Annual
Report
VISTA GROUP INTERNATIONAL LIMITED
2019
02
04
06
07
08
10
12
16
24
44
45
96
At a glance metrics
Letter from the Chair and Group CEO
Group overview
Key themes
Innovation
SaaS transformation
Environmental, social & governance
Group trading overview
Corporate governance
Directors’ report
Financial statements
Independent auditor’s report
103
Corporate information
104 Vista Group office locations
Enhancing
moviegoer
the
experience
This report is dated 26 March 2020 and is signed
on behalf of the Board of Vista Group International
Limited by Kirk Senior, Executive Chair, and Murray
Holdaway, Director.
K Senior
Executive Chair
26 March 2020
M Holdaway
Director
26 March 2020
At a glance metrics
Movio
Maccs
Vista Cinema
Powster
$227m *
Incremental box office revenue
uplift in 2018 to cinema exhibitors
using Movio Cinema
* USD currency
1.9m
bookings using Maccs’
theatrical distribution system
1.7m
food and beverage items ordered through
Vista Cinema’s Serve application in Nov/Dec 2019
(analytics = 2 months)
0.5b
total views in 2019
(online movie marketing platforms)
Movio
Veezi
Flicks
People
2.85b
communications (email and SMS)
were sent via Movio Cinema in 2019
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40.1m
tickets sold in 2019 across all regions
(small circuit or independent cinemas market
– cinemas with less than 20 screens)
16
1
the number of countries with
cinemas using ‘Your Cinema’
Rainbow Tick certification
New Zealand
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Annual Report 2019
Letter from the Chair and Group CEO
Dear Shareholder,
Hello and welcome to the Annual Report for Vista Group International Limited
(Vista Group) for the financial year to 31 December 2019.
Off the back of a strong global film industry, our
two core businesses in combination grew by 16% in
2019, with Vista Cinema up 17% and Movio up 13%.
The focus on recurring and SaaS revenue continues to
deliver benefits and we have made this an important
theme of 2020 and beyond.
Vista Cinema continues to add sites at the consistent
rate of around 800 per year. In 2019, by adding 857
new sites it now serves over 8,000 sites worldwide
representing 40% of all large enterprise circuits
(excluding China the market share of this segment
is 51%). Veezi continues to build momentum with
161 additional sites added and now serves more than
1,000 customers worldwide. Annualised Recurring
Revenue for Veezi (excluding China) was up 22% in
the year – driven by increase in sites and an increase
in revenue per site.
Movio delivered a solid result for 2019. Movio Cinema
and Movio Research (now split out from Movio Media)
reported continued growth in both their customer base
and revenues; these two units form a strong foundation
for the future. Movio Media performed well with the
focus on digital, as the direct email and text business
Following our bumper 2018 result, we are very pleased
to report a resilient set of results for 2019 as the Group
expands its geographic, market and customer reach.
With revenue up 11% for the year to $144.5m, the Group
has tripled in size since listing in 2014.
This result was delivered whilst we commenced a
number of important initiatives that will deliver value
over the medium and longer term. Most significant is
the commitment to accelerate the transition of Vista
Cinema to a SaaS future – a transformative project for
the future of the Group. In addition, we have initiatives
under way to simplify and scale our businesses, to
increase our Target Addressable Markets, to push
faster in our commitments to innovation, and to better
understand moviegoers. Each of these initiatives is
underpinned by a focus on growing recurring revenue.
We connect our work across the Group under the
purpose of ‘Enhancing the Moviegoer Experience’ as
this underpins what we set out to achieve with our
customers across the whole of the film industry value
chain. Examples of how this plays out in Vista Group
products and solutions are included in this report.
Our achievements at Vista Group are based on
the imagination, hard work, and commitment of our
people – from our development centres in Auckland
to our sales and customer facing teams across the
globe. More recently we have actively and intentionally
expanded our global footprint to better serve our
growing customer base. We have expanded our teams
and facilities in London and Los Angeles – in Vista
Cinema, Movio and Powster in particular – and built out
our Netherlands business around Vista Cinema, Maccs
and Cinema Intelligence. We need to make special
mention of the product organisation team in Vista
Cinema, who have delivered new products, innovated
with existing products, taken on new implementations
for the world’s largest cinema chains and stepped
boldly into our SaaS transformation project.
The global box office had a good year in 2019, with
US attendance only slightly down on a record 2018,
and Europe numbers up 4.5% to a historical high,
with record numbers recorded in France, the UK
and Russia.
fell back as expected, and its second half was in line
with the second half of 2018 when it experienced
record growth.
marketing investment in Australia resulted in good
growth in the second half of the year. Users were
up 13% on the previous year.
Maccs was the standout performer in the Additional
Group Companies segment, recording strong revenue
growth of 21%, a positive EBITDA and launching its
new mica offering, an important product for Maccs
that enables them to address the large number of
small independent distributors worldwide.
Numero is now included in this segment following the
acquisition of the remaining shares in the business and
was consolidated for Q4 of 2019. Numero had a good
year, with revenue up due to geographic spread and
wider customer uptake. Numero recorded a breakeven
result for Q4 2019.
Powster grew steadily in 2019 whilst building its internal
capabilities in the US to complement its UK offering.
The volume of contracts and project opportunities
increased in Q4 and Powster enters 2020 with a strong
pipeline. Traffic across the Powster online platforms
increased 23% over the prior year.
Flicks continues to extend its lead as the largest
independent movie site in Australasia. Sales and
Cinema Intelligence and movieXchange, two businesses
in their start-up phase, had mixed years and reported
a loss in the Early Stage Investments segment. Both
businesses are tracking to breakeven. Given the almost
100% overlap in current and expected customer base
the Group has decided to fold both businesses under
Vista Cinema management; this will significantly
reduce both businesses’ ‘go to market’ costs.
Group EBITDA was down 5% on a like for like
basis (both including IFRS 16) to $31.1m, a very
creditable result.
Vista Group continues to maintain a strong balance
sheet and generates positive cashflow from operating
activities to fund the company’s software investments.
Based on the financial statements approved for issue
on 27 February 2020, the board declared a final
dividend of 2.1 cents per share in line with the 2018
final dividend. In light of the uncertainty surrounding
the impact of the COVID-19 outbreak on the global
film industry, the board made the decision to cancel
the final dividend. This decision will be revisited once
the trajectory of COVID-19’s impact on Vista Group
becomes clearer.
We want to take this opportunity to thank our
stakeholders – our shareholders and investors for their
support of our business – and our customers for their
willingness to innovate with us and for trusting Vista
with delivering their mission critical systems. And
clearly everything we do is founded on the imagination,
enthusiasm, and commitment of the people of Vista
Group – they are a diverse and vibrant team constantly
exploring ways to Enhance the Moviegoer Experience.
We’ve had a strong 2019 and we’re looking to the future
with enthusiasm and energy as we continue to build.
Thank you and kind regards
Kirk Senior
Executive Chair
Kimbal Riley
Group CEO
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Annual Report 2019
Group overview
Key themes
The mission of Vista Group is to ‘enhance the moviegoer experience’; we know,
that if we ensure the moviegoer’s experience is at the centre of what we do,
then we will deliver value to our customer’s customer – the moviegoer.
