Rotala's first half profits up boosted by acquisitions

7th Aug 2014 17:20

Rotala's first half profit before tax was up 12% on Thursday, boosted by acquisitions made in March 2013.However, the alternative investment market company revenues were down 2% as contracted services fell 9% due to issues with National Express.Rotala launched legal proceedings against National Express for breach of contract, which hurt revenues during the period. In June 2014 they reached a settlement.Despite the contractual issues, the company said free cash flows will rise and it will focus on a steady increase in dividends per share.The interim dividend was raised by 18% to 0.65p per share.Rotala's chairman, John Gunn, said on Thursday "government decisions at local and national level were making life harder for bus operators". The cost of fuel is one of the main worries for the company.The company is now trying "to buy back ordinary shares for cancellation or treasury should market conditions and cash flows permit", Gunn said.Numis Securities said the group reported "nice numbers", giving it an 'add' rating, the equivalent to 'buy', and raising the target price to 62p from 55p."Earnings before interest and tax (EBIT) and pre-tax profit has been progressed from lower sales and the fresh news is that as well as pursuing a progressive dividend policy Rotala may now engage in share buybacks to enhance earnings per share - permission already exists to do this. Forecasts havebeen maintained," the broker said.Shares rose 1.59% to 56p on Thursday at 9:57.JF