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A photo of a National Express shuttle bus | AccountingWEB | National Express owner’s CFO stands down after accounting blip
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National Express owner’s CFO departs after accounting blip

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The chief financial officer of National Express owner Mobico is out following ‘regrettable’ accounting issues which twice delayed publication of the troubled group’s accounts.

24th Apr 2024
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James Stamp, a former KPMG partner who was appointed to the position less than two years ago, will stand down at the group’s annual general meeting on 11 June.

Helen Cowing, former CFO of investment manager Octopus, food vendor Selecta Group and manufacturer Ideal Standard International, will assume the role of interim CFO on the same day.

She will not hold a board position, the company said.

Stamp “has shown considerable dedication as we have sought to navigate the business through a challenging macroeconomic environment, managing the impacts of high inflation and adapting to a post-Covid world,” said Helen Weir, chair of Mobico.

Stamp said it had been “an honour” to spend seven years with Mobico. He will work with Cowing on the handover.

“It’s not always just the CFO who is to blame when accounts are held up, but they often carry the can,” said a former Deloitte senior manager who asked to remain anonymous.

“Regulators don’t like late filings, and investors don’t either,” they told AccountingWEB. “It may even be out of the CFOs control, particularly where a CEO has got involved, but unfortunately the responsibility of the role has you in the firing line.”

Warning lights

Changes to the indices used by Germany’s statistics office caused accounting problems for Mobico in the country, and resulted in two delays to the reporting of its full-year finances.

In February, the business said it would publish its results “before the end of March” after auditor Deloitte said it needed more time to complete work on the German accounts.

The news sent shares plummeting, and a second announcement in March that the books weren’t to be published came alongside a profit warning.

Mobico’s German group was down £15m as a result of the alterations to how the transport sector calculates cost recovery levels from passenger transit authorities.

The group’s 2022 results had to be restated in respect of a correction to the German Rail contract provision, it told investors.

Post-Covid restructuring

This week, the Birmingham-headquartered transport operator finally revealed the 36% drop in adjusted pre-tax profits for the year to the end of December.

It posted a full-year £162.7m loss, on the back of a £231.2m loss recorded in 2022.

Revenues rose 12.2% to £3.2bn last year on rising bus passenger numbers and fare increases as a result of rail strikes. Headwinds from higher wages, energy bills, a train driver shortage and slow profitability in Germany dragged earnings down, however.

The group has also been hit by inflation and the ending of Covid-era subsidies.

Mobico executives said they want to shift its US school bus business, which has also been a drain on cash, however its Southern European coach operation has proved a glimmer of sunshine with record-breaking profits.

The firm’s flagship UK bus division has also rebounded, but the former National Express coaches are set for a further shake-up.

It said UK coach revenues rose by 3.4%, but cautioned over possible further action to restructure its flagging private coach hire company, National Express Transport Solutions (NXTS).

Last October, two depots in Kent and London were closed, and the firm warned investors “all potential options are being considered, including further rationalisation and rightsizing” as it continues to remodel the division.

‘Regrettable delays’

“Our 2023 results are below the expectations we set ourselves at the beginning of the year,” said chief executive, Ignacio Garat. “The delays due to the additional work relating to the German Rail business was regrettable but it is now concluded.”

“Although group revenue growth was encouraging, driven by passenger demand and actions taken to recover inflation, this has not translated into an improvement in reported profitability,” Garat said.

“I am nevertheless encouraged by the progress we have made in transforming the business, with the new leadership we have appointed in North America School Bus and the UK and Germany making a tangible impact and the first phase of our Accelerate cost efficiency program delivering ahead of expectations,” he said.

“Our focus remains on delivering the benefits of our restructuring programs and in recovering inflationary costs through pricing, while maintaining a relentless focus on the quality of our offering to support growth,” he added.

Analysts at Jeffries noted Cowling’s “turnaround experience” and said they expected a recovery as the business begins to trim its heavily-leveraged operations.

Much of Cowling’s experience has been board level in the retail sector, where she has excelled at overseeing the finances of expanding international businesses.

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By FactChecker
24th Apr 2024 14:40

Sounds like it wasn't an "accounting blip" that did for him (and there's no suggestion of wrongdoing or lack of competence) ... but the 'unforgivable' thing that happened on his watch (despite not being caused by him) was "The news sent shares plummeting"!

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