Yahoo Finance Go-Ahead shares set to be suspended as it counts cost of London & Southeastern Railway failings
Go-Ahead shares derailed today after it delayed publication of its annual results for a third time and warned that its stock will be suspended.
More bad news comes as the beleaguered transport operator continues to count the cost of historic failings on the London & South Eastern Railway (LSER) franchise, which operates Southeastern trains.
Go-Ahead said annual results would be delayed until January as more time was needed to consider the impact of the scandal. Results were due in September but have been delayed three times.
The Department for Transport (DfT) stripped Go-Ahead of the LSER franchise in October after finding the operator failed to declare £25 million in historic Government over-funding.
Go-Ahead set up an independent commission to probe the issues and a new CEO joined last month. The commission has now delivered its report to both Go-Ahead and the DfT. Go-Ahead today admitted to “serious errors... over several years”.
The company “breached contractual obligations of good faith” by failing to tell the DfT it had been overpaid.
Go-Ahead has publicly apologised and said it was “focused on open collaborative and constructive engagement with the DfT in order to reach a full and satisfactory settlement.”
The transport company is likely to face a fine but said it is “difficult to estimate precisely the likely quantum of any penalty” given the unprecedented nature of the breaches. Go-Ahead is consulting lawyers and working with Deloitte.
The complexity of the independent commission’s report and difficulty calculating how much to set aside to cover a likely fine is causing the delay in signing off Go-Ahead’s accounts.
The company expects to file by the end of January but the statutory deadline lapses at the start of that month. As a result, shares are likely to be suspended on January 4 until the accounts are published.
Another delay means Go-Ahead will have to negotiate new waivers on debt covenants with its lenders. Talks are ongoing.
Shares dropped as much as 23% on the update, down 164p to 533p.
Aside from issues with DfT, Go-Ahead said its core business was trading well.
Performance is “in line” with guidance and profit at its rail arm is on track to beat forecasts. Go-Ahead expects to take provisions at both its German and Norwegian rail businesses, including a £10 million charge in Germany.
Investec expects an operating profit of £87.5 million when accounts do arrive.
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