EVT LIMITED - Annual Report 2008 | FinancialReports.eu

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AMALGAMATED HOLDINGS LIMITED ABN 51 000 005 103

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H&JAHL IS ONE OF AUSTRALIA’S PREMIER ENTERTAINMENT, HOSPITALITY AND LEISURE COMPANIES.

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02 Chairman’s Review
17 Financial Report – Contents
04 Board of Directors
18 Directors’ Report
06 Organisational Structure
36 Financial Statements
08 Managing Director’s Review of Operations by Division
97 Directors’ Declaration
98 Independent Auditor’s Report
14 Locations
99 ASX Additional Information

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Amalgamated Holdings Limited Annual Report 2008 1

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I AM PLEASED TO PRESENT TO YOU THIS OVERVIEW OF THE OPERATIONS OF AMALGAMATED HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES (THE “GROUP”) FOR THE YEAR ENDED 30 JUNE 2008. FOR A DETAILED ACCOUNT OF THE ACTIVITIES OF THE GROUP AND A REVIEW OF THE PERFORMANCE FOR THE YEAR, I COMMEND TO YOU THE MANAGING DIRECTOR’S REVIEW OF OPERATIONS BY DIVISION CONTAINED WITHIN THIS ANNUAL REPORT.

ALAN RYDGE – CHAIRMAN

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RESULTS

The Group’s profit attributable to members was $99.4 million compared to $82.2 million in the previous year, an increase of 21%. This was an exceptional result and follows on from the 31 December 2007 half year where profit attributable to members was up 57% over the previous corresponding period.

From a profit perspective the year benefited from the strengthening in the international cinema exhibition business and an improvement of the earnings from the Hotels and Resorts and Thredbo businesses. Domestic exhibition earnings were below those of the prior year due mainly to various nonrecurring items in the prior year’s result.

The earnings from the Technology businesses, particularly Atlab, have been affected by reduced margins, the continuing decline in domestic film production activity and the initial impacts from changing technology.

The Group recorded profits from individually significant items totalling $69.1 million. The individually significant items have been detailed within the financial statements and include the profit on the sale of the Group’s equity accounted interest in Roadshow Distributors Pty Ltd, which was sold to Village Roadshow Limited in August 2007. Shareholders are aware that the Group has been associated with this business for over 30 years, however the opportunity to divest this interest has placed the Group in a financially sound position where it can now focus on its core operating businesses and future development and investment strategies. The sale did not effect the successful cinema joint venture in Australia between the Group and Village Roadshow Limited, which operates some 36 multiplex sites representing 417 screens. The sale price of $129.4 million included the extinguishment of $34.4 million in shareholder loans owing by the Group. The cash proceeds received net of the loans was $95 million. The sale represented a pretax profit on the equity accounted investment of $64.4 million.

PROPERTY

The property portfolio has long been a significant asset component of the Group and the management of, and returns from, the property division is increasing in significance each year. The Group aims to maximise the available returns from the existing property portfolio both through enhanced management and, where appropriate, development.

The Group recently announced the purchase of the Gold Coast International Hotel, a 296 room hotel located at Surfers Paradise in Queensland. The purchase cost was $56.5 million and the acquisition reflects the Group’s policy to build the existing property portfolio when suitable opportunities are presented.

The Group continues to assess development strategies and future capital requirements, including various developments at Thredbo, the Gowings and State Theatre building sites and selected redevelopment of certain owned redundant cinema sites.

RESTRUCTURE INITIATIVES

Whilst trading conditions continue to improve within Germany, the Group continues to maintain a high focus on the German operations and seeks to maximise efficiencies and enhance cost control wherever possible. The Group remains the dominant exhibitor in the German market with 70 cinema locations covering 519 screens.

2 Amalgamated Holdings Limited Annual Report 2008

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The Board is mindful of the impending impact of digital projection on both the cinema exhibition and Atlab businesses. While the digital model and the transition process are yet to be determined the Board is endeavouring to ensure that the transition process will affect the best outcome for the Group.

CORPORATE GOVERNANCE

The Board is aware of the important role that it must undertake in maintaining and upholding corporate governance standards. The Board will, as has always been the case, endeavour to achieve the highest levels of accountability and transparency in all aspects of its reporting.

Consistent with these standards, the Board and Committees continue to be progressive in maintaining a corporate governance culture of which shareholders can rely. The Board and Committees continue to review, assess and, where applicable, implement practices to ensure the Group’s compliance with its legal, statutory and corporate governance requirements.

BOARD OF DIRECTORS

There have been two changes to the composition of the Board during the year. Mr John O’Neill, who was appointed to the Board in 2006, tendered his resignation as a Director of AHL in October 2007.

Mr O’Neill’s resignation was necessitated by his increased business commitments and corresponding reduction in his available time.

Mr Richard Newton was appointed to the Board on 29 February 2008. Mr Newton’s appointment was recommended to the AHL Board by the AHL Nomination and Remuneration Committee. Since his appointment, Mr Newton has contributed greatly to the Board’s deliberations and his breadth of experience, background and skills complement those of the AHL Board.

DIVIDENDS AND CAPITAL MANAGEMENT

The strength in the current year’s profits has enabled the Board to recognise shareholders with an increase in the dividend declared for the year. Directors have declared a final dividend of 19 cents per share which, in addition to the 11 cents per share dividend that was paid on 13 March 2008, brings the total dividend paid for the year to 30 cents. This equates to an increase of 7% over the previous year’s dividend of 28 cents. In declaring the dividend, the Directors continue to be mindful of the current trading environment in which the Group is operating, together with its ongoing cash requirements.

The Directors are continuing to abide by a dividend policy that will not only address the short-term needs of shareholders and the Group, but hopefully be at a level to provide longer-term continuity of earnings for both the Group and shareholders.

Capital management has always been, and remains, an important issue for the Board. Capital management initiatives are periodically assessed and have been incorporated into the Group’s annual strategic planning review. All capital management initiatives applicable to the Group are assessed in the context of relevant factors such as the Group’s longer term strategic plans as well as external conditions, including capital market environment and debt and equity markets.

THE FUTURE

The Board believes the Group is in a strong position at the commencement of the new financial year.

Whilst the market segments in which the various businesses operate will, from time to time, undergo changes the businesses comprising the Group are robust and, notwithstanding variable operating conditions and external factors have a solid future. We can assure shareholders that management will continue to pursue opportunities that will allow long-term earnings growth for the Group.

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Alan G Rydge Chairman Amalgamated Holdings Limited

Amalgamated Holdings Limited Annual Report 2008 3

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DIRECTORS’ QUALIFICATIONS, EXPERIENCE AND INDEPENDENCE STATUS

ALAN RYDGE

Age 56. Non-executive Chairman, Board Member since 1978, Chairman of Directors since 1980, Audit Committee Member and Nomination and Remuneration Committee Member.

Experience

A company director with 30-plus years experience in the film, hospitality, leisure and tourism industries. Joined the Greater Union group in 1971 and was formerly the Group Managing Director.

Directorships

Mr Rydge is also a director of the listed company, Carlton Investments Limited (appointed 1980, chairman since 1980).

In addition, Mr Rydge is chairman of Enbeear Pty Limited and Alphoeb Pty Limited.

THOMAS FORD

FAICD

Age 69. Independent Nonexecutive Director and Board Member since 1993.

Experience

A company director and Investment Banker. 40-plus years of banking and financerelated experience. Previous directorships include Resolute Mining Limited and Australian Pipeline Trust.

Directorships

Directorships of other listed companies, held during the last three years, include:

Resolute Mining Limited (appointed 2001); and
Australian Pipeline Trust (appointed 1999 and resigned 2004).

In addition, Mr Ford is Chairman of Resimac Limited.

ROBERT GRAHAM

DAVID SEARGEANT

BE Sydney, MBA Harvard, FAICD

Age 58. Managing Director, Board Member since 2001 and appointed Managing Director in January 2002.

Age 71. Independent Nonexecutive Director, Board Member since 1990, Audit Committee Member and Nomination and Remuneration Committee Member.

Experience

Managing Director with 30-plus years experience in the hospitality and leisure industries. Former managing director of Rydges Hotels group (1988 – 2002) and the Greater Union group (2000 – 2002).

Experience

A company director with 40-plus years experience as a management consultant and senior executive. Former group general manager and director of Consolidated Press Holdings Limited and managing director of Samuel Taylor.

Directorships

Mr Seargeant held the following directorships during the year:

director of Atlab Holdings Pty Limited;

Directorships

Mr Graham was a former • director of Roadshow director of the Australian Distributors Pty Limited Institute of Company Directors (resigned August 2007); and (1998 – 2001).

director of Tourism Training Australia.

EXPLANATION OF ABBREVIATIONS AND DEGREES: AM Member in the Order of Australia; AO Officer in the Order of Australia; BA Bachelor of Arts; BE Sydney Bachelor of Engineering, The University of Sydney; Bbus (Marketing) Bachelor of Business (Marketing), Monash University; Dip Law (Syd) Diploma of Law, The University of Sydney; FAIB Fellow of The Australian Institute of Bankers; FAICD Fellow of The Australian Institute of Company Directors; FCA Fellow of The Institute of Chartered Accountants in Australia; LLM (Hons) Master of Laws (Honours); MAICD Member of The Australian Institute of Company Directors; MBA Harvard Master of Business Administration, Harvard University.

4 Amalgamated Holdings Limited Annual Report 2008

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ANTHONY CLARK

AM, FCA, FAICD

Age 69. Independent Nonexecutive Director, Board Member since 1998, Audit Committee Member and Nomination and Remuneration Committee Member.

Experience

A company director and previously practised as a Chartered Accountant. 40-plus years accounting, audit, consulting and finance-related experience.

Directorships

Directorships of other listed companies, held during the last three years, include:

Carlton Investments Limited (appointed 2000);
Cumnock Coal Limited (appointed director and chairman 2001 and resigned 2007);
Resource Pacific Holdings Limited (appointed 2008 and resigned 2008);
Ramsay Health Care Limited (appointed 1998); and
Telstra Corporation Limited (appointed 1996 and resigned 2005).

In addition, Mr Clark was previously the deputy chairman of Tourism Australia (resigned December 2006).

MEREDITH HELLICAR BA, LLM (Hons), FAICD

Age 54. Independent Nonexecutive Director, Board Member since 2003.

Experience

A company director with 20-plus years senior executive experience in the telecommunications, resources, logistics, legal services and financial services sectors. Former managing director TNT Logistics Asia, chief executive officer of Corrs Chambers Westgarth and managing director of InTech Financial Services Limited. Previous directorships include Southern Cross Airports Group, HLA Envirosciences, AurionGold Limited, NSW Treasury Corporation, HCS Limited and the NSW Environment Protection Authority.

Directorships

Directorships of other listed companies, held during the last three years, include:

AMP Limited (appointed 2003);
James Hardie Industries NV (appointed 2001 and resigned 2007).

In addition, Ms Hellicar held the following positions during the year:

chairman and director of The Sydney Institute (retired as Chairman in April 2008); and

RICHARD NEWTON

Bbus (Marketing), MAICD

Age 48. Independent Nonexecutive Director and Board Member appointed 29 February 2008.

Experience

A company director with 20-plus years senior executive experience in property investment and development, specifically in hotel operations.

Directorships

Mr Newton held the following positions during the year:

director of Selpam (Australia) Pty Limited (managing director appointed May 1990 and resigned November 2007 and appointed chairman December 2007) and a director of various companies wholly owned by Selpam (Australia) Pty Limited;
chairman of Capricorn Village Joint Venture, WA;
director of Carlton Football Club; and
director of Mobileworld Communications Pty Limited (Crazy John’s).

JOHN O’NEILL AO

Dip Law (Syd), FAIB, FAICD

Age 57. Mr O’Neill resigned as a Director on 11 October 2007. Prior to resignation, Mr O’Neill held the position of Independent Non-executive Director and Board Member and was appointed 14 December 2006.

Experience

A company director and sports management executive with 30-plus years of banking, international sports management and consumer markets and consumer response experience. Former executive director of STW Group Limited, chief executive officer of Football Federation Australia, managing director and chief executive officer of Australian Rugby Union Limited (1995 - 2004) and managing director of State Bank of New South Wales.

Directorships

Directorships of other listed companies, held during the last three years, include:

STW Group Limited (appointed 2006 and resigned 2007).

In addition, Mr O’Neill was reappointed (in June 2007) as managing director and chief executive officer of Australian Rugby Union Limited.

director of the Garvan Institute Foundation.

Amalgamated Holdings Limited Annual Report 2008 5

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AHL ENTERTAINMENT

Greater Union Cinemas

Australia’s leading cinema exhibitor, operating cinemas in major regional centres and every mainland capital.

Birch, Carroll & Coyle Cinemas The dominant cinema exhibitor in Queensland and the Northern Territory.

International Cinemas

Operates under the Cinestar brand with extensive cinema exhibition interests in Germany and the Middle East.

AHL ENTERTAINMENT TECHNOLOGY

Atlab

50% interest in the Atlab group, Australia’s largest film processing and duplicating laboratory. Atlab also offers pre and post-production facilities including sound, digital and optical effects.

Atlab Image & Sound Technology

Provides supply and installation of cinema audio and visual equipment.

Filmlab

State Theatre

2,000-seat performance theatre and function facilities located in the heart of the Sydney CBD.

Manufacture and supply of film processing equipment.

Cinesound Movietone Productions

A joint venture with Fox, providing custody and maintenance of archival newsreel and film footage.

6 Amalgamated Holdings Limited Annual Report 2008

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AHL STRATEGIC INVESTMENTS

Property

Extensive property holdings including cinema, hotel and long-term commercial and retail property investments.

AHL HOSPITALITY & LEISURE

Rydges Hotels & Resorts

Owner and operator of hotels and resorts in Australia, New Zealand, the United Arab Emirates, the United Kingdom and Qatar.

Thredbo Alpine Resort

Australia’s premier alpine resort destination offering a unique summer and winter experience. The activities include the operation of the ski resort, property development and management, and accommodation management.

Featherdale Wildlife Park

Located in western Sydney and is home to Australia’s largest collection of native fauna.

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Amalgamated Holdings Limited Annual Report 2008 7

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DAVID SEARGEANT MANAGING DIRECTOR

ENTERTAINMENT Cinema Exhibition — Domestic

As at 30 June	2008	2007	Movement
Cinema Locations*	54	56	(2)
Cinema Screens*	461	467	(6)

Owned, joint venture and managed cinema sites.

Domestic Exhibition achieved an

The top grossing films for the year were Harry Potter and the Order of the Phoenix and The Simpsons Movie with each achieving in excess of $30 million at the Australian Box Office. Other major contributors were Indiana Jones and the Kingdom of the Crystal Skull , Sex and the City , I Am Legend and The Bourne Ultimatum , with each film grossing in excess of $20 million at the Australian Box Office.

increase in Box Office of $5,962,000 representing growth of 3.4% on a same screen basis compared to the prior year. The result was due largely to a stronger performance in the first half, and an increase in the Average Admission Price of 2.4%. Whilst Domestic Exhibition earnings experienced a decline to the prior year, the comparable period was positively impacted by several property asset sales and the write back of prior period provisions totalling $3,929,000.

8 Amalgamated Holdings Limited Annual Report 2008

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Merchandising revenue continued to show strong growth with a 9% increase in spend per customer. This result was primarily driven by the continuing significant success of the Gold Class concept with total revenues for Gold Class up by 35.3% on the prior year. Initiatives designed to enhance the customer experience by booking online, saw the number of customers using this channel increasing by 33% on the prior year. Similarly, the broadening of retail sales channels for gift card products and a strong focus on corporate sales resulted in a 22% increase in the sales of these products.

The Group undertook a major refurbishment of the George Street Cinema Complex during the year. This refurbishment, which was completed in December 2007, included retrofitting six screens to incorporate two giant G-Max screens and four Gold Class auditoria and a stylish Gold Class lounge. Redevelopment of the ticketing, foyer and food and beverage offering was completed in March 2008.

The Group also commenced a digital cinema test at George Street in April, where d-cinema systems were deployed in all 16 screens, making it the first fully digital cinema complex to operate in Australia. To date, the test has proven successful, and has provided valuable insights with respect to operating in an all-digital environment.

During the year the Group closed two sites, the three screen complex at Canberra Civic and a two screen drive-in located at Bass Hill. The Canberra site is currently being redeveloped as a seven level commercial office development and will be retained by the Group as an investment property, while the Bass Hill site is awaiting development approval for a residential sub-division.

The contribution from the Group’s 50% interest in the Village managed circuit in Victoria increased by 37% over the prior year. This improvement was largely due to the closure of the loss making sites at Waverly Gardens and Dandenong and to growth in same screen trading levels due to a higher number of school holidays in Victoria during the year compared to other states and to the prior year.

Amalgamated Holdings Limited Annual Report 2008 9

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Cinema Exhibition — International

As at 30 June	2008	2007	Movement
Cinema Locations*	74	74	—
Cinema Screens*	559	564	(5)

Owned, joint venture and managed cinema sites.

Germany

The Group’s cinema exhibition circuit in Germany again showed an improved result over the prior year assisted by the further reduction in the level of operating costs.

Whilst Box Office revenue remained at a level consistent with the prior year an increase in merchandising revenue contributed to the growth in total revenue. In addition revenues increased from the promotion and management of in-cinema functions and events through the wholly owned Red Carpet Event business.

After a weaker first half, the first three months of the 2008 calendar year produced a significant growth in admissions with a number of German productions performing strongly, including Keinohrhasen and Die Welle . I am Legend also performed strongly during this period. The box office performance over the last quarter of the financial year was disappointing with a lack of quality film product and the trading for June being impacted by the European Football Championship.

Other films that performed strongly in the German market during the financial year were Harry Potter and the Order of the Phoenix, Ratatouille, The Simpsons Movie, Indiana Jones and the Kingdom of the Crystal Skull, The Golden Compass and Sex and the City .

Middle East

The Middle East cinema business continued to perform strongly. Box Office was ahead of prior year by 17%. Merchandising revenue grew by 20% in total as a result of both growth in admissions of 14.2% and the increase in spend per admission of 5.4%. Online ticketing was introduced in February 2008, and by June, the percentage of tickets sold through this channel had attained 1.5%.

Netherlands

The Group’s 33% interest in a 10 screen multiplex at Enschede was sold during the year. The profit on the sale before income tax was $6,691,000.

10 Amalgamated Holdings Limited Annual Report 2008

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HOSPITALITY AND LEISURE Rydges Hotels and Resorts

Rydges Hotels and	Resorts
As at 30 June	2008	2007	Movement
Locations*	37	34	3
Rooms*	6,406	6,132	274

Owned and managed hotels.

The normalised result for the Hotels and Resorts business was $30,861,000 representing an increase of 22.9% on the prior year. Occupancy for the Group owned hotels was 74.7% and this represented an increase of 2.2 percentage points over the prior comparable year.

With relatively strong demand the focus was on improving yield and this resulted in the growth in the average room rate of 6% over that of the prior year. Demand was particularly strong in the major Australian mainland cities with New Zealand and regional Australia at best flat or declining when compared to the prior year.

Overall the performance of the Group’s portfolio of hotels under management was pleasing and the growth in management fee income largely reflected this.

The launch of the Rydges PriorityGuest program has been very successful with 139,000 members joining in the first year of operation. Key benefits to members include a 10% discount on the Group’s online best available rate, food and beverage discounts and rewards for frequency. The level of bookings now made online either direct or through third party websites is now in excess of 20% of all bookings with www.rydges.com achieving bookings growth of some 80% over those of the prior year.

The Rydges Rejuvenation program continued throughout the year, with a focus on the Rydges Dream Bed, LCD flat screen televisions and the launch of new breakfast concept, Rydges Rise . Also completed during the year was the major refurbishment of Rydges Melbourne with works to the exterior and entry, new foyer and the acclaimed new restaurant and bar concept, Laconda.

During the year the Group was successful in gaining new operating agreements for hotels in Brighton (opening November 2008), Adelaide (opening 2010) and Doha (opening 2010). The Group is currently developing concepts for entry within the 4.5 star boutique hotel segment and the 3.5 star business park and suburban markets.

The Group’s website rydges.com has recently launched Events at Rydges enabling customers to create and book tailored meeting and events online. Additional focus continues to be on the expansion of the hotels and resorts online booking channels both to increase market share and effectively reduce distribution costs.

Amalgamated Holdings Limited Annual Report 2008 11

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Kosciuszko Thredbo

Increased artificial snowmaking effectively negated the otherwise average natural snow conditions for the 2007 season. Thredbo achieved almost 374,000 skier days and this resulted in a significant flow-on effect for ski lessons, ski hire, retail and Thredboland.

The favourable skiing conditions helped to increase Thredbo’s share of the national market by 3.2 percentage points for the 2007 season. Other positive earnings initiatives included the maximisation of yield-per-skier, increased marketing of the shoulder periods and effective management of operating costs.

The volume of total snow throughout the ski field at Thredbo has been significantly increased due to the automation of existing snowmaking systems and the expansion of these systems has continued with Stage 3,

which includes a further thirty five guns covering the World Cup Supertrail, having been completed for the 2008 season.

With the completion of the head lease negotiation, future development will focus on the adoption and staged implementation of a 20-year master plan for the Resort.

Leisure and Attractions

Prolonged wet and unseasonal weather and a reduction in the level of inbound tourists, particularly from the Asian countries, adversely impacted the level of Featherdale’s admissions. Overall total admissions were down 4% over the previous financial year.

The State Theatre experienced improved trading conditions mainly due to an additional 18 shows which resulted in an increase in admissions of 31.9% compared to the previous financial year.

ENTERTAINMENT TECHNOLOGY

Atlab

The 50% owned Atlab group experienced a significant decline in earnings from the previous year, with an overall contraction in margins on the production of feature film and trailer prints despite only slightly reduced volumes. Earnings from the processing of negatives and post production services were also negatively impacted following the cancellation of a major feature production.

A new digital post production facility commenced operations during the year, providing telecine transfers, high definition dailies and video mastering services from within Atlab’s Lane Cove facility in Sydney.

12 Amalgamated Holdings Limited Annual Report 2008

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Atlab Image and Sound Technology

Atlab Image and Sound Technology contributed a satisfactory underlying trading performance for the year, with further growth in spare parts sales. Earnings were however impacted by a write-down in the value of film based inventories as the industry moves towards digitisation.

Filmlab

Filmlab Engineering produced an improved result following a strong lift in processor sales for the year, which more than offset a decline in spare parts revenue which was impacted by adverse movements in exchange rates and in increased raw material and freight costs.

STRATEGIC INVESTMENTS

Roadshow Distributors Pty Limited

The Group's 50% interest in Roadshow Distributors was sold on 15 August 2007 for consideration of $129,440,000, comprising cash proceeds of $95,000,000 and extinguishment of loans totalling $34,440,000. The profit on the sale before income tax was $64,381,000.

Property

Rental income from the Group's property portfolio increased on the prior year through general rental increases. Included in the result for this segment is a fair value decrement of $1,400,000 relating to the revaluation of investment properties. This compares to the prior year fair value increment of $4,879,000, and reflects a general softening in the valuation of commercial property assets.

Construction has commenced on a seven level commercial office development at the former cinema site at Mort Street, Canberra Civic. A precommitment leasing agreement for the entire building has been entered into.

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David C Seargeant Managing Director Amalgamated Holdings Limited

Amalgamated Holdings Limited Annual Report 2008 13

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ENTERTAINMENT

Domestic: 54 sites, 461 screens International: 74 sites, 559 screens www.greaterunion.com.au www.birch.com.au

GREATER UNION

ACT Manuka, Canberra

NSW

Bondi Junction, Sydney Burwood, Sydney Campbelltown, Sydney MEGAPLEX Castle Hill, Sydney Glendale, Newcastle Hornsby, Sydney Hurstville, Sydney Liverpool, Sydney MEGAPLEX Macquarie, Sydney Miranda, Sydney Mosman, Sydney Parramatta, Sydney Newcastle Shellharbour George Street Cinemas, Sydney Tuggerah, Central Coast Wollongong Blacktown Drive-In, Sydney

QLD

Brisbane City Regent Centre, Brisbane Brisbane City Myer Centre, Brisbane

SA

Adelaide City MEGAPLEX Marion, Adelaide Arndale, Adelaide

VIC Melbourne City

WA MEGAPLEX Innaloo, Perth Morley, Perth

BIRCH CARROLL & COYLE

NSW

Coffs Harbour Lismore

NT

Casuarina Darwin City

QLD

Australia Fair, Gold Coast Browns Plains, Brisbane Cairns Central Cairns City Capalaba, Brisbane Carindale, Brisbane MEGAPLEX Chermside, Brisbane Coolangatta, Gold Coast Earlville, Cairns

MEGAPLEX Garden City, Brisbane Grand Central, Toowoomba MEGAPLEX Indooroopilly, Brisbane Ipswich City Mackay City Mt Pleasant, Mackay Maroochydore, Sunshine Coast Morayfield, Brisbane Pacific Fair, Gold Coast Robina, Gold Coast North Rockhampton Strathpine, Brisbane The Strand, Toowoomba Townsville City

CINESTAR

Germany United Arab Emirates www.cinestarcinemas.com www.cinestar.de

STATE THEATRE

Sydney, NSW www.statetheatre.com.au

14 Amalgamated Holdings Limited Annual Report 2008

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ENTERTAINMENT TECHNOLOGY

ATLAB

Sydney, NSW Melbourne, VIC Gold Coast, QLD Auckland, NZ www.atlab.com.au

ATLAB IMAGE & SOUND TECHNOLOGY

Sydney, NSW Melbourne, VIC Adelaide, SA Brisbane, QLD Perth, WA Auckland, NZ

FILMLAB

Sydney, NSW www.filmlab.com.au

HOSPITALITY & LEISURE

RYDGES HOTELS & RESORTS

Rydges Central Reservations Toll Free 1300 857 922

www.rydges.com

AUSTRALIA

Rydges South Park, Adelaide Rydges South Bank, Brisbane Rydges Tradewinds, Cairns Rydges Esplanade Resort, Cairns Rydges Plaza, Cairns Rydges Oasis Resort, Caloundra Rydges Capital Hill, Canberra Rydges Lakeside, Canberra Rydges Eagle Hawk Resort, Canberra Rydges Hobart Rydges Melbourne Rydges North Melbourne Rydges on Bell, Preston, Melbourne Rydges on Swanston, Melbourne Rydges Kalgoorlie Rydges Perth Rydges Gladstone Rydges Sabaya Resort, Port Douglas Rydges Southbank Townsville Rydges Bankstown, Sydney Rydges Campbelltown, Sydney Rydges Camperdown, Sydney Rydges Cronulla, Sydney Rydges North Sydney Rydges Parramatta, Sydney Rydges World Square, Sydney Rydges Port Macquarie Rydges Wollongong Thredbo Alpine Hotel & Apartments

Gold Coast International, Surfers Paradise Capricorn International Resort, Yeppoon Capitol Square Hotel, Sydney Castaways Resort on Mission Beach

NEW ZEALAND

Rydges Auckland Rydges Christchurch Rydges Lakeland Resort, Queenstown Rydges Rotorua

UNITED ARAB EMIRATES

Rydges Plaza Dubai

QATAR

Rydges Plaza Doha

UNITED KINGDOM

Rydges Kensington Plaza, London

THREDBO ALPINE RESORT

Thredbo, NSW www.thredbo.com.au

FEATHERDALE WILDLIFE PARK Doonside, NSW

www.featherdale.com.au

AHL CORPORATE

49 Market Street Sydney, NSW 2000 Phone (02) 9373 6600

www.ahl.com.au

Amalgamated Holdings Limited Annual Report 2008 15

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FOR THE YEAR ENDED 30 JUNE 2008 AMALGAMATED HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

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16 Amalgamated Holdings Limited Annual Report 2008

Directors’ Report	18	20. Other non-current assets	67
Lead Auditor’s Independence Declaration	35	21. Payables	67
Income Statements	36	22. Interest bearing liabilities and
Balance Sheets	37	borrowings	67
		23. Financing arrangements	68
Statements of Changes in Equity	38	24. Provisions	68
Statements of Cash Flows	39	25. Other liabilities	70
Notes to the Financial Statements	40	26. Share capital	70
1. Significant accounting policies	40	27. Reserves and retained earnings	71
2. Segment reporting	47	28. Financial risk management	72
3. Revenue and other income	51	29. Employee benefits	79
4. Profit before income tax	52	30. Commitments and leases	81
5. Discontinued operations	54	31. Contingent assets and liabilities	82
6. Auditors’ remuneration	54	32. Deed of cross guarantee	84
7. Taxation	55	33. Acquisition and disposal of
8. Dividends	59	businesses and subsidiaries	86
9. Earnings per share	60	34. Particulars in relation to
		consolidated entities	87
10. Cash and cash equivalents	60
		35. Investments in associates	88
11. Receivables	60
12. Inventories	61	36. Investments in partnerships	90
		37. Director and executive disclosures	91
13. Other current assets	61
14. Other financial assets	61	38. Related parties	95
		39. Reconciliation of cash flows
15. Available-for-sale financial assets	62	from operating activities	96
16. Investments accounted for using the equity method	62	40. Events subsequent to reporting date	96
17. Property, plant and equipment	62	Directors’ Declaration	97
18. Investment properties	65	Independent Auditor’s Report	98
19. Goodwill and other intangible assets	66	ASX Additional Information	100

Amalgamated Holdings Limited Annual Report 2008 17

Directors’ Report

The directors present their report together with the financial report of Amalgamated Holdings Limited (“Company” or “Parent Entity”) and the consolidated entity (the “Group”), being the Company and its controlled entities, for the year ended 30 June 2008 and the auditors’ report thereon.

CONTENTS OF DIRECTORS’ REPORT

CONTENTS OF DIRECTORS’ REPORT
	Page
Directors	18
Directors’ meetings	18
Company Secretary	18
Principal activities	18
Significant changes in the state of affairs 19
Operating and financial review	19
Review of operations by division	20
Strategic plans by division	20
Dividends	22
Events subsequent to reporting date	22
Likely developments	22
Directors’ interests	22
Indemnification and insurance of
directors and officers	22
Officers who were previously partners
of the audit firm	22
Remuneration report — audited	22
Corporate governance statement	30
Auditor independence	33
Non-audit services provided by KPMG	33
Rounding off	34

DIRECTORS

The directors of the Company in office at any time during or since the end of the year are:

Mr AG Rydge (Chairman);

Mr AJ Clark (Lead independent director);

Mr TC Ford; Mr RM Graham; Ms M Hellicar; Mr RG Newton (appointed 29 February 2008); Mr JA O’Neill (resigned 11 October 2007); and

Mr DC Seargeant (Managing Director).

Particulars of the qualifications, experience and independence status of each director, as at the date of this report, are set out on pages 4 and 5 of the Annual Report.

DIRECTORS’ MEETINGS

The number of directors’ meetings (including meetings of committees of directors) and the number of meetings attended by each of the directors of the Company during the financial year are:

year are:
Full Board of Directors meetings	Audit Committee meetings	Nomination and Remuneration Committee meetings
Number of meetings held: 10	4	7
Number of meetings attended: AG Rydge 10 AJ Clark 10 TC Ford 9 RM Graham 10 M Hellicar 10 RG Newton (appointed 29 February 2008) 3 JA O’Neill (resigned 11 October 2007) 3 DC Seargeant 10	4 4 —(a) 4 —(a) —(a) —(a) 4(b)	7 7 —(a) 7 —(a) —(a) —(a) 5(b)

(a) Reflects non-requirement to attend meetings.

(b) Attended committee meetings by invitation.

COMPANY SECRETARY

Mr GC Dean CA, ACIS was appointed to the position of Company Secretary for Amalgamated Holdings Limited in December 2002. GC Dean was Accounting Manager for the Company (2001 — 2002) and was previously employed by an international mining corporation and a regional accounting practice. GC Dean is a Chartered Accountant and a member of Chartered Secretaries Australia.

