Davenham Group plc
Annual Report and Accounts 2009
positive thinking in business finance
trade finance
property finance
asset finance Contents
1 Financial Performance Summary
2 Chairman’s Statement
3 Chief Executive’s Report
5 Business Review
15 Board of Directors
16 Directors, Auditors and Company Information
17 Directors’ Report
19 Corporate Governance
23 Independent Auditors’ Report
24 Consolidated Income Statement
25 Consolidated Statement of Recognised
Income & Expense
26 Consolidated Balance Sheet
27 Company Balance Sheet
28 Consolidated Cash Flow Statement
29 Company Cash Flow Statement
30 Notes to the Financial Statements
65 Notice of Annual General Meeting
67 Form of Proxy
Positive thinking in business finance
Davenham Group plc is a leading specialist commercial finance company
which provides flexible, innovative finance solutions for SME clients in the UK,
who choose not to, or are unable to, use mainstream clearing bank funding. 1
Davenham Group plc Annual Report and Accounts 2009
Financial Performance Summary
for the year ended 30 June 2009
 Loan portfolio reduced to £193m (2008: £284m)
+
 Revenue of £49.1m (2008: £53.1m)
 Operating loss (before exceptional items) of £48.9m (2008: profit of £13.1m)
 Pre-tax loss of £55.4m (2008: profit of £12.7m)
++
 Impairment charge of £49.2m (£66.7m inclusive of gross up)
+++
(2008: £3.8m (£7.4m
inclusive of gross up)) of which c. 84% is in relation to the impairment of the property
portfolio. c. £31m (c. £38m inclusive of gross up) of this was reported at the interim
results
 Net asset value of £10.9m (2008: £58.2m)
+ including letters of credit of £2.1m (2008: £7.2m).
++ Pre-tax loss is stated after charging costs of £3.2m in relation to the restructuring of the business, the movement in the value of
derivatives not qualifying for hedge accounting of £3.0m and transformation costs associated with restructure and resizing of £0.3m.
+++ Gross up is defined as interest income which continues to be recognised on impaired loans, and is included within the Group’s revenues,
for which a corresponding loan loss charge is made.
Strategic and restructuring update:
 £215m refinancing of the Group’s banking facilities to support new strategy
 Extensive strategic review carried out, resulting in:
– Focus on our trade and asset portfolios within appropriate parameters; and
– Cessation of new facilities in property whilst optimising recoveries from our
property portfolio
 Good progress with de-leveraging the business to a smaller operating and cost base
– Loan portfolio reduced further to £173m as at close of business on 28 September
2009
– Sales offices in Scotland, Liverpool, Newcastle and Bristol closed
– Headcount reduced by 33%
 Annualised cost savings of £3.6m achieved
 £6.5m of exceptional restructuring costs incurred 
 David Bowles has resigned from the Board to pursue new business interests 2
The 2009 financial year was the most challenging in recent
memory. The credit crunch continuing throughout the year
and the recession starting last Autumn had a severe impact
on the economy in general, and on the property market in
particular. Despite having tightened property lending criteria
in the Spring of 2008, the Group has experienced an
unprecedented rise in the number of non performing 
assets in the property loan book.
A full strategic review of the business was undertaken in
the year. This review received the full support of our
banking syndicate and underpinned the new two year
banking agreement in March 2009.  
Performance Summary
Against this background, and given that property loans
comprise over 63% of our loan book, our results for the
year ended 30 June 2009 have been severely affected by 
a high level of provisions. Impairment charges of £66.7m
(2008: £7.4m) were taken against loans believed to be at
risk, of which approximately 82% relates to the property
portfolio. This was the major factor in producing an
operating loss before taxation and exceptional items of
£48.9m (2008: profit of £13.1m) and fully diluted losses per
share of 163.99p (2008: earnings per share of 
35.17p). The net assets of the Group fell to £10.9m 
(2008: £58.2m).
Dividend Policy
The Group has agreed with its banking group not to make
dividend distributions in the short term. The suspension of
dividend payments has the benefit of preserving cash for
the Group.
Our people
A number of our staff left the Group during the year as a
result of phased restructuring. I would like to thank them for
their contribution to the Group and to wish them well in
their future careers. 
We remain confident that the professionalism and
commitment of our remaining staff will serve us well as the
challenging times continue. On behalf of the Board, I would
like to thank all of our employees for the tremendous efforts
they have made in a time of unprecedented change.
Given the downsizing of the Group and the contraction of
its asset base, the risk management function is now being
embraced within the operating divisions. In line with this
structural change, David Bowles has resigned from the
Davenham Board with immediate effect. We would like to
thank him for his contribution to the development of the
Group and wish him success in his future career.
Summary
The economy is expected to remain difficult in the year
ahead. The March 2009 refinancing and restructuring was
designed to allow the Group to meet the continuing
challenges of working out the non performing elements of
its book in order to position it to benefit from an eventual
economic recovery. Nevertheless, a renegotiation of the
banking agreement is likely to be required during the
current financial year.
James Kerr-Muir
Chairman
29 September 2009
Davenham Group plc Annual Report and Accounts 2009
Chairman’s Statement 3
Introduction 
The past twelve months have seen the problems in the
world’s capital markets which were first identified in mid
2007 impact deeply on the world economy, putting the 
UK firmly into recession. This has had a particularly brutal
effect upon the Group’s core SME market, and in particular
its property finance clients, many of whom are struggling
for survival.
Reflecting these global events and a downturn in our results,
we completed a thorough review of the business in Autumn
2008, leading to our decision to focus on operating our
trade and asset portfolios within appropriate parameters,
whilst optimising recoveries from our property portfolio. 
In March 2009, we reported that we had successfully
refinanced the Group’s banking facilities and restructured
our operating divisions. Nevertheless, the quantum of the
downturn, specifically in the property market, has been
greater than many commentators anticipated.
Trading Overview
The deteriorating economy has affected Davenham in three
principal ways:
 In our property book, clients found it increasingly difficult
to repay our loans, either through the successful sale of
their property or through refinancing. The impact 
became more severe as property prices began to fall
sharply;
 In the SME marketplace, the Group’s heartland, across a
wide variety of sectors, many businesses became
increasingly vulnerable to insolvency; and
 In the small ticket asset and professional loans market,
the Group’s loan books experienced a higher rate of
default, whilst recovery against asset values started to
fall as the assets themselves fell in value.
The result of the above principally caused a significant rise
in the level of loan impairment most notably within the
Group’s property loan portfolio, as initially reported upon in
March 2009 and confirmed in these results.    
Strategic review 
During the Autumn of 2008 we carried out a thorough
review of the business, leading to the decision to focus on
operating our trade and asset portfolios within appropriate
parameters, whilst optimising recoveries from our property
portfolio.  
Overall, these changes are resulting in a significant de-
leveraging of the business to a smaller operating and cost
base, a lower loan portfolio and smaller balance sheet. 
As part of the strategic review the Group has taken the
following specific actions:
 Ceased new business in the property division
 Ceased new business in small ticket leasing and
professional loans
 Closed offices in Liverpool, Glasgow, Newcastle and
Bristol
 Reduced its staffing levels from 193 in mid 2008 to 
129 currently
 Reduced its banking facilities from £300m to £180m
 Reduced its indebtedness to its banking group from
£235m to approximately £168m as at 29 September
2009
 Traded cautiously and at a reduced level in its trade and
asset divisions
 Further resourced its property management group with
specialist property asset professionals
The net result of these actions is that operating costs have
been reduced by 25% and the risks within the loan
portfolios have reduced. Additionally all the portfolios have
been provisioned at sensible levels.
The objective has therefore been to ensure the Group
weathers the recessionary forces in the economy emerging
into what will be a significantly changed operating
environment for financing SMEs.
Operating review
Property
As the Group results indicate our specific provisions have
increased to £37.8m (please refer to page 8 for an analysis
of the total impairment charge) – largely as a result of our
clients being unable to refinance or sell their properties to
effect repayment of the associated loans. This has been
complicated by the serious falls in property values across
the UK, of up to 25% in most regions. This has led to
arrears, default and in some cases very serious solvency
issues for our clients.
In many cases where properties have been repossessed
from clients, the Group has often been required to complete
and get properties ready for sale to optimise exit values. We
have met this challenge by taking on property professionals
to support our loan officers and develop full asset
management skills within the team. The Group’s stance is to
work closely with all its clients to protect mutual value which
has seen our clients successfully redeem £57m of property
based loans in the last twelve months. This has been an
outstanding achievement by our clients and staff.
Davenham Group plc Annual Report and Accounts 2009
Chief Executive’s Report 4
Davenham Group plc Annual Report and Accounts 2009
Chief Executive’s Report continued
However, in some cases where relationships have broken
down or our clients have tried to abrogate their obligations,
we have had no option but to take legal action.
The division is currently managing gross assets of 
£151m with specific provisions of £29m. Our intention is 
to redeem these loans over the next 18-24 months. The
Group continues to take a conservative stance in respect 
of the property market outlook, notwithstanding that 
market commentators are referring to a potential recovery
being underway.
Asset
The asset division has three main elements:
Large ticket assets including Manor Credit
Whilst asset values have generally fallen and SMEs are
naturally cautious about taking on further commitments,
demand for this type of finance remains steady. This is the
core of the Group’s asset offering, both through hire
purchase and leasing. Arrears and bad debts have
inevitably increased as the economy has slowed, but these
are not out of line with management expectations.
Small ticket leasing
This book is in ‘run down’ and is liquidating at the expected
rate. Individual leases remain problematic with very little
underlying asset security. Legal action to recover smaller
sums is ongoing.
Professional loans
This book is also in ‘run down’ with workout strategies being
employed by the Group across sole traders and partnerships.
Trade
The trade division embraces a series of working capital
products secured against debtors, stock and underlying
transactions. The division continues to trade cautiously and
is well positioned to address the tough current trading
environment.
Central
The central area of the Group provides services to the rest
of the Group including HR, Training, Finance, Company
Secretarial, Treasury and Marketing. Many of these areas
have been scaled back as part of the downsizing process.
Banking
As stated elsewhere in this report the Group refinanced in
March 2009. This new two year facility was tailored to
support the asset and trade divisions’ working capital
requirements whilst reflecting the recovery of cash from the
downsizing of the property loan book.  
Outlook
Over the past nine months we have taken decisive action
to change the Group’s strategy to meet a very challenging
economic environment.
Significant progress has been made in:
– Reducing credit risk
– Reducing operating costs
– De-leveraging
– Optimising recoveries
– Downsizing the property book
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.
David Coates
Chief Executive
29 September 2009 5
Davenham Group plc Annual Report and Accounts 2009
Business Review
These are the second set of consolidated Financial
Statements reported by the Group in accordance with
International Financial Reporting Standards (IFRS), as
adopted by the EU. 
This has been a very challenging year for the Group as the
impact of interest rate cuts and the liquidity squeeze led to
a more difficult market place. It was during the latter part of
2008 that the Group implemented the revised strategy,
highlighted in the Chief Executive’s Report.
The property division operated in a market experiencing
rapid decline. This was reflected in the paucity of
transactions, the period of time taken to sell a property and
the prices being achieved. The Group was unable to
charge interest on a large proportion of its property
exposures due to the overall value of the property collateral
being less than the level of the original loan advanced. 
In addition, both the asset and trade portfolios began to
see the impact of recessionary pressures as customer’s
access to liquidity was squeezed and overall levels of
trading activity were reduced. 
The cash discounting treatment of non-performing loans
within the property portfolio (together with the fair value
adjustment of the swap portfolio) has had a material impact
on the Group’s results under IFRS (and a significantly
greater impact than would have been the case under UK
GAAP).
Financial Highlights
In this intensely difficult market, Group revenues decreased
by 8% to £49.1m (2008: £53.1m). The loan portfolio,
including letters of credit, reduced by 32% to £193m
(2008: £284m). 
Loss before tax and exceptional items was £48.9m (2008:
profit of £13.1m) after charging £66.7m (2008: £7.4m) for
impairment, the vast majority relating to the performance of
the property portfolio. The impairment charge is inclusive of
gross up which amounted to £17.5m (2008: £3.7m) for the
year reflecting the opportunity loss on many of the Group’s
property loans.
Exceptional costs of £6.5m increased the loss before tax to
£55.4m (2008: profit of £12.7m). 
The Group’s effective tax rate during the year was 26.7%
(2008: 30.6%). A full analysis of the tax charge for the year
is set out in note 9 to the financial statements.
Exceptional costs
During the year, the Group recognised a number of items
within administrative expenses, which due to their size and
unusual nature are disclosed as exceptional costs.
In view of the significant shift in market conditions, the
Group initiated a new strategy which has resulted in the
implementation of a number of restructuring initiatives,
leading in turn to costs being incurred in respect of the new
banking facilities, office closures and redundancies. These
costs have been disclosed as exceptional. 
The Group’s debt levels fell below the overall size of the
swap portfolio, as a result of the Group’s revised strategy.
As a consequence, the Group incurred a charge of £3.0m
(2008: £nil) in relation to fair value movements on its
interest rate swaps which were no longer designated as
hedging drawn down debt.
Borrowing facilities
In late 2006, the Group had negotiated a revolving total
facility agreement of £300m which was due to expire in
December 2009. As part of the Group’s revised strategy,
concerns over the levels of liquidity within the wholesale
banking market, and potential for covenant pressure, the
Group refinanced its banking lines early. It agreed a new
two year facility with its existing syndicate of banks on 23
March 2009. The interest rate increased from 125bps over
LIBOR to 300bps over LIBOR under the new agreement.
The new facility was tailored to ensure the working capital
requirements of the asset and trade divisions were met
whilst reflecting the recovery of cash from the reduction of
the property loan book. 
The facility commenced at £215m and contains covenants
and other undertakings (including the need to obtain
banking group consent to the payment of any dividends)
that the Board considered acceptable in the prevailing
financial environment and appropriate when adopting the
new strategy.
The facility levels as determined by the new banking
agreement are required to reduce in line with
predetermined step downs to £90m by September 2010.
Cash flow
Management focused on the trade and asset portfolios,
whilst at the same time investing considerable efforts
towards cash generation resulting in a net reduction of its
indebtedness by £38m in the year to £179m, as at 30 June
2009. The cessation of lending within the areas of property,
small ticket asset and professional loans, together with a
strong focus on recoveries, particularly in property, were 
the prime drivers in the Group’s overall reduction in its 
debt levels.
Administrative expenses
During this prolonged period of severe economic turmoil,
the Group continues to carefully manage its business,
taking hard decisions to remove costs where practicable.  6
Davenham Group plc Annual Report and Accounts 2009
Business Review continued
Shareholders’ Return
Fully diluted losses per share were 163.99p (2008: earnings
per share of 35.17p) with basic losses per share being
calculated at 163.99p (2008: earnings per share of 35.75p).
In light of the current economic conditions, the Group has
agreed with the banking group not to make dividend
distributions currently.
Key Performance Indicators  
A number of KPIs are used by the Group in managing the
business. The following provides an explanation of the
purpose and basis of the calculation for these KPIs:
Revenue
Measurement of income generated from the deployment of
the Group’s product portfolio. Income is calculated based
upon the various product margins charged and fees
applied and recognised in accordance with the Group’s
income recognition policies, excluding the impact of gross-
up adjustments (the nature of this adjustment is explained
in note 2 of the annual report and accounts).
2005 UK GAAP £28.5m
2006 UK GAAP £32.7m
2007 IFRS £38.6m
2008 IFRS £49.5m
2009 IFRS £31.6m
The reduction in revenue is primarily reflective of a high
number of non-performing accounts being suspended,
resulting in income being frozen, due to the quality of the
underlying Loan to Value. Declining portfolio levels in asset
and trade have also contributed to lower income streams.  
Profit/(Loss) before tax and exceptional items
Measurement of the Group’s return on employed business
resources. The measurement is based upon income less
interest payable, impairment and administrative expenses.
2005 UK GAAP £8.1m
2006 UK GAAP £10.4m
2007 IFRS £11.6m
2008 IFRS £13.1m
2009 IFRS (£48.9m)
The reduction in revenue combined with the requirement
for unprecedented levels of impairment charges has led to
the Group recording a loss for the first time in its history.
Loan Portfolio**
Total amount of the lending portfolio outstanding at the end
of the financial year. The measure assesses the size of the
portfolio and associated dynamics.
** including letters of credit and after loan loss provisions
2005 UK GAAP £154.7m
2006 IFRS £187.3m
2007 IFRS £248.0m
2008 IFRS £284.4m
2009 IFRS £193.0m
The net loan portfolio has decreased in 2009 as a result of
ceasing to write new facilities in property, small ticket
leasing and professional loans, and a cautious lending
approach in the asset and trade divisions. In addition, the
requirement for substantial loan loss provisioning has
further impacted on net portfolio levels.
Portfolio Mix 
The portfolios for the three divisions within the Group have
differing risk and margin characteristics. 
Property Trade Asset
2005 £68.7m £46.2m £39.8m
2006 £91.1m £56.0m £40.2m
2007 £150.4m £56.0m £65.2m
2008 £154.6m £58.4m £71.4m
2009 £110.1m £29.7m £53.2m
The net loan portfolios have decreased across all three
divisions in line with the Group’s revised strategy of
operating its trade and asset portfolios within appropriate
parameters, whilst optimising recoveries from its property
portfolio.
Basic Earnings/(Loss) per share
Assessment of the creation of shareholder value, measured
as the profit/(loss) on ordinary activities after taxation
divided by the weighted average number of ordinary shares
in issue during the year.
2005 21.6p
2006 27.4p
2007 33.44p
2008 35.75p
2009 (163.99p) 7
There have been minimal movements in the weighted
average number of ordinary shares in issue. The reduction
in the earnings per share has been a result of the Group’s
trading losses.
Following the adoption of the Group’s new strategy and the
signing of the £215m facility in March 2009, the Group has
in addition to the traditional KPIs detailed above focussed
on its banking covenants, the key indicators being the step
down of the facility from £215m to £90m and the
underlying value of the Group’s net tangible worth as
defined under UK GAAP . These covenants are explained in
more detail in the liquidity risk section on page 12.
Arrears and Impairment
In addition to the KPIs noted above the Group closely
manages the following credit performance indicators:
 Arrears
 Non-performing debt
 Bad debt charge
As an asset based lender, the Group assesses the
underlying value of the asset against which it advances
funds using the asset held as collateral security. 
Historically, it has been the detailed initial assessment of 
the underlying collateral that has been important in
ensuring the levels of actual capital losses in a “normal
economic environment” reflected as a bad debt charge, 
are kept to a minimum. However, the unprecedented
turmoil in the financial markets has been reflected in the
property market with a sharp reduction in the availability 
of mortgage finance both for the end user and the buy to
let investor resulting in a substantial reduction in the value
of collateral security held. Similar issues are being seen in
the asset and trade divisions, as asset values decline as
demand diminishes whilst the UK economy is in recession.
The deterioration of credit quality will typically manifest itself
through three main stages which are reflected by the three
indicators. 
Arrears on an account reflect the full balance regardless of
the underlying security, which should be equivalent to the
capital outstanding. This occurs where a customer is
unable to service contractual repayments. Remedial action
is taken to address the interest arrears and ensure that the
funds advanced remain asset secured. Should the
customer not be able to remedy the arrears an account
becomes defined as non-performing. At this point further
interest accrued to the account is suspended. 
While non-performing accounts can result in a loss of
income, this historically has not necessarily resulted in a
capital loss as the Group looks to realise the maximum
value of underlying collateral. In the current environment,
the Group has seen the value of this underlying 
collateral eroded substantially below values originally
expected.
A bad debt charge is incurred where there is objective
evidence to show that the carrying value is more than the
future expected cashflows discounted at the original
effective interest rate. In practical terms the value of the
underlying collateral would be less than the outstanding
loan. 
The speed at which credit quality has deteriorated, due to
the current economic environment, has seen accounts
pass directly to the bad debt stage.
The definitions of the metrics used and recent performance
of each of these indicators are as follows:
Arrears, measured as the value of the Group’s customers’
accounts contractually in arrears shown as a percentage 
of the gross portfolio balance, are 66.7% (2008: 12.4%).
Non-performing debt, measured as the value of the
Group’s customers’ accounts where the recognition of
interest has been suspended shown as a percentage of 
the gross portfolio balance, is 64.5% (2008: 13.6%).
