Davenham Group plc
Annual Report and Accounts 2008
positive thinking in business finance
trade finance
property finance
asset finance Positive thinking in business finance
Contents
1 Financial Highlights
2 Company Overview
3 Geographic Reach
4 Chairman’s Statement
5 Chief Executive’s Statement
8 Business Review
16 Board of Directors
17 Directors, Auditors and Company Information
18 Directors’ Report
20 Corporate Governance Statement
23 Independent Auditors’ Report
24 Consolidated Income Statement
25 Consolidated Balance Sheet 
26 Company Balance Sheet 
27 Consolidated Statement of Recognised
Income & Expense 
28 Consolidated Cash Flow Statement
29 Company Cash Flow Statement
30 Notes to the Financial Statements 
69 Notice of Annual General Meeting
71 Form of Proxy
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.
Davenham’s vision is: 
• To become the most valuable and competitive business in its sector
• To be an employer of choice
• To be a high added value supplier to our customers
• To be the trusted commercial finance brand in the UK 1
• Loan portfolio* at the year end of £284m (2007: £271m)
• Group revenue increased by 27% to £53.1m (2007: £41.8 m)
• Underlying profit before taxation** rose by 13% to
£13.1m (2007: £11.6m)
• Statutory profit before tax rose by 9% to £12.7m 
(2007: £11.6m)
• Basic earnings per share increased by 7% to 35.75p
(2007: 33.44p)
• Final recommended dividend of 7 .00p gives a total
dividend of 11.68p (2007: 14.83p)
• Impairment charge of £7 .4m (2007: £6.3m)
• Net assets increased by 12% to £58.2m (2007: £51.9m)
• £300m borrowing facilities committed until December
2009; £211m drawn down at 30 June 2008
Davenham Group plc Annual Report and Accounts 2008
Financial Highlights
for the year ended 30 June 2008
Overview
* including letters of credit
** before £0.3m exceptional costs in the year ended
30 June 2008 in relation to bid defence costs 2
Davenham Group plc Annual Report and Accounts 2008
Company Overview
Davenham’s approach differs
considerably from that of mainstream
banks. As a growing, commercially-
focussed UK business, we have an
affinity with entrepreneurial SMEs
whilst our extensive experience in 
this market underpins our ability to
understand our clients’ businesses
and their finance needs.
The Group has a diverse loan
portfolio, organised into three specific
product sectors: trade finance,
property finance and asset finance.
Our positive approach
Davenham’s commercial stance is to
provide flexible funding to our clients
backed by high levels of service. 
This service covers our initial
response, the subsequent and timely
delivery of financing and the ongoing
relationship with the client.
Davenham has a partnership
approach to its relationships with 
its suppliers of goods and services,
professional advisors and bankers.
This approach embodies the values 
of the Group in particular innovation,
service orientation, integrity and a
positive attitude in business finance.
Welcome to Davenham Group plc –
positive thinking in business finance.
Davenham Group plc specialises in providing
flexible, innovative finance solutions for SME clients
in the UK who choose not to, or are unable to, use
mainstream bank funding.
Overview 3
Davenham Group plc Annual Report and Accounts 2008
Geographic Reach
Our national coverage.
We have 9 offices throughout the UK, covering all our
products. We pride ourselves in having local knowledge
and being accessible to all our clients.
Glasgow
151 West George Street 
G2 2JJ
Tel: 0141 228 4710
Liverpool
7th Floor, Silkhouse Court 
Tithebarn Street, L2 2LZ 
Tel: 0151 515 3099
Birmingham
1st Floor, Lancaster House 
67 Newhall Street, B3 1NQ 
T el: 0121 200 0000
Bristol
1 The Friary , T emple Quay
BS1 6EA 
Tel: 0117 344 5067
Newcastle
Cuthbert House, City Road 
All Saints, NE1 2ET 
Tel: 0191 350 6430
Leeds
18 Park Place, LS1 2SJ
Tel: 0113 205 6510
Manor Credit
Manor House, East View 
Burley Street, Elland HX5 OJQ
Tel: 01422 372 056
Manchester
8 St John Street, M3 4DU
Tel: 0161 832 8484
London
4th Floor, 39 Craven Street
WC2N 5NG
Tel: 020 7968 2050
Overview 4
I am pleased to report that for
the year ended 30 June 2008
the Group has performed
ahead of the prior year and in
line with expectations
notwithstanding an
increasingly challenging
operating environment.
The Group’s performance reflects
management’s actions in recent years
to develop Davenham’s infrastructure
and risk controls, and the continued
strengthening of the Group’s position
as the leading, independent asset-
based lender to the UK SME sector. 
Our Performance
These are the first full year results to
be prepared under International
Financial Reporting Standards (IFRS)
and all figures for the comparative
period are restated under IFRS. 
In the year ended 30 June 2008,
Group revenue increased by 27% to
£53.1m (2007: £41.8m). Operating
profit before taxation and before
exceptional items, rose by 13% to
£13.1m (2007: £11.6m) and earnings
per share increased by 7% to 35.75p
(2007: 33.44p).
At the year end, £211m had been
drawn down from the Group’s £300m
funding facilities and the loan portfolio,
including letters of credit, stood at
£284m (2007: £271m). 
The IFRS impairment charge for the
year rose to £7.4m (2007: £6.3m),
primarily driven by the weakness of
the property market and the falling
number of redemptions resulting from
lower sales volumes.
Group net assets increased by 12% 
to £58.2m (2007: £51.9m). 
Dividend Policy
The Board’s stated progressive
dividend policy takes account of the
underlying growth in long-term
earnings and the capital base of the
Group, while acknowledging the
requirement for continuing investment
to underpin growth over the longer
term. However, and as indicated in 
the Chief Executive’s Statement below, 
the current economic downturn is
expected to have an adverse effect 
on the Group’s business, impacting
earnings and the capital base of the
Group. The Board has, therefore,
concluded that it is prudent to take
action ahead of an anticipated
reduction in profitability and,
accordingly, the Board is
recommending a reduction in the final
dividend to 7.00p (2007: 10.38p) per
share. The total dividend for the year
will be 11.68p per share (2007:
14.83p).
Subject to shareholder approval at the
Group’s Annual General Meeting, the
final dividend will be payable on 31
October 2008 to shareholders on the
register at close of business on 3
October 2008. 
In future years, the Board intends to
resume its progressive dividend policy
from a lower base.
Our People
Our people are our most valued asset
and on behalf of the Board I would like
to thank all of our employees for their
tremendous contribution and
continued focus during these
challenging times. We are confident
that the professionalism of our high
calibre and well-trained staff will
continue to deliver the strong service
and risk management culture which is
the cornerstone of the Group’s
development. 
Summary
We have made significant investment
in the business over the past few
years, continuing to strengthen our
credit and risk processes following the
appointment of our Risk Director,
David Bowles, 18 months ago.
Against the background of a
challenging economic climate and an
increase in the level of impaired debt,
we have taken decisive action to
consolidate the business, to control
costs and to concentrate our
resources on effectively managing the
business through these conditions. 
We remain cautious for the medium
term, but will continue to focus on
achieving longer term shareholder
value.
James Kerr-Muir
Chairman
8 September 2008
Davenham Group plc Annual Report and Accounts 2008
Chairman’s Statement
Overview 5
Davenham has delivered profit
and earnings in the year
ended 30 June 2008 ahead of
last year and in line with
expectations despite an
increasingly challenging
economic environment. 
We continue to make progress in
consolidating the Group’s position as
the leading, independent asset based
lender to the UK SME sector. Our
recently added operations in Bristol
and Glasgow achieved good growth
and our investment in infrastructure
continued to underpin progress. 
Business Overview 
Davenham is a secured lender, with
relatively short term finance provided
to SMEs for property transactions; 
the acquisition of plant, machinery and
equipment; and the funding of stock,
debtors and short term letters of
credit. The Group has a diverse loan
portfolio with lending activities
organised into three product segments:
property finance, asset finance and
trade finance. The loan portfolio within
each product segment is broadly
spread by both sector and geography.
A key indicator of the broad spread of
our portfolio is that no individual
customer exposure accounts for more
than 1.4% of the overall portfolio.
Operational Review
The portfolio grew strongly in the first
half of the year, reducing in the second
half reflecting Davenham’s increasingly
conservative approach to underwriting
new business.
Since the start of the calendar year,
Davenham has continued to
experience credit slippage across its
risk classifications in the property
portfolio as disclosed in Note 17 of 
the Financial Statements. The Board
believes it is prudent to plan for
continuing challenging economic
conditions, and is budgeting for an
increase in the level of impairment
during the current financial year.
Since the autumn of 2007 we have
tightened our lending criteria,
particularly in respect to valuations,
marketing periods and loan value
metrics within the property book. 
We will continue to adapt our lending
criteria to reflect the changing
economic conditions.
In addition, we are re-pricing our
facilities to improve margins on more
conservatively written loans to respond
to the changing environment for credit
risk and our clients’ requirements. 
Loan Portfolio
At the year end, the loan portfolio,
including letters of credit, had
increased year on year by
approximately 5% to £284m (2007:
£271m). 
Over the year, our customer base
grew from 4,814 to 5,050 accounts,
representing a broad geographical and
sector spread. The overall average
exposure of the portfolio now stands
at £64,000 (2007: £65,000). 
Property Finance
The Property Finance loan book stood
at £155m at the year end (2007:
£150m), representing 55% of the
Group loan portfolio generating 55%
of the overall loan portfolio income for
the year. 
Typically, finance is provided for added
value development, refurbishment and
building projects with an average loan
to value of 80% and an average loan
size of £435,000. In most cases, loans
are not only secured against the
property being developed but also
supported by personal guarantees and
other properties and assets owned by
the developer. The portfolio as at 30
June 2008 had a broad geographical
spread, with 34% in the North West,
21% in the West and Midlands, 22%
in Yorkshire and the North East, with
the remainder across the South East
14%, South West 8% and Scotland 1%.
In October 2007, we promoted Anne
Murray to the position of Divisional
Director. She has eight years’
experience in the division and has
been instrumental in managing our
increasingly more cautious approach
across the property loan portfolio.
As previously reported, we have
decided to be far more selective in
underwriting new business
transactions through the adoption of
more conservative lending criteria.
This, combined with a significantly
reduced volume of good quality new
Davenham Group plc Annual Report and Accounts 2008
Chief Executive’s Statement
Overview 6
Davenham Group plc Annual Report and Accounts 2008
Chief Executive’s Statement continued
opportunities, is expected to reduce
our overall income from the property
book.
Asset Finance 
Asset Finance performed well, with the
loan book increasing from £65m to
£71m, representing 25% of the
Group’s year end loan portfolio and
22% of the overall loan portfolio
income during the year. During the
year, the average loan size was
£23,000 with an average duration of
41 months. Manor Credit, which was
acquired in June 2007, was
successfully integrated into the Group. 
During the year, we appointed a new
Divisional Director, Tim Morris, who
has extensive experience and contacts
in the credit industry and as a result
we expect our business referrer
contact base to increase.
We anticipate continuing growth in the
asset portfolio in the short to medium
term.
Trade Finance
The Trade Finance loan book grew 
by 4% from £56m to £58m (including
letters of credit), representing 20% 
of the Group’s year end loan 
portfolio and generated 23% of the
Group’s loan portfolio income during
the year. It remains broadly spread in
terms of its client sectors. The average
loan size during the year was
£389,000 with an average term of 
90 days.
Within the context of the natural
seasonality of the trade finance book,
we saw subdued trading in the first
few months of our financial year,
reflecting the abundance of credit
available at the top of the credit cycle
for these types of deals. However,
there has since been a marked
reversal of this trend. As mainstream
banks restrict overdraft financing at
this stage in the economic cycle, and
as our trade finance products offer an
alternative to such funding, we expect
to see increases in demand in this
division. 
National Footprint
During the year we consolidated our
existing geographical expansion,
growing our team across the UK from
179 to 184 as at 30 June 2008. 
We again saw growth in our London
office, which increasingly contributed
towards Group performance, as have
the recently established offices in
Bristol and Glasgow. 
Investment in Operational
Infrastructure
We have continued to expand our
operational infrastructure:
Risk
We have expanded our risk and
recoveries department to a total of 
14 dedicated people, from diverse
professional backgrounds including
insolvency practitioners and valuers,
and we have also enhanced our
portfolio management information
systems.
People
Davenham is defined by the skills 
and knowledge of its people; it is
dependent on their talent and
diligence in every aspect of the
business. Recognising the need to
compete for the highest calibre people
at every level within the Group, we
have continued to invest in training
and infrastructure to support staff
development. During the year, this has
taken the form of implementing
development and leadership
programmes for our senior managers
and the introduction of the employment
and remuneration infrastructure
required to support performance-
based incentivisation structures for 
our middle tier managers.
Marketing & Brand Development
Our marketing and brand are an
important support for our reputation
as a leader in our field amongst our
referrer network. During the year, 
we undertook some third party
research which, encouragingly,
highlighted Davenham’s reputation 
for professionalism and the positive
approach to dealing with its
stakeholders. Following this research,
we have updated our brand image
and marketing literature, albeit at
minimal investment cost.
Treasury & Funding
Under the governance of its Asset 
and Liability Committee (“ALCO”), 
the Group continues to use 
derivatives selectively. The ALCO
continues to give direction to the
Group treasury strategy, focusing on
the management of the Group’s
balance sheet, its funding mix, 
liquidity needs and interest rate
exposure. 
Funding
At the year end, £211m had been
drawn down from the Group’s £300m
borrowing facilities. The seasonal high
was £235m.
Davenham’s principal facilities are
committed until December 2009 
and they provide the Group with
sufficient funding for its plans during
2009. 
The Group continues to maintain
close, long-standing relationships with
its banking syndicate and aims to
complete its refinancing early in 2009,
resulting in an increase in the cost of
funding, in line with the increase in
financing costs seen across the credit
industry.
Current Trading and Outlook
We see positive signs of increased
new business within our asset and
trade finance products as SMEs seek
alternatives to increasingly scarce
funding from mainstream banks. 
