connecting people to places
Annual Report
For year ended 30 November 2013
Contents
Rotala at a Glance
Directors, Secretary & Advisers
Financial Highlights
Review of Operations & Statutory Reports
Chairman’s Statement & Review of Operations
Strategic Report
Directors’ Report
Independent Auditor’s 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
04
05
08
12
18
22
27
28
29
30
32
34
66
67
76
78
80
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.
02
Rotala Plc // Annual Report 2013
Rotala at a Glance
03
Rotala at
a Glance
04
Rotala Plc // Annual Report 2013
Rotala at a Glance
05
Directors, Secretary & Advisers
Financial Highlights
Country of incorporation of parent company
England and Wales
Company registration number
5338907
A glance at the highlights of the financial year ended 30 November 2013.
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
Revenue
£53,303,000
2.8%
Profit before Taxation
£2,058,000
0.9%
Dividend
1.60p
14.3%
Company Secretary
Kim Taylor
2012
£54,813,000
2012
£2,076,000
2013
£53,303,000
2013
£2,058,000
2013
2012
1.60p
1.40p
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
Massers Solicitors
Rossell House
Tudor Square
West Bridgford
Nottingham
NG2 6BT
Capita Asset Services
34 Beckenham Road
Beckenham BR3 4TU
RBS/Natwest
1 St. Philips Place
Birmingham B3 2PP
2011
£56,077,000
2011
£1,878,000
2011 1.20p
2010
£44,644,000
2010
£1,650,000
2010
0.90p
Contracted Revenue
£20.6m
8.5%
Commercial Revenue
£29.9m
1.0%
Charter Revenue
£2.8m
4%
2013
£20.6m
2013
£29.9m
2013 £2.8m
2012
£22.5m
2012
£29.6m
2012 £2.7m
2011
£21.9m
2011
£30.9m
2011
£3.3m
2010
£18.8m
2010
£21.8m
2010
£4.0m
06
Rotala Plc // Annual Report 2013
Review of Operations & Statutory Reports
07
Review of Operations
& Statutory Reports
08
Rotala Plc // Annual Report 2013
Review of Operations & Statutory Reports
09
Chairman’s Statement and
Review of Operations
I am pleased to be able to make this report to the shareholders of
Rotala Plc for the year ended 30 November 2013.
Revenue
£53,303,000
2.8%
2013
£53,303,000
2012
£54,813,000
2011
£56,077,000
2010
£44,644,000
Revenue by Stream
39% Contracted
56% Commercial
5% 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, the addition
of depots in Kidderminster and Redditch, acquired from First Group Plc (“First”) in the
year, undoubtedly strengthened our position in the region. We are furthermore one of
the leading providers of private bus networks in the country, especially to the aviation
industry around Heathrow.
Contracted Services
Revenues in Contracted Services overall fell by 8.5% to £20.6 million (2012:
£22.5million). The cause of almost all of this reduction in revenue was the loss
in April 2013 of the two route diagrams we operated up to that time for National
Express Limited (“NEL”). In our view NEL breached their contract with us by their
actions. Therefore we have commenced legal proceedings against NEL to recover
our losses. This case is expected to come to trial in the last quarter of 2014. In
these accounts we have written off as an exceptional item £364,000 of our losses,
which form part of our claim against NEL. Looking beyond this exceptional event,
we experienced continuing strong growth in our private bus networks business.
Revenues from these contracts have increased by some 50% over the last two years
and we remain positive about this part of our activities. As might be expected from
the drive of government policy, local authority transport budgets have continued
to be under pressure. Revenues from the local authorities we deal with in the
South West and West Midlands have therefore declined when compared to those
of 2012, though we have not yet seen any similar pattern in Preston. The overall
effect of these market changes over the last few years has been to re-position our
Contracted Services business away from such a considerable exposure to the ebbs
and flows of local government finance to be more focused on privately contracted
bus services with major corporate customers.
Commercial Services
Revenues in Commercial Services rose by 1.2% to £29.9 million (2012: £29.6million).
Part of the reason for this rise is the contribution of the Redditch and Kidderminster
depots which we acquired from First on 3 March 2013. It is however impossible
to say what exactly that contribution has been in 2013, because the acquired
businesses were immediately folded into our existing operations in those localities
and so ceased to have a separate existence. I would estimate however that the
acquired revenue was between £1 million and £2 million. Thus the acquisition of
this business from First masked to some degree the full effect of the actions we
took in 2012 to cut route mileage and pull out of services which we felt were unlikely
to be economic in the longer term. The reduction in the reimbursement rates for
concessionary fares is also a significant contributory factor in this area of business.
Against that we continue to experience strong growth from the continuing wider
introduction of our own network cards. Revenues from this source have increased
by 70% in the last two years. Revenues from Centro’s own Network Card also made
an increased contribution to our revenues. During the year Centro introduced an
updated multi-operator card with a lower fare premium relative to single operator
Contracted Revenue
£20.6m
8.5%
2013
£20.6m
2012
£22.5m
2011
£21.9m
2010
£18.8m
Commercial Revenue
£29.9m
1.2%
tickets and better zonal coverage. We believe that this new card is slowly having
an effect on our business and opens out, both to ourselves and other competing
smaller operators in the West Midlands, the opportunity to achieve better
penetration of the available market share.
Charter Services
Revenues in Charter Services were much the same as they were in 2012 at £2.8
million. In line with group policy we have progressively reduced the exposure of the
group to this area of business in recent years. Airline related chauffeur car services
(which we sub-contract in their entirety) saw some increase in movements and
revenues when compared to those of 2012 but revenues from private hire work were
very little different from those of the previous year.
Strategy and acquisitions
At the beginning of March 2013 we acquired from First certain of their bus operations in
Worcestershire. For a cash consideration of £1.6 million, we bought two freehold depots,
one in Kidderminster and the other in Redditch, 36 vehicles, and various items of plant
and equipment. These depot acquisitions added about 100 staff to our workforce. Initially
the Office of Fair Trading opened an enquiry into the acquisition but finally announced on
23 August 2013 that this enquiry was at an end and that there would be no reference of
the acquisition to the Competition Commission.
2013
£29.9m
2001. It can accommodate up to 60 vehicles. The Redditch depot, built about 35 years
The Kidderminster depot comprises a site of some two acres and was purpose built in
2012
£29.6m
ago, has a slightly smaller useable area and can accommodate about 50 vehicles. The
two depots enable us to extend our existing route networks on the western side of the
Birmingham conurbation.
2011
£30.9m
The integration of these depots into our current depot network was quickly completed
2010
£21.8m
Charter Revenue
£2.8m
4%
2013 £2.8m
2012 £2.7m
2011
£3.3m
2010
£4.0m
and some benefits were felt in 2013. I am sure that in 2014 the positive impact of the
acquisition will become fully visible. Since making the acquisition we have in Redditch
deployed 20 replacement vehicles, some brand new, some from our existing fleet, in
order to be able to take out of service the non-low floor and step entrance vehicles
which not only did not comply with the provisions of the Disability Discrimination Act
which begin to come into force in 2014, but also produced, in our view, unacceptably
high emission levels for a town service. A certain amount of further investment will
be required in replacement vehicles and depot resources to complete the work that is
required.
Fuel prices and fuel usage
Fuel cost remains a significant factor to the business. The policy of the board is to take
out fuel hedges or obtain fuel fixes whenever it seems prudent to do so. At the current
time, using that combination of fuel fixes and fuel hedges via derivative instruments, we
have covered all of the fuel requirements of the group for the whole of 2014 and 2015 at
a combined rate of about 110p per litre. This control over the remaining variable cost in
the business gives considerable certainty to the board when it considers its budgets and
forecasts over the foreseeable future.
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Rotala Plc // Annual Report 2013
Review of Operations & Statutory Reports
11
Chairman’s Statement and
Review of Operations
(continued)
Fuel prices and fuel usage (continued)
At the same time board policies in other areas have aided the reduction in overall levels of fuel consumption. Over the last two years I
Financial review (continued)
The gross loans and borrowings of the group increased by £1.7 million largely because of acquisitions described above; HP obligations
have drawn your attention to two areas of policy in this regard. First we have taken advantage of government initiatives under the heading
fell by £1.8 million year on year to £9.1 million (2012: £10.9 million). Finally there was a positive movement in the Preston pension fund as
of the Green Bus Fund to acquire a total of 23 hybrid diesel-electric vehicles. These have certainly performed well in service and have all
at 30 November 2013 as the funding outlook for the Scheme improved on an accounting basis. The gross liabilities of the group therefore
achieved or exceeded the targeted 30% fuel saving, when compared to a similar diesel bus. Second we are steadily deploying throughout
stood slightly higher than the previous year at £27.3 million at 30 November 2013 (2012: £26.3 million). Net assets reached £23.6 million
the fleet the “EcoManager” fuel saving software which I described to you in detail last year. The roll-out of this system is further helping
at the year end (2012: £21.9million).
to reduce the fuel demands of the existing fleet, and so reduce costs. Finally, when acquiring any vehicle new to the fleet we are acutely
conscious of its relative fuel consumption and certainly favour those marques which have demonstrable advantages in this regard.
Whilst this is not a completely like for like statistic the board has noted that, where once our annualised consumption of diesel reached a
maximum of about 12 million litres, this figure has now fallen to about 10 million litres.
