Rotala announces strong growth and new bus routes

BUS operator Rotala, which runs services in Birmingham and Worcestershire has announced a 23% increase in revenue, but admits its margins are being squeezed by increased competition.

Chairman John Gunn announced in an interim statement that revenue in 2010 grew to £22.5m (2009: £18.3m). He said: “This shows an impressive growth in the business of the company and underpins our optimism about the ability to create a sizeable transport group in the areas in which we operate. This revenue growth, achieved in economically difficult times, is also testament to the investment we have made in new commercial routes and the winning of new contracts in the last year or more.”

Gross profits at the AIM-listed group rose by 12% to £4.71m (2009: £4.21m), though the gross profit margin was a little lower at 21%. (2009: 23%.) Mr Gunn said this was due to increased fuel prices, increased competition in Birmingham and Worcestershire and investment in new routes.
 
Administrative expenses rose by some 23% to £3.12m (2009: £2.54m) due to the establishment of new depots in Bath and Worcester.

Operating profit was £1.6m (2009: £1.7m). Profit before tax for the half year increased by 5% to £805,000 (2009: £764,000). Basic earnings per share, reflecting the increased weighted average number of shares in issue in the period compared to the previous year, were 2.44p per share (2009: 3.00 pence).

Rotala made its first dividend payments in April this year, and Mr Gunn said an interim dividend of 0.30p per share would be made in December.

Alongside the interim statement, the company announced new contracts and contract extensions that would increase annual turnover by up to £800,000.

The contracts include the provision of new bus services in Solihull and Coventry for Centro, as well as new routes for Worcestershire County Council.