Mobico Group Plc (MCG) Earnings Call Transcript & Summary

Good morning, and welcome to the Mobico Group plc Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to Executive Chair, Phil White. Good morning to you, sir.

Good morning. Good morning, everyone, and welcome to our 12 months results presentation. I'm Phil White, and I'm Executive Chair at Mobico. Can I also introduce my 2 colleagues in the room sat next to me. First of all, Brian Egan, our CFO; and Paco Iglesias, our Chief Operating Officer. As usual, we'll start with the highlights with me, followed by the financial review and then operations. Turning to the highlights first. As you can see, we've delivered significant progress in 2025. Revenue increased by 6% to GBP 2.8 billion, while operating profit increased by 9% to GBP 198 million. Operationally, we achieved nearly 25 billion passenger kilometers and secured new contracts worth over GBP 1 billion, a great result. Importantly, we have reached an agreement with the 5 German PTAs in North Rhine-Westphalia on the restructuring of our rail contracts. This derisks the business and assures all our rail operations are sustainable in the long term. All of this has been achieved while making solid progress on safety throughout the whole organization. As you all appreciate, this is something which is absolutely integral to the way we operate. In terms of strategic update, before we dive into the numbers, I want to remind you of the strategy we announced at our H1 results of '25. Our road map hasn't changed. We remain totally focused on stripping away complexity so we can see the high-performing businesses that we know are there. While continuing to cut through that noise, it means streamlining our management structure and aggressively attacking overheads. By being smarter and integrating our operations where it makes sense, we are becoming a leaner, faster and more effective organization. On strengthening our balance sheet, our financial health is paramount. We are focused on generating cash, improving liquidity and reducing debt. Every pound of CapEx is being scrutinized to ensure maximum value, and we're leveraging ALSA's operational excellence to unlock synergies group-wide. Through simplifying and strengthening, we are putting the business back on the path to success to a place where we used to be. In terms of progress and priorities, the financial impact of actions across the group are already visible with adjusted operating profit of GBP 198 million this year. After a challenging start to '25, we delivered a record H2 performance of GBP 138 million. I'm also very pleased to report that all our divisions were profitable in H2. In Germany, we've taken all the necessary steps to make our rail business sustainable by restructuring our contracts to eliminate the significant cash flow over their remaining lives. Once the agreements are formally signed, we'll be able to provide you guys with a much more detailed breakdown of the figures. Until then, I would ask you to please bear with us in respect to the amount of detail we can share with you. We are aggressively reducing costs with some savings delivered already in '25, but we've already announced today that we will be delivering GBP 75 million of cost savings in 2026. And this is an annual run rate of GBP 100 million by the end of the year. We have largely integrated UK Coach into ALSA to create a more robust business. And we have also completed our exit of loss-making businesses in NXTS in UK Coach and the loss-making CARTA contract in WeDriveU. Despite the progress to date, we do recognize challenges ahead and our priorities for 2026 are very clear. As I've said before, our strategy is simple. It's simplify, strengthen and succeed. While our story is one of transition, this should not take away from the fact that ALSA has delivered yet another record year. This was driven by growth in Spain and further revenue diversification. In Morocco, we did face some challenges, which has led us to a reduced operating footprint in the country, but still remains a very profitable business. WeDriveU completed its first year as a stand-alone business, and we apply the lessons learned to improve our operational and financial performance. We've provisioned GBP 52 million for WMATA, that's our contract in Washington. We aren't waiting for a miracle there. We can't afford to. We are having to pursue legal redress with the client, but ensuring that it no longer distracts from our mainstream core operations. In the U.K., the integration of Coach into ALSA is now largely complete with operational and financial benefits starting to be seen from the beginning of the year. And in Bus preparations continuing for franchising, which is due to start in '27. Across the group, we have maintained strong momentum, securing 25 new contracts with a total contract value of GBP 450 million. If you included nonconsolidated joint ventures and joint operation successes, particularly including the Saudi Arabian project in Qiddiya and the Guadalajara health transport bid. If we were to include these in the numbers, the total value of new contracts in '25 exceeds GBP 1 billion. Furthermore, we also expect to be awarded 2 key contracts in Spain in the coming weeks. These include the retention of one of ALSA's largest regional contracts and also the expansion of our business in Ibiza, where we'll become the largest operator on the island. A key highlight is the ongoing growth in ALSA passenger volumes, which reached 640 million total passengers in the year. This was largely driven by a growth of 10% in Spanish domestic demand, mainly regional and urban results. We expect this momentum to continue in 2026 as a Spanish single ticket, which offers unlimited travel for a flat monthly rate becomes embedded in consumer habits. I will now hand over to Brian, who will take you through the financials in more detail.

