TfGM Bus franchising

[Deerfold]

Considering that this was to be the first bus tranche announcement of the Greater Manchester new system, with all their transport professionalism involvement, you would have thought that they would have moved heaven and earth to have the award information on the promised date.

Or are willing to delay it to make sure any potential problems are ironed out before the announcement.

 

[TheGrandWazoo]

Considering that this was to be the first bus tranche announcement of the Greater Manchester new system, with all their transport professionalism involvement, you would have thought that they would have moved heaven and earth to have the award information on the promised date.

You might think that but this is public sector procurement. There is a raft of reviews and approvals to go through. TBH, I've seldom experienced an award on the scheduled date and, funnily enough, one I've been working on has just been put back for the second time.

Just because it's delayed doesn't necessarily mean that there's any material issue

 

[Xenophon PCDGS]

Well yes, there is that. Any delay to such an anticipated announcement of course encourages speculation.

Is it therefore just speculation that the name of Stagecoach has been bandidied around as having raised an objection or has that been as a result of some "insider information"?

 

[GusB]

Is it therefore just speculation that the name of Stagecoach has been bandidied around as having raised an objection or has that been as a result of some "insider information"?

Have you actually read the thread properly?

You are in exactly the same position as everyone else in that nobody knows anything until it's official. Nobody knows other than the people who should actually know, but that won't be known until the other people who need to know have been informed. Those who have been informed and who aren't happy with the situation need to be given time to mull the situation over and decide whether or not they want to challenge the decision that has been made by the people in the know! It then takes a significant amount of time to ensure that everyone who is in the know is fully informed of the decisions that have been made.

In short. wait and see!

 

[Xenophon PCDGS]

Have you actually read the thread properly?

Not all 1,324 postings that have been made so far, as I have a life to live...

 

[GusB]

Not all 1,324 postings that have been made so far, as I have a life to live...

Nobody is expecting you to read from post #1. However, the least you could do is familiarise yourself with the most recent posts.

 

[TheGrandWazoo]

Not all 1,324 postings that have been made so far, as I have a life to live...

No one would expect you to be reading each missive though think the postings from myself and @Goldfish62 are fairly clear and there's the article as well.

There is a delay, clearly. We do not know the reason for the delay. It COULD be an appeal but it COULD be a number of other reasons such as a procedural delay e.g. the appropriate sign offs etc.

Stagecoach and Rotala would be the most likely organisations to effect any appeal, IF that was the reason for a delay, simply as they have the most to lose. However, it could be any business involved that could appeal.

As @Goldfish62 says, in the absence of a definitive statement from TfGM, then the speculation (esp by some of the more creative individuals on this forum) will crank up but, at the moment, we don't know definitively who may been awarded what nor the reason for the delay in the announcement.

 

[Xenophon PCDGS]

As @Goldfish62 says, in the absence of a definitive statement from TfGM, then the speculation (esp by some of the more creative individuals on this forum) will crank up but, at the moment, we don't know definitively who may been awarded what nor the reason for the delay in the announcement.

Perhaps I am too old-fashioned in my thinking, but I do like...."The truth, the whole truth and nothing but the truth"

 

[47550]

I wonder to what extent First Groups performance running Avanti and TPE will affect their bids to run bus franchises. They are not exactly flavour of the month with Andy Burnham.

 

[Xenophon PCDGS]

I wonder to what extent First Groups performance running Avanti and TPE will affect their bids to run bus franchises. They are not exactly flavour of the month with Andy Burnham.

They seem to operate quite a number of services in the "Greater Bristol" region.

 

[47550]

They seem to operate quite a number of services in the "Greater Bristol" region.

Sorry, I should have added ‘bus franchises in Manchester’. Would be quite an embarrassment for the GM mayor if First cocked up running one of his franchises - he couldn’t say he wasn’t warned..

 

[Goldfish62]

I wonder to what extent First Groups performance running Avanti and TPE will affect their bids to run bus franchises. They are not exactly flavour of the month with Andy Burnham.

Andy Burnham plays no part in the bid evaluations, and neither will the performance or lack of of rail contracts.

 

[TheGrandWazoo]

Perhaps I am too old-fashioned in my thinking, but I do like...."The truth, the whole truth and nothing but the truth"

It is very old fashioned as is this is established public sector practice. I have literally been involved, in the last fortnight, in a bid that has had the announcement date put back by a fortnight (following a previous two week delay). Nothing untoward but simply a delay in obtaining the relevant approvals.

The vast majority of the good people in GM have no idea that the 16th Dec was a significant date

Andy Burnham plays no part in the bid evaluations, and neither will the performance or lack of of rail contracts.

Indeed. I know you know but for the benefit of other readers, the process of evaluating bids in a public sector world is prescriptive in order to avoid accusations of favouritism (and let's not mention Baroness Mone at this juncture). They are evaluated and scored on a set of agreed criteria that usually covers cost, quality and social value.

The performance of rail contracts is not a consideration. Otherwise you might query why Go Ahead would be allowed to bid given the Southeastern underpayment of profit share payments to DfT to the tune of c.£70m?

 

[citybus2500]

They took it on "at a price" - not certain if it's a fixed price contract. Whatever it was, it was regarded as onerous which is why Diamond didn't take it on when they bought Bolton depot.

Rotala may not have wanted it, but am sure they would have taken it at the right price. However, as TfGM wouldn't novate any contracts from First to Diamond (Diamond were on the very naughty step at the time) it wasn't an issue. That's why First also kept a couple of evening and Sunday tenders at Bolton, along with the B7RLEs, until the contracts expired.

