Rotala driving forward despite revenue dip
PUBLIC transport group Rotala, which operates services in Manchester and Preston, is eyeing further expansion despite a fall in first half revenues.
When it issued its 2014 results the group, which includes the Flights coaches operation, said it was determined to focus on profitable turnover rather than turnover regardless of margin.
It said it had adhered to this objective in the first half of 2015 and while revenues declined 6% to £24.6m (2014: £26.08m), operating margins during the six months rose from 17.1% to 18.2%.
Pre-tax profit before exceptional items was up 6% to £1.045m (2014: £0.99m) and group has also increased its interim dividend by 11.5% to 0.725p per share (2014: 0.65p).
The period also saw the group complete the acquisitions of Green Triangle Buses and the Wings coach business.
Chairman of the Birmingham-based company John Gunn said: “The group has a strong balance sheet and substantial unused financing facilities. Our aim is to use these assets to continue to make acquisitions similar to GTB and Wings. Our objective is, by this route, to increase the size of the group considerably over the next few years.”
He said GTB and Wings would not make a significant contribution to earnings in 2015, but, once bedded in, would be healthy contributors to group profits in future years.
“There are many more available targets like these,” he added.
Another reason for optimism is the reduction in the cost of fuel, one of the group’s primary outlays.
“Fuel has fallen significantly in price in the last year,” said Gunn. “Whether this is temporary or otherwise is not for me to say but we have been presented with the opportunity to fix fuel costs at this lower level for a number of years ahead. We already have a programme of hedges in place until the end of 2017. The board intends to continue to extend its fuel hedges whenever this is possible beyond that date, in order to create certainty over a key cost and remove a significant uncertainty in the group’s budgets and forecasts.”