Thank you very much, Phil. Good morning, everybody. There's quite a bit -- I will go through it as fast as I can. But first of all, before going through the '25 figures, I want to mention that the '25 numbers have been restated for an GBP 800,000 EBIT impact in Germany and also reflect discontinued operations of School Bus and NXTS. This ensures a clean like-for-like comparison related to the performance that we're discussing today. Revenue of GBP 2.8 billion represents a 6.2% increase from 2024, driven primarily by ALSA's strong growth at 12.8%, reaching EUR 1.5 billion. This reflects continued diversification and great performance in regional and urban divisions. We have also enjoyed good revenue growth in WeDriveU of 4.7% from new contract wins in both shuttle and transit businesses. Revenue growth had delivered a 9.3% increase in operating profit, noting the second half performance was significantly better at EUR 138 million versus EUR 60 million in the first half. It is also up 20% on the same period last year. And this reflects the improved operational performance and also the benefit of cost savings arising from the restructuring improvements that we have been making. Free cash flow was EUR 77.3 million. This was lower than last year, mainly caused by cash outflows related to School Bus before the sale. Covenant gearing improved by 0.1x helped by the proceeds from School Bus. And in terms of statutory results, we went from -- decreased from 12% from -- 21% to 12%. To understand the bridge between our adjusted and statutory operation profit, there are several nonoperating charges that I would like to walk you through. There were no changes to German rail OCP in the period. However, we did realize -- utilize GBP 56 million of provision in the year, leaving the remaining provision at GBP 133 million. This provision will be reviewed in detail at the 15-month audited results. Moving on to WeDriveU. We have made a GBP 52 million onerous contract provision in respect to the WMATA contract. However, we are seeking legal address from the customer to recover the ongoing losses. We expect the outcome of the legal procedures to be successful and the contract loss is significantly reduced. However, the benefit of these future of this legal settlement is not included in the provision. So in other words, we do not expect the loss to be GBP 52 million. We expect to get a settlement, which will hugely reduce that. And we are confident of a favorable outcome. However, the process will take 18 to 24 months. The utilization of the provision in '25 was GBP 4.5 million. It is worth also taking a moment to say that we have learned from this WMATA contract. We have now overhauled our North American bidding process to include vigorous review procedures. A GBP 38 million charge has been recognized in the income statement for retained legal liabilities tied to the open insurance claim from the School Bus sale. The charge stems largely from material adverse developments in more significant individual cases and the in-year cash impact of settling claims was just under GBP 19 million. In Morocco, following a period of rapid change in the local operating environment, we have taken a GBP 27 million charge. This reflects a combination of price concessions we made in Casablanca, which enabled outstanding debts to be settled and a noncash impairment charge following the abrupt transfer of our Marrakech and Tangier contracts in December. To put this adjustment in perspective, on an adjusted basis, Morocco contributed profit of GBP 8 million compared to just under GBP 13 million in 2024. Amortization of intangibles within acquired business from continuing operations increased by EUR 2.8 million during the period, representing an annual charge for intangibles such as acquired brands and customer contracts. Finally, as part of our strategic initiatives to stabilize and improve the group's performance, we invested GBP 35 million on restructuring and streamlining costs. This includes transaction fees related to school bus disposal and the Simplify for Success cost program, which has already delivered benefits in 2025. The end-year cash impact for the restructuring is just under GBP 30 million. Overall, there was GBP 118 million cash outflow due to adjusting items in the period. And this figure includes adjusting items for discontinued businesses. Turning to our balance sheet provisions at