Vista Group operates across the global film industry,
from production to distribution, to cinema exhibition
and the moviegoer. The graphic below is an illustration
of how Vista Group views its vertical market and the
fit of its products.
the opportunity to enable more efficient access to
data for industry participants leading to the Group’s
investment in movieXchange, Movio Media and
additional modules within the Vista Cinema
product set.
Our products follow the film from its creation through
to screenings for the moviegoer – and the tracking of
all the data, interrelationships and information that is
needed by each party for the duration of that journey.
We report on the box office performance of the movie
– back through the cinema exhibition channels – to the
entity that made and invested in the film at the start.
The global cinema market is still expanding with
the number of cinema screens and box office
revenue growing. Industry trends of consolidation,
premiumisation, data driven decisions and marketing,
drive the product functionality of Vista to support
industry participants across the spectrum to improve
their service offerings.
The data aggregation and analysis that is required by
the film industry is very significant. It provides many
additional opportunities for Vista Group products such
as Movio, Numero and Powster. It has also created
Vista Group continues to lead the global industry
in creating innovation-focused products and services
that meet, and aim to exceed, the needs and wants
of our customers and their moviegoers.
Our business model
Production
Distribution
Cinema exhibition
Moviegoer
Vista Cinema
Veezi
movieXchange
Maccs
Movio
Numero
Cinema Intelligence
Powster
2020
Simplify and scale
our operations
Innovate
Increase our target
addressable market
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Annual Report 2019
Stardust
Flicks
Deliver to
top 10 customers
Continue to grow
our understanding of
moviegoer behaviour
Increase our target
addressable market
Innovation
New Vista
Cinema
products
Horizon
Serve
were launched in April 2019
at the CinemaCon industry
trade show in Las Vegas.
Experience
L
A
T
G
D
I
I
Web
Mobile
Kiosk
Digital Signage
CXM (Customer Experience Manager)*
Loyalty
Operations
Point of Sale
Cinema Manager
CashDesk
Food & Beverage
Serve
InTouch
UsherPoint
MovieTeam*
Enterprise
Head Office
Horizon*
Vouchers & Gift Cards
Film Manager
Cinema Intelligence*
Group Sales
Call Centre
movieXchange*
Connect
Services
Managed Upgrades
Customer Integrations
Customer Reports
Customer Feature Developments
First Level Support
Hardware
Available on premise or as Cloud Service.
* Cloud only.
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Vista Group International Limited
Horizon
Horizon enables visibility of the cinema’s operational and
activity data in real time allowing the exhibitor to make
proactive business decisions on the fly on any device
instead of reacting to data days or even weeks later.
Unique to the cinema industry, Horizon has three main components:
Stream
Store
Discover
Using Horizon, Vista’s exhibitor customer can stream data from around
their cinema circuit in real time. Cinema transactional data is replicated
and stored in the cloud (for as long or as short a period as the exhibitor
prefers), allowing control of the data including the ability to monitor
and manage its flow in the cinema network.
Serve
Serve was developed in partnership with an exhibitor
customer. The collaborative innovation that followed
has produced a product that takes restaurant dining
right into the theatre using a mobile application for
waitstaff dedicated to taking food orders.
The ‘Discover’ phase of Horizon unlocks the potential
of rich data insights with cinema-centric self-service
analysis tools; the product offers predefined dashboards
with key industry metrics, or the ability to tailor the
exhibitor’s own.
Horizon is an enabling tool for exhibitors to enhance
the experience of their movie-going guests using
their own data; a ‘matter of record’ and a vast
source of truth that enables operational analysis
as never before.
Gross box office
by time
Total gross
Top 5 classes
& items
Admits over time
Revenue – admits,
gross, total tax, net
Top 5 grossing
distributors &
their films
Horizon real time box office analysis
Serve is made to work in a cinema – standard restaurant
ordering systems are not. User-led design that brought
cinema waitstaff into the design and development
process proved the best way to create the ideal dine-in
point-of-sale (POS) solution for a cinema.
Wider ranging benefits have accrued using Serve: for
example, customer intelligence gathered about habits
within the food and beverage sector, enable a stronger
marketing window into customer behaviour; Serve
orders can be connected to loyalty members and their
habits and preferences recorded. In both cases new
opportunities arise to enhance the experience of
the moviegoer.
Food and beverage insights have influenced marketing
credo at a basic level. Efforts to put a moviegoer
in every seat has progressed to putting the most
financially beneficial guest in as many seats as possible
– a subtle shift that is proving a win-win for Vista’s
innovative customer.
Select
moviegoer seat
View
moviegoer details
View
eligible discounts
Food & Beverage
selection
Add to cart
Hold and deliver
in 30mins
Send and save
Order completed
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Annual Report 2019
SaaS transformation
What we said we’d do
and where we are now
Early-mid
2020
Late
2020
Customer benefits
Fast start
New platform
architecture
Next Gen Cloud Cinema
‘Connect’ as a service*
Fast live
3+ early adopters
China customers
Existing cloud
customers
On track
On track
Latest software
functionality always
available with
easier access to
new features
Increased physical
and data security
with reduced
compliance
costs
Greater reliability
and scalability to meet
peak demands
Circuit wide
information up
to date and
immediately
available
Greater accessibility
from a wider
range of locations
and devices
Reduced
infrastructure costs
in a distributed
cinema circuit
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Annual Report 2019
*Connect is the application that handles all of Vista’s ticketing and food and beverage transactions
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Vista Group International Limited
Late 2019PrepareDesign & validate Define transitions Plan Recruit Completed Environmental, social & governance
Environmental, social & governance
(ESG)
Our core value ‘good things with good
people’ has underpinned the growth of
Vista and contributed to our success.
With growth comes responsibility and consciousness
of our social and environmental footprint; we need
to continue to grow sustainably and honour our role
as employers and in society.
We are proud of the work we have done in 2019
that has built our ability to commit to increased
focus on our ESG visibility and reporting in 2020.
Our commitment is embodied in the following
proverb:
Tiakina te whenua, atawhai te iwi, haere
whakamua – care for the land, care for the
people, go forward.
Our land
We take pride in Vista being a sustainable business
and want to ensure we are owning up to, and taking
responsibility for, the environment issues our world
is facing. For instance, for our Auckland office we
choose low impact supplier Mercury Energy, which
uses 100% renewable energy.
In 2019, our staff led some fantastic initiatives to
support minimising our impact on the environment.
We established
We removed universal landfill rubbish bins and
replaced them with paper, recycling, and organic
landfill bins.
52%
of our New Zealand rubbish was recycled in 2019
(up 37% from 2018).
• We made electric scooters available to our USA team
• We introduced battery recycling
• We hosted ‘Plastic Free July’ events.
Tiakina te
whenua,
te iwi, haere
People and communities
We are passionate about ensuring our people can bring their true selves to work and feel included, safe and
supported. Vista Group interacts with people from all over the globe and from every segment of society and
we are proud that our workforce reflects similar diversity to that of our customer base.
