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Paridian Property Development Fund Limited

Paridian Property Development Fund Limited. Sixth Annual General Meeting Tuesday, 23 October 2007. 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

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Paridian Property Development Fund Limited

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  1. Paridian Property Development Fund Limited Sixth Annual General Meeting Tuesday, 23 October 2007

  2. 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 • Resolution One: election of director • Resolution Two: extension of exercise date and granting of options • Closure of formal business • General discussion and update on future prospects • Refreshments

  3. Board and CEO

  4. Chairman

  5. Board and CEO

  6. Chairman’s Address • Total revenue grew from $2,388,435 in 2006 to $4,324,407 in 2007. • Profit before tax grew from $1,015,437 in 2006 to $2,050,381 in 2007. • Profit after tax grew from $778,957 in 2006 to $1,440,489 in 2007. • Total dividends paid grew from 5.5 cents (out of 2006 profits) to 11.0 cents (out of 2007 profits). The 2007 final dividend of 5.5 cents was 75% franked.

  7. Chairman’s Address (cont.) This has been achieved as a result of: • The establishment of the warehouse loan facility. We have been successful in this regard, initially establishing a facility of $20 million and since increasing it to $60 million • Increasing our equity base by approximately 50%

  8. Chairman’s Address (cont.)Results

  9. Chairman’s Address (cont.)Achievement of 2006 Strategy Priorities established in 2006: • Increase the funding base. Increased by almost $65 million. • Continue to improve the quality and diversification of the loan portfolio. Range of product types in locations from Cairns to South Australia. • Ensure available loan funds are fully employed. • Establish a Responsible Entity for the planned Property Trust. • Continue to seek additional revenue streams from the by-products of the debt funding business. • Establish low volume market for shares. Three sales to date, and another under consideration.

  10. Chairman’s Address (cont.) Warehouse Facility • Warehouse funding approved by BOS International (Australia) Limited • Initially $20,000,000, since increased to $30,000,000 and then to $60,000,000 • Effectively a loan to Paridian which is then on-lent in smaller parcels to developers • BOS International – part of HBOS Group, one of world’s largest financial services groups • Has enabled Paridian to more than double its loan portfolio from $12,000,000 to $26,000,000 at 30 June 2007, with further increases since then • Margin achievable on these funds is approximately 12% • Requires a first loss reserve of 40% to be deposited with BOS International • Increased leverage means an increase in the return on share capital

  11. Chairman’s Address (cont.) Balance Sheet Statistics

  12. Chairman’s Address (cont.) Going Forward • Paridian’s strategic direction is primarily focused on the continued growth of the loan portfolio to a scale in the order of $100 million in the short term. • We are actively seeking opportunities in Sydney and North Queensland. • We are currently in the process of seeking further subordinated debt and equity to facilitate this growth. • A new group structure has been established to further mitigate risk and provide for the inclusion of new subsidiary companies to incorporate additional revenue streams to be created under the Paridian business model, including the establishment of the funds management business through a proposed property trust. • Finally I would like to thank the outgoing and incoming CEO’s, Patrice Sherrie and Leon Stephan.

  13. CEO’s Address Overview of Loan Portfolio at 31 August 2007

  14. Tolibrook Pty Ltd: White Shells Apartments, Marcoola Proposed

  15. Denifern Pty Ltd: Trilogy Apartments, Spring Hill

  16. C-Change Burpengary Pty Ltd: Tennis Park Estate

  17. June Developments Pty Ltd:Koola Beach Holiday Apartments, Bargara Proposed

  18. Four Pillar Investments Pty Ltd: Providence Apartments, Caloundra

  19. ICA (Foundry Shopping Centre) Pty Ltd: Toowoomba Shopping Town Proposed

  20. Strathwyn Pty Ltd: Centra Park Industrial Unit Development, Coolum Proposed

  21. Bloomer Constructions (QLD) Pty Ltd: The Avenues, Morayfield

  22. Roverbury Pty Ltd: Mackay Industrial Development Proposed

  23. C-Change Cairns Pty Ltd: Majestic Palms Proposed

  24. Strathwyn Pty Ltd: Forest Glen Industrial Unit Development Proposed

  25. NoLimit 16 Pty Ltd:Sydenham Village, Delahey VIC

  26. Kawana Island Village Pty Ltd: Azure Kawana Island Proposed

  27. Chring Pty Ltd: Thorn House, Ipswich Proposed

  28. CEO’s Address (cont.) Overview of Loan Portfolio at 31 August 2007 • We are actively seeking commercial prospects to increase diversity

  29. CEO’s Address (cont.) Activity subsequent to Year End • 20 September ICA Group - $6m principal advanced to for a residential and resort development at Wirrina Cove, South Australia • Loans under due diligence Residential – Coomera QLD Residential/ mixed use – Bargara QLD Mixed use – Kirra QLD • Loans repaid No Limit 16 (Sydenham) $5.0m principal repaid Bloomer Constructions (Morayfield) $0.7m principal repaid Loans in Cairns and Burpengary to be repaid shortly

