Investor Presentation - ASX2017/02/21 · SILVER CHEF GROUP 41H17 1H16 Change Revenue ($ millions) $137.8m $100.7m 37% Rental assets (at cost) and lease receivables ($ millions) *

Investor Presentation31 December 2016 Results

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1986 20162013201120082005

Silver Chef established by Non-Executive

Chairman Allan English

Silver Chef30 Year

Anniversary

Silver ChefCanada

established

Silver ChefNew Zealandestablished

LaunchedGoGetta inAustralia

Silver Cheflisted

on ASX

SILVER CHEF GROUP 2

Silver Chef Limited has not considered the financial position or needs of the recipient in providing this presentation. Persons needing advice should consult their stockbroker, bank manager, solicitor, attorney, accountant or other independent financial or legal advisor.

The presentation includes certain ‘forward-looking statements’ which are not historical facts but rather are based on Silver Chef’s current expectations, estimates and projections about the industry in which Silver Chef operates, and beliefs and assumptions regarding Silver Chef’s future performance.

Words such as ‘anticipates’, ‘expects’, ‘intends’, ‘plans’, ‘believes’, ‘seeks’, ’estimates’ and similar expressions are intended to identify forward-looking statements.

These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors, some of which are beyond the control of Silver Chef, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements.

Silver Chef cautions shareholders and prospective shareholders not to place undue reliance on these forward-looking statements, which reflect the view of Silver Chef only at the date of this presentation.

The forward-looking statements made in this presentation relate only to events as of the date on which the statements are made. Silver Chef will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date of this presentation except as required by law or by any appropriate regulatory authority.

DISCLAIMER

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SILVER CHEF GROUP 3

SILVER CHEF GROUP

PERFORMANCE HIGHLIGHTS

Excellent growth in domestic hospitality rental base up 18%* on 30 June 2016

GoGetta volume reduction in response to improved customer quality measures

Canadian rental asset base up 54% on 30 June 2016, with acquisitions up 49%#

NZ asset base up 33% on 30 June 2016 with acquisitions up 66%#

First half earnings impacted by higher GoGetta provisioning – strong second half earnings skew

High first half dividend reflects confidence in second half earnings

Full year earnings guidance in range of $21 to $23m

* Rental asset base includes rental assets at WDV included in property, plant and equipment, rental contracts accounted for as lease receivables at amortised cost# on the previous corresponding period

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SILVER CHEF GROUP 4

1H17 1H16 Change

Revenue ($ millions) $137.8m $100.7m 37%

Rental assets (at cost) and lease receivables ($ millions) * $624.2m $446.8m 40%

NPAT ($ millions) $4.6m $10.3m (55%)

Underlying NPAT ($ millions)# $6.9m $7.6m (9%)

Net operating cash flows ($ millions) $83.7m $53.5m 56%

Basic EPS 12.9cps 32.5cps (60%)

Dividend (fully franked) 12.9cps 17.0cps

SILVER CHEF GROUP– SATISFACTORY HALF YEAR PERFORMANCE

* Includes capitalised upfront lease origination costs# 1H17 excludes non-recurring asset impairment loss of 2.3 million in respect of November 2016 fraud event. 1H16 includes loan note break costs and first time application of deferred cost accounting on upfront origination costs

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SILVER CHEF GROUP 5

GOOD GROWTH IN ORIGINATIONSWITH INCREASED FOCUS ON QUALITY CUSTOMERSCOST VALUE OF RENTAL ASSETS AND WDV OF LEASE RECEIVABLES

GROUP ORIGINATIONS (RENTAL ASSET ACQUISTIONS AND ADVANTAGE)*

* For comparability with prior periods, we have excluded from the FY16 and FY17 rental asset base upfront costs which are now deferred in accordance with AASB 117 Leases and reported as part of plant and equipment.