PRINCIPAL ACTIVITIES

The principal activities of the Group during the course of the year were:

motion picture exhibition in cinemas and drive-in theatres;
ownership of cinema, drive-in, office and retail properties;
operation of hotels, resorts and restaurants and ownership of hotel properties;
ownership and operation of Thredbo Alpine Resort;
ownership and operation of Featherdale Wildlife Park;
ownership and operation of the State Theatre, Sydney;
supply of theatre and film laboratory equipment;
operation of a film processing laboratory and post-production facility; and
investment in shares in various listed and unlisted companies.

During the year the Group disposed of its interest in Roadshow Distributors Pty Limited (“Roadshow Distributors”). Further details of this transaction is outlined in the significant changes in the state of affairs and detailed below.

There were no other significant changes in the nature of the activities of the Group during the year.

18 Amalgamated Holdings Limited Annual Report 2008

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

The significant change in the state of affairs of the Group during the year included the sale of the Group’s interest in Roadshow Distributors which was announced on 15 August 2007. Prior to the sale Roadshow Distributors was an equity accounted associated company. The consideration received was $129,440,000, comprising cash proceeds of $95,000,000 and extinguishment of loans totalling $34,440,000. The profit on the sale before income tax was $64,381,000.

OPERATING AND FINANCIAL REVIEW Overview of the Group

The Group achieved profit before income tax and minority interest of $146,823,000 (2007: $102,432,000) being 43.3% above the prior year result. The profit included a gain on the sale of the Group’s equity accounted interest in Roadshow Distributors of $64,381,000 ($37,977,000 net of income tax). The gain was announced to the market in August 2007 and has been recorded as an individually significant item.

The normalised result, being profit before individually significant items, discontinued operations, minority interest and income tax was $75,623,000 (2007: $65,777,000) and represented an increase of $9,846,000 or 15% above the prior year result. Net profit after individually significant items and income tax was $99,369,000 and compares to a profit of $82,195,000 in the previous year, an increase of 20.9%.

2008	2007
Dis- Individually Normalised continued significant *result operations items**	Dis- Individually Normalised continued significant Total result operations items Total*
$’000 $’000 $’000	$’000 $’000 $’000 $’000 $’000
Entertainment Cinema Exhibition Domestic 34,293 — — Cinema Exhibition International 6,297 — 8,957 Hospitality & Leisure Hotels 30,861 — — Thredbo Alpine Resort 14,938 — — Leisure/Attractions 974 — — Entertainment Technology Atlab Holdings Pty Limited 169 — (4,253) Technology — other 3 — — Strategic Investments Other Available-for-sale investments 402 — — Property 2,744 — — Unallocated revenues and expenses (13,059) — — Discontinued operations Roadshow Distributors — 2,115 64,381 Pier 26 Bar and Café — — —	34,293 36,667 — (2,590) 34,077 15,254 1,526 — (3,300) (1,774) 30,861 25,107 — — 25,107 14,938 13,312 — (1,424) 11,888 974 771 — — 771 (4,084) 2,705 — — 2,705 3 313 — — 313 402 430 — 20,356 20,786 2,744 8,415 — — 8,415 (13,059) (10,676) — — (10,676) 66,496 — 15,112 — 15,112 — — 1,025 7,476 8,501
77,622 2,115 69,085 Finance revenue 3,354 — — Finance costs (5,353) — —	148,822 78,570 16,137 20,518 115,225 3,354 1,312 — — 1,312 (5,353) (14,105) — — (14,105)
Normalised result 75,623 2,115 69,085	146,823 65,777 16,137 20,518 102,432 (20,904) (19,928) (26,404) (333) 99,515 82,171 (146) 24 99,369 82,195
Income tax expense Income tax (expense)/benefit from discontinued operations Minority interest Net profit

Normalised result is profit/(loss) before individually significant items, discontinued operations, minority interest and income tax.

Amalgamated Holdings Limited Annual Report 2008 19

DIRECTORS’ REPORT CONTINUED

An analysis of the last five years is outlined below:

	AIFRS	PREVIOUS AGAAP
	2008 2007 2006 2005	2004
Total operating revenue and other income ($’000) Net profit/(loss)^ ($’000) Basic earnings per share (cents) Dividends declared ($’000) Dividends per share (cents)	619,528 628,905 614,612 598,976 99,369 82,195 59,441 45,651 77.3 64.6 47.3 36.4 38,738 35,854 30,261 23,268 30.0 28.0 24.0 18.5	481,497 (31,168) (25.0) 16,226 13.0

^ Net profit/(loss) after individually significant items, net finance costs, minority interest and income tax.

Investments

The Group acquired property, plant and equipment totalling $32,888,000 during the year. This figure excludes capital expenditure incurred through partnerships’ activities. The acquisitions were primarily attributable to the expansion of the existing cinema circuits, refurbishment requirements for the cinemas, hotels and resorts, the infrastructure and operational requirements for the Thredbo Alpine Resort.

Capital structure

During the year, 577,300 ordinary shares were issued as a result of employees exercising options granted under the Management Share Option Plan. Funds raised from the exercise of these ordinary share options amounted to $1,779,755. In addition, 473,182 performance shares were issued to employees under the Executive Performance Share Plan.

Borrowings decreased by $156,556,000 during the year. The net debt to book equity ratio has decreased to 1.5% as at 30 June 2008 (2007: 34%).

Treasury policy

The Group’s treasury function is responsible for managing interest rate and currency risks and finance facilities. The treasury department operates within policies established by the Board. The Group manages interest rate risk in accordance with a Board approved policy covering the types of instruments that can be used, and the range of protection and duration that instruments can be taken out for. Maturities of instruments to hedge interest rate risk are up to a maximum of five years. Interest rate swap contracts are generally used to swap a portion of long term borrowings at floating rates into fixed rates. The Group currently hedges interest bearing debt in EUR and NZD with cover at 30 June 2008 extending to June 2010 in EUR and December 2009 in NZD. At 30 June 2008, the Group had 52% (2007: 56%) of debt hedged.

The Group enters into a small number of forward contracts to hedge a proportion of anticipated purchase and sales commitments denominated in foreign currencies, principally US dollars.

Liquidity and funding

The Group’s main bank facilities comprise of:

A$160,000,000 of revolving multicurrency loan facilities;
A$70,000,000 of cash advance facilities which are rolling 364-day facilities; and
A$38,750,000 of credit support facilities (for the issue of letters of credit and bank guarantees).

All the above facilities mature on 10 July 2012. Under the revolving multicurrency facilities amounts can be borrowed either in Australian dollars, New Zealand dollars, Euro or United States dollars.

In addition to the above facilities, the Group has a total of A$5,050,000 in overdraft limits to support its transactional banking facilities. All facilities are secured by specific property mortgages over a number of the Group’s properties and are supported by interlocking guarantees by defined Group entities.

Additionally, wholly owned subsidiaries in Germany have working capital and bank guarantee facilities totalling c9,920,000 (A$16,273,000), supported by a letter of credit and bank guarantees drawn under the Credit Support facility in Australia, and a further c5,340,000 (A$8,760,000) working capital and bank guarantee facility which is supported by the Company.

Use of funds under the Group’s main bank facilities is limited by certain undertakings, however it is considered that the Group has sufficient bank facilities available to meet any investment opportunities and seasonal fluctuations in working capital requirements.

Cash flows from operations

Operating net cash inflows increased to $103,002,000 from $63,051,000 in the year to 30 June 2007. This increase was mostly attributable to higher receipts, higher distribution from associates and partnerships, reduced borrowing costs as a result of lower debt levels and working capital movements.

Impact of legislation and other external requirements

There were no changes in environmental or other legislative requirements during the year that have significantly impacted the results of operations of the Group.

REVIEW OF OPERATIONS BY DIVISION

The Managing Director’s review of operations is set out on pages 8 to 13.

STRATEGIC PLANS BY DIVISION

The Group’s strategic plan, which includes future expansion, will depend on industry, economic and political conditions, the potential impact of global events, the future financial performance and available capital, the competitive environment, evolving customer needs and trends, and the availability of attractive opportunities. It is likely that the Group’s strategies will continue to evolve and change in response to these and other factors, and there can be no absolute assurance that these current strategies, as detailed below, will be achieved.

ENTERTAINMENT

The strategic plans for Entertainment are applicable to both the domestic and international cinema businesses.

Cinema Exhibition — Domestic and International Enhancing the customer experience

Whilst the Group has no control over the general audience appeal of available films, providing consumers with a demonstrably superior experience in the cinema to that which can be achieved in the home, is a central strategic platform. To provide this enhanced cinema experience the Group will pursue the following strategies:

expansion of the Gold Class cinema concept to certain cinema locations within the Australian domestic circuit;

20 Amalgamated Holdings Limited Annual Report 2008

expansion of the G-Max cinema concept which provides the ultimate big screen cinema experience through larger screens and seats than a traditional auditorium;
the refurbishment of existing cinemas to improve the customer experience and maximise food, beverage and other revenue opportunities; and
enhanced customer communication and ticketing through online assets.

Maximising returns from existing locations

The cinema exhibition markets in Australia, and those international locations in which the Group currently operates, are considered to be mature markets with limited growth and expansion opportunity. The Group anticipates achieving growth primarily through further expansion of the Gold Class concept building higher frequency through loyalty and further cost improvements.

Rationalising under-performing cinema sites

The Group will continue to pursue the policy of rationalising under-performing cinema sites. All sites, in all territories, are reviewed periodically and, where it is assessed that there is limited profit or potential for performance turnaround, an exit strategy is formulated. Where the site (or group of sites) is subject to long-term leases, the exit strategy may be over a protracted period of time.

Industry developments

The Group believes that there are certain current issues pertaining to the industry that have the capacity to impact the strategic plans and future direction of the cinema operations. The Group will continue to monitor developments in relation to the following issues:

alternative film delivery methods and the rise in popularity of other forms of entertainment (including DVD ownership and the increase of home entertainment systems);
shortening of the release window of film to DVD;
increase in capital expenditure resulting from the development of digital technologies for film exhibition; and
increase in unauthorised recording (piracy) of audio and visual recordings for commercial sale.

HOSPITALITY AND LEISURE Rydges Hotels and Resorts

Enhancing the guest experience

The Group will continue to provide hotel guests with quality 4 star accommodation that consistently delivers a product and service that meets or exceeds guest expectations. To provide this the Group will continue to pursue the following strategies including:

the rejuvenation of all aspects of the hotel business to ensure Rydges’ reputation continues to grow and is enhanced. The rejuvenation programme includes innovations and initiatives relating to products and guest room facilities including the Rydges Dream Bed, Rydges Rise Breakfast and enhanced in-room work and entertainment areas;
the continued expansion of, and maintaining a leadership position in, the online booking capabilities for guests. The Rydges PriorityGuest program and the sales and revenue structure are important support functions for the online strategy;
continuing to improve guest experience by ensuring Group policies encourage, train and support staff to ensure appropriate service delivery.

Increasing the number of hotel rooms

The Group will continue to seek opportunities for future growth through the gaining of new hotel management agreements and freehold acquisitions.

Maximising returns from existing locations

The Group anticipates achieving continuing improvements in results through growth in revenues, effective cost control and, most importantly, a continued focus on the people aspects of the business.

Thredbo Alpine Resort — Kosciuszko Thredbo

Premier holiday destination

The key strategy for the Thredbo Alpine Resort is to maintain the facility as one of the premier Australian holiday destinations. This strategy includes:

continuing to ensure the popularity, highquality and ambience of the winter-time resort facility;
expansion of snow making automation to minimise risks in poor seasons;
increasing the summer and shoulder visitations by both leisure and conference guests; and
ensuring that the environmental integrity of the Resort is maintained and, where possible, improved.

Maximising returns from existing facility

The Group anticipates that the Resort will achieve growth through shoulder periods, summer revenue and cost improvements, increased visitation and increased occupancy rates.

ENTERTAINMENT TECHNOLOGY

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

Atlab, Image and Sound Technology and Filmlab

Maintaining pace with technological advances

The impact of, and transition to, digital technology is delivering significant change to the traditional film-based post production processes. The transition has necessitated significant capital investment in order to maintain Atlab as a market leader full-service Australian laboratory. The future impact of digital technology will impact the print business as the digitilisation of Australian cinemas gathers momentum. The transition process is expected to occur over the next one to three years.

The Group’s continuing investment in the Atlab business is currently under review.

Maximising returns from existing businesses

With pressure on release print margins the short term focus is on restructuring business processes to reduce the level of operating costs.

Industry developments

The Group expects that a digital platform will replace the current 35mm film release printing process over the next one to three years. The Group is assessing potential income streams from digital distribution to partially offset the loss of income from traditional film-based processes.

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.

Amalgamated Holdings Limited Annual Report 2008 21

DIRECTORS’ REPORT CONTINUED

DIVIDENDS

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

				Tax
	Per	Total		rate for
	share	amount	Date of	franking
Type	Cents	$’000	payment	credit
Declared and paid during the year:
Final 2007 — Ordinary shares	18	23,061	20 September 2007	30%
Interim 2008 — Ordinary shares	11	14,202	13 March 2008	30%
		37,263
Declared after the end of the year:
Final 2008 — Ordinary shares	19	24,536	25 September 2008	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

On 28 August 2008 the Company announced it had entered into a contract for the acquisition of the Gold Coast International Hotel for a purchase price of $56,500,000, with expected settlement to occur on or around 10 September 2008.

Other than the matter noted 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 held by
		companies in
		which a director
	Ordinary shares	has a beneficial	Options held
Director	held directly	interest *	directly
AG Rydge	1,526,455	56,165,337	—
AJ Clark	40,000	—	—
TC Ford	—	10,000	—
RM Graham	10,626	—	—
M Hellicar	—	2,000	—
RG Newton	3,000	—	—
DC Seargeant	280,500	190,000	500,000

Relevant interest under the Corporations Act 2001 differs from the disclosure required under Australian Accounting Standards as presented in Note 37 in the Financial Report.

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, RG Newton 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

22 Amalgamated Holdings Limited Annual Report 2008

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 of the Financial Report.

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 30 November 2007 when shareholders approved an aggregate remuneration of $1,100,000 per year. Non-executive directors do not receive any performancerelated 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 and the Nomination and Remuneration Committee. The payment of an additional fee recognises the additional time commitment required by directors who serve on those committees. Directors’ base

fees are presently $90,000 per annum (Chairman: $235,000 per annum inclusive of committee fees). Directors’ fees cover all main board activities. Non-executive director members who sit on both the Audit Committee and Nomination and Remuneration Committee receive an additional payment of $14,000 per annum (Chairman of both the Audit Committee and Nomination and Remuneration Committee: $28,000 per annum).

The remuneration of non-executive directors for the year end 30 June 2008 is detailed on page 26 in this report.

The Company also has a Directors’ Retirement Plan. The Directors’ Retirement Plan was suspended in respect of any new director appointments, on 15 May 2003 and directors appointed to the Board after that date are not entitled to participate in the Directors’ Retirement Plan. Under the Directors’ Retirement Plan, directors with more than three years service receive a retirement lump sum based on the length of service. The plan benefits accrue on a monthly basis and reach the maximum amount after 12 years service. The benefit is capped to a maximum lump sum per director of $165,000. There were no benefits paid under the plan during the year ended 30 June 2008.

The amounts accrued in respect of the Directors’ Retirement Plan are as follows:

	2008	2007
Director	$	$
AJ Clark	165,000	165,000
TC Ford	165,000	165,000
RM Graham	165,000	165,000
Total	495,000	495,000

As at 30 June 2008, the maximum benefit amount has been accrued for each participating director and no further Directors’ Retirement Plan expense accruals will occur in future years.

Managing Director and executive remuneration Objective

The Group aims to reward the Managing Director and executives with a level and mix of remuneration commensurate with their position and responsibilities within the Group, and so as to:

reward executives for Group, business unit and individual performance against targets set by reference to appropriate benchmarks and key performance indicators (“KPI’s”);
align the interests of executives with those of shareholders;
link reward with the strategic goals and performance of the Group; and
ensure total remuneration is competitive by market standards.

Structure

In determining the level and make-up of executive remuneration, the Nomination and Remuneration Committee obtains independent advice on the appropriateness of remuneration packages for executives, given remuneration trends in other companies, from which the recommendations are made to the Board.

It is the Nomination and Remuneration Committee’s policy that employment contracts are entered into with the Managing Director and other executives. Details of these employment contracts are provided on page 25.

Remuneration consists of both fixed and variable remuneration components. The variable remuneration component consists of a Short Term Incentive Plan (“STI”) and a Long Term Incentive Plan (“LTI”).

The proportion of fixed remuneration and variable remuneration (potential short term and long term incentives) is established for each senior executive by the Nomination and Remuneration Committee.

Fixed annual remuneration

Objective

Remuneration levels for executives are reviewed annually to ensure that they are appropriate for the responsibility, qualifications and experience of each executive and are competitive with the market.

The Nomination and Remuneration Committee establishes and issues an appropriate guideline for the purposes of the annual review of fixed remuneration levels. The guideline is based on both current and forecast CPI and market conditions. There are no guaranteed fixed remuneration increases in any senior executives’ contracts.

Structure

Executives have the option to receive their fixed annual remuneration in cash and a limited range of prescribed fringe benefits such as motor vehicles and car parking. The total employment cost of any remuneration package, including fringe benefits tax, is taken into account in determining an employee’s fixed annual remuneration.

Variable remuneration — short term incentive (“STI”)

Objective

The objective of the STI program is to link the achievement of the operational targets with the remuneration received by the executives charged with meeting those targets. The total potential STI available is set at a level so as to provide sufficient incentive to the executive to achieve the operational targets and such that the cost to the Group is reasonable in the circumstances.

Amalgamated Holdings Limited Annual Report 2008 23

DIRECTORS’ REPORT CONTINUED

Structure

Actual STI payments granted to each executive depend on the extent to which specific operating targets, set at the beginning of the year, are met. The operational targets consist of a number of KPI’s covering both financial and non-financial measures of performance. Typically, KPI’s and assessment criteria include:

meeting of pre-determined growth in Group earnings over the prior year;
meeting of strategic and operational objectives; and
assessed personal effort and contribution.

The company has pre-determined benchmarks which must be met in order to trigger payments under the STI. The measures were chosen as they directly align the individual’s STI reward to the KPI’s of the Group and to its strategies and performance.

On an annual basis, after consideration of performance against KPI’s, an overall performance rating for the Group and each individual business unit is approved by the Nomination and Remuneration Committee. The individual performance of each executive is also rated and all three ratings are taken into account when determining the amount, if any, of the STI pool to be allocated to each executive.

The aggregate of annual STI payments available for executives, across the Group is subject to the approval of the Nomination and Remuneration Committee. STI payments are delivered as a cash bonus.

For the Managing Director and named executives the general target bonus opportunity range is from 0% to 100% of the executives’ fixed annual remuneration. The target bonus range for the Managing Director and named executives is detailed below.

	ALLOCATED BETWEEN
Maximum STI calculated fixed annual on Executive remuneration*	Group Divisional Department Special Quantitative Qualitative earnings earnings costs projects KPI’s KPI’s
DC Seargeant 100% NC Arundel 50% GC Dean 40% MR Duff 40% HR Eberstaller 50% RD Entwistle 50% PW Horton 40%	45% — — 50% — 5% 162⁄3% 162⁄3% — — 162⁄3% — 131⁄3% — — 62⁄3% 20% — 20% — 5% 10% 5% — 162⁄3% 162⁄3% — 81⁄3% — 81⁄3% 162⁄3% 162⁄3% — 62⁄3% 10% — 15% — 21⁄2% — 5% 171⁄2%

Fixed annual remuneration is comprised of base salary, superannuation and benefits provided through salary sacrificing arrangements.

Further additional bonuses may be paid above these levels at the discretion of the Nomination and Remuneration Committee and Board, if it is assessed that an exceptional contribution has been made by an executive. No additional bonuses were awarded during the 2008 year. There is no separate profit-share plan.

Variable remuneration — long term incentive (“LTI”)

Objective

The Executive Performance Share Plan was approved by shareholders at the 2006 Annual General Meeting. The Executive Performance Share Plan was designed to link employee reward with KPI’s that drive sustainable growth in shareholder value over the long term. The objectives of the LTI plan are to:

align senior employees’ incentives with shareholder interests;
balance the short term with the long term Company focus; and
retain high calibre senior employees by providing an attractive equity-based incentive that builds an ownership of the Company mindset.
Only senior employees who are able to directly influence the long term success of the Company participate in the Executive Performance Share Plan.

Structure

Executives are awarded performance shares which will only vest on the achievement of certain performance hurdles and service conditions. An offer is made under the Executive Performance Share Plan to senior employees each financial year and is based on individual performance as assessed by the annual appraisal process. If a senior employee does not sustain a consistent level of high performance, they will not be nominated for Executive Performance Share Plan participation. The Nomination and Remuneration Committee reviews all nominated senior employees with participation subject to final Board approval. In accordance with the ASX Listing Rules, approval from shareholders is obtained before participation in the Executive Performance Share Plan commences for the Managing Director.

Each award of performance shares is divided into equal portions with each portion being subject to a different performance hurdle. The performance hurdles are based on earnings per share (“EPS”) and total shareholder return (“TSR”) growth of Amalgamated Holdings Limited as determined by the Board over a three-year period (“Performance Period”). The extent to which the performance hurdles have been met will be assessed by the Board at the expiry of the Performance Period.

The performance hurdles for the awards of performance shares to executives in the financial year ended 30 June 2008 are based on Amalgamated Holdings Limited’s EPS and TSR growth over the Performance Period of the three years from 30 June 2007 (being the “Base Year”) to 30 June 2010.

24 Amalgamated Holdings Limited Annual Report 2008

The performance hurdles are as follows:

EPS hurdle

The EPS hurdle requires that the Company’s EPS growth for the Performance Period must be greater than the target set by the Board. The EPS hurdle was chosen as it provides evidence of the Company’s growth in earnings. The hurdle is as follows:

if annual compound EPS growth over the Performance Period is less than 8%, no shares will vest with the executives;
if annual compound EPS growth over the Performance Period is equal to 8%, but less than 12%, the proportion of performance shares vesting will be increased on a pro-rata basis between 50% and 100%; or
if annual compound EPS growth over the Performance Period compared to the Base Year is equal to or greater than 12%, all of the performance shares awarded (and attaching to this hurdle) will vest with the executive.

If the EPS measure is not achieved within the initial performance measurement period to a threshold level or higher, there will be no entitlement to shares for a participant. If the EPS performance measure is achieved to a threshold level or higher in the initial period, it will not be retested.

TSR hurdle

The TSR hurdle requires that the growth in the Company’s TSR must be at or above the median of the Company’s comparator group (“comparator group”). The comparator group is the S&P/ASX 200 (excluding mining stocks). Growth in TSR is defined as share price growth and dividends paid and reinvested on the exdividend date (adjusted for rights, bonus issues and any capital reconstructions) measured from the time of issue to the time of vesting. The TSR performance hurdle was chosen as it is widely recognised as one of the best indicators of shareholder value creation. The comparator group for TSR purposes has been chosen as it represents the group with which the Company competes for shareholders’ capital. The hurdle is as follows:

if annual compound TSR growth over the Performance Period is less than the 51st percentile, no shares will vest with the executives;
if annual compound TSR growth over the Performance Period is equal to or exceeds the 51st percentile but less than 75th percentile, the proportion of performance shares vesting will be increased on a pro-rata basis between 50% and 100%; or
if annual compound TSR growth over the Performance Period is equal to or greater than 75th percentile, all of the performance shares awarded (and attaching to this hurdle) will vest with the executive.

The TSR calculation, once completed, is independently reviewed. If the TSR measure is not achieved within the initial performance measurement period to a threshold level or higher, there will be no entitlement to shares for a participant. If the TSR performance measure is achieved to a threshold level or higher in the initial period, it will not be retested.

The Board has retained the discretion to vary the performance hurdles and criteria.

Options

Prior to 17 September 2004, the Company delivered LTI grants to executives in the form of options. The last issue of options was granted on 16 September 2004. The Management Share Option Plan has since been suspended and no further grants have been made since 2004. All options on issue have vested and are currently exercisable. The details of options granted, the value of options, vesting periods and lapsed options under the LTI plan are outlined on pages 29 and 30.

Performance indices

In considering the Group’s performance and benefits for shareholders’ wealth, the Nomination and Remuneration Committee has regard to the following indices in respect of the current year and the previous four years:

	AIFRS	PREVIOUS AGAAP
	2008 2007 2006 2005 $ $ $ $	2004 $
Net profit before individually significant items, minority interest and income tax Share price (year end)	77,738,000 81,914,000 73,693,000 64,949,000 4.87 6.45 4.87 4.30	59,349,000 3.37

Employment contracts

It is the Group’s policy that employment contracts for the Managing Director and each senior executive are unlimited in term.

The employment contracts typically outline the components of remuneration paid to the Managing Director and executives but do not prescribe how remuneration levels are to be modified from year to year. Generally, remuneration levels are reviewed each year to take into account cost-of-living changes, and any change in the scope of the role performed by the senior executive and any changes required to meet the principles of the remuneration policy.

Termination provisions in the employment contracts with the named executives are summarised in the table below:

EXECUTIVE	TERMINATION BY EXECUTIVE	TERMINATION BY COMPANY	EXPIRY DATE OF CONTRACTS
DC Seargeant	The notice period is three months.	Other than for gross misconduct, the notice period for the Company is one month. On termination, the Company may make a payment in lieu of notice, equal to the notice period. The Company retains the right to terminate the contract immediately under certain conditions. On termination, the executive is entitled to accrued annual and long service benefits. There are no other termination payments. Payment of any LTI incentive (or pro-rata thereof) is at the discretion of the Board.	Not applicable, rolling contracts.
NC Arundel GC Dean MR Duff HR Eberstaller RD Entwistle PW Horton	The notice period is four weeks.

Amalgamated Holdings Limited Annual Report 2008 25

DIRECTORS’ REPORT CONTINUED

Key management personnel

Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Company and the Group, including directors of the Company and executives.

NAME	POSITION	PERIOD OF RESPONSIBILITY	EMPLOYING COMPANY
Directors
Alan Rydge	Chairman and non-executive director	1 July 2007 — 30 June 2008	(a)
Anthony Clark	Independent non-executive director	1 July 2007 — 30 June 2008	(a)
Thomas Ford	Independent non-executive director	1 July 2007 — 30 June 2008	(a)
Robert Graham	Independent non-executive director	1 July 2007 — 30 June 2008	(a)
Meredith Hellicar	Independent non-executive director	1 July 2007 — 30 June 2008	(a)
Richard Newton	Independent non-executive director	29 February 2008 — 30 June 2008	(a)
John O’Neill	Independent non-executive director	1 July 2007 — 11 October 2007	(a)
Executive Director
David Seargeant	Managing Director and Chief Executive Officer	1 July 2007 — 30 June 2008	(a)
Executives
Norman Arundel	Managing Director Rydges Hotels & Resorts	1 July 2007 — 30 June 2008	(b)
Gregory Dean	Company Secretary	1 July 2007 — 30 June 2008	(a)
Mathew Duff	Director Commercial	1 July 2007 — 30 June 2008	(a)
Hans Eberstaller	Managing Director AHL Strategic Investments	1 July 2007 — 30 June 2008	(c)
Ross Entwistle	Managing Director AHL Entertainment	1 July 2007 — 30 June 2008	(c)
Peter Horton	Director Finance & Accounting	1 July 2007 — 30 June 2008	(a)

(a) Amalgamated Holdings Limited.

(b) Rydges Hotels Limited.

Directors’ and executives’ remuneration

Details of the nature and amount of each major element of the remuneration of each director of the Company and each of the named executive officers of the Company and the Group receiving the highest remuneration are set out below. In accordance with the requirements of AASB 124 ‘Related Party Disclosures’, the remuneration tables are calculated on an accruals basis and only include remuneration relating to the portion of the relevant periods that each individual was a key management person.

	SHORT TERM	SHORT TERM	SHORT TERM	POST- EMPLOY- MENT	SHARE-BASED	SHARE-BASED	OTHER	OTHER	OTHER
	Fixed annual remun- eration and fees	STI bonuses	Non- cash benefits	Supera- nnuation contri- butions	LTI options (a)	LTI equity (b)	Movement in accrued leave enti- tlements	Retire- ment benefits	Insurance premiums (c)	Total	Prop- ortion of remuner- ation per- formance related	Value of options as a proportion of remun- eration
	$	$	$	$	$	$	$	$	$	$
Directors Non-executive AG Rydge 2008 2007 AJ Clark 2008 2007 TC Ford 2008 2007 RM Graham 2008 2007 M Hellicar 2008 2007 RG Newton(f) 2008 2007 JA O’Neill(e) 2008 2007	206,871 197,314 101,835 95,413 77,982 73,394 98,000 86,303 77,982 73,394 25,994 — 22,039 30,581	— — — — — — — — — — — — — —	— — — — — — — — — — — — — —	13,129 12,686 9,165 8,587 7,018 6,606 — 5,697 7,018 6,606 2,339 — 1,983 2,752	— — — — — — — — — — — — — —	— — — — — — — — — — — — — —	— — — — — — — — — — — — — —	— — — (d)22,580 — — — — — — — — — —	— — — — — — — — — — — — —	220,000 210,000 111,000 126,580 85,000 80,000 98,000 92,000 85,000 80,000 28,333 — 24,022 33,333	— — — — — — — — — — — — — —	— — — — — — — — — — — — — —
Executive DC Seargeant 2008 2007	1,036,871 962,314	975,000 675,000	— —	13,129 12,686	— 43,140	283,320 75,662	48,080 43,499	— —	10,032 15,056	2,366,432 1,827,357	53.2% 43.4%	— 2.4%

26 Amalgamated Holdings Limited Annual Report 2008

	SHORT TERM	SHORT TERM	SHORT TERM	POST- EMPLOY- MENT	SHARE-BASED	SHARE-BASED	OTHER	OTHER	OTHER
	Fixed annual remun- eration and fees	STI bonuses	Non- cash benefits	Supera- nnuation contri- butions	LTI options (a)	LTI equity (b)	Movement in accrued leave enti- tlements	Retire- ment benefits	Insurance premiums (c)	Total	Prop- ortion of remuner- ation per- formance related	Value of options as a proportion of remun- eration
	$	$	$	$	$	$	$	$	$	$
Executives — the Company GC Dean 2008 2007 MR Duff(g) 2008 2007 PW Horton 2008 2007	221,871 202,314 363,871 229,543 357,871 344,314	75,895 40,000 124,950 — 124,950 67,034	— — — — — —	13,129 12,686 13,129 8,457 13,129 12,686	— 5,548 — — — 5,498	21,981 5,551 36,136 9,217 35,970 9,217	2,427 32,932 18,906 42,550 9,086 32,291	— — — — — —	617 562 857 1,527 4,838 4,377	335,920 299,593 557,849 291,294 545,844 475,417	29.1% 17.1% 28.9% 3.2% 29.5% 17.2%	— 1.9% — — — 1.2%
Executives — the Group NC Arundel (i) 2008 2007 HR Eberstaller 2008 2007 RD Entwistle(h) 2008 2007	371,871 144,439 143,119 224,932 466,871 284,654	14,583 — 182,502 102,000 57,011 —	— — — — — —	13,129 5,285 12,881 12,318 13,129 8,457	— — — 5,498 — —	23,226 4,518 14,827 3,770 46,909 12,058	25,209 13,404 1,972 30,038 32,013 26,723	— — — — — —	740 210 925 834 407 315	448,758 167,856 356,226 379,390 616,340 332,207	8.4% 2.7% 55.4% 29.3% 16.9% 3.6%	— — — 1.4% — —

(a) Amounts disclosed above for remuneration relating to options have been determined in line with the requirements of accounting standard AASB 2 “Share-based Payment” and in accordance with the guidelines issued by the Australian Securities and Investments Commission. AASB 2 requires the options to be valued at the time they are granted and then to have that value apportioned in equal amounts over the period from grant date to vesting date. A value has been placed on the options using a binomial option pricing model. Factors taken into account by the binomial option pricing model include the exercise price, the term of the option, the current price and the expected price volatility of the underlying share, the expected dividend yield, the risk-free interest rate from the term of the option and market conditions. It has also been assumed that all options will eventually vest. Details of options on issue are set out under “Options” below and further details on the terms and conditions of these options is set out in Note 29 to the Financial Report.

