A LOANS company has suspended another three directors – and warned that the crisis over accounting errors would leave it deep in the red.
Birstall-based Cattles, which operates consumer loans business Welcome Finance, will now be forced to seek waivers from its lenders after it admitted that it may be in breach of borrowing agreements.
Cattles said last week that a “breakdown in internal controls” had led to accounting policies on bad loans being applied incorrectly.
A review into the matter by accountancy firm Deloitte led Cattles to issue two profit warnings in recent weeks.
But the firm said it now expected to incur a “significant” loss for 2008 – its third profits warning in as many weeks – and said financial statements for 2007 would need to be restated.
The company, based at Centre 27 Business Park, said finance director James Corr, chief operating officer Ian Cummine and Welcome’s compliance and risk director Adrian Cummings had been suspended pending the outcome of a review.
Chief executive David Postings has taken direct control of the Welcome business after three directors at the division – managing director John Blake, finance director Peter Miller and operations director Mick Belcher – were suspended last week pending the outcome of a separate inquiry, which is also being conducted by Deloitte.
Shares in Cattles fell by as much as 12% to 2.128p yesterday – having been as high as 300p at the start of the year.
Cattles’ annual results, which were due for release last month, have been delayed pending the review of its impairment policies.
The fresh round of suspensions is the latest blow to the company, which recently conceded defeat in its lengthy battle to secure a licence for banking deposits.
It blamed that decision on turmoil in the financial markets and uncertainty over its own debt position.
Since the start of the year, Cattles has also announced plans to axe 1,000 jobs and close its Hull office as part of efforts to save cash. The cuts are expected to bring savings of about £40m.
Welcome Finance provides loans for people who may not be able to get mainstream loans.
Cattles also includes debt recovery operation The Lewis Group and Cattles Invoice Finance, which provides working capital finance to small and medium-sized firms and operates from six regional centres.
Figures from the company’s website show that Welcome Finance accounts for about 95% of revenues at the group, which was formed 80 years ago. The group is listed on the stock exchange.
Cattles posted pre-tax profits of £165m in 2007.