== Doublepost prevention - post automatically merged: 21 Dec 2022 ==

The Go Ahead Group head office is in London, according to their website.

Investor contacts

Go-Ahead's investor relations key contacts and advisors

www.go-ahead.com

Contacts​

Head Office

The Go-Ahead Group
4 Matthew Parker Street
Westminster
London
SW1H 9NP

The London address tends to be used for bids.

== Doublepost prevention - post automatically merged: 21 Dec 2022 ==

It's basically going to be Post Christmas now then isn't it, if anyone has objected?

I believe the announcement may well come on Friday afternoon . . . .

 

[Simon Dunn]

I note the comments made by Citybus 2500. As the CEO of Rotala Plc, and the person who agreed the deal. No conversation ever took place with TfGM over the novation of Vantage. It was never part of the final agreed deal and whilst they were keeping Vantage, First took the view they may as well keep the other tenders.

 

[neilcobbe]

Looks like it's today. Andy Burnham has tweeted this.

Mod note: Please provide the link to this tweet and copy and paste the contents, using quote tags.

https://twitter.com/AndyBurnhamGM/status/1606194103301001216

Looks like it's today.

"Today I will confirm the names of the operators who will run the first bus services in England to be brought back under public control since deregulation in 1986."

 

[TheGrandWazoo]

https://twitter.com/AndyBurnhamGM/status/1606194103301001216

Looks like it's today.

"Today I will confirm the names of the operators who will run the first bus services in England to be brought back under public control since deregulation in 1986."

Been my understanding that it was today.... and then let the fun begin!! Let the winners go and get the champagne off ice and see how the losers might react to the end of their rein?

 

[landgateblue]

Lee Wasnidge
Following the bids for the first franchises in Manchester, we’ve now been advised that we’ve not been selected to run the services for Wigan. The first franchises covering Wigan and Bolton have been awarded to Go North West.

 

[winston270twm]

Rotala have put out an RNS re: Manchester awards along with a Trading Update:

23 December 2022


Rotala Plc


("Rotala", the "Company" or the "Group")


Business Developments in Greater Manchester and the West Midlands


Trading update for FY 2022


and Prospects for FY 2023



Rotala (AIM: ROL.L), an operator of bus routes in the UK for businesses, local authorities, and the general public, is pleased to announce the outcome of the tender round for the first tranche of franchised bus routes in Greater Manchester and of recent tender rounds in the West Midlands region for supported bus contracts.



Highlights:


· The Company has been awarded seven out of the nine available Small Franchises by the Greater Manchester Combined Authority ("GMCA") in Bolton, Bury, Wigan, Farnworth, Leigh, and Salford ("Small Franchise Areas") with a combined annualised revenue of approximately £18.7 million, starting in late September 2023.


· The Company has won new contracts in the West Midlands, which are expected to increase annualised revenues in this region by approximately £2.9 million starting on 1 January 2023.


· The net effect of the GMCA awards and West Midlands contracts, combined with the unsuccessful bids for two of the larger GMCA franchises, is expected to be a decline in the Group's annualised revenues of approximately £3.5 million, principally effective from FY 2024.


· The Company has agreed in principle to dispose of: (i) its Bolton depot to the GMCA; and (ii) the majority of the busfleet based there to the incoming franchise operators who were successful in their bids for the Large Franchises (the "Disposals").


· The Company traded in line with its budget for the year ended 30 November 2022 ("FY 2022") and successfully met the Board's target to reduce its total net debt to below £40 million as at 30 November 2022.


· Completion of the pre-qualification stages for participation in two further franchise rounds in the GMCA region.


Simon Dunn, Chief Executive of the Company, said: "We have made progress in line with the Board's expectations for the year and have delivered on our key objectives around the recovery of the business. Our focus on deleveraging has resulted in the underlying debt being at a level viewed by the Board as appropriate for the sector. The actions, acquisitions and strategy throughout the year have returned Rotala to a pre-Covid footing, and we are really pleased with the development of our people, organisational culture and processes. The Board believes that all these factors put the business in a much better place for the year ahead."



Outcome of the first Tranche of the Franchise Tender process in Greater Manchester

By way of background, under the Bus Services Act 2017, a Mayoral Combined Authority ("MCA") (a legal body which is set up under national legislation to which certain functions and powers of the constituent councils are transferred to enable collaboration and collective decisions across council boundaries, and with an elected mayor), has the power to suspend the deregulated commercial bus market in its area through the introduction of a franchising scheme. A franchising scheme gives control of a bus market in its area to the MCA and bus operators may only operate franchised bus services in that area under contract to the MCA. In March 2021, the Mayor of Greater Manchester made the decision to introduce such a scheme. The first tranche of the scheme is expected to begin operation in late September 2023.


In the tender process for this first tranche of the franchising scheme, which covers the Company's bus depot in Bolton, together with its related bus operations, the Company has not been successful in its bids for either of the Large Franchise areas covering Bolton and Wigan.


However, the Company has been successful in winning seven out of the nine available Small Franchise Areas which have a combined annual revenue of approximately £18.7 million and each are for a period of between three and five years. As a result, the net effect on the Group is expected to be a decline in its annual revenues in the GMCA area of approximately £6 million, principally effective from the year ending 30 November 2024 ("FY 2024").

As a consequence, the Company has agreed in principle to dispose of its Bolton depot and the majority of the bus fleet based there in two separate stages, as described further below, for an aggregate consideration of approximately £30.1 million in cash. The associated mortgage and hire purchase finance debt will be repaid out of the proceeds of sale. However, the award of the seven Small Franchises worth approximately £18.7 million of combined annual revenue referred to above will require the Company to purchase 67 new buses, as specified by the relevant contracts, at a total cost of approximately £13.0 million, which will be financed by new hire purchase debt.

