in December 2012. At the forthcoming Annual
General Meeting the Board will recommend a final dividend in respect of 2012 of 0.90p per share, making 1.40p
for the year as a whole. 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.
REVIEW OF OPERATIONS & STATUTORY REPORTS // CHAIRMAN’S STATEMENT & REVIEW OF OPERATIONS
15
The Board feels confident about the Group’s prospects and
believes many opportunities will be available to ensure the
continued growth of the group.
Outlook
The acquisition of the Redditch and Kidderminster depots from First will expand further the commercial bus
revenues of the group in line with our stated strategy. After the acquisition approximately 60% of the group’s
annualised revenues will derive from this source. We intend to continue the expansion of our revenues from this
business stream.
Given the downward pressure on local authority transport budgets it is unlikely that contracted revenues from this
source will increase this year. There may well be further reductions. But there is still encouraging activity in the
corporate sector for private bus networks. We are one of the leading players in this field and we are confident that
we will obtain more new business in this area. One of the leading drivers of this business comes from the focus
of government on the reduction of pollution and congestion. This will provide further opportunities for growth. In
addition many private bus tenders derive from decisions by the private sector to outsource those activities (like
transport) which lie outside their core areas of expertise.
Government policy decisions are driving considerable changes in the bus industry. I would have to say that many
of these decisions look illogical: Government wishes to get us out of our cars and on to public transport but takes
decisions which are not calculated to promote the increase in bus patronage that could be obtained with more
coherent thinking. But this does mean that volatility and instability in the bus industry will continue. We have
managed to cope with these changes as a result of much hard work and application of operational expertise, but
the trading environment will remain challenging. Many smaller operators are finding the going very hard and a
number of family businesses of long standing have given up the ghost in the last year or so.
Where others take decisions to divest, or not re-invest, we are given the opportunity to expand, as with the Redditch
and Kidderminster acquisition. Uncertainty brings opportunity. The group has a very solid financial base. Your board
has in the forefront of its mind the total return to shareholders, whether that comes from earnings growth, dividend
growth or net asset value per share. The latter is reflected in a balance sheet underpinned by some £21 million
of vehicle assets and 22 acres of property in prime sites in the books at £9 million. The aim of the board is to be
financially conservative whilst respecting these three key points for shareholder return. We want to create a solid
and reliable performer for all shareholders for the long term.
When we have digested our recent acquisition, the group will be conservatively geared and we possess ample
facilities to take on any further acquisitions that may arise. Therefore the Board feels confident about the group’s
prospects and believes many opportunities will be available to ensure the continued growth of the group.
John Gunn
Non-Executive Chairman
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16 ROTALA PLC // ANNUAL REPORT 2012
Directors’ Report
The Directors present their report together with the
audited financial statements of the group for the year ended
30 November 2012.
Principal activities
The principal activities of the group are the provision of bus services to public and private bodies and tailored
transport solutions to a wide range of private customers.
Review of the business and future prospects
The results of the year and the financial position as at 30 November 2012 are considered by the Directors to be
satisfactory. A review of the group’s activities, using its key performance indicators, and a review of its future
prospects are contained in the Chairman’s Statement and Review of Operations. These key performance indicators
are considered to be:
Gross profit margin
Profit from operations
Profit before taxation
2012
16.5%
£3,392,000
£2,076,000
2011
15.6%
£3,514,000
£1,878,000
Gross profit margin
16.5%
6.5%
Profit from operations
£3,392,000
3.5%
Profit before taxation
£2,076,000
10.5%
2012
2011
2010
2009
16.5%
15.6%
2012
2011
£3,392,000
2012
£2,076,000
£3,514,000
2011
£1,878,000
18.4%
2010
£3,449,000
2010
£1,650,000
19.3%
2009
£3,306,000
2009
£1,528,000
REVIEW OF OPERATIONS & STATUTORY REPORTS // DIRECTORS’ REPORT
17
These key performance indicators are used as follows:
1.
Gross profit margin: it is fundamental to the longer term sustainability of the group that it attains a suitable
level of gross profit in all of its activities. In any contracted business the gross profit margin is computed as
part of the pricing process. Actual margin is then monitored in relation to the contract and service delivery
targets. Gross profit margin will vary depending on the type, location and duration of the contract. Where the
revenue is variable and derived from passengers, routes are constantly monitored for gross profit margin.
Passenger loadings are also analysed and, in concert with margin analysis, frequencies and routes adjusted
to maximise revenue yields. In these instances margins will vary in acceptability depending upon the length,
locality and maturity of the route and the extent of competition;
2.
Profit from operations: profit from operations is a very important determinant of the long term success of
the whole business. Because this indicator is calculated before interest it represents the theoretical debt-
free performance of the group and is thus a key measure of value. It is also a measure of how effectively and
efficiently the group is using its operating assets, particularly in relation to its peers. Therefore this metric is
monitored monthly and progress is frequently reviewed;
3.
Profit before taxation: this indicator is a key determinant of return to shareholders. Therefore it is monitored
through the prism of the monthly management accounts and reviewed by the board at its monthly meetings.
The Board places particular emphasis upon the target that this indicator should grow constantly because
in this manner it can be confident that it is serving the interests of shareholders and providing the company
thereby with the means to sustain its ambitions to increase its overall levels of business.
The directors consider the performance of the group in relation to these KPIs to be satisfactory.
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18 ROTALA PLC // ANNUAL REPORT 2012
Directors’ Report (continued)
Principal risks and uncertainties
The Directors consider that the following factors may be considered to be material risks and uncertainties facing
the group:
Risk
Potential impact
Management or mitigation
Variations in the price of
fuel.
The availability of
sufficient capital and
leasing facilities to
finance the growth in the
group's businesses.
Repayment of the group’s
convertible debt.
Fuel is a significant
cost to the business.
If fuel increases in
price in circumstances
where sales prices
cannot be increased,
then profitability will be
affected.
The group may miss
growth opportunities.
Management monitors fuel prices closely, negotiates fuel
escalator clauses where possible and increases fares
if input costs rise in a sustained pattern. Management
enters into fuel price fixing arrangements as described
in the Chairman’s Statement. Management also
monitors fleet fuel efficiency and uses technological
aids to optimise fuel usage as further described in the
Chairman’s Statement.
Management maintains close contact with actual and
potential shareholders and vehicle financiers to keep
them fully briefed about the progress of the group.
The group may not be
able to meet it debt
repayment obligations.
The debt is due for conversion or repayment on 31
December 2014. Management forecasts encompass the
need to repay this debt, if not converted into ordinary
shares by that date.
New government
legislation or industry
regulation.
Significant unplanned or
unforeseen costs may be
imposed on the business.
Availability of
management resources
of the appropriate quality.
Lack of appropriate
management skills
damages the business
and its prospects.
Management continually monitors regulatory and legal
developments and participates keenly in industry forums.
Management also ensures that it responds to requests
for information and insight from such bodies as the
Competition Commission.
The board continually assesses skill requirements,
management and structures as the business grows.
Appropriate recruits are brought into the business and
any necessary management development courses are
instituted.
The group may not be
able to obtain adequate
levels of insurance cover.
Driver training emphasises a risk - averse culture.
Accident rates are monitored centrally. Claims are
managed by a claims handler who works closely with the
group’s insurance adviser and insurers.
Level of vehicle insurance
rates – particularly in the
event of a major accident
involving passenger
fatality.
Results and dividends
The group’s results for the year are set out on page 26.
The Directors will propose to the Annual General Meeting a distribution, by way of a final dividend, of 0.9p per share
for the year ended 30 November 2012 (2011: 0.8p per share). An interim dividend of 0.5p per share (2011: 0.4p) was
paid on 7 December 2012.
REVIEW OF OPERATIONS & STATUTORY REPORTS // DIRECTORS’ REPORT
19
Directors
The following Directors have held office during the year:
J H Gunn
R A Dunn
S L Dunn
F G Flight
K M Taylor
Directors’ interests
The beneficial interests of the Directors and their families in the company’s shares were as follows:
2012
2011
Ordinary shares
of 25p each
Options over
ordinary shares
of 25p each
Ordinary shares
of 25p each
Options over
ordinary shares
of 25p each
5,526,616
909,454
686,880
1,325,055
357,500
400,000
422,471
467,471
220,000
565,000
5,614,116
909,454
673,544
1,325,055
357,500
400,000
400,000
445,000
220,000
565,000
J H Gunn
R A Dunn
S L Dunn
F G Flight
K M Taylor
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
J H Gunn is also a director of and shareholder in The 181 Fund Limited: see note 27 – Related Parties and
Transactions.
J H Gunn
R A Dunn
S L Dunn
F G Flight
K M Taylor
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
2012
2011
Convertible Unsecured Loan Stock
Convertible Unsecured Loan Stock
-
-
£260,000
-
£25,000
-
-
£260,000
£50,000
£25,000
The terms of the Convertible Unsecured Loan Stock are described in note 19.
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20 ROTALA PLC // ANNUAL REPORT 2012
Directors’ Report (continued)
Directors’ interests (Continued)
Options over 25p ordinary shares
At 1 December
2011
Granted
J H Gunn
R A Dunn
S L Dunn
F G Flight
K M Taylor
80,000
120,000
200,000
400,000
400,000
-
400,000
80,000
80,000
200,000
85,000
-
445,000
80,000
140,000
220,000
80,000
160,000
240,000
85,000
565,000
-
-
-
-
-
22,471
22,471
-
-
-
-
22,471
22,471
-
-
-
-
-
-
-
-
Price
125p
37.5p
62.5p
50.0p
40.05p
162.5p
37.5p
62.5p
50.0p
40.05p
37.5p
62.5p
125p
37.5p
62.5p
50.0p
At 30
November
2012
Date
Exercisable
Date of
Expiry
80,000
29/03/2008
28/03/2015
120,000
30/03/2009
29/03/2016
200,000
06/09/2010
05/09/2017
400,000
400,000
05/09/2011
04/09/2018
22,471
24/09/2015
24/03/2016
422,471
80,000
80,000
30/08/2008
29/08/2015
30/03/2009
29/03/2016
200,000
06/09/2010
05/09/2017
85,000
22,471
467,471
05/09/2011
04/09/2018
24/09/2015
24/03/2016
80,000
30/03/2009
29/03/2016
140,000
06/09/2010
05/09/2017
220,000
80,000
29/03/2008
28/03/2015
160,000
30/03/2009
29/03/2016
240,000
06/09/2010
05/09/2017
85,000
05/09/2011
04/09/2018
565,000
Options were granted on 24 September 2012 under the terms of the Rotala Plc SAYE Share Option Scheme. This is
described in more detail in note 24.
The remuneration of the Directors is set out in note 6. Contracts existing during, or at the end of the year, in which
a Director was or is materially interested, other than employment contracts, are disclosed in note 27 – Related
Parties and Transactions.
The company’s share price at 30 November 2012 was 44p. The high and low prices in the year were 45.5p and 37.5p
respectively.
REVIEW OF OPERATIONS & STATUTORY REPORTS // DIRECTORS’ REPORT
21
Changes in share capital
As set out in note 23 to the financial statements, there were no movements in share capital during the year.
Financial instruments
Details of financial instruments, including information about exposure to financial risks and the financial risk
management objectives and policies, are given in note 26.
Employment policies
It is the policy of the group to consider the health and welfare of employees by maintaining safe places and systems
of work. The group’s employment policies are regularly reviewed to ensure they remain effective. These policies
promote a working environment which underpins the recruitment and retention of professional and conscientious
employees, and which improves productivity in an atmosphere free of discrimination. The group is committed
to giving full and fair consideration to all applicants for employment who are disabled and for continuing the
employment of those who become disabled while employed. Training is also a priority task, especially in this
industry, and is a focus of considerable effort. Employees are consulted and involved in the development of the
group in a number of ways which include regular briefings, team updates and announcements.
Creditor payment policy and practice
The group agrees terms of contracts when orders are placed and goods and services received. It is the group’s
policy that payments to suppliers are made in accordance with the agreed terms and conditions, provided all
trading terms and conditions have been complied with. The group and company had respectively 56 and 65 days’
purchases outstanding at 30 November 2012 (2011: 57 days and 77 days’ respectively), based on the average daily
amount invoiced by suppliers for the year then ended.
Political and charitable contributions
There were no political contributions made by the group during the year ended 30 November 2012 (2011: £Nil).
Charitable contributions amounted to £230 (2011: £510).
Corporate governance
The directors support the recommendations of the UK Corporate Governance Code. The Board is responsible for
the management and successful development of the group by:
• setting the strategic direction;
• monitoring and guiding operational performance;
• establishing polices and internal controls to safeguard the group’s assets.
The composition of the Board provides a blend of skills and experience that ensures it operates as a balanced
team.
The Board meets regularly to review trading performance, to ensure adequate funding is available, to set and
monitor strategy, and when appropriate, to report to shareholders. To enable the Board to discharge its duties, all
directors receive appropriate and timely information.
The Board is responsible for maintaining a strong system of internal control to safeguard shareholders’
investments and the group’s assets. The system of internal financial control is designed to provide reasonable, but
not absolute, assurance against material misstatement or loss.
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22 ROTALA PLC // ANNUAL REPORT 2012
Directors’ Report (continued)
The Directors are responsible for the group’s system of financial control and for reviewing its effectiveness. As the
group continues to grow, the Directors will review their compliance with the Code from time to time and will adopt
such of the provisions as they consider to be appropriate.
Relationships with shareholders
The company values the views of its shareholders and recognises their interest in the company’s strategy and
performance. The Annual General Meeting is used to communicate with shareholders and they are encouraged to
participate. The Directors will be available to answer questions at the Annual General Meeting.
