Annual Report
For year ended 30 November 2014
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
14
20
24
29
30
31
32
34
36
70
71
84
86
88
Rotala Plc
Beacon House, Long Acre, Birmingham B7 5JJ
Telephone: 08458 382 382
Website: www.rotalaplc.com
Produced by Sue Willdigg, Corporate Design Manager for the Rotala Group
Rotala at a Glance
Rotala
at a Glance
02
Rotala Plc // Annual Report 2014
Rotala at a Glance
03
Directors, Secretary & Advisers
Financial Highlights
Rotala at a Glance
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 2014.
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
Profit before Taxation
Dividend
£51,674,000
3.1%
£2,263,000
8.0%
(before exceptional items)
1.85p
15.6%
2014
£51,674,000
2014
£2,263,000
2014
2013
1.85p
1.60p
Company Secretary
Kim Taylor
2013
£53,303,000
2013
£2,094,000
Nominated Adviser and Broker
Auditor
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London
EC4M 7LT
Grant Thornton UK LLP
Chartered Accountants
Registered Auditor
Colmore Plaza
20 Colmore Circus
Birmingham B4 6AT
Solicitors
Squire Patton Boggs (UK) LLP
Registrars
Bankers
Rutland House
148 Edmund Street
Birmingham
B3 2JR
Capita Asset Services
34 Beckenham Road
Beckenham BR3 4TU
RBS/Natwest
1 St. Philips Place
Birmingham B3 2PP
2012
£54,813,000
2012
£2,086,000
2012
1.40p
2011
£56,077,000
2011
£1,878,000
2011
1.20p
Contracted Revenue
Commercial Revenue
Charter Revenue
£17.9m
13.0%
2014
£17.9m
2013
2012
2011
£20.6m
£22.5m
£21.9m
£30.6m
2.0%
£3.2m
14.0%
2014
2013
2012
2011
£30.6m
£29.9m
£29.6m
2014
2013
£3.2m
£2.8m
2012
£2.7m
£30.9m
2011
£3.3m
04
Rotala Plc // Annual Report 2014
Rotala at a Glance
05
Statutory Reports
Review of Operations
& Statutory Reports
06
Rotala Plc // Annual Report 2014
Review of Operations and Statutory Reports
07
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 2014.
Profit before Taxation
£2,263,000
8.0%
(before exceptional items)
Review of trading
It is encouraging to see that pre-tax profits for the year, on a slightly reduced level of
turnover and before exceptional items, rose by 8% compared with those of 2013. These
results reflect our determination to pursue profitable turnover rather than turnover
regardless of margin. In this outcome we met our expectations for the year and fulfilled
our objective of continuing to focus on increased operating efficiency and enhanced
customer service. Exceptional items were largely comprised of the mark to market
provisions for the derivative–based fuel hedges which the company has taken out to cover
2014
£2,263,000
its future fuel requirements. Movements in mark to market provisions must be taken to
2013
£2,094,000
2012
£2,086,000
2011
£1,878,000
Revenue by Stream
35% Contracted
59% Commercial
6% Charter
profit or loss every year, but the fuel hedges are in reality in place to benefit the business
in the future. The accounting therefore does not follow the economic reality and distorts
the results. More information about the fuel hedging position is given below in the
relevant paragraph covering that point.
Contracted Services
The proportion of the group’s revenues derived from Contracted Services has
been falling for several years now, as the focus of our activities has shifted more
and more towards Commercial Services. In 2014 this proportion was 35% (2013:
39%). The reason for this reduction was twofold: first in 2013 there was still some
revenue from the two National Express Limited (“NEL”) route diagrams which we
ceased to operate in March of that year. The legal dispute with NEL that resulted
from the halting of these contracts was satisfactorily resolved in June 2014.
Second, in the last quarter of 2014 the contracted services operated on behalf of
the University of the West of England (“UWE”) were, by mutual consent, converted
into commercial bus services. Aside from these two factors revenues in Contracted
Services were reasonably stable. In Preston we gained some local school and
college contracts and in the South West and the West Midlands the gains and losses
on local authority contracts more or less balanced each other out. Thus revenues
in Contracted Services fell overall by 13% to £17.9 million (2013: £20.6 million).
There are some signs that the substantial contraction in local authority transport
budgets has levelled out. However it must be expected that any new round of budget
reductions directed by Central Government after the upcoming General Election
will have a further impact on available revenues in this area. Accordingly we will
continue the policy we have adopted in recent years of focusing our energies in
Contracted Services on gaining more private bus networks business with corporate
customers.
Statutory Reports
Contracted Revenue
£17.9m
13.0%
2014
£17.9m
2013
2012
2011
£20.6m
£22.5m
£21.9m
Commercial Revenue
£30.6m
2.0%
2014
2013
2012
2011
£30.6m
£29.9m
£29.6m
£30.9m
Charter Revenue
£3.2m
14.0%
2014
2013
£3.2m
£2.8m
2012
£2.7m
2011
£3.3m
Commercial Services
As revenues in Contracted Services have fallen, so the proportion of revenues
from Commercial Services has risen, in 2014 to 59% of group turnover (2013:
56%). Part of the reason for this rise was a full year contribution from the Redditch
and Kidderminster depots which we acquired in 2013. But here and in Preston
revenues showed some underlying growth. In addition the change in status of
services for UWE, as described above, had an impact. The UWE change will drive
growth in Commercial Services further in 2015. To take advantage of this we have
upgraded management in the South West by creating a Managing Director post with
specific responsibility only for this region. In the West Midlands the commercial
bus services of the group have largely been repositioned over the last couple of
years to focus on the western side of the Birmingham conurbation and on Redditch
and Kidderminster in the northern part of Worcestershire. In these areas we hold
more significant market shares upon which we are focusing our investment and
management attention. Furthermore in January 2015 Centro (the West Midlands
Integrated Transport Authority) announced that their Oyster-style bus cards will
be rolled out to all operators by the spring. Income from the Centro Network card
was stable in 2014 but this opening out of the coverage offered by the Swift card
should provide an opportunity for some modest growth in revenue in 2015 and
beyond as, in concert with the multi-operator card introduced last year, travellers
will now be offered increased flexibility and choice. Income from our own network
cards continued to grow strongly in all our operational areas whilst income from
concessionary fares remained steady year on year. Thus overall revenues in
Commercial Services in 2014 rose by 2% to £30.6 million (2013: £29.9 million).
Charter Services
Revenues in Charter Services grew by 14% in 2014 to £3.2 million (2013: £2.8
million). Revenues in chauffeur car hire movements, which we carry out for our
airline customers and which we sub-contract in their entirety, were little changed.
In contrast revenues from private hire coaching work continued their strong
recovery. Hire rates in this area of business have responded well to increased
demand and we have been able to take advantage of the increased availability of
work through the efficient deployment of our existing coach fleet.
08
Rotala Plc // Annual Report 2014
Review of Operations and Statutory Reports
09
Statutory Reports
Chairman’s Statement and
Review of Operations
(continued)
Strategy and acquisitions
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), we are also the number two bus operator. Our strategic aim is to
improve our position, based upon our current hubs of operation, wherever we can by organic growth or, more particularly, by acquisition.
Fleet management
Last year in my report to shareholders I said that we saw very little need to replace vehicles in the fleet unless specific new requirements
arose. This expectation was borne out in practice and in the event only about 5% of the vehicle fleet needed to be replaced during the
year. This meant that, by the end of the year, the average age of the fleet was extended to some 8.34 years (2013: 7.64 years), a figure
which remains very competitive in industry terms. In the current year we once again foresee a low requirement for vehicle replacement
With this aim in mind we, on 28 February 2015, acquired Green Triangle Buses Limited (“GTB”) for a cash consideration of £900,000
unless new contract customers make specific requests or existing customers order upgrades, which would of course carry with them
and the repayment of its existing overdraft of £368,000. GTB has revenues of approximately £3.9 million and made a profit before tax
corresponding price increases.
and exceptional items of £107,000 in the year ended 31 August 2014. GTB operates 43 vehicles from a long leasehold depot in Atherton,
Manchester and employs about 100 staff. The depot is well placed within the local transport network and capable of handling the
expansion needs envisaged for GTB at the current time. The acquisition will enable the company to enhance its position in the Lancashire
market and give it access for the first time to the Greater Manchester area which falls under the remit of Transport for Greater
Manchester. Operationally GTB (which will be renamed Diamond Bus (North West) Limited) will be part of the North West division of
Rotala, with its existing hub in Preston headed by Bob Dunn as Managing Director. The acquisition is not expected to have a material
impact on earnings in the current financial year, but, following the integration of operations and overheads during the remainder of this
year, is expected to have a beneficial effect on earnings in future years.
The board monitors each vehicle in the fleet for relative fuel consumption, reliability and maintenance cost. We believe that having a
modern and efficient bus fleet is a key aspect of customer service. Older vehicles also produce a greater level of emissions and we are
keen to minimise this aspect of bus operation. Those vehicles that fall outside of acceptable parameters are designated for disposal.
Any replacements were a judicious mix of new and 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.
Convertible Loan Stock
This acquisition was facilitated by the revised suite of banking facilities which we entered into with our principal bankers, RBS/Natwest
The convertible loan stock issued in 2008 expired on 31st December 2014. Of the £2.32m loan stock outstanding at 30 November 2013,
in October 2014. These new facilities, totalling £18.0m, replaced the group’s existing facilities of approximately £11.0m with the same
£2.16 million was converted into ordinary shares in accordance with the terms of the loan stock deed and the remainder has been repaid
bank. The new facilities comprise a Term Loan Facility of £7.0m, a Revolving Facility of £9.0m and an Overdraft Facility of £2.0m, with a
at par.
maturity date for all facilities of 30 April 2018. In addition we possess substantial unused vehicle financing facilities. In the opinion of the
board these facilities are ample for the current needs of the group. Taking into account these new facilities and the parallel asset finance
facilities, the group has much headroom within which it can readily finance any further acquisitions.
Share Options
Fuel and hedging
On 24 November 2014 2,685,000 share options were issued to executive directors and senior managers below board level. At the same
time certain share option issues nearing their expiry date were extinguished. The new share options are however entirely performance
related; the new option issue is split into three equal tranches. For the options to be exercisable the share price must exceed the level
The cost of diesel fuel remains a significant factor in the business. The board’s stated policy is to create certainty over the Group’s fuel
set for each tranche, which is 65 pence, 80 pence and 95 pence respectively. Thus the interests of shareholders and management are
costs by hedging the total fuel requirement, whenever it seems prudent to do so. The board’s view is that hedging the fuel requirement
completely aligned: for the share options to be worth anything, management must increase the market value of the company significantly,
is a prudent and conservative approach which reduces the volatility of underlying earnings and cash flows whilst also giving certainty to
which must be in the interest of shareholders.
business planning and financial forecasts. The board therefore has continued to take out fuel hedges against the fuel requirements of the
group, at the present time up to November 2017.
For 2015, where hedges at about 108p a litre were already in place for almost all of the 10 million litre full year fuel requirement, recent
Financial review
oil price volatility will have little or no impact on the company’s prospects. For 2016 the company has been able, taking advantage of
The Consolidated Income Statement is set out on page 29. This section of the review addresses the results before the mark to market
recent falls in the oil price, to extend the coverage of its fuel hedge and reduce the average price per litre of that hedge. The company
provision for fuel derivatives and other exceptional items. I have already highlighted the 3% decrease in revenues year on year and the
has now hedged about 84% of its fuel requirement for that year at an average price of about 102p a litre. For 2017 some 70% of the fuel
reasons for this variance. Cost of Sales fell by 4%; the principal business reasons for this have been described above. Gross Profits were
requirement for that year has now been hedged at an average price of just under 96p a litre.
