Mobico Group Plc

Good morning and welcome to today's meeting, which is the last time I will be presenting MOVICOL results to you. Thank you for taking the time to join us for 24 full-year results. Firstly, I would like to start by thanking you all for your patience over the recent months. We appreciate that it has been some time since we last provided an update. As we go through this morning's presentation, I hope that you will appreciate why the process has again been longer than anticipated, with later conclusion of the audit due to complexities within the results. Overall, you will see that Mobico is continuing along a path to recovery, delivering on our commitments and making some important operational and commercial gains along the way. There are some areas where, despite the relentless focus, we have not progressed as planned, as it is the case with the closing of Germany PTA's negotiation. We will talk about this during the presentation. Helen will shortly talk more about continuing our focus on cash and our absolute commitment to debt reduction. But before I hand over to Helen, I would like to share our key messages from the 2024 results. Firstly, another record performance from ALSA and further growth from We Drive You has driven continued revenue growth for the group, with pricing being the key contributing factor in that growth. Mobico Group has delivered EBIT within guidance in full year 2024, with a corresponding improvement in free cash flow. Our comprehensive profit-improving initiative, Accelerate, delivered ahead of expectations communicated in our Q3 update, supporting an 11% growth in operating profits, which has been a key factor in delivering results that are within our guidance range for the year. We do have some significant impairments and adjusting items that have driven statutory loss for the year. These movements relate principally to North America, school bus, and the UK business, as well as an increase in the German rail owners' contract provisions, all of which Helen will talk about later. We have seen a modest but important reduction in covenant gearing to 2.8 times from 3 times, And as you know, reducing debt and leverage remains our absolute priority, and the sale of a school bus represents an important first step towards that ambition. A key contributor to the reduction in leverage in 2024 has been our much clearer focus on organic debt reduction, including more disciplined capital management. Whilst it is important to note that we have good liquidity and have no debt maturities for over two years, all options to accelerate debt reduction remain under active consideration. And last but not least, we have announced some important leadership changes. Phil White has joined as executive chair with effect from 1st of May, who is with us on the stage today. Paco Iglesias, the CEO of ALSA, has assumed the new role of Group COO. And Ken Engel, who is not present today, but is another transport industry veteran, has assumed the role of CEO UK and Germany. I'm very pleased to welcome Phil and Paco. Phil will be saying a few words at the conclusion of proceedings today. As you know, we have seen, would have seen, we announced the sale of North America School Bus Business to I Square Capital after a long and very thorough and wide-ranging sales process with a broad potential buyer universe. During the sales process, we received consistent feedback on the position of the business and valuation ranges. The transaction delivered a headline enterprise value of $608 million, that's £470 million, which represents a full year 24 adjusted EBITDA multiple of five times. Up from net proceeds will be circa 300 million pounds, with Mobico retaining 65 million of provisions for historical claim liabilities. The conclusion of this transaction is an important step forward for the company. Firstly, it delivers on our commitment to accelerate the reduction of our net debt position, of which this is just the first step. Second, it enables Mobico to reallocate cash flows away from a heavy capital-intensive business and focus them on more attractive growth opportunities with more attractive and predictable returns, specifically in ALSA and We Drive You. Completing this transaction was important for Mobico, but as we have said before, all other options to further reduce debt and leverage are under constant review. Going to operational highlights, I will go through all the additional performances in detail later in the presentation. But first, let me give you a brief overview here of the key developments. Overall, this has been another tough year, unwinding the challenges faced by our businesses and building a platform for continuing recovery and growth making decisive actions to restructure and reorganize operations, and with a relentless focus on improving operating effectiveness and profitability. I am grateful to our dedicated and hardworking team for the progress we have made. ALSA has delivered another record result. substantially underpinning the overall growth and profitability of the group, and with further opportunities ahead of us, including diversification to new sectors and new geographies. In North America, We Drive You and School Bus have worn new contracts and routes through the bidding seasons, despite undergoing a significant separation exercise that is now behind us. We Drive You continues to be a success story, delivering 18.9% revenue improvement versus 23, with continued strong growth expected. And in the UK and Germany, although challenges remain, we have taken important steps forward in restructuring and repositioning their operations. The German rail industry continues to face