village annual report 2010

8/6/2019 Village Annual Report 2010

1/92

village roaDshow limiteD


2/92

f mproduct on

nd mus c

Village Roadshow has beeninvolved in the movie businesssince the 1960s. Jointly ownedwith other leading investors inthe entertainment industry,Village Roadshow EntertainmentGroup comprises: One o the leading independent

Hollywood movie producers,Village Roadshow Pictures,

having won 8 Academy Awardsand 3 Golden Globe Awards orflms including Training Day ,Mystic River and Happy Feet .Since its inception in 1998,Village Roadshow Pictures hasproduced 66 flms with globalbox o fce takings o over US$10billion including blockbusterhits such as The Matrix trilogy,

the Oceans trilogy, Charlie and the Chocolate Factory , Happy Feet , I Am Legend , Get Smart ,and Sherlock Holmes .

Concord Music Group, one othe worlds largest independentmusic companies, with over13,000 master recordings.

prof Village Roadshow frst commenced business in 1954 in Melbourne, Australia andhas been listed on the Australian Securities Exchange since 1988. Still based inMelbourne, Village Roadshow Limited (VRL) is a leading international entertainmentand media company with core businesses in Theme Parks and Attractions, FilmProduction and Music, Cinema Exhibition, Film Distribution and Radio. All o thesebusinesses are well recognised retail brands and strong cash ow generators -together they create a diversifed port olio o entertainment and media assets.

th mp rks nd

ttr ct ons

Village Roadshow has beeninvolved in theme parks since1989 and is Australias largesttheme park owner and operator.On Queenslands Gold Coast VRLhas: Warner Bros. Movie World, the

popular movie themed park; Sea World, Australias premier

marine theme park; Wet n Wild Water World, one o

the worlds largest and mostsuccess ul water parks;

Sea World Resort and WaterPark;

Australian OutbackSpectacular; and Paradise Country and Village

Roadshow Studios.In Sydney VRLs attractionsinclude: the iconic Sydney Aquarium; Sydney Wildli e World; Sydney Tower, Sky Walk and Oz

Trek; Shark Dive Extreme at Manly

Oceanworld; and the tourist auna park Hamilton

Island Wildli e Park inQueensland.

VRL has plans to build Australiasnewest water theme park, Wet nWild Sydney, expected to open inthe summer o 2013/14.VRLs overseas theme parks andattractions include: Kelly Tarltons Antarctic

Encounter and UnderwaterWorld in Auckland, NewZealand;

Wet n Wild Hawaii, USA; and Wet n Wild Phoenix, Arizona

USA.

c n m

xh b t on

Showing movies has a longtradition with Village Roadshow,having started in 1954 with thefrst o its drivein cinemas.Today Village Cinemas jointly

owns and operates 506 screensacross 50 sites in Australia, witha urther 73 screens at 9 sites inSingapore. VRL continues to leadthe world with emerging industry

trends including stadium seating,digital projection, 3D blockbustermovies and the growth categoryo premium cinemas includingGold Class.

f md str but on

Originally started by VillageRoadshow in the late 1960s,Roadshow Films has grown intoAustralasias largestindependent flm distributordistributing flms to cinemas

nationally as well as DVDs tomajor retailers. Roadshow is amajor orce in flm distribution inall mediums in Australia andenjoys long standing distributionagreements and relationships

with key flm suppliers, such asWarner Bros (since 1971), ABC,BBC, The Weinstein Companyand Village Roadshow Pictures.

cont nts 01 Corporate Review02 Theme Parks

and Attractions04 Film Production

and Music

06 Cinema Exhibition 07 Film Distribution08 Radio09 Financial Report85 Additional In ormation

Village Roadshow LimitedABN 43 010 672 054

r d o Village Roadshow startedAustralias frst FM radio station,2Day FM, in 1979. Now, through amajority shareholding o 52.5% inthe Australian listed AustereoGroup Limited, VRL owns andoperates Australias leading FMradio networks, Today FM andTriple M. With two radio stations

in each key mainland capital cityand a strong lineup o starsdriving continued rating success,Austereo has the number one FMstations in Sydney, Melbourne,Brisbane, Perth and second placein Adelaide*. Austereo has alsoexperienced a signifcantincrease in the number o website

unique browsers online, podcastsand video streams # and nowattracts over 5 million listenerson air and on line each week.

*Source: Nielsen Media Research survey 4 2010#Source: Nielsen Netratings, Avacast and Brightcove


3/92

01 Village Roadshow Limited

We are pleased to report that Village Roadshow Limited (VRL)has again produced a solid operating result from its corebusinesses for the year ended 30 June 2010.

Attributable operating pro t after tax before material itemsand discontinued operations for the year was $65.9 million,

17.7% up on $56.0 million for the prior period.EBITDA from operations of $254.5 million was up 8.2% onthe prior period of $235.2 million, re ecting strength in coreoperating divisions. Attributable net pro t after tax amountedto $94.8 million compared to $12.6 million in the prior period,after including material items and discontinued operations.Full details of the Companys nancial performance for the yearended 30 June 2010 can be found in the VRL Groups nancialreport which starts on page 9 of this annual report, and throughthe Companys website atwww.villageroadshow.com.au .

The Companys divisions have performed strongly inchallenging times, maintained solid cash ows andreduced costs.

Whilst economic circumstances are yet to fully improve, theDirectors consider that VRL is appropriately positioned tocapitalise on opportunities as they arise.The highlights for the year were: Australian Cinema Exhibition delivered outstanding results off

a record box of ce year; record theme park attendances were achieved at the

Australian Theme Parks from the continued success of theseason pass sales program;

the challenging retail sector for DVDs impacted on pro tabilityfrom the Film Distribution division;

Austereo maintained its ratings success in the third andfourth radio surveys of 2010;

the completion of the sale of the Greece and Czech Republicbusinesses resulted in a pro t after tax of $25.6 million in the

rst half; disappointing results from the Gold Class USA business due

to the impact of economic conditions in USA; and the successful completion of the buyback of 12.7 million

ordinary shares and 45 million preference shares at a cost of$109.9 million in the rst half.

Since the end of the nancial year the Company announcedan on-market buy-back and variation of rights proposal tosimplify the Groups capital structure and create one class of

shares. An explanatory memorandum setting out the detailsof the proposal was sent to all shareholders and a meeting ofthe Companys shareholders was held on 24 September 2010We are pleased that the proposal has received the support ofshareholders and that all remaining preference shares will havthe same rights as, and effectively convert into, ordinary sharin November 2010.

The simpli cation of the Companys capital structure is a signi cant milestone in VRLs history and will facilitate amore exible dividend policy in the future.

The Company has continued to enjoy the support of itsnanciers for the proposal and the Directors have agreed in th

short term that no dividends will be paid until these particulaborrowings have been repaid.In addition, since year end, the Company has announced thatit has entered into an arrangement to restructure its USAGold Class cinema business, and has signed a conditionalagreement to build and operate a water park in Sydney.The Company continues to operate its businesses withina responsible environmental and social framework whilstcontinuing to maximise long term shareholder value. VRL isnow tracking and reporting appropriately on the environmentsocial and governance issues most material to the Companyand our stakeholders. Our broader sustainability reportinginformation is available on the Companys website atwww.villageroadshow.com.au .We thank our dedicated and talented staff and managementfor their ongoing contribution to the success of VRL and tothe customers of our different businesses. Most particularlywe especially thank you, our shareholders, for your continuesupport throughout the year.

Robert G KirbyChairman

John R KirbyDeputy Chairman

Graham W BurkeManaging Director

To Our Shareholders

corpor tr

Robert G KirbyChairman

John R KirbyDeputy Chairman

Graham W BurkeManaging Director
http://www.villageroadshow.com.au/annual_reports/http://www.villageroadshow.com.au/Additional-Investor-Information/Sustainability-and-Community-Engagement.htmhttp://www.villageroadshow.com.au/annual_reports/http://www.villageroadshow.com.au/Additional-Investor-Information/Sustainability-and-Community-Engagement.htm


4/92


VRL is Australias largest theme park and attractions ownerand operator with an unrivalled portfolio of unique assets.The Gold Coast Theme Parks assets include Warner Bros.Movie World, WetnWild Water World, Sea World, Sea WorldResort and Water Park, Sea World Helicopters, ParadiseCountry, Australian Outback Spectacular and VillageRoadshow Studios. These businesses together produced animproved nancial performance compared to last year withEBITDA up over 10% and net pro t before tax up over 24%.

The result was underpinned by record attendances of 4.5 million guests for the Gold Coast theme parks, up 10% onthe prior year.

The strong attendance and revenue result was in part dueto the year-long success of the annual pass and multi-parkticket offers which proved extremely popular with core andregional market consumers.Strong local and regional attendances also contributed to asigni cant increase in in-park spend with particular success

in food and beverage, revenue increasing $3.4 million or 8.8%compared to the prior year. The successful result was alsoattributable to yield improvement resulting from the growthin direct sales channels, most notably the MyFun website andthe in-house call centre.Warner Bros. Movie World enjoyed signi cantly improvedvisitations during the year and has continued its strongperformance into the new nancial year. In addition to themarketing initiatives, this strong performance was off the backof the DC Comics 75th birthday celebrations and a limited runof theHeroes & Villains evening parade. The special eventsstrategy for Warner Bros. Movie World will continue during the

year, with preparations well advanced for the second annualFright Nights Halloween event at Warner Bros. Movie World.In addition, the weather forecast is calling for snow thisChristmas on the Gold Coast, as Warner Bros. Movie Worldintroduces a new night time Christmas event launching inDecember 2010.WetnWild Water World reinforced its pre-eminent water park position again with signi cant attendance growth andhigh repeat visitation.

