Shares in transport operator Go-Ahead have plunged as it scrambles to calculate the fallout from “serious errors” which led to it being stripped of the Southeastern rail franchise.
The group lost a quarter of its value after revealing that it would have to suspend its shares soon because counting the cost of the scandal will mean it misses a deadline to publish results.
Southeastern was taken over by the government in September after it found the network operator – 65% owned by Go-Ahead – failed to declare £25m of taxpayer funding it should have returned.
Image: Shares have fallen sharplyThe Department for Transport (DfT) is considering issuing a fine over the episode, but Go-Ahead – which is one of the UK’s biggest rail and bus operators – said it was difficult to know how big this would be.
Go-Ahead said an independent review of London & South Eastern Railway (LSER) – which was 35% owned by France’s Keolis – had found “serious errors… with respect to its engagement with the DfT over several years”.
AdvertisementIt accepted that “by failing to notify the DfT of certain overpayments or monies due to the DfT, LSER breached contractual obligations of good faith contained in the franchise agreements”.
Go-Ahead said it was “difficult to estimate precisely the likely quantum of any penalty”, but it was considering with auditor Deloitte whether to include the provision for a fine in its full-year results.
More on Rail Related Topics: RailThe group added: “The behaviours identified by the independent committee which contributed to the management of LSER’s contract with the DfT do not reflect the values and standards of conduct that the group expects of its colleagues.”
It said it would “take this opportunity to further enhance certain aspects to better safeguard and assure the compliance obligations of complex long term rail contracts”.
2:47 Northern Rail to go into public ownershipGo-Ahead said that together with Deloitte it had considered the “complex, detailed nature” of the independent report into Southeastern – a network that covers Kent and parts of East Sussex – and that “additional time is required” to consider its impact on full-year results.
It said it would not be possible to complete the audit before 3 January, the latest date permitted for the publication of its results for the year ending 3 July under Financial Conduct Authority (FCA) rules.
“After consultation with the FCA, the group anticipates that trading in its shares will be temporarily suspended with effect from 7am on 4 January 2022 until publication of the FY21 results,” it said.
“The group is working closely with Deloitte to ensure that the FY21 results are published as soon as possible. This is now expected to be before the end of January 2022.”
Shares, already down 44% for the year to date, tumbled by 24% on Thursday’s update, which also revealed provisions expected to be put aside relating to Go-Ahead’s German and Norwegian businesses.
