Blackfriar: Now it is time for regulators to act over the Cattles' affair

IT was touch and go for a while, but when Cattles finally squeezed through votes on its restructuring and de-listing earlier this week, it marked the end of an ignominious chapter for the company.

Once a stock market darling, the sub-prime was brought to its knees by a long-running accountancy scandal which saw millions of pounds of bad debts under-accounted for.

Its board have long given up hope of nursing it back to growth. Instead, the best the company can hope for is a quiet death, winding down its loan book over the next two to three years to pay off the banks who funded its lending.

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Batley-based Cattles, which lent money to people who struggled to access loans from high street banks, may avoid administration, but has left a trail of devastation in its wake.

Perhaps the most palpable relief at creditors' and shareholders' backing of its so-called scheme of arrangement was felt by banks including Royal Bank of Scotland and HSBC.

But while they will recoup some of their debts, bondholders must accept a paltry 49m of their 750m debts.

Shareholders fare even worse - the planned buyout of Cattles by Bovess Ltd values its equity at 5.3m, giving them just 1p per share. The company was valued at 1.5bn before the credit crisis, with many of its investors former employees who chose to be rewarded in shares.

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Blackfriar hears of some shareholders who lived off the group's dividend payouts - but now find that income stream has disappeared.

Despite plenty of suggestions of significant wrongdoing stretching back at least to 2002, the Financial Services Authority has been conspicuously silent on the case.

Nor has any action resulted from the Accountancy and Actuarial Discipline Board's probe into Cattles' former auditors, PricewaterhouseCoopers.

After a deafening silence during Cattles' two-year demise, now is the time for regulators to act. Shareholders and other investors deserve to know how and why Cattles was allowed to get it so wrong.

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n Upmarket sausage maker Cranswick appears to be bucking the trend.

At a time when rival food manufacturers are battling against rising raw material costs, public sector spending cuts and an increasing reluctance among consumers to spend, Cranswick continues to power ahead.

This week the Hull-based group, which supplies fresh pork and gourmet sausages to the leading supermarket chains, reported a strong rise in quarterly sales and said it is confident about the future despite the challenging consumer conditions ahead.

The group's underlying like-for-like sales rose by five per cent in the three months to December 31.

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Despite the tough economic environment over the past few years, Cranswick has continued to invest.

A new abattoir in Hull and the extension to the Lazenby's sausage facility, also in Hull, were completed during the three months.

Meanwhile, work is continuing at the group's air-dried bacon facility at Sherburn-in-Elmet, near Leeds.

The three facilities will give the group substantial additional capacity and should improve efficiency.

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At a time when rivals are struggling to keep their heads above water, Cranswick has outperformed its sector.

Analysts at Shore Capital said this week: "The company is a best in class player in its sector in our view with sustained industry leading revenue and earnings growth, so deserving a premium rating to our minds.

"The group has well invested facilities that permit strong organic growth in core categories of fresh pork, premium bacon and high-end sausages for several years to come."

Alex Sloane, at Evolution Securities, said: "We expect UK consumers to remain highly focused on value which should continue to drive pork category growth going forward providing a tailwind for Cranswick's top line."

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Cranswick is seeing strong demand as consumers switch to pork, which it has dubbed "the alternative white meat", for both health and money reasons.

"We expect pork's relative value to beef and lamb will continue to drive growth," said Mr Sloane.

Cranswick's sales and marketing director Jim Brisby said demand for pork has risen by five per cent thanks to celebrity chefs using different cuts such as belly pork and shoulder of pork in their dishes.

While a prime cut of beef costs 27 per kilo and lamb costs 16 per kilo, pork costs just 9 a kilo.

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"Pork is a very versatile meat," said Mr Brisby. "It's stealing market share from beef and lamb and it's increasingly being seen as a healthy option."

As consumers tighten their belts this year, Cranswick's "alternative white meat" - 70 per cent cheaper than beef and 40 per cent cheaper than lamb - looks like a good investment for both shoppers and investors.

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