The offering at this water park will be further enhancedthis year by the addition of signi cant attractions to attractWetnWilds growing number of guests. In September thecountrys rst multi-slide looping water slide attraction AquaLoop opened. This will be followed by an adventure parkthemed area featuring pay-as-you-play attractions such asthe Sky Coaster , Zip Linesand a Flow Rider surf machine.Sea World also achieved attendance growth during the year.This is expected to continue into the next year with the additof Australias largest interactive themed play structureCastaway Bay which opened in September. A contemporarysea life exhibit featuring King and Gentoo penguins will alsoopen in December 2010.The upgraded Australian Outback Spectacular show put in asolid performance and Paradise Country performed in linewith expectations given the softness of international tourismThe strong local currency also presented challenges forVillage Roadshow Studios to attract overseas lm productioto its facilities.

th m p rksnd ttr ct ons


5/92


Sea World Resort and Water Park also put in an improvedperformance with EBITDA up more than 6% over the previousyear. This enhanced performance of the Resort was driven inpart by the consumer response to the Resort having its ownwater park combined with the completion of the rst stage ofthe room upgrade program. The Resort was also the proudrecipient of three of the countrys most prestigious familyresort awards during the year.VRLs US Water Parks division consists of two regional waterparks, WetnWild Phoenix located in Arizona, and WetnWildHawaii located on the island of Oahu.Since opening in July 2009, WetnWild Phoenix has performedstrongly with higher than anticipated attendance throughoutthe balance of the summer season. It is anticipated that thepark will complete its second summer season on a positivenote, and continue to show attendance growth as the newpark matures in the market place.Despite a challenging economic environment, WetnWildHawaii produced a solid EBITDA with strong demand in the

core market for season passes which helped offset the declinein tourism visitation to the park. This summer season howeveris proving to be more challenging than last year as the localeconomy struggles to rebound from the economic impact ofthe global nancial crisis and decline in international touristnumbers to the islands.VRLs Attractions division includes Sydney Aquarium, SydneyWildlife World, Sydney Tower Observatory and Skywalk, ManlyOceanworld, Hamilton Island Wildlife Park and Kelly TarltonsAntarctic Encounter and Underwater World in Auckland, NewZealand.

EBITDA for this Attractions division was in line with the pryear although combined attendances were softer than inthe prior period. The addition of the newSuper Croc exhibitat Sydney Wildlife World and various promotional events,including NickelodeonsSpongeBob Squarepants at SydneyAquarium, were well received by the core and regionalmarkets and helped offset a decline in visitation from theInternational tourism market.The Auckland aquarium result was also impacted by aneconomy that is still recovering both domestically andinternationally. A reduction in the number of penguinsavailable for sale whilst the business is building up its animastocks for future internal expansion has also impacted theperformance of this business.In September 2010 VRL also announced it had signed aconditional agreement with the New South Wales Governmeto build and operate VRLs fourth WetnWild water parkat Prospect in Western Sydney. Subject to nance andvarious planning approvals,WetnWild Sydneyis expectedto open during the summer of 2013/14, with VRL investingapproximately $80 million in this world class venue.

WetnWild Sydney will be home to some of the worldsmost thrilling water park rides and attractions.

Catering for all ages the park will include Australias largestman-made beach and wave pool, duelling water coasters,a variety of both teen and family oriented water slides and atoddler pool and interactive water play zone. An integratedWater Management Plan will ensure sustainable watermanagement practices across the park and will also employstate-of-the-art water ef cient design, ltration and recyclingtechnology to maximise water re-use on site.
http://www.wetnwildsydney.com.au/http://www.wetnwildsydney.com.au/


6/92


VRLs Film Production and Music division is held via its40.4% equity accounted investment in Village RoadshowEntertainment Group (VREG), which consists of VillageRoadshow Pictures and Concord Music Group.

Village Roadshow Pictures is one of the leadingindependent movie producers in Hollywood, with 66 lmreleases over the past 12 years generating over US$10billion in worldwide box of ce revenue and 23 number onebox of ce openings.

Concord Music Group is one of the worlds largestindependent record companies and music publishers, withover 13,000 album-length master recordings and a relativelysmall but valuable catalogue of song copyrights.In May 2010, Village Roadshow Pictures successfullyrenegotiated its lm nancing facility.No signi cant pro t or loss has been recorded in theVRL group results in relation to VREG, as VREG is equityaccounted.

Village Roadshow Pictures rst theatrical release of the year,Where The Wild Things Are, generated over US$100 millionin worldwide box of ce receipts. The lm enjoyed a strongaudience turnout in the US and Australia off the back of thepopularity and nostalgia-factor for the classic childrensbook by Maurice Sendak, but was less successful in otherinternational markets.Sherlock Holmes opened in the US on Christmas Day andfrom late December into January holidays in the internationalmarkets with enormous success.

Sherlock Holmes generated blockbuster results withUS$523 million in box of ce receipts and Robert Downey Jr. won a Golden Globe in the Best Actor category in thetitle role.

f m product onnd mus c

The lm was also nominated for two Academy Awards inmusic and art direction. A highly anticipated sequel is beingplanned for late 2011, with Robert Downey Jr. and Jude Lawre-teaming with Guy Ritchie as director forSherlock Holmes 2 .Production is expected to start shortly.The sequel to the rst feature length movie of the populartelevision series,Sex And The City , opened world wide duringMay and June 2010 and enjoyed worldwide box of ce receipof over US$290 million, with a particularly strong result frominternational markets.Subsequent to year end,Cats And Dogs 2 was the rst 3Dfeature lm to be released from Village Roadshow Pictures.Following the original movie of the same name which releasin 2001 and grossed US$201 million worldwide, the sequelopened in the US in July 2010 to coincide with the northernsummer break with its international release following fromJuly through September.This was followed in September by the release of the next 3Dmovie by Village Roadshow Pictures,Legend Of The Guardians.

This lm, directed by Zack Snyder, has been developed froma series of best selling books and is a spectacular CGI fantasyaction-adventure lm. With visually stunning elements themovie will submerge audiences of all ages into the world ofthe owl kingdom.This release will be followed in October 2010 by the movieLife As We Know Itstarring Katherine Heigl (star of27 Dresses andKnocked Up) alongside Josh Duhamel (Transformers ) directedby Greg Berlanti. This romantic comedy is about two peoplewho have nothing in common but their mutual best friends.After their friends die unexpectedly, they end up guardians otheir godchild and fall in love during the process.


7/92


Village Roadshow Pictures is thrilled to continue itspartnership with George Miller with two upcoming lmsin 3D from the Academy Award winning director.In November 2011 the world will see the next chapter in thelife of Village Roadshow Pictures fearless penguin, Mumble,in Happy Feet 2. The originalHappy Feet movie released in 2006grossed over US$385 million worldwide and won the AcademyAward for Best Animated Film. Casting includes the returnof Robin Williams and Elijah Wood and the new addition ofMatt Damon and Brad Pitt as the voices of The Krills. Thistime the exquisite motion-capture imagery will be producedin 3D giving audiences a front row seat to the world of VillageRoadshow Pictures beloved penguins.VRL is proud that bothLegend Of The Guardians and Happy Feet2 were produced in Australia, enhancing the local skill baseand creating important local employment opportunities.This release is being followed up with another Australianbased production, a sequel to the iconicMad Maxseries ofmovies. In 2012 Village Roadshow Pictures will team up againwith George Miller for the next instalment withFury Road.This much anticipated movie will also be shot in 3D and willstar Charlize Theron and Tom Hardy.

Concord Music Group features one of the most prestigiousdiversi ed catalogues of master recordings, a valuableniche-orientated publishing catalogue and diversi edartist roster that includes some of the worlds most wellknown artists.

In addition to being a market leader in Jazz and other nichegenres (with recordings by Louis Armstrong, Miles Davis, JohnColtrane, Ella Fitzgerald and numerous other jazz legends),Concords catalogue contains classic recordings by other

legendary artists, such as Creedence Clearwater Revival, OtiRedding, Little Richard, Ray Charles and Frank Sinatra.Focussed on the more stable adult consumer, Concordemploys a portfolio strategy which includes a few newdeveloping artists balanced by more predictable, establishedartists with existing fan bases. Concord maintains activerecording relationships with over 150 artists and is the currenrecording home to Sir Paul McCartney, Elvis Costello, JamesTaylor, Robert Plant, George Benson, Kenny G, Alison KrauJohn Mellencamp and many more of the worlds best knownrecording artists.Concord releases its new recordings across a number ofactive record labels, such as Concord Records, Hear Music,Rounder, Stax, Telarc and Fantasy. In addition to releasingSir Paul McCartneys last two new albums, Concord hasannounced that it has entered into an arrangement to globallydistribute his entire catalogue of post-Beatles recordings, withplans to relaunch some of these seminal titles in late 2010.In addition to traditional physical and digital distribution

channels, Concord also distributes through non-traditionaloutlets and licenses its recordings for third party use such asin lms, television and video games. An example of these notraditional activities is Concords relationship with StarbucksCorporation with whom Concord maintains an exclusivearrangement to procure and supply CDs to its stores.VREG continues to pursue a number of strategic initiativesaimed at strengthening its balance sheet and augmenting itslong term ability to continue to fund future lms and musicprojects.


