Embattled lender Cattles has posted pre-tax losses of £246.9m for 2010, just months after announcing a major restructuring of its finances.
The figure is down from the £685.4m pre-tax loss the firm recorded in 2009, as financial performance improved for the firm’s three main companies: Welcome Financial Services Limited (WFSL), Shopacheck and The Lewis Group.
WFSL, the firm’s biggest business, reduced its pre-tax losses to £189.7m from £639.5m in 2009 while its loan losses stood at £126m, down from £721.9m the previous year.
However, in a trading statement the Group said WFSL will continue incurring losses due to its ageing book and following the decision that the firm would stop lending and focus on collecting in December 2009.
Conversely, this decision would also reduce impairments as there was no new business to provide impairments against.
WFSL is also expected to incur further losses from claims against it over mis-sold Payment Protection Insurance.
In March this year the Financial Services Compensation Scheme (FSCS) declared WFSL in default and made an agreement to pay WFSL’s PPI claims arising on or after 14 January 2005, in return for payments from the firm totalling £90m, plus “top-up” payments if the firm exceeds its business plan.
The results announcement follows a major restructuring of Cattles, which saw the firm acquired by a specially-created company, Bovess, at the beginning of March after the High Court sanctioned the takeover.
This followed a standstill and equalisation agreement made in 2009 between Cattles and certain of its key creditors in order for it to restructure.
Short-term lender Shopacheck and debt collection agency The Lewis Group both returned to profitability, with the latter recording pre-tax profits and impairment of goodwill of £12.8m, up from a £1.8m loss the previous year.