Property Trade Asset Total
£’000 £’000 £’000 £’000
Arrears
2009 1,852 9 3,870 5,731
2008 28,667 875 5,456 34,998
Non-
performing
2009 132,332 4,941 8,745 146,018
2008 29,597 3,810 4,879 38,286
Bad debt charge, defined as the specific provisioning
charge (net of recoveries and before the effects of
discounting) is £37.8m (2008: £3.1m).
In addition to the specific bad debt charge, the Group
makes charges under IAS 39 ‘Financial Instruments –
Recognition and Measurement’ under the headings of
gross up, cash discounting and collective impairment.
These are defined overleaf: 8
Davenham Group plc Annual Report and Accounts 2009
Business Review continued
Gross up
IAS 39 requires that income continues to be recognised on
the outstanding balance of a loan at the original effective
interest rate, irrespective of the contractual term and whether
interest has been suspended or frozen. Currently interest is
suspended or frozen if the Group believes the serviceability
of the debt is significantly at risk. IAS 39 requires more
interest to be recognised than actually deemed recoverable
from the customer. As this interest is not deemed
recoverable a corresponding loan loss charge is made.
Cash Discounting
The cash discounting charge is the amount of the loss
measured as the difference between the asset’s carrying
amount and the present value of estimated future cash
flows, discounted at the financial assets original effective
interest rate. The cash discounting charge unwinds as the
related cashflows are received. 
Collective Impairment
Future cash flows for a group of loan assets that are
collectively evaluated for impairment are estimated on the
basis of the contractual cash flows of the assets and the
historical loss experience.
The total impairment charge for the year is analysed as
follows into its constituent parts as defined by the Group’s
accounting policies:
Property Trade Asset Total
£’000 £’000 £’000 £’000
Specific bad 
debt charge 31,259 1,873 4,652 37,784
Cash 
discounting 8,508 88 233 8,829
Collective 
impairment (80) 789 1,922 2,631
Sub-total 39,687 2,750 6,807 49,244
Gross up 14,711 1,332 1,426 17,469
Total 54,398 4,082 8,233 66,713
This analysis highlights that the Group has incurred
impairment charges of approximately £11.5m in relation to
cash discounting and collective impairment. A material
element of this relates to the property portfolio. 
As at 30 June 2009 the property portfolio has suffered an
impairment charge in relation to cash discounting and
collective impairment of approximately £8.4m in addition to
specific provisions. As highlighted in the definitions above,
as the property portfolio is disposed of the cash
discounting provision will be released, provided the actual
cashflows are the same as forecast, back into the income
statement reflecting a positive impact on the Group’s
financial performance over the coming year(s).
The impairment charge is also increased by the level of gross
up (see note 17). This charge is offset by a corresponding
increase in the Group’s revenues of £17.5m for the year. The
charge is reflective of that element of the Group’s portfolio
where it is unable to recognise income. This is primarily in
relation to the property portfolio as analysed in note 17.
The level of capital loss the Group has or is expecting to
incur (i.e. the shortfall between capital balances
outstanding and the underlying collateral security) for the
year ended 30 June 2009 amounted to £37.8m of the
headline impairment level charged under IFRS of £66.7m.
The total balance sheet provisions as at 30 June 2009
under IFRS are as follows:
Property Trade Asset Total
£’000 £’000 £’000 £’000
Specific 
provision 29,076 1,681 2,930 33,687
Cash 
discounting 10,416 305 385 11,106
Collective 
impairment 306 931 2,093 3,330
Total 39,798 2,917 5,408 48,123
Risk Environment 
The Group is exposed to a number of risks arising from the
nature of its business and the environment in which it
operates. The Group historically operated in an environment
that exposes it to higher risks than those faced by other
more traditional mainstream business to business asset
secured finance providers.
The business risks facing the Group have significantly
increased and changed since late 2008, reflecting the
worsening economic climate and the implications this carries
for both short and long term performance. The impact of
these increased and changing risks, especially in the
property portfolio, have given rise to numerous changes in
the risk management framework.
The primary areas of change have centred around liquidity
risk and the property portfolio. The property portfolio has
seen the Group having to consider differing types of risk and
their management which are more aligned to a property
investment/fund manager business as opposed to a provider
of finance as highlighted in the Chief Executive’s Report.
The Risk Management Framework has therefore been
strengthened in response to these changes. 9
Davenham Group plc
Board*
Asset/Trade Portfolio
Meeting
Meets monthly to assess
portfolio and provides
recommendation on policy
Property Committee
Meets weekly to assess 
portfolio and provides
recommendations on policy
The property portfolio also 
meets monthly
Individual Risk 
Account Management,
Identification and
Classification 
Individual Risk 
Account Management,
Identification and
Classification 
Risk Management Framework
The risk framework is adopted and implemented through various risk management groups and committees who have been
expanded during the year. The two notable additions have been in relation to the property portfolio and cash management.
The following details the risk control framework:
Audit Committee 
Cash Management
Committee
meets weekly to discuss 
short and medium term 
liquidity requirements
*Asset & Liability Management Committee (ALCO) has now been integrated into the Board. 10
Davenham Group plc Annual Report and Accounts 2009
Business Review continued
Risk Categorisation
The Group has identified the following key risks which could
impact on the Group’s ability to deliver its stated strategy: 
 Credit Risk; 
 Property Risk;
 Treasury Risk;
 Capital Risk;
 Operational Risk; and
 Strategic Risk
The following definitions of the Group’s key risks also reflect
how they are managed and mitigated.
Credit Risk
The Group acknowledges that the taking of credit risk in
order to earn a return is a central facet of the Group’s
business model. This is the risk that a financial loss both in
terms of earnings or capital will arise through a customer
failing to meet the terms and obligations of their contract as
they become due. This risk relates to the Group’s exposure
to its portfolio of loans and receivables.
Adverse changes in the credit quality of the Group’s portfolio
through a general deterioration in economic conditions has
affected the recoverability and value of the Group’s assets,
including its loans and receivables and therefore its financial
performance.
The principal risk management groups and their responsibilities are:
The Board of Davenham Group plc 
Responsibility for the overall risk framework and governance lies with the Board of Directors. 
The Audit Committee
The Audit Committee is a non-executive committee that works on behalf of the Board. Its key responsibilities
include monitoring external auditor performance and ensuring the financial reporting, accounting policies and
internal controls are monitored and assessed and correctly applied to the Group’s reporting statements. 
Internal Audit
The development of a formal internal audit review has been delayed whilst the Group’s financial resources are
focused on the current financial challenges. The Board intends to commence the reviews once the current
challenges have been addressed and believes it would not be appropriate to engage further resource at the
current time.
Asset & Liability Management Committee (ALCO)
The committee was responsible for advising the Board on all matters relating to the balance sheet of the
Group, specifically in relation to the following matters:
 Capital structure and related matters;
 Funding; and
 Liquidity
The committee historically advised the Board and recommended actions it considered necessary or desirable
to establish that the Group’s balance sheet matters are suitably understood and managed. Due to the
seriousness of the current financial challenges facing the Group the Committee no-longer advises the Board.
The Board has now taken direct responsibility.
Group Risk
The function of Group Risk management is to provide the Board with independent oversight that risks are
being adequately managed and providing the divisional risk functions with support and guidance as
necessary.  11
Concentration Risk
The loan portfolio within each product segment is broadly
spread by both sector and geography.
Risk Management
The Group maintains a focused risk management ethic and
framework, core to the strategy and culture of the business. 
Portfolio Meetings
A key risk management control is the monthly portfolio
meeting, used to discuss actions required on delinquent
accounts, trends, recommendations for policy changes and
provisions. 
The monthly portfolio reviews are managed by Divisional
Risk Management on behalf of each product and division,
with independent oversight provided by Group Risk. 
They are held in conjunction with the divisional senior
management, underwriters, customer facing teams and
divisional risk managers.
In addition to the monthly portfolio management meeting
as noted earlier, the Property Committee meets every week
to discuss the performance of the property portfolio – both
performing and non-performing accounts.
Risk Control
Risk is managed through the deployment of specialist and
dedicated risk professionals within each division, with
oversight provided by the Group Risk function. 
Specialist underwriters work in the divisions where they are
closest to their markets. The underwriters have complete
independence from the sales process. External
professionals are used in combination with this internal
expertise to conduct due diligence on the equity value of
the assets being considered for finance, the customer’s
financial position and the ability of the commercial entity to
repay any facility provided. 
On approval, credit risk is closely monitored by account
managers. A rigorous control framework exists to escalate
account level risk from an individual to the divisional
management team and then to Group Risk. All accounts
are reviewed for emerging risks on at least a monthly basis. 
Risk Classification and Monitoring
Each part of the Group’s lending activities has defined risk
classifications, consistently used across product ranges to
ensure complete transparency. The main categories of debt
are:
 Performing
 Arrears
 Impaired
Sub-categories of the primary groups are adopted to give
the Board greater depth to the performance of individual
products. The assignment of loans to different risk categories
is based upon the monthly portfolio review which reflects an
assessment of the relative risk of default and the strength of
the underlying security. The presentation of agreements to
each monthly portfolio review is conducted on all debts that
have or may breach the terms of their facilities. Each loan is
subject to an independent assessment which determines the
allocation of a risk category. 
Detailed account level exception reports are produced
monthly to clarify the status of known risks to the Group
and highlight potential emerging and new risks. The
detailed account level information is collated in order for the
Group to clarify its position on account level risk but also to
build a picture of the portfolio trends. These trends are
used to provide insight to and enable the Board to manage
the risk appetite of the business.
Property Risk
The current upheaval in the property market is subject to
many external economic and market factors which are
cyclical in nature. The unprecedented turmoil in the financial
markets has been reflected in the residential property
market which has seen a period of rapid decline. This is
reflected in terms of the paucity of transactions, the period
of time taken to sell a property and the values being
achieved. The primary cause is the substantial reduction in
the availability of mortgage finance as major lenders have
looked to repair their own balance sheets by limiting lending.
The inability of our clients to sell their underlying property
assets and repay their loans has seen a substantial
increase in the levels of non-performing loans. This has
been heightened by the fact that many of our clients are
property developers and have suffered severe working
capital constraints. We have seen a large number of clients
enter into formal insolvency processes.
The combination of these two factors has resulted in the
Group becoming an Asset Manager as it has had to take
“ownership” of the properties concerned. Ownership does
not necessarily refer to actual legal ownership being
instigated but the Group now has to manage the following:
 Holding the property whilst a buyer is found
 Maintenance of the property
 Completion of developments where developers have
ceased trading
 Managing planning and building inspection sign off and
related regulation
 Managing the sales process via estate agents and direct
approaches 12
Davenham Group plc Annual Report and Accounts 2009
Business Review continued
This change in focus from property lender to property asset
manager has given rise to additional risks, which are
summarised below. The assessment of these risks and the
implications on the short and medium term performance of
the portfolio is discussed and managed at a weekly
Property Committee meeting headed by the Chief
Executive. The outcomes of this meeting are then reflected
within the weekly cashflow meetings and ultimately
reported to the Board on a monthly basis:
 The market risk assesses the response to changes in
the macroeconomic climate including buyer confidence
and interest rate movements. The Property Committee
considers key sales data across the portfolio e.g. sales
rates, visitor levels, offers received and market
intelligence obtained through the management of estate
agents employed to action the disposal of various units.
The Group recently employed the services of an
experienced estate agent to manage the network of
estate agencies being used across the country and take
an active role in the sales process being adopted.
Based upon this information consideration is given to
the pricing of the sales units and whether price changes
are required. The Committee is however focused on the
need to retain value and not to dispose of the assets
concerned through a distressed process unless all other
avenues have been considered.
In addition to monitoring interest rate movements the
Committee also actively monitors the availability of
mortgage products, including buy to let, and which are
being withdrawn/introduced to the market to assess
availability of liquidity.
 Construction/Regulation risk is the failure to meet
planning requirements to ensure compliance with
various permissions and guidance. The risk of not
meeting prescribed development milestones and their
impact on cost overruns and ultimately delayed future
sales performance. The Group now employs
experienced quantity surveyors and building project
managers to assist in managing these risks.
 Other risks include the Group now having to ensure
insurance, health and safety and security requirements
of its property assets are managed and controlled
through specialist advisers.
Treasury Risk
The Group has categorised its treasury risk across the
following elements: 
 Liquidity risk 
 Financing risk
 Market risk – interest rate and currency risk
 Counterparty credit risk
Liquidity Risk
This is the risk to both current and prospective earnings or
capital arising from the Group’s inability to meet its
obligations when they become due without incurring
unacceptable or unexpected losses. This may be despite
the fact that the Group has adequate capital. Liquidity risk
includes the inability to manage unplanned decreases or
changes in funding sources due to changes in market
conditions. Liquidity risk also arises from the failure to
recognise or address changes in market conditions that
affect the ability to liquidate assets quickly and with minimal
loss in value if necessary. 
The Group funds its business through syndicated and
bilateral facilities with major UK and international banks. 
The Group maintains a formal treasury function via
Davenham Treasury Services Limited. This manages the
day to day treasury function, providing funding to, and
taking surplus funds from, each of the Group business
segments as required. The treasury function is charged
with providing daily management information including
short term funding requirements to enable the business to
manage its daily liquidity requirements.
As explained in note 1 to the financial statements, a revised
facility was agreed with the banks in March 2009. The
facility contains certain covenant tests, which are based
upon financial results prepared under UK GAAP including:
 tangible net worth
 net borrowings cover ratio
 the actual amount of loan repayments in the property
portfolio (as against their book values)
 asset quality defined for product type
 individual portfolio exposure levels, and
 facility step-down levels
In addition other undertakings were given (including the
need to obtain banking group consent to the payment of
any dividends) that the Board considered acceptable and
appropriate in the context of the new strategy. 
The covenant tests are reviewed by the Board on a monthly
basis to assess the Group’s performance against each of
the covenants. 
The Group successfully met the facility step-down covenant
test as at 30 June 2009 and is confident it will meet the next
testing point at 30 September 2009. This has been despite
the actual cashflows generated by the property division
being lower than originally forecast. However the quantum
of the cash collected to date has been considerable, with
approximately £57m having been collected from its
realisation between October 2008 and to date. 13
However, as discussed in note 1 to the financial statements,
the directors consider it likely that the Group will breach
some of the facility covenants in the current financial year.
Details of current bank facilities and their maturity dates are
set out in note 21.
Interest Rate Risk
The Group’s long standing treasury strategy is to minimise
interest rate volatility from its bank borrowings. 
The Group looks to fix that element of its floating rate
borrowings against its fixed rate lending thus locking in its
profit element.
The Group has minimal risk to revenue from changes in
market interest rates as the majority of advances made to
the Group’s customers are at rates of interest that are fixed
over the term of the contract. However, elements of the
Trade finance portfolio are priced at floating rates and
historically any impact to revenue from changes in market
rates would be offset by a corresponding reduction in the
cost of funding in relation to that element of the portfolio.
As noted on page 54, the Group is currently locked into
fixed rates of interest on its debt due to the excess swap
portfolio which has resulted in the trade portfolio suffering
from reduced income on its floating rate lending following
interest rate reductions whilst still incurring a fixed rate of
borrowing at levels in excess of current market rates.
Funding facilities provided by the banking syndicate are at
a floating rate. The Group was therefore exposed to the
risk of rising interest rates. However this has been avoided
through the use of financial hedging derivatives. The
counterparties to these derivatives are from the top four of
the Group’s banking syndicate. The Group reviews on a
regular basis counterparty credit risk; currently this is not
considered a material risk to the business.
As a result of the Group using various financial derivatives, 
it limits exposure to movements in bank funding rates in the
short to medium term. As at 30 June 2009, the Group had
£210m of swap contracts in place against an initial £215m
facility level. The covenanted step-down requirements of 
the facility to £90m by September 2010, will result in the
Group having a number of swap contracts which will no
longer remain effective for their remaining contractual
periods. This will result in an over-hedged position at 
various points over the coming years. Therefore, during 
the year, the Group de-designated £105m of hedging
relationships to reflect this.
The impact of these de-designations requires that the fair
value of these contracts is recognised directly within the
income statement and any future movements in these
should also be passed directly through the income
statement rather than the hedging reserve.
An independent valuation of the swap portfolio has now
been undertaken which shows a negative fair value of the
total portfolio of £9.8m as at 30 June 2009 (2008: positive
fair value £2.8m) (refer to note 22). This represents a
£12.6m reduction from 30 June 2008 position. However, of
the £9.8m, only swaps with fair values of £6.8m are
forecast to remain fully effective for their remaining lives and
therefore £3.0m has been recognised as a charge within
the income statement in the year. 
Given that this charge has arisen because of the
requirement to down-size the Group, this cost has been
treated as an exceptional item. 
It should be noted that this charge will be credited back into
the income statement in future years as the lives of these
swaps amortise. Given interest rates remain at all-time lows,
in the event that rates harden during these remaining
periods then the fair value of these swaps will improve and a
credit back to the income statement will be seen.
The treasury function monitors interest rate movements
advising the executive directors on a daily basis. The
function also benefits from regular updates from the treasury
departments of each of the leading banks within the
syndicate keeping the Group advised of any movements
within the capital markets and risk management products
which may be of benefit to the Group.
Currency Risk
The Group has very little exposure to currency risk with all
product foreign exchange transactional risk being the
responsibility of the customer. However certain funding
received or deposits held by the Group at times may not 
be in sterling. This creates a potential exposure to
accounting risk of adverse changes in exchange rate
movements on re-translation. As at 30 June 2009 the
Group had foreign currency cash balances equivalent to
£1.9m. The Group uses formal hedging techniques in the
form of forward contracts where the Group acts as agent
on behalf of its clients.
Capital Risk
The Group’s objective when managing capital is to ensure it
continues as a going concern as well as to provide a
balance between financial flexibility and balance sheet
efficiency. In determining its optimal capital structure, the
Group considers the robustness of future cash flows,
potential funding requirements, the cost of capital and ease
of access to funding sources.
The Group is not subject to any external regulatory capital
requirements. However the Group is required, under its
banking agreement, to procure that the tangible net worth,
(as defined by the banking agreement), of the Group as at
31 March 2010, and as at each quarter end thereafter, is
greater than or equal to £20m, when accounted for under 14
UK GAAP . This covenant has not yet reached its first
testing point, however, at 30 June 2009, under UK GAAP ,
the Group achieved a tangible net worth of £27.1m.
The Group’s equity together with a reconciliation to tangible
net worth is shown below:
2009 2008
£’000 £’000
Borrowings 181,586 219,225
Less cash and cash equivalents (2,562) (2,416)
Net borrowings 179,024 216,809
Total equity 10,922 58,208
Adjustments:
Own shares held reserve 1,507 1,507
IFRS adjustments 14,638 (1,552)
Tangible net worth (as defined 
by the banking agreement) 27,067 58,163
Operational Risk
This is the risk to earnings or capital resulting from
inadequate or failed internal processes, systems and the
actions of our people across the whole Group. The major
areas of operational risk surround:
 Dependence on key suppliers;
 IT security;
 Product documentation and execution;
 Internal and external fraud;
 Implementation of strategic change; and
 Process errors.
The Group manages these risks through a variety of
controls and processes, and mitigation actions including
insurance. The implementation and monitoring of these
actions are reviewed by each of the individual divisional risk
functions which then report into Group Risk. 
External risk advice and support is provided in connection
with human resources, health and safety and IT security
including business continuity planning. Whilst the Group
remains ultimately responsible for the management of 
these risks, the support and advice offered by these
external advisers forms an important part of the risk
management matrix. The Board is updated on a monthly
basis regarding issues surrounding human resource and
health and safety.
Strategic Risk 
This is the risk to earnings or capital through taking 
adverse business decisions, or the unsuccessful
implementation of those decisions both in the short and
long term. 
The Group’s strategic vision, its current goals and its
expectations relating to its future financial position involve
risks and uncertainties which are dependent on future
events and circumstances which may be beyond its
control. These include, among others, UK economic and
business conditions; market-related risks, such as
fluctuations in interest rates; the impact of competition; 
and the timing, impact and other uncertainties of future
mergers or combinations within relevant industries. 
In March 2009, the Group adopted its new strategy of
focusing on its trade and asset portfolio whilst at the same
time ceasing new facilities in property and recovering the
current portfolio. This was supported by the banking group
with the agreement of the Group’s new two year financing
facility.
