Member Info for wealthtrasfer

My scrap book valuation:

UK/Germany = £300m

We-Drive- U = £400m

US School Bus = £800m - £1.2b

ALSA = £1b - £1.2b

= Conservative £2.5b to £3b

- debt of £1.5b (inc Hybrid)

= Value £1b - £1.5b

£2.00 to £3.00 per share

Other analysts have suggested more (£3+) if a successful US School Bus sale materialises around its upper end valuation

I think we are seeing the outcome of a longer term plan to rebrand the operating units, prepare them for sale and break up the group. Ive said this many times - Cosmens only want ALSA and they are in control. The group is being readied to sell off all the pieces, which is probably the right thing to do.

John, as Paddy rightly said theres no need for immediate cash raise. If you refer to 'Fitch' Ratings they also state the same.

NA School is worth much more than £300m. They wouldn't sell. Much more likely to turn their attention to selling off UK and Germany to raise £300m (which would be a better bet in my view)

Lara - thanks for info on NEX LLC. Another rebrand away from National Express and consolidation into meaningful operating units. Its either to get ready to invest and grow once School Bus has gone, which makes sense. Also fees up National Express brand globally leaving the UK also a distinct and unique operating business. Hopefully putting the latter up for sale.

This information and the school bus contract wins and others in Alsa are often in the trade press and the operating units own websites but not on Mobico. Its as if there is no head office and global presence. We are usually last to know whats going on unless we do research. This is an example of poor / lazy management. They are not going to announce everything to the market but at least put it on our own Mobico website to its a source of useful information ratehr than a dated marketing brochure.

Q1 update due this week or next, so I assume 2023 report will have to come at same time or before? it would be pretty strange t have 2024 Q1 before 2023 year end. Last couple of years that came on a Tuesday/Wednesday.

Agreed JG. There have just been too many missteps to put it all down to macros and circumstances beyond their control. There are many things they could have done and could be doing to help mitigate. Only way Garat stays is if Cosmens approve.

I agree with the school bus sale being tough going. I also think if there was 'real' progress and we had acceptable bids then the market tends to react ahead of news and we've seen the opposite. So its either locked tight or not good news, I fear the latter given the last two years. I would wait for news now and reassess as there will be a lot of opportunity to get in, if good news is forthcoming. A strong sale of US School bus should see us rising towards £2 at least but it will take a while so no rush. You might miss out on 30p but still gain a £1+

Or 5. Bid incoming !!!

Why delay results as the board have stated that the German Rail contract provisions will not be ready in time for results. So why wait and allow further damage to the company's value? the only scenarios I can think of are:

1. They are close to being able to positively update on NA School Bus

2. Finishing off Q1 update for a positive spin

or negatively:

3. The auditors are giving them hell and they don't want to publish on their worst case basis

4. There has been US impairment as well and they daren't publish without either 1 or 2 being ready or they'll be reaching for the exit door

Theres nothing else to wait for. What the hell is holding this up while we get battered every day?

Paddy £175m is adjusted profit. My guess is without impairment we will be -£50m to - £25m pbt. This year with low exceptional items and adjusted profits of c. £250m then maybe we could be back at 2019 levels. Shows how little there can be done but wait and see if the expected recovery materialises.

One would hope that there aren't any more skeletons given the bard said only a couple of weeks ago "Given the remaining judgemental items to be finalised Adjusted1 EBIT will now be in the range of £160m - £175m although the Group's expectation is that it should be at the upper end of that range"

However such is the lack of trust and confidence that we are all thinking that it could be possible.

Fingers crossed its as stated and no impairment, as non cash impacting it really isn't going to look good.

JG - I don’t think it is ever flagged. Just tucked away at the end. It should be made clearer

Lara - that refers to debt rather than the impairment which refers to goodwill.

JG-that is the right part and as you say US improved a bit. It’s a snap shot in time of what the business expects to recover from its investments over the lifetime of those assets. When Alsa was impaired last year, the company looks at a formula to say what will our purchased assets recover based on what we know today about the future recoverable amounts ie what is the inflation and interest rate expectations and how that will play out on costs and profits. If they think that future values will be reduced because of interest rates for example then the future value (goodwill) is impaired to reflect that reduced expectation. When things improve and interest rate or inflation and costs expectations go the other way then there is a positive future impairment where an enhanced value is recognised the increase isn’t recaptured in goodwill in the balance sheet and is stored basically as a footnote in the accounts as headroom. That headroom is the increased expected future recoverable amount expected from the goodwill and therefore when you are considering the balance sheet value of assets etc you should consider it.

An important thing to look at when results are published (if no impairment) is to the impairment section down towards the end of the results. Look to see if there’s been a big increase in the overhead value of goodwill. Ie a positive upgrade to the goodwill (future expected returns) of the business because it isn’t captured back into the goodwill in the books and is only recorded as headroom. It’s a very important number as it indicates the actual future value of the companies current book value as opposed to the balance sheet which only records the amount of value recoverable from the impaired investments. This can be a substantial number and when there is a big £m headroom it suggests the company is worth much more than the balance sheet suggests.

I think that Germany is just contract provisions (effectively an impairment, but of the contract rather than impairing future regional cash flows based on macros). Uk, inc Germany, won’t be impaired on a business level as it’s not carrying any intangible value in the books.

I think also that adjusted guidance for this year will be higher than you suggest. I would hope £225m to £250m to show that contracts and cost initiatives have been sorted. If it’s much lower and no improvement on 2023 guidance then it shows a great deal of uncertainty going forward.

German provisions will come with certain caveats I assume as they have stated that final approval of treatment won’t come in time for update. I think the update will be soon as little to now wait for unless as xxxAcc suggested they are close to something meaningful to announce with school bus but I’m not holding out hope there will be anything meaningful… but would be nice for a change to get a positive surprise !

Further sells now balance the 200k purchased

Pretty much guaranteed a small loss I think JG. There will be several exceptional costs due to cutting costs. Positive will be no impairment and some positive news on progress with school bus. Market is t going to react much to jam tomorrow unfortunately as board have lost the markets confidence. That will only come back over the next 12 months if they deliver. So could be a mixed bag as has been the case for last couple of years.

I assume that’s a pi buying as couldn’t get the volume in one hit

Several 20k to 40k purchases (total 200k) went through over 6/7 mins. Followed by 70k sale that dropped it again

For what its worth if you are waiting for a fast buck from a takeover then its unlikely now as Cosmens shareholding is blocking. The only way is breaking up. So if Cosmens found a partner or partners interested in taking US and UK then a takeover of sorts could happen that way but not of the whole to a 3rd party I dont believe.

So the only option for a relatively quick rebound, say 3-9 months, is NA School Bus sale. The intention is there but US macros may scupper it.