Good morning, everyone. Welcome to our 12-month unaudited results presentation. As you know, I'm Phil White. I'm Executive Chair of Mobico. Introducing to my colleagues, we've got Brian Egan, who is our CFO, and Paco Iglesias, who's our COO. You've met all three of us before at our half-year results. You can remember at that time, we weren't really in the best of places. At that time, you will recall that only one of our five divisions as then was really making any real money. Today, we're here to talk to you about the stability we've brought to the business, as well as the momentum being gradually built up as we implement our Simplify for Success program. An apology first.
I'm sorry that the results we are presenting today are unaudited, but as you know, we were left without an an auditor late in the day last year. I'm really pleased to say that we now have KPMG on board. That's a big win, believe it or not, getting an auditor. I know I'll probably be canceled by our advisors for saying this, but please forgive me. I will only use the word unaudited once, because I could use it in every sentence as we go along. I think the same applies to the word adjusted. Forgive me on that, 'cause I don't want to be here all day, and I'm sure you don't want to be here all day, too.
The re-reporting schedule again for this year is quite complex, we'll spend most of 2026, would you believe, in close periods. Brian will explain the schedule in more detail. As is usual, I'll start with the highlights, Brian will follow on the finance review, Paco will do all the operational stuff. Let's start with the highlights first, guys. As you can see, we've delivered significant progress in 2025. Revenue increased by 6% to EUR 2.8 billion, while adjusted operating profit increased by 9% to nearly EUR 200 million. Operationally, we achieved nearly 25,000,000,000 passenger-kilometres and secured new contracts worth over EUR 1 billion. Our German rail business provided a full service in December, would you believe, for the first time in two years.
Importantly, as you've seen, we've reached an agreement with the five German PTAs in North Rhine-Westphalia on the restructuring of all our rail contracts. This de-risks the business and ensures that our rail operations are sustainable in the long term. All of this has been achieved while making solid progress on safety across the whole business, something, as you know, is absolutely integral to the way we operate. In business, we all know that not all contracts are perfect, and we've inherited a few difficult ones. In business, you also have to deal with the unexpected. When this happens, I always believe it's better to be totally transparent and to be very open. Too open, some people will say, but that's my style.
In 2025, as you know, we experienced some issues with certain contracts. We fully recognize this in the year, while at the same time demonstrating the strength of our underlying business. Honestly, we would prefer the scale of the adjusted items to be much smaller. That certainly is our ambition going forward. Before we dive into the numbers, I just want to remind you of our strategy that we announced at our H1 results for 2025. Our roadmap is unchanged. We remain focused on stripping away complexity to reveal the high-performing businesses that we know are there. While continuing through the noise, it means really streamlining our management structure and aggressively attacking overheads.
We are removing as what I call the corporate glue, the scourge of large unlisted companies, the duplication of functions and processes, going through procedures, waiting for yes and no's. It takes a hell amount of time to do this and slows us, slows us down in the past. By being smarter and integrating our operations where it makes sense, we are becoming a leaner, faster, and more effective organization. Our financial health is absolutely paramount. We are very focused on generating cash, improving liquidity, and reducing debt. Every pound of CapEx is now being scrutinized to ensure maximum value, and we're leveraging ALSA's operational excellence to unlock synergies groupwide. Through simplifying and strengthening, we are putting the business back on the path to success, just like where we used to be.
The financial impact of actions across the group are already visible, with operating profit EUR 198 million for 2025. After a challenging start to the year, we delivered a record H2 performance of EUR 138 million. I'm pleased to say that in H2, all our divisions were profitable. In Germany, we've taken the necessary steps to make our rail business sustainable for the long term by eliminating the significant cash flows over the remaining life of the contracts. Once the agreement is formally signed, we'll be able to provide you guys with a more detailed breakdown of the figures. Until then, I would ask you to please bear with us in respect to the amount of detail we can give you today.
We're aggressively reducing costs with some savings delivered in 2025, and we're announcing today that we will deliver EUR 75 million of cost savings in 2026, with an annual run rate of EUR 100 million by the end of the year. We have largely integrated U.K. Coach to ALSA to create a more robust business, one that will meet the challenges of increased competition. We have also completed our exit of loss-making businesses in NXTS, in our coach division, and the loss-making Carter contract in WeDriveU. Despite the progress to date, we do recognize the challenges ahead. Our priorities for 2026 are very clear. As I said, our strategy is indeed simple: simplify, strengthen, and succeed. Whilst our operational story today is one of transition, this should not take away the fact that ALSA has delivered another record year.
This was driven by growth in Spain and further revenue diversification. In Morocco, we have faced and resolved several challenges. This has led us to a reduced operating footprint in the country. WeDriveU completed its first year as a standalone entity. We are applying lessons learned there to improve operational and financial performance. We exited early the loss-making Carter contract at the start of this year, 2026. This contract had lost over $303 million in 2025. You'll see from our RNS that we've provisioned EUR 52 million for WMATA. We aren't waiting for a miracle there. As I said, we want to be open and transparent. We are pursuing legal redress with our client. We are ensuring this no longer distracts from our profitable core business.
In the U.K., the integration of U.K. Coach to ALSA is now largely complete, with operational and functional benefits starting to be seen from the start of this year. In bus, preparations continue for franchising. In Germany, as mentioned previously, we are now operating a full service. This result was achieved through our investment in driver training and increased recruitment. Sounds pretty easy, really. It's pretty obvious anyway. Across the group, we have maintained strong momentum, securing 25 new contracts with a total value of EUR 450 million, while maintaining a disciplined conversion rate of 28% on new deals. This comes compared to 23% last year. It's really worth noting that these contracts exclude non-consolidated stuff, like joint ventures and joint operations.