significant challenges that we, as other operators, are continuing to discuss with the PTAs involved, with negotiations' conclusion still pending. I'm really excited about the continued top-line growth supported by a good new contract win momentum. The key focus areas that have driven this outcome are a strong management of pipeline and conversion rate and an increased rigor on capital allocation discipline and a selective focus on best opportunities from a quality pipeline with 65% of our contract wins being asset light. At group level, we have won 36 new contracts, whose combined annual revenue is $144 million, up from $126 million secured last year. The total value of those contracts is $766 million. Of particular note, within that total are We Drive You and ALSA. The fact that We Drive You has continued to grow its portfolio despite the activity of the school bus sales and separation process is encouraging. Average returns on all of those new contracts include 10% EBIT margins and 28% ROCI. Overall, we were awarded 22% of the contracts for which we bid, which remains broadly in line with our historic conversion rate. I would like now to talk about pricing. Across all of our businesses, it remains important that the group utilizes pricing power, particularly to offset or even exceed inflationary pressures. This slide briefly describes where we have applied such price increases across the different divisions over 24. Our ambition remains to at least mitigate inflation through such moves, but remaining competitive in our markets and delivering best-in-sector standards for quality, on-time service, customer experience, safety, and value. I don't propose to go through all in detail, as we mentioned in the half year. It is important to make clear that we have become more disciplined in identifying where we need to make such increases and implementing them efficiently and in time. As you know, the group is in the midst of contract negotiations within the UK bus and German rail businesses. In UK bus, we have secured an improved funding agreement with Transport for West Midland that runs until the end of 25 and will result in an improved business performance for the current year. With the industry more widely contemplating a move to franchising, including the West Midlands, our discussions with our customers regarding long-term future relationships are ongoing and constructive, with the mayoral decision on franchising expected in May. In the meantime, the business remains dedicated to providing a best-in-class service and experience to our customers, supporting our market-leading reputation. In Germany, the rail industry as a whole continues to be beset by issues that are difficult to resolve. Active discussions with our PTA customers to find an equitable solution for both parties are continuing. This discussion covers two key areas. Firstly, addressing the multiple industry-wide challenges which include material disruptions caused by significantly increased infrastructure and maintenance work, which severely impacts productivity and reliability, triggering additional penalties. Additionally, this amplifies the sector-wide driver shortage issues and increases labor costs. And secondly, resetting the underlying profitability of all long-term contracts. albeit at somewhat a slower pace than we have hoped, their outcome remains critical to the business and both parties are obliged to reach an equitable solution. Despite this, there has been some positive movement in the knowledge reduction in 2024. Also in 2025, the PTAs have agreed a sector initiative that would lead to reduced services and penalties on delivery, and with that money being reinvested into driver training. So this remains a complex situation, and despite this being a top priority for the group, we remain reliant on the engagement of multiple third parties. Helen will have more to say on the detailed position on the German rail business later in the presentation. With that, I will now pass to Helen, who will take you through the financials in more detail.

Thank you, Ignacio. Good morning and thanks everybody for coming today. We're going to look first of all at the consistent financial imperatives and I'd like to begin by recapping those in terms of what's important for the company. Our key priority is improving liquidity and reducing the company's net debt. The North America school bus divestment is the first significant step to addressing our liquidity and net debt objectives. This action de-risks the balance sheet and improves our liquidity position. This is only the first step and all options remain on the table. after the close of the North American school bus transaction, and we'll continue to work through those solutions. In addition, we continue our organic cash improvement, cash generation, which over time will improve the net debt situation after we've covered the short-term capital obligations that we have during the current year. Our focus on sustainable, profitable growth is critical for the development of the financials of the business, contributing to improved liquidity and net debt reduction over time. To deliver this, we've improved our rigour around our capital decision-making in capital investment and also exploring CapEx Lite opportunities for the group. So how have we improved those investment decisions? We've put higher focus on capital investment decision-making by choosing the best opportunities from a quality pipeline. This helps improve our cash flow and our return on capital employed. And as part of this journey, we've lifted the overall skill set in the group finance function, ensuring we have the right support around financial