After months of delays and a suspension from the Stock Exchange, Lookers has issued its financial results for 2019 which include a downward adjustment of £25.5m in profitability.
The troubled franchised dealer group dropped to a £45.5 million loss before tax in the 12 months to 31 December 2019 down from a profit of £41.9m in 2018. The figures came on the back of a £4.79 billion turnover in 2019, fractionally down on £4.83bn the year before.
However, the group reported an underlying profit before tax figure for 2019 of £4.2m against £42.8m in 2018. Net debt reduced from £85.9m to £59.5m in the same period. The 2018 previously audited and published financial results have been restated to reflect the impact of adjustments arising from the Grant Thornton investigation and internal review, IFRS 16 and voluntary presentational changes.
The results include “non-cash adjustments” of £25.5m to “correct misstatements in PBT over a number of years”, according to the firm’s statement.
“Adjustments reduce PBT by £10.9m in 2019 and £7.2m in 2018 with the balance cumulatively decreasing PBT by £7.4m in 2017 and earlier.”
The firm’s fraud investigation has revealed a loss of £327,000 in a single division over a number of years.
Commenting on the results Phil White, Lookers executive chairman said: “The past 12 months has 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. On behalf of the board I would like to thank all of our employees for their efforts and our wider stakeholders for their patience and ongoing support. Despite our recent challenges, we are extremely proud of how our people have responded, showing real dedication and flexibility particularly through maintaining critical vehicle servicing for key workers who have needed to remain on the road.
“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.
“We emerged from the initial lockdown in a strong position and are well equipped to deal with the second lockdown in England. We have an industry leading portfolio, underpinned by a talented and dedicated team which means that we can look to the future with confidence.
“My focus now is to restore the listing of our shares and to strengthen the Board to take advantage of the many opportunities that lie ahead for Lookers, which is fundamentally a great business.”
2020 Trading and Outlook:
Temporary closure of the Group’s dealerships throughout the initial lockdown had a significant impact on financial performance, with the Group expecting to report a material underlying loss before tax in H1.
- Trading in Q3 was better than expected with underlying PBT significantly ahead of last year.
- Q4 will benefit from the full impact of the Group’s restructuring activity although the financial performance for the remainder of the year will inevitably be impacted by the closure of our dealerships under the second lockdown in England which commenced on 5 November 2020, and any further regional restrictions.
- The Group’s net debt has improved during the year and was £54.4m at the end of October (£59.5m at end December 2019). The Group has recently agreed revised covenants with its banks and is currently in discussions to refinance its £250m banking facilities which are in place until March 2022.
- Despite resilient liquidity and before mitigating actions, ongoing uncertainties of COVID-19 and Brexit mean severe but plausible downside sensitivities indicate material uncertainty regarding going concern.
- Activity is underway to enhance systems, controls and policies and procedures to prevent recurrence of the issues which led to the adjustments to our accounts.
- The Group will publish its full Annual Report and Accounts for the year end 31 December 2019 within two working days.
- The Group will publish its interim results for 2020 as soon as possible in December and expects to submit a request to the FCA seeking to restore the listing of the Company’s shares after the publication of its interim results.