Chairman hits out as loses at Cattles reach £745m

The Batley-based group said it shared investors' anger that 2008 losses will come in at 745m, considerably higher than the 555m loss for 2008 announced last November.

The group also warned that it will report "significant" losses for 2009.

The figure will be revealed in the next few weeks.

New chairman Margaret Young, a former non-executive director who repeatedly questioned Cattles' finances, reiterated that Cattles shares are likely to have "little or no value".

The shares have been suspended since April 2009 at 7.65p, having lost 97 per cent of their value in the previous year.

Revealing the results of a forensic review by law firm Freshfields, Ms Young said former directors "had provided incomplete and misleading information and documents".

She added that these documents and the decision to withhold other information "combined to mask the true state of Welcome's loan book and, in particular, the correct level of arrears within that book".

She said that non-executive directors "had regularly challenged certain executives about key matters such as the level of cash being generated by the business, the quality of the rapidly expanding loan book and the adequacy of the loan loss provision".

But in response to these challenges she said that "certain executives had provided a range of presentations, documents and verbal reassurances to the non-executive directors that everything was entirely as it should have been and that there was no reason for concern".

As a result of the forensic review six directors were sacked and none received any compensation.

Ms Young said the group is consulting with its legal advisers on "all possible avenues for potential claims against third parties".

These third parties could include the six directors and former auditor PricewaterhouseCoopers, which was asked to resign last November.

PwC is being is being investigated by the accountancy watchdog, the Accountancy and Actuarial Discipline Board.

Yesterday Ms Young said she was very disappointed to report the scale of the 2008 losses.

"I know that some of our shareholders had a substantial proportion of their savings invested in Cattles' shares, " she said.

"Many of you have lost money that you have told me you could ill afford to lose.

"These facts make it all the more painful for me to present this annual report.

"I share your anger about what has happened. Like you, I feel very let down by certain former executives."

She said she also shared their frustration about the time it is taking to establish responsibility for the problems.

"These matters are extremely complex and cannot be resolved quickly, " she said.

It is understood that city watchdog the Financial Services Authority has launched an investigation into Cattles.

Last October two former Cattles directors, ex-finance director James Corr and ex-chief operating officer Ian Cummine, launched legal action over their sacking.

In December Cattles dashed any remaining hopes for staff and shareholders as it conceded defeat in its attempt to find a viable future for its core Welcome Finance business.

The Batley-based company said it cannot resume lending and instead will wind down its outstanding loan book.

Cattles has been brought to its knees by huge impairment provisions on bad debts which had not been properly accounted for.

Ms Young has said the company's accountancy problems have been traced back as far as 2002 and possibly earlier.

Cattles, which has sold several businesses, expects the wind-down of its loan book to take two to three years during which time more job cuts are inevitable.