Mobico Group H1 2025 Earnings Report

Mobico Group EPS Results

• Actual EPS: GBX 3.80
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Mobico Group Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Mobico Group Announcement Details

• Quarter: H1 2025
• Date: 9/9/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, September 9, 2025
• Conference Call Time: 5:00AM ET

Mobico Group (LON:MCG) is a leading international transport operator, diversified internationally and by business area; with operations in North America, continental Europe, the UK and North Africa. We provide safe, efficient, clean and reliable shared mobility solutions to cities, businesses, education, healthcare and customers. We are internationally diversified with a balanced portfolio of high quality contracts and market-leading customer brands. We help millions of people around the world every day, getting them safely and reliably to work, school, to family and friends. We are leveraging our network economies to shape the future of multi-modal transport. To serve our customers, to make cities function better and to address the environmental challenges that our planet faces throught leadership and innovation.

Mobico Group H1 2025 Earnings Call Transcript

Key Takeaways

• Neutral Sentiment: The newly appointed leadership team of Phil White, Brian Egan and Paco Iglesias will adopt a transparent, open communication style and focus on delivering on their commitments to shareholders and lenders.
• Negative Sentiment: Group revenue grew 7% in H1 to £1.3 billion but adjusted operating profit fell by £8.7 million and free cash flow dropped by £38.5 million, reflecting underperforming divisions and increased costs.
• Positive Sentiment: ALSA delivered another strong half with underlying profit growth of around 10%, passenger figures up 11.5% in Spain, and a pipeline including a €500 million Saudi Arabia bid.
• Negative Sentiment: Underperforming units include WeDriveU’s two loss-making US contracts (one in Charleston to be terminated, one in Washington under remediation), German Rail’s losses from driver shortages and poor infrastructure, and UK Bus preparing for franchising pressures.
• Positive Sentiment: The group is simplifying operations by merging UK Coach into ALSA, cutting overheads, enforcing stricter capex discipline and targeting debt reduction to meet full-year guidance of £180-£195 million in profit.

Presentation

[Phil White, Executive Chair at Mobico Group]

Good morning, everyone. Excuse me, I'm Phil White. I'm Executive Chair of Mobico. Welcome to our 2025 Half-Year Results Presentation. Now, I'm not standing at the podium today. A few weeks ago, I had an operation on my knee. I've got a new knee, and the last thing I want to do is stand up there and fall over. That will make the wrong headlines. You'll have to bear with me if I sit down. Sorry for this. Anyway, can I first introduce my colleague? S at next to me on my left? It's Brian Egan, who's just joined us as CFO. Brian's got a lot of experience in many difficult businesses in many difficult countries. He's definitely the right guy for us at the moment. You'll find that he's a very softly spoken, polite, gentle Irishman from Dublin. Believe me, don't be fooled by that. He's nothing of the sort.

[Phil White, Executive Chair at Mobico Group]

Anybody who worked with him in the room will know he's as absolutely hard as nails, especially when you're negotiating fees with him. Don't be fooled. On my right is Paco, Paco Iglesias. Paco is our new, well, not new, but in this year, our Group Chief Operating Officer. He's also been Chief Executive of ALSA for nearly 10 years. You only have to look at the results of ALSA for the last 10 years, which are absolutely stunning, and they continue to be so. That's all down to Paco and his team. Welcome.

[Phil White, Executive Chair at Mobico Group]

All three of us are from three different countries. We've got an Irishman, a Yorkshireman, our own country, and we've got a Spaniard. We've got one thing in common, although we speak differently. We've all joined the board this year in 2025. What you see before you today is a brand new team.

[Phil White, Executive Chair at Mobico Group]

We set ourselves various commitments. The first thing I did was go around our shareholders and speak to them and introduce myself to try and understand their thoughts on why I'd been appointed, why I'd come back. I had to calm them down on that a bit. When Brian came, we did a full roadshow of our lenders, our banking colleagues. What we've said to them is that our style is perhaps different, not only from our predecessors, but probably from different countries. Going forward, we will be very open and very honest. We will communicate regularly. Hopefully, there won't be any unwelcome surprises. Most importantly, we will deliver what we have promised. This should be pretty easy for us because this is how we normally work. We're normal people. We're going to be open and honest. We will probably be a bit too honest at times.

[Phil White, Executive Chair at Mobico Group]

I'm often criticized for that. We will talk a lot to our stakeholders and probably a bit too much and a bit too less. We'll always try to overdeliver. We are human. Sometimes we won't get it right. We can't get it right every time. We will make mistakes. As it says on your pads in front of you, quite an interesting headline, which I've just seen: What will inspire you today? This is what we're here for. We hope we inspire you. Let me start by telling you how the three of us are approaching our new roles. It really is back to the future. We've actually decided to start by going backwards. I know that sounds a bit crazy, but we're taking a small step back to achieve a bigger future. We've asked ourselves two simple questions. You think they're strange questions. They're so easy. What are we?

[Phil White, Executive Chair at Mobico Group]

What's our priorities? In our case, we don't have the luxury of starting with a clean sheet of paper. We've got to work with what we've got. What are we? This is very simple. We're a major public transport group. We've been listed for years on the London Stock Exchange. We've got businesses in the U.K., the USA, and Spain, and some of the businesses in some of the countries. That's a pretty obvious answer to that question. Being listed on the LSE does give us responsibilities and obligations, and we are fully aware of what our responsibilities are. The second question, what are our priorities, needs a little bit more explanation. I'm going to take you briefly through the group and all our divisions. We're going to be absolutely open and honest with you on this.

