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MANAGING DIRECTOR’S REVIEW OF OPERATIONS BY DIVISION CONTINUED

The Gold Class concept continues
to outperform the traditional cinema
business. The concept was expanded
during the year with additional screens
converted to Gold Class at Innaloo and
Macquarie, and two new screens
added to Southport. In addition, the
Gold Class facilities at Chermside,
Mt Gravatt and Indooroopilly were
refurbished. Revenue from owned and
managed Gold Class sites improved
36.3% on the prior year. Ten locations
in the circuit now offer Gold Class on
28 screens. Further expansion of the
Gold Class concept will occur in the
2007/08 year.

During the year, the Group acquired
the joint venture partner’s interest in
the Shellharbour Cinema Complex,
taking ownership of the profitable,
eight-screen cinema to 100%. In
June 2007, consistent with the Group’s
strategy to exit underperforming cinema
sites, the loss making managed cinema
at Toombul was closed.

The contribution from our 50% interest
in the Village managed circuit in Victoria
declined by some 14% over the prior
year. This decline was largely due to
reduced admissions, partially offset by
increases in average admission price
and merchandising spend per customer.

Cinema Exhibition – International

AS AT 30 JUNE

2007
75
564
2006 MOVEMENT

Cinema locations*

76 (1)

Cinema screens*

569 (5)

* Owned, joint venture and managed cinema sites.
Germany

The Group’s cinema exhibition circuit in
Germany achieved an improved result
over that of the prior year. On a same
screen basis, Box Office increased
by 2.5% and this, combined with a
reduction in operating costs, drove
the turnaround. Whilst screen
advertising demand softened, this
was offset by the strengthened level
of merchandising sales.

Pirates of the Caribbean: Dead Man’s
Chest was the highest grossing film
for the first half of the year and was
strongly supported by Deutschland–Ein
Sommermärchen, a documentary on
the German National Football Team’s
World Cup 2006 journey, Das Parfum
and Casino Royale.

In the second half, the top performing
films were Pirates of the Caribbean:
At World’s End, Mr. Bean’s Holiday,
Spiderman 3 and Shrek the Third.
However, Pirates of the Caribbean:
At World’s End and Shrek the Third
performed below expectation and no
film matched the stand-out success
of Ice Age 2 released in the second
half of the prior financial year.

Middle East

The Middle East cinema business
continued to perform very strongly.
Total revenue and Box Office were
ahead of prior year by 31% and 30%
respectively. The significant growth in
the circuit’s earnings was principally
driven by the continuing success of
the Mall of the Emirates (opened in
November 2005), which continues
to trade well above expectations.

The Netherlands

The Group’s interest in The Netherlands
represents a 33% interest in a
10-screen multiplex at Enschede.
This site traded strongly for the year
and experienced a growth in
admissions of some 26% over
the prior year.