Most notably, the project of in Qiddiya, in Saudi Arabia, and the Guadalajara health bid will bring the total value of new contracts secured in 2025 to in excess of EUR 1 billion. We also expect to be awarded two key contracts in Spain shortly. These include our retention of one of ALSA's largest lead regional contracts and the expansion of our business in Ibiza, where we'll become the largest operator on the island. A key highlight is the ongoing growth in ALSA. Passenger volumes, which increased a new milestone of 640,000,000 passengers. This was largely driven by a growth of 10% in Spanish domestic demand, mainly regional and urban results. As you can see from the charts, we're witnessing consistent upward growth in passenger numbers across Spain.
This isn't merely a seasonal trend. It's a fundamental shift towards public transport and one that is being supported and driven by the Spanish government across the whole country. We do expect this momentum to continue in 2026, as a Spanish single ticket, which offers unlimited travel for a flat monthly rate, becomes embedded in consumer behavior. I will now hand over to Brian, who will take you through the numbers in more detail.
Thank you very much, Phil, for that. Good morning, everyone. Before going into the 2025 figures, I want to mention the 2024 numbers have been restated for a EUR 0.8 million EBIT impact in Germany. They also reflect the discontinued operations of a NASB and ex-NXTS. This ensures a clean and like-for-like comparison for the performance we are discussing today. Revenue of EUR 2.8 billion represents a 6.2% increase from 2024, driven primarily by ALSA's strong growth at 12.8%. ALSA's now reached EUR 1.5 billion in revenue, reflecting the continued diversification, in addition to a great performance in both regional and urban.
We've also enjoyed good revenue growth in WeDriveU of 4.7% from new contracts, both wins both in shuttle and in transit business. Revenue growth helped deliver a 9.3% increase in operating profit, noting second half performance was significantly better at EUR 138 million versus EUR 60 million in the first half. It also, if you look at on the very right-hand side, shows the improvement in performance this year versus the same period for last year. This reflects the improved underlying operation performance and the benefit of cost savings arising from the restructuring and efficiency improvements that we've been making. Free cash flow was EUR 70.3 million.
This was lower than last year, that was mainly caused by cash outflows related to the school bus business, which were made prior to its sale in July, so in the first half of the year. Covenant gearing improved by 0.1 from the end of 2024, again, this has been helped by the proceeds from the school bus sale. In terms of statutory results, operating profit from continuing operations decreased from EUR 12 million to EUR 21.9 million. To understand the bridge between our adjusted statutory operating profits, there are several non-operating charges that I'll walk you through. There were no charges to the German Rail owner's contract provisions in the period. We did utilize EUR 56 million in the provision during the year, leaving the remaining provision at EUR 133 million.
This provision will be reviewed in detail for the 15-month audited results, it's reviewed in detail once a year. Moving to WeDriveU, we have made a EUR 52 million onerous contract provision in respect of the WMATA contract. We are seeking legal redress, which Phil has mentioned, in order to recover ongoing losses. We expect the outcome of these legal proceedings to be successful and the contract losses significantly reduced. However, the benefit of this legal settlement is not included in the provision calculation. We are confident of a favorable outcome. However, the process is expected to take 18-24 months. It's a long process. In the year, the utilization of the provision was just over EUR 4 million. It's worth also taking a moment to say that we have learned from the WMATA contract.
We have overhauled our North American bidding process to include vigorous review procedures. A EUR 38.5 million charge has been recognized in the income statement for retained legal liabilities tied to the open insurance claims from the NASB sale, the school bus sale. The charge stems largely from material adverse developments in more significant individual cases. The year-end cash impact from settled claims was just under EUR 19 million. In Morocco, following a rapid change in local operating environment, we have taken a EUR 27 million charge. This reflects a combination of price concessions we made in Casablanca, which enabled outstanding debts to be settled, and also a non-cash impairment charge following the abrupt transfer of Marrakech and Tangier contracts in December.
To put this adjustment in perspective, on an adjusted basis, Morocco contributed an operating profit of EUR 8 million, compared to just under EUR 13 million in 2024. Amortization of intangibles with acquired businesses from continuing operations increased by EUR 2.8 million during the period. This represents the annual charge for intangibles, such as acquired brands and customer contracts. This happens every year. Finally, as part of our strategic initiatives to stabilize and improve the group's performance, we invested EUR 35 million on restructuring and streamlining costs and also some transaction fees related to the school bus disposal. The year-end cash impact for restructuring was EUR 29.8 million. Overall, there was a cash outflow due to adjusting items in the period. This figure includes adjusting items for discontinued operations. Now turning to our balance sheet, provisions at the bottom of this slide.
We currently have EUR 133 million remaining on the German OCP. We will reevaluate the provision for our 15-month audited results, as will be dependent upon the finalization of the legally binding agreements with the PTAs, which are due to be signed before the 30th of June. Of the EUR 47 million remaining provision for WeDriveU, we expect to utilize EUR 8 million in 2026. Again, as I mentioned, this is still subject to the legal process. Moving to our divisional breakdown. ALSA was our most significant growth driver, with revenue increasing by just under 13% to reach the EUR 1.5 billion mark, and operating profit increased by 14% to EUR 112 million. As I've already mentioned, underpinning these numbers is strong underlying demand in Spain.
