Lookers, the troubled car dealership chain, has said it will have to book a £19m charge to correct inaccuracies in its accounts after an investigation.
Earlier this month, the London-listed firm warned investors they might be unable to buy and sell its shares from the beginning of July because of potential fraud on its books.
It said a draft report from Grant Thornton’s investigation highlighted that it needed to make a £4m adjustment because of “misrepresented and overstated debtor balances”.
The report said there were also a number of fraudulent expense claims within one of the group’s operating divisions.
Lookers said it would also have to make a £15m adjustment to its accounts, related to the “incorrect or inconsistent application of policies, processes and accounting standards” within its 2019 figures.
It said the report, which was received earlier this month, highlighted several areas where financial control needed “strengthening”.
The company’s share price, which has slumped by two-thirds since the start of the year, initially recovered after the announcement on Monday morning, before falling back to close about level with the opening price at 20p.
Lookers said it had started to implement remedial measures to address the problem and was examining its financial systems. An independent board had also been established to ensure the proper implementation of recommendations from the report.
The group said it would still have been profitable before tax in 2019 despite the adjustments.
Car dealerships have also been hit hard by the coronavirus outbreak, which forced sites to shut between late March and early June and resulted in a sharp fall in used-car sales.