19 May 2010
CATTLES plc
INTERIM MANAGEMENT STATEMENT
INTRODUCTION
Cattles plc ("Cattles") today provides its Interim Management Statement covering the period since 31 December 2009.
Cattles announced its audited results for 2008 on 12 May 2010 and intends to announce its results for 2009 in the near future. Shareholders should be aware that again Cattles will be reporting a significant loss for the year ended 31 December 2009 and a negative value for shareholders' funds. As stated on 16 December 2009, the shares are likely to have little or no value.
The cash collection performance of the Welcome Finance ("Welcome") loan book has been as forecast for the first quarter of 2010. Shopacheck and The Lewis Group have made satisfactory starts to 2010.
CURRENT TRADING
A summary of the performance in 2010 by each of the Group's businesses is set out below. All numbers are unaudited.
Welcome
Welcome has historically provided direct repayment loans to over 500,000 customers from a nationwide branch network. On 16 December 2009, the Cattles Board announced to shareholders its recommendation that there should be no further lending in Welcome and that instead the book should be collected out.
On 5 February 2010, Cattles announced the closure of circa 70 Local Management Branches and Local Collections Units nationwide. Welcome entered into a consultation process from that date with staff affected by the proposals, of whom approximately 450 received notice that they were at risk of redundancy and subsequently 382 will leave the business.
On 7 May 2010, Cattles announced a proposal to close 18 branches nationwide and a contraction in the current operations management and their support staff in line with the smaller number of branches. Welcome entered into a consultation process from that date, with staff affected by the proposals, of whom approximately 155 received notice that they were at risk of redundancy.
Welcome's cash collections in the first three months of 2010 were £145 million. Cash collections since this date are in line with management's expectations. Net loans and receivables at 31 March 2010 amounted to £1.1 billion (31 December 2008: £2.2 billion). The reduction reflects cash collected in the 15 month period with no significant further lending, and further impairment of the book.
Shopacheck
Shopacheck provides short-term home collected loans through a nationwide branch network and at 31 March 2010 had 222,000 customers (31 December 2008: 235,000 customers).
Shopacheck continues to lend to new customers. Shopacheck has made a good start to 2010 and its cash collections for the three months ended 31 March 2010 were £38.5 million. Net loans and receivables at 31 March 2010 were £58 million (31 December 2008: £80 million). The reduction in net loans and receivables reflects the seasonality of the lending and a tightening of credit criteria.
The Lewis Group
The Lewis Group, a UK leader in debt recovery and investigation services, provides these services to external clients and both Welcome and Shopacheck. In 2010, The Lewis Group has refocused its strategy on contingent debt collection and by the end of 2010 its commitments to acquire further debt will have been completed. Debt purchases in the three months ended 31 March 2010 were £5.5 million.
Cash collections in the three months to 31 March 2010 were £26.2 million. Purchased debt balances at 31 March 2010 were £144 million (31 December 2008: £154 million).
RESTRUCTURING
Cattles is currently engaged in ongoing discussions with representatives of its key financial creditors in order to progress proposals for a consensual restructuring. Those discussions have been constructive and demonstrate continuing progress towards a consensual restructuring.
On 12 May 2010, the Court of Appeal heard the appeal of Party A and the subsequent cross-appeal of the Royal Bank of Scotland Plc of the decision of the High Court on the application of Cattles to seek a determination in relation to whether the terms contained within certain cross-guarantee documentation operate to subordinate the Company's claims against its subsidiaries, including Welcome Financial Services Limited, to the claims of certain bank creditors. This appeal and a cross-appeal were brought as part of consensual discussions between all parties.
On 13 May 2010, the Court of Appeal unanimously handed down a decision that upheld the decision of the High Court which is explained in the Company's announcement dated 14 December 2009. The cross-appeal in relation to the Cherry v Boultbee issues was stayed.
After judgment was handed down, Party A sought permission from the Court of Appeal to appeal this decision to the Supreme Court. The Court of Appeal did not give such permission and Party A has 28 days from 13 May 2010 to appeal to the Supreme Court for permission to appeal the Court of Appeal's decision.
ENQUIRIES
Margaret Young, Executive Chairman, Cattles plc Tel: 020 7269 7252
Jamie Drummond-Smith, Finance Director, Cattles plc
Paul Marriott, Financial Dynamics