TIDMMCG
RNS Number : 3296H
Mobico Group PLC
27 July 2023
Mobico Group PLC ("Mobico" or the "Group"): results for the six
months ended 30 June 2023
Strong revenue and passenger growth reflecting growth across all
markets
H1 Adjusted Operating Profit affected by GBP60m reduction in
Covid-19 funding, and inflationary costs before the delivery of
cost recovery and pricing actions in H2
FY 2023 Operating Profit expected to be between GBP200m and
GBP215m
First half results, six months ended 30 June 2023
H1 2023 H1 2022 Change (Constant Change
FX) (Reported)
Group Revenue GBP1.57bn GBP1.32bn 14.4% 18.5%
Group EBITDA(1) GBP166.7m GBP197.8m (19.3)% (15.7)%
Group Adjusted(1) Operating
Profit GBP57.5m GBP90.5m (39.7)% (36.5)%
Group Adjusted(1) Profit Before GBP25.4m GBP68.7m
Tax
Adjusted basic(1,2) EPS 1.0p 6.1p
Dividend per share 1.7p -
Return on Capital Employed 5.9% 5.9%
Statutory
Group Operating Profit GBP8.7m GBP42.3m
Group (Loss)/Profit Before Tax GBP(23.4)m GBP20.5m
Group (Loss)/Profit After Tax(2) GBP(39.4)m GBP15.2m
Basic EPS(2) (8.3)p 0.3p
Free cash flow GBP79.7m GBP63.8m
Covenant net debt GBP908.5m GBP946.8m
Covenant gearing 2.8x 3.1x
H1 2023 highlights
-- Strong revenue performance up 19%, driven by:
o Strong growth across all business lines in ALSA
o North America delivering good price increases of over 13% on
the 40% contracts that were up for renewal this bid season
o UK revenues up 20% reflecting strong growth in passengers in
Coach and Bus partly offset by the impact of reduced Bus
funding
-- Adjusted Operating Profit down on H1 2022 as a result of a
reduction in Covid-19 funding of GBP60m. Excluding this, Group
Adjusted Operating Profit has increased by GBP27m, driven by the
strong revenue performance
-- Group Operating Profit is GBP8.7m (H1 2022: GBP42.3m) as a
result of the the reduction in Covid-19 funding
-- Cost inflation came before price rises and cost actions that
will be delivered in H2. Actions already taken give confidence in
stronger than normal H2 weighting
-- Annualised cost savings of GBP30m higher than previously
announced (GBP25m), with GBP15m savings expected in H2 23
-- Strong cash generation in H1 with Free Cash Flow of GBP79.7m
(GBP63.8m in H1 22) with over 100% FCF generation
-- Improved debt maturity and liquidity with a GBP600m RCF
refinanced to 2028, and GBP400m bond refinancing on track for
delivery in Q3 23
-- US Leadership change and UK restructure to accelerate Evolve
strategy and support growth agenda
-- 2023 Full Year Adjusted Operating Profit expected to be
between GBP200m and GBP215m
Ignacio Garat, Mobico Group Chief Executive, said:
"2023 is a year where the Group transitions away from
significant Covid-19 support. We saw strong Revenue growth in the
first half, driven by customer demand. The profit result compared
to prior year was impacted by a GBP60m reduction in Covid-19
funding. Although operating profit was down on the year, once the
GBP60m reduction in 2022 Covid support is taken into account,
Adjusted Operating Profit grew significantly.
In addition, we have seen significant wage inflation however, we
expect this to be recovered - as planned - in the second half.
Although there remain some market uncertainties, encouraging
passenger growth, pricing power, continued pipeline conversion,
high levels of contract retention, the actions we have taken on
pricing and costs, and the ongoing successful mobilisation of
contracts all support our confident full-year outlook."
"I'd like to pay tribute to all of our employees, customers and
partners for their considerable efforts, in a challenging
environment, as we continue to lead the modal shift from cars to
mass transit, improving social mobility and reducing carbon
emissions in the process."
Notes
1. To supplement IFRS reporting, we also present our results
(including EBITDA) on an adjusted basis to show the performance of
the business before adjusting items. These are detailed on page 27
and principally comprise intangible amortisation for acquired
businesses, re-measurement of historic onerous contract provisions
and impairments, re-measurement of the WeDriveU Put Liability,
voluntary repayment of UK CJRS grant income ('furlough') and Group
wide restructuring and other costs. In addition to performance
measures directly observable in the Group financial statements
(IFRS measures), alternative financial measures are presented that
are used internally by management as key measures to assess
performance. Further explanation in relation to these measures can
be found on page 13.
For the six months ended 30 June 2023, we have changed this
terminology from 'underlying' to 'adjusted' to make clearer what
this performance measure represents. There are no changes to the
definition of what is included in these items.
2. H1 2022 restated in respect of correction to deferred tax
assets and liabilities. This has changed 2022 Group Profit After
Tax from GBP15.8m to GBP15.2m and 2022 adjusted EPS from 6.2p to
6.1p and 2022 statutory EPS from 0.4p to 0.3p. Please see note 1 to
the Financial Statements.
3. This announcement contains forward-looking statements with
respect to the financial condition, results and business of Mobico
Group PLC ("Mobico" or the "Group"). By their nature,
forward-looking statements involve risk and uncertainty and there
may be subsequent variations to estimates. Mobico's actual future
results may differ materially from the results expressed or implied
in these forward-looking statements. Unless otherwise required by
applicable law, regulation or accounting standard, Mobico does not
undertake to update or revise any forward-looking statements,
whether as a result of new information, future developments or
otherwise. Forward-looking statements can be made in writing but
also may be made verbally by members of the management of the Group
(including without limitation, during management presentations to
financial analysts) in connection with this announcement.
Enquiries
James Stamp Mobico Group Tel: +44 (0)121 803
2580
John Dean
Stephen Malthouse Headland PR Tel: +44 (0)7734 956
Matt Denham 201
Tel: +44 (0)7551 825
496
A live webcast of the analyst meeting taking place today at
9:00am (BST) will be available on the investor page of the Group's
website: www.mobicogroup.com. The Group plans to release its next
Trading Update on 19 October 2023.
Results overview
In the first half, Mobico Group has delivered a strong Revenue
performance driven by continuing growth in passenger numbers and
contracts across the Group as well as a continuing recovery in
School Bus. Compared to prior year, H1 Adjusted Operating Profit
was affected by a reduction in Covid-19 funding of GBP59.6m. H1
2023 was also affected by significant cost inflation - especially
in salary and wage costs. Actions taken on pricing and costs will
substantially mitigate those extra costs in the second half.
Adjusted Statutory
GBPm H1 2023 H1 2022 Change FY 2022 H1 2023 H1 2022 Change
Revenue
ALSA 559.7 444.2 26.0% 962.5 559.7 444.2 26.0%
North America 587.0 518.7 13.2% 1,048.2 587.0 518.7 13.2%
UK and Germany 422.7 361.4 17.0% 796.8 422.7 361.4 17.0%
------------------------- ------- ------- ------- ------- ------- --------- --------
Total 1,569.4 1,324.3 18.5% 2,807.5 1,569.4 1,324.3 18.5%
------------------------- ------- ------- ------- ------- ------- --------- --------
Operating profit/(loss)
ALSA 57.6 50.3 14.5% 103.9 50.8 44.1 15.2%
North America 13.8 57.4 (76.0)% 68.4 (5.0) 22.8 (121.9)%
UK & Germany (4.9) (9.8) 50.0% 43.2 (16.2) (15.6) (3.8)%
Central Functions (9.0) (7.4) 21.6% (18.2) (20.9) (9.0) (132.2)%
------------------------- ------- ------- ------- ------- ------- --------- --------
Total 57.5 90.5 (36.5)% 197.3 8.7 42.3 (79.4)%
------------------------- ------- ------- ------- ------- ------- --------- --------
Operating margin 3.7% 6.8% (3.1)% 7.0% 0.6% 3.2% (2.6)%
Revenue grew by GBP245m or 18.5% on a reported basis, and by
14.4% on a constant currency basis.This reflects two main factors
(i) firstly, strong underlying growth in those businesses where we
have exposure to passenger demand; and (ii) secondly, a continuing
recovery in the School Bus business through pricing and route
recovery. However Adjusted Operating Profit is down GBP33.0m (and
Statutory Operating Profit down GBP33.6m), as a consequence of the
reduction in Covid-19 funding of GBP59.6m and wage inflation,
before price recovery and cost actions which will be delivered in
H2. Whilst the result of this is that margins are lower than H1 23
(compared to H1 22), we expect a significant re-build in the second
half of the year.
ALSA continued to trade well with growth across all lines of
business, and with Adjusted Operating Profit up 14.5% driven by
revenue growth of 26.0%, with especially strong trading in Long
Haul. North America grew revenues by 13.2% as routes rebuilt in
School Bus but Adjusted Operating Profit was down GBP43.6m (76%)
mainly as a result of the removal of GBP38.7m of Covid related
CERTS funding and the impact of wage investment ahead of pricing
recovery that will deliver in the second half of the year. In the
UK and Germany, revenues grew 17.0%, representing strong trading in
UK Coach, and UK Bus patronage reaching 97% of pre-covid levels.
However, the Adjusted Operating Loss for H1 23 was a result of the
pay settlement in UK Bus, which was retrospectively applied to 1
January 2023, however the increased costs will be recovered through
a combination of fares increases and additional funding that will
benefit the second half of the year.
Strong second half bias to 2023 full year results
During the first half of 2023, Mobico absorbed significant
increases in costs - particularly with higher salary and wage
rates. It was always expected that such costs would be recovered
via a combination of pricing initiatives and the previously
announced cost reduction and productivity improvement program.
Those measures have now been successfully implemented or are well
progressed which will result in a higher weighting to second half
profits. Expected annualised cost savings of GBP30m are higher than
the previously announced GBP25m, with GBP15m savings expected in
the second half of this year.
Balance Sheet, debt maturity and interest costs
As of 30 June 2023, the Group had GBP0.8bn of cash and undrawn,
committed facilities resulting in a covenant gearing ratio of 2.8x,
improved from 3.1x at the same time last year. Immediately post the
period-end, debt maturity and liquidity were improved with the
GBP527m RCF (the majority of which matured in 2025) being replaced
by a GBP600m RCF facility to 2028. The planned refinancing of the
GBP400m bond, maturing in December 2023, is also progressing well
and is expected to be completed in Q3 2023. A bridge-to-bond
facility has been in place since December 2022, and can be extended
(at the option of the Group) to 2025, although this option is not
expected to be utilised.
Interest charges for the Full Year 2023, and subsequent years,
will rise as a consequence of higher bond coupons and interest on
the RCF when drawn. As rates stand today, the anticipated net
interest charge in Full Year 2023 will be c.GBP75m (GBP51m in 2022)
and will rise by a further c.GBP7m in 2024, on a pro forma basis.
80% of our debt is fixed, with the 20% that is swapped to floating
due to revert to fixed in 2025.
Mobico has made clear its objective to reduce gearing through
the growth of EBITDA and Free Cash Flow, and the outlook for
delivery of that plan is on track.
Dividend
The Board has announced an interim dividend of 1.7p, which is in
line with our previously communicated policy that the Group's
interim dividend will be set at a level equivalent to approximately
one third of the prior full year dividend.The Group's policy is to
maintain a dividend cover ratio in excess of two times. The interim
dividend will be paid on 1 September 2023 to shareholders on the
register at the close of business on 4 August 2023.
Outlook
Based on current market conditions, Adjusted Operating Profit
for 2023 is expected to be within the range of GBP200m to
GBP215m.
Strategic Commentary
Across all of its divisions, Mobico has delivered good progress
with the Evolve strategy as it focusses on delivering the highest
standards of safety, reliability, customer satisfaction and
financial returns, whilst also being an environmental leader and an
employer of choice. These standards are the ones that deliver
customer success: they are the factors that drive new business
growth and high levels of contract retention.
Trading
The first half results reflect encouraging top-line growth,
-- strong pricing power to substantially mitigate inflationary pressures;
-- continuing conversion of pipeline opportunities (27 new
contracts vs. 16 in prior year) at a ROCE of 28%;
-- high levels of retention (98% in School Bus and no
significant losses across the rest of the Group); and
-- the encouraging mobilisation of GBP1.4bn of contracts in
total contract value terms (GBP170m annual value)
The programme of cost efficiency measures announced earlier in
the year will also help to ensure our operations remain
competitive, but without compromising front-line service functions
and growth. The original target of GBP25m annualised savings is now
expected to rise to c.GBP30m, with savings of c.GBP15m expected in
the second half of 2023.
We continue to see strong local and national governmental
support for initiatives to drive modal shift towards efficient mass
transit. This includes subsidised fares (in Spain, the UK, Morocco
and Germany), and funding to maintain networks and frequencies on
routes that require continuing passenger growth to be
self-sustaining and profitable.
Environmental, Social & Governance
Mobico's Evolve strategy is directly aligned to the most
pressing environmental and social needs in society. It plans,
mobilises and operates tailored transport solutions that enable
communities, cities and countries to transition from low occupancy
modes of transport to much more efficient, cleaner and safer mass
transit solutions - the adoption of which advances global ambitions
for both a low carbon society and greater mobility.
The Group is moving at pace to evaluate, adopt, and mobilise
Zero Emissions Vehicles (ZEVs) in fleets across the businesses,
around the world. Mobico has a cruicial role to play in planning
and facilitating the transition to ZEV's.
Mobico has previously set out zero emission fleet targets to hit
net zero by 2040 (Scope 1 & 2 emissions). It continues to make
excellent progress on its ZEV transition plan and remains on track
to secure 1,500 ZEVs by 2024 and 14,500 by 2030.
Divisional Results overview
The following section describes the performance of the Group's
continuing businesses for the six month period to 30 June 2023,
compared to the same period in 2022.
ALSA
ALSA is the leading company in the Spanish road passenger
transport sector. It has, over a number of years, significantly
diversified its portfolio away from only Long Haul to having a
multi-modal offering, which today also spans Regional and Urban Bus
and Coach services across Spain, Morocco, Switzerland and
Portugal.
H1 2023 H1 2022 Change FY 2022
m %
Revenue GBP559.7 GBP444.2 26.0% GBP962.5
Adjusted Operating Profit GBP57.6 GBP50.3 14.5% GBP103.9
Revenue EUR638.8 EUR527.5 21.1% EUR1,129.3
Adjusted Operating Profit EUR65.7 EUR59.7 10.1% EUR121.8
Adjusted Operating Margin 10.3% 11.3% (1.0)% 10.8%
Highlights
In its centenary year ALSA continues to grow across all of its
lines of business, with a diverse, growing and resilient portfolio.
ALSA delivered another strong result in the first half of the year
in all its markets:
-- Strong constant currency growth with revenues up 21% (26% on
a reported basis), and Adjusted Operating Profit growth of
10.1%;
-- Statutory Operating Profit of GBP50.8m, an increase of
GBP6.7m versus the prior period;
-- Long Haul revenues were up 34% driven by passenger volume
growth (up 28%) and yields (up 4%). Occupancy ratios were 7
percentage points better than H1 22;
-- Revenue growth accelerated by Government initiatives to drive
modal shift, including multi-discount vouchers;
-- Continuing growth in Regional and Urban business with
revenues up by 12% and 10% respectively
-- Morocco performance ahead of expectations with revenue for H1
2023 growing 8% versus last year
-- International business (including Portugal) up 19% on H1 22;
and
-- Three small but strategic acquisitions in Spain, providing
entry to the target Sevilla bus market and complementing our
regional bus and tourism business in northern Spain.
North America
The North America business operates in thirty-four states and
three Canadian provinces. School Bus operates through medium term
contracts awarded by local school boards. Transit focuses
predominantly on paratransit (the transportation of passengers with
special needs). Shuttle offers corporate employee shuttle services
to a range of sectors including Technology, Biotechnology,
Manufacturing and Universities.