decision-making for the group It's also building on existing high-performing team in business finance and in business development, recognising the workload anticipated with a more rigorous approach. The outstanding performance in Ulster, profitable growth in We Drive You and progress in the UK turnaround have all contributed positively to cash flow and our ability to reduce debt over time. Although this isn't a quick fix, our programme of cash improvements has achieved significantly more than our target of £25 million full year 2024 and will continue that way of operating through 2025 and beyond. More than 25 million was achieved from a standing start in May through December, 2024. We actually achieved 50.4 million pounds in that seven month period. We continue to identify cost reduction opportunities across the group, and this has become an embedded culture for Mobico rather than one-off programs or projects going forward. Now we come on to talk about the financial highlights and allow me to take a few moments to share these with you so that when you look at the figures on the next page you've got a feeling for what's behind them. Revenues improved driven by growth across most markets underpinned by positive passenger demand and a strong performance by business development to grow that pipeline of opportunities. Mobico Group has delivered EBIT within guidance before we talk about impairments in the full year 24 with an improvement in free cash flow and debt. This is despite the fact that German Rail have not yet concluded PTA negotiations and the ongoing implementation of the complex turnaround in the UK. As we said at the half-year, the UK turnaround is taking longer than we initially expected. We won't see the full benefit of those UK run rates until this year, 2025, but we still want to deliver full-year guidance for the group before considering those one-off impairments. Profit improvement initiatives across the group, including Accelerate, remain on track, with divisions at various stages of performance and delivery. And Ulster remains the single biggest profit contributor to the group. We're building the other businesses, so for example, We Drive You has exciting further growth potential. The group adjusted net debt was stable versus the full year 23 year end, with an improvement in covenant gearing. and the group has shown good positive cash generation with free cash flow before growth capex and M&A, up significantly year on year. This is driven by improvements in working capital and initiatives to improve cash, which has funded an increase in maintenance capex. We have plans to further deleverage, with the organic initiatives improving, such that we've been able to prove them successful in 2024, we'll continue that trend in 2025, and our level of ambition continues to grow. The statutory operating loss is a result of the Goodwill impairment charge from North America School Bus, together with an increased onerous contract provision in German Rail. And I will come on and talk about these in detail through the presentation. The sale of North America School Bus brings several positives to the group. It brings certainty from a liquidity perspective, given the debt repayment profile of the group. It mitigates interest costs. It gives us greater flexibility and resource allocation to stronger growth opportunities and greater business resilience generally. It's also true to say that North America School Bus is non-core for Mobico. It would require significant capital with less attractive returns than the rest of the portfolio, and I'll come on and talk about that in a bit more detail. The group's delivered on the financial targets within its control in terms of revenue, profit, cash and debt, before those impairments, which are one-off in their nature. The group is delivered within profit guidance at the lower end of the range, but still well within the range, despite those inflationary headwinds and not closing the DTA negotiations for Germany. The goodwill impairment in North America's school bus is a result of our normal review process each reporting period and is not connected with the sale of school bus. And it's a reflection of lower than anticipated growth in the market and headwinds of cost. That impairment, while disappointing, is unavoidable. The capital investment required to improve school bus is prohibitive and would take too long to turn around if it remained within the group. We continue our support for the UK turnaround, which is progressing. We've implemented a new financial model in Germany, which gives us more rigor, and we invest in further growth opportunities across the group. So our business is growing, it's delivering profit and developing strong cash generation and greater resilience. So now I'd like to take you through the financial results in more detail. And before doing that, we need to address the issue of the restatement of 2023, which you can see on here. So as a comparison for this year's results, full year 23 is restated with a correction to the owner's contract provision in German Rail. In line with UK accounting standards, we're required to adjust for any changes expected over the entire life of the contract on a prudent basis. This restatement has increased the 2023 group statutory operating loss by £22 million to £43.2 million, and I'll talk about those specifics shortly. Now to the 2024 underlying business results. Group revenue increased by 261.5 million pounds and 8.3% growth year on year to reach 3.4 billion for 2024 full year. And we'll break this down by division in the following slide. Let's now look at the group operating profit. Despite several of the