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Cattles halts dividend payouts

David Postings, chief executive of specialist lender Cattles says the group is on course to deliver results in line with expectations in 2008, but has decided to cancel dividend payments as it waits for its banking licence.

Postings says: “Despite this resilient trading performance, in the light of current market and economic conditions, we have decided it would be prudent not to propose a final dividend in respect of the year ending December 31 2008, nor pay an interim dividend in respect of the six months ending June 30 2009.

“This has the benefit of strengthening our capital ratios even further, thus aiding discussions with the Financial Services Authority regarding our deposit taking licence application and with banks regarding wholesale funding. It also preserves cash within the business at a time when liquidity is vital.”

Its trading update for the period ended November 30 2008
showed instalment arrears have increased from 7.4% at the end of September 2008 to 7.9% at the end of November 2008.

Discussions are continuing regarding refinancing the group’s £500m bank syndication due for renewal in July 2009. The group’s funding headroom at the end of November was £129m.

Postings says demand for Welcome Finance’s products remains strong. The business has moderated volumes and receivables growth and has tightened its credit and affordability criteria to new applications.

This has led to a lower acceptance rate of 5.0% of total loan applications, compared to 6.3% in December 2007.


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