Both regional and long-distance sectors are performing well, supported by a better expected trading environment, particularly towards the end of the year. In WeDriveU, revenue increased by just under 5% to EUR 432 million, driven by new contract wins, and as again, as I mentioned, both in shuttle and in transit businesses. The full-year profit remained below 2024 levels due to challenges with WMATA contract and the Carter contract, which has now been exited, which Phil mentioned in his presentation. We saw a meaningful change in the second half of the WMATA performance, with WeDriveU improving to a GBP 17.6 million profit in H2. This recovery is expected to continue in 2026.
On the other hand, the U.K. business continues to face a very challenging environment but has shown great resilience, with revenue decreasing only 4.6%, to EUR 587 million, despite intense competition in the coach business. Breaking this down, U.K. Coach contributed EUR 350 million revenue, while U.K. Bus delivered EUR 272 million. Given the separation of the U.K. Coach as it has moved under ALSA, a profit split isn't available in these financial results. A breakdown will be provided in the full 15-month results ending the 31st of March. With ongoing competition in key routes, it has been a very difficult year for U.K. Coach, with revenues declining by 6.2%. Passenger numbers only fell by 3.8%.
On a positive note, the market appears to be growing and growing quite strongly. In U.K. Bus, revenues rose by 2.4%, and this is largely due to the fare increases that we implemented towards the end of June. The decline in passenger numbers reflects the wider problem right across the industry in the U.K. During the period, we also sold Acocks Green Depot and Oak Road. This resulted in a EUR 4.3 million increase in the adjusted operating profit for the 12 months. Overall, the U.K. reported a EUR 4.6 million operating loss, as I said, largely due to the competitive pressures in U.K. Coach, also combined with a rise in employer National Insurance costs.
We expect to see this performance improve as we move into 2026, along with the benefits of integration into ALSA. In Germany, revenue decreased by 1.6% to EUR 253 million. Whilst the adjusted operating profit increased to EUR 15.6 million due to improved operational performance, this actually was very significant. We recovered from a loss to a profit-making position. The in-year losses on the RRX contract were EUR 56 million, this is a cash outflow, which, this is the significance of the German contracts that we're in the process of finalizing. Central function costs increased by EUR 2.3 million, principally due to higher costs related to professional services and including a higher audit fee.
However, this more, this sort of hides the underlying cost savings that have been made during the year. Looking forward to 2026, we expect us to maintain current levels of performance. For WeDriveU, we expect continued underlying recovery, whilst we continue to redress WMATA through the legal process. By integrating U.K. Coach into ALSA, the business is becoming more competitive. Nevertheless, we expect 2006 to be a challenging year. U.K. Bus is expected to be at breakeven, subject to finalization of funding discussions with Transport for West Midlands. In Germany, our rail business is benefiting from operational improvements and will be de-risked once we have the PTA agreement signed by the 13th of June.
By the way, that's important to mention that the revised contracts will be backdated and effective from the 1st of January, 2026. In respect of central functions, we expect further cost reductions. Moving to our cash flow performance for the period, the most important point to highlight is the impact of School Bus, which is shown in the middle column. In 2025, School Bus was a significant drag on group liquidity prior to its disposal. The School Bus cash outflow was driven by substantial investment in CapEx and working capital requirements that were committed in 2024. Excluding School Bus, the group free cash flow was EUR 76 million. Key year-on-year movements include a working capital net inflow due to the timing of cash collections in ALSA.
The increase in tax is due to a one-off refund because of the change in tax law, which significantly reduced our cash tax payments in 2024. We are looking-- we have an ongoing project to look at managing our tax burden, as one of the problems we have is that our debt is sitting in the U.K., most of our profits are in Spain, and therefore, we don't have an offset for interest. We are targeting a total CapEx of EUR 120 million for 2026. This reflects our commitment to disciplined spending, maximizing cash conversion as we move forward, and Phil has mentioned this in his presentation, and Phil is... or Paco is also going to mention it his. There is very strict CapEx control now in the organization.
However, despite the strong CapEx control, we are able to pursue new growth opportunities, focusing on CapEx-light contracts. In terms of net debt, we saw a EUR 286 million inflow, reflecting the cash proceeds from the School Bus disposal. We recorded a cash outflow of EUR 180 million related to items excluded from our adjusted results, and I talked through these earlier in the presentation. It should be noted that we have paid the Hybrid Bond coupon for 2025, which is the last payment at EUR 21 million. The next payment due is EUR 40 million, which is in February 2027. There was a EUR 9.6 million outflow from other items, primarily driven by exchange movements and derivative settlements. This is partly offset by the sale of an investment.
When we pull all of this together, the group achieved total net funds inflow of EUR 127 million for the period. The funds inflow has offset the loss of School Bus EBITDA, resulting in a covenant gearing improving to 2.7. I should mention that the covenant gearing for the 15 months will be dependent on a number of factors, including the German rail agreement, which has quite complicated accounting implications. However, we can confirm that we will be within the covenant requirement. In terms of debt maturity, at the 31st of December, 2025, the RCFs were all undrawn, and we had nearly EUR 900 million in total between cash and drawn committed facilities available to us. The majority of our RCF will only expire in 2029.