Number of staff by region
Age distribution
New Zealand
410
USA
United
Kingdom
131
100
Europe
74
Mexico
45
South Africa
Australia
Malaysia
9
7
3
23.5%
5.7%
2.7%
68.1%
Generation Z <23
Millennials 24-36
Baby Boomers 54-75
Generation X 37-53
% of male and female
(2018 76%, 24%)
70
30
4%
of staff identify as
*
having a disability
39
languages
*
spoken
10%
identify as being part of
the Rainbow community
*
* reflects New Zealand only data for 2019
atawhai
whakamua
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Annual Report 2019
Our communities
We are determined to make a difference in people’s lives and to foster and develop community initiatives
in New Zealand and across the world. Examples include:
Variety
(USA)
West Side Food
Bank (USA)
Toys for Tots
(USA)
Shadowtech
(NZ)
SESA
(NZ)
College
Robotics (NZ)
All Heart
(NZ)
Auckland City
Mission (NZ)
Eat My Lunch
(NZ)
Breast Cancer
Foundation (NZ)
Medicinema
(UK)
Every Smile
(UK)
Save the
Children (UK)
Vista Foundation
Vista Group is passionate about the
New Zealand film industry and is
continuing to support it through the
Vista Foundation, which aims to foster
a viable, successful and inclusive local
film industry in New Zealand.
With the financial support of Vista Group and external
donors, the Foundation has been able to continue
its support of programmes to educate aspiring
filmmakers. As well as that it has contributed toward
enabling other individuals and groups whose love of
filmmaking manifests in a wide range of constructive
participation in the industry.
The Foundation extends its level of influence on
achieving its aims by partnering with other organisations.
An example is its support of The Dame Gaylene Preston
Award for Documentary Filmmakers – a biennial
commitment to honour documentary filmmakers
agreed by the collective group of The Vista Foundation,
The Arts Foundation of New Zealand, The New Zealand
International Film Festival and The New Zealand Film
Commission. 2019 saw the inaugural presentation of
this Award by Dame Gaylene in person.
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Vista Group International Limited
A significant new initiative in 2019 was
to take up the role of naming sponsor for
the nationally-run, and hugely successful
48 Hour Film Festival, which after many years was
in danger of not continuing in 2019.
With the Foundation’s help the event was rebranded
as The Vista Foundation 48Hours 2019. Once again,
with 530 competing teams from across the nation
representing a diverse range of participants in terms
of gender, ethnicity and age, the Festival was an
event that generated high enthusiasm; it has become
synonymous with the vitality of the New Zealand
film industry and it aligns with the aims of the
Vista Foundation.
Looking forward to 2020, the Foundation will extend
its activities via the continued financial support of
Vista Group and external donors and build its profile
and reputation as a passionate supporter of an
inclusive and successful New Zealand film industry.
Cinema
Movio
Additional
Group
Companies
Early Stage
Investments
Associates
and joint
ventures
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Annual Report 2019
Group trading overview
Total Revenue
$144.5m (up 11%)
Recurring Revenue
$88.2m (up 11%)
Operating Profit
$21.3m (down 14%)
EBITDA (1,2)
$31.1m (down 5%)
Operating Cashflow
$15.5m (down 44%)
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Vista Group International Limited
Group trading
overview
Vista Group produced solid revenue growth (11%),
positive operating cash flow ($15.5m) and maintained
a strong balance sheet to provide a platform for
the continued growth of Vista Group. Like for like
EBITDA(1,2) was $31.1m, down 5% on 2018.
Vista Group continues to be the global leader in
delivering software and data analytics solutions to
the film industry with group companies Vista Cinema,
Movio, and Powster each number one globally in their
respective market segments.
Recurring Revenue was up 11% to $88.2m, 61% of
Group Revenue and revenue from the wider ecosystem
improved with good sales growth in hardware and
payment processing. One of the more pleasing aspects
to the result was the improvement in performance
of the Additional Group Companies segment, driven
by a strong year by Maccs.
This result continues to highlight the key financial
and operating strengths of Vista Group:
• Consistent revenue growth
• Strong annuity revenue
• Sustained profitability
• Positive operating cash generation
• Leading global position in an expanding film industry.
During the year Vista Group announced the
acceleration of its investment in developing the latest
version of its Vista Cinema software for the cloud. With
development now underway, it is expected to go live
with early adopters in late 2020 and go to commercial
release in 2021.
2019
2018
2017
2016
2015
2014
$106.6
$88.6
$65.4
$47.2
6 year revenue
(NZD millions)
$144.5
$130.7
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Annual Report 2019
Cinema
The Cinema segment is the largest within Vista Group and represents 67% of
total revenue.
For the sixth successive year Cinema has grown strongly in revenue, sites installed and market share.
The growth in the customer base is increasingly important as it creates opportunity for other Vista Group
companies. Customers who are already using Vista Cinema products can benefit from the higher value
that accrues when they use Vista Group’s wider integrated products.
Global leader in cinema management software
for cinema exhibitors in the large circuit market
1,200
900
600
300
0
Vista Cinema continues to consistently add around
800 sites per year. In 2019, by adding 857 new sites
to its slate, it now serves over 8,000 sites worldwide
representing 40% of all large circuits. Revenue was
up 17% and like for like EBITDA(1,2) up 9%. Recurring
Revenue was steady at 52% of total revenue and
revenue from third parties in the ecosystem increased
strongly. Particularly pleasing is the expansion of
payment processing opportunities the team
are exploring.
Vista Cinema continues to invest considerably in its
product roadmap. A special mention also goes to the
product development organisation in Vista Cinema,
who have delivered new products, innovated with
existing products, taken on new implementation of
the world’s largest cinema chains and embarked on
a significant SaaS transformation.
Vista market share
Vista Cinema percentage of the world market for Cinema Exhibition Companies with 20+ screens.
36% EUROPE
7,377/20,728 screens
86% CANADA
2,081/2,435 screens
50% USA
17,209/34,779 screens
98% CENTRAL AMERICA
7,684/7,854 screens
63% MIDDLE EAST
1,940/3,106 screens
16% CHINA
6,529/40,636 screens
37% ASIA (excl.CHINA)
5,373/14,450 screens
40% SOUTH AMERICA
2,624/6,543 screens
91% AFRICA
835/915 screens
97% AUSTRALASIA
1,928/1,989 screens
2013
2014
2015
2016
2017
2018
2019
Existing Customers
New Customers
Acquisitions
Vista new sites added
Market share
40% worldwide
53,580/133,435 screens
51%
excluding China
10,000
8,000
6,000
4,000
2,000
0
Global cloud–based cinema management
solution for cinema exhibitors in the small
circuit (or ‘independents’) market
2013
2014
2015
2016
2017
2018
2019
Vista total site count
Veezi continues to build momentum with 161 additional
sites added and now serves more than 1,000 customers
worldwide. Veezi ARR (3) (excluding China) was up 22%
in the year – driven by increase in sites and a modest
increase in revenue per site.
The number of countries with cinemas running
Veezi has increased from 36 to 49. Veezi continues
to expand its product offering via the Vista Cinema
software development model that includes consistent
new feature releases.