8/92


VRLs Cinema Exhibition business continued to outperformexpectations with 3D premium product being a key to thestrong performance.The Cinema Exhibition division operates in Australia,Singapore and the United States, through joint ventures withGreater Union and other independent cinema operators.EBITDA before discontinued operations and material itemsfor the period of $46.6 million was up from $36.0 million forthe prior period, primarily as a result of outstanding resultsfrom the Australian Cinema Exhibition circuit. Total paidadmissions were 37.3 million, up from 34.6 million in the prioryear.

The Australian cinema business continued its record performance throughout the year, boosted with the ow on momentum from the hugely successful movie Avatar .

3D titles performed strongly with top 10 titles including Avatar , Alice In Wonderland, Ice Age 3: Dawn Of The Dinosaursand UP .Since year end the run of strong product has continued withSalt , Wall Street and Inception, as well asCats & Dogs 2, Shrek4, Legend Of The Guardians and the brilliantToy Story 3, all in3D. Further highly anticipated product offerings includeHarry Potter and the Deathly Hallows , Due Date and Tron.The International Cinema Exhibition division operates cinemasin Singapore and the United States through associatedentities. Singapore performed strongly with VRLs share of netpro t before tax of $5.6 million, up from $3.1 million in theprior period. This was attributable to strong attendances andthe popularity of the outstanding 3D product on offer duringthe year.

c n mxh b t on

The United States Gold Class circuit incurred an operating loafter tax (VRL Share) of $9.9 million for the year compared $7.4 million in the prior year, a disappointing return for theyear. In September 2010 an indirect US subsidiary companyof VRL entered into an agreement to restructure the businessand to transfer its Gold Class cinemas and assets to a new UScompany managed by an experienced US cinema operator. Vhas invested approximately US$8 million in the new companexchange for a 30% minority shareholding interest.During the year Village Cinemas sold its interest in the Glensite in New South Wales for $3.4 million, reducing the totalnumber of sites by one and screens by eight. The entire circuin Greece and Czech Republic were also sold in the rst halfthe year.VRLs Australian cinema business currently has 50 sites with506 screens with a further site with 9 screens to be developedat North Ryde in New South Wales in the coming year, whilsVRLs Singapore cinema operations have 9 sites with 73screens.

Village Cinemas, in conjunction with its partners, willcontinue its commitment to capitalise on the success of 3Dand will roll out further digital screens in all locations.

Since September 2009, along with Greater Union, there hasbeen the deployment of digital projectors to 37 screens inAustralia. To date, 21% of screens across the circuit havebeen converted to digital projectors, and it is anticipated thatfurther 70 screens will be converted in the next nancial yea


9/92


Roadshow Entertainment continued to be the number onedistributor in the home entertainment sector.

This result was despite the DVD category experiencing an 8%decline on the prior year, partly driven by a lack of breakout

hits with the notable exceptions ofSherlock Holmes , MaosLast Dancer and 17 Again. Nevertheless there has been a clearfocus on cost control with savings generated in the areas offreight, cost of goods and overheads helping to mitigate thedecline in DVD sales.The DVD distribution relationships with the BBC, the ABC,Channel Nine and Fremantle Media each continue to be highvalued with positive results from their leading brands whichincludeTop Gear , Dr Who, The Wiggles, Underbelly A Tale of Two Cities, Grand Designs and Masterchef .Roadshow Television exceeded expectations with continuedgrowth both in Free to Air and pay-per-view revenue. Pay-per-view had a strong year with the average number of buysas well as the average buy price increasing from the prioryear. These improvements stemmed from the advent of highde nition pay per view. The evolution of digital distribution downloading in Australia has proven bene cial for Roadshowthough this business is still in its infancy. With more digitalretailers emerging this year the revenue streams from video-on-demand and electronic sell through will steadily increasein line with improved national broadband infrastructure.Roadshow is one of the leading suppliers of lm contentthrough the Apple i-Tunes movie download service and isalso now supplying content via Sony Playstation, Fetch TV aTelstra T-box amongst others.In addition Roadshow Live, in conjunction with the DaintyCorporation, is staging the highly acclaimedHairspray musical, which opened in Melbourne on 2 October.

The Film Distribution division includes Roadshow Films,Roadshow Entertainment, Roadshow Television and RoadshowLive, with operations in Australia and New Zealand.EBITDA excluding discontinued operations and material itemsfor the year was $50.0 million, down on the prior year recordof $55.2 million, however operating pro t before tax andmaterial items of $36.6 million was in line with the prior yearresult of $37.0 million.Roadshow Films performed well off the back of a broadproduct offering and strong theatrical demand. This partlyoffset a lower contribution from Roadshow Entertainmentfor the year which has been impacted by the challengingAustralian retail trading environment as well as a decline inthe sales of back catalogue lm titles on DVD.

Strong product performances throughout 2010 helped todrive the solid results from Roadshow Films.

The top 5 lms for the year by sales wereHarry Potter and TheHalf Blood Prince, Sherlock Holmes , Sex And The City 2, Clash Of

The Titans and Valentines Day .The nancial year was also an extremely busy year for therelease of local Australian product. The outstanding successofMaos Last Dancer and Bran Nue Dae con rmed the potentialof locally produced lms to perform in this market particularlywhen the product has clear marketable elements.Strong future product line up after year-end includesInception, Cats & Dogs 2, Legends of The Guardians , Life As WeKnow Itand The Expendables .

f md str but on


10/92


The Radio division comprises VRLs majority shareholdingin Austereo Group Limited (Austereo). VRL maintained itsownership percentage of the Australian Securities Exchangelisted group at 52.5%.EBITDA before material items for the period was $88.5million, up 1.2% on the prior year of $87.4 million, mainlyresulting from an increase in sales revenue of 2.1%.

Austereo continued to lead the Australian capital city commercial radio market through the year.

The stars of Austereos programmes are well known andmany are multi-media leaders, including Hamish & Andy,Kyle & Jackie O, Matt & Jo, Eddie McGuire and Roy & HG.Austereos networks deliver popular culture, music, sportand other topics of interest to Australians under 54. Each ofthe Austereo stations are vital hubs in their cities, focusingon local news and events, building communities through on-going special events, fund-raising and support of communityactivities and issues.

Throughout the year, Austereo maintained its ratings andrevenue share leadership and its market-leading TodayNetwork eclipsed the previous years sales, while the TripleM Network showed recovering trends later in the second halffrom both audience and sales view points. In June 2010, thetotal group posted its highest sales in ten years.

In the fourth radio survey of 2010 Austereo won number one FM positions in Sydney, Melbourne, Brisbane, Perthand number two in Adelaide.

Austereo is also involved in two joint venture radio enterprisesin Canberra and Newcastle who both had a very successfulyear. Both markets won audience leadership along with solidsales growth.

r d o

Overall, Austereo now captures over 40% of people aged10+ via FM Digital, Radio, Online and Mobile, attractingover ve million listeners in total on air and online eachweek.

Kyle and Jackie O dominate breakfast radio in Sydney andHamish and Andy remain the number one show in the drivetime slot. With Matt and Jo drawing audiences, MelbournesFox FM has retained its number one FM station mantle andMix 94.5 has won the Perth number one radio station 10+ agdemographic for the 85th survey in a row.Austereo leads the commercial radio industry in its online/interactive operations and is also a major player in theoverall online entertainment category. Few broadcast mediacompanies can compete with the growth rate of Austereosonline results and continued growth is anticipated into thenext nancial year and beyond.Austereos website unique browsers averaged 1.2 millionper month, up 25% on the prior corresponding period andpodcasts downloads averaged almost 5 million per monthfor the nancial year 2010, more than double the year prior.Video streams showed a massive 135% growth year-on-yearaveraging over 1.4 million streams each month over thepast nancial year. Austereos Today Network websites arestill number one nationally, with Hamish & AndysCaravanof Courage Great Britain and Ireland in June 2010 breakingprevious records to become the most popular online tactic inAustralian radio history with an unparalleled level of visualcoverage resulting in over 1 million video views and almost200,000 unique browsers.Austereos results release and annual report can be viewed atwww.austereo.com.au
http://www.austereo.com.au/index.php?option=com_content&task=view&id=65&Itemid=114http://www.austereo.com.au/index.php?option=com_content&task=view&id=65&Itemid=114http://www.austereo.com.au/index.php?option=com_content&task=view&id=65&Itemid=114


11/92

09 VILLAGE ROADSHOW LIMITED ANNUAL REPORT 2010

F I N A N C I A L

R E P O R T 2 0 1 0

ABN 43 010 672 054

10 Directors Report14 Auditors Independence Declaration14 Remuneration Report29 Corporate Governance Statement33 Statement of Comprehensive Income34 Balance Sheet35 Cash Flow Statement36 Statement of Changes in Equity37 Notes to the Financial Statements37 1. Corporate Information and Summary of Signi cant

Accounting Policies44 2. Revenue and Expenses46 3. Earnings Per Share46 4. Income Tax48 5. Dividends Paid and Proposed49 6. Cash and Cash Equivalents49 7. Trade and Other Receivables50 8. Inventories50 9. Intangible Assets and Goodwill52 10. Other Assets and Film Distribution Royalties52 11. Investments Accounted For Using The Equity Method53 12. Available-For-Sale Investments54 13. Subsidiaries57 14. Property, Plant & Equipment58 15. Trade and Other Payables

58 16. Interest Bearing Loans and Borrowings59 17. Provisions60 18. Other Liabilities60 19. Contributed Equity62 20. Reserves and Retained Earnings63 21. Non-Controlling Interest63 22. Contingencies64 23. Commitments65 24. Superannuation Commitments65 25. Key Management Personnel Disclosures67 26. Share Based Payment Plans72 27. Remuneration of Auditors73 28. Events Subsequent to Reporting Date73 29. Interests in Jointly Controlled Operations74 30. Segment Reporting75 31. Discontinued Operations76 32. Parent Entity Disclosures76 33. Financial Risk Management Objectives

and Policies82 34. Non-Key Management Personnel Related

Party Transactions83 Directors Declaration84 Independent Auditors Report85 Additional InformationIBC Directory

CONTENTS


12/92


DIRECTORS REPORT

Your Directors submit their report for the year ended 30 June 2010.

