Annual
Report
For year ended
30 November 2016
Rotala Plc
Hallbridge Way, Tipton Road, Tividale, West Midlands B69 3HW
Telephone: 0121 322 2222
Website: www.rotalaplc.com
Produced by Sue Willdigg, Corporate Design Manager for the Rotala Group
Contents
1. Rotala at a Glance
Directors, Secretary & Advisers
Financial Highlights
2. Review of Operations & Statutory Reports
Chairman’s Statement & Review of Operations
Strategic Report
Directors’ Report
Independent Auditor’s Report
3. 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 Statement of Financial Position
Company Statement of Changes in Equity
Notes to the Company Financial Statements
4. Shareholder Information
Notice of Annual General Meeting
Notes to Members
Explanatory Notes to Notice of Annual General Meeting
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Rotala Plc | Annual Report 2016
Rotala at a Glance
Statutory Reports
Financial Statements
Shareholder information
1
Rotala
at a Glance
Rotala at a Glance
03
Directors, Secretary & Advisers
Country of incorporation of parent company
England and Wales
Company registration number
5338907
Legal form
Directors
Registered Office
Public Limited Company
John Gunn (Non-Executive Chairman)
Simon Dunn (Chief Executive)
Robert Dunn (Executive Director)
Graham Spooner (Non-Executive Director)
Kim Taylor (Group Finance Director)
Rotala Group Headquarters,
Cross Quays Business Park,
Hallbridge Way,
Tipton, Oldbury,
West Midlands, B69 3HW.
Telephone: 0121 322 2222
Fax: 0121 322 2718
Company Secretary
Kim Taylor
Nominated Adviser and Broker
Auditor
Solicitors
Registrars
Bankers
04
Rotala Plc | Annual Report 2016
Cenkos Securities Plc
6.7.8 Tokenhouse Yard
London
EC2R 7AS
Grant Thornton UK LLP
Chartered Accountants
Statutory Auditor
The Colmore Building
20 Colmore Circus
Birmingham B4 6AT
Squire Patton Boggs (UK) LLP
Rutland House
148 Edmund Street
Birmingham
B3 2JR
Capita Asset Services
40 Dukes Place
London
EC3A 7NH
RBS/Natwest
1 St. Philips Place
Birmingham B3 2PP
Rotala at a Glance
Statutory Reports
Financial Statements
Shareholder information
Financial Highlights
A glance at the highlights of the financial year
ended 30 November 2016.
Revenue
Profit before Taxation
Dividend
£55,000,000
£2,680,000
8%
9.0%
(before exceptional items)
2.30p
9.5%
2016
£55,000,000
2016
£2,680,000
2015
£50,889,000
2015
£2,460,000
2016
2015
2.30p
2.10p
2014
£51,674,000
2014
£2,263,000
2014
1.85p
2013
£53,303,000
2013
£2,094,000
2013
1.60p
Contracted Revenue
Commercial Revenue
Charter Revenue
£19.7m
25.0%
2016
£19.7m
2015
£15.8m
£32.9m
1.0%
2016
2015
£32.9m
£33.2m
£2.4m
25.0%
2016
£2.4m
2015 £1.9m
2014
£17.9m
2014
£30.6m
2014
£3.2m
2013
£20.6m
2013
£29.9m
2013
£2.8m
Rotala at a Glance
05
06
Rotala Plc | Annual Report 2016
Rotala at a Glance
Statutory Reports
Financial Statements
Shareholder information
2
Review of
Operations
& Statutory
Reports
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 2016
Profit before Taxation
£2,680,000
9.0%
(before exceptional items)
The company has continued to make good progress in 2016. We were able to make one
significant acquisition in the year and two small ones. The first and largest acquisition, for
our Heathrow depot, considerably increased our presence in this key market. The two smaller
acquisitions were aimed at the coach charter market in the North West, in which we have now
established a useful foothold. The aims of the Government’s Buses Bill have become much
clearer in the last year. The effects of the Bill look to be very positive for your company, as I
explain in more detail below, though it will inevitably be the cause of continuing instability in
the UK bus market.
Results and review of trading
Revenues for the group as a whole for the year ended 30 November 2016 were £55.0 million.
This represents an increase of 8% on the revenues of £50.9 million achieved in the previous
2016
£2,680,000
year. Gross margins dipped slightly to 18.3% (2015:18.7%), as the acquisitions of the year were
2015
£2,460,000
2014
£2,263,000
2013
£2,094,000
Revenue by Stream
36% Contracted
60% Commercial
4% Charter
bedded in. I am also pleased to report that pre-tax profits before exceptional items rose by a
further 9% to £2.68 million (2015: £2.46 million), which replicated the advance we saw in 2015
over the results achieved in 2014.
Contracted Services
Revenues in Contracted Services rose overall by 25% to £19.7 million (2015: £15.8
million). Contracted Services comprised 36% of group revenues in 2016, compared
to 31% in 2015. The OFJ acquisition was the principal reason for this increase. OFJ
was acquired in January 2016, as described in more detail below, and is a business
positioned largely in the corporate sector of the market. The acquisition thus formed
a welcome boost to our exposure to this part of the transport market. Corporate
contractual income is now the largest component of our Contracted Services division. At
the same time it should be remembered that the comparative figure for revenue in 2015
contains a three month contribution from the British Airways contract which did not finally
finish until the end of the first quarter of that year.
The other major contribution to revenues in Contracted Services comes from Local
Authority bus contracts. Overall the contribution to group revenues from this source fell
slightly and now forms about 15% of group turnover. However there was no uniform
pattern across the group. In the Manchester area our contracted bus income continued
to increase, whilst in the rest of Lancashire local authorities cut back their transport
budgets and this had a commensurate impact on the turnover of the group. We continue
to believe that Manchester offers attractive possibilities for further expansion off the base
which we acquired in 2015. In the West Midlands there is always a considerable churn
in contracts because of the twice-yearly tendering system used by Transport for the West
Midlands (“TfWM”) and our revenues from this source fell a little in this area. However
this slight fall in income is easily surpassed by the award of £866,000 in new tendered
services from TfWM which we announced recently. In the South West, aggressive actions
by First Group in registering some services as commercial, which had formerly been
tendered, forced local authorities to terminate certain contracts with us.
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Rotala Plc | Annual Report 2016
Contracted Revenue
Contracted Revenue
£19.7m
25.0%
2016
£19.7m
2015
£15.8m
Given the continuing pressures on Local Authority budgets (away from the major
conurbations, like Greater Manchester and Bristol, which are benefitting from separate
2014
£17.9m
government initiatives), we do not believe that revenue from tendered Local Authority
bus services is likely to grow in size in the foreseeable future. But we do believe that,
as I shall explain later, the Buses Bill will offer us the opportunity to bid for significant
market shares in the major conurbations in which we are represented. This means that
Contracted Services revenues will form an increasingly important and growing share of
group revenues in the medium term.
Commercial Services
Commercial Services comprised 60% of group revenues in 2016, compared to 65% in
2015. The reason for this fall in the share of group revenues was the OFJ acquisition to
which I have already referred. Revenues in Commercial Services, at £32.9 million for the
year, showed a very slight fall on the 2015 total of £33.2 million. Once again the picture
across the group was mixed. Where a contracted service obliges the bus operator to
take an element of revenue risk (the proportion of which can vary considerably), we
classify the variable element of the revenue under the heading of Commercial Services.
The reduction in contracted income in the South West, to which I have already referred,
had a knock–on effect on Commercial revenues for this reason. The same effect was
felt in the West Midlands from the usual churn in tendered bus contracts, but I should
2013
£20.6m
Commercial Revenue
£32.9m
1.0%
2016
2015
£32.9m
£33.2m
add that, when we sold the Long Acre depot in December 2015, which was otherwise
2014
£30.6m
surplus to requirements, we did deliberately relinquish a small number of commercial
bus services to the north east of the Birmingham conurbation because we could not
economically service them from our main Tividale depot.
However in the North West, in the Manchester and Preston areas combined, our
Commercial Services revenues grew by more than 10% overall. This resulted from
revenue increases in commercial, concessionary and network card categories and so
was widely based. The acquisition of OFJ also brought with it a small but worthwhile
source of commercial revenue. The recently announced gain of tendered services in the
West Midlands will bring with it in a full year the addition of approximately £740,000 in
the variable element of contracted revenue to this category of our turnover.
Charter Services
2013
£29.9m
Charter Revenue
£2.4m
25.0%
Charter Services comprised 4.4% of group revenues in 2016, compared to 3.77% in 2015.
Revenues in Charter Services rose by 25% compared to the previous year to £2.4 million
2016
£2.4m
(2015: £1.9 million). The underlying rise, allowing for the revenue which represented
the tail of the British Airways contract in 2015, is however much greater than this and is
more like 45%. This rise in revenues reflects both a full year contribution from the Wings
business, which was acquired half way through 2015, and a smaller contribution from
the Elite and Wigan Coachways businesses which we acquired during the second half of
2016, as described in detail below. We are very pleased with the contributions which all
three of these acquisitions are making to the service capabilities and financial results of
the group. This contribution strongly underpins the rationale for making the acquisitions in
the first place.
2015 £1.9m
2014
£3.2m
2013
£2.8m
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Statutory ReportsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
Chairman’s Statement and
Review of Operations
(continued)
Strategy and the Buses Bill
In the last year the Buses Bill has begun its progress through Parliament and new regional authorities have been created to take advantage of
the anticipated powers. The Bill, as expected, covers the re-franchising of bus networks in major cities. We have a presence in three of those
conurbations, Greater Manchester, the South West and the West Midlands. The approach of the new transport authorities in each of these regions
is however different. In both the South West and Greater Manchester it is clearly envisaged that the local authorities will use the legislation to
achieve complete control over local bus networks by the franchise process. But in the West Midlands a more collaborative approach using bus
alliances is favoured by the local authority.
From our perspective both lines of approach offer the prospect of considerably increasing the market shares we can achieve to a level to which
we could not possibly have aspired under the existing structure of the bus markets in these locations. In the South West and Greater Manchester
the existing bus markets are dominated by a very small number of bus companies which possess extremely large market shares. If the London
model is employed these dominating market shares will not be allowed to subsist but will be eroded over time by new entrants to the market.
With key presences in Bristol/Bath (where we are the clear number two bus operator) and Greater Manchester (where our overall market share
is very small), Rotala has therefore good prospects of significantly raising its market share. In the West Midlands, though our overall market share
is again relatively small in a market completely dominated by one very large operator, our business is focused on the western and southern sides
of Birmingham and in these particular localities we have substantial market shares. Thus the alternative Bus Alliance route being followed in the
West Midlands also offers good prospects of being able to enhance our market share in certain parts of the West Midlands market and thereby
improve loadings and operational efficiencies.
Therefore we cannot see a downside for the Rotala business in the Buses Bill, indeed quite the reverse.
Acquisitions
In January 2016, we were able to acquire, from OFJ Connections Limited, that part of its business which was conducted in and around Heathrow
airport. This business has a long-established presence in the Heathrow area. Its principal activity is the movement of crew for a large number
of airlines from their aircraft to their hotels and other destinations, including Gatwick airport. Other work is carried out for local educational
institutions and for a number of private clients. The revenue of the business in a full year at the time of acquisition was estimated at about £5.5
million. Most of this business revenue falls within our Contracted Services division. All of these activities dovetail well with our existing work at
Heathrow and enhance our market presence in important parts of this market like private hire and airside and landside passenger transportation.
The acquisition also brought with it a large leasehold depot well-positioned on the Heathrow perimeter road. This gives us ample room for further
expansion in this key market. The consideration for the acquisition was £1.3 million. As part of the acquisition we acquired a vehicle fleet with a
fair value of £0.45 million. The OFJ acquisition took time to integrate with our pre-existing activities in and around Heathrow airport, but this phase
is now over. We are confident that our Heathrow division is well placed to make a substantial contribution to group revenues and profits in its new
and expanded form.
In the second half of the year we made two small acquisitions in the North West. The aim of these two acquisitions was to improve our coverage
of contracted and private hire services in the Blackpool area (to the west of Preston) and the Wigan area on the western side of Manchester. Up
to now we have had little or no penetration in private hire in particular in these localities and we were keen to enhance the reach of the North
West hub of our business which is run from the Preston depot in close alliance with the depot we have at Atherton. First, in northern Manchester,
in early July 2016 we acquired from Elite Minibus and Coach Services Limited (“Elite”) its entire business and 6–strong vehicle fleet for a cash
consideration of £200,000. The Elite business had annual revenues of approximately £500,000. Elite is a well-established operator of contracted
services for local authorities and schools in the Blackpool area. It also has a successful private hire arm. This business, with its small number of
existing staff, has been integrated into the outstation which Rotala already operated in Blackpool. Then at the beginning of August 2016 we
acquired from Rojay Services Limited (“Wigan Coachways”) its entire business and 8–strong vehicle fleet for a cash consideration of £213,000.
