2009 Annual Report

ENTERTAINMENT

Cinema Exhibition — Domestic

Domestic Exhibition enjoyed a particularly strong year with Box Office up over the prior year by 11.7%. This result was driven by the strong performance of The Dark Knight which achieved in excess of $45 million at the Australian Box Office. Other major contributors were Australia, Mamma Mia! and Quantum of Solace all achieving in excess of $30 million and Madagascar: Escape 2 Africa, Twilight, Hancock and Monsters v's Aliens all over $20 million.

During the year, the Group expanded its 3D digital footprint significantly so as to capitalise on the increasing number of titles released in 3D. Over the 12 month period, 46 additional 3D projectors were installed over the circuit taking the total amount of projectors to 53. This is the largest deployment of any exhibitor within Australia.

Merchandising revenue continued to grow with a 5.6% improvement in revenue per admission over the prior year. This growth was driven by a number of successful Candy Bar Combo promotions and the ongoing success of the Gold Class concept. The increased Box Office and merchandising revenue resulted in the Domestic Exhibition earnings for the period increasing over the prior year by $8,690,000 or 25.3%.

In May, the Group launched a new cinema brand, Event Cinemas. Event Cinemas is a new concept and features the premium cinema offering of Gold Class and/or Vmax and enhanced food and beverage facilities, including Scoop Self Serve Candy Bar and Set Café/Bar. The entertainment offered will be expanded through digital to include live concerts and sporting events.

During the year, the Group also successfully launched its cinema loyalty program, Cinebuzz. Key benefits to members include rewards for frequency, invitations to special advance screenings and discounted ticket offers. Over 500,000 customers had joined the program by 30 June 2009.

A strong focus on corporate sales as well as the continued broadening of retail sales channels for gift cards products resulted in a 13.3% increase in the sales of these products. In addition the convenience of purchasing tickets online resulted in a further increase in the number of customers using this channel, increasing by 27.3% on the prior year.

During the year, the Group opened a new 11 screen cinema at the Robina Town Centre on Queensland's Gold Coast, replacing an existing six screen complex. This development is an Event Cinema and includes one Vmax screen and three Gold Class screens. The Group also converted six screens at the Castle Hill complex in Sydney's North West to 5 Gold Class screens. In addition the Group closed the five screen cinema at Hindley Street in Adelaide. The Group has retained ownership of this site and it has been leased to a commercial tenant.

The contribution for the Group's 50% interest in the Village managed circuit in Victoria increased by 54.0% over the prior year. This significant improvement was largely due to the strong movie line-up, the successful opening of a new nine screen cinema at Doncaster in October 2008 and the closure of the lossmaking site at Waverley Gardens in the later part of the prior year.

Cinema Exhibition — International

Germany

The Group's cinema exhibition operations in Germany was the stand-out performer within the Group, showing an increased profit before tax and interest of $11,659,000. Box Office revenue increased over the prior year by 10.3%, with the top performing films for the year being Madagascar: Escape 2 Africa, Angels & Demons, Quantum of Solace, Mamma Mia!, Hancock and The Dark Knight. These films were well supported by a number of German productions including Der Baader Meinhof Komplex, Krabat, Mannersache and 1½ Ritter. The Reader, a joint US and German production, also performed strongly within the German market.

Merchandising revenue per admission increased by 3.7% over the prior year. The increase in revenue along with further reductions in the level of operating costs contributed to the overall improved result.

During the period, four non-profitable sites were closed. However, several significant loss-making sites remain under review, particularly sites at Augsburg and Chemnitz. 3D capability was initially rolled out to 10 sites with a further 26 sites earmarked for 3D capability in the near future.

The Middle East

The Middle East cinema business continued to show growth and traded very strongly during the year. Box office was ahead of the prior year period by 14.7%. Merchandising revenue also grew, to be up by 17.6% over the prior year.

The weakening of the Australian dollar against both the Euro and Dirham also contributed to an increased contribution from the International Cinema operations, particularly from October 2008 through to March 2009.

HOSPITALITY AND LEISURE

Rydges Hotels and Resorts

The profit before tax, interest and individually significant items for the Hotels and Resort business was $24,530,000 representing a decline over the prior year of 20.5%.

