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For the year ended 30 June 2014 

## 9 GOODWILL AND OTHER INTANGIBLE ASSETS (continued) 

## FOR THE YEAR ENDED 30 JUNE 2013 

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Notes: $^{1}$ 

In 2014, all of the brand names (2013: the majority of the brand names) relate to the Village Roadshow Theme Parks group. 

## (a) Impairment testing of goodwill and brand names 

Goodwill and indefinite life intangible assets are tested at least annually for impairment based upon the recoverable amount of the appropriate cash generating units (“CGU’s”) to which the goodwill and indefinite life intangibles have been allocated. Details of the Group’s main goodwill and indefinite life intangible assets are provided below. 

## Goodwill assessed on the basis of fair value less costs of disposal: 

The recoverable amount of the material balances of the Group’s goodwill has been determined based on fair value less costs of disposal (“FVLCD”) calculations. The key assumptions on which the Group has based cash flow projections when determining FVLCD were that projected future performance was based on past performance and expectations for the future, and that no significant events were identified which would cause the Group to conclude that past performance was not an appropriate indicator of future performance. The pre-tax discount rate applied to the cash flow projections was in the range of 11.4% to 15.4% (2013: 11.5% to 13.3%). Cash flows used were mainly from the Group’s 5 year plans. Other than as noted otherwise, cash flows beyond five years were extrapolated using a terminal growth rate of 3% (2013: 3%). The growth rate does not exceed the long-term average growth rate for the businesses in which the CGU’s operate. Goodwill allocated to cash generating units and for impairment testing included material groupings and 2014 balances as follows: 

– Village Roadshow Theme Parks group – $137.1 million (2013: $137.1 million) (re: Australian Theme Park interests) 

– Roadshow Distributors Pty. Ltd. group – $57.1 million (2013: $57.1 million) (re: Film Distribution interests) 

– Village Cinemas Australia Pty. Ltd. – $29.4 million (2013: $29.4 million) (re: Australian Theatres Joint Venture cinema circuit) 

– Village Roadshow Theme Parks USA Inc. – $Nil (2013: $3.7 million) (re: Wet’n’Wild Hawaii) 

– Village Roadshow Digital Pty. Ltd. group – $12.8 million (2013: $10.7 million) (re: Digital interests including Edge Loyalty Systems) 

## Impairment losses recognised: 

Impairment losses for goodwill and other intangibles of $3.0 million were recognised for continuing operations in the year ended 30 June 2014, of which $2.5 million related to the Theme Parks segment, and $0.5 million related to the Cinema Exhibition segment. The pre-tax discount ranges used were 11.4% to 12.9%, and the recoverable amounts were based on fair value less costs of disposal. For the relevant Theme Parks assessment, cash flows beyond five years were extrapolated using a terminal growth rate of 2.5%, and the latest updated forecasts were used in the impairment review, which were lower than the forecasts included in the latest five year plan due to the relevant underlying financial performance being lower than expected. Under the fair value hierarchy, level 3 inputs were used, and the impairment losses have been disclosed in Note 2(d) for 2014. 

## Brand Names: 

Brand names owned by the Village Roadshow Theme Parks group are classified as indefinite life intangible assets and are therefore subject to annual impairment testing. For the purposes of impairment testing the relevant brand names form part of the Australian Theme Parks CGU (2014: $31.1 million, 2013: $31.1 million). Refer above for further details relating to cash flows, growth and discount rates. 

## Sensitivity to changes in assumptions: 

With regard to the assessment of the recoverable amount of intangible assets, the Company believes that no reasonably possible change in any of the above key assumptions would cause the carrying values to exceed recoverable amounts. 