This business also had annual revenues of about £500,000, but with a slightly different emphasis. It has a considerable private hire arm in the
Wigan area. The business has been transferred to and integrated with our existing business at our Atherton depot.
10
Rotala Plc | Annual Report 2016 Dividend
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 match underlying earnings and free cash flows.
The company paid an interim dividend of 0.80 pence per share in December 2016. The board will recommend to the forthcoming Annual General
Meeting a final dividend in respect of 2016 of 1.50 pence per share making a total of 2.30 pence for the year (2015: 2.10 pence).
Depots
Through an acquisition in 2013 the group gained much additional freehold depot capacity in the West Midlands area. This enabled us to
undertake a review of depot locations and the capacities we required. As a result of this review the board decided to dispose of the group’s 4
acre depot in Long Acre, Birmingham, since it could be seen from the review that the depot was surplus to requirements. This sale was completed
in late 2015, just after the start of the accounting period, at a price of £2.5 million, which approximated to the net book value of the property.
At the same time we were able to take advantage of the opportunity to acquire an additional 3 acres of land on a site adjacent to our existing
large depot in Tividale, West Midlands. This land acquisition gives the group a combined 6.7 acre freehold site for its operations there. The
consideration for this site was £380,000 and it brought with it a substantial building suitable for conversion into our centre of bus operations
for the whole West Midlands division of our business. We intend to invest about £600,000 in demolishing part of the building, converting the
remainder, and making the whole site suitable for bus operation. This investment, for which planning permission has been received and the
planning conditions now satisfied, will enable us to more than double the number of buses we can operate from this depot. The Buses Bill, as
outlined above, is expected to bring us considerably greater opportunities in the West Midlands area and this investment will enable us to take
full advantage of these.
Placing of New Shares
In June 2016, the company raised approximately £2.24 million (net of expenses) by way of a placing of 3,872,581 ordinary shares with new and
existing investors at a price of 62 pence per share. The net proceeds from the placing will be used to improve our key bus depots in the West
Midlands, as described above, and provide funds for future bolt-on acquisitions, as with the two we subsequently made in the second half of
2016.
Board changes
In May 2016 we were delighted to welcome a new non-executive director to the board, Graham Spooner. Graham brings with him a wealth of
experience, particularly in the transport sector. Shortly afterwards Geoffrey Flight decided to step down from the board. Geoff had joined us very
soon after Rotala was established 10 years ago. We are grateful for his contribution to the development of Rotala over the years and wish him
well for the future.
11
Statutory ReportsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information Chairman’s Statement and
Review of Operations
(continued)
Fuel and hedging
The fuel hedge position is little changed over the last year. Given the uncertain direction of oil prices during 2016, the board has decided not
to consider fuel hedging again until later in 2017 or until the market uncertainty has been satisfactorily resolved. In summary the group has the
following fuel hedges in place:
•For 2017 about 83% of the fuel requirement is covered at an average price of 95p a litre;
•For 2018 about 85% of the fuel requirement is covered at an average price of 91p a litre.
Fleet management
The focus of our fleet management activity in this accounting period was on the integration of the vehicles acquired with the three acquisitions
we made during the year and then shaping the combined fleet to fit the on-going group requirements. We thus disposed of a number of vehicles
deemed to be surplus to forecast capacity. At the same time in the year we acquired 20 new single deck buses, since these were available at
an advantageous price and we could forecast a need for them in 2016 and 2017. Overall the average age of the fleet was relatively constant, at
8.45 years (2015: 8.24 years), a figure which remains very competitive in industry terms. We do not see the need for a significant number of new
vehicles in the remainder of 2017 unless customer requirements change, but new vehicles in these circumstances would be matched by significant
additional revenues and so make commercial sense. We continue to manage the fleet actively in accordance with our policies and this will no
doubt result in some continuing level of vehicle acquisition and disposal.
When acquiring any vehicle new to the fleet we are acutely conscious of its emission standards and relative fuel consumption. We believe
that having a modern and efficient bus fleet is a key aspect of customer service. The board monitors each vehicle in the fleet for relative fuel
consumption, reliability and maintenance cost. 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.
Financial review
Income Statement
The Consolidated Income Statement is set out on page 31. This section of the review addresses the results before the mark to market provision for
fuel derivatives and other exceptional items. Revenues for the year rose by 8% compared to those of 2015. This increase was principally driven by
the acquisitions made in the year. Cost of Sales also rose by 9%. Gross Profits therefore increased by 6%, whilst the gross profit margin fell slightly
to 18.3% (2015: 18.7%) as the new acquisitions were integrated into the rest of the group. Administrative expenses increased by 3.6% as a result
of the addition of a major new depot in the Heathrow area with the acquisition made there, and also the disposal of a surplus depot in the West
Midlands. The Profit from Operations at £3.95 million (2015: £3.61 million) was 9% up on that achieved in the previous year. Finance expense
however rose by 9% as borrowings were made to facilitate acquisitions and more vehicles were financed through hire purchase agreements.
Profit before taxation therefore rose by 9% when compared to the previous year to £2.68 million (2015: £2.46 million) and is 18% up on the profits
of £2.26 million achieved in 2014. The net contribution represented by the mark to market provision and other exceptional items was very small
(but is analysed in detail in note 10 to these financial statements), so that Profit from Operations and Profit before Taxation including all these
items were not materially different. Basic earnings per share in 2016, after taking into account the mark to market provision and other exceptional
items, were 5.49p per share (2015: 1.74p). However, the impact of the mark to market provisions and the other exceptional items make the basic
earnings per share numbers very difficult to understand. A better guide to true comparability is to consider the adjusted basic earnings per share
numbers. Adjusted basic earnings per share (before the mark to market provision and other exceptional items) were then 5.51p in 2016 (2015:
5.19p), making an increase of 6% in the year and 11% since 2014.
12
Rotala Plc | Annual Report 2016
Financial review (continued)
Balance Sheet
The gross assets of the group grew by 13% in the year and stood at £63.5 million at 30 November 2016 (2015: £56.2 million). Goodwill rose by
just over £1 million as a result of the three acquisitions made during the year. Holdings of freehold property increased following the acquisition of
3 more acres of land adjacent to the Oldbury depot. The bulk of the investment in plant and machinery was represented by new ticket machinery
and an inspection pit for the Manchester depot, and the re-equipment of the workshops for the additional Heathrow depot acquired with the
business in that region. The book value of the vehicle fleet also increased, in the main because of the acquisitions made in the year but also
because of the normal cycle of fleet replacement described above. Stocks of parts, tyres and fuel were all higher at the period end reflecting the
increased size of the business compared to 2015. Trade Receivables for the same reason also rose, compounded by the fact that much of the
new business of the year is delivered by contract, rather than being commercial income. These changes in the shape of the business also drove
the increases in prepayments and accrued income, where the bulk of the increase was accounted for by amounts receivable in Bus Services
Operators’ Grant, concessionary fares schemes and local authority run fares collection systems. Trade and Other Payables however remained at
much the same levels as the previous year. The gross loans and borrowings of the group rose slightly over the year to £16.0 million (2015: £15.1
million) as the drawings on the group’s revolving facility to finance acquisitions were largely counteracted by the repayment made following the
sale of the surplus West Midlands depot and the normal process of mortgage amortisation. Obligations under hire purchase contracts however
rose to a present value of £11.3 million from the £8.5 million seen at the end of 2015. This change arose both from the new vehicles acquired in
the year and a number of hire purchase refinancing transactions. The rise in the oil price in 2016 combined with the plunge in sterling against
the dollar following the decision to exit the European Union served to reverse completely the mark to market provision held in respect of the
group’s fuel derivative position and resulted in a small overall surplus at the period end. The pension obligations of the group did increase year
on year, but this movement reflects the actuarial valuation of 2013, which is about to be superseded. The draft actuarial deficit shown by the
March 2016 valuation which is currently underway shows that the pension scheme is 94% funded. Upward movements in equity and bond markets
also flowing out of the decision to exit the European Union will have closed that gap still further even allowing for falls in applicable discount
rates. The gross liabilities of the group were therefore 14% higher than the previous year at £35.7 million (2015: £31.2 million). Reflecting the new
share issue of £2.24 million in June 2016 in addition to the positive factors described above, the net assets rose to £27.8 million at the end of the
year, compared to £25.0 million at the end of 2015, a rise of 11% year on year.
Cash Flow Statement
Cash flows from operating activities (before changes in working capital and provisions) grew strongly in the year, reaching £6.46 million (2015:
£4.20 million), an increase of 54% compared to the previous year. However the increased size of the group and the fact that the businesses
acquired were largely in the contracted services sector where revenues are billed by invoice rather than being collected at delivery in cash, as
with commercial bus services, had as its consequence an absorption of working capital, rather than the release seen in 2015. Interest paid on HP
agreements was very similar to the previous year. Net cash flows from operating activities were therefore much lower than in 2015 at £1.45 million
(2015: £4.63 million).
13
Statutory ReportsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information Chairman’s Statement and
Review of Operations
(continued)
However the cash requirements for investing and financing activities were also much reduced in 2016 compared to the previous year. Investment
in property, plant and equipment was roughly comparable to that seen in 2015 at £2.57 million but was considerably outweighed by the sale
proceeds of £3.5 million derived from the sale of the Long Acre depot and the usual sales of surplus vehicles. With acquisition spend of £1.87
million on the three acquisitions made in the year, cash used in investing activities fell from £4.15 million in 2015 to £0.93 million in 2016.
The placing of new shares in June 2016 brought in £2.2 million of fresh capital. In addition some share options were exercised. Dividends paid
reflect both an increase in the dividend per share and the number of shares in issue. The share buy-back programme continued, but at a much
lower level and £367,000 was expended on this activity in the year (2015: £771,000). Whilst the group’s revolving credit facility was used to
finance the acquisitions made, the sale of the Long Acre depot facilitated the repayment of £2 million of the facility. In addition the property
mortgages were amortised by the normal £700,000 in the year. Advantage was also taken of the unencumbered value represented by the vehicle
fleet. By refinancing these vehicles with new hire purchase arrangements £2.5 million of capital was released to invest in the business. The
capital element of payments on hire purchase agreements fell somewhat in the year to £3.37 million (2015: £3.55 million). The cash absorbed
by financing activities therefore fell in 2016 to £0.27 million compared to £0.96 million in 2015. There was therefore an overall increase in cash
and cash equivalents for the year of £256,000 compared to a decrease of £489,000 in the prior year. The closing overdraft, net of cash and cash
equivalents, of £342,000 at the end of 2016 (2015: £598,000 overdraft), was in line with management’s plans and expectations.
Outlook
The group performed well in 2016 and trading for the current year has begun in line with budget. Following the three acquisitions which were
made in 2016, together with the more recent announcements of new business, turnover in the current year should show further significant growth.
The group benefits from strong banking and broking relationships which will provide the finance for future acquisitions. Rotala has grown
predominantly through acquisition and we continue to be actively engaged in looking for attractive acquisition opportunities.
The group also possesses a strong and very experienced management team which has demonstrated over the last decade that it has the right
strategy and the skills to implement it. With its excellent base of operating facilities and tangible property and vehicle assets, the group is well
placed to take advantage of the continuing developmental change in the bus industry. As I have stated above the Buses Bill offers many new
and exciting possibilities for the group. We are well positioned in the key conurbations targeted by this Bill. The Bill will enable us to increase
our market shares significantly in areas where such ambitions would previously have been impracticable and unattainable. These encouraging
developments make us confident about the prospects of the group and excited about the possibility of expanding it considerably in the years
ahead.
John Gunn
Non-Executive Chairman
Date: 6 April 2017
14
Rotala Plc | Annual Report 2016
15
Statutory ReportsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information Strategic Report
For the year ended 30 November 2016
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
o
i
t
a
r
e
p
O
f
o
s
a
e
r
A
16
M6
Blackpool
Wigan
Bolton
Manchester
Atherton
Atherton
North West Trading Brands
M6
M6
M1
Wolverhampton
Walsall
M42
West Bromwich
Midlands Trading Brands
Stourbridge
Ludlow
Birmingham
Solihull
M42
Coventry
Worcester
Warwick
M5
Stratford
-upon-Avon
Evesham
M40
M1
Wooton-under-Edge
M4
Chipping Sodbury
South West Trading Brands
Bristol
M5
Kingswood
Bath
A1(M)
M11
M25
M4
M25
M3
Stanwell & Hounslow
Stanwell & Hounslow
M20
London Trading Brands
Key
Operational Depot
Places of Operation
(Not all are shown at this scale)
Motorways
Country Border
M4
Rotala Plc | Annual Report 2016
s Rotala Plc pursues three key strategic goals:
l
a
o
G
• 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.
r
u
O
s
e
u
a
V
l
r
u
O
n
o
i
s
s
i
M
r
u
O
These goals are measured by:
• a focus on earnings per share and the resultant share price;
• the level of new investment in infrastructure, technology and training;
• continually monitoring the timeliness and completeness of service delivery
and levels of customer complaint.