H1 2023 H1 2022 Change FY 2022
m %
Revenue GBP587.0 GBP518.7 13.2% GBP1,048.2
Adjusted Operating Profit GBP13.8 GBP57.4 (76.0)% GBP68.4
Revenue $724.3 $673.5 7.5% $1,296.8
Adjusted Operating Profit $17.1 $74.6 (77.1)% $84.7
Adjusted Operating Margin 2.4% 11.1% (8.7)% 6.5%
Highlights
In School Bus the first half of 2023 has been characterised by
good recovery in pricing, an improvement in driver availability and
a narrower risk outlook for the important new school year start in
September. Prior year H1 profits benefitted from GBP38.7m of CERTS
and GBP1m wage subsidy funding that was not repeated in H1 23.
Pricing recovery on 40% of School Bus contracts that were subject
to renewal will benefit H2 23.
In June 2023 a new CEO, Tim Werner, joined the Group to lead the
North American School Bus business, and to refocus efforts on
driving both operational excellence and growth. With more than 30
years experience, Tim brings significant leadership experience in
transport and complex logistics having served in various senior
roles at Fedex.
In Transit and Shuttle, the business has continued to offset the
impact of cyclical weakness in the Technology industry by winning
business in new sectors, including manufacturing and education. The
business won nine new contracts in the half including a fixed route
and paratransit contract in Charleston, new university shuttle
services in Boston and the San Francisco Bay Area and new corporate
shuttle work in manufacturing with Tesla in Buffalo. The
multi-modal city hub in Chicago was also expanded.
Key highlights include:
-- Revenue growth of 13% as services continue to rebuild;
-- Operating profit lagging due to:
-- CERTS funding (in H1 22) of $50m ($nil in H1 23); and
-- Pricing recovery on 40% of the portfolio to benefit H2 from school restart in September 2023
-- Statutory Operating Loss of GBP(5.0)m in the period compared
to a Profit of GBP22.8m in H1 22.
-- School Bus pricing better than expected at +13% on contracts
due for renewal and +7.4% across the portfolio;
-- Clear evidence that driver hiring and retention is working
well, with 277 net driver hires in H1 (vs. 4 in H1 22 and a loss of
569 in H1 21) demonstrating the effectiveness of our re-invigorated
hiring and training processes; and
-- Acquired final 20% of WeDriveU on 7 July 2023 for $57m, in
line with expectations.
UK & Germany
In the UK Bus sector, Mobico is the market leader in the West
Midlands - the largest UK urban bus market outside London. UK Coach
is the largest operator of scheduled coach services in the UK, and
also serves the fragmented commuter, corporate shuttle, private
hire and accessible transport markets.
In Germany, Mobico is the second-largest rail operator in North
Rhine-Westphalia and one of the top five operators in Germany.
UK
H1 2023 H1 2022 Change FY 2022
m %
Revenue GBP285.4 GBP237.3 20.3% GBP528.3
Adjusted Operating (Loss) GBP(10.8) GBP(12.8) 15.6% GBP25.6
Adjusted Operating Margin (3.8)% (5.4)% 1.6% 4.8%
Germany
H1 2023 H1 2022 Change FY 2022
m %
Revenue GBP137.3 GBP124.1 10.6% GBP268.5
Adjusted Operating Profit GBP5.9 GBP3.0 96.7% GBP17.6
Revenue EUR156.7 EUR147.3 6.4% EUR315.0
Adjusted Operating Profit EUR6.7 EUR3.5 91.4% EUR20.7
Adjusted Operating Margin 4.3% 2.4% 1.9% 6.6%
Highlights
The UK Bus and Coach businesses have been combined into a
"one-UK" structure to drive efficiencies and best practice across
the division. Statutory Operating Loss in the UK is GBP(21.2)m
versus a loss of GBP(13.2)m in the prior period, impacted by the
voluntary repayment of furlough monies in H1 23.
UK Coach:
-- Strong growth in UK Coach Revenue resulting from good
passenger recovery (+42%) and yields (+11%);
-- National Express's UK scheduled coach network has grown eight
times faster than the rest of the market (in terms of volume of
service added);
-- 12% of first-time users on a rail-strike day have since used
National Express again; and
-- Net Promoter Score of 40% despite operational challenges due
to rail strikes demonstrating one of the benefits from actions
taken to re-design the network.
UK Bus
-- UK Bus significantly impacted by drivers' strike in Q1 and
associated wage settlement, retrospectively effective from 1
January 2023;
-- Significant additional and confirmed funding package from
West Midlands Combined Authority to protect services will deliver
further benefits in H2 and extends to the end of FY24;
-- 12.5% fares increase implemented from 3 July 2023, assisting
in recovering cost increases;
-- Customer complaints reduced by 18%; and
-- Closed the driver vacancy gap.
Germany:
-- Constant currency Revenue growth of 6%, with passenger
volumes boosted by German Government's EUR49 monthly travel
initiative;
-- Statutory Operating Profit in Germany of GBP5.0m (H1 22: loss
of GBP(2.4)m);
-- Preparation for mobilisation of RRX Lot 1 continues, with
operations continuing on the emergency award basis; and
-- Successfully concluded contract renegotiations for key
maintenance agreements, which will boost lifetime contract
profitability.
Group Chief Financial Officer's review
Summary Income Statement
Six months to 30 June
------------------------ -------------------------------------------------------------------
Statutory Adjusted Adjusting Statutory
Adjusted Adjusting Total result items Total
result(1) items(1) (2) (2)
2023 2023 2023 2022 2022 2022
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ ---------- ---------- ---------- --------- --------- ---------
Revenue 1,569.4 - 1,569.4 1,324.3 - 1,324.3
Operating costs (1,511.9) (48.8) (1,560.7) (1,233.8) (48.2) (1,282.0)
------------------------ ---------- ---------- ---------- --------- --------- ---------
Operating profit/(loss) 57.5 (48.8) 8.7 90.5 (48.2) 42.3
Share of results from
associates - - - (0.1) - (0.1)
Net finance costs (32.1) - (32.1) (21.7) - (21.7)
------------------------ ---------- ---------- ---------- --------- --------- ---------
Profit/(loss) before
tax 25.4 (48.8) (23.4) 68.7 (48.2) 20.5
Tax (7.2) (8.8) (16.0) (17.3) 12.0 (5.3)
------------------------ ---------- ---------- ---------- --------- --------- ---------
Profit/(loss) for
the year 18.2 (57.6) (39.4) 51.4 (36.2) 15.2
------------------------ ---------- ---------- ---------- --------- --------- ---------
1: To supplement IFRS reporting, we also present our results on
an adjusted basis to show the performance of the business before
adjusting items. These are detailed on page 27 and principally
comprise for the six months to 30 June 2023; intangible
amortisation for acquired businesses, re-measurement of historic
onerous contract provisions and impairments, re-measurement of the
WeDriveU Put Liability, repayment of UK CJRS grant income
('furlough') and Group wide restructuring and other costs. In
addition to performance measures directly observable in the Group
financial statements (IFRS measures), alternative financial
measures are presented that are used internally by management as
key measures to assess performance. Further explanation in relation
to these measures can be found on page 13.
2: Restated for correction to deferred tax assets and
liabilities, see note 1 in the Financial Statements for further
information.
The Group has seen strong passenger growth (as shown in the
below table) and demand for its services in the period resulting in
Group revenue increasing by 18.5% to GBP1,569.4m (H1 2022:
GBP1,324.3m), with double-digit topline revenue growth across all
operating segments.
H1 2023
vs H1
2022 passenger
growth
%
-------------------- ----------------
UK Bus 6%
ALSA urban bus 22%
UK scheduled coach 42%
ALSA long haul 28%
Shuttle 57%
-------------------- ----------------
The Group's Adjusted Operating Profit was GBP57.5m (H1 2022:
GBP90.5m) a reduction of GBP33.0m compared to the the prior period
with an increase in passenger demand in the period, being more than
offset by a reduction in Covid-19 Government support of GBP59.6m,
and the impact of inflation - particularly on driver wages - that
will start to be recovered in the second half of the year.
During the period, the Group recognised GBP6.7m relating to
Covid-19 government compensation in ALSA (H1 2022: GBP8.4m). No
amounts were recognised in North America, compared to GBP38.7m
related to the Coronavirus Economic Relief for Transportation
Services (CERTS) grant and GBP1.0m recorded in respect of wage
subsidy schemes in North America in the prior year.
The Group recognised GBP8.6m of UK Bus recovery funding in the
period (H1 2022: GBP23.4m), with no amounts received in Germany (H1
2022: GBP3.4m).
Revenue Cost
Support Support Total
GBPm GBPm GBPm
ALSA 6.7 - 6.7
--------- --------- ------
North America - - -
--------- --------- ------
UK - 8.6 8.6
--------- --------- ------
German Rail - - -
--------- --------- ------
Total - Six months to 30 June 2023 6.7 8.6 15.3
--------- --------- ------
Total - Six months to 30 June 2022 26.7 48.2 74.9
--------- --------- ------
Excluding the impact of reduced government compensation, the
Group's Adjusted Operating Profit increased by GBP26.6m, which was
a result of growth and the increase in passenger demand seen across
all segments, as noted previously, and increases in pricing and
route recovery improvement in North America, which has been
partially offset by the UK Bus front line strike action resulting
in a network closure for six days and an associated pay
settlement.
Savings relating to the productivity improvement and
cost-reduction programme announced in the Q1 trading statement are
expected to start to be delivered in H2.
After GBP48.8m (H1 2022: GBP48.2m) of adjusting items, statutory
operating profit was GBP8.7m (H1 2022: GBP42.3m).
Adjusted Net Finance Costs increased by GBP10.4m to GBP32.1m (H1
2022: GBP21.7m) due to an increase in the Sterling Overnight Index
Average (SONIA) rate resulting in a higher interest charge on
interest rate swaps (used to swap the fixed interest coupons on the
GBP250m bond into a floating rate) and additional utilisation of
the Revolving Credit Facility. The Group recorded an Adjusted
Profit Before Tax of GBP25.4m (H1 2022: GBP68.7m).
The adjusted effective tax rate of 28.3% (H1 2022: 25.2%)
resulted in an adjusted tax charge of GBP7.2m (H1 2022: GBP17.3m).
The statutory tax charge was GBP16.0m (H1 2022: GBP5.3m), with an
adjusting tax charge of GBP8.8m (H1 2022: GBP12.0m credit)
consisting of a charge of GBP20.9m relating to the write-off of a
deferred tax asset on pre 2017 UK tax losses, which are restricted
in their use, offset by a GBP12.1m credit relating to tax on
adjusting items.
The statutory loss for the period, after the adjusting items
noted below, was GBP39.4m (H1 2022: GBP15.2m profit).
Adjusting items
Adjusting operating items of GBP48.8m (H1 2022: GBP48.2m) were
recorded as a net cost before tax in the Income Statement, of which
GBP23.5m (H1 2022: GBP23.2m) were cash outflows in the period.
Income Income
Statement Statement Cash Cash
Six months Six months Six months Six months
to 30 June to 30 June to 30 June to 30 June
2023 2022 2023 2022
Adjusting items GBPm GBPm GBPm GBPm
------------------------------------------ ----------- ----------- ----------- -----------
Intangible amortisation for acquired
businesses (17.3) (18.7) - -
Re-measurements of onerous contracts
and impairments resulting from the
Covid-19 pandemic (0.9) (3.3) (2.5) (8.3)
Re-measurement of the Rhine-Ruhr onerous
contract provision (0.4) (4.9) (1.4) (4.7)
Re-measurement of onerous contract
provisions and impairments in respect
of North America driver shortages (4.9) (19.7) (7.0) (2.7)
Final re-measurement of WeDriveU put
liability (2.3) - - -
Repayment of UK Coronavirus Job Retention
Scheme grant ('Furlough') (8.9) - - -
Restructuring and other costs (14.1) (1.6) (12.6) (7.5)
========================================== =========== =========== =========== ===========
Adjusting operating items (48.8) (48.2) (23.5) (23.2)
========================================== =========== =========== ----------- -----------
Tax (charge)/credit (8.8) 12.0
========================================== =========== ===========
Total Adjusting items (57.6) (36.2)
------------------------------------------ ----------- -----------
Non-cash intangible amortisation in respect of acquired
businesses reduced by GBP1.4m in the period. Charges relating to
the impact of the re-measurement of onerous contracts and
impairments were significantly reduced at a total of GBP6.2m (H1
2022: GBP27.9m). The WeDriveU put liability charge of GBP2.3m
represents the final true-up of the final 20% tranche of shares,
and effective from 7(th) July 2023, the Group now owns 100% of that
business. Repayment of the UK Coronavirus Job Retention Scheme
grant of GBP8.9m reflects the commitment made to voluntarily repay
furlough funding at the time the dividend was reinstated to
shareholders. Restructuring and other costs of GBP14.1m includes
the impact of Group wide strategic initiatives and
restructuring.
Segmental performance
Six months to 30 June
------------------------ -------------------------------------------------------------------------
Adjusted
Segment Operating Segment
Adjusted
Operating Adjusting Adjusting
Profit/(Loss) items result Profit/(Loss) items result
2023 2023 2023 2022 2022 2022
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ -------------- --------- -------- --------------- --------- --------
ALSA 57.6 (6.8) 50.8 50.3 (6.2) 44.1
North America 13.8 (18.8) (5.0) 57.4 (34.6) 22.8
UK (10.8) (10.4) (21.2) (12.8) (0.4) (13.2)
German Rail 5.9 (0.9) 5.0 3.0 (5.4) (2.4)
Central functions (9.0) (11.9) (20.9) (7.4) (1.6) (9.0)
------------------------ -------------- --------- -------- --------------- --------- --------
Operating profit/(loss) 57.5 (48.8) 8.7 90.5 (48.2) 42.3
------------------------ -------------- --------- -------- --------------- --------- --------
ALSA's Adjusted Operating Profit has increased by GBP7.3m to
GBP57.6m as a result of strong passenger demand with Spanish long
haul performing particularly well with high levels of occupancy.
The Regional and Urban business has also seen continuing growth
boosted by increased mobility, network increases and protected
contracts.
North America Adjusted Operating Profit has decreased by
GBP43.6m, with revenue growth of 13% as services rebuild, being
fully offset by the 2022 CERTS grant income which was recognised in
the prior period (GBP38.7m). School Bus pricing increases in the
period for expiring contracts at c.13% has been better than
expected with driver recruitment progressing well.
In the UK, the Coach business has made significant recoveries
following the impact of the Omicron variant in the early part of
2022 with passenger volumes up 42%, with high levels of occupancy.
UK Bus passenger volumes have increased (6%), but Adjusted
Operating Profit has been significantly impacted by the drivers'
strike in the first quarter of 2023 and the associated 16% wage
settlement which was effective from 1 January, which meant that the
UK recorded an Adjusted Operating Loss of GBP10.8m in the period
(H1 2022: GBP12.8m). The segment result has been impacted by the
voluntary repayment of UK Coronavirus Job Retention Scheme grant
('Furlough') funding of GBP8.9m as described above.
German Rail Adjusted Operating Profit is up GBP2.9m on prior
year, benefitting from a full six months of the Lot 1 Rhine-Ruhr
contract (2022 only included five months) and increased passenger
demand.