[Phil White, Executive Chair at Mobico Group]

If you look at group first, despite having some great businesses, we're not performing as well as we would like to. We have a track record of overpromising and underperforming, and we're overleveraged and unloved by our shareholders. They've told me that, absolutely. Despite this, there are some things that haven't changed since my first spell at National Express when I was the boss here. We still have a great team of loyal people who are committed to looking after their customers and the communities in which they work. As before, we also have a diverse portfolio of businesses, a bit different from the old days, but we've got deep expertise across many geographies and many different modes of transport. We think that we've got many opportunities for significant value creation for our investors and our people, although we have to be a lot more disciplined in our execution.

[Phil White, Executive Chair at Mobico Group]

Please remember, we are a new team and we don't have all the answers just yet. Let's take a look at our various divisions. Firstly, Coach. This is where it all started in the '70s when National Express Coaches was created under National Bus Company. We still have a national network of Coach services in the U.K., mainly run by third parties under our branding. I think that model is well known to you all. We are now creating a pan-European Coach powerhouse. UK Coach will join ALSA from January next year. This will unlock our ability to compete, win, and grow, and deliver more efficiencies and synergies. The National Express brand is highly respected in the U.K.. It's highly recognized, and it will remain as it is. We have today announced that Javier Martinez Prieto has been appointed as Managing Director of UK Coach.

[Phil White, Executive Chair at Mobico Group]

As you know, we're facing many competitive challenges to our network, particularly in pricing. We are fighting back by continuing to invest in the digital customer service interface, more dynamic pricing, and upgrading customer service in all our Coach stations. This will give our passengers a much better experience of traveling with us. Although at the moment, we are maintaining our passenger numbers, which is great news, we are experiencing a reduction in our yields. We have to respond by being more efficient and more cost-effective. If you look at UK Bus, as you know, in my time, UK Bus was formerly the jewel in the National Express Group crown. It is a leading operator in the West Midlands market, but has struggled a lot since COVID. We now have a funding agreement with Transport for the West Midlands, which covers fares and service levels.

[Phil White, Executive Chair at Mobico Group]

Thanks to Kevin Gale and his new team, we have now much improved relationships with our West Midlands stakeholders, which is crucial to us given what is coming around the corner. What's coming around the corner? The answer is the Mayor of the West Midlands, as you know, has decided to introduce bus franchising in the region, and this will happen between 2027 and 2030. This marks the end of the deregulated and commercial bus network introduced in 1986. Our focus now is on preparing for franchising, leveraging our long history in the area, but also looking for opportunities in the other major conurbations. As we did when deregulation was introduced in the 1980s, we will embrace the change and do our best to help our local authority partners achieve a seamless transition to the new regulated era.

[Phil White, Executive Chair at Mobico Group]

Over to the States, WeDriveU operates shuttle and transit services across the USA. It has nearly 100 contracts, the vast majority of which are profitable. Unfortunately, two are loss-making, and that's affected the group's results today. One of the loss-makers is in Charleston, and this will terminate at the end of the year, the contract, and we will not be renewing it. The other loss-maker is our Washington contract, and this has operational issues. We have an action plan in place to fix the problems which have been caused by a difficult mobilization at the start of the contract and significant driver management issues. As you know, WeDriveU separated from its sister business, School Bus, when School Bus was sold earlier in the year, and it is now run as a separate standalone business.

[Phil White, Executive Chair at Mobico Group]

There is a strong pipeline of growth opportunities, both in shuttle and in transit, with four new contracts already secured for the second half of this year, which is good news. Our focus going forward will be securing more asset-like contracts, which are cheaper to operate and carry far less risk. Moving on to German Rail, we're the second largest operator in North Rhine-Westphalia and one of the top five rail operators in Germany. We have three contracts, one profitable and two loss-making. I haven't got the balance quite right there. These have been very difficult contracts for us, particularly in driver recruitment and issues arising from poor rail infrastructure. We are now making progress in reducing the driver shortage gap, which has vastly improved network performance.

[Phil White, Executive Chair at Mobico Group]

We are looking forward to more work by Deutsche Bahn on the network to fix the problems we have that have plagued the systems for quite some time now. We have a new management team in Germany and the U.K. who have engaged a lot more closely with our local stakeholders. Again, crucially important. I can say today that discussions with our German local authority colleagues on our contracts are progressing very well. We are aiming to press ahead with supplementary agreements, which hopefully will be finalized in the coming months. I'm told from a reliable source that we've made more progress in the last four months than the last four years. Hopefully, it will soon be sorted. Moving on to ALSA. In preparing for my script for today, I Googled to try and find what the original name of ALSA was, and here it is.

[Phil White, Executive Chair at Mobico Group]

I can't pronounce it, so Paco, what is it?

[Francisco Paco Iglesias, Greoup COO at Mobico Group]

ALSA is Automóviles Luarca, S.A , but I think Phil has made up a new name. It's much better, much better.