(1) EBITDA is a non-GAAP measure and is defined as earnings before net finance costs, income tax, depreciation and amortisation,
acquisition expenses, capital gains/losses, impairment losses and equity accounted results from associates and joint venture companies.
(2) To enable a like for like comparison, the 2018 results have been adjusted to include the impact of NZ IFRS 16. See section 8.4 of the
following annual financial statements for full details on the impact of adopting NZ IFRS 16 on both the current and prior year.
(3) Annual recurring revenue (ARR) is a 12-month forward view of recurring revenue components of a software business at a point in time.
For Veezi, it represents the number of contracted cinema sites at December, multiplied by the average revenue per site for the preceding year.
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Annual Report 2019
Movio
Additional Group Companies
The Movio segment is the second largest segment within Vista Group
and represents 18% of total revenue. Movio delivered a strong result
in 2019 with revenue up 13%.
This segment comprises the businesses of Maccs, Numero (from October 2019),
Powster and Flicks and represents 12% of total revenue.
Global leader in data driven marketing for
the film industry
Global leader in data driven marketing for the
film industry
Movio’s purpose is to ‘connect everyone with their
ideal movie’. To date, Movio has profiled hundreds
of millions of box office admissions generates data
and profiles on active and connected moviegoers
globally. It is this rich history that has allowed Movio
to develop industry firsts in artificial intelligence
capable of predicting the audience for every film.
This functionality has captured the attention of
Hollywood, with most of the major studios engaging
in data-led strategies using insights generated
by Movio’s AI.
Movio Cinema and Movio Research (now split out
from Movio Media) reported solid growth, 19% and
15% respectively, in their customer base and revenues.
Pleasingly, Movio Cinema is now in 57 countries,
with strong growth particularly in EMEA in the last
12 months and 100% of Movio Research’s revenue
is now recurring in nature.
Movio Media was flat on 2018, however it made strong
progress in the key area of digital campaigns (68%).
This offset a reduction in direct campaigns (16%).
The Moviegoer Data Platform announced in 2019 has
progressed well and will have its first pilot customer
in test from March 2020.
Connected moviegoer (global)
9.8m (up 18%)
North
America
Rest of
the world
Global
North
America
Rest of
the world
Global
20
20
25
33
2018
2019
Active moviegoer
(millions)
19
22
49
48
2018
2019
45
53
86
91
Core Revenue/active moviegoer
(NZ cents)
Maccs was the standout performer, recording strong revenue growth of 21% and positive EBITDA(1), while launching
its new mica offering, aimed at serving the independent distributor market segment. Growth opportunities also
accrue from the continued deployment of MaccsBox, the box office reporting product now servicing over 6,000
cinema sites, and, potential operating synergies with Vista Group’s Numero.
Box office tracking and reporting product
Numero was consolidated into the Group from October 2019. Numero had strong revenue growth during the
year, up 35%, due to geographic expansion and wider customer uptake. Numero was breakeven for Q4 2019
and, as their contracted base business grows, they have a stable platform from which to continue to grow.
Numero has both full and partial coverage of cinemas across the world’s regions. Outside of the US, Numero
reporting dashboards are available in 20+ countries representing significant growth.
Global leader in film marketing products
Powster grew steadily in the year whilst building its internal capabilities in the US to complement its UK offering.
Revenue was up 7%, with an increased volume of contracts and project opportunities in Q4 2019 and Powster
enters 2020 with a strong pipeline. Traffic across the Powster platforms increased 23% over the prior year.
Movie and cinema review and showtime guide site
Flicks continues to extend its lead as the largest independent movie site in Australasia. Sales and marketing
investment in Australia resulted in good growth in the second half of the year. Users were up 13% over 2018.
Flicks’ Your Cinema product (cinema websites for independent cinemas) now has 148 sites live in 16 countries.
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Annual Report 2019
Early Stage Investments
Associates and joint ventures
This segment comprises the businesses of Cinema Intelligence and movieXchange
and generated revenue of $2.9m and an EBITDA(1) loss of $1.3m in 2019.
Vista Group held two investments that were not accounted for as a subsidiary
at year end.
Both businesses are tracking to breakeven and will be folded into the Cinema segment from 2020,
as there is a significant overlap in current and expected customer base. This will materially reduce both
businesses’ sales and marketing costs.
Film forecasting and scheduling
The revenue for Cinema Intelligence revenue grew 13% in 2019, with a stronger second half. The integration work
with Vista Cinema’s Film Manager was completed during the year and Cinema Intelligence product is increasingly
a key component of Vista Cinema contracts.
Real-time distribution of movie media, tickets
and showtimes
movieXchange enables the sharing of digital movie assets such as promotional media (MX Film) and allows
third-party online ticketing sales vendors to access the ticketing inventory of cinema exhibitors (MX Tickets).
Though MX Tickets volume was significantly down due the loss of a key contract in 2018, MX Film made good
progress integrating with exhibitors during 2019 and is now providing content from film studios to exhibitors
that represents the servicing of 8,000+ screens.
Vista China
Operating performance
Though 2019 revenue of $19.2m reflects a 7% decline on 2018, the increase in the percentage of revenue
based on share of online ticket sales reached 80% by year end and the EBITDA loss declined. Vista China
have fine-tuned their strategy to focus on luxury top end cinemas and develop deeper partner relationships
for the independent market.
China film industry update
The 2020 box office in China will be impacted from the Coronavirus (Covid-19), the extent of which remains
unclear, as does the timeframe for recovery. We remain firm in our belief that to truly be a successful software
provider to the global film industry, we must have a strong presence in China – who now account for 30%
of the world’s screens.
Today, Vista China remains an associate company and its results are not consolidated.
We have initiated discussions with WePiao to pause our previously announced equity increase transaction
until the impact of Covid-19 on the cinema industry and on Vista China becomes clearer.
Social app to share video reaction to movies
and television shows
Stardust is a social media platform that enables users to connect with other fans in discussion of movies
and television shows. Stardust was deconsolidated in February 2019 and continues to operate independently
of the Vista Group.
22
Vista Group International Limited
23
Annual Report 2019
Corporate governance
The Board recognises the importance of good corporate governance, particularly its role in delivering improved
corporate performance and protecting the interests of all stakeholders.
The Board is responsible for establishing and implementing the Company’s corporate governance frameworks,
and is committed to fulfilling this role in accordance with best practice while observing applicable laws, the NZX
Corporate Governance Code (NZX Recommendations), the Financial Markets Authority Corporate Governance in
New Zealand – Principles and Guidelines handbook and the Corporate Governance Principles and Recommendations
(4th edition) issued by the ASX Corporate Governance Council (ASX Recommendations).
The Company is listed on the NZX and has a foreign exempt listing on the ASX. As the NZX is the Company’s
home exchange, it is required primarily to comply with the NZX Listing Rules (Listing Rules), including in relation
to corporate governance.
For the period ended 31 December 2019, the Company has prepared its corporate governance statement against
the eight principles of the NZX Recommendations.
