CEO response to Shareholders letter, page-82

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Wobbygong

669 Posts.

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05/10/15

10:06

Post #: 16113799
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Originally posted by ozblue ↑

I'll bite as to why I still think things are fishy.

Going back to 2012, the company had $15m in cash, $6m in borrowings, cashflow of $6.5m, but was able to pay out total dividend of $7.6m. So they ended with $8m cash and $6m debt.

In 2013 with a great period of growth, they increased financial liabilities by $3m but borrowings only increased $1.7m huh? (and this stuff has been audited?) They ended up with $27.8m in cash, no dividend and $9m of debt.
Wouldn't a smart businessman pay off the debt with that huge increase of cash due to $9m in cashflow and $4.3m from the share raising?

Fast forward to when Australians have shares. The company has maintained nearly $A30m cash despite a lot of what here would be called capital expenditure not expenses, yet still made $2m, with operating cashflow of $4.7m for the half year, now no debt, but no dividend.

The company made promises in the prospectus and have failed to meet them, despite being able to pay out a huge dividend in 2012, yet that is not the question that the main man has been asked to explain. But it is what he needs to!!

The difference between 2012 and now is startling in terms of policy. Borrow to pay Divs in 2012, yet 2014 and first half 2015, sitting on a mountain of cash still can't pay a div out of profits/cashflow.
If that doesn't smell fishy, then I don't know what does, so I'll keep sitting on the sidelines watching.

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You answered your own question- 2013 a great period of growth. Use debt to fast forward growth. 2014 on business conditions tightening. More competition. Time to get rid of debt, time to consolidate business ( in this case protect the brand with self owned stores).

pretty sure he paid himself well before listing so he got plenty to survive while it gets tight. I agree that the IPO simply should not have mentioned divs.

My 2 cents

SBB Price at posting: 3.7¢ Sentiment: Buy Disclosure: Held
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