39.7 37.047.0 39.7

50.040.3

66.156.7

81.1

25.922.7

23.627.3

40.546.6

75.085.1

76.9

1.1 3.6

8.5 11.7

15.0

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17$

A m

illio

ns

SilverChef Rental GoGetta Silver Chef Advantage

173.4 197.4 210.2 244.9

283.8

84.0 90.1

117.6

205.4

236.9

6.1

18.7

43.9

56.5

5.4

12.4

21.4

24.6

-

100.0

200.0

300.0

400.0

500.0

600.0

700.0

FY13 FY14 FY15 FY16 1H17

$ m

illio

n

Cost Value of Silver Chef rental assets Cost Value of GoGetta rental assets

Silver Chef Lease Receivables Current Value GoGetta Lease Receivables Current Value

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HALF YEAR EARNINGS ANALYSISUNDERLYING EARNINGS BRIDGE 1H16 TO 1H17 ($M) UNDERLYING EARNINGS BRIDGE 1H17 TO 2H17 ($M)

• Strong margin on asset base growth, but at a lower yield due to

weighting towards GoGetta

• Impairment and bad debts higher than historical rates –driven by

GoGetta acquisitions July 15 to March 16

• Some overhead efficiencies realised

• GoGetta average yield improvement post rental rate rise in May 2016

• Bad debt forecast to be proportionally lower in 2H17 as historical problem

contracts are worked through

• Further overhead efficiencies realised

SILVER CHEF GROUP 6

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SILVER CHEF GROUP 7

HOSPITALITY

Strong underlying growth (23%) in domestic hospitality originations

Expansion of New Zealand office generating significant growth

Continued strong growth in Canada through expansion into eastern provinces

New key account management approach yielding good resultsFor

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• Focus on key dealers driving significant growth in acquisition volumes

• Large growth in franchise sector as product continues to gain traction in this market

• Continued growth in the coffee channel

• Initial feedback encouraging from the pubs and clubs sector

KEY DIVISIONAL STATISTICS 1H17 2H16

Rental asset numbers 67,113 62,599

Originations including Advantage (AUD) $77.4m $57.8m*

Rental assets at cost (AUD) $239.6m $212.3m

Rental asset WDV (AUD) $155.2m $133.5m

Finance lease receivable (AUD) $51.4m $40.9m

Average contract life 29 months 29 months

Average contract size $11,873 $10,336

Customer numbers 11,500 10,692

SILVER CHEF GROUP 8

HOSPITALITYAUSTRALIA

* Relating to six months originations to 30 June 2016

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Rental asset costs (AUD) $22.3m $14.5m



Customer numbers 1,018 904

• Rental asset acquisitions increased 51% on 1H FY16

• Aggressive growth targets being achieved, with strong expansion opportunities in all markets

• Expansion into eastern states – growing sales staff in Toronto, Quebec and in franchise

• Strong support from national dealers and equipment suppliers

Population1 Foodservice Market2 Total outlets2

Canada 35.5 million $US75 billion 91,300

1. Source: World Bank (June 2016)2. Source: Restaurants Canada – Research (July 2016)

SILVER CHEF GROUP 9

VANCOUVER

CALGARY

TORONTO

HOSPITALITYCANADA


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Population1 Foodservice Market2 Total outlets2

New Zealand 4.7 million $NZ 8 billion 15,366

1. Source: Stats – Govt NZ2. Source: Restaurant Association of New Zealand (March 2014 est)




Rental asset costs (AUD) $21.9m $18.1m



Customer numbers 1,083 893

SILVER CHEF GROUP 10

• Rental asset originations up 47% on 1H FY16

• New Zealand continues to be a high growth tourism and hospitality market

• Further investment in sales and customer service staff

• Leveraging key dealer relationships

CHRISTCHURCH

AUCKLAND

HOSPITALITYNEW ZEALAND


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GOGETTAGROWTH


Tightening of credit policy controls, particularly in light commercial sector, to drive reduced provisioning and increased yield

Actions taken to improve fraud prevention controls

Strengthening broker and vendor relationship in key asset classes

Significant demand in both the broker and end user marketsFor

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GOGETTA RENTAL ASSET BASE BY SECTOR