Fleet management
Over the year we have replaced vehicles in the operating fleet as and when we thought appropriate so that by the end of the year the
average age of the fleet stood at 7.64 years, slightly below the average fleet age at the end of 2012. This figure is low in industry terms.
In the current year we foresee very little need to replace vehicles unless specific requirements are issued by new contract customers
or existing customers request upgrades, which would of course carry with them the requisite price increases. We believe that having a
modern and efficient bus fleet is a key aspect of customer service. Older vehicles also emit a greater level of emissions and we are keen
to minimise this aspect of bus operation.
The board monitors each vehicle in the fleet for relative fuel consumption, reliability and maintenance cost. Those vehicles that fall
outside of acceptable parameters are designated for disposal. As a result of this policy about 10% of the vehicle fleet was replaced in the
year. These replacements are a judicious mix of the new and the second hand, chosen so as to meet the criteria which we have set. The
objective, to possess an efficient and effective fleet of the right age profile, continues to be met.
Banking facilities and finance
No new banking facilities were arranged in the year. The existing facilities of the group were used to finance both the acquisition of the
freehold of the depot at Avonmouth, Bristol in January 2013 and the acquisition of the Redditch and Kidderminster depots of First in
March 2013. At 30 November 2013 we have undrawn about £2.5 million of our available £11million facility with our principal bankers,
RBS/NatWest. In addition we possess unused vehicle financing facilities totalling approximately £10 million. In the opinion of the board
these facilities are ample for the current needs of the group.
Financial review
The Consolidated Income Statement is set out on page 27. This section of the review addresses the results before the gain on acquisition,
Cash flows from operating activities before changes in working capital, at £5.8 million (2012: £6.3 million), were a little down on those
generated in the previous year. However, instead of the heavy absorption of working capital seen in 2012, there was a small release,
and so Cash Generated from Operations was greatly improved, at £6.0 million (2012: £2.3 million). Investment in property, plant and
equipment rose this year to £2.6 million (2012: £1.6 million), but the bulk of this (£2.0 million) was represented by the freehold of the
Avonmouth depot. Sale of vehicles, after taking account of the related hire purchase settlements, produced £1.2 million for the group
(2012: £3.1 million). The acquisition of the business from First (£1.7 million) and the Avonmouth purchase accounted for almost all of the
draw downs in bank loans. In addition the capital element of payments on hire purchase agreements was somewhat lower in 2013 at £4.5
million (2012: £5.0 million). After taking account of rising dividends and bank interest payments, the group benefited from a positive cash
inflow of £196,000 for the year, and so a closing overdraft net of cash and cash equivalents of £1,214,000 at the end of 2013, in line with
management’s plans and expectations.
Dividend
The company paid an interim dividend of 0.55 pence per share in December 2012. At the forthcoming Annual General Meeting the board
will recommend a final dividend in respect of 2013 of 1.05p per share, making 1.60p for the year as a whole.
As the company matures I expect the dividend to be progressive. The board is conscious of the importance of dividend flows to
shareholders and has set a target dividend cover of 2.5 times earnings, to which it will move as underlying earnings and free cash flows
improve.
Outlook
The acquisition of the Redditch and Kidderminster depots from First has expanded the commercial bus revenues of the group in line with
our stated strategy. But, as I remarked last year, the bus industry is still going through a period of considerable change. The reduction of
government financial support for transportation by bus over the last four years is a continuing issue. The government, whether at local or
national level, has reduced the funding for subsidised services, reimbursements for concessionary fares and the levels of rebate available
to bus operators on fuel taxes. At the same time more onerous mandatory specifications for new buses continue to be introduced and
are the cause of the increasing cost of new vehicles. These policies, unless halted or reversed, will lead inevitably to a steep drop in the
provision of bus services in many of the less populated areas of the country away from the major urban conurbations. This is in turn
acquisition expenses and exceptional items. I have already highlighted the 3% decrease in revenues year on year and the reasons for
putting a great deal of pressure on all bus service providers but particularly on the operators rather smaller than ourselves, who are
this variance. Cost of Sales also fell by 3%; the principal business reasons for this have been described above. Gross Profits were almost
finding continued existence a considerable struggle.
exactly the same when compared to the previous year, but the gross profit margin improved somewhat to 17.1% from the 16.5% of 2012,
as gross profits increased but revenues declined slightly. Administrative Expenses were a little lower than those of the previous year,
mostly because the Avonmouth property moved from being rented to owned. The Profit from Operations at £3.56 million was therefore
some 5% higher than that seen in 2012. Finance expense was overall much the same as in the previous year. Hire purchase debt fell by
some 16% year on year and so did the associated interest expense. But, since the acquisitions of freeholds and of the business from First
were financed by debt, debt levels overall rose by some 9%, and interest on bank borrowings rose commensurately. Profit before taxation
therefore rose by 5% when compared to the previous year to £2.19 million (2012: £2.09 million).
Basic earnings per share in 2013, after taking into account the gain on acquisition, acquisition expenses and exceptional items, at 5.42p
benefited from a low tax charge, as in 2012. The low tax charge resulted from a number of prior year adjustments, just as in the previous
year. Basic earnings for 2012 were 5.29p per share. The gross assets of the group stood at £50.8 million at 30 November 2013 (2012: £48.2
million). Holdings of Property, Plant and Equipment rose largely as a result of the business acquisition from First and the acquisition of
the freehold of the Avonmouth depot. Trade Debtors fell in the year as management focused on this aspect of working capital but there
was a compensating rise in Other Receivables. The movement in the Green Bus Grant debtor and creditor affected both receivables and
payables in equal measure. The increase in Trade Payables explains the rest of the movement in Trade and Other Payables overall.
For all operators the discontinuities and inconsistencies in government transport policy make long term planning difficult, but the main
effect on our business is that the great technological improvements being made in reducing costs or improving operating efficiencies (for
example with vehicle tracking and mobile phone apps) are not flowing through to you as shareholders. Instead these gains are in effect
being used in their totality to plug the financial gaps created by the changes in the government’s transport policy. Despite these, and
other, headwinds, we have continued to improve our services, our vehicle fleet and our financial results. Thus we remain confident that
our strong management team will continue to increase the value of the business, albeit at a slower pace than we would have wished. Our
dividend policy reflects this confidence and will enable shareholders to share in our financial success as we move forward.
John Gunn
Non-Executive Chairman
Date: 24 April 2014
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Rotala Plc // Annual Report 2013
Review of Operations & Statutory Reports
13
Strategic Report
For the year ended 30 November 2013
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.
Our Goals
Rotala Plc pursues three key strategic goals:
To achieve sustainable growth in shareholder value;
To improve continually the operational capability of the group;
To deliver a consistent quality of service to customers.
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,
These goals are measured by:
organising and delivering turn-key solutions to events and areas requiring many different types and capacities of transport.
Areas of Operation
M6
Blackpool
Wigan
North West Trading Brands
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
a focus on earnings per share and the resultant share price;
the level of new investment in infrastructure, technology and training;
continually monitoring the timeliness and completeness of service delivery and levels of customer complaint.
Our Core Values
Our commitment is to conduct business in an ethical manner; our core values convey our organisational beliefs:
Professional
in our approach to business, with expert presence;
Innovative
in creating new solutions;
Agile
quick to respond and make decisions;
Collaborative
working together with all stakeholders;
Commercially orientated
delivering what clients require;
Results focused
focusing 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.
A1(M)
M11
Our Mission
South West Trading Brands
Wooton-under-Edge
M4
Chipping Sodbury
Kingswood
Bath
Bristol
M5
Radstock
M25
M4
M25
M20
M3
London Trading Brands
Key
Operational Depot
Places of Operation
(Not all are shown at this scale)
Motorways
Country Border
M4
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. (5338907)
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.
Rotala is committed to providing service excellence to stakeholders, by offering value for money and continuous improvement without
compromising on the quality of service. 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 is to build profitable and sustainable revenue. The business is composed largely of contracted or predictable
commercial revenue streams which equate to more than 90% of current revenue levels.
To achieve this level of predictability the business focuses on the development of its three principal revenue streams: contract,
commercial and charter.
14
Rotala Plc // Annual Report 2013
Review of Operations & Statutory Reports
15
Strategic Report
For the year ended 30 November 2013
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:
1.
Individual organisations:
These can have specific transport needs. Private bus networks are designed on a bespoke basis around these needs. We have
Key performance indicators (KPIs)
The key performance indicators of the group (before gains on acquisition, acquisition expenses and exceptional items) are
considered to be:
Gross profit margin
2013
17.1%
£3,557,000
£2,190,000
2012
16.5%
£3,392,000
£2,086,000
contracts of this type with British Airways and National Grid. One of the key factors which drives this customer need comes from
Profit from operations before exceptional items
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.
Profit before taxation
2.
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
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 before exceptional items:
On a purely commercial bus service, the company takes all the risk of operation. Where a contracted service obliges the operator to take
Profit from operations before exceptional items is a very important determinant of the long term success of the whole business.
an element of revenue risk (the proportion of which can vary considerably), the variable element of the revenue is also included under this
Because this indicator is calculated before interest it represents the theoretical debt-free performance of the group and is thus a
heading. Since its foundation Rotala has considerably expanded the number of commercial services it operates in the West Midlands and
key measure of value. It is also a measure of how effectively and efficiently the group is using its operating assets, particularly in
South West. Furthermore early in 2011 the group acquired Preston Bus Limited, setting up a new hub of commercial bus operations in
relation to its peers. Therefore this metric is monitored monthly and progress is frequently reviewed;
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.
