Member Info for rob295

Bladey - you are forgetting about the MASSIVE sell off to the fifth highest close since late April ;)

"It’s all in the next 6 months to the 9 month year end that’s going to matter"

Q1 is definitely going to be a bigger cash outflow than usual (and I think there were a few contract starts). Equally I would assume German cash will still outflow in Q1 as the deal was unresolved by quarter end, which keeps up the cash burn. And then Q1 is possibly the weakest quarter of the year, and so that will limit cash generation from any profitable operations. So nothing massively positive on the cash/debt front. But there should be more clarity (Germany, WeDriveU, NX coach), and plenty of useful information for proper investors to benefit from - and that should help with projections for where it should sit by year end.

Paco seems to be hinting that the summer is going well - and so H1 in November with two good quarters will be interesting - and that's hopefully the first big jump back up. That will also see a higher than normal cash inflow due to the better than usual quarters etc, and moving on from some of the higher cash burn items in Q1.

JO - there will likely be a new trading range after the results. It’s definitely safest to cash in now, as that range could be higher or lower - but those chasing fundamentals will undoubtedly hold. Personally I’m after the marlin, not the sardines

Who knew hitting the top of the trading range could be so disastrous. At least this will keep us entertained while we wait for the results.

“ I see a JO exit before the end of the day and why not if there is profit to be locked in.”

I’ve seen jukeboxes that less frequently change their tune ;)

A bit of information on the tech side of things. Sounds to me like there is still a lot of modernising to do there:

https://www.bytes.co.uk/application/files/3217/8298/5555/Modernising_Infrastructure_at_Pace_National_Express_Transforms_Legacy_Infrastructure_with_Bytes_3.pdf

Conrad - while we are all in a good mood, it is also worth remembering that the Middle East could be important if they can be a preferred provider (as they seem to be on the bus front at least)

He’s not the messiah, he’s a very naughty boy

Sorry for two posts. This website is pretty cranky, so I thought the first had failed

In my head either there is still weak confidence (so 15-25p), or a return of confidence 50-60p+. It’s hard to see in the middle (confidence and yet no confidence). Either you think the debt is a problem or not

I think the difficulty on fair value from the market’s perspective is that there is unlikely to be much middle ground. If the market isn’t confident it’s 15-25p. If it is confident then it’s surely a re-rate back towards 60p+. But I can’t see a small step - either nothing changes (though maybe another trip to 30p and back), or a giant leap. It does feel like it wants to believe if given the opportunity though

Correct me if I'm wrong, but is the biggest shift not in the first 2 months of the time span used, not the last two months?

Sorry Bfd, but if they hit $220m instead of $250m that will be an absolute disaster - yes there would be massive profits from a stock purchase at 30p, but the real key is that shipments flow with ocd like precision, irrespective of shipping costs or availability. This should run like a Swiss watch, not merely tell the time

I try and get my head around the ideas on the shorts but none feel very convincing vs shorts just targeting something with high debt and negative trend (it feels a bit hopeful to assume some deeper strategy). I have spoken to people about Mobico and they won’t even go near it, and having been burned by debt before I get that sentiment, although there are always ones that rise again

And I saw myself how similar 2019 was looking back a year or so ago - and it’s not a massive shift in debt needed for things to look better, it just needs to look more sensible

@JamesOxford - are saying is that they would go short with 100 shares, and long with 100 shares to 'counter-balance'? I'm aware of using options to trade volatility (usually not with a short position, but just with options on each side ahead of a possible soar or sink event, but this one I also don't understand. If the price went to say 10p wouldn't I make 14p on the short and lose 14p on the long, if it went to say 34p wouldn't I make 10p on the long and lose 10p on the short?

Equally, on the other idea - if I went short on the equity and long on the debt - if the company went out of business I'd lose the debt and make it back on the equity short. But if the company did really well I would probably go x2 on the debt, and probably get hit by a bigger rise on the short (equity will do a larger upward move than debt surely). So heads I go evens, tails I get splattered? The sensible thing would be short on the debt, long the equity, surely?

