Go-Ahead shares plunge amid stock suspension alert

Shares of Newcastle-headquartered bus and rail giant Go-Ahead Group, recently stripped of the Southeastern rail franchise, fell another 15% on Thursday after the firm said it anticipates that trading in its shares will be temporarily suspended from January 4, 2022, until it publishes delayed full-year results.

The UK’s Department for Transport (DfT) announced on September 28 that the Operator of Last Resort would take over the running of Go-Ahead’s London & South Eastern Railway (LSER) services from October 17.

The DfT said the decision followed “an investigation which identifies over £25 million of taxpayer money was not declared by LSER, amounting to a significant breach of the franchise agreement, undermining trust.”

On Thursday, Go-Ahead said: “An independent committee comprising the chairs of LSER’s shareholders (Go-Ahead and Keolis UK) commissioned an independent review, led by external legal and accounting advisers, into LSER’s performance of its contractual obligations under the Southeastern franchise agreements.

“The findings of this review have now been shared with the DfT.

“… the review has found that serious errors were made by LSER with respect to its engagement with the DfT over several years.

“In particular, the group accepts 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.

“Accordingly, the group has apologised to the DfT.

“As previously disclosed, the DfT has confirmed that it is considering its options for enforcement action in relation to this matter, including imposing a financial penalty under the Railways Act 1993.

“In the absence of specific precedent or relevant guidance, it is difficult to estimate precisely the likely quantum of any penalty.

“However, the group is considering with Deloitte the inclusion of a provision in the FY21 financial statements.

“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.

“Whilst the board is of the view that the group has good corporate governance arrangements in place, it will take this opportunity to further enhance certain aspects to better safeguard and assure the compliance obligations of complex long term rail contracts.”

On the expected publication date of FY21 results, Go-Ahead said: “As a result of the complex, detailed nature of the report, the group and Deloitte have concluded that additional time is required to consider the implications of the report’s findings for the FY21 results and that it will not be possible to complete the audit before 3 January 2022.

“This is the latest date permitted for publication of the FY21 results under the Financial Conduct Authority (FCA)’s Disclosure Guidance and Transparency Rules.

“After consultation with the FCA, the group anticipates that trading in its shares will be temporarily suspended with effect from 7.00 a.m. on 4 January 2022 until publication of the FY21 results.

“Application will be made to the FCA requesting suspension of trading in the group’s shares in due course.

“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.”