MAKING YOUR BUSINESS STRONGERwww.lawlerpartners.com.au AUTUMN 2006

A QUARTERLY PUBLICATION OUTLINING RELEVANT BUSINESS ISSUES FOR YOU Issue 9

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CONSULTINGExecutive SharePlans

BUSINESS SERVICESInvestment &Support

HAPPENINGS @LAWLER PARTNERS

PICTURE GALLERYKerry O’Keeffe -Aussie BBQ

CLIENT PROFILEThe BavarianHospitality Group

CLIENT PROFILEContinued

TAX CALENDARWORKCHOICESThe New Regime

LawlerLinkLawler Partners have been recognised with two

National Awards - Best Accounting Firm and BestProfessional Services Firm 2006 (turnover under $20 million) at this year’s BRW - St George ClientChoice Awards.

Exceeding client expectations is thephilosophy underpinning the Lawler

Partners business, and it is with muchgratitude and thanks to our clients that weaccept this prestigious acknowledgement.

Not only do the two awards highlight the firm’scommitment to exceeding client expectations, theyalso reinforce the value placed on the relationshipswe hold with clients.

Director and founding Partner, Terry Lawler, saidthat the awards recognised the culture developed inthe firm of understanding a clients business.

For further information visitwww.brw.com.au

For Your Recognition...

“It sounds simple enough but it takesconsiderable commitment and energy to

understand another business well enoughto bring further success to them. We arevery proud of our team of professionals

and their focus on service delivery.”

The national awards were presented by respectedbusiness magazine Business Review Weekly andrecognise the achievements of Australia’s outstandingprofessional service firms, including legal, accounting,engineering and business consulting firms.

The results are based on independent researchconducted by Melbourne firm Beaton Consulting,and clients were surveyed along with more than6,500 business leaders. Respondents were askedto rate firms on a number of key attributes includingtechnical advice, responsiveness and value formoney.

Terry Lawler said Lawler Partners growth in theSydney market would also continue.

“We are growing away from the image of a regionalcompany with an office in Sydney to one of a mid-tier firm in the wider market place.”

Below: Terry accepts the Award on behalf of the firm.

Thank you!

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Following on from Kylee Dare’s article “Is An EmployeeShare Ownership Plan Appropriate For Your Business?”The Linchpin Group look at Executive Share Plans in thisfirst of a two part series.

Executive Share Plans are select plans offered to abusinesses Senior Management. This article discussessome of the important soft issues that arise within aBusiness when an Executive Share Plan is introduced.The Linchpin Group are a multidisciplinary managementconsultancy firm based in Sydney.THE CONTEXT

Many businesses set the foundations for their ExecutiveShare Plans within the context of broader organisationaltransition.This will often include at least one - if not more - of thefollowing:• As a step in the implementation of a succession

programme - where the introduction of the ExecutiveShare Plan is (perhaps) a key step in the owner’stransition from owner or owner/manager;

• As a means of achieving a level of protection ofintellectual capital and the retention of human capital- where there is high business risk attached to theloss of both people and IC;

• As a stimulus to engagement with strategies and plansaimed at enhancing productivity, or successfullydriving re-engineering processes;

• As a means of dealing with significant changes incompetitive dynamics.

WHAT (GENERALLY) WILL CREATE ‘SOFT’ PROBLEMS FORBUSINESSES WHEN AN ESP IS INTRODUCED?Generally there are three core dimensions which requirecareful management in the transition to ESP’s. These are:• Communication of the ESP - how is the creation,

implementation and management of the ESP to becommunicated? The intentions behind the offer ofan ESP are one thing; what is said at this stage iscritical to cementing the ‘right’ perceptions andengagement with the Plan.

• Criteria for the award and distribution of shares - whowill get them? On what basis? When will they become‘my’ shares. Am I expected to pay for them?

• A change in company (or, executive team) dynamics -executives who become ‘owners’ suddenly see the worldthrough a different lens. Beware the ‘big doggie’ syndromelest it changes irreparably the dynamics of the group.

