Lathams Music Portfolio

Background History Established in 1949 as “Latham & Elvidge Pianos” 1968 evolved to “Lathams Piano and Organ Centre” Ultimately trading as “Lathams Music” - Company Name: A.O. Latham & Sons Pty Ltd ABN 45 000 658 033 Accountant: Taggart Partners, Hamilton (Melanie Hamilton) Solicitors: Attwaters, Newcastle (John Attwater) Business Bankers: NAB, Wickham (Lisa Rudd, Scott Smith) Memberships and Licenses Australian Music Association AMA Australian Retailers Association ARA Australian Performing Right Association APRA Phonographic Performance Company of Australia PPCA APMC Systems and Halifax Consulting Group MUSIPOS Geographical Location History 1949-1968 – Hunter Street, Newcastle 1968-1988 – Maitland Road, Mayfield 1974-2010 – Kotara Fair Shopping Mall / Garden City Shopping Centre / Westfield Shopping Centre 1988-1999 – Charlestown Square Shopping Centre 1980-2010 – Bi-Annual Casual Leasing activity @ Greenhills Shopping Centre 2010-2011 – Bradford Close, Kotara and Molly Morgan Drive, Greenhills

Lease Agreements Kotara Lease 5 years + 4yr option + 4 yr option Commencement May 2010 Greenhills Lease 5 years - Commencement August 2010 Product Range Pianos - Acoustic Uprights and Grands, Digital Pianos and Ensembles, Stage Pianos and Portable Pianos Keyboards - Beginner and Intermediate Print Music - PVG, Easy, Classical, TAB, Singles, Scores, Band, Wide range of Instrumental, Choral, Reference Texts, Teaching Material, Exam Music, Dictionaries, Lyrics, Papers and Analyses Guitars - Acoustic, Acoustic/Electric (Semi), Electric, Bass, Acoustic Bass, Classical, Kids Nylon ¼ - ¾ Amplifiers and PA - Acoustic, Electric and Bass Amps, Public Address Systems Drums - Percussion, Assorted Drums, Drum-Kits Brass and Woodwind - Trumpets, Trombones, Flutes, Clarinets, and Saxophones Software - Music Notation, Theory and School Curriculum Software Accessories - A wide range of accessories available through a huge array of suppliers Giftware - A huge range of giftware, some unique to the industry Employees, Staffing Levels and Rosters Currently employing 19 staff members (excluding Directors and Family). Composition 2 Full-Time Members, 3 Permanent Part-Time Members, and 13 Casual Staff Members and 1 Casual Keyboard/Piano Teacher. Various Sample Rosters available. Last Peak Season Sample Rosters are to be provided. Staffing levels are high due to the diverse nature of customer needs. It is often preferable for an employee to possess multiple musical talents in order to more efficiently satisfy our customer’s needs.

Summary of Staff Tracey – 19-years PPT service - Print Music, Brass & Wind, Piano, Keyboard, School Sales, Store Supervisor Joan – 11-years C service - Piano Sales, After Sales / Customer Service Simon – 9-years FT service - Guitar, Guitar Music, Sound Amplification, Recording, Keyboard, School Sales, Store Supervisor Jerome – 9-years C service - Guitar, Piano, Sound Amplification, Recording, IT Specialist, Piano Removals Specialist Grant – 8-years PPT service - Guitar, Piano, Keyboard, Sound Amplification, Recording, Print Music, Website Maintenance, Administration & Marketing, and School Sales. James – 6-years C service - Guitar, Sound Amplification, Guitar Music, Marketing Andrew – 4-years PPT service - Guitar, Customer Service. Libby – 3-years C service - Graphic Design, Marketing, Print Music, IT Specialist, Flute, MVP Kieran – 3-years C service - Piano, Keyboard, Clarinet, Print Music Philiipa – 3-years C service - Print Music, Violin, Piano, Customer Service Josh – 1-year C service - Guitar, Piano, Sound Amplification, Customer Service, BNC Genevieve – 1-year C service - Print Music, Administration, Customer Service, Marketing Sam - 1-year C service - Guitar, Customer Service Harrison – 1-year C service - Guitar, Keyboard, Customer Service Abbie – 1-year C service - Print Music Maintenance, Customer Service Julie – 1-year C service - Administration and Wages Clerk Lisa – 2-years FT service - Administration Assistant, Cleaner, Customer Service Joan R - 20+ C year’s service - Administration Officer Loryn - 20+ C years service - Keyboard / Clavinova Teacher Google Docs Resources List Staff communication is be email, however many files are shared with them via Google Docs. These include Spreadsheets such as price lists and rosters, Documents such as Product Info Sheets and Job Descriptions, and PDF / Picture files of various in-store signage designed in-house.