(b) Amounts disclosed above for remuneration relating to performance shares have been determined in line with the requirements of accounting standard AASB 2 “Share-based Payment”. AASB 2 requires the measurement of the fair value of performance shares at the grant rate and then to have that value apportioned in equal amounts over the period from grant date to vesting date. A value has been placed on the performance shares using a Monte Carlo simulation model. Details of performance shares on issue are set out under “Performance Shares” below and further details on the terms and conditions of these performance shares is set out in Note 29 to the Financial Report.

(c) Amounts disclosed for remuneration of directors and named executives exclude insurance premiums paid by the Group in respect of directors’ and officers’ liability insurance contracts as the contracts do not specify premiums paid in respect of individual directors and officers. Information relating to the insurance contracts is set out within this report. The amounts disclosed in the table above relate to premiums paid by the company for group salary continuance insurance.

(d) Retirement benefits represent benefits accrued during the year. Further information is detailed in the section titled Directors’ Retirement Plan included in the non-executive directors remuneration and Corporate Governance sections of this report.

(e) JA O’Neill was appointed on 14 December 2006 and resigned 11 October 2007.

(f) RG Newton was appointed on 29 February 2008.

(g) MR Duff was appointed to the position of Director Commercial on 1 November 2006.

(h) RD Entwistle commenced employment with the Group on 13 November 2006.

(i) NC Arundel commenced employment with the Group on 29 January 2007.

Amalgamated Holdings Limited Annual Report 2008 27

DIRECTORS’ REPORT CONTINUED

Analysis of STI bonuses included in remuneration

The bonus table below is calculated on an accruals basis and only includes remuneration relating to the portion of the relevant periods that each individual was a key management person. Details of the vesting profile of the STI bonuses awarded as remuneration to the Managing Director and each of the named executive officers of the Company and the Group are detailed below:

and each of the named executive officers of the Company and the Group	are detailed below:
INCLUDED IN REMUNERATION(a)	AWARDED IN YEAR	NOT AWARDED IN YEAR(b)
$	%	%
Managing Director DC Seargeant 975,000 Executives NC Arundel(e) 14,583 GC Dean 75,895 MR Duff(c) 124,950 HR Eberstaller 182,502 RD Entwistle(d) 57,011 PW Horton 124,950	100% 33% 100% 100% 100% 50% 100%	—% 67% —% —% —% 50% —%

(a) Amounts included in remuneration for the year represents the amounts that were awarded in the year based on achievement of personal goals and satisfaction of specified performance criteria for the 2007 year. No amounts vest in future years in respect of the short-term incentive bonus schemes for the 2008 year.

(b) The amounts not awarded are due to the performance or service criteria not being met in relation to the assessment period.

(d) RD Entwistle commenced employment with the Group on 13 November 2006. The bonus awarded for the 2008 year has been apportioned to reflect the period of employment during the 2007 year.

(e) NC Arundel commenced employment with the Group on 29 January 2007. The bonus awarded for the 2008 year has been apportioned to reflect the period of employment during the 2007 year.

Analysis of LTI performance shares granted as remuneration

Details of vesting profile of the performance shares granted as remuneration to the Managing Director and named executives are detailed below:

						FAIR VALUE	FAIR VALUE
	Number	Grant date	Vested during the year	Forfeited during the year(a)	Year in which the grant vests	Performance share — EPS	Performance share — TSR
			%	%		$	$
Managing Director DC Seargeant Executives NC Arundel GC Dean MR Duff HR Eberstaller RD Entwistle PW Horton	100,000 100,000 5,972 14,739 7,337 8,996 12,183 14,433 4,982 5,972 15,938 18,376 12,183 14,203	19 Feb 2007 18 Feb 2008 19 Feb 2007 18 Feb 2008 19 Feb 2007 18 Feb 2008 19 Feb 2007 18 Feb 2008 19 Feb 2007 18 Feb 2008 19 Feb 2007 18 Feb 2008 19 Feb 2007 18 Feb 2008	— — — — — — — — — — — — — —	— — — — — — — — — — — — — —	30 Jun 2010 30 Jun 2011 30 Jun 2010 30 Jun 2011 30 Jun 2010 30 Jun 2011 30 Jun 2010 30 Jun 2011 30 Jun 2010 30 Jun 2011 30 Jun 2010 30 Jun 2011 30 Jun 2010 30 Jun 2011	6.39 6.02 6.39 6.02 6.39 6.02 6.39 6.02 6.39 6.02 6.39 6.02 6.39 6.02	4.63 4.31 4.63 4.31 4.63 4.31 4.63 4.31 4.63 4.31 4.63 4.31 4.63 4.31

(a) The % forfeited in the year represents the reduction from the maximum number of performance shares available to vest due to the performance criteria not being achieved.

28 Amalgamated Holdings Limited Annual Report 2008

Analysis of movements in performance shares

The movement during the year by value, of performance shares in the Company held by the Managing Director and each of the named executives is detailed below:

	Granted during the year (a)	Exercised during the year (b)	Forfeited during the year	Performance shares exercised	Amount paid per share
	$	$	$	Number	$
Managing Director DC Seargeant Executives NC Arundel GC Dean MR Duff HR Eberstaller RD Entwistle PW Horton	516,500 76,128 46,464 74,547 30,845 94,912 73,359	— — — — — — —	— — — — — — —	— — — — — — —	— — — — — — —

(a) The value of performance shares granted in the year is the fair value of the performance shares calculated at grant date using a Monte Carlo simulation model. The total value of the performance shares granted is included in the table above. This amount is allocated to remuneration over the vesting period.

(b) The value of performance shares exercised during the year is calculated as the market price of shares of the Company on the Australian Securities Exchange as at close of trading on the date that the performance shares were exercised.

There were no performance shares granted since the end of the year.

Analysis of LTI options granted as remuneration

No options granted as remuneration to the Managing Director and named executives vested during the year. All outstanding options vested in previous financial years. There are no options yet to vest as at 30 June 2008.

Analysis of movements in options

The movement during the year by value, of options over ordinary shares in the Company held by the Managing Director and each of the named executives is detailed below:

	Granted during the year (a)	Exercised during the year (b)	Forfeited during the year	Options exercised	Amount paid per share
	$	$	$	Number	$
Managing Director DC Seargeant Executives NC Arundel GC Dean MR Duff HR Eberstaller RD Entwistle PW Horton	— — — — — — —	700,000 — 98,700 — — — 157,000	— — — — — — —	250,000 — 30,000 — — — 55,000	2.75 — 3.21 — — — 3.35

(a) The value of options granted in the year is the fair value of the options calculated at grant date using binomial option pricing model. The total value of the options granted is included in the table above. This amount is allocated to remuneration over the vesting period.

(b) The value of options exercised during the year is calculated as the market price of shares of the Company on the Australian Securities Exchange as at close of trading on the date that the options were exercised after deducting the price paid to exercise the option.

There were no amounts unpaid on the shares issued as a result of the exercise of options. No options have been granted since 16 September 2004. There were no options granted since the end of the year.

End of audited Remuneration Report.

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
11 December 2003	30 September 2008	$3.35	463,500
17 June 2004	30 September 2008	$3.14	30,000
16 September 2004	30 September 2008	$3.72	250,000

Amalgamated Holdings Limited Annual Report 2008 29

DIRECTORS’ REPORT CONTINUED

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

As at the date of this report, there were 743,500 unissued ordinary shares under options (743,500 at reporting date). Refer to Note 29 of the Financial Report 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.

Shares issued as a result of the exercise of options

During the year, employees of the Group have exercised options to acquire 577,300 fully paid ordinary shares in the Company at a weighted average exercise price of $3.08. 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 nonexecutive 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. Nonexecutive directors must stand for reelection 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.

30 Amalgamated Holdings Limited Annual Report 2008

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, Mr 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 a 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 understanding of business operations.

Independent professional advice

Each director has the right of access to all relevant Company information and to the Group’s executives and, subject to prior consultation with the Chairman, may seek independent professional advice from a suitably qualified advisor at the Group’s expense. The director must consult with an advisor suitably qualified in the relevant field, and obtain the Chairman’s approval of the fee payable for the advice before proceeding with the consultation. A copy of the advice received by the director is made available to all other members of the Board.

Directors’ Retirement Plan

The Directors’ Retirement Plan was suspended in May 2003 and directors appointed to the Board after that date are not entitled to participate in the Directors’ Retirement Plan.

Eligible directors in office prior to the suspension of the plan in May 2003 are able to participate in the plan. Subject to the Corporations Act 2001 , those eligible directors with more than three years service receive a retirement lump sum based on the length of service. The retirement plan benefits accrue on a monthly basis and reaches the maximum amount after 12 years service. The benefit is capped to a maximum lump sum per eligible Director of $165,000. The Chairman and Managing Director are not eligible to participate in the Directors’ Retirement Plan.

Performance assessment

The Chairman annually assesses the performance of individual directors and meets privately with each director to discuss this assessment. At this same time, directors are able to provide feedback on the performance of the Chairman.

Remuneration

Nomination and Remuneration Committee

The majority of the Nomination and Remuneration Committee members are nonexecutive directors. The role of the Nomination and Remuneration Committee is to review and make recommendations to the Board in regard to appointments and remuneration including:

the appointment of the Managing Director;
the proposed remuneration strategy and package for the Managing Director and senior executives; and
succession plans for senior executives.

The Committee also acts as a nomination committee and reviews the need for appointment of new directors for recommendation to the Board and shareholders for approval.

The members of the Nomination and Remuneration Committee during the year were:

AJ Clark (Chairman) — non-executive independent director;
RM Graham — non-executive independent director; and

• AG Rydge — non-executive director. DC Seargeant — Managing Director, is invited to attend committee meetings. The Nomination and Remuneration Committee meets twice a year and further as required.

Amalgamated Holdings Limited Annual Report 2008 31

DIRECTORS’ REPORT CONTINUED

Remuneration Report

The remuneration report is set out on pages 22 to 30 and forms part of the directors’ report for the year ended 30 June 2008.

Audit Committee

The role of the Audit Committee is

documented in a Charter, which is approved by the Board. The role of the Committee is to serve as an independent and objective body to monitor the Group’s financial reporting process and internal control systems. The Committee also reviews and appraises the audit results of wholly owned entities, and associated entities, and provides an open avenue of communication between the Board, internal and external auditors, and senior executives. The Audit Committee consists of non-executive directors, the majority of whom are independent, and is chaired by an independent director who is not the Chairman of the Board. All Committee members are familiar with finance and accounting procedures.

The Audit Committee’s Charter is available on request from the Company Secretary. The members of the Audit Committee during the year were:

AJ Clark (Chairman) — non-executive independent director;
RM Graham — non-executive independent director; and

• AG Rydge — non-executive director. The Managing Director, Director Finance & Accounting, the Company Secretary, the Group Internal Audit Manager, and the external auditors are invited to attend committee meetings. Other executives may be invited to committee meetings at the discretion of the committee.

The responsibilities of the Audit Committee include:

reviewing the financial reports and other financial information distributed externally;
reviewing any new accounting policies to ensure compliance with Australian Accounting Standards and generally accepted accounting principles;
monitoring compliance with the Corporations Act 2001 , the Listing Rules and other legislative and reporting requirements;
monitoring the corporate risk assessment process;
reviewing the performance of the external auditors and approving the external annual audit fee. The external audit engagement partner was last rotated in August 2006;
liaising with the external auditors and ensuring that the annual statutory audit and half year review are conducted in an effective manner;
assessing whether non-audit services provided by the external auditor are consistent with maintaining the external auditor’s independence. Each reporting period the external auditor provides an independence declaration in relation to the audit or review;
providing advice to the Board in respect of whether the provision of the non-audit services by the external auditor is compatible with the general standard of independence of auditors imposed by the Corporations Act 2001 ;
approving the annual internal audit plan and evaluating and monitoring the internal audit function;
reviewing internal and external audit reports and ensuring appropriate followup action;
reviewing reports on frauds and theft and ensuring appropriate follow-up action;
monitoring the establishment of appropriate ethical standards; and
addressing any matters outstanding with the external auditors or statutory authorities.

The Audit Committee meets at least four times per year. The committee reviews the performance of the external auditors on an annual basis and meets with them during the year to discuss a number of matters including the external audit plan, proposed fees for audit work to be performed, half year and annual reporting and other matters as necessary. The Audit Committee, in scheduled sessions at the end of each meeting, without the presence of management, addresses questions to the external auditors and Group Internal Audit Manager on matters relating to the committee’s responsibilities. Relevant matters arising from these sessions are shared with the full Board.

Risk management

Risk profile and oversight of the risk management system

The Board oversees the establishment, implementation, and annual review of the Company’s Risk Management System. Management has established and implemented the Risk Management System for assessing, monitoring and managing operational, financial reporting, and compliance risks for the Group. Divisional Managing Directors and other senior executives complete and sign off on an annual Directors’ Risk Management Questionnaire. The operational and other compliance risk management procedures have also been assessed and found to be

operating efficiently and effectively. All risk assessments covered the whole year and the period up to the signing of the annual financial report for all material operations in the Group.

As well as the questionnaire, matters relating to the business risk and risk management system are analysed and discussed as part of the annual strategic planning process. The Board provides assistance to management in the development and maintenance of processes to minimise and mitigate business risks.

Financial reporting

The Managing Director and the Director Finance & Accounting have declared, in writing to the Board that the Company’s financial reports are founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board.

Monthly actual results are reported against budgets approved by the directors and revised forecasts for the year are prepared regularly.

Internal audit

The Group Internal Audit Manager assists the Board in ensuring compliance with internal controls and risk management programs by regularly reviewing the effectiveness of compliance and control systems. The Audit Committee is responsible for approving the program of internal audit visits to be conducted each year and the scope of the work to be performed at each location.

Code of Conduct and Ethical Standards

The Company has a Code of Conduct and Ethical Standards (“Code”), which has been endorsed by the Board and applies to all directors and employees. The Code is regularly reviewed and updated as necessary to ensure it reflects the highest standards of behaviour and professionalism and the practices necessary to maintain confidence in the Group’s integrity.

In summary, the Code encapsulates that all directors, managers and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the Group. Every employee has a nominated supervisor to whom they refer any issues arising from their employment.

The Board reviews the Code regularly and processes are in place to promote and communicate these policies.

The Company has a Whistleblowing Policy for the Australian operations. The policy is designed to support and protect employees who report non-compliant, suspicious or unethical conduct by other employees of the Group, regardless of seniority of those

32 Amalgamated Holdings Limited Annual Report 2008

involved in the alleged conduct. The policy formalises the Company’s commitment to protect the confidentiality and position of employees wishing to raise serious matters that affect the integrity of the Company and Group.

All senior management personnel are required to complete legal compliance training at least once every two years. The training covers such topics as:

contract formation and pitfalls;
indemnities in contracts;
issues relating to the Trade Practices Act 1974;
employment contracts, termination and redundancy;
harassment and discrimination;
occupational health and safety obligations; and
corporate policies, including limits of authority and overview of the Corporations Act 2001 .

Dealing in Company shares by directors and employees

The Constitution allows directors to acquire shares in the Company. It is the policy of the Company however that directors only buy or sell shares in the Company in the six-week period immediately following any price sensitive announcement including the half year and full year results, and the Annual General Meeting. Purchases outside of this period must receive the prior approval of the Board. This policy is subject to the overall restriction that persons may at no time deal in any securities when they are in possession of price sensitive information. This policy is also applicable to employees of the Group and the policy is outlined in the Code.

All directors have entered into written agreements to notify the Company Secretary when they buy or sell shares in the Company. In accordance with the provisions of the Corporations Act 2001 and the Listing Rules, the Company Secretary advises the ASX of any transactions conducted by directors in shares in the Company. This information is also reported to the Board.

Environment

The Group’s operations are subject to various environmental regulations under Commonwealth, State or Territory and other applicable legislation.

The Group has an established environmental reporting system for its environmentally sensitive businesses, which monitors compliance with existing environmental regulations and new regulations as they are enacted. The recreational and other ancillary activities conducted by those businesses are subject to various licences and legislation issued under environmental laws that apply

notification is made to the ASX of any other significant matters regarding the Group in accordance with the Listing Rules; and

in each respective location. The Board has a responsibility to ensure that robust systems are in place to manage the assets in a sustainable and responsible manner, and to ensure that the activities of each business are conducted in compliance with legislation.

the external auditor is requested to attend the Annual General Meetings to answer any questions concerning the audit and the content of the auditor’s report.

The reporting system is documented in a legal compliance manual and includes procedures to be followed should an incident occur which may adversely impact the environment. The directors are not aware of breaches of any applicable legislation during the year, which are material in nature and have no reason to believe that any possible legal or remedial action would result in a material cost or loss to the Group.

All of the above information, including that of the previous three years, is made available on the Group’s website within one day of public release.

The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the Group’s strategy and goals. Important issues are presented to shareholders as single resolutions and in plain English. Shareholders are requested to vote on the appointment and aggregate remuneration of directors, the granting of options to the Managing Director and changes to the Constitution. Copies of the Constitution are available to any shareholder who requests it.

Communication with shareholders

The Board provides shareholders with information using a comprehensive Continuous Disclosure Policy which includes identifying matters that may have a material effect on the price of the Company’s shares, notifying them to the ASX, posting them on the Company’s website, and issuing media releases.

AUDITOR INDEPENDENCE

In summary, the Continuous Disclosure Policy operates as follows:

The lead auditor’s independence declaration is set out on page 35 and forms part of the directors’ report for the year ended 30 June 2008.

the Chairman, Managing Director, is set out on page 35 and forms part of Director Finance & Accounting, and the directors’ report for the year ended Company Secretary are responsible for 30 June 2008. interpreting the Company’s policy and where necessary informing the Board. NON-AUDIT SERVICES The Company Secretary is responsible PROVIDED BY KPMG for all communications with the ASX. Such matters are advised to the ASX on During the year, KPMG, the Company’s the day they are discovered, and all senior executives must follow a set in addition to their statutory duties. process, which involves monitoring all The Board has considered the non-audit areas of the Group’s internal and services provided during the year by the external environment. The Company auditor and in accordance with written considers it has complied with all of its advice provided by resolution of the Audit continuous disclosure obligations; Committee is satisfied that the provision of

During the year, KPMG, the Company’s auditor, has performed certain other services in addition to their statutory duties.

The Board has considered the non-audit services provided during the year by the auditor and in accordance with written advice provided by resolution of the Audit Committee is satisfied that the provision of those non-audit services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:

the Annual Report is distributed to all shareholders (unless a shareholder has specifically requested not to receive the document). The Board ensures that the Annual Report contains disclosures required by the Corporations Act 2001 and the Listing Rules;
all non-audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the Audit Committee to ensure they do not impact the integrity and objectivity of the auditor; and
the full texts of notices of meetings and associated explanatory material are placed on the Company’s website;
the Chairman’s address is presented at the Annual General Meeting and subsequently distributed by mail to all shareholders;
the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants , as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.
the half year report contains summarised financial information and a review of the operations of the Group during the period. The report is sent to all shareholders (unless a shareholder has requested not to receive the document);

Amalgamated Holdings Limited Annual Report 2008 33

DIRECTORS’ REPORT CONTINUED

A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 has been included in this directors’ report.

Details of the amounts paid to the auditor of the Company, KPMG, and its related practices for audit and non-audit services provided during the year are set out below:

	THE	GROUP	PARENT ENTITY	PARENT ENTITY
	2008	2007	2008	2007
	$	$	$	$
Audit services:
Auditors of the Company — KPMG Australia
Audit and review of financial reports	886,590	858,091	315,903	314,886
Other assurance services	23,330	40,856	—	—
Overseas KPMG firms
Audit and review of financial reports	375,752	412,612	—	—
	1,285,672	1,311,559	315,903	314,886
Other services:
Auditors of the Company — KPMG Australia
Income tax compliance	147,169	169,976	95,555	94,075
Indirect tax compliance advice	40,571	135,990	14,325	13,830
	187,740	305,966	109,880	107,905
Overseas KPMG firms
International income tax compliance	125,296	126,883	—	—
Indirect tax compliance advice	33,826	49,300	—	—
Revenue certificates compliance	3,595	3,446	—	—
Other taxation services	103,530	117,284	—	—
	266,247	296,913	—	—
	453,987	602,879	109,880	107,905

ROUNDING OFF

The Company is of a kind referred to in Class Order 98/100 (as amended by Class Order 04/667) as issued by the Australian Securities and Investments Commission. In accordance with that Class Order, amounts in the financial report and directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated.

Signed in accordance with a resolution of the directors:

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AG Rydge Director

==> picture [62 x 59] intentionally omitted <==

DC Seargeant Director

Dated at Sydney this 28th day of August 2008.

34 Amalgamated Holdings Limited Annual Report 2008

Lead Auditor’s Independence Declaration UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

To: the directors of Amalgamated Holdings Limited

I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2008 there have been:

(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

(ii) no contraventions of any applicable code of professional conduct in relation to the audit.

==> picture [54 x 17] intentionally omitted <==

KPMG

==> picture [131 x 46] intentionally omitted <==

David Rogers Partner

Sydney 28 August 2008

Amalgamated Holdings Limited Annual Report 2008 35

Income Statements FOR THE YEAR ENDED 30 JUNE 2008

		THE GROUP	THE GROUP	PARENT ENTITY	PARENT ENTITY
		2008	2007	2008	2007
	Note	$’000	$’000	$’000	$’000
Revenue from sale of goods	3	161,581	152,322	—	—
Revenue from rendering of services	3	409,287	401,558	—	—
Finance revenue	3	3,354	1,312	27,896	21,143
Rental revenue	3	22,268	22,147	—	—
Dividends	3	455	2,717	46,409	1,499
Management and other fees	3	20,197	17,681	10,131	9,531
Sundry revenue	3	891	796	144	14
Other income	3	1,495	25,342	—	3,778
Advertising, commissions and marketing expenses		(18,706)	(18,775)	—	—
Depreciation and amortisation	4(a)	(28,618)	(28,574)	(104)	(109)
Employee expenses	4(a)	(150,484)	(144,238)	(8,330)	(7,218)
Film hire and other film expenses		(119,364)	(121,388)	—	—
Finance costs — interest and borrowing expenses	4(a)	(5,353)	(14,105)	(18,495)	(12,030)
Occupancy expenses		(160,236)	(161,374)	—	—
Plant and equipment impairments	4(a)	(1,156)	—	—	—
Investment impairments		—	—	(12,250)	—
Fair value decrement on investment properties	18	(1,400)	—	—	—
Purchases and other direct expenses		(51,198)	(50,839)	—	—
Other expenses		(38,032)	(35,389)	(3,125)	(2,349)
Share of net profit accounted for using the equity method:
Associates	35	12,013	11,224	—	—
Partnerships	36	23,333	18,402	—	—
Profit before tax from continuing operations	4	80,327	78,819	42,276	14,259
Income tax expense	7	(20,904)	(19,928)	(254)	(126)
Profit after tax from continuing operations		59,423	58,891	42,022	14,133
Discontinued operations
Profit after tax from discontinued operations	5	40,092	23,280	—	—
Profit for the year		99,515	82,171	42,022	14,133
Attributable to:
Members of the Parent Entity		99,369	82,195	42,022	14,133
Minority interest		146	(24)	—	—
Profit for the year		99,515	82,171	42,022	14,133
		2008	2007
		Cents	Cents
Earnings per share for profit attributable to members of the
Parent Entity (cents per share)
Basic from continuing operations		46.1	46.3
Basic from discontinued operations		31.2	18.3
Basic for the year		77.3	64.6
Diluted from continuing operations		46.0	46.1
Diluted from discontinued operations		31.1	18.2
Diluted for the year		77.1	64.3

The Income Statements are to be read in conjunction with the notes to the financial statements on pages 40 to 96.

36 Amalgamated Holdings Limited Annual Report 2008

Balance Sheets AS AT 30 JUNE 2008

		THE	GROUP	PARENT ENTITY	PARENT ENTITY
		2008	2007	2008	2007
	Note	$’000	$’000	$’000	$’000
ASSETS
CURRENT ASSETS
Cash and cash equivalents	10	28,472	21,800	176	186
Receivables	11	34,354	36,115	11,188	6,249
Inventories	12	11,940	10,614	—	—
Other	13	4,672	7,336	68	28
Total current assets		79,438	75,865	11,432	6,463
NON-CURRENT ASSETS
Receivables	11	653	1,271	181,243	338,435
Other financial assets	14	502	502	38,689	50,939
Available-for-sale financial assets	15	10,610	13,692	10,610	13,692
Investments accounted for using the equity method	16	118,678	197,329	—	—
Property, plant and equipment	17	482,757	478,094	94	90
Investment properties	18	28,500	29,900	—	—
Goodwill and other intangible assets	19	14,849	13,730	57	115
Deferred tax assets	7(c)	9,670	8,644	—	3,396
Other	20	6,877	7,196	—	—
Total non-current assets		673,096	750,358	230,693	406,667
Total assets		752,534	826,223	242,125	413,130
LIABILITIES
CURRENT LIABILITIES
Payables	21	67,895	65,591	766	721
Interest bearing liabilities and borrowings	22	12,196	46,577	—	—
Current tax liabilities	7(b)	25,352	4,779	24,416	4,523
Provisions	24	11,725	12,619	1,056	996
Other	25	26,045	24,317	—	—
Total current liabilities		143,213	153,883	26,238	6,240
NON-CURRENT LIABILITIES
Payables	21	2	2	—	—
Interest bearing liabilities and borrowings	22	24,892	147,067	14,153	213,115
Deferred tax liabilities	7(c)	7,562	1,243	1,997	—
Provisions	24	9,783	12,736	695	682
Other	25	2,041	3,733	—	—
Total non-current liabilities		44,280	164,781	16,845	213,797
Total liabilities		187,493	318,664	43,083	220,037
Net assets		565,041	507,559	199,042	193,093
EQUITY
Share Capital	26	98,809	97,030	98,809	97,030
Reserves	27	5,177	11,423	10,483	11,072
Retained earnings	27	460,832	398,981	89,750	84,991
Total equity attributable to members of the Parent Entity		564,818	507,434	199,042	193,093
Minority interest		223	125	—	—
Total equity		565,041	507,559	199,042	193,093

The Balance Sheets are to be read in conjunction with the notes to the financial statements set out on pages 40 to 96.

Amalgamated Holdings Limited Annual Report 2008 37

Statements of Changes in Equity FOR THE YEAR ENDED 30 JUNE 2008

		THE GROUP	THE GROUP	PARENT ENTITY	PARENT ENTITY
		2008	2007	2008	2007
	Note	$’000	$’000	$’000	$’000
Total equity at the beginning of the financial year		507,559	461,854	193,093	207,975
Change in fair value of available-for-sale
financial assets, net of tax	27	(2,157)	(6,987)	(2,157)	(1,400)
Change in the fair value of cash flow hedges, net of tax	27	(1,208)	705	—	—
Share of associates’ decrement in foreign currency translation reserve	27	(1,788)	(1,573)	—	—
Share of associate’s decrement in hedging reserve	27	—	(416)	—	—
Share of associate’s decrement in general reserve	27	—	(2)	—	—
Exchange differences on translation of foreign operations, net of tax	27	(2,916)	(578)	—	—
Net present value adjustment of employee share loans	27	6	24	6	23
Employee share-based payments expense	27	1,487	494	1,053	324
Net expense recognised directly in equity		(6,576)	(8,333)	(1,098)	(1,053)
Profit for the year		99,515	82,171	42,022	14,133
Total recognised income for the year		92,939	73,838	40,924	13,080
Employee share-based payments expense
— related entity employees	27	76	28	509	199
Dividends paid to minority interest in subsidiaries		(49)	—	—	—
Transactions with equity holders in their capacity as equity holders:
Shares issued under the Management Share Options Plan	26	1,779	4,827	1,779	4,827
Dividends paid	8	(37,263)	(32,988)	(37,263)	(32,988)
		(35,484)	(28,161)	(35,484)	(28,161)
Total equity at the end of the financial year		565,041	507,559	199,042	193,093
Total equity at the end of the financial year attributable to:
Members of the Parent Entity		564,818	507,434	199,042	193,093
Minority interest		223	125	—	—
		565,041	507,559	199,042	193,093

The Statements of Changes in Equity are to be read in conjunction with the notes to the financial statements on pages 40 to 96.

38 Amalgamated Holdings Limited Annual Report 2008

Statements of Cash Flows FOR THE YEAR ENDED 30 JUNE 2008

		THE GROUP	THE GROUP	PARENT ENTITY	PARENT ENTITY
		2008	2007	2008	2007
	Note	$’000	$’000	$’000	$’000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts in the course of operations		622,953	604,936	—	—
Cash payments in the course of operations		(590,171)	(593,448)	(9,548)	(9,112)
Cash generated/(used) from operations		32,782	11,488	(9,548)	(9,112)
Dividends received		455	2,717	1,402	1,492
Interest received		3,487	1,273	—	—
Distributions from associates and partnerships		47,430	42,320	—	—
Other revenue		43,107	36,168	394	492
Finance costs paid		(4,164)	(12,390)	—	(10)
Income tax refunds		—	208	—	208
Income taxes paid		(20,095)	(18,733)	(18,851)	(17,576)
Net cash provided/(used) by operating activities	39	103,002	63,051	(26,603)	(24,506)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of investments		95,000	26,540	—	4,344
Proceeds from disposal of non-current assets		53	18,355	—	—
Payments for property, plant and equipment		(35,308)	(64,057)	(49)	(16)
Payments for increase in investments in associates and partnerships		(157)	(813)	—	—
Decrease in loans to other entities		1,156	867	—	—
Increase in loans to other entities		(1,822)	(3,402)	—	—
Decrease in loans to associates and partnerships		725	464	—	—
Proceeds from disposal and restructure of certain cinema
partnership interests		—	2,700	—	—
Net cash received on acquisition of controlled entity
(net of acquisition costs)	33(a)	—	169	—	—
Purchase of investments		—	(500)	—	—
Purchase of management rights		—	(3,500)	—	—
Purchase of remaining interest in cinema partnership	33(a)	—	(1,727)	—	—
Return of capital		—	1,008	—	—
Net cash provided/(used) by investing activities		59,647	(23,896)	(49)	4,328
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings		108,334	248,046	—	—
Repayment of borrowings		(229,290)	(259,237)	—	—
Dividends paid		(37,263)	(32,988)	(37,263)	(32,988)
Dividends paid to minority interest in subsidiaries		(49)	—	—	—
Proceeds from the exercise of employee share options		1,779	4,827	1,779	4,827
Decrease in intercompany receivables		—	—	62,126	48,305
Net cash (used)/provided by financing activities		(156,489)	(39,352)	26,642	20,144
Net increase/(decrease) in cash and cash equivalents		6,160	(197)	(10)	(34)
Cash and cash equivalents at the beginning of the year		21,800	22,574	186	220
Effect of exchange rate fluctuations on cash held		512	(577)	—	—
Cash and cash equivalents at the end of the year	10	28,472	21,800	176	186

The Statements of Cash Flows are to be read in conjunction with the notes to the financial statements set out on pages 40 to 96.

Amalgamated Holdings Limited Annual Report 2008 39

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2008

NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES

Amalgamated Holdings Limited (“Parent Entity” or “Company”) is a company domiciled in Australia. The consolidated financial report of the Company for the year ended 30 June 2008 comprise the Parent Entity and its subsidiaries (collectively referred to as the “Group”) and the Group’s interest in associates and partnerships.

Amalgamated Holdings Limited is a company incorporated in Australia and limited by shares. The shares are publicly traded on the Australian Securities Exchange. The nature of the operations and principal activities of the Group are described in Note 2.

The financial report was authorised by the Board of Amalgamated Holdings Limited for issuance on 28 August 2008.

(a) Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (“AASBs”) (including Australian Interpretations) adopted by the Australian Accounting Standards Board and the Corporations Act 2001 .

