FRAUD CAUSES SILVER CHEF PROFIT SLIDE
Written on the 21 February 2017 by Laura Daquino
EQUIPMENT financier Silver Chef (ASX:SIV) has seen its half-year profit slide due to fraud.
The Brisbane company reported an underlying profit after tax of $6.9 million to the ASX today, down from $7.6 million in the same period in 2015.
The underlying result was determined after adding back a provision for asset impairment of $2.3 million after income tax in respect to the fraud event announced to the market mid-November last year.
Bad debt and impairment charges were recognised by Silver Chef's construction hire arm, GoGetta. Silver Chef has since tightened credit controls to safeguard against any similar events, including implementing advanced identity verification software and increasing investment in internal and external audit and risk resources.
Silver Chef CEO Damien Guivarra, who took the helm from founder Allan English on 3 November 2016, says the headline results are only 'disappointing' because of the fraud event, where customers were working in conjunction with fraudulent equipment vendors.
There's strong underlying growth in Silver Chef's rental asset base.
Group revenue, in fact, grew 37 per cent from the previous corresponding period to $137.8 million.
As expected, Silver Chef's legacy business, its hospitality financing arm, was the clear winner. The namesake business saw growth in its asset base of 27 per cent against the previous corresponding period, driven by obvious growth in coffee and franchise businesses Australia-wide.
Canada delivered a substantial result too, with Silver Chef's hospitality business up there delivering $10 million in originations for the first half, up 49 per cent from the same period in 2015.
The board will pay a fully franked interim dividend of 12.9c per share on March 31, from a record date of March 17. The company says the high payout reflects a high level of confidence going forward.
Silver Chef is forecasting full year after tax earnings in the range of $21 million to $23 million.
Business News Australia