The board will continue to monitor market conditions closely and take out such further fuel hedges as it deems are appropriate to meet
its objective of reducing volatility and creating business certainty. Oil prices continue to be volatile and the effect on fuel prices has been
marked. But the fuel duty and delivery cost components of a litre of diesel are unchanged at some 58p and 3p respectively.
therefore up by just over 1% and the gross profit margin improved somewhat to 17.7% from the 17.1% of 2013. Administrative Expenses
were a little higher than those of the previous year. The Profit from Operations at £3.55 million was therefore almost identical to that
of 2013. Finance expense fell by 11% compared to the previous year. Hire purchase debt fell by some 6% year on year and so did the
associated interest expense and the early conversion of the bulk of the convertible loan notes maturing at the end of 2014 also had a
beneficial effect. The net finance cost on the defined benefit pension scheme was furthermore appreciably lower. Profit before taxation
At the same time board policies in other areas have aided the reduction in overall levels of fuel consumption. When acquiring any vehicle
therefore rose by 8% when compared to the previous year to £2.26 million (2013: £2.09 million). Basic earnings per share in 2014, after
new to the fleet we are acutely conscious of its relative fuel consumption and certainly favour those marques which have demonstrable
taking into account the mark to market provision and other exceptional items, was 3.30p. Because of the mark to market provision and
advantages in this regard. Furthermore we are close followers of new fuel technologies, particularly those spin offs from the engineering
other exceptional items in 2014 it is very difficult to derive a meaningful and succinct comparison to a similar figure for 2013, where the
of hybrid vehicles which focus on the optimisation of heating and cooling and the harvesting of available engine power. We continue to trial
earnings per share were distorted by a low tax charge, which resulted from a number of one-off prior year deferred tax adjustments. But
a number of prototypes in this area of development. The fuel consumption improvements which are promised certainly encourage further
the underlying earnings per share picture would, like for like, be roughly comparable to the increase in profit before taxation.
close study. These redesigns of accepted conventional bus power systems also promise interesting enhancements in service reliability
and thus savings in maintenance cost.
10
Rotala Plc // Annual Report 2014
Review of Operations and Statutory Reports
11
Chairman’s Statement and
Review of Operations
(continued)
Financial review (continued)
The gross assets of the group stood at £50.8 million at both 30 November 2013 and 2014. Holdings of Property, Plant and Equipment
Outlook
Trading for the current year has begun positively. However in the first half of the year the contract with British Airways, which the group
fell slightly as the result of depreciation. Trade Receivables were down a little year on year but there were no other variances worthy of
has held for more than 10 years, will come to an end. This will of course have a negative impact on the results of the second half of the
mention in this caption. The reduction in Trade and Other Payables is largely accounted for by a fall in Trade Payables. This fall in turn
year. But the board is confident that this impact will be largely mitigated by the effect of new contracts and further gains in operating
reflects the strong cash flow throughout the year. The gross loans and borrowings of the group fell by almost £1m. This was however
efficiencies.
Statutory Reports
the product of a number of opposing movements. HP obligations fell by £0.6 million year on year to £8.5 million (2013: £9.1 million). The
convertible debt fell by £1.7 million to a figure of £0.6 million at the balance sheet date. Bank debt rose by £1.4 million, as a result of the
renegotiated banking facilities described above, to £10.3 million at the year end. However the bulk of this debt, totalling £7.0 million, is
mortgage debt secured on the freehold properties of the group. Finally there was a further positive movement in the Preston pension
fund as the funding outlook for the Scheme improved still more on an accounting basis so that the balance sheet liability stood at only
£257,000 at 30 November 2014. The gross liabilities of the group were therefore 8% lower than the previous year at £25.2 million (2013:
£27.3 million). Net assets reached £25.6 million at the year’s end, compared to £23.6 million at the end of 2013.
Cash flows from operating activities before changes in working capital, at £5.5 million (2013: £5.8 million), were a little down on those
generated in the previous year. As remarked above, advantage was taken of the strong cash flow this year to reduce trade and other
payables. The unwinding of a tyre contract also meant that more tyres were taken on as stock, explaining the variance in this caption, but
this was balanced out by a reduction in trade and other receivables. Cash Generated from Operations was therefore somewhat down on
last year at £4.5 million (2013: £6.0 million).
Investment in property, plant and equipment fell back in 2014 to £1.1 million (2013: £2.6 million), as a result of the low need for
replacement vehicles. Sale of vehicles, after taking account of the related hire purchase settlements, produced £0.3 million for the group
(2013: £1.2 million). In addition the cash flow statement incorporates the amount expended on the purchase of own shares for the first
time (£0.4 million). The wholesale refinancing of the group’s banking facilities, described earlier in this statement, has a considerable
positive impact on the cash flow, as does the net £1.1 million realised from refinancing some older hire purchase agreements. The capital
element of payments on hire purchase agreements continued its downward path to £3.5 million (2013: £4.5 million). After taking account
of rising dividends but lower bank interest payments, the group benefited from a positive cash inflow of £1.1 million for the year (2013:
£0.2 million), and so a closing overdraft, net of cash and cash equivalents, of £0.1 million at the end of 2014 (2013: £1.2 million overdraft),
in line with management’s plans and expectations.
Dividend
The company paid an interim dividend of 0.65 pence per share in December 2014. At the forthcoming Annual General Meeting the board
will recommend a final dividend in respect of 2014 of 1.20p per share, making 1.85p 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. The board also intends to continue its programme of share buy backs, which it commenced in late 2014. This programme offers
the opportunity to meet the need to issue shares, arising from the conversion of loan stock or exercise of share options, out of the existing
pool of shares in issue, rather than issuing new shares and diluting the interest of current shareholders.
The board intends to continue taking the opportunities currently on offer to fix fuel costs for a number of years ahead. Thus the board will
extend the group’s fuel hedges whenever that is possible in order to give certainty and predictability to a key operating cost over a three
year time horizon. This policy should lock in a key operating cost at a much lower level than has been experienced for a number of years.
It is a step which will also underpin the board’s commitment to a progressive dividend policy. It is pleasing to note that our determination
to deliver value for shareholders has been reflected in a stronger share price over the past two years and this strength should be
bolstered by the certainty of lower fuel prices over the next three years as the result of our hedging activities.
Our strategic focus continues to be on the expansion of our Commercial Services revenue stream. The enhanced banking facilities
which we announced in November 2014 leave us well placed to make further acquisitions like GTB and increase the size of the company
considerably in the next few years. We have also strengthened operational management recently with key recruits at a senior level. We are
confident that we can, strongly equipped as we are in both financial and management resources, implement our strategy successfully. We
believe that the company has performed well in 2014 and that it has good prospects in the years to come.
John Gunn
Non-Executive Chairman
Date: 25 March 2015
12
Rotala Plc // Annual Report 2014
Review of Operations and Statutory Reports
13
Strategic Report
For the year ended 30 November 2014
Rotala Plc is an AIM listed company operating commercial and subsidised bus
routes for businesses, local authorities, the public and private individuals.
Rotala was formed in 2005 and has grown through the acquisition and amalgamation of local coach and bus operations and is now one of
the largest operators in its chosen geographical locations.
Rotala aims to develop sustainable revenue streams through the expansion of its commercial bus and contracted activities and by being
an active participator in transport business trends in the UK. Our transport management expertise has taken us throughout the country,
organising and delivering turn-key solutions to events and areas requiring many different types and capacities of transport.
n
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a
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e
p
O
f
o
s
a
e
r
A
North West Trading Brands
M6
Blackpool
Wigan
Bolton
Atherton
Atherton
M6
M1
M6
Midlands Trading Brands
Wolverhampton
Walsall
M42
West Bromwich
Leicester
Stourbridge
Ludlow
Solihull
M42
Coventry
Worcester
Warwick
M5
Stratford
-upon-Avon
Evesham
M40
Northampton
M1
A1(M)
M11
Wooton-under-Edge
M4
Chipping Sodbury
Kingswood
Bath
Bristol
M5
Radstock
M25
M4
M25
M20
M3
London Trading Brands
South West Trading Brands
14
Rotala Plc // Annual Report 2014
Key
Operational Depot
Places of Operation
(Not all are shown at this scale)
Motorways
Country Border
M4
Statutory Reports
• 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.
s Rotala Plc pursues three key strategic goals:
l
a
o
G
r
u
O
These goals are measured by:
• a focus on earnings per share and the resultant share price;
•
• continually monitoring the timeliness and completeness of service
the level of new investment in infrastructure, technology and training;
delivery and levels of customer complaint.
s
e
u
l
a
V
r
u
O
Our commitment is to conduct business in an ethical manner; our core values convey our organisational beliefs:
Innovative - in creating new solutions;
• Professional - in our approach to business, with expert presence;
•
• 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.
i
n
o
s
s
M
i
r
u
O
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.
Review of Operations and Statutory Reports
15
Strategic Report
For the year ended 30 November 2014
Statutory Reports
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:
Key performance indicators (KPIs)
The key performance indicators of the group (before mark to market provisions, gains on acquisition, acquisition expenses and other
exceptional items) are considered to be:
1.
Individual organisations:
These can have specific transport needs. Private bus networks are designed on a bespoke basis around these needs. One of the
key factors which drives this customer need comes from the increasing prevalence of planning restrictions on new developments.
These restrict car usage and available car parking facilities. There has been much growth in this area of business in recent years
and government policy continues to drive change.
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.
Gross profit margin
Profit from operations before exceptional items
Profit before taxation and exceptional items
These key performance indicators are used as follows:
1.
Gross profit margin:
2014
17.7%
£3,554,000
£2,263,000
2013
17.1%
£3,547,000
£2,094,000
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;
Commercial
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
an element of revenue risk (the proportion of which can vary considerably), the variable element of the revenue is also included under this
heading. Since its foundation Rotala has considerably expanded the number of commercial services it operates in the West Midlands, the
South West and 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.
Profit from operations before exceptional items is a very important determinant of the long term success of the whole business.
Because this indicator is calculated before interest it represents the theoretical debt-free performance of the group and is thus a
key measure of value. It is also a measure of how effectively and efficiently the group is using its operating assets, particularly in
relation to its peers. Therefore this metric is monitored monthly and progress is frequently reviewed;
3.
Profit before taxation:
This indicator is a key determinant of return to shareholders. Therefore it is monitored through the prism of the monthly
management accounts and reviewed by the board at its monthly meetings. The board places particular emphasis upon the target
that this indicator should grow constantly because in this manner it can be confident that it is serving the interests of shareholders
and providing the 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 13. The group’s results for the year are set out on page 29.
The results of the year and the financial position as at 30 November 2014 are considered by the directors to be satisfactory.
16
Rotala Plc // Annual Report 2014
Review of Operations and Statutory Reports
17
Strategic Report
For the year ended 30 November 2014
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.
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.
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 42). 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.
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
2016. 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.
Statutory Reports
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: 25 March 2015
18
Rotala Plc // Annual Report 2014
Review of Operations and Statutory Reports
19
Directors’ Report
For the year ended 30 November 2014
Statutory Reports
The directors present their statutory report for the group for the year ended 30
November 2014.