Corporate
governance
The Investor Centre section of the
Company’s website (vistagroup.co)
includes copies of the following
corporate governance documents
referred to in this section:
• Constitution
• Corporate Governance Code and Appendices
(the Code), including:
- Code of Ethics
- Audit and Risk Committee Charter (ARC Charter)
- Nominations and Remuneration Committee
Charter (NRC Charter)
• Diversity and Inclusion Policy
• Continuous Disclosure Policy
• Share Trading Policy
• Risk and Compliance Framework Summary
Principle 1 –
Code of ethical behaviour
“Directors should set high standards of ethical
behaviour, model this behaviour and hold management
accountable for these standards being followed
throughout the organisation.”
Recommendation 1.1 – The board should document
minimum standards of ethical behaviour to which
the issuer’s directors and employees are expected
to adhere (a code of ethics). The code of ethics and
where to find it should be communicated to the issuer’s
employees. Training should be provided regularly.
The standards may be contained in a single policy
document or more than one policy.
The code of ethics should outline internal reporting
procedures for any breach of ethics, and describe the
issuer’s expectations about behaviour, namely that
every director and employee:
a. acts honestly and with personal integrity in all
actions;
b. declares conflicts of interest and proactively advises
of any potential conflicts;
c. undertakes proper receipt and use of corporate
information, assets and property;
d. in the case of directors, gives proper attention
to the matters before them;
e. acts honestly and in the best interests of the issuer,
as required by law, and takes account of interests
of shareholders and other stakeholders;
f. adheres to any procedures around giving and
receiving gifts (for example, where gifts are given
that are of value in order to influence employees
and directors, such gifts should not be accepted);
g. adheres to any procedures about whistle blowing
(for example, where actions of a whistle blower
have complied with the issuer’s procedures, an
issuer should protect and support them, whether
or not action is taken); and
h. manages breaches of the code.
The Board maintains high standards of ethical conduct
and the Chief Executive Officer (CEO) is responsible
for ensuring that such high standards are maintained
by all of the Company’s staff. Director responsibilities
and expectations with regards to conflicts of interest
are set out in the Code. The most recent version of the
Code is readily available on the Company’s website.
24
Vista Group International Limited
25
Annual Report 2019
Code of Ethics:
The Company has adopted the Code which includes
the Code of Ethics and plays a key role in establishing
the framework by which the Company’s employees
are expected to conduct themselves. The Code of
Ethics is not intended to prescribe an exhaustive list
of acceptable and non-acceptable behaviour, rather
it is intended to facilitate decisions that are consistent
with the Company’s values, business goals and legal
and policy obligations, thereby enhancing performance
outcomes. Employees must familiarise themselves with
the Company’s values, as they govern their behaviour
while they are employed by the Company.
The Code of Ethics covers, among other things,
conflicts of interest, gifts and behaviours.
The Code of Ethics sets out:
• the practices necessary to maintain confidence
in the Company’s integrity;
• the practices necessary to take into account the
Company’s legal obligations and the reasonable
expectations of its stakeholders; and
• the responsibility and accountability of individuals
to report and investigate unethical practices.
Directors and management are expected to lead
the Company according to the Code of Ethics and to
ensure that the standards set out in the Code of Ethics
are communicated to the people who report to the
Directors and management.
Any person who becomes aware of a breach or
suspected breach of the Code of Ethics is required to
report it immediately in accordance with the policy.
The Code of Ethics is provided to new employees as
part of their induction materials and the current version
is maintained on the Company’s internal web portal for
access by employees.
Conflicts of interest:
The Code of Ethics outlines the Board’s policy on
conflicts of interest. Where conflicts of interest do
exist, Directors excuse themselves from discussions
and do not exercise their right to vote in respect
of such matters.
Recommendation 1.2 – An issuer should have a financial
product dealing policy which applies to employees
and directors.
All Directors and employees are required to comply
with the Company’s Share Trading Policy (Share
Trading Policy) in undertaking any trading in
the Company’s shares. The Share Trading Policy
is available on the Company’s website.
Principle 2 –
Board composition & performance
“To ensure an effective board, there should be
a balance of independence, skills, knowledge,
experience and perspectives.”
Recommendation 2.1 – The board of an issuer should
operate under a written charter which sets out the
roles and responsibilities of the board. The board
charter should clearly distinguish and disclose the
respective roles and responsibilities of the board
and management.
The Board is the overall and final body responsible
for all decision making within the Company, having
a core objective to effectively represent and promote
the interests of its shareholders with a view to adding
long-term value to the Company.
The Code describes the Board’s role and responsibilities
and regulates internal Board procedures. The Board
has a responsibility to work to enhance the value of
the Company in the interests of the Company and
its shareholders.
The Board:
The Board is responsible for directing the Company
and enhancing shareholder value in accordance with
good corporate governance principles. Further, the
Board has statutory responsibilities over the affairs
and activities of the Company, with the power to
delegate those responsibilities to the CEO and
the executive team.
The main functions of the Board, the CEO and the
executive team are set out in the Code. There is a clear
delineation between the Board’s responsibility for the
Company’s strategy and activities, and the day-to-
day management of operations conferred upon the
executive team of the Company.
The Board reserves certain functions to itself.
These include:
• monitoring the Company’s performance against its
approved strategic, business and financial plans and
overseeing the Company’s operating results;
• ensuring the Company, the Board and the executive
team’s behaviour is consistent with the Code of
Ethics, including compliance with the Constitution,
any relevant laws, Listing Rules and regulations and
any relevant auditing and accounting principles;
• implementing, and from time to time reviewing,
the Code of Ethics, to foster high standards of
ethical conduct and personal behaviour, and hold
accountable those Directors, managers or other
employees who engage in unethical behaviour;
• ensuring the quality and independence of the
Company’s external audit process; and
• assessing from time to time the Company’s
effectiveness in carrying out the functions listed
above, and the other responsibilities of the Board.
Indemnities and insurance:
In accordance with Section 162 of the Companies Act
1993 and the Constitution, the Company indemnifies
the Directors in relation to potential liabilities and costs
they may incur for acts or omissions in their capacity as
Directors. The Directors’ and Officers’ liability insurance
covers risks normally covered by such policies arising
out of acts or omissions of Directors and employees
in their capacity as such. In addition, the Company
acquired prospectus insurance for its initial public
offering. Details are recorded in the interests register
as required by the Companies Act 1993.
Board meetings:
In the period from 1 January 2019 to 31 December 2019
the Board met formally 8 times. At each scheduled
meeting the Board considers key financial and
operational information as well as matters of strategic
importance. Directors who are not members of the
Board Committees may still attend the Committees’
meetings. Please see page 28 for further information
on the Board Committees.
• selecting and (if necessary) replacing the CEO;
Company subsidiaries:
• ensuring that the Company has adequate
management to achieve its objectives and to
support the CEO so that a satisfactory plan
for management succession is in place;
• reviewing and approving the strategic, business
and financial plans prepared by management;
• reviewing and approving certain material
transactions, and making certain investment
and divestment decisions;
• approving and overseeing the administration of
the Company’s technology development strategy;
The Company has six wholly owned subsidiaries:
Vista Entertainment Solutions Limited (VESL), Virtual
Concepts Limited (VCL), Numero Limited (Numero),
Flicks Limited (Flicks), MovieXchange International
Limited (MX) and Vista Group Limited.