Going concern
The board has examined its strategy and considered its profit and loss and cash flow projections over the two years
to 30 November 2014. It has also evaluated the positive impact of the recently enlarged loan and overdraft facilities
of the group, as described in the Chairman’s Statement. Therefore, after due enquiry, the Board has judged the
cash flow forecasts and banking resources of the group to be adequate to support its continued operations for the
foreseeable future and has adopted the going concern basis in preparing the financial statements.
Directors’ responsibilities statement
The Directors are responsible for preparing the annual report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law
the Directors have elected to prepare the group financial statements in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union. The Directors have elected to prepare the parent
company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (UK
GAAP). Under company law the directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs and profit or loss of the company and group for that period.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
•
for the group financial statements, state whether applicable IFRSs have been followed, subject to any
material departures disclosed and explained in the financial statements;
for the parent company financial statements, state whether applicable UK accounting standards have been
followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
group and company will continue in business.
•
•
The Directors are responsible for keeping adequate accounting records which are sufficient to show and explain the
company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and
the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the group and the company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
REVIEW OF OPERATIONS & STATUTORY REPORTS // DIRECTORS’ REPORT
23
The Board meets regularly to review trading performance,
to ensure adequate funding is available, to set and monitor
strategy, and when appropriate, to report to shareholders.
The Directors confirm that:
•
•
so far as each director is aware, there is no relevant audit information of which the company’s auditors are
unaware; and
the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant
audit information and to establish that the auditors are aware of that information.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on the company’s website. Legislation in the United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Substantial shareholdings
As at 12 April 2013 the company had been notified that the following were interested in 3% or more of the ordinary
share capital of the company:
Name
Mr. J. H. Gunn
Mr. Nigel Wray
The 181 Fund Limited
Mr. F. G. Flight
Link Traders (Aust) Pty Limited
Mr. Graham Peacock
Mrs. Susan Tobbell
Number of
Ordinary Shares
5,526,616
4,944,400
1,980,221
1,325,055
1,300,000
1,075,000
1,075,000
%
15.67
14.02
5.61
3.76
3.69
3.05
3.05
Auditors
Grant Thornton UK LLP were re-appointed as auditors at the last Annual General Meeting and have expressed their
willingness to continue in office as auditor. A resolution to re-appoint them will be proposed at the forthcoming
Annual General Meeting.
For the year ended 30 November 2012, the group has taken advantage of the exemption offered in sections 479A –
479C of the Companies Act 2006 and certain of its subsidiaries have not been subject to an individual annual audit.
Rotala Plc has given a statutory guarantee to each of these subsidiaries guaranteeing their liabilities, a copy of
which will be filed at Companies House.
By order of the Board
Kim Taylor
Secretary
Date: 12 April 2013
Company registration number: 5338907
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24 ROTALA PLC // ANNUAL REPORT 2012
Independent Auditors’ Report
We have audited the financial statements of Rotala plc for the year ended 30 November 2012 which comprise
the consolidated income statement, the consolidated statement of comprehensive income, the consolidated
statement of changes in equity, the consolidated statement of financial position, the consolidated statement of
cash flows, the company balance sheet and the related notes. The financial reporting framework that has been
applied in the preparation of the group financial statements is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied
in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting
Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities Statement on page 22, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing
Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/
apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s
affairs as at 30 November 2012 and of the group’s profit for the year then ended;
the group financial statements have been properly prepared in accordance with IFRS as adopted by the
European Union;
the parent company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
REVIEW OF OPERATIONS & STATUTORY REPORTS // INDEPENDENT AUDITORS’ REPORT
25
Separate opinion in relation to IFRSs
As explained in Note 2 to the group financial statements, the group in addition to complying with its legal
obligation to comply with IFRSs as adopted by the European Union, has also complied with IFRSs as issued by the
International Accounting Standards Board (IASB).
In our opinion the group financial statements comply with IFRSs as issued by the IASB.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report
to you if, in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
•
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
David P White
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Birmingham
Date: 12 April 2013
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26 ROTALA PLC // ANNUAL REPORT 2012
Consolidated Income Statement
For the year ended 30 November 2012
Revenue
Cost of sales
Gross profit
Administrative expenses
Profit from operations
Finance income
Finance expense
Profit before taxation (expense)/credit
Tax (expense)/credit
Profit for the year attributable to the equity
holders of the parent
Earnings per share for profit attributable to the
equity holders of the parent during the year:
Basic (pence)
Diluted (pence)
Note
4
7
8
9
10
11
11
2012
Results for
the year
(£’000)
54,813
(45,790)
2011
Results for
the year
(£’000)
56,077
(47,316)
9,023
(5,631)
3,392
15
(1,331)
2,076
(210)
1,866
5.29
5.18
8,761
(5,247)
3,514
-
(1,636)
1,878
279
2, 157
6.22
5.99
The accompanying notes form an integral part of these financial statements.
FINANCIAL STATEMENTS // CONSOLIDATED INCOME STATEMENT & CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
27
Consolidated Statement of
Comprehensive Income
For the year ended 30 November 2012
Note
22
21
Profit for the year
Other comprehensive income:
Actuarial loss on defined benefit pension
scheme
Deferred tax on actuarial loss on defined
benefit pension scheme
Other comprehensive income for the year (net of tax)
Total comprehensive income for the year attributable
to the equity holders of the parent
2012
£’000
1,866
(1,009)
242
(767)
1,099
2011
£’000
2,157
(648)
162
(486)
1,671
The accompanying notes form an integral part of these financial statements.
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28 ROTALA PLC // ANNUAL REPORT 2012
Consolidated Statement of
Changes in Equity
For the year ended 30 November 2012
Share
capital
£'000
Share
premium
reserve
£'000
Merger
reserve
£'000
Warrant
reserve
£'000
Retained
earnings
£'000
At 1 December 2010
8,265
7,762
2,567
370
Profit for the year
Other comprehensive
income
Total comprehensive income
-
-
-
Transactions with owners:
Issue of share capital
553
Dividends paid or declared
Share based payment
Release of warrant reserve
to retained earnings
-
-
-
Transactions with owners
553
-
-
-
66
-
-
-
66
-
-
-
-
-
-
-
-
140
2,157
(486)
1,671
-
(352)
16
-
-
-
-
-
-
Total
£'000
19,104
2,157
(486)
1,671
619
(352)
16
-
(125)
125
(125)
(211)
283
At 30 November 2011
8,818
7,828
2,567
245
Profit for the year
Other comprehensive
income
Total comprehensive income
Transactions with owners:
Dividends paid or declared
Share based payment
Release of warrant reserve
to retained earnings
Transactions with owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(245)
(245)
1,600
1,866
21,058
1,866
(767)
(767)
1,099
1,099
(283)
2
245
(36)
(283)
2
-
(281)
At 30 November 2012
8,818
7,828
2,567
-
2,663
21,876
The accompanying notes form an integral part of these financial statements.
FINANCIAL STATEMENTS // CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
29
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30 ROTALA PLC // ANNUAL REPORT 2012
Consolidated Statement of
Financial Position
As at 30 November 2012
Note
12
13
21
15
16
17
18
19
20
19
20
22
Assets
Non-current assets
Property, plant and equipment
Goodwill and other intangible assets
Deferred taxation
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Loans and borrowings
Obligations under hire purchase contracts
Total current liabilities
Non-current liabilities
Loans and borrowings
Obligations under hire purchase contracts
Defined benefit pension obligation
Total non-current liabilities
Total liabilities
TOTAL NET ASSETS
2012
£’000
27,509
9,482
521
37,512
1,892
8,454
351
10,697
48,209
6,228
3,550
3,931
13,709
4,216
6,945
1,463
12,624
26,333
21,876
2011
£’000
29,690
9,482
489
39,661
1,272
6,551
869
8,692
48,353
7,671
1,699
4,253
13,623
3,889
8,929
854
13,672
27,295
21,058
The accompanying notes form an integral part of these financial statements.
FINANCIAL STATEMENTS // CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31
Shareholders’ funds
Share capital
Share premium reserve
Merger reserve
Warrant reserve
Retained earnings
Note
23
2012
£’000
8,818
7,828
2,567
-
2,663
2011
£’000
8,818
7,828
2,567
245
1,600
TOTAL EQUITY
21,876
21,058
The financial statements were approved by the Board of Directors and authorised for issue on 12 April 2013
Simon Dunn
Chief Executive
Kim Taylor
Group Finance Director
The accompanying notes form an integral part of these financial statements.
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32 ROTALA PLC // ANNUAL REPORT 2012
Consolidated Statement
of Cash Flows
For the year ended 30 November 2012
Cash flows from operating activities
Profit before taxation
Adjustments for:
Depreciation
Amortisation
Negative goodwill
Finance expense
Gain on sale of property, plant and equipment
Contribution to defined benefit pension scheme
Equity settled share-based payment expense
Cash flows from operating activities before changes in
working capital and provisions
Increase in trade and other receivables
Increase in inventories
(Decrease)/increase in trade and other payables
Cash generated from operations
Interest paid on hire purchase agreements
Net cash flows from operating activities carried forward
2012
£’000
2,076
3,742
-
-
1,316
(417)
(400)
2
6,319
(2,663)
(620)
(721)
(4,004)
2,315
(862)
1,453
2011
£’000
1,878
3,680
115
(192)
1,636
(160)
(312)
16
6,661
(1,657)
(392)
1,838
(211)
6,450
(1,085)
5,365
The accompanying notes form an integral part of these financial statements.
FINANCIAL STATEMENTS // CONSOLIDATED STATEMENT OF CASH FLOWS
33
Note
Cash flows from operating activities brought forward
Investing activities
Purchases of property, plant and equipment
Acquisition of subsidiary, net of cash acquired
Sale of public service vehicles
Net cash from/(used in) investing activities
Financing activities
Issue of ordinary shares
Dividends paid
Proceeds of hire purchase refinancing agreement
Proceeds of mortgage and other loans
Loan stock repaid
Repayment of bank and other borrowings
Loan stock and bank loan interest paid
Capital settlement payments on vehicles sold
Capital element of lease payments
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
17
19
2012
£’000
1,453
(1,562)
-
5,656
4,094
-
(423)
-
3,735
(1,337)
(1,756)
(501)
(2,535)
(5,009)
(7,826)
(2,279)
869
(1,410)
The accompanying notes form an integral part of these financial statements.
2011
£’000
5,365
(583)
(2,562)
1,754
(1,391)
619
(310)
2,415
618
(775)
(745)
(470)
(1,038)
(4,547)
(4,233)
(259)
1,128
869
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34 ROTALA PLC // ANNUAL REPORT 2012
Notes to the Consolidated
Financial Statements
1.
General information
Rotala plc is incorporated and domiciled in the United Kingdom.
The financial statements for the year ended 30 November 2012 (including the comparatives for the year
ended 30 November 2011) were approved by the Board of Directors on 12 April 2013. Amendments to the
financial statements are not permitted after they have been approved.
2. Accounting policies
Basis of preparation
The group’s financial statements have been prepared in accordance with applicable International Financial
Reporting Standards (“IFRS”) as adopted by the European Union and IFRS as issued by the International
Accounting Standards Board. The financial statements have been prepared on a going concern basis as
described on page 22.
Overall considerations
The significant accounting policies that have been used in the preparation of these financial statements are
summarised below. The financial statements have been prepared using the measurement bases specified
by IFRS for each type of asset, liability, income and expense. The measurement bases are more fully
described in the accounting policies below.
Critical accounting estimates and judgements
Certain estimates and judgements need to be made by the directors of the group which affect the results
and position of the group as reported in the financial statements. Estimates and judgements are required
if, for example, as at the reporting date not all liabilities have been settled, and certain assets and liabilities
are recorded at fair value which require a number of estimates and assumptions to be made.
Estimates
The major areas of estimation within the financial statements are as follows:
(a) Impairment of goodwill
The group is required to test, on an annual basis, whether goodwill has suffered any impairment.
The recoverable amount is determined based on value in use calculations. The use of this method
requires the estimation of future cash flows and the choice of a discount rate in order to calculate
the present value of the cash flows. Actual outcomes may vary. More information about the
impairment review is included in note 14.
(b) Share based payment
The group has an equity-settled share-based remuneration scheme for employees. Employee
services received, and the corresponding increase in equity, are measured by reference to the fair
value of the equity instruments at the date of grant, excluding the impact of any non-market vesting
conditions. The fair value of share options is estimated by using the Black-Scholes valuation model
on the date of grant based on certain assumptions. Those assumptions include, among others, the
dividend growth rate, expected volatility, and the expected life of the options. Management then apply
the fair value to the number of options expected to vest.
FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
35
2
Accounting policies (continued)
(c) Pension scheme valuation
The liabilities in respect of defined benefit pension schemes are calculated by qualified actuaries
and reviewed by the group, but are necessarily based on subjective assumptions. The principal
uncertainties relate to the estimation of the life expectancies of scheme members, future investment
yields and general market conditions for factors such as inflation and interest rates. The specific
assumptions adopted are disclosed in detail in note 22 to the consolidated financial statements.
Profits and losses in relation to changes in actuarial assumptions are taken directly to other
comprehensive income and therefore do not impact on the profitability of the business, but the
changes do impact on net assets
(d) Self insurance
The estimation of insurance costs, under the group’s self insurance scheme, is based on premiums
paid and cash paid into the scheme’s bank account. The actual outcome of claims made is
determined over the five years following each period end; no rebate of premium is accounted for until
each insurance period is closed. The directors regularly review claims made and, should insurance
premiums paid to date be considered inadequate in the light of claims, appropriate provision would
be made.
Judgements
The major areas of judgement within the financial statements are as follows:
(a) Useful lives of intangible assets and property, plant and equipment
Property, plant and equipment is depreciated over its useful life. Useful lives are based on the
management’s estimates of the periods within which the assets will generate revenue and which
are periodically reviewed for continued appropriateness. Changes to estimates can result in
significant variations in the carrying value and amounts charged to the Consolidated Statement of
Comprehensive Income in specific periods. More details about carrying values are included in note
12.