The financial report also complies with International Financial Reporting Standards and interpretations adopted by the International Accounting Standards Board.

(b) Basis of preparation

The financial report is presented in Australian dollars, and the functional currency of the Group is Australian dollars.

The financial report is prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: derivative financial instruments, financial instruments classified as available-for-sale, share-based payments and investment properties. Assets held for sale are stated at the lower of carrying amount and fair value less costs to sell.

The preparation of a financial report in conformity with Australian Accounting Standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities and income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of AASBs that have a significant effect on the financial report and estimates with a significant risk of material adjustment in the next year are discussed in Note 1(z).

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

The accounting policies have been applied consistently by all entities in the Group.

The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 (updated by Class Order 05/641 effective 28 July 2005 and Class Order 06/51 effective 31 January 2006) and in accordance with the Class Order, amounts in the financial report and directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated.

The Company and Group have elected to early adopt the following accounting standards and amendments:

Revised AASB 123 Borrowing Costs removes the option to expense borrowing costs and requires that an entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset.
AI 13 Customer Loyalty Programmes addresses the accounting by entities that operate, or otherwise participate in, customer loyalty programmes for their customers. It relates to customer loyalty programmes under which the customer can redeem credits for awards such as free or discounted goods or services.

Certain comparative amounts have been reclassified to conform with the current year’s presentation. In addition, the comparative income statement has been represented as if an operation discontinued during the current period had been discontinued from the start of the comparative period (see Note 5).

The following standards, amendments to standards and interpretations have been identified as those which may impact the Group in the period of initial application. They were available for early adoption at 30 June 2008, but have not been applied by the Group in preparing these financial statements:

AASB 8 Operating Segments (“AASB 8”) replaced the presentation requirements of segment reporting in AASB 114 Segment Reporting . AASB 8 and the consequential amendments in AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8 [AASB 5, AASB 6, AASB 107, AASB 119, AASB 120, AASB 127, AASB 134, AASB 136, AASB1023 and AASB 1038] are applicable for annual reporting periods beginning on or after 1 January 2009. AASB 8 and AASB 2007-3 may impact on the disclosure of operating segments within the financial reports. The Group has yet to determine the effect on the disclosure;
Revised AASB 101 Presentation of Financial Statements (“AASB 101”) introduces as a financial statement (formerly “primary” statement) the “statement of comprehensive income”. The revised standard does not change the recognition, measurement or disclosure of transactions and events that are required by other AASBs. The revised AASB 101 will become mandatory for the Group’s 30 June 2010 financial statements. This revision to the standard is only expected to impact disclosures contained within the financial report;
Revised AASB 3 Business Combinations (“AASB 3”) changes the application of acquisition accounting for business combinations and the accounting for non-controlling (minority) interests. Revised AASB 127 Consolidated and Separate Financial Statements (“AASB 127”) changes the accounting for investments in subsidiaries. The revised AASB 3 and AASB 127 must be early adopted together. As there were no acquisitions during the year, the Group does not expect early adoption would have a material impact on the financial report;
AASB 2008-1 Amendments to Australian Accounting Standard — Share-based Payment: Vesting Conditions and Cancellations changes the measurement of share-based payments that contain non-vesting conditions. AASB 2008-1 becomes mandatory for the Group’s 30 June 2010 financial conditions. The Group presently considers that the amending standard will not have a material effect on the Group’s future financial report.

(c) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Parent Entity and Group as at 30 June each year end.

40 Amalgamated Holdings Limited Annual Report 2008

NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(i) Subsidiaries

Subsidiaries are entities controlled by the Parent Entity. Control exists when the Parent Entity has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are presently exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Investments in subsidiaries are carried at their cost of acquisition, less any impairment losses recognised, in the Parent Entity’s financial statements.

(ii) Associates

Associates are those entities for which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Group’s share of the total recognised gains and losses of associates on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases. The Group’s share of movements in reserves is recognised directly in consolidated reserves. When the Group’s share of losses exceeds its interest in an associate, the Group’s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an associate.

In the Parent Entity’s financial statements, investments in associates are initially recognised at cost, being the fair value of the consideration given and including acquisition charges associated with the investment. Where necessary, the cost is adjusted for any subsequent impairment.

(iii) Partnerships

In the consolidated financial statements, investments in partnerships are accounted for using equity accounting principles. Investments in partnerships are carried at the lower of the equity accounted amount and recoverable amount after adjustment for revisions arising from notional adjustments made at the date of acquisition.

The Group’s share of partnerships’ net profit or loss is recognised in the consolidated Income Statement from the date joint control commenced until the date joint control ceases. The Group’s share of movements in reserves are recognised directly in consolidated reserves.

(iv) Transactions eliminated on consolidation

Intragroup balances, and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements.

Unrealised gains arising from transactions with associates and partnerships are eliminated to the extent of the Group’s interest in the entity.

Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Gains and losses are recognised as the contributed assets are consumed or sold by the associates or partnerships or, if not consumed or sold by the associate or partnership, when the Group’s interest in such entities is sold.

(d) Foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Australian dollars at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Income Statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Australian dollars at foreign exchange rates ruling at the dates the fair value was determined.

(ii) Financial statements of foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to Australian dollars at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to Australian dollars at rates approximating the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on retranslation are recognised in the foreign currency translation reserve. When a foreign operation is disposed of, in part or in full, the relevant amount in the reserve is transferred to profit or loss.

(iii) Net investment in foreign operations

Exchange differences arising from the translation of the net investment in foreign operations, and the effective portion of related hedges are taken to the reserve. They are released to profit or loss as an adjustment to profit or loss on disposal. Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned or likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognised directly in equity in the foreign currency translation reserve.

(e) Derivative financial instruments

The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operating, financing activities and investing activities. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes.

Derivative financial instruments are recognised at fair value. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged (refer Note 1(f)).

The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the balance sheet date, taking into account current interest rates and the creditworthiness of the swap counterparties. The fair value of forward exchange contracts is their quoted market price at the balance sheet date, being the present value of the quoted forward price.

Amalgamated Holdings Limited Annual Report 2008 41

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(f) Hedging

On entering into a hedging relationship, the Group formally designates and documents the hedge relationship and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they are designated.

(i) Cash flow hedges

Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity in the hedging reserve. When the forecast transaction subsequently results in the recognition of a nonfinancial asset or non-financial liability, or the forecast transaction for a non-financial liability becomes a firm commitment for which fair value hedge accounting is applied, the associated cumulative gain or loss is removed from equity and included in the initial cost or other carrying amount of the non-financial asset or liability. If a hedge of a forecast transaction subsequently results in the recognition of a financial asset or a financial liability, then the associated gains and losses that were recognised directly in equity are reclassified into profit or loss in the same period or periods during which the asset acquired or liability assumed affects profit or loss (i.e. when interest income or expense is recognised).

For cash flow hedges, the associated cumulative gain or loss is removed from equity and recognised in the Income Statement in the same period or periods during which the hedged forecast transaction affects profit or loss. The ineffective part of any gain or loss is recognised immediately in the Income Statement.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. At that point in time, any cumulative gain or loss on the hedging instrument recognised in equity is kept in equity until the forecast transaction occurs. If a hedge transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the Income Statement.

(ii) Hedge of net investment in foreign operation

The portion of the gain or loss on an instrument used to hedge a net investment in a foreign operation, that is determined to be an effective hedge, is recognised directly in equity. The ineffective portion is recognised immediately in the Income Statement.

(g) Property, Plant and Equipment

(i) Owned assets

Items of property, plant and equipment (except for investment properties — refer Note 1(g)(ii)) are stated at cost or deemed cost, less accumulated depreciation and impairment losses.

The cost of assets represents the fair value of the consideration provided, plus incidental costs directly attributable to the acquisition and also includes:

the initial estimate of the cost at the time of installation and during the period of use, when relevant and probable, of removing items and restoring the site on which they are located (decommissioning); and
changes in the measurement of existing liabilities recognised for decommissioning costs resulting from changes in the discount rate applied to these future liabilities or changes to estimates of cost.

The cost may also include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

Borrowing cost related to the acquisition or construction of qualifying assets is capitalised into the cost of the asset. Where settlement of any part of cash consideration is deferred, the amounts payable are recorded at their present value, discounted at the rate applicable to the Group if a similar borrowing were obtained from an independent financier under comparable terms and conditions. The unwinding of the discount is treated as interest expense.

Certain items of property, plant and equipment that had been revalued to fair value on or prior to 1 July 2004, the date of transition to AASBs, are measured on the basis of deemed cost, being the revalued amount at the date of that revaluation. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items or property, plant and equipment.

(ii) Investment properties

Investment properties comprise land and buildings which are held for long term rental yields or for capital appreciation, or both, and are not occupied by the Group. Initially, investment properties are measured at cost including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value.

Property that is being constructed for future use as investment property is accounted for as property, plant and equipment until construction or development is complete, at which time it is remeasured to fair value and reclassified as investment property. When a property is reclassified to an investment property following a change in its use, any difference at the date of transfer between the carrying amount of the property immediately prior to transfer and its fair value is recognised directly to the investment property revaluation reserve, if it is a gain. Any decrease in value is recognised in the Income Statement.

Gains or losses arising from changes in the fair values of investment properties are included in the Income Statement in the period in which they arise.

Investment properties are derecognised when they have either been disposed of or when the investment property is permanently withdrawn from use and no future benefit is expected from its disposal. Any gains or losses on the derecognition of an investment property are recognised in the Income Statement in the period of derecognition.

(iii) Leased assets

Leases for property and plant and equipment under which the Parent Entity or its controlled entities assume substantially all the risks and benefits of ownership are classified as finance leases. Other leases are classified as operating leases.

42 Amalgamated Holdings Limited Annual Report 2008

NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES CONTINUED

Finance leases are capitalised. A lease asset and a lease liability equal to the present value of the minimum lease payments are recorded at the inception of the lease. Contingent rentals are written off as an expense of the accounting period in which they are incurred. Capitalised lease assets are depreciated on a straight-line basis over the term of the relevant lease, or where it is likely the Group will obtain ownership of the asset, the life of the asset. They are stated in the Balance Sheet at an amount equal to the lower of their fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation and impairment losses. Lease liabilities are reduced by repayments of principal. The interest components of the lease payments are charged to the Income Statement. Payments made under operating leases are charged against profits in equal instalments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased property.

(iv) Subsequent costs

The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the Income Statement as an expense.

As at the acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to benefit from the business combination’s synergies.

Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised. An impairment loss recognised in respect of goodwill cannot be reversed.

The carrying amount of goodwill in respect of associates is included in the carrying amount of the investment in the associate.

(ii) Construction rights

Construction rights relate to the Group’s ability to develop accommodation in the Thredbo Alpine Resort. Construction rights are recognised at cost and are amortised as the rights are either sold or developed. The carrying value of construction rights is reviewed annually. Any amounts no longer considered recoverable are written off.

(iii) Other intangible assets

Other intangible assets, which largely comprise management rights and software costs, are stated at cost less accumulated amortisation and impairment losses.

Management rights are amortised over the life of the management agreements on a straight-line basis.

Software costs for mainframe application and major operating systems are amortised over a 4 to 5 year period on a straightline basis.

(v) Depreciation

Depreciation is charged to the Income Statement on a straightline basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated. The estimated useful lives in the current and comparative periods are as follows:

estimated useful lives in the are as follows:	current and comparative periods
Buildings	40 — 80 years
Plant and equipment	3 — 20 years
Fixtures and fittings	3 — 10 years
Leasehold buildings	Shorter of estimated useful
and improvements	life and term of lease

Assets are depreciated or amortised from the date of acquisition or, in respect of internally constructed assets, from the time an asset is completed and held ready for use.

Depreciation rates are reviewed annually for appropriateness. The residual value, if not insignificant, is also reassessed annually. When changes are made, adjustments are reflected prospectively in current and future periods only.

(h) Intangible assets

(i) Goodwill

Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

(i) Recoverable amount of assets

At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

The recoverable amount of assets is the greater of their net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Impairment of receivables is not recognised until objective evidence is available that a loss event has occurred. Receivables are individually assessed for impairment.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds the recoverable amount. Impairment losses are recognised in the Income Statement unless the asset or its cash-generating unit has previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of the previous revaluation, with any excess recognised through the Income Statement.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

With the exception of goodwill, an impairment loss is reversed when there is an indication that the impairment loss no longer exists and there has been a change in the estimates used to determine the recoverable amount.

Amalgamated Holdings Limited Annual Report 2008 43

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(j) Investments

All investments are initially recognised at cost, being the fair value of the consideration given and including acquisition charges associated with the investment.

After initial recognition, investments, which are classified as availablefor-sale, are measured at fair value. Available-for-sale financial assets comprise marketable equity securities.

For investments that are actively traded in organised financial markets, fair value is determined by reference to securities exchange quoted market bid prices at the close of business on the balance sheet date.

Gains or losses on available-for-sale investments are recognised as a separate component of equity in the available-for-sale investments revaluation reserve until the investment is sold, collected or otherwise disposed of, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in the Income Statement. An impairment loss recognised in the Income Statement in respect of an available-for-sale investment is not reversed through the Income Statement.

(k) Inventories

Inventories are carried at the lower of cost and net realisable value. Work in progress is valued at cost. Cost is based on the first-in-firstout principle and includes expenditure incurred in bringing inventories to their existing condition and location. The cost of inventory may also include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of inventory.

(l) Contract work-in-progress

For short term contracts, profit is brought to account on completion of each job. For long term contracts, profit recognition commences on 50% completion of each job and is recognised on a percentage completion basis.

(m) Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the Statement of Cash Flows.

(n) Receivables

Trade and other receivables are stated at their amortised cost less an allowance for impairment losses. Where the payment terms for the sale of an asset are deferred, the receivable is discounted using the prevailing rate for a similar instrument of an issuer with similar credit terms. The unwinding of the discount is treated as finance revenue.

(o) Payables

Trade and other payables are recognised at their amortised cost. Liabilities are recognised for amounts to be paid in the future for goods or services received. Trade accounts payable are normally non-interest bearing and settled within 30 days.

(p) Borrowings

Interest bearing and non-interest bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the Income Statement over the period of the borrowings on an effective interest basis.

(q) Provisions

(i) Employee benefits

Provision is made for employee benefits including annual leave for employees and the retirement benefits for qualifying nonexecutive directors. The provision represents the amount which the Group has a present obligation to pay resulting from the employees’ services provided up to the reporting date. The provisions expected to be settled within 12 months have been calculated at undiscounted amounts based on the remuneration rates the employer expects to pay after the reporting date and includes related on-costs.

The liability for employees’ benefits to long service leave represents the present value of the estimated future cash outflows to be made by the employer resulting from employees’ services provided up to the reporting date. Liabilities for employee benefits which are not expected to be settled within 12 months are discounted using the rates attaching to national government securities at reporting date, which most closely match the terms of maturity of the related liabilities.

In determining the liability for employee benefits, consideration has been given to future increases in wage and salary rates, and the Group’s experience with staff departures. Related on-costs have also been included in the liability.

(ii) Onerous contracts

A provision for onerous contracts is recognised when the expected benefits to be derived from a contract are less than the unavoidable costs of meeting the obligations under that contract, and only after any impairment losses to assets dedicated to that contract have been recognised.

The provision recognised is based on the excess of the estimated cash flows to meet the unavoidable costs under the contract over the estimated cash flows to be received in relation to the contract, having regard to the risks of the activities relating to the contract. The net estimated cash flows are discounted using market yields on national government guaranteed bonds with terms to maturity that match, as closely as possible, the expected future cash flows.

(iii) Decommissioning of leasehold improvements

A provision for the estimated cost of decommissioning leasehold improvements is made where a legal or constructive obligation exists.

In determining the provision for decommissioning costs, an assessment is made for each location of the likelihood and amount of the decommissioning costs to be incurred in the future. The estimated future liability is discounted to a present value, with the discount amount unwinding over the life of the leasehold asset as an interest expense. The estimated decommissioning cost recognised as a provision is included as part of the cost of the leasehold improvements at the time of installation or during the term of the lease, as the liability for decommissioning is reassessed. This amount capitalised is then depreciated over the life of the asset.

(iv) Other

Other provisions are recognised in the Balance Sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

44 Amalgamated Holdings Limited Annual Report 2008

NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(r) Superannuation plans

The Parent Entity and controlled entities contribute to several defined contribution superannuation plans. Contributions are charged against income as they are made. These contributions are in accordance with the relevant trust deeds and the Superannuation Guarantee Levy.

(s) Share-based payment transaction — employee share and option plans

(i) Executive Performance Share Plan

Equity-based compensation benefits are provided to employees via the Executive Performance Share Plan.

The fair value of performance shares granted under the Executive Performance Share Plan is recognised as an employee expense over the period during which the employees become unconditionally entitled to the shares. There is a corresponding increase in equity, being recognition of a sharebased payments reserve. The fair value of performance shares granted is measured at grant date. The fair value of the shares was determined using the Monte Carlo simulation model, taking into account the terms and conditions upon which the shares were granted.

To facilitate the operation of the Executive Performance Share Plan, a third party trustee is used to administer the trust which hold shares allocated under the Executive Performance Share Plan.

Performance shares are subject to performance hurdles. The performance shares are recognised in the Balance Sheet as restricted ordinary shares. Performance shares are included within the weighted average number of shares used as the denominator for determining basic earnings per share and net tangible asset backing per share.

The Company incurs expenses on behalf of the trust. These expenses are in relation to administration costs of the trust and are recorded in the Income Statement as incurred.

For employee performance shares issued by the Company to employees of subsidiaries, the amount recognised as an employee expense by the Group in respect of those shares is charged to and recovered from subsidiaries by the Company.

(ii) Management Share Option Plan

The Management Share Option Plan allowed Group employees to acquire shares of the Parent Entity. No new options have been issued under this plan since September 2004. The fair value of options granted was recognised as an employee expense with a corresponding increase in equity reserves. The fair value was measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted was measured using a binomial option pricing model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense was adjusted to reflect the actual number of options that are expected to vest, except where forfeiture was only due to share prices not achieving the threshold for vesting.

(iii) Employee Share Plan

The Company has in prior years issued shares to certain employees under an employee share plan. No shares have been issued under this plan since February 1998. Other than costs incurred in administering the scheme which are expensed as incurred, the scheme does not result in any expense to the Group.

(t) Revenue recognition

Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (“GST”).

(i) Sale of goods

Revenue from the sale of goods comprises revenue earned (net of returns, discounts, allowances and GST) from the provision of products to entities outside the Group. Revenue from the sale of goods is recognised when significant risks and rewards of ownership of goods pass to the customer.

(ii) Rendering of services

Revenue from rendering services is recognised in the period in which the service is provided. Revenue not yet recognised because the service is yet to be provided, is shown on the Balance Sheet under other liabilities as deferred revenue.

(iii) Finance revenue

Finance revenue includes interest and dividend income. Interest income is recognised as it accrues, taking into account the effective yield on the financial asset. Dividend income is recognised on the date that the Group’s right to receive payment is established.

(iv) Rental income

Rental income is recognised in the Income Statement on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income.

(v) Sale of non-current assets

The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal.

(vi) Customer loyalty programme

A group entity operates a loyalty programme where customers accumulate points for purchases made which entitles them to discounts on future purchases. The award points are recognised as a separately identifiable component of the initial sale transaction, by allocating the fair value of the consideration received between the award points and the components of the sale such that the award points are recognised at their fair value. Revenue from the award points is recognised when the points are redeemed. The amount of the revenue is based on the number of points redeemed relative to the total number expected to be redeemed.

(u) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (“ATO”). In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Balance Sheet.

Cash flows are included in the Statement of Cash Flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

Amalgamated Holdings Limited Annual Report 2008 45

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(v) Finance costs

Finance costs include interest, amortisation of discounts or premiums relating to borrowings, amortisation of ancillary costs incurred in connection with arrangement of borrowings, and lease finance charges. Ancillary costs incurred in connection with the arrangement of borrowings are capitalised and amortised over the life of the borrowings.

Finance costs are expensed as incurred unless they relate to qualifying assets. Qualifying assets are assets which take more than 12 months to get ready for their intended use or sale. Where funds are borrowed specifically for the acquisition, construction or production of a qualifying asset, the amount of borrowing costs capitalised is that incurred in relation to that borrowing, net of any interest earned on those borrowings. Where funds are borrowed generally, borrowing costs are capitalised using a weighted average interest rate applicable to the entity’s borrowings during the period.

(w) Taxation

(i) Income tax

Income tax on the Income Statement for the periods presented comprises current and deferred tax. Income tax is recognised in the Income Statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(ii) Tax consolidation regime

The Company is the head entity in the tax-consolidated group comprising all the Australian wholly-owned subsidiaries. The head entity recognises all of the current tax liabilities of the tax-consolidated group.

The tax-consolidated group has entered into a tax funding agreement that requires Australian wholly-owned subsidiaries to make contributions to the head entity for current tax liabilities arising from external transactions occurring after the implementation of tax consolidation.

Under the tax funding agreement, the contributions are calculated using a “group allocation method” so that the contributions are equivalent to the tax balances generated by external transactions entered into by wholly-owned subsidiaries. The contributions are payable as set out in the agreement and reflect the timing of the head entity’s obligations to make payments for tax liabilities to the relevant tax authorities.

The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent that it is probable that future taxable profits of the taxconsolidated group will be available against which the asset can be utilised. Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised assessments of the probability of recovery are recognised by the Company only.

(x) Segment reporting

A segment is a distinguishable component of the Group that is engaged either in providing products or services (“business segment”), or in providing products or services within a particular economic environment (“geographical segment”), which is subject to risks and rewards that are different from those of other segments.

(y) Earnings per share

Basic earnings per share (“EPS”) is calculated by dividing the profit for the period attributable to members of the Parent Entity by the weighted average number of ordinary shares of the Parent Entity.

Diluted EPS adjusts the figures used in the determination of basic EPS to take into account the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. Dilutive potential ordinary shares comprise share options granted to employees.

(z) Accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances.

The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

46 Amalgamated Holdings Limited Annual Report 2008

NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES CONTINUED

Recoverable value of plant and equipment

The Group has undertaken assessments of whether plant and equipment at cinema sites could be deemed to be impaired. These assessments involve an estimation of future trading performance to determine the recoverable amounts.

The Group has also previously recognised impairment write-downs for a number of cinema sites. Where trading circumstances improve at a site, an assessment of recoverable value is made to determine if an impairment loss can be reversed, net of depreciation that would have been incurred had no impairment loss been recognised. These determinations also require estimates and assumptions with regard to the future trading performance of those sites.

Contingent assets and liabilities

Also refer to Note 31 for estimates and judgement made in relation to contingent assets and liabilities.

Critical accounting judgements in applying the Group’s accounting policies — investment properties

In the year to 30 June 2006, the Group acquired two properties which adjoin the State Theatre Building in Market and George Streets, Sydney at a cost of $81,522,000. The Group receives rental income in respect of both properties acquired. Pending completion of planning for the long term use of these combined properties, including the State Theatre property, these properties have not been classified as investment properties. These properties have been accounted for using the cost basis rather than the fair value basis which is applied for investment properties.

(AA)Discontinued operations

A discontinued operation is a component of the Group’s business that represents a separate major line of business that has been disposed of or is held for sale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative Income Statement is restated as if the operation had been discontinued from the start of the comparative period.

NOTE 2 — SEGMENT REPORTING

Segment information is presented in respect of the Group’s business and geographical segments.

Inter-segment pricing is on an arm’s length basis.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise income earning assets and revenue, interest bearing loans and borrowings and expenses, and corporate assets and expenses.

Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period.

Business segments

The Group comprises the following main business segments, based on the Group’s management reporting system and the differing risks and rewards associated with each business.

Cinema Exhibition Domestic

Includes the Australian cinema exhibition operations.

Cinema Exhibition International

Includes the International cinema exhibition operations in Germany and the United Arab Emirates. The Groups’ interest in a cinema site in The Netherlands was sold effective 20 February 2008.

Entertainment Technology

Includes theatre equipment supply and servicing and the manufacture of film processors and related equipment and the Group’s investment in the Atlab group.

Hotels

Includes the ownership, operation and management of hotels in Australia and overseas.

Thredbo Alpine Resort

Includes all the operations of the resort including property development activities.

Leisure/Attractions

Includes ancillary leisure and other activities including Featherdale Wildlife Park and The State Theatre. The sale of Pier 26 Bar & Café was completed in the prior year on 25 June 2007, refer Discontinued Operations — Note 5.

Strategic Investments

Includes the Groups’ 50% interest in Roadshow Distributors Pty Limited to the date of sale of that interest being 15 August 2007, refer Discontinued Operations — Note 5.

Property and Other Investments

Includes property rental, investment properties and available-for-sale investments.

Geographical segments

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets. The Group operates in Australia and New Zealand, Europe and the United Arab Emirates.

Amalgamated Holdings Limited Annual Report 2008 47

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 2 — SEGMENT REPORTING CONTINUED

		Cinema									Cons-
	Cinema	Exhibition	Enter-		Thredbo			Property		Less: Dis-	olidated
	Exhibition	Inter-	tainment		Alpine	Leisure/	Strategic	and Other	Con-	continued	Continuing
	Domestic	national	Technology	Hotels	Resort	Attractions	Investments	Investments	solidated	Operations	Operations
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
30 June 2008
Business segments
Revenue and other income
External segment revenue	116,014	287,179	16,668	123,423	51,774	8,282	64,381	10,240	677,961	(64,381)	613,580
Other income	—	1,481	5	54	8	—	—	402	1,950	—	1,950
Finance income									3,354	—	3,354
Other unallocated revenue									644	—	644
Total revenue and other income									683,909	(64,381)	619,528
Result
Segment result	10,960	(781)	(69)	30,871	14,938	974	—	3,146	60,039	—	60,039
Share of net profit and
profit on sale of equity
accounted business
undertakings	23,333	16,035	(4,012)	(10)	—	—	66,496	—	101,842	(66,496)	35,346
	34,293	15,254	(4,081)	30,861	14,938	974	66,496	3,146	161,881	(66,496)	95,385
Unallocated revenue
and expenses									(13,059)	—	(13,059)
Net financing costs									(1,999)	—	(1,999)
Profit before related
income tax expense									146,823	(66,496)	80,327
Income tax expense									(47,308)	26,404	(20,904)
Profit after income tax expense									99,515	(40,092)	59,423
Minority interest									(146)	—	(146)
Net profit									99,369	(40,092)	59,277
Depreciation and amortisation	(6,121)	(8,105)	(71)	(6,494)	(4,440)	(425)	—	(2,962)	(28,618)	—	(28,618)
Impairment write-downs	—	(1,156)	—	—	—	—	—	—	(1,156)	—	(1,156)
Impairment write-back	—	1,481	—	—	—	—	—	—	1,481	—	1,481
30 June 2008
Individually significant
items
Other income
Profit on sale of equity
accounted investment
(Roadshow Distributors
Pty Limited)	—	—	—	—	—	—	64,381	—	64,381	(64,381)	—
Write-back in provision
for onerous contracts
relating to lease for closed
cinema sites	—	2,266	—	—	—	—	—	—	2,266	—	2,266
Individually significant
items in equity accounted
results
Profit on sale of equity
accounted 33.3% interest
in a cinema site in
The Netherlands	—	6,691	—	—	—	—	—	—	6,691	—	6,691
Impairment write-down
in the equity accounted
carrying value of Atlab
Holdings Pty Limited	—	—	(4,253)	—	—	—	—	—	(4,253)	—	(4,253)
	—	8,957	(4,253)	—	—	—	64,381	—	69,085	(64,381)	4,704

48 Amalgamated Holdings Limited Annual Report 2008

NOTE 2 — SEGMENT REPORTING CONTINUED

Cinema Cons- Cinema Exhibition Enter- Thredbo Property olidated Exhibition Inter- tainment Alpine Leisure/ Strategic and Other Con- Continuing Domestic national Technology Hotels Resort Attractions Investments Investments solidated Operations	Cinema Cons- Cinema Exhibition Enter- Thredbo Property olidated Exhibition Inter- tainment Alpine Leisure/ Strategic and Other Con- Continuing Domestic national Technology Hotels Resort Attractions Investments Investments solidated Operations	Cinema Cons- Cinema Exhibition Enter- Thredbo Property olidated Exhibition Inter- tainment Alpine Leisure/ Strategic and Other Con- Continuing Domestic national Technology Hotels Resort Attractions Investments Investments solidated Operations	Cinema Cons- Cinema Exhibition Enter- Thredbo Property olidated Exhibition Inter- tainment Alpine Leisure/ Strategic and Other Con- Continuing Domestic national Technology Hotels Resort Attractions Investments Investments solidated Operations
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
30 June 2008 Assets Segment assets 91,528 84,121 9,211 222,079 47,579 7,433 — 136,303 598,254 598,254
Equity accounted investments 101,227 13,895 1,747 1,809 — — — — 118,678 118,678
Unallocated corporate assets 35,602 35,602
Consolidated total assets 752,534 752,534
Liabilities Segment liabilities 36,788 64,976 6,507 14,808 6,432 535 — — 130,046 130,046
Unallocated corporate liabilities 57,447 57,447
Consolidated total liabilities 187,493 187,493
Acquisitions of non-current assets 10,487 1,300 162 14,627 2,626 49 — 6,024 35,275 35,275
Australia & NZ Secondary reporting — geographical segments $’000	Europe $’000	Other $’000	Consolidated $’000
External segment revenue 326,401	287,179	—	613,580
Segment assets by location of assets 654,518	87,149	10,867	752,534
Acquisitions of non-current assets 33,975	1,300	—	35,275
Cinema Cons- Cinema Exhibition Enter- Thredbo Property Less: Dis- olidated Exhibition Inter- tainment Alpine Leisure/ Strategic and Other Con- continued Continuing Domestic national Technology Hotels Resort Attractions Investments Investments solidated Operations Operations
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
30 June 2007 Business segments Revenue and other income External segment revenue 110,756 287,692 17,360 110,190 49,609 13,720 — 9,694 599,021 (5,030) 593,991 Other income 2,237 — 110 37 10 7,476 — 25,665 35,535 (7,476) 28,059 Finance income 1,312 — 1,312 Other unallocated revenue 513 — 513
Total revenue and other income 636,381 (12,506) 623,875
Result Segment result 15,675 (9,879) 274 24,732 11,888 9,272 — 29,201 81,163 (8,501) 72,662 Share of net profit of equity accounted business undertakings 18,402 8,105 2,744 375 — — 15,112 — 44,738 (15,112) 29,626
34,077 (1,774) 3,018 25,107 11,888 9,272 15,112 29,201 125,901 (23,613) 102,288 Unallocated revenue and expenses (10,676) — (10,676) Net financing costs (12,793) — (12,793)
Profit before related income tax expense 102,432 (23,613) 78,819 Income tax expense (20,261) 333 (19,928)
Profit after income tax expense 82,171 (23,280) 58,891 Minority interest 24 — 24
Net profit 82,195 (23,280) 58,915
Depreciation and amortisation (5,425) (9,719) (78) (5,112) (4,891) (626) — (2,921) (28,772) 198 (28,574)
Impairment write-downs — — — — — — — — — — —
Impairment write-back — — — — — — — — — — —

Amalgamated Holdings Limited Annual Report 2008 49

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 2 — SEGMENT REPORTING CONTINUED

NOTE 2 — SEGMENT REPORTING CONTINUED	NOTE 2 — SEGMENT REPORTING CONTINUED	NOTE 2 — SEGMENT REPORTING CONTINUED	NOTE 2 — SEGMENT REPORTING CONTINUED
Cinema Cons- Cinema Exhibition Enter- Thredbo Property Less: Dis- olidated Exhibition Inter- tainment Alpine Leisure/ Strategic and Other Con- continued Continuing Domestic national Technology Hotels Resort Attractions Investments Investments solidated Operations Operations
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
30 June 2007 Individually significant items Other income Dividend from listed company — — — — — — — 2,287 2,287 — 2,287 Profit on sale of investments in a listed companies — — — — — — — 18,069 18,069 — 18,069 Profit on sale of Pier 26 and Bar and Café Business — — — — — 7,476 — — 7,476 (7,476) — Other expenses Settlement of legal claim — — — — (1,424) — — — (1,424) — (1,424) Provision for onerous contracts — (3,300) — — — — — — (3,300) — (3,300) Individually significant items in equity accounted results Share of impairment write-downs in carrying value of under-performing cinema sites in joint venture partnerships (2,590) — — — — — — — (2,590) — (2,590)
(2,590) (3,300) — — (1,424) 7,476 — 20,356 20,518 (7,476) 13,042
Cinema Cons- Cinema Exhibition Enter- Thredbo Property olidated Exhibition Inter- tainment Alpine Leisure/ Strategic and Other Con- Continuing Domestic national Technology Hotels Resort Attractions Investments Investments solidated Operations
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
30 June 2007 Assets Segment assets 90,255 95,361 7,817 219,506 49,573 7,634 — 137,158 607,304 607,304
Equity accounted investments 108,456 17,088 6,759 2,083 — — 62,943 — 197,329 197,329
Unallocated corporate assets 21,590 21,590
Consolidated total assets 826,223 826,223
Liabilities Segment liabilities 32,579 76,726 4,558 15,788 6,827 565 — — 137,043 137,043
Unallocated corporate liabilities 181,621 181,621
Consolidated total liabilities 318,664 318,664
Acquisitions of non-current assets 6,990 2,182 92 58,573 2,740 — — 137 70,714 70,714
Australia & NZ Secondary reporting — geographical segments $’000	Europe $’000	Other $’000	Consolidated $’000
External segment revenue 305,402	288,589	—	593,991
Segment assets by location of assets 713,143	100,274	12,806	826,223
Acquisitions of non-current assets 68,532	2,182	—	70,714

50 Amalgamated Holdings Limited Annual Report 2008

		THE	GROUP	PARENT ENTITY	PARENT ENTITY
		2008	2007	2008	2007
	Note	$’000	$’000	$’000	$’000
NOTE 3 — REVENUE AND OTHER INCOME
Revenue
Sale of goods		161,581	152,322	—	—
Rendering of services		409,287	401,558	—	—
		570,868	553,880	—	—
Finance revenue:
Interest income — associates		8	3	—	—
Interest income — controlled entities	38	—	—	27,896	21,143
Interest income — bank deposits		1,409	1,309	—	—
Interest income — other persons		196	—	—	—
Total interest income		1,613	1,312	27,896	21,143
Net change in fair value of cash flow hedges transferred from equity		1,582	—	—	—
Notional interest		159	—	—	—
		3,354	1,312	27,896	21,143
Rental revenue:
Associates	38	271	257	—	—
Other persons		21,997	21,890	—	—
		22,268	22,147	—	—
Dividends received and receivable from:
Controlled entities		—	—	45,007	7
Available-for-sale financial assets		455	2,717	1,402	1,492
		455	2,717	46,409	1,499
Management and consulting fees received and receivable from:
Associates	38	647	1,180	500	500
Controlled entities	38	—	—	9,631	9,031
Partnerships	36	5,273	5,228	—	—
Other persons		14,277	11,273	—	—
		20,197	17,681	10,131	9,531
Sundry revenue		891	796	144	14
Other Income
Disposal of available-for-sale financial assets transferred from equity		—	18,069	—	3,779
Disposal of equity accounted investments		—	1,759	—	—
Profit on sale of business		—	110	—	—
Profit on sale of property, plant and equipment		14	525	—	(1)
Increase in fair value of investment properties		—	4,879	—	—
Property, plant and equipment impairment write-back		1,481	—	—	—
Total other income		1,495	25,342	—	3,778
Total revenue and other income		619,528	623,875	84,580	35,965
Revenue and other income including share of sales revenue
for partnerships:
Revenue as listed above		619,528	623,875	84,580	35,965
Partnerships*	36	176,798	167,329	—	—
		796,326	791,204	84,580	35,965

To more fairly reflect the operations of the Group, revenue disclosed includes the Group’s share of the sales revenue earned by partnerships. The share of sales revenue of each partnership is disclosed at Note 36.

