Car dealership Lookers faces share suspension as auditor Deloitte plans to quit

Oscar Williams-GrutSenior City Correspondent, Yahoo Finance UK
Yahoo Finance UK
A Lookers Skoda dealership in West London. (Lookers)
A Lookers Skoda dealership in West London. (Lookers)

Car dealership group Lookers (LOOK.L) has warned that its shares are set to be suspended at the end of the month over a likely breach to financial reporting rules.

Lookers said in a statement on Monday that it was likely to miss the final deadline of 30 June to file 2019 annual accounts. As a result, the regulator is likely to suspend trading in its shares from 1 July.

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The delay is linked to an independent investigation into fraud. Lookers said in March that it had “identified potentially fraudulent transactions in one of its operating divisions.” Grant Thornton was appointed to investigate.

The investigation found “misrepresented debtor balances” and fraudulent expenses claims, resulting in one-off charges of £4m ($5m). Grant Thornton has delivered a draft report and is in the final stages of wrapping up its probe.

Lookers said its auditor Deloitte has informed the board “additional procedures” are now necessary to finalise the company’s 2019 accounts in light of the draft report. This is likely to delay the accounts beyond 30 June, the date Lookers initially said results would be published by.

“The Board and the Company's finance team is working closely with Deloitte and is developing an action plan to ensure that the additional work required to allow publication of 2019 Results is completed as soon as possible,” Lookers said in a statement.

Deloitte has also told Lookers it intends to quit as the company’s auditor following the publication of the 2019 results. Lookers said it was “engaged in a competitive tender process to appoint a new auditor.”

A spokesperson for Deloitte declined to comment.

Shares in Lookers fell 7.3%.

Last week the company said it was cutting 1,500 jobs and closing 12 dealerships in a bid to save £50m a year. The company, which has over 160 franchise dealerships, said the cuts were “necessary in the current environment to sustain and protect” the business.

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