the bottom of the slide. We currently have GBP 133 million remaining in the German OCP, and we will reevaluate the provision for -- as part of our 15-month audited results as it will be dependent upon the finalization of the legally binding agreements with the PTAs, which are due to be signed before the 30th of June. Of the GBP 47 million remaining in the WeDriveU provision, we expect to utilize GBP 8 million in 2026. In terms of the divisional results, ALSA was our most significant growth driver with revenue increasing by 12.8% to reach the GBP 1.5 billion mark. And operating profit increasing by 14% to GBP 212 million. As I already mentioned, underpinning these numbers is strongly -- strong underlying demand in Spain. Both regional and long-distance sectors are performing well, supported by a better-than-expected trading environment, particularly towards the end of the year. In WeDriveU, revenue increased by almost 5% to GBP 432 million, driven by new contract wins, as I already mentioned before, in both shuttle and Transit. However, the full year profit impact remained below '24 levels due to challenges with WMATA contract and CARTA contract, which has since been exited. The message here is one of turnaround. We saw a meaningful change in the second half of the year in WMATA with adjusted WeDriveU with the operating profit improving to GBP 17.6 million. The recovery is expected to continue into 2026. U.K. business continues to face a challenging environment, but has shown resilience with revenue decreasing by only 4.6% to GBP 587 million despite intense competition in the Coach business. Breaking this down, U.K. Coach contributed GBP 315 million to revenue, while U.K. bus delivered GBP 272 million. Given the separation of U.K. Coach as it moves into ALSA, a profit split isn't available in today's results. However, a breakdown will be available in our audit results to the 31st of March. With ongoing competition in key routes, it has been a difficult year for Coach with revenues declining 6% and passenger numbers only falling by under 4%. On a positive note, the market as a whole continues to grow during the year, and this provides a positive outlook going into 2026. In U.K. Bus revenue rose by 2.4%, largely due to fare increases implemented in June. The decline in passenger numbers reflects the wider industry. During the period, we sold Acocks Green depot and Oak Road. This resulted in a GBP 4.3 million increase to adjusted profit. Overall, the U.K. reported a GBP 4.6 million operating loss, largely due to competitive pressures in Coach and the rise in employer national insurance costs. We expect to see this performance improve as we go through 2026, along with the benefits of integration. In Germany, revenue increased by -- decreased by 1.6% to GBP 253 million. And whilst RME adjusting operating profit increased to GBP 60 million due to improved operational performance. The RRX 1 and RRX 2/3 contracts remain onerous within year losses being offset by a GBP 56 million utilization of the onerous contract provision, i.e. effectively, the loss was GBP 56 million. Central function costs increased by GBP 2 million, principally due to higher costs related to professional fees, including a higher audit fee, which offset underlying cost savings made during the year. Looking forward to 2026, we expect ALSA to maintain current levels of performance. And in WeDriveU, we expect continued underlying recovery, whilst we continue to redress WMATA through the legal costs. By integrating UK Coach into ALSA, the business is becoming more competitive. Nevertheless, we expect 2026 to be a challenging year. U.K. Bus is expected to break even subject to finalization of funding discussions with Transport for West Midlands. In Germany, our rail business is benefiting from operational improvements and will be derisked once the arrangement agreement is signed by the 30th of June. The revised contracts, and this is a very important point, the revised contracts will be backdated to the 1st of January 2026. In respect of the central functions, we will continue to make further cost reductions. Moving to our cash flow performance. The most important point to highlight is the impact of school bus shown in the middle columns. School bus in '25 was a significant drag on group liquidity prior to its disposal. School bus cash outflow was driven by substantial investment in CapEx and working