Notably, the interest rates on our instruments are relatively attractive, and we have significantly reduced our exposure to interest rate volatility, with over 90% of our debt now at fixed rates. In fact, 94%. We have sufficient liquidity to meet our debt maturities arising in 2027. Finally, just to talk through. Well, sorry, well, almost finally. I want to briefly walk through our financial calendar for 2026. As you may have noted, we have adjusted our 2025 and 2026 accounting periods following the appointment of KPMG as our new auditor, which took place in November. These changes are designed to provide KPMG with sufficient time to complete their audit work. However, we do plan to return to a December 31st year-end in 2026.
Our current financial year will be for a period of 15 months to the 31st of March 2026. We expect to release our audit results in late June, early July. Looking into the second half, we will report six-month interim results for the period ending September the 30th and expect to release those in late November. Finally, to bring us back into alignment with the standard calendar year, the final accounting period for 2026 will be a shortened nine-month period ending the 31st of December 2026. Results for the period are expected to be released in March of 2027, making a return to a normal 12-month December year-end. In terms of financial imperatives, the focus remains on ensuring our strong top-line growth translates to sustainable value creation.
As such, we've implemented a disciplined approach to cost control. Specifically, we are implementing controls over capital expenditure and working capital to maximize cash generation and reduce debt. As Phil mentioned, the mission is simply to succeed. To simplify, to succeed. Behind this, we have our Simplify for Success cost program, which is currently targeting EUR 75 million of cost savings in 2026, with a run rate of EUR 100 million from the end of 2026. We are targeting an adjusted operating profit of EUR 195 million-EUR 210 million in 2026. I note, and this is quite important, that this does not include the positive impact of the revised contract changes from the German rail businesses.
Once these agreements become legally binding, which we expect will happen by 30th of June of this year, we will update our guidance. In summary, ALSA remains an engine of growth. WeDriveU is on a recovery path, and our U.K. and German businesses are leaner and more resilient. With EUR 75 million in targeted savings and an operating profit guidance of EUR 195 million-EUR 210 million, and positive net cash in 2026. I will now hand over to Paco, who will go through the operational review.
We'll Squeeze through.
Thank you. Hello, good morning. Thank you, Brian. Thank you, Phil. Thank you, all of you, for being here. For me, it's the first time I'm in the floor, and it's an honor to share some words with you. As you have noticed, I'm Spanish, but you probably don't know is that I'm from the south of Spain, and that means that my accent is a little bit poor, so apologies for that, but I hope you can understand me better. I'll try to give you more view on the operational side after all the numbers that Brian, and the strategy from Phil.
I would like to say something a little bit different and that, well, this is ALSA, and you know that I know ALSA a little bit. I've been working for ALSA for 34 years, and I'm very proud, and the last 10 years as CEO. I would like to explain what is behind the figures of ALSA. I think it's important you to know what's the portfolio of the business that ALSA maintains at the moment. That you probably know that long-haul is like a jewel of the crowd, but long-haul is 17% of the company. It's just 17... Where we are growing more at the moment, where we are growing a lot in international.
That was almost zero five years ago, because Morocco is there. Also in the diversification area, that we are also improving. The largest part of the company right now is the regional one that is also under a concession, under franchises process. If you see the figures, we have managed to keep growing in a two digit in terms of revenue and also in terms of profit. The margin, to be honest, is unbelievable. I think is to achieve 14% margin is a bit challenging for the future.
I would like to convey that it's been a record year for ALSA, not only in terms of revenue or profit or margin, but also number of passengers, customer satisfaction index, safety target, digital sales. It's a mix, a combination of all the factors that we are working in to get the strategy and the numbers done. A couple of points regarding the environment that ALSA, especially in Spain, are now involved. One is very important, is there is no direct impact in the figures, that is the approval of the Mobility Law in Spain. Just for you to know that the former Mobility Law took place in, if I'm not wrong, 1987.
That mean that it's a new law after 40 years. Why it's important that, well, is mobility is now a right in the for the citizens in Spain. It's not only a word, it's something that is like a new pillar of the well-being of the society in Spain, as the healthy or the patients. We have also now mobility on the top of the priorities of the government, and this is very important. Also, this new law secure the system of franchising and concession for long haul in Spain. As I said, I think it's very important. It's something that has been very controversial in the past, if regarding if it's going to be regulated or liberalized. Now with the new law, it's secure.
The other point is the strong support from the government, from this government, to the public transport, not only by the law, but also for the not, it's not subsidy. It's like, because it's not subsidies to the companies, it's to reduce price for the passengers to use more public transport. I think it's the current government that has put on the table million of euros to support all kind of transport: rail, coach, buses, and the rest. I think it's important you to know. My view on 2026 is very positive, and the first two months, I cannot show you the figures, but the starting of the year 2026 is also going, performing very well.
Let me give you an example of growth in this is Qiddiya, the Saudi city on that. How can we growth in that contract is EUR 5 million, EUR 500 million contract in eight year, plus potential extension of two more. It's it fits exactly with the strategy of ALSA. It's asset-light, it's low risk, and it's a project that is absolutely scalable because this is one of it's the first Mia project that the Saudi government is building in the country.
The plan is to have 10 project like Qiddiya in the next year. We have the... We have been awarded in the first one. We are well positioned for the rest of the tendering process that will take place. It's also remarkable that we have won this contract competing in the, what I call the Champions League, because we were competing there with the French state-owned company, the Italian one, the Singaporean one. Well, the top of the top of the company and also that you see the size is also is not that high, as you can imagine as some of our competitors we met. We won the contract through technology and through innovation.