  30. ICA (St Vincent Holdings) Pty Ltd:Wirrina Cove, SA Proposed

  31. CEO’s Address (cont.) Deal Flow and Pipeline • Pre-vetted pipeline of $60,000,000 usually maintained • Source of deals • 40% existing developers • 10% existing developer referral • 40% major banks • 10% other • Strong focus on expanding developer client base

  32. CEO’s Address(cont.) Paridian’s Points of Difference We will continue to maintain and exploit our key points of difference: • Paridian is not a developer • Loans only provided to developers who are independent of Paridian • Direct and supporting security taken to ensure performance of Borrower’s obligations • Loans are short term, with an established exit strategy • Diversification of portfolio/risk – across product, geographic location and developers • Builders are independent of developers * • Strict lending criteria, due diligence process and monitoring process • Strong corporate governance • Active management of all loans *One loan has one common shareholder in development company and building company

  33. CEO’s Address (cont.) 2008 Strategy – Operations • 7 FTE staff including CEO • 2 new staff required to implement growth • Additional space secured • Future cost increases expected to be minimal • Net margin on loan portfolio 10% after operating costs

  34. CEO’s Address (cont.) Priorities for This Year • Seek new capital • Prudently maximise the deployment of warehouse funds on quality opportunities • Expand our points of representation to better service our clients, access growth markets and better manage risk • Establish Property Trust • Explore opportunities to insure the loan portfolio • These initiatives assist the future growth of Paridian • The end result is improved shareholder satisfaction by increasing dividends and enhanced shareholder value

  35. CEO’s Address (cont.) Conclusion • 2007 results reflect the successful early implementation of our growth strategy (only four months benefit of wholesale funding) • 2008 will reflect further growth and added profit from: • Interest and loan fee income • property trust management fees • Thank you to investors, borrowers, key service providers and Paridian’s loyal and enthusiastic team • On behalf of staff and shareholders, special thanks to the Directors who have been with the company since day one and continue to provide active support

  36. Formal Business Annual General Meeting

  37. Financial Statements and Reports Annual General Meeting

  38. Questions from Shareholders Annual General Meeting

  39. Questions received • Directors Fees 2004/05 2005/06 2006/07 2007/08 Actual Actual Actual Forecast Directors fees $’000 358 338 317 230 * Revenue $’000 715 2,388 4,324 Fee % of revenue 50.1% 14.1% 7.3% * Forecast decrease reflects the changed role of the chairman from non-executive to executive • Fees have not increased since the threshold of three loans was achieved, despite the growth • Extended periods of time historically where fees were not taken to preserve cash flow • Paridian has a relatively low number of employees for the revenue and profit generated, and therefore relies heavily on the active involvement of non-executive directors • This is evidenced by the number of Board and committee meetings attended by each director (ranging from 34 to 44 during the financial year) • Fees have been independently confirmed as appropriate

  40. Questions received (cont.) • Capital raising costs • Capital raising expenditure $0.05m • Proceeds from issue of shares $2.9m • Cost of raising capital was 1.7% • Is the property trust a distraction? • No. Our focus remains on the core business and long term the trust will have its own resources. • The benefits include increased revenue and attractiveness to developers. • Shareholder liquidity • Created a low volume market. • A share buyback occurred in the financial year. • Should the limit on the low volume market be fully utilised the Board will consider another buyback next year.

  41. Questions received (cont.) • When will Paridian list? • Market conditions are not conducive at present • It is too early to factor in the full benefits of our wholesale funding facility

  42. Resolution 1 Election of Director

  43. Resolution 2 (non-binding) Extension of option date, and granting of new options

  44. Close of Formal Business Annual General Meeting

  45. The year ahead

  46. The year aheadStrategy and Objectives • Increase equity and debt • Grow Portfolio to $100,000,000 (5 loans per month) • Finalise Lloyds insurance policy (90% loan protection) • Continue Portfolio diversification by: • Developer • Product • Location • Launch Property Trust • Pay dividends – 6 monthly

  47. The year aheadStrategy and Objectives (cont.) • YTD pre tax profit (July to September) $0.8 million • Simplistic extrapolation of pre tax profit $3.2 million • Loan portfolio growth to $100.0 million • Further growth in portfolio and profit is dependent upon growth in capital • Open Sydney office • Establish trust income

  48. The year aheadStrategy and Objectives (cont.) Establish the Property Trust • AFSL application lodged and is being assessed. If granted, Trust will be established shortly afterwards. • Focus currently on sourcing suitable properties/merging with other smaller trust. Benefits to Paridian are: • Provides for additional revenue streams by Paridian acting as fund manager • Increases Paridian’s appeal to developers • Additional revenue streams have a low risk profile • Its own capital will be sourced independently

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