Cattles declares fresh £700m hit

CRISIS-hit lender Cattles will have to declare a further £700m in impairment provisions, it said today..

The sum will be additional to £400m already identified and confirms the firm’s earlier fears of a “significant” pre-tax profit loss for the year ended December 31.

It said an investigation by its law firm Freshfields Bruckhaus Deringer  and Deloitte had confirmed “there has been a breakdown of internal controls which has resulted in the group’s impairment policies being applied incorrectly”.

As a consequence, not only will last year’s accounts need to be restated, but Cattles has warned that previous year’s financial statements may also need to be adjusted as a result.

Cattles, which is in breach of covenants under its borrowing arrangements, announced in February that its results would be delayed pending the outcome of a forensic investigation into its operations.

Since then, six senior executives of the group including two directors have been suspended pending the final outcome of the investigation.

Cattles said today that the board was not yet in a position to provide a definitive explanation for the debacle which has brought it to its knees.

It said discussions with its banks and holders of outstanding Eurobonds and US Private Placement Notes were continuing and that the management’s focus was now on working closely with debt providers.

The company, which is based in Yorkshire has invoice financing businesses in Manchester and Merseyside.