Business And Strategy

The Company’s strategy is to transform the economics of small bus and coach operators through consolidation of their cost bases, economies of scale, reductions in unit costs and the application of superior financial and operational management. It is the objective of the board to fulfil this strategy by building a business, both by acquisition and organic growth, around depots situated in those parts of the country where there is suitable density of population and prospects of continuing economic growth.

Rotala is not, in the main, in competition with the large and well-established bus groups. Their market lies in the commercial bus business whereas Rotala in its bus services is focused on contracted or subsidised work for local authorities.

Rotala was conceived as a consolidator in an industry which, outside of the giants within it, is highly fragmented. Many existing operators are small and are only marginally profitable at best. The opportunity therefore exists to put businesses together, reduce overheads overall and secure more favourable margins. At the same time the industry is a product of the de-regulation some 20 years ago. Those who set themselves up in business then are now approaching retirement and are looking to capitalise on their lifetime of work. Rotala is well placed to take advantage of this factor.

Since Rotala was conceived and launched in early 2005 there have also been many political developments which have served to bolster the logic of the original strategy. The various reports on congestion and environmental pollution, debates on road pricing and congestion zones have focused attention on the necessity of investing in bus and other transport networks, particularly in and around the large conurbations. The franchising model operated by Transport for London is perceived to have been successful. Government papers appear to envisage the replication of the London model in some form in other major conurbations like the Midlands. The Board’s intention is to position the company to take advantage of whatever developments may occur from these initiatives.

To date Rotala has acquired the following companies or businesses in the locations designated:

• Flights Hallmark and Flights Corporate Transfers (Birmingham)
• Zaks Bus & Coach Services (Birmingham)
• Birmingham Motor Traction (Birmingham)
• Diamond Bus Company (Birmingham)
• North Birmingham Busways (Birmingham)
• Ludlows of Halesowen (Birmingham)
• South Gloucester Bus & Coach (Bristol)

Rotala has underpinned these acquisitions by acquiring two depots of 9 acres in total, both in Birmingham and setting up a new depot in Bristol. In addition, via the acquisition of Zak’s, the company obtained a further 3.5 acre depot in northern Birmingham which is well placed to cater for further expansion in activities in this area.

It is the intention of the Board to focus on the Midlands and South West at the current time, since there are many opportunities in this area which fit the company’s strategy.

At present, Rotala provides private bus, coach and car services to corporate customers and scheduled bus services under contract to local authorities, typically for terms of up to three years. Major customers include British Airways and the West Midlands Passenger Transport Executive (Centro). Public sector bus operations are generally conducted under the “Connect” name.