3%4%

36%

GOGETTAGROWTH




Rental assets at cost (AUD) $236.9m $205.4m


Finance lease receivables (AUD) $24.6m $21.4m

Average contract life 22 months 22 months

Average contract size $29,280 $26,090

Customer numbers 7,791 7,182

11%

3%2%

31%40%

13%

Construction

Fitness

Hospitality

Light Commercial

Trucks and Trailers

Other


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CIRCUMSTANCES

• Fraudulent customers worked with fraudulent vendors to defraud GoGetta of $4m worth of assets

• The after tax impact of provisioning against this fraud is $2.3m in the six months to 31 December 2016


RESPONSE TO FRAUD EVENT

MANAGEMENT RESPONSE

• Introduced new third party customer evaluation software to give insight into financial behaviour and to verify customers’ identity against an existing bank account

• GoGetta has reassessed and reaccredited the material portion of the equipment vendor network

• The Company has appointed new internal audit and risk resources to oversee improvements to risk control process

• Silver Chef is a member of a group of financial institutions sharing information on known fraud, identity theft and cybercrime. This enhances our ability to detect known fraud perpetrators and benchmark our processes against wider industry practice

• Broker and vendor network has been rationalised through dis-accreditation and higher credit and customer quality thresholds

• Working with underwriters to improve responsiveness of fraud/crime insurance coverageF

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CAPITAL MANAGEMENT

In advanced negotiations of commercial terms for securitisation funding solution

Strong first half cashflow performance reduced reliance on external debt funding

Lease receivables increased to $80m available for immediate securitisation

Group senior debt facility extended to $400m in July 2016 increasing capacityF

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EQUITY

• Reinvestment of cash operating profits of$83.7m into rental asset base

• Successful placement of DRP shortfall

SENIOR SECURED DEBT

• Extension of senior syndicated facility inJuly to $400m

• Increased diversification of tenor profile totwo, three and four years

SECURITISATION WAREHOUSE INDICATIVE TERMS

• Support from two major Australian banks

• Improved financial leverage withoutrecourse to Silver Chef Limited

• Available to fund both Hospitality andGoGetta lease receivables andRent.Try.Buy contracts

• Purchase the Company book of financeleases

STRATEGY

• Deliver securitisation warehouse foravailability in 1H18

CAPITAL MANAGEMENTF

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• Group bad debt increased to 5.2% - target range of 4-5%

• Tightened credit policy targeting historic return of bad debt to 2.5% - 3.5% of revenue of the Group.

• Highly diversified portfolio with geographic risk, asset class risk and business nature risk being effectively managed

HOSPITALITY BAD DEBTS AND IMPAIRMENT LOSS


CREDIT AND RESIDUAL ASSET RISK

GOGETTA BAD DEBTS AND IMPAIRMENT LOSS

0.9%

1.2%

1.6%

2.9%

2.1%

1.2% 0.7%

2.7%

0.6% 0.6%

1.2%

2.5%

1.3%

3.0%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

FY11 FY12 FY13 FY14 FY15 FY16 1H17 YTD

Impairment Loss to Rental Asset WDV and Lease Receivable

Bad Debts to Revenue

1.4%

0.5%

0.6%

3.5% 3.7% 3.5%

4.3%

2.8%

0.8% 0.6%0.9%

2.9%

4.9%

7.6%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

FY11 FY12 FY13 FY14 FY15 FY16 1H17 YTD

Impairment Loss to Rental Asset WDV and Lease Receivable

Bad Debts to Revenue

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$ millions 1H16 1H17 Change

Revenue 100.7 137.8 37%

Expenses from ordinary activities (30.5) (43.2) 42%

Loss on sale of plant and equipment (3.9) (5.1) 31%

Earnings before interest, depreciation, amortisation, impairment and tax

66.3 89.5 35%

Depreciation, amortisation and impairment (45.7) (76.4) 67%

Finance costs (5.9) (6.5) 10%

Profit before income tax 14.7 6.6 (55%)

