Member Info for wealthtrasfer

If the board can convincingly demonstrate that school bus can achieve the previous margins then I would have thought a keen buyer could and should achieve $500m to $750m (based on US 2019 x 70%. School bus was £900m, exchange rate adjusted £800m revenue and £130 m normalised profit). Although no where near that now it shows what’s possible. Ie potential for consolidation and double value + of their investment.

Yes, but not 6 months after it was reinstated and 12 weeks after comprehensive 6 month results and forecast update indicating “all okay and on track”

Just to add on impairment, although no cash impact there is a significant market confidence impact in reporting losses whether non-cash or not. Which suppresses the SP.

The concern I have is not so much the change in guidance, although it does raise questions about the BODs grip in the finances, and it’s also not the sudden about turn on selling assets to reduce debt (I’d hoped for that for a year or more) it’s the sudden reversal in dividend policy. Again not because I wanted it or invested for it (in fact the opposite, I didn’t want it reinstating as after tax I felt debt reduction was more important) , its why take the extreme and embarrassing uturn based on a £25m adjusted profit forecast reduction when that new forecast is still above where things were in FY22 and growth still coming. Doesn’t make sense unless the costs have been badly misjudged or worse still, growth isn’t materialising as promised!

Jcj - I don’t blame you, I wish I could but I’m too deep and will hold. The problem now is that the market isn’t going to believe any more forecasts and is only going to react to year end trading reports. So no change likely for 6 months Depending on impairment this year the results should be a big improvement, if impaired then it will be another 18 months until next one. No quarterly or half year will be believed now that all confidence is lost in the board.

JG - stubborn or doesn’t have a grip on the business?

“We recognise that the recovery of our profitability will take longer than we had previously expected…”

What in just 12 weeks you upgraded and then down graded expectations? This is a company with fairly visible and predictable costs (over the short terms , particularly when most operating costs are hedged) and historically were quite accurate in forecasting! What changed in 12 weeks? Maybe Werner in the US Bus uncovered more cost than was being disclosed previously. Maybe another impairment is expected at year end. They need to come clean!

Rereading half year report (looking for us bus info) and then todays update 3 months on is at the very best I think misleading. What has changed fundamentally in 12 weeks? Nothing that wasn’t known during the presentation and update. So either the board has been misleading us or they have found something new to concern them that they are not telling us again! Why the sudden change to sell assets that they didn’t want to or need to sell 12 weeks ago? If I was a new euro bond holder I wouldn’t be happy. Garat needs to resign, he’s used up any remaining confidence he had and that doesn’t bode well for company. Maybe Cosmens hand picked him in order to get Asla back on the cheap ;) Joking aside I feel massively misinformed and misled by the board. They were adamant that assets were needed and that growth would deliver the deleveraging, that’s not been born out and they gambled with our investment and lost. If they’d listened to the market when we were back at £1.60-£1.80 and sold NA we would still be there and above. They have to go.

LWHL - they will be in closed period now until disposal is announced or cancelled. No director buys for the foreseeable after results and sale so not before next spring.

Cosmens may swoop in anytime!

This is a proposed sale of school bus ‘only’ not NA. They seem to think that shuttle and transit is more profitable and worthy of further investment. In their current statement they are thinking of partial deleverage from school bus sale and reinvest in growth opportunities. I think as stated previously they’d be better selling all NA as they will have significantly reduced operational capacity in NA. Sell uk as it’s just a political football and never going to be delivering the ROCE they aspire to. Just focus on ALSA.

They should have sold when the market was telling them to do it over a year ago. The management fought against it and lost. I think they have not been straight with shareholders.

My view is the BoD is operationally good but lacks shareholder empathy (should communicate better). As an example I would have thought a 500m euro bond placement was material news for shareholders.

HoplessV - I'd agree its not a bad outcome and an increased finance cost of about £10m p.a. Bringing certainty for the next 2-3 years now. Just need the profit margins to drop through without further impairment and there will be a big rerate.

The board statement in Q1 update says "annualised" incremental cost of £12m, however there would be a cost for setting it up and having it available but, caveated by the fact I don't have knowledge of bridge to bond, I wouldn't think it would be the full annual £12m extra to set it up and have it ready to start in November if needed. They would probably offset short term interest as well if it were the case. Im guessing theres a £x m set up fee due regardless if it is used and then the 5.5% when and if drawn. They would have it place early so that they didn't have their backs against the wall selling the euro bonds this year and to give some certainty to the market beyond 12 months when reporting last year end. They wouldn't want to draw it early as interest is 3% (approx - again as stated in Q1 update) above current expiring bond.

UK public transport operator Mobico (Baa2/BBB, Moody's/Fitch), formerly National Express Group, is preparing to print its inaugural euro bond trade, a no-grow €500m eight-year, via BBVA, Commerzbank, ING, NatWest Markets and Wells Fargo. In its roadshow presentation, the company said it is looking to further diversify its funding sources through the transaction.

Mobico has had a £400m undrawn liquidity facility in place since 2022 to cover an upcoming £400m bond maturity. The planned bond would cancel the facility, according to the presentation.

I’m going to try and make my view really clear: 1. Current £400m bond is 2.5%, 2. The temporary bridge to bond, if used (ie of the new euro bond isn’t completed in time) will replace the £400m bond and costs 5.5% for the time needed u tip it is replaced by 3. The new euro bond to replace either the £400m bond or if later than Nov it will replace the bridge to bond that replaces the original bond and should be around 4.5%.

Hope that is now clear!

JG, as you say it’s a base document to form the general terms of any and all bonds. Individual bonds may vary in specific terms not covered by the base agreement.

As I said Hopeless I think the new euro bonds would be around 4.5% give or take .25%

The 5.5% is the bridge to bond not the new euro bond

I’m not sure you understand smallwheel. I thought it was clear that it is 5.5% interest if it is used. An incremental increase of 3% over the current 2.5%. Im not sure what more is needed to be clear. DYOR.

Balance Sheet and currency “

Over 80% of Group debt is at fixed interest rates. As previously communicated, we have already put in place a bridge-to-bond facility in respect of the £400m bond due November this year. We expect incremental annualised interest costs from this bond refinance to be in the region of £12m. As we manage the currency profile of our debt to match the currency in which EBITDA is generated, our covenant leverage is not impacted by currency volatility. “