OPERATING AND FINANCIAL REVIEW  (continued) Operational Results  (continued) Theme Parks  (continued) Film Distribution Cinema Exhibition Film Production – signing of Memorandum of Understanding agreements with the  government of the Gyeongsangnam-do Province in South Korea to join  Twentieth Century Fox in the design and management of a world class  theme park in Korea, and with Guangxi Longxianggu Investment Co., who  are working with Mission Hills China, for a planned water park in Guangxi  Province, Southern China; – signing of a Consultancy Services Project Coordination agreement with  China Studio Theme Parks Investment Ltd. for a planned “Destination”  Theme Park in Guangdong Province, China; and – working collaboratively with Sunway Group Malaysia to assess the  potential market in Johor Bahru for a hybrid Sea World/Ride Park similar  in style and content to VRL’s Sea World on the Gold Coast. While the VRL group has multiple other opportunities under review, these  will continue to be assessed to ensure only the best are progressed and will  lead to medium and long term future profitability. The Cinema Exhibition division operates predominantly in Australia,  Singapore and the United States through joint ventures including with  Amalgamated Holdings in Australia and other cinema operators. EBITDA  for the year ended 30 June 2014 for the division was $62.6 million,  compared to $58.5 million in the prior year, and PBT was $43.8 million,  compared to $40.4 million in the prior year. At 30 June 2014, the division had 532 screens at 52 sites in Australia, 87  screens at 11 sites in Singapore, 73 screens at 10 sites in the United States,  and 12 screens at one remaining site in the United Kingdom. Some of the  best performing films during FY2014 included;  The Hunger Games: Catching  Fire, The Hobbit: The Desolation of Smaug, Frozen, The LEGO Movie,  Transformers 4, How to Train Your Dragon 2, Man of Steel, The Wolf of Wall  Street, Thor: The Dark World, X-Men: Days of Future Past  and  Gravity . In Australia, Cinema Exhibition’s successful strategy to focus on  incremental revenue initiatives, including loyalty programs, film marketing,  retail gifting and extended use of digital ticketing, together with a number of  cost saving initiatives, has resulted in the delivery of an impressive 7.6%  ($2.8 million) increase in PBT and 6.2% ($3.4 million) increase in EBITDA  compared to FY2013. During the year, the division completed upgrades and refurbishment at  a number of key sites, which is aimed at ensuring continued delivery of  superior offerings in terms of comfort and state of the art technology to  VRL’s customers. The expansion of premium offerings in Gold Class and   continue to drive improved average overall spend per person. The  steady conversion of patrons from VRL’s traditional cinemas to the circuit’s  higher yield premium offerings is having the desired positive impact on the  bottom line. VRL owns 50% of the Golden Village Cinema Exhibition circuit which is the  number one circuit in Singapore with a commanding 43% market share.  On the back of record results in FY2013, strong performance continued  in FY2014, delivering an impressive 10% increase in NPAT and EBITDA.  Dividends of $20.9 million were received by the Group during the year,  compared to $3.9 million received in the prior year. The inclusion of the  much anticipated Suntec City complex, scheduled to open in November  2014, will be an important addition to what is continuing to be a lucrative  cinema circuit in Singapore. The Company’s 30%-owned iPic Theaters in the USA continues to progress  its expansion plans with the successful opening of iPic Wilshire Boulevard,  Los Angeles in May 2014. This takes the total number of sites to 10 and, with  plans progressing for a further two sites in Washington and Houston slated  for opening in FY2015, together with other key strategic and iconic sites  already identified for potential development, VRL is confident that as  a critical mass of locations is reached, this circuit will be a great asset and  addition to VRL’s cinema portfolio. The Company’s single UK site in Belfast  continued to be loss making in FY2014, and VRL continues to actively seek  an exit strategy for this site. In line with the Group’s growth strategy, Cinema Exhibition is targeting  significant population growth corridors for new developments. At present  there are a number of opportunities at various stages of negotiation. VRL is  confident that the expansion of sites into the right locations will continue to  build and grow VRL’s prominent market position and revenues well into the  future. Supported by one of the best film slates seen for many years, VRL is  confident of delivering continued year on year growth in FY2015. Despite a strong second half compared to the corresponding period in  FY2013, the Film Distribution division finished FY2014 with an EBITDA of  $41.7 million, down 9.8%, and PBT of $34.8 million, down 8.3%, as  compared to the previous