Restated results reveal £46m loss at Lookers
Lookers plunged into the red in 2019, it emerged on Wednesday, as the car dealership finally published much-delayed restated results.
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The car dealership swung from a pre-tax profit of £41.9m in 2018 to a £45.5m loss, rocked by a surge in costs. They included a £30.4m goodwill impairment charge, £14.3m of restructuring costs, and the costs and liabilities arising from an investigation by the Financial Conduct Authority. Lookers has set aside £10.4m to cover a potential fine following the probe’s completion.
The results, which were restated following an investigation carried out by Grant Thornton, also revealed that profits had been overstated by a total of £25.5m over a period of several years, including £10.9m in 2019 and £7.2m in 2018.
The business remained profitable on an underlying basis, however, with underlying pre-tax profits of £4.2m, compared to £42.8m a year previously. Total revenue for 2019 was £4.8bn, largely flat on the previous year.
Phil White, executive chairman, said: "The last 12 months have been extremely challenging for Lookers, with the ongoing impact of Covid-19 and the accounting issues.
"The investigation into our financial systems and accounting controls, the delay in publication of our 2019 results, and the subsequent temporary suspension of shares have been a great disappointment. As chairman, I would like to apologise unreservedly to all our stakeholders for the uncertainty this has caused."
Looking ahead, Lookers said it had been hit by the closure of its dealerships during the first national lockdown and expected to report a "material" underlying loss before tax in the first half.
Third-quarter trading was better-than-expected, with underlying profits significantly ahead of the same period a year earlier, but the final three months would "inevitably be impacted" by the second national lockdown.
Interim results are expected to be published "as soon as possible" in December, at which point the company will request the FCA relists its shares. The stock was suspended in June after Lookers missed a six-month deadline to publish the 2019 results.
John Stevenson, analyst at Peel Hunt, said: "While there is no guidance, our forecasts point to a first-half underlying loss of around £50m from Covid disruption, with a strong second half reducing the full-year loss to around £20m."