Income tax expense (4.4) (2.0) (55%)

Statutory net profit after tax 10.3 4.6 (55%)

Adjustments* (2.7) 2.3

Adjusted net profit after tax 7.6 6.9 (9%)

Earnings per share

Basic earnings per share (cents) 32.5 12.9 (60%)

Diluted earnings per share (cents) 32.5 12.9 (60%)

• Strong revenue growth from increase in asset base

• Depreciation and loss on sale increased as a result of higher asset base

• Impairment increased due to relative immaturity of GoGetta asset base

PROFIT AND LOSS

• FY16 adjustment consisted of the after tax effect of the $1m non recurring loan note break costs and $3.7m effect of deferral accounting, FY17 adjustment removes the $2.3m provision for the fraud event

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$ millions FY16 1H17 Change

ASSETS

Cash 5.7 8.5 49%

Trade receivables and other 15.1 23.7 57%

Lease receivables 65.3 81.1 24%

Other current assets 3.2 2.5 (22%)

Rental assets at WDV 332.6 376.1 13%

Other non current assets 11.1 15.8 42%

Total assets 433.0 507.7 17%

LIABILITIES

Trade and other payables 48.9 51.6 6%

Employee benefits 3.4 3.4 0%

Loans and borrowings 250.1 317.7 27%

Financial liabilities 1.4 0.7 (50%)

Total liabilities 303.8 373.4 23%

Net assets 129.2 134.3 4%

• Significant growth in fixed asset base driven from strong acquisition volumes

• Strong growth in long term lease portfolio

• Arrears position increased as a result of GoGetta growth with longer cash flow cycle for customers

FINANCIALPOSITION

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$ millions 1H16 1H17 Change

Net cash from operating activities 53.5 83.7 56%

Payments for plant and equipment (150.3) (185.9) 24%

Proceeds from sale of plant and equipment 27.7 38.4 39%

Net proceeds from borrowing 75.9 67.4 (11%)

Net proceeds from issue of shares 5.5 7.5 36%

Dividend paid (5.5) (7.5) 36%

Other (0.9) (0.8) (11%)

Increase/ decrease in cash in period 5.9 2.8

Cash at end of 31 December 7.5 8.5

CASH FLOW

• Operating cash flow up due to increase in rental asset base

• Significant stabilisation in debt drawdown rate as acquisition rates normalise

• Proceeds on sale up in line with growth in asset base

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• Silver Chef strives to maintain a reputation of exceptional customer and partnerexperience by using insights and customer first thinking to deliver quick, easy,personalised experiences which cannot be delivered by other equipment financiers

• We measure our performance using Net Promoter Score (NPS) through surveyingnew, existing and end of term customers and partners. NPS is a loyalty metric and adiscipline for utilising customer and partner feedback to fuel growth

• Silver Chef is consistently improving its NPS and prides itself on providing a uniqueand memorable experience to all customers

Net promoter score growth 2013–2016

Average NPS 2014/15 63

Average NPS 2015/16 68

Average NPS 1H17 72


EXCELLENT ONGOING CUSTOMER SATISFACTION LEVELS

Financial ServicesAirline

Utilities

TelecomRetail

SilverChef

0

+72

-40

Source: Australian NPS benchmarking August 2016 – Customer Monitor

• We have recently moved to a global NPS platform. This will allow us to gatherthe most current feedback and compare and contrast customer and partnersatisfaction across our global operations

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WE ARE A “B CORP”ORGANISATION


We believe a successful, sustainable commercial enterprise requiresalignment of our activities around a values driven framework and a desire tomake a wider contribution to the world

Silver Chef became a Certified B Corporation in June 2015. The B Corporationcertification is a validation of Silver Chef’s commitment to social andenvironmental responsibility.

B Corporations choose to meet higher standards of social and environmentalperformance, transparency, and accountability. There are more than 1,850Certified B Corps from 50 countries and 130 industries.