As a result, the Group’s actual future financial condition,
performance and results may differ materially from the
plans, goals and expectations set out in its forward-looking
statements. The Group undertakes no obligation to update
the forward-looking statements contained in this document
or any other forward-looking statement it may make.
Davenham Group plc Annual Report and Accounts 2009
Business Review continued 15
Davenham Group plc Annual Report and Accounts 2009
Board of Directors
Sam joined the Board in 
2001, having previously held 
many senior roles within the 
Royal Dutch Shell Group of Companies, including
Director of Finance in Shell UK Limited. Since retiring
from Shell, he has been a consultant to Simmons &
Simmons, the City of London Law firm and to UBS, and
to Schroders, Salomon Smith Barney, the investment
banking arm of Citigroup. Since September 2008, Sam
has been non-executive Chairman of Challenge Energy
Limited. He is also a non-executive director of Quexco
Inc. based in Dallas, USA, and a director/trustee of the
Rockdale Housing Association, a charitable organisation
located in Sevenoaks, Kent.
James is a non-executive 
Director of Gartmore 
Fledgling Trust plc and was
formerly Managing Director UK of Tate & Lyle plc and
Group Finance Director of Kingfisher plc. He has also
held non-executive roles for a number of companies
including Acertec plc, Birmingham Midshires Building
Society and Senior plc.
David’s early career in 
commercial finance/lending 
was within the RBS Group and 
later with Standard Chartered Bank, where he held senior
positions in both the UK and USA. Subsequently, David
held a succession of MD/main board roles with Experian
and Callcredit, before joining Davenham Group plc in
2004 and becoming Chief Executive in 2005.
David joined the Board in 
October 2005, having 
previously held senior roles 
in banking and asset finance including Commercial
Banking Director of TSB Group plc, Director of Business
and Professional Banking of Abbey National Group plc
and Executive Director of Business Finance, First National
Bank Limited. He is also a non executive director of
Fletcher King plc. He was previously non-executive
Chairman of Broadcastle plc, a specialist banking and
asset finance company, acquired by Siemens AG.
David joined Davenham 
in early 2007 from GE Capital 
Bank where he held several 
senior management positions in eight years of service.
His most recent role was as Head of Enterprise Risk
Management and Basel Program Director. Prior to this he
held positions of Risk Director, GE Capital Woodchester,
and previous to this, Risk Director and Head of Risk, GE
Global Consumer Finance. Prior to GE, David held a variety
of Credit, Risk and Fraud Management positions. David
Bowles resigned from the Board on 28 September 2009.
A qualified accountant, 
Paul spent almost ten years 
with State Securities, part of 
Abbey National specialising in asset finance. As Finance
Director, Paul was part of the successful team that
concluded the original sale to Abbey National and then 
in 2003 the sale of State Securities to The Rothschild
Merchant Banking Group.
J R Kerr-Muir 
Chairman
P E Burke 
Finance Director
G L Footitt
Senior non-executive
Director
D H Stewart 
Non-executive Director
D Bowles
Risk Director
D R Coates 
Chief Executive Officer 16
Chairman
J R Kerr-Muir 
Executive Directors
D R Coates Chief Executive Officer
D Bowles Risk Director
(resigned 28 September 2009)
P E Burke Finance Director
Non-executive Directors
G L Footitt
D H Stewart 
Secretary
Qconsult Limited 
Laurel House
173 Chorley New Road
Bolton
BL1 4QZ
Registered Auditors
PricewaterhouseCoopers LLP
101 Barbirolli Square
Lower Mosley Street
Manchester
M2 3PW
Corporate Lawyer
Pinsent Masons LLP
1 Park Row
Leeds 
LS1 5AB
Public Relations
Smithfield Consultants Limited
10 Aldersgate Street
London
EC1A 4HJ
Principal Banker
The Royal Bank of Scotland Plc
6th Floor
1 Spinningfields Square
Manchester
M3 3AP
Nominated Advisor
Hawkpoint Partners Limited
41 Lothbury
London
EC2R 7AE
Broker
Panmure Gordon & Co
Moorgate Hall
155 Moorgate
London
EC2M 6XB
Registrars
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6ZX
Registered Office
8 St. John Street
Manchester
M3 4DU
Registered Number
3976032
Davenham Group plc Annual Report and Accounts 2009
Directors, Auditors and Company Information 17
Davenham Group plc Annual Report and Accounts 2009
Directors’ Report
for the year ended 30 June 2009
The Directors present their report and the audited financial
statements for the year ended 30 June 2009. As set out
more fully in the Statement of Accounting Policies, this
Annual Report has been prepared in accordance with
International Financial Reporting Standards (IFRS). All
financial information given in this Directors’ Report is taken
solely from the statutory results prepared on this basis.
Principal activities
The principal activity of the Group is the granting of credit to
businesses including loans, hire purchase, financial leasing
arrangements and working capital facilities.
Review of business
A review of the business of the Group, a description of the
principal risks and uncertainties facing the Group during the
year ended 30 June 2009 are included in the Business
Review on pages 5 to 14. 
Future developments
As noted in the Chairman’s Statement, a renegotiation of the
Group's banking agreement is likely to be required during the
current financial year, in conjunction with a review of strategic
options for the Group.
Results and transfers to reserves
The consolidated loss for the year ended 30 June 2009 is set
out in the Consolidated Income Statement on page 24. 
In relation to the 2008 financial year, the Directors proposed
a final dividend of £1.8m, payable on 31 October 2008, but
this was withdrawn on 20 October 2008. The Group has
agreed with its banking syndicate not to make dividend
distributions in the short term. The loss for the year of
£40.6m (2008: profit of £8.8m) will be transferred to
reserves.
Directors and their interests
The Directors of the Company at 30 June 2009, all of whom
have been Directors for the whole of the year ended on that
date are listed on page 16.
The Company maintains appropriate Directors’ and Officers’
Liability Insurance in respect of itself and its Directors.
The under mentioned Directors had the following beneficial
interests in the ordinary shares of the Company as follows:
Davenham Group plc ordinary shares of 1p each
30 June 2009 30 June 2008
Number Number
J R Kerr-Muir 90,000 90,000
D R Coates 56,729 56,729
D Bowles 51,355 Nil 
P E Burke 50,000 Nil
G L Footitt 82,325 12,325
D H Stewart 3,935 3,935
The under mentioned directors had the following share
options over the ordinary shares of the Company as follows:
Davenham Group plc ordinary shares of 1p each
30 June 2009 30 June 2008
Number Number
D R Coates 482,258 482,258
P E Burke 353,965 353,965
D Bowles Nil Nil
There have been no changes in the above interests between
30 June 2009 and the date of this report.
Options are exercisable at a price of 147.0p per share. 
The closing market price of ordinary shares at 30 June 2009
was 18.12p. The shares traded in the range 6.0p to 131.5p
during the year.
The Group has an established Long Term Incentive Plan
(LTIP) which allows periodic awards, over shares vesting in
three years, to be made to individuals. The LTIP rewards
participants by reference to performance based criteria. The
choice of criteria is intended to incentivise executives to
deliver substantial real earnings growth, in addition to
generating above market returns for shareholders. During
the year, further awards were made to individuals in
accordance with the Rules of the Plan. 
No director had any material interest in any contract with the
Group during the period under review.
Charitable and political contributions
The Group made contributions of £5,500 (2008: £2,000)
during the year to local charities. No political contributions
were made.
Creditor payment policy
The Group’s current policy concerning the majority of its
creditors is to: 
 settle the terms of payment with those suppliers when
agreeing the terms of each transaction;
 ensure that those suppliers are made aware of the terms
of payment by inclusion of the relevant terms in contracts;
and
 pay in accordance with its contractual and other legal
obligations.
Trade creditor days of the Group for the year ended 30 June
2009 were 38 days (2008: 29 days) based on the ratio of
Group trade creditors at the end of the year to the amounts
invoiced during the year by trade creditors. 
Employees
It is the Group’s policy to involve employees in the business
and to ensure that matters of concern to them, including the
Group’s aims and objectives and its financial performance, 18
are communicated in an open and regular way. This is
achieved through the use of business briefings and other
less formal communications.
The Group remains committed to a policy that promotes
equality of opportunity to all employees and prospective
employees, irrespective of background, for employment,
training, career development and selection on the basis of
ability, qualifications and suitability for the job. Executive
management, managers and employees are required to
support the policy in their day-to-day work, and commit
themselves to maximising the potential of every employee.
Employees who become disabled will be retained and re-
trained, where possible.
Statement of disclosure of information to auditors
In the case of each of the persons who are Directors at the
time when the report is approved, the following applies: 
 so far as the Directors are aware, there is no relevant audit
information of which the Group’s auditors are unaware;
and
 the Directors have taken all the steps that they ought to
have taken as Directors in order to make themselves aware
of any relevant audit information and to establish that the
Group’s auditors are aware of that information.
Statement of Directors’ responsibilities in respect of
the Annual Report and the financial statements
Company law requires the Directors to prepare financial
statements for each financial year that give a true and fair
view of the state of affairs of the Company and the Group
and of the profit and loss of the Group for that period.
In preparing those financial statements, the Directors are
required to:
 select suitable accounting policies and then apply them
consistently;
 make judgements and estimates that are reasonable and
prudent;
 state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
 prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors confirm that they have complied with the
above requirements in preparing the financial statements.
The Directors are responsible for keeping proper accounting
records that disclose with reasonable accuracy at any time
the financial position of the Company and the Group and
enable them to ensure that the financial statements comply
with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and the Group and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the United
Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions. 
Going concern 
The Group’s business activities, together with factors likely to
affect its future development, performance and position are
set out in the ‘Business Review’. The finances of the Group,
its liquidity position and borrowing facilities are described on
pages 5 to 8 of the ‘Business Review’ and the risks faced by
the Group, in particular, the financial covenant risks are set
out in the ‘Business Review’ on page 10.
The Board have specifically considered the material risk of a
breach of its loan covenants within the next 12 months. If a
covenant breach were to occur then the banking syndicate
would have the right, if it chose, to request early repayment
of the outstanding borrowings. This represents a material
uncertainty which may cast a significant doubt on the
Group’s ability to continue as a going concern and,
therefore, it may be unable to realise its assets and discharge
its liabilities in the normal course of business. 
Having made the requisite enquiries, the Directors have a
reasonable expectation that the Group have adequate
resources to continue in operational existence for the
foreseeable future for the reasons set out in note 1 to the
financial statements. Accordingly, they continue to adopt the
going concern basis in preparing the Group and Company
financial statements.
Independent Auditors
PricewaterhouseCoopers LLP have expressed their
willingness to continue in office and resolutions proposing
their re-appointment as auditors and authorising the
directors to determine the auditors’ remuneration will be
proposed at the Annual General Meeting. 
By order of the board
Qconsult Limited
Company Secretary
29 September 2009
Davenham Group plc Annual Report and Accounts 2009
Directors’ Report continued
for the year ended 30 June 2009 19
Davenham Group plc Annual Report and Accounts 2009
Corporate Governance
The Board is committed to maintaining high standards of
Corporate Governance and has continued in its efforts to
further its approach to this and the effective management of
risk, not least in the context of the difficult trading and
economic conditions detailed elsewhere in this report. The
Board further believes that its commitment to good
Corporate Governance is intrinsic to the culture and values
of the Company such as integrity, professional excellence
and ongoing viability. 
As an AIM Company, Davenham is not required to comply
with the Combined Code but, as outlined in the following
paragraphs, the Board has applied the principles of good
governance and the code of best practice set out in the
current edition of the Combined Code where it is practical to
do so in relation to its size and business. 
Directors and the Board
There have been no changes to the Board in the year. 
The Board comprises the Non-Executive Chairman (James
Kerr-Muir), the Chief Executive (David Coates), the Finance
Director (Paul Burke), the Risk Director (David Bowles) and
two Non-Executive Directors (Graham “Sam” Footitt and
David Stewart). The Board considers that Sam Footitt and
David Stewart are independent as defined in the Combined
Code and that James Kerr-Muir was independent on his
appointment as Chairman. The balance of executive and
non-executive directors is considered appropriate for the
size of the Board of the Company.
The Board normally meets monthly for scheduled Board
meetings and in addition for at least one off-site meeting per
annum solely to discuss strategy. In the year ended 30 June
2009, the Board met twelve times. This is consistent with the
number of regular meetings held in the previous year.
Meetings are held at the Head Office in Manchester or on
occasion at its London Office. The Board also meets as
required on an ad hoc basis to deal with urgent business,
including the consideration of transactions. 
The Board has approved a formal schedule of matters
reserved for its consideration and decision. These can be
divided into a number of key areas, including but not limited to:
 Group strategy and transactions
 Financial reporting (including approval of interim and final
financial statements and dividends) 
 The Company’s finance, banking and capital structure
arrangements 
 Regulatory matters (including the issue of shares,
communication and announcements to the market)
 Approval of the Company’s risk management and control
(as recommended by the Audit Committee)
 Approval of policies on remuneration (as recommended
by the Remuneration Committee)
 the Constitution of the Board, including its various
committees, and succession planning (as recommended
by the Nomination Committee)
 Approving the Company’s policies in general in respect
of, inter alia, Health & Safety, Corporate Responsibility, the
environment.
This schedule is also available for inspection on the
Company’s website www.davenham.co.uk. 
Matters requiring Board and Committee approval are
generally the subject of a proposal by the Executive Directors
submitted to the Board, together with supporting
information, as part of the Board or Committee papers
circulated prior to the relevant meeting. All Directors receive
appropriate information on the Company comprising a
financial report and briefings from the Executives before
each scheduled Board Meeting. The Chief Executive also
briefs the Directors on results, key issues and strategy at
such Meetings. 
The Board recognises the importance of ongoing
professional development and education, particularly in
respect of new laws and regulations relevant to the business
of the Company. Such training may be obtained by the
Directors individually through the Company or through other
companies of which they are Directors. Directors may
additionally obtain independent professional advice at the
Company’s expense. Appropriate third party Directors’ and
Officers’ insurance is maintained by the Company.
The Executive Directors have a business coach to assist with
their overall development as business leaders. 
The terms and conditions of appointment of the Non-
Executive Directors, including those of the Chairman, are
available for inspection at the Company’s registered office
during normal business hours. Each letter of appointment
specifies the anticipated level of time commitment including,
where relevant, additional responsibilities in respect of the
Audit, Remuneration or Nomination Committees. Details of
other material commitments are disclosed to the Board and
a register of the same maintained by the Company Secretary.
Corporate governance structure
The posts of Chairman and Chief Executive are held by
James Kerr-Muir and David Coates respectively. The Board
considers that the Chairman and the two independent Non-
Executive Directors, Sam Footitt and David Stewart together
bring a strong and independent Non-Executive element to
the Board. The Senior Independent Director is Sam Footitt.
The Non-Executive Directors are not involved with the day-
to-day management of the Company and are free from any
business or other relationship which could materially interfere
with their judgement. James Kerr-Muir also serves on the
board of Gartmore Fledgling Trust plc. Biographies of the
directors are contained on page 15. 20
Davenham Group plc Annual Report and Accounts 2009
Corporate Governance continued
The Chairman and other Non-Executive Directors meet at
least twice a year without the Executive Directors present. 
In addition, the Chairman regularly briefs the other Non-
Executive Directors on relevant developments regarding the
Company as necessary. The Senior Independent Director,
Sam Footitt, and the other Non-Executive Director, David
Stewart, meet at least annually without the Chairman present
to appraise the Chairman’s performance as part of the
overall Board annual appraisal process. 
The Chairman is responsible for leadership of the Board and
creating the conditions for overall Board and individual
Director effectiveness. The Chief Executive is responsible for
running the Company’s business day-to-day and, subject to
Board agreement, the development and implementation of
strategy. The minutes of meetings of the Board and each
Committee are taken by the Company Secretary. In addition
to constituting a record of decisions taken, the minutes
reflect questions raised by the Board Members relating to
the Company’s businesses and, in particular, issues raised
from the reports included in the Board or Committee papers
circulated prior to the relevant meeting. Unresolved issues 
(if any) are recorded in the minutes. 
The Board is of the opinion that the respective background
of each Non-Executive Director indicates that they are of
sufficient calibre and experience to carry appropriate weight
in the Board’s decision-making process. 
Corporate Governance and the management of the
Company’s resources is achieved by regular review through
monthly management accounts, presentations and external
consultant reports and briefings. The Board receives
analysts’ and brokers’ reports and is updated regularly on
movements in major shareholdings. 
All Directors have access to the advice and services of the
Company Secretary, whose role is to ensure that all
procedures are followed and that applicable rules and
regulations are complied with.
Committees of the Board
The Board has established various committees, each of
which has written Terms of Reference. These are the Audit,
Nomination, Remuneration and Asset & Liability
Management (“ALCO”) committees. The Terms of Reference
for each committee are available on request from the
Company Secretary and are also published on the
Company’s website www.davenham.co.uk. 
The Audit Committee comprises the two Non-Executive
Directors and the Chairman and is chaired by Sam Footitt,
the Senior Independent Director. As noted earlier, the Board
considers the Chairman, on his appointment, met the
independence criteria specified in the Combined Code and
continues to value his contribution to the committee. Non-
committee members and the external auditors are invited to
attend by prior arrangement. The committee reviews all
material controls including financial, operational and
compliance controls including risk management processes,
ensuring that good financial practices are maintained
throughout the Company. The Committee meets on a regular
basis with the external auditors, without the Executive
Directors being present as appropriate, to review and discuss
issues arising from internal and external audits and to agree
the scope and planning of future work. The Committee has
received a report from the external auditors on the 2009
audit. The findings and recommendations of the Committee
are reported to the Board for further detailed consideration. 
The Board is satisfied that the Chairman of the Audit
Committee, Sam Footitt, has appropriate recent and relevant
financial experience for the role. In addition to its work in
relation to the Group’s internal controls and systems set out
above, the Committee is also responsible for reviewing the
integrity of the Company’s accounts, including the annual
and interim results, and recommending their approval to the
Board. 
The Audit Committee has primary responsibility for making a
recommendation on the appointment, reappointment and
removal of the external auditors. The Committee aims to
ensure auditor objectivity and independence is safeguarded
at all times. Specifically, non-audit services, including
taxation and consultancy advice are routinely put out to
tender to other external accounting firms. Accordingly, the
Audit Committee considers that the Company’s auditors are
properly independent.
The Remuneration Committee comprises the Non-
Executive Directors and the Chairman. It is chaired by David
Stewart. The Chief Executive regularly attends by invitation but
is not present for discussions relating to his own remuneration.
The Remuneration Committee has appointed KPMG to advise
it in relation to the design of appropriate executive
remuneration structures. The responsibilities of the
Remuneration Committee include setting remuneration policy,
ensuring that remuneration (including compensation and other
benefits) and the terms of service of the Executive Directors,
the Chairman and senior operating management below Board
level are appropriate and that they are fairly rewarded for the
contribution which they make to the Company’s overall
performance. It is also responsible for the allocation of shares
under long-term incentive arrangements approved by
shareholders and in accordance with agreed criteria. 
In addition, it monitors current best practice in remuneration
and related issues. No Executive Director takes part in any 21
discussion relating to his own remuneration or benefits. The
Board’s policy is that shareholders should have a say in all
new long-term incentive schemes and significant changes to
existing schemes, while acknowledging that the
Remuneration Committee must retain flexibility to alter such
arrangements to reflect changing circumstances. Therefore,
in line with the Company’s commitment to transparency as
regards its remuneration policy and maintaining a continuous
dialogue with shareholders, the Chairman of the
Remuneration Committee, David Stewart, has held
discussions on occasion with shareholders to take soundings
on the key features of any proposed changes to the
Executive Directors’ incentive arrangements. The Committee
is authorised by the Board to seek appropriate professional
advice as and when it considers necessary. 
The Company maintains a performance-driven culture to
promote achievement of financial targets and individual
objectives. To this end, the Company’s Long Term Incentive
Plan adopted by the Board on 16 November 2005 (amended
19 December 2005) is intended to reward through
achievement of objectives albeit that in the present economic
climate, awards under such schemes are unlikely.
The Nomination Committee comprises the Non-Executive
Directors, chaired by James Kerr-Muir, and its principal
responsibilities are to consider and review the size, structure
and composition of the Board. The Committee meets formally
as necessary. It also considers succession planning and
makes recommendations to the Board for any appropriate
changes. There is a formal procedure for appointments to the
Board and the senior management team. 