In particular, we see attractive
opportunities for clients to release
cashflow for working capital 
purposes from the assets they 
already hold. 
Overview 7
However as highlighted by the more
recent statistics and political
commentary surrounding the property
market, we are recording a continued
increase in the level of impairment
within our own property portfolio. This
has been driven by increasing
pressure on valuations, longer
marketing periods and the decreasing
number of property sales. Accordingly,
this is currently expected to reduce
profits through a combination of lower
levels of new business and an
increase in impairment.
We expect the current economic
conditions to prevail for the medium
term, with continuing weakness in the
property market and the overall UK
economy, creating a challenging
operating environment. 
We have therefore taken decisive
action to meet the challenges of this
operating environment by
consolidating our operations and
controlling costs whilst focussing our
resources on managing the business
through these conditions. 
The combination of our strengthened
credit and risk function, our solid
balance sheet and our experienced
management team, leaves Davenham,
with a robust business model, well
placed to rise to the near term
challenges.
David Coates
Chief Executive
8 September 2008
Overview
The combination of our
strengthened credit and risk
function, our solid balance sheet
and our experienced management
team, leaves Davenham, with a
robust business model, well placed
to rise to the near term challenges. 8
Davenham Group plc Annual Report and Accounts 2008
Business Review
Business Review
Financial Performance 
These are the first full set of
consolidated Financial Statements
reported by the Group in accordance
with International Financial Reporting
Standards (IFRS), as adopted by the
EU. The Group has achieved its target
trading results for the year ended 30
June 2008. 
Financial Highlights
Group revenues increased by 27% 
to £53.1m (2007: £41.8m). The loan
portfolio, including letters of credit,
grew modestly by 5% to £284m
(2007: £271m). 
Profit before tax and exceptional items
increased by 13% to £13.1m from
£11.6m. Exceptional costs were
incurred in respect of bid defence
costs, reducing the statutory profit
before tax to £12.7m. 
The Group’s impairment charge, net 
of recoveries increased to £7.4m
(2007: £6.3m). A share option charge
of £0.2m (2007: £0.2m) was made
during the current year.
The Group’s effective tax rate during
the year was 30.6% (2007: 29.3%). A
full analysis of the tax charge for the
year is set out in note 9 to the financial
statements.
Shareholders’ Return
Fully diluted earnings per share 
were 35.17p (2007: 32.72p) with basic
earnings per share being calculated 
at 35.75p (2007: 33.44p).
In light of the current economic
conditions, the Board is
recommending a final dividend of
7.00p per share. Together with the
interim dividend, this gives a total
dividend for the year of 11.68p per
share and dividend cover of 3.06.
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:
£5.4m
£10.4m
£11.6m
£13.1m
£8.2m
2004
2005
2006
2007
2008
UK GAAP
UK GAAP
UK GAAP
IFRS
IFRS
Measurement of the 
Group’s return on employed
business resources. The
measurement is based upon
income less interest
payable, impairment and
administrative expenses.
Profit before tax and
exceptional items
£21.8m
£32.7m
£38.8m
£49.9m
£28.5m
2004
2005
2006
2007
2008
UK GAAP
UK GAAP
UK GAAP
IFRS
IFRS
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 polices.
Revenue*
*excluding the impact of gross-up adjustments
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.
Loan Portfolio**
** including letters of credit
£128.1m
£187.3m
£271.6m
£284.4m
£154.7m
Organic Growth Acquisition
2004
2005
2006
2007
2008
UK GAAP
UK GAAP
IFRS
IFRS
IFRS
£248.0m 9
Business Review
The portfolios for the three
divisions within the Group
have differing risk and margin
characteristics. The portfolio
proportions are monitored to
ensure that risk is balanced
across the divisions.
Portfolio Mix 
£91.1m
£65.2m
£71.4m £154.6m
£150.4m
£58.4m
£56.0m
£39.8m
2004
2005
2006
2007
2008
£68.7m £46.2m
£33.2m £53.4m £41.5m
£56.0m £40.2m
Property Trade Asset
14.2p
27.4p
33.44p
35.75p
21.6p
2004
2005
2006
2007
2008
Assessment of the creation
of shareholder value,
measured as the profit on
ordinary activities after
taxation divided by the
weighted average number 
of ordinary shares in issue
during the year.
Basic Earnings per share
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. It is the detailed initial
assessment of the underlying collateral
that is so important in ensuring the
levels of actual capital losses, reflected
as a bad debt charge, are kept to a
minimum.
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
eventually 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 does
not necessarily result in a capital loss
as the Group looks to fully realise the
value of underlying collateral and is an
important differentiator between us and
cashflow lenders.
A bad debt charge is incurred where
there is insufficient collateral to offset
the balance of funds. 
The definitions of the metric 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 12.4% (2007: 7.1%).
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 13.6% (2007: 7.4%).
Bad debt charge, defined as the
specific provisioning charge (net of
recoveries and before the effects of
discounting) is £3.1m (2007: £2.7m).
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 operates in an
environment that potentially exposes it
to higher risks than those faced by
other more traditional mainstream
business to business asset secured
finance providers.
The Board accepts these higher risks
on the basis that they are controlled
and yield an appropriate level of reward
for the risk taken. The Group looks to
optimise the level of reward achieved
by allowing the differing products to
operate within an agreed risk
framework, specifying parameters and
policies. This framework ensures
consistency across the various product
types, creating a collective approach to
securing the Group’s strategy and
performance targets. 10
Davenham Group plc Annual Report and Accounts 2008
Business Review continued
Risk Management Framework
The Group has developed a strong risk
management framework which
identifies, assesses, measures and
manages risk. It seeks to maximise 
the return to shareholders by 
continually assessing the impact of
legislation and market changes and
how new methodologies and
technologies can help to reduce risk
and increase returns.
The management and maintenance of
the risk framework is considered to be
of such importance that in early 2007
the Board appointed an executive
director responsible for risk. Since that
date the Group has continued to
enhance its risk management capabilities,
specifically through the development of
its professional staff, deployment of risk
control tools and technology and
provision of both qualitative and
quantitative management information to
the Board. The continued development
of the framework remains a key driver in
the delivery of effective risk
management and is reflective of the
continual investment in technology,
monitoring and policing processes. 
The risk framework is adopted and
implemented through various risk
management groups and committees.
The following details the risk control
framework:
Davenham Group plc
Board
Asset and Liability
Management
Committee
Audit Committee 
Risk Committee
Assesses recommendations 
from portfolio meeting and
manages credit risk appetite. 
Portfolio Meetings
Assesses accounts classed as
non performing and provides
recommendations on policy 
Individual Risk 
Account Management,
Identification and
Classification 
Business Review 11
Business Review
The principal risk management groups and their responsibilities are:
Davenham Group plc Board
Responsibility for the overall risk framework and governance lies with the Board of Directors. The Board:
 Determines the overall risk strategy for the Group and associated lending policies;
 Sets the Group’s risk appetite and required levels of reward; 
 Determines risk classifications and ensures risks are correctly categorised, monitored and controlled within
a defined structure that identifies, measures and manages the risk areas; and
 Reviews and approves significant decisions affecting the Group’s risk profile or exposure.
The Board ensures adherence to the highest levels of risk governance through the use of various responsible risk
groups:
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. The
Committee actively adopts the use of external risk advisers, where appropriate, to ensure that the Board
receives the required level of assurance. 
Internal Audit
The Group has, with the help of external advisers, commenced the implementation of formal internal audit
reviews in connection with its financial processes. Despite the relatively small nature of the Group, the Board,
with the support of the Audit Committee, has begun a rolling review and implementation process which
provides additional assurance to the Board surrounding financial risk issues. The instigation of these reviews
will ensure the Group’s governance processes are appropriate to a growing business.
Asset & Liability Management Committee (ALCO)
During 2007, the Group established an ALCO under the Chairmanship of David Stewart, Non-executive
director. The committee is 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 advises the Board and recommends actions it considers necessary or desirable to establish
that the Group’s balance sheet matters are suitably understood and managed. The committee reports key
recommendations and provides information to the Board.
Risk Committee
The Risk Committee is a committee of the executive directors and senior managers, chaired by the Risk
Director. The purpose of the Risk Committee is to:
 Review and assess the effectiveness of risk controls; 
 Identify and assess new and emerging risks;
 Manage adherence to the risk policies and procedures established by the Board;
 Ensure the prudent and transparent management of business risk and associated provisions in accordance
with the lending policies and operational procedures; and
 Manage and co-ordinate operational risk, financial risk and business risk compliance. 12
Davenham Group plc Annual Report and Accounts 2008
Business Review continued
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. 
Its role is to:
 Develop and implement risk management processes that are aligned with business requirements;
 Provide support to the Group to ensure the maintenance of the risk framework; 
 Provide the necessary management information to the Group Risk Committee and the Board;
 To challenge and provide an independent assessment and audit of all business areas; and
 Enhance tools and technology to maximise financial returns from lending.
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;
 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.
The Group’s recognition that credit 
risk is an important aspect of its
business model has and continues 
to ensure that risk management is
central to the strategy of the business.
Considerable investment continues to
be made in people, technology and
the provision of management
information to optimise the risk
infrastructure adopted by the Group.
Central to this has been the
development and provision of micro
and macro level performance metrics,
giving consideration to the entire 
credit lifecycle. 
Adverse changes in the credit quality
of the Group’s portfolio through a
general deterioration in economic
conditions, such as higher interest
rates or a reduction in asset prices
could affect the recoverability and
value of the Group’s assets, including
its loans and receivables and therefore
its financial performance.
A robust risk management process
has been developed across each of
the product types to ensure an
appropriate level of reward is achieved
within the Group’s risk appetite. The
Board controls the balance between
credit risk and reward through the
establishment of a credit risk
framework which is established as
part of overall governance. The
framework is implemented and
administered through the use of credit
risk policies, credit systems and
processes which when combined are
used to measure, mitigate and
manage credit risk within the Group’s
risk appetite.
Concentration risk
The loan portfolio within each product
segment is broadly spread by both
sector and geography. A key indicator
of the broad spread of our portfolio is
that no individual customer exposure
accounts for more than 1.4% of the
overall portfolio.
Risk Management
The Group has developed and
maintains a strong risk management
ethic and framework, core to the
strategy and culture of the business.
The risk functions’ approach is to 
drive business success within the
following remit: 
 To earn competitive returns from
the business’s lending activities at
acceptable risk levels. 
 To provide oversight and
transparency in the management
of risk associated with all business
activities in the political, economic,
market environment and operating
conditions in which it operates
 To ensure that risks taken are
taken within prudent boundaries
Business Review 13
Business Review
In the management of these risks
Davenham relies upon the
competence, experience and
dedication of its trained professional
staff operating with appropriate
segregation of duties, utilising
specialist risk management tools and
technology. Key to the management of
this risk is a deep understanding of
the market in which the business
operates, developed and enhanced
over many years as an asset backed
credit provider.
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
meetings are used to closely monitor
account level losses and to mitigate
against future losses.
The monthly product reviews are
managed by Group Risk on behalf of
each product and division. They are
held in conjunction with the divisional
senior management, underwriters,
customer facing teams and divisional
risk managers.
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 to ensure that lending
practices are rigorously adhered to.
External professionals are used in
combination with this internal expertise
to conduct extensive 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. A variety of credit and fraud
management tools, including detailed
consumer and commercial credit
reference information is used to assist
in the decision making process. 
This ensures that credit risks are fully
understood, using all available market
knowledge, before an offer of credit is
made. 
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. This
is managed through the production of
account level exception reports and
their subsequent discussion at the
portfolio meeting, where all credit
specialists are present and where
actions are agreed and escalated as
appropriate. Where necessary,
accounts are passed to and managed
by specialist recoveries teams, who
engage the wider professional
community to optimise the return 
and minimise financial loss to the
business.
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
a 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, through monitoring
and stress testing against pre-set
tolerances. Where these tolerances are
exceeded, appropriate risk treatment
plans are invoked.
Risk Audit
In addition to the monthly committee
meetings, an independent audit of
performing and non performing
accounts is carried out by the risk
teams to challenge and ensure that
the lending policy and procedures are
being adhered to. Any remedial action
is recorded and escalated through the
Group Risk function. This provides a
second level of independence and
assurance to support the operational
process of managing risk.
Treasury Risk
The Group has categorised its
treasury risk across the following
elements: 
 Liquidity risk 
 Market risk – interest rate and
currency risk
 Counterparty credit risk
Liquidity Risk
This is a 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 14
Davenham Group plc Annual Report and Accounts 2008
Business Review continued
changes in market conditions that
affect the ability to liquidate assets
quickly and with minimal loss in value 
if necessary. 
These constituent parts of liquidity risk
could mean that funding for expansion
may not be available or may prove
more expensive, with these forms of
market risk being very visible in the
current capital markets. In addition,
insufficient levels of capital could result
in the Group being unable to support
current and anticipated business
growth plans impacting on future
dividend payments.
The Group funds its business through
syndicated and bilateral facilities with
major UK and international banks. 
The current syndicated facilities have
original maturities extending out to
December 2009. 
The Group is currently entering into
discussions with the banking syndicate
regarding the renewal of its facilities.
Whilst the current lines do not mature
until December 2009, the Board
believe it is prudent in the current
economic conditions to look to
renegotiate the current facilities and
bring certainty to the Group’s funding
sources.
Details of current bank facilities and
their maturity dates are set out in Note
21 on page 49.
The Group continues to adopt a
conservative approach to its funding
and liquidity requirements. The banking
arrangements are subject to covenants
which are considered to be typical for
facilities of this size, nature,
commencement date and term. The
covenants, the forecast and existing
headroom levels are reviewed by the
Board on a monthly basis to ensure
compliance and to assess the Group’s
performance against each of the
covenants. There were no covenant
breaches in the year. The covenants
remain fixed irrespective of the 
general economic climate. The Group
plans ahead to try to avoid any
potential breaches of the key
covenants but during a downturn in
the economy, there is a risk that the
Group may breach a covenant and, 
in particular, the senior interest cover
covenant.