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 group thereby with the means to sustain its ambitions to increase its overall levels of business.
Trading results and Statement of financial position
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 on pages 8 to 11.
The group’s results for the year are set out on page 27. The results of the year and the financial position as at 30 November 2013 are
considered by the directors to be satisfactory.
16
Rotala Plc // Annual Report 2013
Review of Operations & Statutory Reports
17
Strategic Report
For the year ended 30 November 2013
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.
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 availability of sufficient capital
and leasing facilities to finance the
growth in the group's businesses.
The group may miss growth
opportunities.
Repayment of the group’s convertible
debt.
The group may not be able to meet
its debt repayment obligations.
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.
Management maintains close contact with actual and
potential shareholders. Relationships with the providers
of the group’s asset financing and banking facilities are
dealt with centrally in order to keep them fully briefed
about the progress of the group. All bank account and
treasury management is conducted at group level.
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.
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 governmental bodies.
Availability of management
resources of the appropriate quality.
Lack of appropriate management
skills damages the business and its
prospects.
Fleet insurance and cover and
level of vehicle insurance rates –
particularly in the event of a major
accident involving passenger fatality.
The group may not be able to obtain
adequate levels of insurance cover.
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 is self-insured for high frequency claims of
low value. (See Accounting Policy on page 38). Claims
above a certain level are comprehensively insured in the
normal way. 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. Relationships
with insurance brokers and providers are considered to
be key and are managed centrally by the group.
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 29.
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
2015. It has also evaluated the hire purchase, loan and overdraft facilities available to the group in connection with that period. After due
enquiry, the board has judged the cash flow forecasts, asset financing 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.
Corporate governance
As the company’s shares are traded on AIM, the company is not required to comply with the UK Corporate Governance Code (‘the Code’)
nor has it done so. However, the company is committed to high standards of corporate governance and draws upon best practice
available, including those aspects of the Code considered appropriate. 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 policies 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.
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.
By order of the Board
Kim Taylor
Secretary
Date: 24 April 2014
18
Rotala Plc // Annual Report 2013
Review of Operations & Statutory Reports
19
Directors’ Report
For the year ended 30 November 2013
The directors present their statutory report for the group for the year ended 30
November 2013.
Directors’ interests (Continued)
At 1 December 2012
Price
At 30 November 2013
Date Exercisable
Date of Expiry
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:
J H Gunn
R A Dunn
S L Dunn
F G Flight
K M Taylor
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
2013
Ordinary shares
of 25p each
2013
Options over
ordinary shares
of 25p each
2012
Ordinary shares
of 25p each
2012
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
5,526,616
909,454
686,880
1,325,055
357,500
400,000
422,471
467,471
220,000
565,000
J H Gunn is also a director of and shareholder in The 181 Fund Limited: see note 30 – Related Parties and Transactions.
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
22,471
422,471
80,000
80,000
200,000
85,000
22,471
467,471
80,000
140,000
220,000
80,000
160,000
240,000
85,000
565,000
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
80,000
120,000
200,000
400,000
400,000
22,471
422,471
80,000
80,000
200,000
85,000
22,471
467,471
80,000
140,000
220,000
80,000
160,000
240,000
85,000
565,000
29/03/2008
30/03/2009
06/09/2010
28/03/2015
29/03/2016
05/09/2017
05/09/2011
24/09/2015
04/09/2018
24/03/2016
30/08/2008
30/03/2009
06/09/2010
05/09/2011
24/09/2015
29/08/2015
29/03/2016
05/09/2017
04/09/2018
24/03/2016
30/03/2009
06/09/2010
29/03/2016
05/09/2017
29/03/2008
30/03/2009
06/09/2010
05/09/2011
28/03/2015
29/03/2016
05/09/2017
04/09/2018
2013
Convertible Unsecured Loan Stock
2012
Convertible Unsecured Loan Stock
The remuneration of the directors is set out in note 7 of these financial statements. 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 30 – Related Parties and
S L Dunn
K M Taylor
Beneficial
Beneficial
£260,000
£25,000
£260,000
£25,000
The terms of the Convertible Unsecured Loan Stock are described in note 22.
Transactions.
The company’s share price at 30 November 2013 was 56.5p. The high and low prices in the year were 58.5p and 42.5p respectively.
Dividends
The directors will propose to the Annual General Meeting a distribution, by way of a final dividend, of 1.05p per share for the year ended 30
November 2013 (2012: 0.9p per share). An interim dividend of 0.55p per share (2012: 0.5p per share) was paid on 9 December 2013.
20
Rotala Plc // Annual Report 2013
Review of Operations & Statutory Reports
21
Directors’ Report
For the year ended 30 November 2013
Financial instruments
Details of financial instruments, including information about exposure to financial risks and the financial risk management objectives and
Directors’ responsibilities statement
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and
policies, are given in note 29.
regulations.
Future developments
Likely future developments in the business of the group are dealt with in the Chairman’s Statement and Review of Operations set out on
pages 8 to 11.
Employment policies and employee involvement and communication
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 applications for employment from
those who are disabled and to continuing the employment of those who become disabled while employed.
It is a key policy of the group to consider the health and welfare of employees by maintaining safe places and methods of work. The group
employs a Health and Safety Auditor, who assesses regularly all places of work under a standardised testing scheme. Reports of these
tests are communicated to the board.
Training is also a priority task and is a focus of considerable effort, especially in the field of dealing with passengers. All drivers are issued
with a handbook at the commencement of their employment which sets out in detail the standards which they are expected to meet.
Employees are briefed regularly about the performance and prospects of the group and their individual depots; they are also
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.
consulted about and involved in the development of the group in a number of ways, which include regular briefings, team updates and
The directors are responsible for keeping adequate accounting records which are sufficient to show and explain the company’s
announcements.
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
An SAYE scheme exists for the benefit of all employees. The details of the scheme are set out in note 27 to these financial statements.
group and the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Political contributions
No political contributions were made by the group during the year ended 30 November 2013 (2012: £Nil).
Substantial shareholdings
As at 24 April 2014 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
5,339,400
1,980,221
1,325,055
1,300,000
1,075,000
1,075,000
%
15.67
15.14
5.61
3.76
3.69
3.05
3.05
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.
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 2013, 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: 24 April 2014
22
Rotala Plc // Annual Report 2013
Review of Operations & Statutory Reports
23
Independent Auditor’s Report
To the members of Rotala Plc
We have audited the financial statements of Rotala Plc for the year ended 30 November 2013 which comprise the consolidated income
Matters on which we are required to report by exception
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
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:
reporting framework that has been applied in the preparation of the group financial statements is applicable law and International
• 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: 24 April 2014
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 21, 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 Financial Reporting Council’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 2013
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.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and Directors’ Report for the financial year for which the financial statements
are prepared is consistent with the financial statements.
24
Rotala Plc // Annual Report 2013
Financial Statements
25
Financial
Statements
26
Rotala Plc // Annual Report 2013
Financial Statements
27
Consolidated Income Statement
For the year ended 30 November 2013
2013
£’000
Gain on
acquisition,
acquisition
expenses and
exceptional
items
(note 11)
£’000
Results
before gain on
acquisition,
acquisition
expenses and
exceptional
items
£’000
2012
£’000
Gain on
acquisition,
acquisition
expenses and
exceptional
items
(note 11)
£’000
Results
before gain on
acquisition,
acquisition
expenses and
exceptional
items
£’000
Results for
the year
£’000
53,303
(44,210)
9,093
(5,536)
3,557
44
(1,411)
2,190
(264)
1,926
-
-
-
(132)
(132)
-
-
(132)
119
(13)
54,813
(45,790)
9,023
(5,631)
3,392
15
(1,321)
2,086
(210)
1,876
-
-
-
-
-
-
(10)
(10)
-
(10)
53,303
(44,210)
9,093
(5,668)
3,425
44
(1,411)
2,058
(145)
1,913
5.42
5.17
Results for
the year
£’000
54,813
(45,790)
9,023
(5,631)
3,392
15
(1,331)
2,076
(210)
1,866
5.29
5.18
Note
4
8
9
10
11
12
Revenue
Cost of sales
Gross profit
Administrative
expenses
Profit from operations
Finance income
Finance expense
Profit before taxation
Tax expense
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)
13
13
The accompanying notes form an integral part of these financial statements.
28
Rotala Plc // Annual Report 2013
Financial Statements
29
Consolidated Statement of
Comprehensive Income
For the year ended 30 November 2013
Consolidated Statement of
Changes in Equity
For the year ended 30 November 2013
Note
25
24
Profit for the year
Other comprehensive income:
Items that will not subsequently be reclassified to profit & loss:
Actuarial gain / (loss) on defined benefit pension scheme
Deferred tax on actuarial gain/(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
2013
£’000
1,913
355
(75)
280
2,193
2012
£’000
1,866
(1,009)
242
(767)
1,099
At 1 December 2011
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
Share capital
£'000
8,818
-
-
-
-
-
-
-
Share
premium
reserve
£'000
Merger
reserve
£'000
Warrant
reserve
£'000
Retained
earnings
£'000
7,828
2,567
245
-
-
-
-
-
(245)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
At 30 November 2012
8,818
7,828
2,567
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners:
Dividends paid or declared
Share based payment
Transactions with owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
At 30 November 2013
8,818
7,828
2,567
The accompanying notes form an integral part of these financial statements.
The accompanying notes form an integral part of these financial statements.