Vista Entertainment Solutions Limited
VESL has four wholly owned subsidiaries:
Vista Entertainment Solutions (USA) Inc., Vista
Entertainment Solutions (UK) Limited (VUK), Vista
Entertainment Solutions (Canada) Limited and
Vista Entertainment Solutions (Asia) Sdn Bhd.
VUK has three wholly owned subsidiaries: Vista
International Entertainment Solutions South Africa
(Pty) Limited, Vista Entertainment Solutions (Spain).
S.L.U. and Vista Entertainment Solutions (NL) B.V.
Virtual Concepts Limited
VCL has one wholly owned subsidiary, Movio Limited
and Movio Limited has one wholly owned subsidiary,
Movio Inc.
Numero Limited
Numero Limited has one wholly owned subsidiary,
Numero (Aust) Pty Limited.
MovieXchange International Limited
MX has one wholly owned subsidiary, MovieXchange
Limited.
Board meetings were held for these subsidiaries during
the year ended 31 December 2019, with material matters
raised in these meetings reported to the Company’s
Board, as appropriate.
Delegation:
To enhance efficiency, the Board has delegated
some of its powers to Board Committees and other
powers to the CEO. The CEO’s employment contract
is not for a specific term. The day-to-day leadership
and management of the Company is undertaken by
the CEO and senior management.
The CEO is responsible for:
• recommending to the Board a vision and strategy
for the Company;
• implementing the Board approved strategy
and vision;
• implementing the Board approved risk management
framework and ensuring compliance;
• providing management of the day to day operations
of the Company; and
• acting as the spokesperson for the Company.
The terms of the delegation by the Board to the CEO
are documented in the Code and more clearly set
out in the Company’s Delegated Financial Authority
Manual. This manual also establishes the authority
levels for decision-making within the Company’s
management team.
The CEO has also formally delegated decision
making to senior management within their areas
of responsibility, subject to quantitative limits to
ensure consistent and efficient decision making
across the Company.
26
Vista Group International Limited
27
Annual Report 2019
Board committees:
The Board has established and adopted charters for
two committees: the Audit and Risk Committee and
the Nominations and Remuneration Committee.
The membership of each Committee at 31 December
2019 was:
• Audit and Risk Committee – James Ogden (Chair),
When recommending to the Board suitable candidates
for appointment as Directors, the Nominations and
Remuneration Committee will consider, among
other things:
• the skills and capabilites required to ensure that the
Company remains ‘future fit’;
• the candidate’s skills, expertise and competencies; and
Susan Peterson and Cris Nicolli.
• the candidate’s experience as a Director.
• Nominations and Remuneration Committee – Susan
Peterson (Chair), James Ogden and Cris Nicolli.
Recommendation 2.2 – Every issuer should have
a procedure for the nomination and appointment
of directors to the board.
Nomination and appointment:
The procedures for the appointment and removal of
Directors are ultimately governed by the Constitution.
As mentioned above in Recommendation 2.1, the Board
has established a Nominations and Remuneration
Committee governed by the NRC Charter. A copy
of the NRC Charter is included in the Code, which
is available on the Company’s website. The primary
objectives of the Nominations and Remuneration
Committee in relation to the nomination and
appointment of Directors are:
• to ensure a formal and transparent procedure for
the nomination and appointment of Directors;
• to recommend Director appointments to the
Board; and
• to regularly review the composition of the Board
to ensure the appropriate composition of Directors
is maintained.
The Nominations and Remuneration Committee does
this by:
• making recommendations to the Board as to its size;
• reviewing the composition of the Board to ensure
the most appropriate balance of skills, qualifications
and experience;
• reviewing Board succession plans to maintain
an appropriate balance of skills, experience and
expertise on the Board;
• reviewing criteria for determining suitability of
potential Directors in terms of maintaining a balance
of relevant skills between Board members to ensure
the Board can meet the Company’s objectives;
• identifying and maintaining a list of suitably qualified
people who could be approached for future Board
positions;
• ensuring there is an appropriate induction programme
in place for all new Directors; and
• making recommendations to the Board about the
appointment and re-election of Directors.
28
Vista Group International Limited
Retirement and re-election:
The Board acknowledges and observes the
relevant Director rotation/retirement rules under
the Listing Rules.
Two Directors (Kirk Senior and Cris Nicolli) retired
by rotation and were re-elected at the Annual
Shareholders’ Meeting in May 2019.
Composition of the Board:
At 31 December 2019, the Board comprised six Directors:
– Kirk Senior (Chair)
– James Ogden
– Susan Peterson
– Murray Holdaway
– Brian Cadzow
– Cris Nicolli
The Board has a broad range of IT, film industry,
financial, sales, business and other skills and expertise
necessary to meet its objectives. The Constitution
currently requires the Company to comply with the
minimum Board composition requirements of the Listing
Rules, which require a minimum of three Directors,
a minimum of two Directors that are ordinarily resident
in New Zealand, and a minimum of two Directors that
are Independent Directors.
The Board considers that it has an appropriate mix
of skills, experience and independence to ensure that
the Company is governed in a manner that ensures
that the interests of all shareholders are represented
and protected. The Board has also ensured that
appropriate processes are in place to address
the needs and expectations of stakeholders with
respect to independence in decision-making and
the management of any conflicts of interest.
Recommendation 2.3 – An issuer should enter into
written agreements with each newly appointed director
establishing the terms of their appointment.
New Directors are required to consent to act as a
Director and receive a formal letter of appointment
which sets out their duties, responsibilities, rights
and remuneration entitlements.
Each senior executive is employed under an individual
employment agreement which sets out the terms
on which the senior executive is employed including
details of the executive’s duties, responsibilities, rights
and remuneration entitlements. The employment
agreement also sets out the circumstances in which
employment may be terminated by either the
Company or the executive.
Recommendation 2.4 – Every issuer should disclose
information about each director in its annual report or
on its website, including a profile of experience, length
of service, independence and ownership interests and
director attendance at board meetings.
Information about each Director including a profile
of experience and independence is available on the
Company’s website. The skills and experience of each
Director are set out on page 39 in the ‘Disclosures’
section of this Annual Report. The eight Board
meetings held during the period from 1 January 2019
to 31 December 2019 were attended by all Directors.
Director independence:
The Code requires that a minimum of two Directors
be ‘independent’. The Board takes into account the
guidance provided under the Listing Rules, the NZX
Recommendations and the ASX Recommendations, in
determining the independence of Directors. Under those
rules and recommendations, Directors are considered
to be independent if they are non-executive and do not
have an interest or relationship that could reasonably
influence, or could reasonably be perceived to influence,
in a material way, the Director’s capacity to bring an
independent view to their decisions relating to the
Company, act in the Company’s best interests, and
represent the interests of the shareholders of the
Company generally having regard to the factors that
may impact director independence, if applicable.
The Board will review any determination it makes
as to a Director’s independence on becoming aware
of any information that may have an impact on the
independence of the Director. For this purpose,
Directors are required to ensure that they immediately
advise the Board of any relevant new or changed
relationships to enable the Board to consider and
determine the materiality of the relationships.
