Bus operator back in the black – but warns on north-west depot sale

West Midlands bus group Rotala is back in the black, despite another year of being it by the Covid pandemic.

During 2021, revenue at the firm rose to £96.5m from £78.1m in 2020, while the firm turned around a loss of £4.8m in 2021 into a profit of £300,000 last year.

Rotala also announced this morning (March 15) that it has agreed new banking facilities with HSBC that will provide it with a revolving credit facility of up to £17m and a mortgage facility of £5.8m. The company has an overdraft facility of up to £3 million with the same bank.

The Department for Transport has recently announced the extension of its Bus Recovery Grantscheme, which was originally due to expire in early April 2022, with a further £150m package under the same scheme covering the period up to October 2022.

A statement from Rotala said: “The company welcomes this additional funding which reflects the gradual return of the bus industry to normal operating conditions. Rotala’s passenger volumes continue to increase steadily and are currently at approximately 80% of their pre-COVID-19 levels. The Board expects passenger volumes will continue to recover and that the new BRG package will aid that recovery.”

Rotala mounted a legal challenge last summer against Greater Manchester’s plans to take control of its bus network, alongside Stagecoach. However, last week, Mayor of Greater Manchester, Andy Burnham, was backed by the courts in his bid to implement the scheme.

A statement from Rotala said: As an operator in Greater Manchester, the company has acted to attempt to protect its business from a decision that is not only detrimental to Rotala’s future prospects, but also potentially detrimental to the citizens of Greater Manchester in imposing upon them the financial burden of a franchising scheme that the board believes has not been properly assessed in line with the relevant legislation.

“[If] the franchising scheme is implemented, we will potentially be required to sell our Bolton depot and the bus assets based there to Greater Manchester Combined Authority (GMCA). The board believes that the Bolton depot has first class facilities and is the most modern and up-to-date bus depot operating in Greater Manchester. The bus fleet based there is also the most modern of any of the large operators in that region. The board is therefore confident that the values which might potentially be realised from the sale of these assets under the mechanisms which the GMCA has already announced will at a minimum realise their book values and be more than sufficient to pay off the mortgage on the Bolton depot and the hire purchase debt associated with the bus assets based there.

“As a result, any sale of this nature would have no negative effect on the group’s balance sheet and its leverage would fall to very low levels. In this scenario, the capital which the group currently has invested in its Bolton operation would be realised into cash and be available for re-investment or redeployment elsewhere in the group.”

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