(b) Extinguishment accounting
Where there is an exchange of debt instruments, the future discounted cash flows are compared
to those of the original liability in order to determine if extinguishment accounting is applicable, or
alternatively whether the amendment is treated as a modification to the existing instrument. This
involves a comparison under IAS 39.AG62, between the net present value of the cash flows under
the revised terms versus the original terms, and whether the difference exceeds 10%. During the
current period the refinancing of banking facilities did not generate a difference exceeding this
threshold and no qualitative changes in terms have been identified which indicate the new debt to be
substantially different. Therefore extinguishment accounting has not been applied. During the prior
period, the convertible bonds were amended which involved both the extension of repayment dates
and the reduction in the exercise price of holder conversion options. The conclusion reached was
that the amendment was accounted for as a modification of the existing instrument. This involved
two judgements. The first judgement was whether or not qualitative aspects should be considered in
addition to the 10% quantitative test.
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36 ROTALA PLC // ANNUAL REPORT 2012
2. Accounting policies (continued)
(b) Extinguishment accounting (continued)
The judgement applied in this case was that qualitative aspects were not considered, and accordingly
whether or not extinguishment accounting applied was dependent solely on the 10% quantitative
test. The second judgement was how to incorporate the change in conversion option value in the 10%
quantitative test, as IAS 39.AG62 is not specific on this matter. The judgement applied was to include
the incremental fair value changes of the option arising from the change in option terms within the
10% test.
(c) Deferred tax assets
In determining the deferred tax asset to be recognised, management carefully review the
recoverability of these assets on a prudent basis and reach a judgement based on the best available
information.
Basis of consolidation
The group financial statements consolidate the results of the company and all its subsidiary undertakings
at 30 November 2012. The results of subsidiary undertakings acquired are included from the date on
which control passed to the group. Intercompany transactions and balances between group companies are
therefore eliminated in full.
Business combinations
Where the acquisition method is used, the results of the subsidiary are included from the date of
acquisition. The purchase consideration is allocated to assets and liabilities on the basis of fair value at the
date of acquisition.
Goodwill
Goodwill represents any excess of the cost of the business combination over the fair value of the identifiable
assets, liabilities and contingent liabilities acquired.
Goodwill is tested annually for any impairment and carried at cost less accumulated impairment losses.
Any impairment charge would be included within administrative expenses in the Consolidated Income
Statement. Goodwill impairment charges cannot be reversed. As the group has taken advantage of the
exemption from restating all pre-transition period acquisitions under IFRS 3 ‘Business Combinations’,
goodwill includes intangibles arising on those acquisitions that are not separately identifiable prior to the
date of the change of policy.
Where the fair value of identifiable assets, liabilities and contingent liabilities exceeds the fair value of
consideration paid, the excess is credited in full in profit or loss on the acquisition date.
Other intangible assets - brands
Purchased brands, which are controlled through custody or legal rights and which could be sold separately
from the rest of the business, are capitalised, where fair value can be reliably measured. Where intangible
assets are regarded as having a limited useful economic life, the cost is amortised on a straight-line basis
over that life in administrative expenses in the Consolidated Income Statement.
Other intangible assets - contracts
Where an acquisition is made which contains within it rights to contracted revenue, the present value of the
profits inherent in those contracts is capitalised as an intangible asset. This asset is then amortised over
the remaining life of those contracts in administrative expenses in the Consolidated Income Statement.
FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
37
2. Accounting policies (continued)
Impairment
The group’s goodwill and intangible assets are subject to impairment testing.For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows
(cash-generating units). As a result, some assets are tested individually for impairment and some are
tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected
to benefit from synergies of the related business combination and represent the lowest level within the
group at which management controls the related cash flows.
Individual intangible assets or cash-generating units that include goodwill with an indefinite useful life are
tested for impairment at least annually. All other individual assets or cash-generating units are tested for
impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable.
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting
market conditions less costs to sell, and value in use, based on an internal discounted cash flow evaluation.
Impairment losses recognised for cash-generating units, to which goodwill has been allocated, are credited
initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other
assets in the cash generating unit. With the exception of goodwill, all assets are subsequently reassessed
for indications that an impairment loss previously recognised may no longer exist.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating
unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss
been recognised in prior years. A reversal of an impairment loss is recognised as income immediately.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost, which includes both the purchase
price and any directly attributable costs. Following initial recognition property, plant and equipment is
carried at depreciated cost.
Depreciation is provided to write off the cost, less estimated residual values, of all property, plant and
equipment, except freehold land, evenly over their expected useful lives. It is calculated at the following
rates:
Freehold land
Freehold buildings
Short leasehold property
Plant and machinery
Public Service Vehicles (“PSVs”)
Fixtures and fittings
-
-
-
-
-
-
Not depreciated
Fifty years straight line
Over the period of the lease
Between ten and four years straight line
Between 10% and 25% per annum on a reducing balance basis
Three years straight line
The useful lives and residual values of property, plant and equipment are reviewed at least annually and
adjusted, where applicable. When disposed of, property plant and equipment is derecognised. Where
an asset continues to be used by the group but is expected to provide no future economic benefits, it
is considered to be impaired. Profits and losses on disposal are calculated by comparing the disposal
proceeds with the carrying value of the asset, and the resultant gains or losses are included in profit or loss.
A gain or loss incurred at the point of derecognition is also included in profit or loss at that point.
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38 ROTALA PLC // ANNUAL REPORT 2012
2. Accounting policies (continued)
Property, plant and equipment (continued)
Repairs and maintenance are charged to profit or loss in the financial period in which they are incurred.
Where probable future economic benefits, in excess of the current standard of performance of the existing
asset, are considered to be derived from its major renovation, the cost of that major renovation is added to
the carrying value of that asset. Major renovations are then depreciated over the remaining useful life of the
asset.
Grants
Grants relating to property, plant and equipment are netted off the assets to which they relate and the net
investment in the asset is depreciated as set out above. Other grants are held in trade and other payables
until credited to the income statement as the related expenditure is expensed.
Revenue
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. Contracted and charter services revenues are
recognised when services are delivered, based on agreed contract rates.
Inventories
Inventories are initially recognised at cost on a first in first out basis, and subsequently at the lower of cost
and net realisable value. Cost comprises all costs of purchase and other costs incurred in bringing the
inventories to their present location and condition.
Taxation
The charge for current taxation is provided at rates of corporation tax that have been enacted or
substantively enacted by the balance sheet date. Current tax is based on taxable profits for the year and any
adjustments to tax payable in respect of previous years.
Deferred tax is provided, using the balance sheet method, on all temporary differences which result in an
obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, based on tax
rates and tax laws that have been enacted or substantively enacted at the balance sheet date. Temporary
differences arise between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. The exceptions, where deferred tax assets are not recognised nor deferred tax liabilities
provided, are:
• On initial recognition of goodwill;
•
•
The initial recognition of an asset or liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
Taxable temporary differences associated with investments in subsidiary undertakings where the
timing of the reversal of the temporary difference can be controlled and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised.
Leased assets
In accordance with IAS 17, the economic ownership of a leased asset is transferred to the lessee if the
lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The
related asset is recognised at the time of inception of the lease at the fair value of the leased asset or, if
lower, the present value of the minimum lease payments plus incidental payments, if any, to be borne by
the lessee. A corresponding amount is recognised as a finance leasing liability.
FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
39
2. Accounting policies (continued)
Leased assets (continued)
The interest element of leasing payments represents a constant proportion of the capital balance
outstanding and is charged to profit or loss over the period of the lease.
All other leases are regarded as operating leases and the payments made under them are charged to profit
or loss on a straight line basis over the lease term. Lease incentives are spread over the term of the lease.
Where the Group enters into sale and leaseback transactions, the accounting treatment depends on the
type of lease involved and the economic and commercial substance of the arrangement. Where the Group
retains the majority of the risks and rewards of ownership of the assets they are accounted for as finance
leases and any excess of sales proceeds over the carrying amount of the asset is deferred and amortised
over the lease term. Where the group transfers substantially all the risks and rewards of ownership to the
lessor they are accounted for as operating leases and any excess of sales proceeds over the carrying value
of the asset is recognised in the income statement as a gain on disposal.
Convertible debt
The proceeds (which equate to fair value) received on issue of the group’s convertible debt are allocated into
their liability and equity components and presented separately in the balance sheet. The equity component
is included in the warrant reserve.
The amount initially attributed to the debt component equals the discounted cash flows using a market
rate of interest that would be payable on a similar debt instrument that did not include an option to convert.
Subsequently, the debt component is accounted for as a financial liability measured at amortised cost.
The difference between the net proceeds of the convertible debt and the amount allocated to the debt
component is credited direct to equity through the warrant reserve and is not subsequently re-measured.
On conversion, the debt and equity elements are credited to share capital and share premium as
appropriate.
Transaction costs that relate to the issue of the instrument are allocated to the liability and equity
components of the instrument in proportion to the allocation of proceeds.
Where there is an exchange of debt instruments with different terms, the group considers whether the
discounted cash flows differ from those of the original liability by more than 10%. Where the difference
is more than 10%, then the modification of the terms is accounted for as an extinguishment. Where the
difference is less than 10%, then it is not accounted for as an extinguishment.
Self insurance
The group’s policy is to self insure high frequency claims such as those for traffic accidents. Under this
scheme, premiums are paid to QBE Insurance Limited (“QBE”) in respect of each accounting period.
Premiums paid are held in a fund by QBE in a trust separate from the assets of the company in order to
meet claims as and when they are settled. The company has no control over the assets of this trust. Claims
can be made for a period of up to five years after the accounting period to which they relate. Should a
year of insurance be in surplus, no rebate is recognised until the claim period has expired. Should a year
of insurance be calculated at any time to be in deficit, an appropriate provision is made immediately. Any
provision made is discounted to take account of the expected timing of future payments.
Diesel pricing contracts
The group has entered into agreements to purchase agreed quantities of diesel over a period of time at a
fixed price. The agreements do not meet the definitions of a financial instrument under IAS 32 ‘Financial
Instruments: Disclosure and Presentation’ as the contracts represent executory contracts to buy a non-
financial asset for the use of the group. Therefore no financial asset or liability is recognised in respect of
these contracts.
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2. Accounting policies (continued)
Pension costs
Defined contribution schemes
Contributions to the group’s defined contribution pension scheme are charged in profit or loss in the year in
which they become payable.
Defined benefit pension schemes
Scheme assets are measured at fair values. Scheme liabilities are measured on an actuarial basis using
the projected unit method and are discounted at appropriate high quality corporate bond rates that have
terms to maturity approximating to the terms of the related liability. Appropriate adjustments are made
for unrecognised actuarial gains or losses and past service costs. Any actuarial gains and losses are
recognised immediately in the Consolidated Statement of Comprehensive Income. Past service cost is
recognised as an expense on a straight-line basis over the average period until the benefits become vested.
To the extent that benefits are already vested the group recognises past service cost immediately.
Financial assets
The group classifies its financial assets into one of the categories discussed below, depending on the
purpose for which the asset was acquired. The group has not classified any of its financial assets as held to
maturity, available for sale, or at fair value through profit or loss.
Loans and receivables: these assets are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They arise principally through the provision of goods and services
to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They
are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition
or issue, and are subsequently carried at amortised cost using the effective interest rate method, less
provision for impairment.
Impairment provisions are recognised when there is objective evidence (such as significant financial
difficulties on the part of the counterparty or default or significant delay in payment) that the group
will be unable to collect all of the amounts due under the terms of the receivable, the amount of such
a provision being the difference between the net carrying amount and the present value of the future
expected cash flows associated with the impaired receivable. For trade receivables, which are reported
net, such provisions are recorded in a separate allowance account with the loss being recognised within
administrative expenses in profit or loss. On confirmation that the trade receivable will not be collectable,
the gross carrying value of the asset is written off against the associated provision.
Financial assets are de-recognised when the contractual rights to the cash flows from the asset expire or
when the financial asset and all substantial risks and rewards are transferred.
The group’s loans and receivables comprise trade and other receivables and cash and cash equivalents in
the balance sheet.
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term highly
liquid investments with original maturities of three months or less and bank overdrafts.
FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
41
2. Accounting policies (continued)
Financial liabilities
The group classifies its financial liabilities in a manner which depends on the purpose for which the liability
was acquired:
•
Bank borrowings are initially recognised at fair value net of any transaction costs directly attributable
to the issue of the instrument. Such interest bearing liabilities are subsequently measured at
amortised cost using the effective interest rate method, which ensures that any interest expense
over the period to repayment is at a constant rate on the balance of the liability carried in the
balance sheet. Interest expense in this context includes initial transaction costs and premiums
payable on redemption, as well as any interest or coupon payable while the liability is outstanding;
•
Trade payables and other short-term monetary liabilities are initially recognised at fair value and
subsequently carried at amortised cost, using the effective interest method.
A financial liability is de-recognised when it is extinguished, cancelled or it expires. The group has not
classified any of its financial liabilities at fair value through profit or loss.
Equity
Share capital is determined using the nominal value of shares that have been issued. Premiums received
on the initial issuing of share capital are credited to the share premium reserve. Any transaction costs
associated with the issuing of shares are deducted from share premium, net of any related income tax
benefits. Retained earnings include all current and prior period results as disclosed in the Statement of
Comprehensive Income.
The merger reserve represents the difference between the issue price and the nominal value of shares
issued as consideration for the acquisition of a subsidiary undertaking.
Proceeds from the issue of warrants, net of issue costs, are credited to the warrant reserve and are
transferred to share premium account on exercise of the warrants. Any balance in relation to unexercised
warrants at the expiry of the warrant period is transferred to the profit and loss reserve.
Share based payments
Where share options are awarded to employees, the fair value of the options at the date of grant is charged
in profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting
the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the
cumulative amount recognised over the vesting period is based on the number of options that eventually
vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other
vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are
satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the
options, measured immediately before and after the modification, is also charged in profit or loss over the
remaining vesting period. A decrease in fair value is not recognised.
