6:17 am, October 28, 2024
Dealer group Lookers has published its first set of annual accounts since its takeover by Global Auto Holdings showing that the retailer’s profits crashed to a £1.8m loss before tax.
The previously listed car dealer group saw profits slump as financing costs for the business doubled and non-underlying items sucked cash from the business.
In 2022, Lookers posted a pre-tax profit of £84.4m – but accounts for 2023 show this has plummeted to a loss of £1.8m.
Accounts, which were filed late with Companies House, show that the Car Dealer Top 100 firm made an underlying pre-tax profit of £37.8m in the 12 months to the end of December 2023, but fell into the red when non-underlying costs were factored in.
The figure is 53.4% down on 2022’s result – when it made £82.7m – with the Canadian Global Auto Holdings taking control of the outfit in October 0f 2023.
Lookers was the fourth most profitable group in the Car Dealer Top 100 on 2023 – our list of the most profitable dealers in the UK – but this year will not appear at all.
The takeover was followed by mass redundancies and cutbacks, with staff complaining of ‘disgraceful’ treatment as they faced being let go just weeks before Christmas.
The accounts – which were due with Companies House by the end of September – were eventually uploaded to the Government website on October 22. They were not available for the public to view until last Friday (Oct 25).
They reveal that fees relating to the company’s de-listing from the London Stock Exchange, as a direct result of Global Auto Holdings’ acquisition, totalled an eye-watering £16.6m.
Meanwhile, the cost of putting approximately 14% of its workforce – around 940 people – at risk of redundancy came in at £8.4m.
Despite this, the group ended the year with an average workforce of 6,724 employees, compared to 6,658 in 2022. The cost of wages and salaries also rose to £263.3m compared to £255.3m last time out.
Meanwhile, the group’s highest paid director received £1.16m, compared to £1.08m in 2022.
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Directors say performance has been ‘strong’
The documents reveal that despite reduced profits, Lookers actually sold 97,218 new vehicles in 2023 – a rise of 15.8% on 2022’s 83,946. Used vehicle sales also rose by 2.2% from 79,101 units to 80,880.
The improved sales contributed to a rise in overall revenue from £4.31bn to £4.59bn. Of that improved turnover, new car sales raised £2.16bn with used car sales bringing in £2.32bn.
The performance follows wider industry trends, with the majority of dealers recording decreased profits, despite taking more money in revenue, as a result of dramatic economic headwinds.
A statement in the accounts, signed by executive chairman Kuldeep Billan, said: ‘The group’s trading performance was strong, with all channels showing revenue growth.
‘New vehicle volumes grew 15.8%, driven by fleet and commercial vehicle sales. Due to supply constraints resulting from the semiconductor shortage, in 2022 the OEMs prioritised supply to the more profitable retail channel which resulted in volume reduction within both our fleet and commercial vehicle channels.
‘As supply restrictions eased in 2023, this pattern was reversed, driving significant growth in these channels.
‘The group’s used vehicle volumes increased 2.2% against prior year performance. Used vehicle margin was affected by the return of new car supply which eroded profitability through the year on a comparative basis and is the driver of overall gross profit decline year-on-year.
‘Inflationary pressures impacted our cost base causing a £14m increase in underlying operating costs, and higher interest rates saw finance costs grow by £17m.
‘These cost increases, combined with lower gross profit, led to a decrease in underlying profit before tax compared to prior year of £45m.’
He added: ‘On 6 October 2023 the Group was acquired by Global Auto Holdings Limited at which point the company was de-listed from the London Stock Exchange.
‘Fees relating to the transaction and accelerated costs arising upon acquisition totalled £16.6m and have been classified as non-underlying costs.
‘On 4 December 2023 a consultation programme commenced which put approximately 14% of the workforce at risk of redundancy, as a result of this a further £8.4m of non-underlying expense was incurred in accrued redundancy costs.’