Lathams Music Teaching School Lathams Music currently operates an established Keyboard / Clavinova teaching school. 20+ yrs Long-standing Teacher is on Staff, Mrs. L. Franco, and is responsible for the Annual Yamaha Clavinova Festival, held on the first Sunday in November each year at Brown Sugar Restaurant, Warners Bay. All other Teachers are room rental clients. In order to maximise traffic flow, and encourage music lessons, room rental fees are kept to a minimum of $5.00 per lesson. Usually invoiced in bulk at the beginning of each school term. Currently we have 4 Music Teachers using this facility, but there is room for growth in this area. “Kindermusik” Early Childhood Music Classes are currently being held at Greenhills. This space is also rented to local music teachers at $10.00 per class, also invoiced at the start of each term. Kotara store also has allocated space for this activity. In total, Kotara has 2 small teaching rooms, 1 large teaching room and 1 Early Childhood area / Boardroom, and Greenhills has 2 small teaching rooms and 1 Early Childhood Area.

Customer Database Details This database is the foundation of all of our best marketing activities, offering a cost effective way of promoting our many different products to our loyal customer base. This database is 33,000 clients strong and growing. It is fully categorized by multiple interest groups and/or by Primary or High Schools. A summary of its contents is as follows. 23,500+ Active since 1999, as having purchased a “warranty” item 22,000+ Street Addresses for Mail Invitations or Promotion 8500+ Mobile Phone Numbers for SMS Marketing 3000+ Email addresses (including local Primary and High Schools) 1300+ Company / School Client List xxxx Teacher Client List xxxx Guitar Interest Clients xxxx Piano Interest Clients Capacity to record Birthdays (now part of data collection) 200+ Interstate Client List Twitter Page - 128 following, (Linked to Facebook posts) Facebook page - 621 people like this page, 482 Monthly Active Users 14,062 Post Views for the period 2 Sept 2011 – 1st Oct 2011

Lathams Music Website www.lathamsmusic.com.au Currently hosted and designed by Weblite / Associated IT, Mr. Michael Lacey, Hamilton NSW. Initiation has been made towards an expansion of our site by Artbeat Designs, in conjunction with Libby De Souza (casual staff member doing Honours year Majoring in Graphic Design at UON). Fully itemised quote and contacts in a separate report attached. At present, our webpage is the resource we use to email promotions to our 3000+ clients with email subscriptions. These clients are categorised into their different interest groups. Lathams Music also owns dozens of keyword strong domain names, not currently being used. List attached. Corporate Colours Corporate colours for graphic design purposes are Pantone orange number 152, Pantone blue 2945, and Pantone purple 255. Logo Design was done by Caroline Zambo of John Church Advertising / Worldwide Printing, Broadmeadow in 2005. Most graphic design work in the last 3 years has been done by Libby De Souza Designs. All files are on record.

Dealer Login Details Yamaha Music Australia - lathamsmusic (see Grant) Shriro (Casio) - dealer intranet American Express Merchant Login - lathamsmusic (see Julie or Joan) Sheet Music Direct - User ID XXXX (see Grant) G-Mail Login - [email protected] (see Grant) G-Mail Login - [email protected] (see Tracey) G-Mail Login - [email protected] (see Grant or Libby) BPAY and Funds Transfer Account Details List to be included

Calendar Promotional Activity

MONTH ACTIVITY

JANUARY Post Christmas Sale Stock Clearance from Christmas Holiday Keyboard Lessons Acoustic Piano Promotion (Pianos First) FEBRUARY Back to School Email Schools Specials Student Discount Offer distributed to Teachers

MARCH March Madness Sale - Things starting with “M” on Sale, e.g. Metronomes, Mandolins, Microphones etc.

APRIL Easter Long Weekend Sale Chocolate Eggs on the Counter Focus on Concert Band (Festival Time) MAY Mothers Day Sale Piggy Back on Domayne / Homemakers Email Promo Music Books for Mum JUNE Alex Steinbach Romance Offer 15% Off Email and Snail Mail (Pianos First) Annual Yamaha Music / Lathams Music Birthday Sale JULY Dungeon Jazz Competition - Major Sponsor Christmas in July Sale - Print Music Focus AUGUST Staff Party Month - Boss is Away Sale Snow Time Sale SEPTEMBER Spring Music Festival - School Holidays OCTOBER Band Fest - Local Primary and Concert Bands

Warners Bay Preparations for Christmas - Layby Now for XMAS Greenhills Birthday - Bands @ the BBQ Sale NOVEMBER Yamaha Clavinova Keyboard Festival - Brown Sugar

