Equipment finance specialist Silver Chef has had to deal with a falling margin and higher arrears on the way to reporting strong growth in earnings for the 2012/13 financial year.Silver Chef reported a net profit of A$11.5 million for the year to June - an increase of 28 per cent on the previous corresponding period. Higher earnings came on the back of a 36 per cent increase in revenue, to $114.4 million.The company operates a 'rent, try, buy' business model. Total rental assets under management increased by 39 per cent, to $257.4 million. The company now has hospitality rental assets worth $173.4 million (an increase of 33 per cent) and general equipment assets worth $84 million (an increase of 53 per cent).The strong growth put some strain on the business. The EBIT margin fell from 21.5 per cent in 2011/12 to 20.5 per cent in the year to June. The company said this was due to capacity constraints in handling residual assets (selling old rental assets). During the current financial year it will open a second warehouse.The company also reported a 13.5 per cent increase in its bad and doubtful debt expense.Return on equity fell from 23.6 percent in 2011/12 to 22.1 per cent in the year to June.During the year, the company moved into the New Zealand market.