CORPORATE INFORMATIONVillage Roadshow Limited (the Company or VRL) is a company limitedby shares that is incorporated and domiciled in Australia. The registeredof ce of the Company is located at Village Roadshow Studios, Paci cMotorway, Oxenford, Queensland 4210, with the principal administrativeof ce at Level 1, 500 Chapel Street, South Yarra, Victoria 3141.

DIRECTORS AND SECRETARIESThe names of the Directors and Secretaries of the Company in of ce duringthe nancial year and until the date of this repor t are:

Directors:Robert G. Kirby (Chairman)John R. KirbyGraham W. BurkePeter M. HarviePeter D. JonsonD. Barry ReardonDavid J. EvansRobert Le Tet

Company Secretaries:Philip S. LeggoShaun L. Driscoll

The quali cations and experience of the Directors and Secretaries and thespecial responsibilities of the Directors are set out below.

Directors: Robert G. Kirby

Chairman, Executive Director, Age 59

First joined the Board on 12 August 1988,reappointed 5 July 2001. Holds a Bachelorof Commerce with over 30 years experiencein the entertainment and media industry.Through the launch of Roadshow Home Video,Mr. Kirby was the driving force behind theAustralian video revolution of the 1980s and1990s. He is a pioneer of new cinema conceptsin both Australia and internationally and has

been at the forefront of Vill age Roadshows successful diversi cation intotheme parks, radio and lm production. Chairman of Village RoadshowLimited 1994 to 1998, 2002 to 2006 and f rom June 2010. Deputy ChairmanVillage Roadshow Limited 1990 to 1994, 1999 to 2002 and 2006 to June2010. Director Austereo Group Limited and Chairman of Village RoadshowCorporation Pt y Ltd. Currently Deputy Chair of Peter MacCallum CancerFoundation, Victoria Board of Directors and Member of Patrons Council,Epilepsy Foundation and Patron of Victorian Arts Centre.Member Executive CommitteeChairman Nomination CommitteeOther Listed Public Company Directorships in previous 3 years:Austereo Group Limited, since 19 June 2001

John R. KirbyDeputy Chairman, Executive Director, Age 63

Member of the Board since 12 August 1988.Holds a Bachelor of Economics and is a Certi edPractising Accountant with over 40 yearsexperience in the entertainment industry.Chairman Village Roadshow Limited 1990to 1994, 1999 to 2002 and 2006 to June 2010.Deputy Chairman of Village Roadshow Limited1994 to 1998, 2002 to 2006 and from June 2010.Director Austereo Group Limited and Village

Roadshow Corporation Pty Ltd.Member Executive CommitteeOther Listed Public Company Directorships in previous 3 years:Austereo Group Limited, since 19 January 2001

Graham W. BurkeManaging Director, Executive Director, Age 68

Member of the Board and Managing Directorsince 9 September 1988. Managing DirectorVillage Roadshow Limited, a position he hasheld since 1988 with unrivalled experience in theentertainment and media industries. Mr. Burkehas been one of the strategic and creative forcesbehind Village Roadshows development andfounded Roadshow Distributors with the l ate RocKirby. He was also a founding director of radio

station 2Day FM, and spent four years as the or iginal Commissioner of theAustralian Film Commission. Director Austereo Group Limited and VillageRoadshow Corporation Pty Ltd.Chairman Executive CommitteeMember Remuneration CommitteeOther Listed Public Company Directorships in previous 3 years:Austereo Group Limited, since 19 January 2001

Peter M. HarvieExecutive Director, Age 71

Member of the Board since 20 June 2000.Executive Chairman, Austereo Group Limitedwith over 45 years experience in the advertising,marketing and media industries. First enteredradio in 1993 as Managing Director of the TripleM network before becoming Managing Directorof the enlarged group following its merger withAustereo in 1994. Founder and Managing Directorof the Clemenger Harvie advertising agency

from 1974 to 1993. Director Clemenger BBDO 1975 to 1992. Director MazdaFoundation Limited, Australian International Cultural Foundation and theAustralian National Maritime Museum.Member Executive CommitteeOther Listed Public Company Directorships in previous 3 years:Austereo Group Limited, since 16 January 2001

Peter D. JonsonIndependent Non-Executive Director, Age 64

Member of the Board since 24 January 2001 andLead Independent Director from 26 November2008. Holds a Bachelor of Commerce andMaster of Arts degrees from MelbourneUniversity and Ph D from the London Schoolof Economics. Following a 16 year careerwith the Reserve Bank of Australia including7 years as Head of Research, entered theprivate sector with roles at leading Australian

nancial institutions. Positions included Head of Research, James CapelAustralia; Managing Director, Norwich Union Financial Services; andChairman, ANZ Funds Management. Founding Chair Australian Institutefor Commercialisation Ltd (2002-2007) and Chair of Cooperative ResearchCentre Committee (2005-2010).Chairman Remuneration CommitteeMember Audit & Risk CommitteeOther Listed Public Company Directorships in previous 3 years:Bionomics Ltd, from 11 November 2004 to November 2009Pro Medicus Limited, since October 2000Metal Storm Limited, from February 2006 to February 2009.

D. Barry ReardonIndependent Non-Executive Director, Age 79

Member of the Board since 24 March 1999. Holds

a Bachelor of Arts, Holy Cross College and MBA,Trinity College. Over 40 years in the motion picturebusiness. Formerly Executive Vice President andAssistant to the President, Paramount Pictures.Between 1975 and 1978, Mr. Reardon held thepositions of Executive Vice President, GeneralCinema Theatres and between 1978 and 1999was President, Warner Bros. Distribution. Serves

on the board of various United States companies and organisations andis a Director of Village Roadshow Pictures International Pty Ltd.Member Remuneration CommitteeMember Audit & Risk CommitteeOther Listed Public Company Directorships in previous 3 years:Sundance Cinema Corporation Inc, since January 2006


13/92

DIRECTORS REPORT(CONTINUED)


DIRECTORS AND SECRETARIES(continued)Directors: (continued)

David J. EvansIndependent Non-Executive Director, Age 70

Member of the Board since 2 January 2007.Over 40 years international business experiencein media and entertainment industries includingCEO of GTV Channel Nine in Melbourne,

President, COO at Fox Television and ExecutiveVice President News Corporation, both in theUnited States, including Sky EntertainmentServices Latin America. Most recently Presidentand CEO of Crown Media Holdings Inc,

previously Hallmark Entertainment Networks, since 1999. Serves on theboard of British Sky Broadcasting Group Plc and the Australian TissueEngineering Centre and is a director of Village Roadshow EntertainmentGroup (BVI) Limited.Member Nomination CommitteeOther Listed Public Company Directorships in previous 3 years:Fairfax Media Limited (formerly John Fairfax Holdings Limited), from22 June 2005 to 9 November 2009British Sky Broadcasting Group Plc, since 21 September 2001

Robert Le TetIndependent Non-Executive Director, Age 66

Member of the Board since 2 April 2007.

Holds a Bachelor of Economics Degree fromMonash University and is a quali ed C.P.A.Founded and currently Executive Chairmanof venture capital company, Questco Pty. Ltd.Over 35 years experience in broadcasting, lmand entertainment industries, including Directorof television production company CrawfordProductions. Formerly Deputy Chairman of

radio station EONFM and 20 years as Chairman and CEO of Australiaslargest lm and advertising production company, The Filmhouse Group.Previously Chairman of radio stations 3UZ and 3CV, WSA CommunicationsPty. Ltd. and Entertainment Media Pty. Ltd and Chairman of MetropolitanAmbulance Service in Melbourne. Ser ved as Board Member of theAustralian Broadcasting Authority and Chairman of its Audit Committee.Chairman Audit & Risk CommitteeMember Nomination CommitteeOther Listed Public Company Directorships in previous 3 years:Nil.

Company Secretaries:Philip S. LeggoGroup Company Secretary, Age 56

A Chartered Accountant holding a Bachelor of Business Studies from RoyalMelbourne Institute of Technology and a Fellow of the Australian Instituteof Company Directors. Mr. Leggo has over 20 years experience in the mediaand entertainment industries, is a member of the Companys ExecutiveCommittee and a Secretary and Director of all of Village Roadshowsmajor subsidiaries.

Shaun L. DriscollCo Company Secretary & Group Manager Corporate Services, Age 55

Holds a Bachelor of Arts and Bachelor of Laws from University of Nataland is a Fellow of the Institute of Char tered Secretaries. Mr. Driscoll hasdiverse industry experience including over 20 years with Vill age Roadshow,is a Secretary of all of Village Roadshows subsidiaries and a Directorof Village Roadshows wholly owned subsidiaries.

