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DIRECTORS’ REPORT CONTINUED

Unissued shares

At the date of this report, unissued ordinary shares of the Company under option are:

Grant date Expiry date Exercise price Number of shares
20 November 2003
11 December 2003
17 June 2004
16 September 2004
30 September 2008
30 September 2008
30 September 2008
30 September 2008
$2.75
$3.35
$3.14
$3.72
250,000
770,800
50,000
250,000

Further details on the terms and
conditions of these options is set out
in Note 29.

As at the date of this report, there were
1,320,800 unissued ordinary shares
under options (1,320,800 at reporting
date). Refer to Note 29 for further details
of the options outstanding.

Option holders do not have any right, by
virtue of the option, to participate in any
share issue of the Company.

Share issued as a result of the
exercise of options

During the year, the Managing Director
and executives (including certain named
executives) have exercised options to
acquire 1,592,200 fully paid ordinary
shares in the Company at a weighted
average exercise price of $3.03. No
options have been exercised since the
end of the year.

CORPORATE GOVERNANCE
STATEMENT

This statement outlines the main
corporate governance practices in
place throughout the year, which comply
with the ASX Corporate Governance
Council recommendations, unless
otherwise stated.

Board of directors

Role and responsibilities of the Board

The Board recognises its overriding
responsibility to act honestly, fairly,
diligently and in accordance with the
law in serving the interests of the
Company’s shareholders, as well
as its employees, customers and
the community.

The responsibilities of the Board include:

•
providing input into, reviewing
and approving the corporate and
divisional strategic plans;
•
making decisions in relation to
matters of a sensitive, extraordinary
or strategic nature;
•
providing advice and counsel to
management on a periodic and
ad hoc basis;
•
ensuring best practice corporate
governance;
•
appointing and where appropriate
removing the Managing Director
and approving succession plans;
•
ratifying the appointment and where
appropriate the termination of the
direct reports to the Managing Director;
•
monitoring the performance of
the Managing Director and senior
management and approving
remuneration policies and practices
for such Managing Director and
senior management;
•
enhancing and protecting the
reputation of the Group;
•
reporting to shareholders;
•
ensuring appropriate compliance
frameworks and controls are in
place and are operating effectively;
•
approving and monitoring the
effectiveness of and compliance
with policies governing the
operations of the Group;
•
monitoring compliance with
regulatory requirements and
ethical standards;
•
monitoring the integrity of internal
control and reporting systems;
•
monitoring strategic risk
management systems, including
review of processes for identifying
areas of significant business risk,
including those associated with legal
compliance obligations, monitoring
risk management policies and
procedures, oversight of internal
controls and review of major
assumptions used in the calculation
of significant risk exposure;
•
reviewing and approving business
plans, the annual budget and
financial plans, including available
resources and major capital
expenditure initiatives;
•
monitoring and assessing
management’s performance
in achieving any strategies and
budgets approved by the Board;
•
approving decisions concerning the
capital of the Company, including
capital restructures;
•
reviewing and approving annual
and half-yearly statutory accounts
and other reporting and monitoring
financial results on an ongoing
basis; and
•
determining dividend policy
and declaring dividends.
The Board operates in accordance
with the principles set out in the Board
Charter. The Board Charter details the
Board’s purpose, role, responsibilities
and functions. A copy of the Board’s
Charter is obtainable upon request
from the Company Secretary.

The Board has delegated responsibility
for operation and administration of
the Company to the Managing
Director and executive management.
Responsibilities are delineated by
formal authority delegations.

Board processes

To assist in the execution of its
responsibilities, the Board has in place
an Audit Committee and a Nomination
and Remuneration Committee. These
committees have written mandates
and operating procedures, which
are reviewed on a regular basis.

Recommendation 2.4 of the ASX
Corporate Governance Council
recommendations states that the
Board should establish a nomination
committee. The Board has determined
that any recommendations required by
a nomination committee are undertaken,
as required, by the Nomination and
Remuneration Committee.

The full Board currently holds 10
scheduled meetings each year, including
strategy meetings, and any
extraordinary meetings at such other
times as may
be necessary to address any specific
significant matters that may arise.

The agenda for meetings is prepared
in conjunction with the Chairman,
Managing Director and Company
Secretary. Standing items include the

Managing Director’s report, financial
reports, strategic matters, governance
and compliance. Submissions are
circulated in advance. Executives are
regularly involved in Board discussions
and directors have other opportunities,
including visits to business operations,
for contact with a wider group
of employees.

