Car dealer Lookers halts re­sults amid fraud in­quiry

Com­pany al­ready fac­ing £19m hit to ac­counts again de­lays profits news while in­ves­ti­ga­tion con­tin­ues

The Daily Telegraph - Business - - Business - By Alan Tovey

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.

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