capital requirements that we committed into in 2024. Excluding School bus, the group free cash flow was GBP 76 million. Key year-on-year movements in working capital net outflow due to the timing of cash collections in ALSA. The increase in tax is due to a one-off refund because of the change in Spanish tax law, which significantly reduced the cash tax payments in 2024. Overall, we are looking forward to managing our tax -- to better managing our tax burden and in particular, to find a way to offset our interest against our profits in order to reduce our tax. We are targeting total CapEx of GBP 120 million in 2026. This reflects our commitment to disciplined spending and maximize in cash conversion as we go forward. Despite the reduction in CapEx, we are still able to pursue new growth opportunities, focusing on CapEx-light opportunities. We saw a GBP 287 million inflow, reflecting cash proceeds from the school bus disposal, and we recorded cash flow of GBP 118 million on items excluded from our adjusted results, as I talked to these earlier on. It should be noted that we've paid the hybrid coupon for 2025, which is the last payment at GBP 21 million. The next payment of GBP 40 million is due in February 2027. There was a GBP 10 million outflow from other items primarily driven by ForEx and derivative settlements. When pulled all together, the group achieved a net funds flow of GBP 127 million for the period. The funds inflow has offset the loss of school bus EBITDA, resulting in covenant gearing improving to 2.7x. I should mention the covenant gearing 15 months will be dependent on a number of factors, including German rail agreement. However, it will be within the covenant requirement. Looking at debt maturity at 31st December, the RCFs were drawn with nearly GBP 900 million in cash and undrawn facilities. The majority of our RCF will not expire until 2029. Notably, interest rates on our instruments are relatively attractive and have significantly reduced our exposure to interest rate volatility as 94% of our debt is now on fixed interest rates, and we have significant liquidity to meet the debt maturities that arise in 2027. And finally, I want to walk through our financial calendar for 2026. As you may have noted, we have adjusted our '25 and '26 accounting periods following the appointment of KPMG as our new auditor. These changes are designed to provide KPMG with sufficient time to complete their audit work. However, we plan to return to a December 31 year-end in 2026. Our current financial year will be for a period of 15 months to the 31st of March '26, and we expect to release the audit results for this extended period in late June or July. Looking into the second half, we will report 6-month interim results for the period ending 30th of September with the release expected in late November. And finally, to bring us back into line with a normal calendar year, the final accounting period for 2026 will be shortened to 9-month period ending the 31st of December. Results for that period are expected to release in March 2027 as we return to a normal December year-end. And then just finally, to sum up financial imperatives. The focus remains on ensuring our strong top line growth translates into sustainable value creation. As such, we've implemented a disciplined approach to cost control. Specifically, we are implementing strict controls over our capital expenditure and working capital to maximize cash generation and reduce debt. As Phil already mentioned, the mission is Simplify to Succeed. Behind this, we have Simplify for Success cost program, which is currently targeting GBP 75 million in cost savings in '26 with a run rate of EUR 100 million from the end of '26. We are targeting adjusted profit of GBP 195 million to GBP 210 million in 2026, and I want to just note that this does not include the positive impact of revised contract changes in our German rail business. Once these agreements with the PTAs become legally binding, which we expect to happen by the 30th of June, we will update our guidance. In summary, ALSA remains the engine of growth. We drive you on a recovery path, and our U.K. and German businesses are leaner and more resilient with EUR 75 million in targeted savings and an operating profit guidance range of EUR 195 million to EUR 210 million and a positive net cash for 2026. Thank you very much for that. And now I'll hand over to Paco.

