Lookers has said that it expects to deliver a “small profit” and reduced debt in its 2020 annual financial results – defying analysts’ loss predictions.
The AM100 car retail PLC issued a statement via the London Stock Exchange this morning which stated that it now expects to report an underlying profit before tax of approximately £10 million (2019: £4.2m).
As previously reported, the Lookers board expects net debt of approximately £45m at December 31, 2020 (2019: £59.5m).
Lookers revealed in its LSE statement that its revolving credit facility expires in March 2022 and, as previously disclosed, discussions are progressing with its banking partners.
It said: “Net debt has significantly reduced since the year end.”
News of the improved fortunes of the group, which is hoping to move on from a Financial Conduct Authority (FCA) investigation and internal fraud investigations, put its share prices on the rise this morning.
As this story was published, Lookers PLC share prices had risen 11.3% to 54.8p.
Last week AM reported that UK accounting watchdog the Financial Reporting Council (FRC) had opened an investigation into Deloitte audit of Lookers PLC’s financial statements for 2017 and 2018.
Deloitte resigned as the group’s auditor after last year’s investigation into fraud at the car retailer exposed a £19m ‘black hole’ resulting from overstated supplier bonuses, fraudulent expenses claims and the inconsistent application of policies, processes and accounting standards.
Grant Thornton begun its investigation into the accounts of one of Lookers’ divisions back in March 2020 but widened its scope to the entire group just over a month later.
News of the scale of Lookers' accounting crisis came on the day of its 2020 AGM as the business set in motion a shake-up of its board members as it embarked on widespread redundancies and dealership closures in a bid to save £50m.
Investigations into Lookers finances also delayed the reporting of its 2019 accounts, triggering a suspension of its ability to trade shares on the London Stock Exchange, which was lifted following submission of the accounts in November.
The audit of the Group's financial statements for 2020 is being undertaken by the Group's new auditor, BDO LLP, and is progressing as planned.
The date of Lookers AGM, and publication of its 2020 accounts, will be published in a trading update next month