Our commitment is to conduct business in an ethical manner; our core values convey our organisational beliefs:
• Professional - in our approach to business, with expert presence;
• Innovative - in creating new solutions;
• Agile - quick to respond and make decisions;
• Collaborative - working together with all stakeholders;
• Commercially orientated - delivering what clients require;
• Results focused - focusing on the delivery of value and the job in hand;
• Risk aware - assessing options for alternative strategies.
Our brands signify consistency, reliability and employee commitment.
The commitment is to the delivery of a consistent quality of service in accordance with the service level requirements of all
stakeholders. Continuous improvement is sought; close monitoring of service levels identifies areas for improvement. Well-
planned, clearly focused training supports an improved quality of service.
Rotala aims to become the first choice supplier for bus operations
in its target regions.
Having grown through acquisition in key areas, Rotala has put itself into a position from which it can take advantage of future
developments in the transport industry. The possession of substantial operations in the North West, the West Midlands, the
South West and Heathrow areas ensures that the company is well positioned for future contract wins and organic commercial
growth.
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.
17
Statutory ReportsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
Strategic Report
For the year ended 30 November 2016
Contract
The key aspect of Contracted Operations is that the service is delivered under contract, to specified standards, with the price for the service
determined by the contract alone. Contracted operations service two types of customer
1. Individual organisations:
These can have specific transport needs. Private bus networks are designed on a bespoke basis around these needs. 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 the 1980’s the bus market has evolved and the dominant operators are now more focused on creating
profitable route networks, in contrast to the pre-denationalisation 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 TfGM,
TfWM, Bristol City Council, Worcestershire County Council, South Gloucestershire County Council, and Bath and North East Somerset
Council together with many smaller entities.
Commercial
On a purely commercial bus service, the company takes all the risk of operation. Where a contracted service obliges the operator to take an
element of revenue risk (the proportion of which can vary considerably), the variable element of the revenue is also included under this heading.
Since its foundation Rotala has considerably expanded the number of commercial services it operates in the West Midlands, 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.
18
Rotala Plc | Annual Report 2016
Key performance indicators (KPIs)
The key performance indicators of the group (before mark to market provisions, acquisition expenses and other exceptional items) are considered
to be:
Gross profit margin
Profit from operations before mark to market
provisions and other exceptional items
Profit before taxation and mark to market
provisions and other exceptional items
These key performance indicators are used as follows:
1. Gross profit margin:
2016
18.3%
£3,947,000
£2,680,000
2015
18.7%
£3,609,000
£2,461,000
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;
2. Profit from operations before exceptional items:
Profit from operations before exceptional items: profit from operations before mark to market provisions and other 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 before mark to market provisions and other exceptional items:
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 8-14. The group’s results for the year are set out on page 31. The results of the year and the
financial position as at 30 November 2016 are considered by the directors to be satisfactory.
19
Statutory ReportsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
Strategic Report
For the year ended 30 November 2016
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.
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.
The availability of sufficient capital and
leasing facilities to finance the growth
in the group’s businesses.
The group may miss growth
opportunities.
New government legislation (such as
the Buses Bill) or industry regulation.
Significant unplanned or unforeseen
costs may be imposed on the business.
Availability of management resources
of the appropriate quality.
Lack of appropriate management
skills damages the business and its
prospects.
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.
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.
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.
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, as set out in the group’s accounting policies. 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 2018. 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.
20
Rotala Plc | Annual Report 2016
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 available best practice, including
those aspects of the Code considered appropriate. 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: 6 April 2017
21
Statutory ReportsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information Directors’ Report
For the year ended 30 November 2016
The directors present their statutory report for the group for the year
ended 30 November 2016.
Directors
The following Directors have held office during the year:
J H Gunn
R A Dunn
S L Dunn
F G Flight (resigned 15 June 2016)
G M Spooner (appointed 26 May 2016)
K M Taylor
Future developments and achievement of strategic goals
Likely future developments in the business and the progress that the group has made towards its strategic goals are dealt with in the Chairman’s
Statement and Review of Operations set out on pages 8-14.
Dividends and Share Price
An interim dividend in respect of 2016 of 0.80p per share was paid on 8 December 2016. The directors will propose a final dividend for the year
to the Annual General Meeting of 1.50p per share. In respect of the year ended 30 November 2015, a first interim dividend of 0.725p per share
was paid on 8 December 2015. A second interim dividend of 1.375p per share was paid on 30 March 2016. The directors did not propose a final
dividend in respect of the year ended 30 November 2015 to the Annual General Meeting. The total cash outflow for dividends paid in the year
was therefore £803,000.
The company’s share price at 30 November 2016 was 52.5p (2015: 65.0p). The high and low prices in the year were 75.5p and 52.5p respectively.
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,
to their training, career development and promotion, where employed, and to continuing the employment and training 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 28 to these financial statements.
22
Rotala Plc | Annual Report 2016
Directors’ interests
The beneficial interests of the directors and their families in the company’s shares and share options were as follows:
J H Gunn
R A Dunn
S L Dunn
F G Flight*
G M Spooner*
K M Taylor
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
2016
Ordinary shares
of 25p each
2016
Options over
ordinary shares
of 25p each
2015
Ordinary shares
of 25p each
2015
Options over
ordinary shares
of 25p each
5,364,487
931,925
1,522,596
-
50,000
573,056
200,000
1,046,007
1,203,604
-
-
720,000
6,001,487
931,925
1,404,826
1,100,000
-
413,056
320,000
1,015,000
1,265,000
220,000
-
880,000
*up to date of resignation or from date of appointment.
J H Gunn is also a director of and shareholder in The 181 Fund Limited: see note 32 – Related Parties and Transactions.
At
At
1 December 2015
Price
Issued
Exercised
30 November 2016
Date Exercisable
Date of Expiry
J H Gunn
R A Dunn
S L Dunn
F G Flight
K M Taylor
120,000
200,000
320,000
400,000
-
615,000
1,015,000
80,000
200,000
85,000
-
900,000
1,265,000
80,000
140,000
220,000
160,000
240,000
85,000
395,000
880,000
37.5p
62.5p
50.0p
58.5p
54.0p
37.5p
62.5p
50.0p
58.5p
54.0p
37.5p
62.5p
37.5p
62.5p
50.0p
54.0p
-
-
-
-
31,007
31,007
-
-
-
18,604
-
(120,000)
-
(120,000)
-
-
-
-
-
200,000
200,000
400,000
31,007
615,000
1,046,007
06/09/2010
05/09/2017
05/09/2011
04/09/2018
01/12/2019
01/06/2020
24/11/2017
23/11/2024
(80,000)
-
-
-
-
-
200,000
06/09/2010
05/09/2017
85,000
18,604
05/09/2011
04/09/2018
01/12/2019
01/06/2020
900,000
24/11/2017
23/11/2024
18,604
(80,000)
1,203,604
-
-
-
-
-
-
-
(80,000)
*(140,000)
(220,000)
(160,000)
-
-
-
(160,000)
-
-
-
-
240,000
85,000
395,000
720,000
06/09/2010
05/09/2017
05/09/2011
04/09/2018
24/11/2017
23/11/2024
*lapsed on resignation.
The remuneration of the directors is set out in note 6 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 32 – Related Parties and Transactions.
23
Statutory ReportsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information Directors’ Report
For the year ended 30 November 2016
Purchase of own shares
Ordinary shares have been purchased for treasury in order to meet the need to issue shares in respect of the conversion of loan stock and the
exercise of share options.
2016
2016
Number
812,313
500,000
-
% of called up
share capital
2.07
1.16
-
2016
£
Cost or
proceeds
2015
2015
Number
% of called up
share capital
621,734
700,000
367,501
1,315,000
1.79
3.35
2015
£
Cost or
proceeds
379,892
771,369
-
(966,665)
(2.47)
(435,000)
(457,975)
(1.06)
(172,199)
(236,022)
(0.60)
(94,527)
854,338
1.98
817,036
812,313
2.07
621,734
Ordinary shares held in
treasury at beginning of year
Acquired during the year
Issued in respect of loan stock
conversions
Issued for cash in respect of
share option exercises
Ordinary shares held in
treasury at end of year
The maximum number of ordinary shares held in treasury during the year was 1,218,831 (2015: 1,020,557), representing 2.83% of the called up
share capital of the company (2015: 2.60%).
Substantial shareholdings
As at 6 April 2017 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
Close Asset Management Limited
The 181 Fund Limited
Mr S L Dunn
Miton UK Microcap Trust PLC
Financial instruments
Number of Ordinary Shares
7,380,452
5,364,487
4,552,195
1,802,443
1,522,596
1,451,613
%
17.49
12.71
10.79
4.27
3.61
3.44
Details of financial instruments, including information about exposure to financial risks and the financial risk management objectives and policies,
are given in note 31.
24
Rotala Plc | Annual Report 2016
Directors’ responsibilities statement
The directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements in accordance with applicable
law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors 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 applicable law and United Kingdom Generally Accepted
Accounting Standards (United Kingdom Generally Accepted Accounting Practice including Financial Reporting Standard 101 ‘Reduced Disclosure
Framework’). 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 2016, the group has taken advantage of the exemption offered in sections 479A – 479C of the Companies
Act 2006 and some 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: 6 April 2017
25
Statutory ReportsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
Independent Auditor’s Report
To the members of Rotala Plc
We have audited the financial statements of Rotala Plc for the year ended 30 November 2016 which comprise the consolidated income
statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of
financial position, the consolidated statement of cash flows, the parent company statement of financial position, the parent company statement
of changes in equity and the related notes. The financial reporting framework that has been applied in the preparation of the group financial
statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting
framework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 101 “Reduced Disclosure
Framework”.
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 25, 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 2016
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.
26
Rotala Plc | Annual Report 2016 Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from
branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
David Munton
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Birmingham
Date: 6 April 2017
27
Statutory ReportsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
28
Rotala Plc | Annual Report 2016
Rotala at a Glance
Statutory Reports
Financial Statements
Shareholder Information
3
Financial
Statements
Financial Statements
29
30
Rotala Plc | Annual Report 2016 Consolidated Income Statement
For the year ended 30 November 2016
2016
2015
Results before
mark to market
provision
and other
exceptional
items
£’000
Mark to market
provision and
other
exceptional
items
(note 10)
£’000
54,975
(44,895)
10,080
(6,133)
3,947
14
(1,281)
2,680
(468)
-
-
-
8
8
-
-
8
(14)
Results before
mark to market
provision
and other
exceptional
items
£’000
Mark to market
provision and
other
exceptional
items
(note 10)
£’000
50,889
(41,358)
9,531
(5,922)
3,609
12
(1,160)
2,461
(474)
-
-
-
(1,719)
(1,719)
-
-
(1,719)
399
Results for
the year
£’000
54,975
(44,895)
10,080
(6,125)
3,955
14
(1,281)
2,688
(482)
Results for
the year
£’000
50,889
(41,358)
9,531
(7,641)
1,890
12
(1,160)
742
(75)
2,212
(6)
2,206
1,987
(1,320)
667
Note
4
7
8
9
10
11
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)
12
12
5.51
5.46
5.49
5.44
5.19
5.16
1.74
1.74
The accompanying notes form an integral part of these financial statements.
31
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information Consolidated Statement of
Comprehensive Income
For the year ended 30 November 2016
Note
25
26
Profit for the year
Other comprehensive income:
Items that will not subsequently be reclassified to profit or loss:
Actuarial loss on defined benefit pension scheme
Deferred tax on actuarial loss on defined
benefit pension scheme
Other comprehensive loss for the year (net of tax)
Total comprehensive income for the year attributable to the equity
holders of the parent
2016
£’000
2,206
(860)
163
(697)
1,509
2015
£’000
667
(362)
72
(290)
377
The accompanying notes form an integral part of these financial statements.
32
Rotala Plc | Annual Report 2016 Consolidated Statement of
Changes in Equity
For the year ended 30 November 2016
Share
premium
reserve
£'000
Merger
reserve
£'000
Shares in
treasury
£'000
Retained
earnings
£'000
8,603
2,567
(380)
At 1 December 2014
Profit for the year
Other comprehensive expense
Total comprehensive income
Transactions with owners:
Dividends paid
Share based payment
Purchase of own shares
Transactions with owners
Share capital
£'000
9,794
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Profit for the year
Other comprehensive expense
Total comprehensive income
Transactions with owners:
Dividends paid
Share based payment
Shares issued
Purchase of own shares
Transactions with owners
-
-
-
-
-
968
-
968
-
-
-
-
-
1,272
-
1,272
-
-
-
-
-
-
-
-
Total
£'000
25,606
667
(290)
377
(713)
16
(242)
5,022
667
(290)
377
(713)
16
-
4,702
2,206
(697)
25,044
2,206
(697)
1,509
1,509
(803)
16
-
-
(803)
16
2,240
(195)
-
-
-
-
-
(242)
-
-
-
-
-
-
(195)
At 30 November 2015
9,794
8,603
2,567
(622)
(242)
(697)
(939)
(195)
(787)
1,258
At 30 November 2016
10,762
9,875
2,567
(817)
5,424
27,811
The accompanying notes form an integral part of these financial statements.
