Village Roadshow : VRL Financial Report 30 June 2016

VILLAGE ROADSHOW LIMITED ABN 43 010 672 054

FINANCIAL REPORT 30 JUNE 2016

Your Directors submit their report for the year ended 30 June 2016.

Village Roadshow Limited ("the Company" or "VRL") is a company limited by shares that is incorporated and domiciled in Australia. The registered office and principal administrative office of the Company is located at Level 1, 500 Chapel Street, South Yarra, Victoria 3141.

The names of the Directors and Secretaries of the Company in office during the financial year and until the date of this report are:

Directors Robert G. Kirby

Graham W. Burke John R. Kirby David J. Evans

Peter D. Jonson (retired 19 November 2015)

Jennifer Fox Gambrell (appointed 19 November 2015) Peter M. Harvie (retired 3 February 2016)

Robert Le Tet Timothy M. Antonie

Julie E. Raffe (alternate for Messrs. R.G. Kirby and G.W. Burke)

Company Secretaries Shaun L. Driscoll Julie E. Raffe

The qualifications and experience of the Directors and Secretaries and the special responsibilities of the Directors are set out below. Directors

Co-Executive Chairman and Co-Chief Executive Officer, Executive Director

First joined the Board on 12 August 1988, reappointed 5 July 2001. Holds a Bachelor of Commerce with over 30 years experience in the entertainment and media industry. Chairman of Village Roadshow Limited 1994 to 1998, 2002 to 2006 and from June 2010 to 29 November 2013 when he became Co-Executive Chairman and Co-Chief Executive Officer. Deputy Chairman Village Roadshow Limited 1990 to 1994, 1998 to 2002 and 2006 to June 2010. Through the launch of Roadshow Home Video, Mr. Kirby was the driving force behind the Australian video revolution of the 1980's and 1990's. He is a pioneer of new cinema concepts in both Australia and internationally and has been at the forefront of Village Roadshow's successful diversification into theme parks, radio and international film production. Director of Village Roadshow Corporation Ply. Ltd., Deputy Chair of Peter MacCallum Cancer Foundation, Member of Patrons Council of Epilepsy Foundation and Patron of Arts Centre Melbourne.

Member Executive Committee

Other Listed Public Company Directorships in previous 3 years: Nil

Co-Executive Chairman and Co-Chief Executive Officer, Executive Director

Member of the Board since 9 September 1988. Chief Executive Officer of Village Roadshow Limited from 1988 to 29 November 2013 and Co-Executive Chairman and Co-Chief Executive Officer from 29 November 2013. With unrivalled experience in the entertainment and film industries, Mr. Burke has been one of the strategic and creative forces behind Village Roadshow's development and founded Roadshow Distributors with the late Mr. Roe Kirby. Mr. Burke has been integral to strategically developing Warner Bros. Movie World and Village Roadshow's involvement with Sea World as well as ongoing Australian and international film production. Chairman of Creative Content Australia (formerly IP Australia Foundation) from March 2016. Director Village Roadshow Corporation Ply. Ltd.

Chairman Executive Committee

Other Listed Public Company Directorships in previous 3 years: Nil

Deputy Chairman, Non-Executive Director

Bachelor of Economics, University of Tasmania. Awarded Honorary Doctorate, Griffith University. Member of the Australian Society of Accountants. Chairman of Village Roadshow Corporation Pty. Ltd. Mr. Kirby has held a wide number of executive positions in cinema exhibition, film distribution, radio, theme parks, construction and strategy over his 45 years within Village Roadshow, and has been at the forefront of many of the Group's successful growth outcomes today. Currently, Chairman of the Sony Foundation Australia. Director, Griffith University Advisory for CILECT Congress, Asia Pacific Screen Academy, Queensland College of Arts, and Victoria University Confucius Institute. Previously Chairman, Village Roadshow Limited and Austereo Limited. He was Chairman, The Salvation Army Advisory Board, Chairman, Red Shield Appeal, Deputy Chairman of The Conversation Media Group, former Director of IMNIS and former Director of Jigsaw Foundation at the Royal Children's Hospital, Surf Life Saving Australia Foundation. Former Chairman of Sponsors Appeal Committee of the Victorian College of the Arts, and former Deputy Chairman of the Interim Council of the National Film and Sound Archive. Former member of the Victorian Premier's Multi Media Task Force, Victorian Advisory Council of the Australian Opera, and Progressive Business Victoria and former advisor, Commando Welfare Trust.