For example, if you cannot see very well, but this, one of the main of the strong points in our offer is to build what we call the station for the future. That is a new concept of how people are going to move in the country. I think it's key that it's not a question of price, not only price, it's a question of technology, where we are the technical support for the government as well. We move to WeDriveU, as Brian mentioned, I think it's despite the total figures, the figure from H2 has been very, very positive. We have managed to change the trend that we had in the past.
You know, that from the H1, we had the separation process with the school bus. That has some cost. Now we are focused on the, once the separation has been made, we are focused on the strategy of cost and also to improve our operation and to have better margins on that. Also, as Brian and Phil mentioned, one of the main point is to get rid of the loss-making contract. We don't have much, as we manage in the States, almost 100 contracts, but there are three, four of them that are negative. We are in the process of avoiding all this risk for the future because that will make directly an improvement in the final figures.
Also, to say that it's in the States, where I pass a lot of times in the last year, there is a lot of room for improvement. Our market share in the state is very little. For example, one of our competitor have 10x the size of WeDriveU. That means we have a lot of place, and we are now entering some new areas of the industry, like universities, where I see very interesting through technology and through good performance. We're quite happy and about the future as well in 2026. If we go to U.K., I think it's we cannot share the figures from bus and coach, but I can give you some light on that.
On the bus is where a slight increase on revenue, but it's true that the passengers are going down. Not that much, this I think is in the same trend that all the urban industry in U.K. are doing, are suffering right now. I think well, positive news is we have managed with the authority to secure the fundings in order not to, in order to have at least, I would say, break even in 2025 and, of course, in 2026. Also very important in the coach that I would define the integration, U.K. coach and ALSA is completely success.
Here I can see Javier, who is in charge of U.K. coaching in Birmingham, we are in just less than six months, we have changed a lot of things. Again, if we go to the numbers, the decline on passengers in long haul has been less than 4%. If you consider that our competitor, our main competitor in long haul, has double the size of the flights and the routes that they are operating. our less in passengers is very, very little. We still have the majority market share in long haul by far to our competitor.
We have also a very clear strategy on focusing on specific routes with the new pricing tool on technology that we have completely changed, a new structure that we have put in place, leaner, more close to the ground, to know the problems, and to have several areas depending on the different products that Javier is running there. For example, we have a clear vision that we need to grow in airports, that we are in the overall figures, we are growing a lot. Of course, we are tackling with massive savings, with no impact on safety, not impact at all in the operational excellence.
Also, very optimistic regarding 2026, that we can manage to reverse the situation that we have. Finally, Germany, I think is, Phil mentioned, I think is, several milestone. For the first time, we have, we are running 100% of the services after years. What is even more important, we have achieved the number of drivers that we need. You know, that we have a shortfall in drivers in the last year that made us some penalties with the PTA.
Now, we have all the drivers, and what is more important, we have all the drivers with a lower cost, because you know that part of the driver that we were using in the past came from third parties, from agencies now and with a higher cost. Now, we are running all the operation with our own drivers. For 2026, I think it's very important because it's the year, not only because of the agreement with the PTA, that they are doing extremely well, but also because they are going to start the new process of bidding there.
I think we are in a, now in a very good position after the agreement with the drivers, with good KPIs in operation, to try to keep growing in that market that I see also very interesting for the future. I don't know if... Yes. This is my final slide. I would like to say that this is after one year working on the throughout the group five things that I have identified that we are working in the same page. These are facts. This is not only narrative. There is fact behind all this statement. First, all the division are performing better than last year, is this numbers. Second, is we have a huge opportunities of all around the world.
I mentioned Saudi, I mentioned States. We have also some other opportunities in some other places. The massive cost reduction that we are implementing all around the divisions, including ALSA, but also the rest of the divisions. We are going to work in the future, in the present. We are right now working in the present with a leaner and more efficiency base of cost. That gives us the opportunity to be more profitable. That is linked with the next point, that we are improving the margin of every single contract. We are avoiding totally loss-making contract. This is a process that we are going to finish in the next months. We are trying to get a little bit more of every single contract.
To gain 1% in every single contract, you can imagine that it has a huge impact on profit. Finally, probably this is not a fact, but it's not a number behind that. I've been working, as I said, with National Express in the past, for the last 20 years. For the first time, thanks to these guys, we are working as a group. Now it's not, there are four CEOs or vice president or whatever. We have the same protocols, we have the CapEx view, we have the same procedure for safety, we have everything. I think it's very important in order to get synergies from one part of the world to other.
For example, U.K. Coach, we are using the pricing technology of ALSA or but we have also exported some from the States, in terms of chattel to the business of transit, the business that we have started in Spain, for example. That's all I would like to end, thanking of you. Any question after Phil's conclusion? I want to convey that we, as a team, are strong.
Mm-hmm.
We are excited with the present and the future, and myself, very, very optimistic with 2026. We will see you in the next months again for a new presentation. you can check if I was right or wrong. Hope I was right. Thank you. My opinion.
Just to conclude, special thanks to my buddies over here, Paco and Brian. Let me say, Paco, you have no need at all to apologize for your English. People can probably understand.
Better than me.
I'm not mentioning you. I don't understand a word you said. You know, Paco, your accent from the south of Spain is much easier for people to understand than my accent from the north of England. I can assure you that. Well done. That was a great presentation.