33
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information Consolidated Statement of
Financial Position
As at 30 November 2016
Note
13
14
16
17
18
23
19
20
21
22
23
21
22
23
24
25
26
Assets
Non-current assets
Property, plant and equipment
Goodwill and other intangible assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Held for sale assets
Derivative financial instruments – due in more than one year
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
Derivative financial instruments
Provision for liabilities
Defined benefit pension obligation
Deferred taxation
Total non-current liabilities
Total liabilities
TOTAL NET ASSETS
The accompanying notes form an integral part of these financial statements.
34
2016
£’000
34,876
12,033
46,909
2,855
11,235
-
327
2,159
16,576
63,485
5,195
11,096
3,034
285
19,610
4,900
8,256
-
1,653
800
455
16,064
35,674
27,811
2015
£’000
31,798
10,581
42,379
2,355
7,905
2,479
-
1,118
13,857
56,236
5,370
9,536
3,107
502
18,515
5,600
5,406
1,257
-
278
136
12,677
31,192
25,044
Rotala Plc | Annual Report 2016 Shareholders’ funds
Share capital
Share premium reserve
Merger reserve
Shares in treasury
Retained earnings
TOTAL EQUITY
Note
27
2016
£’000
10,762
9,875
2,567
(817)
5,424
27,811
2015
£’000
9,794
8,603
2,567
(622)
4,702
25,044
The consolidated financial statements were approved by the Board of Directors and authorised for issue on 6 April 2017.
Simon Dunn
Chief Executive
Kim Taylor
Group Finance Director
The accompanying notes form an integral part of these financial statements.
35
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
Consolidated Statement
of Cash Flows
For the year ended 30 November 2016
Cash flows from operating activities
Profit before taxation
Adjustments for:
Depreciation
Acquisition expenses
Finance expense (net)
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
(Increase)/decrease in inventories
(Increase)/decrease in trade and other receivables
(Decrease) / increase in trade and other payables
Movement in provisions
Cash generated from operations
Interest paid on hire purchase agreements
Net cash flows from operating activities carried forward
2016
£’000
2,688
3,050
125
1,267
(342)
(350)
7
16
6,461
(500)
(3,330)
(339)
(364)
(4,533)
1,928
(474)
1,454
2015
£’000
742
3,025
46
1,148
(440)
(350)
8
16
4,195
(94)
(299)
106
1,193
906
5,101
(476)
4,625
The accompanying notes form an integral part of these financial statements.
36
Rotala Plc | Annual Report 2016 Cash flows from operating activities brought forward
Investing activities
Purchases of property, plant and equipment
Acquisition of businesses
Sale of assets held for sale as at 30 November 2015
Sale of property, plant and equipment
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
Bank interest paid
Hire purchase refinancing receipts
Capital settlement payments on vehicles sold
Capital element of lease payments
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
2016
£’000
1,454
(2,558)
(1,871)
2,479
1,023
(927)
2,412
(803)
(367)
2,775
(2,700)
(744)
2,522
-
(3,366)
(271)
256
(598)
(342)
2015
£’000
4,625
(2,403)
(2,431)
-
680
(4,154)
95
(713)
(771)
4,970
(1,163)
(684)
1,152
(301)
(3,545)
(960)
(489)
(109)
(598)
The accompanying notes form an integral part of these financial statements.
37
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information Notes to the Consolidated
Financial Statements
For the year ended 30 November 2016
1. General information
Rotala Plc is incorporated and domiciled in the United Kingdom.
The financial statements for the year ended 30 November 2016 (including the comparatives for the year ended 30 November 2015) were
approved by the Board of Directors on 6 April 2017. Amendments to the financial statements are not permitted after they have been
approved.
2. Accounting policies
Basis of preparation
The group’s financial statements have been prepared in accordance with applicable International Financial Reporting Standards (“IFRS”) as
adopted by the European Union. The financial statements have been prepared on a going concern basis as described on page 20.
Overall considerations
The significant accounting policies that have been used in the preparation of these financial statements are summarised below.
The financial statements have been prepared using the measurement bases specified by IFRS for each type of asset, liability, income and
expense. The measurement bases are more fully described in the accounting policies below.
Critical accounting estimates and judgements
Certain estimates and judgements need to be made by the directors of the group which affect the results and position of the group as
reported in the financial statements. Estimates and judgements are required if, for example, as at the reporting date not all liabilities have
been settled, and certain assets and liabilities are recorded at fair value which require a number of estimates and assumptions to be
made.
Estimates
The major areas of estimation within the financial statements are as follows:
(a)
Impairment of goodwill
The group is required to test, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is
determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the
choice of a discount rate in order to calculate the present value of the cash flows. Actual outcomes may vary. More information
about the impairment review is included in note 15.
(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.
38
Rotala Plc | Annual Report 2016
2. Accounting policies (continued)
(d)
Self-insurance
The estimation of insurance costs, under the group’s self-insurance scheme, is based on premiums paid and claims experience.
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 and the insurance claims provision be considered inadequate in the light of claims experience, further 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 31.
(f)
Acquisition fair values and intangibles
In attributing value to intangibles on acquisition, management has made certain assumptions about the profitability of acquired
businesses, brands and customer relationships. The key assumptions relate to the trading performance of the acquired business
and the derivation of the fair value of assets or liabilities acquired, including any value attributable to intangible assets such as
brands and contracts. Where a business acquired is loss-making, it is considered to be unlikely that brands or contracts have
any value. Management uses valuation techniques and its knowledge of the market, combined with its experience of previous
acquisitions, to determine the fair value of net assets acquired in business combinations. Management bases its assumptions on
observable data as far as possible, but this is not always available. Where observable data is not available management uses
the most suitable information it can identify. Estimated fair values may vary from the actual prices that would be achieved in an
arms’ length transaction at the reporting date.
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 13.
(b) Deferred tax assets
In determining the deferred tax asset to be recognised, management carefully review the recoverability of these assets on a
prudent basis and reach a judgement based on the best available information.
Basis of consolidation
The group financial statements consolidate the results of the company and all its subsidiary undertakings as at 30 November 2016.
The results of subsidiary undertakings acquired are included from the date on which control over the acquisition, the right to exercise that
control, and exposure to variable returns from the acquisition 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.
39
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
2. Accounting policies (continued)
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. 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. Currently these intangibles are amortised over a period of 3 years.
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.
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.
40
Rotala Plc | Annual Report 2016
2. Accounting policies (continued)
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost, which includes both the purchase price and any directly attributable
costs. Following initial recognition property, plant and equipment is carried at depreciated cost.
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 minimal 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 the consolidated income
statement. A gain or loss incurred at the point of derecognition is also included in the consolidated income statement 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
Freehold buildings
Long leasehold property
- Not depreciated
-
-
Fifty years straight line
Shorter of the lease term or 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.
Held for sale assets
When the group decides to dispose of a non-current asset and the sale of that asset is contracted for at the balance sheet date, the asset
is reclassified as a “held for sale” asset in current assets, held at the lower of its carrying or net realisable value and not subject to further
depreciation.
Mark to market provision and other exceptional costs
These items are those which the directors consider to be outside of the normal trading transactions of the group or those which hinder
understanding of the underlying trading results of the group. They are highlighted separately on the Consolidated Income Statement.
41
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
2. Accounting policies (continued)
Taxation
The charge for current taxation is provided at rates of corporation tax that have been enacted or substantively enacted by the reporting
date. Current tax is based on taxable profits for the year and any adjustments to tax payable in respect of previous years.
Deferred tax is provided, using the balance sheet method, on all temporary differences which result in an obligation at the reporting date to
pay more tax, or a right to pay less tax, at a future date, based on tax rates and tax laws that have been enacted or substantively enacted
at the reporting date. Temporary differences arise between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. The exceptions, where deferred tax assets are not recognised nor deferred tax liabilities provided, are:
• On initial recognition of goodwill;
• The initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss; and
• Taxable temporary differences associated with investments in subsidiary undertakings where the timing of the reversal of the
temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
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.
Self-insurance
The group’s policy is to self-insure high frequency, but low value, claims such as those for traffic accidents and to protect itself against high
value claims through an insurance policy issued by a third party subject to an excess. Under this scheme, premiums to obtain the latter
insurance are paid to QBE Insurance Limited (“QBE”) in respect of each accounting period. These premiums are held by QBE in a trust
separate from the assets of the company in order to meet those claims as and when they are settled. The company has no control over the
assets of this trust. The administration of high frequency but low value claims is made by a claims handling specialist and the funding of the
settlement of these claims is made by the company to the claims handler as and when required.
Provisioning for insurance claims is a major area of estimation in these financial statements and the approach used is described in detail
in item (d) of the section on “Estimates” set out above. 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. Any provision made is discounted to take account of
the expected timing of future payments.
42
Rotala Plc | Annual Report 2016
2. Accounting policies (continued)
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 derecognised 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 in the consolidated statement of financial position.
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.
43
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
2. Accounting policies (continued)
Financial liabilities
The group classifies its financial liabilities in a manner which depends on the purpose for which the liability was acquired:
•
Bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument.
Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures
that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated
statement of financial position. 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;
•
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.
A financial liability is derecognised 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.
Dividends
Dividend distributions to the company’s shareholders are recognised as a liability in the group’s financial statements on the date when
dividends are approved by the company’s shareholders. Interim dividends are recognised on the date that they are paid.
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.
44
Rotala Plc | Annual Report 2016
3. Standards and interpretations not yet applied by Rotala Plc
At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards
have been published by the IASB but are not yet effective and have not been applied early by the group. Management anticipates that
the following pronouncements relevant to the group’s operations will be adopted in the group’s accounting policies for the first period
beginning after the effective date of the pronouncement, once adopted by the EU:
•
IFRS 9 Financial Instruments (effective 1 January 2018)
•
IFRS 15 Revenue from Contracts with Customers (effective 1 January 2018)
• Clarification of Acceptable Methods of Depreciation and Amortisation – Amendments to IAS 16 and IAS 38 (effective 1 January 2016)
• Annual Improvements to IFRS 2012-2014 Cycle (effective 1 January 2016)
• Disclosure Initiative: Amendments to IAS 1 Presentation of Financial Statements (effective 1 January 2016)
•
IFRS 16 Leases (not yet adopted by the EU)
• Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses (not yet adopted by the EU)
• Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions (not yet adopted by the EU)
• Amendments to IAS 7: Disclosure Initiative (not yet adopted by the EU).
Other than in respect of IFRS15 and 16, the directors anticipate that the adoption of these Standards and Interpretations in future periods will
have no material impact on the financial statements of the group. With regard to IFRS15 and 16, the group has commenced an assessment of the
impact likely from adopting the standards, but is not yet in a position to state whether the impact will be material to the group’s reported results
or financial position.
Certain other new standards and interpretations have been issued but are not expected to have a material impact on the group’s financial
statements.
45
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
4. Segmental analysis and revenue
All of the activities of the group are conducted in the United Kingdom within the operating segment of provision of bus services.
Management monitors revenue across the following streams: contracted, commercial and charter:
Commercial
Contracted
Charter
Total Revenue
2016
£’000
32,873
19,707
2,395
54,975
2015
£’000
33,155
15,816
1,918
50,889
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 most depots in the group deliver services in each of the three
sub-headings set out above. Furthermore, as a matter of management practice, the business of the group is managed by contract (for
Contracted Revenue) or by route (for Commercial Revenue) or in certain circumstances by both contract and route, depending on the type
of business. Charter business is typically delivered by short term contracts.
Contracted and Charter Services are usually delivered against an agreed service level agreement. Detailed costs for that individual contract
are monitored against those modelled in the original bid calculation. Management then takes appropriate action to correct variances as
necessary whilst maintaining the agreed level of service.
In Commercial Business, where the revenue is variable and derived from passengers, individual routes are constantly monitored for
loadings and revenues and trends in passenger revenues and loadings. Passenger loadings are analysed, often by fare stage, to establish
usage and appropriate routes. In concert with margin analysis, individual frequencies and routes are adjusted to maximise revenue yields.
In certain parts of the business revenues can be derived from a complex combination of a variable passenger revenue underpinned
by a fixed revenue base delivered by contract. These types of service are managed by individual contract and route and so require a
combination of management techniques and analyses to ensure that loadings and revenues are maximised whilst delivery to the service
agreement is maintained.
