June 8, 2020 / 8:46 AM / 2 months ago

UK's Lookers signals shares suspension; auditor Deloitte resigns

(Reuters) - Car dealership network Lookers Plc (LOOK.L) expects to see its shares suspended in July due to further problems with publishing its annual accounts after an investigation into irregularities at some operations, it said on Monday.

Shares in the company slumped nearly 16% in early trade.

The company, which announced the closure of more dealerships last week, also said auditors Deloitte had signalled it would resign after its 2019 financial results are published.

The moves come after another accountant, Grant Thornton, appointed to investigate the issues, shared a draft report on its investigation with Deloitte for review.

In March, the 110-year-old company said it had identified potentially fraudulent transactions in one of its operating divisions.

Later, the company, which represents 31 vehicle brands including BMW and Ferrari in the UK and Ireland, said it expected to take a 4 million pound ($4.93 million) charge in 2019, after an initial investigation found misstatement in debtor balances and “a number” of fraudulent expenses claims at one of its divisions

This prompted the company to extend its investigation across all its operating divisions after initial indications showed some balance sheet accounts were not “fully reconciled”.

Lookers, which has set out plans to close 12 more sites and lay off 1,500 employees, said it was focusing on publishing its 2019 results “by no later than the end of August 2020.”

Amid a string of management changes recently, the company has been hit by dwindling consumer confidence and margin pressures in the British car market, sending its shares down about 51% so far this year.

Reporting by Aniruddha Ghosh in Bengaluru; editing by Patrick Graham and Rashmi Aich

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