Lookers postpones results over ‘potential fraud’
11 Mar 2020
National car dealership Lookers has postponed the publication of its 2019 results after identifying potentially fraudulent transactions in one of its operating divisions
11 Mar 2020
In an announcement to the London Stock Exchange, the company said that during the final stages of preparing its results for the financial year ending 31 December 2019, it had ‘identified potentially fraudulent transactions in one of its operating divisions’.
An external adviser is being appointed to head a full investigation, and as a result, the announcement of the results has been delayed until the second half of next month.
No other details regarding the suspected fraud was disclosed, although the company said ‘the initial findings are not material in the context of the group.’
In February, Lookers named chief financial officer Mark Raban as its new chief executive, replacing Andy Bruce, who left in November after a profit warning for 2019.
In June last year the Financial Conduct Authority (FCA) opened an investigation into legacy sales processes at Lookers between the period 1 January 2016 to 13 June 2019. The company had raised concerns with the regulator after identifying ‘some control issues’ via an independent review of its practices in December 2018.
In a statement last November, Lookers said: ‘Following discussions with the FCA in October, that investigation has now commenced and is in its initial planning and fact-finding phase.’
The company said it continued to ‘fully support’ the FCA, but added ‘we are unable to predict what, if any, impact the outcome of the investigation may have’.
Lookers also said the board had implemented a plan to improve the group's internal control, risk assurance systems and internal audit, requiring a one-off investment of around £10m (2019: £7m, 2020: £3m) as well as an ongoing cost of about £3m per annum to deliver best practice and an enhanced customer experience.
The group has 164 franchise dealerships across the UK and recently sold four sites generating proceeds of £8.3m as part of an ongoing portfolio review which identified 15 sites for sale. Nine were owned on a freehold basis. The remainder of marked sites and other legacy surplus properties will be sold during 2020.