In these circumstances it is impractical to allocate local and central overhead to individual routes and contracts. Costs and Operating Profits
by revenue stream are therefore not calculated. By the very nature of the business the operating assets are also interchangeable and the
vehicles used in particular localities or on specific routes are frequently changed. Thus it is also not practicable to calculate figures for
revenue stream assets. Other information such as capital expenditure, depreciation and impairment is also not analysed separately for this
reason.
In 2016 and 2015 no customer constituted more than 10% of Revenues.
46
Rotala Plc | Annual Report 2016
5. 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
6. Directors’ and key management personnel remuneration
Salaries and other short term employee benefits
Social security costs
Contribution to defined contribution pension scheme
Share based payment expense
2016
£’000
28,921
2,591
348
31,860
16
31,876
2016
£’000
90
1,180
1,270
2016
£’000
560
48
12
11
631
2015
£’000
24,514
2,194
329
27,037
16
27,053
2015
£’000
93
948
1,041
2015
£’000
498
40
11
2
551
1 director (2015: 1) is a member of the group’s defined contribution pension scheme.
Emoluments of the highest paid director were £217,000 (2015: £199,060). Pension contributions of £11,600 (2015: £10,500) were made on
his behalf.
47
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
6. Directors’ and key management personnel remuneration (continued)
The directors’ remuneration was as follows:
2016
£’000
Share
based
payment
expense
Remuneration
Pension
Total Remuneration
2015
£’000
Share
based
payment
expense
Pension
Total
217
121
103
80
15
24
5
4
2
-
-
-
12
-
-
-
-
-
234
125
105
80
15
24
199
104
92
75
-
28
560
11
12
583
498
1
1
-
-
-
-
2
11
-
-
-
-
-
211
105
92
75
-
28
11
511
Executive
S L Dunn
R A Dunn
K M Taylor
Non- Executive
J H Gunn
G M Spooner
F G Flight*
*to date of resignation
The services of John Gunn and certain of those of Robert Dunn are provided respectively by Wengen Limited, and motorBus Limited under
contracts with those companies.
The board considers the directors of the company to be the key management personnel of the group.
7. Profit from operations
This is arrived at after charging/(crediting):
Depreciation of property, plant and equipment
Operating lease expense:
- property
- plant and machinery
Profit on disposal of property, plant and equipment
Auditor’s fees:
- audit of the parent company and the group
- audit of the accounts of subsidiaries
- other non–audit services
48
2016
£’000
3,050
468
2,135
(342)
42
12
-
2015
£’000
3,025
289
1,733
(440)
37
11
-
Rotala Plc | Annual Report 2016
8.
Finance income
Interest receivable on bank deposits
9.
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
2016
£’000
14
2016
£’000
750
-
520
5
6
1,281
10. Profit before taxation
Profit before taxation includes the following mark to market provisions and other exceptional items:
Mark to market profit/(provision) on fuel derivatives (note 31)
Acquisition costs
Abortive acquisition costs
Provision against onerous leases resulting from acquisition
Redundancy costs
Share based payment expense
Profit/(loss) within profit before taxation
2016
£’000
684
(125)
-
(310)
(225)
(16)
8
2015
£’000
12
2015
£’000
668
7
481
3
1
1,160
2015
£’000
(1,608)
(46)
(48)
-
-
(17)
(1,719)
49
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
2016
£’000
2015
£’000
-
-
483
13
(14)
482
482
-
-
74
-
1
75
75
2015
£’000
742
148
(74)
1
-
75
11. Tax expense
Current tax
Current tax on profits for the year
Total current tax
Deferred tax
Origination and reversal of temporary differences
Prior year adjustments
Change in rate of tax
Total deferred tax (note 26)
Income tax expense
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 20%
(2015: 20%)
Non-taxable items
Adjustments in respect of prior periods
Impact of changes in tax rates
Total tax expense
2016
£’000
2,688
538
(15)
13
(54)
482
50
Rotala Plc | Annual Report 2016
12. Earnings per share
Basic
Profit attributable to ordinary shareholders
Weighted average number of ordinary shares
Basic earnings per share
2016
£’000
2,206
40,164,072
5.49p
2015
£’000
667
38,310,257
1.74p
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.
Adjusted basic before mark to market provision and other
exceptional items
Profit before exceptional items attributable to ordinary
shareholders
Weighted average number of ordinary shares
Basic before exceptional items earnings per share
Profit attributable to ordinary share holders
Interest expense of convertible loan notes
Profit for the purposes of diluted earnings per share
2016
£’000
2,212
40,164,072
5.51p
2016
£’000
Diluted
2,206
-
2,206
2015
£’000
1,987
38,310,257
5.19p
2015
£’000
Diluted
667
5
672
Weighted average number of shares in issue
40,164,072
38,310,257
Adjustments for:
- exercise of options
369,473
328,914
Weighted average number of ordinary shares for the purposes of
diluted earnings per share
40,533,545
38,639,171
Diluted earnings per share
5.44p
1.74p
51
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
12. Earnings per share (continued)
Adjusted diluted before mark to market provision and other
exceptional items
Profit attributable to ordinary share holders
Interest expense of convertible loan notes
Profit for the purposes of diluted earnings per share
2016
£’000
Diluted
2,212
-
2,212
2015
£’000
Diluted
1,987
5
1,992
Weighted average number of shares in issue
40,164,072
38,310,257
Adjustments for:
- exercise of options
369,473
328,914
Weighted average number of ordinary shares for the purposes of
diluted earnings per share
40,533,545
38,639,171
Adjusted diluted earnings per share
5.46p
5.16p
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 potential ordinary shares take the form of share 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.
52
Rotala Plc | Annual Report 2016 13. Property, plant and equipment
Long and short
Freehold land
and buildings
£’000
leasehold
property
£’000
Plant and
Public service
Fixtures and
machinery
£’000
vehicles
£’000
fittings
£’000
8,949
-
412
(2,400)
(12)
(19)
900
145
27
-
-
-
2,311
50
358
(217)
(82)
310
34,792
1,993
4,070
-
(2,187)
(48)
428
-
33
-
(70)
(243)
Total
£’000
47,380
2,188
4,900
(2,617)
(2,351)
-
Cost
At 1 December 2014
Acquisition
Additions
Reclassifications to held
for sale
Disposals
Transfers
At 30 November 2015
6,930
1,072
2,730
38,620
148
49,500
Acquisition
Additions
Disposals
-
421
-
-
12
-
-
770
(16)
630
4,937
(1,350)
-
40
-
630
6,180
(1,366)
At 30 November 2016
7,351
1,084
3,484
42,837
188
54,944
Depreciation
At 1 December 2014
Reclassifications to held
for sale
Charge for the year
Transfers
Disposals
At 30 November 2015
Charge for the year
Disposals
At 30 November 2016
Net book value:
At 30 November 2016
At 30 November 2015
514
(278)
86
(8)
(12)
302
62
-
364
6,987
6,628
148
-
24
-
-
172
29
-
201
883
900
795
(106)
321
116
(82)
15,258
-
2,572
(13)
(1,701)
1,044
16,116
231
(4)
2,707
(680)
1,271
18,143
2,213
24,694
1,686
22,504
211
-
22
(95)
(70)
68
21
-
89
99
80
16,926
(384)
3,025
-
(1,865)
17,702
3,050
(684)
20,068
34,876
31,798
The net book value of property, plant and equipment held under hire purchase agreements at 30 November 2016 was £15,664,000 (2015:
£11,913,000). Depreciation of £1,430,000 (2015: £1,118,000) was charged against assets falling into this category in the year.
53
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information 14. Goodwill and other intangible assets
Purchased brands
£’000
Contracts
£’000
Goodwill
£’000
Cost
At 1 December 2014
Additions
At 30 November 2015
Additions
At 30 November 2016
Amortisation
At 1 December 2014
Charge for the year
At 30 November 2015
Charge for the year
At 30 November 2016
Net book value
At 30 November 2016
At 30 November 2015
250
-
250
-
250
250
-
250
-
250
-
-
312
-
312
-
312
312
-
312
-
312
-
-
Total
£’000
10,044
1,099
11,143
1,452
9,482
1,099
10,581
1,452
12,033
12,595
-
-
-
-
-
562
-
562
-
562
12,033
12,033
10,581
10,581
15. 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.
54
Rotala Plc | Annual Report 2016
15. Goodwill and impairment (continued)
The recoverable amount of the goodwill of the business has been determined from value in use calculations based on cash flow projections
from formally approved budgets covering a two year period to 30 November 2018. Major assumptions are as follows:
Discount rate
Operating margin
Long term growth rate
Inflation
CGU
2016
%
12
8
2
3
CGU
2015
%
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.
16. Inventories
Fuel, tyres and spares
2016
£’000
2,855
2015
£’000
2,355
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 £12,344,000 (2015: £13,148,000). No inventory has been written
down to fair value in 2016 or 2015 and therefore no associated expense was incurred.
17. Trade and other receivables
Trade receivables
Tax and social security
Prepayments and accrued income
2016
£’000
3,569
215
7,451
11,235
2015
£’000
2,725
452
4,728
7,905
55
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
17. Trade and other receivables (continued)
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.
In 2016 and 2015 all trade and other receivables have been reviewed for indicators of impairment. 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
Released
Balance carried forward at 30 November
18. Held for sale assets
Held for sale assets
2016
£’000
63
54
117
2016
£’000
-
-
-
-
2016
£’000
-
2015
£’000
36
260
296
2015
£’000
(80)
-
80
-
2015
£’000
2,479
Following an acquisition in 2013, the board conducted a review of depot capacity in the West Midlands. The outcome of this review was a
decision to dispose of the group’s depot in Long Acre, Birmingham, which was identified to be surplus to requirements. The contract for the
sale of the depot was exchanged on 8 September 2015 and the sale was completed on 15 December 2015. The sale price of the property
was equivalent to its book value.
56
Rotala Plc | Annual Report 2016
19. Cash and cash equivalents
Cash and cash equivalents for the purposes of the cash flow statement are analysed as follows:
Cash at bank
Bank overdraft
20. Trade and other payables - current
Trade payables
Taxation and social security
Other creditors
Accruals and deferred income
2016
£’000
2,159
(2,501)
(342)
2016
£’000
3,326
652
694
523
5,195
2015
£’000
1,118
(1,716)
(598)
2015
£’000
3,490
825
670
385
5,370
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.
21. Loans and borrowings
Current:
Overdrafts
Bank loans
Non-current
Bank loans
2016
£’000
2,501
8,595
11,096
4,900
4,900
2015
£’000
1,716
7,820
9,536
5,600
5,600
57
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
21. Loans and borrowings (continued)
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
Later 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
Later than five years
2016
£’000
2016
£’000
2016
£’000
2016
£’000
Bank loans
Obligations under
Trade and other
and overdrafts
hire purchase
payables
Total
11,474
4,982
-
-
3,448
3,165
4,679
974
3,991
18,913
-
-
-
8,147
4,679
974
16,456
12,266
3,991
32,713
2015
£’000
2015
£’000
2015
£’000
2015
£’000
Bank loans
Obligations under
Trade and other
and overdrafts
hire purchase
payables
Total
9,940
980
5,002
-
3,465
2,412
3,012
360
4,160
17,565
-
-
-
3,392
8,014
360
15,922
9,249
4,160
29,331
The analysis above represents minimum payments on an undiscounted basis.
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 £2.5 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.
58
Rotala Plc | Annual Report 2016
22. Obligations under hire purchase contracts
Future lease payments are due as follows:
Not later than one year
More than one but less than two years
More than two but less than five years
Later than five years
Not later than one year
More than one but less than two years
More than two but less than five years
Later than five years
2016
£’000
Minimum lease payments
3,448
3,165
4,679
974
12,266
2015
£’000
Minimum lease payments
3,465
2,412
3,012
360
9,249
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.
2016
£’000
Interest
414
272
261
29
976
2015
£’000
Interest
358
203
166
9
736
2016
£’000
3,034
8,256
11,290
2016
£’000
Present value
3,034
2,893
4,418
945
11,290
2015
£’000
Present value
3,107
2,209
2,846
351
8,513
2015
£’000
3,107
5,406
8,513
59
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
23. Derivative financial instruments
Derivative financial instruments are analysed as follows (see also note 31):
Current assets –debtors due in more than one year
Current liabilities
Non-current liabilities
Asset/(liability)
2016
£’000
327
(285)
-
42
2015
£’000
-
(502)
(1,257)
(1,759)
Financial assets at fair value through profit or loss are presented within Operating Activities and therefore form 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 31.