[Phil White, Executive Chair at Mobico Group]

When I Googled it, some wag had called ALSA a lifesaving acquisition, and it truly is. We much prefer ALSA to the big name, don't we, Paco, but we like a lifesaving acquisition because that makes me feel good as well. ALSA truly has been a lifesaving acquisition. It is a new jewel in the Mobico crown. It's the largest bus and Coach operator in mainland Spain and has expanded into the Canary Islands, the Balearics, and also Morocco, Portugal, Switzerland, and the Middle East. It has also been very brave and very successful in diversifying into other transport-related businesses, such as health transport, which basically is ambulances. There is also a strong pipeline of growth opportunity in both new contracts and potential acquisitions. For instance, ALSA are currently bidding with a local partner for a significant 10-year asset-light contract in Saudi Arabia.

[Phil White, Executive Chair at Mobico Group]

This contract is valued at over EUR 500 million and is part of a EUR 75 billion global investment there to create the world's largest entertainment destination. If you get that, that will be really good news. ALSA continues to be our dominant business within the group. Underlying profit growth compared to last year is again in double figures at around 10%. We will be maximizing ALSA's operational experience to drive improved performance across the whole group. Looking ahead, there are three things we need to do. Firstly, we've got to simplify our business. Secondly, we've got to strengthen our balance sheet. Thirdly, we've got to succeed by delivering on our promises. We've got to stop letting people down. We're streamlining our management structure. We're attacking overheads. We're removing duplication and integrating businesses where this makes sense to do so. It sounds simple, and it is.

[Phil White, Executive Chair at Mobico Group]

We will strengthen our balance sheet by generating more cash, improving liquidity, and reducing debt, which is far too big. We are already reviewing our capex and acquisition plans to get better value from our investments. Succeed. What does succeed mean? I always feel the biggest motivator for people who work for us and work with us is not money. It's the success of the business. If we have a successful business, we have happy people who provide quality service for all our customers. If our people feel good about our business, they'll stay with us, fight for us, and hopefully feel even happier. This is what I focused on in the first few months. I'm trying to get a buzz back in the business, a good feeling. To achieve success, we've got to deliver what we've promised. We haven't done this for quite a while, which is not good.

[Phil White, Executive Chair at Mobico Group]

We've got to make our customers happy. We've got to hit our targets. We've got to generate cash to fund more investment in the business. We've got to be smarter. We can't settle for second best anymore. We've got to achieve the right value for our investors, earn back their trust, and we want to make them love us again. Just a brief explanation of the results before I hand over to my colleague on my left. Here is a summary slide of our H1 results. You've already seen these in the RNS this morning. The good news, particularly in public transport, is the top line is still growing, up 7% in the group compared to last year. The bottom line is not so good. We're not converting our revenue and our cash into profits. We've got to manage our costs better.

[Phil White, Executive Chair at Mobico Group]

Let's face it, this should be a lot easier job for us compared to managing our revenue. Hitting the costs, controlling the costs, reducing their costs is a lot easier than making new customers and new stakeholders pay for you. ALSA has delivered another strong performance this year. Unfortunately, it's not been replicated elsewhere in the group. Our U.K., WeDriveU, and German Rail businesses have made little or no financial contribution to the half-year bottom line. This is incredibly sad, and it can't continue. As a result of this, EBIT is about GBP 9 million down on last year. We've also had to make a further impairment charge on the sale of the School Bus business. This means we have wasted even more money on bad investment. I'll be as bold to say that.

[Phil White, Executive Chair at Mobico Group]

We've got to invest our money a lot better than we have done in the past. It's a first half where we could have done much better. As I've said this morning, we're taking immediate action to address all these underlying issues. We expect to deliver full-year results, Gerald, in line with our previously stated guidance. I will now hand over to Brian to give you some interesting stuff.

[Brian Egan, CFO at Mobico Group]

Okay, thank you very much, Phil, and good morning, everyone. Thank you very much for coming today. First of all, I would like to begin by highlighting the direction we are taking in terms of the financials. The good news is that our revenue continues to grow year- on- year. However, we are now focused on reducing and controlling costs in order to improve profitability. Second, we need to manage our balance sheet, and this means a particular tighter control over capex and working capital. This will increase our cash generation so we can reduce our debt to acceptable levels. As Phil said, we need to simplify and strengthen the business. H1 Group revenue increased by GBP 86 million, reaching GBP 1.3 billion. This is a 7% increase, mainly reflects the strong growth in ALSA, where passenger figures grew across all businesses, including 11.5% in Spain.

[Brian Egan, CFO at Mobico Group]

In WeDriveU, we also saw strong revenue growth of over 13%, driven by new contracts in corporate, university, shuttle space, and paratransit operations. U.K. revenue was flat in H1 when you take into account the exit of NXTS contracts. It is important to note that the Coach sector in the U.K. remains extremely competitive. Adjusted operating profit for the group is GBP 59.9 million, an GBP 8.7 million decrease versus last year. This reduction was the result of lower profitability in WeDriveU caused by operational challenges in Washington-based paratransit contracts. Of particular note, GBP 82 million profit was generated by ALSA. The rest of the group reduced their profit by GBP 22 million. This is being addressed. The business simply cannot afford the central and divisional overheads at this level, and steps to reduce them significantly have already been taken.