Relevant Interests:As at the date of this report, the relevant interests of the Directors in theshares, options and in-substance options of the Company and relatedbodies corporate were as follows:

A STEREOGRO P

NAME Of DIRECTOR VILLAGE ROADSHOW LIMITED LIMITED

Ordinary Preference Ordinary OrdinaryShares Shares Options Shares

John R. Kirby 77,859,352 181,093,856Rober t G. Kirby 77,859,352 181,093,856Graham W. Burke 77,859,352 6,000,000 181,093,856Peter M. Harv ie 257,400 242,900 1,030,001Peter D. Jonson 20,000 37,000 D. Barr y Reardon 10,000 8,552 David J. Evans 80,000 Robert Le Tet

Messrs R. G. Kirby, J. R. Kirby and G.W. Burke each have a relevant interestin 100% of the issued capital of: Village Roadshow Corporation Pty. Limited, the immediate parent entity

of the Company; and Positive Investments Pty. Limited, the ultimate parent entity of

the Company.

PRINCIPAL ACTIVITIESThe principal activities of the Company and its controlled entities (theGroup, VRL group or consolidated entity) during the nancialyear were: Theme park and water park operations (Theme Parks); Aquariums and other attraction operations (Attractions); Cinema exhibition operations (Cinema Exhibition); FM radio operations (Radio); and Film, DVD and video distribution operations (Film Distribution).

OPERATING AND FINANCIAL REVIEWOverview:The VRL group recorded an attributable operating pro t after tax beforematerial items and discontinued operations for the year ended 30 June 2010of $65.9 million, compared to $56.0 million for the prior period.

EBITDA from operations of $254.5 million increased 8.2% on the prior periodgure of $235.2 million re ecting strength in core operating divisions.

Attributable net pro t af ter tax amounted to $94.8 million compared

to $12.6 million in the prior period, after including material items anddiscontinued operations.

Pro t after tax from discontinued operations of $25.6 million representsthe pro t on sale of the Greece and Czech Republic operations, aspreviously announced.

Total attributable pro t from material items after tax of $3.4 million forthe current period includes unrealised gains on interest r ate and foreigncurrency derivatives, net realised foreign currency losses, wr ite-downs andprovisions relating to the Groups investment in the US Gold Class business,costs resulting from the lapsed option to purchase Aussie World on theSunshine Coast and impairment of the Groups Sydney Wildlife World assets.

Key Points Australian Cinema Exhibition delivered outstanding results off a record

box of ce year; Record park attendances achieved at the Australian Theme Parks from

the continued success of the season pass sales program; Challenging retail sector for DVDs impacted pro tability from the Film

Distribution division; Austereo maintained its ratings success in the third and fourth radio

survey of 2010; Successful completion of the buyback of 12.7 million ordinary shares and

45 million preference shares at a cost of $109.9 million in the rst half; Completion of the sale of Greece and Czech Republic businesses

resulting in a pro t after t ax of $25.6 million in the rst half; Disappointing results from Gold Class USA business resulting from

impact of economic circumstances in USA; and Announcement of an on-market buy-back and variation of rights

proposal to simplify the Groups capital structure and create one classof shares.


14/92



EBITDA before material items for the period was $88.5 million, up 1.2% onthe prior year of $ 87.4 million, mainly resulting from an increase in salesrevenue of 2.1%.

film Production and Music:In May 2010, the Group contributed a further US$17.5 million to Vill ageRoadshow Entertainment Group (VREG), to assist in obtaining furthermedium term debt facilities to secure the current line up of productions.In August 2010, the amounts provided since May 2010, plus accruedinterest, were repaid to the Group. No signi cant pro t or loss hasbeen recorded in the VRL group results in relation to VREG, as VREG isequity accounted.

Debt and Capital Management:In the rst half of the year the VRL group sold its investments in the Greeceand Czech Republic operations which realised $83.8 million in proceeds,reducing the reliance on debt facilities in funding the Groups capitalmanagement initiatives in the period.

In addition to the re nancing of the Corporate, Cinema Exhibition andAttractions debt facilities in the rst half, the VRL group commencedand successfully completed in the second half of the nancial year there nancing of the debt facilities of its Film Distribution division.

On 9 August 2010, VRL announced a proposal to simplify its capit alstructure by varying the rights of its preference shares so that they have thesame rights as the ordinary shares, and an on-market buy-back of ordinaryand preference shares. The proposal is subject to various conditions further details were contained in the announcement made on 9 August2010, and full details were provided in the Explanatory Memorandum whichwas released on 24 August 2010.

DIVIDENDSThe VRL Board has resolved that no nal dividend will be declared for theyear ended 30 June 2010 as a result of the current work being undertakento simplify the capital structure of the VRL group.

In December 2009, a fully-franked nal dividend of 6.0 cents per ordinaryshare and 9.0 cents per A Class preference share was paid, and in July2009, a fully-franked interim dividend of 3.75 cents per ordinary and A Classpreference share was paid. In the year ended 30 June 2009, a fully-franked

nal dividend of 9.0c per ordinary share and 12.0c per A Class preferenceshare was paid.

EARNINGS PER SHAREBasic earnings per share were 72.88 cents (2009: (2.17) cents), basic earningsper share before discontinued operations were 51.41 cents (2009: (4.17)cents), and basic earnings per share before material items and discontinuedoperations were 48.54 cents (2009: 31.97 cents). There were no potential

ordinary shares that were dilutive in the years ended 30 June 2010 or 30 June2009. Total earnings per share before material items and discontinuedoperations were 34.80 cents (2009: 24.91 cents), based on a weightedaverage total of 189,282,366 (2009: 224,741,215) ordinary and A Classpreference shares.

SIGNIFICANT CHANGES IN STATE OF AFFAIRSTotal equity of the economic entity decreased by $22.8 million to $686.3 millionduring the year. This was mainly attributable to reductions in contributedequity of $108.4 million (mainly resulting from share buybacks) and reservesof $3.8 million, which was partly offset by a reduction in accumulated lossesof $81.0 million and an increase in non-controlling interests of $8.4 million.Net pro t attributable to members of the parent was $94.8 million, but afteraccounting for dividends provided and paid during the year of $14.9 million,and the transfer to accumulated losses of net reserve amounts of $1.1 million,accumulated losses of the economic entity decreased by $81.0 million.

EVENTS SUBSEQUENT TO REPORTING DATEOther than the following, there have been no material transactions whichsigni cantly affect the nancial or operational position of the economicentity since the end of the nancial year.

(a) Restructuring o Gold Class SA Operations:An indirect US subsidiary company of VRL (VR Attractions) has signeda Memorandum of Understanding in relation to the Gold Class USAoperations which, if completed, will result in VR Attractions contributingapproximately US$8 million to a new company, which will be 30% ownedby VR Attractions and which will own the restr uctured Gold Class USAbusiness operations.

OPERATING AND FINANCIAL REVIEW(continued)Overview: (continued)With regards to the trading results, the VRL group has demonstratedthe underlying strength of its core operating businesses, and continuesto focus on delivering what consumers want and to not only meet theirentertainment expectations but to exceed them. This focus is deliveringstrong results for the VRL group and demonstrating its commitment to bethe best in the entertainment industry.

The divisions have performed strongly in challenging times, maintained

solid cash ows and reduced costs. Economic circumstances are yetto fully improve but it is considered that the VRL group is in the rightposition to be able to capitalise on opportunities as they arise.

The proposed buy back and rights variation proposal is in response torequests from shareholders to simplif y VRLs capital structure. The Boardof VRL believes the transaction provides an appropriate choice for thoseshareholders who wish to remain as shareholders and those who preferto realise their holding for cash.

Cinema Exhibition:The Cinema Exhibition business continued to outperform expectations with3D premium product being a key to the strong performance. The VRL group,in conjunction with its partners, will continue its commitment to capitaliseon this success and roll out further digital screens in all locations.

EBITDA before discontinued operations and material items for the per iodof $46.6 million was up from $36.0 million for the prior per iod, primarilyas a result of outstanding results from the Australian Cinema Exhibitioncircuit. Singapore performed strongly with an operating pro t (VRL share)

of $5.6 million up from $ 3.1 million in the prior period. The United StatesGold Class circuit incurred an operating loss (VRL Share) of $9.9 million forthe year compared with $7.4 million in the prior year.

An indirect US subsidiary company of VRL (VR Attractions) has signeda Memorandum of Understanding in relation to the Gold Class USAoperations which, if completed, will result in VR Attractions contributingapproximately US$8 million to a new company, which will be 30% ownedby VR Attractions and which will own the restr uctured Gold Class USAbusiness operations.

Theme Parks:The Gold Coast Theme Parks maintained their market leading position,being creative in their product offering resulting in record attendances andstrong maintainable earnings.

EBITDA for the Theme Parks division, which includes the Gold Coast ThemeParks and US Water Parks was $96.0 million, excluding material items,compared to $81.3 million for the prior year. Operating pro t before tax andmaterial items for the Theme Parks division was $42.9 million, compared

to $32.5 million for the pr ior year.Attractions:EBITDA for the Attractions division, which includes the Sydney AttractionsGroup and Kelly Tarltons Antarctic Encounter and Underwater World, was$19.8 million, excluding material items, compared to $19.9 million for theprior year. Operating pro t before tax and material items for the Attractionsdivision was $8.5 million, compared to $10.3 million for the prior year. Forthe current period combined attendances were 2.5 million w hich is downfrom 2.7 million in the prior period.

film Distribution:The Film Distribution business continued to be a leader in lm distributionwith good product which, together with a focus on cost reduction, has partlyoffset the decline in DVD sales in a challenging retail sector.