Directors’ interests (Continued)
At
At
1 December 2013
Price
Issued Extinguished
30 November 2014 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, convertible unsecured loan stock and share options
were as follows:
J H Gunn
R A Dunn
S L Dunn
F G Flight
K M Taylor
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
2014
Ordinary shares
of 25p each
2014
Options over
ordinary shares
of 25p each
2013
Ordinary shares
of 25p each
2013
Options over
ordinary shares
of 25p each
6,421,488
909,454
1,364,634
1,200,000
413,056
320,000
1,037,471
1,287,471
220,000
880,000
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.
S L Dunn
K M Taylor
Beneficial
Beneficial
-
-
£260,000
£25,000
2014
Convertible Unsecured Loan Stock
2013
Convertible Unsecured Loan Stock
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
125p
37.5p
62.5p
50.0p
40.05p
-
-
-
-
-
-
-
54.0p
615,000
422,471
80,000
80,000
200,000
85,000
22,471
615,000
-
-
-
-
-
162.5p
37.5p
62.5p
50.0p
40.05p
-
54.0p
900,000
(80,000)
-
-
(80,000)
-
-
-
-
(80,000)
-
-
-
-
-
-
120,000
200,000
320,000
400,000
22,471
615,000
1,037,471
-
80,000
200,000
85,000
22,471
-
-
30/03/2009
29/03/2016
06/09/2010
05/09/2017
05/09/2011
04/09/2018
24/09/2015
24/03/2016
24/11/2017
23/11/2024
-
-
30/03/2009
29/03/2016
06/09/2010
05/09/2017
05/09/2011
04/09/2018
24/09/2015
24/03/2016
900,000
24/11/2017
23/112024
467,471
80,000
140,000
220,000
80,000
160,000
240,000
85,000
-
565,000
900,000
(80,000)
1,287,471
37.5p
62.5p
125p
37.5p
62.5p
50.0p
54.0p
-
-
-
-
-
-
395,000
-
-
(80,000)
-
-
-
-
80,000
140,000
220,000
-
160,000
240,000
85,000
395,000
30/03/2009
29/03/2016
06/09/2010
05/09/2017
-
-
30/03/2009
29/03/2016
06/09/2010
05/09/2017
05/09/2011
04/09/2018
24/11/2017
23/11/2024
395,000
(80,000)
880,000
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
Transactions.
The company’s share price at 30 November 2014 was 54.0p. The high and low prices in the year were 58.75p and 50.0p respectively.
Dividends
The directors will propose to the Annual General Meeting a distribution, by way of a final dividend, of 1.20p per share for the year ended 30
November 2014 (2013: 1.05p per share). An interim dividend of 0.65p per share (2013: 0.55p per share) was paid on 8 December 2014.
Purchase of own shares
At 30 November 2014 700,000 ordinary shares with a nominal value of £175,000 had been purchased for treasury at a total cost of
£380,000. Loan note holders have the right, on or before 31 December 2014, to convert their holdings into ordinary shares. Ordinary
shares were purchased for treasury in order to meet this need. Shares in treasury represent 1.79% of the called up share capital of the
company as at 30 November 2014.
20
Rotala Plc // Annual Report 2014
Review of Operations and Statutory Reports
21
Directors’ Report
For the year ended 30 November 2014
Statutory Reports
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 Strategic Report, the Directors’ Report, the annual report and the financial statements in
policies, are given in note 29.
accordance with applicable law and 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 13.
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
consulted about and involved in the development of the group in a number of ways, which include regular briefings, team updates and
announcements.
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.
Political contributions
No political contributions were made by the group during the year ended 30 November 2014 (2013: £Nil).
Substantial shareholdings
As at 25 March 2015 the company had been notified that the following were interested in 3% or more of the ordinary share capital of the
company:
Name
Mr Nigel Wray
Mr John Gunn
Number of Ordinary Shares
6,574,000
6,421,488
Close Asset Management Limited
2,251,404
The 181 Fund Limited
Mr S L Dunn
Mr F G Flight
1,802,443
1,364,634
1,200,000
%
17.04
16.65
5.84
4.67
3.54
3.11
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to
prepare the group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European
Union. The directors have elected to prepare the parent company financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (UK GAAP). Under company law the directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs and profit or loss of the company and group for that period. In preparing
these financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• for the group financial statements, state whether applicable IFRSs have been followed, subject to any material departures
disclosed and explained in the financial statements;
• for the parent company financial statements, state whether applicable UK accounting standards have been followed, subject to any
material departures disclosed and explained in the financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company will
continue in business.
The directors are responsible for keeping adequate accounting records which are sufficient to show and explain the company’s
transactions and disclose with reasonable accuracy at any time the financial position of the group and the company and enable them to
ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the
group and the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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 2014, 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: 25 March 2015
22
Rotala Plc // Annual Report 2014
Review of Operations and Statutory Reports
23
Independent Auditor’s Report
To the members of Rotala Plc
Statutory Reports
We have audited the financial statements of Rotala Plc for the year ended 30 November 2014 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 Financial
• 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 Munton
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Birmingham
Date: 25 March 2015
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 23, 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/auditscopeukprivate.
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 2014
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 2014
Review of Operations and Statutory Reports
25
Financial Statements
Financial
Statements
26
Rotala Plc // Annual Report 2014
Financial Statements
27
Consolidated Income Statement
For the year ended 30 November 2014
Financial Statements
2014
£’000
Results before
mark to market
provision
and other
exceptional
items
£’000
Mark to market
provision and
other
exceptional
items
(note 11)
£’000
51,674
(42,517)
9,157
(5,603)
3,554
11
(1,302)
2,263
(498)
-
-
-
(745)
(745)
-
-
(745)
156
2013
(as restated)
£’000
Gain on
acquisition,
acquisition
expenses and
exceptional
items
(note 11)
£’000
-
-
-
(132)
(132)
-
-
(132)
119
Results
before gain on
acquisition,
acquisition
expenses and
exceptional
items
£’000
Results for
the year
£’000
51,674
(42,517)
53,303
(44,210)
9,157
(6,348)
2,809
11
(1,302)
1,518
(342)
9,093
(5,546)
3,547
8
(1,461)
2,094
(244)
Results for
the year
£’000
53,303
(44,210)
9,093
(5,678)
3,415
8
(1,461)
1,962
(125)
1,765
(589)
1,176
1,850
(13)
1,837
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
3.30
3.26
5.21
4.88
28
Rotala Plc // Annual Report 2014
The accompanying notes form an integral part of these financial statements.
Financial Statements
29
Consolidated Statement of
Comprehensive Income
For the year ended 30 November 2014
Consolidated Statement of
Changes in Equity
For the year ended 30 November 2014
Financial Statements
Profit for the year
Other comprehensive income:
Items that will not subsequently be reclassified to profit or
loss:
Actuarial gain on defined benefit pension scheme
Deferred tax on actuarial gain on defined
benefit pension scheme
Other comprehensive income for the year (net of tax)
Note
25
24
2014
£’000
1,176
41
(9)
32
2013
(as restated)
£’000
1,837
451
(95)
356
Total comprehensive income for the year attributable to the
equity holders of the parent
1,208
2,193
At 1 December 2012
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners:
Dividends paid
Share based payment
Transactions with owners
Share capital
£'000
8,818
-
-
-
-
-
-
7,828
2,567
-
-
-
-
-
-
-
-
-
-
-
-
Share
premium
reserve
£'000
Merger
reserve
£'000
Shares in
treasury
£'000
Retained
earnings
£'000
Total
£'000
21,876
1,837
356
2,663
1,837
356
2,193
2,193
(494)
9
(494)
9
(485)
(485)
4,371
1,176
32
23,584
1,176
32
1,208
1,208
(564)
7
-
-
(564)
7
1,751
(380)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(380)
(380)
(557)
814
At 30 November 2013
8,818
7,828
2,567
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners:
Dividends paid
Share based payment
Shares issued
Purchase of own shares
Transactions with owners
-
-
-
-
-
976
-
976
-
-
-
-
-
775
-
775
-
-
-
-
-
-
-
-
At 30 November 2014
9,794
8,603
2,567
(380)
5,022
25,606
The accompanying notes form an integral part of these financial statements.
The accompanying notes form an integral part of these financial statements.
30
Rotala Plc // Annual Report 2014
Financial Statements
31
Financial Statements
Shareholders’ funds
Share capital
Share premium reserve
Merger reserve
Shares in treasury
Retained earnings
TOTAL EQUITY
Note
26
2014
£’000
9,794
8,603
2,567
(380)
5,022
2013
£’000
8,818
7,828
2,567
-
4,371
25,606
23,584
The financial statements were approved by the Board of Directors and authorised for issue on 25 March 2015
Simon Dunn
Chief Executive
Kim Taylor
Group Finance Director
Consolidated Statement of
Financial Position
As at 30 November 2014
Note
14
15
24
17
18
19
20
21
22
23
19
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
Derivative financial instruments
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
2014
£’000
30,454
9,482
73
40,009
2,197
7,506
-
1,050
10,753
50,762
4,899
4,604
3,479
566
13,548
6,300
5,051
257
11,608
25,156
25,606
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
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 2014
Financial Statements
33
Consolidated Statement
of Cash Flows
For the year ended 30 November 2014
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
Notional expense of defined benefit pension scheme
Equity settled share-based payment expense
Cash flows from operating activities before changes in working
capital and provisions
Decrease/(increase) in trade and other receivables
(Increase)/decrease in inventories
(Decrease)/increase in trade and other payables
Movement on financial instrument provision
Cash generated from operations
Interest paid on hire purchase agreements
Net cash flows from operating activities carried forward
2014
£’000
1,518
3,136
-
-
1,291
(103)
(404)
10
7
5,455
361
(372)
(1,468)
569
(910)
4,545
(610)
3,935
2013
£’000
1,962
3,253
(387)
155
1,453
(283)
(333)
10
9
5,839
(95)
66
147
-
118
5,957
(671)
5,286
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) investing activities
Financing activities
Shares issued
Dividends paid
Own shares purchased
Proceeds of mortgage and other bank loans
Repayment of bank and other borrowings
Loan stock and bank loan interest paid
Hire purchase refinancing receipts
Hire purchase settlement payments
Capital settlement payments on vehicles sold
Capital element of lease payments
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Financial Statements
2014
£’000
3,935
(1,065)
-
435
(630)
30
(564)
(380)
9,650
(7,827)
(601)
2,222
(1,103)
(105)
(3,522)
(2,200)
1,105
(1,214)
(109)
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)
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 2014
Financial Statements
35
Notes to the Consolidated
Financial Statements
For the year ended 30 November 2014
Financial Statements
1.
General information
2.
Accounting policies (continued)
Rotala Plc is incorporated and domiciled in the United Kingdom.
The effects of the application of IAS 19 on the statement of comprehensive income for the year ended 30 November 2013 and 30
The financial statements for the year ended 30 November 2014 (including the comparatives for the year ended 30 November 2013)
were approved by the Board of Directors on 25 March 2015. Amendments to the financial statements are not permitted after they
November 2014 are as follows:
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. The financial statements have been prepared on a going concern basis as described on
page 18.
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.
New standards
The group has adopted the new standard IFRS 13 Fair Value Measurement (effective 1 January 2013) during the year (see note 29).
IFRS 13 clarifies the definition of fair value and provides related guidance and enhanced disclosures about fair value measurements.
It does not affect the items that are required to be fair-valued. The scope of IFRS 13 is broad and applies for both financial and
non-financial items for which other IFRS require or permit fair value measurements or disclosures about fair value measurements,
except in certain circumstances. IFRS 13 applies prospectively for annual periods beginning on or after 1 January 2013. Its
disclosure requirements need not be applied to comparative information in the first year of adoption.