Cash management
Six months Six months
to 30 June to 30 June
2023 2022
Funds flow GBPm GBPm
----------------------------------------------------------- ----------- -----------
Adjusted Operating Profit 57.5 90.5
Depreciation and other non-cash items 109.2 107.3
----------------------------------------------------------- ----------- -----------
EBITDA 166.7 197.8
Net maintenance capital expenditure* (55.0) (88.3)
Working capital movement (3.6) (24.9)
Pension contributions above normal charge (3.7) (3.6)
----------------------------------------------------------- ----------- -----------
Operating cash flow 104.4 81.0
Net interest paid (16.0) (13.2)
Tax paid (8.7) (4.0)
----------------------------------------------------------- ----------- -----------
Free cash flow 79.7 63.8
Growth capital expenditure* 3.0 (29.2)
Acquisitions and disposals (net of cash acquired/disposed) (6.4) (25.6)
Adjusting items (23.5) (23.2)
Payment on hybrid instrument (21.3) (21.3)
Dividend (30.7) -
Other, including foreign exchange 38.2 (62.2)
----------------------------------------------------------- ----------- -----------
Net funds flow 39.0 (97.7)
----------------------------------------------------------- ----------- -----------
Net Debt (1,168.9) (1,167.5)
----------------------------------------------------------- ----------- -----------
* Net maintenance capital expenditure and growth capital
expenditure are defined in the glossary of Alternative Performance
Measures on page 13
The Group generated EBITDA of GBP166.7m in the period (H1 2022:
GBP197.8m) which was impacted by the GBP59.6m reduction in Covid-19
government grant support noted previously.
GBP55.0m of maintenance capital expenditure is principally
related to asset purchases in North America and ALSA and is
GBP33.3m less than H1 2022 as the Group accelerated capital
expenditure at the end of December 2022, to secure production
slots, resulting in a lower cash outflow in H1 2023. Working
capital is well controlled with an outflow of GBP3.6 million,
compared to an outflow of GBP24.9m in the previous period due to
CERTS receipts being received in 2021.
Free cash inflow is GBP79.7m in the period (H1 2022: GBP63.8m),
representing strong free cash flow conversion of 138% (H1 2022:
70%).
Growth capital expenditure is a net receipt of GBP3.0m in the
period (H1 2022: GBP29.2m expenditure) due to funding from the
local authority of GBP11.9m relating to the new Casablanca fleet,
which was purchased for the Casablanca contract in the prior year,
and assets purchased on new business primarily in North America and
ALSA. Acquisition costs of GBP6.4m (H1 2022: GBP25.6m) relate
mainly to small acquisitions in ALSA, as well as earn-out
consideration paid for previous acquisitions, with the prior period
including GBP18.2m for the purchase of a further 10% of WeDriveU
and GBP6.0m for the acquisition of Vitalia in Spain.
A cash outflow of GBP23.5m was recorded in respect of the items
excluded from adjusted results as explained above. GBP21.1m of
coupon payments on the hybrid instrument were made in the period
and GBP30.7m in respect of the dividend that was reinstated
following the 2022 full year results at 5.0p per share. Other
inflows of GBP38.0m principally reflect the movement in exchange
rates and settlement of foreign exchange derivatives.
Net funds inflow for the period of GBP39.0m (H1 2022: GBP97.7m
outflow) resulted in Net Debt of GBP1,168.9m (H1 2022:
GBP1,167.5m).
Please see page 14 for a reconciliation to the statutory cash
flow statement.
Dividend
The Board has announced an interim dividend of 1.7p, which is in
line with our previously communicated policy that the Group's
interim dividend will be set at a level equivalent to approximately
one third of the prior full year dividend. The Group's policy is to
maintain a dividend cover ratio in excess of two times.
Treasury management
The Group maintains a disciplined approach to its financing and
is committed to an investment grade credit rating.
In light of the impact of the Covid-19 pandemic on EBITDA
generation, the Group had previously renegotiated its covenants to
obtain waivers from, or amendments to, the normal covenant tests,
from 2020 to 2022. This period has now ended and the usual covenant
tests apply from 30 June 2023 onwards, being a <3.5x test for
gearing and a >3.5x test for interest cover. At 30 June 2023,
covenant gearing was 2.8x (31 December 2022: 2.8x) and interest
cover was 6.3x (31 December 2022: 8.6x); both comfortably within
their covenants.
At 30 June 2023, the Group had utilised GBP1.1bn of debt capital
and committed facilities, with an average maturity of 3.7 years. At
30 June 2023, the Group's RCFs were undrawn and the Group had
available a total of GBP0.8bn in cash and undrawn committed
facilities. The table below sets out the composition of these
facilities:
Facility Utilised Headroom Maturity
at 30 June at 30 June year
GBPm 2023 2023
Funding facilities GBPm GBPm
------------------------------ -------- ----------- ----------- ----------
Core RCFs* 527* - 527* 2024-2025*
2023 bond 400 400 - 2023
2028 bond 250 250 - 2028
Private placement 404 404 - 2027-2032
Divisional bank loans 139 139 - Various
Leases 176 176 - Various
-------- ----------- -----------
Funding facilities excluding
cash 1,896 1,369 527
Net cash and cash equivalents (311) 311
----------- -----------
Total 1,058 838
------------------------------ -------- ----------- ----------- ----------
* Figures shown as at 30 June 2023. Subsequent to the period end
the Group completed the refinancing of its Core RCF facility, with
the signing of a new GBP600m, 5 year committed revolving credit
facility, with options to extend for two further years.
In November 2023, the GBP400m 2023 bond matures, and the Group
anticipates refinancing this with a new bond in Q3 2023. In
anticipation of this refinancing, the Group previously entered into
a GBP400m bridge-to-bond facility in December 2022 in order to
maintain liquidity headroom; this facility is for an initial period
of 18 months and includes committed options to extend the maturity
date until December 2025 if required.
To ensure sufficient availability of liquidity, the Board
requires the Group to maintain a minimum of GBP300m in cash and
undrawn committed facilities at all times. This does not include
factoring facilities which allow the without-recourse sale of
receivables. These arrangements provide the Group with more
economic alternatives to early payment discounts for the management
of working capital, and as such are not included in (or required
for) liquidity forecasts.
At 30 June 2023, the Group had foreign currency debt and swaps
held as net investment hedges. These help mitigate volatility in
the foreign currency translation of our overseas net assets. The
Group also hedges its exposure to interest rate movements to
maintain an appropriate balance between fixed and floating interest
rates on borrowings. At 30 June 2023, the proportion of Group debt
at floating rates was 18% (31 December 2022: 19%).
Return on capital employed
The return on capital employed at the end of the period was 5.9%
(31 December 2022: 7.7%; 30 June 2022: 5.9%).
Group tax policy
We adopt a prudent approach to our tax affairs, aligned to
business transactions and economic activity. We have a constructive
and good working relationship with the tax authorities in the
countries in which we operate and there are no outstanding tax
audits in any of our main three markets of the UK, Spain and North
America. The Group's tax strategy is published on the Group website
in accordance with UK tax law.
Pensions
The Group's principal defined benefit pension scheme is in the
UK. The combined deficit under IAS 19 on 30 June 2023 was GBP34.6m
(December 2022: GBP42.1m), with the IAS 19 deficit for the Group
main's scheme, West Midlands Bus being GBP32.1m (December 2022:
GBP39.7m)
The agreed deficit repayments on the West Midlands Bus plan are
GBP7.5m, GBP7.7m and GBP7.8m per annum for the three years from 1
April 2023.
Fuel costs
Fuel cost represents approximately 9% of revenue (30 June 2022:
8%). At 30 June 2023 the Group is fully hedged for 2023 at an
average price of 48.5p per litre; around 75% hedged for 2024 at an
average price of 51.1p; and around 35% hedged for 2025 at an
average price of 52.3p. This compares to an average hedged price in
2020, 2021 and 2022 of 37.2p, 37.8p and 37.5p respectively.
Going concern
The Financial Statements have been prepared on a going concern
basis as the Directors are satisfied that the Group has adequate
resources to continue in operational existence for a period of not
less than 12 months from the date of approval of the financial
statements. Details of the Board's assessment of the Group's 'base
case', 'reasonable worse case', and 'reverse stress tests' are
detailed in note 1 of the Financial Statements on pages 22 to
23.
Risks and uncertainties
In the 2022 Annual Report the Board set out what it considered
to be the principal risks and uncertainties. Having subsequently
reviewed these again the Board considers them to remain relevant.
The principal risks are summarised below:
-- Unprecedented external factors threatening the resilience of
the business: the risk being the Group is not able to identify and
therefore sufficiently prepare and test appropriately for such
events and therefore lead to significant financial and reputational
damage.
-- Economic conditions: declining economic conditions with very
high inflation, high energy prices and cost pressures may impact
demand for travel and increase pressure on labour costs.
-- Political and geopolitical environment: the Group's
profitability and operational flexibility are impacted by the
threat of recession and political instability driven by new
elections in the UK and Spain, bringing potential political and
regulatory changes to countries we operate in.
-- Regulatory landscape and ability to comply: our industry is
highly regulated and we need to ensure compliance with not only
existing, but also new regulation to avoid operational, financial
and reputational damage.
-- Climate changes (physical): Widespread events such as extreme
weather can interrupt operations and cause revenue loss even if the
Group's assets are undamaged.
-- Changing customer expectations in a digital world: failure to
adapt to changing customer expectations, especially in the digital
environment, could affect customer satisfaction and the business's
ability to capitalise on valuable customer data and commercial
initiatives.
-- Climate changes and transition to ZEV: increased political
and customer demand for ZEVs; increased execution risk as part of
this transition; and significant change in infrastructure.
-- Competition and market dynamics: increased competition from
other modes of transport and/or in terms of increased price
competition.
-- Attractions/retention of talent/HR/labour relations:
increased unionisation, industrial action and/or poor labour
relation results in strike action; increased wages costs; ability
to retain management talent and leadership skills; shortage in
drivers leads to operational disruption and wage cost
inflation.
-- Cyber/IT failures/Data Protection: loss of confidential data
causing damage to brand reputation and incurring penalties; major
IT failure causing severe or sustained disruption to the
business.
-- Safety incidents, litigations and claims: a major safety or
security-related incident could impact the Group both financially
and reputationally.
-- Credit/financing: Group liquidity could be impacted by a
material increase in borrowing costs; and a material tightening of
credit markets
James Stamp
Group Chief Financial Officer
27 July 2023
Alternative performance measures
In the reporting of financial information, the Group has adopted
various Alternative Performance Measures ("APMs"). APMs should be
considered in addition to IFRS measurements. The Directors believe
that these APMs assist in providing useful information on the
Adjusted performance of the Group, enhance the comparability of
information between reporting periods, and are used internally by
the Directors to measure the Group's performance. The key APMs that
the Group focuses on are as follows:
Measure Closest Definition and reconciliation Purpose
IFRS measure
EBITDA Operating Earnings Before Interest EBITDA is used as a key
profit(1) and Tax plus Depreciation measure to understand
and Amortisation. It is profit and cash generation
calculated by taking Adjusted before the impact of investments
Operating Profit and adding (such as capital expenditure
back depreciation, fixed and working capital).
asset grant amortisation, It is also used to derive
and share-based payments. the Group's gearing ratio.
This is illustrated in the
Group Chief Financial Officer's
Report on page 10.
Gearing No direct The ratio of Covenant Net The gearing ratio is considered
equivalent Debt to EBITDA over the a key measure of balance
last 12 months, after making sheet strength and financial
the following adjustments stability by which the
to EBITDA: including any Group and interested stakeholders
pre-acquisition EBITDA generated assesses its financial
in that 12-month period position.
by businesses acquired by
the Group during that period;
the reversal of IFRS 16
accounting; the exclusion
of the profit or loss from
associates; the exclusion
of the profit or loss attributable
to minority interest; and
the add back of interest
costs arising from the unwind
of the discount on provisions.
Free cash Net cash The cash flow equivalent Free cash flow allows
flow generated of Adjusted Profit After us and external parties
from operating Tax. to evaluate the cash generated
activities A reconciliation of Adjusted by the Group's operations
Operating Profit and net and is also a key performance
cash flow from operating measure for the Executive
activities to free cash Directors' annual bonus
flow is set out in the supporting structure and management
tables below. remuneration.
Net maintenance No direct Comprises the purchase of Net maintenance capital
capital equivalent property, plant and equipment expenditure is a measure
expenditure and intangible assets, other by which the Group and
than growth capital expenditure, interested stakeholders
less proceeds from their assesses the level of
disposal. It excludes capital investment in new/existing
expenditure arising from capital assets to maintain
discontinued operations. the Group's profit.
It includes the capitalisation
of leases initiated in the
year in respect of existing
business.
A reconciliation of capital
expenditure in the statutory
cash flow statement to net
maintenance capital expenditure
(as presented in the Group
Chief Financial Officer's
Report) is set out in the
supporting tables below.
Growth No direct Growth capital expenditure Growth capital expenditure
capital equivalent represents the cash investment is a measure by which
expenditure in new or nascent parts the Group and interested
of the business, including stakeholders assesses
new contracts and concessions, the level of capital investment
which drive enhanced profit in new capital assets
growth. It includes the to drive profit growth.
capitalisation of leases
initiated in the year in
respect of new business.
Net Debt Borrowings Cash and cash equivalents Net Debt is the measure
less cash (cash overnight deposits, by which the Group and
and related other short-term deposits) interested stakeholders
hedges and other debt receivables, assesses its level of
offset by borrowings (loan overall indebtedness.
notes, bank loans and finance
lease obligations) and other
debt payable (excluding
accrued interest).
The components of Net Debt
as they reconcile to the
primary financial statements
and notes to the accounts
is disclosed in note 14.
Covenant Borrowings Net Debt adjusted for certain Covenant Net Debt is the
Net Debt less cash items agreed with the Group's measure that is applicable
and related lenders as being excluded in the covenant gearing
hedges for the purposes of calculating test.
Net Debt for covenant assessment.
The adjustments principally
comprise the exclusion of
IFRS 16 liabilities, the
exclusion of amounts owing
under arrangements to factor
advance subsidy payments,
the add back of trapped
cash, and an adjustment
to retranslate any borrowing
denominated in foreign currency
to the average foreign currency
exchange rates over the
preceding 12 months.
Adjusted Profit after Is the Adjusted Profit attributable Adjusted earnings is a
earnings tax to equity shareholders for key measure used in the
the period, and can be found calculation of Adjusted
on the face of the Group earnings per share.
Income Statement in the
first column.
Adjusted Basic earnings Is Adjusted earnings divided Adjusted earnings per
earnings per share by the weighted average share is widely used by
per share number of shares in issue, external stakeholders,
excluding those held in particularly in the investment
the Employee Benefit Trust community.
which are treated as cancelled.
A reconciliation of statutory
profit to Adjusted profit
for the purpose of this
calculation is provided
within note 8 of the financial
statements.
Adjusted Operating Statutory operating profit Adjusted Operating Profit
Operating profit(1) excluding adjusting items, is a key performance measure
Profit and can be found on the for the Executive Directors'
face of the Group Income annual bonus structure
Statement in the first column. and management remuneration.
It also allows for ongoing
trends and performance
of the Group to be measured
by the Directors, management
and interested stakeholders.
Adjusted Operating Adjusted Operating Profit/(Loss) Adjusted Operating Margin
Operating profit (1) divided by revenue is a measure used to assess
Margin divided by and compare profitability.
revenue It also allows for ongoing
trends and performance
of the Group to be measured
by the Directors, management
and interested stakeholders
Adjusted Profit before Statutory profit before Adjusted Profit before
Profit Before tax tax excluding adjusting tax allows a view of the
Tax items, and can be found profit before tax after
on the face of the Group taking account of the
Income Statement in the Adjusting items
first column.
Return Operating Adjusted Operating Profit ROCE gives an indication
on capital profit(1) divided by average capital of the Group's capital
employed and net assets employed. Capital employed efficiency and is a key
(ROCE) is net assets excluding performance measure for
Net Debt and derivative the Executive Directors'
financial instruments, and remuneration.
for the purposes of this
calculation is translated
using average exchange rates.