group's divisions being in various stages of recovery, group full year profit, as I mentioned, is 187.7 million pounds and 11.8% increase versus 2023 before we talk about impairments. Ulster and North America, particularly We Drive You, have performed well, partially offset by that lower profitability in the UK and Germany. Our adjusted basic earnings per share increased to 4.8 pence due to EBIT growth, offset by some higher finance costs and profits from associates. No dividend has been paid at the end of the financial year 2024. I'll address free cash flow more fully shortly. Return on capital employed is at 10.2% versus 7% in the year before, and it's driven primarily by the write-down of goodwill in school bus, leading to a lower asset base. We continue to focus on contracts with improved returns in relation to capex we've invested, and we're becoming a more capex-like business. This is enabled by the pipeline approach that I talked about earlier. Covenant gearing at year end 2024 improved by 20 basis points to 2.8 times, a positive development versus three times at the year end 2023 and in line with the commitment we gave at the half year. Improvement is a function of our increased profitability while holding adjusted net debt stable versus the year-end 2023, and that was possible because although we encountered headwinds from a cash point of view, we had generated significant extra cash. So overall, we've delivered revenue growth, we've managed those debt levels to hold them stable, we've generated cash and delivered profit within guidance before we talk about those one-off impairments. So we move next to look at divisional performance in a little more detail, and Ignacio will also talk about it a bit later on from an operational standpoint. We delivered profitable growth in Ulster and North America in both We Drive You and School Bus, while the UK and Germany continue their recovery. In 2024, Ulster delivered an outstanding performance, the growth that led to revenue of £1.3 billion, £162 million up from full year 23, which is a huge growth achieved in a single year. Our regional long-haul sectors in Ulster saw a 36% jump in adjusted operating profit to £186.1 million from £136.8 million fuelled by that revenue growth. Long-haul has continued its momentum due to the leadership shown in the Ulster business as well as a successful young summer scheme. North America is showing good progress with 8% reported revenue growth at 1.2 billion from 1.1 billion, with operating profits increasing by 11.2 million to 38 million pounds. Now, although we don't report audited results by each North American division due to the recent separation of the businesses, I can provide illustrative figures, and I'd like to do that. I think it's going to be helpful. So, on an indicative, unaudited basis, North America School Bus delivered £793 million of revenue, which is a growth of 4% year-on-year. Its indicative operating profit was £9 million, with an operating margin of about 1%, an improvement on prior year. North America's school bus has achieved its first net positive route outcome in a decade, which is showing its recovery. And it operates with a focus on school year rather than Mobico financial year. So when we talk about price increases, for 23-24, we saw 7.5% on a school year contract basis, and we see the early effects already of the 6.3% overall price increase for school bus for the 2024-25 school year. Significant capex is going to be needed if we had retained that business to fuel higher growth and complete its recovery. Come on and talk about We Drive You. We Drive You is an exciting business for us. It's experienced in the region of 16% revenue growth, despite reduction in volume with a single major client, and it's been able to manage those headwinds incredibly effectively. In 2024, those illustrative, unaudited financials show revenue for We Drive You of £412 million and an operating profit of £29 million, which is up 31% versus the prior year, with significant opportunity for growth. A higher cost base, where we've invested in people, has affected our ability to translate, at the moment, all of that revenue growth into profitability. Examples of such costs are driver wages and maintenance, but also investing in overheads. and over time we'll be able to scale our revenue to result in recovery of that investment. We Drive You has a solid pipeline of opportunities and it continues to develop the CapEx Lite proposition. Coming down to talk about the UK, delivered revenue of £623 million with growth of £12.9 million, operating profit down by £17 million, looking at bus and coach individually, UK bus revenue, £265.5 million, an increase of £19.5 million. UK coach revenue, £357.5 million, slightly down at £6.6 million year on year. Coach was a key driver of reduction in profit when you compare to the prior year, and that's really due to the headwinds of the rail strike, where we received significant benefits in 2023, and as we've cycled that performance, we've not been able to recover all of that. German Rail maintained revenue of £256.5 million. It's a £3.3 million decrease on prior year expressed in sterling, but on a local currency basis, it's actually an increase of €4.2 million. This was despite the revenue that we lost due to the national driver shortages, which is a challenge faced across the industry, and you'll hear us talk about that today. The adjusted operating loss of £9.3 million versus the prior year was close to break-even, but still a disappointing result. That deterioration is principally due to labour costs, overhead inflation and higher penalties, which all of the industry is facing. and have