Total
£'000
21,058
1,866
(767)
1,600
1,866
(767)
1,099
1,099
(283)
2
245
(283)
2
-
(245)
(36)
(281)
-
-
-
-
-
-
-
-
2,663
1,913
280
21,876
1,913
280
2,193
2,193
(494)
9
(494)
9
(485)
(485)
4,371
23,584
30
Rotala Plc // Annual Report 2013
Financial Statements
31
Consolidated Statement of
Financial Position
As at 30 November 2013
Note
14
15
24
17
18
19
20
21
22
23
22
23
25
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
Derivative financial instruments
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
2013
£’000
30,930
9,482
424
40,836
1,826
7,863
3
317
10,009
50,845
6,304
5,462
3,318
15,084
5,712
5,793
672
12,177
27,261
23,584
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
Shareholders’ funds
Share capital
Share premium reserve
Merger reserve
Retained earnings
TOTAL EQUITY
Note
26
2013
£’000
8,818
7,828
2,567
4,371
2012
£’000
8,818
7,828
2,567
2,663
23,584
21,876
The financial statements were approved by the Board of Directors and authorised for issue on 24 April 2014
Simon Dunn
Chief Executive
Kim Taylor
Group Finance Director
The accompanying notes form an integral part of these financial statements.
The accompanying notes form an integral part of these financial statements.
32
Rotala Plc // Annual Report 2013
Financial Statements
33
Consolidated Statement
of Cash Flows
For the year ended 30 November 2013
Cash flows from operating activities
Profit before taxation
Adjustments for:
Depreciation
Gain on acquisition
Acquisition expenses
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
Decrease/(increase) in inventories
Increase/(decrease) in trade and other payables
Cash generated from operations
Interest paid on hire purchase agreements
Net cash flows from operating activities carried forward
2013
£’000
2,058
3,253
(387)
155
1,367
(283)
(333)
9
5,839
(95)
66
147
118
5,957
(671)
5,286
2012
£’000
2,076
3,742
-
-
1,316
(417)
(400)
2
6,319
(2,663)
(620)
(721)
(4,004)
2,315
(862)
1,453
Cash flows from operating activities brought forward
Investing activities
Purchases of property, plant and equipment
Acquisition of business
Sale of public service vehicles
Net cash (used in) / from investing activities
Financing activities
Dividends paid
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 increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
2013
£’000
5,286
(2,564)
(1,714)
1,941
(2,337)
(494)
3,927
-
(289)
(706)
(702)
(4,489)
(2,753)
196
(1,410)
(1,214)
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.
The accompanying notes form an integral part of these financial statements.
34
Rotala Plc // Annual Report 2013
Financial Statements
35
Notes to the Consolidated
Financial Statements
For the year ended 30 November 2013
1.
General information
Rotala Plc is incorporated and domiciled in the United Kingdom.
2.
Accounting policies (continued)
(d) Self insurance
The financial statements for the year ended 30 November 2013 (including the comparatives for the year ended 30 November 2012)
were approved by the Board of Directors on 24 April 2014. 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 16.
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 16.
(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.
(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 25 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.
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.
(e) Fixed price diesel contracts
The fair value of the fixed price diesel contracts is based on the future cash flows arising under the contract, compared
to the expected cash flows that would have arisen had the contract not been in place. No discounting is applied as none
of the contracts are for a period greater than 12 months and therefore any impact of discount rates is not considered
material. More details in respect of these contracts are included in note 29.
Judgements
The major areas of judgement within the financial statements are as follows:
(a) Useful lives of 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 judgements can result in significant variations in the carrying value and amounts charged
to the Consolidated Income Statement in specific periods. More details about carrying values are included in note 14.
(b) 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 2013.
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. Acquisition costs are expensed
as incurred.
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.
36
Rotala Plc // Annual Report 2013
Financial Statements
37
2.
Accounting policies (continued)
2.
Accounting policies (continued)
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
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost, which includes both the purchase price and any directly
business, are capitalised, where fair value can be reliably measured. Where intangible assets are regarded as having a limited
attributable costs. Following initial recognition property, plant and equipment is carried at depreciated cost.
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
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 reduced or 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.
those contracts is capitalised as an intangible asset. This asset is then amortised over the remaining life of those contracts in
A gain or loss incurred at the point of derecognition is also included in profit or loss at that point.
administrative expenses in the Consolidated Income Statement.
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
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
business combination and represent the lowest level within the group at which management controls the related cash flows.
is depreciated as set out above. Other grants are held in trade and other payables until credited to the income statement as the
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
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.
pro rata to the other assets in the cash generating unit. With the exception of goodwill, all assets are subsequently reassessed for
Cost comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition.
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.
Depreciation is provided to write off the cost, less estimated residual values, of all property, plant and equipment, except freehold
land, over their expected useful lives. It is calculated at the following rates:
Freehold land
Freehold buildings
- Not depreciated
- Fifty years straight line
Short leasehold property
- Over the period of the lease
Plant and machinery
- Between ten and four years straight line
Public Service Vehicles (“PSVs”)
- Between 10% and 25% per annum on a reducing balance basis
Fixtures and fittings
- Three years straight line
Exceptional Costs
Exceptional costs are items which the directors consider to be outside of the normal trading transactions of the group. They
are highlighted separately on the Consolidated Income Statement to enable the underlying trading results of the group to be
identifiable.
Taxation
The charge for current taxation is provided at rates of corporation tax that have been enacted or substantively enacted by the
reporting 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
reporting 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 reporting 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 reporting 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.
38
Rotala Plc // Annual Report 2013
2.
Accounting policies (continued)
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
Financial Statements
39
2.
Accounting policies (continued)
Pension costs
Defined contribution scheme
Contributions to the group’s defined contribution pension scheme are charged in profit or loss in the year in which they
lease at the fair value of the leased asset or, if lower, the present value of the minimum lease payments plus incidental payments, if
become payable.
any, to be borne by the lessee. A corresponding amount is recognised as a finance leasing liability.
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. Fixed price
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 or available for sale.
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 assets include derivative financial instruments held at fair value through profit and loss (“FVTPL”). These assets are, if
they meet the relevant conditions, designated at FVTPL upon initial recognition. All of the group’s derivative financial instruments
currently fall into this category. Assets in this category are measured at fair value with gains or losses recognised in profit or loss.
The fair values of these financial assets are determined by reference to active market transactions or using a valuation technique
where no active market exists.
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
agreements with suppliers do not meet the definitions of a financial instrument under IAS 39 ‘Financial Instruments: Recognition
instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest
and Measurement’ as the contracts represent executory contracts to buy a non-financial asset for the use of the group. Therefore
rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of
no financial asset or liability is recognised in respect of these contracts.
The group has entered into a diesel commodity forward contract with a bank. The agreement does not meet the definitions 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;
hedging transactions under IAS 39 ‘Financial Instruments: Recognition and Measurement’, but is accounted for as a derivative and
•
Trade payables and other short-term monetary liabilities are initially recognised at fair value and subsequently carried at
is recorded at fair value through profit and loss.
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.
40
Rotala Plc // Annual Report 2013
2.
Accounting policies (continued)
Financial Statements
41
Equity
Share capital is determined using the nominal value of shares that have been issued. Premiums received on the initial issuing of
All of the activities of the group are conducted in the United Kingdom within the operating segment of provision of bus services.
share capital are credited to the share premium reserve. Any transaction costs associated with the issuing of shares are deducted
Management monitors revenue across the following streams: contracted, commercial and charter:
4.
Segmental analysis and revenue
from share premium, net of any related income tax benefits. Retained earnings include all current and prior period results.
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.
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.
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.
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.
•
•
•
•
•
•
•
•
IFRS 9 Financial Instruments (no mandatory effective date)
IFRS 10 Consolidated Financial Statements (effective 1 January 2014)
IFRS 11 Joint Arrangements (effective 1 January 2014)
IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2014)
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 2014)
IAS 28 (Revised), Investments in Associates and Joint Ventures (effective 1 January 2014)
• Disclosures - Offsetting Financial Assets and Financial Liabilities - Amendments to IFRS 7 (effective 1 January 2013)
• Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32 (effective 1 January 2014)
• Mandatory Effective Date and Transition Disclosures - Amendments to IFRS 9 and IFRS 7 (effective 1 January 2015)
• Annual Improvements 2009-2011 Cycle (effective 1 January 2013)
• Transition Guidance - Amendments to IFRS 10, IFRS 11 and IFRS 12 (effective 1 January 2014)
• Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36) (effective 1 January 2014)
Based on the group’s current business model and accounting policies, management does not expect a material impact on the group
financial statements when these standards and interpretations become effective.
Contracted
Commercial
Charter
Total Revenue
2013
£’000
20,602
29,937
2,764
53,303
2012
£’000
22,513
29,569
2,731
54,813
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 2013 and 2012 no customer constituted more than 10% of Revenues.
42
Rotala Plc // Annual Report 2013
5.
Other gains
Financial assets at fair value through profit or loss (note 29)
6.
Staff costs
Staff costs (including directors) comprise:
Wages and salaries
Employer’s national insurance contributions
Defined contribution pension costs
Share-based payment expense
The average number of employees, including directors, during the year was as follows:
Management and administrative
Direct
7.