Where equity instruments are granted to persons other than employees, profit or loss is charged with the
fair value of goods and services received.
Segmental reporting
IFRS 8 requires the identification of operating segments on the basis of internal reports that are regularly
reviewed by the entity’s chief operating decision maker (“CODM”). The CODM has been determined to be
the executive directors.
The group has three main revenue streams: contracted, commercial and charter. All 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.
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3.
Standards and interpretations not yet applied by Rotala Plc
At the date of authorisation of these financial statements, certain new standards, amendments and
interpretations to existing standards have been published, but are not yet effective, and have not been
adopted early by the group.
Management anticipates that all of the relevant pronouncements will be adopted in the group’s accounting
policies for the first period beginning after the effective date of the pronouncement. Information on new
standards, amendments and interpretations that are expected to be relevant to the group’s financial
statements is provided below. Certain other new standards and interpretations have been issued, the impact
of which has yet to be established by the directors. The revision to IAS 19 may have a material impact on the
group’s financial statements.
•
•
•
•
•
•
•
•
IFRS 9 Financial Instruments (effective 1 January 2015)
IFRS 10 Consolidated Financial Statements (effective 1 January 2013)
IFRS 11 Joint Arrangements (effective 1 January 2013)
IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2013)
IFRS 13 Fair Value Measurement (effective 1 January 2013)
IAS 19 Employee Benefits (Revised June 2011) (effective 1 January 2013)
IAS 27 (Revised), Separate Financial Statements (effective 1 January 2013)
IAS 28 (Revised), Investments in Associates and Joint Ventures (effective 1 January 2013)
• Deferred Tax: Recovery of Underlying Assets - Amendments to IAS 12 (effective 1 January 2012)
• Presentation of Items of Other Comprehensive Income - Amendments to IAS 1 (effective 1 July 2012)
Based on the group’s current business model and accounting policies, management does not otherwise
expect a material impact on the group financial statements when these standards and interpretations
become effective, other than the revision to IAS 19 noted above.
FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
43
4.
Segmental analysis and revenue
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 streams: contracted,
commercial and charter:
Contracted
Commercial
Charter
Total
2012
£’000
2011
£’000
2012
£’000
2011
£’000
Revenue
22,513
21,878
29,569
30,884
2012
£’000
2,731
2011
£’000
3,315
2012
£’000
2011
£’000
54,813
56,077
The group consists of a number of operational depots arranged around and reliant on a central core, in
concept a hub and spoke arrangement. All the services that the group performs are similar and every depot
in the group delivers services in each of the three sub-headings set out above. Furthermore, as a matter
of management practice, the business of the group is managed by contract (for Contracted Revenue) or by
route (for Commercial Revenue) or in certain circumstances by both contract and route, depending on the
type of business. Charter business is typically delivered by short term contracts.
Contracted and Charter Services are usually delivered against an agreed service level agreement. Detailed
costs for that individual contract are monitored against those modelled in the original bid calculation.
Management then takes appropriate action to correct variances as necessary whilst maintaining the agreed
level of service.
In Commercial Business, where the revenue is variable and derived from passengers, individual routes are
constantly monitored for loadings and revenues and trends in passenger revenues and loadings. Passenger
loadings are analysed, often by fare stage, to establish usage and appropriate routes. In concert with margin
analysis, individual frequencies and routes are adjusted to maximise revenue yields.
In certain parts of the business revenues can be derived from a complex combination of a variable
passenger revenue underpinned by a fixed revenue base delivered by contract. These types of service are
managed by individual contract and route and so require a combination of management techniques and
analyses to ensure that loadings and revenues are maximised whilst delivery to the service agreement is
maintained.
In these circumstances it is impractical to allocate local and central overhead to individual routes and
contracts. Costs and Operating Profits by revenue stream are therefore not calculated. By the very nature
of the business the operating assets are also interchangeable and the vehicles used in particular localities
or on specific routes are frequently changed. Thus it is also not practicable to calculate figures for revenue
stream assets. Other information such as capital expenditure, depreciation and impairment is also not
analysed separately for this reason.
In 2012 and 2011 no customer constituted more than 10% of Revenues.
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44 ROTALA PLC // ANNUAL REPORT 2012
5.
Staff costs
Staff Costs (including Directors) comprise:
Wages and salaries
Employer’s national insurance contributions
Defined contribution pension costs
Share based payment expense
2012
£’000
24,776
2,309
156
27,241
2
27,243
2011
£’000
25,240
2,145
159
27,544
16
27,560
The average number of employees, including Directors, during the year was as follows:
2012
Number
2011
Number
Management and administrative
86 82
Direct
1,003
1,089
1,049
1,131
The prior year employee numbers have been restated to ensure consistency of comparability with those of
2012.
6. Directors’ and key management personnel remuneration
Salaries and other short term employee benefits
Social security costs
Contribution to defined contribution pension scheme
Share based payment expense
2012
Number
2011
Number
446
36
6
-
488
467
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6
13
525
1 director (2011 - 1) is a member of the group’s defined contribution pension scheme.
Emoluments of the highest paid director were £149,160 (2011: £149,259). Pension contributions of £5,600
(2011: £5,600) were made on his behalf.
FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
45
6. Directors’ and key management personnel remuneration (continued)
The Directors’ remuneration was as follows:
2012
£’000
Share
based
payment
expense
Remuneration
Total Remuneration
Executive
S L Dunn
R A Dunn
K M Taylor
Non- Executive
J H Gunn
F G Flight
149
112
85
75
25
446
-
-
-
-
-
-
149
112
85
75
25
446
149
122
96
75
25
467
2011
£’000
Share
based
payment
expense
2
9
2
-
-
Total
151
131
98
75
25
13
480
The services of John Gunn, Geoffrey Flight and Robert Dunn are provided respectively by Wengen Limited,
Central Coachways Limited and motorBus Limited under contracts with those companies.
The board considers the directors of the Company to be the key management personnel of the group.
7. Profit from operations
This is arrived at after charging/(crediting):
Depreciation of property , plant and equipment
Amortisation of intangible assets
Operating lease expense
- property
- plant and machinery
Profit on disposal of property, plant and equipment
Auditors' fees
- parent company
- subsidiaries
2012
£’000
3,742
-
474
1,602
(417)
43
3
2011
£’000
3,680
115
320
823
(160)
8
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46 ROTALA PLC // ANNUAL REPORT 2012
8.
Finance income
Interest receivable on bank deposits
9.
Finance expense
Bank borrowing and overdraft interest
Interest payable on loan notes
Hire purchase contracts
Debt arrangement costs
Other interest
2012
£’000
15
2012
£’000
272
229
825
-
5
1,331
2011
£’000
-
2011
£’000
91
434
1,085
23
3
1,636
FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
47
10.
Tax expense
Current tax
Current tax on profits for the year
Adjustments in respect of prior years
Total current tax
Deferred tax
Origination and reversal of timing differences
Change in rate of tax
Adjustments in respect of prior periods
Total deferred tax (note 21)
Income tax expense/(credit)
2012
£’000
-
-
-
451
26
(267)
210
210
2011
£’000
-
-
-
78
-
(357)
(279)
(279)
The tax assessed for the year is different to the standard rate of corporation tax in the U.K. for the following
reasons:
Profit before taxation
Profit at the standard rate of corporation tax
in the UK of 24% (2011 - 25%):
Expenses not taxable
Capital allowances higher than depreciation
Utilisation of previously unrecognised tax losses
Adjustments in respect of prior periods
Total tax charge /(credit)
2012
£’000
2,076
498
(47)
-
-
(241)
210
2011
£’000
1,878
469
(19)
(300)
(72)
(357)
(279)
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48 ROTALA PLC // ANNUAL REPORT 2012
11. Earnings per share
Basic
Profit attributable to ordinary shareholders
Weighted average number of ordinary shares in
issue
2012
£’000
1,866
2011
£’000
2,157
35,270,888
34,651,991
Basic earnings per share
5.29p
6.22p
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.
Profit attributable to ordinary share holders
Interest expense of convertible loan notes (note 9)
Profit for the purposes of diluted earnings per share
2012
£’000
Diluted
1,866
229
2,095
2011
£’000
Diluted
2,157
434
2,591
Weighted average number of shares in issue
35,270,888
34,651,991
Adjustments for:
- assumed conversion of convertible loan notes
- exercise of options
Weighted average number of ordinary shares for the
purposes of diluted earnings per share
5,146,333
49,331
40,466,552
8,638,889
-
43,290,880
Basic diluted earnings per share
5,18p
5.99p
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.
FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
49
12. Property, plant and equipment
Freehold
land and
buildings
£’000
Short
lease hold
property
£’000
Plant and
machinery
£’000
Public
service
vehicles
£’000
Fixtures
and fittings
£’000
Cost
At 1 December 2010
4,012
1,057
1,169
30,536
Additions
Acquisition
Disposals
84
950
-
31
-
(1)
304
267
(13)
2,293
6,390
(2,502)
At 30 November 2011
5,046
1,087
1,727
36,717
Additions
Transfers
Disposals
43
185
-
-
(185)
-
946
-
(17)
5,779
-
(8,929)
696
104
-
(16)
784
32
-
-
Total
£’000
37,470
2,816
7,607
(2,532)
45,361
6,800
-
(8,946)
At 30 November 2012
5,274
902
2,656
33,567
816
43,215
Depreciation
At 1 December 2010
Charge for the year
Acquisition
Disposals
At 30 November 2011
Charge for the year
Transfers
Disposals
At 30 November 2012
Net book value
166
79
-
-
245
132
54
-
431
At 30 November 2012
4,843
At 30 November 2011
4,801
107
40
-
-
147
13
(54)
-
106
796
940
687
256
264
(11)
7,830
3,184
3,452
(922)
424
121
-
(6)
9,214
3,680
3,716
(939)
1,196
13,544
539
15,671
273
3,225
-
-
-
(3,707)
99
-
-
3,742
-
(3,707)
1,469
13,062
638
15,706
1,187
20,505
531
23,173
178
245
27,509
29,690
The net book value of public service vehicles at 30 November 2012 held under hire purchase agreements
was £20,177,000 (2011: £21,326,000). Depreciation of £3,318,000 (2011: £2,554,000) was charged against
assets falling into this category in the year.
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50 ROTALA PLC // ANNUAL REPORT 2012
13. Goodwill and other intangible assets
Purchased
brands
£’000
Contracts
£’000
Goodwill
£’000
Total
£’000
Cost
At 1 December 2010 and 2011 and
at 30 November 2011 and 2012
250
312
9,482
10,044
Amortisation
At 1 December 2010
Charge for the year
At 30 November 2011
Charge for the year
At 30 November 2012
Net book value
At 30 November 2012
At 30 November 2011
250
-
250
-
250
-
-
197
115
312
-
312
-
-
-
-
-
-
-
447
115
562
-
562
9,482
9,482
9,482
9,482
14. Goodwill and impairment
The group consists of a number of operational depots arranged around and reliant on a central core, in
concept a hub and spoke arrangement. The complex matrix of management of the group’s business is set
out in detail in note 4 to these financial statements. In summary, the group’s businesses are managed at
their lowest levels by contract and by bus route, or sometimes by both methods. They are not managed
by revenue stream. Moreover the manner in which the group has expanded, with the addition, integration
and transformation of a number of businesses and entities, has obscured the formal breakdown of the
total amount of goodwill. The directors consider that, in the light of these factors, the group’s business
represents a single cash generating unit for the purposes of evaluating the carrying value of goodwill.
Accordingly, the evaluation calculations have been carried out on this basis.
FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
51
14. Goodwill and impairment (continued)
The recoverable amount of the goodwill of the business has been determined from value in use calculations
based on cash flow projections from formally approved budgets covering a two year period to 30 November
2014. Other major assumptions are as follows:
Discount rate
Operating margin
Growth rate
Inflation
CGU
2012
%
12
8
2
3
CGU
2011
%
15
8
6
3
Operating margins have been based on past experience and future expectations in the light of anticipated
economic and market conditions. Discount rates are based on the group’s weighted average cost of
capital. Growth rates, beyond the first two years, are based on management estimates and on the historic
achievements of the group. This rate does not exceed the average long term growth rate for the relevant
markets. Inflation has been based on management’s expectation given historic trends. After applying
sensitivity analysis in respect of the results and future cash flows, in particular for presumed growth rates
and discount rates, management is satisfied that it is highly improbable that there would be such change in
a key assumption that it would reduce recoverable amount to below book value.
15.
Inventories
Fuel and spares
2012
£’000
1,892
2011
£’000
1,272
There is no material difference between the replacement cost of stocks and the amounts stated above.
The amount of inventories recognised as an expense during the year was £15,488,000 (2011: £17,487,000).
No inventory has been written down to fair value in 2012 or 2011 and therefore no associated expense was
incurred.
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52 ROTALA PLC // ANNUAL REPORT 2012
16.
Trade and other receivables
Trade receivables
Tax and social security
Prepayments and accrued income
Vehicle order deposit placed (see note 18)
2012
£’000
3,660
371
3,740
683
8,454
2011
£’000
2,929
466
1,713
1,443
6,551
The carrying values of trade and other receivables are considered to be a reasonable approximation of
fair value. The effect of discounting trade and other receivables has been assessed and is deemed to be
immaterial to the results.
All trade and other receivables have been reviewed for indicators of impairment. During the year no trade
receivables were found to be impaired and a provision of £33,000 was released (2011: provision of £18,000
was created and utilised).