As the consideration payable for each stage of disposal is material when compared to the Company's market capitalisation, pursuant to Rule 15 of the AIM Rules for Companies, the approval of the Company's shareholders in a general meeting may need to be obtained prior to the sale of both the Bolton depot and the Bolton bus fleet. If a general meeting is called, the Board intends to recommend to Shareholders that they approve the relevant sale transactions, and the Directors intend to irrevocably commit their own shareholdings in favour of approving any such transactions. Further announcements regarding these disposals will be made in due course.


The Disposals in detail


The approach adopted by the GMCA in setting up the franchise framework has the following key features:

· A proposal, as its preferred option, that the GMCA purchases the bus depots which it regards as key in making a success of its franchising plan, including the Company's bus depot in Bolton;


· A proposal to facilitate the reallocation of the relevant current bus fleets in the initial franchise areas following the award of the franchise contracts using a specific mechanism (the "Residual Value Mechanism"). Under thisprocess, a bus operator will agree with the GMCA which of its vehicles are to be placed into a notional asset pool. The GMCA will then allocate vehicles to franchises. The incoming franchise operator will purchase the vehicles allocated by the GMCA to a franchise from the outgoing franchise operator. The price of each vehicle will be determined by the Residual Value Mechanism which will be incorporated into the contract for any franchise granted by the GMCA.


The impact on the Company of these two policy approaches is as follows:


· The Company has agreed in principle to sell its Bolton bus depot to the GMCA, with all its associated fixtures, fittings, plant and machinery. The Company has already signed non-binding heads of terms covering this sale. This is anticipated to lead to a conditional exchange of contracts on the disposal of the depot and then, subject to obtaining any necessary shareholder approval, completion of the sale. The sale of the depot will only become binding on both parties when the conditions for completion set out in the exchanged contracts are satisfied. Prior to completion, there is no certainty that the transaction will proceed;

· The Company intends in September 2023 to dispose of the majority of the bus fleet currently based at the Bolton depot by placing these vehicles into the notional asset pool described above. The GMCA has allocated these buses to the Large and Small Franchise Areas. These vehicles will be acquired by the successful franchise bidders at the value determined by the GMCA under the Residual Value Mechanism. The remaining vehicles in the Bolton fleet will be retained by the Company for on-going work.

The overall effect of these transactions on the Company is that, subject to signing conditional sale and purchase agreements and receiving any necessary shareholder approvals, it will receive cash consideration of approximately £30.1 million, in aggregate, for the assets included within the two disposal stages outlined above. The total unaudited net book value of these assets, at their respective dates of sale, is expected to be approximately £22.7 million.

In the period from completion of the disposal to the GMCA of the Company's Bolton bus depot to the commencement of the Bolton franchise by the successful franchise winner, which is expected to be in late September 2023, the Company will continue to operate from the Bolton depot and carry out all the bus services it currently runs from that depot. To facilitate this, the Company has agreed to lease back from the GMCA, at a nominal rent, the Bolton depot, and all other assets necessary to support the continued operation of bus services from the bus depot until the formal commencement of the Bolton franchise, which is expected to be in late September 2023, when the short-term lease will terminate.



New contracts won in the West Midlands


In the West Midlands, Rotala has continued to work in partnership with Transport for the West Midlands to optimise, with other bus operators, the existing overlaps on commercial routes to make sure that service frequencies are properly married to current passenger volumes. At the same time, in response to current Government policy and local needs, the size of the tendered services market has continued to grow. The Company has participated fully in the recent tender rounds for contracts of this type and has won several new contracts such that it expects annualised revenues in this region to increase by approximately £2.9 million. These new contracts have durations of between one and four years and commence on 1 January 2023. Since vehicles which were formerly used on commercial routes will be redeployed on tendered routes, the vehicle numbers deployed in the Company's operation in the West Midlands will remain roughly the same and the new work will not necessitate the purchase of any new vehicles.


The Effect of the Disposals and the New contracts on the debt finance of the Company


In accordance with its stated strategy, during the COVID-19 pandemic, the Board focused on cash generation and debt reduction. As such, the Board set a target for the Company's total net debt to be at or below £40 million at 30 November 2022. This target has successfully been met, as is shown in the table below.


In the following table the total unaudited net debt of the Company at 30 November 2022 is then adjusted on a pro forma basis to reflect:


· the anticipated receipt of the cash proceeds from the disposals in the GMCA region;


· the application of those proceeds to repay the mortgage and hire purchase ("HP") debt related to the assets disposed of;


· the inception of the HP finance needed to purchase the required bus fleet for the new work in the GMCA area; and


· the remaining balance of the cash receipts taken to the cash line on the balance sheet.

	Unaudited Total Net Debt at 30 November 2022	Application of proceeds of the Disposals	Forecast mortgage and lease liability amortisation in FY 2023	HP finance for new work in GMCA area	Unaudited Proforma Total Net Debt after the Disposals and financing of new vehicles required
	£'000	£'000	£'000	£'000	£'000
Mortgage liabilities	5,439	-2,010	-276	0	3,153
HP debt	33,361	-13,482	-8,177	13,025	24,727
Other lease liabilities	566	0	-389	0	177
Revolving commercial facility drawn	0	0	0	0	0
Net cash asset	-1,214	-14,651	0	0	-15,865
Total	38,152	-30,143	-8,842	13,025	12,192

Trading update


The Disposals do not preclude the Company from bidding for the franchises which cover the north-east and southern areas of the GMCA region. The Company has already successfully completed the pre-qualification stages for participation in these two further franchise rounds which are expected to be conducted in the year ending 30 November 2023 ("FY 2023") and FY 2024.


