RNS Number : 0540V
Go-Ahead Group PLC
09 December 2021
The Go-Ahead Group plc 4 Matthew Parker Street,
London, SW1H 9NP
Telephone 020 7799 8999
9 December 2021
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
THE GO-AHEAD GROUP PLC
( " GO-AHEAD" OR " THE GROUP")
UPDATE ON DISCUSSIONS WITH THE DFT REGARDING LSER
AND DELAY TO ANNOUNCEMENT OF FY21 RESULTS
The Go-Ahead Group today announces an update on discussions with
the Department for Transport (DfT) regarding London & South
Eastern Railway Ltd (LSER) and the expected date for publication of
the Group's financial results for the year ended 3 July 2021
(FY21), previously expected to be 16 December 2021.
Update on discussions with the DfT regarding LSER
As announced on 28 September 2021, the Operator of Last Resort
took over delivery of passenger services on the Southeastern
franchise when its existing contract expired on 17 October 2021.
The DfT's decision not to award a National Rail Contract to LSER
from this date was as a consequence of discussions with the DfT
regarding the calculation of profit share payable by LSER under
franchise agreements and the treatment of certain overpayments made
by the DfT to LSER over the course of the franchise agreements.
Go-Ahead has been focused on open collaborative and constructive
engagement with the DfT in order to reach a full and satisfactory
settlement with the DfT. 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.
Notwithstanding the complexity of the franchise agreements
relating to LSER, 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
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.
Further details relating to these matters will be set out with
the FY21 results.
Update on expected date of publication of FY21 results
The independent committee's report has also been shared with
Deloitte. 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.
Results for the year ended 3 July 2021
On 8 November 2021, the Group announced that the FY21 results
remained in line with the Board's expectations. Whilst the audit is
ongoing, the Board's current expectations are that adjusted
operating profit for the rail division will now be ahead of
previous expectations, in part reflecting the treatment of certain
non-recurring items in rail. Expectations for the regional bus and
London & International bus divisions are unchanged.
The Group also highlighted on 8 November that government funding
arrangements in relation to its Norway rail business for the
remainder of the current financial year had not yet been agreed.
Whilst discussions are ongoing regarding the continuation of
government support of rail services, unless a satisfactory
agreement can be reached, the Board expects that a material
provision would be required in the FY21 results for potential
losses in our rail contract in Norway.
In German rail, following the recognition of a GBP25.9m
provision in the first half of the year reflecting latest financial
projections for the contracts in Bavaria, a further provision of up
to GBP10m is expected to be recognised in the FY21 results. The
Board's expectation is that provisions for both Norway and Germany
would be treated as exceptional items.
The audit of the FY21 results is ongoing and all of the
expectations referenced in this announcement are subject to audit
Under the Group's debt facilities, the Group is required to
publish audited results by a specified date. As a result of the
further delay to the publication of the Group's FY21 results beyond
31 December 2021, the Group will be seeking appropriate waivers of
this requirement. A similar waiver was previously agreed in
relation to the Group's revolving credit facility in respect of the
delay to the publication of the results beyond 31 October 2021.
Annual General Meeting
The Group's Annual General Meeting will take place on 21
December 2021 and will be held in accordance with applicable
COVID-19 rules and guidance. As previously announced, the Group is
required to convene a separate shareholder meeting in connection
with the Group's annual report and accounts and certain other
matters ordinarily put to shareholders at the Group's Annual
General Meeting. The details and timing of this meeting, previously
expected to take place in February 2022, will be confirmed in due
The person responsible for arranging the release of this
announcement on behalf of the Group is Carolyn Ferguson, Company
For further information, please contact:
Media - Andrew Clark, Go-Ahead 07977 343 846
Investors Relations - Holly Gillis, Citigate
Dewe Rogerson 07940 797 560
Go-Ahead is a leading public transport operator, connecting
communities through bus and rail services. Our purpose is to be the
local partner taking care of journeys that enhance the lives and
wellbeing of our communities across the world.
We employ more than 27,000 people across our bus and rail
businesses in the UK, Singapore, Ireland, Norway and Germany. In
addition to the travelling public, our customers include
governments and local authorities. We are committed to tackling
climate change, poor air quality and social isolation.
Go-Ahead is one of the UK's largest bus operators. We run a
fleet of more than 6,000 buses across England and run a quarter of
London's buses for Transport for London. Outside London, we serve
high-density commuter markets in the North East, Greater
Manchester, East Yorkshire, Oxfordshire, East Anglia, the South
East and the South West of England. We also operate a bus contract
in Singapore and two bus contracts in Ireland.
We operate rail franchises in the UK, Germany and Norway. In the
UK, we run the country's largest passenger franchise, GTR
(Southern, Gatwick Express, Great Northern and Thameslink). This is
managed through our 65 per cent owned subsidiary Govia, which is 35
per cent owned by Keolis UK. In Germany and Norway, our contracts
are run exclusively by Go-Ahead.
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