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Today's loss of the SE franchise wipes out about half of the rail franchise. But more importantly, the other half (GTR) is now due for renewal with the government. That franchise expires literally within 2 days. They have not yet secured an extension of that franchise. If they lost that, they would effectively have *no* rail franchise as the remainder is tiny in comparison.
Rail accounts for about 75% of revenue and about 20% of profits pre-covid, but the biggest loss of all is the loss of faith with the government. That could be fatal for the group. You can guarantee that the government will make an example of them.
Rail is only 15% of GOG projected profits. One or two contract issues for a significantly undervalued share still doesn't say sell to me. I'm going to let it settle for a few weeks.
@CHRI55
The point I've noted here is that, in the first half, there was a profit of £56.1m of which £6.5m came from the total rail franchises. The rest is coming from the buses.
Foolishly or not, Ive decided to leave things be. Everything is a risk.
@CHRI55: Yeah I am out.
I could have handled a 50% share drop on incompetence, but I'm not prepared to stay with a company facing a fraud investigation. There is a material possibility that they could lose their GTR franchise as well, which would effectively leave them without any rail division... That could easily unravel into a question of company survival.
Who cares about volume? The share is being traded at these prices and it is not some kind of mirage just because the entire float isn't being traded. People should not underestimate the perils of investing in a stock with a known financial irregularity that according to the DT may have referred itself to the SFO. As somebody with experience of investing in PFC SFO investigations are long and any whiff of corruption or fraud can lose you contacts both on the procurement and sales side before you even open your mouth. GO has really one customer, the UK Government. Will it even be able to procure the equipment needed to run their current operations, honestly it's a question worth asking, companies hate trading with companies with a whiff, they just decide not worth the risk or reputation impact. PFC was trading at around 800p before the SFO investigation started and ended up at 100p before recovering to 155p this week following an resolution. So for GOG to only fall 25% I think it barmy. Should be 75% down minimum, if not more. Firesell is probably best hope.
The interesting part of the day is teh number of shares sold "silently" so to speak which will be known after hours !!!
@ShearClass: In terms of volume, I would say that it's not huge, but as I mentioned, it was large compared to ADV, because overall, this is a low turnover share. I would be surprised if any funds have sold though - becasue it's too late for that. There would not be the liquidity to soak up those sells.
I did a lot of research this morning to guide my decision. The main problem that I see is the possibility that they will also lose the GTR franchise as it is up for renewal *within days*. It does not bode well. I suspect the government will want a scapegoat here and they will punish the company.
Good luck guys. With some luck, this is an overreaction. This is no longer an investment for me.
@moonman1977, it's multi faceted and given the parties representing the claimants I certainly don't think it's ridiculous. The main accusations centre on around overcharging of consumers and breaching competition law,
https://www.catribunal.org.uk/sites/default/files/2021-07/1404_Courtney%20and%20Vermeer_rule_76_website_summary_270721.pdf
I look forwards to seeing how it unfolds.
@Jwd222
Mate, if I knew the answer to that I'd be retired by now.
I'm just interested to see where it goes at the moment, although in a passive way thankfully, as my share portfolio is for later life which isn't that far away, but long enough- if I get there.
Obviously after this news I mean in years to come can it go back to 20 spit it with revenues lost I was expecting dividend as well I thought this would be a safe share to park your money how wrong I was totally shocked
@Jwd222
I have personal doubts that the share price will reach £20 for a little while.
Just a nagging feeling.
We won’t see the highs of 20 anymore?
@Moonman1977
Thanks mate. On a personal level I'm not selling out at a large loss here. It'll take a long time to recover and may dip further, but it's not like the bus operations are in trouble. I don't expect the other rail franchise to be renewed but I'm guessing folk are factoring that in.
So, as a novice, am I right in saying the franchises are about running things. Not ownership.
The buses they own those companies. I live in Brighton as, as far as I am aware, Go Ahead own Brighton & Hove Buses.
The franchises for rail I assume are different ?
What’s the future now will they only have a bus service? No rail
I have to reiterate the vol sold is 200k the vol bought is 200k the shares in issue is 25million, a drop in the ocean in terms of volume if the institutions were worried would not the sold be alot higher as ownership below shows 85% held by institutions
State or Government 0.02%
7,082 shares
Individual Insiders 0.2%
104,970 shares
Employee Share Scheme 2.3%
1,009,417 shares
Private Companies 3.5%
1,490,323 shares
General Public 9.0%
3,848,870 shares
Institutions 85.0%
36,502,666 share
I mean what happened have they lost the rail services or is it in case can forget a dividend this year or next now.
Damn how times change this was supposed to be a safe share with good revenue and solid business expected a dividend this year, not sure what now the future holds will it ever get back to 20 or will they lose the rail for good? Lost a lot today
Has 30 September pushed back?
Is 30 september delayed again?
It says on website 4 October declare is this company going down now have they lost the rail service or will they get it back?
Ate you dumping the shares they supposed to declare a dividend on 4 October
Are you dumping the shares they supposed to declare a dividend on 4 october
@Canetoad, average daily volume in 2021 is 91k shares, so to be 20% down on 5 x average volume at midday is not tiny, it's a significant reaction.
What is very suspect is that yesterday saw 2 x average volume, even though the price closed up very slightly. Weird.
There is a further contingent liability in the form of an anti competition case against Govia Thameslink that is about to enter court ; https://www.catribunal.org.uk/cases/14047721-david-courtney-boyle-edward-john-vermeer
What are the odds of that case succeeding after today's news?
Total Shares: 43,177,390
Traded Today: 456,025
Volume Today%: 1.06%
It's significantly higher than ADV, but this is not a big selloff. It's tiny.