In addition, an ALCO meeting is held
every two months to consider the key
treasury indicators, including forecast
deviances from budget if expected.
Annual liquidity requirements are
reviewed and agreed on an annual
basis as part of the Group’s formal
budgetary process.
The Group has implemented 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.
Interest Rate Risk
The Group’s long standing treasury
strategy is to minimise interest rate
volatility from its bank borrowings. 
The implementation and monitoring 
of the Group’s treasury strategy and
overall management is monitored and
directed by the ALCO. 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.
Funding facilities provided by the
banking syndicate are at a floating rate.
The Group is therefore exposed to the
risk of rising interest rates which it
manages 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 term to medium term. As at
30 June 2008 95% (2007: 57%) of the
Group’s bank funding was protected
against future interest rate volatility. 
Consequently, based upon the
contractual maturities of the swap
portfolio at the end of the year, a
hypothetical increase of 1% in three
month LIBOR would increase the
Business Review 15
Business Review
Group’s annual interest charge by
around £0.3m (2007: £1.0m).
The treasury function monitors interest
rate movements advising the executive
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 the 30 June
2008 the Group had foreign currency
cash balances equivalent to £0.8m.
The Group believes its exposure to
foreign exchange movements is
minimal and therefore does not use
any formal hedging techniques.
Capital Risk
The Group is not subject to any
external regulatory capital
requirements. The Group continues to
manage its strong capital base to
ensure that future growth and planned
distributions to shareholders through
an appropriate level of dividend are
maintained. However the Group is
required, under its banking agreement,
to maintain a gearing ratio that does
not exceed five times. Throughout the
year under review, the Group complied
with this covenant. The covenant is
tested on a quarterly basis but is
reported on to both the Board and the
banking syndicate on a monthly basis.
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 mitigates such risks
through the close monitoring and
management of the various related
projects that form part of the
implementation of the strategic 
goals.
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. 
As a result, Davenham’s actual future
financial condition, performance and
results may differ materially from the
plans, goals and expectations set out
in its forward-looking statements.
Davenham undertakes no obligation to
update the forward-looking 
statements contained in this 
document or any other forward-looking
statement it may make. 16
Davenham Group plc Annual Report and Accounts 2008
Board of Directors
D H Stewart 
Non-executive Director
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 Chairman of
IDDAS Limited, non executive director of Fletcher
King plc and director of Savile Group plc. He was
previously non-executive Chairman of Broadcastle
plc, a specialist banking and asset finance
company, acquired by Siemens AG.
J R Kerr-Muir 
Chairman
James is currently Chairman of Acertec plc and 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 Birmingham
Midshires Building Society and Senior plc.
D R Coates 
Chief Executive Officer
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 CEO in 2005.
D Bowles
Risk Director
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.
G L Footitt
Senior non-executive Director
Sam joined the Board in 2001, having previously
held many senior roles within Royal Dutch Shell plc,
including Director of Finance of Shell UK Limited.
Since retiring from Royal Dutch Shell plc he has
been a consultant to Simmons & Simmons, the City
of London Law firm and to Schroder Salomon
Smith Barney, the investment banking arm of
Citigroup, Inc. He is also non-executive Director of
Challenge Energy Limited and Quexco Inc.
P E Burke 
Finance Director
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.
Governance 17
Directors
J R Kerr-Muir Chairman
Executive Directors
D R Coates Chief Executive Officer
D Bowles Risk Director
P E Burke Finance Director
S R Marsh Managing Director
(resigned 1 July 2007)
Non-executive Directors
G L Footitt
D H Stewart 
Secretary
D E Smethurst
Registered Auditors
PricewaterhouseCoopers LLP
101 Barbirolli Square
Lower Mosley Street
Manchester
M2 3PW
Corporate Lawyers
Eversheds LLP
Eversheds House
70 Great Bridgewater Street
Manchester
M1 5ES
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 2008
Directors, Auditors and Company information
Governance 18
Davenham Group plc Annual Report and Accounts 2008
Directors’ Report
for the year ended 30 June 2008
The Directors present their report and the audited financial
statements for the year ended 30 June 2008. 
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 and a description of
the principal risks and uncertainties facing the Group during
the year ended 30 June 2008 are included in the Business
Review on pages 8 to 15. 
Future developments
The Group has made significant investment in the business
over the past few years, particularly in strengthening the
credit and risk function which enables the Group to rise to
the near term challenges. The Group remains cautious for
the medium term, but will continue to focus on achieving
longer term shareholder value.
Results and transfers to reserves
The consolidated profit for the year ended 30 June 2008 is
set out in the Consolidated Income Statement on page 24.
During the financial year a final dividend of £2.7m, in relation
to the year ended 30 June 2007, and an interim dividend of
£1.2m, in relation to the year ended 30 June 2008, were
paid to the ordinary shareholders. The Directors have
proposed a final dividend of £1.8m, payable on 31 October
2008. The retained profit for the year of £8.8m (2007: £8.2
m) will be transferred to reserves.
Directors and their interests
The Directors of the Company at 30 June 2008, all of whom
have been Directors for the whole of the year ended on that
date, except where stated, are listed on page 16.
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 2008 30 June 2007
Number Number
J R Kerr-Muir 90,000 57,774
D R Coates 56,729 56,729
D Bowles Nil Nil 
P E Burke Nil Nil
G L Footitt 12,325 12,325
S R Marsh (resigned 1 July 2007) 15,500 322,750
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 2008 30 June 2007
Number Number
D R Coates 482,258 482,258
P E Burke 353,965 353,965
There have been no changes in the above interests between
30 June 2008 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 2008
was 116.5p. The shares traded in the range 116.5p to
338.5p 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 £2,000 (2007: £6,000)
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
2008 were 29 days (2007: 40 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. 
Governance 19
Employment policy
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 1985. 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. 
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
D E Smethurst
Company Secretary
8 September 2008
Governance 20
Davenham Group plc Annual Report and Accounts 2008
Corporate Governance Statement
The Board recognises the importance of strong effective
Corporate Governance and although as an Aim company,
Davenham is not required to comply with the Combined
Code, the Board is committed to moving towards full
compliance where practical and with regard to the size and
nature of the Company. 
Directors and the Board
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 Footitt and David
Stewart). The Board considers that Mr Footitt and Mr
Stewart are independent as defined in the Combined Code
and that Mr Kerr-Muir was independent on his appointment
as Chairman. Given the size of the Company, the balance of
executive and non-executive directors is considered
appropriate for the Company. 
Board meetings are held monthly or more frequently where
business needs require at the Company’s Head Office in
Manchester or on occasion at its London Office. The Directors
have adopted a formal schedule of matters reserved for the
Board, setting out issues that must be referred to the Board
for their consideration and decision. These include strategy,
financial planning and control, structure and capital,
committees of the Board (and their Terms of Reference),
dividends, internal controls, corporate governance, policies,
remuneration, acquisitions and disposals, major contracts and
communications. Each board member receives a full Board
pack comprising an agenda, detailed financial and business
information for review and discussion in advance of the
monthly meetings. The Chief Executive reports to the Board
on operational and strategic developments at the monthly
meetings. Specific strategy review meetings are regularly
scheduled in addition to the monthly Board Meetings.
The roles of the Chairman and the Chief Executive are
separate and clearly defined and have been agreed by the
Board. 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 Group’s business day-to-day
and, subject to Board agreement, the development and
implementation of strategy. During the year the Chairman
met with the non-executive Directors without the executive
Directors present and the non-executive Directors met
without the Chairman being present. 
Mr Graham Footitt is the Senior Independent Director
nominated by the Board. He is available to meet major
shareholders. Biographies of the directors are contained on
page 16. The non-executive Directors have no involvement
with the day-to-day management of the Company and are
free from any business or circumstances which could
materially interfere with the exercise of their judgement. The
Board considers that the non-executive Directors’ depth of
experience and differing backgrounds greatly enhance the
skill base and perspectives of the Board. Mr Kerr-Muir also
serves on the boards of Gartmore Fledgling Trust plc and
Acertec plc. 
The Articles of Association require one third of the Board to
retire by rotation. At the 2007 Annual General Meeting, Mr
Kerr-Muir was re-elected and Mr Bowles, being in his first
year of office, was elected to the Board. At the Annual
General Meeting of the Company in October 2008, Mr
Footitt and Mr Burke will stand down and offer themselves
for re-election. 
The Board formulates strategy and is responsible and
accountable for the Group’s operational and financial
performance. Corporate Governance and the stewardship of
the Group’s resources is achieved by regular review through
monthly management accounts, presentations and external
consultant reports. The Board receives analysts’ and
brokers’ reports and is updated regularly on movements in
major shareholdings. The Board delegates specific
responsibilities to certain committees and reviews the
performance of management in meeting business
objectives, planning the succession of key executives, and
determining appropriate remuneration levels through its
Remuneration Committee. 
All Directors have access to the Company Secretary who is
responsible for ensuring that Board procedures are observed
and for advising on corporate governance matters. All
Directors, on appointment and throughout their service, are
entitled to receive any training they consider necessary to
fulfil their responsibilities effectively. Directors may
additionally seek to take independent professional advice at
the Company’s expense. Appropriate third party Directors’
and Officers’ insurance is maintained by the Company.
The Board recognises the importance of undertaking a
formal evaluation of its own performance. The evaluation of
the Board, its committees, the collective and individual
contribution of the Board of Directors is undertaken annually
and the results compiled by the Company Secretary for
discussion and review. The evaluation for the current year is
consistent with performance objectives showing that the
Board dialogue ensures constructive debate and challenges
in operational and strategic matters. Consequently, the
effectiveness of the Board has benefited from enhanced
information and reporting. Regular presentations from the
senior management team at the scheduled monthly
meetings throughout the year and at strategy meetings
promote good communication and useful dialogue.
Governance 21
Committees of the Board
The Board is supported by various committees, each of which
has written Terms of Reference. These are the Audit,
Nomination, Remuneration and Asset & Liability (“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 composition and work of these committees is
summarised below.
The Audit Committee comprises the two non-executive
Directors and the Chairman and is chaired by Mr Footitt, the
Senior Independent Director. The Board considers the
Chairman meets the independence criteria specified in the
Combined Code and his contribution to the committee is
welcome. Non-committee members and the external auditors
are invited to attend by prior arrangement. The committee
ensures that good financial practices are maintained
throughout the Company and that appropriate controls are in
force, thus providing support to the Board in its responsibilities
for financial reporting, compliance, risk and internal control
systems. The committee benefits from presentations made by
external auditors and has received a report from the external
auditors on the 2008 audit.
The committee also reviews the scope of the external audit. In
addition, the objectivity and the effectiveness of the external
auditors are considered by the committee. The committee
reviews the level of fees and recommends to the Board 
the appointment, remuneration and terms of engagement for
the auditors. 
The Remuneration Committee is chaired by Mr Stewart. Its
other members are Mr Footitt and Mr Kerr-Muir . Non-committee
members are invited to attend by prior arrangement. The
committee has responsibility for recommending the Group’s
overall remuneration policy, and determining individual
remuneration packages for Executive Directors and senior
management. No Executive Director takes part in any
discussion relating to his own remuneration or benefits. The
committee is also responsible for the review of the Company’s
share schemes and senior incentive plans with regard to both
the Company’s strategic aims and the practice of comparable
organisations. It is authorised by the Board to seek appropriate
professional advice as and when it considers necessary. 
The Company has a performance-driven culture at all levels.
The structure rewards achievement of financial targets and
individual objectives. It is designed to promote an environment
which ensures maximum contribution from all employees.
Executive Directors and senior management will benefit from
the Company’s Long Term Incentive Plan adopted by the
Board on 16 November 2005 (amended 19 December 2005)
through achievement of objectives.
The Nomination Committee comprises the non-executive
Directors, chaired by Mr Kerr-Muir, and is responsible for
reviewing the size, structure and composition of the Board.
The committee also considers succession plans 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 Committee recommends
actions it considers necessary or desirable to ensure that the
Company’s balance sheet matters are suitably managed. The
ALCO is chaired by Mr Stewart and comprises in addition the
executive directors. Others are invited to attend at the
discretion of the committee. Any director may attend as an
observer. 
Further information on the Board and its committees can be
found on page 11 of the Business Review.
Attendance at Meetings
The Board generally meets each month, with additional
meetings being held as necessary. The Directors were able
to attend all meetings of the Board and most meetings of the
relevant committees. On the very few occasions where
attendance at a committee meeting was not possible, any
comments of an absent Director on any matters to be dealt
with at the meeting are relayed in advance to the Chairman
of the committee. Minutes of meetings are also circulated to
the Board and the Committee.
Relationship with Shareholders
The Board values the views of its shareholders and is
committed to maintaining effective communication. The
Board benefits from feedback at its regular presentations to
analysts and fund managers and also from the house brokers
to ensure a mutual understanding of views and the
opportunity to discuss any issues. The executive directors set
aside appropriate time to meet both investors and analysts
on a regular basis. 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 after shareholders
have voted on a show of hands. Details of the 2008 AGM 
are set out in the notice of the meeting enclosed with 
this report.
Governance 22
Davenham Group plc Annual Report and Accounts 2008
Corporate Governance Statement continued
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
information required in compliance with AIM Rule 26, and is
updated regularly. 
Corporate and Social Responsibility
The Board is committed to managing and minimising any
adverse impact on the environment. In recognition of the
importance of social, environmental and ethical matters in the
conduct of the Company’s business, the Board requires that
such activities are carried out in a responsible way and that
the highest standards of health and safety in respect of our
employees and customers are maintained. The Board
recognises that employees have a fundamental role in the
future success of the business and that a safe and rewarding
working environment is of the highest importance.
