Deloitte Steps Down as Issa Brothers’ EG Group Auditor

Summary

• The British petrol stations company, EG Group has appointed KPMG as its new auditor after Deloitte resigned on governance concern
• Deloitte had signed a clean audit of the Group’s 2019 financial statements and there have been no disagreements on any audit or accounting issue
• The private equity group TDR Capital and the brothers Mohsin and Zuber Issa jointly owns the EG Group

The British petrol stations company, EG Group has appointed KPMG as its new auditor after Deloitte resigned.  According to media reports, Deloitte resigned with “immediate effect” amid concerns about its governance and internal controls. For the last four years, the firm had been auditing EG Group’s accounts.

In a private notice, the Group informed its shareholders that KPMG had been appointed as its auditor following Deloitte’s resignation, but did not provide the reason for Deloitte’s resignation in it. It reportedly stated that Deloitte had signed a clean audit of the Group’s 2019 financial statements, and there have been no disagreements on any audit or accounting issue.

This year the EG Group had not intended to change its auditor and in its annual report released in July had affirmed the reappointment of Deloitte to the role. The Big Four, an accounting firm, had not identified any concerns in the report while giving the group an unreserved audit for 2019.

It’s not only the Deloitte’s resignation as an auditor, but EG Group has been making news of late for various other reasons-

Asda Buyout

TDR Capital and the Issa brothers have come into an agreement this month to buy Asda for £6.8 billion. Asda is the UK’s third-largest supermarket chain. Both the shareholders will have an equal stake in the supermarket business. According to media reports, this is the largest private equity purchase by the UK company. Welcoming the Asda acquisition, Chancellor Rishi Sunak tweeted that the supermarket chain has returned to a majority of British property for the first time in twenty years.

EG Group Owned Burger King to close restaurants

EG Group operated, Gourmet Burger Kitchen (GBK), after a pre-pack administration process, has planned 26 stores closures with 362 job cuts saving 35 sites and 669 jobs on 14 October 2020. Last year, GBK said that it witnessed improvements in trading after a major restructuring process in 2018, which saw it shut a raft of sites. However, because of the pandemic impacting its liquidity and potential to be sold as a solvent business, the company owned by South African group Famous Brands slid into administration.

British poultry tycoon Ranjit Boparan, who has been known as the "Chicken King" has signed a rescue deal with GBK. After a string of administrations, closures and sales of casual dining restaurants.

Ed's Diner and Harry Ramsden are the chains owned by his company, along with Birmingham-based meat processing firm 2 Sisters group, the largest food company by turnover in the UK. Ranjit Boparan also bought Carluccio's after it went into insolvency. Some of the well-known high street names such as Wagamama, Cafe Rouge and Burger King are also looking at restructuring as the pandemic worsened an already difficult outlook.

About EG Group

Formed in November 2016 by the merger of European Forecourt Retail Group and Euro Garages, EG Group is one of the global leaders in forecourt convenience retailing. It spreads its operations over 1,100 retail sites in Benelux and France.

The company has made further acquisitions in France, Italy, the Netherlands and the US. Esso, BP and Shell are its fuel retail brands, along with leading non-fuel offering including brands such as Starbucks, Subway, Greggs, KFC, Burger King and Carrefour.

The private equity group TDR Capital and the brothers Mohsin and Zuber Issa jointly owns the EG Group, which owns nearly 6,000 petrol stations. The company reported more than €20billion of revenue in the previous year and has grown rapidly in recent years through a series of debt-financed gas station acquisitions in Europe, Australia and the USA. The Blackburn, Lancashire brothers have turned into billionaires with their stake in the company and are known to be the most powerful operators in the global gas station market.

Conclusion

The EG Group, co-owned by the TDR Capital, a private equity group and the Mohsin and Zuber Issa, popularly known as Issa brothers, has been ramping on the growth path with a series of acquisition of debt-financed gas station in USA, Europe and Australia. The Group has stated that it is looking forward to working with KPMG in the future and is continuously striving to advance its internal processes, controls, and governance.