On 20 February, 2009 the Board of Cattles announced a delay in the release of the Group’s preliminary results announcement for the year ended 31 December, 2008. Since then, an independent forensic review, established by the Audit Committee, with the assistance of Freshfields Bruckhaus Deringer LLP, Cattles’ legal advisers, and Deloitte LLP, the Group’s internal auditors, has made significant progress.
Based on information received to date and subject to completion of its external audit, the Board believes that the Group will incur a significant loss before tax for the year ended 31 December, 2008 and that it will be necessary to restate the Group’s financial statements for the year ended 31 December, 2007.
Forget not that 2008 hitherto saw a 25 per cent rise in pre-tax profits for Britain’s most beloved doorstep lender.
The Board believes that Cattles is in breach of covenants under its borrowing arrangements and Cattles will therefore be seeking appropriate waivers from its relevant debt providers.
In other words, some serious accounting shenannigans seem to have gone one here. And as if any more proof of that were needed:
The Board now announces that Mr. James Corr, Finance Director of Cattles, Mr. Ian Cummine, Chief Operating Officer of Cattles and Chairman of Welcome Financial Services, and Mr. Adrian Cummings, Compliance and Risk Director for Welcome Financial Services Lending Division, have been suspended pending the outcome of the review. These suspensions are in addition to the suspensions announced on 3 March, 2009.
That’s three more directors to the slaughter.
Alas, as FT Alphaville reported last week, the meat is unclean. Some sort of fatal neurodegenerative disease seems to have taken hold. More specifically, James Hamilton at Numis Securities suggested that the rot had set in around Cattles’ accounting policies – those that allowed loans to have 240 days in arrears before any impairment charges were taken.
Cattles shares were down another 20 per cent on Tuesday. But does anyone really give a jot when they’re tuppence apiece? What investors really want right now, FT Alphaville would suggest, is for an FSA bod to serve his daughter a lovely Cattles burger.