Internal Control
The Board, with the assistance of its Audit Committee, is
responsible for the Company’s system of internal control
and monitoring the effectiveness of such systems. The
internal controls include safeguarding assets against
unauthorised use, maintaining proper accounting records
and ensuring reliability of financial information. Such
systems are designed to manage the risk of failure to
achieve business objectives but cannot provide absolute
assurance against material misstatement, loss or fraud. The
Board is committed to this key activity and ensures that it
monitors any factors which it believes might prove a risk to
the business, prospects or assets of the Group. The Board
appoints experienced, professional staff to fulfil their duties
and responsibilities and the Risk Director and Risk team
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. 
Governance 23
Davenham Group plc Annual Report and Accounts 2008
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 2008 which comprise the
Consolidated Income Statement, the Consolidated and
Parent Company Balance Sheets, the Consolidated and
Parent Company Cash Flow Statements, the Consolidated
and Parent Company Statements of Recognised Income and
Expense and the related notes. These financial statements
have been prepared under the accounting policies set out
therein. 
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report
and the financial statements in accordance with applicable law
and International Financial Reporting Standards (IFRSs) as
adopted by the European Union are set out in the Statement
of Directors’ Responsibilities.
Our responsibility is to audit the financial statements in
accordance with relevant legal and regulatory requirements
and International Standards on Auditing (UK and Ireland). This
report, including the opinion, has been prepared for and only
for the company’s members as a body in accordance with
Section 235 of the Companies Act 1985 and for no other
purpose. We do not, in giving this opinion, 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.
We report to you our opinion as to whether the financial
statements give a true and fair view and have been properly
prepared in accordance with the Companies Act 1985. 
We also report to you whether in our opinion the information
given in the Directors’ Report is consistent with the financial
statements. The information given in the Directors’ Report
includes that specific information presented in the Business
Review that is cross referred from the Review of business
section of the Directors’ Report.
In addition we report to you if, in our opinion, the company has
not kept proper accounting records, if we have not received all
the information and explanations we require for our audit, or if
information specified by law regarding directors’ remuneration
and other transactions is not disclosed.
We read other information contained in the Annual Report
and consider whether it is consistent with the audited
financial statements. The other information comprises the
Directors’ Report, the Chairman’s Statement and the Chief
Executive’s Statement, the Business Review and the
Corporate Governance Statement, and other information
listed on the contents page.
Basis of audit opinion
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test
basis, of evidence relevant to the amounts and disclosures in
the financial statements. It also includes an assessment of the
significant estimates and judgments made by the directors 
in the preparation of the financial statements, and of whether
the accounting policies are appropriate to the group’s 
and company’s circumstances, consistently applied and
adequately disclosed.
We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary
in order to provide us with sufficient evidence to give
reasonable assurance that the financial statements are free
from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated
the overall adequacy of the presentation of information in the
financial statements.
Opinion
In our opinion:
 the group financial statements give a true and fair view, in
accordance with IFRSs as adopted by the European Union,
of the state of the group’s affairs as at 30 June 2008 and
of the group’ s profit and cash flows for the year then ended;
 the parent company financial statements give a true and
fair view, in accordance with IFRSs as adopted by the
European Union as applied in accordance with the
provisions of the Companies Act 1985, of the state of the
parent company’ s affairs as at 30 June 2008 and cash flows
for the year then ended;
 the financial statements have been properly prepared in
accordance with the Companies Act 1985; and
 the information given in the Directors’ Report is consistent
with the financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
Manchester
8 September 2008
Independent Auditors’ Report 24
Consolidated Income Statement
for the year ended 30 June 2008
Davenham Group plc Annual Report and Accounts 2008
2008 2007
Notes £’000 £’000
Revenue 3 53,148 41,798
Finance costs 5 (16,391) (11,202)
Gross profit 36,757 30,596
Administrative expenses (24,022) (18,995)
Operating profit 6 12,735 11,601
Operating profit before exceptional items 13,053 11,601
Exceptional costs: relating to bid defence (318) –
Operating profit 12,735 11,601
Taxation 9 (3,891) (3,397)
Profit for the financial year 25 8,844 8,204
Earnings per share
– Basic 12 35.75p 33.44p
– Diluted 12 35.17p 32.72p
Dividends per share
– Paid during the period 11 15.06p 12.16p 
– Proposed 11 7.00p 10.38p
There is no difference between the operating profit and the retained profit for the period stated above and their historical cost equivalents.
There have been no other gains or losses in the period other than those shown in the income statement.
All results are from continuing operations.
The notes on pages 30 to 68 form part of these financial statements.
Financial Statements Davenham Group plc Annual Report and Accounts 2008
Consolidated Balance Sheet
as at 30 June 2008
30 June 30 June
2008 2007
Notes £’000 £’000
ASSETS
Non-current assets
Goodwill 13 1,909 1,909
Other Intangible assets 14 780 796
Property, plant & equipment 15 1,023 1,052
Loans & advances to customers 17 53,808 58,066
Deferred taxation asset 19 1,594 1,307
Derivative financial instruments 22 1,853 1,221
60,967 64,351
Current assets
Loans & advances to customers 17 222,778 208,326
Other receivables, prepayments & accrued income 18 1,151 1,516
Derivative financial instruments 22 995 1,057
Cash and cash equivalents 20 2,416 7,094
227,340 217,993
Total assets 288,307 282,344
LIABILITIES
Current liabilities
Borrowings 21 9,195 10,801
Current Tax Liabilities 4,835 2,205
Derivative financial instruments 22 10 235
Trade and other payables 23 6,000 6,291
20,040 19,532
Non-current liabilities
Borrowings 21 210,030 210,349
Derivative financial instruments 22 29 543
210,059 210,892
Total liabilities 230,099 230,424
Net Assets 58,208 51,920
SHAREHOLDERS’ EQUITY
Share capital 25 261 260
Share premium 25 26,528 26,503
Own shares held reserve 25 (1,507) (1,507)
Retained earnings 25 30,427 25,307
Share based payment reserve 25 477 277
Hedging reserve 25 2,022 1,080
Total Shareholders’ equity 58,208 51,920
The financial statements on pages 24 to 68 were approved by the board of directors on 8 September 2008 and were signed on its behalf
by:
D R Coates
Director
The notes on pages 30 to 68 form part of these financial statements.
Financial Statements
25 Davenham Group plc Annual Report and Accounts 2008
Company Balance Sheet
as at 30 June 2008
26
2008 2007
Notes £’000 £’000
ASSETS
Non current assets
Investment in Group undertakings 16 7,618 7,618
Other intangible assets 14 208 230
Property, plant & equipment 15 4 –
Deferred taxation asset 19 – 27
7,830 7,875
Current assets
Other receivables, prepayments & accrued income 18 28,369 21,171
Cash and cash equivalents 20 44 4,035
28,413 25,206
Total assets 36,243 33,081
LIABILITIES
Current liabilities
Trade and other payables 23 3,692 2,765
Non-current liabilities
Deferred taxation liability 19 7 –
Total liabilities 3,699 2,765
Net assets 32,544 30,316
SHAREHOLDERS’ EQUITY
Share capital 25 261 260
Share premium 25 26,528 26,503
Own shares held reserve 25 – (1,507)
Retained earnings 25 5,278 4,783
Share based payment reserve 25 477 277
Total Shareholders’ equity 32,544 30,316
Financial Statements Davenham Group plc Annual Report and Accounts 2008
Consolidated Statement of 
Recognised Income & Expense
for the year ended 30 June 2008
27
2008 2007
£’000 £’000
Profit for the year 8,844 8,204
Cash flow hedges:
– fair value adjustment, net of tax 1,309 1,422
– tax on fair value adjustment (367) (398)
Net gains recognised directly in equity 9,786 9,228
There are no movements to be recognised through the parent company Statement of Recognised Income and Expense in 2008 or 2007.
Financial Statements Davenham Group plc Annual Report and Accounts 2008
Consolidated Cash Flow Statement
for the year ended 30 June 2008
28
2008 2007
Notes £’000 £’000
Cash flows from operating activities
Cash generated from operations 29 3,206 31,094
Tax paid (1,915) (3,049)
Net cash inflow from operating activities 1,291 28,045
Cash flows from investing activities
Acquisition of business and subsidiary undertakings net of cash acquired (240) (25,126)
Purchase of property, plant and equipment (168) (264)
Proceeds from sale of property, plant and equipment 4 34
Purchase of intangible assets (261) (353)
Bank interest received – 4
Net cash outflow from investing activities (665) (25,705)
Cash flows from financing activities
Proceeds from issue of share capital 26 34
Exercise of own shares for Employee Benefit Trust – 696
Dividends paid to shareholders 11 (3,724) (3,157)
Net cash outflow from financing activities (3,698) (2,427)
Net decrease in cash and cash equivalents (3,072) (87)
Cash and cash equivalents at 1 July (3,707) (3,620)
Cash and cash equivalents at 30 June (6,779) (3,707)
For the purposes of the cash flow statement, cash and cash equivalents comprise:
Cash at bank and in hand 20 2,416 7,094
Bank overdrafts included within current borrowings (9,195) (10,801)
(6,779) (3,707)
Financial Statements Davenham Group plc Annual Report and Accounts 2008
Company Cash Flow Statement
for the year ended 30 June 2008
29
2008 2007
Notes £’000 £’000
Cash flows from operating activities
Cash generated from operations 29 (1,509) 7,133
Tax paid – –
Net cash inflow from operating activities (1,509) 7,133
Cash flows from investing activities
Acquisition of business and subsidiary undertakings – (538)
Purchase of property, plant and equipment (4) –
Purchase of intangible assets (91) (157)
Net cash outflow from investing activities (95) (695)
Cash flows from financing activities
Proceeds from issue of share capital 26 34
Purchase of own shares 1,507 696
Dividends paid to shareholders 11 (3,920) (3,157)
Net cash outflow from financing activities (2,387) (2,427)
Net decrease in cash and cash equivalents (3,991) 4,010
Cash and cash equivalents at 1 July 4,035 25
Cash and cash equivalents at 30 June 44 4,035
For the purposes of the cash flow statement, cash and cash equivalents comprise:
Cash at bank and in hand 20 44 4,035
44 4,035
Financial Statements Davenham Group plc Annual Report and Accounts 2008
Notes to the Financial Statements
for the year ended 30 June 2008
30
1 Accounting Policies
Statement of Compliance
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 1985 as
applicable to companies reporting under IFRS.
Basis of preparation
Prior to 1 July 2007, the Group prepared its audited financial statements and unaudited interim financial statements under UK Generally
Accepted Accounting Principles (‘UK GAAP’). From 1 July 2007, the Group was required to prepare its annual consolidated financial
statements in accordance with International Financial Reporting Standards (‘IFRS’) as adopted by the European Union and implemented
in the UK. The date of transition to IFRS for the Group was 1 July 2006 and the Group has prepared its opening IFRS balance sheet as
at that date.
The financial statements have been prepared in accordance with the accounting policies described below. 
The comparative figures in respect of 2007 have been restated to reflect the revised accounting policies. Reconciliations and explanations
of the effect of adopting IFRS compliant accounting policies on the Group’s equity (net assets), profits and cash flows are provided in
Note 32 to the accounts.
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of derivative financial
instruments. 
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 if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
Estimates and judgements made by management in the application of IFRS that have a significant effect on the financial statements are
discussed in Note 2.
Standard, 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 2008 or later periods, but which the Group and the Company have not early adopted.
– IFRS 8 ‘Operating segments’ – it is not expected that this standard, which is effective from 1 January 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 January 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 January 2009, will have
a material impact on the share based payments incurred by the Group.
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. 
Financial Statements 31
1 Accounting Policies continued
Basis of consolidation continued
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 shares of the identifiable net assets acquired is
recorded as goodwill. 
Intra group transactions, including income and profits, are eliminated fully on consolidation. 
Identifiable assets, liabilities and contingent liabilities acquired in the 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.
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. 
Financial Statements Davenham Group plc Annual Report and Accounts 2008
32
1 Accounting Policies continued
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 reflect 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.
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 flows 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 quarterly 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 flows, 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 as a loan loss charge within administrative expenses. 
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. This is referred to as the ‘gross-up adjustment’ to the loan loss charge (refer to the
revenue recognition accounting policy entitled ‘Interest and similar income’). 
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.
Notes to the Financial Statements continued
for the year ended 30 June 2008
Financial Statements 33
1 Accounting Policies continued
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 finance costs. 
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. 
Financial Statements Davenham Group plc Annual Report and Accounts 2008
34
1 Accounting Policies continued
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. 
Cash and cash equivalents 
For the purposes of the cash flow 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. 
Notes to the Financial Statements continued
for the year ended 30 June 2008
Financial Statements 35
1 Accounting Policies continued
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.
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 flow 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. 
2 Key sources of estimation uncertainty and judgement
Loan loss provisioning
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 £0.2 million
lower/higher (2007: £0.1 million lower/higher).
Goodwill impairment reviews
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 £1.9 million (2007: £1.9 million).
Details of the value in use calculation are provided in note 13 on page 40.
Financial Statements Davenham Group plc Annual Report and Accounts 2008
36
3 Revenue
2008 2007
£’000 £’000
Interest and similar income receivable from customers 38,430 27,893
Fees and commissions income 14,718 13,901
Interest receivable from banks – 4
53,148 41,798
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 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 (559) 17,305
Central expenses (4,252)
Profit before taxation before exceptional items 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 49 199
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).
Notes to the Financial Statements continued
for the year ended 30 June 2008
Financial Statements 37
4 Segmental information continued
The segmental income and results for the year ended 30 June 2007 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 22,477 11,182 8,135 4 41,798
Finance costs (6,325) (2,136) (2,741) – (11,202)
Gross profit 16,152 9,046 5,394 4 30,596
Result
Segment result 9,170 4,021 553 4 13,748
Central expenses (2,147)
Profit before taxation 11,601
Taxation (3,397)
Profit for the financial year 8,204
Property Trade Asset
finance finance finance Central Group
£’000 £’000 £’000 £’000 £’000
Segment assets and liabilities
Segment assets 150,411 50,785 65,196 15,952 282,344
Total assets 282,344
Segment liabilities 118,768 40,101 51,480 20,075 230,424
Total liabilities 230,424
Other segment items
Capital expenditure 56 57 388 476 977
Depreciation 50 49 49 49 197
Amortisation – other intangible assets 32 32 31 31 126
Loan loss charge 3,059 756 2,445 – 6,260
The loan loss charge includes the ‘gross-up adjustment’ of £3,237,000 (note 17).
