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If Mobico is getting hammered due to UK policy then it shows how little is understood by the market about where Mobico derives its income.

Lara - who increased and how much? thanks

The transport authority recognises that, during a transition to a Franchising Model (2026-2027), the operator (National Express), [I'm paraphrasing] .."may be less likely to want to continue to subsidise certain routes and that additional funding will be needed to support that until franchising is in place and that has been priced into the model".

Having read the reports, it looks an odds on certainty that the authority will go for franchising. Hopefully they will buy the depots and assets from Mobico, that would be a real winner for us. Release cash, remove a lot of risk and uncertainty, transferring the revenue risk to the authority and make it easier and more certain of a profit stream.

Gengjis - thanks for posting. I had a look at the consultation docs, looks like they’ve already decided and this is just a box ticking excessive. The interesting arguments made for franchising include and focus on that the private operators that currently provide the service (ie 95% National Express) are able to do what they like, charge what they want and retain all the profits from tickets that deprives the region of investment! Good luck with that.

They are going to build depots, buy buses and set up ticketing and management,

Franchising Commencing 2027 - 2029.

Riflemans - Yes and so could £1.20. Depends on what you are hoping for. Take your pick.

No doubt we will follow

On a plus note for the School Bus sale, the US has cut again

Hi Carrington - I don't add DYOR etc as I don't post to advise or lead whether I'm buying or selling. There is only one reason I can think of to post when you've bought and sold. It has no other value. These boards can sway sentiment in low volume trading, but agree that they don't make much of a difference in the end.

Carrington - you sold half your holding at around 60p and some at 80p. You try and get people to follow your actions which helps achieve your goal of buying back in again lower after missing out on a further 15% rise.

For balance: Uk is a relatively small percentage of global revenue. The wage rises last year were largely covered off with to fair increases and UK Bus and Coach are running at a small profit (partly due to some income previously recorded as revenue now being recorded as 'Grant Income' going straight to the bottom line), even before the July fair increases and the new price agreement for Jan 25 which will include for NI and basic wage increases too.

So UK is largely not an issue in regards to the reasons you gave. The one you didn't mention may be an issue in its timing and scale and that is the German Rail subsid.

2 years ago my view was sell UK and Germany (or move Germany under ALSA as part of Cosmens interest in European Rail), list US School Bus and WeDrveU in the states and sell ALSA to Cosmens. If that had been the plan there would have been a lot of value created. I don't understand the boards determination to hang on to the UK business it doesn't make sense in terms of their stated 'Evolve' strategy. Perhaps it's something now being considered and made possible by the name change. UK can still be sold, FG could be a ready made buyer.

JG - I completely understand and if I was break even and nervous then cutting the exposure may be sensible. Unfortunately Im not break even and have a large holding but can see the potential gains still in the long run, which is what I signed up for in the first place. Most investors, me included, didn't foresee the barrage of problems coming MCG's way. With hindsight some of it should have been more obvious but a lot was also out of anyones control. Its a very personal choice at the end of the day. But as ChangeofPace says Id rather be here than a lot of other options as there is a recovery in play but timing is still a little uncertain.

Genghis - agreed, I don't think its a quick fix either which is why I think likely sometime 2025. They cant defer and delay indefinitely otherwise they will be breach of their duty under the contract terms as posted below. Meanwhile ALSA and US will forge ahead and UK will just plod along. Germany is the last piece of the jigsaw.

JG - this is a timing issue and any provision will

Likely be reversed when the PTA discussions are resolved. This is always a story of 2025 which I’m thinking will be a big reversal of fortunes over the last 4 years. If you always had another 2 year timeframe in mind as I do then hold.

JG, re: Is there anything to stop MCG just pulling the German contract if the business isn't viable as result of these discussions ( they hinted at a viable business solution in the recent update)?

Thats an interesting point. I assume there are cross company guarantees to the German Rail Operating Subsiduary and therefore probably cant walk away and theres reputational damage to consider. However if the PTA is considered to have not delivered its legal responsibilities under the contract then I would assume eventually and after much cost and time it could get out.