Good morning all. Thank you very much, Brian and Phil. My name is Paco Iglesias. I have just turned 1 year as CEO of the company. I joined ALSA 34 years ago and serving the last 10 years as CEO. So let's start with ALSA that is the company I know better. And just behind these numbers is not only the growth, but it is how diversified is our business. You can see that Long Haul that used to be the most important part of the company has now about 17% of the revenue of the company, but it's not because it has been reduced, it's because the rest of the areas has grown a lot. And especially if you can see the international side and also the new businesses that we have running right now. And the margins are great, but we have record year, but not only in revenue and EBIT, but also in passengers, in customer satisfaction index, in digital sales, in safety targets and the rest of the main metrics that the home operation are good to remark. Two comments on the environment that ALSA is running business in Spain. One is the approval of the mobility law in Spain last -- at the end of last year that the former mobility law took place in '87. That means that now after almost 40 years, we have a new one that is remarkable that is a step up on the right of the citizens in order to the mobility on that. And it's also important that secure the franchisee system for the Long Haul in Spain for the future. And the second point from the environment is that there is a real support from the government to the public transport with million of euros to enhance the mobility on that. A few words on the '26 outlook is positive in the first 2 months that we are in good progress. Just an example of growth of ALSA in Qiddiya mega project in Saudi Arabia that is a good example of modernization and how to enter in a country internal stabilization process, as you can imagine, very, very difficult challenges for everything. But this case fits exactly with the strategy that we are trying to explain. It's an asset-light contract, low risk. And what is more important in my view is a scalable project. This is the first of the macro project that the Saudi Kingdom is projecting for the country, and there will be about 10 more projects in the near future. And it's also remarkable that we won that contract in a very competitive scenario. We are competing with the Champion League of the main players, the state-owned companies from France, from Italy, also private company from Singapore and some other countries. And we won this contract through technology innovation as part of the challenge, not only by price or by reference. Innovation like the design of a new bus station that could help and be used by the passengers in the future with a different model of business. If we move to review in the states, despite the number you see be seen as net positive. Just to remark as Brad and Phil said that in the H2 of last year, we improved significantly the profits in the states. And the reason behind is back to basics to have a better control on operation and cost and very simple things that sometimes it seems not to be as simple. You know that you remember that in H1, we completed the sale and the exit of school bus that could bring us some cost, but in the second half, we have been running in stand-alone business from the new areas of WeDriveU. And I also want to highlight that there is a lot of room for growing there because our market share in the state is very, very little just to say that some of our competitors have 10x the size of WeDriveU. So you can imagine that there is a lot of opportunities. And we are focusing in new areas like universities with technology and areas with asset-light contract is a good opportunity to keep growing. If we move to U.K., this is the overall figures, but let me say something on bus and also coach. In terms but it's real that we have had a certain decrease on passenger, not that much, but we have an increase on numbers on revenues, thanks to the rise that took place at the middle of last year. But I think where in U.K. Bus we have assets and we have a strong position in order to tackle with the forthcoming process of franchising that is likely to happen in the future. In U.K. Coach, I think I would define that the integration with ALSA has been a complete success. We are also having a huge competition there, but also the number of passengers that we have seen in the year is we have lost less than 4% of them. And if you take into account that our main competitor there has doubled the size in terms of flights in terms of journeys, I think it's more than a milestone to keep retaining the vast majority of the market share by far in the Long Haul business. All the action of the integration go through technology, through adapting the network and to get savings in all the areas that are not impacted on safety or the operational excellence. And also my view for '26 is positive because we are putting in place a customized strategy for every single route to compete in some areas like airports, we are still growing in terms of passengers. Finally, if we move to Germany, I think it's remarkable, not only the result, but we achieved for the first time in the last months or years, 100% of operation at the end. That means despite the construction that we have reduced the number of penalties and what is more important that we achieved 100% of the drivers that need to run the operation. And this is not only that we are doing the things better in terms of operation, but also that we are getting savings because we used to use drivers for a third-party agency that cost us in the past higher than what we have right now. Apart from the agreement that has already been mentioned with the PTAs, the 5, 6 PTAs that are there, '26 is a very important year as we need to keep growing, but also there will be opportunities with the new bidding process that they are putting in place. So this is a momentum that we have to leverage with the operation to keep performing good on operation. And finally, on the -- just after 1 year, as I said, as CEO of the company, I would like to highlight 5 points that I see, and this is facts, it's not narrative, it's fact that are in place all over [indiscernible] on all the divisions. On the first is that all of them are performing better than last year in the second half of the year. This is fact. Second is the huge opportunities that we have in the pipeline. I mentioned some of them. I mentioned Saudi, I mentioned the states, but also bidding process in Spain and some other countries. The third is the massive cost reduction that we are putting in place that will have impact, the most of the impact in '26. And as I said, not impacting safety or operational excellence. Next one is through avoiding loss-making contracts and avoiding contract that are not performing well that we did in the last 6 months, we are getting improvement in the margins of every single contract. And finally, probably this is more might be or an opinion, but after I joined National Express 20 years ago, with the process of merger with ALSA. And for the first time in these 20 years, I see we are working as a group, exporting the best practices of real between the countries and the division such as the technology that we have implemented in U.K. coach or the procedures that we have been in the states with the scheduling or the payrolls. And just to finish, I think we are strong as a team. We are excited with the opportunities and very, very optimistic with '26 as well. Thank you very much. And Phil, please.