The Asset and Liability Management Committee
(“ALCO”) is responsible for reviewing and advising the Board
on capital structure, funding and liquidity. The ALCO is
chaired by David Stewart and in addition comprises the
Executive Directors. Relevant senior financial management
are invited to attend. Any director may attend as an observer.
The Committee recommends to the Board any actions it
considers are required to ensure that the Company’s
balance sheet matters are appropriately managed. The
management of the Group’s capital structure, funding and
liquidity is currently managed directly by the Board. 
Further information on the Board and its committees can be
found on page 10 of the ‘Business Review’.
Re-election
Under the Company’s Articles of Association, all Directors are
subject to election by shareholders at the Annual General
Meeting following appointment and all Directors are subject
to retirement by rotation requiring re-election at intervals of no
more than three years. The letters of appointment of each of
the Non-Executive Directors and the Chairman confirm that
appointments are for specified terms and that reappointment
is not automatic. At the Annual General Meeting of the
Company in November 2009, David Stewart and David
Coates will stand down and offer themselves for re-election. 
Performance Evaluation
A formal evaluation of the Board and each of the individual
director’s own performances is undertaken annually. This
includes a review of success in achieving objectives set during
the period and agreeing areas for improvement going forward.
The evaluation for the current year is ongoing but is
consistent with previous reviews indicating that the Board
continues to benefit from constructive debate and challenges
in the Company’s operational and strategic matters. Regular
presentations from the senior management team are held at
the scheduled monthly meetings throughout the year and at
strategy meetings which promotes good communication and
ongoing dialogue at the operational level.
Relationship with Shareholders and
Dialogue with institutional shareholders
The Chairman and Executive Directors regularly attend
brokers’ and analysts’ presentations in relation to the
Company’s interim and full year results. The Chief Executive,
with assistance from the Company’s advisors, collates
feedback from such presentations and reports the findings to
the Board. The Chairman and Chief Executive also maintain
occasional dialogue with major shareholders in relation to,
inter alia, strategy and corporate governance issues. 
All shareholders receive the Annual Report and Accounts
and are welcome to attend the Annual General Meeting
(“AGM”) in Manchester. Formal notification of the meeting is
sent at least 20 working days in advance as required under
the Combined Code. The Directors attend the meeting and
are available to answer questions both formally during the
meeting and informally afterwards. 
The collection and analysis of the proxy votes is handled
independently by the Company’s registrars. The Chairman
announces the results of the proxy votes which have been
lodged after shareholders have voted on a show of hands.
Details of the 2009 AGM are set out in the notice of the
meeting enclosed with this report. All Committee Chairmen
are available at the AGM.
The Chairman and Senior Independent Non-Executive
Director are available to shareholders and may be contacted
through the Company Secretary.
The Company’s website at www.davenham.co.uk is an
important source of information for investors, including 22
information required in compliance with AIM Rule 26, and is
updated regularly. 
Corporate and Social Responsibility
Corporate responsibility is considered to be integral to the
Company’s culture and business practice and is applied to all
its relationships, whether internally with employees or
externally within the marketplace. The Board is committed to
managing and minimising any potential adverse
environmental issues. In line with such objectives, the Board
requires that all the Company’s activities are carried out in a
responsible way and that the highest standards of health and
safety, ethical and social conduct are maintained. The Board
also believes that such initiatives as creating a better work/life
balance are directly beneficial to the Company by improving
efficiency and morale.
Internal Control and Risk Management 
The Board, with the assistance of its Committees, is
responsible for analysing the strategic, financial and
operational risks which could affect the Company’s
businesses. These include, but are not limited to, the market
and economic conditions in which the Company operates,
competitor activities, gearing, regulation and business plans.
Any potential impact is prioritised and evaluated not only in
terms of possible financial impact on the Company such as
loss of income/additional expenditure but also according to
potential effects on employees, operational processes and
stakeholder relations.
The successful management of such risks is seen as key to
the Company’s ability to achieve its corporate goals. Clearly
in the currently unstable economic outlook, the risk
associated with an economic downturn has been a key risk
for executive management and Board attention. The
Company’s ‘key risks’ are discussed in more detail in the
Business Review (pages 10 to 14).
David Bowles is the Risk Director and an Executive Board
member. He is responsible for the management of risk.
Overall responsibility for the risk management process rests
at Board level. The Board systematically reviews and
evaluates the risks of the Company regularly, which ensures
that as new risks emerge in connection with projects or
general market developments, appropriate actions can be
discussed, agreed and taken in a flexible manner.
Overall, the Board, together with its Audit Committee, is
responsible for the systems of internal control and the
continued monitoring of the effectiveness of such systems.
This responsibility includes safeguarding the Company’s
assets against unauthorised use, maintaining proper
accounting records and ensuring accurate financial
information. The Directors recognise that such systems are
designed to manage rather than eliminate the risk of failure to
achieve business objectives but cannot provide absolute
assurance against material misstatement, financial loss or
fraud. The Board appoints experienced, professional staff to
fulfil their duties and responsibilities and during the year,
significant additional resource was deployed to the Risk
teams. The Risk Director and Risk teams contribute
significantly to the process for identifying and managing
significant risks throughout the year. The Board has reviewed
the need for an internal audit function but considers that the
size and the centralisation of the key finance activities of the
Group do not justify such an appointment at the present time. 
Davenham Group plc Annual Report and Accounts 2009
Corporate Governance continued 23
Davenham Group plc Annual Report and Accounts 2009
Independent Auditors’ Report
to the Members of Davenham Group plc
We have audited the Group and Parent Company financial
statements (the “financial statements’’) of Davenham Group
plc for the year ended 30 June 2009 which comprise the
Consolidated Income Statement, the Consolidated and
Parent Company Statements of Recognised Income and
Expense, the Consolidated and Parent Company Balance
Sheets, the Consolidated and Parent Company Cash Flow
Statements and the related notes. The financial reporting
framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union and, as regards
the Parent Company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities
Statement set out on page 18, the directors are responsible for
the preparation of the financial statements and for being
satisfied that they give a true and fair view. Our responsibility is
to audit the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing
Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and
only for the Company’ s members as a body in accordance with
Sections 495 and 496 of the Companies Act 2006 and for no
other purpose. We do not, in giving these opinions, accept or
assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it
may come save where expressly agreed by our prior consent
in writing.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free
from material misstatement, whether caused by fraud or error.
This includes an assessment of: whether the accounting
policies are appropriate to the Group’s and Parent Company’s
circumstances and have been consistently applied and
adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall
presentation of the financial statements.
Opinion on financial statements 
In our opinion:
 the financial statements give a true and fair view of the
state of the Group’ s and of the Parent Company’ s affairs as
at 30 June 2009 and of the Group’s loss and Group’s and
Parent Company’s cash flows for the year then ended;
 the Group financial statements have been properly prepared
in accordance with IFRSs as adopted by the European
Union; 
 the Parent Company financial statements have been
properly prepared in accordance with IFRSs as adopted by
the European Union and as applied in accordance with the
provisions of the Companies Act 2006; and
 the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006. 
Emphasis of Matter – Going Concern
In forming our opinion on the financial statements, which is not
qualified, we have considered the adequacy of the disclosures
made in note 1 to the financial statements which indicate that
the Directors consider it likely that the Group will breach one of
the Group’ s borrowing covenants in the forthcoming year. As a
result, the Directors are considering various strategic options
which it will ask the Group’s lenders to support. These
circumstances indicate, along with all other matters set out in
note 1, the existence of a material uncertainty as any failure by
the Group’s lenders to agree to waive covenants whilst the
Group continues to explore its strategic options would cast
significant doubt upon the Group’ s ability to continue as a going
concern. The financial statements do not include any
adjustments that would be necessary if the Group were unable
to continue as a going concern.
Opinion on other matter prescribed by the
Companies Act 2006
In our opinion the information given in the Directors’ Report for
the financial year for which the financial statements are prepared
is consistent with the financial statements.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if,
in our opinion: 
 adequate accounting records have not been kept by the
Parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or 
 the Parent Company financial statements are not in
agreement with the accounting records and returns; or 
 certain disclosures of directors’ remuneration specified by
law are not made; or
 we have not received all the information and explanations
we require for our audit.
Mark Hannam (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Manchester
29 September 2009 24
Consolidated Income Statement
for the year ended 30 June 2009
Davenham Group plc Annual Report and Accounts 2009
2009 2008
Before Exceptional Before Exceptional
exceptional items exceptional items
items (Note 6) Total items (Note 6) Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
Revenue 3 49,074 – 49,074 53,148 – 53,148
Finance costs 5 (15,907) – (15,907) (16,391) – (16,391)
Gross profit 33,167 – 33,167 36,757 – 36,757
Administrative expenses (15,382) (6,479) (21,861) (16,266) (318) (16,584)
Loan loss impairment 17 (66,713) – (66,713) (7,438) – (7,438)
Operating (loss)/profit before taxation 6 (48,928) (6,479) (55,407) 13,053 (318) 12,735
Taxation 9 12,986 1,814 14,800 (3,980) 89 (3,891)
(Loss)/profit for the year after taxation 25 (35,942) (4,665) (40,607) 9,073 (229) 8,844
(Loss)/earnings per share
– basic 12 (145.15)p (18.84)p (163.99)p 36.67p (0.92)p 35.75p
– diluted 12 (145.15)p (18.84)p (163.99)p 36.08p (0.91)p 35.17p
Dividends per share
– Paid during the period 11 Nil 15.06p
– Proposed* 11 Nil 7.00p
* The 2008 proposed final dividend was withdrawn on 20 October 2008.
All results are from continuing operations.
The notes on pages 30 to 64 form part of these financial statements. 25
Consolidated Statement of 
Recognised Income & Expense
for the year ended 30 June 2009
Davenham Group plc Annual Report and Accounts 2009
2009 2008
£’000 £’000
(Loss)/profit for the year (40,607) 8,844
Effective portion of changes in fair value of interest rate cashflow hedges:
– fair value adjustment (9,590) 1,309
– tax on fair value adjustment 2,686 (367)
Net (losses)/gains recognised directly in equity (47,511) 9,786 
There are no movements to be recognised through the parent company Statement of Recognised Income and Expense in 2009 or
2008.
The notes on pages 30 to 64 form part of these financial statements. 26
Davenham Group plc Annual Report and Accounts 2009
Consolidated Balance Sheet
as at 30 June 2009
30 June 30 June
2009 2008
Notes £’000 £’000
ASSETS
Non-current assets
Goodwill 13 1,909 1,909
Other intangible assets 14 415 780
Property, plant & equipment 15 868 1,023
Loans & advances to customers 17 68,635 53,808
Deferred taxation asset 19 14,451 1,594
Derivative financial instruments 22 155 1,853
86,433 60,967
Current assets
Loans & advances to customers 17 122,309 222,778
Other receivables, prepayments & accrued income 18 827 1,151
Derivative financial instruments 22 63 995
Cash and cash equivalents 20 2,562 2,416
125,761 227,340
Total assets 212,194 288,307
LIABILITIES
Current liabilities
Borrowings 21 82,879 9,195
Current tax liabilities 2,396 4,835
Derivative financial instruments 22 6,051 10
Trade and other payables 23 7,319 6,000
98,645 20,040
Non-current liabilities
Borrowings 21 98,707 210,030
Derivative financial instruments 22 3,920 29
102,627 210,059
Total liabilities 201,272 230,099
Net assets 10,922 58,208
SHAREHOLDERS’ EQUITY
Share capital 25 261 261
Share premium 25 26,528 26,528
Own shares held reserve 25 (1,507) (1,507)
Retained earnings 25 (9,884) 30,427
Share based payment reserve 25 406 477
Hedging reserve 25 (4,882) 2,022
Total Shareholders’ equity 10,922 58,208
The financial statements on pages 24 to 64 were approved by the board of directors on 29 September 2009 and were signed on its
behalf by:
D R Coates
Director
The notes on pages 30 to 64 form part of these financial statements. 27
Davenham Group plc Annual Report and Accounts 2009
Company Balance Sheet
as at 30 June 2009
30 June 30 June
2009 2008
Notes £’000 £’000
ASSETS
Non-current assets
Investment in Group undertakings 16 7,618 7,618
Other intangible assets 14 99 208
Property, plant & equipment 15 9 4
Deferred taxation asset 19 63 –
7,789 7,830
Current assets
Other receivables, prepayments & accrued income 18 34,036 28,369
Cash and cash equivalents 20 243 44
34,279 28,413
Total assets 42,068 36,243
LIABILITIES
Current liabilities
Trade and other payables 23 2,262 492
Borrowings 21 9,966 3,200
Non-current liabilities
Deferred taxation liability 19 – 7
Total liabilities 12,228 3,699
Net assets 29,840 32,544
SHAREHOLDERS’ EQUITY
Share capital 25 261 261
Share premium 25 26,528 26,528
Own shares held reserve 25 – –
Retained earnings 25 2,645 5,278
Share based payment reserve 25 406 477
Total Shareholders’ equity 29,840 32,544
The notes on pages 30 to 64 form part of these financial statements. 28
Davenham Group plc Annual Report and Accounts 2009
Consolidated Cash Flow Statement
for the year ended 30 June 2009
2009 2008
Notes £’000 £’000
Cash flows from operating activities
Cash generated from operations 29 5,414 3,206
Tax repaid/(paid) 2,188 (1,915)
Net cash inflow from operating activities 7,602 1,291
Cash flows from investing activities
Acquisition of business and subsidiary undertakings net of cash acquired – (240)
Purchase of property, plant and equipment (113) (168)
Purchase of intangible assets (43) (261)
Proceeds from sale of property, plant and equipment 16 4
Net cash outflow from investing activities (140) (665)
Cash flows from financing activities
Proceeds from issue of share capital – 26
Dividends paid to shareholders 11 – (3,724)
Net cash outflow from financing activities – (3,698)
Net increase/(decrease) in cash and cash equivalents 7,462 (3,072)
Cash and cash equivalents at 1 July (6,779) (3,707)
Cash and cash equivalents at 30 June 683 (6,779)
For the purposes of the cash flow statement, cash and cash equivalents comprise:
Cash at bank and in hand 20 2,562 2,416
Bank overdrafts included within current borrowings 21 (1,879) (9,195)
683 (6,779)
The notes on pages 30 to 64 form part of these financial statements. 29
Davenham Group plc Annual Report and Accounts 2009
Company Cash Flow Statement
for the year ended 30 June 2009
2009 2008
Notes £’000 £’000
Cash flows from operating activities
Cash used in operations 29 (1,939) (1,509)
Tax repaid 2,188 –
Net cash inflow/(outflow) from operating activities 249 (1,509)
Cash flows from investing activities
Purchase of property, plant and equipment (43) (4)
Purchase of intangible assets (7) (91)
Net cash outflow from investing activities (50) (95)
Cash flows from financing activities
Proceeds from issue of share capital – 26
Purchase of own shares – 1,507
Dividends paid to shareholders 11 – (3,920)
Net cash outflow from financing activities – (2,387)
Net increase/(decrease) in cash and cash equivalents 199 (3,991)
Cash and cash equivalents at 1 July 44 4,035
Cash and cash equivalents at 30 June 243 44
For the purposes of the cash flow statement, cash and cash equivalents comprise:
Cash at bank and in hand 20 243 44
The notes on pages 30 to 64 form part of these financial statements. 30
Davenham Group plc Annual Report and Accounts 2009
Notes to the Financial Statements
for the year ended 30 June 2009
1. Basis of preparation 
These consolidated and Company financial statements have been prepared in accordance with EU endorsed International Financial
Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations issued by the
International Accounting Standards Board.
These consolidated and Company financial statements have also been prepared in accordance with the Companies Act 2006 as
applicable to companies reporting under IFRS.
Basis of preparation 
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of derivative
financial instruments. 
The financial statements have been prepared in accordance with the accounting policies described in note 2 below. 
Standards, amendments and interpretations that are not yet effective and have not been early adopted
The following standards, amendments and interpretations to existing standards have been published and are mandatory for accounting
periods beginning on or after 1 January 2009 or later periods, but which the Group and the Company have not early adopted.
– IAS 1 ‘Presentation of Financial Statements (Revised)’ – this will revise the presentation of the financial statements including a
single statement of comprehensive income or a separate income statement and a statement of comprehensive income with a
statement of movements in reserves. Adopting this change would only result in a presentational change to the financial
statements. There will be no change in the recognition, measurement or disclosure of transactions and events.
– IFRS 8 ‘Operating segments’ – it is not expected that this standard, which is effective for the Group from 1 July 2009, 
will significantly impact on the Group’s segmental disclosures.
– Amendment to IAS 23 ‘Borrowing costs’ – it is not expected that this amendment, which is effective from 1 July 2009, will have
an impact on the Group or Company’s result as the Group’s existing accounting policy requires that borrowing costs relating to
assets in the course of development are capitalised as part of the asset’s costs rather than expensed.
– IFRS 2 ‘Share based payments’ (amended) – it is not expected that this standard, which is effective from 1 July 2009, will have
a material impact on the share based payments incurred by the Group.
– Amendment to IFRS 7 ‘Financial Instruments: disclosures’ – the amendment clarifies and enhances disclosures about fair value
measurements and the liquidity risk of financial instruments. We expect the amendment will result in further changes and
enhancements to the risk disclosures.
– Improvements to IFRSs (May 2008) – several small amendments with no significant impact for the Group.
Other new standards, amendments and interpretations have been considered but are not deemed to be relevant to the Group.
Going concern
Company Law requires the Directors to prepare financial statements that give a true and fair view of the state of the affairs of the Company
and the Group and of the profit or loss of the Group for the period under review. Fundamental to this requirement is that the Directors
assure themselves that it is reasonable for them to conclude that it is appropriate to prepare the financial statements on a going
concern basis.
The financial statements of the Group have been prepared on a going concern basis, which assumes that the Group will continue to
be able to meet its liabilities as and when they fall due, for the foreseeable future.  
In March 2009 Davenham agreed a new two year £215m facility which was tailored to support the Group’s revised strategy ensuring
the working capital requirements of the asset and trade divisions were met whilst reflecting the recovery of cash from the downsizing
of the property loan book. 
However, in the sectors in which the Group operates, especially in relation to the property market, economic conditions have declined
since issuing the Group’s interim results on 26 March 2009. The Group has generated lower than forecast cash inflows from its property
division whilst also incurring higher than forecast impairment levels. 31
1. Basis of preparation continued
Going concern continued
In conjunction with its advisors, the Board has recently undertaken a thorough review of the Group’s forecasts, which extend beyond
one year from the date of approval of these financial statements and take account of the impact of the principal risks and uncertainties
set out on pages 10 to 14. The forecasts make assumptions in respect of future trading conditions, most notably in respect of the
economic environment and its impact on the Group’s revenues and costs. In addition to this, the nature of the Group’s property division
in the current environment is such that there can be considerable variation in the timing of cash inflows. The forecasts take into account
foreseeable downside risks based upon on the information that is available at the time of approval of these financial statements and
indicate that the property division will continue to generate lower than originally forecast cash inflows but reflect positive contribution
levels from both the trade and asset portfolios in line with its new strategy.
In addition the high level of non-performing debt and a forecast inability to recover property loans through the realisation of security as
quickly as originally forecast will result in a burden of finance costs being higher than originally forecast.
The debt burden is further impacting on the Group’s profitability through the carrying of its swap portfolio. The Group adopted a
traditional approach to its treasury management over the past three years seeing a swap portfolio being built up of varying amounts
reflecting movements in the market. The strategy of the Group was to ensure the interest rate risk in relation to its fixed rate lending
portfolios ie Property and Asset were mitigated through the use of fixed interest rate swaps. This of course was predicated upon the
Group’s portfolio remaining at or above levels during 2007/08 and the Group would not be faced with the current run down situation
of property portfolio.
The Group has therefore suffered both from being locked into funding cost rates in excess of current market rates (swapped at a weighted
average of 5.5% vs 1% LIBOR) and also being an in over-hedged position whereby the notional swap values are in excess of the Group’s
debt levels.
Based upon these forecasts a breach of certain of the Group’s covenants is likely in the current financial year. One of the key banking
covenants relates to the quarterly step-downs of the Group’s facility from £215m to £90m by 30 September 2010. In addition the Group
also has a tangible net worth covenant, calculated under UK GAAP , which requires the Group to have a tangible net worth (as defined
in the banking agreement) equal to or in excess of £20m as from the first testing point of 31 March 2010 and then quarterly thereafter.
