re: Ann: Application for Reinstatement of Sec... With PPN about...

re: Ann: Application for Reinstatement of Sec... With PPN about to be reinstated, a VCAT hearing coming up on 20 August to decide what happens to the BAR20 liquor licence and an AGM to be held on 31 August, I sense huge changes are on the way for how the board will run PPN in the future.

First of all I would like to see at least 5 competent directors on a strong effective board committed to looking after ALL shareholders and ensuring that ALL transactions are at "ARM'S LENGTH".

I would expect the new board to meet at least 6 times a year with extra meetings should there be a crisis. According to the last four annual reports, PPN held SOLITARY board meetings in 2008, 2009, 2010 & 2011. This wasn't good enough in view of the crisis taking place with the BAR20 liquor licence.

I would also like to see the board implement all or most of the recommendations in the Corporate Governance Statement, some of which are as follows:

Principle 1:Lay Solid Foundations for Management & Oversight
1.1 Establish functions reserved to the board and those delegated to senior executives and disclose those functions.
1.2 Disclose the process for evaluating the performance of senior executives.

Principle 2: Structure of the board to add value
2.1 The majority of the board should be independent directors
2.2 The chairperson should be an independent director
2.3 The roles of chairperson and chief executive officer should not be exercised by the same individual
2.4 The board should establish a nomination committee
2.5 Disclose the process for evaluating the performance of the board, its committees and individual directors

Principle 3: Promote Ethical and Responsible Decision Making
3.1 Establish a code of conduct to guide the directors, the chief executive officer (or equivalent), the chief financial officer and executives as to the practices necessary to maintain confidence in the company's integrity
& the responsibility and accountability of individuals for reporting and investigating reports of unethical practice.

Apart from all that, I would like to see a new strong independent board look at whether the rent received from MCP Pty Ltd on Horne St has been correctly assessed based on the true value of Horne St given that Valuer Walstab calculated $600,000+ a year as a fair rent on a property worth $5.75 million in 2003.

While they are at it, the new board should look at PPN's service contract with MCP Pty Ltd as $450,000 pa to collect rent from itself sounds a bit steep. It appears that the service contract was signed at a time when there was just a single director apart from the majority shareholder.

Things need to change immediately if not sooner. By the time the AGM is held on 31 August 2012, VCAT may have made its decision regarding the CEO's liquor licence and we could be looking for a new CEO.

Before I finish, I would like to say that Nick Pitliangos, who replaced Mr Micovski on the board, is doing a great job with BAR20. With Nick at the helm, new bouncers and zero tolerance towards bad behaviour by both staff & customers, our King St investment may no longer be called "Notorious BAR20".

See you all at the AGM on 31 August and make sure you fill out your proxy forms.