Lookers has revealed it lost £36.1m in the first half of 2020 as the first national lockdown ravaged the business.
Shares in the dealer group have now been relisted on the Stock Exchange after it laid bare the dramatic impact the coronavirus crisis had on the business at the start of trading.
Lookers’ share price bounced 77 per cent to 37.25p after the market opened as analysts said it looked like the group had turned a corner.
Analyst Mike Allen, of Zeus Capital, said he hoped the ‘legacy issues were behind them’ and that the group can ‘finally look forward’.
While analysts Peel Hunt said in a briefing to investors that it thought Lookers was now ‘well placed for recovery’ after ‘significant operational improvements’.
The share price bounce came after a Lookers reported revenue dropped 40 per cent from £2.6bn to £1.5bn for the first six months of 2020, a statutory loss before tax of £50m, and an underlying loss of £36.1m.
The huge swing represents a 264 per cent fall as Lookers reported a £22m profit for the same period in 2019.
Lookers says that the drastic action it took during 2020 – which included shutting 12 dealerships and making 1,500 staff redundant at a cost of £4.2m – has improved things, but the effects are unlikely to wash through until 2021.
However, the group said performance in the second half of the year, despite a second lockdown in November, would ‘largely offset’ the loss made in the first half.
The group now operates from 140 dealerships following 27 closures during 2019 and 2020.
Shares in the group were suspended since July after the group consistently missed deadlines to file its accounts.
Mark Raban, chief executive officer, said: ‘2020 was a challenging year for Lookers, managing the impact of the Covid-19 pandemic and a number of legacy issues facing the group, which required significant action to restructure and improve the business for the long term.
‘Despite a resilient sales performance, the benefit of government support and prompt action taken to manage costs, in the first half we incurred a significant loss in a very difficult period for the car retail industry.
‘Although various restrictions continued into the second half of the year, trading improved significantly, benefiting from the material cost saving measures implemented earlier in the year and enhancements we have made to our retail offer, including the capability to carry out contactless vehicle sales.’
Raban said the group was now entering 2021 with ‘a high level of uncertainty in the wider environment’.
He added: ‘We are confident that the group is now much better positioned for the longer term and can capitalise on the various opportunities ahead, not least in electrification and digital developments.’
Lookers also announced that Duncan McPhee has been appointed chief operating officer and a search is currently underway for the appointment of Phil White’s successor as chairman.
Lookers says trading in the second half of 2020 was ‘encouraging’ and said it ‘significantly outperformed’ the retail new car market. There was no explanation given as to why the interim results have been delayed.
Looking ahead to 2021, the dealer group said there was ‘continued uncertainty’ around the pandemic and in an effort to ‘protect the group’s balance sheet’ it will not be paying dividends for the year ended December 31, 2020.
‘In light of the evolving Covid-19 situation and latest lockdown restrictions impacting much of the group’s portfolio, the board remains cautious about the outlook for 2021,’ said the statement.
‘However, the board continues to believe the group is well positioned to benefit from its continued progress and the exciting sector developments including electrification and further digitisation.’
Lookers also confirmed the appointment of BDO as the group’s auditors.
Mike Jones, chairman of ASE Global and the compiler of the Car Dealer Top 100 list of the most profitable dealers in the UK, said the group was moving away from its ‘annus horribilis’.
He said: ‘With the dual announcements of their interim results and the appointment of a chief operating officer, Lookers will be relieved to take two strides in moving away from their annus horribilis.
‘Lookers will emerge from the crisis a different business, having chosen to close nearly 20 per cent of their dealerships during 2019 and 2020 and the publication of these results should see the shares resume trading on the Stock Market.
‘Trading for the business in the first half of 2020 was tough, given the first lockdown, with losses significantly greater than those generated by Marshalls and Vertu. It is pleasing to see the bounce back during the second half of the year, with the company looking like generating a profit of over £30m “largely offsetting” the loss in H1.
‘The report also laid out the significant costs of the fraud investigation and subsequent financial restatements, with professional fees coming in at £3.5m. Hopefully, with the operating team now in place and the results announced, the group can fully refocus on profitable trading and rebuilding their reputation.’
First published: January 29, 0724; Updated: 10:17
Lookers timeline: What’s happened when?
January 6, 2021 – Lookers appoints Anna Bielby as interim chief financial officer, but there was no news on the delayed interim results.
December 29, 2020 – A third of shareholders vote against Lookers directors’ remuneration packages – including CEO Mark Raban’s £450k salary – at a general meeting.
December 18, 2020 – Lookers tells investors that its interim results, promised to be delivered before the end of the year, will now not be published.
December 9, 2020 – Lookers reveals interim CFO Jim Perrie has quit early and says it is ‘unlikely’ the interim results will be out before the end of the year.
November 25, 2020 – Lookers finally releases its annual accounts for 2019 showing a statutory loss for 2019 of £45.5m. Promises interim results in December and the hopeful reinstatement of shares on Stock Market.
October 31, 2020 – Long-standing Lookers non-executive director Tony Bramall, one of the group’s major investors, brings forward the date he will leave the board to the end of December. No reason is given for his early departure.
October 19, 2020 – Lookers updates market on performance in Q3, but still no word on its 2019 accounts or the FCA investigation. Analysts expect results to be out before December.
August 20, 2020 – Accounts delayed for fourth time and no promise given as to when they’ll be published.
June 9, 2020 – Lookers says it will suspend shares on July 1. Delays accounts for third time and says they’ll be published ‘no later than the end of August 2020’.
June 5, 2020 – Lookers says it will axe 12 dealerships and cut 1,500 jobs.
May 2020 – Pendragon CEO Bill Berman admits he wrote to Lookers to discuss a merger and updates Stock Market to that effect. Move described as ‘two drunk men bumping into each other in a bar’.
April 2020 – Fraud investigation deepens. £4m charge revealed and firm says there could be more. Delays accounts to June.
March 12, 2020 – New chief operating officer Cameron Wade leaves role after only a month in post.
March 11, 2020 – Lookers delays results, saying that in final stages of preparation ‘potentially fraudulent transactions’ in one division were discovered. Promises results in April.
November 2019 – Chief executive Andy Bruce and chief operating officer Nigel McMinn leave firm abruptly.
June 2019 – FCA launches review into sales processes at Lookers between January 2016 and June 2019. Lookers cannot ‘estimate what effect, if any, the outcome of the investigation may have’.
December 2018 – Lookers launches independent internal audit into sales process. It eventually finds ‘control issues’ in sales process where ‘improvements’ are needed. Findings handed to FCA.