Thank you, Paco. Thank you, Brian. In order to give a bit of time for Q&A, I'll speak through the conclusions, if you don't mind. Brian and Paco given you a lot of information to think about. So it'd be interesting what you have to say when you ask us questions. But just to summarize, I'll be very straight here. We are fixing the businesses that need our focus. We are simplifying and integrating where it counts. We have a lot of good people working for Mobico throughout the business from our Board up all the way to our drivers, whether it's a coach, a bus or a train. They're doing a tremendous job for us, and it's sometimes in very difficult circumstances. And what we are trying to do is take all our people with us on the journey that we've set out already to undertake. So thank you all for joining us today and being available. Thank you all for all your patience over the years. And let us spend a bit of time now on answering some of the questions that we've either not dealt with in detail today in this session or in the webcast this morning.

Yes, that's great. Thank you very much indeed for your presentation. [Operator Instructions] And Patrick, at this point, if I may now hand over to you to take us through the Q&A session. read out the questions where appropriate to do so, and I'll pick up from you at the end. Thank you.

Thank you, moderator. The first question has been pre-submitted. How do you expect WeDriveU to perform in the short term and medium term?

Absolutely positive, as I said, because we have for -- one reason is because we have managed to get rid of the loss-making contract. And the second, we are improving margins in the current contract through technology and protocols and [indiscernible].

Thank you. Second question is also presubmitted. The interest payments on the hybrid bonds are going to be significant moving forward. When will the company likely be in a position to pay this off through refinancing or any other means?

To buy back the hybrid bond. So I mean, at the moment, the company doesn't have any plans to refinance the hybrid bond. I mean the focus of the business at the moment is on generating more profits, running a really good business, generating more profits and more cash. We've also been working on obviously the disposal of school bus. We've now renegotiated the German agreement, which as you'll see from this year is a huge drain. So that's going to stop going forward. And also, we're looking to monetize the U.K. bus assets. So between the extra cash that is coming in from those 3 events plus better profitability and cash, we will then get to the point where we can look at our overall funding position. But we absolutely don't have any plan at the moment to target the repayment of the hybrid bonds.

Thank you, Brian. Question from Nicholas. Any news on hiring a new CEO?

I suppose I've got to take that one. This is probably one area where I've got no power at all, but one that rests with the Board. As you know, the joint role of Chairman and also CEO, it's called Executive Chair, is very transitional and not a permanent position. So at the moment, we're working on a number of projects together, which is involving all 3 of us. That will not last forever. And I'm sticking my neck out here, I'm sure the Board will be wanting to split that role as soon as possible when the company is in a stable state and a good time to do it. So as I say, it's temporary, it's not permanent, and it will be done, I think, sometime during this calendar year.

Thanks, Phil. A question from Danielle. Does your group guidance to be net cash positive in 2026 relate to total cash movement, i.e., after debt repayment, restructuring and any other items?

Sorry, the 2 questions, do we intend to pay the next coupon? So again, we will announce that closer to the date. Does the group guidance to be net cash positive include total cash movement, i.e., after debt repayment? So what it means is that we will generate net cash for our operations after restructuring items, correct, yes.

I think we talked to the jump in cash tax question from Alex.

So the reason for -- there was a special one-off in Spain where we got a credit in the previous year. But there is a challenge that we have at the moment, which is that our loans are mainly in the U.K., and we're not getting any tax relief on interest. So that's one of the projects we're working at the moment is to see how we can position our loans so that they get tax relief on the interest.

Another question from Alex. I think this was for U.S. school bus. Why was disposal proceeds, [ GBP 209 million ] versus the presentation, which states GBP 287 million?

So it's mainly after the repayment of debt. So one is a net figure. The GBP 209 million is after the repayment of debt in the states. So there were leases that had to be paid off and the GBP 287 million is the gross number.

And a question on Germany. Given everything that has arisen over the recent years in terms of challenges, do we now see a decent opportunity for growth in German rail?

I'll take that one. I mean if you'd ask me that question 6 months ago, I would have definitely said no, given the experience and the cash drain we're experienced in Germany. However, with the agreement we've just reached with the PTAs, which has stabilized our position dramatically and also eliminated any future cash drain. We do know there are opportunities coming up in Germany over franchising local rail services. And I think we'll be looking at them a lot more closely than we would have done a few months ago.

