Mobico Group Plc

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. Okay. So you'll have to bear with me if I sit down. So sorry for this. So anyway, can I first introduce My colleague sat next to me, on my left, is Brian Egan, who's just joined us as CFO. Brian's got a lot of experience in many difficult businesses in many difficult countries, so he's definitely the right guy for us at the moment. You'll find that he's a very softly spoken, polite, gentle, gentle Irishman from Dublin. But believe me, don't be fooled by that, he's nothing of the sort. Anybody who worked with him in the room... Well, no, he's as absolutely hard as nails, especially when you're negotiating fees with him. Okay? So 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. Now, 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. So that's all down to Paco and his team. Welcome. 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. But we've got one thing in common, although we speak differently. We've all joined the board this year in 2025. So what you see before you today is a brand new team. 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. Sorry to calm them down on that a bit. And when Brian came, we did a full roadshow of our lenders, our banking colleagues. And 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, so hopefully there won't be any unwelcome surprises. but most importantly we will deliver what we have promised now this should be pretty easy for us because this is how we normally work we're normal people so we're going to be open and honest and probably we'll be a bit too honest at times 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 and we'll always try to over deliver But we are human. Sometimes we won't get it right. We can't get it right every time. We will make mistakes. So, as it says on your pads in front of you, quite interesting headline which I've just seen. What will inspire you today? And this is what we're here for. So we hope we inspire you. So, 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 the strange questions are so easy. What are we? And 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. So what are we? Now 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 UK, the USA and Spain and some other business and some other countries. That's a pretty obvious answer to that question. But 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. So what I'm going to do is take you briefly through the group and all our divisions. And we're going to be absolutely open and honest with you on this. So 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 over-promising and under-performing. And we're over-leveraged 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 a 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. And 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 but please remember we are a new team and we don't have all the answers just yet so let's take a look at our various divisions firstly coach This is where it all started in the 70s with National Express coaches created under National Bus Company. And we still have a national network of coach services in the UK, mainly run by third parties under our branding. I think that model is well known to you all. But 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 UK, is highly recognised and it will remain as it is. We have today announced that Xavier Martinez Prieto has been appointed as MD of UK Coach. 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 travelling with us. Although at the moment we are maintaining our passenger numbers, which is great news, we are experiencing reduction in our yields. So 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's the 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. 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. So 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 80s, we will embrace the change and do our best to help our local authority partners achieve a seamless transition to the new regulated era. Over to the States. We Drive You operates shuttle and transit services across the USA. It has nearly 100 contracts, the vast majority of which are profitable. but 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 mobilisation at the start of the contract and significant driver management issues. As you know, We Drive You separated from its sister business, School Bus, when School Bus was sold earlier in the year and it is now run as a separate stand-alone business. 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 less 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. And we are looking forward to more work by Deutsche Bahn on the network to fix the problems we have that have plagued the system for quite some time now. We have a new management team in Germany and the UK 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 finalised 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. But I can't pronounce it, so Paco, what is it?

ALSA is Automobiles and Worker Sociedad Anónima, but I think Phil has made up a new name for ALSA, but it's much better, much better.

But when I googled it, some wag had called ALSA a life-saving acquisition. And it truly is. And we much prefer Alsa to the big name, don't we, Paco? But we like a life-saving acquisition, because that makes me feel good as well. So Alsa truly has been a life-saving 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 Canaries, 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 like contract in Saudi Arabia. This contract is valued at over 500 million euros and is part of a 75 billion euro global investment there to create the world's largest entertainment destination. So if we get that, that will be really good news. That also 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 maximising ALSA's operational experience to drive improved performance across the whole group. So 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. And thirdly, we've got to succeed by delivering on our premises. We've got to stop letting people down. So we're streamlining our management structure, we're attacking overheads, we're removing duplication and integrating businesses where this makes sense to do so. Sounds simple and it is. 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 well i always feel the biggest motivator for people who work for us and work with us is not money it's the successes of 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 and 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. But to achieve success, we've got to deliver what we've promised. And we haven't done this for quite a while. Which is not good. So, 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. And we've got to achieve the right value for our investors, earn back their trust, and we want to make them love us again. So 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. But the bottom line is not so good. We're not converting our revenue and our cash into profits. So we've got to manage our costs better. 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 your customers and your stakeholders pay for you. So ALSA has delivered another strong performance this year, but unfortunately it's not been replicated elsewhere in the group. Our UK, We Drive You 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 9 million down on last year and we've also had to make a further impairment charge on the sale of school bus. This means we have wasted even more money on bad investment. I'll be as bold to say that. We've got to invest our monies a lot better than we have done in the past. So it's a first half where we could have done much better. But as I've said this morning, we are taking immediate action to address all these underlying issues. And 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.