In addition, some of the unimpaired trade receivables are past due as at the reporting date. The ages of
trade receivables past due but not impaired are as follows:
Not more than 3 months overdue
More than 3 months but not more than 1 year
2012
£’000
45
189
234
Movements in the group trade receivables provision in the year are as follows:
Balance brought forward at 1 December
Provided in the year
Acquired
Released
Utilised in the year
Balance carried forward at 30 November
2012
£’000
33
-
-
(33)
-
-
2011
£’000
107
118
225
2011
£’000
-
18
33
-
(18)
33
FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
53
17. Cash and cash equivalents
Cash and cash equivalents are analysed as follows:
Cash at bank
18.
Trade and other payables - current
Trade payables
Taxation and social security
Other creditors
Accruals and deferred income
Grant payable (see also note 16)
Dividend declared and payable
2012
£’000
351
2012
£’000
3,720
536
261
1,028
683
-
6,228
2011
£’000
869
2011
£’000
3,760
839
177
1,311
1,443
141
7,671
The directors consider that the carrying amount of trade and other payables approximates to their
fair value. The effect of discounting trade and other payables has been assessed and is deemed to be
immaterial to the group’s results.
During 2012 the group placed an order for 8 (2011: 15) hybrid diesel electric buses. The group received
from the Government’s Green Bus Fund a related grant for the acquisition of these vehicles. As a condition
of its receipt, the grant had to be passed immediately to the manufacturer and the vehicles have to be in
operation by 31 March 2013. As at 30 November 2012 none (2011: 2) of these vehicles had been delivered
and therefore the grant has been treated as a payable in these accounts as not all of the criteria are yet met,
with the related deposit placed with the manufacturer treated as a receivable.
As the vehicles are delivered, the receivable and corresponding payable are released, and any cost of
the asset in excess of the grant received is capitalised. All the vehicles had been delivered by the date of
signature of these accounts. The grant gives rise to a contingent liability (see note 30).
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19.
Loans and borrowings
Current
Convertible loan stock
Overdrafts
Bank loans
Non-current
Convertible loan stock
Bank loans
Analysis of maturity
2012
£’000
-
1,761
1,789
3,550
2,316
1,900
4,216
2012
£’000
2012
£’000
Convertible
debt
Bank loans
and overdrafts
2012
£’000
Obligations
under hire
purchase
2012
£’000
Trade
and other
payables
2011
£’000
1,572
-
127
1,699
2,306
1,583
3,889
2012
£’000
Total
In one year or less or
on demand
In more than one year but
not more than two years
In more than two years but
not more than five years
185
2,330
-
3,678
384
1,711
4,525
3,373
4,100
4,664
13,052
-
-
6,087
5,811
2,515
5,773
11,998
4,664
24,950
2011
£’000
2011
£’000
2011
£’000
Convertible
debt
Bank loans
and
overdrafts
Obligations
under hire
purchase
2011
£’000
Trade
and other
payables
2011
£’000
Total
In one year or less or
on demand
In more than one year but
not more than two years
In more than two years but
not more than five years
Later than 5 years
1,776
212
184
1,623
2,506
-
-
-
5,038
4,162
5,567
6
5,380
12,406
-
-
-
5,969
8,073
6
4,466
1,835
14,773
5,380
26,454
FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
55
19.
Loans and borrowings (continued)
Convertible debt
A convertible unsecured loan stock was issued on 3 March 2008 in connection with the acquisition of
The Diamond Bus Company Limited. The convertible loan stock was originally redeemable at par on
31 December 2011 or convertible into 25p ordinary shares of the company at a price of 67.5p per share.
However, with effect from 31 August 2011, holders of £2,315,850 of the stock agreed to defer the redemption
date to 31 December 2014. For these holders conversion may take place on or before 31 December 2014
at a price of 45p per share. None of the remaining £1,571,650 of the stock was converted before the
redemption date of 31 December 2011 and became redeemable in accordance with the original loan stock
deed. The loan stock continues to bear a coupon of 8%.
Bank borrowings
The group entered into a Senior Term and Revolving Facilities Agreement with its bankers on 20 November
2012. This agreement provides a revolving £5m facility combined with a mortgage facility of up to £3.4m. It is
for an initial three year term, renewable at 20 November 2015. There is a separate mortgage facility with the
same bank, which expires on 20 December 2016, for a sum of £620,000.
The group entered into a cross-guarantee and floating charge agreement on 27 May 2010 covering its
overdraft facilities.
The bank loans are secured on the group’s freehold property. The annual mortgage repayments are
calculated such that the mortgage facilities amortise in a straight line over a term of 15 years which is
considered to give a reasonable approximation to the effective interest rate.
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56 ROTALA PLC // ANNUAL REPORT 2012
20. Obligations under hire purchase contracts
Not later than one year
More than one but less
than two years
More than two but less
than five years
Not later than one year
More than one but less
than two years
More than two but less
than five years
Later than 5 years
2012
£’000
Minimum lease
payments
2012
£’000
2012
£’000
Interest
Present value
4,525
3,373
4,100
11.998
2011
£’000
594
342
186
1,122
2011
£’000
3,931
3,031
3,914
10,876
2011
£’000
Minimum lease
payments
Interest
Present value
5,038
4,162
5,567
6
785
477
329
-
4,253
3,685
5,238
6
14,773
1,591
13,182
The present values of future lease payments are analysed as:
Current liabilities
Non-current liabilities
2012
£’000
3,931
6,945
10,876
2011
£’000
4,253
8,929
13,182
Obligations under hire purchase contracts are secured on the assets to which they relate.
FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
57
21. Deferred taxation
The deferred tax asset included in the Statement of Financial Position is analysed as follows:
Accelerated capital allowances
Arising on fair value adjustments on acquisitions
Arising on defined benefit pension scheme
Losses
Asset
The movements in the deferred tax asset in the year are as follows:
Balance brought forward at 1 December
Recognised in business combination
Recognised in profit or loss
Recognised in other comprehensive income
Balance carried forward at 30 November
2012
£’000
(396)
(302)
351
868
521
2012
£’000
489
-
(210)
242
521
2011
£’000
(248)
(308)
214
831
489
2011
£’000
68
(20)
279
162
489
At 30 November 2012 there were £nil (2011: £nil) timing differences or unused tax losses for which deferred
tax has not been provided.
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58 ROTALA PLC // ANNUAL REPORT 2012
22. Pensions
Group companies operate defined contribution pension schemes. The assets of the schemes are held
separately from those of the group in independently administered funds. The pension charge amounted to
£156,000 (2011: £159,000). Contributions amounting to £973 (2011: £Nil) were payable to the funds at the
balance sheet dates.
Another group company operates a defined benefit pension scheme within the West Midlands Integrated
Transport Authority Pension Fund (“WMITAPF”), governed by the Local Government Superannuation
Regulations 1986. The group accounts for pensions in accordance with IAS 19 “Employee Benefits”.
Contributions amounting to £22,841 (2011: £49,435) were payable to the fund at the balance sheet dates.
WMITAPF defined benefit pension scheme
The calculations of the IAS 19 disclosures for the WMITAPF have been based on the most recent actuarial
valuations, which have been updated to 30 November 2012 by an independent professionally qualified
actuary to take account of the requirements of IAS 19.
The principal actuarial assumptions used were as follows:
Rate of increase in salaries
Rate of increase of pensions in payment
Discount rate
Inflation
Expected long-term rate of return
-Equities
- Government bonds
- Other bonds
- Cash
- Property
30 November
2012
%
30 November
2011
%
n/a
2.0
4.0
2.0
7.0
2.7
3.6
0.5
n/a
n/a
2.1
4.9
2.1
7.0
3.0
4.2
0.5
n/a
The expected return on plan assets is based on expectations at the beginning of the period for returns over
the entire life of the benefit obligation. The expected returns are set in conjunction with external actuaries
and take account of market factors, fund managers views and targets for future returns and where
appropriate historical returns.
The life expectancy assumptions used for the scheme are periodically reviewed and as at 30 November 2012
were:
Current pensioner aged 65 - male
Current pensioner aged 65 - female
Future pensioners at age 65 (aged 45 now) - male
Future pensioners at age 65 (aged 45 now) - female
30 November
2012
Years
30 November
2011
Years
20.9
23.7
22.3
25.2
20.8
23.6
22.2
25.2
FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
59
22. Pensions (continued)
Since the scheme has been closed for a number of years, there is no current service cost to be charged to
operating profits.
Change in assumption
Impact on overall liability
Discount rate
Inflation
Life expectancy
Increase/decrease by 0.1%
Increase/decrease of 1.27%
Increase/decrease by 0.1%
Increase/decrease of 1.28%
Increase by 1 year
Increase of 2.2%
The amounts recognised in the balance sheet were determined as follows:
Equities
Bonds
Cash
Total market value of assets
Present value of scheme liabilities
Pension liability before tax
Related deferred tax asset
Net pension liability
30 November
2012
£’000
30 November
2011
£’000
6,959
8,506
-
15,465
(16,928)
(1,463)
351
(1,112)
6,434
8,079
44
14,557
(15,411)
(854)
214
(640)
The equity investments and bonds which are held in plan assets are quoted and are valued at the current
bid price.
The total charge to profit and loss for pensions is as follows:
Finance cost
- expected return on assets
- interest cost
Net cost
Total defined benefit cost
Defined contribution costs
Total profit and loss charge
2012
£’000
734
(734)
-
-
(156)
(156)
2011
£’000
676
(676)
-
-
(159)
(159)
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22. Pensions (continued)
Analysis of amount included within the group’s statement of total comprehensive income:
Actual return less expected return on pension
scheme assets
Changes in assumptions underlying the present
value of the scheme liabilities
Actuarial loss
2012
£’000
638
(1,647)
(1,009)
2011
£’000
(107)
(541)
(648)
Actuarial (losses)/gains as a percentage of scheme assets and liabilities at 30 November 2012 were as
follows:
Actual return less expected return on pensions
scheme assets as a percentage of scheme assets
Total actuarial gain/(loss) recognised in statement of
total comprehensive income as a percentage of the
present value of scheme liabilities
2012
2011
4.2
(5.9)
(0.7)
(3.6)
The cumulative amount of actuarial gains and losses on defined benefit schemes recognised in the
statement of total comprehensive income since 25 January 2011 (the date at which the pension scheme
entered the group) is a loss of £1,657,000.
The amount of contribution to be paid by the group to the scheme during the next financial year is £400,000.
The movement in deficit during the year under IAS 19 was:
Deficit in scheme at 30 November
Movements in the period
- Contributions
- Actuarial loss
Deficit in scheme at the end of the year
2012
£’000
(854)
400
(1,009)
(1,463)
2011
£’000
(518)
312
(648)
(854)
FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
61
22. Pensions (continued)
The movement in assets during the year under IAS 19 is as follows:
Deficit in scheme at 30 November
Expected return on plan assets
Actuarial gains/(losses)
Employer contributions
Benefits paid
At end of year
The movement in liabilities during the year under IAS 19 is as follows:
At 30 November
Interest cost
Actuarial loss - changes in assumptions
Benefits paid
At end of year
23.
Share capital
2012
£’000
14,557
734
638
400
(864)
15,465
2012
£’000
(15.411)
(734)
(1,647)
864
2011
£’000
14,253
676
(107)
312
(577)
14,557
2011
£’000
(14,771)
(676)
(541)
577
(16,928)
(15,411)
Authorised and called up and fully paid
2012
Number
2012
£’000
2011
Number
Ordinary shares of 25p each
35,270,888
8,818
35,270,888
As at 1 December 2010
16 February 2011
26 May 2011
As at 30 November 2011 and 2012
Number
33,060,368
1,648,020
562,500
35,270,888
2011
£’000
8,818
Nominal Value
£’000
8,265
412
141
8,818
Ordinary shares participate fully in the rights to vote, receive dividends and take part in any distribution of
capital. There are no restrictions on ordinary shares nor are there any redeemable shares of any kind.
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62 ROTALA PLC // ANNUAL REPORT 2012
24.
Share options and warrants
As at 30 November 2012 the following share options had been issued and were outstanding under the
company’s employee share option schemes:
Date of grant
29 March 2005
30 August 2005
30 March 2006
24 July 2007
6 September 2007
5 September 2008
Number of
options granted
Earliest exercise
date
Date of expiry
Exercise price
240,000
93,333
520,000
208,000
880,000
695,000
29 March 2008
28 March 2015
30 August 2008
29 August 2015
30 March 2009
29 March 2016
24 July 2010
23 July 2017
6 September 2010
5 September 2017
5 September 2011
4 September 2018
125.0p
162.5p
37.5p
62.5p
62.5p
50.0p
24 September 2012
431,066
24 September 2015
24 March 2016
40.05p
The Rotala Plc SAYE Share Option Scheme (the “Scheme”) is an HM Revenue & Customs approved share
option scheme, administered by the Yorkshire Building Society (“YBS”), open to all employees. The issue
of share options of 24 September 2012 is at present the only issue in relation to this Scheme. The Scheme
runs for an initial three year period. Employees will subscribe, through payroll deductions, a monthly sum
which will accumulate in their individual savings accounts at YBS. At the end of the three year period the
employee will have the option to purchase ordinary shares of 25 pence in the Company (“Ordinary Shares”)
at a price fixed at the start of each three year period. Under the rules of the Scheme, the Board is free
to price the share option at a discount to the market price of the Ordinary Shares, at the time the option
is granted. Opportunities to subscribe for further options under the Scheme will arise every six months,
within a period of approximately 42 days after the announcement of the Interim and Annual Results of the
Company. In the initial phase of the Scheme the Board has decided that it is prepared to allocate up to 1
million options over Ordinary Shares of the Company for this purpose.
The company also operates an unapproved equity-settled share based remuneration scheme for group
executive directors and senior management. The only vesting condition is that the individual remains an
employee of the group until the option is exercised.
2012
Weighted average
exercise price
2011
Weighted average
exercise price
Number
Number
Outstanding at the beginning of the year
63.34p
2,714,333
63.34p
2,714,333
Forfeited during the year
Issued during the year
(58.00)
40.05
(78,000)
431,066
-
-
-
-
Outstanding at the end of the year
60.21p
3,067,399
63.34p
2,714,333
The exercise price of options outstanding at the end of the year ranged between 37.5p and 162.5p (2011:
37.5p and 162.5p) and their weighted average remaining contractual life was 4.23 years (2011: 5.48 years).
