Rotala plc, which owns a number of UK operators including Preston Bus, Blue Diamond and Wessex Connect, has improved its financial standing but expects fare increases to be likely in light of the BSOG cuts – according to its latest trading update.
The update also includes prospects for the current year and outlines how Rotala participated fully in the Competition Commission’s (CC) investigation into local bus services.
The company stated it is pleased many of its recommendations are reflected in the CC’s final proposals. The board sees nothing detrimental to the company in the changes which have been proposed by the CC. The firm believes, in the longer term, smaller operators like Rotala will see benefits to its business from the final report of the CC.
Preston Bus has recently taken delivery of its first four Optare hybrid buses as a result of its participation in the government’s Green Bus Fund. Rotala claims the vehicles show an improvement in fuel consumption, depending on route served, of up to 50%. The remaining eleven currently on order are due to be delivered by the end of the first quarter of 2012. The company intends to make a bid for further hybrid buses in the third round of funding.
The update states the majority of the holders of the Convertible Unsecured Loan Stock (CULS) in the company had committed themselves well before the end of 2011 to the extension of the life of the CULS until December 31, 2014. This agreement covers £2,315,850 of Loan Stock. The remainder of the CULS outstanding at November 30, 2011, totalling £1,571,650, was redeemed as at December 31, 2011, in accordance with the wishes of the holders.
The reduction of the amount of CULS over the last twelve months from its original total of £4,662,500, with the corresponding reduction of the associated interest, has significantly improved the debt/ equity and debt/EBITDA ratios enjoyed by the company.
The statement also outlines plans to review fares after the BSOG cut in April. Fares in the Midlands have already risen by 5.6% from the beginning of 2012, while elsewhere they were increased in the latter part of 2011. They will be reviewed on the anniversary of the previous change.
Full results for the year ended November 30, 2011, are expected to be broadly in line with management expectations. These results will be released in March 2012.
Rotala is an AIM-listed company. Visit www.rotalaplc.com