The Board anticipated that FY 2022 would be a year of transition. As the Group exited from Government support packages, and realigned itself towards the "new normal", the Board's expectation was to match or better the £1.3 million loss recorded for the year ended 30 November 2021 at the normalised pre-tax profit/loss line. The Group traded in line with this budget for FY 2022. The Board believes that the Group is now well positioned to return to pre-COVID levels of profitability.

Profit before tax but after exceptional items fluctuates principally as a result of the marking to market of the Group's fuel derivative position. In FY 2022, this produced a profit of £2.6 million. In addition, in FY 2022, a profit of £0.6 million was recorded on the sale of a surplus leasehold property. This will also be treated as an exceptional item in the Company's FY 2022 audited final results which are expected to be released in March 2023.


Fuel hedging


The Group's budget for FY 2023 anticipates fuel usage of approximately 13 million litres. Some 38 per cent. of this fuel usage has been covered by hedging contracts, at an average price of 116p per litre. For reference, the market price of fuel at the date of this announcement (excluding VAT) is 128p per litre.

The Board will continue to monitor market conditions closely and take out such further fuel hedging contracts as it deems are appropriate to meet its objective of reducing volatility in its costs and, where possible, creating greater business certainty.

Industry developments and prospects for the Group


The Board believes that the acquisition of two of the UK's largest bus groups (Stagecoach Group plc and The Go Ahead Group plc) indicates a positive outlook for the UK bus industry as a whole. In addition, at a lower level, there is a considerable amount of re-organisation and restructuring activity taking place within the UK bus industry. The fact the Company was able to acquire the bus businesses of two smaller travel and leisure companies (Claribel Coaches Limited and Johnsons (Henley) Limited) in the first half of FY 2022, and then subsequently Midland Classic Limited (now renamed Diamond Bus (East Midlands) Limited), and the collapse into administration of Bournemouth Transport Limited, also provides evidence about current bus industry trends. The principal driver of these trends remains that passenger volumes have yet to recover to pre-COVID 19 levels. Nationally, passenger volumes remain at about 85% of those levels for the bus industry as a whole. However, the Company's own operations have performed better than this and have reached approximately 95% of pre-COVID 19 levels. Whilst some of the absence of passenger volume may be ascribed to the reduction in commuter traffic occasioned by the desire to "work from home", in the case of the bus industry, the principal issue is that concessionary cardholders (largely pensioners) have not returned to their previous travel habits. Recent industry reports make it clear that this is a matter of confidence in travel by bus rather than any other factor.

In the shorter term, the UK Government is responding to these issues with two further initiatives. On 19 August 2022, the Department for Transport ("DfT") announced that the Bus Recovery Grant scheme ("BRG"), which was originally due to expire in October 2022, would be extended to 31 March 2023. The BRG is designed to compensate bus operators for the absence of revenue as the industry recovers from COVID-19. This amounts to a commitment by the UK Government of a further £130 million to bus services in England outside of London in this recovery period. Subsequently, on 3 September 2022, the DfT announced that it would invest up to a further £60 million in bus services in England outside of London via a fare capping scheme. The objective of this scheme is, in the context of the cost-of-living crisis, to ensure access to affordable public transport. The scheme will cover the three-month period from 1 January 2023. In the medium term, large-scale investment by the UK Government continues under the banner of its National Bus Strategy and is viewed by the Board as positive for the UK bus industry. The Company, as encouraged by the DfT, continues to work closely with all the local authorities in whose areas it operates, particularly those which have received funding for Bus Service Improvement Plans, to redefine and reshape bus networks in order to take account all of these industry trends and Government initiatives.

These trends are expected to produce continued turbulence in the bus industry, which should bring a healthy flow of opportunities to the Company, much like the acquisitions made during the year, for both organic growth and acquisitions. The Board is of the view that the Group has available to it ample bank facilities to cater for any such growth opportunities, including the utilisation of its revolving loan facility with HSBC Bank plc, which at present is undrawn. For all these reasons, and despite the increased cost of living, fluctuating fuel prices and general rise of inflation, the Board remains very confident about the future prospects of the Company.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018.

Rotala Plc	0121 322 2222
John Gunn, Chairman Simon Dunn, Chief Executive Kim Taylor, Group Finance Director
Shore Capital	020 7408 4090
Tom Griffiths / James Thomas / Lucy Bowden (Corporate Advisory) Henry Willcocks (Corporate Broking)

About the business


Rotala provides a range of transport solutions, ranging from local bus services under contract to local authorities, through to commercial bus routes. Rotala has operations at Heathrow Airport, in the East and West Midlands and in the North West. Operating companies are Diamond Bus Ltd, Diamond Bus (North West) Ltd, Diamond Bus (East Midlands) Ltd, Hallmark Connections Ltd and Preston Bus Ltd.

 

[Volvodart]

The Company has been awarded seven out of the nine available Small Franchises by the Greater Manchester Combined Authority ("GMCA") in Bolton, Bury, Wigan, Farnworth, Leigh, and Salford ("Small Franchise Areas") with a combined annualised revenue of approximately £18.7 million, starting in late September 2023.

http://otp.investis.com/clients/uk/rotala/rns/regulatory-story.aspx?cid=182&newsid=1655360

Business Developments, Trading Update & Prospects
Released : 23/12/2022 12:30


RNS Number : 9153K
Rotala PLC
23 December 2022





23 December 2022





Rotala Plc

("Rotala", the "Company" or the "Group")



Business Developments in Greater Manchester and the West Midlands

Trading update for FY 2022

and Prospects for FY 2023



Rotala (AIM: ROL.L), an operator of bus routes in the UK for businesses, local authorities, and the general public, is pleased to announce the outcome of the tender round for the first tranche of franchised bus routes in Greater Manchester and of recent tender rounds in the West Midlands region for supported bus contracts.



