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It has been a tumultuous year for equipment services provider Silver Chef Group (ASX: SIV) and the company now warns of losses at the full year.
In April, Silver Chef exited its GoGetta equipment financing business to focus on its core hospitality operations, a decision which led to a $13 million loss at the half year.
Now Silver Chef has revealed its hospitality business is also suffering and it expects underlying profit for the segment to be $17-18 million, down from an initially forecast $20-24 million.
The news has sent SIV stock tumbling more than 11 per cent in early trade (at the time of writing, 10:30am AEST).
The company currently expects that the FY18 statutory loss overall will be "substantially greater than the previous FY18 net profit after tax guidance of between $9-12 million".
During what Silver Chef is now calling "the most significant year of change" in its 32-year history, the company has admitted to making hard calls in support of its future growth.
"Difficult decisions have been made which are right for the long-term growth and success of our company changes which set us up for a successful trajectory of the coming five years," said Silver Chef.
The group's transformation strategy includes overhauling the Silver Chef brand to focus entirely on hospitality, creating a simpler organisational structure, pushing expansion into North America and building its digital capabilities.
Silver Chef is also currently contending with ASIC over commercial contracts issued under GoGetta.
The corporate watchdog has alleged that the contracts, which relate to the purchase of sedans, wagons or SUVs, amount to consumer lending without an appropriate license.
"Silver Chef has commissioned EY to undertake an extensive review of all contracts and the GoGetta internal processes," said the company.
"Management is committed to working with ASIC to resolve the matter. We expect the ongoing discussions with ASIC will straddle the year end period so the impact on the FY18 accounts is unknown at this stage."
Despite its roughest year yet, Silver Chef is optimistic that the company can achieve growth in the coming years.
"While these necessary changes have resulted in some short-term pain, both the board and management are confident that they will deliver the group's historic levels of growth and returns over the next few years," said Silver Chef.
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Business News Australia
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