resulted from those industry-wide driver shortages causing an agreed mileage reduction. Those industry-wide shortages have had a significant adverse impact on results, which, as we talked about, because we haven't closed the negotiations with the DTA, those have not yet been compensated, which we would expect to have a positive effect financially. So in summary, we're achieving revenue growth across the business, across 90% of our business, and 74% of the business's revenue shows double-digit profit growth. So now let's just talk about Accelerate and revisiting what we talked about in the half year when we talked about the programme. At the full year 2024, Accelerate programmes delivered ahead of expectations with 52 million of savings now embedded. Accelerate is over delivered by 2 million, the target we set and spoke to you about at the half year. These savings are across organisational design, procurement and digital enablement. The Accelerate programme will now deliver sustainable savings of £52 million for the full year 2025 and beyond, and the mindset of cost review is a cultural shift. We've appointed a new head of procurement, and we've also focused resources on indirect costs to maintain momentum in this area with benefits for the future. I'm going to walk you through adjusting items in detail because I think that's something that you would probably like to understand further. And these are the adjusting items that are bringing us to a statutory loss after all of that good performance that I talked about and after delivering ongoing profitability within guidance on an underlying basis. These are one-off, but I'll take you through each of these. To start with, we have £27.7 million in non-cash amortization for acquired intangibles, which we're basically classifying as an adjusting item due to its size and nature, which aligns with historical accounting practice for the group. North America's school buses post-pandemic recovery still faces headwinds, and the recovery is not quite as fast as we would like because we're seeing driver wage inflation, rising maintenance costs, and potential fleet cost inflation from new tariffs. These have lowered our profitability and our future cash flow forecasts. Future improvements are only included in these figures for audit purposes, if evidenced by full year 24 year-end documentation, and we're not able to substantiate significantly to be able to improve on the forecast. And consequently, a 547.7 million goodwill impairment for North America's school bus was agreed in full year 24 and is an entirely appropriate adjustment in our balance sheet. It's unconnected with the sale, and it really reflects the appropriate carrying value for this asset in the balance sheet of Mobico. On an ongoing basis, we also have to review onerous contracts and the provisions in accordance with UK accounting rules for accounting for contracts. Remeasurement of remaining onerous contracts and impairments resulting from both the COVID-19 pandemic and also North America driver shortages result in a total credit of 4.8 million as these customer contracts have returned to profitability across the group. We have recorded an 86.4 million charge related to the re-measurement of owner's contract provision in German Rail on the RRX contracts. And a shift in the broader industry landscape primarily drives this change, experiencing persistent, slower than anticipated recovery from driver shortages and the penalties, as well as other cost pressures. We'll cover Germany in more detail a little bit later in the presentation. We then have $50.6 million in restructuring and other costs, and these relate to group-wide strategic initiatives and restructuring, from which we'll see future benefits. This includes expenses associated with our Accelerate initiative, which came down as we expected second half on a run rate basis, as we talked about at the half year. This restructuring also includes costs directly linked to the previously announced sale of our North American school bus division. Below operating loss, so it doesn't affect the reported profit, there's a 194.4 million tax charge in relation to the derecognition of tax assets in the UK and North America. And this is because of the length of time it would take to utilise those losses based on the future cash flow forecasts. It's entirely aligned with UK accounting practice, where the standard for attaining tax losses in the UK has a rather high bar for acceptance. It's important to note that this write-off has no impact whatsoever on our ability to utilise those losses in the future and therefore has no impact on future cash tax payable. Excluding North America school bus impairment, adjusting items are lower than full year 2023. While the North America school bus impairment is disappointing, it has to be done to recognise the appropriate level of goodwill in the accounts, given we don't amortise goodwill on an annual basis for the group. I'd like to come on and talk about cash flow. Our operating free cash flow generation has seen a significant uplift of £46.4 million compared to last year, before we then utilised some of it on growth capex and M&A. And several key factors drive this positive momentum. Firstly, we've delivered improved EBITDA of £426 million in that full year 2024, and that increased profitability clearly translates to improved cash flow. Moving on to maintenance capital expenditure, the £157.9 million invested primarily focuses on essential asset purchases, for example, replenishment of vehicles for profitable contracts. The maintenance investment is an increase of £22.2 million against prior year, driven by the renewal of the profitable