Panic over suspensions at Cattles after Deloitte audit

By DAILY MAIL REPORTER
Updated: 19:55 EST, 3 March 2009

Discrepancies: Cattles is in trouble after auditors Deloitte discovered problems with its accounts

Consumer lending group Cattles sparked a fresh wave of panic after suspending three directors and issuing its second profits warning in as many weeks.

The senior managers from Welcome Financial Services, the company's main division, were told to go home after auditors at Deloitte found discrepancies in how the business accounted for bad debts.

Cattles, which provides unsecured loans to people with poor credit histories, said there had been a 'breakdown in internal controls which had resulted in the group's impairment policies having been applied incorrectly'.

Executives are in the dark over how much the latest setback will damage the already overdue full-year figures.

But in a brief statement to the stock exchange the company admitted earnings will be 'substantially' lower than City forecasts.

Police in West Yorkshire, where the company is based, said they haven't been called in to investigate the trio - John Blake, the managing director of Welcome, Peter Miller, finance director of the business and Mick Belcher, operations director.

Heavily indebted Cattles will now have to sit down with its lenders to explain the latest debacle.

Analysts at Numis fear the firm is set to breach bank agreements governing £500m of debts.

The shares, which have collapsed 98 per cent in the past year, fell 2.1p, or 40 per cent, to 3.1p yesterday.

In a separate calamity finance director James Corr, who delayed his retirement last month to provide a safe pair of hands through the crisis, has fallen ill. The firm said: 'Mr Corr is currently unable to fulfil his duties.'