As a B Corporation, Silver Chef has an ongoing commitment to building asustainable modern business. This is achieved by focusing on theenvironment, good governance, staff, customers and our community.

Silver Chef’s largest shareholder, The English Family Foundation, is a non-profit foundation that uses its dividend income to support OpportunityInternational and other charities. In conjunction with OpportunityInternational and the English Foundation, Silver Chef has to date fundedmore than nine hundred thousand people out of poverty

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Creating Stakeholder Value –The Silver Chef Approach

B-Corp

Engaged and Happy Staff

Increased Innovation

and Productivity

Happy Customers =

High NPS

Increased Sales

Increased Profits

• Silver Chef believes that a strong core purpose leads to success within every aspect of its business

• Maintaining a higher purpose driven culture as reflected by Silver Chef’s B-Corp accreditation allows the Company to attract and maintain high quality staff

• With high quality, highly engaged staff comes increased innovation and productivity within the organisation. This enables the Company to achieve exceptionally high customer NPS scores

• Happy customers leads to return business, and return business leads to increased profits. This allows the Company to provide value to all stakeholders

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STRATEGY AND OUTLOOK

Strong 2H17 earnings skew, driven by improved GoGetta contract yield and improved cost management

Full year earnings guidance $21 - $23m, underlying $23 - $25m

Strong acquisition growth rate in Canada

Buoyant domestic and New Zealand hospitality market conditions

Significant demand for GoGetta product in both the broker and end user markets

Deliver securitisation funding solution for availability in 1H18

Differentiate ourselves from traditional equipment financers through our purpose and our stakeholder value model

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SILVER CHEF GROUP 24SILVER CHEF GROUP 24

ABOUTSILVER CHEF LIMITED

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PRODUCT ANDKEY FEATURES

Customer Decision in Further 12 Months

Subsequent Decision

Customer Decision at 12 Months

Initial OfferingRentTryBuy

(RTB)

Purchase Continue Renting

Easy OwnGo.Own.Plus

(LTR)Continue RTB Retention

Purchase Return Equipment* Continue Renting

Upgrade Return Equipment*

RTB Retention LTR Advantage

Length of Contract 12 Months 12 Months 36 Months 48 Months

Operating/Finance Lease Operating Operating Finance Finance

Typical Rental Rate 5.5% – 6.5% per month 20% Discount off RTB rate 30% Discount off RTB rate 3.5% per month

Other Features n/a n/a n/a 6 Months Rent Free; Franchise Only

* Assets are refurbished at our facilities and 80% re-rented within 60 days

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ORGANISATIONCHART

Chief Executive Officer

Damien Guivarra

Executive General Manager Northern Region

Rob Phelps

Northern Region Sales

Northern Region Customer Service

Remarketingand Distribution

Executive General Manager Southern Region

Mike Connell (Secondment)

Southern RegionSales

Southern Region Customer Service


Executive General Manager Canada

Kristian Thanas

CanadaSales

CanadaCustomer Service


Group Sales & Marketing Manager

Kevin Savvas

Marketing

Franchise

Long Term Rental

Chief Financial Officer

Doug McAlpine

IT

Finance

Credit Risk

Head of People and Culture

Mike Connell

Quality Training and Coaching

People and Culture

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DAMIEN GUIVARRACHIEF EXECUTIVE OFFICER

Mr Damien Guivarra was appointed to the role of ChiefOperating Officer in October 2015. Over the last ten years MrGuivarra has played an integral role in the growth of theCompany holding a variety of sales focused and operationalmanagement roles. He spent the last three years managing theNorthern Region business across both the Silver Chef andGoGetta brands. Prior to joining Silver Chef, he held a variety ofnational sales and marketing roles.

