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Assignment Stage 1(ASS#1): Getting Started
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CQUniversity
Martin
Turner
ACCT11059
– Using Accounting for Decision Making
Zoe
De-Witt (S0271932)
Due 7th
April 2015
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Step 2
The company I was assigned is the Silver
Chef Group.
Silver Chef provides equipment funding solutions
to small to medium sized businesses. You can find the latest Annual Report
below, and also attached with final submission.
·
2014 - Annual Report year
ending June 2014
A Brief History
Founder Allan English
established Silver Chef in Australia in 1985 after learning about the booming
home delivery pizza service in America. Believing in its potential growth
within Australia, he and his business partner invested in conveyor ovens.
Unfortunately, many small pizza businesses couldn't afford to purchase these
ovens, so the pair came up with the idea to rent them out instead.
Following their success
with the leasing of pizza ovens ten years later, Allan bought out his business
partner and constructed a program in which his clients would be able to obtain
the equipment they needed for their businesses without having to commit large
amounts of capital up-front. Thus, launching the Rent-Try-Buy option to the
hospitality sector, expanding from his pizza oven days, providing a full range
of kitchen equipment.
Continuing down the Silver
Chef timeline, in 2005, Silver Chef was admitted to the Australian stock
exchange. Furthermore in 2008, a new initiative was launched, the GoGetta. This
option branches out towards other industries offering equipment funding to
small businesses who are just starting out.
Subsequent demands to
expand the company internationally in 2011, Silver Chef was launched in New
Zealand to franchise partners within the hospitality sector, further expanding
to Canada in 2013.
Today, Silver Chef provides
equipment funding solutions to small to medium sized enterprises, helping them
to reach their full potential within their business sector. Rent-Try-Buy is
currently available to clients in hospitality, while GoGetta offers a
'go.rent.go.grow.go.own' solution to more than twenty industries including
construction, fitness and transport.
Silver Chef places an emphasis on creating a unique culture
that helps many people alike achieve their hopes and dreams. Silver Chef is
guided by principles of Teamwork, Respect, Attitude, Flexibility, Integrity,
Communication and Wellbeing instilling these core values into their
everyday work year after year.
Key Concepts and Questions
After reading through the last three years of
Annual Reports for Silver Chef, I noticed that the firm appears to be improving
with each financial year. However, with further reading, I noticed that there are some
key challenges that the firm is having. The new expansion into Canada has cost
the firm $1.3 million dollars, slightly deceasing the EBITDA margins. Due to
the expansion being very recent, only $3.6 million was generated between both
Canada and New Zealand, the majority was in Australia with a growth of $93.1
million, that’s a 26% growth from year ending June 2013. Bad debts have
increased into FY15 and the main risks that the group is facing with that are
credit risks and residual asset risks. The group manages credit risks by:
·
Receiving rental payments by
direct debit a week in advance which allows the credit team to identify issues
early
·
Receiving a security bond at
the beginning of the contract which is used to offset and overdue amounts owed
·
Seeking out to work with small
businesses and their cash flow commitments; if a contract remains in arrears,
recovery action is implemented
The
group manages residual risks by:
·
Registering its rental assets
on the Personal Property Securities Register and retaining title over these.
·
The use of agents to recover
assets on defaulting contracts
·
Management of returned assets;
assets are cleaned serviced and remarketed through direct sale or back onto a
new rental contract
I
think the methods the group is using to manage these risks are adequate because
the group is still making over $12 million in profit despite the bad debts
being at 1% of the rental income. These bad debts were caused by $1 million
worth of rental assets being written off after being stolen near the beginning
of contracts. The only other negative I noticed within this report is that the
share price fell at the end of FY14 from $7.38 (FY13) to $5.07, other than that
the firm appears to be meeting all their goals. The firm’s highlights for the
year include:
·
Asset acquisitions up to 10% to
$137.7 million
·
Revenue up 24% to $141.3
million
·
Rental assets (at cost) and
lease receivables up to 16% to $299.0 million
·
Profit (after tax) up 11% to
$12.7 million
·
Earnings per share (EPS) up 5%
to 43.4 cents
·
Equity up 16% to $67.7 million
With
restructure and expansions, the firm is catering for future growth paired with
an increased focus on staff training, the firm is creating solid foundations to
build onto. The firm believes that if they continue to meet their high customer
satisfaction levels, then business will continue to grow, this outlook is
linked to staff bonuses to insure that these levels of satisfaction is met.