The group has also adopted the revisions within IAS 19 Employee Benefits (Revised June 2011). The amendments to IAS 19
made a number of changes to the accounting for employee benefits, the most significant relating to defined benefit plans. The
amendments: (1) eliminate the ‘corridor method’ and require the recognition of remeasurements (including actuarial gains and
losses) arising in the reporting period in other comprehensive income; (2) change the measurement and presentation of certain
components of the defined benefit cost. The net amount in profit or loss is affected by the removal of the expected return on plan
assets and interest cost components and their replacement by a net interest expense or income based on the net defined benefit
asset or liability; (3) enhance disclosures, including more information about the characteristics of defined benefit plans and related
risks.
IAS 19 has been applied retrospectively in accordance with its transitional provisions. Consequently, the group has restated its
reported results throughout the comparative periods presented; there was no cumulative effect to opening equity as at 1 December
Increase in finance costs
Increase in other financial items
Decrease in tax expense
(Decrease) in profit for the year
Other comprehensive income:
Increase in actuarial remeasurement
Increase in income tax relating to items not
reclassified
Increase in other comprehensive income
Increase / (decrease) in total comprehensive
income
Year to 30 November
2014
£’000
Year to 30 November
2013
£’000
(120)
(10)
27
(103)
130
(27)
103
-
(86)
(10)
20
(76)
96
(20)
76
-
The effects on earnings per share for the year ended 30 November 2013 are as follows:
Earnings per share for profit attributable to the
equity holders of the parent during the year:
As originally reported
Effect of prior
year adjustment
Basic (pence)
Diluted (pence)
5.42
5.17
(0.21)
(0.29)
Restated
5.21
4.88
2012. There was no effect on the statements of financial position at 1 December 2012 and 30 November 2013 resulting from the
The application of IAS 19 did not have a material impact on the statement of cash flows for the year ended 30 November 2013 and
application of IAS 19, nor did the application of IAS 19 affect the statement of financial position at 30 November 2014.
2014.
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.
36
Rotala Plc // Annual Report 2014
Financial Statements
37
2.
Accounting policies (continued)
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 on the
date of grant by using the Black-Scholes valuation model or a binomial valuation model, according to the characteristics
of the option, and is 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.
(d) Self insurance
The estimation of insurance costs, under the group’s self insurance scheme, is based on premiums paid and cash paid
into the scheme’s bank account. The actual outcome of claims made is determined over the five years following each
period end; no rebate of premium is accounted for until each insurance period is closed. The directors regularly review
claims made and, should insurance premiums paid to date be considered inadequate in the light of claims, appropriate
provision would be made.
(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 the
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.
(c) Extinguishment accounting
Where there is an exchange of debt instruments, the future discounted cash flows are compared to those of the original
liability in order to determine if extinguishment accounting is applicable, or alternatively whether the amendment is
treated as a modification to the existing instrument. This involves a comparison under IAS 39.AG62, between the net
present value of the cash flows under the revised terms versus the original terms, and whether the difference exceeds
10%. During the current period the refinancing of banking facilities generated a difference exceeding this threshold and
therefore extinguishment accounting has been applied.
Financial Statements
2.
Accounting policies (continued)
Basis of consolidation
The group financial statements consolidate the results of the company and all its subsidiary undertakings as at 30 November 2014.
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 fair value of consideration transferred for the business acquisition over the acquisition date
fair value of the identifiable assets, liabilities and contingent liabilities acquired.
Goodwill is tested annually for any impairment and carried at cost less accumulated impairment losses. Any impairment charge
would be included within administrative expenses in the Consolidated Income Statement. Goodwill impairment charges cannot
be reversed. As the group has taken advantage of the exemption from restating all pre-transition period acquisitions under IFRS 3
‘Business Combinations’, goodwill includes intangibles arising on those acquisitions that are not separately identifiable prior to the
date of the change of policy.
Where the fair value of identifiable assets, liabilities and contingent liabilities exceeds the fair value of consideration paid, the excess
is credited in full in profit or loss on the acquisition date.
Other intangible assets - brands
Purchased brands, which are controlled through custody or legal rights and which could be sold separately from the rest of the
business, are capitalised, where fair value can be reliably measured. Where intangible assets are regarded as having a limited
useful economic life, the cost is amortised on a straight-line basis over that life in administrative expenses in the Consolidated
Income Statement.
Other intangible assets - contracts
Where an acquisition is made which contains within it rights to contracted revenue, the present value of the profits inherent in
those contracts is capitalised as an intangible asset. This asset is then amortised over the remaining life of those contracts in
administrative expenses in the Consolidated Income Statement.
Impairment
The group’s goodwill and intangible assets are subject to impairment testing.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-
generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related
business combination and represent the lowest level within the group at which management controls the related cash flows.
Individual intangible assets or cash-generating units that include goodwill with an indefinite useful life are tested for impairment
at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value
in use, based on an internal discounted cash flow evaluation. Impairment losses recognised for cash-generating units, to which
goodwill has been allocated, are credited initially to the carrying amount of goodwill. Any remaining impairment loss is charged
pro rata to the other assets in the cash generating unit. With the exception of goodwill, all assets are subsequently reassessed for
indications that an impairment loss previously recognised may no longer exist.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the
revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised in prior years. A reversal of an impairment loss is recognised
as income immediately.
38
Rotala Plc // Annual Report 2014
Financial Statements
39
2.
Accounting policies (continued)
Property, plant and equipment
2.
Accounting policies (continued)
•
On initial recognition of goodwill;
Financial Statements
Items of property, plant and equipment are initially recognised at cost, which includes both the purchase price and any directly
attributable costs. Following initial recognition property, plant and equipment is carried at depreciated cost.
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.
A gain or loss incurred at the point of derecognition is also included in profit or loss at that point.
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.
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
-
Not depreciated
Freehold buildings
-
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
Grants
Grants relating to property, plant and equipment are netted off the assets to which they relate and the net investment in the asset
is depreciated as set out above. Other grants are held in trade and other payables until credited to the income statement as the
related expenditure is expensed.
Revenue
Revenue represents sales to external customers excluding value added tax. Passenger revenue is recognised when payment is
received in cash. Subsidy revenue from local authorities is recognised on an accruals basis, based on actual passenger numbers.
Contracted and charter services revenues are recognised when services are delivered, based on agreed contract rates.
Inventories
Inventories are initially recognised at cost on a first in first out basis, and subsequently at the lower of cost and net realisable value.
Cost comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition.
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:
•
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.
Leased assets
In accordance with IAS 17, the economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all
the risks and rewards related to the ownership of the leased asset. The related asset is recognised at the time of inception of the
lease at the fair value of the leased asset or, if lower, the present value of the minimum lease payments plus incidental payments, if
any, to be borne by the lessee. A corresponding amount is recognised as a finance leasing liability.
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.
Where finance leases or hire purchase agreements are refinanced, amounts received as cash inflows are shown in the cash flow
statement as hire purchase refinancing, and cash outflows to settle the original leases are shown as hire purchase settlement
payments.
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. Any equity component is included in a 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.
40
Rotala Plc // Annual Report 2014
Financial Statements
41
Financial Statements
2.
Accounting policies (continued)
2.
Accounting policies (continued)
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
agreements with suppliers do not meet the definitions of a financial instrument under IAS 39 ‘Financial Instruments: Recognition
and Measurement’ as the contracts represent executory contracts to buy a non-financial asset for the use of the group. Therefore
no financial asset or liability is recognised in respect of these contracts.
The group has entered into diesel commodity forward contracts. The agreements do not meet the definitions of hedging
transactions under IAS 39 ‘Financial Instruments: Recognition and Measurement’, but are accounted for as a derivative and are
recorded at fair value through profit and loss.
Pension costs
Defined contribution schemes
Contributions to the group’s defined contribution pension schemes are charged in profit or loss in the year in which they
become payable.
Defined benefit pension schemes
Scheme assets are measured at fair values. Scheme liabilities are measured on an actuarial basis using the projected unit
method and are discounted at appropriate high quality corporate bond rates that have terms to maturity approximating to
the terms of the related liability. Appropriate adjustments are made for unrecognised actuarial gains or losses and past
service costs. Any actuarial gains and losses are recognised immediately in Other 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 and liabilities include derivative financial instruments held at fair value through profit and loss (“FVTPL”). These
assets and liabilities 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 and liabilities in this category are measured at fair value with
gains or losses recognised in profit or loss. The fair values of these financial assets and liabilities 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
instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate
method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the
liability carried in the balance sheet. Interest expense in this context includes initial transaction costs and premiums payable
on redemption, as well as any interest or coupon payable while the liability is outstanding;
• Trade payables and other short-term monetary liabilities are initially recognised at fair value and subsequently carried at
amortised cost, using the effective interest method.
A financial liability is de-recognised when it is extinguished, cancelled or it expires. The group has not classified any of its financial
liabilities, other than derivatives, at fair value through profit or loss.
Equity
Share capital is determined using the nominal value of shares that have been issued. Premiums received on the initial issuing of
share capital are credited to the share premium reserve. Any transaction costs associated with the issuing of shares are deducted
from share premium, net of any related income tax benefits. Retained earnings include all current and prior period results.
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 and non-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.
42
Rotala Plc // Annual Report 2014
Financial Statements
43
Financial Statements
3.
Standards and interpretations not yet applied by Rotala Plc
4.
Segmental analysis and revenue
At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing
All of the activities of the group are conducted in the United Kingdom within the operating segment of provision of bus services.
standards have been published, but are not yet effective, and have not been adopted early by the group.
Management monitors revenue across the following streams: contracted, commercial and charter:
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 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)
• IAS 27 (Revised), Separate Financial Statements (effective 1 January 2014)
• IAS 28 (Revised), Investments in Associates and Joint Ventures (effective 1 January 2014)
• 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)
• 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)
• IFRS 9 Financial Instruments (IASB effective date 1 January 2018)*;
• IFRS 14 Regulatory Deferral Accounts (effective 1 January 2016)*;
• IFRS 15 Revenue from Contracts with Customers (effective 1 January 2017)*;
• IFRIC Interpretation 21 Levies (IASB effective 1 January 2014);
• Defined Benefit Plans: Employee Contributions (amendments to IAS 19) (IASB effective 1 July 2014);
• Clarification of Acceptable methods of Depreciation and Amortisation – Amendments to IAS 16 and IAS 38 (IASB effective date
1 January 2016)*;
• Annual improvements to IFRSs 2010-2012 Cycle (IASB effective date generally 1 July 2014);
• Annual improvements to IFRSs 2011-2013 Cycle (IASB effective date 1 July 2014);
• Annual improvement to IFRSs 2012-2014 Cycle (effective 1 January 2016)*;
• Amendments to IAS 16 and IAS 41: Bearer Plants (effective 1 January 2016)*;
Contracted
Commercial
Charter
Total Revenue
2014
£’000
17,891
30,623
3,160
51,674
2013
£’000
20,602
29,937
2,764
53,303
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
• Amendments to IAS 27: Equity Method in Separate Financial Statements (effective 1 January 2016)*;
service agreement is maintained.
*not adopted by the EU (as at 2 March 2015)
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.
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 2014 and 2013 no customer constituted more than 10% of Revenues.
44
Rotala Plc // Annual Report 2014
Financial Statements
45
5.
