Davenham losses and liabilities widen
DISTRESSED lender Davenham Group announced a further widening of pre-tax losses to £10.7m during the six months to December 31, 2010 (2009: £8m loss) on reduced revenues of £11.6m (£17.4m).
The firm continued to be hampered by impairment charges on bad loans made largely through its now defunct property lending division at the height of the property boom.
The losses mean that the firm’s balance sheet has worsened, and its liabilities now outweigh its assets by £36.8m. This time last year, the firm had net assets of £3m.
The company said that it was continuing to collect its outstanding loan book, which now stands at £65.1m. However, the gulf between that and the amount owed to its bank has also grown, and by the end of the year the level of money owed to its RBS-led banking syndicate was £86.3m.
Davenham said that it had “substantially” reduced its annual cost base by around £1.8m, but has incurred one-off costs of £2.7m during the period as a result of redundancy payments and refinancing charges.
It also said the level of write-downs relating to its property book had slowed to £4.9m, compared with £7.9m a year ago.
A joint statement by chairman James Kerr-Muir and managing director Paul Burke – both of whom recently survived two attempts by rebel shareholders to oust them – indicated that Davenham remains in exclusive talks with its largest shareholder, Kingswood Property Finance and Moor Park Capital about reopening parts of its loan book.
However, it continued to add the caveat that even if a deal were agreed, shareholders were unlikely to see any return on their shares.
“In the absence of a successful conclusion to the discussions with Kingswood and Moor Park Capital, further reductions to the cost base/ headcount are expected as the Group continues to run-off its loan portfolios,” they said.
