1 year ago
Troubled car dealer group Lookers has delayed publication of its annual results for last year yet again – and there is no news on when they’ll finally be released.
In an announcement to the Stock Market this morning the dealer group said it was ‘not possible’ to publish its 2019 financial results by the end of August.
After reviewing the accounts at the start of the month, the board has decided to widen its investigation and the group could even be forced to restate previous years’ accounts too.
However, Lookers still believes that despite the issues, 2019 will be profitable.
In July, shares in the group were suspended when it failed to deliver its 2019 results on time.
In a statement, Lookers said: ‘Following review of the final report from Grant Thornton LLP on August 3, the board and its auditors, Deloitte LLP, extended the scope of the 2019 audit at consolidated group and individual entity level.
‘The extended scope of the audit has identified further work on the group’s corporate leasing division and vehicle financing arrangements and the 2018 and earlier balance sheets to ensure correct identification and allocation of adjustments.
‘Further work is ongoing to finalise the 2019 accounts.’
Lookers said it is working with its auditors and accounting advisors to ‘assess the impact’ and revealed it may have to restate previous years’ accounts.
The statement added that the group will be working to finalise the accounts ‘as soon as possible’ and that the board is committed to getting to the bottom of what has happened.
The Lookers statement added: ‘The board continues to believe that the likely magnitude of the potential restatements referred to above will not prevent 2019 from remaining profitable at the underlying profit before tax level.
‘The company remains in close dialogue with its banking partners.’
So, what has happened at Lookers?
The trouble for Lookers began in 2019, which turned out to be a pretty turbulent year.
Chief executive Andy Bruce and chief operating officer Nigel McMinn left abruptly in November following two profit warnings.
Lookers’ offices in Newcastle upon Tyne were poised to close with the loss of some 60 jobs, and there was an ongoing inquiry by the Financial Conduct Authority (FCA) over the way it sold car loans between January 1, 2016 and June 13, 2019.
The results of this are still not yet known.
On March 11, the day its results were expected to be published, the company issued an announcement to the London Stock Exchange saying that during the final stages of preparing its results for the financial year ending December 31, 2019, the company had ‘identified potentially fraudulent transactions in one of its operating divisions’.
An advisor was appointed to lead a full investigation, with the results delayed until April.
And then what happened?
Lookers’ new chief operating officer, Cameron Wade, left the business with immediate effect on March 12, after only being in the role for a month.
And then, on April 27, the fraudulent investigation deepened.
Lookers announced that the investigation into fraudulent transactions had found some debtor balances in respect of bonuses had been misrepresented, as well as some fraudulent expense claims.
Both would result in a £4m charge in the group’s 2019 financial statements.
Lookers said some other irregularities were also discovered and were expected to result in another charge. In addition, the firm said it would be taking advantage of the FCA’s relief measure allowing the group to extend publication of its audited accounts until June.
Job losses, potential acquisition, board shake-up and more delays
In June, Lookers said it was to axe 12 dealerships and 1,500 jobs as it sought to reduce costs by £50m a year, and it was believed to be in talks with a consortium of four banks to secure its future.
The results were delayed again.
Later in June, it announced that it would temporarily suspend trading of its shares on July 1 as it delayed its results for 2019 once again.
At the end of June, Lookers shook up its board and announced a number of members would leave, with current chairman Phil White taking up the position of executive chairman on July 1 to ‘oversee this transitional period’ alongside CEO Mark Raban.
The pair were re-elected at the company’s AGM in late June and on July 3 it was announced to the London Stock Exchange that its shares were suspended. Lookers also revealed it would book a £19m hit to profits relating to findings of the internal fraud investigation.
This latest delay to the accounts will come as yet another shock from the troubled dealer group as many in the industry were expecting to see the results this month.
Additional reporting: James Batchelor
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