Embattled sub-prime lender Cattles has admitted that there has been a breakdown in internal controls which has resulted in the group’s impairment policies having been applied incorrectly.

Although it is still not possible to quantify the effect on the Group’s financial statements, the Board believes that profit before tax for the year ended 31 December, 2008 is likely to be substantially lower than its expectations as at 20 February 2009.

David Postings, CEO of Cattles, has taken direct management control of Welcome Financial Services, Cattles’ principal operating entity.

John Blake, managing director, Peter Miller, finance director and Mick Belcher, operations director of Welcome Financial Services have been suspended pending the outcome of an inquiry which is also being conducted by Deloitte.

The price was down by over 40% as of 3pm today at 3.05p, which gave it a market capitalisation of £16.045 million.