TIDMCTT
RNS Number : 8251U
Cattles PLC
22 October 2010
22 October 2010
CATTLES plc
INTERIM MANAGEMENT STATEMENT
INTRODUCTION
Cattles plc ("Cattles") today provides its Interim Management
Statement covering the period since 30 June 2010.
Cattles announced its audited results for 2008 on 12 May 2010
and intends to announce its audited results for 2009 in the near
future. The finalisation of the 2009 Annual Report and Financial
Statements is closely linked to the progress made on the
restructuring of the Group, which is set out below.
As referred to in the previous Interim Management Statement on
19 May 2010, shareholders should be aware that Cattles will be
reporting a significant loss for the year ended 31 December 2009
and a negative value for shareholders' funds. Cattles continues to
believe that its financial creditors are likely to suffer an
aggregate loss of around GBP1 billion. Consequently, as previously
stated on a number of occasions, Cattles continues to believe that
the shares have little or no value.
The cash collection performance of the Welcome Finance
("Welcome") loan book has met forecast for the first nine months of
2010. Shopacheck and The Lewis Group have continued to make
satisfactory progress during 2010.
CURRENT TRADING
A summary of the performance in 2010 for each of the Group's
three businesses is set out below. All financial information for
the nine months ended 30 September 2010 and as at 30 September 2010
and 31 December 2009 is unaudited.
Welcome
Welcome has historically provided direct repayment loans to more
than half a million customers from a nationwide branch network. On
16 December 2009, the Cattles Board announced to shareholders that
there would be no further lending in Welcome and that instead, the
business would focus on a plan of collecting out Welcome's customer
loans.
Welcome has been successful in implementing this cash
collections strategy during 2010 and cash collected from customers
in the first nine months of 2010 at GBP396.6 million met
management's expectations.
Welcome has also taken steps to reduce its cost base:
-- On 5 February 2010, the closure of 65 Local Management
Branches and Local Collections Units was announced with a reduction
in staff of 382
-- On 7 May 2010, the closure of 18 branches was announced with
a contraction in the current operations management and their
support staff in line with the smaller number of branches. As a
result, 139 employees left the business
-- On 2 September 2010, a further 15 branches were closed and
changes made to the administration of customer service. As a
result, 64 employees have left the business, with a further 76
still at risk of redundancy
Welcome now operates from 102 branches and had a total workforce
of 1 331 at 30 September 2010 (31 December 2009: 2,284).
Welcome's net book value of loans and receivables at 30
September 2010 amounted to GBP0.8 billion (31 December 2009: GBP1.1
billion).
Shopacheck
Shopacheck provides short-term home collected loans through a
nationwide branch network and at 30 September 2010 had 223,000
customers (31 December 2009: 227,000 customers).
Shopacheck continues to lend to both new and existing customers,
but in late 2009 it tightened its credit issuance criteria to
improve credit quality in anticipation of the deteriorating
economic environment. Despite lower volumes as a result of this
decision, Shopacheck has made good progress during 2010
concentrating on growing its agency base and opening a number of
new branches to be able to better serve its customers. Key
performance indicators, which are in line with management's
expectations, are as follows:
-- 53,000 new customers during the first nine months of 2010
-- New loans for the nine months ended 30 September 2010 were
GBP67.3 million
-- Collections for the nine months ended 30 September 2010 were
GBP114.5 million
-- Net book value of loans and receivables at 30 September 2010
was GBP54.0 million (31 December 2009: GBP64.3 million)
The business is now well placed to serve its customers and meet
demand during the seasonal peak period.
The Lewis Group
The Lewis Group provides debt recovery and investigation
services to external clients and both Welcome and Shopacheck.
In 2010, The Lewis Group has refocused its strategy on
contingent debt collection. During 2009, The Lewis Group ceased
acquiring debt portfolios, other than on forward flow contractual
arrangements. Its commitment to acquire further debt was completed
in August 2010. Key performance indicators are as follows:
-- Cash collections in the nine months to 30 September 2010 were
ahead of management's expectations at GBP76.3 million (2009:
GBP70.9 million)
-- Debt purchases in the nine months ended 30 September 2010
were GBP13.6 million (2009: GBP41.6 million)
-- Purchased debt balances at 30 September 2010 were GBP130.8
million (31 December 2009: GBP145.2 million)
The Lewis Group has made progress in developing its contingent
debt collection business during 2010 although this market remains
highly competitive.
RESTRUCTURING
As previously announced, the Courts have finally determined that
Cattles' claim against Welcome for its inter company debt ranks
behind the claims of certain bank creditors. Clarification of this
very important issue allowed all parties to accelerate their
discussions about the restructuring of the Group's balance
sheets.
Cattles, Welcome Financial Services Limited and other members of
the Group continue to engage in discussions with representatives of
certain of their key financial creditors and other stakeholders in
order to progress proposals for a consensual restructuring.
Discussions presently envisage that, as part of a restructuring,
Cattles would compromise its subordinated inter company claims
against Welcome Financial Services Limited and other subsidiaries
in the Group for not less than GBP39 million. Such compromise would
occur in the event of a sale to a newly incorporated company of
either: (i) the entire issued share capital of Cattles (at a price
of up to 1p per share); or (ii) certain of its subsidiaries
(including Welcome Financial Services Limited) for a nominal
payment to Cattles (with no offer to Cattles' shareholders), in
either case, together with a creditor scheme of arrangement of
Welcome Financial Services Limited. Cattles would use the payment
of not less than GBP39 million to meet its own costs and to
compromise amounts it owes to its creditors (which at the last
audited balance sheet date of 31 December 2008 totalled
GBP2.8bn).
Those discussions remain constructive and demonstrate continuing
progress towards a consensual restructuring of the Group although
there remain a number of commercial, legal and regulatory issues to
be resolved before any such restructuring can be finalised.
ENQUIRIES
Margaret Young, Executive Chairman, Cattles plc Tel: 020 7269
7252
Paul Felton-Smith, Finance Director, Cattles plc
Georgina Turner, Financial Dynamics Tel: 020 7269 7136
This information is provided by RNS
The company news service from the London Stock Exchange
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