Failure of a covenant test would render the facilities in default and repayable on demand at the option of the lenders, if an amendment
or waiver is not granted by the lenders in advance. The granting of a waiver requires consent by 66.67% of the banking group. 
Such a majority can be achieved through the support of the two lead banks plus one other member of the remaining six banks in the
syndicate. 
The Group reports on its trading performance and covenant compliance (whether tested or not) on a monthly basis. The two lead banks
are also given a monthly update through meetings with the senior management team. In addition, the banks have the option to attend
the monthly portfolio meetings enabling them to assess firsthand the performance of the various product groups. The Group was
compliant with its banking covenants as at 30 June 2009 and remains compliant as at the date of approval of the financial statements,
including the 30 September 2009 testing point. The principal financial covenants are due to be tested again as at 31 December 2009
and 31 March 2010.
The Group has proactively entered into detailed on-going discussions with the banking group to consider various strategic options on
behalf of shareholders. The options being considered may see the acceleration of cash inflows via asset sales or through access to
new forms of funding. In addition the Board may consider proposing an amendment to the terms of the current funding facility primarily
in relation to its current covenant testing. The Board is currently reviewing in detail (together with the Company’s advisers) the feasibility
of various options, prior to deciding which to pursue. 
Although the Directors remain confident of a successful outcome for at least one of the strategic options that it is considering, they
have concluded that, given the current economic circumstances, that success is not entirely within the Company’s control, indicating
a material uncertainty which may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern. 
If this is the case, the Group and the Company may be unable to continue to realise assets and discharge liabilities in the normal course
of business. These financial statements do not include any adjustments that would result from the going concern basis of preparation
being inappropriate. 32
Davenham Group plc Annual Report and Accounts 2009
Notes to the Financial Statements continued
for the year ended 30 June 2009
1. Basis of preparation continued
Use of assumptions and estimates
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances,
the results of which form the basis of making the judgements about the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised.
Estimates and judgements made by management in the application of IFRS that have a significant effect on the financial statements
are:
IAS 39 ‘Financial Instruments: Recognition and Measurement’
The Group reviews its loans and receivables on an ongoing basis to assess the level of impairment. Future cash flows are estimated
on the basis of the contractual cash flows of the assets and historical loss experience. Historical loss experience is adjusted on the
basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss
experience is based and to remove the effects of conditions in the historical period that do not exist currently. To the extent that the
net present value of estimated future cash flows differs by +/-1%, the loan loss provision in the balance sheet would be an estimated
£1.2m lower/higher (2008: £0.3m lower/higher).
IAS 36 ‘Impairment of assets’ 
Determining whether goodwill is impaired requires an estimation of the value in use of the CGU’s to which goodwill has been allocated.
The value in use calculation requires the entity to estimate the future cash flows expected to arise from the CGU’s and a suitable
discount rate in order to calculate present value. The carrying amount of goodwill at the balance sheet date was £1.9m (2008: £1.9m).
Details of the value in use calculation are provided in note 13 on page 43.
IAS 12 ‘Income taxes’
In applying the Group’s accounting policy in relation to deferred tax, as set out below, the Directors are required to make assumptions
regarding the Group’s ability to utilise historical tax assets following an assessment of the likely quantum and timing of future taxable
profits. A deferred tax asset is recognised to the extent that the Directors are confident that the Group’s future profits will utilise historical
tax assets.
2. Accounting Policies 
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these group
financial statements.
Basis of consolidation 
A business combination is recognised where separate entities or businesses have been brought together within the Group. Subsidiaries
are all entities over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. 
The purchase method of accounting is used to account for business combinations made by the Group. The cost of a business
combination is measured as the fair value of the assets acquired and liabilities incurred or assumed at the date of exchange, plus costs
directly attributable to the business combination. 
Identifiable assets, liabilities and contingent liabilities acquired in a business combination are measured initially at their fair values at the
acquisition date. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is
recorded as goodwill. 
Intra group transactions, including income and profits, are eliminated fully on consolidation. 
Segmental reporting 
A business segment is a distinguishable component of the Group that provides products that are subject to risks and returns that are
different from those of other business segments. For management purposes, the Group is organised into three operating segments:
Property Finance, Trade Finance and Asset Finance. Management believe that there is only one geographical segment, being the UK
market. 33
2. Accounting Policies 
Financial assets 
Management determines the classification of the Group’s financial assets at initial recognition into one of the following categories:
Loans and receivables 
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They arise when the Group provides money directly to a customer with no intention of trading the receivable. Loans and receivables
are initially recorded at fair value including any transaction costs and are subsequently measured at amortised cost using the effective
interest rate (EIR) method.
Financial assets at fair value through profit or loss 
This category comprises derivatives that are not designated as hedges, and any financial assets that are designated as fair value
through the profit and loss on inception. These financial assets are initially recognised at fair value, with transaction costs recorded
immediately in the income statement, and are subsequently measured at fair value. Gains and losses arising from changes in fair value
are recognised in the income statement. 
Held-to-maturity 
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the
Group has a positive intention and ability to hold to maturity. Were the Group to sell a significant amount of held-to-maturity assets the
entire category would be tainted and reclassified as available-for-sale. 
Available-for-sale 
Available-for-sale investments are those intended to be held for an indefinite period of time, which may be sold in response to needs
for liquidity or changes in interest rates. 
The Group has not held any held-to-maturity investments or available-for-sale financial assets at any point during the reporting periods. 
Revenue recognition 
Revenue comprises the fair value of the consideration received or receivable, net of value added tax, and is recognised as follows: 
Interest and similar income 
Interest income is recognised in the income statement for all financial assets measured at amortised cost using the effective interest
method. The effective interest method is a method of calculating the amortised cost of a financial asset and allocating the interest income
over the relevant period. The effective interest rate (‘EIR’) is the rate that exactly discounts estimated future cash receipts through the
expected life, or contractual term if shorter, of the financial asset to the net carrying amount of the financial asset. When calculating
the EIR, the Group estimates cash flows considering all contractual terms of the financial instruments, such as early settlement income,
but does not include an expectation for future credit losses. The calculation includes all fees charged to customers, such as acceptance
or similar fees and direct and incremental transaction costs, such as broker commissions. 
Amounts due from lessees under finance leases and hire purchase contracts are recorded as receivables at the amount of the Group’s
net investment in the contract. Finance income is allocated to accounting periods so as to refiect a constant periodic rate of return on
the Group’s net investment (before tax) outstanding in respect of the lease. 
Interest income continues to be recognised at the EIR once a financial asset or a group of similar financial assets has been written down
as a result of an impairment loss, irrespective of the terms of the loan and whether interest has been suspended on the customer’s
account. A gross-up adjustment to income is offset by a corresponding gross-up adjustment to the loan loss charge (refer to the
accounting policy entitled ‘Impairment of loans and receivables’). 
Fee and commissions income
The Group earns fee income from services provided to clients. Fee income can be divided into two broad categories, fees earned from
services that are provided over a period of time which are recognised over the period in which the service is provided, and fees that
are earned on the completion of a significant act or on the occurrence of an event such as the completion of a transaction, which are
recognised when the act is completed or the event occurs. 
Fees and commissions that are an integral part of a loan or receivable are deferred (together with related direct costs) and recognised
over the life of the agreement as an adjustment to the effective interest rate. 34
Davenham Group plc Annual Report and Accounts 2009
Notes to the Financial Statements continued
for the year ended 30 June 2009
2. Accounting policies continued
Impairment of loans and receivables 
In respect of loans and receivables, the Group assesses on an ongoing basis whether there is objective evidence that a loan asset or
a group of loan assets is impaired. A loan asset or a group of loan assets is impaired and impairment losses are incurred only if there
is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’)
and the loss event has an impact on the estimated future cash fiows of the loan asset or group of loan assets that can be reliably
estimated. 
The Group reviews its leasing and loan portfolios to assess impairment at least on a monthly basis. In determining whether an impairment
loss is to be recorded in the income statement the Group makes judgements as to whether there is observable data indicating that
there is a measurable decrease in the estimated cash flows from an individual lease or loan. This evidence can be as a result of non-
payment or other evidence of a deterioration of the financial status of the customer. The Group takes account of the value of collateral
held and also any movements in market conditions that impact on the value of collateral when calculating the level of impairment loss
to be charged to the income statement.
The Group first assesses whether objective evidence of impairment exists individually for loan assets that are individually significant,
and either individually or collectively for loan assets that are not individually significant. 
If there is objective evidence that an impairment loss has occurred, the amount of the loss is measured as the difference between the
asset’s carrying amount and the present value of estimated future cash fiows, excluding future credit losses that have not been incurred,
discounted at the loan asset’s original EIR. The carrying amount of the asset is reduced through the use of a loan loss provision. 
The amount of the loss is recognised in the income statement. 
For the purposes of a collective evaluation of impairment, loan assets are grouped on the basis of similar credit risk characteristics.
Those characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors’
ability to pay all amounts due according to the contractual terms of the assets being evaluated. Future cash flows for a group of loan
assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets and historical
loss experience for assets with credit risk characteristics similar to those in the Group. Historical loss experience is adjusted on the basis
of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience
is based and to remove the effects of conditions in the historical period that do not exist currently.
The accuracy of the allowances and provisions made depends on how accurately the Group estimates future cash flows for specific
counterparty allowances and provisions and the model assumptions and parameters used in determining collective allowances.
While this necessarily involves judgement, the Group believes that its allowances and provisions are reasonable and supportable.
Where interest income continues to be recognised on impaired loans, which cannot be collected from the customer due to the interest
being fixed at the outset or interest having been suspended on the customer’s account, referred to as the ‘gross-up adjustment’ to
income, a corresponding loan loss charge is made. 
Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment.
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. 
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows
(cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the
impairment at each reporting date.
Interest payable
Interest payable is stated after charging amortisation of loan arrangement fees. Loan arrangement fees are deducted from the liability
recorded in the balance sheet and amortised over the life of the relevant arrangement.
Operating leases – as lessee
Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Payments made
under operating leases are charged to the income statement on a systematic straight line basis over the period of the lease.
Foreign currency 
The Group’s financial statements are presented in Pounds Sterling, which is the Group’s functional and presentational currency. 
All subsidiaries of the Group have Pounds Sterling as their functional currency. Foreign exchange gains and losses resulting from the
translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income
statement as part of administrative expenses.  35
2. Accounting policies continued
Exceptional Items
Exceptional items are those significant items which are separately disclosed by virtue of their size or nature to enable a full understanding
of the Group’s financial performance, and are shown separately on the face of the income statement. 
Intangible assets 
Goodwill and Other Intangible Assets
Goodwill arising on acquisition represents the excess of the cost of a business combination over the fair values of the Group’s share
of the identifiable net assets acquired. Goodwill is not amortised, but is reviewed annually for impairment. Any impairment is recognised
immediately through the income statement and is not subsequently reversed. 
Other intangible assets, including customer relationships, are valued on acquisition and shown separately from goodwill. 
These intangibles are amortised over their estimated useful lives (5 – 10 years).
Computer software 
Acquired software licenses are capitalised as intangible assets and amortised over their useful lives, 3 years, on a straight line basis. 
Costs that are directly attributable with the creation of identifiable software, which meet the development asset recognition criteria as
laid out in IAS 38 ‘Intangible assets’, are recognised as internally generated intangible assets. 
Direct costs include the employment costs of internal software developers, consultancy costs and borrowing costs. Borrowing costs
are capitalised until such time as the internally generated software is substantially ready for its intended use. 
Computer software development costs recognised as assets are amortised over their estimated useful lives (3 years) on a straight line
basis. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. 
All other software development and maintenance costs are recognised as an expense as incurred. 
Property, plant and equipment 
Property, plant and equipment is stated at cost less accumulated depreciation. Cost represents expenditure that is directly attributable
to the purchase of the asset.
Land and buildings are not subject to regular revaluations. 
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the items will flow to the Group and the cost of the item can be measured reliably. 
Land is not depreciated. Depreciation on other assets is calculated using the straight line basis on tangible fixed assets at rates
calculated to write off the assets over their anticipated useful lives as follows: 
Freehold buildings 50 years
Fixtures and fittings 4 – 5 years
Computer and ancillary equipment 3 years
Motor vehicles 4 years 
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. 
Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in the income statement. 
Investments in subsidiary undertakings
Investments in subsidiary undertakings are initially and subsequently recognised at cost. The Company recognises income from the
investment only to the extent that it receives distributions from post-acquisition accumulated profits. Distributions received in excess
of such profits are regarded as a recovery of investment and recognised as a reduction in the cost of the investment.
At each reporting date, an assessment is made as to whether there is any indication that the investment may be impaired. If such an
indication exists, the Company estimates the investment’ s recoverable amount. The investment is written down to the recoverable amount
if this is lower than its carrying value. The impairment loss is recognised in the Company’s income statement.  36
Davenham Group plc Annual Report and Accounts 2009
Notes to the Financial Statements continued
for the year ended 30 June 2009
2. Accounting policies continued
Cash and cash equivalents 
For the purposes of the cash fiow statement, cash and cash equivalents includes cash in hand, deposits held with banks, which have
a residual maturity of 3 months at the date of acquisition, and bank overdrafts. Bank overdrafts are shown within borrowings in current
liabilities in the balance sheet. 
Employee benefits 
Pension obligations 
The Group operates a money purchase pension scheme for the members of the Group. The assets of the scheme are held separately
from those of the Group in independently administered funds. The pension cost charge represents contributions payable by the Group
to the scheme. 
The Group provides no other post-retirement benefits to its employees or directors. 
Share-based payments 
The Group operates a number of share based payment award schemes. The fair value of the options is measured at grant date and
spread over the vesting period through the income statement with a corresponding increase in equity. The fair value of the share
options and awards are measured using an option-pricing model taking into account the terms and conditions of the individual schemes.
The fair value of the options awarded under the schemes with market based performance conditions is estimated using a Monte-Carlo
simulation model. The fair value of options awarded under schemes with market and non-market based performance conditions is
estimated using the Binomial and Black-Scholes models respectively.
The Group makes charges to the income statement for employer’s National Insurance liabilities on options granted as incurred.
Borrowings 
Borrowings include bank borrowings and other borrowings, overdrafts and obligations under finance leases and hire purchase contracts. 
Bank borrowings and other borrowings are recognised initially at fair value, being their issue proceeds net of any transaction costs
incurred. These borrowings are subsequently stated at amortised cost; any difference between the proceeds, net of transaction costs,
and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Current tax 
The charge for current tax is based on the results for the period as adjusted for items which are non-assessable or disallowed. 
It is calculated using rates of tax that have been enacted by the balance sheet date. 
Deferred tax 
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the financial statements. 
Deferred tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which
case it is recognised in equity. 
Deferred tax is determined using tax rates and laws that have been enacted by the balance sheet date and are expected to apply when
the related deferred tax asset is realised or the deferred tax liability is settled. 
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilised. 
Share capital 
Ordinary shares are classified as equity. 
Shares are recorded at their nominal value with any surplus received on their issue taken to the share premium account. Incremental
costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds. 
Where any group company purchases the Company’s equity share capital, the consideration paid, including any directly attributable
incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders, via the own shares held
reserve, until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of
any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the
Company’s equity holders. 37
2. Accounting policies continued
Dividend distribution 
Final dividends payable to the Group’s shareholders are recognised in the Group’s financial statements in the period in which the
dividends are approved by the Group’s shareholders. Interim dividends payable are recognised in the period in which the dividends
are paid. 
Derivative financial instruments and hedging activities 
Derivatives are initially recognised at fair value on the date the derivative contract is entered into and are subsequently re-measured 
at fair value. The fair value of derivatives is determined by using a valuation model and is primarily based on observable market data.
The method of recognising the resulting gain or loss from the re-measurement depends on whether the derivative is designated as a
hedging instrument, and if so, the nature of the item being hedged. 
The Group’s policy is to designate derivatives on the date that the derivative contract is committed to. The Group designates its
derivatives as a hedge of the variability of cash flows associated with highly probable forecast transactions and recognised assets and
liabilities (‘cash fiow hedging instrument’). 
To qualify for hedge accounting, the Group is required, at inception, to document prospectively the relationship between the item
being hedged and the hedging instrument. The Group is also required to document and perform an assessment of the relationship
between the hedged item and the hedging instrument, which shows that the hedge will be highly effective in offsetting changes in cash
flows of the hedged item on an ongoing basis. This effectiveness testing is re-performed at each reporting date to ensure that the hedge
remains highly effective. 
The effective portion of changes in the fair value of derivatives designated as cash flow hedging instruments is recognised in equity within
the hedging reserve. The change in the fair value relating to the ineffective portion is recognised immediately in the income statement
within finance costs. 
Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item will affect profit, i.e. when
the forecast interest payment that is hedged is expensed. 
When a cash flow hedging instrument expires or is sold, or when a cash flow hedge no longer meets the criteria for hedge accounting,
hedge accounting is discontinued prospectively. Any cumulative gain or loss existing in equity at that time remains in equity and is
recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement. 
3. Revenue 
2009 2008
£’000 £’000
Interest and similar income receivable from customers 46,088 47,103
Fees and commissions income 2,986 6,045
49,074 53,148
Interest and similar income includes the ‘gross-up adjustment’ of £17,469,000 (2008: £3,662,000) (note 17). The 2008 split between
interest and similar income, and fees and commissions income has been restated to ensure that there is a consistent methodology of
splitting revenue between the current and prior year. 38
Davenham Group plc Annual Report and Accounts 2009
Notes to the Financial Statements continued
for the year ended 30 June 2009
4. Segmental information
A business segment is a distinguishable component of the Group that provides products that are subject to risks and returns that are
different from those of other business segments. For management purposes the Group is organised into three operating segments:
Property Finance, Trade Finance and Asset Finance. 
The segmental income and results for the year ended 30 June 2009 and segment assets and liabilities as at that date are as follows:
Property Trade Asset
finance finance finance Central Group
£’000 £’000 £’000 £’000 £’000
Income
Revenue 27,534 10,358 11,182 – 49,074
Finance costs (10,554) (2,683) (4,426) 1,756 (15,907)
Gross Profit 16,980 7,675 6,756 1,756 33,167
Result
Segment result (40,534) (464) (4,712) (3,218) (48,928)
Exceptional items (6,479)
Taxation 14,800
Loss for the financial year (40,607)
Included within the exceptional items of £6,479,000 are redundancy costs relating to property of £193,000, trade of £78,000 and asset
of £92,000. The remaining exceptional items are in the central segment.
Property Trade Asset
finance finance finance Central Group
£’000 £’000 £’000 £’000 £’000
Segment assets and liabilities
Segment assets
Total assets 110,071 27,666 53,207 21,250 212,194
Segment liabilities
Total liabilities 103,593 26,038 50,076 21,565 201,272
Other segment items
Capital expenditure 40 40 40 36 156
Depreciation 46 46 46 26 164
Amortisation – other intangible assets 70 67 134 47 318
Loan loss charge 54,398 4,082 8,233 – 66,713
The loan loss charge includes the ‘gross-up adjustment’ of £17,469,000 (note 17).
Capital expenditure comprises additions to property, plant and equipment (note 15) and intangible assets (note 14). 39
4. Segmental information continued
Each of the trading divisions is provided with funding for its gross portfolio from Davenham Treasury Services Ltd against which a
deduction is made for a pro-rata divisional share of the Group’s equity base, calculated by reference to portfolio size, giving rise to a
divisional ‘net debt’ position. Each division is then charged interest by Davenham Treasury Services Ltd on its net debt at a rate
equivalent to that charged to the Group on its external borrowings.
This basis of interest calculation gives rise to resultant credit in Davenham Treasury Services Ltd primarily due to the level of provisions,
which are not deducted from divisional portfolio balances but are of course reflected in the Group’s equity position, thus resulting in
the trading divisions incurring interest costs in relation to their non-performing/provisioned accounts.