[Brian Egan, CFO at Mobico Group]

I would like to confirm that our full-year profit guidance remains at GBP 180 to GBP 195 million. Free cash flow of GBP 57.8 million is GBP 38.5 million down from the prior year as a result of an increase in working capital, mainly because of delayed collections in ALSA. This is expected to reverse in H2. Return on capital employed was 11.6% versus 8.1% in half-year 2024. However, this is primarily due to the impairment of Schoolbus, leading to a lower asset base. Whilst net debt and carbon and gearing have increased since the year-end, this is before the benefit of the GBP 273 million Schoolbus deleveraging proceeds. Taking these proceeds into account, gearing would have been 2.7% rather than 3%. Strategy profit from continuing operations is GBP 35 million, a GBP 23 million improvement on the prior year.

[Brian Egan, CFO at Mobico Group]

Revenue has grown across all of our businesses except for UK Coach, and this is the result of the exit of the loss-making private Coach operations, which reduced revenue by GBP 12.5 million. In terms of operating profit, only two of the divisions made a profit: ALSA and WeDriveU. However, the profit from WeDriveU is GBP 13 million lower than last year due to operational challenges in the Wilmata contract. It is clear that there is a strong top-line growth, but we need much better control over our costs. As I mentioned before, central and divisional overheads are being reduced at present. I will now discuss our divisions in their local currencies. ALSA's continued strong performance saw revenue increase of over 13%. Adjusted operating profit was in line with last year, with a 9.9% increase in adjusted operating profit.

[Brian Egan, CFO at Mobico Group]

There was particularly good momentum in regional, urban, and long-distance markets in Spain, where revenue grew by over 10% and operating profit grew 8%. The extended Young Summer Initiative has driven strong long-haul performance, which is 20% up on prior years. ALSA continues to diversify business in Spain, for example, the health transport business, where revenue more than doubled since the same period last year from EUR 18 million to EUR 39 million. It's also important to note that of the EUR 97 million profit generated by ALSA, EUR 9.3 million came from outside Spain. Underlying profit margin is in line with H1 2023, with settlements in regional and urban businesses in the prior year taken into account. The underlying profit growth was 11%. ALSA had a successful half-year in terms of contract retention and bids for new contracts, including Andalucia, Ibiza, and the contract in Saudi Arabia that Phil mentioned earlier.

[Brian Egan, CFO at Mobico Group]

Whilst WeDriveU has seen revenue grow by 16%, the operating profit of $3.4 million is disappointing. This is as a result of operational challenges with the Wilmata contract. Although it took some time, Wilmata operational targets are now being met. However, costs grew in doing so, and these are now being right-sized. Looking forward, streamlined business processes, automated systems, and tight cost control will drive margin improvement in WeDriveU. Strong contract momentum continued in H1, and these contract wins alone will increase annual operating profit by over $2 million. Moving on to the U.K. performance. During H1, we saw increased competition in the Coach sector and the announcement by TFWM of their intention to franchise the regional bus market. Overall revenue declined by GBP 12.5 million. However, this was due to our exiting of the loss-making NXTS and any A2 Coach businesses. Otherwise, revenue is flat.

[Brian Egan, CFO at Mobico Group]

Growth continued in Ireland with revenues up GBP 2.7 million due to strong demand. The reduction of GBP 1.5 million in operating losses to GBP 9.1 million in the Coach business is materially driven by the exit of the loss-making contracts that I've already mentioned. Total UK Coach operating margin improved by 0.6% as a result of the restructuring and changes to seasonal timetables to optimize the network utilization. UK Bus reported an operating loss reduced by GBP 2.5 million to - GBP 0.5 million, so it's virtually break-even. However, this was supported by funding increases from GBP 23.7 million to GBP 26.2 million from TFWM. To optimize business operations, a 2% network reduction commenced in May with the 1% already in effect, and the remainder expected by September. This will improve operating profit by approximately GBP 1.4 million.

[Brian Egan, CFO at Mobico Group]

In addition, an agreed price increase of 8.6%, which was effective from the 16th of June, is expected to generate almost GBP 8 million in operating profit for the full year 2025. Finally, turning to German Rail, our rail business in Germany performed in line with expectations, delivering a H1 turnover of EUR 143 million, up 1.9%, and delivering an operating profit of EUR 0.6 million. The ORX1 and ORX2/3 contracts are both onerous contracts with losses of EUR 26.5 million. There are cash losses of EUR 26.5 million, being offset by a utilization of the onerous contract provision, which is now reduced to EUR 158 million at the 30th of June. Our investment in driver training is paying off with an increase of 22 drivers year to date, up to 333 drivers in total. The increased level of infrastructure works and network disruption continued to result in penalties under the contract.

[Brian Egan, CFO at Mobico Group]

However, as Phil has already stated, the discussions with the German PTAs are progressing constructively and are expected to conclude in the coming months. Now, looking at our cash, focusing on our cash, our operating free cash flow generation is lower by GBP 38.5 million versus last year. This is driven by increased working capital outflow in the period. The outflow is as a result of the timing of cash collections in ALSA and is expected to reverse before the year-end. Growth capital expenditure of GBP 61.5 million has increased by 33.4%. GBP 50.8 million of this capex related to Schoolbus. Acquisitions cash outflow of GBP 114.9 million related to deferred consideration on the Canary Bus acquisition that ALSA completed last year.