year’s results of $46.2 million and $38.0 million  respectively. The FY2014 result was largely the outcome of a challenging  slate for Theatrical and underperforming commercial content (Film and  TV), particularly  Transcendence  which resulted in an approximate $2 million  minimum guarantee write off, however the division is focused on the  identification of further opportunities across the release windows, whilst  progressing initiatives to reduce overhead costs. Roadshow Films finished the financial year as the lead distributor in the  market commanding a 28.4% market share, up 2.9% on last year. This was  aided by the delivery of some outstanding performances in the second half  as the stronger films began to flow through the schedule. Best performers  in FY2014 included  The Hunger Games: Catching Fire, The Wolf of Wall Street,  The LEGO Movie, The Hobbit: The Desolation of Smaug, American Hustle  and  Gravity . Warner Bros. continues to be a key supplier for the Theatrical  division, providing some major film titles during FY2014. Roadshow also  renewed the Lionsgate output agreement for an additional three year term  from January 2015. The Australian Film industry continues to provide ongoing film distribution  opportunities with two releases during the year;  Wolf Creek 2  and  The Rover .  There are currently a number of films forecast for release in FY2015,  including  Paper Planes  and  Felony , and the upcoming slate is looking  increasingly optimistic with a number of scheduled releases. Roadshow  Films also continues to be active within the independent film market  – upcoming key titles include  The Imitation Game  (Film Nation),  Point Break (Lionsgate) and  The Story of Your Life  (Film Nation). Roadshow Entertainment experienced a challenging year impacted by many  changes in the market for packaged media. Despite these challenges,  Roadshow remained the number one independent retail distributor of  DVD’s in Australia, holding a market share of 14.5%. The first half results  were adversely impacted by the reduction of theatrical product available,  however the division benefited from the stronger theatrical content  released in the second half. Retail sales of TV on DVD delivered solid  results throughout the year, primarily driven by strong library sales and the  content from Roadshow’s output deals with the BBC, ABC, ITV and Shine. The Australian digital market showed strong growth of approximately 22%  at the retail level and 25% at the trade level over the year, and Roadshow  now holds a 16% share of this market. Subscription Video on Demand  (“SVOD”) is expected to grow in 2015 with the anticipated launch of several  SVOD services in both Australia and NZ, including the potential entrance of  Netflix. VRL is well positioned with three of Roadshow’s four TV output  contracts in a non-exclusive position to SVOD rights. Roadshow Television holds strong output deals across each of the four major  television segments in Australia and New Zealand. During the year, the  Channel 9 Free to Air output contract in Australia was renewed for a further  4 years, solidifying the future revenue streams from this sector. In the  financial year, Roadshow Television delivered strong revenue and profit results  off the back of better than average film performance, as well as several  additional sales packages placed across the independent television market. Village Roadshow Entertainment Group (“VREG”) is 47.12% owned by the  VRL group, and as detailed in Note 11(b) to the Financial Statements, the  VRL group has no carrying value for the equity-accounted investment in  VREG. In addition, there were no amounts included in the VRL group results  as no cash dividends were received from VREG in the year ended 30 June  2014 (2013: $3.8 million profit included in the VRL group results in relation  to cash dividends received). VREG consists of Village Roadshow Pictures (“VRP”) and Village Roadshow  Pictures Asia (“VRP Asia”). VRP released three films in the second half of  FY2014:  The LEGO Movie , which grossed USD 468 million worldwide,  Winter’s Tale , which grossed USD 31 million worldwide and  Edge of  Tomorrow , which has grossed USD 364 million worldwide to date. VRP’s goal of 6-8 film releases per year is on track with an increased number  of titles slated for FY2015. Upcoming releases being co-produced with Warner  Bros. include  The Judge, American Sniper, Jupiter Ascending, In the Heart of the  Sea, Mad Max: Fury Road , and  San Andreas . VRP is also in advanced  discussions to enter a co-production agreement with Sony Pictures. VRP Asia released one film during the year,  Man of Tai Chi , in July 2013. VRP  Asia continues to build its Chinese film business with upcoming releases  Zhong Kui: Snow Girl and The Dark Crystal ,  IPO  and  Mountain Cry . The  continued growth of the Chinese film business will create a valuable portfolio  of films to solidify VRP Asia’s presence in film production in this region. 13 ANNUAL REPORT 2014 CLOSE FILE X