"I’m hoping for an overall £100m non cash bottom line release"

I think the ideal - and most likely - outcome is that most of the provision remains

I'm not 100% on the detail of this, but can explain with an example. In 2025 the adjusted operating profit was £6.6m. Then let's say the contract does mean +£25m in 2026 from the modified contract (just as an example). If the provision remains (minus any contribution in 2031 and 2032) then this means that you boost adjusted operating profit by £25m + any change in performance (and not only does Adjusted OP go up, but the Adjusted EBITDA does too). If instead the provision were already to be reduced by £25m then you would surely have an adjusted operating profit still of £6.6m + any change in performance (and so no +£25m on the Adjusted OP or EBITDA). And this is key as the Adjusted EBITDA is used in the covenant tests - and so that is +/- £25m translated into covenant headroom. The impact on cashflow is identical, but you get two different covenant ratios

I'm no accountant, but I think this treatment would be valid given that the contract overall remains onerous - but the specifics in the rules over how they handle this will dictate quite a lot - and it might result in quite a bit more funny accounting. Maybe someone who is an accountant can add detail

On German Rail they have been clear that there is no backdating, except to the start of 2026. But €200m would be +£24.6m over 7 years, so its very feasible that the contract will rise by that amount, and for improvements in earnings expected to be achieved by Mobico make up the rest of the difference to the £50m per annum hole that existed in 2025 (ie 50:50 better performance and uplift by the PTAs). So the figure passes the sniff test imo

As to why the debt value is so low - it's the exact same reason the share price is low. If the pudding comes out the oven well done they will adjust accordingly, but they don't give credit for the cooking process appearing to be on track - not in situations like these. If you've seen a big firm in action, it's often not a very impressive operation (there are exceptions who are very good). I am slightly surprised though that the company doesn't just go buy some of it in the open market, as financially you would be buying at a yield above what you are paying, and would get a good return on some of the cash in the bank - I don't know if they feel they can't do that, or just don't want to

"Golongtrim" - The actual figures are a bit of an simplification - but my logic is that there was a cash outflow of -£50m a year on German rail in 2025 (£56.1m exceptional cash and £6.6m adjusted operating profit). There will be losses when both contracts are running but they probably can't be too much bigger than £10m for the recovery in the last two years to work). So we are probably looking at a delta of +£40m over the run of both contracts existing (ie until 2030) - or a loss of -£10m annually until 2030 (averaged)

That may come with a smaller rise, and underlying improvements (and probably will), but in terms of run rate over the next few years we can use £40m. In 2031 there will be a large delta (bigger than stated), but most of that won't be sustainable, as it is an unusual contract, so shouldn't really feed into run rate (instead it should reflect a normal contract profitability)

JO - run rate is normally the normal rate in a full year. So run-rate of £100m and £75m in 2026 would mean £75m in 2025 + £25m in 2027, not £100m + £75m? Maybe it's just unclear what you are trying to say, but the £175m is what you seem to imply from those figures

It's a bit of a simplification of things like German Rail which may have delayed benefits rather than quite such a large shift, but ultimately, I think this covers all the key cash movements :

2025 outflow excluding working capital movements, financial movements, foreign exchange, acquisitions : -£110m (summed from accounts and rounded)

Cost savings achieved in 2026: +£75m (implied from presentation)

Reduction in capex spend vs 2025: +£50m (implied from presentation, accounts)

WeDriveU contract exits: +£15m (ballpark estimate)

German rail agreement: +£40m (assuming reduction in outflow through to 2030, but then inflow through to 2032)

TOTAL = +£180m

Cash inflow in 2026: +£70m (based on 2025 performance except as above, run rate figure ignoring restructuring costs etc)

Increase in hybrids: -£20m (rounded down a bit for ease of figures) - in theory paid for by cost savings

Remainder of cost savings: +£25m (implied from presentation)

Cash inflow in 2027: +£75m (based on 2025 performance except as above)

Loss making German rail contract ends: +£20m (uplift as German rail becomes cash generating)

Cash inflow in 2031: +£95m (based on 2025 performance except as above)

Then any contract movements in terms of core business in 2025 will move that up or down

Apparently ALSA is the 44th most reputable company in Spain, and highest in transport sector: (followed by IAG, Metro de Madrid & Renfe)

https://www.hosteltur.com/177102_las-empresas-turisticas-que-figuran-entre-las-200-organizaciones-mas-reputadas-de-espana.html