Highlights:



· The Company has been awarded seven out of the nine available Small Franchises by the Greater Manchester Combined Authority ("GMCA") in Bolton, Bury, Wigan, Farnworth, Leigh, and Salford ("Small Franchise Areas") with a combined annualised revenue of approximately £18.7 million, starting in late September 2023.



· The Company has won new contracts in the West Midlands, which are expected to increase annualised revenues in this region by approximately £2.9 million starting on 1 January 2023.



· The net effect of the GMCA awards and West Midlands contracts, combined with the unsuccessful bids for two of the larger GMCA franchises, is expected to be a decline in the Group's annualised revenues of approximately £3.5 million, principally effective from FY 2024.



· The Company has agreed in principle to dispose of: (i) its Bolton depot to the GMCA; and (ii) the majority of the busfleet based there to the incoming franchise operators who were successful in their bids for the Large Franchises (the "Disposals").



· The Company traded in line with its budget for the year ended 30 November 2022 ("FY 2022") and successfully met the Board's target to reduce its total net debt to below £40 million as at 30 November 2022.



· Completion of the pre-qualification stages for participation in two further franchise rounds in the GMCA region.



Simon Dunn, Chief Executive of the Company, said: "We have made progress in line with the Board's expectations for the year and have delivered on our key objectives around the recovery of the business. Our focus on deleveraging has resulted in the underlying debt being at a level viewed by the Board as appropriate for the sector. The actions, acquisitions and strategy throughout the year have returned Rotala to a pre-Covid footing, and we are really pleased with the development of our people, organisational culture and processes. The Board believes that all these factors put the business in a much better place for the year ahead."





Outcome of the first Tranche of the Franchise Tender process in Greater Manchester



By way of background, under the Bus Services Act 2017, a Mayoral Combined Authority ("MCA") (a legal body which is set up under national legislation to which certain functions and powers of the constituent councils are transferred to enable collaboration and collective decisions across council boundaries, and with an elected mayor), has the power to suspend the deregulated commercial bus market in its area through the introduction of a franchising scheme. A franchising scheme gives control of a bus market in its area to the MCA and bus operators may only operate franchised bus services in that area under contract to the MCA. In March 2021, the Mayor of Greater Manchester made the decision to introduce such a scheme. The first tranche of the scheme is expected to begin operation in late September 2023.



In the tender process for this first tranche of the franchising scheme, which covers the Company's bus depot in Bolton, together with its related bus operations, the Company has not been successful in its bids for either of the Large Franchise areas covering Bolton and Wigan.



However, the Company has been successful in winning seven out of the nine available Small Franchise Areas which have a combined annual revenue of approximately £18.7 million and each are for a period of between three and five years. As a result, the net effect on the Group is expected to be a decline in its annual revenues in the GMCA area of approximately £6 million, principally effective from the year ending 30 November 2024 ("FY 2024").



As a consequence, the Company has agreed in principle to dispose of its Bolton depot and the majority of the bus fleet based there in two separate stages, as described further below, for an aggregate consideration of approximately £30.1 million in cash. The associated mortgage and hire purchase finance debt will be repaid out of the proceeds of sale. However, the award of the seven Small Franchises worth approximately £18.7 million of combined annual revenue referred to above will require the Company to purchase 67 new buses, as specified by the relevant contracts, at a total cost of approximately £13.0 million, which will be financed by new hire purchase debt.



As the consideration payable for each stage of disposal is material when compared to the Company's market capitalisation, pursuant to Rule 15 of the AIM Rules for Companies, the approval of the Company's shareholders in a general meeting may need to be obtained prior to the sale of both the Bolton depot and the Bolton bus fleet. If a general meeting is called, the Board intends to recommend to Shareholders that they approve the relevant sale transactions, and the Directors intend to irrevocably commit their own shareholdings in favour of approving any such transactions. Further announcements regarding these disposals will be made in due course.



The Disposals in detail



The approach adopted by the GMCA in setting up the franchise framework has the following key features:



· A proposal, as its preferred option, that the GMCA purchases the bus depots which it regards as key in making a success of its franchising plan, including the Company's bus depot in Bolton;



· A proposal to facilitate the reallocation of the relevant current bus fleets in the initial franchise areas following the award of the franchise contracts using a specific mechanism (the "Residual Value Mechanism"). Under thisprocess, a bus operator will agree with the GMCA which of its vehicles are to be placed into a notional asset pool. The GMCA will then allocate vehicles to franchises. The incoming franchise operator will purchase the vehicles allocated by the GMCA to a franchise from the outgoing franchise operator. The price of each vehicle will be determined by the Residual Value Mechanism which will be incorporated into the contract for any franchise granted by the GMCA.



The impact on the Company of these two policy approaches is as follows:



· The Company has agreed in principle to sell its Bolton bus depot to the GMCA, with all its associated fixtures, fittings, plant and machinery. The Company has already signed non-binding heads of terms covering this sale. This is anticipated to lead to a conditional exchange of contracts on the disposal of the depot and then, subject to obtaining any necessary shareholder approval, completion of the sale. The sale of the depot will only become binding on both parties when the conditions for completion set out in the exchanged contracts are satisfied. Prior to completion, there is no certainty that the transaction will proceed;



· The Company intends in September 2023 to dispose of the majority of the bus fleet currently based at the Bolton depot by placing these vehicles into the notional asset pool described above. The GMCA has allocated these buses to the Large and Small Franchise Areas. These vehicles will be acquired by the successful franchise bidders at the value determined by the GMCA under the Residual Value Mechanism. The remaining vehicles in the Bolton fleet will be retained by the Company for on-going work.



