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DIRECTORS’ REPORT CONTINUED

ENTERTAINMENT
TECHNOLOGY

The strategic plans for Entertainment
Technology are applicable to each of
the technology businesses.

Atlab, Atlab Image and Sound
Technology and Filmlab

Maintaining pace with technological
advances

STRATEGIC INVESTMENTS

Property

Maximising returns from existing investment

The Group has a number of property assets that it intends to redevelop over time.
The timing of these redevelopments is dependent on the type of use and stage of
the property cycle.

DIVIDENDS

Dividends paid or declared by the Company since the end of the previous year were:

The Group expects that future changes
in digital technology, and the possible
resulting loss of market share, will be
offset by the Group’s ability to react,
change and adapt to emerging
technological advancements and
evolution. The Group has identified
certain areas of technological
advancement within the industry where
it is envisaged that a certain amount of
market repositioning will occur and, as
such, measures have been initiated to
maximise opportunities from the
emerging technologies.

Maximising returns from existing
businesses

The Group anticipates that the
technology businesses will continue
to achieve growth through revenue and
cost improvements, and development of
and expansion to other markets and
territories, and by renewing its major
contracts on commercially favourable
terms with the aim of increasing the
average contract length.

Industry developments

The Group expects that a digital
platform will eventually replace the
current 35mm film release printing
process, thereby severely impacting
the existing film processing business.
At present, the Group believes that any
material shift in the transfer of such
technology to be gradual and the
implications of this change are
intrinsically linked to the long term
strategy of maintaining pace with,
and adjusting to, future
technological advances.

Cents
per
share
Total
amount Date of payment
Tax rate
for franking
credit
$’000
Declared and paid during the year:
Final 2006 — Ordinary shares 16
Interim 2007 — Ordinary shares 10
20,195
12,793
21 September 2006
15 March 2007
30%
30%
32,988
Declared after the end of the year:
Final 2007 — Ordinary shares 18 23,055 20 September 2007 30%

All the dividends paid or declared by the Company since the end of the previous year
were 100% franked.

EVENTS SUBSEQUENT TO REPORTING DATE

Subsequent to 30 June 2007, the Company announced the sale of the 50%
shareholding in Roadshow Distributors Pty Limited, an associate as at 30 June 2007.
The sale price of $129,440,000 included the extinguishment of $34,440,000 in loans
owing from a Group entity and cash proceeds of $95,000,000. The pre-tax profit on
sale of the Group’s interest in Roadshow Distributors Pty Limited was $64,382,000.

Other than the matter discussed above, there has not arisen in the interval between
the end of the year and the date of this report, any item, transaction or event of a
material and unusual nature likely, in the opinion of the directors of the Company,
to affect significantly the operations of the Group, the results of those operations,
or the state of affairs of the Group, in future years.

LIKELY DEVELOPMENTS

Likely developments in the operations of the Group are referred to in the review of
operations by division, set out within this report.

DIRECTORS’ INTERESTS

The relevant interest of each director of the Company in share capital of the
Company, as notified by the directors to the Australian Securities Exchange (“ASX”)
in accordance with Section 205G(1) of the Corporations Act 2001, at the date of this
report is as follows:

Ordinary shares
Director held directly
Ordinary shares
held by companies
in which a director has a
beneficial interest* Options held directly
AG Rydge 1,526,455
AJ Clark 40,000
TC Ford —
RM Graham 10,626
M Hellicar —
JA O’Neill (appointed
14 December 2006) —
DC Seargeant 100,500
56,165,337
—
10,000
—
2,000
—
150,000
—
—
—
—
—
—
750,000

* Relevant interest under the Corporations Act 2001 differs from the disclosure required under Australian Accounting
Standards as presented in Note 37 to the financial statements.

TAX CONSOLIDATION

Effective 1 July 2002, for the purposes
of income taxation, the Company and
its wholly-owned Australian subsidiaries
have formed a tax-consolidated group.
Members of the group have entered
into a tax sharing arrangement in order
to allocate income tax expense to the
wholly-owned subsidiaries using a
‘group allocation method’ approach.
In addition, the agreement provides
for the allocation of income tax
liabilities between the entities should
the head entity default on its tax
payment obligations.

