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P.s. what is their take on it in relation to Mobico rather than generally what does Special Situation Stock mean. Thanks

Anyone in the know what Berenberg mean by “ Special situation" stocks are Sodexo , Mobico , and Entain , Berenberg says”

Genghis - School Bus will indeed be sold on its merits and the rest of the business wont be of interest. Im mentioning US impairment as its the most likely and is all to do with school bus. The headroom on impairment improved at the half year due to lower future interest rate and inflation expectations. However another number used in the calculations is the future performance of contracts and margin comes into play. There has been a material reduction in margin which may well reduce the value of those contracts. There is a balancing effect from interest rate and inflation. I dont know ho exactly the calculation is completed so cant say what the net effect of all those items are. Im just saying that it is something to be aware of. The company stated last year at the half year that no impairments were thought necessary and then at full year whacked a large impairment on ALSA. So it might or might not happen but it wont help a steady positive recovery if there is a large impairment is US due to margin.

To balance that, it could well be the case that a valuation put on the sale of the business by the advisers overides that need to consider impairment. My pay grade isn't high enough to know the answer to that?

Poker - I agree with your two posts. The only thing I would say is about your comment "impairments can be reversed in the future though, of course if economic conditions improve" They aren't re-captured into NAV / Intangible assets as far as I know. They are captured as 'headroom' in any future impairment calculation. For example the recent improvement in US intangible due to future interest rate and inflation expectations is included in headroom but not intangibles. So its useful to understand the headroom recorded as it provides a cushion against future impairment (for anyone wanting to know what the numbers are, they are all in the accounts).

P.s. to clarify why its important there isn't an impairment (US is the highest risk of impairment mainly due to margin recovery) in the full year accounts is it would likely delay an otherwise likely steady recovery in my view, this is twofold:

1. Investors look at the headline numbers and will see a loss, again, and although not cash impacting it has a confidence impact, especially when not looking past the headline profit or loss. Without school bus sale this could delay recovery for 12 months in my view.

2. It could impact the sale value of US School bus and debt reduction expectations.

Allinadays work - thats the most succinct post Ive read for some time, thanks. I couldnt agree more.

Assuming that there isnt a game changing event such as a takeover or sale of US school bus, then this year is the first for 3 years where the most of the contracts (around 75%-80%) will have recovered the inflationary cost increases. The second half or around 4 months (Sept to Dec) the majority of the remaining contracts will have also been renegotiated. So in 13 months time we will see what the underlying business looks like (cost recovery and no covid support and overhead reduction) with most of the one off costs out of the way.

The first properly clean year that can be compared with previous performance will be 25-26.

Assuming that we see no impairment and between a small loss and small profit in a few weeks time then we should start to build on the recent rise in SP through the year and next.

Sounds like more of the same today. I’ve filtered out the ‘positive’ and ‘negative’ posters that don’t support their views with useful information, commentary, thoughts or facts. Feel better for it already :)

I think you miss the point of the board xxx. Im not here to get your positivity, whether its founded or not. Im here to get and share useful information that you may not find on your own or you get it quicker by sharing. Thats all really. If you think you are improving the share price by daily positivity then good luck but I don't think Im effecting it negatively by sharing information or questioning events as it wont make a jot of difference. There is no value in constant positivity or negativity and if thats all the board offers then I wouldn't waste any more time on it.

Is there a place for 'old' investors who have a deep understanding and 'history' to be pragmatic (read:negative) without being call de-rampers?

if so then we are all good

Pedro, you may be right to a certain extent that long term holders here are frustrated. They have a good understanding of how we got here and what has and is being achieved. I have a significant holding and want more than anything for the recovery which I also agree will / should eventually come. That said it also shows that yourself and others as fairly new shareholders are coming off the lows and are more hopeful (read: positive) that there will be a quick recovery. Most people here want the same result but are mindful of how we got here and what it will take to get back. None of which its worth noting is going to influence outcome.

I don't think there are many of any shorters around on here 'bashing' actively at the minute since recovering from lows?

Poker - thanks. I hope they are following their stated intentions to improve ROCE and this purchase adheres to that. It may well do but as we have no knowledge of it other than cursory press report its hard to tell and doesn't look like theyre trying to move away from the traditional commercial operation.

As discussed last night Pedro, this decision was taken well before US School Bus was mentioned. The board hasnt covered itself with glory in the last few years. Its not about being negative its about looking at the facts. The facts are the facts. You can spin a positive on anything and as you say it offers some balance but it has to be based on reality to be of value.

On the face of it they've bought a low margin bolt on that theybve been courting for years. Looks like a vanity project unless the board can enlighten otherwise. When the board have stated that 28% ROCE is more where they would like to be then this doesn't seem to make sense. Especially when creating 3% net return against 5% finance (numbers are approx).

I’m surprised that the market is so surprised, given the US numbers were worse. The view is still downwards with inflation. The over reaction with MCG is pi’s and won’t change any medium term recovery.

The market will either see it as you’ve said that it’s a statement of confidence that everything is business as usual and cash isn’t a problem and profits are upon us or they’re going to see it as an issue using cash reserves unnecessarily on a low margin bolt on. Let’s see what the board has to say and what investors make of it!

Exactly! Even if the board has seen solid interest in US school bus sale, nothing is a done deal until signed and completed which will certainly be a long way off yet. Unless the deal is structured in a way to suit us such as non cash or performance based (which I strongly doubt) then it’s not a good look given the markets reaction to the boards performance last year.

Unfortunately as much as I want it to be the best deal ever, I doubt it is and suspect Gwillerz parody is probably closer to reality.

They’ve been talking about wanting to acquire them for years according to press reports, so unlikely it’s because they feel confident about US school bus. I think that given their stated objective is improved ROCE targeting 28%, it’s a strange step to take to acquire another low margin business and spending a not insignificant cash sum when trying to reduce debt. I think they wanted it for years and bought it because it was either now or never. Not a smart move given the cancellation of dividend and market concerns over debt. Unless I’m missing something, I think this reflects the managements attitude to shareholders rather well.

🤣🤣

Let’s see if the board can explain the logic. But on the face of it there are better things to spend 80m euros on than to get £2.5m return. One example might be a 80m share buy back to provide shareholders 4-5 times the return . Looks like a vanity project for ALSA / Cosmens unless they can explain the benefits.