Losses prompt shake-up at Freedom Finance
CONTINUED losses at Cheshire broker Freedom Finance have led to a major reorganisation of the business.
According to the Wilmslow firm’s latest accounts its trade and assets have been sold to Moneio Ltd, an internet loans business launched by Freedom in 2008.
It will no longer arrange loans, and instead focus on processing historic payment protection insurance claims.
In their report the directors said the business, “could no longer sustain the level of operating losses that were being incurred”.
During the year to April 30 it recorded operating losses of £2.6m, up from £2.4m the previous year.
The directors said: “There has continued to be significant pressure on operating margins, increasing regulation and a volatile trading environment due to the recession and several lenders withdrawing from the market.”
Based on forecasts management said the firm, which employed 186 staff during the accounting period, would have enough cash to continue at least until January 2011.
But they admit the “potential variability” in the cash flow position, “creates a material uncertainty which may cast significant doubt on the entity’s ability to continue as a going concern”. However, the accounts have been prepared on a going concern basis.
Revenue nearly halved to £13.5m but the company made a pre-tax profit of £14.9m after taking into account the 2008 disposal of Swedish subsidiary Freedom Finance Kreditservice for £15.3m. The company, which is controlled by the Delaware-based JZ International, paid a dividend for the year of £12.5m.
The sale to Moneio, which took place in November, was valued at £800,000 and settled with the cancellation of debtor balances.
The accounts also show that the company changed its name to Wilmslow Financial Services in January, which was the name first used by founder Rupert Webb when he launched the firm in 1983.
The company is also in dispute with HM Revenue & Customs over a VAT bill worth £3.2m. No one at the business could be reached for comment.