Thank you.
Let's conclude. We're not going to keep you much longer with the presentations. I suppose to conclude the first half of the year, compared to that, we're in a much better position in the H2, and there's been a significant turnaround throughout the business, especially coming up in 2026. We've streamlined our business by getting rid of the corporate glue, as I say, and exiting loss-making operations. No point in running them if you're not making money. We are streamlining and simplifying, removing unnecessary layers and complexity. We're working smarter, becoming leaner, more agile, and better able to respond positively to market trends and opportunities. There's still lots and lots of opportunities out there for us. As Brian mentioned, costs and cash flow are now the key priorities for strengthening the business, and of course, we continue to seek every opportunity to deleverage.
Everything we've discussed today is about creating a sustainable business. I spent the first six months of my tenure looking backwards, trying to fix things that had happened probably years ago. We're now no longer just looking backwards to manage challenges. We're rewiring and rebuilding our business to deliver long-term, profitable growth for our shareholders. For our millions of customers, we are committed to delivering what they deserve, and that's the best possible service we can provide. We are here for them, you know. They are not here for us, and that's important. In summary, we're fixing the businesses that need our focus. We are simplifying and integrating where it counts. Importantly, we are taking our people with us on this journey, retaining the brilliant talent that we have in our business, and I can tell you, we have some brilliant talent. I'm not just saying.
That's easy to say. Working with these guys since I've joined, very young, and they make me feel young, too, and I love that. From the board up to the guys who turn out every day to run our buses, to run our coaches, and run our trains, whose jobs can be both very difficult and dangerous, we owe a lot to these guys. There are thousands of them who do this on a regular basis. Couple of thank yous. You know, thank you for coming along today, and thanks for the patience you've given us over the last 12 months or so. A very special thanks to our advisors over there, who support us all the time.
Give us a nudge when we need it, pull us back when we need it, and stop us from saying silly things, which is mainly me when I'm feeling a bit crazy. You know, we couldn't do it without you guys, and we really, really appreciate it. You know, thanks for turning up today. I can tell you, I'm very looking forward to a number of site visits in Ibiza, right? Where I can show you our late night and early morning services, and I'm sure you'll enjoy it. You know, thanks very much for everything. Thank you. Over to Q&A. Gemma, are you going to manage this? Gerald, do you want to kick off? Gerald, be nice.
Morning, everyone. Gerald Khoo from Panmure Liberum. I'll start with three, if I can. Morocco, can you talk us through what's gone wrong, when did it go wrong, and why has it led to such a large exceptional charge? On the topic of exceptionals, can you talk through, how much of those turn into cash? Let's assume WMATA does. I know you're-.
Yeah
Confident that it won't. Then on, again, on the exceptionals, you've talked about more vis, sort of more cost reductions. What exceptional should we expect associated with that? Finally, on U.K. Bus asset monetization, I think you sold two depots. You gave us the gain. Are you able to give us the proceeds from those two sales?
Right.
How many depots have you got left?
Can you do the operational stuff in Morocco first, explaining what happened there? Brian, can you deal with the exceptional stuff?
Well, okay. Well,
I think your mic, your mic's working here, Paco.
Okay, sorry.
You're all right.
Morocco. Just to put you in context, we started Morocco 1999, so it is 27 years ago. And we reached six operation in Morocco five years ago. So until more than 20 years, we did not reach the size of the business that we have. Now, we are running four cities, and we are running the first and the second cities in Morocco, that is Casablanca and Rabat, as you know. So I think it is part of our bidding process. Sometimes you win, sometimes you lose. This is nothing to be at fault, and we are still the largest urban operator in Morocco.
What we have done with the exceptional is just to all the asset we have and the staff that we need to be out of the company because of the process of losing Tangier and Marrakech, this is the cost. If you ask me, are you optimistic in Morocco? We are making money in Morocco. We will make money in Morocco 2026. We have some opportunities in the future to keep growing. As at the largest operator there, it will be more difficult because now there are more big companies competing with us that we don't have in the past. We have also some areas that, I cannot say, but some areas of diversification where we can enter in the Moroccan market. My view is, it's being, of course, I prefer to win rather than to lose. I think it's part of the normal business, and I'm not especially worried, and I'm optimistic for the future in Morocco.
I think when you're operating a successful business, and you grow it to the extent that we did, there's always a lot of people, a lot of competitors who want a share of it. They'll come in and take it, whatever business you're in, whatever profits you're making. I think that's what's happened to us in Morocco. On the numbers, Brian.
In Morocco, I mean, we had a provision of just roughly EUR 20 million at the half year. Then in the second half of the year, we had this issue where the authorities ended a contract, and we had to impair some of the assets. In terms of the other questions, the sales of the depots, we sold two depots, just over EUR 4 million, the proceeds from those. Then we looked to monetize the rest of the U.K. Bus business. That was all that we had at the end of the year. On the exceptionals for the cost restructuring, we don't have a number for this year. At the moment, we're working through more cost takeout. We'll give more guidance on that for the at the 15-month stage. We'll have a better handle on that.
The final one was the adjustments. I can very quickly go through them. I mean, obviously, the WeDriveU contract provision, which you mentioned. I mean, we do absolutely expect to be successful at litigation. I mean, that there will be a cash cost if we were unsuccessful, but that certainly is not what we expect, and the legal advice is very solid. On the legal claims, that will end up being cash because it's a provision for settlements. On the intangibles, that's non-cash, the write-down, and the restructuring cost that is mainly cash.
