Shares dive at Davenham

MANCHESTER lender Davenham saw 75% wiped off its market value today after admitting it will not make a profit this year.

Shares in the group dived almost 75% or 38.5p to 13p in early trading, valuing the group at £3.38m, after it also revealed that it has axed 20 per cent of its workforce.

The group, which provides loans of up to £5m to small and medium-sized companies, blames the current economic conditions and volatile markets which have led to an increase in bad debts.

Around 40 members of staff from the group’s 190-strong workforce have lost their jobs as Davenham moves to slash costs  and deal with increasing numbers of customers defaulting on loan payments, particularly in its property portfolio which has seen business fall dramatically.

In a blow to shareholders, it has withdrawn its final dividend to “conserve cash”, and has closed its property division to new business.

It is also ploughing resources into its specialist recovery unit, and is currently discussing an extension to its banking facilities as well as renegotiating banking covenants to “reflect the changed dynamics of the business.”

The group said: “The pre-emptive actions we are taking to reduce the company’s cost base and downsize the business to a smaller base are designed to optimise Davenham’s position during these difficult times.”