Occupancy in the Group's owned hotels was 73.3%, down 1.4 percentage points over the prior year. There was only a marginal decline in average rate, resulting in a revenue per available room rate of $101.95, down 2.9% on the prior year. This result reflects an increased market share and was relatively pleasing considering the challenging trading environment.

Operating costs were reasonably well controlled; however, the result was impacted by one-off restructuring costs associated with the integration of a new owned hotel and redundancy and staff reallocation expenses.

With the global financial crisis negatively impacting demand, the focus was on cost control and growing market share via increased levels of promotional activity.

This resulted in improved staff productivity and significant volume growth from the leisure market. However, the growth in leisure travel was not at a pace sufficient to offset declines in the corporate, conference and inbound segments.

Despite soft demand across the board, results held up well in Canberra, Perth, Brisbane, Townsville, Gladstone and Christchurch. Conversely, trading conditions were difficult in Tropical North Queensland and Sydney.

The Rydges PriorityGUEST program has grown into a significant contributor to the Group's revenues. Rooms booked through the program exceeded 245,000, an increase of some 50% over the prior year.

Bookings from Rydges.com grew by 156,300 to 254,045 and accounted for 16.6% of total rooms sold during the year. Rooms booked online now account for 28% of total rooms sold.

The Group acquired the Gold Coast International Hotel in October 2008. Three new managed hotels, Rydges Hideaway Resort Fiji, Rydges Brighton and Rydges Kalgoorlie also joined the group. A 380 room extension and major expansion of conference space were completed at Rydges Bell City, and an 80 room extension and a new ball room are currently under construction at Rydges Auckland.

A review of the carrying value of owned hotel properties as at 30 June 2009, resulted in impairment write-downs totalling $3,028,000 in respect of two hotel properties. The impairment write-downs have been disclosed as individually significant items for the year ended 30 June 2009.

Kosciuszko Thredbo

With the completion of stage 4 of the enhancement and automation of Thredbo's snowmaking system, it now offers a great and much improved product with ski slopes of all skier levels from beginners, intermediate and advance terrain now being covered by snowmaking. Thredbo achieved approximately 392,500 skier days, which was the best result in the last five years and the third best ever recorded.

The favourable skiing conditions particularly in July and August 2008 helped Thredbo achieve a record financial result. Other positive earnings initiatives included the maximisation of yield-per-skier, increased marketing of the shoulder periods and effective management of operating costs.

Future development will focus on the adoption and staged implementation of a 20 year master plan for the Resort.

The start of winter 2009 has been above average.

Leisure and Attractions

Featherdale's earnings were slightly ahead of the prior year notwithstanding the continued weakness in the inbound tourist market. The weakness in the inbound market was offset by strong domestic market admissions, which were boosted by the World Youth Day period.

The State Theatre experienced significantly improved trading conditions compared to the prior year, driven by the increased number of performances held at the theatre over this period.

ENTERTAINMENT TECHNOLOGY

Atlab

The Group sold its 50% interest in the Atlab group in September 2008. The consideration for the sale was $1,500,000, which was equivalent to the Group's carrying value and, as a result, there was no profit or loss on sale.

Other

The Atlab sale did not include the whollyowned businesses of Edge Digital Technology (previously known as Atlab Image and Sound Technology) nor the Filmlab business.

Edge Digital Technology improved revenues from installation projects; however, the result was negatively impacted by reduced margins and a stock obsolescence write-off. Filmlab produced a satisfactory result but was impacted by a $566,000 inventory write-down.

STRATEGIC INVESTMENTS

Property

Rental income from the Group's property portfolio was generally in line with the prior year. Included in the result for this segment is a fair value decrement of $1,030,000 relating to the revaluation of investment properties. This compares to the prior year fair value decrement of $1,400,000 and reflects continued softening in the valuation of commercial property assets.

An impairment write-down of $2,312,000 was recognised in the financial year for a retail property owned by the Group. The impairment write-down has been disclosed as individually significant item for the year ended 30 June 2009.

Construction is expected to be completed in November 2009 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. Sales and marketing of the residential sub-division of the Bass Hill Drive-In site has commenced.

David C Seargeant
Managing Director
Amalgamated Holdings Limited