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
2013
£’000
3
2013
£’000
24,139
2,072
158
26,369
9
26,378
2013
£’000
92
981
1,073
2013
£’000
433
32
8
2
475
2012
£’000
-
2012
£’000
24,776
2,309
156
27,241
2
27,243
2012
£’000
86
1,003
1,089
2012
£’000
446
36
6
-
488
One director (2012: 1) is a member of the group’s defined contribution pension scheme.
Emoluments of the highest paid director were £149,160 (2012: £149,160). Pension contributions of £8,400 (2012: £5,600) were
made on his behalf.
Financial Statements
43
7.
Directors’ and key management personnel remuneration (continued)
The directors’ remuneration was as follows:
2013
£’000
Share based
payment
expense
Remuneration
2012
£’000
Share based
payment
expense
Total
Remuneration
149
103
81
75
25
433
1
1
-
-
-
2
150
104
81
75
25
435
149
112
85
75
25
446
-
-
-
-
-
-
Total
149
112
85
75
25
446
Executive
S L Dunn
R A Dunn
K M Taylor
Non- Executive
J H Gunn
F G Flight
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.
8.
Profit from operations
This is arrived at after charging/(crediting):
Depreciation of property, plant and equipment
Operating lease expense:
- property
- plant and machinery
Profit on disposal of property, plant and equipment
Auditor’s fees:
- parent company
- subsidiaries
2013
£’000
3,253
299
1,941
(283)
52
3
2012
£’000
3,742
474
1,602
(417)
43
3
44
Rotala Plc // Annual Report 2013
Financial Statements
45
9.
Finance income
12. Tax expense
Interest receivable on bank deposits
Net finance gain on pension scheme (note 25)
10. Finance expense
Bank borrowings and overdraft interest
Interest payable on loan notes
Hire purchase contracts
Other interest
11. Profit before taxation
Profit before taxation includes the following:
Acquisition costs (note 31)
Gain arising on acquisition (note 31)
Contract exit costs
Loss within profit from operations
Finance expense - amortisation of debt component of
convertible debt
Loss within profit before taxation
2013
£’000
8
36
44
2013
£’000
521
185
699
6
2012
£’000
15
-
15
2012
£’000
272
229
825
5
1,411
1,331
2013
£’000
2012
£’000
Gain arising on acquisition,
acquisition expenses and
exceptional items
Gain arising on acquisition,
acquisition expenses and
exceptional items
(155)
387
(364)
(132)
-
(132)
-
-
-
-
(10)
(10)
Current tax
Current tax on profits for the year
Total current tax
Deferred tax
Origination and reversal of temporary differences
Change in rate of tax
Adjustments in respect of prior periods
Total deferred tax (note 24)
Income tax expense
2013
£’000
-
-
448
22
(325)
145
145
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 23%
Expenses not taxable
Adjustments in respect of prior periods
Total tax expense
2013
£’000
2,058
473
(25)
(303)
145
2012
£’000
-
-
451
26
(267)
210
210
2012
£’000
2,076
498
(47)
(241)
210
46
Rotala Plc // Annual Report 2013
13. Earnings per share
Basic
Profit attributable to ordinary shareholders
Weighted average number of ordinary shares in issue
Basic earnings per share
2013
£’000
1,913
35,270,888
5.42p
2012
£’000
1,866
35,270.888
5.29p
The calculation of the basic and diluted earnings per share is based on the earnings attributable to the ordinary shareholders
divided by the weighted average number of shares in issue during the year.
Profit attributable to ordinary share holders
Interest expense of convertible loan notes
Profit for the purposes of diluted earnings per share
2013
£’000
Diluted
1,913
185
2,098
2012
£’000
Diluted
1,866
229
2,095
Weighted average number of shares in issue
35,270,888
35,270,888
Adjustments for:
- assumed conversion of convertible loan notes
- exercise of options
5,146,333
162,362
5,146,333
49,331
Weighted average number of ordinary shares for the purpose of
diluted earnings per share
40,579,583
40,466,552
Basic diluted earnings per share
5.17p
5.18p
In order to arrive at the diluted earnings per share, the weighted average number of ordinary shares has been adjusted on the
assumption of conversion of all dilutive potential ordinary shares. The company has in issue two sources of potential ordinary
shares: convertible loan notes and share options. The convertible loan notes are assumed to have been converted into ordinary
shares (where dilutive), but the associated interest expense has been added back to the profit attributable to shareholders. In
respect of the options a calculation has been carried out to determine the number of shares, at the average annual market price
of the company’s shares, which could have been acquired, based on the monetary value of the rights attached to those shares.
This number has then been subtracted from the number of shares that could be issued on the assumption of full exercise of the
outstanding options, in order to compute the necessary adjustments in the above table.
Financial Statements
47
14. Property, plant and equipment
Short
Freehold land
leasehold
Plant and
Public service
Fixtures and
and buildings
property
machinery
£’000
£’000
£’000
vehicles
£’000
fittings
£’000
Cost
At 1 December 2011
Additions
Acquisition
Disposals
5,046
43
185
-
1,087
-
(185)
-
1,727
946
-
(17)
36,717
5,779
-
(8,929)
784
32
-
-
Total
£’000
45,361
6,800
-
(8,946)
At 30 November 2012
5,274
902
2,656
33,567
816
43,215
Acquisition
Additions
Transfers
Disposals
1,939
1,996
(283)
-
-
-
(2)
-
61
463
285
342
3,474
-
-
56
-
2,342
5,989
-
(1,336)
(3,765)
(582)
(5,683)
At 30 November 2013
8,926
900
2,129
33,618
290
45,863
Depreciation
At 1 December 2011
Charge for the year
Transfers
Disposals
At 30 November 2012
Charge for the year
Transfers
Disposals
At 30 November 2013
Net book value
At 30 November 2013
At 30 November 2012
245
132
54
-
431
95
(107)
-
419
8,507
4,843
147
13
(54)
-
106
21
-
-
1,196
273
-
-
13,544
3,225
-
(3,707)
539
99
-
-
15,671
3,742
-
(3,707)
1,469
13,062
638
15,706
316
107
2,726
-
95
-
3,253
-
(1,336)
(2,108)
(582)
(4,026)
127
556
13,680
151
14,933
773
796
1,573
19,938
1,187
20,505
139
178
30,930
27,509
The net book value of public service vehicles at 30 November 2013 held under hire purchase agreements was £13,998,000 (2012:
£20,177,000). Depreciation of £1,649,000 (2012: £3,138,000) was charged against assets falling into this category in the year.
48
Rotala Plc // Annual Report 2013
Financial Statements
49
15. Goodwill and other intangible assets
16. Goodwill and impairment (continued)
Purchased brands
£’000
Contracts
£’000
Goodwill
£’000
Total
£’000
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 2015. Other major assumptions are as
Cost
At 1 December 2011 and 2012 and
at 30 November 2012 and 2013
Amortisation
At 1 December 2011
Charge for the year
At 30 November 2012
Charge for the year
At 30 November 2013
Net book value
At 30 November 2013
At 30 November 2012
250
250
-
250
-
250
-
-
312
197
115
312
-
312
-
-
9,482
10,044
-
-
-
-
-
9,482
9,482
447
115
562
-
562
9,482
9,482
16. 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.
follows:
Discount rate
Operating margin
Growth rate
Inflation
CGU
2013
%
12
8
2
3
CGU
2012
%
12
8
2
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.
17.
Inventories
Fuel and spares
2013
£’000
1,826
2012
£’000
1,892
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 £14,622,000 (2012: £15,488,000). No inventory has been
written down to fair value in 2013 or 2012 and therefore no associated expense was incurred.
18. Trade and other receivables
Trade receivables
Tax and social security
Prepayments and accrued income
Vehicle order deposit placed
2013
£’000
2,948
337
4,578
-
7,863
2012
£’000
3,660
371
3,740
683
8,454
50
Rotala Plc // Annual Report 2013
Financial Statements
51
18. Trade and other receivables (continued)
20. Cash and cash equivalents
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 no provision was created (2012: provision of £33,000 was released).
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
Movements in the group trade receivables provision in the year are as follows:
Balance brought forward at 1 December
Released
Balance carried forward at 30 November
19. Derivative Financial Instruments
Fuel commodity forward contract (note 29)
2013
£’000
24
121
145
2013
£’000
-
-
-
2013
£’000
3
2012
£’000
45
189
234
2012
£’000
33
(33)
-
2012
£’000
-
Financial assets at fair value through profit or loss are presented within Operating Activities as part of changes in working capital in
the statement of cash flows.
Changes in fair values of financial assets at fair value through profit or loss are recorded within Other Gains in the income
statement.
The fair value of the commodity forward contract is determined in accordance with the procedure described in note 29.
Cash at bank
Bank overdraft
21. Trade and other payables - current
Trade payables
Taxation and social security
Other creditors
Accruals and deferred income
Grant payable
2013
£’000
317
(1,531)
(1,214)
2013
£’000
4,592
475
281
956
-
6,304
2012
£’000
351
(1,761)
(1,410)
2012
£’000
3,720
536
261
1,028
683
6,228
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 had placed an order for 8 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 had to be in operation by 31 March 2013. As at 30 November 2012 none of the vehicles had been
delivered and therefore the grant was treated as a payable in those accounts as not all of the criteria were met, with the related
deposit placed with the manufacturer treated as a receivable. There were no such amounts received in the year ended 30 November
2013.