24. Provision for liabilities
At 1 December 2014 and 2015
Created during the year
Utilised during the year in profit or loss
Balance at 30 November 2016
Insurance claims provision
Provision for
onerous leases
Insurance claims
arising as a result
provision
of acquisitions
£’000
-
1,301
-
1,301
£’000
-
497
(145)
352
Total
£’000
-
1,798
(145)
1,653
As set out in note 2 to these financial statements, the accounting policy of the group is to self-insure high frequency, but low value, claims
such as those for traffic accidents and to protect itself against high value claims through an insurance policy issued by a third party subject
to an excess. At the end of the year responsibility for the administration of new claims passed to a third party claims handling specialist
and QBE retained responsibility for settling all claims made up to 30 November 2016. At the same time QBE returned £1.3 million in cash
to the company out of the trust fund which it holds to settle claims made against the group, but the company assumed responsibility for
funding those claims when they are settled. As at 30 November 2016 it is considered by the company that the sum of £1.3 million returned
to the company was sufficient to meet the settlement responsibility which was transferred back to the company at that date. Although the
form of the manner in which insurance claims are made against the company and settled by the company has therefore changed, the
substance has not changed and the accounting policy remains the same as in previous periods.
Given the length of time which can elapse in dealing with insurance claims, it is probable that the above provision will be utilised gradually
over the five year period in which claims can be made. Claims experience in the future will dictate the extent to which additions to the
provision may be required and the extent of its utilisation in any accounting period.
60
Rotala Plc | Annual Report 2016
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 £348,000 (2015: £329,000). Contributions amounting to £39,441 (2015:
£10,291) 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 £44,554 (2015: £29,167) were payable to the fund at the balance sheet date. Expected
contributions for the year ending 30 November 2017 are £334,000.
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.
Investment risk
The plan assets at 30 November 2016 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 2016 is 13 years (2015: 13 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 2016 by an independent professionally qualified actuary to take account of the requirements of IAS 19.
The principal actuarial assumptions used were as follows:
30 November
2016
%
30 November
2015
%
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
n/a
2.3
2.7
2.3
6.5
2.6
3.6
0.5
n/a
1.9
3.4
1.9
6.5
2.6
3.6
0.5
61
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
25. Pensions (continued)
The expected rates of return are 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
2016
Years
30 November
2015
Years
21.6
24.5
23.4
26.4
21.5
24.4
23.3
26.3
Since the scheme has been closed for a number of years, there is no current service cost to be charged to operating profits.
Discount rate
Inflation
Life expectancy
Change in assumption
Impact on overall liability
Increase/decrease by 0.1%
Increase/decrease of 1%
Increase/decrease by 0.1%
Increase/decrease of 1.3%
Increase by 1 year
Increase of 3.5%
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 of the liabilities
of the scheme.
62
Rotala Plc | Annual Report 2016
25. Pensions (continued)
The amounts recognised in the statement of financial position were determined as follows:
Equities
Bonds
Other
Cash
Total market value of assets
Present value of scheme liabilities
Pension liability before tax
Related deferred tax asset
Net pension liability
30 November
2016
£’000
4,605
10,045
3,887
127
18,664
(19,464)
(800)
144
(656)
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
- return on plan assets
- interest cost on pension liabilities
Net finance loss
Total defined benefit loss
Defined contribution costs
Total profit and loss charge
2016
£’000
(7)
566
(571)
(5)
(12)
(348)
(360)
30 November
2015
£’000
3,976
9,061
3,778
101
16,916
(17,194)
(278)
55
(223)
2015
£’000
(7)
607
(610)
(3)
(10)
(329)
(339)
63
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
25. Pensions (continued)
Analysis of amount included within the group’s statement of total comprehensive income:
Return on assets (less interest)
Changes in assumptions underlying the present value of the
scheme liabilities
Actuarial (loss)/gain
2016
£’000
1,673
(2,533)
(860)
2015
£’000
(152)
(210)
(362)
Actuarial (losses)/gains as a percentage of scheme assets and liabilities at 30 November 2016 were as follows:
Return on 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
2016
2015
2014
(as restated)
9.0
4.4
(0.9)
2.1
5.6
0.2
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 £2,087,000 (2015: £1,227,000). The
actual return on plan assets was £2,239,000 (2015: £456,000).
The movement in deficit during the year under IAS 19 was:
Deficit in scheme at 30 November
Movement in period
- Contributions
- Administrative expenses
- Actuarial (loss)/gain
- Return on plan assets
- Interest cost
Deficit in scheme at the end of the year
2016
£’000
(278)
350
(7)
(860)
566
(571)
(800)
2015
£’000
(257)
351
(7)
(362)
607
(610)
(278)
64
Rotala Plc | Annual Report 2016
25. Pensions (continued)
The movement in assets during the year under IAS 19 is as follows:
At 30 November
Expected return on plan assets
Actuarial (losses)/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
2016
£’000
16,916
566
1,673
350
(7)
(834)
18,664
2016
£’000
(17,194)
(571)
(2,533)
834
2015
£’000
17,231
607
(152)
351
(7)
(1,114)
16,916
2015
£’000
(17,488)
(610)
(210)
1,114
(19,464)
(17,194)
26. Deferred taxation
The deferred tax liability included in the Statement of Financial Position is analysed as follows:
Accelerated capital allowances
Arising on fair value adjustments on acquisitions
Arising on defined benefit pension scheme
Arising on derivative financial instruments
Losses
Liability
2016
£’000
(1,136)
107
144
(8)
438
2015
£’000
(770)
114
55
352
113
(455)
(136)
65
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
26. Deferred taxation (continued)
The movements in the deferred tax (liability)/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
2016
£’000
(136)
-
(482)
163
(455)
2015
£’000
73
(206)
(75)
72
(136)
At 30 November 2016 there were £nil (2015: £nil) temporary differences or unused tax losses for which deferred tax has not been provided.
27. Share capital
Allotted and called up and fully paid
2016
Number
2016
£’000
2015
Number
Ordinary shares of 25p each
43,047,584
10,762
39,175,003
2015
£’000
9,794
Issued Shared Capital
As at 1 December 2014 and 30 November 2015
8 June 2016
As at 30 November 2016
Number
Nominal Value
39,175,003
3,872,581
43,047,584
£’000
9,794
968
10,762
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 2016 854,338 ordinary shares were held in treasury (2015: 812,313).
66
Rotala Plc | Annual Report 2016
28. Share options and warrants
As at 30 November 2016 the following share options had been issued and were outstanding under the company’s employee share option
schemes:
Date of grant
Number of
options granted
Earliest exercise date
Date of expiry
Exercise price
24 July 2007
6 September 2007
5 September 2008
160,000
740,000
655,000
24 July 2010
23 July 2017
6 September 2010
5 September 2017
5 September 2011
4 September 2018
24 November 2014
2,585,000
24 November 2017
23 November 2024
17 October 2016
503,210
1 December 2019
1 June 2020
62.50p
62.50p
50.00p
54.00p
58.05p
The Rotala Plc SAYE Share Option Scheme (the “Scheme”) is an HM Revenue & Customs approved share option scheme, administered by
the Yorkshire Building Society (“YBS”), open to all employees. The issue of share options on 17 October 2016 is at present the only issue
in relation to this Scheme. The Scheme runs for a 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.
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.
2016
Weighted average
exercise price (p)
2015
Weighted average
Number
exercise price (p)
Number
Outstanding at beginning of the year
Forfeited during the year
Exercised
Issued during the year
53.69
(57.92)
(37.60)
58.05
4,851,905
(253,930)
(457,975)
503,210
53.06
(52.80)
(40.05)
-
5,157,858
(69,931)
(236,022)
-
Outstanding at the end of the year
55.52
4,643,210
53.69
4,851,905
The exercise price of options outstanding at the end of the year ranged between 50.0p and 62.5p (2015: 37.5p and 62.5p) and their
weighted average remaining contractual life was 5.19 years (2015: 5.77 years).
Of the outstanding options at the reporting date 1,555,000 (2015: 2,166,000) were exercisable. The weighted average exercise price of
these options was 57.23p (2015: 53.31p).
The fair value of options granted was determined under IFRS 2 using a binominal valuation model. Significant assumptions used in the
calculations included:
• a share price volatility of 15% based on expected and historical price movements;
• a weighted average share price of 58.05p;
• a risk-free interest rate of 3%; and
• a period to maturity of three and a half years from the date of grant of the options.
The weighted average fair value of options granted was 3.46p
67
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
29. Dividends paid and proposed
2016
£’000
2015
£’000
Declared and paid in the year
Ordinary first interim dividend for 2015 of 0.725 pence per share (2014: 0.65 pence)
276
Ordinary second interim dividend for 2015 of 1.375 pence per share
(2014: final dividend of 1.20 pence)
Proposed for approval (not recognised as a liability at 30 November)
Ordinary interim dividend for 2016 of 0.80 pence per share (2015: 0.725 pence)
Ordinary final dividend for 2016 of 1.50 pence per share
(2015: second interim dividend of 1.375 pence)
527
803
338
633
971
254
459
713
276
527
803
30. 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
2016
£’000
2015
£’000
Land and
buildings
Other
assets
Land and
buildings
Other
assets
446
1,800
1,406
2,554
3,372
-
283
969
4,790
1,280
2,603
-
5,224
4,354
6,042
3,883
68
Rotala Plc | Annual Report 2016
31. Financial instruments - risk management
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:
2016
£’000
2015
£’000
Carrying value
Carrying value
Financial assets - loans and receivables
Trade and other receivables
Cash and cash equivalents
Financial liability – FVTPL
Fuel commodity forward derivative contracts - asset
Fuel commodity forward derivative contracts – liability
Financial liabilities - at amortised cost
Trade and other payables
Loans and borrowings
6,726
2,159
8,885
327
285
4,478
15,996
20,474
4,506
1,118
5,624
-
1,759
4,493
15,136
19,629
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. These give the group certainty over a
substantial proportion of its projected diesel expenditure up to November 2018.
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 allocation of the group’s financial liabilities is classified as Level 2
69
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
31. 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 contracts.
The reconciliation of the carrying amounts of financial instruments classified within Level 2 is as follows:
Balance at 1 December 2015
Released to exceptional items within operating profit
Payments on matured instruments
Balance net (asset) at 30 November 2016
2016
£’000
(1,759)
684
1,117
42
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 2016.
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 in the Strategic Report.
In assessing and managing the liquidity risks of its derivative financial instruments the group considers both contractual inflows and
outflows. The contractual cash flows of the group’s derivative financial assets and liabilities are as follows:
2016
£’000
2015
£’000
‹ 6 months
6-12 months
› 12 months
‹ 6 months
6-12 months
› 12 months
Cash (outflow)/inflow
(126)
(159)
328
(322)
(735)
(702)
70
Rotala Plc | Annual Report 2016
31. Financial instruments - risk management (continued)
Interest rate risk
The group seeks to obtain a favourable interest rate on its cash balances through the use of bank treasury deposits.
The interest rate profile of the financial liabilities of the group, all of which are in Sterling, was as follows:
2016
£’000
2015
£’000
Financial liabilities on
Financial liabilities on
Financial liabilities on
Financial liabilities on
which a floating rate
which a fixed rate is
which a floating rate
which a fixed rate is
is paid
16,087
paid
11,199
is paid
15,899
paid
7,750
UK Sterling
In the year the group paid interest at a rate of between 2.85% and 3.25% (2015: between 3.0% and 3.75%) 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 3.3% and 4.5% (2015: between 3.0% and 8.0%) 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 when it considers it appropriate to do so 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
2016
£’000
10,762
9,875
2,567
(817)
5,424
27,811
2015
£’000
9,794
8,603
2,567
(622)
4,702
25,044
71
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
32. Related parties and transactions
•
The services of J H Gunn were provided by Wengen Limited, a company controlled by J H Gunn, and invoiced by that company to
Rotala, as set out in note 6. At the year end none (2015: none) of the amount charged was unpaid and included within creditors.
During the year J H Gunn received from Rotala a total of £127,585 (2015: £116,948) in dividends on ordinary shares.
•
Certain of the services of R A Dunn were provided by motorBus Limited, a company controlled by R A Dunn, and invoiced by that
company to a subsidiary undertaking of Rotala, as set out in note 6. At the year end £15,544 (2015: £20,966) of the amount charged
was unpaid and included within creditors. During the year R A Dunn received from Rotala a total of £19,570 (2015: £16,825) in
dividends on ordinary shares.
•
The services of F G Flight were provided by Central Coachways Limited, a company controlled by F G Flight, and invoiced by that
company to Rotala. At 30th November 2015 £2,750 of the amount charged was unpaid and included within creditors. Up to the date of
his resignation F G Flight received from Rotala a total of £23,100 (2015: £22,200) in dividends on ordinary shares.
• During the year S L Dunn received from Rotala a total of £30,825 (2015: £25,458) in dividends on ordinary shares.
• During the year K M Taylor received from Rotala a total of £10,874 (2015: £7,642) in dividends on ordinary shares.