Amalgamated Holdings Limited Annual Report 2008 51

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

		THE GROUP	THE GROUP	PARENT ENTITY	PARENT ENTITY
		2008	2007	2008	2007
	Note	$’000	$’000	$’000	$’000
NOTE 4 — PROFIT BEFORE INCOME TAX
(a) Expenses and losses/(gains)
Profit before income tax has been arrived at after charging/
(crediting) the following items:
Cost of goods sold		46,552	45,510	—	—
Finance costs:
Interest expense — associates		361	1,642	—	—
Interest expense — controlled entities	38	—	—	18,495	12,020
Bank interest and finance costs		3,951	10,843	—	—
Interest and finance costs — other persons		33	12	—	10
Finance charges on capitalised leases		818	1,125	—	—
Total interest expense and finance charges		5,163	13,622	18,495	12,030
Unwind of notional interest		190	483	—	—
		5,353	14,105	18,495	12,030
Net bad and doubtful debts expense including movement
in the doubtful debts allowance		452	(286)	—	—
Amortisation of:
Intangible assets		1,788	1,226	58	69
Leased plant and equipment		116	82	—	—
Leasehold buildings		3,009	3,416	—	—
Other		221	151	—	—
		5,134	4,875	58	69
Depreciation		23,484	23,699	46	40
Total depreciation and amortisation		28,618	28,574	104	109
Impairment write-downs:
Property, plant and equipment		1,156	—	—	—
Increase/(decrease) in provision for:
Onerous contracts		(4,348)	2,734	—	—
Insurance loss contingencies and other		(23)	(378)	—	—
Provision for decommissioning		57	—	—	—
Support of related entities		—	(852)	—	—
		(4,314)	1,504	—	—
Employee expenses:
Employee benefits provisions		6,746	7,254	417	536
Share-based payments expense		1,410	477	977	306
Salaries and wages		136,237	130,854	6,677	6,112
Superannuation		6,091	5,653	259	264
Total employee expenses		150,484	144,238	8,330	7,218
Net foreign exchange (gains)/losses		75	(61)	—	—
Operating lease rental expense		97,840	99,831	58	35
Loss on sale of property, plant and equipment		264	202	—	—

52 Amalgamated Holdings Limited Annual Report 2008

	THE GROUP		PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
NOTE 4 — PROFIT BEFORE INCOME TAX
CONTINUED
(b) Individually significant items
Profit before income tax includes the following revenues/(expenses)
whose disclosure is relevant in explaining the financial performance
of the Group:
Other Income
Dividend from a listed company	—	2,287	—	—
Profit on sale of investments in listed companies	—	18,069	—	3,779
Other Expenses
Write-back/(provision) for onerous contracts relating to lease for
closed cinema sites	2,266	(3,300)	—	—
Impairment write-down in the carrying value of investment	—	—	(12,250)	—
Settlement of legal claim not recoverable from insurance due
to collapse of HIH Insurance	—	(1,424)	—	—
Individually significant items in equity accounted results
Profit on sale of equity accounted 33.3% interest in a cinema site
in The Netherlands	6,691	—	—	—
Impairment write-down in the equity accounted carrying value
of Atlab Holdings Pty Limited	(4,253)	—	—	—
Share of impairment write-down in carrying value of
underperforming cinema sites in partnerships	—	(2,590)	—	—
Individually significant items relating to
discontinued operations
Profit on sale of equity accounted investment —
Roadshow Distributors Pty Limited	64,381	—	—	—
Profit on sale of Pier 26 Bar and Café business	—	7,476	—	—
	69,085	20,518	(12,250)	3,779

Amalgamated Holdings Limited Annual Report 2008 53

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 5 — DISCONTINUED OPERATIONS

2008

On 15 August 2007 the Company sold its 50% shareholding in Roadshow Distributors Pty Limited, an associate as at 30 June 2007. This was not shown as a discontinued operation at the end of the prior financial year (30 June 2007) and the comparative Income Statement for the year ended 30 June 2007 has been re-presented to show the discontinued operation separately from continuing operations.

2007

The sale of the Pier 26 Bar and Café business was completed on 25 June 2007.

Analysis of profit and loss of discontinued operations

	THE GROUP
	2008	2007
	$’000	$’000
Revenue from sale of goods	—	4,296
Revenue from rendering of services	—	38
Rental revenue	—	696
Total revenue	—	5,030
Advertising, commissions and marketing expenses	—	(60)
Depreciation and amortisation	—	(198)
Employee expenses	—	(1,412)
Occupancy expenses	—	(480)
Purchases and other direct expenses	—	(1,218)
Other expenses	—	(637)
Total expenses	—	(4,005)
	—	1,025
Share of associate’s net profit accounted for using the equity method	2,115	15,112
Profit before income tax	2,115	16,137
Income tax expense	—	(333)
Profit after income tax for discontinued operations	2,115	15,804
Gain on sale of discontinued operations	64,381	7,476
Tax on gain on sale	(26,404)	—
Profit for the period	40,092	23,280

During the 12 months to 30 June 2008, the discontinued operations had cash inflows from operating activities of $nil (2007: $1,223,000), cash inflows from investing activities on disposal of $95,000,000 (2007: $22,529,000) and cash inflows from financing activities of $nil (2007: $10,000,000).

	THE	GROUP	PARENT ENTITY	PARENT ENTITY
	2008	2007	2008	2007
	$	$	$	$
NOTE 6 — AUDITORS’ REMUNERATION
Audit services:
Auditors of the Company — KPMG Australia
Audit and review of financial reports	886,590	858,091	315,903	314,886
Other assurance services	23,330	40,856	—	—
Overseas KPMG firms
Audit and review of financial reports	375,752	412,612	—	—
	1,285,672	1,311,559	315,903	314,886
Other services:
Auditors of the Company — KPMG Australia
Income tax compliance	147,169	169,976	95,555	94,075
Indirect tax compliance advice	40,571	135,990	14,325	13,830
	187,740	305,966	109,880	107,905

54 Amalgamated Holdings Limited Annual Report 2008

	THE GROUP	THE GROUP	PARENT ENTITY	PARENT ENTITY
	2008	2007	2008	2007
	$	$	$	$
NOTE 6 — AUDITORS’ REMUNERATION
CONTINUED
Overseas KPMG firms
International income tax compliance	125,296	126,883	—	—
Indirect tax compliance advice	33,826	49,300	—	—
Revenue certificates compliance	3,595	3,446	—	—
Other taxation services	103,530	117,284	—	—
	266,247	296,913	—	—
	453,987	602,879	109,880	107,905
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
NOTE 7 — TAXATION
(a) Income tax expense
The major components of income tax expense/(benefit) are:
Income Statement
Income tax expense reported	20,904	19,928	254	126
Income tax attributable to discontinued operations	26,404	333	—	—
	47,308	20,261	254	126
Current income tax
Current income tax expense/(benefit)	40,238	16,638	(6,183)	(1,851)
Adjustments in respect of current income tax of prior year	320	328	44	76
Deferred income tax
Relating to origination and reversal of temporary differences	6,750	3,295	6,393	1,901
Income tax expense reported in the Income Statement	47,308	20,261	254	126
Income tax charged/credited to Equity
Deferred income tax related to items charged or credited directly to equity:
Net loss/(gain) on revaluation of cash flow hedges	459	(279)	—	—
Unrealised loss/(gain) on available-for-sale investments	924	(2,701)	924	(650)
Reversal of available-for-sale investments revaluation reserve on
realisation of investment	—	4,776	—	861
Adjustment to shared-based payments reserve	76	18	76	18
Net (gain)/loss on hedge of net investment in overseas subsidiaries	(2)	5	—	—
Income tax benefit reported in equity	1,457	1,819	1,000	229
Reconciliation between income tax expense and pre-tax net profit
A reconciliation between income tax expense and accounting profit before
income tax multiplied by the Group’s applicable income tax rate is as follows:
Profit before tax from continuing operations	80,327	78,819	42,276	14,259
Profit before tax from discontinued operations	66,496	23,613	—	—
Accounting profit before income tax expense	146,823	102,432	42,276	14,259

Amalgamated Holdings Limited Annual Report 2008 55

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

		THE GROUP		PARENT ENTITY	PARENT ENTITY
		2008	2007	2008	2007
		$’000	$’000	$’000	$’000
NOTE 7 — TAXATION CONTINUED
Prima facie income tax expense calculated at the Group’s statutory income
tax	rate of 30% on the accounting profit	44,047	30,730	12,683	4,278
Increase in income tax expense due to:
	Depreciation and amortisation of buildings	710	677	—	—
	Share of non-deductible items in partnerships’ income tax	117	227	—	—
	Tax losses of non-resident controlled entity not carried forward as
	deferred tax asset	1,424	4,095	—	—
	Capital losses not recognised or utilised	—	1,358	—	—
	Non-refundable franking credits grossed up	180	1,137	180	192
	Dividends from equity accounted associates	300	1,833	—	—
	Impairment write-down of associate carrying value	1,276	—	3,675	—
	Share based payments not deductible for tax	413	120	293	92
	Net higher overseas tax rate	90	217	—	—
	Sundry items	19	—	45	—
		4,529	9,664	4,193	284
Decrease in income tax expense due to:
	Franking credits on dividends received	172	1,164	172	210
	Franking credits on dividends received from equity accounted associates	429	2,625	429	429
	Dividends received from controlled entities	—	—	13,502	—
	Share of associates’ net profit	5,514	7,901	—	—
	Capital profits offset by capital losses	19,314	8,329	—	1,156
	Capital losses recognised or utilised	2,563	—	2,563	2,654
	Sundry items	—	775	—	63
		27,992	20,794	16,666	4,512
Income tax underprovided in prior year		320	328	44	76
		20,904	19,928	254	126
(b)	Current tax liabilities
Provision for current income tax
Movements during the year:
Balance at the beginning of the year		4,779	6,299	4,523	6,857
Income tax paid		(20,095)	(18,733)	(18,851)	(17,576)
Current year income tax provided		40,337	16,581	(6,183)	(1,851)
Current year’s income tax provision in respect of controlled entities taken
up by Parent Entity		—	—	44,882	16,809
Tax	refunds received	—	208	—	208
Underprovision in prior year		331	424	45	76
		25,352	4,779	24,416	4,523

56 Amalgamated Holdings Limited Annual Report 2008

	BALANCE SHEET	BALANCE SHEET	INCOME STATEMENT	INCOME STATEMENT
	THE GROUP		THE GROUP
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
NOTE 7 — TAXATION CONTINUED
(c) Deferred Income Tax
Deferred tax liabilities — The Group
Deferred tax liabilities comprise:
Difference in depreciation and amortisation of property, plant and
equipment for accounting and income tax purposes	7,607	3,972	3,635	597
Difference in treatment of property lease for accounting and tax purposes	1,675	—	1,675	—
Investment properties	3,760	4,217	(457)	1,501
Available-for-sale investments	1,666	2,590	—	—
Interest and holding charges capitalised	740	802	(62)	(148)
Fair value of cash flow hedges	7	466	—	(5)
Expenditure currently deductible for tax but deferred and amortised for
accounting purposes	1,217	995	222	174
Prepayments	121	200	(79)	16
Share based payments deductible for tax but deferred and amortised for
accounting purposes	881	560	397	578
Share of partnership timing differences	1,140	1,148	(8)	(548)
Sundry items	315	136	179	(131)
	19,129	15,086
Less: Deferred tax liabilities of the tax-consolidated group offset against
deferred tax assets	(11,567)	(13,843)
	7,562	1,243
Deferred tax assets — The Group
Deferred tax assets comprise:
Provisions and accrued employee benefits not currently deductible	4,571	4,722	151	1,670
Unrealised foreign exchange losses not currently deductible	182	156	(26)	(107)
Unrealised foreign exchange differences on hedge of net investment	4	6	—	—
Deferred revenue	1,616	1,740	124	417
Difference in depreciation and amortisation of property, plant and equipment
and intangible assets for accounting and income tax purposes	6,496	3,146	(3,350)	(158)
Lease termination payment not currently deductible	630	840	210	(840)
Share of partnership timing differences	6,431	5,450	(981)	(1,007)
Tax losses carried forward	991	—	(991)	—
Capital losses carried forward	—	6,023	6,023	1,359
Sundry items	316	404	88	(73)
	21,237	22,487
Less: Deferred tax liabilities of the tax-consolidated group offset against
deferred tax assets	(11,567)	(13,843)
	9,670	8,644
Deferred tax income — The Group			6,750	3,295

Amalgamated Holdings Limited Annual Report 2008 57

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

	BALANCE SHEET	BALANCE SHEET	INCOME STATEMENT	INCOME STATEMENT
	PARENT ENTITY		PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
NOTE 7 — TAXATION CONTINUED
Deferred tax liabilities — Parent Entity
Deferred tax liabilities comprise:
Share-based payment deductible for tax but deferred and amortised for
accounting purposes	881	560	397	578
Difference in depreciation and amortisation of property, plant and equipment
for accounting and income tax purposes	5	13	(8)	(1)
Other investments	1,666	2,590	—	—
	2,552	3,163
Less: Deferred tax liabilities offset against deferred tax assets	(555)	(3,163)
	1,997	—
Deferred tax assets — Parent Entity
Deferred tax assets comprise:
Provisions and accrued employee benefits not currently deductible	525	503	(22)	(41)
Capital losses carried forward	—	6,023	6,023	1,358
Sundry items	30	33	3	7
	555	6,559
Less: Deferred tax liabilities offset against deferred tax assets	(555)	(3,163)
	—	3,396
Deferred tax income — Parent Entity			6,393	1,901

At 30 June 2008, a deferred tax liability relating to investments in subsidiaries has not been recognised because the Parent Entity controls whether the liability will be incurred and it is satisfied that it will not be incurred in the foreseeable future.

	THE GROUP		PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
Unrecognised deferred tax assets
Revenue losses — foreign	36,513	49,596	—	—
Temporary differences — foreign	6,381	3,470	—	—
	42,894	53,066	—	—

Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilise the benefits.

Included in the deferred tax assets not recognised is the gross value of tax revenue losses arising in Germany of $121,709,000 (2007: $130,516,000). The availability of these tax losses is subject to certain utilisation limits and ongoing availability tests under German tax law. At 30 June 2008, there is no recognised deferred income tax liability (2007: $nil) for taxes that would be payable on the unremitted earnings of certain of the Group’s subsidiaries or associates.

Tax consolidation

The Parent Entity and its wholly owned Australian resident subsidiaries have formed a tax-consolidated group with effect from 1 July 2002. Amalgamated Holdings Limited (Parent Entity) is the head entity for the tax-consolidated group. Members of the group have entered into a tax sharing arrangement in order to allocate current and deferred tax amounts to the wholly owned subsidiaries using a “group allocation method approach”. The Parent Entity recognises deferred tax assets arising from unused tax losses (including capital losses) of the tax-consolidated group to the extent that it is probable that future taxable profits (including capital gains) of the tax-consolidated group will be available against which the asset can be utilised. 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.

58 Amalgamated Holdings Limited Annual Report 2008

NOTE 7 — TAXATION CONTINUED

Tax funding arrangement for members of the tax consolidated group

Members of the tax-consolidated group have entered into a tax funding arrangement which sets out the funding obligations of the taxconsolidated group in respect of tax amounts. The tax funding arrangements require payments to or from the Parent Entity as head entity equal to the current tax liability or asset assumed by the head entity excluding any tax loss deferred tax asset assumed by the head entity. The members of the tax-consolidated group have also entered into a valid tax sharing agreement under the tax consolidation legislation which sets out the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations and the treatment of entities leaving the tax-consolidated group.

Tax payments under the tax funding agreement are recognised as an increase or decrease in the subsidiaries’ intercompany accounts with the Parent Entity.

NOTE 8 — DIVIDENDS

	Per share	Total amount	Date of payment	Tax rate for franking credit	Percentage franked
	Cents	$’000
Dividends on ordinary shares paid by the Company during the year are: 2008 Final 2007 dividend paid Interim 2008 dividend paid	18 11	23,061 14,202	20 September 2007 13 March 2008	30% 30%	100% 100%
		37,263
2007 Final 2006 dividend paid Interim 2007 dividend paid	16 10	20,195 12,793	21 September 2006 15 March 2007	30% 30%	100% 100%
		32,988
Subsequent events Since the end of the financial year, the directors declared the following dividend: Final 2008 dividend	19	24,536	25 September 2008	30%	100%

The financial effect of this final dividend in respect of the year has not been brought to account in the financial statements for the year ended 30 June 2008 and will be recognised in subsequent financial reports.

There are no shareholders’ dividend plans in operation.

	PARENT ENTITY	PARENT ENTITY
	2008	2007
	$’000	$’000
Franking credit balance
The amount of franking credits available are:
Franking account balance as at the beginning of the financial year at 30% (2007: 30%)	110,723	102,250
Franking credits from the payment of income tax and income tax payable	39,065	15,018
Franking debits from the payment of dividends	(15,970)	(14,137)
Franking credits from the receipt of dividends	601	7,592
The amount of franking credits available for future reporting periods	134,419	110,723

The impact on the franking account of dividends proposed or declared before the financial report was authorised for issue but not recognised as a distribution to equity holders during the period is to reduce the balance by $10,515,000 (2007: $9,881,000).

The ability to utilise franking credits is dependent upon there being sufficient available profits to declare dividends.

In accordance with the tax consolidation legislation, the Parent Entity, as the head entity in the tax-consolidated group, has also assumed the benefit of the franking credits available.

Amalgamated Holdings Limited Annual Report 2008 59

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 9 — EARNINGS PER SHARE

Classification of securities as potential ordinary shares

Options outstanding under the Management Share Option Plan that have dilutive potential have been classified as potential ordinary shares and included in the calculation of diluted earnings per share.

Further details of options are contained in Note 29.

	THE	GROUP
	2008	2007
	$’000	$’000
Earnings reconciliation
Profit after tax from continuing operations	59,423	58,891
Less: Profit/(loss) after tax attributable to minority interest	146	(24)
Basic earnings — continuing operations	59,277	58,915
Basic earnings — discontinued operations	40,092	23,280
Earnings attributable to members of the Parent Entity	99,369	82,195
	Number	Number
Weighted average number of ordinary shares used as the denominator number for basic earnings per share	128,522,733	127,195,840
Effect of management share options on issue	322,090	568,481
Number for diluted earnings per share	128,844,823	127,764,321

NOTE 10 — CASH AND CASH EQUIVALENTS

NOTE 10 — CASH AND CASH EQUIVALENTS
		THE GROUP		PARENT ENTITY
		2008	2007	2008	2007
	Note	$’000	$’000	$’000	$’000
Cash at bank and on hand		28,472	21,800	176	186
Details of the amount of cash at bank and on hand and the Group’s
exposure to interest rate risk and a sensitivity analysis for financial
assets and liabilities are disclosed in Note 28.
NOTE 11 — RECEIVABLES
Current
Trade receivables		20,275	22,742	—	—
Less: impairment of trade receivables		(2,223)	(1,774)	—	—
		18,052	20,968	—	—
Other receivables		12,592	13,366	—	—
Receivable from associates		—	99	357	254
Receivable from partnerships		3,710	1,682	—	—
Receivable from controlled entities	38	—	—	10,831	5,995
		34,354	36,115	11,188	6,249
Non-current
Trade receivables		261	807	—	—
Receivable from associates		43	43	—	—
Receivable from controlled entities	38	—	—	180,894	338,014
Present value of loans provided under the employee share plan		349	421	349	421
		653	1,271	181,243	338,435

Trade receivables are non-interest bearing and are generally on 30-90 day terms.

The Group’s exposure to credit and currency risks related to trade and other receivables are disclosed in Note 28.

60 Amalgamated Holdings Limited Annual Report 2008

NOTE 11 — RECEIVABLES CONTINUED

Allowances are made for impairment losses until such time that the Group is satisfied that no recovery of the amount owing is possible at that point the amount considered irrecoverable is written off against the asset directly.

As at 30 June 2008, trade receivables with a value of $2,223,000 (2007: $1,774,000) were impaired and fully provided for. Movements in the allowance for trade receivables are as follows:

	THE GROUP		PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
Balance at 1 July	1,774	2,937	—	—
Charge for the year	568	719	—	—
Provision no longer required	(155)	(1,745)	—	—
Net foreign currency differences on translation of foreign operations	36	(137)	—	—
	2,223	1,774	—	—

As at 30 June 2008, the analysis of trade receivables for the Group that were past due but not impaired is as follows:

	THE GROUP
	2008	2007
	$’000	$’000
Not past due nor impaired	14,575	14,746
Less than 30 days overdue	1,347	3,003
More than 30 days overdue but less than 90 days overdue	419	917
More than 90 days overdue	1,711	2,302
	18,052	20,968

All other receivables do not contain impaired assets and are not past due. Based on the credit history of these other receivables, it is expected that these amounts will be recovered when due.

		THE GROUP		PARENT ENTITY	PARENT ENTITY
		2008	2007	2008	2007
	Note	$’000	$’000	$’000	$’000
NOTE 12 — INVENTORIES
Raw materials and stores		2,984	3,660	—	—
Work-in-progress		3,472	2,186	—	—
Finished goods		5,484	4,768	—	—
Total inventories at the lower of cost and net realisable value		11,940	10,614	—	—
NOTE 13 — OTHER CURRENT ASSETS
Prepayments		3,991	5,093	68	28
Derivatives at fair value	28	397	2,066	—	—
Sundry		284	177	—	—
		4,672	7,336	68	28
NOTE 14 — OTHER FINANCIAL ASSETS
Investments (unquoted):
Controlled entities	34	—	—	37,189	37,189
Associates	16	—	—	1,500	13,750
Other entities		502	502	—	—
		502	502	38,689	50,939

In the Parent Entity financial statements, investments in associates are accounted for at cost less impairment losses recognised, whereas in the Group financial statements investments in associates are accounted for using the equity method (refer Note 16).

During the year, an impairment loss was recognised in respect of the Company’s investment in Atlab Holdings Pty Limited. Refer Note 35 for details.

Amalgamated Holdings Limited Annual Report 2008 61

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

	THE GROUP		PARENT ENTITY	PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
NOTE 15 — AVAILABLE-FOR-SALE FINANCIAL
ASSETS
Investments in listed companies	10,610	13,692	10,610	13,692

The Group’s equity investments are listed on the Australian Securities Exchange. For investments classified as available-for-sale, a 10% increase in the market price of the shares at the reporting date would have increased equity by $743,000 after tax (2007: an increase of $958,000); an equal change in the opposite direction would have decreased equity by $743,000 after tax (2007: a decrease of $958,000).

		THE	GROUP	PARENT ENTITY
		2008	2007	2008	2007
	Note	$’000	$’000	$’000	$’000
NOTE 16 — INVESTMENTS ACCOUNTED FOR
USING THE EQUITY METHOD
Associates	35	17,451	88,873	—	—
Partnerships	36	101,227	108,456	—	—
		118,678	197,329	—	—

The Group accounts for investments in associates and partnerships using the equity method.

During the year, an impairment loss was recognised in respect of the Groups’ investment in Atlab Holdings Pty Limited. Refer Note 35 for details.

	THE GROUP	THE GROUP	PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
NOTE 17 — PROPERTY, PLANT AND EQUIPMENT
Freehold land and buildings
At cost	355,063	351,474	—	—
Less: Accumulated depreciation	(49,646)	(46,245)	—	—
	305,417	305,229	—	—
Land subject to long term leases
At cost — subject to long term lease	56	56	—	—
At cost — subject to long term finance lease	7,582	7,323	—	—
	7,638	7,379	—	—
Buildings and improvements subject to long term leases
At cost — on land subject to long term lease	43,745	52,416	—	—
At cost — other leasehold improvements	27,588	23,905	—	—
At cost — subject to long term finance lease	24,561	23,724	—	—
	95,894	100,045
Less: Accumulated amortisation	(34,489)	(41,084)	—	—
	61,405	58,961	—	—
Capital work in progress
At cost	7,478	5,198	5	—
Plant and equipment
At cost	358,389	343,466	899	854
Less: Accumulated depreciation	(258,236)	(243,026)	(810)	(764)
	100,153	100,440	89	90
Leased plant and equipment
At cost	2,088	2,088	—	—
Less: Accumulated amortisation	(1,422)	(1,201)	—	—
	666	887	—	—
Total property, plant and equipment at net book value	482,757	478,094	94	90

62 Amalgamated Holdings Limited Annual Report 2008

	THE GROUP	THE GROUP	PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
NOTE 17 — PROPERTY, PLANT AND EQUIPMENT
CONTINUED
Reconciliations
Summaries of the movements in carrying amounts of each class of
property, plant and equipment between the beginning and end of
the year are set out below:
Freehold land and buildings
At cost at the beginning of the year	351,474	305,294	—	—
Less: Accumulated depreciation at the beginning of the year	(46,245)	(42,722)	—	—
Net balance at the beginning of the year	305,229	262,572	—	—
Additions	5,768	44,100	—	—
Transfer from capital work in progress	783	100	—	—
Disposals	(19)	(113)	—	—
Net foreign currency differences on translation of foreign operations	(2,669)	1,957	—	—
Depreciation	(3,675)	(3,387)	—	—
Net balance at the end of the year	305,417	305,229	—	—
Land subject to long term leases
At cost at the beginning of the year	7,379	7,969	—	—
Less: Accumulated depreciation at the beginning of the year	—	—	—	—
Net balance at the beginning of the year	7,379	7,969	—	—
Net foreign currency differences on translation of foreign operations	259	(590)	—	—
Net balance at the end of the year	7,638	7,379	—	—
Buildings and improvements subject to long term leases
At cost at the beginning of the year	100,045	104,167	—	—
Less: Accumulated depreciation at the beginning of the year	(41,084)	(38,178)	—	—
Net balance at the beginning of the year	58,961	65,989	—	—
Additions	443	325	—	—
Acquisition through business acquired	—	485	—	—
Transfer from capital work in progress	4,507	22	—	—
Net foreign currency differences on translation of foreign operations	503	(1,549)	—	—
Disposals	—	(19)	—	—
Depreciation	(3,009)	(3,474)	—	—
Disposal through sale of business	—	(2,818)	—	—
Net balance at the end of the year	61,405	58,961	—	—
Capital work in progress
Balance at the beginning of the year	5,198	1,778	—	—
Net foreign currency differences on translation of foreign operations	(52)	76	—	—
Additions	13,704	4,581	5	—
Transfer from capital works in progress	(11,372)	(1,237)	—	—
Balance at the end of the year	7,478	5,198	5	—

Amalgamated Holdings Limited Annual Report 2008 63

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

	THE GROUP	THE GROUP	PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
NOTE 17 — PROPERTY, PLANT AND EQUIPMENT
CONTINUED
Plant and equipment
At cost at the beginning of the year	343,466	351,727	854	844
Less: Accumulated depreciation at the beginning of the year	(243,026)	(241,602)	(764)	(726)
Net balance at the beginning of the year	100,440	110,125	90	118
Additions	12,973	13,899	44	16
Acquisitions through business acquired	—	58	—	—
Transfer from capital work in progress	6,160	1,002	—	—
Net foreign currency differences on translation of foreign operations	696	(2,634)	—	—
Disposals	(268)	(798)	—	(6)
Disposals through sale of business	—	(760)	—	—
Reclassification to software	(364)	—	—	—
Depreciation	(19,809)	(20,452)	(46)	(38)
Impairment write-back	1,481	—	—	—
Impairment carrying value adjustments	(1,156)	—	—	—
Net balance at the end of the year	100,153	100,440	89	90
Leased plant and equipment
At cost at the beginning of the year	2,088	—	—	—
Less: Accumulated amortisation at the beginning of the year	(1,201)	—	—	—
Net balance at the beginning of the year	887	—	—	—
Transfers	(105)	—	—	—
Acquisition through entity acquired	—	969	—	—
Amortisation	(116)	(82)	—	—
Net balance at the end of the year	666	887	—	—

Independent valuations of land and buildings

In determining current values for the Group’s interest in land and buildings and integral plant and equipment, including long-term leasehold land and improvements, directors have relied upon independent valuations from registered qualified valuers. Except for investment properties, which are revalued every year (refer Note 18), valuations are carried out on a progressive three year cycle. All business segments are not valued at the one time, the last valuations being completed as at 30 June 2006 and 30 June 2007.