22. Loans and borrowings
Current:
Overdrafts
Bank loans
Non-current
Convertible loan stock
Bank loans
2013
£’000
1,531
3,931
5,462
2,316
3,396
5,712
2012
£’000
1,761
1,789
3,550
2,316
1,900
4,216
52
Rotala Plc // Annual Report 2013
Financial Statements
53
22. Loans and borrowings (continued)
Analysis of maturity
2013
£’000
2013
£’000
2013
£’000
2013
£’000
2013
£’000
Convertible debt
and overdrafts
hire purchase
payables
Total
Bank loans
Obligations under
Trade and other
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 five years
185
2,331
-
-
5,632
3,132
406
-
3,776
3,420
2,614
125
4,873
14,466
-
-
-
8,883
3,020
125
2,516
9,170
9,935
4,873
26,494
2012
£’000
2012
£’000
2012
£’000
2012
£’000
2012
£’000
23. Obligations under hire purchase contracts
Future lease payments are due as follows:
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
Convertible debt
and overdrafts
hire purchase
payables
Total
Bank loans
Obligations under
Trade and other
Not later than one year
More than one but less than two 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
185
2,330
-
3,678
384
1,711
4,525
3,373
4,100
4,664
13,052
More than two but less than five years
-
-
6,087
5,811
Later than 5 years
2,515
5,773
11,998
4,664
24,950
The present values of future lease payments are analysed as:
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. 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.
Current liabilities
Non-current liabilities
Obligations under hire purchase contracts are secured on the assets to which they relate.
2013
£’000
Minimum lease payments
3,776
3,420
2,614
125
9,935
2012
£’000
Minimum lease payments
4,525
3,373
4,100
-
2013
£’000
Interest
458
231
132
3
824
2012
£’000
Interest
594
342
186
-
2013
£’000
Present value
3,318
3,189
2,482
122
9,111
2012
£’000
Present value
3,931
3,031
3,914
-
11,998
1,122
10,876
2013
£’000
3,318
5,793
9,111
2012
£’000
3,931
6,945
10,876
54
Rotala Plc // Annual Report 2013
Financial Statements
55
24. Deferred taxation
25. Pensions (continued)
The deferred tax asset included in the Statement of Financial Position is analysed as follows:
WMITAPF defined benefit pension scheme
Accelerated capital allowances
Arising on fair value adjustments on acquisition
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
2013
£’000
(275)
173
170
356
424
2013
£’000
521
123
(145)
(75)
424
2012
£’000
(396)
(302)
351
868
521
2012
£’000
489
-
(210)
242
521
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 2013 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
2013
%
30 November
2012
%
n/a
2.2
4.3
2.2
7.0
3.4
4.4
0.5
n/a
n/a
2.0
4.0
2.0
7.0
2.7
3.6
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
At 30 November 2013 there were no (2012: £nil) temporary differences or unused tax losses for which deferred tax has not been
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 were:
provided.
25. 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 £158,000 (2012: £156,000). Contributions amounting
to £22,789 (2012: £22,841) were payable to the funds at the balance sheet date.
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 £66,667 (2012: £nil) were payable to the fund at the
balance sheet date.
Current pensioner aged 65 - male
Current pensioner aged 65 - female
Future pensioners at aged 65 (aged 45 now) - male
Future pensioners at aged 65 (aged 45 now) - female
30 November
2013
Years
30 November
2012
Years
21.8
24.6
23.9
27.0
20.9
23.7
22.3
25.2
Since the scheme has been closed for a number of years, there is no current service cost to be charged to operating profits.
Discount rate
Inflation
Life expectancy
Change in assumption
Impact on overall liability
Increase/decrease by 0.1%
Increase/decrease of 1.25%
Increase/decrease by 0.1%
Increase/decrease of 1.27%
Increase by 1 year
Increase of 2.1%
56
Rotala Plc // Annual Report 2013
Financial Statements
57
25. Pensions (continued)
25. Pensions (continued)
The amounts recognised in the statement of financial postion were determined as follows:
Actuarial (losses)/gains as a percentage of scheme assets and liabilities at 30 November 2013 were as follows:
Actual return less expected return on pension 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
2013
2012
2011
3.2
2.1
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 £1,302,000.
The amount of contribution to be paid by the group to the scheme during the next financial year is £350,000. The actual return on
plan assets was £1,327,000 (2012: £1,372,000).
The movement in deficit during the year under IAS 19 was:
Deficit in scheme at 30 November
Movement in period
- Contributions
- Actuarial gain/(loss)
- Expected return on assets
- Interest cost
Deficit in scheme at the end of the year
2013
£’000
(1,463)
400
355
693
(657)
(672)
2012
£’000
(854)
400
(1,009)
734
(734)
(1,463)
Equities
Bonds
Total market value of assets
Present value of scheme liabilities
Pension liability before tax
Related deferred tax asset
Net pension liability
2013
£’000
7,248
8,858
16,106
(16,778)
(672)
141
(531)
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 on pension liabilities
Net finance gain
Total defined benefit gain
Defined contribution costs
Total profit and loss charge
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
2013
£’000
693
(657)
36
36
(158)
(122)
2013
£’000
510
(155)
2012
£’000
6,959
8,506
15,465
(16,928)
(1,463)
351
(1,112)
2012
£’000
734
(734)
-
-
(156)
(156)
2012
£’000
638
(1,647)
355
(1,009)
58
Rotala Plc // Annual Report 2013
Financial Statements
59
25. Pensions (continued)
27. Share options and warrants
The movement in assets during the year under IAS 19 is as follows:
As at 30 November 2013 the following share options had been issued and were outstanding under the company’s employee share
At 30 November
Expected return on plan assets
Actuarial gains
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
26. Share capital
2013
£’000
15,465
693
510
400
(962)
16,106
2013
£’000
(16,928)
(657)
(155)
962
2012
£’000
14,557
734
638
400
(864)
15,465
2012
£’000
(15,411)
(734)
(1,647)
864
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
319,165
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.
(16,778)
(16,928)
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.
Authorised and called up and fully paid
2013
Number
2013
£’000
2012
Number
Ordinary shares of 25p each
35,270,888
8,818
35,270,888
2012
£’000
8,818
As at 1 December 2011 and 2012 and
30 November 2012 and 2013
Number
Nominal Value
£’000
35,270,888
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.
2013
Weighted average
exercise price (p)
2012
Weighted average
Number
exercise price (p)
Number
Outstanding at the beginning of the year
Forfeited during the year
Issued during the year
60.21
(40.05)
-
3,067,399
(111,901)
-
63.34
(58.00)
40.05
2,714,333
(78,000)
431,066
Outstanding at the end of the year
60.97
2,955,498
60.21
3,067,399
The exercise price of options outstanding at the end of the year ranged between 37.5p and 162.5p (2012: 37.5p and 162.5p) and their
weighted average remaining contractual life was 3.28 years (2012: 4.23 years).
Of the outstanding options at the reporting date 2,636,333 (2012: 2,636,333) were exercisable. The weighted average exercise price
was 63.50p (2012: 63.50p).
60
Rotala Plc // Annual Report 2013
Financial Statements
61
28. Commitments under operating leases
29. Financial instruments - risk management (continued)
The group had total commitments under non-cancellable operating leases as set out below:
Operating lease commitments payable:
Within one year
In two to five years
In more than five years
2013
£’000
2012
£’000
Land and
buildings
Other
Land and
buildings
282
532
1,441
1,924
5,463
875
337
565
1,488
Other
1,833
5,113
587
2,255
8,262
2,390
7,533
29. 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. Financial assets are classified as loans and receivables
or designated at fair value through profit and loss (“FVTPL”); 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 assets - FVTPL
Fuel commodity forward derivative contract
Financial liabilities - at amortised cost
Trade and other payables
Loans and borrowings
2013
£’000
2012
£’000
Carrying value
Carrying value
2,948
317
3,265
3
4,873
11,174
16,047
4,343
351
4,694
-
4,664
7,766
12,430
Financial assets and liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair
value hierarchy. This grouping is determined based on the lowest level of significant inputs used in fair value measurement, as
follows:
• Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities
•
Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices)
• Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs)
The fair values of the group’s financial assets are classified as Level 2.
The group’s diesel forward contracts are not traded in active markets. The fair value of the diesel forward contracts has been
measured by the contracting bank using inputs obtained from forward pricing curves corresponding to the maturity of the contract.
The reconciliation of the carrying amounts of financial instruments classified within Level 2 is as follows:
Balance at 1 December 2012
Gain recognised in operating profit
2013
£’000
-
3
3
Gains or losses related to these financial instruments are recognised within profit from operations in profit or loss and all amounts
recognised in the current period relate to financial assets held at 30 November 2013.
Changing inputs to Level 2 valuations to reasonably possible alternative assumptions would not change significantly amounts
recognised in profit or loss, total assets, total liabilities or total equity.
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 16.
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:
2013
£’000
2012
£’000
Financial liabilities
Financial liabilities
Financial liabilities
Financial liabilities
on which a floating
on which a fixed rate
on which a floating
on which a fixed rate
rate is paid
is paid
rate is paid
8,346
11,938
4,444
is paid
13,766
The group’s derivative financial instruments relate to fuel commodity forward contracts, which help to mitigate the group’s exposure
UK Sterling
to fluctuations in diesel prices. There are a number of contracts in place at the reporting date which, taken together with diesel
fixed price contracts give the group certainty on a substantial proportion of its projected diesel expenditure up to November 2015.