Of the outstanding options at the balance sheet date 2,636,333 (2011: 2,714,333) were exercisable. The
weighted average exercise price was 60.21p (2011: 63.34p).
FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
63
24.
Share options and warrants (continued)
The fair value of options granted was determined under IFRS 2 using the Black-Scholes valuation model.
Significant assumptions used in the calculations included:
• an exercise price of 40.05p;
• a share price volatility of 20% based on expected and historical price movements;
• a weighted average share price of 44.5p;
• a dividend yield of 3%;
• a risk-free interest rate of 3%; and
• a period to maturity of three years from the date of grant of the options.
The weighted average fair value of options granted in the period was 8p.
Warrants
A total of 239,830 warrants over ordinary shares at a price of 67.5p expired unexercised on 31 December
2011. There are no further warrants now outstanding.
25. Commitments under operating leases
The group had total commitments under non-cancellable operating leases as set out below:
2012
£’000
2011
£’000
Land and
buildings
Other
Land and
buildings
Operating lease commitments payable:
Within one year
In two to five years
In more than five years
337
565
1,488
1,833
5,113
587
359
755
1,534
Other
1,244
4,129
328
2,390
7,533
2,648
5,701
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26.
Financial instruments - risk management
The group holds or issues derivative financial instruments to finance its operations and manage its
operating risks. The Board agrees and reviews policies and financial instruments for risk management.
All financial assets are classified as loans and receivables and all financial liabilities are measured at
amortised cost.
The principal financial assets and liabilities on which financial risks arise are as follows:
Financial assets - loans and receivables
Trade and other receivables
Cash and cash equivalents
Financial liabilities - at amortised cost
Trade and other payables
Loans and borrowings
2012
£’000
2011
£’000
Carrying value
Carrying Value
4,343
351
4,694
4,664
7,766
12,430
4,372
869
5,241
5,380
5,588
10,968
Financial risk management
The principal financial risks to which the group is exposed are liquidity, credit, interest rate, commodity
and capital risk. Each of these is managed as set out below. The overall objective of the Board is to set
policies that seek to reduce risk as far as possible without unduly affecting the group’s competitiveness and
flexibility.
Liquidity risk
The group has a policy of ensuring that sufficient funds are always available for its operating activities.
The Board continually monitors the group’s cash requirements, as disclosed on page 21.
Interest rate risk
The group seeks to obtain a favourable interest rate on its cash balances through the use of bank
treasury deposits.
The interest rate profile of the financial liabilities of the group, all of which are in Sterling, was as
follows:
2012
£’000
2011
£’000
Financial liabilities
on which a floating
rate is paid
Financial liabilities
on which a fixed
rate is paid
Financial liabilities
on which a floating
rate is paid
Financial liabilities
on which a fixed
rate is paid
UK Sterling
4,444
13,766
625
18,145
FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
65
26.
Financial instruments - risk management (continued)
Interest rate risk (continued)
In the year the group paid interest at a rate of between 3% and 4.5% (2011: between 3% and 4.5%) on its
liabilities subject to floating rates of interest. The financial liabilities subject to fixed rates of interest
(fixed for the whole year) were at rates between 5% and 11% (2011: between 5% and 11%) in the year. If
floating rates of interest changed by 1%, the group’s interest expense would not change by a material
sum.
Credit risk
The group is exposed to credit risk on cash and cash equivalents, and trade and other receivables. Cash
balances, all held in the UK, are placed with the group’s principal bankers. The client base of the group
lies mainly in government and semi-government bodies and substantial blue chip organisations. As a
result the group rarely needs to carry out credit checks, but does do so if it judges this to be appropriate.
Provisions for doubtful debts are established in respect of specific trade and other receivables where it
is deemed they are impaired.
Commodity risk
The Group is exposed to risk in the fluctuating price of diesel. It mitigates this risk through entering
fixed price purchase contracts.
Capital risk
The group considers its capital to comprise its ordinary share capital, share premium, other reserves
and accumulated retained earnings. The group manages its capital to ensure that entities in the
group will be able to continue as going concerns, while maximising the return to shareholders. The
Board closely monitors current and forecast cash balances to allow the group to maximise return to
shareholders by way of dividends, whilst maintaining suitable amounts of liquid funds to allow continued
investment in the group. The group sets the amount of capital in proportion to its overall financing
structure, i.e. equity and financial liabilities. The group manages the capital structure and makes
adjustments to it in the light of changes in economic conditions and the risk characteristics of the
underlying assets. In order to maintain or adjust the capital structure, the group may adjust the amount
of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to
reduce debt.
Capital for the reporting period under review is as follows:
Share capital
Share premium reserve
Merger reserve
Warrant reserve
Retained earnings
Total capital
2012
£’000
8,818
7,828
2,567
-
2,663
2011
£’000
8,818
7,828
2,567
245
1,600
21,876
21,058
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66 ROTALA PLC // ANNUAL REPORT 2012
27. Related parties and transactions
1.
2.
3.
4.
5.
6.
7.
The services of J H Gunn were provided by Wengen Limited, a company controlled by J H Gunn, and
invoiced by that company to Rotala, as set out in note 6. At the year end £nil (2011: £nil) of the amount
charged was unpaid and included within creditors. During the year J H Gunn received from the company
a total of £66,669 (2011: £48,942) in dividends on ordinary shares and £nil (2011: £10,400) in interest on
convertible unsecured loan stock.
The services of R A Dunn were provided by motorBus Limited, a company controlled by R A Dunn, and
invoiced by that company to a subsidiary undertaking of Rotala, as set out in note 6. At the year end
£10,570 (2011: £11,319) of the amount charged was unpaid and included within creditors. During the
year R A Dunn received from Rotala a total of £10,913 (2011: £7,917) in dividends on ordinary shares.
The services of F G Flight were provided by Central Coachways Limited, a company controlled by F G
Flight, and invoiced by that company to Rotala, as set out in note 6. At the year end £7,891 (2011: £5,000)
of the amount charged was unpaid and included within creditors. During the year F G Flight received
from Rotala a total of £15,901 (2011: £11,926) in dividends on ordinary shares and £2,000 (2011: £4,000)
in interest on convertible unsecured loan stock.
During the year S L Dunn received from the company a total of £8,083 (2011: £4,990) in dividends on
ordinary shares and £20,800 (2011: £20,800) in interest on convertible unsecured loan stock.
During the year K M Taylor received from the company a total of £4,290 (2011: £3,218) in dividends on
ordinary shares and £2,000 (2011: £2,000) in interest on convertible unsecured loan stock.
In the period to 6 May 2011 goods and services to the value of £65,251 were invoiced to Dunn Motor
Traction Limited, a company of which R A Dunn was a director until that date. At 30 November 2012 and
2011 Mr Dunn and his beneficial interests held no shareholding in that company.
J H Gunn is a director of The 181 Fund Limited (“The Fund”), a company incorporated in Jersey. The
Fund held an interest in 1,730,221 ordinary shares of Rotala as at 30 November 2012 (2011: 1,730,221
ordinary shares). The Fund also held £400,000 of the convertible loan stock of Rotala as at that date
(2011: £605,850). Under Jersey law, Mr Gunn, as a non-resident of that state, is unable to exercise his
vote at board meetings of The Fund. At 30 November 2012 Mr. Gunn and his beneficial interests held
25.02% (2011: 24.9%) of the ordinary share capital of The Fund. During the year The Fund received
from the company a total of £20,763 (2011: £14,387) in dividends on ordinary shares and £40,234 (2011:
£48,468) in interest on convertible unsecured loan stock.
28 Post balance sheet events
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 £1.5 million in cash. At the date of these accounts it is possible only to
estimate the fair values of the assets which have been acquired. These are set out below. It is not expected
that there will be a material amount of goodwill attached to the acquisition.
Fixed assets
Vehicles
Freehold land and buildings
Other fixed assets
Total fixed assets
£’000
250
1,189
61
1,500
FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
67
29. Capital commitments
As at 30 November 2012 the group had placed orders for undelivered vehicles with a capital value of
£1,677,000 (2011: £2,764,000).
30. Contingent liabilities
As related in note 18, the group during the year received a grant of £683,000 from the Government’s Green
Bus Fund for the acquisition of 8 hybrid diesel electric vehicles. The principal condition of this grant is that
the vehicles should be retained by the group for at least three years. If this condition is not observed the
grant becomes repayable. The group has no intention of not meeting this condition of the grant.
The group in 2011 received a grant of £1,664,000 from the Government’s Green Bus Fund for the acquisition
of 15 hybrid diesel electric vehicles. The principal condition of this grant is that the vehicles should be
retained by the group for at least three years. If this condition is not observed the grant becomes repayable.
The group has no intention of not meeting this condition of the grant.
31. Audit exemption for subsidiary undertakings
For the year ended 30 November 2012, the group has taken advantage of the exemption offered in sections
479A – 479C of the Companies Act 2006 and, with the exception of Preston Bus Limited, its subsidiary
undertakings have not been subject to an individual annual audit. Rotala Plc has given a statutory
guarantee to each of these subsidiary undertakings guaranteeing their liabilities, a copy of which will be
filed at Companies House.
The companies which have taken this exemption are as follows:
Name
Flights Hallmark Limited
Central Connect Limited
The Diamond Bus Company Limited
Flights Corporate Transfers Limited
Hallbridge Way Property Limited
North Birmingham Busways Limited
North Birmingham Training Limited
Ludlows of Halesowen Limited
Diamond Bus Company Holding Limited
Company Number
4327651
3506681
2531054
4390228
6504654
2852589
3661642
1352987
6504657
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68 ROTALA PLC // ANNUAL REPORT 2012
Company Balance Sheet
As at 30 November 2012
Note
2012
£’000
2011
£’000
Fixed assets
Investments
Current assets
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current (liabilities)/assets
Total assets less current liabilities
Creditors: amounts falling due after more than
one year
Net assets
Capital and reserves
Called up share capital
Share premium account
Warrant reserve
Profit and loss account
Shareholders’ funds
3
4
5
6
8
10
10
10
11
25,539
25,539
1,870
-
1,870
(5,148)
(3,278)
22,261
(4,216)
18,045
8,818
7,828
-
1,399
18,045
4,569
22
4,591
(7,766)
(3,175)
22,364
(3,889)
18,475
8,818
7,828
245
1,584
18,475
The financial statements were approved by the Board of Directors and authorised for issue on 12 April 2013
Simon Dunn
Chief Executive
Kim Taylor
Group Finance Director
The accompanying notes form an integral part of these financial statements.
FINANCIAL STATEMENTS // COMPANY BALANCE SHEET & NOTES TO THE COMPANY FINANCIAL STATEMENTS
69
Notes to the Company
Financial Statements
1. Accounting policies
The following principal accounting policies have been applied in the preparation of the financial statements:
Basis of preparation
The financial statements have been prepared under the historical cost convention and are in accordance
with United Kingdom applicable accounting standards.
Investments
Investments held as fixed assets are stated at cost less any provision for impairment. Where possible,
advantage is taken of the merger relief rules and shares issued for acquisitions are accounted for at
nominal value.
Deferred taxation
Deferred tax balances are recognised in respect of all timing differences that have originated but not
reversed by the balance sheet date except that the recognition of deferred tax assets is limited to the extent
that the company anticipates making sufficient taxable profits in the future to absorb the reversal of the
underlying timing differences.
Deferred tax balances are measured on an undiscounted basis at tax rates that are expected to apply in the
periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at
the balance sheet date.
Convertible debt
The proceeds received on issue of the company’s convertible debt are allocated into their liability and equity
components and presented separately in the balance sheet.
The amount initially attributed to the debt component equals the discounted cash flows using a market rate
of interest that would be payable on a similar debt instrument that did not include an option to convert.
The difference between the net proceeds of the convertible debt and the amount allocated to the debt
component is credited direct to equity and is not subsequently re-measured. On conversion, the debt and
equity elements are credited to share capital and share premium account, as appropriate.
Transaction costs that relate to the issue of the instrument are allocated to the liability and equity
components of the instrument in proportion to the allocation of proceeds.
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70 ROTALA PLC // ANNUAL REPORT 2012
1. Accounting policies
Share based payments
Where share options are awarded to employees, the fair value of the options at the date of grant is charged
to the profit and loss account over the vesting period. Non-market vesting conditions are taken into
account by adjusting the number of equity instruments expected to vest at each balance sheet date so that,
ultimately, the cumulative amount recognised over the vesting period is based on the number of options
that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As
long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market
vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market
vesting condition.
Where the terms and conditions of options are modified before they vest, the increase in the fair value of
the options, measured immediately before and after the modification, is also charged to the profit and loss
account over the remaining vesting period.
Where equity instruments are granted to persons other than employees, the profit and loss account is
charged with the fair value of goods and services received.
Related party disclosures
The company has taken advantage of the exemption conferred by Financial Reporting Standard 8 ‘Related
Party Disclosures’ not to disclose transactions with members of the group headed by Rotala plc on the
grounds that 100% of the voting rights in the company are controlled within that group and that the
company is included in the consolidated financial statements.
2. Profit/(loss) for the financial year
The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006
and has not presented its own profit and loss account in these financial statements. The group’s profit
for the year includes a loss after taxation of £149,000 (2011: profit £1,439,000) which is dealt with in these
parent company financial statements.
3.
Investments
Cost and net book value
At 1 December 2011 & 30 November 2012
Subsidiary
undertakings
£’000
25,539
The principal undertakings (all held directly except where indicated), in which the company’s interest at the
year end is 20% or more, are as follows:
FINANCIAL STATEMENTS // NOTES TO THE COMPANY FINANCIAL STATEMENTS
71
3.