The calculation of ROCE
is set out in the reconciliation
tables below.
--------------- --------------- ----------------------------------- ----------------------------------
(1) Operating profit is presented on the Group income statement.
It is not defined per IFRS, however is a generally accepted profit
measure.
Supporting reconciliations
Six months Six months
to 30 June to 30 June
Reconciliation of net cash flow from operating 2023 2022
activities to free cash flow GBPm GBPm
----------------------------------------------- ----------- -------------------------
Net cash flow from operating activities 120.6 92.9
----------------------------------------------- ----------- -------------------------
Cash (receipts)/payments in respect of IFRIC
12 asset purchases treated as working capital
for statutory cash flow* (11.9) 25.7
Cash expenditure in respect of adjusting items 23.5 23.2
Net maintenance capital expenditure (55.0) (88.3)
Other non-cash movements (0.4) (0.2)
Profit on disposal of fixed assets 2.9 10.5
----------------------------------------------- ----------- -------------------------
Free cash flow 79.7 63.8
----------------------------------------------- ----------- -------------------------
*During the year the Group received cash in respect of a capital
grant receivable for assets (principally vehicles) acquired
in previous years to fulfil a contract in Morocco that is accounted
for under the IFRIC12 financial asset model and for which the
statutory cash flow for these purchases and grants receivable
are accordingly presented as a movement in working capital,
with the assets being recorded as contract assets on the balance
sheet rather than in property, plant and equipment or intangible
assets. In order to be consistent with the treatment of asset
purchases on other contracts, these asset purchases are reclassified
to capital expenditure for the purposes of the "funds flow"
presented in the CFO report. The grant receipt has been included
as growth capital expenditure, consistent with the original
asset purchases for new business and consistent with previous
years.
Six months Six months
to 30 June to 30 June
Reconciliation of capital expenditure in statutory 2023 2022
cash flow to funds flow GBPm GBPm
----------------------------------------------------- ----------- -----------
Purchase of property, plant and equipment (41.8) (70.0)
Proceeds from disposal of property, plant and
equipment 3.2 5.5
Payments to acquire intangible assets (4.8) (5.7)
Proceeds from disposal of intangible assets 0.4 4.1
----------------------------------------------------- ----------- -----------
Net capital expenditure in statutory cash flow
statement (43.0) (66.1)
Profit on disposal of fixed assets (2.9) (10.5)
Capitalisation of leases initiated in the year,
less disposals (18.0) (15.2)
Cash receipts/payments in respect of IFRIC12
purchases (as explained above) 11.9 (25.7)
----------------------------------------------------- ----------- -----------
Net capital expenditure in the funds flow (presented
in the Group Chief Financial Officer's Report) 52.0 (117.5)
----------------------------------------------------- ----------- -----------
Split as:
Net maintenance capital expenditure (55.0) (88.3)
Growth capital expenditure 3.0 (29.2)
12 months 12 months
to 30 June to 30 June
2023 2022*
Reconciliation of ROCE GBPm GBPm
---------------------------------------------------- ----------- -----------
Group statutory operating (loss)/profit (192.1) 32.2
---------------------------------------------------- ----------- -----------
Add back: adjusting items 356.4 122.4
---------------------------------------------------- ----------- -----------
Return - Adjusted Group Operating Profit 164.3 154.6
---------------------------------------------------- ----------- -----------
Average net assets 1,433.2 1,580.2
Average net debt 1,168.2 1,125.9
Average derivatives (excluding derivatives reported
within net debt) (21.6) (19.7)
Foreign exchange adjustment 187.0 (50.2)
---------------------------------------------------- ----------- -----------
Average capital employed 2,766.8 2,636.2
---------------------------------------------------- ----------- -----------
Return on capital employed 5.9% 5.9%
---------------------------------------------------- ----------- -----------
*Return on capital for the 12 months to 30 June 2022 has been
recalculated following the prior year restatement for deferred tax
assets and liabilities (see note 1). This has resulted in no change
to the previously reported Return on capital employed of 5.9%.
Directors' Responsibilty Statement
The Directors confirm that, to the best of their knowledge:
-- the condensed financial statements of the Company have been
prepared in accordance with IAS 34; and
-- the interim management report of the Company includes:
o a fair review of the important events during the first six
months of the year and their impact on the condensed financial
statements and a description of the principal risks and
uncertainties for the remaining six months of the year, as required
by DTR 4.2.7R; and
o a fair review of related party transactions and changes
therein, as required by DTR 4.2.8R.
On behalf of the Board
Ignacio Garat James Stamp
Chief Executive Chief Financial
Officer Officer
MOBICO GROUP PLC
CONDENSED GROUP INCOME STATEMENT
For the six months ended 30 June 2023
Unaudited six months to 30 June
----- -------------------------------------------------------------------
Audited
Year to
Adjusting Adjusting 31
Items (Restated) Items (Restated) December
Adjusted (note Adjusted (note
result 5) Total result 5) Total Total
2023 2023 2023 2022 (1) 2022 2022 (1) 2022
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- ----- --------- ---------- --------- ---------- --------- ---------- ---------
Revenue 3 1,569.4 - 1,569.4 1,324.3 - 1,324.3 2,807.5
Operating costs (1,511.9) (48.8) (1,560.7) (1,233.8) (48.2) (1,282.0) (2,966.0)
--------------------- ----- --------- ---------- --------- ---------- --------- ---------- ---------
Group operating
profit/(loss) 57.5 (48.8) 8.7 90.5 (48.2) 42.3 (158.5)
Share of results
from associates
and joint ventures - - - (0.1) - (0.1) (0.4)
Finance income 4 1.7 - 1.7 1.3 - 1.3 2.2
Finance costs 4 (33.8) - (33.8) (23.0) - (23.0) (53.2)
--------------------- ----- --------- ---------- --------- ---------- --------- ---------- ---------
Profit/(loss)
before tax 25.4 (48.8) (23.4) 68.7 (48.2) 20.5 (209.9)
Tax (charge)/credit 6 (7.2) (8.8) (16.0) (17.3) 12.0 (5.3) (10.8)
--------------------- ----- --------- ---------- --------- ---------- --------- ---------- ---------
Profit/(loss)
for the period 18.2 (57.6) (39.4) 51.4 (36.2) 15.2 (220.7)
--------- ---------- --------- ---------- --------- ---------- ---------
Profit/(loss)
attributable to
equity shareholders 16.8 (57.4) (40.6) 47.9 (35.7) 12.2 (221.8)
Profit/(loss)
attributable to
non-controlling
interests 1.4 (0.2) 1.2 3.5 (0.5) 3.0 1.1
--------- ---------- --------- ---------- --------- ---------- ---------
18.2 (57.6) (39.4) 51.4 (36.2) 15.2 (220.7)
--------------------- ----- --------- ---------- --------- ---------- --------- ---------- ---------
Earnings per share: 8
- basic earnings
per share (8.3)p 0.3p (39.7)p
- diluted earnings
per share (8.3)p 0.3p (39.7)p
--------------------- ----- --------- ---------- --------- ---------- --------- ---------- ---------
(1) Restated for correction to deferred tax assets and
liabilities, see note 1 for further information
MOBICO GROUP PLC
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2023
(Restated)
Unaudited Unaudited Audited
six months six months year to
to to 31 December
30 June 30 June 2022
2023 2022 (1) GBPm
GBPm GBPm
------------------------------------------------- ------------ ----------- -------------
(Loss)/profit for the period (39.4) 15.2 (220.7)
Items that will not be reclassified subsequently
to profit or loss:
Actuarial gains on defined benefit pension
plans 4.2 36.6 53.0
Deferred tax charge on actuarial movements (1.0) (9.2) (12.7)
Gains on equity instruments classified as
fair value through Other Comprehensive Income - 0.4 1.7
------------------------------------------------- ------------ ----------- -------------
3.2 27.8 42.0
------------------------------------------------- ------------ ----------- -------------
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on retranslation of
foreign operations (78.6) 132.1 146.9
Exchange differences on retranslation of
non-controlling interests (1.6) 2.1 3.1
Gains/(losses) on net investment hedges 33.6 (44.8) (57.6)
(Losses)/gains on cash flow hedges (45.5) 96.1 78.6
Cost of hedging 0.3 (0.7) (0.7)
Hedging gains and losses reclassified to
Income Statement 7.0 (39.2) (77.7)
Deferred tax (charge)/credit on foreign
exchange differences (4.2) 0.1 1.3
Deferred tax credit/(charge) on cash flow
hedges 9.5 (14.3) 5.2
------------------------------------------------- ------------ ----------- -------------
(79.5) 131.4 99.1
------------------------------------------------- ------------ ----------- -------------
Other comprehensive (expenditure)/income
for the period (76.3) 159.2 141.1
------------------------------------------------- ------------ ----------- -------------
Total comprehensive (expenditure)/income
for the period (115.7) 174.4 (79.6)
------------------------------------------------- ------------ ----------- -------------
Total comprehensive (expenditure)/income
attributable to:
------------ ----------- -------------
Equity shareholders (115.3) 169.3 (83.8)
Non-controlling interests (0.4) 5.1 4.2
------------ ----------- -------------
(115.7) 174.4 (79.6)
------------------------------------------------- ------------ ----------- -------------
(1) Restated for correction to deferred tax assets and
liabilities, see note 1 for further information
MOBICO GROUP PLC
CONDENSED GROUP BALANCE SHEET
At 30 June 2023
(Restated)
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 (1) 2022
Note GBPm GBPm GBPm
------------------------------------ ---- --------- ---------- ------------
Non-current assets
Intangible assets 1,545.9 1,870.1 1,620.9
Property, plant and equipment 1,121.2 1,162.3 1,175.3
Non-current financial assets 19.5 47.2 26.9
Deferred tax assets 180.1 152.7 185.5
Investments accounted for using the
equity method 12.8 13.8 13.9
Trade and other receivables 162.7 167.7 173.5
Finance lease receivable 7.8 11.6 9.7
Defined benefit pension assets 12 0.2 - 0.4
------------------------------------ ---- --------- ---------- ------------
Total non-current assets 3,050.2 3,425.4 3,206.1
------------------------------------ ---- --------- ---------- ------------
Current assets
Inventories 32.1 32.6 32.4
Trade and other receivables 563.7 517.3 560.7
Finance lease receivable 3.7 4.5 4.3
Derivative financial instruments 11 40.9 78.0 37.7
Current tax assets 2.9 5.7 2.3
Cash and cash equivalents 9 356.8 341.9 291.8
------------------------------------ ---- --------- ---------- ------------
Total current assets 1,000.1 980.0 929.2
------------------------------------ ---- --------- ---------- ------------
Assets classified as held for sale 13 24.5 19.4 18.6
------------------------------------ ---- --------- ---------- ------------
Total assets 4,074.8 4,424.8 4,153.9
------------------------------------ ---- --------- ---------- ------------
Non-current liabilities
Borrowings (854.4) (1,294.3) (886.3)
Derivative financial instruments 11 (34.4) (16.1) (22.4)
Deferred tax liability (26.2) (19.6) (26.9)
Other non-current liabilities (111.7) (141.3) (121.2)
Defined benefit pension liabilities 12 (34.8) (61.2) (42.5)
Provisions (59.3) (68.0) (65.7)
------------------------------------ ---- --------- ---------- ------------
Total non-current liabilities (1,120.8) (1,600.5) (1,165.0)
------------------------------------ ---- --------- ---------- ------------
Current liabilities
Trade and other payables (923.5) (798.4) (874.5)
Borrowings (673.9) (202.2) (602.0)
Derivative financial instruments 11 (45.3) (81.5) (41.9)
Current tax liabilities (4.2) (10.2) (4.2)
Provisions (81.0) (91.8) (75.6)
------------------------------------ ---- --------- ---------- ------------
Total current liabilities (1,727.9) (1,184.1) (1,598.2)
------------------------------------ ---- --------- ---------- ------------
Total liabilities (2,848.7) (2,784.6) (2,763.2)
------------------------------------ ---- --------- ---------- ------------
Net assets 1,226.1 1,640.2 1,390.7
------------------------------------ ---- --------- ---------- ------------
Shareholders' equity
Share capital 30.7 30.7 30.7
Share premium 533.6 533.6 533.6
Own shares (3.6) (4.0) (3.9)
Hybrid reserve 502.2 502.2 513.0
Other reserves 403.8 513.7 481.7
Retained earnings (283.7) 20.3 (207.4)
------------------------------------ ---- --------- ---------- ------------
Total shareholders' equity 1,183.0 1,596.5 1,347.7
Non-controlling interest in equity 43.1 43.7 43.0
------------------------------------ ---- --------- ---------- ------------
Total equity 1,226.1 1,640.2 1,390.7
------------------------------------ ---- --------- ---------- ------------
(1) Restated for correction to deferred tax assets and
liabilities, see note 1 for further information
MOBICO GROUP PLC
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2023
Non-
Share Share Own Hybrid Other Retained controlling Total
capital premium shares reserve reserves earnings Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- -------- -------- ------- -------- --------- --------- ------- ------------ -------
At 1 January 2023 30.7 533.6 (3.9) 513.0 481.7 (207.4) 1,347.7 43.0 1,390.7
---------------------- -------- -------- ------- -------- --------- --------- ------- ------------ -------
(Loss)/Profit
for the period - - - - - (40.6) (40.6) 1.2 (39.4)
Other comprehensive
(expenditure)/income
for the period - - - - (77.9) 3.2 (74.7) (1.6) (76.3)
---------------------- -------- -------- ------- -------- --------- --------- ------- ------------ -------
Total comprehensive
expenditure - - - - (77.9) (37.4) (115.3) (0.4) (115.7)
Own shares released
to equity employee
share schemes - - 0.3 - - (0.3) - - -
Accrued payments
on hybrid instrument - - - 10.5 - (10.5) - - -
Payments on hybrid
instrument - - - (21.3) - - (21.3) - (21.3)
Deferred tax on
hybrid bond payments - - - - - 2.6 2.6 - 2.6
Dividends - - - - - (30.7) (30.7) - (30.7)
Contributions
from non-controlling
interests - - - - - - - 0.4 0.4
Other movements
with non-controlling
interests - - - - - - - 0.1 0.1
At 30 June 2023 30.7 533.6 (3.6) 502.2 403.8 (283.7) 1,183.0 43.1 1,226.1
---------------------- -------- -------- ------- -------- --------- --------- ------- ------------ -------
MOBICO GROUP PLC
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2022
(Restated) (Restated) (Restated)
Other Retained (Restated) Non- Total
Share Share Own Hybrid reserves earnings Total controlling equity
capital premium shares reserve (1) (1) (1) interests (1)
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- -------- -------- ------- -------- ---------- ---------- ---------- ------------ ----------
At 1 January 2022 30.7 533.6 (4.5) 513.0 384.0 (16.2) 1,440.6 41.1 1,481.7
----------------- -------- -------- ------- -------- ---------- ---------- ---------- ------------ ----------
Profit for the
period - - - - - 12.2 12.2 3.0 15.2
Other
comprehensive
income for the
period - - - - 129.7 27.4 157.1 2.1 159.2
----------------- -------- -------- ------- -------- ---------- ---------- ---------- ------------ ----------
Total
comprehensive
income - - - - 129.7 39.6 169.3 5.1 174.4
Shares purchased - - (0.2) - - - (0.2) - (0.2)
Own shares
released
to equity
employee
share schemes - - 0.7 - - (0.7) - - -
Accrued payments
on hybrid
instrument - - - 10.5 - (10.5) - - -
Payments on
hybrid
instrument - - - (21.3) - - (21.3) - (21.3)
Deferred tax on
hybrid bond
payments - - - - - 2.6 2.6 - 2.6
Purchase of
subsidiary
shares from
non-controlling
interest - - - - - 5.5 5.5 (5.5) -
Contributions
from
non-controlling
interests - - - - - - - 3.0 3.0
----------------- -------- -------- ------- -------- ---------- ---------- ---------- ------------ ----------
At 30 June 2022 30.7 533.6 (4.0) 502.2 513.7 20.3 1,596.5 43.7 1,640.2
----------------- -------- -------- ------- -------- ---------- ---------- ---------- ------------ ----------
(1) Restated for correction to deferred tax assets and liabilities,
see note 1 for further information
MOBICO GROUP PLC
CONDENSED GROUP STATEMENT OF CASH FLOWS
For the six months ended 30 June 2023
Unaudited Unaudited
six months six months Audited
to 30 to 30 year to
June June 31 December
2023 2022(1) 2022
Note GBPm GBPm GBPm
-------------------------------------------- ---- ----------- ------------ ------------
Cash generated from operations 15 144.9 109.9 284.9
Tax paid (8.7) (4.0) (17.6)
Interest paid (16.0) (13.2) (48.6)
Interest received 0.4 0.2 2.5
-------------------------------------------- ---- ----------- ------------ ------------
Net cash flow from operating activities 120.6 92.9 221.2
-------------------------------------------- ---- ----------- ------------ ------------
Cash flows from investing activities
Payments to acquire businesses, net
of cash acquired 13 (3.2) (4.4) (4.8)
Deferred consideration for businesses
acquired 13 (3.0) (1.3) (3.7)
Purchase of property, plant and equipment (41.8) (70.0) (169.0)
Proceeds from disposal of property,
plant and equipment 3.2 5.5 9.3
Payments to acquire intangible assets (4.8) (5.7) (10.7)
Proceeds from disposal of intangible
assets 0.4 4.1 5.2
Payments to settle net investment hedge
derivative contracts (0.6) (5.0) (10.5)
Receipts on settlement of net investment
hedge derivative contracts 4.9 2.9 3.1
Receipts relating to associates and
investments 0.9 0.3 0.7
-------------------------------------------- ---- ----------- ------------ ------------
Net cash flow from investing activities (44.0) (73.6) (180.4)
-------------------------------------------- ---- ----------- ------------ ------------
Cash flows from financing activities
Dividends paid to holders of hybrid
instrument (21.3) (21.3) (21.3)
Principal lease payments (32.3) (37.7) (85.9)
Increase in borrowings 163.9 72.3 128.8
Repayment of borrowings (79.7) (90.5) (169.5)
Payments to settle foreign exchange
forward contracts (11.2) (17.6) (61.7)
Receipts on settlement of foreign exchange
forward contracts 23.1 7.7 22.3
Purchase of own shares (0.2) (0.2) (0.3)
Acquisition of non-controlling interests(2) - (18.2) (19.1)
Contributions from non-controlling
interests 0.4 3.0 3.2
Disposals of non-controlling interests - - 0.6
Dividends paid to shareholders of the
Company (30.7) - -
-------------------------------------------- ---- ----------- ------------ ------------
Net cash flow from financing activities 12.0 (102.5) (202.9)
-------------------------------------------- ---- ----------- ------------ ------------
Increase/(decrease) in net cash and
cash equivalents 88.6 (83.2) (162.1)
-------------------------------------------- ---- ----------- ------------ ------------
Opening net cash and cash equivalents 233.1 376.2 376.2
Increase/(decrease) in net cash and
cash equivalents 88.6 (83.2) (162.1)
Foreign exchange (11.1) 8.0 19.0
-------------------------------------------- ---- ----------- ------------ ------------
Closing net cash and cash equivalents 9 310.6 301.0 233.1
-------------------------------------------- ---- ----------- ------------ ------------
(1) Restated for correction to deferred tax assets and
liabilities, see note 1 for further information
(2) Amounts in 2022 include GBP18.2m paid on exercise of 10% of
the WeDriveU put liability
MOBICO GROUP PLC
NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS
For the six months ended 30 June 2023
1. General information
Basis of preparation
The condensed interim Financial Statements have been prepared in
accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority and with International
Accounting Standards 34 'Interim Financial Reporting' as issued by
the International Accounting Standards Board. It should be read in
conjunction with the Annual Report and Accounts for the year ended
31 December 2022, which were prepared in accordance with applicable
law and International Financial Reporting Standards as issued by
the International Accounting Standards Board.