During the year ended 30 June 2008, the Group restructured its Treasury function in relation to intra-group lending. The Group’s external
borrowings are all held within Davenham Treasury Services Limited, a wholly owned subsidiary of the Group, which subsequently lends
monies across the Group at commercial interest rates. This process was only fully effective during 2008 and therefore the finance costs
shown within the business segments above are not directly comparable with those for 2007. Prior to this the total Group’ s external finance
costs were re-apportioned across the three divisions based upon a weighted average, calculated by reference to loan portfolio size.
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.
Financial Statements Davenham Group plc Annual Report and Accounts 2008
38
5 Finance Costs
2008 2007
£’000 £’000
Interest payable on bank loans and overdrafts 16,391 11,202
6 Operating Profit
2008 2007
£’000 £’000
Operating profit is stated after charging:
Depreciation for the period 197 197
Loan loss provisions* 7,438 6,260
Profit on disposal of property, plant and equipment (4) (10)
Operating lease payments 265 259
Amortisation of other intangibles 277 126
* The loan loss provisioning charge includes £3,662,000 (2007: £3,237,000) in respect of the ‘gross-up adjustment’ (note 17).
2008 2007
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 106 50
Fees payable to the company’s auditor and its associates for other services:
The audit of company’s subsidiaries pursuant to legislation 13 11
Tax services 2 368
Other assurance 47 52
Audit costs have increased in the current year as a result of the IFRS implementation.
7 Directors’ emoluments
The remuneration paid to the directors of Davenham Group plc in respect of qualifying services was:
2008 2007
£’000 £’000
Emoluments and benefits 887 796
Company pension contributions to money purchase schemes 68 58
Other post employment benefits 1 1
Other long term benefits 12 12
Share based payments 68 47
1,036 914
The above reflects the total key management compensation.
Retirement benefits are accruing to 4 (2007: 3) directors under a money purchase pension scheme.
Emoluments include the following amounts in respect of the highest paid director:
2008 2007
£’000 £’000
Emoluments and benefits 265 248
Company pension contributions to money purchase schemes 24 22
289 270
During the year 60,849 shares (2007: 53,892) were awarded to the highest paid director under the long term incentive scheme.
Notes to the Financial Statements continued
for the year ended 30 June 2008
Financial Statements 39
8 Employee information
The average monthly number of persons (including directors) employed during the period was:
2008 2007
Number Number
Administration 186 162
£’000 £’000
Staff costs (for the above persons)
Wages and salaries 8,692 6,781
Social security costs 991 860
Pension costs 617 512
Share-based payments 200 183
Other benefits 236 165
10,736 8,501
Other benefits principally comprises the cost of providing health and life assurance cover.
9 Taxation
9(a) Analysis of tax charge in the period
2008 2007
£’000 £’000
Current tax
– United Kingdom corporation tax on profits of the period 4,545 4,064
– Adjustments in respect of previous periods – 22
Total current tax 4,545 4,086
Deferred tax
Current year deferred tax expense (592) (474)
Adjustment in respect of prior periods (192) (345)
Change in tax rate 130 130
Deferred tax (654) (689)
Tax on profit on ordinary activities 3,891 3,397
The tax on the Group’ s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable
to profits of the consolidated entities as follows:
9(b) Factors affecting tax charge for the period
2008 2007
£’000 £’000
Profit before tax 12,735 11,601
at the UK tax rate 29.5% (2007: 30%) 3,757 3,480
Income not subject to tax (12)
Expenses deductible for tax purposes 173 132
Adjustment in respect of prior periods (192) (345)
Change in tax rate – current year 35 –
Change in tax rate – prior year 130 130
Total tax charge for the year 3,891 3,397
The standard rate of current tax for the year is 29.5% (2007: 30%), 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 Profit of Davenham Group plc
As permitted by Section 230 of the Companies Act 1985, the parent company’s income statement has not been included in these
financial statements. The profit for the year, which has been dealt with in the financial statements of the parent company, amounts to 
£4.4m (2007: £7.8m). 
Financial Statements 40
11 Dividends
2008 2007
£’000 £’000
Ordinary shares – Final 2006 paid – 7.71p per share – 2,001
Ordinary shares – Interim 2007 paid – 4.45p per share – 1,156
Ordinary shares – Final 2007 paid – 10.38p per share 2,701 –
Ordinary shares – Interim 2008 paid – 4.68p per share 1,219 –
3,920 3,157
The Directors have proposed a final dividend of 7.00p per Ordinary share, payable on 31 October 2008 to shareholders on the register at
the close of business on 3 October 2008. In accordance with IAS 10, the dividend has not been included as a liability as at 30 June 2008.
Included in the dividend payment of £3.9m dividends of £0.2m (2007: £0.2m) have been 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.
2008 2007
Weighted Weighted
average average
number of Earnings number of Earnings
Earnings of shares per share Earnings of shares per share
£’000 ’000 pence £’000 ’000 pence
Shares in issue during the year 26,061 26,009
Own shares held (1,321) (1,474)
Basic EPS 8,844 24,740 35.75 8,204 24,535 33.44
Effect of dilutive securities:
Options – 408 (0.58) – 538 (0.72)
Diluted EPS 8,844 25,148 35.17 8,204 25,073 32.72
13 Goodwill
Group Group
2008 2007
Goodwill £’000 £’000
Cost
At 1 July 1,909 –
Acquisition of subsidiary – 1,909
At 30 June 1,909 1,909
Accumulated amortisation and impairment
At 1 July 2006 and 30 June 2007 and 30 June 2008 – –
Net book amount at 30 June 2007 and 30 June 2008 1,909 1,909
Net book amount at 1 July 2006 – –
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 year 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.
Davenham Group plc Annual Report and Accounts 2008
Notes to the Financial Statements continued
for the year ended 30 June 2008
Financial Statements 41
14 Other intangible assets
Software Customer
Costs Intangible Total
Group £’000 £’000 £’000
Cost
At 1 July 2006 409 – 409
Additions 353 – 353
Arising on acquisition – 360 360
At 1 July 2007 762 360 1,122
Additions 261 – 261 
At 30 June 2008 1,023 360 1,383 
Accumulated amortisation and impairment
At 1 July 2006 200 – 200
Charge for the year 126 – 126
At 1 July 2007 326 – 326
Charge for the year 227 50 277
At 30 June 2008 553 50 603
Net book amount
At 30 June 2008 470 310 780
At 30 June 2007 436 360 796
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 other
administrative expenses.
Software Customer
Costs Intangible Total
Company £’000 £’000 £’000
Cost
At 1 July 2006 146 – 146
Additions 157 – 157
At 1 July 2007 303 – 303
Additions 91 – 91
At 30 June 2008 394 – 394
Accumulated amortisation and impairment
At 1 July 2006 4– 4
Charge for the year 69 – 69
At 1 July 2007 73 – 73
Charge for the year 113 – 113
At 30 June 2008 186 – 186
Net book amount
At 30 June 2008 208 – 208
At 30 June 2007 230 – 230
Financial Statements 42
15 Property, plant and equipment
Computer
Equipment
Freehold Motor and Fixtures
Property Vehicles & Fittings Total
Group £’000 £’000 £’000 £’000
Cost
At 1 July 2006 750 222 871 1,843
Additions 151 – 113 264
Disposals – (116) (2) (118)
At 1 July 2007 901 106 982 1,989
Additions – 38 130 168
Disposals – (18) (29) (47)
At 30 June 2008 901 126 1,083 2,110
Depreciation
At 1 July 2006 143 110 583 836
Charge for the year 15 45 137 197
On disposals – (96) – (96)
At 1 July 2007 158 59 720 937
Charge for the year 18 31 148 197
On disposals – (18) (29) (47)
At 30 June 2008 176 72 839 1,087
Net book value At 30 June 2008 725 54 244 1,023
Net book value At 30 June 2007 743 47 262 1,052
Computer
Equipment
Freehold Motor and Fixtures
Property Vehicles & Fittings Total
Company £’000 £’000 £’000 £’000
Cost
At 1 July 2006 –– – –
Additions –– – –
Disposals –– – –
At 1 July 2007 –– – –
Additions –– 4 4
Disposals ––
At 30 June 2008 –– 4 4
Depreciation
At 1 July 2006 –– – –
Charge for the year –– – –
On disposals –– – –
At 1 July 2007 –– – –
Charge for the year –– – –
On disposals –– – –
At 30 June 2008 –– – –
Net book value At 30 June 2008 –– 4 4
Net book value At 30 June 2007 – – – –
Depreciation and profit/loss on disposal have been charged/credited to the income statement through administrative expenses.
Davenham Group plc Annual Report and Accounts 2008
Notes to the Financial Statements continued
for the year ended 30 June 2008
Financial Statements 43
16 Investments in subsidiary undertakings
2008 2007
Company £’000 £’000
Cost
At 1 July 7,618 7,080
Additions – 538
Disposals – –
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 2008, all of which are 100% owned and included in 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.
Financial Statements 44
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 8 to 15 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 12.
Maximum exposure to credit risk
The maximum exposure to credit risk of the Group’s loans and receivables in set out in the table below:
2008 2007
Group £’000 £’000
Property Finance 154,644 150,411
Trade Finance 50,567 50,785
Asset Finance 71,375 65,196
Total loans and receivables 276,586 266,392
Comprising:
Current assets 222,778 208,326
Non-current assets 53,808 58,066
276,586 266,392
Other financial assets subject to credit risk include derivative financial instruments of £2,848,000 (2007: £2,278,000) and other debtors of
£365,000 (2007: £524,000). These are subject to a maximum exposure to credit risk equal to their carrying value.
Credit quality
A summary of the arrears status of the Group’s loans and receivables, by class, is shown below as at 30 June 2008 and 2007:
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 and accrued interest (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
Property Trade Asset
Finance Finance Finance Total
Group £’000 £’000 £’000 £’000
2007
Neither past due nor impaired 127,410 47,480 56,696 231,586
Past due but not impaired 14,294 – 5,105 19,399
Impaired 10,197 4,152 5,617 19,966
Outstanding customer balance 151,901 51,632 67,418 270,951
Unamortised fees and costs and accrued interest 63 (11) 316 368 
Gross loans and receivables 151,964 51,621 67,734 271,319
Loan loss provision (1,553) (836) (2,538) (4,927)
Total loans and receivables 150,411 50,785 65,196 266,392
Financial Statements
Davenham Group plc Annual Report and Accounts 2008
Notes to the Financial Statements continued
for the year ended 30 June 2008 45
Financial Statements
17 Loans and advances to customers continued
Loans and receivables – past due but not impaired
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 
Property Trade Asset
Finance Finance Finance Total
Group £’000 £’000 £’000 £’000
2007
Past due up to 31 days 2,869 – 4,591 7,460
Past due 32-65 days 5,254 – 190 5,444
Past due 66-95 days 757 – 93 850
Past due 96 days or more 5,414 - 231 5,645
Total 14,294 – 5,105 19,399
Renegotiated loans and receivables
In Property, Trade and Asset renegotiated loans that would otherwise be past due or impaired totalled £1.0m, £nil and £2.6m at 30 June
2008 (2007: £nil, £nil and £2.3m) 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 2008 the Group has not disclosed the fair value of the collateral held as security
in respect of its past due secured loan, 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.  
• Secured loans
Secured loans are underwritten based upon equity in the asset and the customer’s financial standing. A first legal charge is secured and
registered against the customer’s property, to ensure that the customer prioritises repayments of the secured loan. In many instances
additional security is obtained in the form of personal guarantees and second and third ranking charges against residential and
commercial property.
These additional forms of security are impractical to fair value as valuations of the guarantees are not capable of being accurately
determined at any point during the agreement.
• 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. 46
Davenham Group plc Annual Report and Accounts 2008
Notes to the Financial Statements continued
for the year ended 30 June 2008
Financial Statements
17 Loans and advances to customers continued
• Trade Finance
Trade Finance provide 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.
Loan loss provision
The following tables provide an analysis of the movement of the Group’s loan loss provision and charge during 2008 and 2007:
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
Property Trade Asset
Finance Finance Finance Total
Group £’000 £’000 £’000 £’000
2007
At 1 July 2006 1,295 1,653 1,358 4,306
Utilised (311) (1,293) (895) (2,499)
Recoveries of amounts previously written off – – 97 97
Charged to the income statement:
Additional provisions created 569 476 2,075 3,120
Recoveries of amounts previously written off – – (97) (97)
569 476 1,978 3,023
At 30 June 2007 1,553 836 2,538 4,927
Loan loss charge before gross-up adjustment 569 476 1,978 3,023
Gross-up adjustment 2,490 280 467 3,237
Total bad and doubtful debt charge 3,059 756 2,445 6,260 47
Financial Statements
17 Loans and advances to customers continued
Loans and advances to customers include hire purchase receivables as follows:
Gross investment in finance leases receivable:
2008 2007
£’000 £’000
No later than 1 year 19,286 7,372
Later than 1 year and no later than 5 years 67,606 69,645
Later than 5 years – 1,674
86,892 78,691
Unearned future finance income on finance leases (15,517) (13,495)
Net investment in finance leases 71,375 65,196
Net investment in finance leases receivable:
No later than 1 year 17,567 7,130
Later than 1 year and no later than 5 years 53,808 56,781
Later than 5 years – 1,285
71,375 65,196
Company
Company loans and receivables, as shown in Note 18, of £26,310,000 (2007: £19,741,000), 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
2008 2007 2008 2007
£’000 £’000 £’000 £’000
Amounts owed by Group undertakings – – 26,310 19,741
Other debtors 365 524 – –
Corporation tax – – 1,955 1,026
Other taxation 18 256 – 323
Prepayments and accrued income 768 736 122 81
Deferred taxation – – – 27
1,151 1,516 28,369 21,171
There is no material difference between the fair value and the carrying value of the Group’s and Company’s other debtors. Notes to the Financial Statements continued
for the year ended 30 June 2008
48
Davenham Group plc Annual Report and Accounts 2008
Financial Statements
19 Deferred tax
Deferred tax is calculated in full on temporary timing differences under the liability method using a tax rate of 28% (2007: 30%).
