Go-Ahead Group Chief Financial Officer Elodie Brian has resigned with immediate effect, after an announcement that sent shock waves through the Stock Market today – causing Go-Ahead’s share price to fall by 25% to £7.71.
It comes after Secretary of State for Transport Grant Shapps announced that the government will take over running services on Go-Ahead’s Southeastern franchise (operated by subsidiary London & South Eastern Railway, LSER) from 17 October 2021, when its existing agreement expires.
The DfT’s ‘operator of last resort’ will be appointed. Go-Ahead’s other rail business GTR, which trades as Thameslink, Great Northern, Southern and Gatwick Express, is not affected.
Mr Shapps says that a “serious breach of the franchise agreement’s ‘good faith” obligation in relation to financial matters was identified.”
An investigation by the Department for Transport identified that since October 2014 LSER has not declared over £25m of taxpayer funding in a profit-share, which should have been returned. Go-Ahead has now repaid the £25m.
In a Stock Market statement Go-Ahead says: “This decision is a consequence of ongoing discussions with the DfT regarding the historical calculation by LSER of the profit share over a number of years and related additional matters.”
Go-Ahead has appointed Gordon Boyd as Interim CFO with immediate effect. A “highly-experienced interim CFO” he has held senior financial roles within Drax, Infinis PLC and Capita PLC.
In a statement Go-Ahead says: “LSER’s owners (Go-Ahead and Keolis UK) commissioned an independent review into the matter on 11 August led by their respective Chairs.
“Although the independent review is ongoing and the contracts concerned are highly complex, the Group acknowledges that errors have been made in relation to the franchise.”
Go-Ahead Group Chairman, Clare Hollingsworth, said: “We recognise that mistakes have been made and we sincerely apologise to the DfT. We are working constructively with the DfT towards a settlement of this matter.”
As a consequence of these ongoing discussions with the DfT regarding the LSER profit share, the announcement of the Group’s results for the year ended 3 July 2021, scheduled for 30 September 2021, has been postponed.