[Brian Egan, CFO at Mobico Group]

In terms of net debt, the cash outflow of GBP 44.1 million consists of GBP 26.5 million OCP utilization, which I mentioned previously on the German Rail contracts, GBP 17.6 million related to restructuring, the majority of which is the vast majority, in fact, of which relates to the Schoolbus disposal. Adjusting items are explained in more detail in the appendix. GBP 21.3 million of coupon payments on the hybrid instrument were made in the period in line with prior periods. A net funds outflow for the period of GBP 90 million resulted in adjusted net debt of GBP 1.3 billion at the end of the period. At 30th of June, covenant and gearing was 3 x. As I mentioned before, this does not reflect the benefit of Schoolbus net proceeds for the covenant deleveraging of GBP 273 million.

[Brian Egan, CFO at Mobico Group]

This would have reduced gearing to 2.7 x, but obviously, the cash came in in July and missed the year-end. We expect full-year 2025 covenant and gearing to be approximately 2.5 x, and that's at the 31st of December. Finally, debt maturity. At the 30th of June 2025, the group had utilized GBP 1.2 billion of committed facilities with an average maturity of 5 years. We had cash and undrawn facilities of GBP 700 million in total. Of course, we received the Schoolbus deleveraging proceeds in July. 75% of our debt is fixed, with most of the floating portion due to revert to fixed by the end of the year. With the proceeds from the Schoolbus sale, we have sufficient liquidity to meet the earliest debt maturities, which are May 2027. In addition, the majority of the ORCF facility has been extended to 2029.

[Brian Egan, CFO at Mobico Group]

Finally, in relation to the hybrid bonds call window, which expires in February 2026, the group will decide whether to roll the bond prior to this stage. I would now like to hand you back to Phil.

[Phil White, Executive Chair at Mobico Group]

Let me just summarize and conclude the presentation by telling you what we want to do with the business going forward. Please remember, we are a new team. We've got a new approach. We've got a very different style, and we've got a very simple strategy. Our first objective is to get the group right by fixing the underperforming businesses. This is an absolute must. Secondly, we want to continue to invest in our strong businesses to ensure they continue to grow and develop. This is also very important. We have to continue to feed and support our growing businesses. Thirdly, we need to be leaner and smarter. We want to be more efficient and improve our EBITDA. We have to do this to strengthen our balance sheet. Fourthly, we're going to continue to generate positive cash flows to reduce our debt levels so they're more manageable and more affordable.

[Phil White, Executive Chair at Mobico Group]

Fifthly, to care for our customers, give them a great experience on their journeys so they come back and they stay with us. Most importantly of all, to make our people feel proud again. Happy people means happy customers. Thank you. Over to you guys now. It's your turn. Q&As. Paco's been very quiet this morning, so he's going to answer all the difficult questions. Aren't you, Paco? Gerald? A nice, easy one to get it going.

[Gerald Khoo, Analyst at Panmure Liberum]

Morning, everyone. Gerald Khoo from Panmure Liberum. I'll start with three. Firstly, WeDriveU, can you elaborate on the problem contract in Washington? You talked about inherited problems. How much of that was foreseen? How much of it was foreseeable? How do you go about fixing the operations and therefore the profitability? Secondly, UK Coach, what changes with, shall we say, the effective merger operationally with ALSA? What's going to be run differently? How much can change given the fact that 80% of the operations are actually outsourced? Finally, in UK Bus, what share do you think you have of the West Midlands bus market? What opportunities might there be to extract capital or assets once franchising has run its course?

[Phil White, Executive Chair at Mobico Group]

Okay. WeDriveU first. I'll answer it generally, and perhaps Brian or Erik can come in, but Erik will correct me if I'm wrong. This was a contract in Washington. We did have a contract there already, but this opportunity gave us to secure a much, much bigger operation. We were given a very short timescale, I think a month to mobilize it. Hindsight's a wonderful thing on these sorts of things, but we could have pushed back on that and given more time. Also, I think when you talk about the inheritance, there were also driver retentions and recruitment problems, Gerald, before we got there. These turned out to be much bigger than we thought. First of all, the issue was understanding the financial information when we first arrived and understanding what it was telling us.

[Phil White, Executive Chair at Mobico Group]

Secondly, we had to tackle the driver recruitment issue very quickly because we weren't hitting our required service levels, which were incurring penalties on us, quite expensive penalties. We fixed that by recruiting more drivers. Like in Germany, we bridged the gap. We're probably, to be on the safe side, we've recruited more drivers than we need. Instead of incurring the penalties, we're incurring extra operational costs. What we've got to try and achieve, and it's really what our main purpose in life is, is to get the number of drivers in line with the number of buses we've got to get out every morning. It's not rocket science. It's just getting down to the detail, managing the driving port, getting on all the buses, and hitting the service, and making our customer happy, which is not the moment, all right? It's probably a longer job than we thought.

[Phil White, Executive Chair at Mobico Group]

As far as ALSA is concerned, and the transfer of ALSA to Coach, the Coach market has changed. As you know, we've got people who want more of our business than we like them to have, but that's life. There are different rules of play to disruptors coming in and how you can act to incumbents already there and how you can respond. The balance of power under competition law is with the disruptor, not the incumbent. You might think that's fair. How long they cream off our existing routes is another matter. They don't operate a network. These disruptors, they cream off the best routes and take our best revenue away. We've got big issues to face. The market's changed. It won't go back. We've got to respond by being meaner and leaner. We can't afford the overhead costs that go with the current business.

