(Alliance News) - Transport operator Go-Ahead on Thursday said it has apologised to the UK government after admitting to errors and failings in the way it ran the Southeastern rail franchise.
Go-Ahead said the review of London & South Eastern Railway franchise with the UK government found that "serious errors" were made by LSER in its dealings with the Department for Transport over several years.
Go-Ahead said it has accepted 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." As a result, the company has apologised to the DfT.
The government department is considering enforcement action, Go-Ahead said, including a financial penalty.
Go-Ahead promised to enhance "certain aspects" of its corporate governance in order to better safeguard and assure compliance obligations of complex long-term rail contracts.
Go-Ahead also has delayed annual results due next week until January, so that auditors Deloitte can consider the implications of the LSER review. As result of missing the deadline for publication, shares will be suspended from trading, starting January 4.
Go-Ahead said it expects adjusted operating profit for the rail division to be ahead of previous expectations, partly due to the accounting treatment of some non-recurring items. Expectations for the company's bus divisions are unchanged.
Go-Ahead shares were down 15% early Thursday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.1% at 7,347.29
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Hang Seng: up 1.1% at 24,249.36
Nikkei 225: closed down 0.5% at 28,725.47
S&P/ASX 200: closed down 0.3% at 7,384.50
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DJIA: closed up 0.1% at 35,754.75
S&P 500: closed up 0.3% at 4,701.21
Nasdaq Composite: closed up 0.6% at 15,786.99
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EUR: down at USD1.1324 (USD1.1332)
GBP: down at USD1.3204 (USD1.3236)
USD: down at JPY113.53 (JPY113.83)
Gold: up at USD1,786.22 per ounce (USD1,782.70)
Oil (Brent): up at USD76.12 a barrel (USD75.86)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's key economic events still to come
1100 GMT Ireland industrial production
1100 GMT Ireland consumer price index
0830 EST US jobless claims
0945 EST US consumer comfort index
1000 EST US monthly wholesale trade
1030 EST US EIA weekly natural gas storage report
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UK Prime Minister Boris Johnson is facing anger from Tory members of Parliament after he hastily triggered a switch to his Plan B for coronavirus restrictions to tackle the Omicron variant as Downing Street was engulfed in a crisis over allegations of a rule-breaking Christmas party. Johnson announced on Wednesday that work-from-home guidance will return, Covid health certificates are to become mandatory in large venues and mask rules will be extended to combat the rapidly-spreading strain in England. But despite the strengthening of the rules he said Christmas parties and nativities could go ahead, as he set out the move while under increasing pressure over the event in No 10 last December. Conservative backbenchers openly questioned the Government's "credibility" in being able to enforce the rules while so many believed Downing Street had breached them. Mandatory mask wearing will be extended to indoor public venues including cinemas, theatres and places of worship from Friday but will not be required in pubs and restaurants, while the guidance to work from home where possible will return on Monday.
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China warned four Western nations that they would come to regret launching a joint diplomatic boycott of the upcoming Winter Olympics in Beijing. "The US, Australia, Britain and Canada's use of the Olympic platform for political manipulation is unpopular and self-isolating, and they will inevitably pay the price for their wrongdoing," foreign ministry spokesman Wang Wenbin said.
