Member Info for wealthtrasfer

Basic message of why US School Bus is the one to be sold is that it requires relatively heavy investment and Mobico are not in a position to do that and therefore gain from the opportunities in that market. Others with funds would have a better opportunity to deliver the return to previous results.

£30m bid error is most likely why CFO fallen on sword

Looks like they are waiting until School Bus year 2024 starts in the autumn and then seeking interest/bids with a view to conclude by end of the year. Sounds like they perhaps have interest but that they want to see the actual numbers applied before committing?

SP reflecting short term holders expecting a quick boost from NA sale, now realising that’s very unlikely.

Fish - Id rather they didn't sell US at all and just concentrated on getting out of the UK

Francisco Iglesias Campos for CEO :)

Fish - I think they have realised that as of now they arent going to get the high valuations hoped and that the current conditions (see below) are not good enough so will keep it there and wait for progress on margins:

For an asset to be classified as held-for-sale it needs to meet the following criteria:

Management commits to a plan to sell the asset (e.g., identifying the asset, setting an expected date of completion, etc.) The asset is available for sale in its present condition.

I think forecast 2024 operating profits are disappointing but perhaps overly cautious as they are fully aware they dontn want to miss them again and want to over deliver.

Positive: Great to see ROCE values on new contract wins -

43 new contracts won, worth over £1bn in total contract value and c.£126m in annualised revenue, with

average ROCE of 23%

Buried at the end of report and reflective of the slow recovery (as shown in the accounts) and therefore lack of convincing bids:

Potential disposal of North America School Bus business -

During the year the Group announced that it would start a process for the potential disposal of the North America

School Bus business. The Directors have considered whether this would meet the criteria for disclosing as held for

sale at the 31 December 2023 and at the date of these accounts. At the date of issue of these Financial

Statements the Directors believe that the sale plan is not progressed sufficiently for the Held for Sale criteria to

have been met.

Gallat - why and you and flip-flop here then. Surely you’d be better devoting your time and energy elsewhere?

JG- the only one of the metrics that could wipeout the headroom and more is the profit margin, which for 2023 has dropped more than the trigger point. However we don’t know whether that in itself effects the calculations as they will no doubt consider reasonable margins across the remaining life of the investment. And impairment only covers investments ie assets that were purchased such as Durham school bus etc….

We would need to know the workings of the calculations to know for sure. I don’t know if they are made public on request or not, but seems like an important metric. I assume analysts will have that information but Pi’s don’t. It’s one to be aware of and consider for the future in MCG and other stocks where long term assets are utilised.

As Hindy says we are now locked in and without the detail of how it’s calculated we can’t make an informed decision anyways. Just keeping fingers crossed.

JG - the numbers you quote are the carrying value not including headroom.

The calculation is stated as being highly sensitive to changes in the pre-tax discount rate, long term growth rate and trading assumptions

around profit margin. Its the last part "trading assumptions" that will be key here as I think that the pre-tax discount rate is the same or similar as H1 update, long term growth rate is slightly improved but profit margin is obviously way off. That may be looked at over the remaining years rather than reflecting 2023 margin and using that as a forward view of recovery but to what extent I don't know.

Although improvements to headroom are not captured in the carrying value the more Ive tried to understand it, there does appear to be some limited circumstances where write down of the goodwill has occurred and the company can demonstrate a 'permanent' positive change has occurred there good be a limited recapture to previous written down values. So this could in theory be applied to Alsa if there was a recognised long term value creation. The more I look at it the more I realise its above my pay grade. If anyone on here is a specialist accountant with knowledge of the calculations I would be interested to try and understand it better?

JG - I think because 22 was still a recovery year and although impairment was in Alsa that was actually doing quite well, it wasn’t such an issue. 23 is different as an impairment of US would come when looking to get the best price for the Us asset that might be impaired. It’s only the margin that I’m thinking could be an issue. The discount rate shouldn’t be an issue but we don’t have access to the exact calculations used so it’s guess work.

it doesn’t change my view of the potential recovery this year and I’m holding for the next two years anyway.

It’s just my top wish list of things not to happen in the results as it’s the main thing unknown and will influence investors decisions on whether to now come in with the worst behind us. Anyway it’s all speculation and Monday will spill the goods.

There’s going to be a lot to take in Monday morning and I would say to anyone holding longer than a couple of months to consider the detail and don’t react too soon if headlines don’t look good. We are close to H2 update which should be a better picture.

JoseyWales - the likely hood of a US impairment is the great unknown and is possible due to the significantly reduced margins in that unit. That would be a real problem. Everything crossed that doesn't come about. It seems like a close call to me.

"expecting the worst..."

Anyone thats been here for a while is expecting the worst, as that has been the experience over the last 2-3 years - covid aside. The market is also fearing the worst, based on the experience, which is why we are back at the pandemic fear lows.

I'm expecting nothing much on NA, a small loss for 2023, revenue growth to £3.15b and forward guidance of £250m - £300m adjusted profits for 2024 with a statutory profit of about £75m - £100m. That will be a good result for me and put us back on an upward path. In 12 months if they can deliver that and they should be able to if nothing much changes and the price increases fall through to the bottom line without further inflationary pressures on costs then even with the debt repayments we should return to business as usual. With the exception of a large external event beyond the boards control, I think this is a path that can and will be achieved.

Getting ready for Monday. Bottle of whisky still drown sorrows or champagne ? Probably a coffee that’s a bit 😕

A light reporting day and a releasing on a Monday would indicate that they at least aren't trying to bury the report?

It is what GLG think or want you to think. Cosmens and others think the opposite. Who is right?

HV - feels like a coin toss. My position feels pretty reckless at this stage, which is the opposite of what was intended:

For me and happy to hold for 12 months then I'd go with a '3' on the reckless scale

if you're hoping to get a fast profit then an '8'

Good Luck :)

Paddy - as we've discussed here before: that £80m finance costs are now partially offset with newly found cost savings of c. £50m p.a. So the net impact of the increased finance cost is lower than historic finance costs