[Phil White, Executive Chair at Mobico Group]

This is why it's going to be part of ALSA to form a big pan-European Coaching business. That will bring new eyes into the business. The Coach operation's been operated for a long time. It brings people in who can look at things differently. Probably be a bit harder than our current management and me. I'm too soft. We need somebody else coming in there, looking at the new model, using all the systems and best practices from ALSA, and really looking at the business as an acquisition. That's what we want them to do. I think what I'd like to do, if at all possible, is to become the new disruptor. We can't do that ourselves. It's impossible. Secondly, on UK Bus market share, it's big, Gerald. I don't want to quote a number, but it's bloody big, right? There's a lot of interest.

[Phil White, Executive Chair at Mobico Group]

The key to success of bus re-regulation is having the vehicles and the depots. You can see that in Manchester. I've got a long queue of strategic operators ringing me every day to buy our buses and to buy our depots. There's a lot of interest, but I think there's better ways of doing this in the future. As I said before, we didn't like deregulation, but we embraced it. We don't like re-regulation now because it didn't suit us. Deregulation didn't, but we'll embrace re-regulation. We're working with the local authorities in the West Midlands. We want them to begin to think again, to love us, not to think we're just after the money because we're not.

[Jack Cummings, Analyst at Berenberg]

Morning, everyone. Jack Cummings at Berenberg. Also, three questions, please. Firstly, just two on the guidance. The profit guidance is obviously quite H2 weighted. Could we just get a little bit more color in terms of the building blocks which can get you to that H2 profit number to hit the guidance? Secondly, on the guidance, obviously there's a GBP 15 million range. What needs to happen or what are the kind of pinch points here that could get you to the top end versus bottom end of that guidance? The final question is just on the CapEx. What goes into the decision-making process between that growth CapEx and the CapEx that's kind of to the side for small M&A versus potential cash conversion given the leverage? Thank you.

[Phil White, Executive Chair at Mobico Group]

Thanks, Jack. There are three easy ones, so I'll hand it over to Brian.

[Brian Egan, CFO at Mobico Group]

Just looking at H1 versus H2, traditionally, 1/3 of the profit is H1, 2/3 H2. That is mainly driven by the fact that particularly July and August are really big months for the business. In fact, December is also a big month. It really is very much in line with, if you go back over the last two or three years. In terms of delivering at the higher end of the range, I look towards Erik here. Some of the critical factors, particularly WeDriveU, is a big one. If WeDriveU can manage to get the cost issue under control earlier, it's going to help us towards the higher end. If it's going to be later, then we're going to be towards the lower. That's probably the biggest one, if I'm honest about it. The third one was, we are looking at capex.

[Brian Egan, CFO at Mobico Group]

It's a bit hard to just answer at the moment. At capex, we have a budget that we've agreed for capex over the next couple of years. The priority, obviously, is retention capex. Then there's a balance left. It depends upon a level of flexibility around that, depending on the opportunity. One of the problems here at the moment is that we are quite constrained because of our debt position. The priority is, number one, retention capex. Then there is an amount left over. Then we look at the returns, depending on whether it's a contract bid. There are a couple of good opportunities, in fact, that we're looking at at the present. Certainly, the answer is looking at it at the moment. That will depend on the return of both of those.

[Jack Cummings, Analyst at Berenberg]

Thanks.

[Alex Paterson, Analyst at Peel Hunt]

Hi, it's Alex Paterson from Peel Hunt. As I'm greedy, can I ask four questions, please? They're all very simple ones.

[Phil White, Executive Chair at Mobico Group]

That's fine, on my condition.

[Alex Paterson, Analyst at Peel Hunt]

First question is, just before the North America School Bus deal closed, you were talking about leverage being fairly flat year- on- year. You're now saying 2.5 x. Can you just say what's driven that improvement, please? Secondly, in the UK Bus, can you say what sort of proportion of your fleet is owned? I know you've got some of it through Zenobi, and I'm not quite sure what those proportions are now. Thirdly, on Germany, can you say has the group given any guarantees over the German Rail losses? Lastly, just on Germany, as it stands, if nothing changed, what would your expectation of cash losses be in the next couple of years? If you can get a better deal, when you described it as equitable in the statement, does that mean no more outflows or, you know, what kind of change on that?

[Phil White, Executive Chair at Mobico Group]

Brian.

[Brian Egan, CFO at Mobico Group]

Okay, so that didn't work so easy. Let me just, you know, put them sort of randomly. First of all, cash losses for Germany. You'll see for the first half of this year, $26 million. We have actually an impairment at the start of the year of $170 million. That is the expected cash loss from those contracts. Clearly, the discussions we're having at present, we are optimistic. I mean, they are going quite well. Anything that will hopefully end up, because discussions end up in a positive note, we will hopefully be able to reverse some or maybe even all of that $170 million, depending on how they get on. That is cash.

[Kevin Gale, CEO - UK & Germany at Mobico Group]

I think they're quite front-end loaded.

[Brian Egan, CFO at Mobico Group]

They are correct. That's correct. This year, it's almost $50 million. In terms of the improved leverage as a result of the School Bus , this year we have the benefit of a half-year's profit from the School Bus . That half-year disappears next year. We get a double benefit in this particular year because we have a half-year benefit of the School Bus profit. Next year, that half-year disappears. In fact, we have a negative impact with the School Bus taken out next year. It improves, and then it goes back a little bit. We look at next year, unless, of course, we take actions to address that, which we're looking at at the moment. There is a guarantee, I don't have the details, there is a guarantee in relation to German Rail.