The overall effect of these transactions on the Company is that, subject to signing conditional sale and purchase agreements and receiving any necessary shareholder approvals, it will receive cash consideration of approximately £30.1 million, in aggregate, for the assets included within the two disposal stages outlined above. The total unaudited net book value of these assets, at their respective dates of sale, is expected to be approximately £22.7 million.



In the period from completion of the disposal to the GMCA of the Company's Bolton bus depot to the commencement of the Bolton franchise by the successful franchise winner, which is expected to be in late September 2023, the Company will continue to operate from the Bolton depot and carry out all the bus services it currently runs from that depot. To facilitate this, the Company has agreed to lease back from the GMCA, at a nominal rent, the Bolton depot, and all other assets necessary to support the continued operation of bus services from the bus depot until the formal commencement of the Bolton franchise, which is expected to be in late September 2023, when the short-term lease will terminate.



New contracts won in the West Midlands



In the West Midlands, Rotala has continued to work in partnership with Transport for the West Midlands to optimise, with other bus operators, the existing overlaps on commercial routes to make sure that service frequencies are properly married to current passenger volumes. At the same time, in response to current Government policy and local needs, the size of the tendered services market has continued to grow. The Company has participated fully in the recent tender rounds for contracts of this type and has won several new contracts such that it expects annualised revenues in this region to increase by approximately £2.9 million. These new contracts have durations of between one and four years and commence on 1 January 2023. Since vehicles which were formerly used on commercial routes will be redeployed on tendered routes, the vehicle numbers deployed in the Company's operation in the West Midlands will remain roughly the same and the new work will not necessitate the purchase of any new vehicles.

 

[TheGrandWazoo]

Lee Wasnidge
Following the bids for the first franchises in Manchester, we’ve now been advised that we’ve not been selected to run the services for Wigan. The first franchises covering Wigan and Bolton have been awarded to Go North West.

Indeed - hence my cryptic

Let the winners go and get the champagne off ice and see how the losers might react to the end of their rein?

Rein alluding to Stagecoach rather than a spelling mistake (I used to watch 321 on a Saturday night BTW)

Another good result of Go Ahead off the back of developments in Southampton and Bournemouth, and earlier, in Cornwall

 

[WatcherZero]

According to that trading update Rotala has sold their Bolton depot to GMCA (Greater Manchester Combined Authority) and their existing fleet to Go-Ahead to operate their franchise contracts netting them £30.15m, half has been used to pay down their debt and half will be retained as cash, this reduces their forecast mortgage repayments by £8m. £13m will be invested in buying new buses to operate in Greater Manchester and other startup costs which will be borrowed rather than using their fresh cash.

 

[Robertj21a]

Good move for GoAhead, and not bad for Rotala - now for comments from the others that lost out......

 

[158756]

Are there any details of which routes are included in the contracts?

 

[WatcherZero]

Local accountability at centre of new bus network as operators appointed to run first franchised services outside of London for almost 40 years​

23 December 2022 at 14:27

• Bus operators to be held locally accountable to bus passengers for the first time – with customer complaints one of several measures to influence operator payments
• GM plan talks with rail industry to integrate 20% of train services into Bee Network from 2025
• Renewed focus on customer experience as raft of improvements to be delivered over next 12 months
• Another 50 fully electric buses ordered to operate in Bury, Rochdale and Oldham, bringing total to 270 in 2024
• Bus patronage at highest levels since pandemic following introduction of new lower fares – with new weekly capped ticket set to launch in the new year
• More than £7m awarded to complete major cycle route connecting Chorlton and Manchester city centre and £3.5m to upgrade road safety cameras

For the first time in nearly four decades, Greater Manchester’s bus passengers will be involved in holding local bus operators to account over how they perform.
The city-region is the first to use powers contained within the Bus Services Act 2017, with Go North West and Diamond appointed to run Greater Manchester’s first locally controlled bus services since they were deregulated in 1986, signifying the biggest change to public transport in generations.

https://dmscdn.vuelio.co.uk/publicitem/b9202394-6d12-4836-820f-788c88d973e4
Currently in Greater Manchester, like all areas outside of London, the majority of bus services are provided on a commercial basis by private bus companies, with operators deciding on routes, frequencies, timetables, fares and quality standards.
Franchising is a more effective way of delivering bus services, where the bus network is planned and overseen by the local transport authority, with Greater Manchester now able to specify bus routes, service levels and fares. It is common in Europe but until now it was only permitted in London in the UK.
With local control and accountability a key element of the Bee Network, customer focused performance targets, including punctuality and reliability of services and levels of customer complaints, will sit at the heart of the operators’ contracts and impact what they get paid.
To help ensure a positive customer experience for all users, Transport for Greater Manchester (TfGM) has prioritised a range of improvements to be introduced over the next 12 months, including the launch of the Bee Network Customer Contact Centre. This will provide an accessible and integrated single point of contact for customers travelling in Greater Manchester.

Improvements to passenger information will also be introduced next year, alongside a new Bee Network app, providing access to Bee Network fares and tickets as well as information to help plan your journey, including when there’s disruptions.


