Bus operator Rotala set to take legal action against National Express in row over revenues

BIRMINGHAM-based bus and coach group Rotala is to take legal action against the city’s rival bus operator, National Express, in a dispute over a major revenue loss.

In its annual results published today, Rotala said group revenues overall had declined 3% to £53.3m (2012: £54.8m).

It said revenues in its contracted services operation declined by 8.5% to £20.6m (2012: £22.5m).

“The cause of almost all of this reduction in revenue was the loss in April 2013 of the two route diagrams we operated up to that time for National Express Ltd,” said Rotala chairman John Gunn in his report.

“In our view NEL breached their contract with us by their actions. Therefore we have commenced legal proceedings against NEL to recover our losses. This case is expected to come to trial in the last quarter of 2014.

“In these accounts we have written off as an exceptional item £364,000 of our losses, which form part of our claim against NEL.”

He said that looking beyond this exceptional event, the group, which operates the Flights coaches business and several bus fleets around the UK, including the West Midlands, South West and Preston, had done reasonably well.

“We experienced continuing strong growth in our private bus networks business. Revenues from these contracts have increased by some 50% over the last two years and we remain positive about this part of our activities,” he said.

Local authority cutbacks have impacted the business, with revenue from councils in the West Midlands and the South West reduced compared with 2012, although it said it had not seen this pattern repeated in Preston.

“The overall effect of these market changes over the last few years has been to re-position our Contracted Services business away from such a considerable exposure to the ebbs and flows of local government finance to be more focused on privately contracted bus services with major corporate customers,” added Gunn.

Revenues in its Commercial Services rose by 1.2% to £29.9m (2012: £29.6m). Part of the reason for the rise was the contribution of the Redditch and Kidderminster depots which were acquired by Rotala from First Group in March last year.

The impact of fuel costs were minimised by a hedging agreement running until the end of 2015.

Overall, pre-tax profit came in at £2.19m (2012: £2.09m). Gross profit margin was up to 17.1% (2012: 16.5%). Basic earnings per share rose to 5.42p (2012: 5.29p)  and the company has proposed a final dividend of  1.05p per share (2012: 0.90p), making 1.60p for the year, a rise of 14%.