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.
Deferred taxation assets recognised in the financial statements is as follows:
Accelerated
tax Share based Hedging
Group depreciation Provisions payments amounts Total
£’000 £’000 £’000 £’000 £’000
At 1 July 2007 1,205 469 53 (420) 1,307
Debit to income statement (note 9) 503 176 25 – 654
Credited to hedging reserve – – – (367) 367
At 30 June 2008 1,708 644 28 (787) 1,594
Accelerated Other
tax timing
Company depreciation differences Total
£’000 £’000 £’000
At 1 July 2007 (23) 50 27
Debit to income statement (note 9) 16 (50) (34)
At 30 June 2008 (7) – (7)
Other timing differences principally relate to either timing differences arising from changes in accounting policies following the transition
to IFRS, fair value gains and losses relating to cash flow hedging instruments or share-based payments.
Of the Group and Company’s deferred tax asset balance at 30 June 2008 of £1,594,000 (2007: £1,307,000) and £27,000 
(2007: £(7,000)) respectively are expected to be realised in more than one year.
There are no unrecognised amounts for deferred taxation in the Group or Company.
20 Cash and cash equivalents
Group Group Company Company
2008 2007 2008 2007
£’000 £’000 £’000 £’000
Cash at bank and in hand 2,416 7,094 44 4,035 49
Financial Statements
21 Borrowings
Group Group Company Company
2008 2007 2008 2007
£’000 £’000 £’000 £’000
Current
Secured bank overdraft 9,195 10,801 – –
Unsecured intra-group borrowings – – 3,200 2,601
9,195 10,801 3,200 2,601
Non-current
Secured bank loan 210,030 210,349 – –
Total borrowings 219,225 221,150 3,200 2,601
The secured bank loan included within non-current bank borrowings is stated net of £970,000 (2007: £951,000) unamortised loan
arrangement fees.
There is no material difference between the fair value and the carrying value of the Group’s and Company’s borrowings.
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 pages 8 to 15 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 12.
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 below. The amounts shown therefore do not reconcile to the Group and Company’s balance sheets.
The interest cost included within the repayments profile below 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 14. As a consequence, the interest payments included in the table below will be reduced by £756,000 (2007:
£2,048,000) based upon the interest rate swaps in existence at the Balance Sheet date.
The contractual maturity of the RCF is 7 December 2009.
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
Group £’000 £’000 £’000 £’000
2007
Bank overdrafts 10,801 – – 10,801
Bank borrowings – 13,284 230,481 243,765
10,801 13,284 230,481 254,566
On Up to 1–5
demand 1 Year years Total
Company £’000 £’000 £’000 £’000
2008
Intra–group borrowings 3,200 – – 3,200 Notes to the Financial Statements continued
for the year ended 30 June 2008
50
Davenham Group plc Annual Report and Accounts 2008
Financial Statements
21 Borrowings continued
On Up to 1–5
demand 1 Year years Total
Company £’000 £’000 £’000 £’000
2007
Intra-group borrowings 2,601 – – 2,601
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
2008 216 174 390
2007 227 174 401
The Company has no operating lease contracts.
Trade and other payables are all payable within 3 months.
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 8 to 15 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 ‘Counterparty credit risk’ on pages 13 and 14.
The following table shows the fair value of derivative financial instruments, as well as their notional amounts, all of which are designated
as cash flow hedges:
2008 2007
Notional Notional
amount Assets Liabilities amount Assets Liabilities
Group and Company £’000 £’000 £’000 £’000 £’000 £’000
Interest rate swaps – current hedge 200,000 2,136 (6) 120,400 1,099 –
Interest rate swaps – forward hedge 20,000 712 (33) 75,000 1,179 (778)
2,848 (39) 2,278 (778)
Comprising:
Current 995 (10) 1,057 (235)
Non-current 1,853 (29) 1,221 (543)
2,848 (39) 2,278 (778)
There is no material ineffectiveness arising in the income statement from the cash flow hedges in either 2008 or 2007.
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.
At 30 June 2008, the fixed interest rates vary from 4.84% to 6.245% (2007: 4.84% to 6.245%), and the floating rates are  LIBOR. 
Gains and losses recognised in the hedging reserve in equity (note 25) on interest rate swap contracts as of 30 June 2008 will be
continuously released to the income statement over the remaining life of the swaps. 51
Financial Statements
23 Trade and other payables
Group Group Company Company
2008 2007 2008 2007
Current £’000 £’000 £’000 £’000
Trade payables 2,115 1,524 134 107
Amounts owed to Group undertakings – – 3,200 2,601
Other taxation and social security – – 226 –
Accruals 3,885 4,767 132 57
6,000 6,291 3,692 2,765
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
2008 2007
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 26,009,333 260
51,232 new shares have been allotted during the period following the exercise of share options by employees. Proceeds from the issue
of these shares amounts to £25,616.
25 Statement of changes in Shareholders’ equity 
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 ––––– 924 924
Tax on fair value gains on cash flow hedges––––– 18 18
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 Hedging 2007
capital account reserve account reserve Reserve equity
Group £’000 £’000 £’000 £’000 £’000 £’000 £’000
2007
At beginning of the year 259 26,470 (2,203) 20,260 94 56 44,936
New shares issued 1 33 – – – – 34
Decrease in own shares held – – 696 – – – 696
Profit for the financial year – – – 8,204 – – 8,204
Dividends –––(3,157)––(3,157)
Increase in Share Based Payment Reserve – – – – 183 – 183
Fair value gains on cash flow hedges – –––– 1,422 1,422
Tax on fair value gains on cash flow hedges – –––– (398) (398)
Closing shareholders’ equity 260 26,503 (1,507) 25,307 277 1,080 51,920  Notes to the Financial Statements continued
for the year ended 30 June 2008
52
Davenham Group plc Annual Report and Accounts 2008
Financial Statements
25 Statement of changes in Shareholders’ equity continued
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
Own Share
Called up Share shares Profit based Total
share premium held and loss payment 2007
capital account reserve account reserve equity
Company £’000 £’000 £’000 £’000 £’000 £’000
2007
At beginning of the year 259 26,470 (2,203) 100 94 24,720
New shares issued 1 33 – – – 34
Decrease in own shares held – – 696 – – 696
Profit for the financial year – – – 7,840 – 7,840
Dividends –––(3,157)–(3,157)
Increase in Share Based Payment Reserve –––– 183 183
Closing shareholders’ equity 260 26,503 (1,507) 4,783 277 30,316
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. The decrease in the amount held in the Own Shares Held reserve reflects
the transfer of the balance to other group companies.
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
From 1 July 2006 the Group achieved hedge accounting such that the hedging reserve includes the effective portion of the cumulative
net change in the fair value of cash flow hedging instruments relating to hedged transactions that have not yet occurred.
26 Contingent liabilities
2008 2007
£’000 £’000
Letters of credit 7,215 5,194
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. 53
Financial Statements
27 Operating lease arrangements
At the balance sheet date the Group had total future lease payments under non-cancellable operating leases as follows:
2008 2007
Land and Land and
buildings buildings
£’000 £’000
Future lease payments:
Within one year 126 227
In two to five years 96 174
After five years – –
222 401
The following amounts were recognised in the income statement in the year:
2008 2007
£’000 £’000
Lease payments 265 259
28 Related party transactions
The Company is provided with borrowing facilities by one of its subsidiary undertakings, for which a financing charge is levied each month.
During the year, the Company took over the administration of 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. The balance owed to Group as at
30 June 2008 in respect of payroll costs was £2,264,000.   
The following related party transactions were carried out by the Company with its subsidiary undertakings during the year:
2008 2007
£’000 £’000
Net increase/(decrease) in the borrowing of funds 3,206 (905)
Receivables due from and payables to subsidiary undertakings are disclosed in note 18 and 23 respectively.
29 Reconciliation of profit before taxation to cash flows from operations
Group Group Company Company
2008 2007 2008 2007
£’000 £’000 £’000 £’000
Profit on ordinary activities before taxation 12,735 11,601 4,415 7,840
Add back: share based payments 200 183 200 183
Operating profit before share based payments 12,935 11,784 4,615 8,023
Depreciation of property, plant and equipment 197 197 – –
Amortisation of intangible assets 277 126 113 69
Amortisation of loan arrangement fees 550 296 – –
(Increase)/Decrease in other receivables, prepayments and accrued income 365 (1,032) (7,171) (2,081)
Increase/(Decrease) in other creditors, trade and other payables (51) 1,654 934 1,122
Profit on disposal of property, plant and equipment (4) (10) – –
Net cash inflow from trading activities 14,269 13,015 (1,509) 7,133
Increase in loans and advances to customers (10,194) (60,560) – –
Increase in borrowings (869) 78,639 – –
Net cash inflow/(outflow) from operating activities 3,206 31,094 (1,509) 7,133 Notes to the Financial Statements continued
for the year ended 30 June 2008
54
Davenham Group plc Annual Report and Accounts 2008
Financial Statements
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”). Six 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 the PSP , the fair value per option granted and the assumptions used in the calculation are as follows:
PSP 1 PSP 2 PSP 3
Award date 19 December 2005 24 January 2006 20 September 2006
Exercise price Nil £3.39 Nil
Vesting date 19 December 2008 24 January 2009 20 September 2009
Expected exercise date 19 December 2008 24 July 2012 20 September 2009
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
the FTSE All Share Index the FTSE All Share Index the 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 remuneration committee remuneration committee
Number of employees 4 1 5
Share price at grant date £3.00 £3.39 £3.345
Shares under option 97,480 Nil 111,152
Expected volatility 25% 32% 25%
Option life 7 years from vesting date 7 years from vesting date 7 years from vesting date
Risk free rate n/a 4.129% n/a
Expected dividend yield 3.85% 3.41% 4.74%
Fair value per share
– 50% EPS £2.67 £0.96 £2.90
– 50% TSR £1.185 £0.654 £1.502
Average remaining
contractual life at
30 June 2008 7.5 years 7.6 years 8.25 years 55
Financial Statements
30 Share based payments continued
PSP 4 PSP 5 PSP 6
Award date 7 September 2007 12 October 2007 10 April 2008
Exercise price Nil Nil Nil
Vesting date 7 September 2010 12 October 2010 7 September 2010
Expected exercise date 7 September 2010 12 October 2010 7 September 2010
Performance condition 50% on EPS and 50% on 50% on EPS and 50% on 
TSR measured against the TSR 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) 100% on EPS 
Eligibility At the discretion of the At the discretion of the At the discretion of the
remuneration committee remuneration committee remuneration committee on 
recommendation of the CEO
Number of employees 5 1 16
Share price at grant date £3.18 £2.58 £1.51
Shares under option 154,826 14,563 98,853
Expected volatility 23% 23% n/a
Option life 7 years from vesting date 7 years from vesting date 7 years from vesting date
Risk free rate 5.057% 5.057% n/a
Expected dividend yield 4.83% 4.83% 11.0%
Fair value per share
– 50% EPS £2.71 £2.71
– 50% TSR £1.50 £1.50 £1.06
Average remaining
contractual life at
30 June 2008 9.25 years 9.3 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. Notes to the Financial Statements continued
for the year ended 30 June 2008
56
Davenham Group plc Annual Report and Accounts 2008
Financial Statements
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 2008 1.1 years 1.9 years 2.9 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. 57
Financial Statements
30 Share based payments continued
A reconciliation of the option movements over the year to 30 June 2008 is shown below:
2008 2007
Weighted average Weighted average
Number exercise price Number exercise price
PSP1
Outstanding at 1 July 110,833 – 170,800 –
Granted during the period –– ––
Forfeited (13,353) – (59,967) –
Outstanding at 30 June 97,480 – 110,833 –
Exercisable at 30 June –– ––
PSP2
Outstanding at 1 July 23,598 £3.39 23,598 £3.39
Granted during the period –– ––
Forfeited (23,598) £3.39 –
Outstanding at 30 June –– 23,598 £3.39
Exercisable at 30 June –
PSP3
Outstanding at 1 July 124,625 – ––
Granted during the period –– 171,312 –
Forfeited (13,473) – (46,687) –
Outstanding at 30 June 111,152 – 124,625 –
Exercisable at 30 June –– ––
PSP4
Outstanding at 1 July –– ––
Granted during the period 169,401 – ––
Forfeited (14,575) – ––
Outstanding at 30 June 154,826 – ––
Exercisable at 30 June –– ––
PSP5
Outstanding at 1 July –– ––
Granted during the period 14,563 – ––
Forfeited –– ––
Outstanding at 30 June 14,563 – ––
Exercisable at 30 June –– ––
PSP6
Outstanding at 1 July –– ––
Granted during the period 120,442 – ––
Forfeited (21,589) – ––
Outstanding at 30 June 98,853 – ––
Exercisable at 30 June –– –– Notes to the Financial Statements continued
for the year ended 30 June 2008
58
Davenham Group plc Annual Report and Accounts 2008
Financial Statements
30 Share based payments continued
2008 2007
Weighted average Weighted average
Number exercise price Number exercise price
SAYE 1
Outstanding at 1 July 172,268 £2.10 209,123 £2.10
Forfeited (73,446) £2.10 (36,855) £2.10
Outstanding at 30 June 98,822 £2.10 172,268 £2.10
Exercisable at 30 June – – ––
SAYE 2
Outstanding at 1 July 52,990 ––
Granted – £2.50 55,258 £2.50
Forfeited (20,637) £2.50 (2,268) £2.50
Outstanding at 30 June 32,353 £2.50 52,990 £2.50
Exercisable at 30 June –– ––
SAYE 3
Outstanding at 1 July –– ––
Granted 81,299 £2.08 ––
Forfeited (8,583) £2.08 ––
Outstanding at 30 June 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 £200,000 (2007: £183,000).
