Member Info for wealthtrasfer

Historically between 12th and 20th, it will likely be 14th to 24th ish so next 2-3 weeks. Not long to confirm the momentum hopefully.

Sweepstake on who reduces their Short next - Im going for GLG tomorrow by 0.1

(if they do then I will believe its orchestrated!)

JG - yes all positive. Also adding to Uk performance will be the July fare increases, NXTS turn around and statement that H2 would be "more positive".

Plus working cordially with German Rail to look at costs which may result in a positive change to provisions.

and much higher ROCE on new projects.

I don't know if you noticed that the goodwill headroom in US also increased by £300+m (ALSA and UK unchanged)

All pretty positive.

I reiterate that I think Q3 guidance for FY will be towards high end of forecast and wouldn't be surprised if FY 2024 report exceeded it at around £220m. But we have been there before and it didn't turn out that way, so its just what Im hoping for based on the HY report and the fact I think Helen is playing her cards close and is someone who likes to outperform.

CofP - the net debt increase does include an accretive one off cost for the initial payment of Grupo (Canary Bus).

"The acquired business has contributed £23.9m of revenue and £3.3m adjusted operating profit to the Group’s result for the period between acquisition and the balance sheet date."

Change of Pace - about the Canary Bus aquisition cost?

Not sure how I didn't see this before (maybe its been posted here and I missed it), as we have discussed a few times. Canary bus acquisition cost (£):

Net assets acquired 15.4

Goodwill 46.0

Total consideration £61.4m

Represented by:

Cash consideration 38.6

Deferred consideration 22.8

The cash consideration represents around half of the increase in Net Debt at HY.

Lara - I wish I knew the answer to those questions as I would have timed my entry much better. I’m going with Poker’s views that the shorts just read the finances, covid recovery timing, macros etc… better than I did. They are seeing the same turn of the tide starting with half year but more importantly the new cfo and the confidence and ideas she is bringing. Macros are the common effect on the short and long positions ultimately,

Systematicas turn to reduce... its almost as if its orchestrated

May well drip down but positive news flow over next 7 months likely to create sustained recovery. I'm now hoping for a good Q3 update within next 8 weeks along the lines of debt management improving, cash recovery improving, profit to be at high end of forcecast. US sale progressing as expected.

Well we got b) + on the yesterdays possible outcomes. Incredible what difference a few months makes. Helen seems to be a great stabilising asset. Very pleased to hear that her appointment is intended to be longer term and not just as interim CFO.

The big take outs are Helens initiatives on cash management and organic debt reduction and the clarity on the Hybrid remaining and accepting the coupon increase, which is already factored in. This coupled with the stabilised NASB contracts, takes away most of the short term debt and cash concerns we had. Needless to say the absolute power house of ALSA is really making this all possible, full credit to the ALSA management team.

This presentation and update brings back the hope and opportunity I invested for initially and I can now see a clearer path back to where things should be. In fact I am now very confident continuing to hold for the next couple of years which was always the plan but which was sorely tested over the last year or so.

For what its worth I also have more confidence in Garat (Poker, I said Id put my hands up if he pulled the rabbit out the hat and whilst he hasnt yet done that, he has managed to turn up from the bottom of the slide) following the HY but still think that they could have communicated much better over the last year to the private shareholder group in order to help calm nerves.

All in all a solid turn around and I expect we will see a significant return over the next 18-24 months with lots of opportunities for positive news flow int he next 6-9 months.

Barney - expecting a) and hoping for b)

Agreed JG - 'No more excuses'. I don't think we need or can expect amazing results or announcements of imminent sale of school bus. Just predictable and stable revenues, costs and recovery of margins and no more provisions, impairments or black holes. If we can stablise this year without any more so called 'exceptional items', and deliver an albeit small profit then 2025 will be the year when pricing can start to recover and margins improve. A sale of school bus will then be the accelerant of a more rapid recovery. We need stability first to really benefit from the sale of NASB.

