Cattles cancels dividend to boost cash
FINANCE group Cattles, the sub-prime and doorstep lender, said it is on track to deliver results in line with expectations, but cancelled its final dividend of 2008 as well as next year’s interim payout in a bid to save cash.
In a trading update for the period ended November 30 ahead of its close period for the year ended 31 December 2008, the Leeds-based lender also reported an increase in bad debts.
The company said the proportion of loans partially in arrears rose to 35% of the total loan book by the end of November, up from 33.8% two months earlier.
The group blamed the drop on the current squeeze on consumers’ disposable income.
Earlier this month the group saw its shares fall after being forced to admit that its application for a banking licence from the Financial Services Authority (FSA) is “proceeding at a slower pace” than expected.
The group said that as a result of the current downturn it had taken the decision to cut dividends in an attempt to boost cash ratios – which would aid its discussions with the FSA regarding its licence application and with banks regarding wholesale funding.
On a positive note Cattles said demand for the group’s consumer finance products remains high and the business has improved pricing and reduced its risk through tightened credit and affordability criteria – resulting in a lower acceptance rate of 5.0% of total loan applications
Chief executive David Postings said: “Cattles has strong demand for its products. The group is on course to deliver trading results in line with expectations in 2008 despite having deliberately reduced volumes in all businesses since February.
“Although affected by the current economic situation, our operating model is proving robust and arrears and impairment are within reasonable tolerances. 2008 has been a challenging year but the group is on course to deliver trading results in line with expectations. 2009 will present greater challenges and we are developing plans to maintain the stability and financial robustness of the business under a variety of potential outcomes.”
Earlier this year Cattles announced that group finance director James Corr will be leaving the group after the announcement of the preliminary results in February 2009.
Today Cattles announced he will be replaced by Robert East in March 2009.
Mr East joined the group in June of this year as banking director and has more than 30 years’ experience in the financial services sector.