The segmental income and results for the year ended 30 June 2008 and segment assets and liabilities as at that date are as follows:
Property Trade Asset
finance finance finance Central Group
£’000 £’000 £’000 £’000 £’000
Income
Revenue 29,273 12,187 11,688 – 53,148
Finance costs (7,668) (2,530) (5,634) (559) (16,391)
Gross Profit 21,605 9,657 6,054 (559) 36,757
Result
Segment result 12,583 4,036 1,245 (4,811) 13,053
Exceptional items (318)
Taxation (3,891)
Profit for the financial year 8,844
Property Trade Asset
finance finance finance Central Group
£’000 £’000 £’000 £’000 £’000
Segment assets and liabilities
Segment assets 154,644 50,567 71,375 11,721 288,307
Total assets 288,307
Segment liabilities 117,431 38,399 54,200 20,069 230,099
Total liabilities 230,099
Other segment items
Capital expenditure 99 99 135 96 429
Depreciation 50 50 50 47 197
Amortisation – other intangible assets 57 57 107 56 277
Loan loss charge 4,382 1,473 1,583 – 7,438
The loan loss charge includes the ‘gross-up adjustment’ of £3,662,000 (note 17).
Capital expenditure comprises additions to property, plant and equipment (note 15) and intangible assets (note 14).
All of the exceptional items included above relates to the central segment.
The amount included as segment liabilities within the three trading divisions represents the total external bank borrowings. These have
been allocated on a weighted average basis by reference to loan portfolio sizes.
Management believe that there is only one geographical segment, being the UK market. 40
Davenham Group plc Annual Report and Accounts 2009
Notes to the Financial Statements continued
for the year ended 30 June 2009
5. Finance Costs
2009 2008
£’000 £’000
Interest on bank loans and overdrafts 12,715 17,451
Interest payable/(receivable) on swaps 3,192 (1,060)
15,907 16,391
6. Operating (loss)/profit
2009 2008
£’000 £’000
Operating (loss)/profit is stated after charging/(crediting):
Depreciation for the period 164 197
Loan loss provisions* 66,713 7,438
Loss on disposal of intangible assets 91 –
Loss/(profit) on disposal of property, plant and equipment 90 (4)
Operating lease payments 245 265
Amortisation of other intangibles 318 277
Exceptional costs relating to redundancy & refinancing 3,467 –
Exceptional costs relating to loss on de-designation of interest rate swaps 3,012 –
Exceptional costs relating to bid defence – 318
Total exceptional costs 6,479 318
* The loan loss provisioning charge includes £17,469,000 (2008: £3,662,000) in respect of the ‘gross-up adjustment’ (note 17).
The Group’s definition of exceptional items is disclosed in note 2.
In view of the significant shift in market conditions, the Group implemented a number of restructuring initiatives, leading to costs in respect
of banking, office closures and redundancies. These costs totalled £3,467,000.
In addition and directly linked to the Group’s requirement under its new banking agreement to reduce levels of outstanding debt, 
the Group has incurred a charge in relation to fair value movements on interest rate swaps which no longer qualify for hedge accounting
of £3,012,000.
2009 2008
Services provided by the company’s auditor and its associates: £’000 £’000
During the year the group obtained the following services from the Company’s auditor and its associates:
Fees payable to the Company’s auditor for the audit of parent company and consolidated accounts 124 106
Fees payable to the company’s auditor and its associates for other services:
The audit of company’s subsidiaries pursuant to legislation 17 13
Tax services 29 2
Other assurance 45 47 41
7. Directors’ emoluments
The remuneration paid to the directors of Davenham Group plc in respect of qualifying services was:
2009 2008
£’000 £’000
Emoluments and benefits 1,069 887
Company pension contributions to money purchase schemes 63 68
Other post employment benefits 1 1
Other long term benefits 12 12
Share based payments 112 68
1,257 1,036
Key management personnel, as defined under IAS 24 ‘Related Party Disclosures’, have been identified as the Board of Directors as
the controls operated by the Group ensure that all key decisions are reserved for the Board. The above reflects the total key management
compensation.
Retirement benefits are accruing to 3 (2008: 4) directors under a money purchase pension scheme.
Emoluments include the following amounts in respect of the highest paid director:
2009 2008
£’000 £’000
Emoluments and benefits 375 265
Company pension contributions to money purchase schemes 26 24
401 289
During the year 221,622 share options (2008: 60,849) were granted to the highest paid director under the long term incentive scheme
(note 30).
8. Employee information
The average monthly number of persons (including directors) employed during the period was:
2009 2008
Number Number
Administration 158 186
£’000 £’000
Staff costs (for the above persons)
Wages and salaries 6,431 8,692
Social security costs 751 991
Pension costs 568 617
Share-based payments 225 200
Other benefits 216 236
8,191 10,736
Other benefits principally comprises the cost of providing health and life assurance cover. 42
Davenham Group plc Annual Report and Accounts 2009
Notes to the Financial Statements continued
for the year ended 30 June 2009
9. Taxation
9(a)   Analysis of tax (credit)/charge in the period
2009 2008
£’000 £’000
Current tax
– United Kingdom corporation tax on (losses)/profits of the period (32) 4,545
– Adjustments in respect of previous periods (4,597) –
Total current tax (4,629) 4,545
Deferred tax 
Current year deferred tax expense (7,740) (592)
Adjustment in respect of prior periods (2,431) (192)
Change in tax rate – 130
Deferred tax (10,171) (654)
Tax (credit)/charge on (loss)/profit on ordinary activities (14,800) 3,891
The tax on the Group’s (loss)/profit before tax differs from the theoretical amount that would arise using the weighted average tax rate
applicable to (losses)/profits of the consolidated entities as follows:
9(b)  Factors affecting tax (credit)/charge for the period
2009 2008
£’000 £’000
(Loss)/Profit before tax (55,407) 12,735
at the UK tax rate of 28.0% (2008:29.5%) (15,514) 3,757
Income not subject to tax – (12)
Expenses not deductible for tax purposes 103 173
Adjustment in respect of prior periods (7,028) (192)
Losses carried back 7,639 –
Change in tax rate – current year – 35
Change in tax rate – prior year – 130
Total tax (credit)/charge for the year (14,800) 3,891
The standard rate of current tax for the year is 28% (2008: 29.5% – based on the weighted average, which reflects the reduction in
the rate of UK standard rate corporation tax to 28%, effective from 1 April 2008, and which is deemed an appropriate ‘standard’ rate
of tax for the Group).
10. Results of Davenham Group plc
As permitted by Section 408 of the Companies Act 2006, the parent company’s income statement has not been included in these
financial statements. The loss for the year, which has been dealt with in the financial statements of the parent company, amounts to
£2.9m (2008: profit of £4.4m).  43
11. Dividends
2009 2008
£’000 £’000
Ordinary shares – Final 2007 paid – 10.38p per share – 2,701
Ordinary shares – Interim 2008 paid – 4.68p per share – 1,219
– 3,920
The Directors do not propose to pay dividends in respect of the 2009 financial year.
Included in the dividend payment of £3.9m in 2008 are dividends of £0.2m which were paid to the Employee Benefit Trust.
12. Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number
of ordinary shares in issue during the year, excluding own shares held which are treated, for this purpose, as being cancelled.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive
potential ordinary shares.
2009 2008
Weighted Weighted
average average
number of Loss number of Earnings
Loss of shares per share Earnings of shares per share
£’000 ‘000 pence £’000 ‘000 pence
Shares in issue during the year 26,061 26,061
Own shares held (1,299) (1,321)
Basic EPS (40,607) 24,762 (163.99) 8,844 24,740 35.75
Effect of dilutive securities:
Options ––– – 408 (0.58)
Diluted EPS (40,607) 24,762 (163.99) 8,844 25,148 35.17
13. Goodwill
Group Group
2009 2008
Goodwill £’000 £’000
Cost
At 30 June 2008 and 30 June 2009 1,909 1,909
Accumulated amortisation and impairment
At 30 June 2008 and 30 June 2009 – –
Net book amount at 30 June 2008 and 30 June 2009 1,909 1,909
Goodwill relates entirely to the Group’s Manor Credit division. The impairment review carried out demonstrated no evidence of
impairment.
The recoverable amount of goodwill is determined from value in use calculations. The key assumptions for the value in use calculations
are those regarding discount rates, growth rates and expected changes to loan loss rates and direct costs. Management estimates
discount rates using pre-tax rates that reflect current market assessments of the time value of money and the rates specific to Manor
Credit (Davenham) Ltd. Changes in loan loss rates and direct costs are based on historic experience and expectations of short-term
future changes in the market. The Group prepares a cash flow forecast derived from the approved budget for the following three years
and extrapolates this in line with historic long-term UK GDP growth. The cash flows are discounted using a pre-tax discount rate of
10%.
The Company has no goodwill. 44
Davenham Group plc Annual Report and Accounts 2009
Notes to the Financial Statements continued
for the year ended 30 June 2009
14. Other intangible assets
Software Customer
Costs Intangible Total
Group £’000 £’000 £’000
Cost
At 1 July 2007 762 360 1,122
Additions 261 – 261
At 1 July 2008 1,023 360 1,383
Additions 43 – 43
Disposals (390) – (390)
At 30 June 2009 676 360 1,036 
Accumulated amortisation and impairment
At 1 July 2007 326 – 326
Charge for the year 227 50 277
At 1 July 2008 553 50 603
Charge for the year 268 50 318
Disposals (300) – (300)
At 30 June 2009 521 100 621
Net book amount
At 30 June 2009 155 260 415
At 30 June 2008 470 310 780
Other intangible assets comprises of computer software and the estimated fair value derived from customer relationships following the
acquisition of Manor Credit in June 2007.
All amortisation charges for the year have been charged to the income statement through administrative expenses (note 6).
Software Customer
Costs Intangible Total
Company £’000 £’000 £’000
Cost
At 1 July 2007 303 – 303
Additions 91 – 91
At 1 July 2008 394 – 394
Additions 43 – 43
Disposals (7) – (7)
At 30 June 2009 430 – 430
Accumulated amortisation and impairment
At 1 July 2007 73 – 73
Charge for the year 113 – 113
At 1 July 2008 186 – 186
Charge for the year 152 – 152
Disposals (7) – (7)
At 30 June 2009 331 – 331
Net book amount
At 30 June 2009 99 – 99
At 30 June 2008 208 – 208 45
15. Property, plant and equipment
Computer
Equipment
Freehold Motor and Fixtures
Property Vehicles & Fittings Total
Group £’000 £’000 £’000 £’000
Cost
At 1 July 2007 901 106 982 1,989
Additions – 38 130 168
Disposals – (18) (29) (47)
At 1 July 2008 901 126 1,083 2,110
Additions – – 113 113
Disposals – (79) (856) (935)
At 30 June 2009 901 47 340 1,288
Depreciation
At 1 July 2007 158 59 720 937
Charge for the year 18 31 148 197
Disposals – (18) (29) (47)
At 1 July 2008 176 72 839 1,087
Charge for the year 18 18 128 164
Disposals – (57) (774) (831)
At 30 June 2009 194 33 193 420
Net book value at 30 June 2009 707 14 147 868
Net book value at 30 June 2008 725 54 244 1,023
The cost of freehold properties includes land of £0.1m (2008: £0.1m) on which depreciation is not provided.
Computer
Equipment
Freehold Motor and Fixtures
Property Vehicles & Fittings Total
Company £’000 £’000 £’000 £’000
Cost
At 1 July 2007 ––––
Additions –– 4 4
At 1 July 2008 –– 4 4
Additions –– 7 7
At 30 June 2009 – – 11 11
Depreciation
At 1 July 2007 ––––
Charge for the year ––––
At 1 July 2008 ––––
Charge for the year –– 2 2
At 30 June 2009 –– 2 2
Net book value at 30 June 2009 –– 9 9
Net book value at 30 June 2008 – – 4 4
Depreciation and profit/(loss) on disposal have been charged/(credited) to the income statement through administrative expenses
(note 6). 46
Davenham Group plc Annual Report and Accounts 2009
Notes to the Financial Statements continued
for the year ended 30 June 2009
16. Investments in subsidiary undertakings
2009 2008
Company £’000 £’000
Cost
At 1 July 7,618 7,618
Additions – –
At 30 June 7,618 7,618 
Provision for diminution in value at 30 June – –
Net book amount at 30 June 7,618 7,618 
The subsidiaries of the Company at 30 June 2009, all of which are 100% owned and included in the Group consolidation, are:
Subsidiary undertaking Country of registration Principal business activity
St Johns Street Holdings Limited Cayman Islands Holding company – dormant during the year
Davenham Group Holdings plc England and Wales Holding company 
*Davenham Trust PLC England and Wales Provision of finance and related services
*Davenham Trade Finance Limited England and Wales Provision of sales, import and stock finance
*Booker Montague Leasing Limited England and Wales Provision of leasing and asset finance service – 
dormant during the year 
*St John Street Properties Limited England and Wales Property investment company – dormant during the year
*Davenham Mortgage Finance Limited England and Wales Dormant during the year
Davenham Group Trustees Limited England and Wales Employee benefit trust
Davenham Treasury Services Limited England and Wales Provision of finance and related services to Group companies
*Manor Credit (Davenham) Limited England and Wales Provision of finance and related services
* Indicates holdings through a subsidiary undertaking, Davenham Group Holdings plc.
17. Loans and advances to customers
Credit risk
Credit risk in relation to loans and receivables is the risk that financial loss arises from the failure of a customer to meet their obligations
under a loan agreement.
A description of the Group’s objectives, policies and processes for managing credit risk and how it is measured is set out in the
Business Review on pages 10 to 14 in the section entitled ‘Credit risk’. Details are also given in relation to the concentration risk
associated with the Group’s receivables in the section entitled ‘Concentration risk’ on page 11.
Maximum exposure to credit risk
The maximum exposure to credit risk of the Group’s loans and receivables is set out in the table below:
2009 2008
Group £’000 £’000
Property Finance 110,071 154,644
Trade Finance 27,666 50,567
Asset Finance 53,207 71,375
Total loans and receivables 190,944 276,586
Comprising:
Current assets 122,309 222,778
Non-current assets 68,635 53,808
190,944 276,586
Other financial assets subject to credit risk include derivative financial instruments of £218,000 (2008: £2,848,000), other debtors of
£418,000 (2008: £365,000) and cash and cash equivalents of £2,562,000 (2008: £2,416,000). These are subject to a maximum
exposure to credit risk equal to their carrying value. 47
17. Loans and advances to customers continued
Credit quality
A summary of the arrears status of the Group’s loans and receivables, by class, is shown below as at 30 June 2009 and 30 June 2008:
Property Trade Asset
Finance Finance Finance Total
Group £’000 £’000 £’000 £’000
2009
Neither past due nor impaired 15,689 25,632 46,136 87,457
Past due but not impaired 1,852 9 3,870 5,731
Impaired 132,332 4,941 8,745 146,018
Outstanding customer balance 149,873 30,582 58,751 239,206
Unamortised fees and costs (4) – (135) (139)
Gross loans and receivables 149,869 30,582 58,616 239,067
Loan loss provision (39,798) (2,916) (5,409) (48,123)
Total loans and receivables 110,071 27,666 53,207 190,944
Property Trade Asset
Finance Finance Finance Total
Group £’000 £’000 £’000 £’000
2008
Neither past due nor impaired 99,590 47,183 62,059 208,832
Past due but not impaired 28,667 875 5,456 34,998
Impaired 29,597 3,810 4,879 38,286 
Outstanding customer balance 157,854 51,868 72,394 282,116
Unamortised fees and costs (60) – 235 175
Gross loans and receivables 157,794 51,868 72,629 282,291
Loan loss provision (3,150) (1,301) (1,254) (5,705)
Total loans and receivables 154,644 50,567 71,375 276,586
Loans and receivables – past due but not impaired.
Property Trade Asset
Finance Finance Finance Total
Group £’000 £’000 £’000 £’000
2009
Past due up to 31 days 72 9 2,460 2,541
Past due 32-65 days 384 – 870 1,254
Past due 66-95 days 145 – 251 396
Past due 96 days or more 1,251 – 289 1,540
Total 1,852 9 3,870 5,731
Property Trade Asset
Finance Finance Finance Total
Group £’000 £’000 £’000 £’000
2008
Past due up to 31 days 11,480 403 3,990 15,873
Past due 32-65 days 7,649 – 978 8,627
Past due 66-95 days 1,559 236 25 1,820
Past due 96 days or more 7,979 236 463 8,678
Total 28,667 875 5,456 34,998  48
Notes to the Financial Statements continued
for the year ended 30 June 2009
Davenham Group plc Annual Report and Accounts 2009
17. Loans and advances to customers continued
Renegotiated loans and receivables
In Property, Trade and Asset renegotiated loans that would otherwise be past due or impaired totalled £nil, £nil and £1.5m at 30 June
2009 (2008: £1.0m, £nil and £2.6m) respectively.
Collateral
The Group holds collateral in relation to its loans and receivables, further details of which are provided below:
In accordance with IFRS 7 paragraph 36(b), as at 30 June 2009 the Group has not disclosed the fair value of the collateral held as security
in respect of its hire purchase or lease receivables on the basis that it would be impractical to do so and instead provided below is an
explanation of the nature of the collateral held. It would be impractical to fair value the collateral held because information on the
current value of customers’ assets and first charge liabilities is not maintained for all past due loans. 
• Property loans
Secured property loans were underwritten based upon equity in the asset and the customer’s financial standing. A first legal charge
was secured and registered against the customer’s property, to ensure that the customer prioritises repayments of the secured loan.
In many instances additional security was obtained in the form of personal guarantees and second and third ranking charges against
other residential and commercial property.
The fair value of the collateral for all past due loans approximates to the carrying value of such loans.
• Hire purchase & Lease
The majority of facilities provided for the acquisition of plant, vehicles and machinery are written on lease and unregulated hire purchase
agreements. These can be terminated in the event of default. If this occurs, the assets financed can be immediately repossessed and
disposed.
The terms of a regulated hire purchase contract allow the customer to voluntarily terminate and allow the Group to repossess the asset,
both subject to meeting certain criteria.
A customer may voluntarily terminate the hire purchase contract provided they have paid at least 50% of the contract and have not
received a notice of default. In this instance the asset is returned and disposed of, with the proceeds offset against the customer’s
outstanding balance. 
Legally, the Group may repossess a vehicle financed on a regulated hire purchase contract, provided the customer has paid less than
one third of the contract and a notice of default has been issued. The Group endeavour to negotiate arrangements with the customer
to avoid the need for repossession. Vehicles that are repossessed are promptly disposed of at auction and the proceeds offset against
the customer’s outstanding balance. The customer is liable for any remaining balance.
The only way of estimating the fair value of used assets on hire purchase and lease would be on an aggregate basis which may result
in the collateral disclosure being misleading when some loans in the portfolio are over collaterised and other loans have insufficient
collateral. In these circumstances netting the fair value of the two types of collateral could under or over report the amount of credit
risk.
• Trade Finance
Trade Finance provides working capital secured against debtors and other tangible assets. Wherever possible, additional security is
obtained. These include personal guarantees from major shareholders, charges over personal and other business property, debentures,
a floating charge, cross company guarantees from associated companies, and unlimited warranties in the case of fraud. These
additional forms of security are impractical to fair value as valuations of the guarantees or warranties are not capable of being accurately
determined at the balance sheet date. 49
17. Loans and advances to customers continued
Loan loss provision 
The following tables provide an analysis of the movement of the Group’s loan loss provision and charge during 2009 and 2008:
Property Trade Asset
Finance Finance Finance Total
Group £’000 £’000 £’000 £’000
2009
At 1 July 2008 3,150 1,301 1,254 5,705
Utilised (5,011) (2,313) (5,286) (12,610)
Recoveries of amounts previously written off 1,972 1,179 2,633 5,784
Charged to the income statement:
Additional provisions created 41,659 3,929 9,440 55,028
Recoveries of amounts previously written off (1,972) (1,179) (2,633) (5,784)
39,687 2,750 6,807 49,244
At 30 June 2009 39,798 2,917 5,408 48,123
Loan loss charge before gross-up adjustment 39,687 2,750 6,807 49,244
Gross-up adjustment 14,711 1,332 1,426 17,469
Total bad and doubtful debt charge 54,398 4,082 8,233 66,713
Property Trade Asset
Finance Finance Finance Total
Group £’000 £’000 £’000 £’000
2008
At 1 July 2007 1,553 836 2,538 4,927
Utilised (231) (573) (2,457) (3,261)
Recoveries of amounts previously written off 9 99 155 263
Charged to the income statement:
Additional provisions created 1,828 1,038 1,173 4,039
Recoveries of amounts previously written off (9) (99) (155) (263)
1,819 939 1,018 3,776
At 30 June 2008 3,150 1,301 1,254 5,705
Loan loss charge before gross-up adjustment 1,819 939 1,018 3,776
Gross-up adjustment 2,563 534 565 3,662
Total bad and doubtful debt charge 4,382 1,473 1,583 7,438 50
Notes to the Financial Statements continued
for the year ended 30 June 2009
Davenham Group plc Annual Report and Accounts 2009
17. Loans and advances to customers continued
Loans and advances to customers include hire purchase receivables as follows:
Gross investment in finance leases receivable:
2009 2008
£’000 £’000
No later than 1 year 5,857 19,286
Later than 1 year and no later than 5 years 57,364 67,606
Later than 5 years 1,806 –
65,027 86,892
Unearned future finance income on finance leases (11,820) (15,517)
Net investment in finance leases 53,207 71,375
Net investment in finance leases receivable:
No later than 1 year 5,737 17,567
Later than 1 year and no later than 5 years 46,207 53,808
Later than 5 years 1,263 –
53,207 71,375 
Company
Company loans and receivables, as shown in note 18, of £33,643,000 (2008: £26,310,000), comprise amounts due from subsidiary
companies, all of which are repayable on demand.
