Foragers Plan, page-25

If a few of the major shareholders had taken a proactive interest in TGA since it floated, the executive team would not have got away with the poor performance that we have witnessed. If Forager can garner support from other major shareholders, and rattle the cage, that would be an excellent outcome.

I do not know enough about TEF to know if it has been building up a quality lease book, or not. If TEF has limited its focus in a way that generates a quality lease book, then there maybe no need to sell TEF. If the lease book is of poor quality, a buyer would pay very little for TEF. The answer may be to decelerate the growth of TEF by only chasing quality leases, and let the lease book heal itself over time. Obviously, if TEF can be sold for more than it is worth, it should be sold, but the same is true of the Consumer Leasing unit.

The problems that businesses get into when diversifying is often not the fields they diversify into, but rather poor execution. In every field of commercial endeavour that TGA entered and withdrawn from in the last dozen years, some other players have been successful. I hold TGA and CCP, which duo for a time competed in two lines of business (collecting on PDLs and providing unsecured loans), and CCP was, and is, successful, whereas TGA failed.

In a small way TGA has been successful in commercial leasing for a long time (before it floated). Its lessees were confined to TAB franchisees. As long as TGA sticks to similar franchisee-focused equipment leasing, it should be able to build up income-generating leases of an acceptable quality. A franchisor's selection-of-franchisees process acts as a filter to exclude the unwashed, so statistically a TAB franchisee, for example, is probably a quality lessee, and the same would be for some other franchises. For all I know TEF may have a dysfunctional goaling system that encourages lease-book growth at the expense of lease quality. This is something that an active large shareholder like Forager, preferably with the support of other large shareholders, could investigate. I read somewhere that company executives in the USA would soil their underwear if on taking a telephone call, they heard, "I am T Boone Pickens.", because TBP would invest in badly run companies, and tear into them.

On SIV, it had a fine business specialising in catering equipment, and then it decided to launch GoGetta, which focused on a very different type of lessee and equipment. GoGetta was a mistake, because the lessees were poor payers, and SIV was not as good at deploying the type of repossessed equipment financed by GoGetta as it is in respect to catering equipment. I am sure that a less-than-astute management could make the same mistake in the consumer-leasing field.

In the absence of commercial astuteness, a quality that TGA has been singularly devoid of in the last decade, TGA should stick to what it knows – that is, consumer and franchisee leasing (limited to selected franchisors). If a modicum of managerial astuteness manifests itself in future, the new management could try to be entrepreneurial again.