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MANAGING DIRECTOR’S REVIEW OF OPERATIONS BY DIVISION CONTINUED

HOSPITALITY & LEISURE
Rydges Hotels & Resorts
AS AT 30 JUNE 2007 2006 MOVEMENT
Locations*
Rooms*
34
5,698
35
5,705
(1)
(7)

* Owned and managed hotels.
Market conditions within Australia
were buoyant with growth in both
the corporate and leisure segments.
Conditions in New Zealand were
less favourable.

Rydges Hotels & Resorts achieved a
strong full year result, with growth in
average room rate of 9% and revpar of
7.2%. Earnings for the Group owned
hotels increased by 8.9% over the prior
year. Occupancy was down slightly,
partly due to the ongoing restructuring
of the market mix. Online bookings
reached 15% of total rooms sold
compared to 9% for the prior year.

Income from hotel management fees
increased by 4.2% over the prior year.
Rydges successfully secured the
management agreement of Rydges
World Square, a major Sydney CBD
hotel as well as Rydges Gladstone,
Rydges Townsville and the newly
opened Rydges Sabaya Resort Port
Douglas. In addition, Rydges acquired
the freehold properties, Rydges
Cronulla and Rydges Bankstown
hotels, in the final quarter of the year.

Internationally, the managed hotels
in Dubai, Doha and London traded
very strongly.

The revitalisation program of owned
hotels is nearing completion with the
introduction of the Rydges Dream bed,
new bed linen, LCD television screens
and the commencement of the rollout
of the new breakfast concept.

Thredbo Alpine Resort

Thredbo achieved a very creditable result
in a season where the level of natural
snowfall was one of the lowest recorded.
Artificial snow making assisted in
achieving growth in market share,
despite experiencing a 4% decline in
skier numbers. The volume of snow was
greatly increased due to the automation
of existing snow making systems.

Kosciuszko Thredbo Pty Limited
has executed a new head lease for
a further term of 50 years and is now
in the process of finalising new leases
with all sub-lessees.

Leisure and Attractions

The sale of Pier 26 Bar and Café
was completed in June 2007.

Featherdale Wildlife Park continued
to trade solidly and revenues have
not been significantly impacted by
the opening of Sydney Wildlife World.

The State Theatre result was below
that of the prior year due to softened
demand for concert business.

ENTERTAINMENT
TECHNOLOGY

Atlab

The 50% owned Atlab group
experienced an overall decline in
earnings from the previous year. Good
returns from the production of feature
film and trailer prints, where steady
volumes and increased margins
generated a lift in earnings, were offset
by declining profits from negative
processing and post-production
services. The decline in negative
processing and post-production
services reflects the further deterioration
in the local film production activity.

Towards the end of the year, Atlab
commenced construction of a new
facility within the Sydney laboratory
which will provide telecine transfers,
high definition dailies and video
mastering services to the
Australian market.

Atlab Image & Sound Technology

Atlab Image & Sound Technology
achieved a solid performance for the
year. Highlights included the successful
introduction of Atlab’s ec2 digital
projection system and strong sales of
spare parts and particularly xenon lamps.

Filmlab

Filmlab Engineering performed well with
strong demand for spare parts more
than offsetting a decline in processor
sales. Filmlab Systems International
produced a disappointing result with a
sharp decline in sales of analyser units.
This business was sold in May 2007.

STRATEGIC INVESTMENTS

Roadshow Distributors Pty Limited

The Group’s 50% share of earnings
from Roadshow Distributors Pty Limited
remained strong although down on the
prior year’s performance.

The best performing theatrical releases
for the year included the Academy
Award winning films Happy Feet and
The Departed. Other key releases
included Superman Returns, 300,
Oceans 13 and Music and Lyrics.

The Entertainment division delivered
another strong performance with
growth in DVD back catalogue sales
supporting new release titles.
The contribution from the Television
division improved on the prior year
as a consequence of pay television
subscriber growth and continuing
strength in pay-per-view revenue.

The Group’s 50% interest in Roadshow
Distributors Pty Limited was sold on
15 August 2007. Further details relating
to this transaction are outlined within
the events subsequent to reporting
date section of the directors’ report.

Property

Rental income from the Group’s property
portfolio increased primarily as a result
of the full year impact of the prior year
acquisitions of the Gowings Building
and the Mick Simmons Building.
The buildings adjoin the State Theatre
and the State Theatre Office Block
which are also owned by the Group.
The consolidated holding totals
3,872 square metres of prime Sydney
CBD property.

David C Seargeant

Managing Director