Composition of the Board

The composition of the Board is
determined using the following
principles:

•
the Board should comprise of at
least seven directors;
•
the Board should comprise
of a majority of non-executive
independent directors; and
•
the Board should comprise of
directors with a broad range of
relevant expertise.
The Chairman of the Board is a non-
executive director. There is a Managing
Director, who is also the Chief Executive
Officer (“CEO”). It is standard practice
to have six non-executive directors,
the majority of whom are deemed to be
independent under the principles set out
below. The composition of the Board is
reviewed periodically by the Chairman
and the directors to ensure that the
Board has an appropriate mix of
expertise and experience. When a
vacancy exists, through whatever cause,
or where it is considered that the Board
would benefit from the services of a
new director with particular skills, the
Chairman, together with the Board
identifies suitable candidates with the
appropriate expertise and experience.
The Board then appoints the most
suitable candidate who must then stand
for election at the next general meeting
of shareholders. Non-executive directors
must stand for re-election each three
years. The terms and conditions of
the appointment and the retirement
of directors, including the Managing
Director, are first considered by
the Nomination and Remuneration
Committee and then recommended for
determination by the Board. A formal
letter of appointment is provided to all
incoming non-executive directors.

Directors’ independence

The Board has considered specific
principles in relation to a director’s
independence. The Board has
determined that an independent
director is a director who is not a
member of management (a non-
executive director) and who:

•
is not a substantial shareholder
of the Company or does not have
a material* beneficial interest in a
substantial shareholder of the
Company;
•
has not within the last three years
been employed in an executive
capacity by the Company or another
Group member, or been a director
after ceasing to hold any
such employment;
•
within the last three years has not
been a principal or employee of a
material* professional advisor or a
material* consultant to the Company
or another Group member;
•
is not a material* supplier or customer
of the Company or another Group
member, or an officer of or
otherwise associated, directly or
indirectly, with a material* supplier
or customer;
•
must have no material* contractual
relationship with the Company or
another Group member other than
as a director of the Company; and
•
is free from any interest and any
business or other relationship
which could, or could reasonably
be perceived to, materially* interfere
with the director’s ability to act in
the best interests of the Company.
*
The Board considers, “material”,
in this context, to be where any
director-related business relationship
has represented, or is likely in the
future to represent, the lesser of at
least 10% of the relevant segment’s
or the director-related business’s
revenue. The Board considered
the nature of the relevant industries’
competition, and size and nature
of each director-related business
relationship, in arriving at this
threshold.
Two directors of the Company are also
directors of Carlton Investments Limited
(“Carlton”), which is a substantial
shareholder of the Company. Carlton
is a publicly listed company that holds
a wide portfolio of investments. The
Board has considered the question
of independence of the director of
Carlton who does not have a substantial
beneficial shareholding in his own right.
The Board has concluded that, as the
nature of Carlton’s business is in no way
similar to the businesses of the Group,
the sole holding of a directorship in
Carlton should not impact on the ability
and willingness of a director to

effectively review and challenge the
performance of management and
exercise independent and objective
judgement for the benefit of all
shareholders of the Company.

Chairman and Managing Director

The Chairman is responsible for leading
the Board, ensuring that Board activities
are organised and effectively conducted
and for ensuring directors are properly
briefed for meetings. The Managing
Director is responsible for implementing
Group strategies and policies.

Recommendation 2.2 of the ASX
Corporate Governance Council
recommendations states that the
Chairman should be an independent
director. The Chairman, AG Rydge, is
not considered an independent director
due to the substantial shareholding
clause. Mr Rydge was previously
Chairman and Managing Director of the
Company until retiring from the position
of Managing Director on 31 December
2001. The Board has determined that
the chairmanship of Mr Rydge is of
significant benefit to the Company and
the Group due to his long standing
contribution to, and association
with, the Company and extensive
knowledge of the film, hospitality
and tourism industries. Mr Rydge has
been non-executive Chairman since
1 January 2002.

Conflict of interest

In accordance with the Corporations Act
2001 and the Company’s Constitution,
directors give standing notice on
appointment of any interest that could
potentially conflict with that of the
Company and must keep the Board
advised of any changes. Where the
Board believes a significant conflict of
interest exists, the director concerned
does not receive the relevant Board
papers and is not present at the
meeting whilst the item is considered.

Director education

The Company has a process to educate
new directors about the nature of the
business, current issues, corporate
strategy and the Company’s
expectations of directors. All directors
are made aware of their rights to access
employees, information and resources.
Directors are encouraged to visit
facilities of the Group and meet
with management to gain a better