Morocco?
Morocco, going forward, that is really the in terms of a go-forward, that isn't an impact because that's a provision against... In other words, we're not going to recover that debt. That debt is now gone. It's not a cash. It's not a. The debt has disappeared effectively.
Gerald, on the West Midlands depots, one is a depot, Acocks Green. It's very old, in need of a lot of maintenance, and the other property was a bit of car parking land. It's one bus garage and a bit of land.
Sounds like it was in the books at nil.
Sorry?
Sounds like it was, they were in the books at virtually nil, if you-
Yeah.
Yeah.
Yeah.
it was a bit more, a little bit more than that, but it [crosstalk]
There was no write down, was there?
No, no. We made a profit. We made a profit. We made a profit of EUR 4 million. I think it was in the books, it was about EUR 7 million . Yeah, EUR 7 million it was in the books.
Muneeba Kayani , Bank of America. Firstly, just on your guidance, the low end implies a decline in profits at EBIT. Can you explain how you've thought about that and the range, like the bottom and top-end scenarios? Secondly, on ALSA, if I understand your outlook, you are saying kind of maintain profitability. Is that a comment on the margin, given the strong margin that you saw last year? You still expect top-line growth? If you could just clarify kind of the moving parts between the top line and the margin outlook on ALSA for 2026, as you've thought about it.
Yeah. I'll give, and I might ask Paco for some help on the second one. For the first question, you know, we've taken a view on the guidance for next year. We felt it was right to start at the more or less where we ended this year, I guess, or very slightly below. I mean, we certainly hope to do better than the minimum, but that is where we felt being sensible about guidance was the right place to be. What we don't want to do, which has been a constant theme in the past, is where we give guidance and then miss it. We want to give guidance that we very firmly believe that we can achieve. And then on...
Margins.
On the margins, you know, ALSA had an extraordinarily strong performance this year. Again, you know, maintaining that performance, and, you know, there are some challenges, for example, Morocco, we've just discussed. Making sure that we can, you know, maintain that level of profitability going forward, I think is what we believe is achievable. I mean, there are quite a lot of challenges within the mix of ALSA. I don't know whether you've anything to add.
Yeah, yeah. Oh, okay. Of course, I said in the presentation that 14 is unbelievable. It's something that, even if you have asked me, one year ago, I would say that that's very, very difficult to achieve 14%. What I can say is that the trend in ALSA, that we are growing in terms of revenue through business as usual. Passengers, they are growing even two digits, thanks to a lot of things, but also because we are winning new contracts. For example, in that figures is not included the Qiddiya contract, or it's not included the new contract that we are going to start in Ibiza or some other places, or Guadalajara.
I don't know if to be honest, I don't know if we can reach 14% of margin, what to do? I can say this, that we are still growing. There is room for improvement in terms of revenue, in terms of passengers, and even in terms of profit. I'm not obsessed that I need to reach 14% of margin. I'm obsessed that we need to keep growing all the opportunities we have. If the margin is 12%, it's fine for me. If the margin is 20%, much better.
I think you might, I think you might think we're a bit cautious. I think we think we're being realistic, and we've got to rebuild a lot of trust with you guys and with our shareholders. I think by being open and realistic than putting figures out that end up to be meaningless is the best way to go, rather than you know, totally failing and failing to hit guidance year on year. I don't think that's the best way to go.
Thank you. If I may ask a third question on the Qiddiya project?
Yeah
In Saudi Arabia. We've heard in other projects there have been many delays. Kind of as you think about this project and other projects in Saudi, how do you factor in kind of timing of these projects and impacts from your perspective?
Well, my experience with that, you know, that, we run the three contract in Middle East, two in Saudi and one in Bahrain. This Qiddiya project, this is a fact, we were awarded, and we need, we need to start in 45 days after the sign of the contract. My experience is they are doing very quickly because they know they need to have these cities running. For example, they are now launching a project with rail that we are not in, but, and we have been asked the timeline, they to us, that we can manage a second project there. I'm not, I'm not worried about that. Also to say that in the first month of operation, it was like a white operation. We, we made profits from the day number one, because it's not a risk contract. This is a gross cost. If I have to bet, I would say that this is something that is going to happen quite quickly.
Thank you.
Good morning. Jack Cummings at Berenberg. Three questions, please. The first one is just on the cost savings program. I was wondering if you could just flesh out a little bit more. I know you mentioned kind of corporate glue, but what specifically you are taking out of the business and in what divisions? The second is on the pipeline. Obviously, you've won a decent amount of revenue and contracts, both outside of the joint venture and including it. What's the pipeline looking like for full year 2026? Just finally on covenant leverage, I think 2.7x at year end, how should we think about how that's going to trend over the next 12 months? Will it tick up a little bit in the next three to six when North America School Bus comes out and then fall? Just any more color there would be great. Thank you.
I'll do the corporate glue one because it's my theme, this one. It's quite easy, really. It's what Paco said. It's the first time we've been really operating as a team, probably since I left a long time ago. We work together. We've got a strong GEC, our group executives. Importantly, it's how we deal with requests, either for approvals or for help. We deal with them quickly. If it's a no, we tell them no straight away. We don't just ask them: "Can you give me more information?" Give them, and then tell them no. If it's a yes, we, you know, we're pretty positive about that. It's all about the speed of things. You tend in these big corporates where we've all worked before, they lose the nimbleness goes, you know.