As at 31 December 2019, the Board considers that
James Ogden, Susan Peterson and Cris Nicolli are
Independent Directors. As at 31 December 2019, the
Board determines that Murray Holdaway, Brian Cadzow
and Kirk Senior are not Independent Directors because
of their executive responsibilities and respective
substantial shareholdings.
Length of service of Directors:
DIRECTOR
APPOINTED
LENGTH OF SERVICE
TO 31 DEC 2019
Murray Holdaway 6 August 2003
16 years, 5 months
Brian Cadzow
6 August 2003
16 years, 5 months
Kirk Senior
3 June 2014
5 years, 7 months
Susan Peterson
3 June 2014
5 years, 7 months
James Ogden
3 June 2014
5 years, 7 months
Cris Nicolli
17 February 2017 2 years, 11 months
Ownership interests:
The table of Directors’ shareholdings is included in
the Disclosures section of this Annual Report set out
on page 41.
Recommendation 2.5 – An issuer should have a
written diversity policy which includes requirements
for the board or a relevant committee of the board
to set measurable objectives for achieving diversity
(which, at a minimum, should address gender diversity)
and to assess annually both the objectives and the
entity’s progress in achieving them. The issuer should
disclose the policy or a summary of it.
Diversity and Inclusion Policy:
The Company values and respects the contributions,
ideas and experiences of people from all backgrounds
and is proud of its diversity with staff from all around
the world. The Company has a formal Diversity and
Inclusion Policy, a copy of which is available on the
Company’s website. The Diversity and Inclusion Policy
sets out the Company’s commitment to achieving
diversity in the attributes and experiences of the
Board, management and staff.
The Company set the following diversity objectives
for the 2019 financial year:
Objective: Review inclusion practices globally to ensure
all staff feel safe and can bring their whole self to work.
Progress made: The Company have reviewed the
employee lifecycle (from potential candidates through
to leavers) to ensure everyone feels included, valued and
safe. Key initiatives include working with staff to create
and grow community groups such as Vista Rainbow and
women’s support networks to provide a direct voice
to management on how the Company can ensure staff
feel safe and included. The Company reviewed staff
policies, communications and recruitment to remove
any instances of potential bias.
29
Annual Report 2019
Objective: Ensure the succession plan for all senior
executive roles include at least one qualified female
potential successor.
Progress made: This was achieved for 80% of the
Executive Leadership Team (direct reports to the
Group CEO) through identification, development and
encouragement of potential internal female successors.
Objective: Continue to strive to ensure strong female
candidates are identified in the recruitment process
for all roles.
Progress made: The Company has made great progress
against this goal in 2019. The recruitment team has
actively sourced talented female candidates to build the
internal talent pipeline. There has been a 50% increase
in 2019 when compared against the prior year.
Objective: Review and encourage the participation
of underrepresented groups in leadership development
programmes.
Progress made: The Company has actively encouraged
staff from underrepresented groups to participate in
leadership development programmes. The development
included staff who are not currently in management
roles but who have been identified as having significant
potential to ensure that they are better prepared to
move into leadership roles when the opportunity arises.
Over 40% of the Company’s current leadership training
participants now come from underrepresented groups.
Objective: Complete a review of gender pay
equality across roles, age and salary bands for Vista
Entertainment offices in Auckland, Los Angeles
and London.
Progress made: This was completed in July 2019,
and the Company was pleased to see that there
was no variance in position in range for incumbents
between genders.
Gender diversity statistics as at 31 December 2019:
MALE
FEMALE
31 DECEMBER 2019
NO.
%
NO.
%
TOTAL
Board
Senior Executive
5
10
83%
100%
1
0
17%
0%
6
10
Total Company
547
70% 231
30%
778
MALE
FEMALE
31 DECEMBER 2018
NO.
%
NO.
%
TOTAL
Board
Senior Executive
5
9
83%
90%
1
1
17%
10%
6
10
Total Company
541
76% 169
24%
710
* For the purposes of this annual report ‘Senior Executive’ means
the senior executive team constituted in accordance with the Code,
and who report directly to the CEO. The senior executive team are
‘officers’ for the purposes of the Listing Rules but exclude Executive
Directors as they are captured in the ‘Board’ line.
30
Vista Group International Limited
The Company has set the following objectives for the
2020 financial year:
appropriate. Further, Directors have unrestricted
access to the Company’s records and information.
Recommendation 2.8 – A majority of the board should
be independent directors.
AREAS
OF FOCUS
Gender
OBJECTIVE
Improve the representation of women
at senior levels of business.
Ensure the succession plan for all senior
executive roles include at least one
qualified female potential successor.
100% of shortlists for all senior management
roles must include one woman.
Cultural
Increase the Company’s Maori cultural
competency in New Zealand leaders
and staff.
Proactively work to encourage Maori and
Pacifica staff to move into technology
careers.
Diversity &
inclusion
Celebrate staff diversity and encourage
greater understanding of that diversity.
Maintain the Company’s Rainbow Tick
accreditation and continue to support
rainbow initiatives globally.
Ensure all staff can bring their whole
self to work and feel included, safe
and supported.
Extend workplace flexibility practices.
Recommendation 2.6 – Directors should undertake
appropriate training to remain current on how to best
perform their duties as directors of an issuer.
All Directors are responsible for ensuring they remain
current in understanding their duties as Directors.
To ensure ongoing education, Directors are regularly
informed of developments that affect the Company’s
industry and business environment, as well as company
and legal issues that impact the Directors themselves.
Directors have access to management and any
additional information they consider necessary
for informed decision making.
Board access to information and advice:
The Chief Financial Officer (CFO), supported by
the General Counsel, is responsible for supporting
the effectiveness of the Board by ensuring that
policies and procedures are followed and co-ordinating
the completion and dispatch of the Board agendas
and papers. All Directors have access to the senior
management team, including the CFO and the General
Counsel, to discuss issues or obtain information on
specific areas in relation to items to be considered
at Board meetings or other areas as they consider
The Board is currently comprised of six Directors, three
of which are Independent. The Board is committed to
achieving a majority of Independent Directors through
its Board succession plan that is currently underway.
Recommendation 2.9 – An issuer should have an
independent chair of the board. If the chair is not
independent, the chair and the CEO should be
different people.
The Chair of the Board is elected by the Directors.
The Board supports the separation of the role of Chair
(Kirk Senior) and CEO (Kimbal Riley) in accordance
with the requirements of the NZX Recommendations
and the ASX Recommendations. The Chair of the
Board’s role is set out in the Code and includes:
• to manage the Board effectively;
• to provide leadership to the Board; and
• to facilitate the Board’s interface with the CEO.
The NZX Recommendations encourage issuers to
consider having an independent chair, and the ASX
Recommendations require that the Chair of the
Board is an independent Director. While, Mr Senior
is not considered to be an Independent Director,
he is considered by the Directors to be the most
appropriate Director to act as Chair because of the
depth of his leadership and operational experience
and considerable professional network across the
international film industry. The Board is confident
that Mr Senior is capable of exercising independent
views and judgement in exercising his role as Chair.
