Go-Ahead’s share on the London Stock exchange have been suspended from trading this morning, pending finalisation of results for the year ended 3 July 2021.
On 9 December 2021, the Company announced that it and its auditors, Deloitte, needed additional time to finalise the Company’s audited financial statements for the year ended 3 July 2021 (FY21 Results).
This meant it would not be possible for the company to publish the FY21 Results by 3 January 2022 (as required under Stock Exchange rules) as negotiations continue over a £25m breach of Southeastern’s railway franchise agreement.
In September 2021 the Department for Transport (DfT) revealed that it had discovered discrepancies over several years in payments that Southeastern should have made.
The issue is understood to relate to overpaid track access grants to pay for using the HS1 high-speed railway, used by the Javelin commuter trains from Kent to London St Pancras (pictured), which Southeastern did not declare and return until government accounting teams uncovered the “breach of good faith”.
At the time, Transport Secretary, Grant Shapps said that an investigation had found that since 2014 Southeastern had not declared more than £25m of historical taxpayer funding that should have been returned, and described this as a serious breach of the franchise agreement’s “good faith” obligation.
He said the money had been recovered and further investigations were being conducted into historical contract issues related to the franchise. As a result, negotiations for Go-Ahead for a new contract for Southeastern, to replace the expired franchise were cancelled and the operator was taken over by the DfT’s ‘operator of last resort’, meaning that it is now directly controlled by the DfT.
Go-Ahead’s results, which had already been postponed once, were due to be released on 16 December. They will not be ready until the end of January as its auditor, Deloitte, works through the accounts.
The delay means that the group will miss the six-month deadline to file annual results and on 9 December 2021 had to apply to suspend share trading under regulatory rules.
Go-Ahead will also be making provision for a large fine for the Southeastern breach of contract, as well as the repaid £25m of taxpayers’ money.
Go-Ahead said its review of the events led by the chairs of the group and of Keolis, its joint venture partner in rail, had been shared with the DfT. At the time the group said: “Notwithstanding the complexity of the franchise agreements relating to LSER [Southeastern], the review has found that serious errors were made by LSER with respect to its engagement with the DfT over several years.”
It added: “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.”
Go-Ahead chief financial officer Elodie Brian, who was CFO at Southeastern during the affected franchise period, resigned when the scandal broke.
As 3 January 2022 is the last date permitted for publication of the FY21 Results under the Financial Conduct Authority’s (FCA) Disclosure Guidance and Transparency Rules and the FCA’s Listing Rules, following consultation with the FCA, Go-Ahead today requested that the listing of the Company’s ordinary shares of 10 pence each and the Company’s 2.50% Guaranteed Bond due 2024 be temporarily suspended with effect from 7.30 a.m. on 4 January 2022.
Go-Ahead says it intends to request a restoration of the listing of its Ordinary Shares and its Bond on publication of the FY21 Results. The Group says it “continues to work closely with Deloitte to ensure that the FY21 Results are published as soon as possible. This is expected to be before the end of January 2022.”