The slower they are on making decisions and getting bogged down, the more chance that opportunities disappear. We've had one already. I mean, an acquisition in another country in Europe. We've delayed it and deferred it and messed about with it in the past, and it's gone away, hasn't it? There's a danger. By being so bloody slow, you can miss such a lot by being too careful. We've got this governance. You know, I know you guys think governance is important, and I appreciate that, governance doesn't make you any money. It makes you do things right, and you know the difference between right and wrong. There's a balance between good governance and good and quick decision-making, and that's getting rid of that glue that's sticking us everywhere.
Let me add something. We're now, as Mobico, running 12 countries. If you compare 12 countries with our main competitors in the Champions League, they are running in 40, 50 countries. That means there is a lot of room for places to go. Let me not release the exact pipeline, but it also is a fact that we submit roughly 30 bidding process in a year. I would say less than half in Spain. This is, of course, is the line of the Chair, but more than 50% out of Spain. In the other 11 countries that we run, we are preparing something to. Not only that, we are also having a look or not a footprint, but some researches and some ongoing negotiation. It at least five more countries where we are not in at the moment. Let me say that I'm not going to show you the opportunity.
Mm-hmm.
They are competitors. I can assure you that we have a lot of opportunity. I'm not saying I'm not so, that we are going to win all of them. You know, that the ratio of winning contract is about 30%.
Mm-hmm.
You can imagine that if we have this size of opportunities, one, two, three, we will win, I hope. If not, he has to fire me.
Okay. Brian, could you do the cost stuff.
Just in terms of cost savings, EUR 75 million, that is spread right across the group. Head office is about, I mean, just in very rough terms, it's around EUR 15 million out of head office. The big focus, as we've mentioned in really all the presentations, has been on U.K. Coach, which is about EUR 25 million, and then it's EUR 10 million out of the other divisions, so Germany, ALSA, and WeDriveU. But it really is right across the business. On the covenant, it's a little bit complicated because of the German settlement, because that's going to influence the ratios very significantly. In fact, the accounting is quite complicated. In fact, even KPMG are getting technical advice as to how it's treated. It will be without Germany, it will be low, obviously, the covenant, the covenant ratio, but probably in the threes. You know, I'm probably getting stared at now, I'm not supposed to say this so much. It will be in the threes.
Mm-hmm.
Without, excluding Germany. With Germany, that again, depends on accounting, it would be lower, and by the year-end, it will be below three.
Any other questions, guys?
Yeah. Ruairi Cullinane, RBC. The first question on ALSA concession renewal. What percentage of ALSA's revenues are up for renewal in full year 2027? Is there anything else coming in the years after that? You know, if you could even give us an indicator of what percentage of earnings, that would be even better. Secondly, on provisions on the balance sheet. You've helpfully quantified that there'll be EUR 8 million of utilization from the WeDriveU onerous contract provision. You may not be able to comment on German Rail, but if you can, that would be appreciated. Is there anything else we should be thinking about?
Okay.
Yeah, I'll leave it at that.
Okay.
Thank you.
Thanks, Ruairi Can you talk a bit about concessions coming up, Paco?
Yes.
This year and next year?
Yes. Well, the franchise process is ongoing. It's true that there's been a general delay, but it's something, for example, right now there is one or two contracts on the table. We are not the incumbent, but in Spain, we have, in March, it's, we need to submit at least two offers in the process. We will have the process. I don't expect that we will have in all... Of course, not all of them, because if I'm not wrong, we manage 21 contracts in long haul in Spain. Probably it's a process that will take at least a couple of years to finish.
After that, you know that there is a process of mobilization, claims, and so on. I don't have the crystal ball, but I think it's something that for sure is not going to impact 2026. It's strange that could impact in 2027 or at least in the first half of 2027. That is something that is happening. Of course, we haven't lost a single contract in long haul in the history in Spain. As I show, the revenue of long haul is 17% of the company. Is a good margin, and of course, after a bidding process, you usually lose a little of margins, but because you have to reduce price, but after that, there is a recovery coming from the increase on passengers. It's a process like a peak on that. I don't know if that answer your question or not, but is... T his is my expectation.
On German Rail, I'm sorry, I can't give you any more because that's a commitment we've made to the local authorities there until we get the contract signed. You know, they're a different organization to us, you know, a political organization, and they've got a lot of people who they report to, including their elected members and officers, and also central government. We did say in the announcement that we're reducing the length of our loss-making contract, we're increasing the length of our profit-making contract, and we're also changing the basis of our profit-making contract to gross costs rather than net costs, and that takes away a load of revenue risk. All I can say, there have been long negotiations, and we're very happy with the outcome. There's a lot of tricky accounting I can't understand, but as Brian says, we're seeking help there, but we are very satisfied with the outcome.
I think the important point is when you put the three contracts together, the cash, the cash leakage is going to stop. That's the intention.
Brian, on provisions and stuff?
I think only the two different provisions, so on WMATA, it'll be EUR 8 million being released next year. On the German one, we just have to finalize the contracts, and we disclose that. Hopefully, again, with the full year results.
Okay. Any more questions, guys? Are we done? I think we are. Thank you very much for coming along. Really enjoyed meeting as usual. As you said, as we've been seeing a lot of you in the future, and particularly in this year. Please don't get too bored with us. I know we're not the most exciting people. But w e do our best. Thank you very much.
Thank you.