National Express owner Mobico set for FTSE 250 relegation after audit issues

Mobico Group, the owner of National Express, could fall off London’s FTSE 250 index after a torrid share price performance over the last 12 months.

Mobico shares fell over six per cent on Wednesday morning, adding to a near fifty per cent drop over the last year.

Based on provisional results from the quarterly review of the index compiler FTSE Russell, investment funds Next Energy Solar Fund and Octopus Renewables Infrastructure Trust also look likely to dip out.

Brunner Investment Trust, Alpha Group International, XPS Pensions Group and the asset manager Liontrust are all lined up as potential replacements.

Should Mobico fall off the capital’s midcap index, it would be yet another dent to investors’ confidence in the transport firm.

Shares crashed earlier in March after the company was forced to delay publication of its full-year results for a second time due to issues with accounting judgements relating to its German rail business.

The problems, caused by changes to indices used by Germany’s statistics office, ultimately resulted in the departure of Mobico’s chief financial officer, James Stamp.

Stamp’s departure capped off a year of issues at Mobico, which renamed itself from National Express last May.

Costs have hampered growth in the firm’s UK and US bus businesses. Its North American school bus segment, in particular, has sucked out cash to address staff shortages and has now been put up for sale in an effort to cut spending.

Mobico issued a profit warning in March and bought down forecasts for adjusted earnings before interest and tax (EBIT) to between £160m and £175m, compared with £175m and £185m.

“Confidence has ebbed away following accounting issues and other operational challenges,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said.

The performance comes in stark contrast to Mobico’s transport rival Firstgroup, the shares of which are up close to 50 per cent in the last 12 months.