[Brian Egan, CFO at Mobico Group]

In terms of the percentage of fleet owned by us.

[Phil White, Executive Chair at Mobico Group]

Kevin, have you got that number?

[Kevin Gale, CEO - UK & Germany at Mobico Group]

A second. Two-thirds, 1/3. Two-thirds, 1/3.

[Phil White, Executive Chair at Mobico Group]

Okay. Happy, Alex. Any other questions, guys?

[Ruairi Cullinane, Analyst at RBC]

Yeah, good morning. It's Ruairi Cullinane from RBC. The first question is, it doesn't seem like you're looking for a CEO, which I think was a top priority in the spring. What drove the change there? Secondly, could you touch on options to delever? Would that be, you know, non-core disposals? What could be on the cards given the potential upward pressure to leverage in full year 2026 as School Bus EBITDA drops off? Finally, I think there was a fare increase in UK Bus last summer, but there wasn't much sign of it annualizing in H1. Could you just explain that? Should we expect the fare increase this summer to annualize as a typical fare increase? Thank you.

[Phil White, Executive Chair at Mobico Group]

Okay. As sort of Executive Chair, which means both jobs, I think I'm best to answer the first question. At the moment, I think the board are happy with the new team. We've got a lot of projects in hand at the moment. I would like to work with Paco and Brian into the near future to make sure all those projects are achieved in a good way. I don't think at the moment the board are rushing to find a new CEO. They're quite happy to stick with the team that's here and hopefully will deliver the results they've asked us to deliver. Deleverage. I suppose the easy answer is when you're in a position like that, when we're earning the EBITDA we've got at the moment, and we've got the level of debt we've got at the moment, nothing's off the table.

[Phil White, Executive Chair at Mobico Group]

I think we've got to be hard. There might be disposals, there might be more disposals. We've already said we're going to look at efficiencies. We're looking at integrating the businesses together. We're going to cut out the duplication. You have to remember, between 60% - 70% of our costs are labor costs. When we're talking about being more efficient, cutting costs, we're really talking about people. The important thing is if we do that, we've got to be honest with them and we've got to do it in a kind and caring way. As I said, we're looking at everything at the moment.

[Brian Egan, CFO at Mobico Group]

Yeah, so I think, in general, we haven't, you know, we put a detailed plan together, but there are two approaches. First of all, it's to reduce the debt itself. We have to look at how we do that. The second thing is create capacity to manage more debt by improving our EBITDA. They're the two things we're looking at. First, we'll create more capacity with the higher EBITDA, and second, then to attack the debt.

[Phil White, Executive Chair at Mobico Group]

Okay.

[Brian Egan, CFO at Mobico Group]

The fare increase we're like.

[Phil White, Executive Chair at Mobico Group]

Oh, the fare increase.

[Brian Egan, CFO at Mobico Group]

It's on 8 points.

[Phil White, Executive Chair at Mobico Group]

Sorry, when did we implement it, Kevin?

[Brian Egan, CFO at Mobico Group]

The end of June.

[Phil White, Executive Chair at Mobico Group]

Oh, it's the end of June, so that's really early.

[Brian Egan, CFO at Mobico Group]

For this year, it's.

[Phil White, Executive Chair at Mobico Group]

It's 8.6%. It's going to be interesting to see how the customers react to it.

[Brian Egan, CFO at Mobico Group]

The expectation is a GBP 7.5 million impact.

[Phil White, Executive Chair at Mobico Group]

Yes, and I think Kevin will agree with me. We spent too many years when you get a funding agreement with it, but you don't get it for nothing. To get that funding agreement, which is stable at the moment, they control our service levels and our fares. It's the first increase we've had in how many years, Kevin?

[Kevin Gale, CEO - UK & Germany at Mobico Group]

It's the first substantial increase in five years.

[Brian Egan, CFO at Mobico Group]

It is a big one. It is going to be interesting to see whether we land it.

[Kate Chow, Analyst at Bank of America]

Kate Chow from Bank of America. Thanks for taking my questions. Also, three from me. First, I think Brian, you mentioned for WeDriveU, you're expecting a $2 million improvement. Can I just confirm it's a $2 million kind of on top of first half performance, basically full year impact coming through in the second half? Second, on ALSA margins, you mentioned some one-off items to the first half. Can you elaborate a little bit on what those items are? Just thinking ahead for the second half, how should we think about margin? It's going to be kind of similar around 12%, that kind of level. Number three, on the hybrid, I appreciate, you know, a decision is coming in the next few months. Anything you guys can share on current thinking? Thank you.

[Brian Egan, CFO at Mobico Group]

Okay, the first one, the $2 million in relation to WeDriveU, that's just the profit value of contracts won in the first half of the year. That's the annual profit increase expected to be generated from those contracts. In terms of the margin, if you compare like for like, you'll see the margin, while the profit of the margin is slightly down. In the first half of last year, a provision was released. The expectation was we'd have to repay some grants. We didn't have to repay the grants, and therefore, we released, it was an $8 million provision. It basically slightly inflated last year's result compared to this year. If you back that out, you'll see that overall there's an 11% growth in profit in ALSA.