asset base in Ulster. And we've achieved a substantial improvement in working capital, resulting in a 48.2 million cash inflow. And that's a direct consequence of our focus on cash collections through full year 24, particularly in Ulster, which we're actively rolling out as best practice across the group. And this has been achieved without any compromise whatever to customer relationships. This is not about stretching payables or collections in any way. These three items together produce operating cash flow of 309 million pounds full year 24. Interest costs increased by 22.6 million, and the increase in interest paid is due to two main factors. Firstly, the first full interest payment on a new 500 million euro bond, which replaced a maturing bond with a lower interest rate in September 23. And secondly, the impact of higher interest rates on our floating rate debt and RCF facility. Tax was lower by £12.2 million. We paid £15 million compared to £27.2 million in full year 2023. This lower figure is primarily due to a tax refund received in ALSA related to historical tax losses, which were already accounted for as receivable at the end of full year 2023, but we received the cash in 2024. So free cash flow before growth capex and M&A grew by £46.6 million to £210 million. Our growth capital expenditure amounted to 59.3 million pounds, an increase of 41.4 million compared to 17.9 outflow in full year 23, and that increase in expenditure reflects several key strategic imperatives. Increased investments driven by new growth contract wins in North America, the timing of fleet purchases in Ulsa, And the fact that the prior year benefited from a £12 million funding receipt from the local authority related to the new Casablanca fleet, so it makes this year look comparatively worse by £12 million. And finally, our acquisitions resulted in a cash outflow of £57.9 million, primarily related to the acquisition of Canary Bus in Ulster, which is performing well and on plan. So you can see that after investing additional funds in maintenance capex, growth capex and M&A, we're still delivering an improved free cash flow of £6.7 million at £92.9 million. We continue to focus on cash improvement targets, now without the capex requirements of North America, which I'll come on and talk about, North America school bus, I'm sorry, for the second half of 2025, given that we expect the close to take place in July. Coming on to look at net debt in more detail, Covenant Gearing had an improvement of 20 basis points to 2.8 times, driven by the improvement in earnings and our ability to hold net debt stable. We did this despite various headwinds by generating the cash that we've just talked about. And you can see from what I've talked about about how it's been utilized. As discussed in the half-year results, we've extended the core RCF facility for a further year with a one-year extension option available, taking us to 2030 if we decided to enter into those discussions. We could consider requesting an extension, but we're not ready to share our thinking at this time as we're currently reviewing the total debt stack post the sale of North America's school bus. To break down the net debt items, 23.1 million of coupon payments on the hybrid instrument were made in the period, in line with prior periods, and other inflows of 26.7 million pounds reflect the movement in exchange rates, principally on the group's Euro-denominated debt and the settlement of foreign exchange derivatives. This resulted in a marginal change in net funds flow. The sale of school buses is expected to be broadly neutral to covenant gearing in full year 25, depending on the timing of completion and the adjustments on the close. So now let's come on and look at debt maturity, and we can see that it's improved. As of the 31st of December, the group had approximately £1.2 billion of net debt and £600 million of undrawn committed facilities, with an average maturity of 5.9 years. Importantly, our revolving credit facility was extended and remained undrawn by the year end. We had a total of £800 million available in cash and undrawn committed facilities. To ensure financial flexibility, the Board requires a holding of a minimum of £300 million in cash and undrawn committed facilities. This policy excludes off-factoring facilities which efficiently manage working capital through the without-recourse sale of receivables. We strategically utilise foreign currency debt and swaps as net investment hedges, and these instruments are crucial in mitigating potential volatility arriving from the foreign currency translation of our overseas net assets. So as of 31st December 24, the proportion of group debt at the floating rates remain consistent with the prior year at 21%. The £500 million hybrid bond is a core element of our capital structure and it provides important financial flexibility as the business continues to balance deleveraging with investment for growth. As we approach the call period of November to February, we'll assess our options and the market conditions to determine the best course of action. The final amount of net proceeds from the North America school bus will be subject to customary completion adjustment by virtue of the completion accounts mechanism. And after repayment of school bus non-IFRS 16 leases, approximately $75 million at 31st of December, the remainder of those net proceeds will initially be held as cash. So now let's come on and talk about German Rail. You heard from Ignacio that the German rail industry continues to face significant challenges that we and other operators are continuing to discuss with the PTA. Those industry delays have