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BROKER RATING CHANGES
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RBC CUTS DIAGEO TO 'UNDERPERFORM' (SECTOR PERFORM) - PRICE TARGET 3,100 (3,000) PENCE
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BARCLAYS RAISES CRH TO 'EQUAL WEIGHT' (UNDERWEIGHT) - PRICE TARGET 45 EUR
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MORGAN STANLEY RAISES POLYMETAL TO 'OVERWEIGHT' (EQUAL-WEIGHT) PRICE TARGET 1,650 (1,400) PENCE
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COMPANIES - FTSE 100
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Jet engine maker Rolls-Royce said it expects its 2021 cash outflow to be better than forecast. Rolls-Royce said it was seeing good results from its restructuring programme, as the jet engine maker seeks to reduce costs and deliver a leaner and more efficient company. The London-based firm said the gradual recovery in international flying alongside a market recovery in the Power Systems unit and resilience in the Defence arm were driving improvements in trading. In addition, its restructuring programme, launched in May 2020, is delivering sustainable cost savings more quickly than initially anticipated. This leaves the company well-placed to meet the GBP1.3 billion savings target set for the end of 2022, it said. Rolls-Royce said the improved trading performance drove a return to positive free cash flow in the third quarter and reduced the outflow expected in the second half. In addition, around GBP300 million of original equipment concession outflows, originally expected in 2021, are now expected to fall in 2022 due to delayed delivery of aircraft for which it has already supplied engines. As such, Rolls-Royce's free cash outflow in 2021 is expected to be better than the GBP2 billion previously guided. Rolls-Royce said large engine flying hours are currently around 50% of 2019 levels and around 46% year-to-date as compared to the 43% average for the first half of the year. Engine flying hours in business aviation remain above their 2019 level.
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DS Smith said pretax profit and revenue rose for the first half of financial 2022 as the paper and packaging firm increased its interim dividend. For the six months to October 31, revenue rose to GBP3.4 billion from GBP2.9 billion last year and pretax profit increased to GBP177 million from GBP120 million. DS Smith declared an interim dividend of 4.8 pence a share, up 20% from 4.0p a year prior. Looking ahead, DS Smith issued a positive outlook for continued growth over remainder of the financial year. "We have built a business to benefit from the significant structural growth drivers within fibre based corrugated packaging. These benefits, combined with our scale, geographic footprint, sustainability and innovation focus, position us very well for continued volume and market share growth. Together with pricing momentum, this underpins our confidence to deliver a significant improvement in profitability during the second half of this year in line with our expectations and towards our medium-term targets," it said.
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COMPANIES - FTSE 250
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Online greeting cards seller Moonpig said profit and revenue declined in the recent half year but still was well above two years ago. Pretax profit in the six months that ended October 31 was GBP18.7 million, down from GBP33.0 million a year ago but doubled from GBP9.4 million in 2019. Revenue fell to GBP142.6 million from GBP155.9 million year-on-year but was up from GBP66.3 million two year ago. Moonpig said it is retaining customers acquired during the Covid-19 lockdown, with 89% of revenue being received from existing customers.
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COMPANIES - MAIN MARKET AND AIM
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YouGov said it has acquired Link Marketing Services, a Zurich-based market and social research firm, for CHF26.4 million, about GBP21.7 million, in cash, drawn from existing reserves. Link recorded adjusted pretax profit of CHF2.0 million on CHF23.0 million in revenue in 2020. The existing Link management team will continue to run Link, which also will keep its name.
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COMPANIES - GLOBAL
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New Zealand will ban the sale of cigarettes to future generations as the country aims to become smokefree by 2025, the government announced. People aged 14 and under when the law comes into effect will never be able to legally purchase tobacco, Associate Health Minister Ayesha Verrall said. "We want to make sure young people never start smoking so we will make it an offence to sell or supply smoked tobacco products to new cohorts of youth," she said. Under the new law, people will only be able to buy tobacco products with very low-levels of nicotine and fewer shops will be able to sell tobacco products.
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Thursday's shareholder meetings
Bioventix PLC - AGM
BlackRock Greater Europe Investment Trust PLC - AGM
Doric Nimrod Air One Ltd - AGM
Doric Nimrod Air Three Ltd - AGM
Doric Nimrod Air Two Ltd - AGM
Eight Capital Partners PLC - GM re net assets below called-up share capital
Frontier IP Group PLC - AGM
Kenmare Resources - EGM
Lok'nStore Group PLC - AGM
Orchard Funding Group PLC - AGM
Ridgecrest PLC - AGM
Royal Hill Music Royalty Fund Ltd - AGM
Scottish Investment Trust PLC - GM re merger with JPMorgan Global Growth & Income
Shepherd Neame Ltd - AGM
Volution Group PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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