property dip
The asset finance arm of Davenham is seeking growth in new
business of 50 per cent, and it is hoping to achieve this by
national growth, which it has begun the process of by establishing
new offices in London, Glasgow and Bristol, and also by expanding
Manor Credit, the yellow plant and commercial vehicle leasing
business it bought from London Scottish bank last year, across the
UK. “Manor Credit,” said David Coates, its managing director, “has
been integrated into the Davenham family. Historically it has been
the jewel in the crown of Yorkshire, now we want to make it the
jewel in the crown of the UK.”
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Coates also considers Davenham, which had an asset finance
portfolio of £42m this time last year, to be in a unique position
in that it is happy to refinance companies using used assets as
security. Many finance company rivals prefer to use younger assets
as security. Furthermore, Davenham is hoping to capitalise on the
withdrawing of significant amounts of funding from the clearing
banks. Meanwhile, last month, to cope with the planned increase in
leasing Davenham signed up Copernicus, the lease software
provider.
Clearly extra effort is being invested in asset finance – and
also trade finance – as they will be responsible for keeping the
company on track while its property finance arm, which it expanded
in 2007, is being pared back to reflect the sharp deterioration in
the UK housing market.
On the back of this analyst Panmure Gordon & Co predicted
last month a drop in Davenham’s profits before tax for year end
2009 from £13.7m to £8.9m, and also for earnings per share to go
down to 25.3p from 39p. Panmure Gordon highlights that this drop
“pales compared to the 60 per cent + cuts we have made for many
banks and other lenders” over recent months. Nonetheless,
considering the 57 per cent drop in the company’s share price in
the year to date, the forecasted 35 per cent cut in PBT is
generous.
Loan portfolio: £284m (4% growth YY)
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By GlobalDataDebt: £300m
Share capital and reserves: £55m
Brendan Malkin
