Cattles PLC the parent company of Cattles Invoice Finance just can’t keep out of the news but unfortunately for all of the wrong reasons.
This time the board of the parent company has suspended three directors of one of it’s subsidiaries (Welcome Finance) who appear to be carrying the can for allegedly not applying the correct group procedures to the impairment provisions resulting in a delay to the publishing of the audited accounts.
Shares have dived even further from their high of £2.20 a year ago to just 2.5p at the moment at which price I have risked a modest amount and I am now the proud owner of 10,000 shares in Cattles. For anyone crying “foul” there is no conflict of interest as it’s many years since I introduced any business to the factoring subsidiary and they are certainly off the radar as far as Factoring Solutions is concerned until their financial position becomes far, far clearer.
My original blog post has been edited as I didn’t make it clear that the suspended directors were from the Welcome Finance subsidiary of Cattles PLC which has absolutely nothing to do with the invoice finance fellow subsidiary.
On 3rd March Cattles released an announcement stating that “the Board believes that there has been a breakdown in internal controls which has resulted in the Group’s impairment policies having been applied incorrectly. Although it is still not possible to quantify the effect on the Group’s financial statements, the Board believes that profit before tax for the year ended 31 December, 2008 is likely to be substantially lower than its expectations as at 20 February 2009.”
Seven days later Cattles released another statement this time saying “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.”
To go from “profits are likely to be substantially lower” to “the group will incur a significant loss” – within the space of one week is some going indeed. I don’t know how many people bought shares in Cattles based on the first announcement that implied that a profit would still be made. I certainly did
It’s fairly obvious that Cattles plc is in a spot of bother and it’s common knowledge that the company has been trying to sell it’s factoring subsidiary for quite a few months now. In view of the fact that the parent company is probably in breach of it’s banking covenants and is trying to renegotiate it’s banking facilities what is the likely outcome if the sale of the factoring subsidiary does go through.
With some cash coming into the company (I assume) and a huge reduction in the group borrowings does that mean that the banks will look more kindly upon the company or will they decide that it’s probably the optimum time to put it to rest.
As a shareholder i’m not sure whether or not to sit it out and hope for the best or to cut and run before it goes bust
The company I work for has been assured that there is absolutely no problems with Cattles Invoice Finance. It’s the other Cattles PLC Subsidiaries that are struggling.
In fact, we have been told that thier share prices have gone up in the last week. We have also told that they are in the processes of being bought over by a very large private equity company with lots of cash.
Hi Julie. I hope that you are correct but you are obviously a little nervous otherwise you wouldn’t have been looking on the internet for news and I see that you have visited the “Cattles section” here quite a few times this month.
You are quite right about the share price going up this week as it’s currently standing at 3.7p which is almost a 100% improvement on last weeks price of 2p but still not a patch on last year’s high of £2.20
I think that it’s common knowledge in the market place that Cattles Invoice Finance is supposedly in the throes of a takeover but it is taking an awful long time to complete as it’s always going to be “next week”
Yet another doom and gloom announcement by Cattles this morning with the amount of bad debts seemingly getting worse by the week.
Oddly enough despite the talk of huge losses,bad debts and the breaching of banking covenants etc there is still somebody out there buying up the shares in tranches of a million or two at a time so someone must know something.
There was an interesting line slipped in at the end of the official announcement that “The core actions include the consideration of selected disposals of businesses and assets” which I assume is referring to Cattles Invoice Finance.
I’m still intrigued to know what the effect the sale of Cattles Invoice Finance on the share price of the parent company will be as conceivably the debt portfolio within the factoring subsidiary is of higher quality than the rest of the business
I couldn’t stand the tension any longer and sold my remaining 10,000 shares in Cattles which left me with a small profit overall