		THE	GROUP	PARENT ENTITY
		2008	2007	2008	2007
		$’000	$’000	$’000	$’000
Most recent valuations of land	and buildings, excluding
investment properties
Due to the diversity of the Group’s operations, valuations have been
prepared on a highest and best alternate use or existing use (going
concern) basis. It is considered that these valuations best approximate
the fair values of the properties at	the dates of the valuations.
A summary is set out as follows:
Highest and best alternate use:
Independent valuation	— 2007	83,000	83,000	—	—
Existing use:
Independent valuation	— 2007	424,385	422,857	—	—
Independent valuation	— 2006	227,278	231,246	—	—
		734,663	737,103	—	—

64 Amalgamated Holdings Limited Annual Report 2008

NOTE 17 — PROPERTY, PLANT AND EQUIPMENT CONTINUED

The written-down book value of assets, shown in the financial statements as plant and equipment and which are deemed integral to land and buildings, has been determined to total approximately $49,000,000 as at 30 June 2008 (2007: $43,000,000).

In determining the current value of land and buildings, the directors have not taken into account the potential impact of capital gains tax.

Impairment losses recognised

During the financial year, a decline in the trading performance at a number of cinema sites in Germany (Cinema Exhibition International segment) resulted in a reassessment of the recoverable amount of plant and equipment at those cinema sites. Based on this assessment, the carrying amount of plant and equipment at a number of cinema sites was written down by $1,156,000 in the 2008 financial year (2007: $nil). The estimated recoverable amounts were based on the plant and equipment value in use, determined using discount rates in the range of 10%–12.75% per annum.

Also during the period, an impairment write-down made in a prior period was partially written back by $1,481,000. This write-back was deemed appropriate due to improved cash flow generated by the site resulting from lower rental costs and a general improvement in trading.

Security

The following assets, whose carrying values are listed below, are subject to mortgage security to secure the Group’s bank loan facilities. Refer Note 23.

	THE	GROUP	PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
Freehold land and buildings	159,188	157,702	—	—
Investment properties	28,500	29,900	—	—
	187,688	187,602	—	—

Land and buildings subject to finance lease

The Group leases a property under a finance lease agreement. At the end of the lease, the Group has the option to purchase the property at no additional cost. If this option is not exercised, the Group can occupy the premises for a further five year period rent-free. At 30 June 2008, the net carrying amount of the property was $28,668,000 (2007: $28,467,000). The leased property secures lease obligations.

	THE GROUP		PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
NOTE 18 — INVESTMENT PROPERTIES
Freehold land and buildings
At fair value	28,500	29,900	—	—
Summary of movements in balance:
Balance at the beginning of the year	29,900	24,900	—	—
Additions during the year	—	121	—	—
Fair value (decrements)/increments during the year	(1,400)	4,879	—	—
Balance at the end of the year	28,500	29,900	—	—

The carrying amount of investment properties is the fair value of the property as determined by a registered qualified independent valuer. Fair values were determined having regard to recent market transactions for similar properties in the same location as the Group’s investment properties.

Investment properties comprise a number of commercial properties that are leased to third parties and which are held to derive rental income or capital appreciation or both. Each of the leases for investment properties contains an initial non-cancellable period of between five to 15 years. Subsequent renewals are negotiated with the lessee. No contingent rents are charged for these investment properties.

During the financial year ended 30 June 2008, $2,219,000 (2007: $2,169,000) was recognised as rental income for investment properties in the Income Statement with $730,000 (2007: $584,000) incurred in respect of direct costs, including $100,000 (2007: $43,000) for repairs and maintenance.

Amalgamated Holdings Limited Annual Report 2008 65

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

	THE GROUP		PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
NOTE 19 — GOODWILL AND OTHER INTANGIBLE
ASSETS
Goodwill	5,064	4,917	—	—
Construction rights	1,388	1,388	—	—
Liquor licences	185	185	—	—
	6,637	6,490	—	—
Management rights	6,097	5,865	—	—
Less: Accumulated amortisation	(1,129)	(413)	—	—
	4,968	5,452	—	—
Software	5,090	3,068	115	242
Less: Accumulated amortisation	(1,846)	(1,280)	(58)	(127)
	3,244	1,788	57	115
	14,849	13,730	57	115

Reconciliations

Summaries of the carrying amount movements of each class of intangible assets between the beginning and end of the year are set out below:

	Goodwill	Construction Rights	Liquor Licences	Management Rights	Software
	$’000	$’000	$’000	$’000	$’000
2008 — The Group Gross balance at the beginning of the year Accumulated amortisation and impairment losses at the beginning of the year	4,917 —	1,388 —	185 —	5,865 (413)	3,068 (1,280)
Net balance at the beginning of the year Acquisitions Transfer from plant and equipment Amortisation Net foreign currency differences on translation of foreign operations	4,917 — — — 147	1,388 — — — —	185 — — — —	5,452 230 — (715) 1	1,788 2,157 364 (1,073) 8
Net balance at the end of the year	5,064	1,388	185	4,968	3,244
2007 — The Group Gross balance at the beginning of the year Accumulated amortisation and impairment losses at the beginning of the year	11,220 —	1,388 —	263 —	865 (209)	9,611 (7,914)
Net balance at the beginning of the year Acquisitions Disposals Amortisation Net foreign currency differences on translation of foreign operations	11,220 — (5,974) — (329)	1,388 — — — —	263 — (78) — —	656 5,000 — (203) (1)	1,697 1,176 (47) (1,023) (15)
Net balance at the end of the year	4,917	1,388	185	5,452	1,788

Impairment losses recognised

No impairment losses in relation to goodwill have been recognised in the year ended 30 June 2008 (2007: $nil).

66 Amalgamated Holdings Limited Annual Report 2008

	THE GROUP		PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
NOTE 19 — GOODWILL AND OTHER INTANGIBLE
ASSETS CONTINUED
Impairment tests for cash-generating units containing goodwill
The following units have significant carrying amounts of goodwill:
Cinema partnership — Cinema Exhibition International	4,218	4,071	—	—
Multiple units without significant goodwill	846	846	—	—
	5,064	4,917	—	—

The recoverable value of the Group’s share of a cinema partnership in Germany is based on a value in use calculation. This calculation uses cash flow projections based on actual operating results and the three-year plan, with cash flows beyond the three-year period being projected using a 2% per annum growth rate which is considered appropriate given economic indicators and the expected long term increase in revenue and operating costs in that market. A pre-tax discount rate of 12.3% per annum has been used in discounting the projected cash flows.

			THE GROUP		PARENT ENTITY
			2008	2007	2008	2007
		Note	$’000	$’000	$’000	$’000
NOTE 20 — OTHER NON-CURRENT ASSETS
Security deposits in respect of long term operating leases			4,985	5,490	—	—
Wildlife			640	640	—	—
Sundry			1,252	1,066	—	—
			6,877	7,196	—	—
NOTE 21 — PAYABLES
Current
Trade creditors			30,930	32,985	—	—
Other creditors and accruals			36,965	32,606	766	721
			67,895	65,591	766	721
Non-current
Payables to associates			2	2	—	—
The Group’s exposure to currency and liquidity risk related to trade and
other payables is disclosed in Note 28.
NOTE 22 — INTEREST BEARING LIABILITIES
AND BORROWINGS
Current
Interest bearing liabilities and borrowings
Bank loans	— secured	23	5,842	4,704	—	—
Loans from other companies	— unsecured		393	358	—	—
Loans from associates	— unsecured		848	35,253	—	—
Loans from other companies	— secured		458	589	—	—
Lease liabilities	— secured	30	4,405	4,385	—	—
Deferred financing costs			(242)	(206)	—	—
			11,704	45,083	—	—
Non-interest bearing loans
Loans from other companies	— unsecured		492	1,494	—	—
			12,196	46,577	—	—

Amalgamated Holdings Limited Annual Report 2008 67

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

			THE GROUP	THE GROUP	PARENT ENTITY	PARENT ENTITY
			2008	2007	2008	2007
		Note	$’000	$’000	$’000	$’000
NOTE 22 — INTEREST BEARING LIABILITIES
AND BORROWINGS CONTINUED
Non-current
Interest bearing liabilities and borrowings
Bank loans	— secured	23	13,931	132,187	—	—
Lease liabilities	— secured	30	9,685	13,502	—	—
Loans from controlled entities		38	—	—	14,153	213,115
Deferred financing costs			(744)	(822)	—	—
			22,872	144,867	14,153	213,115
Non-interest bearing loans
Loans from other companies	— unsecured		2,020	2,200	—	—
			24,892	147,067	14,153	213,115

The Group’s exposure to currency and liquidity risk related to interest bearing liabilities and borrowings is disclosed in Note 28.

NOTE 23 — FINANCING ARRANGEMENTS

Bank debt — secured

The Group’s secured bank debt facilities comprise the following:

A$160,000,000 of revolving multi-currency loan facilities;
A$70,000,000 of cash advance facilities;
A$38,750,000 of credit support facilities (for the issue of letters of credit and bank guarantees); and
A total of A$5,050,000 in overdraft limits to support its transactional banking facilities.

The above facilities mature on 10 July 2012. These facilities are supported by interlocking guarantees from most Group entities and are secured by specific property mortgages. Debt drawn under these facilities bear interest at the relevant inter-bank benchmark reference rate plus a margin of between 0.45% to 0.90%. At 30 June 2008, the Group had drawn $13,931,000 (2007: $132,187,000) under the debt facilities, of which 32% was subject to interest rate swaps used for hedging.

Other loans — International

In addition to the above facilities, wholly owned subsidiaries in Germany have working capital and bank guarantee facilities totalling c9,920,000 (A$16,273,000) (secured by a letter of credit and bank guarantees drawn under the credit support facility in Australia), and additional working capital facilities totalling c5,340,000 (A$8,760,000) supported by the Company. Debt drawn under these facilities bear interest at the relevant inter-bank benchmark reference rate plus a margin of between 0.35% to 2.0%. These facilities are subject to annual review. At 30 June 2008, the Group had utilised $5,842,000 (2007: $4,704,000).

Finance lease liability — International

A wholly owned subsidiary in Germany also has a property finance lease with a balance outstanding of $13,849,000 (2007: $17,194,000). The lease bears interest at the relevant inter-bank benchmark reference rate plus a margin of 1.75% and as at 30 June 2008 had interest rate swaps used for hedging applying to 82% of the balance outstanding (Refer also to Note 30).

		THE GROUP		PARENT ENTITY
		2008	2007	2008	2007
	Note	$’000	$’000	$’000	$’000
NOTE 24 — PROVISIONS
Current
Employee benefits	29	10,269	10,278	1,056	996
Onerous contracts		1,108	1,755	—	—
Insurance loss contingencies and other claims		348	586	—	—
		11,725	12,619	1,056	996
Non-current
Employee benefits	29	2,513	2,323	695	682
Onerous contracts		113	3,714	—	—
Decommissioning of leasehold improvements		7,157	6,699	—	—
		9,783	12,736	695	682

68 Amalgamated Holdings Limited Annual Report 2008

	THE GROUP		PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
NOTE 24 — PROVISIONS CONTINUED
Reconciliations
Reconciliations of the carrying amounts of each class of provisions,
except for employee benefits, are set out below:
Onerous contracts
Carrying amount at the beginning of the year	5,469	8,456	—	—
Provisions utilised during the year	(1,958)	(2,375)	—	—
Provisions for lease costs on closed cinema sites raised/(released)	(2,266)	3,300	—	—
Provisions for surplus leased space raised/(released)	(124)	231	—	—
Payments made on lease termination	—	(3,500)	—	—
Notional interest	—	154	—	—
Reduction made during the year	—	(797)	—	—
Net foreign currency differences on translation of foreign operations	100	—	—	—
Carrying amount at the end of the year	1,221	5,469	—	—
Insurance loss contingencies and other claims
Carrying amount at the beginning of the year	586	2,505	—	—
Payments made during the year	(215)	(1,541)	—	—
Provisions made during the year	9	47	—	—
Reduction made during the year	(32)	(425)	—	—
Carrying amount at the end of the year	348	586	—	—
Decommissioning of leasehold improvements
Carrying amount at the beginning of the year	6,699	7,046	—	—
Provisions made during the year	57	—	—	—
Notional interest	190	126	—	—
Net foreign currency differences on translation of foreign operations	211	(473)	—	—
Carrying amount at the end of the year	7,157	6,699	—	—
Support of related entities
Carrying amount at the beginning of the year	—	852	—	—
Reduction made during the year	—	(852)	—	—
Carrying amount at the end of the year	—	—	—	—

Onerous contracts

The onerous contracts provision relates to a long term non-cancellable operating lease in respect of a hotel property and one cinema site in Germany that has been closed. The hotel lease has a further one year to run. Since entering into this lease, there has been a change in market conditions which has resulted in this lease being deemed onerous and therefore a provision has been raised for the forecast net deficit resulting from obligations under this lease. The cinema site lease also has a further one year to run. The basis of accounting is set out in Note 1(q)(ii).

Insurance loss contingencies and other claims

The provision relates to estimated costs to be incurred in respect of various claims that are expected to be settled within twelve months of the balance date.

Decommissioning of leasehold improvements

The decommissioning of leasehold improvements provision has been raised in respect of “make-good” obligations under long term lease contracts for cinema sites. In determining the provision, an assessment has been made, for each location, of the likelihood that a decommissioning cost will be incurred in the future and where applicable, the level of costs to be incurred. Uncertainty exists in estimating the level of costs to be incurred in the future because of the long-term nature of cinema leases. The basis of accounting is set out in Note 1(q)(iii).

Amalgamated Holdings Limited Annual Report 2008 69

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

		THE GROUP	THE GROUP	PARENT ENTITY	PARENT ENTITY
		2008	2007	2008	2007
	Note	$’000	$’000	$’000	$’000
NOTE 25 — OTHER LIABILITIES
Current
Deferred revenue		26,032	24,298	—	—
Derivatives at fair value	28	13	19	—	—
		26,045	24,317	—	—
Non-current
Deferred revenue		2,041	3,733	—	—
		PARENT ENTITY		PARENT ENTITY
		2008	2007	2008	2007
		Shares	Shares	$’000	$’000
NOTE 26 — SHARE CAPITAL
Share capital
Fully paid ordinary shares		129,136,106	128,085,624	98,809	97,030
Movements in share capital
Balance at the beginning of the year		128,085,624	126,148,002	97,030	92,203
Shares issued under the Management Share Option Plan		577,300	1,592,200	1,779	4,827
Performance shares issued under the Executive Performance Share Plan		473,182	345,422	—	—
Balance at the end of the year		129,136,106	128,085,624	98,809	97,030
Share capital consists of:
Ordinary shares		128,125,334	127,549,324
Employee share plan		177,220	183,620
Tax exempt share plan		14,948	7,258
Performance shares — restricted and held in trust		818,604	345,422
Balance at the end of the year		129,136,106	128,085,624

Ordinary shares

Effective 1 July 1998, the Company Law Review Act 1998 abolished the concept of par value shares and the concept of authorised capital. Accordingly, the Company does not have authorised capital or par value in respect of its issued shares.

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands, every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

Share buy-back

There is no current on-market buy-back.

Dividend reinvestment plan

The dividend reinvestment plan has been suspended since 1993.

Employee and executive share plans

Information relating to the plans is set out in Note 29.

Options

Information relating to the Management Share Option Plan, including details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the financial year, is set out in Note 29.

70 Amalgamated Holdings Limited Annual Report 2008

	THE GROUP		PARENT ENTITY	PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
NOTE 27 — RESERVES AND RETAINED EARNINGS
Reserves
Available-for-sale investments revaluation	7,471	9,628	7,471	9,628
Investment property revaluation	3,553	3,553	—	—
Hedging	380	1,172	—	—
Share-based payments	3,012	1,444	3,012	1,444
Foreign currency translation	(9,239)	(4,374)	—	—
	5,177	11,423	10,483	11,072
Movements in reserves
Available-for-sale investments revaluation reserve
Balance at the beginning of the year	9,628	16,615	9,628	11,028
Movement in fair value — net of tax	(2,157)	6,337	(2,157)	1,419
Recognised in Income Statement for investments sold — net of tax	—	(13,324)	—	(2,819)
Balance at the end of the year	7,471	9,628	7,471	9,628
Investment property revaluation reserve
Balance at the beginning of the year	3,553	3,553	—	—
Balance at the end of the year	3,553	3,553	—	—
Hedging reserve
Balance at the beginning of the year	1,172	883	—	—
Movement in fair value of cash flow hedging instruments — net of tax	(1,208)	705	—	—
Share of associates’ decrement in hedging reserve	—	(416)	—	—
Transfer to retained earnings	416	—	—	—
Balance at the end of the year	380	1,172	—	—
Share-based payments reserve
Balance at the beginning of the year	1,444	898	1,444	898
Amount recognised in Income Statement as employee expense	1,410	477	977	306
Amount charged to related entities	76	28	509	199
Other adjustments	82	41	82	41
Balance at the end of the year	3,012	1,444	3,012	1,444
Foreign currency translation reserve
Balance at the beginning of the year	(4,374)	(2,223)	—	—
Currency translation adjustment on controlled foreign entities’
financial statements	(2,916)	(578)	—	—
Share of associates’ decrement in foreign currency translation reserve	(1,788)	(1,573)	—	—
Transfer to retained earnings	(161)	—	—	—
Balance at the end of the year	(9,239)	(4,374)	—	—
General reserve
Balance at the beginning of the year	—	—	—	—
Share of associates’ decrement in general reserve	—	(2)	—	—
Transfer to retained earnings	—	2	—	—
Balance at the end of the year	—	—	—	—

Available-for-sale investments revaluation reserve

This reserve includes the cumulative net change in the fair value of available-for-sale investments. Amounts are recognised in the Income Statement when the associated assets are sold or impaired.

Amalgamated Holdings Limited Annual Report 2008 71

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 27 — RESERVES AND RETAINED EARNINGS CONTINUED

Investment property revaluation reserve

This reserve relates to property that has been reclassified as an investment property and represents the cumulative increase in fair value of the property at the date of reclassification.

Hedging reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred.

Share-based payments reserve

This reserve includes the cumulative fair value of management share options not exercised and the fair value of the executive performance shares which have been recognised as an employee expense in the Income Statement.

Foreign currency translation reserve

The foreign currency translation reserve records the foreign currency differences arising from the translation of foreign operations, the translation of transactions that hedge the Group’s net investment in a foreign operation or the translation of foreign currency monetary items forming part of the net investment in a foreign operation and the Group’s share of associates’ increment or decrement in the foreign currency translation reserve. Refer to accounting policy Note 1(d).

	THE GROUP	THE GROUP	PARENT ENTITY	PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
Retained earnings
Balance at the beginning of the year	398,981	349,776	84,991	103,846
Transfer from general reserve	—	(2)	—	—
Transfer from hedging reserve	(416)	—	—	—
Transfer from foreign currency translation reserve	161	—	—	—
Profit attributable to members of the Parent Entity	99,369	82,195	42,022	14,133
Dividends paid during year	(37,263)	(32,988)	(37,263)	(32,988)
Balance at the end of the year	460,832	398,981	89,750	84,991

NOTE 28 —FINANCIAL RISK MANAGEMENT

The Company’s and Group’s exposure to financial risks, objectives, policies and processes for managing the risks including methods used to measure the risks, and the management of capital are presented below:

The Company’s and Group’s activities expose it to of the following financial risks:

credit risk;
liquidity risk;
market risk, including currency risk and interest rate risk.

The Board of Directors has overall responsibility for the oversight of the risk management framework. Risk management policies are established to identify and analyse the risks faced by the Company and Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly and modified as appropriate to reflect changes in market conditions and the Company’s and Group’s activities.

The Audit Committee oversees how management has established and monitors internal compliance and control systems and to ensure the appropriate and effective management of the above risks. The Audit Committee is assisted in its oversight role by the Internal Auditor. The Internal Auditor undertakes reviews of risk management controls and procedures in accordance with an annual plan approved by the Audit Committee. The results of these Internal Audit reviews are reported to the Audit Committee.

Credit risk

Credit risk arises from trade and other receivables outstanding, cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions. It is the risk of financial loss to the Group if a customer or counterparty to the financial instrument fails to meet its contractual obligations, and arises principally from the Group’s trade receivables from customers. For the Company, it arises principally from receivables due from subsidiaries.

Trade and other receivables

The Company’s and Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate, have less of an influence on credit risk. Exposure to credit risk is monitored on an ongoing basis. Management has established a credit policy under which each new customer requiring credit over a certain amount is analysed individually for creditworthiness before the Group’s standard payment and conditions are offered. Purchase limits are established for major customers, which represents the maximum open amount without requiring approval from management.

The Company and Group have established an allowance for impairment that represents their estimate of incurred losses in respect of trade and other receivables. The main component of this allowance relates to exposures for specific debtors.

72 Amalgamated Holdings Limited Annual Report 2008

NOTE 28 — FINANCIAL RISK MANAGEMENT CONTINUED

Investments

Investments of surplus cash and deposits and derivative financial instruments are with banks with high credit ratings. Given their high credit ratings, management does not expect any counterparty to fail to meet its obligations.

At the balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial instruments, in the Balance Sheet.

Guarantees

All guarantees are in respect of obligations of subsidiaries, partnerships in which the Group has an interest or associates. Details of guarantees given by the Company and the Group are provided in Note 31 and Note 32.

The Group’s exposure

The Group’s maximum exposure to credit risk at the reporting date was:

		THE GROUP
		2008	2007
	Note	$’000	$’000
Available-for-sale financial assets	15	10,610	13,692
Receivables	11	35,007	37,386
Cash and cash equivalents	10	28,472	21,800
Security deposits in respect of long-term leases	20	4,985	5,490
Interest rate swaps used for hedging	13	372	2,066
Forward exchange contracts used for hedging	13	25	—
		79,471	80,434
The maximum exposure to credit risk for receivables at the reporting date by geographic region was:
Domestic		25,059	24,329
New Zealand		1,207	1,560
Germany and other Euro-zone countries		8,728	11,431
United Kingdom		13	66
		35,007	37,386
The maximum exposure to credit risk for receivables by business segment at the reporting date was:
Cinema Exhibition		15,546	14,907
Hotels		7,577	8,649
Thredbo Alpine Resort		574	878
Leisure / Attractions		298	197
Property		2,924	4,047
Entertainment Technology		3,701	3,485
Other		4,387	5,223
		35,007	37,386

The Company’s exposure

The Company’s maximum exposure to credit risk at the reporting date was $192,431,000 (2007: $344,684,000) for loans and receivables. This exposure is limited to Australia. Subsidiaries account for $191,725,000 (2007: $344,009,000) of the Company’s receivables carrying amount.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows. Group Treasury aims at maintaining flexibility in funding by keeping committed credit lines available with a number of counterparties.

Amalgamated Holdings Limited Annual Report 2008 73

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 28 — FINANCIAL RISK MANAGEMENT CONTINUED

The Group’s Financial Liabilities

The contractual maturities of the Group’s financial liabilities, including interest payments and excluding the impact of netting agreements are as follows:

	Carrying	Contractual	6 month	Between 6 to	Between 1	Between 2	Over
	Amount	cash flows	or less	12 months	to 2 years	to 5 years	5 years
	$’000	$’000	$’000	$’000	$’000	$’000	$’000
30 June 2008
Non-derivative financial
liabilities
Secured bank loans	19,773	(24,612)	(818)	(6,510)	(1,115)	(16,169)	—
Unsecured loans from
other companies	393	(409)	(409)	—	—	—	—
Unsecured loans from
associates	848	(1,447)	(42)	(38)	(73)	(215)	(1,079)
Secured loans from
other companies	458	(460)	(460)	—	—	—	—
Finance lease liability	14,090	(15,777)	(2,778)	(2,532)	(5,090)	(5,377)	—
Non-interest bearing
loans from other
companies unsecured	2,512	(2,512)	(185)	(185)	(331)	(726)	(1,085)
Trade payables	30,930	(30,930)	(30,930)	—	—	—	—
Other creditors and accruals	36,965	(36,965)	(36,965)	—	—	—	—
Derivative financial
liabilities/(assets)
Interest rate swaps used
for hedging (net)	(359)	362	131	97	134	—	—
Forward exchange contracts
used for hedging (net)	(25)	25	25	—	—	—	—
	105,585	(112,725)	(72,431)	(9,168)	(6,475)	(22,487)	(2,164)
30 June 2007
Non-derivative financial
liabilities
Secured bank loans	136,891	(187,399)	(8,651)	(4,960)	(10,137)	(30,025)	(133,626)
Unsecured loans from
other companies	358	(386)	(14)	(372)	—	—	—
Unsecured loans from
associates	35,253	(36,249)	(34,498)	(42)	(393)	(211)	(1,105)
Secured loans from
other companies	589	(601)	(6)	(595)	—	—	—
Finance lease liability	17,887	(20,667)	(2,668)	(2,710)	(5,114)	(10,175)	—
Non-interest bearing
loans from other
companies unsecured	3,694	(4,447)	(873)	(869)	(431)	(948)	(1,326)
Trade payables	32,985	(32,985)	(32,985)	—	—	—	—
Other creditors and accruals	32,606	(32,606)	(32,606)	—	—	—	—
Derivative financial
liabilities/(assets)
Interest rate swaps used for
hedging (net)	(2,066)	2,130	517	448	722	443	—
Forward exchange contracts
used for hedging (net)	19	(20)	(20)	—	—	—	—
	258,216	(313,230)	(111,804)	(9,100)	(15,353)	(40,916)	(136,057)

For derivative financial assets and liabilities, maturities detailed in the table above approximate periods that cash flows and impact on profit is expected to occur.

74 Amalgamated Holdings Limited Annual Report 2008

NOTE 28 — FINANCIAL RISK MANAGEMENT CONTINUED

The Company’s Financial Liabilities

The contractual maturities of the Company’s financial liabilities, including interest payments and excluding the impact of netting agreements are as follows:

	Carrying	Contractual	6 month	Between 6	Between 1	Between 2	Over
	Amount	cash flows	or less	to 12 months	to 2 years	to 5 years	5 years
	$’000	$’000	$’000	$’000	$’000	$’000	$’000
30 June 2008
Non-derivative financial
liabilities
Loans from controlled entities	14,153	(14,153)	—	—	(14,153)	—	—
Trade payables	—	—	—	—	—	—	—
Other creditors and accruals	766	(766)	(766)	—	—	—	—
	14,919	(14,919)	(766)	—	(14,153)	—	—
30 June 2007
Non-derivative financial
liabilities
Loans from controlled entities	213,115	(213,115)	—	—	(213,115)	—	—
Trade payables	—	—	—	—	—	—	—
Other creditors and accruals	721	(721)	(721)	—	—	—	—
	213,836	(213,836)	(721)	—	(213,115)	—	—

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Group uses derivative financial instruments such as foreign exchange contracts and interest rate swaps to hedge exposures to fluctuations in foreign currency exchange rates and interest rates. Derivatives are used exclusively for hedging purposes and are not traded or used as speculative instruments. This is carried out by Group Treasury under policies approved by the Board of Directors.

Interest rate risk

The Group manages interest rate exposures on borrowings in accordance with a Board approved treasury policy that specifies parameters for hedging including hedging percentages and approved hedging instruments. The policy specifies upper and lower hedging limits set for specific time frames out to 5 years.

At the reporting date the interest rate profile of the Group’s and the Company’s interest-bearing financial instruments was:

	THE GROUP	THE GROUP	PARENT ENTITY	PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
Fixed rate instruments
Financial assets	372	2,066	—	—
Financial liabilities	(1,105)	(1,641)	—	—
	(733)	425	—	—
Variable rate instruments
Financial assets	26,712	14,913	181,070	338,200
Financial liabilities	(34,432)	(189,313)	(14,153)	(213,115)
	(7,720)	(174,400)	166,917	125,085

The Group manages interest rate risk in accordance with a Board approved policy covering the types of instruments, range of protection and duration of instruments. The financial instruments cover interest rate swaps, forward rate agreements and interest rate options. Maturities of these instruments are up to a maximum of five years. Interest rate swaps and forward rate agreements allow the Group to raise long term borrowings including long term finance leases, at floating rates and swap them into fixed rates.

The approved range of interest rate cover is based on the projected debt levels for each currency and reduced for each future year. The Group currently hedges interest bearing debt in AUD, EUR and NZD with cover at 30 June 2008 extending to June 2010 in EUR and December 2009 in NZD. At 30 June 2008, the Group had 52% (2007: 56%) of debt hedged.

The Group classifies interest rate swaps as cash flow hedges and states them at fair value.

Details on the major components of the Group’s interest bearing liabilities is disclosed in Note 23.

Amalgamated Holdings Limited Annual Report 2008 75

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 28 —FINANCIAL RISK MANAGEMENT CONTINUED

Sensitivity Analysis

Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. The Group’s derivatives (interest rate swaps) qualify for hedge accounting and the effective movement in their fair value is accounted for in equity in the hedge reserve. Therefore a change in interest rates at the reporting date would not affect profit or loss.

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) equity and profit or loss for the financial year by the amounts shown below. This analysis assumes that all other variables, in particular foreign exchange rates, remain constant and is presented gross of tax. This analysis is performed on the same basis for 2007.

			EQUITY
	PROFIT OR LOSS		(HEDGING RESERVE)
	100 bp	100 bp	100 bp	100 bp
	increase	increase	increase	increase
	$’000	$’000	$’000	$’000
30 June 2008
Variable rate instruments	(71)	71	—	—
Interest rate swaps	183	(183)	143	(147)
Net sensitivity	112	(112)	143	(147)
30 June 2007
Variable rate instruments	(1,898)	1,898	—	—
Interest rate swaps	1,231	(1,231)	1,797	(1,855)
Net sensitivity	(667)	667	1,797	(1,855)

It should be noted that the Group’s debt level as at 30 June 2008 is low when compared to prior years and is not necessarily representative of debt levels for the coming year.

Foreign exchange risk

The Group is exposed to currency risk on purchases, borrowings and surplus funds that are denominated in a currency other than the respective functional currencies of Group entities, primarily the Australian dollar (AUD), but also the New Zealand dollar (NZD), Euro (EUR) and US dollars (USD). The Group manages foreign currency exposures in accordance with a Board approved treasury policy that specifies parameters for hedging, including hedging percentages and approved hedging instruments. At any point in time the Group hedges up to 60 percent of “highly probable” foreign currency exposures and 100 percent of confirmed foreign currency exposures. Typically foreign currency exposures are hedged with the utilisation of forward exchange contracts.

The Group’s exposure to foreign currency risk was based on the following notional amounts:

		JUNE 2008			JUNE 2007
	EUR	NZD	USD	EUR	NZD	USD
	$’000	$’000	$’000	$’000	$’000	$’000
Cash and cash equivalents	856	122	—	—	238	—
Trade receivables	—	261	—	—	600	—
Secured bank loans	—	(7,931)	—	—	(17,687)	—
Trade payables	—	(394)	—	—	(709)	—
Gross balance sheet exposure	856	(7,942)	—	—	(17,558)	—
Interest rate swaps	—	(13)	—	—	269	—
Forward exchange contracts	—	25	138	—	14	204
	—	12	138	—	283	204
Net exposure	856	(7,930)	138	—	(17,275)	204

The Company has no exposure to foreign currency risk.

Sensitivity Analysis

A 10 percent strengthening/weakening of the Australian dollar against the following currencies at 30 June would have increased/(decreased) equity and profit or loss (pre-tax) by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2007.

