Bus company expands operations with £2m acquisition

Rotala

Bus and coach business Rotala has expanded its operation with the acquisition of a rival West Midlands operator in a deal worth almost £2m.

Tividale-based Rotala has invested £1.95m buying up the entire bus business, bus brand and 31-strong vehicle fleet of Central Buses, part of the CEN Group.

The consideration is being funded from Rotala’s existing debt facilities.

Rotala estimates that the Central business, which is based in Perry Barr, has annual revenues of approximately £2.8m and that its vehicle fleet has a fair value of approximately £1.5m.

Rotala said it would not will not assume any other assets or liabilities of any materiality on acquisition.

On this basis the acquisition is expected to generate about £0.45m of positive goodwill on consolidation. No additional overheads are expected to be required.

The acquisition is expected to see Rotala benefit from additional EBITDA of approximately £0.45m in the first full year of ownership.

Central Buses is a well-established operator of commercial and contracted bus services in the northern part of the West Midlands area. The business, together with its staff, will be integrated into the existing depot infrastructure which Rotala already possesses in the West Midlands.

The acquisition will also extend the group’s network of bus services in the northern part of Birmingham, particularly in the Perry Barr area.

The acquisition is expected to complete later this month.

In a trading update accompanying the announcement, Rotala said results for the year ended November 30, 2017, were expected to be in line with market expectations.

Growth for the year was achieved largely from acquisitions, as was the case in the prior year.

At the end of July 2017 Rotala acquired Hansons (Wordsley), an independent bus company operating in Stourbridge. This was followed in September by the acquisition of a bus business in Eccles, Manchester and at the end of the financial year the group acquired the Hotel Hoppa bus business in and around Heathrow airport.

The business changed its banking relationship during the year and entered into new agreement replacing its existing banking facilities on generally more favourable terms.

The new facilities comprise a term loan of £5.5m, a revolving facility of £15.5m and an overdraft facility of £3.5m, with a maturity date for all these facilities of December 5, 2021.

Taking into account these new facilities and parallel asset finance facilities, the company has approximately £10m available to fund further acquisitions.

Trading for the current year is said to be in line with budget.

“Following the four acquisitions which have been made since July 2017, the group’s turnover in FY 18 is expected to grow considerably,” it said.

“The board remains focused on identifying suitable acquisitions which will enhance and expand the services of the group.

“The group performed well in 2017, and, with a strong management team and large network of operating facilities, is well placed to take advantage of continuing developments in the bus industry. Such uncertainty brings opportunity to groups like Rotala and the group is well placed to take advantage of any opportunities that may arise.”

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