National Express’ owner had to postpone the release of the company’s annual accounts because the auditor needs additional time to review “accounting judgements”.
Deloitte had originally planned to release Mobico’s 2023 results the following week. However, Deloitte is still awaiting Deloitte’s approval, primarily due to questions about accounting in its German rail division. Deloitte has not yet signed off on the results, which are expected before the end March. This would mean that they will be one month late.
The company tried to reassure investors that the delay would not impact last year’s figures, and that adjusted underlying earnings were still expected to remain within the previously stated range of £175 to £185 millions. But its words were not heard: Mobico shares fell by over 9 percent, or 8p. They closed at 76 1/4p and are now more than 80 percent below the level they reached in the days leading up to the first Covid locking down in early 2020.
Ruairi Cullinane is a broker and analyst in the transport industry at RBC.
Mobico is not the only company to have frightened investors in recent times. In October, the company’s shares dropped by more than 25% due to a reduced profit forecast for the year and the suspension of dividends.
Mobico, which is the most well-known brand in Britain, was called National Express until last summer. It owns school buses in the United States which it’s trying to sell. Alsa, an operator of Spanish trains and buses, and a German railway division make up around 6 percent of group profits.
Deloitte is interested in a closer look at the German rail division. National Express Germany operates routes in the West of the country between cities like Dortmund and Cologne. Profitability projections are estimated for various stages in the future. Deloitte said that these “accounting judgements”, especially those made in the year 2022, need to be reviewed.
Mobico stated that the remainder of the audit was “well advanced” and the delay would give Deloitte the “required amount of time” to complete their audit. Alsa delivered “another solid performance” last, the company said. The businesses in North America and the UK had also performed as expected.
Mobico had more problems in Germany where it was affected by a shortage of train drivers across the industry and did not save as much money from lower energy prices. The group will have to pay between £40 and £70 millions more to its German rail contracts from now until 2033 when they expire. Mobico already had a provision of just under £21 million for onerous contracts.
Analysts said that the increase in stock price was “relatively high”, as it represented up to 15 percent of the market value.
Alex Paterson, an analyst in the transport industry at Peel Hunt, stated that the new charge “is likely to further hinder the ability of the group to deliver”. Mobico’s net debt was just over £900m as of last summer. Investors are unlikely to be concerned that debt may not fall as quickly as hoped, as Ignacio Garat has stated he would only consider reinstating dividends “once progress is made in deleveraging”.