Thanks, Phil. We've had a few questions in on our gearing. I'll take one from Martin. Currently, though, this is well within the 2.7x. I assume that the 15-month period will be impacted by 2 periods, the additional Jan to March, which I think is historically the weakest period. Is that correct? And what could we maybe expect for the 15 months results?

So he is correct. I mean the first quarter is the weakest because there are 2 issues. First of all, we lose the benefit of the first quarter of profits from school bus. The second issue is that quarter 1 is always a quarter where we have a lot of cash outflow. So for example, we paid the coupon and we also have some one-off cash outflows, for example, insurance. So that does make the covenant position by picking up a March measurement date. But it will be within the covenant requirement.

Thanks, Brian. A question from Michael. Beyond the sort of close period reporting for this year, could we give some views on the biggest opportunities we expect over the next 12 to 24 months? I think we've already answered the question about.

Okay. Well, we as Mobico are running right now in 12 countries, and our main competitors, as I said, are running more than 40, 50 countries. So there is a lot of room for new countries to enter, and we are analyzing at least 5 of them, but not only that I said at the beginning, we have opportunities in the market like Saudi with the project. We have also a lot of opportunities in the States, but also in Spain within the bidding process, Portugal, so a lot of opportunities.

Thank you. I think we probably only have a few more minutes for a couple more questions. There's a few in from Pratik. What is the impact on profitability and market share of entering our U.K. markets?

Well, it depends on the fight that we have in terms of fares. As I said that from the point I have reviewed in the last month, they are growing and we are not reducing passengers and our strategy is to focus on specific routes and also to reduce our base of cost to be more efficient on that. So I cannot give you a number, but I'm optimistic.

Yes. In terms of profitability, we were going to disclose profit split at the 15 months. That's certainly our plan at the moment, but we haven't up to date. But I mean, clearly, it is significant. If you look at the yield numbers, we are charging less for every passenger that's on our buses, and that is having a significant impact on profitability.

What is the total financial impact of having lost Marrakech and...

Well, I don't know exactly the figures, but taking into account that we run in the past, until December 6 cities in Morocco. Now we are running 4 of them, and we are running the first and the second city in Morocco that Rabat and Casablanca. And we are -- with the expectation we have is to keep having profits in '26. So of course, there will be some shortfall from [indiscernible] Marrakech, but we are also improving our operation in Rabat and Casablanca. So I don't think that the impact will be important in '26.

A question from John. Looking forward to the rest of 2026 and 2027, what do you consider the biggest commercial risks faced by the group?

This is a question I'm always asked, and I probably always give the same answer. The thing that keeps me awake at night when I should be sleeping soundly is also always politics, whichever country you operate in. We've all seen what's happening regarding the introduction of bus franchising and the impact it has on our West Midlands operations. And we've all seen the impact of the reregulation, should I put it, of the railways. So the first answer is politics. The second answer is competition. When you have good businesses like we have, there's always people who would like a share of them and a lot of disruptors around, so we have to manage our way through that. And thirdly, I would say it's the level of debt we have. We're very much over leverage for the size of the business now, and we're working hard through cost savings and increased profitability on contracts to manage that in a much better way.

So I think this is going to have to be our last question given the time constraints. It's from Resmus. Can you explain how revenue is going up and there are big cost savings, but the adjusted profit guidance that we've given for 2026 is flat. I think it's slightly up, but could we just explain.

I mean some of the cost savings required to stay where we are. I mean one of the questions earlier on, for example, is with UK Coach. So in order to keep our profitability where it is to protect our profitability, we've had to take out a lot of cost. And there are some other one-off costs. I mean we will have a slightly negative on Morocco, and we also have some additional professional costs this year, particularly the audit fee. So a lot of the cost takeout doesn't necessarily go straight to the bottom line. It protects the profit line where it is present. And obviously, the biggest example of that is in U.K. Coach, where we're taking to take over GBP 25 million of cost, but most of that is going to protect profitability [indiscernible].

Thank you. I think we're going to have to close it off here, and I'll hand back to you, moderator. We do see all these questions, and we will try to get back to you in written form later in the day.

Fantastic. Thank you guys once again for addressing those questions and for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good afternoon to all.