Mayor of Greater Manchester, Andy Burnham, said: “Locally controlled bus services are fundamental to our Bee Network vision for a better public transport network for all, and as the first area to do this outside London, Greater Manchester is once again blazing a trail.
“Franchising will enable us to better integrate services as part of a joined-up network, with simpler fares and ticketing, a price cap so no one pays more than they need to, a better customer service offer and a single look for the whole network.
“Passengers are at the very core of our Bee Network vision and when we talk about local accountability, we really mean it – that is why at the heart of our contracts with operators will be a performance regime that will influence operator payments based on those factors that we know are of most importance to customers, including punctuality, reliability and customer complaints.
“The move to franchising is the biggest change to public transport for almost 40 years and today is a significant step on our journey as we appoint operators to run the very first franchised services from September next year and I am especially pleased that both operators provided strong social value plans, with commitments around recruitment and pay in line with the city-region’s Good Employment Charter.”
The contracts to run the first locally controlled services were signed today, Friday 23 December, meaning the first services will start on 24 September 2023, with Go North West to operate two large franchises and Diamond operating seven smaller franchises across Wigan, Bolton and parts of Salford and Bury.

Nigel Featham, Managing Director of Go North West, said: “We are extremely proud and excited to have been selected to run the first franchised bus services in Greater Manchester and to be able to play our part in delivering the Bee Network.
“We are absolutely committed to providing the best possible service to the people of Bolton and Wigan and can’t wait to get started. This new era of public transport will not only represent major change for bus passengers, but the thousands of people working to provide these vital services.
“While change can be exciting and full of new possibilities, it can also be unsettling and I want to reassure staff working at the depots to be run by Go North West from next September that we will be working hard to ensure a smooth transition in the coming months.”

Bob Dunn, Managing Director at Diamond, said: “I am pleased that we have won seven of the eleven franchises that we have bid for and look forward to the new challenges and opportunities that the next year will bring.
“In 2023, in partnership with the Mayor, TfGM and GMCA, we will be stepping up the quality on over 40 bus routes in Greater Manchester, supported by our team of over 250 colleagues and 80 buses.
“We cannot wait to meet our new customers, and look forward to continuing to playing a key role in the significant improvements taking place to Greater Manchester’s public transport offer.”
Greater Manchester’s vision for a truly integrated public transport network includes all modes of transport, with ambitions for services on six key routes to be integrated into the Bee Network once buses are brought under local control from 2025:

• Wigan – Victoria, which includes the development of a new station at Golborne anticipated to open late 2025 subject to DfT and industry approvals
• Stalybridge –Southport
• Glossop – Hadfield – Piccadilly
• Rose Hill – Piccadilly
• Buxton – Piccadilly
• Alderley Edge – Piccadilly

The move would see around one in five local train services integrated into the Bee Network, with a focus on performance and reliability, improved train station accessibility and a pilot of pay-as-you-go fares, similar to Metrolink’s touch-in/touch-out system.
Greater Manchester plans to explore these proposals with the rail industry as part of discussions about longer-term devolution of rail to the city-region, which would see larger parts of the network integrated into the Bee Network by the end of the decade.

Transport Commissioner for Greater Manchester, Vernon Everitt, said: “Today’s announcements on bus franchising and our ambitions for local rail services demonstrate further strong momentum towards delivery of the Bee Network – an integrated London-style transport system.
“We are seeing a strong increase in the number of customers using Metrolink trams and buses, demonstrating high demand for safe, reliable and affordable public transport in our rapidly growing city-region.
“We will progressively make it easier for everyone to use our services with simplified and joined-up fares, ticketing and information provision across bus, tram, rail and cycle hire. We will also continue to tackle crime and anti-social behaviour and support vulnerable people on the network in collaboration with the TravelSafe Partnership.
“We are also developing major local transport schemes at pace, with more than £100m of projects currently being delivered including new electric buses, quality bus routes and better transport interchanges.
“I’d like to thank the business community and the people of TfGM, our industry partners and many other stakeholders who are working so hard to totally transform the transport system in Greater Manchester.”

While the move to franchising will better enable integrated fares across other modes of transport, bus passengers have been benefitting from new lower fares since September, when they were brought in a year ahead of schedule to help with the cost-of-living crisis.
With an estimated 3.5 million bus journeys each week during November, the number of people using commercial bus services in November was 7.5% higher than November 2021 and is now at its highest level since the pandemic.

The bus cap will be extended to weekly tickets from January, meaning adults will pay no more than £21 to make unlimited journeys on any bus in Greater Manchester over seven days (£10.50 for children). While this is a small increase on existing prices, given current rate of inflation, it is lower than expected increases to the any bus 7-day ticket and will ensure customers aren’t impacted as much as they would otherwise have been.
Franchising will also deliver a cleaner, more environmentally friendly bus fleet for Greater Manchester. Following an initial order for 50 brand new electric buses to operate in Wigan and Bolton, an order for a further 50 double-deck electric buses has now been placed with manufacturer Alexander Dennis at a cost of £22.7m, to operate in parts of Bury, Rochdale and Oldham when the second tranche of franchising is introduced there in April 2024.

The buses will be funded from the government’s ‘City Region Sustainable Transport Settlement’ (CRSTS), following Greater Manchester’s award of £1.07billion earlier this year, £438m of which is already ringfenced to improve buses, routes and services.
Changing how people travel and encouraging more people to walk, scoot and cycle is a key part of delivering the city-region’s ambition to have half of all journeys made by public transport or active travel by 2040.
Greater Manchester is delivering the UK's largest cycling and walking network and through the Mayor’s Cycling and Walking Challenge £3.5m will be spent on the renewal and replacement of 91 speed cameras across Greater Manchester, around three-quarters of which are to be positioned on Bee Network active travel routes to help keep cyclists safe.