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 the occurrence of other events. 59
Financial Statements
31 Business Combination
On 26 June 2007 the business and assets of Manor Credit were acquired by Manor Credit (Davenham) Limited, a subsidiary of the
Group, from the London Scottish Bank Group.
The consideration paid and assets acquired are shown in the table below:
2008 2007
£’000 £’000
Intangible assets – 360
Property, plant and equipment – 3
Loans and advances to customers – 23,089
Trade and other receivables – 5
Net assets acquired – 23,457
Goodwill on acquisition – 1,909
Total consideration – 25,366
Net consideration – cash – 25,097
Acquisition costs – 269
Total consideration – 25,366
Less acquisition costs accrued 240 (240)
Net cash outflow 240 25,126
There was no difference between the fair value of the assets acquired and the acquiree’s carrying value at the point of acquisition, other
than the intangible assets.
Included in the goodwill recognised above are certain intangible assets that cannot be separately identified and measured due to their
nature.  This includes control over the acquired business and increased scale across the Group’s Asset finance offering.  Management
believes that goodwill represents value to the Group for which the recognition of a discrete intangible asset is not permitted.
As the business was acquired 4 days prior to the previous financial year-end there was no material contribution to the Group’s profit for
the prior year. During the year ended 30 June 2008 the business contributed £2.4m to the operating profit of the Group.
Prior to acquisition the Manor Credit business was part of London Scottish Finance Limited. However, only certain of the assets of
London Scottish Finance Limited were acquired. In these circumstances it is not practical to provide details of profits or recognised gains
and losses for the Manor Credit business for financial periods prior to acquisition.
32 Application of IFRS – Basis of Preparation
IFRS applies to all AIM companies’ accounting periods beginning on or after 1 January 2007. The date of transition to IFRS is 1 July
2006, being the start of Davenham’s accounting period of comparative information.
In order to show the effect of the transition from UK GAAP to IFRS-compliant accounting policies on the Group’s reported financial
position and financial performance, the following reconciliations have been presented and explained:
• A reconciliation of equity (i.e. net assets) as at 1 July 2006 and 30 June 2007; and
• A reconciliation of profit for the year ended 30 June 2007.
Each of these reconciliations are presented and explained on pages 60 to 68. In addition, in order to show the effect of the transition
from UK GAAP to IFRS-compliant accounting policies on the Group’s cash flows, a reconciliation of cash flows for the year ended 30
June 2007 has also been given.
There are no UK GAAP to IFRS adjustments in respect of the Company.
Transitional arrangements
IFRS 1 ‘First Time Adoption of International Financial Reporting Standards’, permits companies adopting IFRS for the first time to take certain
exemptions from the full requirements of IFRS in the transition period. Davenham’s application of the optional exemptions is as follows: Davenham Group plc Annual Report and Accounts 2008
Notes to the Financial Statements continued
for the year ended 30 June 2008
60
Financial Statements
32 Application of IFRS – Basis of Preparation continued
Business combinations
The Group has elected not to apply IFRS 3 ‘Business Combinations’ retrospectively to past business combinations that occurred prior
to 1 July 2006 and therefore no adjustment has been made.
Share based payments
The Group has elected not to apply IFRS 2 ‘Share Based Payments’ to equity instruments, such as employee share schemes, that were
granted on or before 7 November 2002 and to those instruments that were granted after 7 November 2002 which vested before 1 July
2006.
KEY IMPACT ANALYSIS
Income recognition
Interest income
Under UK GAAP , interest receivable on interest-bearing loan agreements is recognised on the accruals basis. In the case of hire purchase
and leasing agreements, interest receivable is computed at the inception of the agreement, added to the customer’s balance and
released to the profit and loss account on an actuarial basis over the life of the agreement. 
All introducer fees and direct incremental transaction costs are expensed to the profit and loss account as incurred.
Acceptance fees and similar fees charged to borrowers at the inception of the loan are credited to the profit and loss account when charged.
Under IFRS, all the Group’s customer advances are classified as ‘loans and receivables’ and interest is recognised using the effective
interest rate (‘EIR’) method. The EIR is a method of calculating the amortised cost of a financial asset and of allocating the interest income
over the life of the loan. The EIR is the rate that exactly discounts estimated future cash payments or receipts through the expected life
of the financial asset to its net carrying amount. When calculating the EIR, the Group estimates cash flows considering all contractual
terms. The calculation includes all fees and direct and incremental transaction costs. The application of the EIR method has the effect of
recognising interest income to give a constant rate of return on the amount outstanding over the period of the loan.
The impact under IFRS, as at 1 July 2006, was an increase in net assets of £0.4m. For the year ended 30 June 2007, there was a
decrease in revenue of £0.1m, resulting in an increase in net assets, at 30 June 2007, of £0.3m. This results primarily from the inclusion
of early settlement fees within the EIR calculation, and the deferral of acceptance fees and similar fees charged to borrowers at the
inception of the loan with third party loan origination costs. The customer’s option to settle their loan early increases the value of loans
and receivables in the balance sheet representing the early settlement fees, which the Group is entitled to charge.
IFRS requires that income continues to be recognised on the outstanding balance of a loan at the original EIR, irrespective of the
contractual term of the loan and whether interest has been suspended or not.
As a consequence, IFRS requires more interest to be recognised than under UK GAAP . As this interest is not charged to the customer,
a corresponding loan loss charge is made. The impact on profit is zero, but the revenue and administrative expenses lines are effectively
‘grossed-up’ by the same amount. The income gross-up adjustment for the twelve months ended 30 June 2007 was £3.2m.
Loan loss provisioning
Under UK GAAP, customers’ accounts receivable consist of amounts outstanding under hire purchase agreements, finance leases,
property related products and factoring agreements, including repayments not yet due at the year end, less an appropriate provision for
bad debts based upon a detailed individual assessment of accounts and a general provision for doubtful debts based on a fixed
percentage of the portfolio balance.
Under IFRS, at each balance sheet date the Group assesses whether there is any objective evidence that a loan or group of loans is
impaired. If any such evidence exists, the amount of the loss is measured as the difference between the loan’s carrying amount on the
balance sheet and the present value of estimated future cash flows (excluding future credit losses that have not been incurred)
discounted at the loan’s original EIR.
The impact under IFRS, as at 1 July 2006, was an increase in net assets of £0.2m. For the year ended 30 June 2007, there was a
decrease in revenue of £0.3m, resulting in a decrease in net assets at 30 June 2007 of £0.1m.
Treasury and hedging
The Group manages the risk of the exposure of floating rate borrowings to adverse interest rate fluctuations by the use of financial
hedging instruments, primarily swaps. Under UK GAAP, amounts payable or receivable in respect of these hedging instruments are
recognised as adjustments to finance costs over the period of the contracts.
Under IFRS, derivatives, including financial hedging instruments, are initially recognised and subsequently re-measured at fair value. 
The Group designates its derivatives as cash flow hedges of floating rate borrowings (‘cash flow hedging instrument’). 61
Financial Statements
32 Application of IFRS – Basis of Preparation continued
T o qualify for hedge accounting, the Group is required, at inception, to document in advance the relationship between the item being hedged
e.g. the variable rate loan cash flows, and the hedging instrument e.g. the swap. The Group is also required to document and demonstrate
an assessment of the relationship between the hedged item and the hedging instrument, which shows that the hedge will be and has been
effective. This effectiveness testing is reperformed at each reporting period end to ensure that the hedge remains highly effective.
The fair value of hedging instruments is determined by using a valuation model and is primarily based on observable market data.
Gains or losses on highly effective cash flow hedging instruments are recognised in equity. The gain or loss relating to the ineffective
portion is recognised immediately in the income statement.
Davenham has adopted cash flow hedge accounting with effect from 1 July 2006. The impact on transition under IFRS is positive as the
initial fair value of the financial instruments being recognised represents an adjustment to shareholder’s equity of £0.1m. The impact as
at 30 June 2007 is a positive adjustment to shareholder’s equity of £1.1m.
Others
The adoption of IFRS has resulted in a number of other minor changes including:
Goodwill and other intangible assets
Under UK GAAP , goodwill arising on the acquisition of subsidiary undertakings and trading assets is capitalised at cost and subsequently
amortised on a straight-line basis over its estimated useful life. This reflects the estimated period over which the value of the underlying
businesses acquired is expected to exceed the value of the underlying assets. Goodwill is reviewed for impairment at the end of the first
full year after acquisition and in other years if events or changes in circumstances indicate that the carrying value may not be fully
recoverable. Any impairment assessed is charged to the profit and loss account.
Under IFRS, for qualifying business combinations, goodwill represents the excess of consideration over the fair values of acquired assets
(including any separately quantifiable intangible assets), liabilities and contingent liabilities. IAS 38 ‘Intangible Assets’ requires that goodwill
is not amortised but instead subject to an annual impairment review. Any impairment loss would be recognised as an expense
immediately through the income statement. 
Also, under IFRS, additional intangible assets are separately recognised which under UK GAAP are recorded within the goodwill
valuation. At 30 June 2007, a customer relationship intangible arising on the acquisition of Manor Credit, valued at £0.4m has been
recognised separately from goodwill. Under IAS 38, this intangible is amortised over its useful economic life, deemed to be 7 years.
Reclassification of capitalised software
Under UK GAAP, capitalised software costs can be recognised as a tangible fixed asset. Under IFRS, capitalised software costs are
recognised as an intangible asset. Capitalised software with a net book value of £0.2m as at 1 July 2006 and £0.4m as at 30 June 2007
has been reclassified from property, plant and equipment to intangible assets.
Reconciliation of cash flows
There are some major differences between a cash flow statement prepared under IAS 7 ‘Cash Flow Statements’ and one prepared under
FRS 1. 
Definition of cash and cash equivalents
The cash flows reported under IAS 7 relate to movements in cash and cash equivalents, whereas FRS 1 required the movements in cash
only. There was no concept of cash equivalents under FRS 1.
Under UK GAAP , the Group’s syndicated bank borrowings were excluded from the cash flow statements. This treatment is not permitted
under IAS 7, therefore cash flows arising from the issuance of bank borrowings are now included within financing activities in the cash
flow statement. The impact under IFRS is a net decrease in cash and cash equivalents as at 30 June 2006 of £131.4m and at 30 June
2007 of £78.9m.
Presentational change
IAS 7 requires cash flows to be reported under three headings: operating, investing and financing, whereas FRS 1 required cash flows
to be reported under significantly more headings including separate headings for cash flows arising from taxation and equity dividends.
Under IAS 7, tax cash flows are included within operating activities and equity dividends payments are included within financing activities.
Reclassification of intangible assets
On transition to IFRS, a customer relationship intangible has been reclassified from goodwill to intangible assets. Therefore cash flows
arising from the purchase or disposal of intangibles are shown separately within the investing activities section of the cash flow statement. 