[Brian Egan, CFO at Mobico Group]

The final one on the hybrid, we will take a view and that is timeless, but the current thinking is that we will roll this. We make a decision closer to the date.

[Phil White, Executive Chair at Mobico Group]

Any other questions? Gerald, what do you have now on?

[Brian Egan, CFO at Mobico Group]

I know.

[Gerald Khoo, Analyst at Panmure Liberum]

Gerald Khoo from Panmure Liberum, again. German Rail. You sort of outlined the sort of scope of talks. You talked about how there was discussion about how the owners' contract visions are front-end loaded. What's the trade-off between time and value? If talks were to drag on, is there a lost opportunity to recover? Or is it not possible to recover past losses, so to speak?

[Brian Egan, CFO at Mobico Group]

No. The discussions, I mean, there are two broad buckets. The first is compensation for the past. It's what we are seeking. Now, whether we've been successful or not, we don't know at this time. There are two buckets. One, it's to do with compensation for the past. For example, we've incurred a lot of penalties which really relate to the poor infrastructure. The second bit is in terms of profitability going forward. They're the two areas. Depending on how we come out, we have two different buckets. The answer is yes, we absolutely are looking for compensation for some of the past costs. Absolutely.

[Phil White, Executive Chair at Mobico Group]

Any other questions?

[Ruairi Cullinane, Analyst at RBC]

Yeah, Ruairi Cullinane, RBC again. Just on, is there any growth angle to incorporating a UK Coach within ALSA? Obviously, there's a mention of making it a pan-European powerhouse, or is it mostly about best practice?

[Brian Egan, CFO at Mobico Group]

I can get that. Are there, apart from the integration, what are the sort of, do we see a growth opportunity of putting it on the ALSA?

[Francisco Paco Iglesias, Greoup COO at Mobico Group]

First, sorry for my English. I'm a very simple person. I think that the success is to do the things simple. That's the reason I believe in this project. I believe in this team. This strategy is very simple. The plan for this merger between UK Coach and ALSA is right there. It's to get the things simple. What do I mean by that? For me, we need to focus on the metrics, on the basics. What does it mean? For example, occupancy. What's the ratio of occupancy? Can we improve that? For sure, I think. For example, customers. Can we improve the scoring from our customer? What do they need? Are we delivering the best for them? I think we can do that. For example, the cost. Can we remove duplicates between people in ALSA and people in the U.K.? For sure.

[Francisco Paco Iglesias, Greoup COO at Mobico Group]

For sure, U.K. does things better than ALSA, and ALSA does other things better than the U.K. Can we get the best of that? My expectation is to focus on these three things: operation, operation, the occupancy level, cost efficiency, customer, how to deliver better, and cost that is very related with technology. We have different technologies in the U.K. and ALSA. We are not going to get just ALSA, but I think we have to make a better decision in the next tools, for example, for planning, for pricing, for whatever you can consider that is important in a transport business. This is my idea. I'll work with Kevin and the team and the new people that are going to join the project. I think that we're not going to make up the wheel again. It's just to make very simple things.

[Francisco Paco Iglesias, Greoup COO at Mobico Group]

I think we have had success in the past. Why not in the future? Let's see in the next month. I'm optimistic.

[Phil White, Executive Chair at Mobico Group]

Okay, thanks, Paco. Any more? Okay, then, guys. Just before we finish, I'd just like to thank a few people, if you don't mind me saying. So thanks for everybody in the room today, and thanks for all the people who have dialed in to listen and see the presentation. I would also like to thank our fantastic advisors who make us think differently and help us to really explain our strategy to everybody, our shareholders and our lenders. Thank you to all the people at the center and in our divisions who work so hard. We deliver what they're doing. They've worked incredibly hard over the last few weeks in getting the results in order and the presentation so we can explain the results to guys like you and people on the phone. I'd also say a special thank you for two people.

[Phil White, Executive Chair at Mobico Group]

First of all, thank you for the RMT for being so caring again and looking after all your customers in London. You do a great job of that. Thank you to a writer in the Sunday Times called Rod Liddell. I don't know whether you saw it over the weekend, but he was comparing various accents in the north of England, and how nice Geordie and Cleveland accents were. Lovely to hear. He described the Yorkshire accent, " as a pantomime agglomeration of belched arrogance, right? Thank you for listening to my belched arrogance this morning. I really appreciate it. Now, going forward, we're going to update you later in the year. This will include a strategic update on ALSA, and we'll do that, quite a comprehensive presentation on that to you.

[Phil White, Executive Chair at Mobico Group]

Secondly, we'll bring you up to date on the progress we're making and efforts to improve our efficiency and to increase our EBITDA, things that have formed such a huge part of the presentation this morning. Great to see you all. Have a safe journey back to work or back to home. Avoid the tube. Give a big kiss to RMT, and we'll see you soon. Thank you.

Participants

Executives

• Kevin Gale, CEO - UK & Germany
• Brian Egan, CFO
• Phil White, Executive Chair
• Francisco Paco Iglesias, Greoup COO

Analysts

• Kate Chow, Analyst at Bank of America
• Jack Cummings, Analyst at Berenberg
• Ruairi Cullinane, Analyst at RBC
• Alex Paterson, Analyst at Peel Hunt
• Gerald Khoo, Analyst at Panmure Liberum