These condensed interim Financial Statements for the six months
ended 30 June 2023 do not comprise statutory accounts within the
meaning of section 434 of the Companies Act 2006. Statutory
accounts for the year ended 31 December 2022 were approved by the
Board of Directors on 1 March 2023 and delivered to the Registrar
of Companies. The report of the auditors on those accounts was
unqualified, did not contain an emphasis of matter paragraph and
did not contain any statement under Section 498 of the Companies
Act 2006.
Figures for the year ended 31 December 2022 have been extracted
from the Group's Annual Report and Accounts for the year ended
2022. The interim results are unaudited but have been reviewed by
the Group's auditor.
Going concern
The Financial Statements have been prepared on a going concern
basis. In adopting this basis, the Directors have considered the
Group's business activities, principal risks and uncertainties,
exposure to macroeconomic conditions, financial position, liquidity
and borrowing facilities.
The Group continues to maintain a strong liquidity position,
with GBP0.8bn in cash and undrawn committed facilities available to
it as of 30 June 2023 and total committed facilities of GBP1.9bn at
this date. Within the going concern outlook period, the only expiry
of these facilities is a GBP400m sterling bond maturing in November
2023. In anticipation of this refinancing, the Group entered into a
GBP400m bridge-to-bond facility in December 2022; this is for an
initial period of 18 months and includes committed options to
extend the maturity date until December 2025. Additionally, on 11
July 2023 the Group refinanced its revolving credit facility
("RCF"), increasing the facility size to GBP600m. This replaces the
existing facility, the majority of which was due to mature in 2025.
The new facility is committed for five years (to July 2028), with
two annual extension options to July 2030. Covenants and other key
terms are consistent with those of the Group's former RCF.
The Group has positive relationships and regular dialogue with
its lenders. Certain of the Group's borrowings are subject to
covenant tests on gearing and interest cover on a bi-annual basis.
A gearing covenant of <3.5x and an interest covenant of >3.5x
apply to the Group.
The Group has continued to grow throughout the period to June
2023, to deliver record revenue (at constant currency) in the first
six months of the year. The outlook for the near term is
encouraging, with all divisions due to improve profitability in the
latter part of the year. This is driven by ongoing expansion and
growth across the business and the impact of the decisive action
taken to recover the impact of cost inflation seen in the first
half, as well as the benefit from the previously announced cost
efficiency programme. Despite the prevailing macroeconomic
uncertainty, we are confident in the Group's prospects as a
value-for-money provider of essential public services, and
therefore consider the business highly resilient to cost-of-living
pressures. At the same time the Directors remain confident in the
longer term outlook for the Group with an ambition to selectively
pursue growth from a strong pipeline of opportunities. This growth
ambition is strengthened by government policy which is highly
supportive of public transport as part of the solution to climate
change.
In the base case projections, which cover the period to August
2024, for the remainder of this year we assume a continuation of
the positive momentum seen across the Group in the first half
leading to improved profitability in all divisions following
recovery of inflation and implementation of targeted cost saving
initiatives. For the 2024 projections, we assume ongoing growth in
the base business, meaningful upside from pricing renegotiations in
excess of wage inflation in North America School Bus, price
increases in UK Bus, the impact of our cost reduction program, as
well as success in securing new growth contract wins in our chosen
markets across the Group.
Consistent with the assessment at 31 December 2022, the
reasonable worst case ("RWC") has been formed around the following
four themes, all of which relate to the prevailing macroeconomic
situation:
1. Driver shortages: despite demonstrable progress in closing
the driver shortage gap in the year so far, we prudently assume
that most divisions will continue to be impacted by further driver
shortages in the upcoming 12 months, affecting the Group's ability
to deliver services, with a 1% reduction in revenue pertaining to
unavailability of drivers applied across several divisions of the
Group. In North America, we assume that 75% of the routes due to be
recovered between now and the start of the new school year in
September are not reinstated due to unavailability of drivers,
resulting in lost revenue in both 2023 and 2024.
2. Reduced demand: despite the essential nature of many of our
services, we prudently assume that lower household disposable
incomes due to high inflation, coupled with increasing
unemployment, lead to a reduction in demand for our services. This
also assumes that contract wins and retention rates suffer as a
result of public authorities and businesses cutting budgets. The
downside modelled varies between divisions according to the nature
of its customer base.
3. Inflation: we assume that cost inflation is a further 1%
higher than that already modelled in H2 2023 and 5% higher than
modelled in 2024, and that only around half of this is passed on to
customers in the form of price increases or contractual margin
protection mechanisms. For UK Bus, additional incremental cost to
take account of the driver pay deal agreed in March 2023 has also
been applied to the 2024 projections.
4. Price rises: price rise assumptions have only been applied
where we are able to control prices, considering other competition
factors and contractual indexation mechanisms.
These downsides have been modelled for each division
independently, taking into account the current economic situation
in each market, including the relative labour market and inflation
dynamics between geographies, which has been corroborated against
independent external forecasts.
In addition to these wider downside themes described above, we
further assume failure to win certain new growth contracts, a
shortfall in government funding, and higher interest rates on
non-fixed borrowings as a result of central banks' efforts to
curtail high inflation.
Consistent with prior assessments, against the RWC the Group has
again assumed mitigations in the form of further reductions in
expenditure, over and above those reflected in the base case,
primarily around discretionary spending and back office cost
savings, and curtailment of capital expenditure.
The Directors have reviewed the base case and RWC projections
and in both scenarios the Group has a strong liquidity position
over the next 12 months and significant headroom on all of its
covenant tests.
1. General information
In addition to the base case and RWC scenarios, the Directors
have reviewed reverse stress tests, in which the Group has assessed
the set of circumstances that would be necessary for the Group to
either breach the limits of its borrowing facilities or breach any
of the covenant tests.
In applying a reverse stress test to liquidity the Directors
have concluded that the set of circumstances required to exhaust it
are so extreme as to be considered clearly remote. As ever,
covenants that include EBITDA as a component are more sensitive to
reverse stress testing; the Directors have therefore conducted
in-depth stress testing on all covenant tests at December 2023 and
June 2024. In doing so, the Directors have considered all cost
mitigations that would be within their control if faced with
another short-term material EBITDA reduction and no lender support
to amend or waive EBITDA-related covenants. Stress tests on both
reduced passenger demand and higher irrecoverable cost inflation
have been modelled. Taking this into account the Directors
concluded that the probability was remote that circumstances arise
that cause covenants to be breached.
A stress test on the interest cover covenant has also been
performed in light of ongoing high market interest rates and
predictions that central bank rates may rise further to curtail
inflation. The vast majority of the Group's borrowings are fixed,
however a stress test was performed on those which are not yet
fixed - principally the new bond planned to be issued later in
2023, and the floating rate interest rate swap. Taking this into
account, the Directors conclude that the probability was remote
that circumstances arise that cause covenants to be breached.
In conclusion, the Directors have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for a period of 12 months from the date of approval of
the Financial Statements. For this reason, they continue to adopt
the going concern basis in preparing the interim Financial
Statements for the period ended 30 June 2023.
Accounting policies
The accounting policies adopted in the preparation of the
interim condensed Consolidated Financial Statements are consistent
with those followed in the preparation of the Group's 2022 Annual
Report and Accounts, except for the adoption of new standards
effective as of 1 January 2023.
The Group has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective.
Several Standards and amendments apply for the first time in
2023, but do not have an impact on the interim condensed
Consolidated Financial Statements of the Group.
Taxes on income in the interim periods are accrued using the tax
rate that is expected to apply to total annual earnings.
Adjusted profit, after 'adjusting items' (previously 'Underlying
profit', after 'Separately disclosed items')
The Group presents results on a statutory and adjusted basis.
The alternative performance measure (APM) 'adjusted profit'
represents a change in terminology from the prior period which
separately disclosed certain items to show an 'underlying' profit
measure. The change in terminology has been adopted to reduce any
judgement and interpretation of the meaning 'underlying' profit by
users of the Financial Statements. As this is a terminology change
only, there has been no change to how the Group determines items to
be adjusting, and there has been no change to previously reported
comparatives. Any previously 'separately disclosed items', continue
to meet the definition of 'adjusting items' following the change in
terminology in the current year.
The Group Income Statement has been presented in a columnar
format to enable users of the Financial Statements to view the
adjusted results of the Group. The Group's policy is to adjust for
items that are considered significant in nature and value or not in
the normal course of business, or are consistent with items that
were treated as adjusting in prior periods. Treatment as adjusting
items provides users of the accounts with additional useful
information to assess the year-on-year trading performance of the
Group. The adjusted profit measures are not recognised profit
measures under IFRS and may not be directly comparable with
adjusted profit measures used by other companies.
Further details relating to adjusting items are provided in note
5.
1. General information
Restatement of Deferred Tax Assets and Deferred Tax
Liabilities
Consistent with the Group's 2022 Annual Report and Accounts, the
prior year comparatives within this report have been restated (as
indicated in the table below) for previously unrecognised deferred
tax assets, and to de-recognise previously recognised deferred tax
liabilities. Please refer to the Group's 2022 Annual Report for the
full details regarding the change.
INCOME STATEMENT 30 June 2022 30 June 2022
(Reported) (Restated)
--------------------------- -------------------------- --------------------------
Adjusted Adjusting Total Adjusted Adjusting Total
result Items result Items
--------------------------- -------- --------- ----- -------- --------- -----
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- -------- --------- ----- -------- --------- -----
Profit/(loss) before
tax 68.7 (48.2) 20.5 68.7 (48.2) 20.5
--------------------------- -------- --------- ----- -------- --------- -----
Tax (charge)/credit (16.7) 12.0 (4.7) (17.3) 12.0 (5.3)
--------------------------- -------- --------- ----- -------- --------- -----
Profit/(loss) for
the year 52.0 (36.2) 15.8 51.4 (36.2) 15.2
--------------------------- -------- --------- ----- -------- --------- -----
Profit/(loss) attributable
to equity shareholders 48.5 (35.7) 12.8 47.9 (35.7) 12.2
--------------------------- -------- --------- ----- -------- --------- -----
Profit/(loss) attributable
to non-controlling
interests 3.5 (0.5) 3.0 3.5 (0.5) 3.0
--------------------------- -------- --------- ----- -------- --------- -----
52.0 (36.2) 15.8 51.4 (36.2) 15.2
--------------------------- -------- --------- ----- -------- --------- -----
Basic EPS 0.4p 0.3p
--------------------------- -------- --------- ----- -------- --------- -----
Diluted EPS 0.4p 0.3p
--------------------------- -------- --------- ----- -------- --------- -----
30 June 30 June
2022 2022
STATEMENT OF COMPREHENSIVE INCOME (Reported) (Restated)
-------------------------------------------- ----------- -----------
Profit for the year 15.8 15.2
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on retranslation
of foreign operations 130.7 132.1
Other comprehensive income for the
year 157.8 159.2
------------------------------------------------ ----------- -----------
Total comprehensive income for the
year 173.6 174.4
------------------------------------------------ ----------- -----------
Total comprehensive income attributable
to:
Equity shareholders 168.5 169.3
Non-controlling interests 5.1 5.1
------------------------------------------------ ----------- -----------
173.6 174.4
----------------------------------------------- ----------- -----------
30 June 30 June
2022 2022
BALANCE SHEET (Reported) (Restated)
------------------------- ----------- -----------
Deferred tax assets 143.0 152.7
----------------------------------------- ----------- -----------
Total non-current
assets 3,415.7 3,425.4
----------------------------------------- ----------- -----------
Total assets 4,415.1 4,424.8
----------------------------------------- ----------- -----------
Deferred tax liabilities (44.2) (19.6)
----------------------------------------- ----------- -----------
Total non-current
liabilities (1,625.1) (1,600.5)
----------------------------------------- ----------- -----------
Total liabilities (2,809.2) (2,784.6)
----------------------------------------- ----------- -----------
Net assets 1,605.9 1,640.2
----------------------------------------- ----------- -----------
Retained earnings (8.7) 20.3
----------------------------------------- ----------- -----------
Other reserves 508.4 513.7
----------------------------------------- ----------- -----------
Total equity 1,605.9 1,640.2
----------------------------------------- ----------- -----------
Use of judgements and estimates
The critical accounting judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those described in the
Group's Annual Report and Accounts for the year ended 2022.