Investments (continued)
Country of
incorporation or
registration
Proportion of voting
rights and ordinary
share capital held
Flights Hallmark Limited
Hallbridge Way Property Limited
Central Connect Limited
The Diamond Bus Company Limited*
Preston Bus Limited
* Held indirectly
England
England
England
England
England
4. Debtors
Prepayments and accrued income
Vehicle order deposit place (see note 5)
Amounts due from subsidiary undertakings
100%
100%
100%
100%
100%
2012
£’000
79
683
1,108
1,870
Nature of business
Transport
Property holding
Transport
Transport
Transport
2011
£’000
14
1,443
3.112
4,569
All amounts shown under debtors fall due for payment within one year.
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72 ROTALA PLC // ANNUAL REPORT 2012
5. Creditors: amounts falling due within one year
Dividend declared and payable
Bank loans and overdrafts (note 6)
Convertible loan stock (note 6)
Amounts due to subsidiary undertakings
Grant payable (see also note 4)
Trade creditors
Other creditors
2012
£’000
-
2,401
-
1,635
683
57
372
5,148
2011
£’000
141
127
1,572
4,248
1,443
60
175
7,766
During 2012 the company placed an order for 8 (2011: 15) hybrid diesel electric buses. The company
received from the Government’s Green Bus Fund a related grant for the acquisition of these vehicles. As
a condition of its receipt, the grant had to be passed immediately to the manufacturer. As at 30 November
2012 none (2011: 2) of these vehicles had been delivered. The grant has therefore been treated as a payable
in these accounts, with the related deposit placed with the manufacturer treated as a receivable.
As the vehicles are delivered the receivable and corresponding payable are released. All the vehicles had
been delivered by the date of signature of these accounts. The grant gives rise to a contingent liability (see
note 15).
6. Creditors: amounts falling due after more than one year
Convertible loan stock
Bank loan
2012
£’000
2,316
1,900
4,216
2011
£’000
2,306
1,583
3,889
Convertible debt
A convertible unsecured loan stock was issued on 3 March 2008 in connection with the acquisition of
The Diamond Bus Company Limited. The convertible loan stock was originally redeemable at par on
31 December 2011 or convertible into 25p ordinary shares of the company at a price of 67.5p per share.
However, with effect from 31 August 2011, holders of £2,315,850 of the stock agreed to defer the redemption
date to 31 December 2014. For these holders conversion may take place on or before 31 December 2014
at a price of 45p per share. None of the remaining £1,571,650 of the stock was converted before the
redemption date of 31 December 2011 and became redeemable in accordance with the original loan stock
deed. The loan stock continues to bear a coupon of 8%.
FINANCIAL STATEMENTS // NOTES TO THE COMPANY FINANCIAL STATEMENTS
73
6. Creditors: amounts falling due after more than one year (continued)
Bank loan
This loan is secured upon three freehold properties held by subsidiary undertakings of the company, Flights
Hallmark Limited, Preston Bus Limited and Hallbridge Way Property Limited.
The company entered into a Senior Term and Revolving Facilities Agreement with its bankers on 20
November 2012. This agreement provides a revolving £5m facility combined with a mortgage facility of up
to £3.4m. It is for an initial three year term, renewable at 20 November 2015. There is a separate mortgage
facility with the same bank, which expires on 20 December 2016, for a sum of £620,000.
The group entered into a cross-guarantee and floating charge agreement on 27 May 2010 covering its
overdraft facilities.
The bank loans are secured on the group’s freehold property. The annual mortgage repayments are
calculated such that the mortgage facilities amortise in a straight line over a term of 15 years.
Analysis of maturity
In one year or less, or on demand
In more than one year but not more
than two years
In more than two years but not more
than five years
In one year or less, or on demand
In more than one year but not more
than two years
In more than two years but not more
than five years
Convertible debt
2012
£’000
Bank loan
2012
£’000
-
2,316
-
2,316
2,401
289
1,611
4,301
Convertible debt
2011
£’000
Bank loan
2011
£’000
1,572
-
2,306
3,878
127
1,583
-
1,710
Total
2012
£’000
2,401
2,605
1,611
6,617
Total
2011
£’000
1,699
1,583
2,306
5,588
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74 ROTALA PLC // ANNUAL REPORT 2012
7. Deferred tax
No closing deferred tax provision is required for the company for 2012. The potential deferred taxation
assets not provided are:
Accelerated capital allowances
Losses
2012
£’000
-
16
16
The deferred tax asset above has not been recognised in accordance with the company’s accounting
policies.
8.
Share capital
2012
Number
Ordinary shares of 25p each
35,270,888
Allotted and called up and fully paid
2012
£’000
8,818
2011
Number
35,270,888
Issued Share Capital
As at 1 December 2010
16 February 2011
26 May 2011
As at 30 November 2011 and 2012
Number
33,060,368
1,648,020
562,500
35,270,888
2011
£’000
-
12
12
2011
£’000
8,818
Value
8,265
412
141
8,818
Ordinary shares participate fully in the rights to vote, receive dividends and take part in any distribution of
capital. There are no restrictions on ordinary shares nor are there any redeemable shares of any kind.
9.
Share options and warrants
As at 30 November 2012 the following share options had been issued and were outstanding under the
company’s employee share option schemes:
Number of
options granted
Earliest
exercise date
Date of expiry
Exercise price
Date of grant
29 March 2005
30 August 2005
30 March 2006
24 July 2007
240,000
29 March 2008
28 March 2015
93,333
30 August 2008
29 August 2015
520,000
208,000
30 March 2009
29 March 2016
24 July 2010
23 July 2017
6 September 2007
880,000
6 September 2010
5 September 2017
5 September 2008
695,000
5 September 2011
4 September 2018
24 September 2012
431,066 24 September 2015
24 March 2016
125.0p
162.5p
37.5p
62.5p
62.5p
50.0p
40.05p
FINANCIAL STATEMENTS // NOTES TO THE COMPANY FINANCIAL STATEMENTS
75
9.
Share options and warrants (continued)
The Rotala Plc SAYE Share Option Scheme (the “Scheme”) is an HM Revenue & Customs approved share
option scheme, administered by the Yorkshire Building Society (“YBS”), open to all employees. The issue
of share options of 24 September 2012 is at present the only issue in relation to this Scheme. The Scheme
runs for an initial three year period. Employees will subscribe, through payroll deductions, a monthly sum
which will accumulate in their individual savings accounts at YBS. At the end of the three year period the
employee will have the option to purchase ordinary shares of 25 pence in the Company (“Ordinary Shares”)
at a price fixed at the start of each three year period. Under the rules of the Scheme, the Board is free
to price the share option at a discount to the market price of the Ordinary Shares, at the time the option
is granted. Opportunities to subscribe for further options under the Scheme will arise every six months,
within a period of approximately 42 days after the announcement of the Interim and Annual Results of the
Company. In the initial phase of the Scheme the Board has decided that it is prepared to allocate up to 1
million options over Ordinary Shares of the Company for this purpose.
The company also operates an unapproved equity-settled share based remuneration scheme for group
executive directors and senior management. The only vesting condition is that the individual remains an
employee of the group until the option is exercised.
2012
Weighted
average
exercise price
2012
Number
2011
Weighted
average
exercise price
2011
Number
63.34
2,714,333
63.34p
2,714,333
(58.00)
40.05
(78,000)
431,066
-
-
-
-
60.21p
3,067,399
63.34p
2,714,333
Outstanding at beginning
of the year
Forfeited during the year
Issued during the year
Outstanding at the end of
the year
The exercise price of options outstanding at the end of the year ranged between 37.5p and 162.5p (2011:
37.5p and 162.5p) and their weighted average remaining contractual life was 4.23 years (2011: 5.48 years).
Of the outstanding options at the balance sheet date 2,636,333 (2011: 2,714,333) were exercisable. The
weighted average exercise price was 60.21p (2011: 63.34p).
The fair value of options granted was determined under IFRS 2 using the Black-Scholes valuation model.
Significant assumptions used in the calculations included:
• an exercise price of 40.05p;
• a share price volatility of 20% based on expected and historical price movements;
• a weighted average share price of 44.5p;
• a dividend yield of 3%;
• a risk-free interest rate of 3%; and
• a vesting period of three years from the date of grant of the options.
The weighted average fair value of options granted in the period was 8p.
Of the outstanding options at the balance sheet date 2,636,333 (2011: 2,714,333) were exercisable. The
weighted average exercise price was 60.21p (2011: 63.34p).
Warrants
A total of 239,830 warrants over ordinary shares at a price of 67.5p expired unexercised on 31 December
2011. There are no further warrants now outstanding.
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76 ROTALA PLC // ANNUAL REPORT 2012
10. Reserves
At 1 December 2011
Loss for the year
Employee share schemes
Release from warrant reserve
Dividends paid and payable
Share premium
account
2012
£’000
7,828
-
-
-
-
At 30 November 2012
7,828
11. Reconciliation of movements in shareholders’ funds
(Loss)/profit for the year
Issue of shares
Share based payment charge credited to reserves
Dividends paid and payable
Net addition to shareholders’ funds
Opening shareholders’ funds
Closing shareholders’ funds
Warrant
reserve
2012
£’000
Profit and
loss account
2012
£’000
245
-
-
(245)
-
-
2012
£’000
(149)
-
2
(283)
(430)
18,475
18,045
1,584
(149)
2
245
(283)
1,399
2011
£’000
1,439
619
16
(352)
1,722
16,753
18,475
12. Pensions
The company does not have a pension scheme of any nature.
13. Capital commitments
As at 30 November 2012 the company had placed orders for undelivered vehicles with a capital value of
£1,677,000 (2011: £2,764,000).
14. Commitments under operating leases
The company had the following operating lease commitments:
Expiry date
- up to one year
- between two and five years
Other
2012 £’000
Other
2011 £’000
-
31
4
3
FINANCIAL STATEMENTS // NOTES TO THE COMPANY FINANCIAL STATEMENTS
77
15. Contingent liabilities
The company has entered into a cross-guarantee and floating charge agreement with its subsidiaries. At 30
November 2012 the contingent liability amounted to £717,000 (2011: £nil).
The company has guaranteed some of the hire purchase obligations of its subsidiaries. At 30 November
2012 the contingent liability amounted to £10,876,000 (2011: £13,182,000).
As related in note 5, the company during the year received a grant of £683,000 from the Government’s Green
Bus Fund for the acquisition of 8 hybrid diesel electric vehicles. The principal condition of this grant is that
the vehicles should be retained by the group for at least three years. If this condition is not observed the
grant becomes repayable. The company has no intention of not meeting this condition of the grant.
The company in 2011 received a grant of £1,664,000 from the Government’s Green Bus Fund for the
acquisition of 15 hybrid diesel electric vehicles. The principal condition of this grant is that the vehicles
should be retained by the group for at least three years. If this condition is not observed the grant becomes
repayable. The company has no intention of not meeting this condition of the grant.
16. Related parties and transactions
1.
2.
3.
The services of J H Gunn were provided by Wengen Limited, a company controlled by J H Gunn, and
invoiced by that company to Rotala. At the year end £nil (2011: £nil) of the amount charged was unpaid
and included within creditors. During the year J H Gunn received from Rotala a total of £66,669 (2011:
£48,942) in dividends on ordinary shares and £nil (2011: £10,400) in interest on convertible unsecured
loan stock.
The services of R A Dunn were provided by motorBus Limited, a company controlled by R A Dunn, and
invoiced by that company to a subsidiary undertaking of Rotala. At the year end £10,570 (2011: £11,319)
of the amount charged was unpaid and included within creditors. During the year R A Dunn received
from Rotala a total of £10,913 (2011: £7,917) in dividends on ordinary shares.
The services of F G Flight were provided by Central Coachways Limited, a company controlled by F G
Flight, and invoiced by that company to Rotala. At the year end £7,891 (2011: £5,000) of the amount
charged was unpaid and included within creditors. During the year F G Flight received from Rotala a
total of £15,901 (2011: £11,926) in dividends on ordinary shares and £2,000 (2011: £4,000) in interest on
convertible unsecured loan stock.
4.
During the year S L Dunn received from Rotala a total of £8,083 (2011: £4,990) in dividends on ordinary
shares and £20,800 (2011: £20,800) in interest on convertible unsecured loan stock.
5.
During the year K M Taylor received from Rotala a total of £4,290 (2011: £3,218) in dividends on ordinary
shares and £2,000 (2011: £2,000) in interest on convertible unsecured loan stock.
6.
7.
In the period to 6 May 2011 goods and services to the value of £65,251 were invoiced by a subsidiary
undertaking of Rotala to Dunn Motor Traction Limited, a company of which R A Dunn was a director until
that date. At 30 November 2012 and 2011 Mr Dunn and his beneficial interests held no shareholding in
that company.
J H Gunn is a director of The 181 Fund Limited (“The Fund”), a company incorporated in Jersey. The
Fund held an interest in 1,730,221 ordinary shares of Rotala as at 30 November 2012 (2011: 1,730,221
ordinary shares). The Fund also held £400,000 of the convertible loan stock of Rotala as at that date
(2011: £605,850). Under Jersey law, Mr Gunn, as a non-resident of that state, is unable to exercise his
vote at board meetings of The Fund. At 30 November 2012 Mr. Gunn and his beneficial interests held
25.02% (2011: 24.9%) of the ordinary share capital of The Fund. During the year The Fund received from
Rotala a total of £20,763 (2011: £14,387) in dividends on ordinary shares and £40,234 (2011: £48,468) in
interest on convertible unsecured loan stock.
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78 ROTALA PLC // ANNUAL REPORT 2012
Notice of Annual General Meeting
NOTICE IS HEREBY given that the Annual General Meeting (“AGM”) of Rotala plc
(the “Company”) will be held at 12pm on 22 May 2012 at the offices of the Company
at Beacon House, Long Acre, Birmingham, B7 5JJ for the purpose of considering,
and if thought fit, passing the following Resolutions with or without modifications and
of which Resolutions 1 to 6 (inclusive) will be proposed as ordinary resolutions and
Resolutions 7 to 8 will be proposed as special resolutions.