Poker - no I'm talking about Garat in particular as CEO. I appreciate and anticipate that what you will say is that he is somewhat guided by others, but he is paid to lead. Garat has decided or gone along with the plan to trade out of debt and to resist an asset sale which was contrary to widely held views and peer actions. A gamble. There is no use having a puppet CEO if that is what he is? Also I would still ask why he would agree to spend £70m + [best estimate, as we still don't know but will next week!] on Grupo 1844 at such a time of sensitivity around debt? I don't care how good a future add on it is, it was the wrong move at the wrong time and was in no way supportive of the continuous share slide. The messages are too mixed. Garat states that he is 'primarily focused on debt reduction' but brings back a dividend, spends cash on aquisitions and refuses to sell assets until pretty much forced to do so. I don't agree with the premise that he has waited for a more opportune moment to sell either. I hope and wish to be proved wrong and he achieves a sale of school bus at improved metrics over First Group did by going early. First Group also took years to sell the US arm not months. Im will be more than happy to say Im wrong if he pulls the rabbit out the hat.

John, yes the market is pricing it as it stands today with the risk of further trading deterioration, which is a big risk, and the probability then that further refinancing of debt would be virtually impossible. There is that risk no doubt. This is a fairly high risk, high reward situation now. A total lack of confidence in management isn't helping. If trading stabilises and there is some recovery on German contract provisions then this will no doubt turn the risk in our favour.

JG - hopefully no delays this time, they've given themselves an extra 4 weeks this year for new CFO to get to grips!

Interesting investor note from AozoraStep Capital from 'mid last year, one that Im sure you will relate to regarding IR and I agree with re: management lack of action:

"....Usually, I try to stay away from activism, as management should be able to

judge a situation better than me. However, when the valuation of a company declines continuously

without the management trying to intervene, either with a trading update or a strategic change, I begin

to reach out to show my ideas and gather the interest from management. With National Express/Mobico

I have suggested to seek a buyer for their US business, as all their competitors have done so. Given the

bad macroeconomic environment we are in, this sale might only achieve $1bn instead of $2bn in normal

times. However, the proceeds could be invested in UK Gilts and aligned with their debt maturities,

reducing their interest expense by £50-60mio annually. At the current valuation, Mobico could return 10%

annually to shareholders instead. Unfortunately, the head of investor relations, John Dean, ignored me

and then wouldn’t arrange a call with management or himself. I understand that it might be hard to sell

the US business at a time when the profitability is way below 2019 profitability. Nonetheless, it could be

communicated to markets that this would at least be an option to repay the hybrid bond in 2026."

John, I just dont see it limping to nothing. If either US or ALSA get sold then there should be virtually £0 debt and a good business either way remaining. If ALSA sells then there will be funds to invest in School Bus, coupled with WeDriveU it has significant value still well in excess of current SP. UK also has a value, probably around current market cap with debt gone.

The worst situation is a low ball offer from Cosmens to asset strip or a placing (which I dont think will come unless its Cosmens back door into taking ownership). Fitch still see investment grade and non breach of covenants even with 11% coupon on Hybrid. It will all depend on EBIT next year, but thats a risky strategy.

This tells you want you want to know:

https://www.fitchratings.com/research/corporate-finance/fitch-downgrades-mobico-to-bbb-outlook-stable-06-06-2024

Management tossed a coin and lost when they decided to ride out the storm and grow their way out of debt. Everyone else took the right approach and sold assets. Most commentators including Fitch stated that this was possible but not very likely to succeed. Now it appears that unless there is interest at around $1bn which Im also sceptical of, we are stuck. We are left with potential UK sale to the likes of First Group or wait for Cosmens to 'save the day' by taking ALSA private or making an offer for the whole at a bargain price.

To get School Bus sold may take the sale of WeDriveU to sweeten the prospects, just as First Group did with their exit!

Management have been caught with their pants down and have put all shareholders in a precarious position. Lets hope their strategy to wait until now to sell is actually achievable at the right price.

Smokey - understandable getting frustrated. This your post from June which may also happen:

"I'm not even going to talk about the RNS, better to stay positive than vent anger, doesn't get you anywhere.

Seems to be holding 50p well. We just need a good HY report in August and this will turn fast, before you know it we will see pound instead of pence. Shorters will close positions and will get re rated by market."

Based on rough numbers and looking at First Bus sale, allowing for a proportionate revenue split on the valuation because they sold Transit as well as School Bus. If Mobico achieves the sale valuation based on School Bus revenue multiple then the value should be around $1bn or slightly less. But based on EBITDA it would be lower still. So my best 'guess' is around $800m - $900m. I assume expected interest rate reductions could improve it though.