MARKET REPORT: Go-Ahead stock hits the buffers as penalty looms

Go-Ahead Group, the UK’s biggest rail operator, saw its shares derailed after it admitted to ‘serious errors’ over its running of the Southeastern railway.

The stock tumbled 14.9 per cent, or 105p, to 600p as the company predicted that it would be slapped with a fine by the Department for Transport (DfT) over the matter. However, the size of the penalty was ‘difficult’ to estimate.

Go-Ahead was stripped of the Southeastern contract by the DfT in September after failing to repay £25million in taxpayer cash.

Off the rails: Go-Ahead stock tumbled 14.9%, or 105p, to 600p as the company predicted that it would be slapped with a fine by the Department for Transport

Keolis, the company’s partner in running Southeastern which is owned by the French state-backed firm SNCF, is also set to receive a hefty penalty.

As a result of the fallout from the scandal and the expected fines, Go-Ahead will not be able to file its accounts before a deadline on January 3, meaning its shares will be ‘temporarily suspended’ from trading the following day.

This, in turn, means the company is at risk of defaulting on its loans. However, it is currently trying to agree a waiver on its debt repayments until it can publish its annual results. 

Stock Watch –  Cloudcall

Cloudcall, a provider of telephone and messaging systems to businesses, soared after a takeover swoop from a tech investor.

Venture capital firm Xplorer has offered 81.5p per share in cash, a whopping 72 per cent premium to the company’s closing price on Wednesday, the last trading day before the deal was announced.

The offer, which values the entire business at nearly £40million, has been unanimously recommended by Cloudcall’s board. 

The shares soared 66.3 per cent, or 31.5p, to 79p.  

There was further misery abroad, with Go-Ahead’s Norwegian business facing heavy losses on a rail contract unless it can thrash out a funding deal with the country’s government.

Meanwhile, its German arm is dealing with mounting financial pressure including nearly £26million in losses from contracts in Bavaria. Another £10million is expected to be set aside for losses in its results.

The FTSE 100 lost 0.2 per cent, or 15.79 points, to 7321.26 while the FTSE 250 dropped 0.4 per cent, or 82.39 points, to 23148.04.

Tighter pandemic restrictions in the UK dented market confidence heading into the festive season, with leisure stocks taking a hit amid worries rules around mask-wearing could put off customers.

Shares in Cineworld slipped 3.5 per cent, or 1.78p, to 49.86p while Restaurant Group, the owner of Wagamama and Frankie & Benny’s, sank 4.8 per cent, or 4.4p, to 86.5p and Revolution Bars fell 6.1 per cent, or 1.25p, to 19.25p.

Discount retailer B&M bounced 2.3 per cent, or 14.2p, to 644p after unveiling plans to return £250million to shareholders. 

The company will pay a special dividend of 25p per share on January 14 after business boomed during the pandemic.

FTSE 250 ventilation specialist Volution jumped 4.9 per cent, or 25p, to 539p as it shrugged off supply chain issues and rising costs to post a bullish trading update.

Revenues for the four months to the end of November were up 14.6 per cent year-on-year, boosted by several acquisitions and the company increasing prices to combat inflation. 

Pharma giant AstraZeneca climbed 0.9 per cent, or 78p, to 8362p after its Evusheld antibody treatment to protect against Covid-19 received emergency approval from US regulators.

The therapy is designed for adults and teenagers with compromised immune systems who may not be able to take vaccines.

Antivirus software seller Avast snapped up Evernym, a US-based provider of identity verification tech, for an undisclosed sum.

The purchase, which is expected to complete in mid-December, is expected to help Avast develop ‘breakthrough identity products’. The shares edged up 0.1 per cent, or 0.6p, to 614.6p.

Mid-cap construction group Balfour Beatty added 2.3 per cent, or 5.6p, to 252.8p as it predicted a return of profits to pre-pandemic levels.

The group expects a profit for 2021 ‘in line’ with the £172million it delivered in 2019.

Peer Renew Holdings shot up 5.4 per cent, or 43p, to 845p after record results. For the year to the end of September, pre-tax profits jumped 27 per cent to £40.8million while revenues surged 28 per cent to £791million.

This post first appeared on Dailymail.co.uk