Reclassification of software-related cash flows
On transition to IFRS, capitalized software has been reclassified from property, plant and equipment to intangible assets. Therefore cash
flows arising from the purchase or disposal of software are shown separately within the investing activities section of the cash flow statement. Davenham Group plc Annual Report and Accounts 2008
Notes to the Financial Statements continued
for the year ended 30 June 2008
62
Financial Statements
Reconciliation of Profit between UK GAAP and IFRS for the 12 months ended 30 June 2007
12 months Adjustments
ended 30 June
UK GAAP Headings IFRS Headings 2007
UK GAAP 1. Reclassify 2. EIR
Turnover 38,685 (38,685)
Revenue 38,685 (124)
Interest Payable (11,202) 11,202
Finance costs (11,202)
Gross Profit 27,483 (27,483)
Gross profit 27,483 (124)
Administration Expenses (15,385) 15,385
Administrative expenses (15,385)
Profit on Ordinary Activities before tax 12,098 (12,098)
Operating profit 12,098 (124)
Taxation (3,530) 3,530
Taxation (3,530) 35
Profit after taxation 8,568 (8,568)
Profit for the financial year 8,568 (89) 63
Financial Statements
12 months
ended 30 June
4.Gross up 2007
3.Impairment /gross down 5. Hedging 6. Goodwill 7.Software IFRS
3,237 41,798
(11,202)
0 3,237 0 0 0 30,596
(352) (3,237) (21) (18,995)
(352) 0 0 (21) 0 11,601
98 0 0 0 0 (3,397)
(254) 0 0 (21) 0 8,204 Davenham Group plc Annual Report and Accounts 2008
Notes to the Financial Statements continued
for the year ended 30 June 2008
64
Financial Statements
Reconciliation of Equity (net assets) between UK GAAP and IFRS as at 30 June 2007
As at Adjustments
UK GAAP Headings IFRS Headings 30 June 2007 1. Reclassify
UK GAAP headings 2. EIR
Fixed Assets
Intangible Assets
Positive Goodwill 2,287 (2,287)
Negative Goodwill (25) 25
2,262 (2,262)
Tangible Assets 1,488 (1,488)
3,750 (3,750)
Assets
Non-current assets
Goodwill 2,262
Other intangible Assets 0
Property, plant and equipment 1,488
Loans & advances to customers 58,066
Deferred taxation asset 1,804 (103)
Derivative financial instruments 0
63,620 (103)
Current Assets
Debtors receivable within one year 211,372 (211,372)
Debtors receivable after one year 58,066 (58,066)
Cash at bank and in Hand 7,094 (7,094)
276,532 (276,532)
Current assets
Loans & advances to customers 208,052 368
Other receivables, prepayments & accrued income 1,516
Derivative financial instruments 0
Cash and cash equivalents 7,094
216,662 368
Creditors falling due within one year (19,297) 19,297
T otal Assets 280,282 265
Net current assets 257,235 (257,235)
Liabilities
Current liabilities
Borrowings 10,801
Current tax liabilities 2,205
Derivative financial instruments 0
Trade and other payables 6,291
19,297 0
Total assets less current liabilities 260,985 (280,985)
Non-current liabilities
Borrowings 210,349
Derivative financial instruments 0 
210,349 0
Creditors falling due after more than one year
Bank loans and other creditors (210,349) 210,349
Loan stock liabilities 0
Total liabilities 229,646 0
Net assets 50,636 (50,636)
Net Assets 50,636 265
Capital and reserves
Called up share capital 260 (260)
Share Premium Account 26,503 (26,503)
Own Shares held reserve (1,507) 1,507
Profit and Loss account 25,103 (25,103)
Share based payment reserve 277 (277)
Shareholders' funds 50,636 (50,636)
Shareholders’ equity
Share capital 260
Share premium 26,503
Own shares held reserve (1,507)
Retained Earnings 25,103 265
Share based payments reserve 277
Hedging reserve 0
Total Shareholder’s equity 50,636 265 65
Financial Statements
As at
30 June 2007
3.Impairment 4.Gross up 5. Hedging 6. Goodwill 7.Software IFRS
(353) 1,909
360 436 796
(436) 1,052
58,066
26 (420) 1,307
1,221 1,221
26 0 801 7 0 64,351
(94) 208,326
1,516
1,057 1,057
7,094
(94) 0 1,057 0 0 217,993
(68) 0 1,858 7 0 282,344
10,801
2,205
235 235
6,291
0 0 235 0 0 19,532
210,349
543 543
0 0 543 0 0 210,892
0 0 778 0 0 230,424
(68) 0 1,080 7 0 51,920
260
26,503
(1,507)
(68) 7 25,307
277
1,080 1,080
(68) 0 1,080 7 0 51,920 Davenham Group plc Annual Report and Accounts 2008
Notes to the Financial Statements continued
for the year ended 30 June 2008
66
Financial Statements
Reconciliation of Equity (net assets) between UK GAAP and IFRS as at 1 July 2006 
As at Adjustments
UK GAAP Headings IFRS Headings 1 July 2006 1. Reclassify
UK GAAP headings 2. EIR
Fixed Assets
Intangible Assets
Positive Goodwill 24 (24)
Negative Goodwill (52) 52
(28) 28
Tangible Assets 1,216 (1,216)
1,188 (1,188)
Assets
Non-current assets
Intangible Assets (28)
Property, plant and equipment 1,216
Loans & advances to customers 34,639
Deferred taxation asset 1,248 (138)
Derivative financial instruments 0
37,075 (138)
Current Assets
Debtors receivable within one year 149,085 (149,085)
Debtors receivable after one year 34,639 (34,639)
Cash at bank and in Hand 1,937 (1,937)
185,661 (185,661)
Current assets
Loans & advances to customers 147,342 492
Other receivables, prepayments & accrued income 495
Derivative financial instruments 0
Cash and cash equivalents 1,937
149,774 492
Creditors falling due within one year (11,122) 11,122
T otal Assets 186,849 354
Net current assets 174,539 (174,539)
Liabilities
Current liabilities
Borrowings 5,557
Current tax liabilities 1,168
Derivative financial instruments 0
Trade and other payables 4,397
11,122 0
Total assets less current liabilities 175,727 (175,727)
Non-current liabilities
Borrowings 131,414
Derivative financial instruments
131,414 0
Creditors falling due after more than one year
Bank loans and other creditors (131,414) 131,414
Loan stock liabilities 0
Total liabilities 142,536 0
Net assets 44,313 (44,313)
Net Assets 44,313 354
Capital and reserves
Called up share capital 259 (259)
Share Premium Account 26,470 (26,470)
Own Shares held reserve (2,202) 2,202
Profit and Loss account 19,692 (19,692)
Share based payment reserve 94 (94)
Shareholders’ funds 44,313 (44,313)
Shareholders’ equity
Share capital 259
Share premium account 26,470
Own shares held reserve (2,202)
Retained Earnings 19,692 354
Share based payments reserve 94
Hedging reserve 0
Total Shareholder’s equity 44,313 354 67
Financial Statements
As at
4.Gross up/ 1July 2006
3.Impairment gross down 5. Hedging 6. Goodwill 7.Software IFRS
28 172 172
(172) 1,044
34,639
(72) (22) 1,016
123 123
(72) 0 101 28 0 36,994
257 148,091
495
203 203
1,937
257 0 203 0 0 150,726
185 0 304 28 0 187,720
5,557
1,168
230 230
4,397
0 0 230 0 0 11,352
131,414
18 18
0 0 18 0 0 131,432
0 0 248 0 0 142,784
185 0 56 28 0 44,936
259
26,470
(2,202)
185 28 20,259
94
56 56
185 0 56 28 0 44,936 Davenham Group plc Annual Report and Accounts 2008
Notes to the Financial Statements continued
for the year ended 30 June 2008
68
Financial Statements
Reconciliation of cash flows between UK GAAP and IFRS for the year ended 30 June 2007
UK GAAP Headings IFRS Headings For the year For the year
ended 30 June ended 30 June
2007 UK GAAP IFRS 2007
UK GAAP IFRS format adjustments IFRS
Cash inflow/(outflow) from 
operating activities 31,094
Taxation (3,049)
Cash flows from operating activities
Cash generated from operations 31,094 31,094
Tax paid (3,049) (3,049)
Net cash inflow from operating activities 28,045 28,045
Capital expenditure and financial investment
Purchase of tangible fixed assets (617)
Sale of tangible fixed assets 31
Cash outflow from capital expenditure and 
financial investment (586)
Acquisitions
Cash outflow on acquisition of subsidiary (25,118)
Cash inflow/(outflow) before use of liquid 
resources and financing 2,341
Cash flows from investing activities
Acquisition of business and subsidiary 
undertakings net cash acquired (25,118) 360 (24,758)
Purchase of property, plant & equipment (617) 348 (269)
Proceeds from sale of property, 
plant & equipment 31 31
Purchase of intangible assets 0 (708) (708)
Net cash outflow from 
investing activities (25,704) 0 (25,704)
Equity dividends paid (3,157)
Financing
Exercise of own shares for EBT 695
Issue of shares net of issue costs 34
Net cash inflow from financing 729
Cash flows from financing activities
Proceeds from issue of share capital 34 34
Exercise of own shares for Employee Benefit Trust 695 695
Issue of new borrowings 0 (78,935) (78,935)
Dividends paid to shareholders (3,157) (3,157)
Net cash outflow from financing activities (2,428) (78,935) (81,363)
Decrease in cash in period (87)
Net decrease in cash and cash equivalents (87) (78,935) (79,022)
Cash and cash equivalents at beginning 
of the year (3,620) (131,414) (135,034)
Cash and cash equivalents at end of the year (3,707) (214,056)
For the purpose of the cash flow statement, 
cash and cash equivalents comprise:
Cash at bank and in hand 7,094
Bank overdrafts (10,801)
Bank borrowings (210,349)
Total (214,056) Davenham Group plc Annual Report and Accounts 2008
Notice of Annual General Meeting
69
Shareholder Information
NOTICE IS HEREBY GIVEN that the Annual General Meeting of
the Company will be held at the Lancashire & Cumberland Suite,
Institute of Directors Hub, Peter House, St Peter’s Square, Oxford
Street, Manchester M1 5AN on Friday 24th October 2008 at
2:00pm to transact the following business:
ORDINARY BUSINESS
1. To receive the accounts of the Company for the year ended 
30 June 2008 and the reports of the directors and the auditors.
2. To declare a final dividend.
3. To re-elect Paul E Burke as a director.
4. To re-elect Graham L Footitt as a director.
5. 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 7 to
the passing of resolution 6) pass the following resolutions.
Resolution 6 will be proposed as an ordinary resolution.
Resolutions 7 and 8 will be proposed as special resolutions.  
6. 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
£90,939 (being approximately 35% 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.
7. THAT, subject to the passing of resolution 6, 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 2009), 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.
8. That the articles of association approved by the Board be
adopted as the articles of association of the Company in
substitution for, and to the exclusion of, all existing articles of
association of the Company. 
Dated: 24th September 2008
By Order of the Board
Dawn E Smethurst
Secretary
Registered Office:
8 St John Street
Manchester M3 4DU
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).
T o 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 24 October 2008 and any adjournment(s) thereof by
using the procedures described in the CREST Manual. 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 7RA19) 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 Davenham Group plc Annual Report and Accounts 2008
Notice of Annual General Meeting continued
70
Shareholder Information
1. General 
Provisions in the current Articles of Association (“Current Articles”) which
replicate provision contained in the Companies Act 2006 are, in the main,
to be amended in the proposed New Articles. The main changes, including
those made to reflect this approach are detailed below.
2. Form of Resolution
The Current Articles contain references to extraordinary resolution, a
concept which has not been retained under the Companies Act 2006.
References to extraordinary resolutions in the New Articles are deleted
and changed to special resolutions. The voting thresholds for the passing
of the extraordinary resolutions (and which are now special resolutions in
the New Articles) remains unchanged at 75 per cent of shareholders entitled
to vote, present and voting, voting in favour of the resolution. 
3. Purchase of Own Shares
Regulation 10.4 of the Current Articles sets out some specific conditions
pursuant to which shares can be purchased by the Company and these
have been deleted from the New Articles. 
4. Electronic Communication 
With effect from 20 January 2007 the electronic communications provisions
of the Act are repealed and are replaced by the electronic communication
provisions of the Companies Act 2006 and, to the extent relevant, in the
Disclosure and Transparency Rules of the Financial Services Authority. The
New Articles proposed to be adopted in place of the Current Articles bring
into effect all such changes. The Company is required to seek the individual
agreement of each shareholder to such means of communication in
accordance with the terms of such New Articles.  
5. Directors Authorisation of Situations in which a Director has
an Interest
The Companies Act 2006 sets out directors’ general duties which largely
codify the existing law but with some changes. Under the Companies Act,
from 1 October 2008 a director must avoid a situation where he has, or can
have, a direct or indirect interest that conflicts, or possibly may conflict
with the company’s interests. The requirement is very broad and could
apply, for example, if a director becomes a director of another company or
trustee of another organisation. The Companies Act 2006 allows directors
of public companies to authorise conflicts and potential conflicts, where
appropriate, where the articles of association contain provision to this
effect. The Companies Act 2006 also allows the articles of association to
contain other provisions for dealing with directors’ conflicts of interest to
avoid breach of duty. The New Articles give directors authority to approve
such situations and to include other provisions to allow conflicts of interest
to be dealt with in a similar way to the current position.  
There are safeguards which will apply when directors decide whether to
authorise a conflict or potential conflict. First, only directors who have no
interest in the matter being considered will be able to take the relevant
decision, and secondly, in taking the decision the directors must act in a
way they consider, in good faith, will be most likely to promote the company’ s
success. The directors will be able to impose limits and conditions when
giving authorisation if they think this is appropriate.
It is the Board’s intention to report annually on the Company’s procedure for
ensuring that the Board’ s powers to authorise conflicts are operating effectively .
6. Indemnification of Directors and other Officers
The New Articles reflect sections of the Companies Act 2006 that replace
equivalent sections of the Companies Act 1985. The provisions (which are
broadly the same in both the Companies Acts 1985 and 2006) relax, to a
limited extent, the prohibition on indemnifying directors allowing companies
to provide insurance and to fund directors’ defence costs in advance. Directors
can be indemnified against liabilities to a ‘qualifying third party’ and against
liabilities incurred in connection with the Company’ s activities as trustees of a
‘qualifying pension scheme’ but not against liabilities of the Company itself. 
7 . Proxies and Corporate Representatives
The Companies Act 2006 provides for the following: 
(i) members of a company may appoint more than one proxy , provided that
each proxy exercises rights attached to a different share or shares;
(ii) proxies may attend a meeting speak and vote (both on a show of hands
and on a poll); and
(iii) the timing for delivery of proxies excludes part of a day that is not a
working day; and 
(iv) the appointment by a shareholder, of more than one representative.
The New Articles reflect these new provisions.
8. Authentification of Documents
The detailed provisions relating to the power of persons to authenticate in
the Current Articles has been deleted and replaced in the New Articles
which simply provides for the Company to require how the identity of the
sender has to be confirmed. 
Notes continued
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 22 October 2008 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 September 2008,
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. The principal changes introduced in the new Articles of Association (the “New
Articles”) are summarised in Appendix 1 of this notice. The New Articles are
available for inspection at the registered office of the Company.
7. In order to facilitate voting by corporate representatives at the meeting,
arrangements will be put in place at the meeting so that:
(i) if a corporate shareholder has appointed the Chairman of the meeting as
its corporate representative with instructions to vote on a poll in
accordance with the directions of all the other corporate representatives for
that shareholder at the meeting, then on a poll those corporate
representatives will give voting directions to the Chairman and the
Chairman will vote (or withhold a vote) as corporate representative in
accordance with those directions; and
(ii) if more than one corporate representative for the same corporate
shareholder attends the meeting but the corporate shareholder has not
appointed the Chairman of the meeting as its corporate representative, a
designated corporate representative will be nominated, from those
corporate representatives who attend, who will vote on a poll and the other
corporate representatives will give voting directions to that designated
corporate representative.
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.
APPENDIX 1 Davenham Group plc Annual Report and Accounts 2008
Form of Proxy
71
Shareholder Information
 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 Friday 24th October 2008 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 2008
2 To declare a final dividend of 7.00p per share
3 To re-elect Paul E Burke as a director
4 To re-elect Graham L Footitt as a director.
5 To re-appoint PricewaterhouseCoopers LLP as auditors and to
authorise the Directors to determine their remuneration
6 To authorise the Directors to allot relevant securities pursuant to 
section 80 of the Companies Act 1985
7 To authorise the Directors to allot equity securities pursuant to
section 95 of the Companies Act 1985
8 To adopt the Articles of Association of the Company approved by the Board
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. If you indicate that you want your vote withheld your proxy may abstain from voting and therefore there is no vote at law to be counted in the calculation of
the proportion of votes for and against the 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
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