prompted us to increase the owner's contract provision in the normal annual review of such provisions, giving changes in our view of the contract's future profitability. Three main factors impact that future view. Firstly, we continue to experience persistent levels of driver shortages, which lead to contractual penalties incurred due to train cancellations. Secondly, we're facing higher pay inflation. And finally, central overhead costs have also contributed to significant increase in the RRX owner as contract provision. It remains the case that the PTAs are obliged to find a mutually acceptable solution to these problems, which are referred to in the contract as equitable solution. Despite the challenges, we've made excellent progress in closing the driver gap. Training course capacity now at Mobico has increased by 121%, and we now have driver training places up from 24 in 2023 to 164 currently. And those will come to fruition later this year, as you heard Ignacio refer to. It's a 12 to 18-month lead period, and we're nearing the end of that, which will help significantly. We're also improving productivity to help mitigate the impact of driver shortages. This investment in drivers, crucial for the medium and long-term health of our operations, also contributes to the current onerous contract provision increase because of the costs involved. Let's come on and talk about prioritising debt reduction. Now, as we've talked about and as I promised, I'd like to share some more details on our debt reduction and our key focus as a leadership team. Due to trading performance and other initiatives, the group's net debt level was stable from full year 23 to 24, and our government gearing, as I mentioned, was reduced to 2.8 times. We recently announced the sale of School Bus for net proceeds of approximately $365 to $385 million. This sale is an essential first step in our journey to deleverage the group, and we're pleased to have successfully concluded what a comprehensive sales process. We expect the close of the transaction to take place in July of this year, The Accelerate programme has proved highly effective in delivering annualised savings, which we've talked about, £52 million per annum. And in parallel, we're working on continued initiatives to conserve cash and reduce our debt organically. These plans are business-wide, with a pipeline of initiatives greater than our target to ensure delivery. We're ambitious, and we're engaging the entire organisation around the metric of cash. It's easily understandable, everybody can relate to it, and everybody can have a direct impact. We made a strong start by significantly exceeding our full year 24 target of £25 million, which we've now delivered £54 million for last year. And we're confident that we can achieve our target in 2025, which was initially set at £50 million, which we hope to significantly exceed. These are proven initiatives where we've already delivered. In the short term, net debt will increase due to historic capex commitments, where advantageous terms were negotiated, and you'll see that in 2025. It benefited in 2023 and 2024, but you'll see a short-term bump in 2025, and that relates to received vehicles that we now have to pay for. Those were favourable commercial terms at the time, and commercially positive for the group. We just need to pay the bill. This takes nothing away from the underlying improvement in cash and our ongoing commitment to self-help by looking not just at strategic options but also at organic deleverage. I'm now going to hand back to Ignacio to take you through a brief operational review before closing the presentation and opening for questions. Thank you.

Thank you, Helen. Now moving into details across all areas of the business. Turning to ALSA, the division has once again delivered outstanding revenue growth, reflecting consistently good progress in regional, long-haul, and urban bus products. We have also seen continued momentum on diversification, including medical and international expansion in countries such as Portugal. We also saw our contract in Bahrain extended for five years, which is a great sign of the outstanding service and customer satisfaction that we provide. In Saudi, the coach contract won in 23 is performing well and is attracting many new appealing business opportunities in the area. Our success in Bahrain and Saudi has built strong credentials and highlights the potential platform for future growth across the Middle East. There was also investment made in a state-of-the-art CRM and revenue management tools, which have delivered high-quality customer segmentation data and have enabled increasingly targeted marketing to increase returns. As a reminder, this exceptional level of performance in the division has been delivered in the face of increased competition from high-speed rail, highlighting the exceptional resilience of the business. Moving on to North America, and starting with a quick recap on school bus, the underlying revenue growth of 7.3% for the year reflects the first net root wins for many years and targeted pricing actions that had a positive impact on the bottom line. There were also significant operational improvements implemented, which included areas such as fleet management and driver training. And as previously noted, the $548 million impairment charge is a consequence of lower profitability and cash flow forecasts due to continued market challenges despite significant operational improvements. We Drive U continues to offer significant growth opportunities, which have resulted in almost doubling the profits delivered across the past three years when I decided to combine the divisions, moving