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Annual General Meeting Wednesday, 15 October 2008. Agenda . Welcome Introduction of Board Confirm quorum Confirmation of notice of meeting Reading of proxies (Company Secretary) Chairman’s address Chief Executive Officer’s address Financial statements and reports General questions
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Annual General Meeting Wednesday, 15 October 2008
Agenda Welcome • Introduction of Board • Confirm quorum • Confirmation of notice of meeting • Reading of proxies (Company Secretary) • Chairman’s address • Chief Executive Officer’s address • Financial statements and reports • General questions • Resolutions • Close of formal business • General discussion and update on future prospects • Refreshments
Board and Senior Management Board of Directors • Nigel Chamier OAM (Executive Chairman) • Peter Dowling AM • The Hon. Dr David Hamill (to 15 October 2008) • John McAuliffe AM • James Whitelaw (from 1 July 2008) • Thomas Nulty (Apology) Chief Executive Officer & Company Secretary • Leon Stephan
Chairman’s Address Change in Board composition The Hon. Dr. David Hamill • Resigning from the Board after the AGM James Whitelaw • Appointment effective 1 July 2008 • Resolution 3 addresses confirmation of this appointment 4
Chairman’s Address Admission papers and proxies Admission papers • Required for voting on the motions being put to the meeting Reading of proxies • Resolution 1 – re-election of Nigel Chamier • Resolution 2 – re-election of Tom Nulty • Resolution 3 – confirmation of James Whitelaw appointment • Resolution 4 – change of company name 5
Chairman’s Address (cont.) New businesses To further mitigate risk we sought to grow additional revenue streams under the Paridian business model. Property Trust • Paridian Securities obtained its varied AFSL from ASIC in May 2008 • While delaying the acquisition of any significant asset due to current market conditions, there are benefits to Paridian in acquiring a smaller asset. We are currently exploring such opportunities. Paridian Consulting • Undertook the first assignment in 07/08 being services to Government re Boggo Road
Chairman’s Address (cont.) Debt and Equity • Current issues in global capital markets have affected our ability to increase equity and debt • A further 847,000 shares were issued in a tough market • $1.96m in notes raised during year, more in progress • BOSIAL warehouse loan facility remains at $60m, not fully drawn due to capital constraints • Quick statistics snapshot at 30 June: • Interest cover 1.9 times • Net debt to equity 143% • Equity capital ratio 30% • We target 10% margin on funds borrowed. Risks are: • Non-recoverable loans • Changes in the warehouse loan facility covenants • An unexpected increase in the cost of debt • To mitigate risks: • Strict due diligence before loan approval and monthly monitoring throughout course of loan. Loans are actively managed to protect recoverability • Locked in BOSIAL facility in mid 2007 for three years • Interest on most debt is fixed until early 2009 through interest rate swaps
CEO’s Address (cont.) Overview of Loan Portfolio 30 June * Project selling down, hence facility reduced
Bargara Property Developments Pty Ltd:Dwell Residential Units, Bargara Proposed
CEO’s Address(cont.) Paridian’s key points of difference Paridian is well placed to succeed during these tough market conditions: • Maintaining and exploiting our key points of difference: • Paridian is not a developer • Loans only provided to developers who are independent of Paridian • Builders are independent of developers* • Strict lending criteria, due diligence and monitoring process • We have established processes • Diversification of portfolio/risk – across product, geographic location and developers • Strong corporate governance • Direct and supporting security taken to ensure performance of borrower’s obligations • Loans are short term, with an established exit strategy • Active management of all loans *One loan has one common shareholder in the development company and building company
CEO’s Address (cont.) Activity subsequent to Year End • Matters being reviewed: • Residential sales are slow • South Australian and Toowoomba loans require restructuring • New loans under due diligence • Palm Beach mixed use (Gold Coast), Kawana residential (Sunshine Coast) • Loans repaid • Trilogy • Consulting Engagements • In September we were appointed by Queensland Transport to assist their negotiations with developers, commencing with Brunswick Street Station. We were also engaged to assist South Bank Corporation in negotiations with a potential tenant in the South Bank precinct. • Property Trust activity • Reviewing opportunities.
CEO’s Address (cont.) Priorities for 2008/09 • 2008 results reflect our commitment to the growth strategy established in 2006 • Our priorities in 2008/09: • Increase the funding base, although difficult in this market. • Further diversify the loan portfolio • Ensure loan funds are fully employed • Ensure new loans are priced appropriately to reflect increased market risk • Grow the consulting revenue streams • Seek appointment for stage 2 of Boggo Road, progress Queensland Transport and South Bank engagements, secure project management advisory roles with developers • Continue reviewing opportunities for the Property Trust • Chairman will address the challenges of the year ahead following the formal business of the meeting
Formal Business Annual General Meeting
Financial Statements and Reports 30 June 2008
Resolution 1 Re-election of Director Nigel Chamier
Resolution 2 Re-election of Director Tom Nulty
Resolution 3 Confirmation of Appointment James Whitelaw
Resolution 4 Change of company name Paridian Group Limited
Close of Formal Business Annual General Meeting
The year aheadKey points • Issues now facing the market • How Paridian is managing increased risk • Expected events • Our commitment • Conclusion
The year aheadIssues now facing the market • Facts • Investor confidence is shattered • Credit is often impossible to obtain regardless of price • Sales of development stock have slowed and in some cases stopped. Many projects have had no sales for a year • The market cannot absorb all the distressed property that could be up for sale in the next year • Is this a typical downturn in the normal business cycle, or a “1 in 100” year event? • Will the issues facing our funder BOSIAL and the sale of BankWest to CBA impact on our business?
The year aheadHow Paridian is managing increased risk • Be realistic, stay calm and focussed • Accept that many factors are beyond our control • New loans will be in areas of greatest growth • SE, central and north Queensland (notably Mackay) • South Australia is a growth market, Sydney (but not just yet) • Work with our clients and first mortgagees • Consider taking over first mortgages • Acknowledge that developers are often best placed to work out a project • Take additional security wherever possible
The year aheadExpected events • Interest rates will fall quickly • Mergers in banking sector will strengthen balance sheets • Most investors will avoid companies with complex financial structures lacking in transparency • Many investors will feel more comfortable with real estate • The markets will recover as real estate investment returns outshine returns on cash, and become cash flow positive
The year aheadOur commitment • The majority of directors have made additional investment in Paridian since 30 June 2008 • We will continue to be diligent in managing the existing portfolio • We will carefully investigate business acquisitions that add value • We will seek to grow other revenue streams, and management of other funds • We acknowledge that it will be a very difficult year ahead
The year aheadConclusion • We have significant upside in one project • We have to manage each loan as particular circumstances arise • We all have money in the business • We welcome your feedback and will keep you informed by way of regular newsletters • First quarter (Jul to Sep) pre tax profit of $0.85 million is in line with last year • We cannot give earnings guidance