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Davenham Group

  • BY: Andrew Hore |
  • POSTED: 17/10/2008 |

Davenham Group got the timing of its profit warning just right on Friday because it was issued at 4.30pm making it too late to affect the share price.

Davenham is an asset based lender. It warns that it has had to increase its loan provisions and has stopped any property based lending. Staff numbers have been reduced by 20%. Management expects the company to lose money this year and it won‘t be paying the 7p a share final dividend for last year.

Davenham reported a rise in profits from £11.6m to £12.7m, after £318,000 of bid defence costs, in the year to June 2008.

Davenham has borrowing facilities of £300m which last until the end of 2009. It was using £211m of facilities at the end of June 2008. These facilities are being renegotiated and revised in order to change the banking covenants.

ACP Capital built up a 29.1% stake in Davenham in the autumn of 2007 and considered bidding for the company. It decided not to bid in January 2008. The shares were trading at around five times their current price when ACP bought its stake. 

Davenham floated on Aim on 22 November 2005. A share placing at 254p a share raised £27.7m - £23.5m net - for the company and £16.9m for selling shareholders.

At 51.5p a share, Davenham is valued at £13.4m. 

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