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Silver Chef (ASX: SIV) has outlined a major business transformation following its exit from the GoGetta business which it blamed for its first half loss of $13 million.
The hospitality services provider announced in February that it was exiting the GoGetta business following a strategic review.
Silver Chef has written to shareholders and announced a trading update to explain its new direction in the wake of its decision to cut and run from the GoGetta equipment financing operations to focus exclusively on the growth of its core hospitality business in Australia and internationally.
The group outlines four major reasons for dumping GoGetta, saying that the business was never going to match Silver Chef's returns, that GoGetta would hinder the company from expanding overseas, that it did not fit with the brand's strategic goals of being a world-leading brand name, and that a larger Silver Chef was more "opportune' for shareholders than GoGetta.
With GoGetta out of the picture, Silver Chef says it is in a position to commence its "transformation project". The company says it can create a brand which will flgrow now that the "distraction" will no loger stop Silver Chef from performing to its best abilities.
The letter, signed by chairman Allan English and CEO Damien Guivarra acknowledged that in the past six months the company's performance was "below expectations with lower than expected revenue growth and an increase in bad debts".
Silver Chef says the "transformation project" has four pillars:
- A Single Brand: Silver Chef will become a single brand dedicated solely to hospitality. This sharper focus will enable a deeper understanding of both customers and the industry, which will unlock additional growth in dedicated hospitality channels such as coffee and franchise;
- A Simpler Australian Organisational Structure: A restructure of the Australian business creating national alignment and enabling operational teams to focus on delivering further growth;
- Expansion in North America: The Company will continue its expansion into North America off the back of in-depth market and customer intelligence, and customer focused technology; and
- Digital Investment: The Company will direct capital to accelerate development of technology to build scalable systems that improve customer experience and deliver internal efficiencies and cost savings.
If successful, the company says it will become an international, dominating force in the hospitality sector. The company still has to offload GoGetta and says this process has commenced.
Silver Chef says it remains on track to report a hospitality pre-tax profit of between $20 million and $24 million and a statutory loss of between $9 million and $12 million.
Shares in Silver Chef closed were steady at $3.41 at around midday. The price has nearly halved since it hit $8.35 in November, 2017, and is well down from its all time high of $11.74 from October 2016.
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