Warners Bay Christmas Catalog Promotion Inside Music and Yamaha Focus Catalogs DECEMBER End of School Year Sponsorships Various High School Awards Programs Christmas Catalog Promotion - Inside Music and Yamaha

Focus

Other Marketing Activity Facebook and Twitter Blogs - linked together - 9 Administrators, Supervised by Grant Gibbins. Greenhills have their own Facebook page Facebook Ads – Conducted in order to attract “friends” in specific demographics and locations within Australia, with musical interest. Email Notifications - Via Website, for various Customer Interest Events / Promotions SMS Messaging - www.5cSMS.com.au Prepaid $0.05 for each 160 characters TV - usually with NBN - Chris Moonie Radio - NXFM or KOFM Mail - Mail Merge specific targets via MUSIPOS Data Export and Word Mail Merger (Avery J8159 Labels) Google Ad Words - Multiple Campaigns running simultaneously under pre-set budget controls Yellow and White Pages – Sensis 1 unit colour ad under “Music and Musial Instruments” 1 unit colour ad under “Pianos” Phone listing under Piano Removalists White Pages Super Bold listing of all phone numbers Within Muswellbrook and Newcastle/Maitland Book Bus Seat Signs - Charlestown Road (nearest cross road, Carnley Avenue) Great exposure for Sales and other publicity as it is a very high traffic position. 3 other bus seat ads were used in the area to promote the move from Westfield etc, but have since been retired. The minimum period for leasing these signs is 2 years.

Newsletters to Teachers - These are posted out on a bi-annual basis, to our key Piano and Guitar teachers, as well as to High School Music teachers. Each one has relevant details of a host of different products of interest to them. Sponsorships and Production Assistance - In order to maximise the loyalty to Lathams Music, we have engaged in an array of publicity promoting and production assistance with many local societies. Exposure to musicians and their audiences and families is gained through a number of strategic sponsorships within the Region. Examples of these are the Lake Macquarie Eisteddfod “Archibald Latham Concerto Prize”, St Francis Xavier “Battle of the Bands”, Cessnock High School “Lathams Music Award” for the highest academic achievement in Music, etc. Web Presence - Lathams Music thus far have a fairly basic web presence, with Contact Details, Promotional Offers, Letter from the Principal, Links to supplier sites, Basic info on a basic range of product, and Handy Hints for various instruments. We have tendered web designers who are quoting on upgrading the site to include “shopping cart” facilities in order to take sales online. Their proposals are to be included. Instore Promotions - Each month we draw a name from the submissions collected on the counters of each store for an open order of $100.00 *conditions apply. This encourages people to join our promotions mailing list. In these submissions, we ask for customer interest groups in order to better tailor the promotion directed at them. We also ask for email and mobile numbers for more cost effective promoting.

Flyers and Posters - Various promotional flyers are distributed within the white product bags we used for sales. This can improve customer revisits and loyalty. VIP Loyalty Cards - These are issued to all customers (except our VIP Teachers) who use them to attract a $25.00 voucher once they have spent $200.00 on general merchandise or print music. Lathams Music Gold Card - Our VIP teachers automatically receive 15% discount, as this select group of people have shown consistent and dedicated loyalty to Lathams Music over many years of sales, with an excellent credit history. Management must approve teachers on this list.

LITTLE BOOK OF BIG DEALS!

P: 4952 43116 Bradford Close, Kotara

11 Molly Morgan Drive, East MaitlandVouchers valid at both Lathams stores.

BUY ANY TWO SETS OF STRINGS AND GET 15% OFF

Expires 1/9/10. Applies to full priced items only. While stocks last. Offer valid once to each customer. Conditions apply. See instore.

BUY ANY SET OF BONGOS AND GET A

FREE GIG BAG

BUY 2 SETS OF AMS DRUM-

STICKS & GET THE 3RD FREE

20% OFF ALL WOODEN

PERCUSSION SETS

FINALE PRINT MUSIC 2008HALF PRICE!

BUY 2 DVD’S IN THE SAME SERIES

& GET 10% OFF THE TOTAL

BUY A DIATONIC HARMONICA & GET A HOLDER HALF PRICE

ORBUY A CHROMATIC

HARMONICA & GET A HOLDER FREE

BUY A GUITAR FX PEDAL AND GET A 2ND IN THE SAME SERIES 30% OFF

BUY ANY SET OF GUITAR/BASS

STRINGS & GET A QUIKTUNE TUNER

HALF PRICE

BUY A FLUTE, CLARINET, TRUMPET OR SAX AND

RECEIVE A MUSIC STAND, INSTRUMENT CARE KIT AND TUTOR

BOOK FREE

BUY ANY TWO PRINT MUSIC BOOKS AND

GET 10% OFF











30% off pedal of lesser value only.