HEADING OFF SOME OF THE ISSUES WITH THOUGHTFULPLANNING

We’ll deal with each of these in turn by looking at likelycauses and some solutions which can be readily found inthe right tactical planning.COMMUNICATION OF THE ESP

Some commonly experienced problems arise with ESPsthrough the perceptions of those to whom the Plan is offered.Clear communication of the rationale, benefits, rules, rewardsand mechanics of the ESP is required to positively influence thoseperceptions. Some common issues and their solutions include:

ExecutiveConsulting

LOOK OUT FOR THE ‘SOFT’ ISSUES!!PLANS

Share

Lawler Partners along with their business partners have the skill and the precedents to assist you in this area.

ISSUE/PERCEPTION

1 Lack of understanding of an Executive Share Plan.

2 The ESP is seen as offering a trade-off between likelyshareholder ‘value’ and team/company ‘values’.

3 Perceptibly little value or a leap of faith requiringpersonal investment.

(a) The ESP will deliver little additional value to theparticipants.

(b) “What? You’re asking us to pay for the shares?”.

4 The vesting period is too long/unfair/unclear (the dangerof which is cynicism and a lack of engagement).

5 Too complicated from a tax point of view.

TACTICAL SOLUTION

Careful explanation in written form and throughpresentations/road-shows explaining the ‘what’ and the‘why’. Some emphasis on the ‘how’. Check for meaningand understanding before the offer is made.

Explain that the ESP is no different to other performanceincentives (e.g. bonuses).

Reinforce the meaningful benefits of participation - anasset with significant potential for growth.

Regular communication of vesting rules and CEO-individual letter on passing vesting milestones.

The offer documents and presentations should highlightthe need for appropriate financial advice. The businessmight even consider engaging a financial adviser to provideinitial personal advice to the executive team (individually).

Investment

AND

FOR GROWING BUSINESSES

Business Services

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Souls Private Equity Limited (SPEL) is aninvestment initiative sponsored by WashingtonH. Soul Pattinson and Company Limited (Soul

Pattinson) which focuses on long terminvestments in unlisted & listed small to medium

sized enterprises with the goal of achievingreturns in excess of stock market returns.

The Soul Pattinson Group has been successfullyinvesting in Australian and Asian private equitybusinesses for a number of years including New HopeCorporation Limited, SP Telemedia Limited and NBNEnterprises Pty Limited.

In the main, SPEL invests in and supports unlistedSME’s which offer high prospects for capital growthover the long term (ranging from 3 to 10 years).Investment in unlisted securities has traditionally beenthe domain of larger financial institutions while privateequity investment entities have suffered from lack ofliquidity.

SPEL offers investors access to, andliquidity in, the investment class which it

considers can generate higher returns in thelong term than those available from

traditional equity investments.

The company listed on 16 December 2004 with apublic equity raising of $130 million. The deal flow sincethis time has been significant however only a verylimited number of projects have been invested in orcontinue to be under review. The investment range thatis considered is up to approximately $20 million perentity. Projects investigated have included a wide rangeof investments being start up, venture capital, IPO pre-investment, Bio-tech, life sciences, including smallthrough to large mature businesses.

Private equity investments to date include businessesin the building industry, consumer hair products,merchant banking, specialist medical services,engineering and aquaculture. Quite a number of theseequity investments have been in country areas andcover a number of Australian states.

For further information please contact DirectorTerry Lawler via

tlawler@lawlerpartners.com.auor phone 02 4935 6115

Mr Andrew Fairfull, the General Manager PrivateEquity advised that SPEL is presently specificallyfocused at private equity investments related to expansioncapital, succession planning and management buyouts.

“as in all investment decisions the quality of themanagement is a critical issue and we are keen

to support the growth and development ofprivate entities that have quality managementteams in place. It should also be highlightedthat we provide a range of debt and equitysolutions with security being taken over thebusiness not the owner’s personal assets.”

