## 1 CORPORATE INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

The financial report of Village Roadshow Limited (“the Company” or “VRL”) for the year ended 30 June 2014 was authorised for issue on 19 September 2014, in accordance with a resolution of the Directors. VRL is a for-profit entity incorporated in Australia and limited by shares, which are publicly traded on the Australian Securities Exchange. The principal activities of the Company and its subsidiaries are described in Note 1(c)(xxix). 

## (a) Basis of preparation 

The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 , Australian Accounting Standards and other mandatory professional reporting requirements. The financial report has also been prepared on a historical cost basis, except for derivatives and any available for sale investments that are measured at fair value. 

The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000), unless stated otherwise, under the option available to the Company under ASIC Class Order 98/100. The Company is an entity to which the class order applies. 

The presentation and classification of comparative items in the financial report have been adjusted where appropriate to ensure that the disclosures are consistent with the current period. 

## (b) Statement of compliance and new accounting standards and interpretations 

(i) The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (“IFRS”). 

(ii) The Group has adopted the following new and amended Australian Accounting Standards and AASB Interpretations in the current financial year: 

– AASB 10: Consolidated Financial Statements . 

– AASB 11: Joint Arrangements . 

– AASB 12: Disclosure of Interests in Other Entities . 

– AASB 13: Fair Value Measurement . 

– AASB 119: Employee Benefits . 

– AASB 2012-2: Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Finanical Liabilities 

– AASB 2011-4: Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements 

– AASB 2012-9: Amendment to AASB 1048 arising from the withdrawal of Australian Interpretation 1039 

The Group has early adopted AASB 2013-3: Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets . 

Adoption of these amended Accounting Standards did not have any impact on the financial position or performance of the Group. 

(iii) A number of standards and interpretations have been issued by the Australian Accounting Standards Board (“AASB”) or the International Accounting Standards Board (“IASB”) prior to 30 June 2014, which are effective from a future date. Further details are as follows: 

– AASB 9: Financial Instruments:  AASB 9 includes requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the project by the International Accounting Standards Board (“IASB”) to replace IAS 39: Financial Instruments: Recognition and Measurement (AASB 139: Financial Instruments: Recognition and Measurement). Application date of this standard is 1 January 2018, and application date for the Group is 1 July 2018. The impact of adoption of this standard on the Group’s financial results has not yet been assessed. 

– AASB 1031: Materiality:  The revised AASB 1031 is an interim standard that cross-references to other Standards and the Framework (issued December 2013) that contain guidance on materiality. AASB 1031 will be withdrawn when references to AASB 1031 in all Standards and Interpretations have been removed. Application date of this standard is 1 January 2014, and application date for the Group is 1 July 2014. This standard has no financial impact on the Group as it relates to disclosures only. 

– IFRS 15: Revenue from Contracts with Customers:  The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Application date of this standard is 1 January 2017, and application date for the Group is 1 July 2017. The impact of adoption of this standard on the Group’s financial results has not yet been assessed. 

– The impacts of all other standards and amendments to accounting standards that have been issued by the AASB but are not yet effective for the period ending 30 June 2014, have been determined as having no significant impact on the financial results of the Group. 

## (c) Summary of significant accounting policies 

## (i) Basis of consolidation 

The consolidated financial statements comprise the financial statements of Village Roadshow Limited and its subsidiaries (“the Group”, “VRL group” or “consolidated entity”) as at 30 June each year. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. 

In preparing the consolidated financial report, all inter-company balances and transactions, income and expenses and profits and losses resulting from intra-group transactions have been eliminated in full. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. 

## (ii) Business combinations 

Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer, and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred. 

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group’s operating or accounting policies and other pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. 

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured at fair value as at the acquisition date through profit or loss. 

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with AASB 139: Financial Instruments: Recognition and Measurement  either in profit or loss or in other comprehensive income. If the contingent consideration is classified as equity, it shall not be remeasured. 

## (iii) Revenue recognition 

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: 

## (a) Sale of goods 

Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered passed to the buyer at the time of delivery of the goods to the customer. 

## (b) Rendering of services 

Revenue from the rendering of services is recognised when control of a right to be compensated for the services has been attained by reference to the stage of completion. Where contracts span more than one reporting period, the stage of completion is based on an assessment of the value of work performed at that date. 

## (c) Interest income 

Revenue is recognised as interest accrues using the effective interest rate method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. 

