Cattles’ future hangs in balance

CATTLES warned today that its profits would be even lower than previously expected after auditors found that the group’s impairment policies have been applied incorrectly.

Only last month, the lender said its preliminary results would be delayed pending completion of a review of bad loan provisions.

That announcement sent Cattles shares, which had already crashed 90% in the last 12 months, plummeting another 53%.

Now Deloitte, the group’s internal auditors have identified a breakdown in internal controls, which has resulted in the impairment policies not being applied correctly.

Cattles said that although it was still not possible to quantify the effect on the group’s financial statement, pre-tax profits for the year ended December 31 would be substantially lower than its expectations in February.

Furthermore, it expects to enter into discussions with its banks and the holders of its outstanding Eurobonds and US Private Placement Notes.

Adding to its woes, finance director James Corr has had to step down from his role before the review is completed due to ill health. He had been due to retire this month. In his absence, Robert East has agreed to take on his responsibilities, although his appointment to the board remains deferred until further notice.

In January, Cattles announced that it had withdrawn its application for permission to take retail deposits after it was told by the Financial Services Authority that a licence was unlikely to be granted until the “unprecedented turmoil in the financial markets has stabilised” and the terms of its renegotiation of £635m of bank facilities had been finalised.

Discussions are ongoing with its bank syndicate regarding the refinancing of facilities due for repayment in July.

At the beginning of this year the group also revealed plans to cut around 1,000 jobs and shut its Hull office.

The group also runs the Cattles Invoice Finance subsidiary, which has offices in Manchester and Liverpool and is up for sale.

It said the cost-cutting measures would save around £40m a year and would help to ensure that the company remained profitable.