Seasonality
The Group operates a diversified portfolio of bus, coach and
rail businesses operating in international markets. The North
American bus business is aligned to the school years with profits
each half year to 30 June determined by the price rates and routes
agreed ahead of each school year. The UK and Spanish coach
businesses typically earn lower operating profits for the first
half of the year than the second half. This is because of the
higher demand created by leisure travellers during the summer
months. In recent years the Covid-19 pandemic has impacted the
business due to timings of lockdowns and mobility restrictions.
2. Exchange rates
The most significant exchange rates to UK Sterling for the Group
are as follows:
Six months to Six months to Year to 31 December
30 June 2023 30 June 2022 2022
Closing Average Closing Average Closing Average
rate rate rate rate rate rate
---------------- ------- ------- ------- ------- ---------- ---------
US dollar 1.27 1.23 1.22 1.30 1.21 1.24
Canadian dollar 1.68 1.66 1.57 1.65 1.64 1.61
Euro 1.16 1.14 1.16 1.19 1.13 1.17
---------------- ------- ------- ------- ------- ---------- ---------
If the results for the six months to 30 June 2022 had been
retranslated at the average exchange rates for the period to 30
June 2023, North America would have achieved an adjusted operating
profit of GBP60.1m on revenue of GBP543.5m compared to adjusted
operating profit of GBP57.4m on revenue of GBP518.7m as reported,
and ALSA would have achieved an adjusted operating profit of
GBP52.3m on revenue of GBP462.1m, compared to adjusted operating
profit of GBP50.3m on revenue of GBP444.2m as reported.
3. Segmental analysis
The Group's reportable segments have been determined based on
reports issued to, and reviewed by, the Group Executive Committee
and are organised in accordance with the geographical regions in
which they operate and nature of services that they provide.
Management considers the Group Executive Committee to be the chief
decision-making body for deciding how to allocate resources and for
assessing operating performance.
Segmental performance is evaluated based on operating profit or
loss and is measured consistently with operating profit or loss in
the Consolidated Financial Statements. Group financing activities
and income taxes are managed on a group basis and are not allocated
to reportable segments.
Central functions is not a reportable segment but has been
included in the segmental analysis for transparency and to enable a
reconciliation to the consolidated Group.
Revenue is disaggregated by reportable segment, class and type
of service as follows:
Six months to 30 June 2023
-------------------------------------------------------------
Grants
Contract Passenger and Private Other
Analysis by class and revenues revenues subsidies hire revenues Total
reportable segment GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- --------- --------- ---------- ------- --------- -------
UK 17.8 222.2 21.9 12.3 11.2 285.4
German Rail - 24.9 112.0 - 0.4 137.3
ALSA 114.8 292.3 92.8 31.0 28.8 559.7
North America 552.8 - - 31.2 3.0 587.0
-------------------------- --------- --------- ---------- ------- --------- -------
Total 685.4 539.4 226.7 74.5 43.4 1,569.4
-------------------------- --------- --------- ---------- ------- --------- -------
Analysis by major service
type
-------------------------- --------- --------- ---------- ------- --------- -------
Passenger transport 685.4 539.4 226.7 74.5 8.0 1,534.0
Other products and
services - - - - 35.4 35.4
Total 685.4 539.4 226.7 74.5 43.4 1,569.4
-------------------------- --------- --------- ---------- ------- --------- -------
There are no material inter-segment sales between reportable
segments.
Included in grants and subsidies is GBP6.7m (2022: GBP8.4m) of
government support recognised in ALSA from Public Transport
Authorities to compensate for revenue shortfalls due to Covid-19
pandemic.
In the prior year GBP14.9m of revenue was recognised relating to
grant support in response to Covid-19 in the UK. In addition in
2022 grants and subsidies also included GBP3.4m subsidies in
Germany in respect of the Federal Framework Regulation on Aid to
Public Transport.
In 2022, the West Midlands Combined Authority (WMCA), supported
by our UK Bus business (UK Bus) and other regional operators,
applied for and was awarded a grant by the Department for Transport
(DfT) under the UK Government's Bus Improvement Plan (BSIP). A
pre-application condition for the BSIP grant set by the DfT was the
existence of an Enhanced Partnership Plan (EPP) and an Enhanced
Partnership Scheme (EPS) between WMCA and regional bus operators.
This was in place for the West Midlands prior to the commencement
of the BSIP. The BSIP was available to WMCA and regional bus
operators in return for delivering certain improvements in bus
services in the West Midlands.
In the prior year, a total amount of GBP12.0m was recognised
which represented the pro-rata element of the total three year
(April 2022 - March 2025) grant funding available in respect of the
BSIP that the UK delivered on in 2022, which totalled GBP48.0m.
This included GBP4.0m of income recorded in revenue representing
the portion of the grant income designed to compensate the business
for freezing passenger fares and a further GBP8.0m recorded to
reduce expenditure to reflect the elements of the BSIP programme
compensating the business for the costs incurred in maintaining the
bus network during that period. The grant funding was awarded
during the second half of 2022 and therefore no amounts were
recognised in the period to 30 June 2022.
During the period to 30 June 2023, UK Bus renegotiated the terms
of the BSIP grant with the WMCA resulting in additional funding,
and releasing the business from its commitment to freeze passenger
fares for the remainder of the grant period. The grant income
relating to freezing fares was applicable up to 30 June 2023, and
amounted to GBP3.2m. No more funding is expected under this element
of the BSIP.
For the portion of the funding available for maintaining the bus
network, the updated agreement confirmed the income to be received
until 31 December 2024. During the year the income has been
recognised on a straight-line basis pro-rata based on the total
funding available to the business to the end of 2024. This has
resulted in further grant income of GBP6.6m recorded to reduce
expenditure to reflect the elements of the BSIP programme
compensating the business for the costs incurred in maintaining the
bus network during that period.
In addition, there is now also GBP33.0m of BSIP funding from 1
January 2023 to 31 December 2024 of which GBP8.2m has been
recognised on a pro-rata basis against the costs incurred in
maintaining network services.
A total amount of GBP18.0m of BSIP funding has been recognised
in the period to 30 June 2023.
3. Segmental analysis
Six months to 30 June 2022
-------------------------------------------------------------
Grants
Contract Passenger and Private Other
Analysis by class and revenues revenues subsidies hire revenues Total
reportable segment GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- --------- --------- ---------- ------- --------- -------
UK 20.3 163.7 36.0 9.6 7.7 237.3
German Rail - 22.9 100.5 - 0.7 124.1
ALSA 86.8 233.8 82.5 21.3 19.8 444.2
North America 492.6 - - 23.2 2.9 518.7
-------------------------- --------- --------- ---------- ------- --------- -------
Total 599.7 420.4 219.0 54.1 31.1 1,324.3
-------------------------- --------- --------- ---------- ------- --------- -------
Analysis by major service
type
-------------------------- --------- --------- ---------- ------- --------- -------
Passenger transport 599.7 420.4 219.0 54.1 5.5 1,298.7
Other products and
services - - - - 25.6 25.6
Total 599.7 420.4 219.0 54.1 31.1 1,324.3
-------------------------- --------- --------- ---------- ------- --------- -------
Operating profit is analysed by reportable segment as
follows:
Six months to 30 June
----------------------------------------------------------------
(Restated)
Adjusted Adjusting Segment Adjusted Adjusting Segment
result items result result items result
Analysis by class 2023(2) 2023(2) 2023(2) 2022 2022 2022(1)
and reportable segment GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ -------- --------- -------- -------- --------- ------------
UK (10.8) (10.4) (21.2) (12.8) (0.4) (13.2)
German Rail 5.9 (0.9) 5.0 3.0 (5.4) (2.4)
ALSA 57.6 (6.8) 50.8 50.3 (6.2) 44.1
North America 13.8 (18.8) (5.0) 57.4 (34.6) 22.8
Central functions (9.0) (11.9) (20.9) (7.4) (1.6) (9.0)
---------------------------- -------- --------- -------- -------- --------- ------------
Operating profit/(loss) 57.5 (48.8) 8.7 90.5 (48.2) 42.3
Share of results
from associates and
joint ventures - (0.1)
Net finance costs (32.1) (21.7)
---------------------------- -------- --------- -------- -------- --------- --------
(Loss)/profit before
tax (23.4) 20.5
Tax charge (16.0) (5.3)
---------------------------- -------- --------- -------- -------- --------- --------
(Loss)/profit for
the period (39.4) 15.2
---------------------------- -------- --------- -------- -------- --------- --------
(1) Restated for correction to deferred tax assets and
liabilities, see note 1 for further information
Segmental results for current year shown before internal
management recharges on an arms' length basis, consistent with how
management review the segmental results internally. Previous year
segmental results include an immaterial management recharge.
In addition to revenue related grants, government grants
relating to expenses have also been recognised as a credit within
operating expenses totalling GBP8.6m under the Bus Recovery Grant
(BRG) which is intended to compensate UK bus operators for
continuing bus services during the Covid-19 recovery period.
In the prior year, government grants relating to expenses were
also recognised as a credit within operating expenses totalling
GBP48.2m in response to the Covid-19 pandemic. The principle
arrangements were the Coronavirus Economic Relief for
Transportation Services (CERTS) scheme in North America, whereby
GBP38.7m was recognised during the six months to June 2022, GBP1.0m
in respect of wages subsidy schemes in North America, and
Stabilisation Funding of GBP8.5m in the UK. These arrangements were
designed to provide relief to companies in respect of costs for
jobs retained, and to cover applicable overhead and operational
expenses.
4. Net finance costs
Six months Six months Year to
to to 31 December
30 June 30 June 2022
2023 2022 GBPm
GBPm GBPm
----------------------------------------- ---------- ---------- ------------
Bank and bond interest payable (22.4) (15.0) (35.5)
Lease interest payable (4.3) (4.1) (9.4)
Other interest payable (4.3) (1.5) (3.0)
Unwind of discounting (1.9) (1.4) (3.4)
Interest cost on defined benefit pension
obligations (0.9) (1.0) (1.9)
----------------------------------------- ---------- ---------- ------------
Total finance costs (33.8) (23.0) (53.2)
Lease interest income 0.2 0.3 0.5
Other financial income 1.5 1.0 1.7
----------------------------------------- ---------- ---------- ------------
Total finance income 1.7 1.3 2.2
----------------------------------------- ---------- ---------- ------------
Net finance costs (32.1) (21.7) (51.0)
----------------------------------------- ---------- ---------- ------------
5. Adjusted profit
In order to illustrate the adjusted trading performance of the
Group, presentation has been made of performance measures excluding
those items to provide a more comparable year-on-year operating
performance of the Group.
The Group's policy is to exclude items that are considered
significant in nature and quantum, or are not in the normal course
of business or are consistent with items that were treated
adjusting items in prior periods.
The total adjusting items before tax for the six months to 30
June 2023 is a net charge of GBP48.8m (2022: GBP48.2m). The items
excluded from adjusted profit are:
Six months Six months Year to
to to 31 December
30 June 30 June 2022
2023 2022 GBPm
GBPm GBPm
---------------------------------------------- ---------- ---------- ------------
Goodwill impairment of ALSA - - (260.6)
Intangible amortisation for acquired
businesses (17.3) (18.7) (37.2)
---------------------------------------------- ---------- ---------- ------------
(17.3) (18.7) (297.8)
---------------------------------------------- ---------- ---------- ------------
Re-measurements of onerous contracts
and impairments resulting from the Covid-19
pandemic (0.9) (3.3) (7.6)
Re-measurement of the Rhine-Ruhr onerous
contract provision (0.4) (4.9) (9.3)
Re-measurement of onerous contract provisions
and impairments in respect of North
America driver shortages (4.9) (19.7) (31.4)
Final re-measurement of the WeDriveU
put liability (2.3) - -
Repayment of UK Coronavirus Job Retention
Scheme grant ('Furlough') (8.9) - -
Restructuring and other costs (14.1) (1.6) (9.7)
---------------------------------------------- ---------- ---------- ------------
(31.5) (29.5) (58.0)
Total adjusting items (48.8) (48.2) (355.8)
---------------------------------------------- ---------- ---------- ------------
Intangible amortisation for acquired businesses
Consistent with previous periods the Group classifies the
amortisation for acquired intangibles as an adjusting item by
virtue of its size and nature. This amounts to GBP17.3m in the
period. Its exclusion from the adjusted result enables comparison
and monitoring of divisional performance by the Group Executive
Committee regardless of whether through acquisition or organic
growth. In addition, by disclosing this separately the Group gives
users of the accounts visibility of the amount of amortisation of
acquired intangibles which improves comparability of the Group's
results with those of peer companies, as this continues to be a
common adjustment from profit in comparative companies.
Re-measurement of onerous contracts and impairments resulting
directly from the Covid-19 pandemic
The Group continues to operate services in line with its
commitments under customer contracts which are loss making. These
contracts became onerous due to the impact of the Covid-19
pandemic. For the contracts which the Group is still committed to,
the provision has been re-measured. In the UK this re-measurement
has resulted in an increase in the provision of GBP0.9m.The
majority of the contracts are expected to have ended within the
next 18 months.
Rhine-Ruhr Express onerous contract provision
In German Rail, the RRX contract continues to be onerous.
Management have re-assessed the overall losses under the contract
taking account of updated energy prices and assumptions. This has
led to an increase in the provision of GBP0.4m. The Group is
committed to operating the contract until 2033.
5. Adjusted profit
Onerous contract provision charges and impairments in respect of
North America driver shortages
During the period, the impact of driver shortages in North
America on some of the contracts previously assessed as onerous has
been more significant than anticipated as it has resulted in
further increases in wages (to retain and recruit) and a slower
increase in service levels than expected on those specific
contracts. This has led to both an increase in provision of GBP6.5m
to cover these additional losses, and an increase in the
utilisation of the provision during the period for losses incurred.
This has been partially offset by a provision release of GBP1.1m on
a number of previously onerous contracts which have become
profitable where the Group has successfully negotiated price
increases for the 2023/24 school year and onwards. In addition, the
increased profitability forecast on a number of customer contracts
has led to the reversal of GBP0.5m previous impairments on customer
contract intangible assets at 30 June 2023. The remaining onerous
contracts end between June 2024 and June 2026.
Final re-measurement of the WeDriveU put liability
In conjunction with the acquisition of WeDriveU, Inc. during
2019 the Group issued put options to the seller for the remaining
shares. The options had three tranches for the remaining 40% of the
business (10%, 10%, 20%). The first two tranches were exercised in
2020, and 2021, with settlement in 2021 and 2022 respectively. At
31 December 2022 the final option to sell the remaining 20% shares
had been exercised by the non-controlling interest. At 30 June 2023
this has not yet been settled so the Group has a liability for the
final settlement.
At 30 June 2023 the put liability for the remaining 20%
shareholding in WeDriveU has been re-measured following the final
negotiations with the seller. This re-measurement has led to an
additional charge of GBP2.3m.
Gains and losses on re-measurement of the put liability have
been recorded as adjusting items in previous years (2020 full year:
GBP33.9m gain, 2021 full year: GBP11.5m expense, 2022 full year:
GBPnil), therefore the final re-measurement has also been presented
as adjusting for consistency.