At first I had a number of concerns with this
assignment, I found everything very overwhelming and to add to the worry, I
have never done any sort of accounting subjects before, which lead me to become
very confused when reading through the annual reports. I found it quite
difficult reading these reports trying to gain an understanding of what I was
actually looking at. After countless hours of reading, I ended up going to my
boss at work and asking him to help me interpret the reports to me. Once I
understood the terminology, I was quite happy to go ahead and learn more about
my firm. It was actually really good to be given Silver Chef since I work in
the hospitality industry; I learnt that the business that I work for actually
leases some equipment from Silver Chef, which made it all the more interesting.
Favourite Blogs – Top Three
I
love how Jade has a friendly attitude in her blog; it makes it so much more
exciting to read. She has provided extensive research into her firm, and gives
us good insight into how well her company is performing. She is very honest in
her blog, which really is the whole point to a blog in my opinion.
Jodie’s
first post was just my favourite; the title was what lured me in! Jodie has
described her company in simple terms that makes it easy for everyone to
understand, but has also provided a lot of detail. She connects to the reader
very well offering a good opinion with good research.
I
like Madison’s blog because firstly she is studying the same degree as me, so I
find her quite relatable! She has researched her company thoroughly and I found
it quite easy to read and understand what her company was about.
Step 3
Please
find attached a copy of my spreadsheet containing my company’s financial
statements.
Step 4
Summary of Chapter One
KCQs
Throughout
the chapter I found myself getting slightly distracted every few minutes or so,
my mind would trail off to thinking about something else, so I did find it
quite difficult trying to take in the entire chapter. However, I did find some
bits quite amusing, like when you wrote about how accounting is a model – not a
fashion model, had a little giggle to myself. Although I found the section
about Luca Pacioli quite interesting, I thought it was funny that he was the
first person to publish the method considering it had been around for many
years before that, its crazy thinking that accounting has been around for so
many years.
The
discussion on partnerships really cleared up the relationship between both of
my bosses and how they run their business. I found this, as well as so many
other things quite relatable, like how you enjoying playing piano. I myself
actually play an instrument too and I always love finding out that others can
play music because it’s not so common. I also liked the way you relate a topic
back to something simple that I can understand and wrap my head around. I do
struggle with studying and it makes the learning process so much easier for me.
Some
things I didn’t quite understand were the accounting equations. I did read over
them quite a few times trying to understand them, but I just kept confusing
myself. Another thing I struggled with was a few terminologies, but that was
easily fixed with a quick dictionary search.
I
found it quite surprising that so many people in business have an accounting
background, but I suppose it make sense because it would help these people to
understand how their businesses operate. It’s pretty hard to believe though
that you had to use a typewriter back in the day to type and submit your assignments.
I couldn’t imagine life without the technology that we have today, so when you
spoke about the keyboard layouts and quills, I found it quite boring, sorry!
The
key things I need to remember about this chapter is that businesses are
everywhere and that they all use some sort of accounting to record daily
activities. I also need to go back over the accounting equations a really break
down the paragraphs and understand what it all really means.
Summary of Chapter
Three KCQs
(Still need to do - waiting on to see if my first summary was okay and whether i should follow the same idea)
Step 5
Student
Feedback
The five students in my group include Kyara
Beasley, Kylie Urquhart, Lara Mathews, Laszlo Rauch and myself. The students
whom I have chosen to give feedback are listed below. Their names are inclusive
with feedback.
- Student One – Kyara Beasley
Feedback:
- Student Two – Helen Bensilum
Feedback:
- Student Three – Lara Mathews
Feedback:
My Received
Feedback
(PENDING)