EBITDA excluding discontinued operations and material items for theyear was $50.0 million, down on the prior year record of $55.2 million,however operating pro t before tax and material items of $36.6 million wasalmost unchanged from the prior year result of $37.0 million. RoadshowFilms performed well off the back of good product of fering and strongtheatrical demand. This partly offset a lower contribution from RoadshowEntertainment for the year which has been impacted by declining consumerdemand for retail DVD product.

Radio:Austereo continued its dominant market position, maintaining number oneFM radio positions in Sydney, Melbourne, Perth, Brisbane and number twoin Adelaide in the fourth radio survey in 2010.


15/92



SHARE OPTIONSDetails of unissued shares under option, and shares issued as a resultof the exercise of options, are set out in Note 19 of the Financial Report.Details of share, option and in-substance option transactions in relationto Directors of the economic entity are set out in Notes 25 and 26 of theFinancial Report.

INDEMNIFYING AND INSURANCE OF OFFICERSAND AUDITORSSince the commencement of the nancial year, the Company has not,in respect of any person who is or has been an of cer or auditor of theCompany or related body corporate, indemni ed or made any relevantagreement for indemnifying against a liabilit y (including costs and expensesincurred in successfully defending legal proceedings) incurred as anof cer or auditor, nor has the Company paid or agreed to pay a premiumfor insurance against any such liabilities incurred as an of cer or auditorother than an un-allocated group insurance premium of $202,037(2009: $192,699) which has been paid to insure each of the Director s andSecretaries of the Company against any liabilities for costs and expensesincurred in defending any legal proceedings arising out of their conductas of cers of the Company or related body corporate, other than conductinvolving wilful breach of duty.

REMUNERATION REPORTThe Remuneration Report, which forms part of this Directors Report, is setout on pages 14 to 28.

DIRECTORS MEETINGSThe following table sets out the attendance of Directors at formal Directorsmeetings and committee of Directors meetings held during the period thatthe Director held of ce and was eligible to attend:

EVENTS SUBSEQUENT TO REPORTINGDATE (continued)(b) Part-Repayment o Loans and Release o Guarantee re:film Production and Music Division:As announced to the Australian Secur ities Exchange (ASX) on 9 August2010, the VRL group has now been repaid for the loans made to VREGsince May 2010 (and accrued interest), and has also been released fromthe guarantee that was provided in May 2010, resulting in approximatelyUS$20.6 million being repaid to the VRL group in August 2010.

(c) Simpli cation o Capital Structure and CapitalManagement Proposal:As advised to the A SX on 9 August 2010, VRL intends to vary the r ightsof VRLs preference shares so that they have the same rights as VRLsordinary shares, and also intends to conduct an on-market buy-backof ordinary and preference shares. The proposed variation of rightsis conditional on VRL buying back ordinary shares and preference sharestotalling at least 11 million shares in VRL, and the capital managementproposal is conditional upon various matters including shareholderapproval. Full details were contained in the Explanatory Memorandumthat was released on 24 August 2010.

LIKELY DEVELOPMENTS ANDEXPECTED RESULTSIn accordance with the Groups strategy of continually improving eachindividual divisions operating performance through the continued

development of innovative and competitive products and services, it isanticipated that the Groups diversi ed businesses will continue to operatepro tably in the future.

ENVIRONMENTAL REGULATIONAND PERFORMANCEThe VRL group is subject to the National Greenhouse and Energy Reporting Actfor the year ended 30 June 2010, however this will not result in anymaterial impact to the VRL group.

NAME Of DIRECTOR N MBER Of MEETINGS HELD WHILE IN OffICE N MBER Of MEETINGS ATTENDED

Formal Audit & Risk Remuneration Nomination Formal Audit & Risk Remuneration Nomination

Graham W. Burke 14 2 14 2 David J. Evans 15 1 12 1Peter M. Harv ie 15 14 Peter D. Jonson 15 4 2 15 4 2 John R. Kirby 14 1 8 1Robert G. Kirby 14 14 Robert Le Tet 15 4 1 15 4 1D. Barr y Reardon 15 4 2 11 3 2

Informal procedural meetings attended by a minimum quorum of three Directors to facilitate document execution and incidental matters are not includedin determining the number of Direc tors meetings held.

TAX CONSOLIDATIONA description of the economic entitys position in relation to Austr alian TaxConsolidation legislation is set out in Note 4 of the Financial Repor t.

AUDITOR INDEPENDENCEThe Auditors Independence Declaration to the Directors of VillageRoadshow Limited, which forms part of this Directors Report, is set out onpage 14.

NON-AUDIT SERVICES PROVIDED BY AUDITORDetails of the non-audit services provided by the auditor are set out inNote 27 of the Financial Report. The non-audit ser vices summarisedin Note 27 were provided by the VRL groups auditor, Ernst & Young.The Directors are satis ed that the provision of non-audit services iscompatible with the general standard of independence for auditorsimposed by the Corporations Act 2001. The nature and scope of eachtype of non-audit serv ice provided means that auditor independencewas not compromised.

ROUNDINGThe amounts contained in this report and in the nancial statements havebeen rounded (where applicable) to the nearest thousand dollars underthe option available to the Company under A SIC Class Order 98/100. TheCompany is an entity to which the Class Order applies.

Signed in accordance with a resolution of the Directors at Melbourne this31st day of August 2010.

R.G. KirbyDirector


16/92


AUDITORS INDEPENDENCE DECLARATION TO THE DIRECTORS OF VILLAGE ROADSHOWLIMITEDIn relation to our audit of the nancial repor t of Village Roadshow Limited for the nancial year ended 30 June 2010, to the best of my knowledge and belief,there have been no contraventions of the auditor independence requirements of the Corporations Act 2001or any applicable code of professional conduct.

Ernst & Young

Rodney PiltzPartner

31 August 2010 Liability limited by a scheme approved under Professional Standards Legislation.

A DITORS I DEPE DE CE DEClARATIO

The Directors of the Company present the Remuneration Report (the Report) which details the compensation arrangements in place for Director s andsenior managers of the Company and of other senior managers of the VRL group for the year ended 30 June 2010 in accordance with Section 300A of theCorporations Act 2001(the Act).

The relevant share-based payments for these Directors and Key Management Personnel are set out in Note 26 of the Financial Report.

The information provided in this Report has been audited as required by Section 308 (3C) of the Act. The Report forms part of the Directors Report.

A. EXECUTIVE SUMMARY1. Categories o Directors and Senior ManagementThe relevant Directors and senior managers to whose compensation arrangements this Report refers have been segregated into the following categories:

Categories and groupings o directors and executives re erred to in Remuneration Report

Messrs John Kirby, Robert Kirby

and Graham Burke= VRL Executive Director KMP Executive Director KMP Executive KMP

= All membersof Village Roadshow LimitedsExecutive Committee

Key Management Personnelo the Village RoadshowLimited Group

Mr. Peter Harvie

All other non-Director membersof Village Roadshow LimitedsExecutive Committee

Executive Committee KMP

All Non-Executive Directors of Village Roadshow Limited Non-Executive Director KMP

Top 5 Most Highly Remunerated Executives of the Company, VillageRoadshow Limited, and of the Village Roadshow consolidated group

Drawn from Executive Committee KMP

REm ERATIO REPORT


17/92

REm ERATIO REPORT (CONTINUED)


A. EXECUTIVE SUMMARY(continued)1. Categories o Directors and Senior Management (continued)(a) Executive KMPThese are executives who fall in the de nition of Key Management Personnel of the VRL group, being those persons, including any Executive Director, withthe authority and responsibility for planning, directing and controlling the activities of the VRL group, and are referred to in this report as Executive KMP.All Executive KMP are the members of the Village Roadshow Limited Executive Committee.

In the case of Village Roadshow Limited, these Executive KMP are further split into 2 categories:

(i). Executive Director KMP

The Companys 4 Executive Directors are referred to in this report as Executive Director KMP. Of these 4 Executive Director KMP, 3 Executive Directors,being Messrs. John R. Kirby, Rober t G. Kirby and Graham W. Burke, have their remuneration set and are paid by Vil lage Roadshow Limited and are referredto as VRL Executive Director KMP. Mr. Peter M. Harvies remuneration is set and paid by Austereo Group Limited, a controll ed entity and part of the VRLgroup, which is separately listed on the Australian Securities Exchange (ASX).

(ii). Executive Committee KMPThe non-director senior executives on the Village Roadshow Limited Executive Committee are referred to in this report as the Executive CommitteeKMP, the 5 most highly remunerated of which are Messrs. Timothy Carrol l, Simon T. Phillipson, Philip S. Leggo, Peter J. Davey and Ms. Julie E. Raffe.