DOUG MCALPINECHIEF FINANCIAL OFFICER

Doug is a Chartered Accountant and commenced as Silver Chef'sChief Financial Officer in August 2014. He brings to the company15 years of accounting and finance experience, includingFinancial Officer and Company Secretary of public companies inAustralia. His previous experience includes Chief FinancialOfficer of Stanmore Coal Limited and prior to that Chief FinancialOfficer of Watpac Limited and Ariadne Limited. Doug has strongcompetencies in the areas of accounting, capital management,corporate governance and risk management.


SILVER CHEF LEADERSHIP TEAMF

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ROB PHELPSEXECUTIVE GENERAL MANAGERNORTHERN REGION

Robert has more than 25 years of experience in the financial sector, including executive positions with RemServ, St George Banking Group and National Australia Bank. Robert has a track record of achieving industry leading customer satisfaction levels and high performance sales cultures. As Executive General Manager he is passionate and dedicated to delivering superior customer service and building strong and mutually rewarding relationship with partners and clients.

KRISTIAN THANASEXECUTIVE GENERAL MANAGERCANADA

Kristian joined Silver Chef in 2012 as part of a new business development role in the hospitality sector in NSW. With a significant history of starting and selling his own businesses in the hospitality sector, he was an integral member of the Canadian start up team in late 2013. Kristian has historically been a Silver Chef customer and vendor providing him with a unique insight into the Silver Chef business. Kristian is now Executive General Manager of the Canadian business overseeing the growth within that rapidly growing market and is also a member of the company's executive management team.


SILVER CHEFLEADERSHIP TEAM

MIKE CONNELLHEAD OF PEOPLE AND CULTURE

Mike Connell joined the company in January 2016.Mike has over 25 years in Human Resources with abroad range industries and markets both withinAustralia and Asia. His experience includes seniorexecutive roles with Wesfarmers, Downer Mining,Ansaldo STS and Thiess. Mike is in the final stages ofcompleting his PhD in Management the focus of whichis achievement of effectiveness by corporation’sthrough the alignment of their financial and moral-based goals.

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SILVER CHEFLEADERSHIP TEAM

KEVIN SAVVAS

Kevin Savvas started with the Company in 2011 as theNorthern Region Sales Manager for Silver Chefimplementing key strategic initiatives that led toexceptional growth in a core market. Kevin’s approachto innovation and leadership is derived from hisextensive experience in the advertising andtechnology space. Since that initial role, Kevin has heldthree progressive roles in the organisation workingacross the Silver Chef and GoGetta brands.

SIMONE SMITH-HENRYGROUP PROJECT MANAGER

Simone is responsible for Project Management andProject Execution across the group. Simone joined SilverChef in 2007, and has extensive experience across allaspects of the Groups operations. A PRINCE2 certifiedProject Manager, Simone uses her qualifications alongwith the groups Gazelle and Argenti methodologies todrive executional excellence. Prior to her time at SilverChef Simone had operational roles in a range ofmanufacturing and professional services firms.

VINNIE D’ALESSANDROIT MANAGER

Vinnie D'Alessandro joined Silver Chef in June 2015 as ITManager. He has 18 years of technology experienceacross various operational, architecture, strategy andmanagement roles. After a decade in the energy andconstruction industries, Vinnie joined the ASX listed TattsGroup where he led the award winning infrastructurearchitecture team. Since joining Silver Chef he hasdeveloped the Group IT strategy and set about building ateam of solution focused technology professionals.

GROUP SALES & MARKETING MANAGER

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Company SecretaryDon Mackenzie

Share RegisterBoardroom Pty LimitedGPO Box 3993Sydney NSW 2001Phone: 1300 737 760Fax: 1300 653 459Website: www.boardroomlimited.com.au

Securities ExchangeThe Company is listed on the Australian SecuritiesExchange (SIV.AX).

Other InformationSilver Chef Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares.

COMPANY DIRECTORY

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http://www.boardroomlimited.com.au/

Documents

Investor Presentation - ASX2017/02/21 · SILVER CHEF GROUP 41H17 1H16 Change Revenue ($ millions) $137.8m $100.7m 37% Rental assets (at cost) and lease receivables ($ millions) *