Soul Pattinson is Australia’s third oldest publiccompany and has had an involvement with the privateequity market for most of its existence. Their philosophyhas and continues to be one of longer term investmentand support adopting a “partnership approach” toachieve a mutually beneficial result.

Lawler Partners have been pleased to work with 2clients in which SPEL have taken an equity position andwe also have a business relationship with Pitt CapitalPartners Limited. Pitt Capital, which is part of the SoulPattinson Group, is a merchant bank providing a fullrange of corporate advisory services which include:

• Mergers and acquisitions

• Equity and debt raisings

• Underwriting of equity raisings

• Restructures

SUPPORT

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@Lawler

Happenings

PartnersLawler Partners Sydney Morning Herald “GoodLiving” Restaurant of the Month Club.

• In October 2005, we launched the concept ofthe Restaurant of the Month Club as a way toreward introducers of business to the firm.

At the beginning of a month an email is sent outadvising the restaurant given the highest numberof points for the month in the “Good Living”section of Tuesday’s SMH. The email alsoadvises that a luncheon time has been bookedand that for a cost of $50 per head the recipientis invited to attend and bring along a guest. Thatguest can be any person either spouse, businesspartner, associate or client, and the luncheonprovides an opportunity to relax and enjoy thecuisine of a top restaurant for a fraction of thenormal cost.

The operative word is “relax” - no speeches, no“stand up and introduce your guest” - just sitdown and if you want to just gorge and guzzle.

So far we have visited Becasse Restaurant in

Clarence Street, (twice - as it was our first luncheon),Bennelong - at the Opera House, and Cru Dining -Quay Passenger Terminal.

In all, eighty guests have enjoyed the fine food andwine these restaurants have offered.

These lunches have caused a bit of movement alongthe F3 but with the aid of the team at the SMH wewill be choosing some fine eateries in Newcastleand on the Central Coast. Notwithstanding thedistance however, those Novocastrians who havecome to the lunches have found it a splendid excuseto catch up and visit Sydney connections. LateMarch will see us dine at Restaurant II, Bolton StreetNewcastle.

This calendar year the club will also continue withthe luncheon concept but will acquire block bookingsat special sporting events and concerts so keep youreye on your email.

If you would like further information about the LunchClub contact Clive Chambers on 02 8346 6000 or emailcchambers@lawlerpartners.com

Above: Kerry O’Keeffe delivers his speech. Above: All Guests at the Lawler Aussie BBQ.

On February 2nd, former test cricketer, mediapersonality and ABC commentator Kerry O’Keeffeentertained 200 of the firms’ clients & colleagues atour ‘Aussie BBQ’ function in Sydney.

Kerry kept guests captivated with witty storiesfrom his test playing days, and shared some thoughtson Australian cricket in general. His trademarkinfectious laugh was also a hit.

Kerry O’Keeffe Wit, Wisdom& LARGER THAN LIFE

Above: Ben Skinner & Kerry O’Keeffe.

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Picture Gallery

Above: Alistair Little (Tress Cox) &Charles Bavin (Hunt & Hunt).

Above: Peter Grealish, Stuart Westgarth & MarkWilks (Corrs Chambers Westgarth).

Above: Leah Young & Claire Robbs(Life Without Barriers).

Above: Mark Sample (ANZ Banking Group Ltd.)& Rob Whitton.

Above: Rob Westphal (Souls Private Equity Ltd.)& David Fairfull (Pitt Capital Partners).

Above: Brad Tonks & Craig Milne (Craig Milne & Co.).

Above: Tony Marsden & Phil Young(Australian Financial Risk Management).

Kerry O’Keeffe Function

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GROUPHospitalityThe Bavarian

Client Profile

John Szangolies has been involved in hospitality allhis life. He began in the restaurant industry when heopened ‘The Cauldron’ in Darlinghurst in 1970. Thenfollowed ‘The Rocks Push’ in 1972, before purchasing‘Argyle Events & Catering’ in 1982. Since then, John hasbuilt their unique offering into an extensive complex knownas The Bavarian Hospitality Group, an umbrella companyfor several restaurants, bars and function venues in theSydney area.

