Lookers warns of first-half loss and expands accounting probe
Under-fire car dealership Lookers said today it has widened the scope of its audit into a £19m black hole in its 2019 financial results as it warned it will fall to a loss in the first half of 2020.
Today Lookers’ board and auditor Deloitte expanded their investigations on the back of Grant Thornton’s probe to encompass the firm’s corporate leasing division and vehicle financing arrangements. It will also examine its balance sheets from 2018 and earlier years “to ensure correct identification and allocation of adjustments”.
“Further work is ongoing to finalise the 2019 accounts,” Lookers said after Grant Thornton filed a report of the findings of its probe earlier this month.
That means the results will not be published before the end of August, after the second hand car dealer suspended its shares in July over the black hole.
It revealed the “potentially fraudulent” £19m accounting irregularity after years of overstated profits earlier this summer.
“The board is working with [auditor] Deloitte LLP and its external accounting advisers to assess the impact of these matters on the group’s 2019 financial statements including restatement of prior year accounts,” Lookers said today.
“The board remains committed to ensuring the issues identified in the report are fully considered and addressed and continues to work with the auditors to progress the finalisation of the 2019 audit as quickly as possible.”
Lookers said the eventual profit restatements will not stop 2019 from remaining profitable on an underlying basis.
Deloitte has promised to quit after the 2019 results are released.
The investigation prompted a wholesale boardroom shake-up, with five directors including its chairman set to step down. Earlier this year Lookers lost its chief operating officer, Cameron Wade, barely a month into the job, as the accounting irregularity came to light.
Lookers braces for lockdown loss
Separately Lookers revealed trading has picked up in June and July after a disastrous lockdown for the dealership chain.
It expects to fall to a “material” underlying loss for the first half of 2020 due to lockdown, while revenue of £1.6bn is set to slump by around £1bn compared to the £2.6bn recorded for the first six months of 2019.
Chief executive Mark Raban said: “This has been a very challenging period for Lookers, but it is encouraging that we are beginning to see some healthy signs of recovery in vehicle sales since the easing of lockdowns.
“I would like to thank all my colleagues for their amazing commitment in difficult circumstances and the efforts they have made to adapt, innovate and improve our physical and online proposition to customers, ensuring a safe and smooth retail environment. I am also extremely grateful to all our other stakeholders, including our brand partners, for their support through this period.
“We remain cautious about the future given ongoing uncertainties in the wider environment, but confident in the opportunities for the Lookers business moving forward.”