Car dealer Lookers halts results amid fraud inquiry
Company already facing £19m hit to accounts again delays profits news while investigation continues
EMBATTLED car dealer Lookers has delayed its annual results again and extended an accounting investigation into potential fraud.
The company announced it will no longer be possible to post 2019 results by the end of August as hoped, saying it has been forced to look in more detail at problems with its corporate leasing and car finance divisions.
Its numbers have already been delayed twice and were originally due for release in March. Lookers shares have been suspended since July because of uncertainty caused by the delays and investigation.
Bosses previously warned of a potential £19m hit to Lookers’ accounts to correct overstatements of profits dating back several years, and called in consultant Grant Thornton in March to investigate.
It is examining bonus payments to some staff and evidence of potentially fraudulent expense claims.
Grant Thornton is working with the company’s auditor Deloitte, which has said it will resign once the investigation is over.
The dealer also reported strong demand for cars since being allowed to reopen following the lockdown as customers rushed to spend their savings.
Lookers sold 14,000 cars in July, up 17pc on the same month a year earlier, and revenues from servicing vehicles were also higher. However, overall revenues in the first half are expected to be down by £1bn at £1.6bn after lockdown hammered demand.
The company warned of a significant underlying loss in the period, although it expects to be profitable for the full year.
It has launched a massive restructuring that will cut more than one in five workers, leaving 6,700 staff. Lookers is also closing 27 dealerships. The firm’s troubles first started last summer when it revealed it was being investigated by the Financial Conduct Authority over its sales practices.
In September, The Daily Telegraph revealed that the watchdog’s interest was sparked by a string of mis-selling allegations from a whistleblower.
The following month, chief executive Andy Bruce and chief operating officer Nigel McMinn suddenly quit.
In February, Cameron Wade took over from Mr McMinn, and chief financial officer Mark Raban was promoted to chief executive.
Mr Wade resigned with immediate effect in March, days after the potential fraud was first revealed.
There were further management shake-ups, with Lookers saying in late June that two non-executive directors would stand down after its annual meeting, though both had been listed as up for re-election when the notice calling the meeting was issued a fortnight before.
Chairman Phil White was also appointed as executive chairman as part of the management reshuffle, working closely with chief executive Mr Raban.
Rival dealer Vertu also said it is bouncing back from the coronavirus closures, making a £7.4m profit in July with new cars sales up 18.4pc on the month.
The strong performance more than countered losses from March to June, meaning that the business has made adjusted pe-tax profit of £2.2m for the year to date.
Robert Forrester, chief executive, said that performance is considerably better than expected.
Vertu shares rose 14pc to close at 25.2p yesterday, valuing the company at just over £93m.