The names, positions, dates of appointment, and dates of cessation (if ceasing up to 30 June 2010), of these Executive KMP for the 2009 and 2010 nancialperiods are as follows:

Name Title/Position Appointment Cessation CategoryRobert G. Kirby Executive Chairman^ 3 Jun 2010 VRL Executive Director KMP

John R. Kirby Executive Deputy Chairman# 3 Jun 2010 VRL Executive Director KMP

Graham W. Burke Managing Director# 9 Sep 1988 VRL Executive Director KMP

Peter M. Harvie Executive Director 20 Jun 2000 Executive Director KMP

Peter E. Foo Group Chief Operating Of cer 19 Mar 2007 19 Jun 2009 Executive Committee KMP

Philip S. Leggo Group Company Secretary 23 Feb 1993 Executive Committee KMP

Julie E. Raffe Chief Financial Of cer 28 Sep 1992 Executive Committee KMP

Tony N. Pane Chief Tax Counsel 17 Jan 2000 31 Dec 2008 Executive Committee KMP

Simon T. Phillipson General Counsel 13 May 1996 Executive Committee KMP

Timothy Carroll Chief Marketing Of cer 6 Mar 2000 Executive Committee KMP

Peter J. Davey Managing Director Corporate Development 1 Dec 2005 30 Jun 2010 Executive Committee KMP

David Kindlen Chief Information Of cer 1 Dec 2006 Executive Committee KMP

# Executive Directors since 1988^ Executive Director since July 2001

(b) Non-Executive Director KMPOther than the Executive KMP referred to above, the Groups other KMP are referred to as Non-Executive Director KMP .

The names, dates of appointment, and dates of cessation (if ceasing up to 30 June 2010), of these Non-Executive Director KMP dur ing the 2009 and 2010nancial periods are as follows:

Name Title/Position Appointment Cessation CategoryPeter D. Jonson Independent Director 24 Jan 2001 Non-Executive Director KMP

D. Barry Reardon Independent Director 24 Mar 1999 Non-Executive Director KMP

David J. Evans Independent Director 2 Jan 2007 Non-Executive Director KMP

Robert Le Tet Independent Director 2 Apr 2007 Non-Executive Director KMP

2. Remuneration OutlineThe 3 VRL Executive Director KMP receive base remuneration and superannuation of $1,932,175 per annum each, unchanged from the previous two years.In addition, the 3 VRL Executive Director K MP are eligible to earn up to 100% of their base remuneration in the form of an annual bonus. 50% of the bonusis based on cash ow return on investment (CFROI) and 50% is based on earnings per share (EPS) grow th relative to the top 300 stocks listed on ASX.The CFROI bonus amounted to $672,387 each (2009: $680,816) and, being due and payable, has been accrued for at 30 June 2010 and 2009. The EPScomponent of the bonus is not capable of being determined until approximately September of each year when the results of the ASX 300 EPS numbers areknown accordingly it has not been accrued at 30 June 2010 or 2009. The EPS component of the bonus for the 30 June 2009 nancial year was $916,088each (2008: $733,337) and this component has been re ected as paid in the 30 June 2010 (30 June 2009) period.

Mr. Peter Harvie is Executive Chairman of Austereo Group Limited and is remunerated by that entity based on the performance of that entity.

All other Executive Committee K MP can also earn bonuses. In each case bonuses are based on a mix of the same metrics as for the bonuses for VRLExecutive Director KMP together with speci c individual KPIs for each Executive Committee KMP. Where the component of the bonus, if any, is basedon CFROI and thus due and payable, this has been accrued for at 30 June 2010 and 2009 and re ected in the tables on pages 16 to 19. All other short termbonus amounts refer to bonuses paid during the current and prev ious year to Executive Commit tee KMP re ecting their per formance for the year ended30 June 2009 and 2008 respectively.

In addition the CEO, Mr. Graham Burke, is eligible to earn up to 6 million options over ordinar y shares over the ve years to March 2013. For the maximumnumber of options to vest the three year cumulative compound annual growth of normalised EPS and dividend per share (DPS) must be at least 10%in each of calendar years 2010, 2011 and 2012. If the EPS and DPS cumulative annual growth rate is less than 5% then no options vest with a sliding scaleof vesting of options between 5% and 10% growth on these two measures. This CEO Long Term Incentive Plan was approved by shareholders at a GeneralMeeting held on 17 July 2008.

No long term incentive plan allocations were made during the year to any Executive KMP.

The detailed compensation arrangements of all KMP for the years ended 30 June 2010 and 2009 are set out in the tables on pages 16 to 19.


18/92



A .

E X E C U T I V E S U M M A R Y ( c

o n t i n u e d

)

2 . R e m u n e r a t i o n O u t l i n e ( c

o n t i n u e d

)

C o m p e n s a t i o n o K e y M a n a g e m e n t P e r s o n n e l o t h e C o m p a n y a n d t h e G r o u p o r t h e p e r i o d e n d e d 3 0 J u n e 2 0 1 0

S H O R T T E R M B E N E f I T S

P O S T E M P L O Y M E N T

L O N G T E R M B E N E f I T S

T O T A L %

N A M E

P O S I T I O N f r o m

/ t o

L o n g

L . T . I .

P E R f O R M -

( p o s i

t i o n s

d o n o

t n e c e s s a r

i l y

C a s h

N o n -

S e r v i c e

T E R M I N -

S H A R E -

A N C E

c o - i n c i

d e w

i t h e m p

l o y m e n

t

S a l a r y

B o n u s

m o n e t a r y

S u p e r -

R e t

i r e m e n

t

I n c e n

t i v e

L e a v e

A T I O N

B A S E D

R E L A T E D

D i r e c t o r s

c o m m e n c e m e n

t d a t e s )

Y E A R

N O T E

& F e e s

S . T . I .

B e n e

t s

O t h e r

a n n u a t

i o n

B e n e

t s

P l a n s

a c c r u a l

B E N E f I T S

P A Y M E N T

T O T A L

P A Y

R o b e r

t G K i r b y

E x e c u

t i v e

C h a i r m a n

2 0 1 0

4 , 6

1 , 8 8 0 , 3 8 7

1 , 5 8 8 , 4 7 5

1 3 3 , 9 7 4

3 , 5 7 6

5 0 , 0

0 0

3 8 , 0

5 1

3 , 6 9 4 , 4 6 3

4 3 . 0

0 %

s i n c e

0 3

/ 0 6 / 2 0 1 0

%

5 0 . 9

0

4 3 . 0 0

3 . 6 3

0 . 1 0

1 . 3 5

1 . 0 3

1 0 0 . 0 0

J o h n

R . K

i r b y

E x e c u

t i v e

D e p u

t y C h a i r m a n

2 0 1 0

4

1 , 8 8 2 , 1 7 5

1 , 5 8 8 , 4 7 5

3 6 , 4

6 5

5 0 , 0

0 0

6 0 , 5

2 3

3 , 6 1 7 , 6 3 8

4 3 . 9

1 %

s i n c e

0 3 / 0 6

/ 2 0 1 0

%

5 2 . 0

3

4 3 . 9

1

1 . 0 1

1 . 3 8

1 . 6 7

1 0 0 . 0 0

G r a

h a m

W . B

u r k e

M a n a g

i n g

D i r e c t o r

2 0 1 0

3 , 4

1 , 8 8 2 , 1 7 5

1 , 5 8 8 , 4 7 5

2 3 5 , 2 0 5

5 0 , 0

0 0

4 0 , 5

4 2

4 1 7 , 5 1 1

4 , 2 1 3 , 9 0 8

4 7 . 6

0 %

s i n c e

0 9 / 0 9 / 1 9 8 8

%

4 4

. 6 7

3 7 . 7 0

5 . 5 8

1 . 1 9

0 . 9 6

9 . 9

1

1 0 0 . 0 0

V R L E x e c u t i v e D i r e c t o r K M P S u b t o t a l s

5 , 6 4 4 , 7 3 7

4 , 7 6 5 , 4 2 5

4 0 5 , 6 4 4

3 , 5 7 6

1 5 0 , 0 0 0

1 3 9 , 1 1 6

4 1 7 , 5 1 1

1 1 , 5

2 6 , 0

0 9

P e t e r

M . H

a r v i e

E x e c u

t i v e

D i r e c t o r

2 0 1 0

2 , 8

8 0 9 , 6 3 3

1 1 , 9

6 4

3 2 , 4

8 8

5 2 , 7

5 3

1 5 , 6

2 0

9 2 2 , 4 5 8

5 . 7 2 %

s i n c e

2 0 / 0 6

/ 2 0 0 0

%

8 7 . 7

7

1 . 3 0

3 . 5 2

5 . 7 2

1 . 6 9

1 0 0 . 0 0

E x e c u t i v e D i r e c t o r K M P S u b t o t a l s

6 , 4 5 4 , 3 7 0

4 , 7 6 5 , 4 2 5

4 1 7 , 6 0 8

3 , 5 7 6

1 8 2 , 4 8 8

5 2 , 7

5 3

1 5 4 , 7 3 6

4 1 7 , 5 1 1

1 2 , 4

4 8 , 4

6 7

P e t e r

D . J

o n s o n

I n d e p e n

d e n

t D i r e c t o r

2 0 1 0

1 4 2 , 2 0 2

2 0 , 8

3 5

1 2 , 7

9 8

1 7 5 , 8 3 5

s i n c e

2 4 / 0 1 / 2 0 0 1

%

8 0 . 8 7

1 1 . 8

5

7 . 2 8

1 0 0 . 0 0

D . B

a r r y

R e a r d o n

I n d e p e n

d e n

t D i r e c t o r

2 0 1 0

1 5 0 , 0 0 0

1 5 0 , 0 0 0

s i n c e

2 4 / 0 3

/ 1 9 9 9

%

1 0 0 . 0 0

1 0 0 . 0 0

D a v i

d J . E v a n s

I n d e p e n

d e n

t D i r e c t o r

2 0 1 0

9 8 , 6

2 4

8 , 8 7 6

1 0 7 , 5 0 0

s i n c e

0 2

/ 0 1 / 2 0 0 7

%

9 1 . 7

4

8 . 2 6

1 0 0 . 0 0

R o

b e r

t L e

T e t

I n d e p e n

d e n

t D i r e c t o r

2 0 1 0

7 0 , 0

0 0

5 0 , 0

0 0

1 2 0 , 0 0 0

s i n c e

0 2 / 0 4

/ 2 0 0 7

%

5 8 . 3 3

4 1 . 6

7

1 0 0 . 0 0

N o n - E

x e c u t i v e D i r e c t o r K M P S u b t o t a l s

4 6 0 , 8 2 6

2 0 , 8

3 5

7 1 , 6

7 4

5 5 3 , 3 3 5

D i r e c t o r S u b t o t a l s

6 , 9 1 5 , 1 9 6

4 , 7 6 5 , 4 2 5

4 3 8 , 4 4 3

3 , 5 7 6

2 5 4 , 1 6 2

5 2 , 7

5 3

1 5 4 , 7 3 6

4 1 7 , 5 1 1

1 3 , 0

0 1 , 8

0 2

N o t e s : r e f e r

t o p a g e

1 7


19/92


20/92



A .

