dividends, page-26

A few comments in relation to the dividend information as outlined in the supplementary prospectus dated 6th September 2013;

'The Company expects to pay a dividend of 25% of the Group’s net profit after tax with respect to
earnings generated from completion of the Offer to 31 December 2013.'
Tick although they knew all along it was going to be peanuts ($283k total).

'Thereafter the Company is targeting a dividend pay-out ratio of at least 25% of the Group’s net profit after tax. Depending on available profits and the financial position of the Company, it is the current intention of the Board to pay an annual dividend each September.'
Big cross, they did not pay a divvy last September as intended.

'The Board can provide no guarantee as to the future dividend policy or the extent of future dividends , as
these will depend on, among other things, the actual levels of profitability and the financial and taxation​

position of the Company at the time.'
Definitely an out clause IMO. Not to mention the word 'targeting' in the paragraph above.

So my thoughts are that Mr. Xu may be feeling reluctant to pay a 25% divvy ATM for two reasons:
1. Personal. 45% of the divvy amount goes to straight into his pocket and being unfranked I'd imagine he doesn't want to pay additional personal income tax on what he may view as an unnecessary dividend at this time (although I'm sure he realises the inevitability of paying additional tax on dividends in the years ahead).
2. Business. The company is focussed on rapid expansion right now and Mr. Xu may feel that the $2-$2.5million (my FY 2014 forecast only) would better spent on funding expansion as it will increase sales & profits more effectively than appeasing disgruntled Aussie shareholders in the short term and lining their pockets with cash.

Having said that I could easily imagine another massive backlash from shareholders should he decide to reneg on the 25% divvy on NPAT.  But is this his focus right now and does he really care? He/the board backed away from the 'intended'  Sept divvy so what's to stop him from doing the same with the full divvy come Feb? He would no doubt cop it left, right and centre (and probably never hear the end of it) but again does he care when clearly his focus is on continued expansion after years of blood, sweat and tears?

Obviously none of us know the answer to this question and I have no idea what will be decided for Feb but I don't think that we can just assume that a 25% divvy is a done deal. Personally I'd rather that SBB continue to aggressively expand (creating larger revenues and improved margins) and pay us all a bigger divvy down the track. Don't get me wrong, a $2-2.5million divvy now would obviously be nice for shareholders and especially the SP (and therefore my bank balance) but I'm trying to put myself in Mr. Xu's shoes and say ok, what is the smartest way forward for my company right now, knowing that the SP will eventually revert back to fairer value once profits, operating cash flows and NTA soar, and larger, more regular divvies become the norm.

Note: my opinion should not be relied upon nor considered as advice of any kind. Please DYOR.