According to delayed accounts which have now been filed, the loss was largely due to one-off expenses connected to the takeover of Lookers Limited by Global Auto Holdings Limited. The group’s core business remained profitable in 2023.
Lookers’ shareholders voted in favour of the takeover bid in September last year. Global Auto Holdings is a North American business which owns dealerships in Canada, where it is based, and the US.
The deal was worth more than £500m, and was valued at 130p per share in Lookers. A 120p per share deal had been rejected.
One wholly owned subsidiary of Lookers is Charles Hurst; Northern Ireland’s largest used and new car dealership by turnover which employs around 870 people.
Lookers owns over 130 car dealerships across the UK, including all of the Charles Hurst businesses. These companies are registered in Northern Ireland on Belfast’s Boucher Road.
Revenues rose at Lookers Limited in 2023, going up 6.3% to £4.5bn from £4.3bn in 2022. The cost of sales also rose 7.8% to £4bn.
Lookers’ non-sales related costs bit into these margins. Its operational expenses went up 12% to £495m from £441m, while finance costs rose 68% to £41.2m.
The company therefore defines its “underlying profit” as £37m in 2023, which is a decrease of over 50% from the £82.7m made in 2022.
However, the company actually made a loss before tax of £1.8m due to what it defines as “non-underlying items,” which were largely expenses related to the takeover and the subsequent round of redundancies that hit the company.
The accounts show that £11.9m were spent on “takeover-related costs”, and a further £8.4m on “post-takeover costs”.
The accounts explain the post-takeover costs by saying: “During December 2023, the group announced a restructuring programme that put approximately 14% of the workforce at risk of redundancy. Such redundancy costs have been deemed non-underlying by their size and irregularity.”
Employee costs increased in 2023 at Lookers by about 3%, going up to £263m from £255m.
These redundancies impacted Charles Hurst, with employees becoming aware that about 100 jobs were at risk around two weeks before Christmas.
A source told the Belfast Telegraph at the time that “people who have worked for the company for over 40 years have also been told that they are out the door.”
New vehicle sales increased by about 15.8% across the group to over 97,000 new vehicle units, while used vehicle sales stayed steadier, registering a 2% rise to 80,000
The strategic report attached to the group’s accounts says: “Inflationary pressures impacted our cost base causing a £14m increase in underlying operating costs, and higher interest rates saw finance costs grow by £17m.
“These cost increases, combined with lower gross profit, led to a decrease in underlying profit before tax compared to the prior year of £45m.”