from $19 million in 2022 to a profit of $70 million in 2024. This has been underpinned by operational improvements and significant actions over loss and low margin contracts, The business has displayed strong resilience and an ability to capture new contracts despite the not inconsiderable destruction of the separation from the school bus business and the reduction of 50 million revenue from a top high-tech customer over the period. We drive you also links strongly to one of our key strategic focuses, that being enabling the business to direct its growth towards asset-light investments. This was evident in 2024, with over three-quarters of the new contract wins being asset-light investments. There have also been changes made in the operations to optimize the business setup. This includes improving the operating base as well as newly separated and better resource functions. And looking forward, margin will continue to recover and expected through H225 and also into 26, which will follow the H125 increased cost through the separation process. In the UK, revenue growth reflected passenger growth together with fare increases in July 23 of 12.5% and in July 24 of 6%. In addition, the successful negotiation with Transport for West Midland secures a funding extension at a more equitable profit margin until December 25. The appointment of Kevin Gale as divisional CEO is a cornerstone of the continuing turnaround as he brings considerable operational experience both in the UK and Germany, and as well as bus, coach, and rail. In UK coach, decisive action was implemented last year to optimize network and operations. This included a redesign of a seasonal network to cope more efficiently with seasonal volume changes. review of third-party costs, improved asset utilization, and reduction in maintenance costs. This has delivered significant run rate efficiency into 2025. In NXDS, the transport solutions, we saw 5 million improvement in losses, with further work underway to eliminate remaining losses during 2025. We secured important strategic retention of key airport contracts in Fort Dublin and Stansted, and this adds to the successful renewal of Luton at the end of 23. Moving into Germany, it was another difficult year, reporting revenue of 256.5 million, down 1.2% on a constant currency basis, and the adjusting operating loss was $9.3 million. Revenue continued to be impacted by higher operational penalties because of train cancellations caused by the continued worsening of industry-wide factors, worsening infrastructure reliability and increased infrastructure repair and renewals activity impacting on driver availability and utilization. As mentioned by Helen, an 86 million charge was taken to increase the owner's contract provisions for RX1 and RX2 and 3, reflecting the further deterioration in anticipated profitability over the life of the contracts. However, it is important to note again that the German results presented are stated prior to any mitigations that might be agreed with negotiations continuing. Despite the above challenges, significant investment and progress has been made in the year to address the underlying driver shortages and ensure a strong position moving through 2025 and into 2026. A meaningful driver recruitment, training, retention, and development program was launched in early 24 to arrest the decline experienced and reverse the dependency on agency drivers. By the end of 24, there were a total of 164 candidates in training compared to 59 in the previous year, with further 152 expecting to commence training in 25. As a reminder, the training process lasts 12 to 14 months. In Q1, we have already seen net increases of 22 drivers. Solving the driver shortages will enable us to progressively reinstate mileage and significantly reduce penalties. Now, I'll turn briefly to our opportunity pipeline. As I have mentioned earlier, the largest part of the growth prospects we can have are increasingly asset-light in nature. That's important, partly because it reflects the continuing opportunity to shift towards being a business with lower capital intensity, greater flexibility, and higher ROCI. Indeed, that was a key driver behind the decision to sell a school bus. But the dominance of asset-light options in the mix allows us to both favor lower capital intensity while also cherry-picking those opportunities that do require investment but offer the returns to justify it. So, to summarize our objectives from here, In conclusion, let me recap on key focus areas for full year 25. We remain focused on our consistent financial imperatives, net debt reduction, sustainable profitable growth, and UK turnaround and improved margins and cash generation. Optimizing or exciting opportunities in ALSA and newly consolidated We Drive You. Conclude the German PTA rail negotiation. And finally, our new appointed CEO Paco will be driving best practices and driving operational improvements across the group. Before we go to Q&A, and this will be my last presentation as CEO of Mobico, I would like to say a few words. It has clearly been a more difficult period than we all would have hoped for, but I would like to thank you for your support and your time. I would also like to put down on record my admiration for the work of our Mobico colleagues. Across our operations, our teams, the drivers and those in the depot and the central teams play a tremendous role in the communities which we serve, and it's been a privilege working with them. And with that, we can go now to the Q&A, and Phil will say a few words at the conclusion of our meeting today. We'll take the questions from the room. So Gerald, you were the first one.