TODAY THERE ARE A NUMBER OF BUSINESSES WHICHOPERATE WITHIN BHG:

Löwenbräu Keller is the most authentic Bavarianrestaurant and bar in Sydney, Winner of the 2005 NSWRestaurant and Catering Awards for “Best EuropeanRestaurant” and second consecutive year “BestEntertainment Restaurant”. Here, patrons can experience

the most traditional Bavarian hospitality outside ofMunich, with German speaking staff in dirndl andlederhosen, authentic décor, and traditional oompahband.

Above the Löwenbräu Keller is the modern Europeanstyle Überbar, offering exclusive biers, mouth wateringcuisine and cocktails.

Argyle Events & Catering has five very unique venuesin the magnificent Argyle Stores heritage building atthe Rocks. The function centre is continually growingwith two additional levels of the old Argyle storesrecently negotiated from the Sydney Harbour ForeshoreAuthority. After extensive refurbishment this area willopen in October 2006, accommodating up to 3000people and making it one of the largest function venuesin Sydney.

German Beverage Imports (GBI) is the sole companyin Australia importing six exclusive Bavarian biers -Löwenbräu Original, Löwenbräu Dunkel, SpatenMünchener Hell, Franziskaner Hefe-Weissbier Hell,Franziskaner Hefe-Weissbier Dunkel and Löwenbräualcohol-free. These biers are available on tap in varioussizes of original steins at all of BHG’s venues.

After selling his interest in Jordons SeafoodRestaurant in 2001, John embarked on developing afive year strategic plan which included formalising thestructure of the business for future expansion. A Boardof Management was put in place to assist with theimplementation, and it was at this time that John beganhis relationship with Lawler Partners.

John says “I was looking for assistance notonly in relation to the businesses

compliance needs but also some strongcommercial and strategic advice”.

Plans for expansion included the successful BavarianBier Cafés, now operating out of York Street and ManlyWharf in Sydney and opening soon at O’Connell Street.

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John Szangolies, Tourism Legend and Managing Director ofthe Bavarian Hospitality Group (BHG) talks to LawlerLink about

his business and its plans for further expansion.

For further information visitwww.lowenbrau.com.au

“Out of the Löwenbräu experience, wedecided to expand the concept to newlocations and new markets, with the

same focus on the key ingredients (thefood, the bier and Bavarian theme) thatmake the Bavarian Hospitality Group

the success it is.” says John.

As with the Löwenbräu, the designer space of the cafésis filled with long wooden tables, edged with cosy booths,and is dominated by the stunning bar. However, whilstthe name indicates that the cafés are all about bier - theyaim to also take their food and coffee just as seriously.Over the next five years the company plans to open 20 cafésacross Australia, with a number of sites already identified.

When asked about the secret to BHG’s success in theindustry, John gives credit to the skills of innovativedesigner Michael McCann who has worked on the overalllook and feel of the venues.

“It is important not to scrimp in the designarea. We spend a significant amount ofmoney on the fit out of each location”.

IT’S NOT JUST ABOUT THE BIER!

“I also believe that customer service isparamount so we have a thorough staffselection and training process in place.”

For almost five years, Lawler Partners Directors KyleeDare and Terry Lawler have guided BHG management ina number of areas including business planning anddevelopment, commercial negotiations, compliancematters and strategy.

John comments, “We have doubled ourturnover in less than two years and nowemploy over 250 staff. A small companygoing through rapid growth like we didrequires business advisers with a high

level of commercial experience”.