Ordinary Resolutions
1.
2.
3.
THAT, the accounts of the Company for the financial period ended 30 November 2012, together with the
directors’ report and the auditors’ report on those accounts, be received and considered.
THAT, upon recommendation of the directors, a dividend of 0.90p per ordinary share be declared as a final
dividend in respect of the financial year ended 30 November 2012.
THAT, Grant Thornton UK LLP be and are hereby re-appointed as auditors of the Company to hold office
until the conclusion of the next general meeting of the Company before which statutory accounts are laid
and that the directors of the Company be and are hereby authorised to fix the auditors’ remuneration from
time to time.
4.
THAT, Kim Taylor who is retiring by rotation in accordance with the Company’s articles of association and,
being eligible, offers himself for re-election as a director of the Company, be re-elected as a director of the
Company.
Special Business
5.
THAT, in accordance with section 366 of the Companies Act 2006 (“CA 2006”), the Company and its
subsidiaries are hereby authorised to:-
5.1 make political donations to political organisations or independent election candidates, as defined in
sections 363 and 364 of CA 2006, not exceeding £25,000 in total; and
5.2 incur political expenditure, as defined in section 365 of CA 2006, not exceeding £25,000 in total,
during the period commencing on the date of this Resolution and ending on the earlier of the conclusion
of the next annual general meeting of the Company and 31 May 2014.
6.
THAT, in substitution for all existing such authorities, the directors be and are hereby generally and
unconditionally authorised pursuant to section 551 of CA 2006 to exercise all powers of the Company to
allot shares in the Company or to grant rights to subscribe for, or to convert any security into shares in
the Company up to an aggregate nominal amount of £2,939,240 (being approximately one-third of the
issued ordinary share capital of the Company as at 12 April 2013 being the last working day prior to the
publication of the notice convening the meeting) provided that such authority, unless renewed or revoked
by the Company in general meeting, shall expire on the earlier of the conclusion of the next annual general
meeting of the Company and 31 May 2014 but the Company may, before such expiry, make an offer or
agreement which would or might require shares to be allotted or rights to be granted after such expiry and
the directors may allot shares or grant rights in pursuance of that offer or agreement as if the authority
conferred by this Resolution had not expired.
SHAREHOLDER INFORMATION // NOTICE OF ANNUAL GENERAL MEETING
79
Special Resolutions
7. THAT, in substitution for all existing such authorities and subject to the passing of Resolution 6, the
directors be generally empowered pursuant to section 570 of CA 2006 to allot equity securities (within the
meaning of section 560 of CA 2006) for cash pursuant to the authority conferred by Resolution 6 or by way of
sale of treasury shares as if section 561 of CA 2006 did not apply to the allotment or sale provided that this
power:-
7.1
is limited to the allotment of equity securities:-
7.1.1
where such securities have been offered (whether by way of a rights issue, open offer or
otherwise) to holders of ordinary shares of 25 pence each in the capital of the Company
(“Ordinary Shares”) in proportion (as nearly as may be) to their existing holdings of Ordinary
Shares but subject to the directors having a right to make such exclusions or other
arrangements in connection with the offer as they deem necessary or expedient to deal
with equity securities representing fractional entitlements and/or to deal with legal and/
or practical problems under the laws of any territory, or the requirements of any regulatory
body or stock exchange in any territory; and
7.1.2
otherwise than pursuant to paragraph 7.1.1 up to an aggregate nominal value of £440,886
(representing approximately 5 per cent. of the issued ordinary share capital of the Company
as at 12 April 2013);
7.2
shall expire at the earlier of the conclusion of the next annual general meeting of the Company and
31 May 2014, but such authority shall extend to the making of an offer or agreement which would or
might require equity securities to be allotted after such expiry date and the directors may allot equity
securities in pursuance of that offer or agreement as if the power conferred by this Resolution had
not expired;
8.
THAT the Company be and is hereby generally and unconditionally authorised for the purposes of section
701 of CA 2006 to make market purchases (within the meaning of section 693(4) of CA 2006) of Ordinary
Shares provided that:-
8.1
the maximum number of Ordinary Shares which may be purchased is 3,527,088 (representing ten
per cent of the Company’s issued ordinary share capital as at 12 April 2013);
8.2
the minimum price (exclusive of expenses) which may be paid for each Ordinary Share is 25 pence;
8.3
8.4
8.5
the maximum price (exclusive of expenses) which may be paid for each Ordinary Share is an amount
equal to 105 per cent of the average of the middle market quotations of an Ordinary Share taken
from the London Stock Exchange Daily Official List for the five business days immediately preceding
the day on which the share is contracted to be purchased;
this authority shall expire on the earlier of the conclusion of the next annual general meeting of the
Company after the passing of this Resolution and 31 May 2014 (unless previously renewed, varied or
revoked by the Company in general meeting); and
the Company may, before such expiry, enter into one or more contracts to purchase Ordinary Shares
under which such purchases may be completed or executed wholly or partly after the expiry of
this authority and may make a purchase of Ordinary Shares in pursuance of any such contract or
contracts.
By Order of the Board
Kim Taylor
Company Secretary
Date: 12 April 2013
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80 ROTALA PLC // ANNUAL REPORT 2012
Notes to Members
1.
2.
A member entitled to attend and vote at the meeting is also entitled to appoint one or more proxies to
attend, speak and vote instead of him/her. A member may appoint more than one proxy in relation to the
meeting, provided that each proxy is appointed to exercise the rights attached to a different share or shares
held by that member. The proxy need not be a member of the Company. Please refer to the notes to the
form of proxy for further information on appointing a proxy, including how to appoint multiple proxies (as the
case may be).
In the absence of instructions, the person appointed proxy may vote or abstain from voting as he/she thinks
fit on the specified Resolutions and, unless otherwise instructed, may also vote or abstain from voting on
any other matter (including amendments to Resolutions) which may properly come before the meeting.
3.
Shareholders may appoint a proxy or proxies:-
3.1
by completing and returning a form of proxy by post or by hand to the offices of the Company’s
registrars, Capita Registrars Limited, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU; or
3.2
in the case of CREST members, through the CREST electronic proxy appointment service.
4.
5.
6.
To be effective, the appointment of a proxy, or the amendment to the instructions given for a previously
appointed proxy, must be received by the Company’s registrars, Capita Registrars Limited, PXS,
34 Beckenham Road, Beckenham, Kent BR3 4TU by one of the methods in note 3 above not less than
48 hours before the time for holding the meeting. In addition, any power of attorney or other authority under
which the proxy is appointed (or a notarially certified copy of such power or authority) must be deposited at
the offices of the Company’s registrars, Capita Registrars Limited, PXS, 34 Beckenham Road, Beckenham,
Kent BR3 4TU not less than 48 hours before the time for holding the meeting. Any such power of attorney
or other authority cannot be submitted electronically.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment
service may do so by using the procedures described in the CREST Manual. CREST personal members
or other CREST sponsored members, and those CREST members who have appointed a voting service
provider, should refer to their CREST sponsor or voting service provider who will be able to take the
appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate
CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear
UK & Ireland Limited’s (“Euroclear UK & Ireland”) specifications and must contain the information
required for such instructions, as described in the CREST Manual. The message, regardless of whether it
constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed
proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID RA 10) by the
specified latest time(s) for receipt of proxy appointments. For this purpose, the time of receipt will be taken
to be the time (as determined by the timestamp applied to the message by the CREST Application Host)
from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed
by CREST. After this time any change of instructions to proxies appointed through CREST should be
communicated to the appointee through other means.
SHAREHOLDER INFORMATION // NOTES TO MEMBERS
81
7.
8.
9.
10.
11.
12.
13.
CREST members and, where applicable, their CREST sponsors, or voting service providers should note that
Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular
message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST
Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST
member is a CREST personal member, or sponsored member, or has appointed a voting service provider,
to procure that his CREST sponsor or voting service provider takes) such action as shall be necessary
to ensure that a message is transmitted by means of the CREST system by any particular time. In this
connection, CREST members and, where applicable, their CREST sponsors or voting service providers are
referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST
system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in regulation 35(5)
(a) of the Uncertificated Securities Regulations 2001.
Completion and return of the Form of Proxy will not preclude a shareholder from attending and voting in
person at the meeting.
In the case of joint holders of a share the vote of the senior who tenders a vote, whether in person or by
proxy, shall be accepted to the exclusion of the votes of the other joint holders. For this purpose seniority is
determined by the order in which the names of the holders stand in the register of members in respect of
the joint holding.
Any corporation which is a member can appoint one or more corporate representatives who may exercise
on its behalf all of its powers as a member provided that they do not do so in relation to the same shares.
Copies of the directors’ service contracts and the terms and conditions of appointment of non-executive
directors will be available for inspection at the registered office of the Company during usual business
hours from the date of this notice until the date of the meeting and at the venue of the meeting for at least
30 minutes prior to and at the meeting.
The Company, pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, specifies that
only those members entered on the register of members of the Company at the close of business on 20 May
2013 shall be entitled to attend and vote at the meeting or, if the meeting is adjourned, the close of business
on such date being not more than two days prior to the date fixed for the adjourned meeting. Changes to
entries on the register of members after such time shall be disregarded in determining the right of any
person to attend or vote at the meeting.
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82 ROTALA PLC // ANNUAL REPORT 2012
Explanatory Notes to the
Annual General Meeting
At the Annual General Meeting the following will be proposed as explained below:
Resolution 2
Declaration of a final dividend
Shareholder approval is required for the payment of a final dividend as recommended by the board of directors.
Subject to shareholder approval this dividend will be paid on 28 June 2013 to those shareholders on the Company’s
register of members as at close of business on 31 May 2013.
Resolution 5
Authority to make donations to political organisations and to incur political expenditure
Part 14 of the Companies Act 2006 (“CA 2006”), amongst other things, prohibits the Company and its subsidiaries
from making donations of more than £5,000 to an EU political party or other EU political organisation or to an
independent election candidate in the EU in any 12 month period unless they have been authorised to make
donations by the Company’s shareholders.
CA 2006 defines ‘political organisations’, ‘political donations’ and ‘political expenditure’ widely. It includes
organisations which carry on activities which are capable of being reasonably regarded as intended to affect public
support for a political party or an independent election candidate in any EU Member State or to influence voters
in relation to any referendum in any EU Member State. As a result, it is possible that the definition may include
bodies, such as those concerned with policy review and law reform, which the Company and/or its subsidiaries may
see benefit in supporting.
Accordingly, and as proposed to Shareholders at the Company’s annual general meeting in 2012, the Company
wishes to ensure that neither it nor its subsidiaries inadvertently commits any breaches of CA 2006 through the
undertaking of routine activities, which would not normally be considered to result in making political donations
or incurring political expenditure. Neither the Company nor any of its subsidiaries has any intention of making any
particular political donations under the terms of this Resolution.
Resolution 6
Authority to allot relevant securities
Under section 549 of CA 2006, the directors of a company may not allot shares in the Company, or grant rights to
subscribe for, or to convert any security into, shares in the Company unless authorised to do so. This resolution, if
passed, will continue the directors’ flexibility to act in the best interests of shareholders, when opportunities arise,
by issuing new shares, and renews the authority given at the last AGM.
This authority will allow the directors to allot new shares and to grant rights in respect of shares up to a nominal
value of £2,939,240 which is equivalent to one third of the total issued ordinary share capital as at 12 April 2013.
The directors have no current intention of exercising this authority.
This authority will expire at the conclusion of the next AGM, or 31 May 2014, whichever is the earlier.
SHAREHOLDER INFORMATION // EXPLANATORY NOTES TO THE ANNUAL GENERAL MEETING
83
Resolution 7
Authority to disapply pre-emption rights
If equity securities (within the meaning of section 560 of CA 2006) are to be allotted for cash, section 561 of CA 2006
requires that those equity securities are offered first to existing shareholders in proportion to the number held by
them at the time of the offer and otherwise in compliance with the technical requirements of CA 2006. However,
it may be in the interests of the Company for the directors to allot shares and/or sell treasury shares other
than to shareholders in proportion to their existing holdings or otherwise than strictly in compliance with those
requirements.
A special resolution will be proposed to renew the authority of the directors to allot equity securities for cash
without first being required to offer such securities to existing shareholders. This authority is limited to the
allotment of equity securities and/or sale of treasury shares for cash up to a maximum nominal amount of
£440,886 which is equivalent to 5 per cent of the total issued ordinary share capital of the Company as at 12 April
2013 and allotments of equity securities and/or sale of treasury shares in connection with a rights issue or other
offer to shareholders, subject to the directors ability to make arrangements to deal with certain legal or practical
problems arising in connection with such offer. This power will expire at the conclusion of the next AGM, or 31 May
2014, whichever is the earlier.
Resolution 8
Authority to purchase own shares
The directors believe that it is in the interests of the Company and its members to continue to have the flexibility
granted to the directors at the last AGM to purchase its own shares and this resolution seeks continued authority
from members to do so. The directors intend only to exercise this authority where, after considering market
conditions prevailing at the time, they believe that the effect of such exercise would be to increase the earnings per
share and be in the best interests of shareholders generally.
The effect of such purchases would either be to cancel the number of shares in issue or the directors may elect to
hold them in treasury pursuant to the Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003
(the “Regulations”).
This resolution would be limited to 3,527,088 ordinary shares, representing approximately 10 per cent of the issued
share capital as at 12 April 2013. The directors intend to seek renewal of this power at each Annual General
Meeting.
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Rotala Plc
Beacon House, Long Acre, Birmingham B7 5JJ
Telephone: 08458 382 382
Website: www.rotalaplc.com