Car dealer Lookers takes £25m hit from 'fraudulent' deals

Troubled dealership swings to a £45.5m pre-tax loss in 2019, compared to a £41.9m profit in the previous year

Lookers swung deep into the red after an investigation by Grant Thornton identified cash expenses fraud at the embattled car dealer.

The company said it had taken a £25.5m hit to "correct misstatements in [profit before tax] over a number of years" after discovering "potentially fraudulent transactions" in one of its divisions.

The adjustments related to its accounts between 2019 and "2017 and earlier". It added that the fraud investigation revealed a loss of £327,000 in a single division over a number of years. 

Bosses previously warned of a potential £19m hit to Lookers' accounts to correct overstatements of profits dating back several years, and called in auditors Grant Thornton in March to investigate.

Its shares have been suspended since July after repeated delays in publishing its accounts.

The troubled dealership swung to a £45.5m pre-tax loss in 2019, compared to a £41.9m profit in the previous year. 

Executive chairman Phil White said: "The last 12 months have been extremely challenging for Lookers with the ongoing impact of Covid-19 and the accounting issues. Significant restructuring activity has been necessary to ensure we lay the right foundations for the future. 

"The investigation into our financial systems and accounting controls, the delay in the publication of our 2019 results and the subsequent temporary suspension of our shares have been a great disappointment. As chairman of Lookers, I would like to apologise unreservedly to all our stakeholders for the uncertainty this has caused."

Lookers is undertaking a massive restructuring programme that will cut more than one in five workers, leaving 6,700 staff, and close 27 dealerships.

It expects to publish its interim results for 2020 as soon as possible in December, after which it will submit a request to the City watchdog to restore its listing.

It added that trading during the third quarter of 2020 was ahead of expectations, with underlying profits "significantly ahead" of the prior year.

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