Member Info for wealthtrasfer

Rob - thanks for digging the numbers out. I guess theres a fair few things to close out which could move the dial either way. Im taking the advance warning from the board that they expect a meaningful number which £40m certainly would be in terms of the NAV given the current level. In itself though it isnt going to change the future potential now that NASB has gone but Im sure, in the absence of positive news, will move the SP down again.

The shorts adding does seem small and incremental to me if there is indeed some known unknown coming, I would have expected to see bolder moves. Im in the same thought process as you JG and hoping its covering off other positions until the direction of travel becomes more certain. Im getting pretty numb to it all and just waiting for hopefully some positive news that we can build on for a change. Its been a long slog.

JG - the write off at FY24 was to the Goodwill only of the North American CGU, which included WeDriveU (and Tax Credit impairment for US and UK). The goodwill was the future expectation of cashflows and has been reduced to zero.

From what I can understand of it that WeDriveU becomes its own separate CGU now it was split and NASB written off. I assume (and accountants please correct me) that the future value of WeDriveU isnt recaptured and therefore will not be reflected in the balance sheet, but clearly has value.

The next write down at HY25 is the difference between the assets value on the balance sheet of NASB vs the net amount received from the sale. I cant see the NASB or whole of NA CGU value in the balance sheet (maybe Im missing something here) and without that we cant approximate the loss/gain.

Hopefully Francisco Iglesias gets the job but it comes with risks. He’s done a mega job with Alsa but its like being a great driver joining red Bull and falling short of Verstappen, ending up being fired and losing a great driver. Is he happy to stay where he is or does he want/need a bigger role beyond group commercial director and CEO of Alsa. It’s going to be tough to find anyone more capable. If he can’t turn things around then we are in the stuck anyways.

JG - business as usual is absolutely viable with WeDriveU, but I get the feeling that Cosmens will want to focus on Europe as they are good at that and not so good across the pond. Uk is a dead duck. Germany may come good and fits the European play if it becomes viable. WeDriveU is, although usefully diversifying, a distraction and a territory both remote to the core business and with a different mind set. My gut feel is that they would rather not be distracted and return to focus within Europe, diversifying and de-risking more across the mobility sector as they have in Spain with Health Care, Tourism etc.... Europe is a huge opportunity and more stable than US and UK in my view.

JG - since Cosmens became firmly in control (blocking holding % - or so close as to be effective), I assume that a break up of the group is going on so that the beloved ALSA comes home to Spain. Next step, WeDriveU. Cant do anything about Germany until contract resolved and that may be of interest to the Cosmens other european rail interests (Evolyn). UK to be sold off too. I cant see how things will be left to business as usual just without NASB.

GoodBloke - how's your German ;)

There is hope that if they can get an agreement that 'some' of the £200m already sunk will be recoverable. How much is anyones guess. My guess is 20% - 50%. But it is just a guess, based on previous comments and finger in the air.

Genghis, they are stuck between a rock and a hard place. If they invoke the 'Fair Returns' clause in the contract without legal due process and walk then they will be hit with a large bill to cover the gap between Mobico Bid Price and a New Comer. That will be huge and not sustainable. They wont be able to close down the German Subsidiary as no doubt there are parent company guarantees in place.

They also cant keep writing down the contract asset over the next 8 years whilst trying to rebuild the company and reducing debt.

The contract negotiations are going to be long and difficult as not all the problems stem from track issues and the utility compensation. There were acknowledged errors in the bid too.

Driver shortages should be improving next year as the newly enlarged driver trainee intake moves through the system.

The PTA's also have to deal with many contractors and any deal done will impact across the sector and I doubt can be resolved in isolation with Mobico.

That all points to years of delay and as you say the more companies going bankrupt make it easier to resolve for the rail authorities.

Totally agree Rob. Problem for Mobico is, how long will it take and can we keep taking the pain!

Unfortunately not.

https://www.mobicogroup.com/media/news-releases/2023/1-billion-german-rail-contract-award/

Unfortunately the RRX contract won to great fanfare in 2023 has until 2033 to run. If Mobico don't find an amicable solution as slated by the board as being Contractually Obliged, then there must be a case to walk away. The understanding is currently if they walk away without a legal ruling then Mobico is on the hook to fund the difference in price between an incoming contractor and Mobicos price. Therefore there is no walking walking away unless Garat heads up a competing rail business and bids strongly for the Lots. There has to be due process and one Im sure Mobico lawyers are racking up fees for. At som epoint though there must be a contractually ability to walk if the PTA's don't meet their side of the contract.

Lara - thank you. Took some time out for sanity. Keep checking in to see what the general mood is. Seems better at the minute. Long way to go.

I’m not sure patience has paid off just yet Carrington @35p has a long way to go to recover where it should be but good to see more positivity. As I’ve said many times and it still holds, Germany needs to be positively resolved and then we are game back on. 24 months will hopefully be patience rewarded !

What a bunch of desperate and sad keyboard warriors. Getting more and more desperate by the day. Pointless being on the so called discussion forum. No discussion just morally devoid cretins plying their trade. See you all at £1.80. Bye for now.

Thanks Rob, appreciate the info. I guess they had no choice then.

Great for confidence in the future. But like the Grupo deal, what have they paid and how have they paid it? Very important when telling the market their primary and immediate focus is debt reduction!

With Alda performing it would not be hard to see how covenant net debt could be further organically reduced to £500m over 3 years and be at the boards long term target of 1.5 x

If what Rob is going for happens then out of the £300 funds from NASB. £100m reduces the new hybrid from £500 to £400. Sat at 6% would give an interest charge of £24m similar to existing £21m. £100m would reduce covenant net debt to c. £825-£850 and £100m left to reinvest

Covenant net debt at year end was £991. It should be lower at half year.

Hi Rob, good summery. I agree 4. Is a good option - if its possible? ie the market thinks the company is low risk enough to issue a new perpetual 'loan'.

A £400m new hybrid, £100 reduction in net debt and £100m left to finance growth would be a nice outcome. If that happens then a rerate is likely too imo.

Schmoky - theres nothing to renew. Its perpetual and to be repaid at the discretion of the company. Mobico don't have to repay it as long as they pay the coupon. There is an impact on net debt and covenant ratios as the remaining 50% will lose its equity status and become debt. Min covenant ratios will just be okay as long as ALSA and WeDriveU don't drop the ball on EBITDA. But they do need to raise the money sooner rather than later as they shouldn't risk breaching the covenants lightly.