Fair value
There is no material difference between the fair value and the carrying value of the Group’s and Company’s loans and advances to
customers.
18. Other receivables, prepayments and accrued income
Group Group Company Company
2009 2008 2009 2008
£’000 £’000 £’000 £’000
Amounts owed by Group undertakings – – 33,643 26,310
Other debtors 418 365 – –
Corporation tax – – – 1,955
Other taxation – 18 – –
Prepayments and accrued income 409 768 393 104
827 1,151 34,036 28,369
There is no material difference between the fair value and the carrying value of the Group’s and Company’s other receivables. 51
19. Deferred tax
Deferred tax is calculated in full on temporary timing differences under the liability method using a tax rate of 28% (2008: 28%).
Deferred tax assets have been recognised in respect of all tax losses and other temporary differences giving rise to deferred tax assets
because it is probable that these assets will be recovered.
The elements of the deferred taxation asset recognised in the financial statements are as follows:
Unclaimed
capital Loan loss Share based Hedging
allowances provisions payments Losses amounts Total
Group £’000 £’000 £’000 £’000 £’000 £’000
At 1 July 2008 1,709 644 28 – (787) 1,594
Credit to income statement (note 9) 5,964 2,959 – 405 843 10,171
Credited to hedging reserve – – – – 2,686 2,686
At 30 June 2009 7,673 3,603 28 405 2,742 14,451
The unclaimed capital allowances of £7,673,000 are considered to be recoverable against future taxable profits primarily due to the
fact that future taxable profits before capital allowances are forecast to be considerably higher than future accounting profits. This is
due to the UK corporation tax rules for finance lessors requiring that the capital elements of lease repayments be taxed and that capital
allowances be claimed by the lessor. 
The deferred tax asset of £405,000 arising from losses carried forward has been recognised as recoverable against future taxable profits
that the directors consider more likely than not to occur on the basis of management forecasts.
The deferred tax assets relating to provisions and hedging are timing differences which arise from IAS 39 loan loss provisions and losses
relating to cash flow hedging instruments.
Unclaimed
capital Other timing
allowances differences Total
Company £’000 £’000 £’000
At 1 July 2008 (7) – (7)
Credit to income statement (note 9) 69 1 70
Credited to hedging reserve –––
At 30 June 2009 62 1 63
The Group and Company’s deferred tax asset balances are expected to be realised as stated below:
2009 2008
Group £’000 £’000
Deferred tax asset to be recovered within 12 months 4,731 –
Deferred tax asset to be recovered after more than 12 months 9,720 1,594
14,451 1,594
2009 2008
Company £’000 £’000
Deferred tax asset/(liability) to be recovered/(discharged) within 12 months – –
Deferred tax asset/(liability) to be recovered/(discharged) after more than 12 months 63 (7)
63 (7)
There are no unrecognised amounts for deferred taxation in the Group or Company. 52
Notes to the Financial Statements continued
for the year ended 30 June 2009
Davenham Group plc Annual Report and Accounts 2009
20. Cash and cash equivalents
Group Group Company Company
2009 2008 2009 2008
£’000 £’000 £’000 £’000
Cash at bank and in hand 2,562 2,416 243 44
21. Borrowings
Group Group Company Company
2009 2008 2009 2008
£’000 £’000 £’000 £’000
Current
Secured bank overdraft 1,879 9,195 – –
Secured bank loan 81,000 – – –
Unsecured intra-group borrowings – – 9,966 3,200
82,879 9,195 9,966 3,200
Non-current
Secured bank loan 98,707 210,030 – –
Total borrowings 181,586 219,225 9,966 3,200
The secured bank loan included within non-current bank borrowings is stated net of £1,293,000 (2008: £970,000) of unamortised loan
arrangement fees. 
The interest rate on the secured bank loan is 300bps over Libor.
The Group’s obligations under the new banking agreement are secured on the Group’s undertaking and assets, including by way of
fixed and floating charge.
There is no material difference between the fair value and the carrying value of the Group’s and Company’s borrowings.
The carrying amounts of the Group’s borrowings are denominated in pounds sterling.
Liquidity risk – borrowings
A description of how the Group is exposed to liquidity risk in relation to its borrowings, as well as details on the Group’s objectives,
policies and processes for managing liquidity risk and how it is measured, is set out in the Business Review on page 12 in the section
entitled ‘Liquidity risk’. Details are also given in relation to the concentration risk associated with the Group’s borrowings in the section
entitled ‘Concentration risk’ on page 11.
The contractual undiscounted cashflows of the Group’s and Company’s borrowings, including both capital and interest payments, are
analysed by maturities in the table opposite. The amounts shown therefore do not reconcile to the Group and Company’ s balance sheets.
The interest cost included within the repayments profile opposite has been estimated based upon an assumption that LIBOR as at the
balance sheet date remains constant throughout the remaining period of the Group’s Revolving Credit Facility (‘RCF’).
The requirements of IFRS 7 are such that the forecast future cash flows in respect of interest payable are calculated by reference to
the expected movements in interest rates over the contractual term of the borrowings. However, through the Group’s interest rate risk
management policy, borrowings in respect of fixed rate lending are converted from floating rate to fixed rate, as noted in the Business
Review section on page 13. As a consequence, the interest payments included in the table opposite will be increased by £6,776,000.
(2008: £756,000) based upon the effective interest rate swaps in existence at the Balance Sheet date. In addition, as a result of the
Group’s step down in facilities the Group has £105m of ineffective interest rate swaps which will further increase the interest payments
in the table opposite by £3,129,000 (2008: £nil).
The contractual maturity of the RCF is 31 March 2011. 53
21. Borrowings continued
On Up to 1–5
demand 1 Year years Total
Group £’000 £’000 £’000 £’000
2009
Bank overdrafts 1,879 – – 1,879
Bank borrowings – 82,805 100,510 183,315
1,879 82,805 100,510 185,194
On Up to 1–5
demand 1 Year years Total
Group £’000 £’000 £’000 £’000
2008
Bank overdrafts 9,195 – – 9,195
Bank borrowings – 13,082 216,770 229,852
9,195 13,082 216,770 239,047
On Up to 1–5
demand 1 Year years Total
Company £’000 £’000 £’000 £’000
2009
Intra-group borrowings 9,966 – – 9,966
On Up to 1–5
demand 1 Year years Total
Company £’000 £’000 £’000 £’000
2008
Intra-group borrowings 3,200 – – 3,200
Liquidity risk – loan commitments
As at 30 June 2009, the Group had undrawn facility commitments payable of £26.6m (30 June 2008: £48.5m). The drawing of these
facility amounts are subject to satisfactory underlying asset quality, as defined by the individual facilities, compliance with audit
requirements and standard terms and conditions.
These undrawn facilities represent the maximum possible amount that could be called by our customers. In practice, a substantial element
of these commitments remains undrawn, and is to be expected.
The Company has no loan commitments.
Liquidity risk – obligations under operating lease contracts
The maturity profiles of the contractual cash flows associated with the Group’s operating leases are analysed below:
Up to 1–5
1 year years Total
Group £’000 £’000 £’000
2009 102 47 149
2008 126 96 222
The Company has no operating lease contracts.
Trade and other payables are all payable within 3 months. 54
Notes to the Financial Statements continued
for the year ended 30 June 2009
Davenham Group plc Annual Report and Accounts 2009
22. Derivative Financial Instruments 
A description of how the Group is exposed to interest rate and currency risk in relation to its borrowings and lending, as well as details
on the Group’ s objectives, policies and processes for managing these risks and how they are measured, is set out in the Business Review
on pages 10 to 14 in the sections entitled ‘Interest rate risk’ and ‘Currency risk’. Details are also given in relation to the counterparty
credit risk associated with the Group’s derivative financial instruments in the section entitled ‘Interest Rate Risk’ on page 13.
The following table shows the fair value of all derivative financial instruments, as well as their notional amounts:
2009 2008
Notional Notional
amount Assets Liabilities amount Assets Liabilities
Group and Company £’000 £’000 £’000 £’000 £’000 £’000
Interest rate swaps – current hedge 210,000 – (9,794) 200,000 2,136 (6)
Interest rate swaps – forward hedge – 177 (177) 20,000 712 (33)
Forward exchange contracts 1,100 41 – –––
218 (9,971) 2,848 (39)
Comprising:
Current 63 (6,051) 995 (10)
Non-current 155 (3,920) 1,853 (29)
218 (9,971) 2,848 (39)
The following table shows the fair value of those derivative financial instruments, as well as their notional amounts, which do not
represent cashflow hedges:
2009 2008
Notional Notional
amount Assets Liabilities amount Assets Liabilities
Group and Company £’000 £’000 £’000 £’000 £’000 £’000
Interest rate swaps – current hedge 105,000 – (3,012) –––
Interest rate swaps – forward hedge ––– –––
– (3,012) ––
Comprising:
Current – (2,910) ––
Non-current – (102) ––
– (3,012) –––
The interest rate swaps classified above as current hedges reflect those instruments which were operative as at the Balance Sheet date.
Those classified as forward hedges relate to interest rate swaps entered into under a forward-starting arrangement whereby they do
not become operative until after the Balance Sheet date. Details of the interest rate swaps are shown opposite: 55
22. Derivative Financial Instruments continued
Interest rate swaps as at 30 June 2009:
Notional Principal Life Remaining 
£’000 Pre-margin Rate Contract Date in years
Fortis 10,000 4.880%01/07/2008 2.00
HBOS 10,000 5.845% 09/08/2007 1.17
Lloyds 10,000 5.175% 20/06/2007 3.00
Lloyds 10,000 5.817% 09/08/2007 1.17
Lloyds 10,000 4.848% 01/07/2008 2.00
Lloyds 15,000 6.245% 02/07/2007 1.00
Lloyds 15,000 5.120% 18/09/2008 0.25
Lloyds 15,000 6.160% 27/07/2007 1.08
Lloyds 20,000 5.250% 30/11/2007 3.42
Lloyds 20,000 4.960% 17/03/2008 1.75
RBS 10,000 6.155% 11/06/2007 1.00
RBS 10,000 6.245% 02/07/2007 1.00
RBS 10,000 6.160% 09/08/2007 1.17
RBS 15,000 5.080% 01/10/2008 0.25
RBS 20,000 5.050% 31/07/2007 0.08
RBS 10,000 5.200% 02/07/2007 8.00
Total Current Swaps 210,000 5.512% 1.77
Forward Swaps
Lloyds 5,000 5.175% 20/06/2007 8.00
Lloyds 5,000 5.175% 20/06/2007 8.00
Lloyds (10,000) 5.175% 20/06/2007 8.00
Total Forward Swaps – 5.175% 8.00
Interest rate swaps as at 30 June 2008:
Notional Principal Life Remaining 
£’000 Pre-margin Rate Contract Date in years
HBOS 10,000 5.845% 09/08/2007 2.17
Lloyds 10,000 5.175% 20/06/2007 4.00
Lloyds 10,000 5.817% 09/08/2007 2.17
Lloyds 15,000 6.245% 02/07/2007 2.00
Lloyds 15,000 6.160% 27/07/2007 2.00
Lloyds 20,000 4.880% 03/07/2006 0.01
Lloyds 20,000 5.250% 30/11/2007 4.42
Lloyds 20,000 4.960% 17/03/2008 2.75
RBS 10,000 5.200% 11/06/2007 9.00
RBS 10,000 6.155% 02/07/2007 2.00
RBS 10,000 6.245% 02/07/2007 2.00
RBS 10,000 6.160% 09/08/2007 2.17
RBS 20,000 4.840% 31/07/2007 0.08
RBS 20,000 5.050% 01/07/2006 1.08
Total Current Swaps 200,000 5.570% 2.57
Forward Swaps
Fortis 10,000 4.880% 01/07/2008 3.00
Lloyds 10,000 4.848% 01/07/2008 3.00
Lloyds 5,000 5.175% 20/06/2007 9.00
Lloyds 5,000 5.175% 20/06/2007 9.00
Lloyds (10,000) 5.175% 20/06/2007 9.00
Total Forward Swaps20,0005.051% 6.60 56
Notes to the Financial Statements continued
for the year ended 30 June 2008
Davenham Group plc Annual Report and Accounts 2009
22. Derivative Financial Instruments continued 
As noted in the table above as at 30 June 2009, the fixed interest rates vary from 4.84% to 6.245% (2008: 4.84% to 6.245%), and
the floating rates are LIBOR for those interest rate swaps which are being hedge accounted. Gains and losses recognised in the
hedging reserve in equity (note 25) on interest rate swap contracts as of 30 June 2009 will be continuously released to the income
statement over the remaining life of the swaps.
As noted in the Business Review on page 13, the Group has £105m of notional swaps in place which are no longer expected to be
effective due to the overhedged position arising from the step-down in the Group’s borrowing facilities. Consequently, these swaps have
been de-designated with effect from 1 January 2009 and their fair value movement of £3.0m has been recognised in the income
statement in 2009.
None of the forward contracts are hedge accounted. These contracts are taken out by the Group to hedge exchange rate risk on letters
of credit issued in foreign currencies.
23. Trade and other payables
Group Group Company Company
2009 2008 2009 2008
£’000 £’000 £’000 £’000
Current
Trade payables 1,929 2,115 796 134
Other taxation and social security 1,062 – 28 226
Accruals 4,328 3,885 1,438 132
7,319 6,000 2,262 492
There is no material difference between the fair value and the carrying value of the Group’s and Company’s trade and other payables.
24. Share capital
2009 2008
Number £’000 Number £’000
Authorised
Ordinary shares of 1p each 40,000,000 400 40,000,000 400
Allotted, called up and fully paid
Ordinary shares of 1p each 26,060,565 261 26,060,565 261
No new shares have been allotted during the period.  57
25. Statement of changes in Shareholders’ equity
Own Share
Called up Share shares Profit based Total
share premium held and loss payment Hedging 2009
capital account reserve account reserve Reserve equity
Group £’000 £’000 £’000 £’000 £’000 £’000 £’000
2009
At beginning of the year 261 26,528 (1,507) 30,427 477 2,022 58,208
Loss for the financial year – – – (40,607) – – (40,607)
Increase in Share Based Payment Reserve – – – – 225 – 225
Transfer of share based payments reserve 
for expired options – – – 296 (296) – –
Fair value losses on cash flow hedges ––––– (9,590) (9,590)
Tax on fair value losses on cash flow hedges––––– 2,686 2,686
Closing shareholders’ equity 261 26,528 (1,507) (9,884) 406 (4,882) 10,922
Own Share
Called up Share shares Profit based Total
share premium held and loss payment Hedging 2008
capital account reserve account reserve Reserve equity
Group £’000 £’000 £’000 £’000 £’000 £’000 £’000
2008
At beginning of the year 260 26,503 (1,507) 25,307 277 1,080 51,920
New shares issued 1 25 – – – – 26
Profit for the financial year – – – 8,844 – – 8,844
Dividends –––(3,724)––(3,724)
Increase in Share Based Payment Reserve – – – – 200 – 200
Fair value gains on cash flow hedges – –––– 1,309 1,309
Tax on fair value gains on cash flow hedges – –––– (367) (367)
Closing shareholders’ equity 261 26,528 (1,507) 30,427 477 2,022 58,208 
Own Share
Called up Share shares Profit based Total
share premium held and loss payment 2008
capital account reserve account reserve equity
Company £’000 £’000 £’000 £’000 £’000 £’000
2009
At beginning of the year 261 26,528 – 5,278 477 32,544
Loss for the financial year – – – (2,929) – (2,929)
Increase in Share Based Payment Reserve –––– 225 225
Transfer of share based payments reserve for expired options – – – 296 (296) –
Closing shareholders’ equity 261 26,528 – 2,645 406 29,840
Own Share
Called up Share shares Profit based Total
share premium held and loss payment 2008
capital account reserve account reserve equity
Company £’000 £’000 £’000 £’000 £’000 £’000
2008
At beginning of the year 260 26,503 (1,507) 4,783 277 30,316
New shares issued 1 25 – – – 26
Decrease in own shares held reserve – – 1,507 – – 1,507
Profit for the financial year – – – 4,415 – 4,415
Dividends –––(3,920)–(3,920)
Increase in Share Based Payment Reserve –––– 200 200
Closing shareholders’ equity 261 26,528 – 5,278 477 32,544 58
Notes to the Financial Statements continued
for the year ended 30 June 2009
Davenham Group plc Annual Report and Accounts 2009
25. Statement of changes in Shareholders’ equity continued
Own Shares Held Reserve
The Own Shares Held reserve represents the cost of funding the purchase, by the Trustees of the Company’s Employee Benefit Trust,
of ordinary shares in the Company, at an open market value.
Share Based Payment Reserve
The share based payment reserve represents the fair value of equity-settled share-based instruments, which are determined at the date
of grant and expensed over the vesting period.
Hedging Reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments
related to hedged transactions that have yet to occur.
26. Contingent liabilities
2009 2008
£’000 £’000
Letters of credit 2,060 7,215
Letters of credit issued to overseas suppliers of the Group’s customers are shown as contingent liabilities until the terms of those letters
of credit are fulfilled.
27. Operating lease arrangements
At the balance sheet date the Group had total future lease payments under non-cancellable operating leases as follows:
2009 2008
Land and Land and
Buildings Buildings
£’000 £’000
Future lease payments:
Within one year 102 126
In two to five years 47 96
After five years – –
149 222
The following amounts were recognised in the income statement in the year:
2009 2008
£’000 £’000
Lease payments 245 265 59
28. Related party transactions
a) Funding
The Company is provided with borrowing facilities by one of its subsidiary undertakings.
b) Remuneration of key management personnel
Disclosures related to the remuneration of key management personnel as defined in IAS 24 ‘Related Party Disclosures’ are given in note 7.
c) Payroll
The Company administers the Group’s payroll, with the relevant payroll charges being recharged to fellow group companies. 
The Company does not make any charges for providing these services. 
d) Transactions between the Company and its subsidiaries
The Company has entered into transactions with its subsidiary undertakings in respect of Group services (that include audit, marketing,
IT, company secretarial and purchasing). Recharges are made to the subsidiaries based on the utilisation of these services.
Receivables due from and payables to subsidiary undertakings are disclosed in notes 18 and 23 respectively.
29. Reconciliation of loss before taxation to cash flows from operations
Group Group Company Company
2009 2008 2009 2008
£’000 £’000 £’000 £’000
(Loss)/Profit on ordinary activities before taxation (55,407) 12,735 (4,342) 4,415
Add back: share based payments 225 200 225 200
Add back: loss on de-designation of interest rate swaps 3,012 – – –
Less fair value gain on foreign exchange contracts (41) – – –
Operating (loss)/profit before share based payments and loss on 
de-designation of interest rate swaps (52,211) 12,935 (4,117) 4,615
Depreciation of property, plant and equipment 164 197 2 –
Amortisation of intangible assets 318 277 152 113
Amortisation of loan arrangement fees 1,000 550 – –
(Increase)/Decrease in other receivables, prepayments and accrued income 324 365 (7,622) (7,171)
Increase/(Decrease) in other creditors, trade and other payables 1,319 (51) 8,536 934
Decrease in amounts due to Group undertakings – Group Relief – – 1,110 –
Loss/(Profit) on disposal of property, plant and equipment 90 (4) – –
Loss on disposal of intangibles 91 – – –
Net cash (outflow)/inflow from trading activities (48,905) 14,269 (1,939) (1,509)
(Decrease)/Increase in loans and advances to customers 85,642 (10,194) – –
Increase in borrowings (31,323) (869) – –
Net cash inflow/(outflow) from operating activities 5,414 3,206 (1,939) (1,509) 60
Davenham Group plc Annual Report and Accounts 2009
Notes to the Financial Statements continued
for the year ended 30 June 2009
30. Share based payments
Within the scope of IFRS 2, the Group has two share based payment award schemes in place, a Performance Share Plan (“PSP”) and
a Save As You Earn scheme (“SAYE”). Seven awards have been made in respect of the PSP and three awards in respect of the SAYE.
