7:22 am, April 24, 2020
Misrepresented bonuses and fraudulent expenses will result in Lookers posting a one-off cash charge of £4m in its 2019 results.
The car dealership group announced in March that it had identified ‘potential fraudulent transactions’ in one of its operating divisions and delayed publishing its results.
The investigation – carried out with Grant Thornton LLP – has found that some debtor balances in respect of bonuses had been misrepresented, as well as some fraudulent expense claims.
Both of these will result in a £4m charge in the group’s 2019 financial statements.
The Lookers board has also extended the investigation across all of its divisions, but this has been delayed due to the on-going coronavirus crisis.
However, the statement says some other irregularities have already been discovered and these are also expected to result in another charge.
The statement to the stock market said: ‘While the aggregate impact of the fraud investigation is not yet known, the board currently anticipates that the group will still be profitable for FY 2019 on an underlying PBT basis.’
Accountants UHY Hacker Young have said they believe other dealers could be facing similar issues and admitted it has taken on ‘several clients’ in similar positions.
Lookers has also revealed it will be taking advantage of the FCA’s relief measure allowing the group to extend publication of its audited accounts until June.
In the update, which covers the first two months of the year, the group recorded a decline in new car sales versus last year of -4.8%, used car sales dropped -2.6%, while like-for-like aftersales revenue was up by 0.9%.
Operating costs have been reduced as headcount is six per cent below where it needs to be as a recruitment freeze has been put in place.
Lookers has also sold seven sites, releasing £17.6m. In total it wants to sell 15 and the remainder will go in 2020.
Mark Raban, Chief Executive Officer, said: ‘These are challenging times and on behalf of everyone at Lookers our first thoughts remain for those impacted by the virus and those serving on the front line.
‘I want to thank all my colleagues who have been furloughed for their patience and understanding during a difficult time for all.
‘We are also continuing to take prudent steps, with the support of our major stakeholders, to ensure that the business returns to full operation in the best possible condition.’
Lookers said it expects to report net debt at 31 December 2019 of around £62m (2018: £86.9m). The group’s £250m revolving credit facility with five banks expires in March 2022.
It also added that around 7,000 staff have been furloughed and board members and senior managers have taken a 30 per cent pay cut.