Other losses and 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
2014
£’000
(559)
2014
£’000
23,571
2,062
251
25,884
7
25,891
2014
£’000
93
962
1,055
2014
£’000
457
32
8
2
499
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
One director (2013: 1) is a member of the group’s defined contribution pension scheme.
Emoluments of the highest paid director were £168,569 (2013: £149,160). Pension contributions of £8,400 (2013: £8,400) were made
on his behalf.
46
Rotala Plc // Annual Report 2014
Financial Statements
7.
Directors’ and key management personnel remuneration (continued)
The directors’ remuneration was as follows:
2014
£’000
Share based
payment
expense
Remuneration
2013
£’000
Share based
payment
expense
Total
Remuneration
169
106
82
75
25
457
1
1
-
-
-
2
170
107
82
75
25
459
149
103
81
75
25
433
1
1
-
-
-
2
Total
150
104
81
75
25
435
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:
- audit of the parent company
- audit of the accounts of subsidiaries
- other non–audit services
2014
£’000
3,136
295
1,720
(103)
48
3
12
2013
£’000
3,253
299
1,941
(283)
52
3
-
Financial Statements
47
9.
Finance income
12. Tax expense
Financial Statements
2014
£’000
2013
(as restated)
£’000
-
-
428
22
(325)
125
125
2013
(as restated)
£’000
1,962
451
(23)
(303)
125
2014
£’000
11
2014
£’000
475
155
650
20
2
2013
(as restated)
£’000
8
2013
(as restated)
£’000
521
185
699
50
6
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
-
-
305
37
-
342
342
1,302
1,461
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 21%
(2013: 23%)
Expenses not taxable
Adjustments in respect of prior periods
Total tax expense
2014
£’000
1,518
319
(14)
37
342
2014
£’000
2013
£’000
Mark to market
provision and other
exceptional items
Gain arising on acquisition,
acquisition expenses and
exceptional items
-
-
-
(559)
(81)
(105)
(745)
(155)
387
(364)
-
-
-
(132)
Interest receivable on bank deposits
10. Finance expense
Bank borrowings and overdraft interest
Interest payable on loan notes
Hire purchase contracts
Net finance costs on pension scheme (note 25)
Other interest
11. Profit before taxation
Profit before taxation includes the following:
Acquisition costs
Gain arising on acquisition
Contract exit costs
Mark to market provision on fuel derivatives
Payments on fuel derivatives
Prior year fleet insurance payment (see below)
Loss within profit before taxation
When the group acquired Preston Bus Limited in early 2011, expert assessment of that company’s self-insured motor insurance
fund at that time indicated that the fund was actually in surplus. In the event this opinion proved erroneous and in 2014 a payment of
the above sum was made to close all insurance years before the acquisition of Preston Bus Limited by the group. If this deficit had
been known about at acquisition, it would naturally have been provided for at the time.
48
Rotala Plc // Annual Report 2014
Financial Statements
49
13. Earnings per share
14. Property, plant and equipment
Financial Statements
Basic
Profit attributable to ordinary shareholders
Weighted average number of ordinary shares
Basic earnings per share
2014
£’000
1,176
35,659,541
3.30p
2013
(as restated)
£’000
1,837
35,270,888
5.21p
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
2014
£’000
Diluted
1,176
38
1,214
2013
(as restated)
£’000
Diluted
1,837
142
1,979
Weighted average number of shares in issue
35,659,541
35,270,888
Adjustments for:
- assumed conversion of convertible loan notes
- exercise of options
1,322,222
271,052
5,146,333
162,362
Weighted average number of ordinary shares for the purposes
of diluted earnings per share
37,252,815
40,579,583
Diluted earnings per share
3.26p
4.88p
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.
Total
£’000
43,215
2,342
5,989
-
290
143
(5)
428
638
95
-
45,863
2,993
(1,476)
47,380
15,706
3,253
-
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 2012
Acquisition
Additions
Transfers
Disposals
5,274
1,939
1,996
(283)
-
902
-
-
(2)
-
2,656
33,567
61
463
285
342
3,474
-
816
-
56
-
(1,336)
(3,765)
(582)
(5,683)
At 30 November 2013
8,926
900
2,129
33,618
Additions
Disposals
23
-
-
-
264
(82)
2,563
(1,389)
At 30 November 2014
8,949
900
2,311
34,792
Depreciation
At 1 December 2012
Charge for the year
Transfers
Disposals
At 30 November 2013
Charge for the year
Disposals
At 30 November 2014
Net book value:
At 30 November 2014
At 30 November 2013
431
95
(107)
-
419
95
-
514
8,435
8,507
106
21
-
-
127
21
-
148
752
773
1,469
316
107
13,062
2,726
-
(1,336)
(2,108)
(582)
(4,026)
556
321
(82)
795
13,680
151
14,933
2,634
(1,056)
65
(5)
3,136
(1,143)
15,258
211
16,926
1,516
19,534
1,573
19,938
217
139
30,454
30,930
The net book value of public service vehicles at 30 November 2014 held under hire purchase agreements was £12,793,000 (2013:
£13,998,000). Depreciation of £1,363,000 (2013: £1,649,000) was charged against assets falling into this category in the year.
50
Rotala Plc // Annual Report 2014
Financial Statements
51
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 2016. Other major assumptions are as
Financial Statements
Cost
At 1 December 2012 and 2013 and
at 30 November 2013 and 2014
250
312
9,482
10,044
Amortisation
At 1 December 2012
Charge for the year
At 30 November 2013
Charge for the year
At 30 November 2014
Net book value
At 30 November 2014
At 30 November 2013
250
-
250
-
250
-
-
312
-
312
-
312
-
-
-
-
-
-
-
9,482
9,482
562
-
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
2014
%
12
8
2
3
CGU
2013
%
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
2014
£’000
2,197
2013
£’000
1,826
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 £13,869,000 (2013: £14,622,000). No inventory has been
written down to fair value in 2014 or 2013 and therefore no associated expense was incurred.
18. Trade and other receivables
Trade receivables
Tax and social security
Prepayments and accrued income
2014
£’000
3,202
442
3,862
7,506
2013
£’000
2,948
337
4,578
7,863
52
Rotala Plc // Annual Report 2014
Financial Statements
53
18. Trade and other receivables (continued)
20. Cash and cash equivalents
Financial Statements
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 certain trade receivables were
found to be impaired and a provision of £80,000 was created (2013: no provision was created).
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
Provided
Balance carried forward at 30 November
19. Derivative financial instruments
Fuel commodity forward contract (liability) / asset (note 29)
2014
£’000
124
73
197
2014
£’000
-
(80)
(80)
2014
£’000
(566)
2013
£’000
24
121
145
2013
£’000
-
-
-
2013
£’000
3
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.
The fair value of the commodity forward contracts is determined in accordance with the procedure described in note 29.
Cash and cash equivalents for the purposes of the cash flow statement are analysed as follows:
Cash at bank
Bank overdraft
21. Trade and other payables - current
Trade payables
Taxation and social security
Other creditors
Accruals and deferred income
2014
£’000
1,050
(1,159)
(109)
2014
£’000
3,301
597
359
642
4,899
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.
22. Loans and borrowings
Current:
Overdrafts
Bank loans
Convertible loan stock
Non-current
Convertible loan stock
Bank loans
2014
£’000
1,159
2,850
595
4,604
-
6,300
6,300
2013
£’000
317
(1,531)
(1,214)
2013
£’000
4,592
475
281
956
6,304
2013
£’000
1,531
3,931
-
5,462
2,316
3,396
5,712
54
Rotala Plc // Annual Report 2014
Financial Statements
55
22. Loans and borrowings (continued)
Analysis of maturity
23. Obligations under hire purchase contracts
Future lease payments are due as follows:
2014
£’000
2014
£’000
2014
£’000
2014
£’000
2014
£’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
599
4,386
-
-
-
1,015
6,003
-
3,878
2,597
2,736
102
3,660
12,523
Not later than one year
-
-
-
3,612
8,739
102
More than one but less than two years
More than two but less than five years
Later than 5 years
599
11,404
9,313
3,660
24,976
The analysis above represents minimum payments on an undiscounted basis.
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
Convertible debt
A convertible unsecured loan stock was issued on 3 March 2008. The loan stock was redeemable at par on 31 December 2014 or
convertible into 25p ordinary shares of the company at a price of 45.0p per share by that date. By 30 November 2014, holders of
£1,720,850 of loan stock had exercised their right to convert. Of the remainder, after the balance sheet date, holders of £435,000
also exercised their right to convert and holders of £160,000 chose to be re-paid at par.
Bank borrowings
The group renewed its Senior Term and Revolving Facilities Agreement with its bankers on 31 October 2014. This agreement
provides a revolving £9.0 million facility combined with a mortgage facility of up to £7.0 million and an overdraft facility of £2.0
million. It is for an initial term of three years and six months, renewable at 30 April 2018. 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 10 years which is considered to give a reasonable approximation to the
effective interest rate.
Financial Statements
2014
£’000
Interest
399
223
158
3
783
2013
£’000
Interest
458
231
132
3
824
2014
£’000
3,479
5,051
8,530
2014
£’000
Present value
3,479
2,374
2,578
99
8,530
2013
£’000
Present value
3,318
3,189
2,482
122
9,111
2013
£’000
3,318
5,793
9,111
2014
£’000
Minimum lease payments
3,878
2,597
2,736
102
9,313
2013
£’000
Minimum lease payments
3,776
3,420
2,614
125
9,935
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
The present values of future lease payments are analysed as:
Current liabilities
Non-current liabilities
Obligations under hire purchase contracts are secured on the assets to which they relate.
56
Rotala Plc // Annual Report 2014
Financial Statements
57
Financial Statements
24. Deferred taxation
The deferred tax asset included in the Statement of Financial Position is analysed as follows:
25. Pensions (continued)
Investment risk
Accelerated capital allowances
Arising on fair value adjustments on acquisitions
Arising on defined benefit pension scheme
Arising on derivative financial instruments
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
2014
£’000
(611)
103
60
119
402
73
2014
£’000
424
-
(342)
(9)
73
2013
£’000
(275)
173
170
-
356
424
2013
£’000
521
123
(125)
(95)
424
At 30 November 2014 there were £nil (2013: £nil) temporary differences or unused tax losses for which deferred tax has not been
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 £251,000 (2013: £158,000). Contributions amounting to
£28,134 (2013: £22,789) 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 Pension Regulations. The group accounts for pensions in
accordance with IAS 19 “Employee Benefits”. Contributions amounting to £29,167 (2013: £66,667) were payable to the fund at the
balance sheet date. Expected contributions for the year ending 30 November 2015 are £350,000.
The plan exposes the group to actuarial risks such as interest rate risk, investment risk, longevity risk and inflation risk.
Interest rate risk
The present value of the defined benefit liability is calculated using a discount rate determined by reference to market yields of high
quality corporate bonds. The estimated term of the bonds is consistent with the estimated term of the defined benefit obligation
and is denominated in sterling. A decrease in market yield on high quality corporate bonds will increase the group’s defined benefit
liability, although it is expected that this would be offset partially by an increase in the fair value of certain of the plan assets.
58
Rotala Plc // Annual Report 2014
The plan assets at 30 November 2014 are predominantly in equities and bonds. The equities are largely invested in a spread of
UK, North American, European and Asian equities, together with investments in two different diversified growth funds. This is
considered to form a good spread of risk.
Longevity risk
The group is required to provide benefits for life for the members of the defined benefit pension scheme. An increase in the life
expectancy of members will increase the defined benefits liability.