Leaders also agreed funding to complete the Chorlton Cycleway – a continuous 5km cycle route connecting Chorlton with Manchester City Centre. The £7.2m project will deliver almost 3km of the route from Seymour Grove to Sandy Lane, including Brooks Bar junction. The full scheme includes four innovative Cycle Optimised Protected Signal junctions (CYCLOPS) junctions as well as 11 cycle bypasses at bus stops and new and improved crossing facilities.

Active Travel Commissioner for Greater Manchester, Dame Sarah Storey, said: “It's good to see the funding approval for the upgrade to safety cameras. I've placed a big emphasis on road danger reduction in my recent Refreshed Mission for Greater Manchester's Active Travel Network – with a big part of this being for the region to adopt Vision Zero.
“With speeding being a leading cause of injury and death in collisions, utilising safety cameras like these are one of the tools we have to enforce the speed limits and keep people on all modes safe. The value of preventing these deaths and serious injuries to the Greater Manchester economy is estimated to be in the region of £4.5 billion by 2040.
“Connecting the network and delivering longer routes was another key focus in my priorities and so the funding approval for the completion of the Chorlton Cycleway is great progress. The Bee Network's success lies in having a mix of modal options for different journey types and users, so having longer routes for cycling that are connected through safe junctions and delivered to a consistent and high specification, is key and is also one of the initial statements from the launch of the region’s active travel ambitions in 2017."

Local accountability at centre of new bus network as operators appointed to run first franchised services outside of London for almost 40 years

news.tfgm.com

 

[Xenophon PCDGS]

Well, it all looks "sweetness and light" and no-one in Greater Manchester will have any future bus travel problems because it is a well known fact (in certain circles) that those employed by local authorities really knows what the travelling public like rather than the managing owners of bus fleets.

 

[WatcherZero]

Well thats alright then as the managing owners of bus fleets will continue to be the managing owners of bus fleets.

 

[Xenophon PCDGS]

Well thats alright then as the managing owners of bus fleets will continue to be the managing owners of bus fleets.

Yes, but I am really sure that Damascene Moments would all have descended upon them when they knew that their tenders had been successful. A pity, though, as this will mean that members of bus transport websites will have nothing to moan about or make political scoring points on those favoured areas within Greater Manchester.

 

[winston270twm]

According to that trading update Rotala has sold their Bolton depot to GMCA and their existing fleet to Go-Ahead to operate their franchise contracts netting them £30.15m, half has been used to pay down their debt and half will be retained as cash, this reduces their forecast mortgage repayments by £8m. £13m will be invested in buying new buses to operate in Greater Manchester and other startup costs which will be borrowed rather than using their fresh cash.

In addition to the above, Diamond NW will be also be building a new larger purpose-built depot near to their current Eccles depot to both replace that & operate the new smaller franchises from:

Greater Manchester Franchising Awards​

22 December 2022

North West
Following today’s announcement, Diamond Bus North West are pleased to announce that it has been selected to operate 7 of the 11 franchises issued by the Greater Manchester Combined Authority (GMCA) in the north western part of Greater Manchester.

Following three years of dedicated investment in our Bolton depot and Greater Manchester fleet, we are disappointed that we haven’t won a large franchise opportunity in this first tranche of the franchising scheme. Having recently won Bolton Large Business of the Year and numerous awards at the 2022 UK Bus Awards, we had hoped this would have been the beginning of our journey to a successful operating partnership as a large franchise operator in the region. We feel our bid provided a strong, viable proposal, which included the provision of new modern and environmentally friendly vehicles for the people of Greater Manchester. Although we are disappointed, we respect the decision of TfGM/GMCA and will work closely with them to ensure a smooth transition to the new franchisee who will commence operation in September 2023.

Under the Franchise framework, some of our employees will be subject to a TUPE process, but we are hopeful that we can retain as many as practically possible to continue our small franchise work which will operate from our depot based in Eccles. Additionally it is anticipated that those in regional group roles will be retained to support the smaller North West and Preston Bus businesses.

The depot in Eccles is to be relocated to a brand new, purpose built state of the art site nearby. The new depot will have capacity for over 100 vehicles. Due to the length of time in purchasing a site, obtaining planning permission and constructing the facility, additional parking, office and workshop capacity has been secured in the vicinity of our current site on an interim basis to enable the successful operation of the new franchises from September 2023. Furthermore, over 60 brand new double and single deck vehicles will be delivered over the summer, for use on the new franchises.

Rotala has agreed in principle to sell the Bolton bus depot to the GMCA. In the interim period from completion of sale to GMCA and the commencement of the new successful franchise winner, Diamond will continue to operate from the Bolton depot in order to carry out all the bus services currently run from that depot.

Diamond Bus North West intends, in September 2023 to dispose of the majority of the bus fleet currently based at the Bolton depot by placing these vehicles into the notional asset pool, from which GMCA will allocate vehicles to the new franchises. The incoming franchise operator will then purchase the vehicles allocated by the GMCA from Diamond Bus North West .

Diamond North West has been successful in the pre-qualification stages for participation in two further franchise rounds in the GMCA region. The second tranche of franchise awards is expected to be released later in 2023, and we look forward to a positive outcome from these.

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DBNW Greater Manchester Franchising Awards | Diamond Bus

www.diamondbuses.com

 

[TheGrandWazoo]

Well thats alright then as the managing owners of bus fleets will continue to be the managing owners of bus fleets.

Except their role will simply to execute the plans rather than define them - a totally different role