John Linton
Anyone who has sailed off shore between one land mass and another in the open ocean would have felt the slight, but noticeable change in motion of the boat as the water depth, in the space of a few hundred meters, plunges from around 140 meters to many hundreds of meters as the continental shelf becomes the continental slope. Of course the depth change and distance from shore varies enormously depending on where you are around the world but the sensation is almost identical irrespective of the location. This feeling also gives you a sense of 'never being the same again' or something along those lines.
Sometime yesterday I experienced a similar feeling but as I was on dry land at the time it obviously had nothing to do with a geographic continental shelf. I don't know what it was but it was an almost tangible 'feeling' that things had changed and from now on conditions would be different and required actions would be very different. It occurred as we were winding up Exetel's September board meeting. There was nothing momentous, or even very unusual, discussed at the meeting which was basically 'problem free' as such meetings go. So I don't know what came over me but I've lived long enough to know that things have changed for both me and for Exetel and they will never be the same again.
Whether this is good or bad for either 'entity' - I don't know - for the time being all I feel is that they are different and it will take me a while to work out just how different and what particular way(s). One manifestation of either that 'feeling' or a lack of sleep over the past few days was that I slept soundly and unbrokenly last night for the first time that I can remember. I'm not particularly 'emotional' as a person - possibly quite the reverse unless the red wine or the single malt has been flowing too freely - so I've learned on the few occasions that I've felt this way to take notice rather than dismiss it.
Meanwhile there is another day's challenges and another deluge of information to be absorbed, skipped over or ignored and the usual decision making processes to be gone through. A little later this morning this will include a meeting with an 'investment adviser' who contacted me 'out of the blue' to see if he could 'help us'. I get a number of odd calls in any given week and can mostly work out what they are about but I have no idea what this person wants to talk with us about. Perhaps the current financial climate is so bad that tiny companies such as Exetel have made it to the horizon of 'money/deal manipulators'? Then again, perhaps in this non down turn M and A opportunities and therefore more importantly fees, are much scarcer than they once were.
Despite what those dorks masquerading as a Federal Government might say there very definitely is a significant 'down turn' in at least one aspect of business in NSW and that is Sydney CBD property prices. I mentioned late last year/earlier this year that we were investigating buying our own office building (actually one floor in an office building of a little over 400 square meters) as it would save us money in the longer term by allowing us to set up our own data centre in the same location as our Sydney based personnel. The election of Labor and the correlated plunge in business confidence and the uncertainty introduced by CK and SS with their NBN 'tender' nonsense made us too cautious to proceed at that time so we advised the various people we had been in contact with (including our banks) that we were putting that process on indefinite hold.
Over the past 6 months or so Annette has kept her eye on what has been happening in that area of business and, despite what certain ACT based idiots might say, or even the more optimistic of Sydney estate agents might try and claim, two things are very obvious. The first is that almost no sales of floor space are taking place in the Sydney CBD and that the few that are happening are at significantly lower prices that were being asked for late in 2007. So Annette found a suitable office floor at some $500,000 less than very similar space in the same area as we were very seriously considering a few months ago. (incidentally that space is still on the market and the agent advised us that they would be 'open to an offer').
I still have very serious reservations as to how the current 'non down turn' is going to last but the numbers at $500,000 less than we were working on last time are, obviously, more attractive. It would be nice to have our own data centre, not just financially but for many operational reasons, and there is a persuasive reason for locating our personnel in the CBD rather than North Sydney. However I'm still very conscious that business is tough and shows every sign of getting tougher and I very much doubt that whatever falls in Sydney CBD real estate prices have occurred so far are unlikely to be the last. Despite there being no down turn this particular floor space is on the market as a mortgagee sale and therefore will be sold at a realistic price - but how far will prices continue to fall?
The other major question is just how much 'office' space we need over the next year or so. At the moment we have the same amount of office space in Colombo as we have in Sydney and our plans are to only hire support, admin, programming, provisioning and accounting personnel in Sri Lanka in the future so we will need less space in Sydney than we have now for those position types (approximately 325 square meters in each location). Perhaps we don't need an office at all at some future time that may be not that far distant with almost every Australian Exetel person working from their home? It is not an easy decision to make at any time let alone in these financially troubled times.
We will met with our bank later today to confirm the terms and rates of their offer of finance and then think about it over the weekend. Perhaps it's the implications of making a further $A2+ million commitment to Exetel that provoked the 'continental slope' feeling yesterday?