Inside Music Catalog - Assembled bi-annually by AMS, and participation voluntary, however Lathams Music have not missed a single edition since its launch (originally MDA Catalog) over 10 years ago. This catalog is distributed to a select group of postcodes via a letterbox drop on nominated weekends throughout May/June/July and October/November/December/January. Copies are also available in-store.

Best of Yamaha Catalog - Focus dealers are privy to the most elite deals from Yamaha and as so making this promotion one of Yamaha’s best buy-in periods. This catalog is distributed by postcode also, and runs over November and December each year.

Pianos First Promotional Material - “Pianos First” routinely run quarterly promotions for their very popular Alex.Steinbach Pianos. For example, this quarter, they are offering 15% off the Retail prices of their “Romance” model, which includes the offer to use their 3 years Interest Free facility. Other promotions have included 3 months free music lessons (they pay your teacher), and wonderful Tasmanian Product Christmas Hampers CURRENT SWOT Analysis Strengths Acknowledged Print Music division has a strong reputation, iconic within Region. Our customer service is friendly, respectful and not intimidating. Delivery crew ready with specialised equipment, vehicle and expertise. Staff expertise widely versed in all industry areas. Traditional family values Music Store, not Rock or Pro shop. Yamaha Gold Standard Pianos Exclusive Lag and Hagstrom Dealer. Preferred Local Retailer for AMS products - Industry Leader. We are conveniently and centrally located in high growth suburban areas and high traffic commercial areas. “At the door” parking specifically allocated for Lathams Music customers. Credibility, Reliability, Longevity & Versatility - Are the end results of the goodwill of our third generation business, operating for over 62 years.

Opportunities recently Achieved Change premises location to reduce rent & overheads. Negotiated favourable lease terms. Online website store initiated. Increased market coverage into Maitland. Staff incentives via achievement of targets. Introduction of new brands such as Blackstar Amplification. Review staffing levels to achieve maximum efficiency. 2010/11 Weaknesses Addressed Lack of Brand coverage - since increased. Cost of Rent - since relocated premises out of Westfield / Park Ave, & negotiated favourable leasing terms. Flexibility of operating Hours (Public Holidays) - now closed Public Holidays unless “Promotion” planned. Location - Increased coverage via two diverse locations. Communication - Sacked Telstra and employed Engin and HCT. Policy and Procedures - since implemented improved clarification via job descriptions and improved communication of company procedures via staff emails. Number of Staff - since reviewed and maximised efficiently, job description tasks quantified. 2010/11 Threats Addressed Cash Flow - Take advantage of suppliers’ prompt payment terms. Increase orders deposits / ask for pre payment of customer orders. Competitors - Bold and proactive approach adopted. Losing Staff - No-one is indispensable, but loyalty is appreciated greatly. Ability to adjust to external forces - Increased awareness of competitors’ actions. Debt Levels - Refinanced to take advantage of lower interest rates. Higher Rent/Overheads - Eliminated after Westfield exit. Increasing Costs – Re-price delivery charges to reflect fuel costs. Loss of Major Brands - 5km radius of existing dealers protected zone. Number of Staff - Optimised to reflect revised operational efficiencies.

Sample Artwork

Its beautiful rich tone inspires romance and provides the soundtrack to the lives of millions.

!e Alex.Steinbach “Romance” is Australia’s number one selling German designed piano, the complete piano. It’s ideal for teachers, beginners, intermediate and advanced students alike.

!e Romance models are therefore an excellent choice for parents wishing to invest in a piano that will carry their child right through to higher examinations and performance preparation if desired.

It is also perfect for households requiring a piano to suit a number of family members at di"erent playing levels.

For the !rst time ever, Alex.Steinbach are o"ering a special price only available on this top selling model.

Purchase a new Alex.Steinbach Romance piano at Lathams Music before June 30, 2011 and receive a massive 15% Discount!

#e 15% o" discount is available on all cash/credit card purchases as well as the Alex.Steinbach 3 Years Interest Free Purchase Plan* allowing you to enjoy your piano at home straight away while paying it o" gradually over 3 years! Available in Black or White; Semi-Gloss or Polished Walnut or Mahogany. * #is o"er is valid from April 1 to

June 30, 2011 and is subject to approval.

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4/6 Bradford Cl, KOTARA Ph 4952 43113a/11 Molly Morgan Dr, GREENHILLS Ph 49 344 661

locations!two new

6 Bradford Cl

KOTARA

11 Molly Morgan Dr

EAST MAITLAND

KOTARA & EAST MAITLAND

PH: 4952 4311 www.lathamsmusic.com.au