AUDITJeff AbelaT 02 8346 6064

BUSINESS RECOVERY &INSOLVENCYSydney: Rob WhittonT 02 8346 6000Newcastle: Paul GidleyT 02 4935 6184

BUSINESS SERVICESSydney: Glenn HarrisT 02 8346 6000Newcastle: Simon RutherfordT 02 4935 6109

HOSPITALITY & GAMINGPeter McLeanT 02 4928 7009

CORPORATE ADVISORYSimon Rutherford & Terry LawlerT 02 4935 6109 T 02 4935 6115

EQUIPMENT FINANCE,INSURANCE PREMIUM FUNDING& MORTGAGE BROKINGBrett DerwinT 02 4927 5799

FINANCIAL PLANNING &INVESTMENT ADVICEMark ArnoldT 02 4928 7000

FIRM & STRATEGY MATTERSTerry LawlerT 02 4935 6115

FORENSIC ACCOUNTING &LITIGATION SUPPORTRay TolcherT 02 4935 6112

INFORMATION TECHNOLOGYSteve MeynT 02 4935 6199

MANAGEMENT CONSULTING -GOVERNMENTKeith RogersT 02 4969 6610

SUPERANNUATIONDamien PassmoreT 02 4935 6157

SMALL BUSINESSPeter CoughlanT 02 4935 6113

TAXATIONDarren ShoneT 02 4935 6116

CONTACTSTax Calendar

SYDNEY

Level 7, 1 Margaret StreetSydney NSW 2000 AustraliaPO Box 5446 Sydney 2001T 02 8346 6000 F 02 8346 6099E info@lawlerpartners.com

NEWCASTLE

763 Hunter StreetNewcastle West NSW 2302 AustraliaPO BOX 2368 Dangar 2309T 02 4962 2688 F 02 4962 3245 DX 4303E mail@lawlerpartners.com.au www.lawlerpartners.com.au

“Liability limited by a scheme approvedunder Professional Standards Legislation”

March 2006

21 Due date for lodgement and payment ofFebruary 2006 monthly BAS and IAS.

31 End of the 2006 Fringe Benefits Tax (FBT)year.

31 Due date for lodgement of income tax returnand payment of tax for company and

April 2006

21 Due date for lodgement and payment ofMarch 2006 monthly BAS and IAS.

28 Last day for payment of March quarteremployee superannuation contributions toavoid liability for the SuperannuationGuarantee Charge.

28 Due date for lodgement and payment ofMarch 2006 quarterly BAS and IAS.

May 2006

15 Due date for lodgement of income tax returns(where a tax liability exists) and payment oftax for all tax returns for the June 2005 yearend not previously required to be lodged.

21 Due date for lodgement and payment ofApril 2006 monthly BAS and IAS.

21 Due date for lodgement and payment of FBTreturns for the FBT year ended 31 March 2006.

Upon the Bill’s introduction, Lawler Partners havereleased a number of Alerts outlining the major changesand their impact, followed by seminars held in Newcastleand the Central Coast which were attended by many ofour clients. Further seminars are also proposed.

The seminars separated fact from fiction in aninformative, practical, interactive session. Your positive

feedback and comments regarding our updates andthe subsequent presentations have been very muchappreciated and are assisting us to prepare contentfor future communications.

The changes will impact on payroll systems,particularly leave accrual and payment systems, onleave entitlements for all employees, disciplinary andtermination processes and on industrial relationsmatters, such as the negotiation of enterpriseagreements and rights of entry of union officials.These new requirements will affect any employerwho is an incorporated entity.

If you missed out on the presentation and areresponsible for payroll, employee relations, industrialrelations, employee policies and processes withinyour organisation, contact Kimberley Evans ontelephone 02 4935 6191 for a copy of the updatesand presentation notes.

We will continue to keep you informed as the newworkplace relations system progresses.

THE NEW REGIMEWorkChoices

superannuation fund taxpayers(turnover more than $2 million butless than $10 million) in the latest yearlodged.

31 Due date for lodgement of initial NSWLand Tax returns for land held as at 31December 2005.

Above: Darren Shone, Geoff Beesley & GregJesson at the Newcastle seminar.