Cattles reveals £555m loss for 2008

[Main man]

Cattles reveals £555m loss for 2008 - 27/11/2009

Cattles has revealed that it made a loss before tax of £555.3m for the year ended 31 December 2008, according to its unaudited results.

An interim management statement also reveals that profit before tax for the year up to December 2007 would be restated to £22.7m, due to an extra provision it has had to make of £700m against losses on impaired loans.

Cattles revealed earlier this year that it expected to make the extra provision, after an internal audit of its accounting process discovered a £700m blackhole in amounts held against loan losses.

The sub-prime lender also had to consider whether to include an extra £150m incurred as at at 31 December 2008. This has also been taken into account for the interim statement.

Cattles added that the group’s balance sheet at 31 December 2008 would be likely to show a deficiency of shareholders’ funds of £197m, with loans and advances to customers of £2.5bn and gross external borrowings of £2.7bn.

Unaudited results of the group for the nine months until 30 September this year, taken from the management accounts, show a loss before tax of £347.4m. As at 30 September 2009, loans and advances amounted to £1.9bn and gross external borrowings reached £2.7bn.

Cattles said the group continues to generate cash and at 1 November 2009 it held cash of £392m. Its subsidiary Welcome Finance has collected cash of £570.4m in the nine months ended 30 September 2009.

After drawn out negotiations the group has reached a standstill agreement with its creditors which it claims will help to stabilise the financial position of the firm. It is now continuing talks with creditors over a restructuring of the group.

The directors of Cattles have concluded that the value of the company’s net assets is now less than half of its called-up share capital.

In these circumstances the directors are required by law to convene a general meeting of shareholders to consider what action should be taken to deal with the situation.

[LuggerBugs]

Re: Cattles reveals £555m loss for 2008

The word "standstill" is particularly apt. No more capital coming Cattles' way apart from that being generated by their Shopacheck brand, and of course being recovered from existing loans, although many Welcome Finance customers are now in the position of being unable to pay back their committments, whilst many more are eating into those recovery figures by reclaiming their mis sold PPI.

All monies recovered in any case going to service that void in their accounts.

Some investors seem to think this makes everything all rosy in the garden, and they are hopeful of the share prices rising again once Cattles are allowed back in the Club.

Quite where they manage to get their optimism from, I have no idea. With no more loans being written, how can they generate further income? And with no capital to feed into further lending, they are flogging the proverbial dead horse.

Cattles and WFS are all but dead in the water. The banks will milk them for all they can in the hope of salvaging as much from the mess as they can get away with. They will NOT commit to helping Cattles redevelop their business model, since that buys further into the problems inherent in sub prime lending. Cattles can be as sweet and innocent as they like, and treat customers like human beings from now on, but the confidence in that market has gone, and the banks will not wish to risk getting their fingers burnt again. Especially since they are trying themselves to project a diferent image.

Nope, if I were a Welcome Finance employee, I'd be job hunting now, before all the rest of Cattles slip into the queue at the job centre.