Under the terms of the PSP , the Remuneration Committee can grant nil cost options or market value options over shares or make awards
of free shares to employees of the Group. Under the terms of the SAYE, all employees employed by the company are invited to enter
into a monthly savings contract for a period of 3 years in conjunction with the grant of a share option granted at a 20% discount to the
market value of the company’s shares at the invitation date. 
All share-based payment schemes are equity-settled schemes.
For PSP’s in existence during the year, the fair value per option granted and the assumptions used in the calculation are as follows:
PSP 1 PSP 3 PSP 4
Award date 19 December 2005 20 September 2006 7 September 2007
Exercise price Nil Nil Nil
Vesting date 19 December 2008 20 September 2009 7 September 2010
Expected exercise date 19 December 2008 20 September 2009 7 September 2010
Performance condition 50% on EPS and 50% on  50% on EPS and 50% on 50% on EPS and 50% on
TSR measured against the TSR measured against the TSR measured against the
constituent companies of constituent companies of constituent companies of
FTSE All Share Index FTSE All Share Index FTSE All Share Index
(excluding Investment Trusts) (excluding Investment Trusts) (excluding Investment Trusts)
Eligibility At the discretion of the At the discretion of the At the discretion of the 
remuneration committee the remuneration committee the remuneration committee
Number of employees 4 5 5
Share price at grant date £3.00 £3.345 £3.18
Shares under option 97,480 111,152 154,826
Expected volatility 25% 25% 23%
Option life 7 years from vesting date 7 years from vesting date 7 years from vesting date
Risk free rate n/a n/a 5.057%
Expected dividend yield 3.85% 4.74% 4.83%
Fair value per share
– 50% EPS £2.67 £2.90 £2.71
– 50% TSR £1.185 £1.502 £1.50
Average remaining 
contractual life at 
30 June 2009 6.5 years 7.25 years 8.25 years 61
30. Share based payments continued
PSP 5 PSP 6 PSP 7
Award date 12 October 2007 10 April 2008 17 September 2008
Exercise price Nil Nil Nil
Vesting date 12 October 2010 7 September 2010 17 September 2011
Expected exercise date 12 October 2010 7 September 2010 17 September 2011
Performance condition 50% on EPS and 50% on 100% on EPS 100% on TSR
TSR measured against the measured against the
constituent companies of constituent companies of 
the FTSE All Share Index the FTSE All Share Index
(excluding Investment Trusts) (excluding Investment Trusts) 
Eligibility At the discretion of the At the discretion of the At the discretion of the
remuneration committee remuneration committe remuneration committe
on recommendation of
the CEO
Number of employees 1 16 6
Share price at grant date £2.58 £1.51 £0.925
Shares under option 14,563 98,853 617,250
Expected volatility 23% n/a 30%
Option life 7 years from vesting date 7 years from vesting date 7 years from vesting date 
Risk free rate 5.057% n/a 5.3859%
Expected dividend yield 4.83% 11.0% Nil
Fair value per share
– 50% EPS £2.71
– 50% TSR £1.50
– 100% EPS £1.06
– 100% TSR £0.43
Average remaining 
contractual life at 
30 June 2009 8.3 years 8.25 years 9.25 years
The EPS element has been valued using a Black Scholes model for nil cost PSP awards, and a Binomial model for market value PSP
awards. The TRS element of both market value and nil cost PSP awards have been valued using a Monte Carlo simulation model.
Options awarded under PSP 2 have lapsed since the employee who was a member of this scheme has left the business. 62
Davenham Group plc Annual Report and Accounts 2009
Notes to the Financial Statements continued
for the year ended 30 June 2009
30. Share based payments continued
For the SAYE, the fair value per option granted and the assumptions used in the calculation are as follows:
SAYE 1 SAYE 2 SAYE 3
Award date 19 December 2005 7 November 2006 26 October 2007
Exercise price £2.10 £2.50 £2.08
Vesting date 1 February 2009 1 December 2009 1 December 2010
Expected exercise date 1 May 2009 1 March 2010 1 March 2011
Performance condition None None None
Eligibility All employees All employees All employees
Number of employees 77 49 66
Share price at grant date £3.00 £3.155 £2.87
Shares under option 172,268 52,990 81.299
Expected volatility 25% 25% 23%
Option life 6 months from vesting date 6 months from vesting date 6 months from vesting date
Risk free rate 4.267% 4.961% 4.913%
Expected dividend yield 3.85% 3.85% 5.73%
Fair value per option £0.93 £0.78 £0.73
Average remaining 
contractual life at 
30 June 2009 – 0.9 years 1.9 years
SAYE options have been valued using a Black Scholes model.
Due to the fact that the Group has only been listed from November 2005, there is not sufficient historical data available to reliably calculate
expected future volatility. Instead, an average of the expected volatility of a peer group of comparable companies has been calculated
using historical data over a term broadly equal to the expected term (and in the case of the PSP , the performance period). The expected
life of the option is the average expected period from grant to the expected exercise date. The risk free rate has been calculated based
on the implied yield of zero-coupon Government bonds (UK Strips) with a remaining term equal to the expected term. 63
30. Share based payments continued
A reconciliation of the option movements over the year to 30 June 2009 is shown below:
2009 2008
Weighted average Weighted average
Number exercise price Number exercise price
PSP 1
Outstanding at 1 July 97,480 – 110,833 –
Granted during the period –– ––
Forfeited –– (13,353) –
Expired (97,480) – ––
Outstanding at 30 June –– 97,480 –
Exercisable at 30 June –– ––
PSP 3
Outstanding at 1 July 111,152 – 124,625 –
Granted during the period –– ––
Forfeited –– (13,473) –
Outstanding at 30 June 111,152 – 111,152 –
Exercisable at 30 June –– ––
PSP 4
Outstanding at 1 July 154,826 – ––
Granted during the period –– 169,401 –
Forfeited –– (14,575) –
Outstanding at 30 June 154,826 – 154,826 –
Exercisable at 30 June –– ––
PSP 5
Outstanding at 1 July 14,563 – ––
Granted during the period –– 14,563 –
Forfeited –– ––
Outstanding at 30 June 14,563 – 14,563 –
Exercisable at 30 June –– ––
PSP 6
Outstanding at 1 July 98,853 – ––
Granted during the period –– 120,442 –
Forfeited –– (21,589) –
Outstanding at 30 June 98,853 – 98,853 –
Exercisable at 30 June –– ––
PSP 7
Outstanding at 1 July –– ––
Granted during the period 676,709 – ––
Forfeited (59,459) – ––
Outstanding at 30 June 617,250 – ––
Exercisable at 30 June –– –– 64
Davenham Group plc Annual Report and Accounts 2009
Notes to the Financial Statements continued
for the year ended 30 June 2009
30. Share based payments continued
2009 2008
Weighted average Weighted average
Number exercise price Number exercise price
SAYE 1
Outstanding at 1 July 98,822 £2.10 172,268 £2.10
Forfeited (27,686) £2.10 (73,446) £2.10
Outstanding at 30 June 71,136 £2.10 98,822 £2.10
Exercisable at 30 June –– ––
SAYE 2
Outstanding at 1 July 32,353 £2.50 52,990 £2.50
Granted –– ––
Forfeited (22,905) £2.50 (20,637) £2.50
Outstanding at 30 June 9,448 £2.50 32,353 £2.50
Exercisable at 30 June –– ––
SAYE 3
Outstanding at 1 July 72,716 £2.08 ––
Granted –– 81,299 £2.08
Forfeited (50,939) £2.08 (8,583) £2.08
Outstanding at 30 June 21,777 £2.08 72,716 £2.08
Exercisable at 30 June –– ––
Exercise of an option is subject to continued employment.
The total charge for the year relating to share based payment plans was £225,000 (2008: £200,000).
In addition to the schemes referred to above, a Deferred Annual Bonus scheme was established on 30 April 2008. Under the terms of
the scheme, the executive directors have the opportunity to invest up to 50% of their gross annual bonus in the acquisition of the
company’s shares at a price equal to market value as at the date of the award. Under the terms of the scheme the Company would
grant matching share awards which would vest if performance conditions were met on the expiry of specified periods or on occurrence
of other events.  65
Davenham Group plc Annual Report and Accounts 2009
Davenham Group plc
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the Annual General Meeting of
the Company will be held at the Manchester Suite, Institute of
Directors Hub, Peter House, St Peter’s Square, Oxford Street,
Manchester M1 5AN on Wednesday 25th November 2009 at
2:00pm to transact the following business:
ORDINARY BUSINESS
1. To receive the accounts of the Company for the year ended 30
June 2009 and the reports of the directors and the auditors.
2. To re-elect David R Coates as a director.
3. To re-elect David H Stewart as a director.
4. To re-appoint PricewaterhouseCoopers LLP as auditor to the
Company, to hold office until the conclusion of the next general
meeting at which accounts are laid before the Company and to
authorise the Directors to fix their remuneration.
SPECIAL BUSINESS
To consider and, if thought fit, (and in the case of resolution 6 to
the passing of resolution 5) pass the following resolution.
Resolution 5 will be proposed as an ordinary resolution.
Resolution 6 will be proposed as a special resolution.   
5. THAT the Directors be and are hereby generally and
unconditionally authorised in accordance with section 80 of the
Companies Act 1985 (the “Act”) (in substitution for any existing
authorities to allot relevant securities) to exercise all the powers
of the Company to allot relevant securities (within the meaning
of section 80 of the Act) up to a maximum nominal amount of
£86,868 (being approximately 33% of the issued share capital
of the Company) provided that such authority shall expire at the
conclusion of the next Annual General Meeting (or, if earlier on
31 December 2009) and provided further that the Company
may before such expiry make such offers or agreements which
would or might require relevant securities to be allotted after
such expiry.
6. THAT, subject to the passing of resolution 5, the Directors be
and are hereby empowered pursuant to section 95(1) of the
Act to allot equity securities (as defined in section 94(2) of the
Act) for cash as if section 89(1) did not apply to such allotment,
provided that this power shall be limited to:
(i) the allotment of equity securities in connection with a rights
issue or other issue in favour of the holders of ordinary
shares (notwithstanding that, by reason of such exclusions
or other arrangements as the Directors may deem
necessary or expedient to deal with fractional entitlements or
legal or practical problems under the laws of, or the
requirements of any recognised regulatory body or any
stock exchange in, any territory, the equity securities to be
issued are not offered to all such holders in proportion to the
number of ordinary shares held by each of them); and
(ii) the allotment (otherwise than pursuant to sub-paragraph 
(i) above) of equity securities up to an aggregate nominal
value of £13,000 being approximately 5% of the Company’ s
issued share capital;
and such power shall expire on the conclusion of the next Annual
General Meeting of the Company after the passing of this resolution
(or if earlier 31 December 2010), save that the Company may
before such expiry make any offers or agreements which would or
might require equity securities to be allotted after such expiry.
Dated: 25th October 2009
By Order of the Board
Qconsult Limited
Secretary
Registered Office:
8 St John Street
Manchester 
M3 4DU 66
Davenham Group plc Annual Report and Accounts 2009
Notice of Annual General Meeting continued
Notes
1. Every holder has the right to appoint some other person(s) of
their choice, who need not be a shareholder as his proxy to
exercise all or any of his rights, to attend, speak and vote on
their behalf at the meeting. If you wish to appoint a person
other than the chairman, please insert the name of your
chosen proxy holder in the space provided on the form of
proxy. If the proxy is being appointed in relation to less than
your full voting entitlement, please enter in the field after the
proxy's name and address, the number of shares in relation to
which they are authorised to act as your proxy. If left blank,
your proxy will be deemed to be authorised in respect of your
full voting entitlement (or if this proxy form is completed in
respect of a designated account, the full voting entitlement for
that designated account).
To appoint more than one proxy, (an) additional proxy form(s)
may be obtained by contacting the Registrars helpline on 0871
384 2748 or you may photocopy the form. (Calls to this
number are charged at 8p per minute from a BT landline.
Other telephone provider costs may vary. Please indicate in the
appropriate field the number of shares in relation to which they
are authorised to act as your proxy. Please also indicate by
ticking the box provided, if the proxy instruction is one of
multiple instructions being made. All forms must be signed
and returned together.
2. In order to be valid, any form of proxy and power of attorney
or other authority under which it is signed, or notarially certified
or office copy of such power or authority, must reach the
Company’s registrars, Equiniti, Aspect House, Spencer Road,
Lancing, West Sussex, BN99 6ZX not less than 48 hours
before the time of the meeting or of any adjournment of the
meeting. 
3. CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service 
may do so for the Annual General Meeting to be held on 
25th November 2009 and any adjournment(s) thereof by using
the procedures described in the CREST Manual available at
www.euroclear.com/crest. CREST Personal Members or other
CREST sponsored members, and those CREST members
who have appointed a voting service provider(s), should refer
to their CREST sponsor or voting service provider(s), who will
be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the
CREST service to be valid, the appropriate CREST message (a
“CREST Proxy Instruction”) must be properly authenticated in
accordance with CRESTCo’s specifications and must contain
the information required for such instructions, as described in
the CREST Manual. The message, regardless of whether it
constitutes the appointment of a proxy or to an amendment to
the instruction given to a previously appointed proxy must, in
order to be valid, be transmitted so as to be received by the
issuer’ s agent (ID RA19) by the latest time(s) for receipt of proxy
appointments specified in the notice of meeting. For this
purpose, the time of receipt will be taken to be the time (as
determined by the timestamp applied to the message by the
CREST Applications Host) from which the issuer’ s agent is able
to retrieve the message by enquiry to CREST in the manner
prescribed by CREST . After this time any change of instructions
to proxies appointed through CREST should be communicated
to the appointee through other means.
CREST members and, where applicable, their CREST
sponsors or voting service providers should note that
CRESTCo does not make available special procedures in
CREST for any particular messages. Normal system timings
and limitations will therefore apply in relation to the input of
CREST Proxy Instructions. It is the responsibility of the CREST
member concerned to take (or, if the CREST member is a
CREST personal member or sponsored member or has
appointed a voting service provider(s), to procure that his
CREST sponsor or voting service provider(s) take(s)) such
action as shall be necessary to ensure that a message is
transmitted by means of the CREST system by any particular
time. In this connection, CREST members and, where
applicable, their CREST sponsors or voting service providers
are referred, in particular, to those sections of the CREST
Manual concerning practical limitations of the CREST system
and timings.
The Company may treat as invalid a CREST Proxy Instruction
in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
4. As permitted by Regulation 41 of the Uncertificated Securities
Regulations 2001, shareholders who hold shares in
uncertificated form must be entered on the Company’s share
register at 6:00pm on 23 November 2009 in order to be
entitled to attend and vote at the Annual General Meeting.
Such shareholders may only cast votes in respect of shares
held at such time. Changes to entries on the relevant register
after that time shall be disregarded in determining the rights of
any person to attend or vote at the meeting.
5. The total number of Ordinary shares of 1p in issue as at 1st
October 2009, the last practicable day before printing this
document was 26,060,565 ordinary shares and the total level
of voting shares was 26,060,565.
6. Website Documentation
In accordance with section 311A of the Companies Act 2006,
the contents of this notice of meeting, details of the total
number of shares in respect of which members are entitled to
exercise voting rights at the AGM and, if applicable, any
members’ statements, members’ resolutions or members’
matters of business received by the Company after the date of
this notice will be available on the Company’s website
www.davenham.co.uk.  
7. Right to Ask Questions
Pursuant to section 319A of the Companies Act 2006, the
Company must cause to be answered at the AGM any
question relating to the business being dealt with at the AGM
which is put by a member attending the meeting, except in
certain circumstances, including if it is undesirable in the
interests of the Company or the good order of the meeting that
the question be answered or if to do so would involve the
disclosure of confidential information.
Corporate shareholders are referred to the guidance issued by the
Institute of Chartered Secretaries and Administrators on proxies
and corporate representatives (www.icsa.org.uk) for further details
of this procedure. 67
Davenham Group plc Annual Report and Accounts 2009
Davenham Group plc
Form of Proxy
 I/We 
(Please insert full name(s) and address(es) in block letters)
of
being (a) member/members of the above-named Company hereby appoint the Chairman of the Meeting, or (see Note 1 below)
of
regarding shares as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of  
the Company to be held on Wednesday 25th November 2009 and at any adjournment thereof, and to vote as indicated below.
Please tick this box if this proxy appointment is one of multiple appointments being made.
Please indicate how you wish your proxy to vote by inserting “X” in the box below. If no indication is given, and on any other resolutions
proposed at the meeting, your proxy will vote or abstain from voting as he/she thinks fit.
RESOLUTIONS
For Against Vote
Withheld
1 To receive the Accounts for the year ended 30 June 2009
2 To re-elect David R Coates as a Director
3 To re-elect David H Stewart as a Director
4 To re-appoint PricewaterhouseCoopers LLP as auditors 
and to authorise the Directors to determine their remuneration
5 To authorise the Directors to allot relevant securities pursuant to 
section 80 of the Companies Act 1985
6 To authorise the Directors to allot equity securities pursuant to 
section 95 of the Companies Act 1985
Name: (Block capitals)
Address:
Signature(s):
or Common Seal Date:
Notes
1. Any member entitled to attend and vote at the Annual General Meeting is entitled to appoint one or more proxies (who need not be a member of the Company)
of his/her own choice to attend and, on a poll, to vote in his/her place. If a member wishes to appoint a proxy other than the Chairman, delete the words “the
Chairman of the Meeting or,” initial the alteration and insert the name of the person you wish to appoint as your proxy. The Chairman of the Meeting shall act as
a proxy unless another proxy is indicated. A proxy will act in his/her discretion in relation to any business, other than that above, at the meeting (including any
resolution to amend a resolution or to adjourn the meeting).
2. All members are entitled to attend and vote at the meeting, whether or not they have returned a form of proxy.
3. The vote withheld option is provided to enable you to abstain on any particular resolution. However, it should be noted that a “vote withheld” is not a vote in
law, and will not be counted in the calculation of the proportion of votes “For” and “Against” a resolution. 
4. If a member is a corporation, this form of proxy must be executed under its common seal or by the signature of an officer or attorney duly authorised in writing.
[A copy of the authorisation of such officer or attorney must be lodged with the form of proxy.]
5. In the case of joint holders, the signature of any one holder will be sufficient, but the names of all joint holders should be stated, and the vote of the senior
holder who tenders a vote will be accepted to the exclusion of the vote(s) of other joint holder(s), seniority being determined by the order in which the names
stand in the register of members of the Company.
6. In order to be valid, this form of proxy, duly executed together with any power of attorney or other authority under which it is signed, or a notarially certified or
office copy of such power or authority, must be lodged at the Company’s Registrars not less than 48 hours before the time of the meeting or any adjournment
of the meeting.
7. CREST participants may lodge their proxy appointments via CREST. Please refer to note 3 in the notice of meeting.
8. Any alterations made to this form of proxy should be initialled. Equiniti
Aspect House
Spencer Road
Lancing
West Sussex BN99 6ZX
BUSINESS REPLY SERVICE
Licence No. SEA 10855
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SECOND FOLD
THIRD FOLD AND TUCK IN
FIRST FOLD
 Manchester
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Manchester
M3 4DU
Leeds
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Leeds
LS1 2SJ
Manor Credit
Manor House
East View
Burley Street
Elland
HX5 0JQ
Birmingham
1st Floor
Lancaster House
67 Newhall Street
Birmingham
B3 1NQ
London
3rd Floor
40 Craven Street
London
WC2N 5NG
www.davenham.co.uk