E X E C U T I V E S U M M A R Y ( c

o n t i n u e d

)

2 . R e m u n e r a t i o n O u t l i n e ( c

o n t i n u e d

)

C o m p e n s a t i o n o K e y M a n a g e m e n t P e r s o n n e l o t h e C o m p a n y a n d t h e G r o u p o r t h e p e r i o d e n d e d 3 0 J u n e 2 0 0 9

S H O R T T E R M B E N E f I T S

P O S T E M P L O Y M E N T

L O N G T E R M B E N E f I T S

T O T A L %

N A M E

P O S I T I O N f r o m

/ t o

L o n g

L . T . I .

P E R f O R M -

( p o s i

t i o n s

d o n o

t n e c e s s a r

i l y

C a s h

N o n -

S e r v i c e

T E R M I N -

S H A R E -

A N C E

c o - i n c i

d e w

i t h e m p

l o y m e n

t

S a l a r y

B o n u s

m o n e t a r y

S u p e r -

R e t

i r e m e n

t

I n c e n

t i v e

L e a v e

A T I O N

B A S E D

R E L A T E D

D i r e c t o r s

c o m m e n c e m e n

t d a t e s )

Y E A R

N O T E

& F e e s

S . T . I .

B e n e

t s

O t h e r

a n n u a t

i o n

B e n e

t s

P l a n s

a c c r u a l

B E N E f I T S

P A Y M E N T

T O T A L

P A Y

J o h n

R . K

i r b y

E x e c u

t i v e

C h a i r m a n

2 0 0 9

7

1 , 8 3 2 , 1 7 5

1 , 4 1 4 , 1 5 3

1 2 9 , 2 0 6

1 0 0 , 0 0 0

3 0 , 5

0 9

3 , 5 0 6 , 0 4 3

4 0 . 3

3 %

s i n c e

2 8 / 0 6

/ 2 0 0 6

%

5 2 . 2

6

4 0 . 3 3

3 . 6 9

2 . 8 5

0 . 8 7

1 0 0 . 0 0

R o b e r

t G K i r b y

E x e c u

t i v e

D e p u

t y C h a i r m a n

2 0 0 9

6 , 7

1 , 8 3 0 , 6 4 5

1 , 4 1 4 , 1 5 3

1 6 3 , 6 6 5

3 , 0 6 0

1 0 0 , 0 0 0

3 0 , 5

0 2

3 , 5 4 2 , 0 2 5

3 9 . 9

2 %

s i n c e

2 8 / 0 6 / 2 0 0 6

%

5 1 . 6

8

3 9 . 9 2

4 . 6 2

0 . 0 9

2 . 8 2

0 . 8 6

1 0 0 . 0 0

G r a

h a m

W . B

u r k e

M a n a g

i n g

D i r e c t o r

2 0 0 9

3 , 7

1 , 8 3 2 , 1 7 5

1 , 4 1 4 , 1 5 3

2 7 8 , 3 3 9

1 0 0 , 0 0 0

3 0 , 5

1 0

4 1 7 , 5 1 1

4 , 0 7 2 , 6 8 8

4 4 . 9

7 %

s i n c e

0 9 / 0 9 / 1 9 8 8

%

4 4 . 9 9

3 4 . 7 2

6 . 8 3

2 . 4 6

0 . 7 5

1 0 . 2 5

1 0 0 . 0 0

V R L E x e c u t i v e D i r e c t o r K M P S u b t o t a l s

5 , 4 9 4 , 9 9 5

4 , 2 4 2 , 4 5 9

5 7 1 , 2 1 0

3 , 0 6 0

3 0 0 , 0 0 0

9 1 , 5

2 1

4 1 7 , 5 1 1

1 1 , 1

2 0 , 7

5 6

P e t e r

M . H

a r v i e

E x e c u

t i v e

D i r e c t o r

2 0 0 9

2 , 5

7 4 2 , 1 2 0

1 0 0 , 0 0 0

1 2 , 5

5 6

1 0 0 , 0 0 0

6 8 , 3

3 7

1 3 , 9

3 7

1 , 0 3 6 , 9 5 0

1 6 . 2

3 %

s i n c e

2 0 / 0 6 / 2 0 0 0

%

7 1 . 5

7

9 . 6 4

1 . 2 1

9 . 6 4

6 . 5 9

1 . 3 4

1 0 0 . 0 0

E x e c u t i v e D i r e c t o r K M P S u b t o t a l s

6 , 2 3 7 , 1 1 5

4 , 3 4 2 , 4 5 9

5 8 3 , 7 6 6

3 , 0 6 0

4 0 0 , 0 0 0

6 8 , 3

3 7

1 0 5 , 4 5 8

4 1 7 , 5 1 1

1 2 , 1

5 7 , 7

0 6

P e t e r

D . J

o n s o n

I n d e p e n

d e n

t D i r e c t o r

2 0 0 9

1 3 2 , 6 4 5

2 , 2 7 4

1 1 , 9

3 8

1 4 6 , 8 5 7

s i n c e

2 4 / 0 1 / 2 0 0 1

%

9 0 . 3

2

1 . 5 5

8 . 1 3

1 0 0 . 0 0

D . B

a r r y

R e a r d o n

I n d e p e n

d e n

t D i r e c t o r

2 0 0 9

1 5 0 , 0 0 0

1 5 0 , 0 0 0

s i n c e

2 4 / 0 3

/ 1 9 9 9

%

1 0 0 . 0 0

1 0 0 . 0 0

D a v

i d J . E v a n s

I n d e p e n

d e n

t D i r e c t o r

2 0 0 9

8 2 , 5

6 9

7 , 4 3 1

9 0 , 0

0 0

s i n c e

0 2 / 0 1 / 2 0 0 7

%

9 1 . 7

4

8 . 2 6

1 0 0 . 0 0

R o b e r

t L e

T e t

I n d e p e n

d e n

t D i r e c t o r

2 0 0 9

5 5 , 0

4 6

6 4 , 9

5 4

1 2 0 , 0 0 0

s i n c e

0 2 / 0 4

/ 2 0 0 7

%

4 5 . 8 7

5 4 . 1 3

1 0 0 . 0 0

N o n - E

x e c u t i v e D i r e c t o r K M P S u b t o t a l s

4 2 0 , 2 6 0

2 , 2 7 4

8 4 , 3

2 3

5 0 6 , 8 5 7

D i r e c t o r S u b t o t a l s

6 , 6 5 7 , 3 7 5

4 , 3 4 2 , 4 5 9

5 8 6 , 0 4 0

3 , 0 6 0

4 8 4 , 3 2 3

6 8 , 3

3 7

1 0 5 , 4 5 8

4 1 7 , 5 1 1

1 2 , 6

6 4 , 5

6 3

N o t e s : r e f e r

t o p a g e

1 9


21/92


22/92



A. EXECUTIVE SUMMARY(continued)3. Remuneration SummaryFor the convenience of readers the main issues relevant to each of the above main categories of KMP are summarised below together with the relevantpage reference within the Report where further details about each component can be found.

(a) Executive KMP

Issue SummaryRe erencein Report

Remunerationstrategy andpolicy

The performance of the Company depends upon the skills and quality of its Directors and senior executives. To prosperthe Group must attract, motivate and retain highly skilled Directors and executives. The compensation structureis designed to strike an appropriate balance between xed and variable remuneration, rewarding capability andexperience and providing recognition for contribution to the Groups overall goals and objectives.

The Company aims to reward Executive Director KMP and Executive Committee KMP with a level and mixof remuneration commensurate with the seniority of their position and responsibilities within the Group, so as to rewardfor Group performance against targets set by reference to appropriate benchmarks, align the interests of the ExecutiveDirector KMP and Executive Committee KMP with those of the Company and of its shareholders, link their rewards to thestrategic goals and perfor mance of the Group, and ensure total compensation is competitive by market standards.

Page 22

Key changesfor 2010

There was one change to the composition of the Executive KMP during the year with Mr. Peter Davey retiring from theExecutive Committee effective from 30 June 2010, ceasing as KMP from that date.

FixedRemuneration

The level of xed pay is set so as to provide a base level of

village annual report 2010

Documents