Other Listed Public Company Directorships in previous 3 years: Nil

Directors (continued)

Independent Non-Executive Director

Member of the Board since 2 January 2007, appointed Lead Independent Director on 1 July 2014. Over 40 years international business experience in media and entertainment industries including CEO of GTV Channel Nine in Melbourne, President, COO at Fox Television and Executive Vice President News Corporation, both in the United States, including Sky Entertainment Services Latin America. Most recently President and CEO of Crown Media Holdings Inc, previously Hallmark Entertainment Networks, since 1999 and served on the board of British Sky Broadcasting Group Pie from September 2001 until November 2011. Director of Village Roadshow Entertainment Group Limited.

Member Remuneration Committee

Chairman Corporate Governance &Nomination Committee (from November 2015)

Other Listed Public Company Directorships in previous 3 years: Nil

Independent Non-Executive Director

Member of the Board since 2 April 2007. Holds a Bachelor of Economics Degree from Monash University and is a qualified accountant. Founded and currently Executive Chairman of venture capital company, Questco Pty. Ltd. Over 35 years' experience in broadcasting, film and entertainment industries, including Director of television production company Crawford Productions. Formerly Deputy Chairman of radio station EONFM and 20 years as Chairman and CEO of Australia's largest film and advertising production company, The Filmhouse Group. Previously Chairman of radio stations 3UZ and 3CV, WSA Communications Pty. Ltd. and Entertainment Media Pty. Ltd. and Chairman of Metropolitan Ambulance Service in Melbourne. Served as Board Member of the Australian Broadcasting Authority and Chairman of its Audit Committee.

Chairman Audit &Risk Committee

Member Corporate Governance & Nomination Committee

Other Listed Public Company Directorships in previous 3 years: Nil

Independent Non-Executive Director

Member of the Board since 1 December 2010. Holds a Bachelor of Economics degree (major in accounting) from Monash University and qualified as a Chartered Accountant. Over 20 years experience in investment banking focussing on large scale mergers and acquisitions and capital raisings in the Australian media and entertainment, retail and consumer sectors. Managing Director of UBS Investment Banking from 2004 to 2008.

Member Audit & Risk Committee

Chairman Remuneration Committee (from November 2015) Member Corporate Governance & Nomination Committee

Other Listed Public Company Directorships in previous 3 years:

Premier Investments Limited, since 1 December 2009 Breville Limited, since 19 December 2013

Independent Non-Executive Director

Member of the Board since 19 November 2015. Holds a Doctorate in Business Administration (DBA) from the International School of Management in Paris and an MBA from Baylor University in Texas. Until the sale to Accor in 2016, was President of Fairmont Hotels and Resorts and President FRHI International, overseeing the luxury brand's global hotel portfolio including Raffles, Fairmont and Swissotel in all international markets outside North America. Over 25 years of experience in the luxury, resort and business segments of the hospitality industry. Formerly Chief Operating Officer, Europe as well as Senior Vice-President Global Brand Management for lnterContinental Hotels Group, and previously holding several senior management roles at Starwood and ITT Sheraton including VP Global Brand Manager Sheraton Hotels &Resorts.

Member Remuneration Committee Member Audit &Risk Committee

Other Listed Public Company Directorships in previous 3 years: Nil

Finance Director

Member of the Board since 15 May 2012 as alternate director for Messrs. R.G. Kirby and G.W. Burke. Fellow of Chartered Accountants Australia and New Zealand, Fellow of Financial Services Institute of Australia, and graduate of Australian Institute of Company Directors. Formerly Chief Financial Officer since 1992, Ms. Raffe has over 25 years experience in the media and entertainment industries. Director of Village Roadshow's wholly owned subsidiaries.