With regard to the Adjusted Operating Profit, that shouldn't be effected as much as the statutory result if its deemed an exceptional adjustment. As Poker says there will be a cash outflow impact as well.

I think overall there will be a resolution but whether it will be in time for FY 24 is a big unknown and my guess is that its not that likely given that the PTA discussion / agreements will undoubtably impact many other contracts across the German Rail network and therefore will be very big numbers even for the German Treasury. They will not be keen to hand out billions of Euros unless they absolutely have to.

To Quote the CFO, Helen says (in HY report):

"Our German Rail management team is working closely with the German Rail PTAs to address these structural

issues facing the industry, and to protect Mobico’s interests, within the terms of the current contracts. Whilst it is

still too early to tell how those critical discussions might conclude, or when, it remains clear that all parties are

motivated to arrive at a sustainable and commercially viable conclusion.

The outcome will have a critical impact upon delivery of FY 24. "

Timing is going to everything here!

JG - Im not concerned about anything other than German Rail. ALSA and US will be fine. Im not concerned about UK so much either as the recent fare increases and renegotiation for Bus will pick up the inflationary budget effects. Also UK bus is not reflecting the full picture in the revenue numbers as some of the income is now being recorded as Grant income which will go straight to the bottom line.

In simple terms though, unless PTA resolves in MCG's favour to provide a return that is equitable then yes there will likely be a fairly sizeable provision against the contract due to revenues declining 20% at Q3 (10% at HY). They have spelt out what the impact could be per 5% decline in revenues in the accounts. So unless this is offset by the PTA negotiations, expect a hit.

If the PTA does conclude satisfactorily then some of the historic provisions and these expected provisions would be reversed. Its all in the timing of the discussions

Genghis and Poker - spot on.

However the impact should be somewhat lower than the Currys example of you follow it through. Mobico has 47,000 worldwide employees. UK delivers around 18% of worldwide revenue so if we roughly take 20% of worldwide workforce then we have c. 10,000 employees. Less than half of Currys. The min wage increase will have less effect as most will be above min wage as stated by the company, so its the impact on NI mostly.

Currys impact is £21m from NI so we might expect c. £10m hit for NI. Then theres Rates and other impacts. Lets say a total of £15m. From that the timing of West Midlands Bus pricing negotiation is very helpful for a change and will no doubt price much of that in and coach is fairly elastic in its ability to recover costs. My guess is the impact on contracts that cannot be immediately repriced could be around £5m - £8m.

By far the biggest risk is German Rail. Its all there in the accounts. Im not referring to provisions already taken due to power and driver shortages. Look at the expectations around reduction in passenger numbers !! there are references around the various reports but look at Q3 Revenue statement and at end of Page 199 and start of Page 200 in the Annual Report Dec 23. This is what I believe the Shorts are betting on.

If the German PTA isnt resolved by March results then a provision is highly likely which will impact what should be a positive net result and turn it negative. It is likely to be reversed with a large positive gain in 25 - 26 (if PTA discussions conclude as per the contract intentions) resulting in what should look like a bumper gain (German Rail impairment is not Goodwill so it will be recaptured).

Hope my ramblings make sense. But just as the ALSA and US impairment came as a surprise to some it was all there to see the risks in the accounts.

Thanks. Looks like we are up to 24 hours ahead of ourselves. Perhaps something will come from the company in the morning.

With regards NASB; the board sounded confident that the would be further news to be announced (see Q3 update). I assume that progress was slow up to the US Election results and that the result was a positive for NASB sale prospects. We could really do with an update pre-year end.

German rail is I suspect going to take much longer. It is important that there is a positive resolution before results otherwise there will no doubt be further negative provisions to be made. A German rail discussion wont be taken in isolation with MCG as there are consequences across the rail network. It could take a long time to resolve.

Thanks JG. Is it me or should we not expect MCG to get the PR machine out and communicate to the market?

I don't see Mobico listed on FTSE 250 Index today. Assuming list is up to date.