Inflation risk
A significant proportion of the defined benefits liability is linked to inflation. An increase in the inflation rate will increase the group’s
liability.
The weighted average duration of the defined benefit obligation at 30 November 2014 is 15.5 years (2013: 16.5 years).
WMITAPF defined benefit pension scheme
The calculations of the IAS 19 disclosures for the WMITAPF have been based on the most recent actuarial valuations, which have
been updated to 30 November 2014 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
30 November
2014
%
30 November
2013
%
n/a
2.0
3.6
2.0
6.5
2.6
3.6
0.5
n/a
2.2
4.3
2.2
7.0
3.4
4.4
0.5
The expected return on plan assets is based on expectations at the beginning of the period for returns over the entire life of the
benefit obligation. The expected returns are set in conjunction with external actuaries and take account of market factors, fund
managers views and targets for future returns and, where appropriate, historical returns.
The life expectancy assumptions used for the scheme are periodically reviewed and as at 30 November were:
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
2014
Years
30 November
2013
Years
21.4
24.3
23.2
26.2
21.8
24.6
23.9
27.0
Financial Statements
59
Financial Statements
2013
(as restated)
£’000
606
(155)
451
2012
4.2
(5.9)
25. Pensions (continued)
25. Pensions (continued)
Since the scheme has been closed for a number of years, there is no current service cost to be charged to operating profits.
Analysis of amount included within the group’s statement of total comprehensive income:
Discount rate
Inflation
Life expectancy
Change in assumption
Impact on overall liability
Increase/decrease by 0.1%
Increase/decrease of 1.3%
Increase/decrease by 0.1%
Increase/decrease of 1.3%
Increase by 1 year
Increase of 2.2%
The above analysis is based on a change in an assumption whilst holding all other assumptions constant. In practice, this is unlikely
to occur and changes in some of the assumptions may be correlated. The sensitivity of the defined benefit obligation to significant
actuarial assumptions has been estimated, based on the average age and the normal retirement age of members and the duration
Actual return less expected return on pension scheme assets
Changes in assumptions underlying the present value of the
scheme liabilities
Actuarial gain
2014
£’000
963
(922)
41
of the liabilities of the scheme.
Actuarial (losses)/gains as a percentage of scheme assets and liabilities at 30 November 2014 were as follows:
The amounts recognised in the statement of financial position were determined as follows:
30 November
2014
£’000
30 November
2013
£’000
Equities
Bonds
Total market value of assets
Present value of scheme liabilities
Pension liability before tax
Related deferred tax asset
Net pension liability
12,492
4,739
17,231
(17,488)
(257)
54
(203)
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:
Administration expense
Finance cost
- expected return on assets
- interest cost on pension liabilities
Net finance loss
Total defined benefit loss
Defined contribution costs
Total profit and loss charge
60
Rotala Plc // Annual Report 2014
2014
£’000
(10)
682
(702)
(20)
(30)
(251)
(281)
7,248
8,858
16,106
(16,778)
(672)
141
(531)
2013
(as restated)
£’000
(10)
607
(657)
(50)
(60)
(158)
(218)
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
2014
2013
(as restated)
5.6
0.2
3.8
2.7
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 £865,000 (2013:
£897,000). The actual return on plan assets was £1,644,000 (2013: £1,337,000).
The movement in deficit during the year under IAS 19 was:
Deficit in scheme at 30 November
Movement in period
- Contributions
- Administrative expenses
- Actuarial gain
- Expected return on assets
- Interest cost
Deficit in scheme at the end of the year
2014
£’000
(672)
404
(10)
41
682
(702)
(257)
2013
(as restated)
£’000
(1,463)
400
(10)
451
607
(657)
(672)
Financial Statements
61
25. Pensions (continued)
26. Share capital (continued)
Financial Statements
The movement in assets during the year under IAS 19 is as follows:
At 30 November
Expected return on plan assets
Actuarial gains
Employer contributions
Administrative expenses
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
2014
£’000
16,106
682
963
404
(10)
(914)
17,231
2014
£’000
(16,778)
(702)
(922)
914
2013
(as restated)
£’000
15,465
607
606
400
(10)
(962)
16,106
2013
(as restated)
£’000
(16,928)
(657)
(155)
962
(17,488)
(16,778)
Allotted and called up and fully paid
2014
Number
2014
£’000
2013
Number
Ordinary shares of 25p each
39,175,003
9,794
35,270,888
2013
£’000
8,818
As at 30 November 2012 and 2013
35,270,888
8,818
Number
Nominal Value
£’000
21 July 2014
29 September 2014
6 October 2014
16 October 2014
20 October 2014
23 October 2014
20 November 2014
80,000
88,889
55,556
55,556
111,112
3,290,780
222,222
20
22
14
14
28
823
55
As at 30 November 2014
39,175,003
9,794
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.
At 30 November 2014 700,000 ordinary shares were held in treasury (2013: nil).
27. Share options and warrants
As at 30 November 2014 the following share options had been issued and were outstanding under the company’s employee share
option schemes:
Earliest exercise date
Date of expiry
Exercise price
Date of grant
30 March 2006
24 July 2007
6 September 2007
5 September 2008
Number of
options granted
440,000
182,000
880,000
695,000
30 March 2009
29 March 2016
24 July 2010
23 July 2017
6 September 2010
5 September 2017
5 September 2011
4 September 2018
24 September 2012
275,858
24 September 2015
24 March 2016
24 November 2014
2,685,000
24 November 2017
23 November 2024
37.50p
62.50p
62.50p
50.00p
40.05p
54.00p
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,
except for the issue of 24 November 2014. Here the option issue is split into three equal tranches. For a tranche to be exercisable
the share price of the company must have reached 65p, 80p and 95p respectively.
62
Rotala Plc // Annual Report 2014
Financial Statements
63
27. Share options and warrants (continued)
29. Financial instruments - risk management
2014
Weighted average
exercise price (p)
2013
Weighted average
Number
exercise price (p)
Number
The group holds 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”); financial liabilities are measured at amortised cost or FVTPL.
The principal financial assets and liabilities on which financial risks arise are as follows:
Financial Statements
Outstanding at beginning of the year
Forfeited during the year
Extinguished
Exercised
Issued during the year
60.97
(48.47)
(135.50)
(37.5)
54.00
2,955,498
(69,307)
(333,333)
(80,000)
2,685,000
60.21
(40.05)
3,067,399
(111,901)
-
-
-
-
-
-
Outstanding at the end of the year
53.06
5,157,858
60.97
2,955,498
The exercise price of options outstanding at the end of the year ranged between 37.5p and 62.5p (2013: 37.5p and 162.5p) and their
weighted average remaining contractual life was 6.45 years (2013: 3.28 years).
Of the outstanding options at the reporting date 2,197,000 (2013: 2,636,333) were exercisable. The weighted average exercise price
was 53.54p (2013: 63.50p).
The fair value of options granted was determined under IFRS 2 using a binominal valuation model. Significant assumptions used in
the calculations included:
•
an exercise price of 65p, 80p and 95p for three tranches each of 895,000 shares;
•
a share price volatility of 15% based on expected and historical price movements;
•
a weighted average share price of 54p;
•
a dividend per share of 1.1p;
•
a risk-free interest rate of 3%; and
•
a period to maturity of three years from the date of grant of the options.
The weighted average fair value of options granted in the period was 1.75p.
28. Commitments under operating leases
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
2014
£’000
2013
£’000
Land and
buildings
Other
Land and
buildings
277
882
1,517
1,838
4,661
154
282
532
1,441
Other
1,924
5,463
875
2,676
6,653
2,255
8,262
Financial assets - loans and receivables
Trade and other receivables
Cash and cash equivalents
Financial assets - FVTPL
Fuel commodity forward derivative contract
Financial liability – FVTPL
Fuel commodity forward derivative contracts
Financial liabilities - at amortised cost
Trade and other payables
Loans and borrowings
2014
£’000
2013
£’000
Carrying value
Carrying value
3,202
1,050
4,252
-
(566)
3,660
10,904
14,564
2,948
317
3,265
3
-
4,873
11,174
16,047
The group’s derivative financial instruments relate to fuel commodity forward contracts which help to mitigate the group’s exposure
to fluctuations in diesel prices. There are a number of contracts in place at the reporting date which, taken together with diesel
fixed price agreements, give the group certainty over a substantial proportion of its projected diesel expenditure up to November
2017.
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.
64
Rotala Plc // Annual Report 2014
Financial Statements
65
29. Financial instruments - risk management (continued)
29. Financial instruments - risk management (continued)
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 entities using inputs obtained from forward pricing curves corresponding to the maturity of the
Interest rate risk
The group seeks to obtain a favourable interest rate on its cash balances through the use of bank treasury deposits.
Financial Statements
contracts.
The reconciliation of the carrying amounts of financial instruments classified within Level 2 is as follows:
Balance at 1 December 2013
Loss recognised in operating profit
Payments on matured instruments
Balance at 30 November 2014
2014
£’000
3
(650)
81
(566)
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 or liabilities held at 30 November 2014.
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 18.
In assessing and managing liquidity risks of its derivative financial instruments the group considers both contractual inflows
and outflows. Contractual cash flows of the group’s derivative financial assets and liabilities are as follows:
2014
£’000
2013
£’000
‹ 6 months
6-12 months
› 12 months
‹ 6 months
6-12 months
› 12 months
Cash outflow
Cash inflow
(151)
-
(127)
-
(268)
-
(4)
-
-
4
-
3
66
Rotala Plc // Annual Report 2014
The interest rate profile of the financial liabilities of the group, all of which are in Sterling, was as follows:
2014
£’000
2013
£’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
UK Sterling
11,516
7,918
8,346
is paid
11,938
In the year the group paid interest at a rate of between 3% and 3.75% (2013: between 3.5% and 4%) 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% (2013: between 4.4% and 8%) in the year. If floating rates of interest changed by 1%,
the group’s interest expense would not change by a material sum.
Credit risk
The group is exposed to credit risk on cash and cash equivalents, and trade and other receivables. Cash balances, all held
in the UK, are placed with the group’s principal bankers. The client base of the group lies mainly in government and semi-
government bodies and substantial blue chip organisations. As a result the group rarely needs to carry out credit checks, but
does do so if it judges this to be appropriate. Provisions for doubtful debts are established in respect of specific trade and other
receivables where it is deemed they are impaired.
Commodity risk
The group is exposed to risk in the fluctuating price of diesel. It mitigates this risk through entering fixed price purchase
contracts 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
Shares in treasury
Retained earnings
At end of year
2014
£’000
9,794
8,603
2,567
(380)
5,022
25,606
2013
£’000
8,818
7,828
2,567
-
4,371
23,584
Financial Statements
67
30. Related parties and transactions
34. Post balance sheet events
1.
The services of J H Gunn were provided by Wengen Limited, a company controlled by J H Gunn, and invoiced by that company
On 28 February 2015 the company acquired Green Triangle Buses Limited (“GTB”) for a cash consideration of £900,000 (“The
to Rotala, as set out in note 7. At the year end £nil (2013: £nil) of the amount charged was unpaid and included within creditors.
