7th Aug 2014 11:05
LONDON (Alliance News) - Private bus network provider Rotala PLC Thursday reported an increase in first half pretax profit and said that improving cash flow and anticipated lower levels of capital expenditure will enable "enhancement of earnings per share" through a share buy-back programme.
In a statement, Rotala said it made a GBP1.1 million pretax profit in the six months ended May 31, compared with GBP946,000 in the corresponding period last year. Revenue fell to GBP26.1 million from GBP26.7 million but lower cost of sales resulted in stronger gross profit, which is the difference between the two. A 7% fall in interest expense also contribute to the increase in pretax profit.
The revenue figure was due to a 9% fall in contracted services revenue on the loss of two routes operated on behalf of National Express Ltd. In June, Rotala reached a settlement of a claim it had taken out against National Express in the wake of the loss of those routes.
Commercial services revenue increased by 2%, mainly due to a full six-month contribution from the acquisition of the Redditch and Kidderminster businesses from First Group PLC in March 2013. Revenues in Charter Services recorded an overall increase of 19%, mainly due to a "substantial recovery" in the revenue from its private coach-hire business.
Adminstrative expenses increased to GBP2.81 million from GBP2.78 million.
Rotala increased its interim dividend to 0.65 pence from 0.55p.
"In the short to medium term we see a low requirement for replacement vehicles: the fleet is in good condition, well matched to the demands being placed upon it. Hire purchase instalments on the current fleet will also continue to fall and will be about GBP3.4 million for the year as a whole [from GBP4.5 million last year]," Non-Executive Chairman John Gunn said in a statement.
"Thus I see free cash flows increasing and, in the absence of acquisitions, my aim will be to continue the steady increase in dividends per share. We will also look to using our existing permissions to buy back ordinary shares for cancellation or treasury should market conditions and cash flows permit," Gunn added.
He said the group's efforts are concentrated on expanding its commercial bus activities in all of its geographies, and said the group also is keen to continue the "encouraging inroads" made by its private bus networks business.
"Little can be expected from local authority transport work in the foreseeable future. Pressure on local government budgets will undoubtedly be a continuing theme," Gunn said.
Rotala shares were Thursday quoted up 1.6% at 56.00p.
By Samuel Agini; [email protected]; @samuelagini
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