In the year the group paid interest at a rate of between 3.5% and 4% (2012: between 3% and 4.5%) on the liabilities subject
to floating rates of interest set out above. The financial liabilities set out above subject to fixed rates of interest (fixed for the
whole year) were at rates between 4.4% and 8% (2012: 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.
62
Rotala Plc // Annual Report 2013
Financial Statements
63
29. Financial instruments - risk management (continued)
30. Related parties and transactions
Credit risk
The group is exposed to credit risk on cash and cash equivalents, and trade and other receivables. Cash balances, all held
1.
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 7. At the year end £nil (2012: £nil) of the amount charged was unpaid and included within
in the UK, are placed with the group’s principal bankers. The client base of the group lies mainly in government and semi-
creditors. During the year J H Gunn received from Rotala a total of £77,373 (2012: £66,669) in dividends on ordinary shares.
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 and fuel commodity forward derivative 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 returns 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. For example, in the past
two years the board has undertaken refinancing of debt to optimise the position. In order to maintain or adjust the capital
structure, the group may also 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
Retained earnings
At end of year
2013
£’000
8,818
7,828
2,567
4,371
23,584
2012
£’000
8,818
7,828
2,567
2,663
21,876
2.
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 7. At the year end £8,466 (2012: £10,570) of the amount
charged was unpaid and included within creditors. During the year R A Dunn received from Rotala a total of £12,732 (2012:
£10,913) in dividends on ordinary shares.
3.
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 7. At the year end £7,500 (2012: £7,891) of the amount charged was unpaid and
included within creditors. During the year F G Flight received from Rotala a total of £18,551 (2012: £15,901) in dividends on
ordinary shares and £nil (2012: £2,000) in interest on convertible unsecured loan stock.
4.
During the year S L Dunn received from Rotala a total of £9,616 (2012: £8,083) in dividends on ordinary shares and £20,800
(2012: £20,800) in interest on convertible unsecured loan stock.
5.
During the year K M Taylor received from Rotala a total of £5,005 (2012: £4,290) in dividends on ordinary shares and £2,000
(2012: £2,000) in interest on convertible unsecured loan stock.
6.
J H Gunn is a director of The 181 Fund Limited (“The Fund”), a company incorporated in Jersey. The Fund held an interest in
1,980,221 ordinary shares of Rotala as at 30 November 2013 (2012: 1,730,221 ordinary shares). The Fund also held £55,000
of the convertible loan stock of Rotala as at that date (2012: £400,000). 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 2013 Mr. Gunn and his beneficial interests
held 28.2% (2012: 25.02%) of the ordinary share capital of The Fund. During the year The Fund received from Rotala a total of
£26,473 (2012: £20,763) in dividends on ordinary shares and £18,200 (2012: £40,234) in interest on convertible unsecured loan
stock.
64
Rotala Plc // Annual Report 2013
Financial Statements
65
31. Acquisition
32. Capital commitments
As at 30 November 2013 the group had placed orders for undelivered vehicles with a capital value of £602,000 (2012: £1,677,000).
33. Contingent liabilities
The group in 2011 and 2012 received grants totalling of £2,347,000 from the Government’s Green Bus Fund for the acquisition of 23
hybrid diesel electric vehicles. The principal condition of the grants is that the vehicles should be retained by the group for at least
three years. If this condition is not observed the grants become repayable. The group has no intention of not meeting this condition
of the grants.
34. Audit exemption for subsidiary undertakings
For the year ended 30 November 2013, 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
Diamond Bus Company Holding Limited
Company Number
4327651
3506681
2531054
4390228
6504654
6504657
As set out in the Chairman’s Statement, on 3 March 2013 the group acquired certain businesses and assets in Kidderminster and
Redditch from First Group plc. The Chairman’s Statement describes the reasons for the acquisition and should be consulted for a
detailed description of all the relevant factors. The consideration for the acquisition was £1.559 million in cash. The book value and
fair value of the assets acquired are set out below.
Book value
Fair value adjustment
Fair value on acquisition
Fixed assets
Vehicles
Freehold land and buildings
Other fixed assets
Total fixed assets
Current assets
Deferred taxation
Current liabilities
Creditors due within one year
Gain on acquisition (note 11)
Acquisition costs (note 11)
Total cash consideration paid
£’000
250
1,248
61
1,559
-
-
-
£’000
92
691
-
783
123
(519)
(396)
£’000
342
1,939
61
2,342
123
(519)
(396)
(387)
155
1,714
1,714
Because the acquired business was immediately folded in to the existing operations of the group in the same localities, it is not
possible to distinguish revenues and profits for the acquired business in the period to 30 November 2013.
The fair value adjustments relate to the buses and freehold properties acquired, together with the liabilities assumed with the
business purchase. The deferred taxation asset arises from the purchased goodwill, emanating from the acquisition of the
business, recorded in the subsidiary undertaking which acquired that business.
Pre-acquisition book values were determined based on applicable IFRS, immediately prior to the acquisition. The values of assets
recognised on acquisition are their estimated fair values. For the buses acquired this is based on the directors’ assessment of the
age and condition of each of the vehicles and their knowledge of disposal values for equivalent vehicles. The buildings were valued
by professional valuers on an existing use basis. The fair value of liabilities brings the accounting policies in line with those of the
group for items such as claims.
The acquisition expenses incurred by the group amounted to £155,000 and have been expensed in the Consolidated Income
Statement in Administrative Expenses.
66
Rotala Plc // Annual Report 2013
Financial Statements
67
Company Balance Sheet
As at 30 November 2013
Fixed assets
Investments
Current assets
Debtors
Creditors: amounts falling due within one year
Net current (liabilities)
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
Profit and loss account
Shareholders’ funds
Note
3
4
5
6
8
10
10
11
2013
£’000
25,539
5,001
5,001
(5,573)
(572)
24,967
(5,712)
19,255
8,818
7,828
2,609
19,255
2012
£’000
25,539
1,870
1,870
(5,148)
(3,278)
22,261
(4,216)
18,045
8,818
7,828
1,399
18,045
The financial statements were approved by the Board of Directors and authorised for issue on 24 April 2014
Simon Dunn
Chief Executive
Kim Taylor
Group Finance Director
The accompanying notes form an integral part of these financial statements.
Notes to the Company
Financial Statements
For the year ended 30 November 2013
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.
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.
68
Rotala Plc // Annual Report 2013
Financial Statements
69
2.
Profit/(loss) for the financial year
5.
Creditors: amounts falling due within one 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 profit after taxation of
£1,695,000 (2012: loss £149,000) which is dealt with in these parent company financial statements.
3.
Investments
Cost and net book value
At 1 December 2012 & 30 November 2013
Bank loans and overdrafts (note 6)
Amounts due to subsidiary undertakings
Grant payable
Trade creditors
Other creditors
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,
6.
Creditors: amounts falling due after more than one year
are as follows:
Flights Hallmark Limited
Hallbridge Way Property Limited
Central Connect Limited
The Diamond Bus Company Limited*
Preston Bus Limited
* Held indirectly
4.
Debtors
Prepayments and accrued income
Vehicle order deposit place (see note 5)
Amounts due from subsidiary undertakings
Country of
Proportion of voting
incorporation or
rights and ordinary share
registration
capital held
Nature of business
England
England
England
England
England
100%
100%
100%
100%
100%
Transport
Property holding
Transport
Transport
Transport
2013
£’000
166
-
4,835
5,001
2012
£’000
79
683
1,108
1,870
All amounts shown under debtors fall due for payment within one year.
Convertible loan stock
Bank loan
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. The loan stock continues to bear a coupon of 8%.
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 company 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.
2013
£’000
5,076
-
-
90
407
5,573
2013
£’000
2,316
3,396
5,712
2012
£’000
2,401
1,635
683
57
372
5,148
2012
£’000
2,316
1,900
4,216
70
Rotala Plc // Annual Report 2013
Financial Statements
71
6.
Creditors: amounts falling due after more than one year (continued)
9.
Share options and warrants
Analysis of maturity
As at 30 November 2013 the following share options had been issued and were outstanding under the company’s employee share
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
2013
£’000
-
2,316
-
2,316
Convertible debt
2012
£’000
-
2,316
-
2,316
Bank loan
2013
£’000
5,076
3,008
388
8,472
Bank loan
2012
£’000
2,401
289
1,611
4,301
Total
2013
£’000
5,076
5,324
388
10,788
Total
2012
£’000
2,401
2,605
1,611
6,617
7.
Deferred tax
No closing deferred tax provision is required for the company for 2013. The potential deferred taxation assets not provided are:
Losses
2013
£’000
-
-
The deferred tax asset above was not recognised in accordance with the company’s accounting policies.
8.
Share capital
Ordinary shares of 25p each
35,270,888
2013
Number
Allotted and called up and fully paid
2013
£’000
8,818
2012
Number
35,270,888
Issued Share Capital
Number
As at 1 December 2011 and 2012 and 30 November 2012 and 2013
35,270,888
2012
£’000
16
16
2012
£’000
8,818
Value
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.
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
29 March 2008
28 March 2015
30 August 2008
29 August 2015
30 March 2009
29 March 2016
24 July 2010
23 July 2017
880,000
6 September 2010
5 September 2017
695,000
5 September 2011
4 September 2018
125.0p
162.5p
37.5p
62.5p
62.5p
50.0p
40.05p
24 September 2012
319,165
24 September 2015
24 March 2016
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.
