North East transport firm Go-Ahead group could face up to £81.3m in costs following a rail franchise loss that has overshadowed the company.
In the publication of results delayed on three occasions, the firm said the sum includes £30m for a potential fine and £51.3m owed to the Department for Trade (DfT), which stripped it of the LSER franchise last October. So far, £49.2m has been paid by the franchise to the Government, it added.
In a call with journalists, interim group chief finance officer Gordon Boyd said the company did not know whether it would be the subject of a Serious Fraud Office investigation.
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Group chief executive Christian Schreyer - who described the last two years as the most challenging in the group’s history - apologised to shareholders in a long-delayed full year results update which comes amid a suspension of trading in Go Ahead shares.
The Newcastle headquartered group - the North East’s third largest company by turnover - said it was braced for a fine from the DfT and had provisioned £30m following its admission that it had not declared £25m of funding in conjunction with the London & South Eastern Railway (LSER) contract.
Additional liabilities of £21.3m could also be due to the DfT, which the firm said relates to commercial negotiations over settlement of franchises.
The group said an otherwise strong performance was “overshadowed by matters relating to London & South Eastern Railway (LSER) and challenges in international rail.”
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The company said it accepts “serious errors” were made in relation to the LSER franchise, and in its dealings with the DfT - to which it said it had apologised.
Elsewhere, Go-Ahead said it had provisioned £66.2m to mitigate reductions in revenue across its Norwegian rail franchise which was launched just before the pandemic struck. Problems with the firm’s German rail contracts meant the firm restated an exceptional charge by £37.1m.
Despite the problems, the group reported strong underlying performance with adjusted operating profits rising from £76.4m to £115.5m in 2021. It also reported a statutory loss before tax of £6.9m, down from £39.5m.
Revenues topped £4.05bn, up from £3.8bn in the same period.
Go Ahead’s board has now applied to the FCA for restoration of trading on the London Stock Exchange.
Christian Schreyer said: “It’s been a very challenging year for Go-Ahead and our shareholders, for which I apologise, on behalf of the board. I’m pleased to be publishing these results today and I am looking firmly to the future with optimism.
“The group’s operating performance is strong and we are seeing a reassuring recovery in passenger volumes across bus and rail following the impacts of COVID-19 with our trading expectations for 2022 unchanged. In relation to London & South Eastern Railway, we are optimistic that the outstanding matters will soon be settled with the DfT.
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“In international rail, I am confident that we have the right team in place to address the challenging contractual situations we face in those markets.
“In my 25 year career in public transport and mobility services, I have never been so proud to be part of the industry as throughout the pandemic. Transport workers all over the world stepped up and kept vital services moving at a time when much of the world appeared to stop.
“Go-Ahead’s 27,000 people have demonstrated incredible resilience and commitment through this period, and I have great confidence in my teams around the world to support the next exciting phase for the Group.