Client News

Silver Chef delivers another record profit

Coffee MachineLeading equipment financier Silver Chef Limited (ASX: SIV) today reported a record net profit after tax of $12.7 million for the year to 30 June 2014, up 11% from the previous year. This result is at the upper end of the guidance range for FY14 of $12.3 million to $12.7 million. The result reflects a 24% increase in revenue to $141.3 million. Total rental assets (at cost) and lease receivables increased 16% to $299.0 million (FY13: $257.4 million). The Board has declared a fully franked final dividend of 16.0 cents per share taking the full year fully franked dividend to 30.0 cents per share. The dividend has a record date of 12 September and a payment date of 26 September 2014. The Company’s Dividend Reinvestment Plan will continue to operate, with shares acquired under the plan being issued at a 5% discount to the 5 day volume weighted average price preceding the payment date. Executive Chairman Allan English said the Group result was underpinned by strong organic growth in the Company’s core Silver Chef (Hospitality) equipment rental operations, but was partially offset by weaker growth than expected in the GoGetta equipment finance business which had been flagged earlier to the market. In respect of the GoGetta business, Mr English said “When I returned to the Company in an executive capacity in February 2014, one of my key priorities was to review the GoGetta business and implement actions for improvement. I am pleased to say that following the changes we have implemented, GoGetta had a strong last quarter and the business overall has good growth prospects for the year ahead.” Mr English said the Silver Chef Hospitality division, which comprises approximately 68% of the business’ rental assets and lease receivables, had achieved 13% growth (measured by new acquisitions) during the year. “This is a strong result and our Queensland team in particular delivered an outstanding performance,” Mr English said. “The $0.9 million of operating costs expensed in establishing a second Reconditioning and Disposal (RAD) facility in Melbourne contributed to improved efficiency at our Brisbane RAD facility, which had reached capacity limitations in prior periods”. Mr English said the Hospitality division would continue its focus on growing core markets in Australia. The Company’s long-term international growth strategy remains on track with the New Zealand business, which was established in 2011, making a profit and the Canadian operation, established in 2013, growing slightly ahead of target. Operating costs expensed in the start-up phase for Canada amounted to $1.3 million, with losses expected to reduce over the 2015 financial year. In FY15, the Company will continue investing in the longer term growth of the Company including improving the systems and processes. The Company increased its debt facility limit with the Commonwealth Bank from $110 million to $120 million in FY14, bringing total debt facilities including unsecured corporate notes to $150 million. The Board will continue to seek further diversification of debt as the Company grows. Mr English said that the outlook for FY15 was positive, with Silver Chef’s key market, the hospitality industry, continuing to grow and the new initiatives for GoGetta will continue to gain momentum. “The cafe and hospitality industry has consistently expanded in the past few years and it is our expectation that the consumer’s love of a cup of coffee and dining out with friends will continue,” Mr English said. “If we continue to maintain our current high customer satisfaction levels in the future then our business will continue to grow.”