Davenham cuts costs and jobs as it slides to loss

SMALL business asset-based lender Davenham Group said today it had slashed jobs and costs after crashing more than £55m into the red.

The Manchester-based group’s exposure to the commercial property market left it nursing a loss of £55.4m, after an impairment charge of £66.7m was declared. More than 80% of the impairment charge related to the firm’s property portfolio.

In a bid to cut costs Davenham has cut its workforce by a third from 193 to 129 and has closed sales offices in Liverpool, Newcastle, Bristol and Scotland.

One off restructuring costs of £6.5m were incurred to save the business £3.6m.

Revenue in the year to June 30 was down 8% to £49.1m.

Chief executive David Coates said: “Over the past nine months we have taken decisive action to change Davenham’s strategy to meet a very challenging economic environment.”

He said “significant progress” had been made in a number of areas including cutting costs, downsizing the property book, reducing credit risk and de-leveraging.

Mr Coates said he could see no green shoots of recovery and that investment bank Hawkpoint had been appointed to “evaluate” options to maximise stakeholder value.

“We do not see a significant uplift in the economic environment currently and we will continue to focus on collecting-out our property book.

“Our banks continue to show support for the group and we are working closely with them. Now that the rate of provisioning across our property book has slowed, the board has appointed Hawkpoint to evaluate the options available to maximise stakeholder value.”