Repayment of Coronavirus Job Retention Scheme (CJRS) support
received in respect of the year ended 31 December 2021
At the end of 2021 the Group announced an intention to
voluntarily repay amounts of CJRS ('furlough') amounts received for
that period following the re-instatement of the dividend to
shareholders. During 2023 a dividend was paid and a provision has
been recognised for the commitment to HMRC for the CJRS repayment
of GBP8.9m. The original receipt of CJRS was not recorded as an
adjusting item and was included in adjusted profit consistent with
the staff costs which it was designed to compensate.
The repayment however, has been disclosed as an adjusting item
as this is a one-off cost which is historic in nature (occurring
more than two years after initial receipt), a material amount, and
unlike the original receipt, there are no corresponding staff costs
in the period to be offset against.
Restructuring and other costs
These costs relate to Group-wide strategic initiatives and
restructuring. These are one-off, short-term initiatives expected
to last 1-2 years. They are significant in nature and are not
considered to be part of the day to day operational costs of the
Group and therefore have been treated as adjusting items. These
amount to GBP14.1m at 30 June 2023 compared to GBP9.7m at 31
December 2022.
6. Taxation
Tax on profit on ordinary activities for the six months to 30
June 2023 has been calculated on the basis of the estimated annual
effective rate for the year ending 31 December 2023. The adjusted
tax charge of GBP7.2m (2022 interim restated: GBP17.3m) represents
an effective tax rate of 28.3% on the adjusted result (2022 interim
restated: 25.2%).
The total adjusting tax charge of GBP8.8m (2022 interim:
GBP12.0m credit) is made up of a GBP7.5m tax credit on tax
deductible adjusting operating costs (2022 interim: GBP7.9m
credit), a GBP4.6m tax credit on adjusting intangible amortisation
(2022 interim: GBP5.1m credit) an additional GBP20.9m tax charge
(2022 interim: GBP1.0m charge) which is shown as an adjusting
item.
This additional adjusting tax charge of GBP20.9m is relation to
the reassessment of the Mobico Group PLC deferred tax asset. This
asset relates to (pre 2017) UK tax losses in Mobico Group PLC of
GBP84m as at 30 June 2023. These losses are restricted in their use
to certain income within Mobico Group PLC only. As at 31 December
2022 these losses were assumed to start being utilised in 2023 and
fully recovered by 2030. Following changes to restructuring of
internal debt within the Group and material one-off costs in the
interim period, the amount of income in Mobico Group PLC was
reduced significantly, which means that the losses would be
utilised at a later date than was forecast in prior periods. Given
the increased uncertainty in relation to their utilisation and that
they are restricted in nature means that they were written down at
30 June 2023. This tax charge has been shown as an adjusting tax
item, by virtue of its size and nature, and consistent with how
significant deferred tax changes have been presented in prior
periods.
The total tax charge of GBP16.0m (2022 interim restated: GBP5.3m
charge) includes a deferred taxation charge of GBP7.8m (2022
interim restated: GBP4.4m credit). Deferred tax asset
recoverability has been assessed using the strategic plan
projections used for the going concern and impairment
assessments.
7. Dividends paid and proposed
Following the conclusion of the Group's 2022 full year result
earlier in the year, the Board announced the reinstatement of the
dividend reflecting a strong outlook for the business and
recognising it needs to be done prudently and alongside a continued
focus on the pace of deleveraging and maintaining sufficient
investment capacity for growth, with a full year dividend of 5.0p
per share approved at the AGM on 10 May 2023 and paid on 15 May
2023. The dividend payment was GBP30.7m.
The Group's Policy is to maintain a dividend policy cover ratio
of at least two times. The Board has announced an interim dividend
of 1.7p, which is in line with our previously communicated policy
that the Group's interim dividend will be set at a level equivalent
to approximately one third of the prior full year dividend.
8. Earnings per share
(Restated)
Six months Six months
to to Year to
30 June 30 June 31 December
2023 2022 (1) 2022
------------------------------------ ---------- ----------- ------------
Basic earnings per share (8.3)p 0.3p (39.7)p
------------------------------------ ---------- ----------- ------------
Adjusted basic earnings per share 1.0p 6.1p 15.0p
------------------------------------ ---------- ----------- ------------
Diluted earnings per share (8.3)p 0.3p (39.7)p
------------------------------------ ---------- ----------- ------------
Adjusted diluted earnings per share 1.0p 6.1p 15.0p
------------------------------------ ---------- ----------- ------------
(1) Restated for correction to deferred tax assets and
liabilities, see note 1 for further information
Basic earnings per share is calculated by dividing the earnings
attributable to equity shareholders, a loss of GBP51.1m (2022
interim (restated): GBP1.7m profit; 2022 full year: GBP243.1m loss)
by the weighted average number of ordinary shares in issue during
the period, excluding those held by employees' share ownership
trusts and held as own shares which are both treated as cancelled.
Earnings attributable to equity shareholders is inclusive of
amounts accruing to the holders of the hybrid instrument and is
calculated as follows:
(Restated) Year to
Six months Six months 31 December
to to 2022
30 June 30 June
2023 2022 (1)
--------------------------------------------- ---------- ----------- ------------
(Loss)/profit attributable to equity
shareholders (40.6) 12.2 (221.8)
Accrued payments on hybrid instrument (10.5) (10.5) (21.3)
--------------------------------------------- ---------- ----------- ------------
Earnings attributable to equity shareholders (51.1) 1.7 (243.1)
--------------------------------------------- ---------- ----------- ------------
(1) Restated for correction to deferred tax assets and
liabilities, see note 1 for further information
For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to include the weighted
average number of ordinary shares that would be issued on the
conversion of all the dilutive potential ordinary shares into
ordinary shares.
The reconciliation of the weighted average number of ordinary
shares is as follows:
Six months Six months Year to
to to 31 December
30 June 30 June 2022
2023 2022
---------------------------------- ----------- ----------- ------------
Basic weighted average shares 612,881,204 612,726,088 612,772,081
Adjustment for dilutive potential
ordinary shares(1) 396,286 93,690 339,199
---------------------------------- ----------- ----------- ------------
Diluted weighted average shares 613,277,490 612,819,778 613,111,280
---------------------------------- ----------- ----------- ------------
(1) Potential ordinary shares have the effect of being
anti-dilutive in 2023 and 2022 full year, and have been excluded
from the calculation of diluted earnings per share
Adjusted basic and diluted earnings per share have been
calculated since, in the opinion of the Directors, they reflect the
adjusted performance of the business' operations more
appropriately.
The reconciliation of statutory profit to adjusted profit for
the financial period is as follows:
(Restated) Year to
Six months Six months 31 December
to to 2022
30 June 30 June GBPm
2023 2022 (1)
GBPm GBPm
------------------------------------------------ ---------- ----------- ------------
Earnings attributable to equity shareholders
(2) (51.1) 1.7 (243.1)
------------------------------------------------ ---------- ----------- ------------
Adjusting operating items 48.8 48.2 355.8
Adjusting tax charge/(credit) 8.8 (12.0) (19.5)
Adjusting items attributable to non-controlling
interests (0.2) (0.5) (1.1)
------------------------------------------------ ---------- ----------- ------------
Adjusted earnings attributable to
equity shareholders(2) 6.3 37.4 92.1
Amounts accruing to the holders of
the hybrid instrument 10.5 10.5 21.3
------------------------------------------------ ---------- ----------- ------------
Adjusted profit attributable to equity
shareholders 16.8 47.9 113.4
------------------------------------------------ ---------- ----------- ------------
(1) Restated for correction to deferred tax assets and
liabilities, see note 1 for further information
(2) Includes amounts accruing to the holders of the hybrid
instrument
9. Cash and cash equivalents
At At At
30 June 30 June 31 December
2023 2022 2022
GBPm GBPm GBPm
-------------------------- -------- -------- ------------
Cash at bank and in hand 141.0 117.3 171.7
Overnight deposits 3.8 0.4 6.6
Other short term deposits 212.0 224.2 113.5
-------------------------- -------- -------- ------------
Cash and cash equivalents 356.8 341.9 291.8
-------------------------- -------- -------- ------------
Included within cash and cash equivalents are certain amounts
which are subject to contractual or regulatory restrictions. These
amounts held are not readily available for other purposes within
the Group and total GBP0.5m (2022: GBP13.1m).
9. Cash and cash equivalents
Cash at bank and in hand earns interest at floating rates based
on daily bank deposit rates.
Short-term deposits are made for varying periods of between one
day and three months depending on the immediate cash requirements
of the Group and earn interest at the agreed short-term floating
deposit rate. The fair value of cash and cash equivalents is equal
to the carrying value.
For the purposes of the Consolidated Statement of Cash Flows,
cash and cash equivalents and bank overdrafts in notional cash
pooling arrangements are presented net. Bank overdrafts form an
integral part of the Group's cash management strategy as they arise
from the Group's cash pooling arrangement with its bank. Net cash
and cash equivalents comprise as follows:
At At At
30 June 30 June 31 December
2023 2022 2022
GBPm GBPm GBPm
------------------------------ -------- -------- ------------
Cash at bank and in hand 356.8 341.9 291.8
Bank overdrafts (46.2) (40.9) (58.7)
------------------------------ -------- -------- ------------
Net cash and cash equivalents 310.6 301.0 233.1
------------------------------ -------- -------- ------------
10. Impairment
During the current period, in line with the requirements of IAS
34, the Group has performed an assessment for indicators of
significant impairment, and has concluded overall that there was
not a significant indicator of impairment at 30 June 2023 in either
the ALSA or North America cash generating units ("CGUs").
Consequently, a full impairment review was not performed on either
CGU. However, the Group has updated the 31 December 2022 impairment
assessment for latest critical inputs to determine the level of
available headroom when using the latest pre-tax discount rates and
long term growth rates as of 30 June 2023, and the Group's latest
forecast for 2023. Forecasts for 2024 and beyond remain in line
with the board-approved forecast, which has not changed since 31
December 2022.
Consistent with previous years, goodwill has been allocated to
individual cash-generating units for annual impairment testing on
the basis of the Group's business operations. The carrying value by
cash-generating unit is as follows:
At At At
30 June 30 June 31 December
2023 2022 2022
GBPm GBPm GBPm
UK 52.4 52.4 52.4
North America 709.4 742.4 743.2
ALSA 548.4 807.4 560.6
-------------- -------- -------- ------------
1,310.2 1,602.2 1,356.2
-------------- -------- -------- ------------
The key assumptions used in the annual impairment assessment at
31 December 2022, and the review performed at 30 June 2023, are as
follows:
Pre-tax discount rate Growth rate used
applied to cash flow to extrapolate cash
projections flows into perpetuity
30 June 31 December 30 June 31 December
2023 2022 2023 2022
----------------------- ---------- ----------- ----------- -------------
North America 9.9% 10.3% 3.4% 3.4%
ALSA 13.8% 13.9% 3.1% 3.0%
----------------------- ---------- ----------- ----------- -------------
North America
As of 31 December 2022, the value in use of the North America
CGU exceeded its carrying amount by GBP225.9m. At 30 June 2023, the
pre-tax discount rate has reduced to 9.9% (31 December 2022:
10.3%), resulting in the value in use now exceeding the carrying
amount by GBP371.7m. The value in use calculation remains highly
sensitive to changes in the pre-tax discount rate, long term growth
rate and trading assumptions around profit margin. Sensitivity
analysis has been conducted on each of these inputs independently.
The value in use of the North America CGU would be reduced to its
carrying value if i) pre-tax discount rates increased by 190bps (31
December 2022: 110bps); ii) the long term growth rate used to
extrapolate the cash flows into perpetuity decreased by 190bps (31
December 2022: 120bps); or iii) the profit margin (defined as
earnings before interest, tax and amortisation, divided by revenue)
decreased by 200bps (31 December 2022: 130bps).
ALSA
The Group performed its annual impairment assessment on the ALSA
CGU at 31 December 2022 and, following a significant increase in
the pre-tax discount rate due to ongoing market volatility, the
recoverable amount of the CGU had reduced to below its carrying
amount, leading to a non-cash impairment charge of GBP260.6m being
recognised at 31 December 2022.
As of 30 June 2023, the pre-tax discount rate has reduced to
13.8% (31 December 2022: 13.9%), resulting in its value in use
exceeding its carrying amount by GBP78.8m as of 30 June 2023 (31
December 2023: GBPnil). The value in use calculation remains highly
sensitive to changes in the pre-tax discount rate, long term growth
rate and trading assumptions around profit margin and long haul
concession renewals. Sensitivity analysis has been conducted on
these inputs independently.
10. Impairment
The value in use of the ALSA CGU would be reduced to its
carrying value if i) pre-tax discount rates increased by 130bps (31
December 2022: 0bps); ii) the long term growth rate used to
extrapolate the cash flows into perpetuity decreased by 120bps (31
December 2022: 0bps); or iii) the profit margin (defined as
earnings before interest, tax and amortisation, divided by revenue)
decreased by 80bps (31 December 2022: 0bps).
The Directors consider the assumptions used to be consistent
with the historical performance of each cash-generating unit and to
be realistically achievable in light of economic and industry
measures and forecasts. As in prior years, the full annual
impairment review will be conducted in late 2023.
11. Derivative financial assets and liabilities
The Group's multi-national transport operations and debt
financing expose it to a variety of financial risks, including the
effects of changes in fuel prices, foreign currency exchange rates
and interest rates. The Group has in place a risk management
programme that seeks to limit the adverse effects of these
financial risks on the financial performance of the Group by means
of derivative financial instruments.
As at 30 June 2023 the Group's portfolio of hedging instruments
included fuel price derivatives, cross currency swaps, foreign
exchange derivatives and interest rate derivatives. The fuel price
derivatives are in place to hedge the changes in price of the
different types of fuel used in each division. The cross currency
swaps are in place to hedge the risk of changes in foreign exchange
rates. The foreign exchange derivatives are in place to hedge the
foreign exchange risk on translation of net assets denominated in
foreign currency. In addition, the Group holds five GBP50.0m
denominated interest rate derivatives to swap fixed interest on a
GBP250m Sterling bond to a floating rate.
These derivative financial instruments are held in the balance
sheet at fair value and are measured using level 2 inputs. The fair
value is either determined by the third-party financial institution
with which the Group holds the instrument, in line with the market
value of similar financial instruments, or by the use of valuation
techniques using market data. The Group has no financial
instruments with fair values that are determined by reference to
significant unobservable inputs i.e. those that would be classified
as level 3 in the fair value hierarchy, other than deferred
contingent consideration and financial assets at fair value through
Other Comprehensive Income. There has not been a significant change
in the sensitivities disclosed in the 2022 Annual Report for level
3 items. There have not been any transfers of assets or liabilities
between levels of the fair value hierarchy and there are no
non-recurring fair value measurements.
The Group applies relevant hedge accounting to the majority of
its derivatives outstanding as at 30 June 2023. All designated
hedge relationships were effective under IFRS 9.
In respect of fuel hedges, at 30 June 2023 the Group was around
75% hedged for 2024, at an average price of 51.1p/litre and around
35% hedged for 2025 at an average price of 52.3p/litre. Hedged
volumes are in line with the normal hedging programme at this
stage.