76 Amalgamated Holdings Limited Annual Report 2008

NOTE 28 — FINANCIAL RISK MANAGEMENT CONTINUED

	THE GROUP	THE GROUP	PARENT	ENTITY
	Equity	Profit or loss	Equity	Profit or loss
	$’000	$’000	$’000	$’000
30 June 2008
AUD/USD +10%	(6)	—	—	—
AUD/USD -10%	7	—	—	—
AUD/NZD +10%	(722)	—	—	—
AUD/NZD -10%	882	—	—	—
AUD/EUR +10%	(78)	—	—	—
AUD/EUR -10%	96	—	—	—
30 June 2007
AUD/USD +10%	(18)	—	—	—
AUD/USD -10%	22	—	—	—
AUD/NZD +10%	(1,658)	—	—	—
AUD/NZD -10%	2,026	—	—	—

Hedging of net investment in foreign subsidiaries

The Group’s NZD denominated bank loan is designated as a hedge of the Group’s investment in its subsidiaries in New Zealand. The carrying amount of the loan at 30 June 2008 was $7,931,000 (2007: $17,687,000). A foreign exchange profit of $1,767,000 (2007: profit of $891,000) was recognised in equity on translation of the loan to AUD.

The majority of the movement in the AUD/NZD sensitivity analysis in the table above is attributed to movements in the holding value of this NZD bank loan (and associated interest rate swaps). This movement would have an opposing movement in the AUD holding value of the underlying hedged investment in New Zealand.

Fair values

The fair values of financial assets and liabilities together with their carrying amounts shown in the Balance Sheet are as follows:

		Carrying	Fair	Carrying	Fair
		amount	value	amount	value
	Note	2008	2008	2007	2007
		$’000	$’000	$’000	$’000
The Group
Cash and cash equivalents	10	28,472	28,472	21,800	21,800
Trade and other receivables	11	34,658	34,658	36,965	36,965
Present value of loans provided under the employee share plan	11	349	349	421	421
Other financial assets	14	502	502	502	502
Available-for-sale financial assets	15	10,610	10,610	13,692	13,692
Investment properties	18	28,500	28,500	29,900	29,900
Security deposits — operating leases	20	4,985	4,985	5,490	5,490
Bank loans	22	(18,787)	(18,787)	(135,863)	(135,863)
Finance lease liabilities	22	(14,090)	(14,090)	(17,887)	(17,887)
Loans from associates	22	(848)	(848)	(35,253)	(35,253)
Loans from other companies	22	(3,363)	(3,363)	(4,641)	(4,641)
Payables	21	(67,897)	(67,897)	(65,593)	(65,593)
Interest rate swaps:
Assets	13	372	372	2,066	2,066
Liabilities	25	(13)	(13)	—	—
		359	359	2,066	2,066
Forward exchange contracts:
Assets	13	25	25	—	—
Liabilities	25	—	—	(19)	(19)
		25	25	(19)	(19)
		3,475	3,475	(148,420)	(148,420)
Unrecognised (losses)/gains			—		—

Amalgamated Holdings Limited Annual Report 2008 77

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 28 — FINANCIAL RISK MANAGEMENT CONTINUED

		Carrying	Fair	Carrying	Fair
		amount	value	amount	value
	Note	2008	2008	2007	2007
		$’000	$’000	$’000	$’000
Parent Entity
Cash and cash equivalents	10	176	176	186	186
Receivable from controlled entities	11	191,725	191,725	344,009	344,009
Other receivables	11	357	357	254	254
Loans provided under the employee share plan	11	349	349	421	421
Available-for-sale financial assets	15	10,610	10,610	13,692	13,692
Payables	21	(766)	(766)	(721)	(721)
		202,451	202,451	357,841	357,841
Unrecognised (losses)/gains			—		—

Estimation of fair values

The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected in the table above:

Quoted investments

Fair value is determined by reference to the securities exchange quoted market prices at close of business on the balance sheet date, without any deduction for transaction costs.

Derivatives

Bank mark-to-market valuations have been used to determine the fair value of interest rate swaps and forward exchange contracts. These have been back tested against valuations generated by the Group’s treasury system pricing module, using market quoted data as at balance date. The system uses discounted cash flow techniques to value financial instruments.

Interest bearing loans and borrowings

Fair value is calculated based on discounted expected future principal and interest cash flows.

Finance lease liabilities

The fair value is estimated as the present value of future cash flows, discounted at market interest rates for similar lease arrangements. The estimated fair value reflects the assessed current interest rate for a similar lease where this rate has been determined to be different from the rate charged.

Trade and other receivables/payables

For receivables/payables with a remaining life of less than one year, the notional amount is deemed to reflect the fair value. All other receivables/ payables are discounted to determine the fair value where an appropriate rate of interest is not received/charged in respect of the amount.

Interest rates used for determining fair value

The Group uses a bank quoted interest rate swap curve as of 30 June 2008 plus assessed risk factors/credit spread to discount financial instruments.

Capital management

The Group manages its capital with the objective of maintaining a strong capital base so as to maintain investor, creditor and market confidence and to have the capacity to take advantage of opportunities that will enhance the existing businesses and enable future growth and expansion. The Board monitors the return on capital, which the Group defines as operating profit after income tax divided by the of total shareholders’ equity and long term debt. The Board also monitors the Group’s gearing ratio, being net debt divided by total equity.

It is recognised that the Group operates in business segments in which operating results may be subject to volatility and the Board of Directors continuously reviews the capital structure to ensure sufficient:

surplus funding capacity is available;
funds are available for capital expenditure and to implement longer term business development strategies; and
funds are available to maintain appropriate dividend levels.

There were no changes in the Group’s approach to capital management during the year.

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.

78 Amalgamated Holdings Limited Annual Report 2008

		THE GROUP		PARENT ENTITY
		2008	2007	2008	2007
	Note	$’000	$’000	$’000	$’000
NOTE 29 — EMPLOYEE BENEFITS
Employee benefits
Aggregate liability for employee benefits including on-costs:
Current
Employee benefits provision	24	10,269	10,278	1,056	996
Non-current
Employee benefits provision	24	2,513	2,323	695	682
		12,782	12,601	1,751	1,678

Management Share Option Plan

There were no options granted during the current or previous financial year. Unissued ordinary shares of the Company under option are:

GRANT DATE	EXPIRY DATE	EXERCISE PRICE	NUMBER OF OPTIONS
11 December 2003	30 September 2008	$3.35	463,500
17 June 2004	30 September 2008	$3.14	30,000
16 September 2004	30 September 2008	$3.72	250,000
			743,500

The weighted average remaining contractual life of options outstanding at the end of the year was 0.25 years (2007: 1.25 years).

Options granted to each eligible employee ranged from 2,500 to 1,225,000 options. A total of 19 employees hold options at reporting date. During the year, employees exercised options to acquire 577,300 fully paid ordinary shares at a weighted average exercise price of $3.08. No options have been exercised since the end of the year.

Set out below are summaries of options granted:

Grant Date	Expiry Date	Exercise Price	Balance at the start of the year Number	Granted during the year Number	Exercised during the year Number	Expired during the year Number	Balance at the end of the year Number	Exercisable at the end of the year Number
The Group and Parent Entity — 2008 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	— — — —	(250,000) (307,300) (20,000) —	— — — —	— 463,500 30,000 250,000	— 463,500 30,000 250,000
Total			1,320,800	—	(577,300)	—	743,500	743,500
Weighted average exercise price			$3.30	—	$3.08	—	$3.47	$3.47
The Group and Parent Entity — 2007 05 February 2002 20 November 2003 11 December 2003 17 June 2004 16 September 2004	30 September 2006 30 September 2008 30 September 2008 30 September 2008 30 September 2008	$2.26 $2.75 $3.35 $3.14 $3.72	355,500 450,000 1,807,500 50,000 250,000	— — — — —	(355,500) (200,000) (1,036,700) — —	— — — — —	— 250,000 770,800 50,000 250,000	— 250,000 770,800 50,000 250,000
Total			2,913,000	—	(1,592,200)	—	1,320,800	1,320,800
Weighted average exercise price			$3.15	—	$3.03	—	$3.30	$3.30

Amalgamated Holdings Limited Annual Report 2008 79

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 29 — EMPLOYEE BENEFITS CONTINUED

Management share options granted on or after 5 February 2002 with an expiry date of 30 September 2008

These options vested on 30 September 2006. Since vesting, 1,814,000 options have been exercised to acquire fully paid ordinary shares. Options on issue under this plan total 743,500 as at 30 June 2008 and, if not exercised, the options will expire on 30 September 2008.

The ability to exercise these options was conditional on the Group achieving certain performance hurdles relating to increases in operating profit (5% per annum), earnings per share (5% per annum) and the market value of the Company’s share price (10% per annum). The performance hurdles were evaluated in September 2006 and it was determined that all the relevant applicable hurdles had been achieved.

Executive performance share plan

The establishment of the Executive Performance Share Plan was approved by shareholders at the 2006 Annual General meeting. Employees receiving awards under the Executive Performance Share Plan are those of a senior level and above (including the Managing Director).

An employee awarded performance shares is not legally entitled to shares in the Company before the performance shares allocated under the plan vest. However, the employee can vote and receive dividends in respect of shares allocated to them. Once the shares have vested, they remain in the trust (refer Note 1(s)(i)) until the earlier of the employee leaving the Group, the tenth anniversary of the date the performance shares were awarded or the Board approving an application for their release.

Award, vesting and exercise under the plan are made for no consideration.

Set out below is a summary of performance shares awarded under the plan:

Type of right	Grant Date	Balance at start of year Number	Granted during the year Number	Exercised during the year Number	Expired during the year Number	Balance at end of year Number
The Group and Parent Entity — 2008 Performance shares Performance shares	18 Feb 2008 19 Feb 2007	— 345,422	473,182 —	— —	— —	473,182 345,422
The Group and Parent Entity — 2007 Performance shares	19 Feb 2007	345,422	—	—	—	345,422

The performance period is three years. None of the performance shares awarded under the plan vested or became exercisable during the year. Fair value of rights granted

The assessed fair value at grant date of performance shares granted under the Executive Performance Share Plan during the year ended 30 June 2008 was $6.02 (2007 issue : $6.39) for those shares that have earning per share hurdles and $4.31 (2007 issue : $4.63) for those shares that have total shareholder return hurdles.

Tax exempt share plan

All Australian resident permanent employees (excluding directors) are eligible to participate in the Tax Exempt Share Plan. The Tax Exempt Share Plan enables participating employees to make salary sacrifice contributions to purchase shares on-market on a monthly basis. The shares in the Tax Exempt Share Plan are restricted from being traded and must be held for a minimum of three years whilst the participant remains an employee of the Group. Trading restrictions are lifted on the cessation of employment.

Offers under the Tax Exempt Share Plan are at the discretion of the Company. All shares acquired under the Tax Exempt Share Plan rank equally with all other ordinary shares.

The total number of shares purchased during the year by employees, under the Tax Exempt Share Plan, totalled 8,344 shares (2007: 7,258 shares).

Employee share plan

At 30 June 2008, the total shares issued under the plan was 177,220. There were no shares issued during the year. The plan is closed to new members and no offers have been made under the plan since 1998.

The market value of ordinary shares at 30 June 2008 was $4.87.

Note 26 provides details of the movement in the ordinary share capital during the year.

Superannuation

The Parent Entity and controlled entities contribute to several defined contribution superannuation plans — refer also to Note 1(r). The superannuation contributions recognised as an expense in the Income Statement is detailed below:

	THE		PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
Superannuation contributions recognised as an expense	6,091	5,751	259	264

80 Amalgamated Holdings Limited Annual Report 2008

NOTE 30 — COMMITMENTS AND LEASES

NOTE 30 — COMMITMENTS AND LEASES
	THE	GROUP	PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
Capital expenditure commitments
Contracted but not provided for and payable:
Within one year	12,774	3,665	—	—
Operating lease commitments — as lessee
Future minimum operating lease rentals not provided for and payable:
Within one year	95,943	91,999	230	240
Later than one year but not later than five years	333,645	336,986	364	594
Later than five years	456,389	509,560	—	—
	885,977	938,545	594	834

The Group leases various properties, including cinema sites, under operating leases. The leases typically run for periods up to 20 years, with varying terms, escalation clauses and renewal or extension options. The head lease in respect of the Thredbo Village and ski area is for a longer period, being 50 years. A Group subsidiary exercised its option under the head lease and entered into a new lease, on similar terms, for a further 50 years which commenced on 29 June 2007.

A small number of leases have commitments in respect of contingent rental payments which arise when the operating performance of a site exceeds a pre-determined amount. Also, there are rentals which are determined as the higher of a base rental and a fixed percentage of a defined amount reflecting the operating performance of a site. Contingent rental payments recognised as an expense in the period for the Group amounted to $1,535,000 (2007: $1,319,000).

	THE	GROUP	PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
Sub-lease receivables — as lessor
Future lease receivables in relation to sub-leases of property space
under operating leases not recognised and receivable:
Within one year	9,290	8,822	—	—
Later than one year but not later than five years	33,897	33,085	—	—
Later than five years	254,883	247,620	—	—
	298,070	289,527	—	—
Operating leases — as lessor
Future operating lease rentals for owned properties not recognised
and receivable:
Within one year	8,584	10,367	—	—
Later than one year but not later than five years	11,461	16,923	—	—
Later than five years	11,128	10,947	—	—
	31,173	38,237	—	—

The Group receives rental income from a number of properties, both owned and leased. With exception to sub-leases under the Thredbo head lease, leases are for periods ranging between one to 18 years and have varying terms, escalation clauses and renewal options. There are approximately 700 sub-leases under the Thredbo head lease. Thredbo sub-leases consist of long term accommodation sub-leases for holiday apartments, chalets and lodges and also retail sub-leases for shops. Long term accommodation sub-leases are typically for a period mirroring the head lease, which was renewed for a further 50-year period on 29 June 2007 (refer above).

Amalgamated Holdings Limited Annual Report 2008 81

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

		THE GROUP		PARENT ENTITY
		2008	2007	2008	2007
	Note	$’000	$’000	$’000	$’000
NOTE 30 — COMMITMENTS AND LEASES
CONTINUED
Finance lease commitments — as lessee
Finance lease rentals are payable as follows:
Within one year		5,277	5,316	—	—
Later than one year but not later than five years		10,500	15,005	—	—
Later than five years		—	—	—	—
		15,777	20,321	—	—
Less: Future lease finance charges		(1,687)	(2,434)	—	—
		14,090	17,887	—	—
The present value of lease payments are as follows:
Within one year		4,405	4,385	—	—
Later than one year but not later than five years		9,685	13,502	—	—
Later than five years		—	—	—	—
		14,090	17,887	—	—
Finance lease liabilities provided for in the accounts:
Current	22	4,405	4,385	—	—
Non-current	22	9,685	13,502	—	—
Total lease liabilities		14,090	17,887	—	—

Of the above lease, $13,849,000 (2007: $17,194,000) is in respect of land and buildings. The lease term is for a remaining three year period at the end of which time the controlled entity has an option to purchase the property at no additional cost. If the option was not exercised, a nominal value would be recovered over time in respect of the property.

The remaining balance of $241,000 (2007: $693,000) is in respect of plant and equipment. The lease term is for a remaining six month period at the end of which time the controlled entity has an option to purchase the equipment at no additional cost.

Finance lease commitments — as lessor

Neither the Group nor the Parent Entity has finance lease or hire purchase arrangements in place where they act as a lessor.

NOTE 31 — CONTINGENT ASSETS AND LIABILITIES

Details of contingent liabilities and contingent assets which although considered remote the directors consider should be disclosed, are as follows:

Claims against Group entities

Claim from a dispute over contract terms

During the financial year ended 30 June 2008 a Group entity received a claim, resulting from a dispute over contract terms, seeking recovery of past payments made totalling $4,141,000, plus interest and legal costs. A provision has not been established for this amount as the success of the claim is not currently considered probable.

Claims for personal injury

The nature of the Group’s operations results in claims for personal injury being received from time to time. The directors believe that the outcome of any current claims outstanding, which are not provided against in the financial statements, will not have a significant impact on the operating result of the Group or the Company in future reporting periods.

The directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.

Taxation — overseas controlled entities

A contingent asset exists at 30 June 2008 totalling approximately $7,950,000 (2007: $4,866,000) relating to disputed value-added tax provided for or paid by certain overseas controlled entities on a number of products sold during the period since 1 January 2005.

82 Amalgamated Holdings Limited Annual Report 2008

	THE	GROUP	PARENT ENTITY	PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
NOTE 31 — CONTINGENT ASSETS AND
LIABILITIES CONTINUED
Controlled entities
The Parent Entity has guaranteed the obligations of some controlled
entities in respect of a number of lease commitments.
The operating lease commitments not included in the Parent Entity’s
financial statements are due:
Not later than one year	—	—	60,993	54,271
Later than one year but not later than five years	—	—	93,911	103,192
Later than five years	—	—	104,621	120,650
	—	—	259,525	278,113
The Parent Entity has guaranteed the Group’s share of other commitments
in respect of financing and other arrangements of certain controlled entities:	—	—	7,782	6,894
Finance lease commitments guaranteed by the Parent Entity	—	—	3,931	5,829
Certain controlled entities hold interests in partnerships (refer Note 36),
and as such are jointly and severally liable for 100% of all liabilities incurred
by those partnerships. The total assets of the partnerships are sufficient to
meet such liabilities. The partnerships’ liabilities not included in the Group’s
financial statements, amounted to:	35,700	29,555	—	—
In addition, the Parent Entity or a controlled entity has guaranteed the
obligations of entities within the Group in respect of the lease commitments
of certain partnerships. The partnerships’ operating lease commitments,
not included in the Group’s financial statements, guaranteed by the Parent
Entity or a controlled entity are due:
Not later than one year	47,477	47,700	14,942	15,252
Later than one year but not later than five years	186,739	183,898	60,278	58,868
Later than five years	248,889	283,660	86,068	95,761
	483,105	515,258	161,288	169,881
Associates
The Parent Entity or a controlled entity has guaranteed the Group’s share
of obligations made by certain associates (refer Note 35) in respect of
operating lease commitments:	56,522	55,195	56,522	55,195
Total contingent liabilities	575,327	600,008	489,048	515,912

Amalgamated Holdings Limited Annual Report 2008 83

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 32 — DEED OF CROSS GUARANTEE

Pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998, the wholly-owned subsidiaries listed below are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports, and directors’ report.

It is a condition of the Class Order that the Parent Entity and each of the subsidiaries enter into a Deed of Cross Guarantee. The effect of the deed is that the Parent Entity guarantees to each creditor payment in full of any debt in the event of winding up of any of the subsidiaries under certain provisions of the Corporations Act 2001 . If a winding up occurs under other provisions of the Act, the Parent Entity will only be liable in the event that after six months any creditor has not been paid in full. The subsidiaries have also given similar guarantees in the event that the Parent Entity is wound up.

The subsidiaries subject to the deed are:

Birch, Carroll & Coyle Limited Kosciuszko Thredbo Pty Limited Bryson Hotel Pty Limited Kvarken Pty Limited Canberra Theatres Limited Lakeside Hotel Pty Limited Chyadis Pty Limited Mamasa Pty Limited Elsternwick Properties Pty Limited Noahs Limited Featherdale Farm & Aviaries Pty Limited Northside Gardens Hotel Pty Limited Featherdale Holdings Pty Limited Pantami Pty Limited Filmlab Engineering Pty Limited RQ Motels Pty Limited Glenelg Theatres Pty Limited Rydges Bankstown Pty Limited Greater Entertainment Pty Limited Rydges Cronulla Pty Limited Greater Occasions Australia Pty Limited Rydges Hotels Limited Greater Union International Holdings Pty Limited Sonata Hotels Pty Limited Greater Union Nominees Pty Limited Tannahill Pty Limited Greater Union Screen Entertainment Pty Limited The Geelong Theatre Company Limited Greattheatre Pty Limited The Greater Union Organisation Pty Limited GUO Investments (WA) Pty Limited Thredbo Resort Centre Pty Limited Gutace Holdings Pty Limited Tobeon Pty Limited Haparanda Pty Limited Tourism & Leisure Pty Limited Haymarket’s Tivoli Theatres Pty Limited Western Australia Cinemas Pty Limited Image and Sound Technology Pty Limited Zollverein Pty Limited Kidsports Australia Pty Limited

A consolidated Income Statement and consolidated Balance Sheet, comprising the Company and controlled entities which are a party to the deed, after eliminating all transactions between parties to the deed, at 30 June 2008 are set out as follows:

	THE GROUP	THE GROUP
	2008	2007
	$’000	$’000
Income Statement
Profit before tax	66,222	75,465
Income tax expense	(19,213)	(18,920)
Profit after income tax but before discontinued operations	47,009	56,545
Discontinued operations	40,092	23,280
Profit after income tax and discontinued operations	87,101	79,825
Retained earnings at the beginning of the year	393,600	346,765
Transfer from reserves	(255)	(2)
Dividends paid during the year	(37,263)	(32,988)
Retained earnings at the end of the year	443,183	393,600
Balance Sheet
Cash and cash equivalents	22,604	10,965
Receivables	20,347	19,008
Inventories	9,420	8,603
Other	2,943	5,934
Total current assets	55,314	44,510

84 Amalgamated Holdings Limited Annual Report 2008

	THE	GROUP
	2008	2007
	$’000	$’000
NOTE 32 — DEED OF CROSS GUARANTEE CONTINUED
Receivables	653	464
Investments in controlled entities	73,742	73,902
Other financial assets	500	500
Available-for-sale financial assets	10,610	13,692
Investments accounted for using the equity method	102,974	178,159
Property, plant and equipment	400,467	387,142
Investments properties	28,500	29,900
Goodwill and other intangible assets	10,109	9,583
Deferred tax assets	4,399	7,501
Other	1,892	1,706
Total non-current assets	633,846	702,549
Total assets	689,160	747,059
Payables	26,155	20,596
Interest bearing liabilities and borrowings	—	31,975
Current tax liabilities	24,860	4,879
Provisions	10,073	9,858
Other	21,479	18,454
Total current liabilities	82,567	85,762
Payables	2	2
Loans from controlled entities	16,858	30
Interest bearing liabilities and borrowings	24,892	147,067
Deferred tax liabilities	2,013	33
Provisions	2,959	3,949
Other	1,878	2,657
Total non-current liabilities	48,602	153,738
Total liabilities	131,169	239,500
Net assets	557,991	507,559
Equity
Share capital	98,809	97,030
Reserves	15,999	16,929
Retained earnings	443,183	393,600
Total equity	557,991	507,559

Amalgamated Holdings Limited Annual Report 2008 85

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

	THE GROUP
	2008	2007
	$’000	$’000
NOTE 33 — ACQUISITION AND DISPOSAL OF BUSINESSES
AND SUBSIDIARIES
(a) Acquisition
There were no acquisitions of subsidiaries during the year.
On 24 January 2007, the Group increased its interest in Shellharbour Cinema Partnership from 50% to
100%. The operating results from that date have been included in the consolidated operating results
for the 2007 year. Prior to this increase, Shellharbour Cinema Partnership was accounted for as a partnership
investment. Refer also to Note 36.
Carrying value of 50% interest immediately prior to 24 January 2007	—	321
Consideration for additional 50% interest	—	1,727
	—	2,048
Fair value of assets acquired:
Cash	—	169
Property, plant and equipment	—	1,512
Other net liabilities	—	(1,040)
Management rights acquired	—	1,407
Total consideration and carrying value of initial 50% interest	—	2,048
If this increase in the Group’s interest in Shellharbour Cinema Partnership had occurred on 1 July 2006,
Group revenue for the year to 30 June 2007 would have increased by $2,484,000 to $626,359,000 and
the Group profit for the year to 30 June 2007 would have increased by $115,000 to $82,310,000.
(b) Disposal
There were no disposals of subsidiaries during the year.
During the 2007 year, the Group disposed of its interest in the Pier 26 Bar and Café business.
Details of the disposal are as follows:
Consideration received	—	17,492
Transaction costs	—	(386)
Carrying value of entity disposed	—	(9,630)
Profit on disposal	—	7,476
Net assets of entities disposed of:
Cash	—	20
Property, plant and equipment	—	3,578
Goodwill	—	5,974
Other net assets	—	57
	—	9,629

The entity was disposed of on 25 June 2007 and the operating results to that date were included in the consolidated result.

86 Amalgamated Holdings Limited Annual Report 2008

NOTE 34 — PARTICULARS IN RELATION TO CONSOLIDATED ENTITIES

OWNERSHIP INTEREST 2008 2007 Note % % Parent Entity Amalgamated Holdings Limited Subsidiaries AHL Administration Pty Limited 100 100 Amalgamated Holdings Superannuation Fund Pty Limited 100 100 Ancona Investments Pty Limited 100 100 Beachcode Limited (a)(c)(h) – 100 Birch, Carroll & Coyle Limited 100 100 BLN Hotels Property Unit Trust 100 100 Blue Rock Venue Management Pty Limited 100 100 Bryson Centre Unit Trust 100 100 Bryson Hotel Property Unit Trust 100 100 Bryson Hotel Pty Limited 100 100 Canberra Theatres Limited 100 100 Cinema Facility Management GmbH (a)(f) 51 51 Chyadis Pty Limited 100 100 Digital Cinema Integration Partners Pty Limited 100 100 Edge Investments BV (a)(e) 100 100 Elsternwick Properties Pty Limited 100 100 Erste Kinoabspielstätten Verwaltungs GmbH (a)(f) 100 100 Featherdale Farm & Aviaries Pty Limited 100 100 Featherdale Holdings Pty Limited 100 100 Filmlab Engineering Pty Limited 100 100 Filmpalast am ZKM Karlsruhe Beteiligungs GmbH (a)(f) 100 — Glenelg Theatres Pty Limited 100 100 Greater Entertainment Pty Limited 100 100 Greater Occasions Australia Pty Limited 100 100 Greater Union Betriebsmittel GmbH (a)(f) 100 100 Greater Union Filmpalast Dortmund GmbH (a)(f) 100 100 Greater Union Filmpalast GmbH (a)(f) 100 100 Greater Union Filmpalast Rhein-Main GmbH (a)(f) 100 100 Greater Union Holdings Limited (b) 100 100 Greater Union International BV (a)(e) 100 100 Greater Union International GmbH (f) 100 100 Greater Union International Holdings Pty Limited 100 100 Greater Union Limited (c) 100 100 Greater Union Nominees Pty Limited 100 100 Greater Union Screen Entertainment Pty Limited 100 100 Greater Union Theaters GmbH (a)(f) 100 100 Greater Union Theaters Mainz GmbH & Co. KG (a)(f) 100 100 Greater Union Theaters Zweite GmbH & Co. KG (a)(f) 100 100 Greater Union Theaters Verwaltungs GmbH (a)(f) 100 100 Greattheatre Pty Limited 100 100 GUO Investments (WA) Pty Limited 100 100 Gutace Holdings Pty Limited 100 100 Haparanda Pty Limited 100 100 Haymarket’s Tivoli Theatres Pty Limited 100 100 Image and Sound Technology Pty Limited 100 100 Kidsports Australia Pty Limited 100 100 Kosciuszko Thredbo Pty Limited 100 100 KTPL Unit Trust 100 100 Kvarken Pty Limited 100 100	OWNERSHIP INTEREST
	2008 2007 Note % %
	Subsidiaries Greater Union Theaters Management Mainz GmbH (a)(f) 100 100 Greater Union Theaters Zweite Verwaltungs GmbH (a)(f) 100 100 Neue Filmpalast Management GmbH (a)(f) 100 100 Turmpalast Frankfurt Management GmbH (a)(f) 100 100 Vierte Kinoabspielstatten Verwaltungs GmbH (a)(f) 100 100 Zweite Kinoabspielstatten Verwaltungs GmbH (a)(f) 100 100 Lakeside Hotel Property Unit Trust 100 100 Lakeside Hotel Pty Limited 100 100 Lakeside International Hotel Unit Trust 100 100 Mamasa Pty Limited 100 100 Multiplex Cinemas Magdeburg GmbH (a)(f) 100 100 Multiplex Cinemas Oberhausen GmbH (a)(f) 100 100 Neue Filmpalast Beteiligungs GmbH (a)(f) 100 100 Neue Filmpalast GmbH & Co. KG (a)(f) 100 100 Noahs Hotels (NZ) Limited (a)(d) 100 100 Noahs Limited 100 100 Northside Gardens Hotel Property Unit Trust 100 100 Northside Gardens Hotel Pty Limited 100 100 Pantami Pty Limited 100 100 Red Carpet Event GmbH (a)(f) 100 100 Rivercode Limited (a)(c)(h) – 100 RQ Motels Pty Limited 100 100 Rydges Bankstown Pty Limited 100 100 Rydges Cronulla Pty Limited 100 100 Rydges Hobart Hotel Property Unit Trust 100 100 Rydges Hobart Hotel Pty Limited 100 100 Rydges Hotels Limited 100 100 Rydges Hotels Resorts Asia Pte Limited (g) 100 100 Rydges Queenstown Hotel Limited (a)(d) 100 100 Sonata Hotels Pty Limited 100 100 Tannahill Pty Limited 100 100 The Geelong Theatre Company Limited 100 100 The Greater Union Organisation Pty Limited 100 100 Thredbo Resort Centre Pty Limited 100 100 Tobeon Pty Limited 100 100 Tourism & Leisure Pty Limited 100 100 Turmpalast Frankfurt GmbH & Co. KG (a)(f) 100 100 Vierte Kinoabspielstatten GmbH & Co. KG (a)(f) 100 100 Western Australia Cinemas Pty Limited 100 100 Zollverein Pty Limited 100 100 Zweite Kinoabspielstatten GmbH & Co. KG (a)(f) 100 100
	(a) These companies are audited by other member firms of KPMG International. (b) This company was incorporated and is domiciled in Jersey. (c) These companies were incorporated in and carry on business in the United Kingdom. (d) These companies were incorporated in and carry on business in New Zealand. (e) These companies were incorporated in and carry on business in The Netherlands. (f) These companies were incorporated in and carry on business in Germany. (g) This company was incorporated in and carries on business in Singapore. (h) These companies were placed into liquidation during the year. All companies, except those stated above, were incorporated in Australia.

Amalgamated Holdings Limited Annual Report 2008 87

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 35 — INVESTMENTS IN ASSOCIATES

Details of the Group’s investments in associates are as follows:

NAME	PRINCIPAL ACTIVITIES	INVESTMENT INTEREST	CONTRIBUTION TO CARRYING AMOUNT	OPERATING PROFIT
		2008 2007 % %	2008 2007 $’000 $’000	2008 2007 $’000 $’000
Atlab Holdings Pty Limited	Multiple copy film release printing and post-production facility	(g) 50 50	1,500 6,584	(4,084) 2,705
Cinesound Movietone Productions Pty Limited	Film owner and 50 distributor	50 50	247 175	72 39
Filmpalast am ZKM Karlsruhe GmbH & Co KG	Film exhibitor	50 50	2,160 3,124	1,053 1,088
Filmpalast Konstanz GmbH & Co KG	Film exhibitor	50 50	591 603	173 90
Greater Union Kieft BV	Film exhibitor	(f) 50 50	277 555	7,126 452
MAF Greater Union LLC	Film exhibitor	49 49	10,867 12,806	7,683 6,475
Roadshow Distributors Pty Limited	Film distributor	(e) — 50	— 62,943	2,115 15,112
Rydges Rotorua Hotel Limited	Hotel owner	(d) 25 (d) 25	1,809 2,083	(10) 375
			17,451 88,873	14,128 26,336
Less: Discontinued Operations (Note 5) Roadshow Distributors Pty Limited				2,115 15,112
				12,013 11,224

(a) Dividends received from associates for the year ended 30 June 2008 by the Group amount to $16,744,000 (2007: $12,371,000).

(b) MAF Greater Union LLC was incorporated in the United Arab Emirates. CS Konstanz GmbH and Filmpalast an ZKM Karlsruhe GmbH were incorporated in Germany. Greater Union Kieft BV was incorporated in The Netherlands. All other associates were incorporated in Australia.

(c) The balance date of all associates is 30 June, with the exception of MAF Greater Union LLC which has a balance date of 31 December.

(d) Rydges Rotorua Hotel Limited has been equity accounted from 1 July 2006. The 2007 amount includes an adjustment of $130,000 on adoption of equity accounting.

(e) The interest in this associate was disposed of during the 2008 financial year.