INDEMNIFICATION AND
INSURANCE OF DIRECTORS
AND OFFICERS

The Company’s Constitution provides
an indemnity to each person, including
AG Rydge, AJ Clark, TC Ford,
RM Graham, M Hellicar, JA O’Neill and
DC Seargeant, who is or who has been
a director or alternate director of the
Company or of any related body
corporate of the Company. The indemnity
also extends to such other officers or
former officers, including executive
officers or former executive officers, of
the Company and of any related body
corporate of the Company as the
directors of the Company determine.

In terms of the indemnity, the Company
will indemnify the directors and other
officers of the Company acting as such,
to the full extent permitted by law,
against any liability to another person
(other than the Company or a related
body corporate) incurred in acting as
a director or officer of the Company,
unless the liability arises out of conduct
involving a lack of good faith. The
indemnity includes any liability for costs
and expenses incurred by such person
in defending any proceedings, whether
civil or criminal, in which judgement is
given in that person’s favour, or in which
the person is acquitted and in making
an application in relation to any
proceedings in which the court grants
relief to the person under the law.

The Company has provided directors’
and officers’ liability insurance policies
that cover all the directors and officers
of the Company and its controlled
entities. The terms of the policies
prohibit disclosure of details of the
amount of the insurance cover, its
nature and the premium paid.

OFFICERS WHO WERE
PREVIOUSLY PARTNERS
OF THE AUDIT FIRM

The following persons were officers of
the Company during the year and were
previously partners of the current audit
firm, KPMG, at a time when KPMG
undertook an audit of the Company:

•
AJ Clark (retired from audit firm
in 1998); and
•
PW Horton (retired from audit firm
in 2001).
REMUNERATION REPORT

— AUDITED
This report outlines the remuneration
arrangements in place for directors and
executives of the Group.

Remuneration philosophy

The Nomination and Remuneration
Committee is responsible for making
recommendations to the Board on
remuneration policies and packages
applicable to the Board members and
senior executives of the Group. The
objective of the remuneration policy
is to ensure the remuneration package
properly reflects the person’s duties and
responsibilities, and that remuneration is
competitive in attracting, motivating and
retaining people of the appropriate quality.

Remuneration levels are competitively
set to attract appropriately qualified and
experienced directors and executives.
The Nomination and Remuneration
Committee obtains independent advice
on the level of remuneration packages.
The remuneration packages of the
Managing Director and senior executives
include an at-risk component that
is linked to the overall financial and
operational performance of the Group
and based on the achievement of
specific goals of the Group. Executives
participate in the Company’s Executive
Performance Share Plan. The long term
benefits of the Executive Performance
Share Plan are conditional upon the
Company achieving certain performance
criteria, details of which are outlined below.

The Company also has the following:

•
Tax Exempt Share Plan;
•
Management Option Share Plan
(suspended to new issues and no
grants have been made under this
plan since 2004); and
•
Employee Share Plan (closed to new
members and no offers have been
made under the plan since 1998).
Further details in relation to the various
share plans and option plan are provided
in Note 29.

Remuneration structure

In accordance with best practice
corporate governance, the structure of
non-executive director remuneration is
separate and distinct from senior
executive remuneration.

Non-executive director
remuneration

Objective

The Board seeks to set aggregate
remuneration at a level which provides
the Company with the ability to attract
and retain directors of the highest
calibre, whilst incurring a cost which
is acceptable to shareholders.

Structure

The Constitution and the ASX Listing
Rules specify that the aggregate
remuneration of non-executive directors
shall be determined from time to time
by a general meeting. An amount not
exceeding the amount determined is
then divided between the directors as
agreed. The latest determination was
at the Annual General Meeting held on
21 October 2005 when shareholders
approved an aggregate remuneration
of $800,000 per year. Non-executive
directors do not receive any performance-
related remuneration nor are they issued
options, shares or performance shares.

The amount of aggregate remuneration
sought to be approved by shareholders
and the manner in which it is apportioned
amongst directors is reviewed annually.
The Board considers advice from
external consultants as well as the
fees paid to non-executive directors
of comparable companies when
undertaking the annual review process.

Each director receives a fee for being a
director of the Company. An additional
fee is also paid for being a member
of the Audit Committee. The payment of
an additional fee recognises the additional
time commitment required by directors
who serve on that committee. Directors’
base fees are presently $85,000 per
annum (Chairman: $220,000 per
annum). Directors’ fees cover all main
board activities. Non-executive director
members who sit on the Audit
Committee receive an additional
payment of $13,000 per annum
(Chairman of the Audit Committee:
$26,000 per annum).