The Governance of Girvan

In 1988 the board of Girvan had seven members:

Paul F. Petersen (Diploma in Building Technology) Chairman

Warren A. Duncan (BComm, chartered accountant) Chief Executive Officer
B. Hill (BComm) Finance Director
A.R Ambler (BE, DipIE) Managing Director, Manufacturing Companies
S.J. Bartrop Managing Director, Finance Companies
D.H. Collis (BEc, MBA) Managing Directors, Construction Companies
R.D. Stephens Managing Director, Beazer Joint Venture

Paul Petersen had been with Girvan since 1979, when he had been employed as a project
manager. Within a year he was appointed managing director, a position he held until 1988, when
he handed the role over to Warrenn Duncan. Petersen then became chairman of the board but
continued to exercise significant influence over all major decisions.

His Management style throught was described by those working with him variouslt as
“optimistic” “visionary”, and “dominant. As the commented to the Journal Australian Business
in September 1988.

We don’t have middle managers (in the Girvan Group), I hate them. Please define the
words “General Manager”. To me it means manager of bugger all.

Warren Duncan joined the board in 1988, after the diversification and acquisition
program was well advanced, to provide professional managerial skills to the group. He was a
chartered accountant who had been Petersen’s financial adviser as a partner in the accounting
firm Pannell Kerr Foster. When the cashflow crisis occurred he led the operation to liquidate
assets.

Collis also joined the board in 1988, from outside the group, to help with the managerial
problems. He subsequently resigned.

Hill, Ambler and Bartrop were all full time executive with longer service in the group.
They had grown with the company under the enthusiastic leadership of Petersen, and had seen
other executives, who had questioned his intuitive decision making, leave the company.

Stephen was the only truly non-executive director, Resident in Britain, he had been
appointed to the board in connection with a construction partnership with Beazer Housing and
Property Ltd, a British construction company, and C. Itoh and Co., a Japanese property
company.
The Cashflow Crisis

The stock market crash brought the Girvan share price down from the high of A$1.50
back to par at 50 cents. Over the next few months it fell further to around 40 cents. Then there
was a slight rally during the early months of 1988 bringing the price back to around 80 cents, but
this was not maintained and from August 1988 the price declined progressively – 50 cents at the
year end, 35 cents in mid-June 1989, and down to below 20 cents by late 1989 as the stock
market assessed the future for the group.

The downturn in the property market and very high interest rates, on a company whose
strategy involved speculative property development and corporate acquisitions on the back of
high gearing, was blamed. Interest rates during 1988 were running some 3 per cent above those
in the previous year.

Rumours of a severe cashflow crisis emerged, fuelled bu Girvan’s attempts to sell off
assets, in particular companies in the financial services field under Trans-Australian Securities
Ltd and the more diverse activities under Girvan Brothers Holdings Pty Ltd.