Impairment of property loan
book contributes to decision to stop writing business.
Go deeper with GlobalData
Manchester-based
commercial finance company Davenham Group plc has stopped writing
new business, following a strategic review by Hawkpoint
Partners.
Corporate finance advisory firm Hawkpoint will
work with Davenham to collect in its loan books “in a prudent and
orderly manner”.
A statement from Davenham said: “The detailed
parameters of that run-off are being finalised with the banking
syndicate, to ensure a stable platform.”
Financial results put out by Davenham in March
reflected the extent of the challenges it was facing.
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By GlobalDataThe company had difficulty in selling its
property assets, the vast majority of which were non-performing,
resulting in reduced income and continued operating losses.
The operating loss before tax was £8m (€9.4m)
for the six months to end-December 2009, compared to £30.4m for the
same period a year earlier. Operating loss before tax for the full
year to end-June 2009 was £55.4m.
Revenue was £17.4m for the six months to
end-December 2009, against £27m for the comparable period in 2008.
Revenue for the year to end-June 2009 was £49.1m.
The net assets of the group were £3m at 31
December 2009, compared to £26.3m in 2008, primarily reflecting
impairment in the property portfolio and the impact of continuing
trading losses.
In the results statement, Davenham admitted
there was “likely to be no value for ordinary shareholders in the
company”.
The statement continued: “In the circumstances,
and having regard to the ongoing costs of maintaining the listing
of the company’s shares, the company intends to convene a general
meeting of shareholders at which a resolution will be proposed to
cancel the admission of its securities to the Alternative
Investment Market.”
In July 2009, Davenham warned of losses as its
property loan book impairment worsened. Last year the company
stopped lending to small residential housing developers, cut staff
numbers and closed a number of offices.
Davenham’s asset finance activities included
dealer finance and equipment finance on a range of items such as
office equipment and plant machinery. It also offered a facility
for financing software-only transactions. The company’s focus was
lending in the SME market, including trade and property
finance.
