For the first time ever, Allan English has his tail between his legs. The Chairman's Report is a little embarrassing, by his standards. It's also the first time I can remember the company as having more than one cockroach in the kitchen.
They've messed-up the last couple of years stellar growth in GoGetta, and he knows it. For a person who's taken so much pride in getting his systems right as the Group scales up, it really is baffling that the first rule of financing - "get your credit quality right" - should have taken a back seat to exponential revenue growth from just the one sector (light commercial).
Even if there's no more bad news to come, there will be "significant" impairment losses. Costs to repossess, refurbish and re-market vehicles from non-performing customers will mount up in what appears to be a desperate effort to generate revenue on what could well be tens of $millions of idle capital.
A number of senior management positions remain vacant - I presume Silver Chef have given them the boot- but it was Mr. English who presided over this "finite" (in his words) debacle.
Still, it looks like a very strong business model, and the Group is making great progress in so many other areas of operations. This appears to be a function of their Argenti approach, and is one of the least discussed strengths about Silver Chef.
SIV's future is very promising, but I would be interested to see how the credit quality for the whole Hospitality area - which needs some tightening - is going to hold up going forward. They need to learn from all this.
[BTW, Arowana have complete egg on their face in recently predicting EPS 2018 of $1.03 for what is their largest holding!]
SIV Price at posting:
$7.35 Sentiment: Buy Disclosure: Held