Outstanding at beginning of the year
Forfeited during the year
Issued during the year
2013
Weighted average
exercise price (p)
60.21
(40.05)
-
2013
Number
3,067,399
(111,901)
-
2012
Weighted average
exercise price (p)
63.34
(58.00)
40.05
2012
Number
2,714,333
(78,000)
431,066
Outstanding at the end of the year
60.97
2,955,498
60,21
3,067,399
The exercise price of options outstanding at the end of the year ranged between 37.5p and 162.5p (2012: 37.5p and 162.5p) and their
weighted average remaining contractual life was 3.28 years (2012: 4.23 years).
Of the outstanding options at the balance sheet date 2,636,333 (2012: 2,636,333) were exercisable. The weighted average exercise
price was 63.50p (2012: 63.50p).
72
Rotala Plc // Annual Report 2013
Financial Statements
73
10. Reserves
15. Contingent liabilities
Share premium account
2013
£’000
Profit and loss account
2013
£’000
7,828
-
-
-
7,828
2013
£’000
1,695
9
(494)
1,210
18,045
19,255
1,399
1,695
9
(494)
2,609
2012
£’000
(149)
2
(283)
(430)
18,475
18,045
At 1 December 2012
Profit for the year
Employee share schemes
Dividends paid
At 30 November 2013
11. Reconciliation of movements in shareholders’ funds
Profit/(loss) for the year
Share based payment charge credited to reserves
Dividends paid
Net addition to shareholders’ funds
Opening shareholders’ funds
Closing shareholders’ funds
12. Pensions
The company does not have a pension scheme of any nature.
The company has entered into a cross-guarantee and floating charge agreement with its subsidiaries. At 30 November 2013 the
contingent liability amounted to £387,000 (2012: £717,000).
The company has guaranteed the hire purchase obligations of its subsidiaries. At 30 November 2013 the contingent liability
amounted to £9,111,000 (2012: £10,876,000).
The company in 2011 and 2012 received grants totalling of £2,347,000 from the Government’s Green Bus Fund for the acquisition
of 23 hybrid diesel electric vehicles. The principal condition of the grants is that the vehicles should be retained by the group for at
least three years. If this condition is not observed the grants become repayable. The company has no intention of not meeting this
condition of the grants.
16. Related parties and transactions
1.
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 (2012: £nil) of the amount charged was unpaid and included within creditors. During the year J
H Gunn received from Rotala a total of £77,373 (2012: £66,669) in dividends on ordinary shares.
2.
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 £8,466 (2012: £10,570) of the amount charged was unpaid and
included within creditors. During the year R A Dunn received from Rotala a total of £12,732 (2012: £10,913) in dividends on
ordinary shares.
3.
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 £7,500 (2012: £7,891) of the amount charged was unpaid and included within
creditors. During the year F G Flight received from Rotala a total of £18,551 (2012: £15,901) in dividends on ordinary shares
and £nil (2012: £2,000) in interest on convertible unsecured loan stock.
4.
During the year S L Dunn received from Rotala a total of £9,616 (2012: £8,083) in dividends on ordinary shares and £20,800
(2012: £20,800) in interest on convertible unsecured loan stock.
5.
During the year K M Taylor received from Rotala a total of £5,005 (2012: £4,290) in dividends on ordinary shares and £2,000
(2012: £2,000) in interest on convertible unsecured loan stock.
6.
J H Gunn is a director of The 181 Fund Limited (“The Fund”), a company incorporated in Jersey. The Fund held an interest in
1,980,221 ordinary shares of Rotala as at 30 November 2013 (2012: 1,730,221 ordinary shares). The Fund also held £55,000
of the convertible loan stock of Rotala as at that date (2012: £400,000). 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 2013 Mr. Gunn and his beneficial interests
held 28.2% (2012: 25.02%) of the ordinary share capital of The Fund. During the year The Fund received from Rotala a total of
£26,473 (2012: £20,763) in dividends on ordinary shares and £18,200 (2012: £40,234) in interest on convertible unsecured loan
13. Capital commitments
stock.
As at 30 November 2013 the company had placed orders for undelivered vehicles with a capital value of £602,000 (2012: £1,677,000).
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
2013
£’000
22
45
Other
2012
£’000
-
31
74
Rotala Plc // Annual Report 2013
Shareholder Information
75
Shareholder
Information
76
Rotala Plc // Annual Report 2013
Shareholder Information
77
Notice of Annual General Meeting
NOTICE IS HEREBY given that the Annual General Meeting (“AGM”) of Rotala plc
Special Resolutions
(the “Company”) will be held at 12 pm on 29 May 2014 at the offices of the Company
at Beacon House, Long Acre, Birmingham, B7 5JJ for the purpose of considering,
8.
THAT, in substitution for all existing such authorities and subject to the passing of Resolution 7, 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 7 or by way of sale of treasury shares as if section 561 of CA 2006 did not apply to
and if thought fit, passing the following Resolutions with or without modifications and
the allotment or sale provided that this power:-
of which Resolutions 1 to 7 (inclusive) will be proposed as ordinary resolutions and
8.1
is limited to the allotment of equity securities:-
Resolutions 8 to 9 will be proposed as special resolutions.
Ordinary Resolutions
8.1.1
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
1.
THAT, the accounts of the Company for the financial period ended 30 November 2013, together with the directors’ report and the
of any territory, or the requirements of any regulatory body or stock exchange in any territory; and
auditor’s report on those accounts, be received and considered.
2.
THAT, upon recommendation of the directors, a dividend of 1.05p per ordinary share be declared as a final dividend in respect of the
approximately 10 per cent. of the issued ordinary share capital of the Company as at 24 April 2014);
8.1.2
otherwise than pursuant to paragraph 8.1.1 up to an aggregate nominal value of £881,772 (representing
financial year ended 30 November 2013.
3.
THAT, Grant Thornton UK LLP be and are hereby re-appointed as auditors of the Company to hold office until the conclusion of the
authority shall extend to the making of an offer or agreement which would or might require equity securities to be allotted
next general meeting of the Company before which statutory accounts are laid and that the directors of the Company be and are
after such expiry date and the directors may allot equity securities in pursuance of that offer or agreement as if the power
hereby authorised to fix the auditors’ remuneration from time to time.
conferred by this Resolution had not expired;
8.2
shall expire at the earlier of the conclusion of the next annual general meeting of the Company and 31 May 2015, but such
4.
THAT, John Gunn who is retiring by rotation in accordance with the Company’s articles of association and, being eligible, offers
9.
THAT the Company be and is hereby generally and unconditionally authorised for the purposes of section 701 of CA 2006 to make
himself for re-election as a director of the Company, be re-elected as a director of the Company.
market purchases (within the meaning of section 693(4) of CA 2006) of Ordinary Shares provided that:-
5.
THAT, Robert Dunn who is retiring by rotation in accordance with the Company’s articles of association and, being eligible, offers
9.1
the maximum number of Ordinary Shares which may be purchased is 3,527,088 (representing ten per cent of the Company’s
himself for re-election as a director of the Company, be re-elected as a director of the Company.
issued ordinary share capital as at 24 April 2014);
Special Business
6.
THAT, in accordance with section 366 of the Companies Act 2006 (“CA 2006”), the Company and its subsidiaries are hereby
authorised to:-
6.1 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
6.2
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 2015.
7.
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 24 April 2014 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 2015
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.
9.2
the minimum price (exclusive of expenses) which may be paid for each Ordinary Share is 25 pence;
9.3
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;
9.4
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 2015 (unless previously renewed, varied or revoked by the Company in general
meeting); and
9.5
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: 24 April 2014
78
Rotala Plc // Annual Report 2013
Notes to Members
Shareholder Information
79
1.
A member entitled to attend and vote at the meeting is also entitled to appoint one or more proxies to attend, speak and vote
10.
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
instead of him/her. A member may appoint more than one proxy in relation to the meeting, provided that each proxy is appointed 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
exercise the rights attached to a different share or shares held by that member. The proxy need not be a member of the Company.
holders stand in the register of members in respect of the joint holding.
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).
2.
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:-
11.
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.
12.
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.
13.
The Company, pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, specifies that only those members
3.1 by completing and returning a form of proxy by post or by hand to the offices of the Company’s registrars, Capita Asset Services,
entered on the register of members of the Company at the close of business on 27 May 2014 shall be entitled to attend and vote at
PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU; or
3.2 in the case of CREST members, through the CREST electronic proxy appointment service.
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.
4.
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 Asset Services, 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 Asset Services, 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.
5.
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.
6.
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.
7.
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.
8.
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.
9.
Completion and return of the Form of Proxy will not preclude a shareholder from attending and voting in person at the meeting.
80
Rotala Plc // Annual Report 2013
Shareholder Information
81
Resolution 9 – 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 outcome of such purchases would either be to cancel that number of shares 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 24
April 2014. The directors intend to seek renewal of this power at each Annual General Meeting.
Explanatory Notes to Notice of
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 27 June 2014 to those shareholders on the Company’s register of members as at close of business
on 6 June 2014.
Resolution 6 – 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 2013, 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 7 – 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 24 April 2014. The directors have no current intention of exercising
this authority.
This authority will expire at the conclusion of the next AGM, or 31 May 2015, whichever is the earlier.
Resolution 8 – 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 £881,772 which is equivalent to 10 per cent of the total issued ordinary share capital of the
Company as at 24 April 2014 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 2015, whichever is the earlier.
Rotala Plc
Beacon House, Long Acre, Birmingham B7 5JJ
Telephone: 08458 382 382
Website: www.rotalaplc.com