Acquisition”). At completion Rotala also repaid approximately £368,000 to GTB’s bankers to settle the outstanding overdraft. At the
During the year J H Gunn received from Rotala a total of £99,451 (2013: £77,373) in dividends on ordinary shares.
date of acquisition GTB had net assets of some £466,000 including Hire Purchase debt of £233,000. In the year ended 31st August
Financial Statements
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 £10,060 (2013: £8,466) of the amount charged was
unpaid and included within creditors. During the year R A Dunn received from Rotala a total of £14,551 (2013: £12,732) 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 £2,500 (2013: £7,500) of the amount charged was unpaid and included
within creditors. During the year F G Flight received from Rotala a total of £21,201 (2013: £18,551) in dividends on ordinary
shares.
4.
During the year S L Dunn received from Rotala a total of £10,990 (2013: £9,616) in dividends on ordinary shares and £16,843
(2013: £20,800) in interest on convertible unsecured loan stock.
5.
During the year K M Taylor received from Rotala a total of £5,720 (2013: £5,005) in dividends on ordinary shares and £1,620
(2013: £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 1,802,443 ordinary shares of Rotala as at 30 November 2014 (2013: 1,980,221 ordinary shares). The Fund held £nil of the
convertible loan stock of Rotala as at that date (2013: £55,000). 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 2014 Mr. Gunn and his beneficial interests held
28.3% (2013: 28.2%) of the ordinary share capital of The Fund. During the year The Fund received from Rotala a total of £31,684
(2013: £26,473) in dividends on ordinary shares and £3,563 (2013: £18,200) in interest on convertible unsecured loan stock.
31. Capital commitments
As at 30 November 2014 the group had placed orders for undelivered vehicles with a capital value of £nil (2013: £602,000).
32. Contingent liabilities
The group in 2012 received a grant of £683,000 from the Government’s Green Bus Fund for the acquisition of 7 hybrid diesel electric
vehicles. The principal condition of the grant is that the vehicles should be retained by the group for at least three years. If this
condition is not observed the grant becomes repayable. The group has no intention of not meeting this condition of the grant.
33. Audit exemption for subsidiary undertakings
For the year ended 30 November 2014, 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
Company number
Wessex Bus Limited
Shady Lane Property Limited
Diamond Bus Limited
Hallmark Connections Limited
Hallbridge Way Property Limited
Diamond Bus Company Holding Limited
4327651
3506681
2531054
4390228
6504654
6504657
2014, GTB had revenues of approximately £3.9 million and a profit before tax and exceptional items of £107,000. On this basis the
Acquisition is expected to generate about £434,000 of positive goodwill and intangible assets.
GTB operates 43 vehicles from a long leasehold depot in Atherton, Manchester and employs about 100 staff. The depot is well
placed within the local transport network and capable of handling the expansion needs envisaged for GTB at the current time.
The Acquisition will enable the company to enhance its position in the Lancashire market and give it access for the first time to
the Greater Manchester area which falls under the remit of Transport for Greater Manchester. Operationally GTB (which will be
renamed Diamond Bus (North West) Limited in due course) will be part of the North West division of Rotala, with its existing hub in
Preston headed by Bob Dunn as Managing Director.
Book value £’000
Fixed assets
Vehicles
Leasehold land and buildings
Other fixed assets
Total fixed assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Current liabilities
Bank overdraft
Creditors due within one year
Creditors due after more than one year
Deferred taxation
Net assets
Preliminary goodwill arising on acquisition
Acquisition costs
Total cash consideration paid
838
260
39
1,137
78
220
-
298
(368)
(407)
(775)
(54)
(140)
466
434
36
936
The Share Purchase Agreement provides for a period of 90 days within which closing assets and liabilities as at 28 February
2015 will be precisely ascertained and valued. At the date of these accounts it is not therefore possible to state what fair value
adjustments, if any, will be required.
68
Rotala Plc // Annual Report 2014
Financial Statements
69
Company Balance Sheet
As at 30 November 2014
Fixed assets
Investments
Tangible assets
Current assets
Debtors
Creditors: amounts falling due within one year
Net current assets / (liabilities)
Total assets less current liabilities
Creditors: amounts falling due after more than
one year
Provisions for liabilities
Net assets
Capital and reserves
Called up share capital
Share premium account
Shares in treasury
Profit and loss account
Shareholders’ funds
Note
3
4
5
6
7
8
10
12
12
12
13
2014
£’000
30,539
49
30,588
5,826
5,826
(4,973)
853
31,441
(6,300)
(566)
24,575
9,794
8,603
(380)
6,558
24,575
2013
£’000
25,539
-
25,539
5,001
5,001
(5,573)
(572)
24,967
(5,712)
-
19,255
8,818
7,828
-
2,609
19,255
The financial statements were approved by the Board of Directors and authorised for issue on 25 March 2015
Simon Dunn
Chief Executive
Kim Taylor
Group Finance Director
The accompanying notes form an integral part of these financial statements.
70
Rotala Plc // Annual Report 2014
Financial Statements
Notes to the Company
Financial Statements
For the year ended 30 November 2014
1.
Accounting policies
The following principal accounting policies have been applied in the preparation of the parent company 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.
Fixed assets
All fixed assets are initially recorded at cost.
Depreciation
Depreciation is calculated so as to write off the cost of all assets, less the estimated residual value, over the useful economic life of
the assets, as follows:
Plant and machinery - 33% straight line
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.
Financial Statements
71
Financial Statements
1.
Accounting policies (continued)
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.
3.
Investments (continued)
The principal undertakings (all held directly except where indicated), in which the company’s interest at the year end is 20% or more,
are as follows:
Country of
Proportion of voting
incorporation or
rights and ordinary share
registration
capital held
Nature of business
England
England
England
England
England
England
100%
100%
100%
100%
100%
100%
Transport
Transport
Property holding
Property holding
Transport
Transport
Wessex Bus Limited
Hallmark Connections Limited
Hallbridge Way Property Limited
Shady Lane Property Limited
Diamond Bus Limited *
Preston Bus Limited
* Held indirectly
Provisions
The company has a number of fuel commodity forward contracts at the year end which will require settlement in the future and
4.
Tangible assets
therefore the company has recognised a liability in respect of these contracts.
2.
Profit/(loss) for the financial year
The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its
own profit and loss account in these financial statements. The group’s profit for the year includes a profit after taxation of £4,506,000
(2013: profit £1,695,000) which is dealt with in these parent company financial statements.
3.
Investments
Cost and net book value
At 1 December 2013
Additions
At cost
At 30 November 2014
Net book value
At 30 November 2014
Subsidiary
undertakings
£’000
25,539
5,000
30,539
30,539
Cost:
At 1 December 2013
Additions
At 30 November 2014
Depreciation:
At 1 December 2013
Charge for the year
At 30 November 2014
Net book value:
At 30 November 2014
At 30 November 2013
Plant and machinery
-
72
72
-
23
23
49
-
72
Rotala Plc // Annual Report 2014
Financial Statements
73
5.
Debtors
7.
Creditors: amounts falling due after more than one year (continued)
Financial Statements
Prepayments and accrued income
Taxation
Deferred tax (note 9)
Amounts due from subsidiary undertakings
All amounts shown under debtors fall due for payment within one year.
6.
Creditors: amounts falling due within one year
Bank loans and overdrafts (note 7)
Convertible unsecured loan stock
Amounts due to subsidiary undertakings
Trade creditors
Taxation and social security
Accruals and deferred income
Other creditors
7.
Creditors: amounts falling due after more than one year
Convertible loan stock
Bank loan
2014
£’000
256
8
136
5,426
5,826
2014
£’000
3,939
595
-
51
4
124
260
2013
£’000
166
-
-
4,835
5,001
2013
£’000
5,076
-
-
90
-
-
407
4,973
5,573
2014
£’000
-
6,300
6,300
2013
£’000
2,316
3,396
5,712
Convertible debt
A convertible unsecured loan stock was issued on 3 March 2008. The loan stock was redeemable at par on 31 December 2014 or
convertible into 25p ordinary shares of the company at a price of 45.0p per share by that date. By 30 November 2014, holders of
£1,720,850 of loan stock had exercised their right to convert. Of the remainder, after the balance sheet date, holders of £435,000
also exercised their right to convert and holders of £160,000 chose to be re-paid at par.
Bank borrowings
The group renewed its Senior Term and Revolving Facilities Agreement with its bankers on 31 October 2014. This agreement
provides a revolving £9.0 million facility combined with a mortgage facility of up to £7.0 million and an overdraft facility of £2.0
million. It is for an initial term of three years and six months, renewable at 30 April 2018. 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 10 years which is considered to give a reasonable approximation to the
effective interest rate.
Analysis of maturity
In one year or less, or on demand
In more than one year but not more than two years
In more than two years but not more than five years
In one year or less, or on demand
In more than one year but not more than two years
In more than two years but not more than five years
Convertible debt
2014
£’000
Bank loans
and overdrafts
2014
£’000
595
-
-
595
3,939
700
5,600
10,239
Convertible debt
2013
£’000
Bank loans
and overdrafts
2013
£’000
-
2,316
-
2,316
5,076
3,008
388
8,472
8.
Provisions
Fuel commodity forward contracts liability
2014
£’000
(566)
Total
2014
£’000
4,534
700
5,600
10,834
Total
2013
£’000
5,076
5,324
388
10,788
2013
£’000
-
74
Rotala Plc // Annual Report 2014
Financial Statements
75
9.
Deferred tax
11. Share options and warrants
The deferred tax asset included in the company balance sheet is analysed as follows:
As at 30 November 2014 the following share options had been issued and were outstanding under the company’s employee share
Financial Statements
Accelerated capital allowances
Arising on derivative financial instruments
Losses
Asset
The movements in the deferred tax asset in the year are as follows:
Balance brought forward at 1 December
Recognised in profit or loss
Balance carried forward at 30 November
2014
£’000
2
119
15
136
2014
£’000
-
136
136
2013
£’000
-
-
-
-
2013
£’000
-
-
-
At 30 November 2014 there were £nil (2013: £nil) temporary differences or unused tax losses for which deferred tax has not been
provided.
10. Share capital
Ordinary shares of 25p each
39,175,003
2014
Number
Allotted and called up and fully paid
2014
£’000
9,794
2013
Number
35,270,888
Issued Share Capital
Number
As at 30 November 2012 and 2013
35,270,888
21 July 2014
29 September 2014
6 October 2014
16 October 2014
20 October 2014
23 October 2014
20 November 2014
80,000
88,889
55,556
55,556
111,112
3,290,780
222,222
2013
£’000
8,818
Nominal Value
£’000
8,818
20
22
14
14
28
823
55
As at 30 November 2014
39,175,003
9,794
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.
At 30 November 2014 700,000 ordinary shares were held in treasury (2013: nil).
option schemes:
Date of grant
30 March 2006
24 July 2007
6 September 2007
5 September 2008
24 September 2012
24 November 2014
Number of
options granted
Earliest
exercise date
Date of expiry
Exercise price
440,000
182,000
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
275,858
24 September 2015
24 March 2016
2,685,000
24 November 2017
23 November 2024
37.50p
62.50p
62.50p
50.00p
40.05p
54.00p
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,
except for the issue of 24 November 2014. Here the option issue is split into three equal tranches. For a tranche to be exercisable
the share price of the company must have reached 65p, 80p and 95p respectively.
2014
Weighted average
exercise price (p)
2014
2013
Weighted average
2013
Number
exercise price (p)
Number
Outstanding at beginning of the year
Forfeited during the year
Extinguished
Exercised
Issued during the year
60.97
(48.47)
(135.50)
(37.5)
54.00
2,955,498
60.21
(69,307)
(40.05)
(333,333)
(80,000)
2,685,000
-
-
-
3,067,399
(111,901)
-
-
-
Outstanding at the end of the year
53.06
5,157,858
60.97
2,955,498
The exercise price of options outstanding at the end of the year ranged between 37.5p and 62.5p (2013: 37.5p and 162.5p) and their
weighted average remaining contractual life was 6.45 years (2013: 3.28 years).