(f) The Group through its 50% interest in Greater Union Kieft BV, held a 33.3% interesting a cinema site in The Netherlands. This interest was sold effective 20 February 2008, resulting in a profit on sale of $6,691,000.

(g) Impairment loss recognised

The Parent Entity and the Group have recognised impairment losses against the carrying values of their 50% interest in the Atlab Holdings Pty Limited Group (“Atlab”). In the Parent Entity financial statements the investment in Atlab is accounted for at cost, where as in the Group financial statements the investment is accounted for using the equity method. This has resulted in different impairment losses being recognised in the Group and the Parent Entity financial statements. In the Group financial statements the investment in Atlab has been written down by $4,253,000, whereas in the Parent Entity financial statements an impairment loss of $12,250,000 has been recognised. Atlab has experienced a significant decline in earnings over the year to 30 June 2008, which has lead to a reassessment of the carrying value of the investment. The assessed recoverable amount was determined as the present value of future cash flows to be derived from the investment. In making this determination, a pre-tax discount rate of 12.75% per annum was used.

88 Amalgamated Holdings Limited Annual Report 2008

	THE GROUP	THE GROUP
	2008	2007
	$’000	$’000
NOTE 35 — INVESTMENTS IN ASSOCIATES CONTINUED
Summarised financial information relating to associates
The Group’s share of aggregate assets, liabilities, revenues and net profit of associates is as follows:
Revenues — as reported by associates	83,483	264,595
Net profit — as reported by associates	18,381	26,336
Net profit — equity adjusted	14,128	26,336
Current assets	25,214	163,168
Non-current assets	25,940	68,734
Total assets	51,154	231,902
Current liabilities	23,937	125,406
Non-current liabilities	3,474	29,606
Total liabilities	27,411	155,012
Net assets — as reported by associates	23,743	76,890
Adjustments arising from equity accounting:
Goodwill	—	12,558
Foreign exchange translation	(2,039)	(575)
Other — impairment write-down	(4,253)	—
Net assets — equity adjusted	17,451	88,873
Movements in carrying amount of associates
Carrying amount of associates at the beginning of the year	88,873	76,515
Foreign currency translation movements	(1,924)	(521)
Share of associates’ net profit	18,381	26,336
Impairment write-down	(4,253)	—
Distributions received from associates	(16,744)	(12,371)
Share of (decrement)/increment in associates’ reserves	(1,788)	(1,991)
Reclassification from other financial assets	—	1,814
Disposal of associate	(65,058)	(909)
Other	(36)	—
Carrying amount of associates at the end of the year	17,451	88,873
Commitments
Share of associates’ capital expenditure commitments contracted but not provided for or payable:
Not later than one year	1,469	788
Later than one year but not later than five years	—	—
	1,469	788
Share of associates’ operating lease commitments contracted but not provided for or payable:
Not later than one year	5,761	6,510
Later than one year but not later than five years	17,377	21,192
Later than five years	33,263	32,778
	56,401	60,480

Amalgamated Holdings Limited Annual Report 2008 89

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

	THE GROUP
	2008	2007
	$’000	$’000
NOTE 35 — INVESTMENTS IN ASSOCIATES CONTINUED
Share of associates’ finance lease commitments contracted but not provided for or payable:
Not later than one year	2,456	259
Later than one year but not later than five years	392	—
Later than five years	—	—
	2,848	259
Less: Future lease finance charges	(450)	—
	2,398	259

Share of associates’ contingent liabilities

Refer to Note 31.

NOTE 36 — INVESTMENTS IN PARTNERSHIPS

NAME	PRINCIPAL ACTIVITIES	NATURE OF INTEREST	PROFIT SHARE	INVESTMENT CARRYING AMOUNT	SHARE OF SALES REVENUE	CONTRIBUTION TO OPERATING PROFIT
			2008 2007 % %	2008 2007 $’000 $’000	2008 2007 $’000 $’000	2008 2007 $’000 $’000
Australian Theatres Joint Venture	Operator of multiscreen cinema complexes	Share of partnership assets	50 50	86,540 92,793	138,798 131,278	18,982 (d)14,305
Browns Plains Multiplex Cinema Partnership	Operator of a multiscreen cinema complex	Share of partnership assets	33 33	143 151	1,313 1,252	82 97
Castle Hill Multiplex Cinema Partnership	Operator of a multiscreen cinema complex	Share of partnership assets	33 33	3,627 3,886	4,745 4,836	616 790
Casuarina Cinema Centre Partnership	Operator of a multiscreen cinema complex	Share of partnership assets	50 50	3,661 4,234	10,405 9,031	1,876 1,620
Garden City Cinema Partnership	Operator of a multiscreen cinema complex	Share of partnership assets	33 33	2,966 3,131	4,207 4,017	845 913
Geelong Cinema Partnership	Operator of a multiscreen cinema complex	Share of partnership assets	(c) 50 (c)50	(75) (75)	3,320 3,283	— 245
Jam Factory Cinema Operations Partnership	Operator of a multiscreen cinema complex	Share of partnership assets	50 50	1,670 1,455	7,651 6,852	215 (271)
Piccadilly Cinema	Owner and operator of a multiscreen cinema complex	Share of partnership assets	(e)— (e)—	— —	— —	— 11
Shellharbour Cinema Partnership	Operator of a multiscreen cinema complex	Share of partnership assets	(b)— (b) —	— —	— 1,242	— 135
Southport 6 Cinemas	Operator of a multiscreen cinema complex	Share of partnership assets	(a) 51 (a) 51	1,517 1,519	2,975 2,262	326 172
Toowoomba Cinema Centre Partnership	Operator of a multiscreen cinema complex	Share of partnership assets	50 50	1,178 1,362	3,384 3,276	391 385
				101,227 108,456	176,798 167,329	23,333 18,402

(a) The partnership is not consolidated as the Group does not have control and the power to govern financial and operating policies.

(b) Shellharbour Cinema Partnership became wholly owned on 24 January 2007.

(c) Provision for diminution in the value of the investment carrying amount has been raised against this entity in prior years.

(d) Profit is after the impact of the Group’s share of a provision for the write-down in the carrying value of specific under-performing cinema sites amounting to $Nil (2007: $2,590,000).

(e) The interest in this partnership was sold during the 2007 financial year.

90 Amalgamated Holdings Limited Annual Report 2008

NOTE 36 — INVESTMENTS IN PARTNERSHIPS CONTINUED

During the year, the cinema partnerships purchased management and consulting services of $5,273,000 (2007: $5,228,000), block and artwork of $135,000 (2007: $143,000) and other services of $328,000 (2007: $329,000) from the Group. These transactions were on normal commercial terms.

	THE GROUP	THE GROUP
	2008	2007
	$’000	$’000
The Group’s share of the partnerships’ assets and liabilities consists of:
Current assets	13,823	12,646
Non-current assets	77,762	80,959
Total assets	91,585	93,605
Current liabilities	16,042	12,558
Non-current liabilities	1,526	1,962
Total liabilities	17,568	14,520
Share of net assets	74,017	79,085
Movements in carrying amount of partnerships
Carrying amount of partnerships at the beginning of the year	108,456	119,783
Net additional investments in partnerships	157	813
Contributions for capital	—	—
Share of partnerships’ profit	23,333	18,402
Gross distributions	(30,686)	(29,949)
Disposal of investment	(33)	(93)
Amortisation of capitalised interest	—	(33)
Reclassification to plant and equipment	—	(467)
Carrying amount of partnerships at the end of the year	101,227	108,456

Refer to Note 31 for details of contingent liabilities

NOTE 37 — DIRECTOR AND EXECUTIVE DISCLOSURES

Information regarding individual directors’ and executives’ compensation and some equity instruments disclosures, as permitted by Corporations Regulations 2001 , are provided in the remuneration report contained within the directors’ report. The relevant sections of the remuneration report are outlined below:

SECTION OF REMUNERATION REPORT	DIRECTORS’ REPORT PAGE REFERENCE
Non-executive director remuneration	23
Managing Director and executive remuneration	23
Fixed annual remuneration	23
Variable remuneration — short term incentive (“STI”)	23
Variable remuneration — long term incentive (“LTI”)	24
Employment contracts	25
Directors’ position and period of responsibility	26
Directors’ and executives’ remuneration	27

Directors

The following persons were directors of Amalgamated Holdings Limited during the financial year:

NAME	POSITION	PERIOD OF RESPONSIBILITY
AG Rydge AJ Clark TC Ford RM Graham M Hellicar RG Newton JA O’Neill DC Seargeant	Non-executive director and Chairman Non-executive director and lead independent director Non-executive director Non-executive director Non-executive director Non-executive director Non-executive director Managing Director	1 July 2007 to 30 June 2008 1 July 2007 to 30 June 2008 1 July 2007 to 30 June 2008 1 July 2007 to 30 June 2008 1 July 2007 to 30 June 2008 29 February 2008 to 30 June 2008 1 July 2007 to 11 October 2007 1 July 2007 to 30 June 2008

Amalgamated Holdings Limited Annual Report 2008 91

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 37 — DIRECTOR AND EXECUTIVE DISCLOSURES CONTINUED

Other key management personnel

The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, during the financial year:

NAME	POSITION	PERIOD OF RESPONSIBILITY
NC Arundel GC Dean MR Duff HR Eberstaller RD Entwistle PW Horton	Managing Director, Rydges Hotels Limited Company Secretary, Amalgamated Holdings Limited Director — Commercial, Amalgamated Holdings Limited Managing Director AHL Strategic Investments, The Greater Union Organisation Pty Limited Managing Director AHL Entertainment, The Greater Union Organisation Pty Limited Director Finance & Accounting, Amalgamated Holdings Limited	1 July 2007 to 30 June 2008 1 July 2007 to 30 June 2008 1 July 2007 to 30 June 2008 1 July 2007 to 30 June 2008 1July 2007 to 30 June 2008 1 July 2007 to 30 June 2008

All of the above persons were also key management persons during the year ended 30 June 2007. NC Arundel and RD Entwistle commenced employment with the Group on 29 January 2007 and 13 November 2006 respectively. MR Duff was appointed to the key management position on 1 November 2006, prior to the appointment MR Duff held a senior finance position within The Greater Union Organisation Pty Limited.

Key management personnel remuneration

The key management personnel remuneration included in employee expenses is as follows:

	THE	GROUP	PARENT ENTITY	PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
Employee benefits
Short-term	5,127,939	4,627,074	3,891,982	3,400,302
Other	156,109	669,462	94,843	446,496
Post-employment	132,307	133,481	93,168	97,906
Equity compensation	462,369	196,171	377,407	164,829
	5,878,724	5,626,188	4,457,400	4,109,533

The comparative disclosures include key management personnel who ceased employment with the Company or Group during the previous financial year. The individuals who were previously key management personnel and who ceased employment with the Company or Group during the previous financial year include Messrs PG Lonergan, GC Lopez and DA Tynan.

Equity instruments

All options refer to options over ordinary shares of Amalgamated Holdings Limited, which are exercisable on a one-for-one basis under the Management Share Option Plan.

Options and rights over equity instruments granted as remuneration

No options over ordinary shares were granted or vested under the Management Share Option Plan at any time during the year.

Further details regarding options granted to executives under the Management Share Option Plan are given in Note 29.

Option holdings and transactions

The movement during the year in the number of options over ordinary shares in Amalgamated Holdings Limited held, directly, indirectly or beneficially, by each key management personnel, including their related parties, is as follows:

	Held at the beginning of the year	Granted	Exercised	Other *	Held at the end of the year	Vested and exercisable at 30 June
Director DC Seargeant 2008 2007	750,000 750,000	— —	(250,000) —	— —	500,000 750,000	500,000 750,000

92 Amalgamated Holdings Limited Annual Report 2008

NOTE 37 — DIRECTOR AND EXECUTIVE DISCLOSURES CONTINUED

	Held at the beginning of the year	Granted	Exercised	Other *	Held at the end of the year	Vested and exercisable at 30 June
Executives NC Arundel (commenced 2008 employment on 2007 29 January 2007) GC Dean 2008 2007 MR Duff (appointed to 2008 executive position on 2007 1 November 2006) HR Eberstaller 2008 2007 RD Entwistle (commenced 2008 employment on 2007 13 November 2006) PW Horton 2008 2007	— — 60,000 100,000 — — — 100,000 — — 100,000 150,000	— — — — — — — — — — — —	— — (30,000) (40,000) — (50,000) — (100,000) — — (55,000) (50,000)	— — — — — 50,000 — — — — — —	— — 30,000 60,000 — — — — — — 45,000 100,000	— — 30,000 60,000 — — — — — — 45,000 100,000
Former executives PG Lonergan (ceased 2008 employment on 2007 31 March 2007) GC Lopez (ceased 2008 employment on 2007 29 September 2006) DA Tynan (ceased 2008 employment on 2007 30 November 2006)	— 200,000 — 100,000 — 100,000	— — — — — —	— (200,000) — — — (100,000)	— — — (100,000) — —	— — — — — —	— — — — — —

This movement represents the balance of ordinary shares held at the relevant date, being the date of appointment to the executive position or termination from the Group.

No options held by key management personnel are vested but not exercisable at 30 June 2008 (2007: nil). No options have been granted since the end of the year. No options were held by the related parties of key management personnel.

Performance share holdings and transactions

The movement during the year in the number of performance shares in Amalgamated Holdings Limited held, directly, indirectly or beneficially, by each key management personnel, including their related parties, is as follows:

	Held at the beginning of the year	Granted	Held at the end of the year
Director DC Seargeant 2008 2007	100,000 —	100,000 100,000	200,000 100,000
Executives NC Arundel (commenced employment 2008 on 29 January 2007) 2007 GC Dean 2008 2007 MR Duff (appointed to executive 2008 position on 1 November 2006) 2007 HR Eberstaller 2008 2007 RD Entwistle (commenced employment 2008 on 13 November 2006) 2007 PW Horton 2008 2007	5,972 — 7,337 — 12,183 — 4,982 — 15,938 — 12,183 —	14,739 5,972 8,996 7,337 14,433 12,183 5,972 4,982 18,376 15,938 14,203 12,183	20,711 5,972 16,333 7,337 26,616 12,183 10,954 4,982 34,314 15,938 26,386 12,183

No performance shares have been granted since the end of the year. No performance shares were held by the related parties of key management personnel.

Amalgamated Holdings Limited Annual Report 2008 93

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 37 — DIRECTOR AND EXECUTIVE DISCLOSURES CONTINUED

Equity holdings and transactions

The movement during the year in the number of ordinary shares of Amalgamated Holding Limited held, directly, indirectly or beneficially, by key management personnel, including their related parties is as follows:

	Held at the beginning of the year	Purchases	Received on exercise of options	Sales	Other *	Held at the end of the year
Directors AG Rydge (Chairman) 2008 2007 AJ Clark 2008 2007 TC Ford 2008 2007 RM Graham 2008 2007 M Hellicar 2008 2007 RG Newton (appointed 2008 29 February 2008) 2007 JA O’Neill (appointed 2008 14 December 2006 and 2007 resigned 11 October 2007) DC Seargeant (Managing Director) 2008 2007	57,704,154 57,704,154 40,000 40,000 10,000 10,000 10,626 10,626 2,000 2,000 — — — — 250,500 250,500	— — — — — — — — — — — — — — — —	— — — — — — — — — — — — — — 250,000 —	— — — — — — — — — — — — — — (30,000) —	— — — — — — — — — — 3,000 — — — — —	57,704,154 57,704,154 40,000 40,000 10,000 10,000 10,626 10,626 2,000 2,000 3,000 — — — 470,500 250,500
Executives NC Arundel (commenced 2008 employment on 29 January 2007) 2007 GC Dean 2008 2007 MR Duff (appointed to executive 2008 position on 1 November 2006) 2007 HR Ebertstaller 2008 2007 RD Entwistle (commenced 2008 employment on 13 November 2006) 2007 PW Horton 2008 2007	— — 25,500 10,500 30,000 — — — — — 30,000 25,000	— — — — — — — — — — — —	— — 30,000 40,000 — — — 100,000 — — 55,000 50,000	— — (10,000) (25,000) — — — (100,000) — — (40,000) (45,000)	— — — — — 30,000 — — — — — —	— — 45,500 25,500 30,000 30,000 — — — — 45,000 30,000
Former executives PG Lonergan (ceased employment 2008 on 31 March 2007) 2007 GC Lopez (ceased employment 2008 on 29 September 2006) 2007 DA Tynan (ceased employment 2008 on 30 November 2006) 2007	— — — 16,720 — 100,000	— — — — — —	— 200,000 — — — 100,000	— (199,804) — — — —	— (196) — (16,720) — (200,000)	— — — — — —

This movement represents the balance of ordinary shares held at the relevant date, being the date of appointment to the executive position, commencement with the Group or termination from the Group.

No shares were granted to key management personnel during the financial reporting period as compensation in the year to 30 June 2008.

Loans and other transactions with key management personnel and their related parties

Loans to key management personnel and their related parties

There were no loans above $10,000 outstanding at any time during the year with any key management personnel or their related parties.

94 Amalgamated Holdings Limited Annual Report 2008

NOTE 37 — DIRECTOR AND EXECUTIVE DISCLOSURES CONTINUED

Other transactions with the Company or its controlled entities

AG Rydge and AJ Clark are directors of Carlton Investments Limited. Carlton Investments Limited rents office space from a controlled entity. Rent is charged to Carlton Investments Limited at a market rate. Rent received during the year was $31,774 (2007: $31,079). The Company holds shares in Carlton Investments Limited. Dividends received during the year from Carlton Investments Limited totalled $402,318 (2007: $430,508).

AG Rydge paid rent and levies to a controlled entity during the year amounting to $18,294 (2007: $14,298). A company associated with RM Graham paid rent and levies to a controlled entity during the year amounting to $5,226 (2007: $4,112). Rent is charged to AG Rydge and RM Graham at market rates.

Apart from the details disclosed in this note, no key management personnel has entered into a material contract with the Parent Entity or the Group since the end of the previous year and there were no material contracts involving directors’ interests existing at reporting date.

From time to time, key management personnel of the Parent Entity or Group, or their related parties, may purchase goods or services from the Group. These purchases are usually on the same terms and conditions as those granted to other Group employees. Where the purchases are on terms and conditions more favourable than those granted to other Group employees, the resulting benefits form part of the total remuneration outlined within the remuneration report.

NOTE 38 — RELATED PARTIES

Parent Entity

The Parent Entity within the Group is Amalgamated Holdings Limited.

Subsidiaries

Interest in subsidiaries are set out in Note 34.

	PARENT ENTITY	PARENT ENTITY
	2008	2007
	$’000	$’000
The aggregate outstanding amounts at reporting date of loans between the Parent Entity and its wholly-owned
subsidiaries and the revenue and expense items brought to account by the Parent Entity in relation to these
loans during the year is as follows:
Loans to controlled entities (current)	10,831	5,995
Loans to controlled entities (non-current)	180,894	338,014
Loans from controlled entities (non-current)	14,153	213,115
Interest received or due and receivable	27,896	21,143
Interest paid or due and payable	18,495	12,020
Management and consulting fees paid or due and payable	9,631	9,031
Current tax payable assumed from wholly-owned tax consolidated entities	44,882	16,809
Tax losses assumed from wholly-owned tax-consolidated entities at no consideration	—	6,023

Loans

Loans between entities in the Group are repayable at 13-months notice. Interest is charged monthly at commercial rates of interest, based on the Parent Entity’s average cost of funds.

Management fees

The Parent Entity charges all operating and wholly-owned controlled entities a management fee equal to 3% (2007: 3%) of net operating revenue for management services provided by directors and senior executives of the Parent Entity.

Associates

Interest received and paid on the loans to and from associates is shown in Notes 3 and 4.

Other transactions were:

sale of management services at a cost of $647,000 (2007: $1,180,000);
hire of films from Roadshow Distributors Pty Limited on normal commercial terms to a value of $1,582,000 (2007: $6,599,000);
receipt of property rentals from associates of $271,000 (2007: $257,000); and
share based payment costs of $76,000 (2007: $28,000) recharged to an associate.

Relationships with partnerships

Refer to Notes 11, 16, 31, 33 and 36.

Rent of premises

The Parent Entity occupies premises owned by a wholly owned controlled entity, The Greater Union Organisation Pty Limited. The Parent Entity was not charged rent for these premises.

Key management personnel

Disclosures relating to directors and named executives are set out in Note 37.

Amalgamated Holdings Limited Annual Report 2008 95

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

NOTE 39 — RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES

	THE GROUP		PARENT ENTITY	PARENT ENTITY
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
Reconciliation of profit after related income tax expense to net cash
provided by operating activities
Profit after income tax expense	99,515	82,171	42,022	14,133
Adjustments for:
Profit on sale of non-current assets	(64,131)	(27,737)	—	(3,779)
Depreciation and carrying value adjustments	23,159	23,897	46	40
Amortisation and carrying value adjustments	5,354	4,875	58	69
(Decrease)/increase in provisions	(2,658)	(7,265)	416	157
Increase/(decrease) in income taxes payable	20,573	(1,520)	(18,597)	(17,242)
Fair value increment/(decrement)	1,400	(4,879)	—	—
Share-based payments	1,409	477	977	306
Equity accounted investment decreases	47,430	42,320	—	—
Share of associates’ net profit	(37,461)	(44,738)	—	—
Investment impairment	—	—	12,250	—
Unrealised foreign exchange losses/(gains)	75	(61)	—	—
Net cash provided/(used) by operating activities before change
in assets and liabilities	94,665	67,540	37,172	(6,316)
Change in assets and liabilities adjusted for effects of consolidation of
controlled entities acquired / disposed during the year:
Intercompany revenue	—	—	(82,534)	(30,181)
Intercompany expense	—	—	18,495	12,020
Decrease/(increase) in receivables	3,489	(8,806)	(104)	(20)
(Increase) in inventories	(1,800)	(407)	—	—
Decrease/(increase) in other current assets	1,796	(1,758)	—	(4)
Increase/(decrease) in creditors and accruals	(2,487)	(2,795)	368	(5)
Increase in deferred tax items	6,641	3,451	—	—
Increase in other liabilities	(585)	2,192	—	—
Decrease in borrowing costs payable	1,283	3,634	—	—
Net cash provided/(used) by operating activities	103,002	63,051	(26,603)	(24,506)

NOTE 40 — EVENTS SUBSEQUENT TO REPORTING DATE

Acquisition of hotel

Dividends

For final dividends declared after 30 June 2008 see Note 8.

96 Amalgamated Holdings Limited Annual Report 2008

Directors’ Declaration

In the opinion of the directors of Amalgamated Holdings Limited:
(a) the financial statements and notes, set out on pages 36 to 96, and the remuneration disclosures that are contained in the remuneration report in the Directors’ Report set out on pages 22 to 30, are in accordance with the Corporations Act 2001 , including:
- (i) giving a true and fair view of the financial position of the Parent Entity and the Group’s financial position as at 30 June 2008 and of their performance for the financial year ended on that date; and
- (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001;
(b) there are reasonable grounds to believe that the Parent Entity will be able to pay its debts as and when they become due and payable.
There are reasonable grounds to believe that the Parent Entity and the subsidiaries identified in Note 32 will be able to meet any obligations or liabilities to which they are or may become subject by virtue of the Deed of Cross Guarantee between the Company and those subsidiaries pursuant to ASIC Class Order 98/1418.
The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive officer and chief financial officer for the year ended 30 June 2008.

Signed in accordance with a resolution of the directors:

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AG Rydge DC Seargeant Director Director

Dated at Sydney this 28th day of August 2008.

Amalgamated Holdings Limited Annual Report 2008 97

Independent Auditor’s Report TO THE MEMBERS OF AMALGAMATED HOLDINGS LIMITED

REPORT ON THE FINANCIAL REPORT

We have audited the accompanying financial report of Amalgamated Holdings Limited (the Company), which comprises the balance sheets as at 30 June 2008, and the income statements, statements of changes in equity and cash flow statements for the year ended on that date, a summary of significant accounting policies and other explanatory notes 1 to 40 and the directors’ declaration of the Consolidated Entity comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year (the “Consolidated Entity”).

We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards (including the Australian Accounting Interpretations), a view which is consistent with our understanding of the Company’s and the Consolidated Entity’s financial position and of their performance.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Auditor’s opinion

In our opinion:

Directors’ responsibility for the financial report

The directors of the Company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In note 1, the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements , that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

(a) the financial report of Amalgamated Holdings Limited is in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the Company’s and the Consolidated Entity’s financial position as at 30 June 2008 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.
(b) the financial report also complies with International Financial Reporting Standards as disclosed in note 1.

REPORT ON THE REMUNERATION REPORT

We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2008. The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with Section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with auditing standards.

Auditor’s opinion

In our opinion, the remuneration report of Amalgamated Holdings Limited for the year ended 30 June 2008 complies with Section 300A of the Corporations Act 2001 .

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KPMG

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David Rogers Partner Sydney 28 August 2008

98 Amalgamated Holdings Limited Annual Report 2008

ASX Additional Information

Additional information required by the Australian Securities Exchange Listing Rules and not disclosed elsewhere in the Annual Report is set out below:

SHAREHOLDINGS (AS AT 29 AUGUST 2008)

SUBSTANTIAL SHAREHOLDERS

The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are:

Shareholder	Number of ordinary shares held
Enbeear Pty Limited	56,598,377 *
Carlton Investments Limited	56,588,377
Investors Mutual Limited	14,612,359
IOOF Holdings Limited	13,017,940
Maple-Brown Abbott Limited	9,395,924

Includes Carlton Investments Limited holding.

VOTING RIGHTS

Ordinary shares

There were 4,258 holders of ordinary shares of the Company. The voting rights attaching to the ordinary shares, set out in clause 54 of the Company’s Constitution, are:

“Subject to any rights or restrictions for the time being attached to any class or classes of shares:
(a) at meetings of members or classes of members, each member entitled to vote may vote in person or by proxy or attorney; and
(b) on a show of hands, every person present who is a member or a representative of a member has one vote, and on a poll, every member present in person or by proxy or attorney and every person who is a representative of a member has one vote for each share he holds or represents as the case may be.”

Options

There were 19 holders of options of the Company. There are no voting or dividend rights attached to the options.

DISTRIBUTION OF EQUITY HOLDERS

	ORDINARY SHARES	ORDINARY SHARES	OPTIONS
	Number of	Number of	Number of	Number of
	shareholders	shares held	optionholders	options held
1 – 1,000	2,183	997,285	—	—
1,001 – 5,000	1,286	3,401,824	10	48,000
5,001 – 10,000	357	2,687,129	2	20,000
10,001 – 100,000	395	9,555,048	6	175,500
100,001 and over	37	112,494,820	1	500,000
	4,258	129,136,106	19	743,500

The number of shareholders holding less than a marketable parcel is 107.

UNQUOTED ORDINARY SHARES

There were 995,724 unquoted ordinary shares issued pursuant to the employee share plans. The shares were held by 571 holders.

SHARE REGISTRY

Computershare Investor Services Pty Limited Level 3, 60 Carrington Street Sydney NSW 2000 GPO Box 7045 Sydney NSW 2001 Telephone 1300 855 080 Facsimile 03 9473 2500

ON-MARKET BUY BACK

There is no current on-market buy back.

COMPANY SECRETARY

Mr Greg Dean CA, ACIS

Amalgamated Holdings Limited Annual Report 2008 99

ASX ADDITIONAL INFORMATION CONTINUED

REGISTERED OFFICE

The registered office of the Company is:

Level 10 49 Market Street Sydney NSW 2000 Telephone 02 9373 6600 Facsimile 02 9373 6534

OTHER INFORMATION

Amalgamated Holdings Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares. Shares are listed on the Australian Securities Exchange under the code AHD.

TWENTY LARGEST SHAREHOLDERS

The names of the 20 largest shareholders of the quoted shares are:

TWENTY LARGEST SHAREHOLDERS The names of the 20 largest shareholders of the quoted shares are:
	Number of	Percentage of
	shares held	capital held
Enbeear Pty Limited	28,028,359	21.7
Eneber Investment Company Limited	16,045,906	12.4
RBC Dexia Investor Services Australia Nominees Pty Limited (Bkcust Account)	12,759,314	9.9
National Nominees Limited	9,795,908	7.6
RBC Dexia Investor Services Australia Nominees Pty Limited	8,364,119	6.5
HSBC Custody Nominees (Australia) Limited	6,316,067	4.9
The Manly Hotels Pty Limited	4,625,001	3.6
JP Morgan Nominees Australia Limited	4,420,690	3.4
Carlton Hotel Limited	4,262,225	3.3
Alphoeb Pty Limited	3,203,846	2.5
Citicorp Nominees Pty Limited	2,488,059	1.9
Mr AG Rydge	1,526,455	1.2
Citicorp Nominees Pty Limited (CFSIL Cwlth Aust SHS 18 Account)	1,313,354	1.0
Sandhurst Trustees Limited (SISF Account)	1,215,527	0.9
TN Phillips Investments Pty Limited	1,178,652	0.9
Australian United Investment Company Limited	1,000,000	0.8
Cogent Nominees Pty Limited	848,449	0.7
Argo Investments Limited	752,392	0.6
Citicorp Nominees Pty Limited (CFSIL Cwlth Aust SHS 14 Account)	535,020	0.4
Presdar Pty Limited	402,000	0.3
	109,081,343	84.5

ANNUAL GENERAL MEETING

The Annual General Meeting will be held at 10am on Friday 24 October 2008 at The State Ballroom, State Theatre, 49 Market Street, Sydney NSW 2000.

WEBSITE

www.ahl.com.au

100 Amalgamated Holdings Limited Annual Report 2008

view our online annual report at

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THE 2008 AHL ONLINE REPORT PROVIDES A HIGH STANDARD OF READABILITY AND ACCESSIBILITY AND ALLOWS YOU TO SEARCH, VIEW, EXTRACT, EMAIL AND PRINT ALL OR ANY PART OF THE REPORT YOU REQUIRE.

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Designed and produced by Designate Reporting

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AMALGAMATED HOLDINGS LIMITED ABN 51 000 005 103

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AI assistant

EVT LIMITED — Annual Report 2008

64888_rns_2008-09-18_5ca7b0ea-4b8a-4f08-93c6-0c32f63611bb.pdf

RESULTS

PROPERTY

RESTRUCTURE INITIATIVES

CORPORATE GOVERNANCE

BOARD OF DIRECTORS

DIVIDENDS AND CAPITAL MANAGEMENT

THE FUTURE

DIRECTORS’ QUALIFICATIONS, EXPERIENCE AND INDEPENDENCE STATUS

ALAN RYDGE

Experience

Directorships

THOMAS FORD

Experience

Directorships

ROBERT GRAHAM

DAVID SEARGEANT

Experience

Experience

Directorships

Directorships

ANTHONY CLARK

Experience

Directorships

Experience

Directorships

RICHARD NEWTON

Experience

Directorships

JOHN O’NEILL AO

Experience

Directorships

AHL ENTERTAINMENT

Greater Union Cinemas

International Cinemas

AHL ENTERTAINMENT TECHNOLOGY

Atlab

Atlab Image & Sound Technology

Filmlab

State Theatre

Cinesound Movietone Productions

AHL STRATEGIC INVESTMENTS

Property

AHL HOSPITALITY & LEISURE

Rydges Hotels & Resorts

Thredbo Alpine Resort

Featherdale Wildlife Park

ENTERTAINMENT Cinema Exhibition — Domestic

Domestic Exhibition achieved an

Cinema Exhibition — International

Germany

Middle East

Netherlands

HOSPITALITY AND LEISURE Rydges Hotels and Resorts

Kosciuszko Thredbo

Leisure and Attractions

ENTERTAINMENT TECHNOLOGY

Atlab

Atlab Image and Sound Technology

Filmlab

STRATEGIC INVESTMENTS

Roadshow Distributors Pty Limited

Property

ENTERTAINMENT

GREATER UNION

NSW

QLD

SA

BIRCH CARROLL & COYLE

NSW

NT

QLD

CINESTAR

STATE THEATRE

ENTERTAINMENT TECHNOLOGY

ATLAB

FILMLAB

HOSPITALITY & LEISURE

EVT LIMITED Annual Report 2008