MCG Mobico Group Plc

25 March 2024

MOBICO GROUP PLC

UPDATE ON TIMING OF RESULTS AND GUIDANCE

Mobico Group plc ("Mobico" or "the Group") today announces an update on the timing of the publication of its audited financial results for the year ended 31 December 2023 ("FY 2023 Results").  As a result of the events set out below the Group now expects to publish its FY2023 Results in the second half of April.  

Review of accounting judgements and FY2023 audit

On 20 February 2024, Mobico announced a delay in the publication of its FY 2023 Results as a result of a need to undertake a further review of certain accounting judgements relating to its German Rail business².  Since that date, good progress has been made by the Group in completing this further review and the associated audit of those judgements by its auditors.    

All of the substantive work required in relation to the audit of the remainder of the Group's businesses has been completed, however a number of judgemental items relating to the German Rail business remain to be agreed between the Group and its auditors.

Unexpected changes to Indices 625 & 626

A number of statistical indices are used in the German transport sector to determine the level of cost recovery.  In particular, two indices, Indices 625 & 626, are used by the Group (and others operating in the German transport sector) to calculate and agree the recovery of energy costs from relevant passenger transit authorities.

Destatis, the German Federal Statistical Office, has recently and unexpectedly published restated and rebased versions of Indices 625 & 626 ("the revised indices") and withdrawn the previous versions of those indices. Those previous versions had been used by the Group in calculating the performance of the German Rail business for the FY2023 Results. 

The Group has made an initial assessment of the implications of the revised indices.  Whilst it is the Group's expectation that the models used to calculate the profitability of the German Rail business remain valid, further work is now required to determine the full effect of the revised indices. The Group has a constructive relationship with the relevant passenger transit authorities, and will discuss with them how the impact of the revised indices should be addressed within the context of that relationship and the underlying contracts. Realistically, however, it is unlikely that those points will be resolved before the Group intends to publish its FY2023 results. At this stage the Group currently estimates that the maximum effect of the revised indices, before any mitigation, is a reduction in total cost recovery over the term of the contracts (to 2032) of around £15m.

These unexpected recent changes, and the additional work and time required as a result, are the cause of the further delay in the publication of the Group's FY2023 Results.

Guidance

As noted above, at this late stage of the audit process a number of judgemental items remain to be agreed between the Group and its auditors which could affect the final outcomes for FY2023 (including the existence and extent of any prior year adjustment).  In particular, the Group needs to fully assess and understand the impact of the revised indices on the financial results.

As a result, the Group updates its previous guidance to reflect the situation and notes that:

·    Given the remaining judgemental items to be finalised Adjusted¹ EBIT will now be in the range of £160m - £175m although the Group's expectation is that it should be at the upper end of that range; and 

·    It expects an increase to the onerous contract provision as at 31 December 2023 of about £70m in addition to a prior year adjustment in relation to the onerous contract provision in FY2022 of an amount in the region of £25m. 

Conference call

Management will host a briefing call at 08:30 today. To access the call, please use the following details:

United Kingdom (Local): +44 20 3936 2999

United Kingdom (Toll-Free): +44 800 358 1035

Passcode: 686611

Notes:

1.  To supplement IFRS reporting, the Group presents its results (including EBIT and EBITDA) on an adjusted basis to show the performance of the business before adjusting items. These principally comprise intangible amortisation for acquired businesses, re-measurement of historic onerous contract provisions and impairments, settlement 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. For the year ended 31 December 2023, the Group has 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. The German Rail business is expected to represent less than 6% of FY 2023 Group Adjusted¹ EBIT

All numbers included in this announcement are subject to completion of the audit. 

Legal Entity Identifier: 213800A8IQEMY8PA5X34

Classification: 2.2 for the purposes of DTR 6 Annex 1

The information contained within this announcement is deemed by Mobico to constitute inside information as stipulated under the Market Abuse Regulation (EU) No.596/2014 as it forms part of domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018. By the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

The person responsible for arranging for the release of this announcement on behalf of Mobico is Simon Callander, General Counsel and Company Secretary.

Enquiries

Mobico Group PLC

Headland

About Mobico

Mobico is a leading, international shared mobility provider with bus, coach and rail services in the UK, North America, continental Europe, North Africa and the Middle East.  Through its German Rail business it operates all three of the RheinRuhr Express ("RRX") lines and the Rhein-Munster Express ('RME') line under long-term contracts in the German federal state of North Rhine-Westphalia.  The accounting for two of the RRX contracts (Lots 2 and 3) and the RME contract involve significant management judgments covering key areas including expected long term revenue and passenger growth assumptions, energy price performance and cost development over the remaining contract life and the extent to which those may be offset by contractual protection mechanisms in place.  Those judgments have to be regularly reassessed and retested.  The RRX contracts for Lots 2 and 3 are also the subject of an onerous contract provision on the Balance Sheet reflecting management's estimate of the expected contract life losses which has to be re-valued at every half-year and full year. 

Forward looking statements and other important information

This document contains forward-looking statements with respect to the financial condition, results and business of Mobico Group PLC. 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 document.