•
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 2016 (2015: 1,802,443 ordinary shares). 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 2016 Mr. Gunn and his beneficial interests
held 30% (2015: 29.4%) of the ordinary share capital of The Fund. During the year The Fund received from Rotala a total of £37,851
(2015: £33,345) in dividends on ordinary shares.
72
Rotala Plc | Annual Report 2016
33. Acquisitions
(a) Business of OFJ Connections
As set out in the Chairman’s Statement, in January 2016 the group acquired the Heathrow business of OFJ Connections Limited, together
with certain vehicle assets. The Chairman’s Statement describes the details of and the reasons for the acquisition, and should be consulted
for a detailed description of all the relevant factors. The consideration for the acquisition (excluding acquisition costs) was £1.3 million in
cash. The book values of the assets acquired are set out below
Book value
£’000
Fair value
adjustment
£’000
Fair value
on acquisition
£’000
Fixed assets
Vehicles
Total fixed assets
Current liabilities
Other payables and accruals
Non-current liabilities
Provision for onerous vehicle lease contracts
Net assets
Goodwill
Acquisition costs (note 10)
Total cash consideration paid
653
653
(110)
(110)
(217)
(217)
(195)
(195)
-
-
-
-
458
458
(110)
(110)
(217)
(217)
131
1,201
77
1,409
Because the acquired business was immediately folded into the existing operations of the group in the relevant locality, it is not possible to
distinguish revenues and profits for the acquired business in the period to 30 November 2016. Pre-acquisition book values were determined
based on applicable IFRS, immediately prior to the acquisition. The values of assets recognised on acquisition are their estimated fair
values. For the vehicles acquired this is based on the directors’ assessment of the age and condition of each of the vehicles and their
knowledge of disposal values for equivalent vehicles. Certain of the existing operating lease commitments of the acquired business at the
date of acquisition were assessed by the directors as being at non-market rates and accordingly appropriate provision was made.
The directors have made an assessment of whether there are any intangible assets acquired with the business. The OFJ brand name
was not acquired. No licenses were acquired with the business. The sales and purchase agreement includes a standard non-compete
clause; however, the sellers had no intention of re-entering the respective markets at the acquisition date and so there could be no value
attributable to this clause. Where there were contracts in place, there was no evidence that these contracts produced any immediately
identifiable profits or positive cash flows in the hands of the previous owners. On these bases no separate intangible assets have been
identified. The goodwill generated by the acquisition arose from the benefit of synergies with the existing business of the group in the
respective location. As stated above the business acquired includes a vehicle fleet and these vehicles were immediately subsumed into
existing operations following acquisition. The acquisition expenses incurred by the group amounted to £77,000 and have been expensed in
the Consolidated Income Statement in Administrative Expenses.
73
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
33. Acquisitions (continued)
b) Businesses of Elite Minibus and Coach Services and Wigan Coachways
As set out in the Chairman’s Statement, in July and August 2016 the group acquired the much smaller businesses and vehicle fleets of Elite
Minibus and Coach Services Limited and Rojay Services Limited (trading as “Wigan Coachways”). The Chairman’s Statement describes the
details of and the reasons for the acquisitions, and should be consulted for a detailed description of all the relevant factors. The aggregate
consideration for the acquisitions was £0.4 million in cash. The book values of the assets acquired are set out below.
Book value
£’000
Fair value
adjustment
£’000
Fair value
on acquisition
£’000
Fixed assets
Vehicles
Total fixed assets
Current liabilities
Other payables and accruals
Net assets
Goodwill
Acquisition costs (note 10)
Total cash consideration paid
205
205
(9)
(9)
(33)
(33)
-
-
172
172
(9)
(9)
163
251
48
462
Because the acquired businesses were immediately folded into the existing operations of the group in the relevant localities, it is not
possible to distinguish revenues and profits for the acquired businesses in the period to 30 November 2016. Pre-acquisition book values
were determined based on applicable IFRS, immediately prior to the acquisition. The values of assets recognised on acquisition are their
estimated fair values. For the vehicles acquired this is based on the directors’ assessment of the age and condition of each of the vehicles
and their knowledge of disposal values for equivalent vehicles.
The directors have made an assessment of whether there are any intangible assets acquired with the businesses. The directors do not
consider that the brand names have any separable values in the private hire markets. No licenses were acquired with the businesses. The
sales and purchase agreements include standard non-compete clauses; however, the sellers had no intention of re-entering the respective
markets at the acquisition date and so there could be no value attributable to these clauses. Where there were contracts in place, there
was no evidence that these contracts produced any immediately identifiable profits or positive cash flows in the hands of the previous
owners. On these bases no separate intangible assets have been identified. The goodwill generated by the acquisitions arose from the
benefit of synergies with the existing businesses of the group in their respective locations. As stated above the businesses acquired include
vehicle fleets and these vehicles were immediately subsumed into existing operations following acquisition. The acquisition expenses
incurred by the group amounted to £48,000 and have been expensed in the Consolidated Income Statement in Administrative Expenses.
74
Rotala Plc | Annual Report 2016
34. Capital commitments
As at 30 November 2016 the group had no capital commitments. As at 30 November 2015 the group had placed orders for undelivered
vehicles with a capital value of £2.555 million.
35. Post balance sheet events
There are no post balance sheet events to be noted.
36. Audit exemption for subsidiary undertakings
For the year ended 30 November 2016, 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 (North West) Limited
Diamond Bus Company Holding Limited
4327651
3506681
2531054
4390228
6504654
3037228
6504657
75
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
Company Statement of
Financial Position
As at 30 November 2016
Fixed assets
Investments
Tangible assets
Current assets
Debtors
Cash and cash equivalents
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
2016
£’000
31,480
238
31,718
11,628
1,301
12,929
2015
£’000
31,480
248
31,728
9,698
-
9,698
(11,646)
(10,247)
1,283
33,001
(4,900)
(1,586)
26,515
10,762
9,875
(817)
6,695
26,515
(549)
31,179
(5,600)
(1,759)
23,820
9,794
8,603
(622)
6,045
23,820
The parent company financial statements were approved by the Board of Directors and authorised for issue on 6 April 2017.
Simon Dunn Kim Taylor
Chief Executive Group Finance Director
The accompanying notes form an integral part of these financial statements.
76
Rotala Plc | Annual Report 2016 Company Statement of
Changes In Equity
For the year ended 30 November 2016
Share Capital
£’000
Share Premium
Reserve
£’000
Shares in
Treasury
£’000
Retained
Earnings
£’000
At 1 December 2014
9,794
8,603
(380)
Profit for the year
Dividends paid
Shares issued
Share based payment
Purchase of own shares
-
-
-
-
-
-
-
-
-
-
At 30 November 2015
9,794
8,603
Profit for the year
Dividends paid
Share based payment
Shares issued
Purchase of own shares
-
-
-
968
-
At 30 November 2016
10,762
-
-
-
1,272
-
9,875
-
-
529
-
(771)
(622)
-
-
-
172
(367)
(817)
Total
£’000
24,575
184
(713)
529
16
(771)
23,820
1,437
(803)
16
2,412
(367)
6,558
184
(713)
-
16
-
6,045
1,437
(803)
16
-
-
6,695
26,515
The accompanying notes form an integral part of these financial statements.
77
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information Notes to the Company
Financial Statements
For the year ended 30 November 2016
1. Accounting policies
The following principal accounting policies have been applied in the preparation of the parent company financial statements.
The principal activity of the Company is that of a holding company which has remained unchanged from the previous year.
Basis of preparation
The financial statements have been prepared under the historical cost convention and are in accordance with Financial Reporting Standard
101 ‘Reduced Disclosure Framework’ and the Companies Act 2006.
First time application of FRS 101
In the current year the Company has adopted FRS 101. In previous years the financial statements were prepared in accordance with
applicable UK accounting standards.
This change in the basis of preparation has not materially altered the recognition and measurement requirements previously applied in
accordance with UK GAAP.
There have been no material amendments to the disclosure requirements previously applied in accordance with UK GAAP.
Functional and presentation currency
The financial statements are presented in British Pounds Sterling.
Financial Reporting Standard 101 – reduced disclosure exemptions
The Company has taken advantage of the following disclosure exemptions under FRS 101:
•
•
•
•
•
•
•
•
•
•
The requirement of IFRS 7 Financial Instruments Disclosure;
The requirements of paragraphs 91-99 of IFRS 13 Fair Value Measurement;
The requirement in paragraph 38 of IAS 1 ‘Presentation of Financial Statements’ to present comprehensive information in respect of:
paragraph 79(a)(iv) of IAS 1;
Paragraph 73(e) of IAS 16 Property, Plant and Equipment;
Paragraph 118(e) of IAS 38 Intangible Assets;
Paragraph 76 and 79(d) of IAS 40 Inventory Property;
The requirements of paragraph 10(d), 10(f), 16, 38A, 38C, 38D, 40A, 40B, 40C, 40D, 111 and 134-136 of IAS 1 Presentation of
Financial Statements;
The requirements of IAS 7 Statement of Cash Flows;
The requirements of paragraph 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors;
The requirements of paragraph 17 of IAS 24 Related Party Disclosures.
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
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 company but is expected
to provide reduced or minimal 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 the income
statement. A gain or loss incurred at the point of derecognition is also included in the income statement at that point.
78
Rotala Plc | Annual Report 2016
1. Accounting policies (continued)
Repairs and maintenance are charged to profit or loss in the financial period in which they are incurred. Where probable future economic
benefits, in excess of the current standard of performance of the existing asset, are considered to be derived from its major renovation, the
cost of that major renovation is added to the carrying value of that asset. Major renovations are then depreciated over the remaining useful
life of the asset.
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:
Plant and machinery - 33% 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.
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.
Self- insurance
The company’s policy is to self-insure high frequency, but low value, claims such as those for traffic accidents and to protect itself against
high value claims through an insurance policy issued by a third party subject to an excess. Under this scheme, premiums to obtain the latter
insurance are paid to QBE Insurance Limited (“QBE”) in respect of each accounting period. These premiums are held by QBE in a trust
separate from the assets of the company in order to meet those claims as and when they are settled. The company has no control over the
assets of this trust. The administration of high frequency but low value claims is made by a claims handling specialist and the funding of the
settlement of these claims is made by the company to the claims handler as and when required.
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. Any provision made is discounted to take account of the expected timing of future payments.
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.
Provisions
The company has a number of fuel commodity forward contracts at the year end, the settlement of which lies in the future; therefore the
company has recognised both an asset and a liability in respect of these contracts, as appropriate.
79
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
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 £1,437,000 (2015:
profit £184,000) which is dealt with in these parent company financial statements.
3.
Investments
Cost and net book value
At 1 December 2015
Additions
At cost
Net book value
At 30 November 2016
Net book value
At 30 November 2015
Subsidiary
undertakings
£’000
31,480
-
31,480
31,480
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 rights
incorporation or
and ordinary share capital
registration
England
England
England
England
England
England
England
England
England
held
100%
100%
100%
100%
100%
100%
100%
100%
100%
Nature of business
Transport
Transport
Property holding
Transport
Transport
Property holding
Transport
Holding company
Dormant
Diamond Bus Limited*
Diamond Bus (North West) Limited
Hallbridge Way Property Limited
Hallmark Connections Limited
Preston Bus Limited
Shady Lane Property Limited
Wessex Bus Limited
Diamond Bus Company Holding Limited
Flights Hallmark Limited
* Held indirectly
80
Rotala Plc | Annual Report 2016
4.
Fixed assets
Plant and machinery
Cost:
At 1 December 2015
Additions
Disposals
At 30 November 2016
Depreciation:
At 1 December 2015
Charge for the year
Disposals
At 30 November 2016
Net book value:
At 30 November 2016
At 30 November 2015
5. Debtors
368
38
(16)
390
120
36
(4)
152
238
248
Prepayments and accrued income
Taxation
Deferred tax (note 9)
Financial instruments – due in more than one year
Amounts due from subsidiary undertakings
All amounts shown under debtors fall due for payment within one year, except where indicated.
2016
£’000
555
12
175
328
10,558
11,628
2015
£’000
466
46
366
-
8,820
9,698
81
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
6. Creditors: amounts falling due within one year
Bank loans and overdrafts (note 7)
Trade creditors
Taxation and social security
Accruals and deferred income
Other creditors
7. Creditors: amounts falling due after more than one year
Bank loan
Bank borrowings
2016
£’000
11,095
118
31
132
270
11,646
2016
£’000
4,900
4,900
2015
£’000
9,522
287
27
148
263
10,247
2015
£’000
5,600
5,600
The company 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 £2.5 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
Bank loans
and overdrafts
2016
£’000
Bank loans
and overdrafts
2015
£’000
11,095
700
4,200
15,995
9,522
700
4,900
15,122
82
Rotala Plc | Annual Report 2016
8. Provisions
Fuel commodity forward contracts liability
Insurance claims provision
2016
£’000
(285)
(1,301)
(1,586)
2015
£’000
(1,759)
-
(1,759)
As set out in note 1 to the company financial statements, the accounting policy of the company is to self-insure high frequency, but low
value, claims such as those for traffic accidents and to protect itself against high value claims through an insurance policy issued by a
third party subject to an excess. At the end of the year responsibility for the administration of new claims passed to a third party claims
handling specialist and QBE retained responsibility for settling all claims made up to 30 November 2016. At the same time QBE returned
£1.3 million in cash to the company out of the trust fund which it holds to settle claims made against the group, but the company assumed
responsibility for funding those claims when they are settled. As at 30 November 2016 it is considered by the company that the sum of
£1.3 million returned to the company was sufficient to meet the settlement responsibility which was transferred back to the company at that
date. Although the form of the manner in which insurance claims are made against the company and settled by the company has therefore
changed, the substance has not changed and the accounting policy remains the same as in previous periods.