Of the outstanding options at the reporting date 2,197,000 (2013: 2,636,333) were exercisable. The weighted average exercise price
was 53.54p (2013: 63.50p).
76
Rotala Plc // Annual Report 2014
Financial Statements
77
11. Share options and warrants (continued)
14. Pensions
The fair value of options granted was determined using a binominal valuation model. Significant assumptions used in the
The company does not have a pension scheme of any nature.
Financial Statements
15. Capital commitments
As at 30 November 2014 the company had placed orders for undelivered vehicles with a capital value of £nil (2013: £602,000).
16. Commitments under operating leases
The company had the following annual operating lease commitments:
Expiry date
- up to one year
- between two and five years
17. Contingent liabilities
Other
2014
£’000
22
23
Other
2013
£’000
22
45
The company has entered into a cross-guarantee and floating charge agreement with its subsidiaries. At 30 November 2014 the
contingent liability amounted to £70,000 (2013: £387,000).
The company has guaranteed the hire purchase obligations of its subsidiaries. At 30 November 2014 the contingent liability
amounted to £8,530,000 (2013: £9,111,000).
The company in 2012 received a grant of £683,000 from the Government’s Green Bus Fund for the acquisition of 7 hybrid diesel
electric vehicles. The principal condition of the grant is that the vehicles should be retained by the company for at least three years.
If this condition is not observed the grant becomes repayable. The company has no intention of not meeting this condition of the
grant.
calculations included:
• an exercise price of 65p, 80p and 95p for three tranches each of 895,000 shares;
• a share price volatility of 15% based on expected and historical price movements;
• a weighted average share price of 54p;
• a dividend per share of 1.1p;
• a risk-free interest rate of 3%; and
• a period to maturity of three years from the date of grant of the options.
The weighted average fair value of options granted in the period was 1.75p.
12. Reserves
At 1 December 2013
Profit for the year
Shares issued
Employee share schemes
Share buyout
Dividends paid
2014
Share Premium
Account
£’000
7,828
-
775
-
-
-
As at 30 November 2014
8,603
13. Reconciliation of movements in shareholders’ funds
Profit for the year
Share based payment charge credited to reserves
Dividends paid
Share buyout
Shares issued
Net addition to shareholders’ funds
Opening shareholders’ funds
Closing shareholders’ funds
2014
Profit and Loss
Account
£’000
2,609
4,506
-
7
-
(564)
6,558
2014
£’000
4,506
7
(564)
(380)
1,751
5,320
19,255
24,575
2014
Shares in
treasury
£’000
-
-
-
-
(380)
-
(380)
2013
£’000
1,695
9
(494)
-
-
1,210
18,045
19,255
78
Rotala Plc // Annual Report 2014
Financial Statements
79
18. Related parties and transactions
19. Post balance sheet events (continued)
Financial Statements
1.
2.
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 (2013: £nil) of the amount charged was unpaid and included within creditors. During the year J
H Gunn received from Rotala a total of £99,451 (2013: £77,373) in dividends on ordinary shares.
The services of R A Dunn were provided by motorBus Limited, a company controlled by R A Dunn, and invoiced by that
company to a subsidiary undertaking of Rotala. At the year end £10,060 (2013: £8,466) of the amount charged was unpaid and
included within creditors. During the year R A Dunn received from Rotala a total of £14,551 (2013: £12,732) 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 £2,500 (2013: £7,500) of the amount charged was unpaid and included within
creditors. During the year F G Flight received from Rotala a total of £21,201 (2013: £18,551) in dividends on ordinary shares.
4.
During the year S L Dunn received from Rotala a total of £10,990 (2013: £9,616) in dividends on ordinary shares and £16,843
(2013: £20,800) in interest on convertible unsecured loan stock.
5.
During the year K M Taylor received from Rotala a total of £5,720 (2013: £5,005) in dividends on ordinary shares and £1,620
(2013: £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
1,802,443 ordinary shares of Rotala as at 30 November 2014 (2013: 1,980,221 ordinary shares). The Fund also held £nil of the
convertible loan stock of Rotala as at that date (2013: £55,000). 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 2014 Mr. Gunn and his beneficial interests
held 28.3% (2013: 28.2%) of the ordinary share capital of The Fund. During the year The Fund received from Rotala a total of
£31,684 (2013: £26,473) in dividends on ordinary shares and £3,563 (2013: £18,200) in interest on convertible unsecured loan
stock.
19. Post balance sheet events
On 28 February 2015 the company acquired Green Triangle Buses Limited (“GTB”) for a cash consideration of £900,000 (“The
Acquisition”). At completion Rotala also repaid approximately £368,000 to GTB’s bankers to settle the outstanding overdraft. At the
date of acquisition GTB had net assets of some £466,000 including Hire Purchase debt of £233,000. In the year ended 31st August
2014, GTB had revenues of approximately £3.9 million and a profit before tax and exceptional items of £107,000. On this basis the
Acquisition is expected to generate about £434,000 of positive goodwill and intangible assets.
GTB operates 43 vehicles from a long leasehold depot in Atherton, Manchester and employs about 100 staff. The depot is well
placed within the local transport network and capable of handling the expansion needs envisaged for GTB at the current time.
The Acquisition will enable the company to enhance its position in the Lancashire market and give it access for the first time to
the Greater Manchester area which falls under the remit of Transport for Greater Manchester. Operationally GTB (which will be
renamed Diamond Bus (North West) Limited in due course) will be part of the North West division of Rotala, with its existing hub in
Preston headed by Bob Dunn as Managing Director.
Fixed assets
Vehicles
Leasehold land and buildings
Other fixed assets
Total fixed assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Current liabilities
Bank overdraft
Creditors due within one year
Creditors due after more than one year
Deferred taxation
Net assets
Goodwill arising on acquisition
Acquisition costs
Total cash consideration paid
Book value £’000
838
260
39
1,137
78
220
-
298
(368)
(407)
(775)
(54)
(140)
466
434
36
936
The Share Purchase Agreement provides for a period of 90 days within which closing assets and liabilities as at 28 February
2015 will be precisely ascertained and valued. At the date of these accounts it is not therefore possible to state what fair value
adjustments, if any, will be required.
80
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Financial Statements
81
Shareholder Information
Shareholder
Information
82
Rotala Plc // Annual Report 2014
Shareholder Information
83
Notice of Annual General Meeting
M
G
A
NOTICE IS HEREBY given that the Annual General Meeting (“AGM”) of
Rotala plc (the “Company”) will be held at 12 pm on 21 May 2015 at the
offices of the Company at Beacon House, Long Acre, Birmingham, B7 5JJ
for the purpose of considering, and if thought fit, passing the following
Resolutions with or without modifications and of which Resolutions 1 to 7
(inclusive) will be proposed as ordinary resolutions and Resolutions 8 to 9
will be proposed as special resolutions.
Ordinary Resolutions
1.
THAT, the accounts of the Company for the financial period ended 30 November 2014, together with the directors’ report and the
auditor’s report on those accounts, be received and considered.
2.
THAT, upon recommendation of the directors, a dividend of 1.20p per ordinary share be declared as a final dividend in respect of the
financial year ended 30 November 2014.
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
next general meeting of the Company before which statutory accounts are laid and that the directors of the Company be and are
hereby authorised to fix the auditors’ remuneration from time to time.
4.
5.
THAT, Simon Dunn who is retiring by rotation in accordance with the Company’s articles of association and, being eligible, offers
himself for re election as a director of the Company, be re elected as a director of the Company.
THAT, Geoffrey Flight who is retiring by rotation in accordance with the Company’s articles of association and, being eligible, offers
himself for re election as a director of the Company, be re elected as a director of the Company.
Special Business
Shareholder Information
Special Resolutions
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
the allotment or sale provided that this power:-
8.1
is limited to the allotment of equity securities:-
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
of any territory, or the requirements of any regulatory body or stock exchange in any territory; and
8.1.2
otherwise than pursuant to paragraph 8.1.1 up to an aggregate nominal value of £979,375 (representing
approximately 10 per cent. of the issued ordinary share capital of the Company as at 24 March 2015);
8.2
shall expire at the earlier of the conclusion of the next annual general meeting of the Company and 31 May 2016, but such
authority shall extend to the making of an offer or agreement which would or might require equity securities to be allotted
after such expiry date and the directors may allot equity securities in pursuance of that offer or agreement as if the power
conferred by this Resolution had not expired;
9.
THAT the Company be and is hereby generally and unconditionally authorised for the purposes of section 701 of CA 2006 to make
market purchases (within the meaning of section 693(4) of CA 2006) of Ordinary Shares provided that:-
9.1
the maximum number of Ordinary Shares which may be purchased is 3,917,500 (representing ten per cent of the Company’s
issued ordinary share capital as at 24 March 2015);
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;
6.
THAT, in accordance with section 366 of the Companies Act 2006 (“CA 2006”), the Company and its subsidiaries are hereby
9.4
this authority shall expire on the earlier of the conclusion of the next annual general meeting of the Company after the
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 2016.
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 £3,264,584 (being
approximately one-third of the issued ordinary share capital of the Company as at 24 March 2015 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 2016
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..
passing of this Resolution and 31 May 2016 (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: 25 March 2015
84
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Shareholder Information
85
Notes to Members
Shareholder Information
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
8.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in regulation 35(5)(a) of the Uncertificated
instead of him/her. A member may appoint more than one proxy in relation to the meeting, provided that each proxy is appointed to
Securities Regulations 2001.
exercise the rights attached to a different share or shares held by that member. The proxy need not be a member of the Company.
Please refer to the notes to the form of proxy for further information on appointing a proxy, including how to appoint multiple
proxies (as the case may be).
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:-
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,
PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU; or
3.2 in the case of CREST members, through the CREST electronic proxy appointment service.
4.
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
9.
Completion and return of the Form of Proxy will not preclude a shareholder from attending and voting in person at the meeting.
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
the exclusion of the votes of the other joint holders. For this purpose seniority is determined by the order in which the names of the
holders stand in the register of members in respect of the joint holding.
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
entered on the register of members of the Company at the close of business on 19 May 2015 shall be entitled to attend and vote at
the meeting or, if the meeting is adjourned, the close of business on such date being not more than two days prior to the date fixed
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
for the adjourned meeting. Changes to entries on the register of members after such time shall be disregarded in determining the
authority under which the proxy is appointed (or a notarially certified copy of such power or authority) must be deposited at the
right of any person to attend or vote at the meeting.
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.
86
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Shareholder Information
87
Shareholder Information
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 3,917,500 ordinary shares, representing approximately 10 per cent of the issued share capital as at 24
March 2015. 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 26 June 2015 to those shareholders on the Company’s register of members as at close of business
on 5 June 2015.
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 2014, 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 £3,264,584
which is equivalent to one third of the total issued ordinary share capital as at 24 March 2015. The directors have no current intention of
exercising this authority.
This authority will expire at the conclusion of the next AGM, or 31 May 2016, 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 £979,375 which is equivalent to 10 per cent of the total issued ordinary share capital
of the Company as at 24 March 2015 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 2016, whichever is the earlier.
88
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Shareholder Information
89
Rotala Plc
Beacon House, Long Acre, Birmingham B7 5JJ
Telephone: 08458 382 382
Website: www.rotalaplc.com