Derivative financial assets and liabilities on the balance sheet
are as follows:
At At At
30 June 30 June 31 December
2023 2022 2022
GBPm GBPm GBPm
----------------------------------------- -------- -------- ------------
Fuel derivatives 1.7 26.1 7.4
Cross currency swaps 1.4 5.7 2.7
----------------------------------------- -------- -------- ------------
Non-current derivative financial
assets 3.1 31.8 10.1
----------------------------------------- -------- -------- ------------
Fuel derivatives 4.9 63.7 12.5
Cross currency swaps 12.0 2.6 8.0
Foreign exchange derivatives 24.0 11.7 17.2
----------------------------------------- -------- -------- ------------
Current derivative financial assets 40.9 78.0 37.7
----------------------------------------- -------- -------- ------------
Fuel derivatives (9.8) (0.1) (4.8)
Interest rate derivatives (24.6) (16.0) (17.6)
----------------------------------------- -------- -------- ------------
Non-current derivative financial
liabilities (34.4) (16.1) (22.4)
----------------------------------------- -------- -------- ------------
Fuel derivatives (20.7) (3.1) (12.6)
Cross currency swaps (1.0) (33.7) (15.6)
Interest rate derivatives (10.1) (1.5) (9.2)
Foreign exchange derivatives (13.5) (43.2) (4.5)
----------------------------------------- -------- -------- ------------
Current derivative financial liabilities (45.3) (81.5) (41.9)
----------------------------------------- -------- -------- ------------
In addition to financial derivatives above, non-current
financial assets on the Group Balance Sheet at 30 June 2023 also
includes GBP16.4m of financial assets at fair value through Other
Comprehensive Income (2022 interim: GBP15.4m, 2022 full year:
GBP16.8m).
12. Pensions and other post-employment benefits
The UK division operates a defined benefit scheme. The Group
also provides certain additional unfunded post-employment benefits
to employees in North America and ALSA, and maintains a small,
legacy rail defined benefit scheme. The post-employment benefits
for these schemes have been combined into the 'Other' category
below.
The assets of the defined benefits schemes are held separately
from those of the Group and contributions to the schemes are
determined by independent professionally qualified actuaries.
The total pension operating cost for the six months to 30 June
2023 was GBP4.5m (2022 interim: GBP5.9m; 2022 full year: GBP9.7m),
of which GBP3.6m (2022 interim: GBP3.0m; 2022 full year: GBP6.2m)
relates to the defined contribution schemes.
12. Pensions and other post-employment benefits
The defined benefit pension (liability)/asset included in the
balance sheet is as follows:
At At At
30 June 30 June 31 December
2023 2022 2022
GBPm GBPm GBPm
Other 0.2 - 0.4
Defined benefit pension assets 0.2 - 0.4
UK (32.1) (58.9) (39.7)
Other (2.7) (2.3) (2.8)
------------------------------------ ------------------- --------------------- ------------
Defined benefit pension liabilities (34.8) (61.2) (42.5)
------------------------------------ ------------------- --------------------- ------------
Total (34.6) (61.2) (42.1)
------------------------------------ ------------------- --------------------- ------------
The UK net defined benefit pension liability, was calculated
based on the following assumptions:
UK
----------------------------- ----------------------------
Six months Year ended
ended 30 June 31 December
2023 2022
----------------------------- -------------- ------------
Rate of increase in salaries 2.5% 2.5%
Rate of increase in pensions 2.6% 2.5%
Discount rate 5.3% 4.8%
Inflation rate (RPI) 3.2% 3.1%
Inflation rate (CPI) 2.6% 2.5%
----------------------------- -------------- ------------
The Directors regard the assumptions around pensions in payment,
discount rate, inflation and mortality to be the key assumptions in
the IAS 19 valuation. The following table provides an approximate
sensitivity analysis of a reasonably possible change to these
assumptions:
Six months ended Year ended 31
30 June 2023 December 2022
--------------------------------------- ---------------- --------------
UK UK
--------------------------------------- ---------------- --------------
Effect of a 0.5% increase in pensions
in payment (12.7) (17.1)
Effect of a 0.5% increase in the
discount rate 20.1 24.2
Effect of a 0.5% increase in inflation (14.1) (19.0)
Effect of a 1 year increase in
mortality rates (11.7) (12.6)
--------------------------------------- ---------------- --------------
The above sensitivity analyses are based on a change in an
assumption while holding all other assumptions constant. Aside from
the matching insurance contracts held in the UK scheme, no
allowance has been made for any change in assets that might arise
under any of the scenarios set out above.
13. Business Combinations
(a) Acquisitions - ALSA
During the period, the ALSA division acquired control of
Tranvias De Sevilla, a regional transport provider in Andalusia,
Spain; Estebanez, a regional transport provider in Castilla &
Leon, Spain; and RC Travel, a Spanish travel agency. It also
acquired the remaining share capital of ALSA Mirat, a regional
transport provider in Extremadura, Spain, previously recognised as
an associate. The aggregated values of all four companies are
presented below:
GBPm
------------------------------ -----
Property, plant and equipment 1.3
Inventory 0.1
Trade and other receivables 1.3
Cash and cash equivalents 1.7
Borrowings (0.2)
Trade and other payables (2.3)
Net assets acquired 1.9
Goodwill 3.9
-------------------------------- -----
Total consideration 5.8
-------------------------------- -----
Represented by:
------------------------------ -----
Cash consideration 4.9
Deferred consideration 0.9
-------------------------------- -----
5.8
------------------------------ -----
Given the proximity of these acquisitions to the period end, and
as permitted by IFRS 3 Business Combinations, the fair value of
acquired identifiable assets and liabilities have been presented on
a provisional basis. The fair value adjustments will be finalised
within 12 months of the acquisition date, principally in relation
to the valuation of provisions acquired.
Trade and other receivables had a fair value and a gross
contracted value of GBP1.3m. The best estimate at the acquisition
dates of the contractual cash flows not to be collected was
GBPnil.
13. Business Combinations
Goodwill of GBP3.9m arising from the acquisitions consists of
certain intangibles that cannot be separately identified and
measured due to their nature. This includes control over the
acquired businesses and increased scale in our operations in ALSA,
along with growth benefits of the regional business in areas not
previously operated. None of the goodwill recognised is expected to
be deductible for income tax purposes.
The acquired businesses have contributed GBP2.4m of revenue and
GBP0.2m operating profit to the Group's result for the period
between acquisition and the balance sheet date. Had the acquisition
been completed on the first day of the financial year, the Group's
revenue would have been GBP1,573.3m and the Group's statutory
operating profit for the period would have been GBP8.5m.
(b) Acquisitions - further information
Deferred consideration of GBP3.0m was paid in the period
relating to acquisitions in earlier years.
Total cash outflow in the period from acquisitions in the ALSA
division was GBP5.8m, comprising consideration for current year
acquisitions of GBP4.9m and deferred consideration of GBP2.6m, less
cash acquired in the businesses of GBP1.7m. In North America
deferred consideration of GBP0.4m was paid in the period relating
to acquisitions in earlier years.
Transaction costs were insignificant in the period to 30 June
2023 (2022 interim: GBP0.1m).
During the period to 30 June 2023, the movement in the Group's
carrying value of goodwill principally relates to the acquisition
of Tranvias De Sevilla .
(c) Assets held for sale
At the reporting date the Group had several assets that met the
IFRS 5 criteria of held for sale and are therefore included within
current assets. These include a building in ALSA with a carrying
amount of GBP18.1m (2022: GBP18.1m); a bus depot in the UK with a
carrying amount of GBP2.0m; and public service vehicles and
right-of-use property leases in North America with a carrying
amount of GBP4.4m. The prior year also included public service
vehicles held in the UK at a carrying amount of GBP1.3m.
14. Net debt
At 30
At 1 January Cash Foreign Other June
2023 flow Acquisitions exchange movements 2023
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- ------------ ------ ------------ --------- ---------- ---------
Components of financing
activities
Bank and other loans(1) (194.7) (41.5) (0.2) 7.8 - (228.6)
Bonds (621.4) - - - 3.2 (618.2)
Fair value of interest
rate derivatives (26.0) - - - (3.4) (29.4)
Fair value of fx forward
contracts 11.9 (11.8) - 6.0 - 6.1
Cross currency swaps (6.0) 1.0 - 10.5 - 5.5
Net lease liabilities(2) (183.7) 32.3 - 4.6 (18.1) (164.9)
Other debt payable (411.9) (44.3) - 9.2 (0.1) (447.1)
-------------------------- ------------ ------ ------------ --------- ---------- ---------
Total components
of financing facilities (1,431.8) (64.3) (0.2) 38.1 (18.4) (1,476.6)
-------------------------- ------------ ------ ------------ --------- ---------- ---------
Cash 171.7 (21.2) 1.5 (11.0) - 141.0
Overnight deposits 6.6 (2.9) 0.2 (0.1) - 3.8
Other short-term deposits 113.5 98.6 - (0.1) - 212.0
Bank overdrafts (58.7) 12.4 - 0.1 - (46.2)
-------------------------- ------------ ------ ------------ --------- ---------- ---------
Net cash and cash
equivalents 233.1 86.9 1.7 (11.1) - 310.6
-------------------------- ------------ ------ ------------ --------- ---------- ---------
Other debt receivables 2.7 0.6 - (0.1) - 3.2
Remove: fair value
of fx forward contracts (11.9) 11.8 - (6.0) - (6.1)
Net debt(3) (1,207.9) 35.0 1.5 20.9 (18.4) (1,168.9)
-------------------------- ------------ ------ ------------ --------- ---------- ---------
(1) Net of arrangement fees totalling GBP1.2m on bank and other
loans
(2) Includes finance lease receivables which are reported
separately from borrowings on the face of the Group's Balance
Sheet
(3) Excludes accrued interest on long-term borrowings
Borrowings include non-current interest bearing loans and
borrowings of GBP854.4m (2022 interim: GBP1,294.3m; 2022 full year:
GBP886.3m).
Other non-cash movements represent lease additions and disposals
of GBP18.1m (2022 interim: GBP15.2m), a GBP0.3m (2022 interim:
GBP0.4m) reduction from the amortisation of loan and bond
arrangement fees, GBPnil (2022 interim: GBP0.2m) hedging
ineffectiveness recognised in the Income Statement, and a GBP3.4m
change in the fair value of the hedging derivatives, offset by a
GBP3.4m change in fair value of bonds.
14. Net debt
At 30
At 1 January Cash Foreign Other June
2022 flow Acquisitions exchange movements 2022
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- ------------ ------- ------------ --------- ---------- ---------
Components of financing
activities
Bank and other loans(1) (189.6) 18.3 (1.0) (10.5) (0.1) (182.9)
Bonds (640.9) - - - 11.0 (629.9)
Fair value of interest
rate derivatives (6.3) - - - (11.0) (17.3)
Fair value of fx forward
contracts (9.9) 9.9 - (25.7) - (25.7)
Cross currency swaps 2.6 (0.7) - (27.1) - (25.2)
Net lease liabilities(2) (218.9) 37.7 (0.6) (12.1) (15.2) (209.1)
Other debt payable (393.9) - - (11.6) (0.2) (405.7)
-------------------------- ------------ ------- ------------ --------- ---------- ---------
Total components of
financing facilities (1,456.9) 65.2 (1.6) (87.0) (15.5) (1,495.8)
-------------------------- ------------ ------- ------------ --------- ---------- ---------
Cash 268.1 (158.9) 0.4 7.7 - 117.3
Overnight deposits 0.4 - - - - 0.4
Other short-term deposits 239.9 (16.0) - 0.3 - 224.2
Bank overdrafts (132.2) 91.3 - - - (40.9)
-------------------------- ------------ ------- ------------ --------- ---------- ---------
Net cash and cash
equivalents 376.2 (83.6) 0.4 8.0 - 301.0
-------------------------- ------------ ------- ------------ --------- ---------- ---------
Other debt receivables 1.0 0.6 - - - 1.6
Remove: fair value
of fx forward contracts 9.9 (9.9) - 25.7 - 25.7
Net debt(3) (1,069.8) (27.7) (1.2) (53.3) (15.5) (1,167.5)
-------------------------- ------------ ------- ------------ --------- ---------- ---------
(1) Net of arrangement fees totalling GBP1.3m on bank and other
loans
(2) Includes finance lease receivables which are reported
separately from borrowings on the face of the Group's Balance
Sheet
(3) Excludes accrued interest on long-term borrowings
15. Cash flow statement
The reconciliation of Group (loss)/profit before tax to cash
generated from operations is as follows:
Six months Six months
to to Year to
30 June 30 June 31 December
2023 2022 2022
GBPm GBPm GBPm
------------------------------------------- ---------- ---------- ------------
Net cash inflow from operating activities
(Loss)/profit before tax (23.4) 20.5 (209.9)
Net finance costs 32.1 21.7 51.0
Share of results from associates and
joint ventures - 0.1 0.4
Depreciation of property, plant and
equipment 101.1 100.4 203.5
Intangible asset amortisation 26.6 26.8 55.5
Amortisation of fixed asset grants (1.2) (1.2) (2.1)
Gain on disposal property, plant and
equipment (2.5) (6.5) (10.5)
Gain on disposal of intangible assets (0.4) (4.0) (5.1)
Share-based payments - - 1.2
Increase in inventories (0.6) (1.9) (1.5)
Increase in receivables (11.2) (93.5) (118.5)
Increase in payables 24.1 48.8 52.5
Receipts on settlement of fuel forward
contracts - - 26.2
Decrease in provisions (3.5) (7.6) (23.9)
Decrease in pensions (4.2) - (3.2)
Adjusting operating items(1) 31.5 29.5 318.6
Cash flows relating to adjusting operating
items (23.5) (23.2) (49.3)
------------------------------------------- ---------- ---------- ------------
Cash generated from operations 144.9 109.9 284.9
------------------------------------------- ---------- ---------- ------------
(1) Excludes amortisation from acquired intangibles which is
included within 'intangible asset amortisation' above
16. Commitments and contingencies
Capital commitments
Capital commitments contracted but not provided at 30 June 2023
were GBP159.2m (2022 full year: GBP166.4m).
Contingent liabilities
Bonds and letters of credit
In the ordinary course of business, the Group is required to
issue counter-indemnities in support of its operations. As at 30
June 2023, the Group has performance bonds in respect of businesses
in the US of GBP172.9m (2022 full year: GBP132.7m), in Spain of
GBP82.9m (2022 full year: GBP89.9m), in Germany of GBP29.3m (2022
full year: GBP25.8m) and in the Middle East of GBP6.3m (2022 full
year: GBP10.3m). Letters of credit have been issued to support
insurance retentions of GBP183.0m (2022 full year: GBP179.8m).
Legal
Through the ordinary course of our operations, the Group is
party to various litigation, claims and investigations. We do not
expect the ultimate resolution of any of these proceedings to have
a material adverse effect on the Group's results, cash flows or
financial position.
17. Related party transactions
There have been no material changes to the related party
balances disclosed in the Group's 2022 Annual Report and there have
been no transactions which have materially affected the financial
position or performance of the Group in the six months to 30 June
2023.
INDEPENDENT REVIEW REPORT TO MOBICO GROUP PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2023 which comprises the Condensed Group
Income Statement, the Condensed Group Statement of Comprehensive
Income, the Condensed Group Balance Sheet, the Condensed Group
Statement of changes in Equity, Condensed Group Statement of Cash
Flows and the related notes 1 to 17.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2023 is not prepared, in all material respects, in accordance
with United Kingdom adopted International Accounting Standard 34
and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council for use in the
United Kingdom (ISRE (UK) 2410). A review of interim financial
information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with United Kingdom adopted
international accounting standards. The condensed set of financial
statements included in this half-yearly financial report has been
prepared in accordance with United Kingdom adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410; however future events or conditions
may cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly financial report, we are
responsible for expressing to the company a conclusion on the
condensed set of financial statements in the half-yearly financial
report. Our Conclusion, including our Conclusion Relating to Going
Concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
ISRE (UK) 2410. Our work has been undertaken so that we might state
to the company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
Birmingham, United Kingdom
27 July 2023
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END
IR NKABQCBKDNOB
(END) Dow Jones Newswires
July 27, 2023 02:00 ET (06:00 GMT)
Mobico (LSE:MCG)
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