Member Executive Committee

Other Listed Public Company Directorships in previous 3 years: Nil

Company Secretaries

Group Company Secretary

Holds a Bachelor of Arts and Bachelor of Laws from University of Natal, is a Chartered Secretary and Fellow of the Governance Institute of Australia. Formerly Co-Company Secretary & Group Manager Corporate Services, Mr. Driscoll has diverse industry experience including over 25 years with Village Roadshow. Chairman of the Group's Management, Risk & Compliance Committee, Secretary of all Village Roadshow group companies and Director of Village Roadshow's wholly owned subsidiaries.

Finance Director

Appointed secretary of the Company on 29 April 2011. Details as above. Relevant Interests

As at the date of this report, the relevant interests of the Directors in the shares (and "in-substance options" which are included in the totals

shown for ordinary shares) and options of the Company and related bodies corporate were as follows:

Messrs R.G. Kirby, G.W. Burke and J.R. Kirby each have a relevant interest in 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.

  OPERATING AND FINANCIAL REVIEW

  Principal Activities

  The principal activities of the Company and its controlled entities ("the Group", "VRL group" or "consolidated entity") during the financial year were:

• Theme park and water park operations ("Theme Parks");

• Cinema exhibition operations ("Cinema Exhibition");

Film and DVD distribution operations ("Film Distribution"); and

Sales promotion and loyalty program operations ("Marketing Solutions").

In addition the VRL group has an equity-accounted 50.17% interest in Village Roadshow Entertainment Group Limited ("VREG") which has film production activities ("Film Production") - refer to Note 11 to the Financial Statements for further details. Other activities, including corporate overheads, financing activities, and digital and information technology development, are included under 'Other'.

Overview of Results and Dividends IDistributions

The VRL group reported an attributable net profit of $15.7 million for the year ended 30 June 2016, down from the prior corresponding period result of $43.9 million, which included attributable losses after tax from material items of $35.2 million in the year ended 30 June 2016 and $6.2 million in the prior year.

Attributable net profit, before material items and discontinued operations ("NPAT") for the year ended 30 June 2016 was $50.9 million, marginally up on the prior year result of $50.1 million. Earnings before interest, tax, depreciation and amortisation, excluding material items and discontinued operations ("EBITDA") for the year ended 30 June 2016 was $168.8 million, up 1.8% on the prior year result of $165.7 million.

Basic earnings per share from continuing operations were 9.8 cents per share (2015: 27.5 cents per share). There were 1,601,464 potential ordinary shares that were dilutive in the year ended 30 June 2016 (2015: 2,082,767). Diluted earnings per share before material items and discontinued operations of 31.4 cents per share increased slightly compared to the prior year result of 31.0 cents per share, based on a weighted average total of 162,159,487 ordinary shares (2015: 161,600,932 ordinary shares).

In the year ended 30 June 2016, a fully-franked final dividend of 14.0 cents per ordinary share was paid in October 2015, and a fully-franked interim dividend of 14.0 cents per ordinary share was paid in April 2016. Subsequent to 30 June 2016, the VRL Board has declared a fully­ franked final dividend of 14.0 cents per ordinary share, which will be paid in October 2016. In the year ended 30 June 2015, a fully-franked final dividend of 14.0 cents per ordinary share was paid in October 2014, and a fully-franked interim dividend of 14.0 cents per ordinary share was paid in April 2015.

Net cash flows from operations totalled $82.3 million in the year ended 30 June 2016, compared to $111.3 million in the prior year. Cash flows used in investing and financing activities totalled $111.5 million in the year ended 30 June 2016, compared to $147.3 million used in the prior year. The current year included $98.9 million relating to purchases of property, plant, equipment and intangibles, compared to a total of $81.0 million in the prior year. Net proceeds from borrowings in the year ended 30 June 2016 were $95.6 million, compared to $13.0 million in the prior year.

An analysis of the Company's operations, financial position, business objectives and future prospects is set out below. Further financial summary information is set out in the Reconciliation of Results on pages 10 and 11, which form part of this Directors' Report, and in Note 29 to the Financial Statements.