Shares in bus and rail operator Go-Ahead Group (GOG) careered 18% lower to 841p after the firm revealed that the Department for Transport had relieved it of the Southeastern rail franchise due to accounting errors.
Control of Southeastern will pass to the publicly-owned Operator of Last Resort from 18 October, the date when Go-Ahead’s existing agreement ends, effectively nationalising the service.
Southeastern joins three others which are already owned and operated by the Government, and from April a fifth service - ScotRail - will also be operated by the OLR.
The decision to remove the franchise was ‘a consequence of ongoing discussions with the Department for Transport regarding the historical calculation by London and Southeastern Railway Limited of the profit share over a number of years and related additional matters’ according to the company.
The firm has spent the last six weeks reviewing its accounts and has admitted that ‘errors have been made in relation to the franchise’. As a first step the group has repaid £25 million of historical payments due to the Government which weren’t paid.
Stripping Go-Ahead of the franchise, Transport Secretary Grant Shapps described the failure to repay the Government as ‘a serious breach of good faith’. Further investigations are being carried out, and the firm could be liable to financial penalties.
As a result of 'ongoing discussions’ with the Government, Go-Ahead has delayed the release of its results for the full year to 3 July and will announce a revised date in the coming weeks.
Also, as a direct consequence of the accounting oversight, chief finance officer Elodie Brian has stepped down with immediate effect after 13 years with the firm. Gordon Boyd, formerly chief bean-counter at Capita (CPI), has been parachuted in as interim finance director.
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