Given the length of time which can elapse in dealing with insurance claims, it is probable that the above provision will be utilised gradually
over the five year period in which claims can be made. Claims experience in the future will dictate the extent to which additions to the
provision may be required and the extent of its utilisation in any accounting period.
9. Deferred tax
The deferred tax asset included in the company balance sheet is analysed as follows:
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
2016
£’000
3
(8)
180
175
2016
£’000
366
(191)
175
2015
£’000
(1)
352
15
366
2015
£’000
136
230
366
At 30 November 2016 there were £nil (2015: £nil) temporary differences or unused tax losses for which deferred tax has not been provided.
83
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
10. Share capital
Ordinary shares of 25p each
43,047,584
2016
Number
Allotted and called up and fully paid
2016
£’000
10,762
2015
Number
39,175,003
Issued Share Capital
As at 1 December 2014 and 30 November 2015
8 June 2016
As at 30 November 2016
Number
39,175,003
3,872,581
43,047,584
2015
£’000
9,794
Nominal Value
£’000
9,794
968
10,762
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 2016 854,338 ordinary shares were held in treasury (2015: 812,313).
11. Share options and warrants
As at 30 November 2016 the following share options had been issued and were outstanding under the company’s employee share option
schemes:
Date of grant
24 July 2007
6 September 2007
5 September 2008
24 November 2014
17 October 2016
Earliest
exercise date
24 July 2010
Date of expiry
Exercise price
23 July 2017
Number of
options granted
160,000
740,000
655,000
6 September 2010
5 September 2017
5 September 2011
4 September 2018
2,585,000
24 November 2017
23 November 2024
503,210
1 December 2019
1 June 2020
62.50p
62.50p
50.00p
54.00p
58.05p
The Rotala Plc SAYE Share Option Scheme (the “Scheme”) is an HM Revenue & Customs approved share option scheme, administered by
the Yorkshire Building Society (“YBS”), open to all employees. The issue of share options on 17 October 2016 is at present the only issue
in relation to this Scheme. The Scheme runs for a 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.
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.
84
Rotala Plc | Annual Report 2016
11. Share options and warrants (continued)
2016
Weighted average
exercise price (p)
2016
2015
Weighted average
2015
Number
exercise price (p)
Number
Outstanding at beginning of the year
Forfeited during the year
Exercised
Issued during the year
53.69
(57.92)
(37.60)
58.05
4,851,905
(253,930)
(457,975)
503,210
53.06
(52.80)
(40.05)
-
5,157,858
(69,931)
(236,022)
-
Outstanding at the end of the year
55.52
4,643,210
53.69
4,851,905
The exercise price of options outstanding at the end of the year ranged between 50.0p and 62.5p (2015: 37.5p and 62.5p) and their
weighted average remaining contractual life was 5.19 years (2015: 5.77 years).
Of the outstanding options at the reporting date 1,555,000 (2015: 2,166,000) were exercisable. The weighted average exercise price of
these options was 57.23p (2015: 53.31p).
The fair value of options granted was determined under IFRS 2 using a binominal valuation model. Significant assumptions used in the
calculations included:
•
•
•
•
a share price volatility of 15% based on expected and historical price movements;
a weighted average share price of 58.05p;
a risk-free interest rate of 3%; and
a period to maturity of three and a half years from the date of grant of the options.
The weighted average fair value of options granted was 3.46p.
12. Reserves
a)
Called up share capital represents the nominal value of shares which have been issued;
b)
The share premium account includes any premiums received on the issue of share capital. Any transaction costs associated with the
issuance of shares are deducted from the share premium reserve;
c)
Shares in Treasury result from the acquisition by the company of its own shares. Shares are issued from Treasury to meet the
requirement to satisfy the exercise of share options under the company’s SAYE and unapproved share option schemes;
d)
The profit and loss account includes all current and prior period retained profits and losses.
13. Pensions
The company does not have a pension scheme of any nature.
14. Capital commitments
As at 30 November 2016 the company had no capital commitments. As at 30 November 2015 the company had placed orders for
undelivered vehicles with a capital value of £2.555 million.
85
Financial StatementsRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
15. Commitments under operating leases
The company had total commitments under non cancellable operating leases as set out below:
Operating lease commitments payable:
- Within one year
- In two to five years
Other Assets
2016
£’000
14
4
18
Other Assets
2015
£’000
12
9
21
16. Contingent liabilities
The company has entered into a cross-guarantee and floating charge agreement with its subsidiaries. At 30 November 2016 the contingent
liability amounted to £1,503 (2015: £14,000).
The company has guaranteed the hire purchase obligations of its subsidiaries. At 30 November 2016 the contingent liability amounted to
£11,290,000 (2015: £8,513,000).
17. Related parties and transactions
•
The services of J H Gunn were provided by Wengen Limited, a company controlled by J H Gunn, and invoiced by that company to
Rotala, as set out in note 6 of the group financial statements. At the year end none (2015: none) of the amount charged was unpaid
and included within creditors. During the year J H Gunn received from Rotala a total of £127,585 (2015: £116,948) in dividends on
ordinary shares.
•
Certain of the services of R A Dunn were provided by motorBus Limited, a company controlled by R A Dunn, and invoiced by that
company to a subsidiary undertaking of Rotala, as set out in note 6 of the group financial statements.. At the year end £15,544 (2015:
£20,966) of the amount charged was unpaid and included within creditors. During the year R A Dunn received from Rotala a total of
£19,570 (2015: £16,825) in dividends on ordinary shares.
•
The services of F G Flight were provided by Central Coachways Limited, a company controlled by F G Flight, and invoiced by that
company to Rotala. At 30th November 2015 £2,750 of the amount charged was unpaid and included within creditors. Up to the date
of his resignation F G Flight received from Rotala a total of £23,100 (2015: £22,200) in dividends on ordinary shares.
•
•
•
During the year S L Dunn received from Rotala a total of £30,825 (2015: £25,458) in dividends on ordinary shares.
During the year K M Taylor received from Rotala a total of £10,874 (2015: £7,642) in dividends on ordinary shares.
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 2016 (2015: 1,802,443 ordinary shares). 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 2016 Mr. Gunn and his
beneficial interests held 30% (2015: 29.4%) of the ordinary share capital of The Fund. During the year The Fund received from Rotala
a total of £37,851 (2015: £33,345) in dividends on ordinary shares.
18. First time adoption of FRS 101
The policies applied under FRS 101 are not materially different from those applied under the Company’s previous accounting framework
and have not impacted on the reported equity, profit or loss, or cash.
86
Rotala Plc | Annual Report 2016
87
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Rotala Plc | Annual Report 2016
Rotala at a Glance
Statutory Reports
Financial Statements
Shareholder Information
4
Shareholder
Information
Shareholder Information
89
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 26 May 2017 at the offices of the
Company at Cross Quays Business Park, Hallbridge Way, Tipton, Oldbury, West
Midlands, B69 3HW for the purpose of considering, and if thought fit, passing
the following Resolutions with or without modifications and of which Resolutions
1 to 8 (inclusive) will be proposed as ordinary resolutions and Resolutions 9 to
10 will be proposed as special resolutions.
Ordinary Resolutions
1.
THAT, the accounts of the Company for the financial period ended 30 November 2016, together with the directors’ report and the auditor’s
report on those accounts, be received and considered.
2.
THAT, upon the recommendation of the Board of Directors, a dividend of 1.50p per ordinary share be declared as a final dividend in
respect of the financial year ended 30 November 2016.
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.
THAT, John Gunn, 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.
5.
THAT, Robert 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.
6.
THAT, Graham Spooner, who was appointed after the 2016 AGM and so must seek re-election as a director according to the Company’s
articles of association, be re elected as a director of the Company.
Special Business
7.
THAT, in accordance with section 366 of the Companies Act 2006 (“CA 2006”), the Company and its subsidiaries are hereby authorised to:-
7.1 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
7.2 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 2018.
8.
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 £3,587,299 (being approximately one-third of the
issued ordinary share capital of the Company as at 6 April 2017 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 2018 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.
90
Rotala Plc | Annual Report 2016
Special Resolutions
9.
THAT, in substitution for all existing such authorities and subject to the passing of Resolution 8, 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 8 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:-
9.1 is limited to the allotment of equity securities:-
9.1.1
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
9.1.2
otherwise than pursuant to paragraph 9.1.1 up to an aggregate nominal value of £1,076,190 (representing approximately
10 per cent. of the issued ordinary share capital of the Company as at 6 April 2017);
9.2 shall expire at the earlier of the conclusion of the next annual general meeting of the Company and 31 May 2018, 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;
10.
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:-
10.1
the maximum number of Ordinary Shares which may be purchased is 4,304,758 (representing ten per cent of the Company’s
issued ordinary share capital as at 6 April 2017);
10.2
the minimum price (exclusive of expenses) which may be paid for each Ordinary Share is 25 pence;
10.3
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;
10.4
this authority shall expire on the earlier of the conclusion of the next annual general meeting of the Company after the
passing of this Resolution and 31 May 2018 (unless previously renewed, varied or revoked by the Company in general
meeting); and
10.5
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
Secretary
Date: 6 April 2017
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Shareholder InformationRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information
Notes to Members
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 instead of
him/her. A member may appoint more than one proxy in relation to the meeting, provided that each proxy is appointed to exercise the
rights attached to a different share or shares held by that member. The proxy need not be a member of the Company. Please refer to the
notes to the form of proxy for further information on appointing a proxy, including how to appoint multiple proxies (as the case may be).
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 methods in note 3
above not less than 48 hours before the time for holding the meeting. In addition, any power of attorney or other authority under which the
proxy is appointed (or a notarially certified copy of such power or authority) must be deposited at the offices of the Company’s registrars,
Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU not less than 48 hours before the time for holding the meeting.
Any such power of attorney or other authority cannot be submitted electronically.
5.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the
procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members
who have appointed a voting service provider, should refer to their CREST sponsor or voting service provider who will be able to take the
appropriate action on their behalf.
6.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy
Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s (“Euroclear UK & Ireland”) specifications
and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether
it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be
valid, be transmitted so as to be received by the issuer’s agent (ID RA 10) by the specified latest time(s) for receipt of proxy appointments.
For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST
Application Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.
After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other
means.
7.
CREST members and, where applicable, their CREST sponsors, or voting service providers should note that Euroclear UK & Ireland Limited
does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore,
apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST
member is a CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his CREST
sponsor or voting service provider takes) such action as shall be necessary to ensure that a message is transmitted by means of the CREST
system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers
are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
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8.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001.
9.
Completion and return of the Form of Proxy will not preclude a shareholder from attending and voting in person at the meeting.
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 24 May 2017 shall be entitled to attend and vote at the meeting or, if the
meeting is adjourned, the close of business on such date being not more than two days prior to the date fixed for the adjourned meeting.
Changes to entries on the register of members after such time shall be disregarded in determining the right of any person to attend or vote
at the meeting.
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Shareholder InformationRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information Explanatory Notes to Notice of
Annual General Meeting
At the Annual General Meeting the following will be proposed as
explained below:
Resolution 7 – 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 2015, 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 8 – 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 £3,587,299 which is
equivalent to one third of the total issued ordinary share capital as at 6 April 2017. The directors have no current intention of exercising this
authority.
This authority will expire at the conclusion of the next AGM, or 31 May 2018, whichever is the earlier.
Resolution 9 – 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 £1,076,190 which is equivalent to 10 per cent of the total issued ordinary share capital of the Company as at 6 April
2017 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 2018, whichever is the earlier.
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Rotala Plc | Annual Report 2016
Resolution 10 – 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 4,304,758 ordinary shares, representing approximately 10 per cent of the issued share capital as at 6 April
2017. The directors intend to seek renewal of this power at each Annual General Meeting.
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Shareholder InformationRotala at a GlanceStatutory ReportsFinancial StatementsShareholder Information Rotala Plc, Hallbridge Way, Tipton Road, Tividale, West Midlands B69 3HW
Telephone: 0121 322 2222 Website: www.rotalaplc.com