The Board, the Board Committees and each Director
have the right, subject to the approval of the Chair
of the Board, to seek independent professional advice
at the Company’s expense to assist them to carry
out their responsibilities as a Director or Committee
member. Further, the Board and Board Committee
members have the authority to invite external advisors
with relevant experience and expertise to attend
Board or Board Committee meetings.
Recommendation 2.7 – The board should have a
procedure to regularly assess director, board and
committee performance.
Performance evaluation of the Board, its Committees
and individual Directors:
The Chair of the Board must ensure that rigorous,
formal processes for evaluating the performance of
the Board, Board Committees and individual Directors
are in place and the Chair must lead such processes.
As part of that evaluation process the Board must
establish performance criteria for itself and review its
performance against those criteria (at least) annually.
The Board must also review its relationship with
management annually. As part of the review process,
the Board will use, evaluate, and where necessary,
action the results of a Board performance questionnaire.
Further, the Board Committees undertake an annual
self-review of their objectives and responsibilities.
In addition, those objectives and responsibilities are
also reviewed by the Board and CEO against the
relevant Board Committee charter.
A survey and review was undertaken in November 2018
and the results reported to the Board at the February
2019 meeting. Recommendations from the results
of the review have been considered and are being
implemented by the Board.
Performance evaluation of senior executives:
The Board is responsible for constantly monitoring
the performance of the CEO against the Board’s
requirements.
The Nominations and Remuneration Committee is
responsible for evaluating the performance of the
CEO and oversees the CEO’s evaluation of senior
management that report directly to the CEO. The
functions of the Committee are set out in the NRC
Charter. A copy of the NRC Charter is included in the
Code, which is available on the Company’s website.
31
Annual Report 2019
Principle 3 –
Board committees
“The board should use committees where this will
enhance its effectiveness in key areas, while still
retaining board responsibility.”
Recommendation 3.1 – An issuer’s audit committee
should operate under a written charter. Membership on
the audit committee should be majority independent
and comprise solely of non-executive directors of the
issuer. The chair of the audit committee should be an
independent director and not the chair of the board.
Audit and Risk Committee:
The Board has an Audit and Risk Committee whose
primary objective is to assist the Board in fulfilling
its responsibilities, by:
• ensuring the quality and independence of the
Company’s external audit process;
The current members of the Audit and Risk Committee
are James Ogden (Chair), Susan Peterson and
Cris Nicolli.
Recommendation 3.2 – Employees should only attend
audit committee meetings at the invitation of the
audit committee.
The ARC Charter provides that employees and
Directors who are not members of the Audit and Risk
Committee can only attend Audit and Risk Committee
meetings at the invitation of the Committee.
Recommendation 3.3 – An issuer should have
a remuneration committee which operates under
a written charter (unless this is carried out by the
whole board). At least a majority of the remuneration
committee should be independent directors.
Management should only attend remuneration
committee meetings at the invitation of the
remuneration committee.
• overseeing (among other things):
Nominations and Remuneration Committee:
- the integrity of external financial reporting,
- application of accounting policies,
- financial management, and
- the risk management framework and monitoring
compliance with that framework;
• providing a formal forum for communication between
the Board and senior financial management;
• regularly reviewing the Company’s internal controls
and systems;
• undertaking an annual self-review of the Committee’s
objectives;
• regularly reporting to the Board on the operation of
the Company’s risk management and internal control
processes; and
• providing sufficient information to the Board to
allow the Board to report annually to shareholders
and stakeholders on risk identification and
management procedures and relevant internal
controls of the Company.
Charter:
The Company’s Audit and Risk Committee operates
under a written charter. A copy of the Charter is
included in the Code, which is available on the
Company’s website.
Composition of the Audit and Risk Committee:
All of the Committee members are non-executive and
Independent Directors. The Audit and Risk Committee
is chaired by James Ogden who is an Independent
Director and not Chair of the Board.
In addition to the objectives mentioned in
Recommendation 2.2, further primary objectives
of the Nominations and Remuneration Committee
are to ensure that a formal and transparent method
of recommending Director remuneration packages
exists, and to assist the Board in the establishment
of remuneration policies and practices. This includes
setting and reviewing the remuneration of the CEO,
senior executives and Directors (both executive
and non-executive). The Committee is also required
to regularly review and recommend changes to
Director remuneration to ensure such remuneration
is appropriate and effectively managed.
The Nominations and Remuneration Committee may
invite such members of management and any other
persons, including external advisers, as the Committee
considers necessary to provide information and advice.
All Directors are entitled to attend meetings of the
Nominations and Remuneration Committee by standing
invitation provided that executive Directors shall not be
entitled to attend meetings where they are conflicted
for personal reasons.
A copy of the NRC Charter is included in the Code,
which is available on the Company’s website.
Composition of the Nominations and Remuneration
Committee:
The current members of the Nominations and
Remuneration Committee are Susan Peterson (Chair),
James Ogden and Cris Nicolli. All of the members of
the Committee, including the Chair, are Independent
Directors.
32
Vista Group International Limited
Recommendation 3.4 – An issuer should establish
a nomination committee to recommend director
appointments to the board (unless this is carried
out by the whole board), which should operate under
a written charter. At least a majority of the nomination
committee should be independent directors.
The Nominations and Remuneration Committee
recommends director appointments to the Board.
A single committee covering nominations and
remuneration has been established to match the
structure and operations within the Company and
to enable more efficient use of Director resources.
A copy of the NRC Charter is included in the Code,
which is available on the Company’s website. Further
information as to the primary objectives and processes
of the Nomination and Remuneration Committee
in relation to the nomination and appointment
of Directors are contained on pages 26 and 28 in
relation to Recommendation 2.2. The composition
of the Nominations and Remuneration Committee is
described above in relation to Recommendation 3.3.
Recommendation 3.5 – An issuer should consider
whether it is appropriate to have any other board
committees as standing board committees. All
committees should operate under written charters.
An issuer should identify the members of each of
its committees, and periodically report member
attendance.
The Board has established a Disclosure Committee
in accordance with the Continuous Disclosure Policy
(Disclosure Committee). The Disclosure Committee
determines whether certain information is material
and whether it should be released in accordance with
the Continuous Disclosure Policy and the Company’s
obligations under the Listing Rules and relevant law.
The Disclosure Committee is made up of the CEO,
CFO, General Counsel and one Independent Director.
Other committees may be established from time to time.
The Nominations and Remuneration Committee held
4 formal meetings during the financial year ended
31 December 2019 with other matters, particularly
the approval of grants under the long term incentive
plan for employees dealt with by the full Board in this
period. The Audit and Risk Committee met 5 times
during the year. The auditors, PricewaterhouseCoopers,
attended all of the Audit and Risk Committee meetings.
The meetings of both committees were attended by
all members.
Recommendation 3.6 – The board should establish
appropriate protocols that set out the procedure to
be followed if there is a takeover offer for the issuer
including any communication between insiders and
the bidder. It should disclose the scope of independent
advisory reports to shareholders. These protocols should
include the option of establishing an independent
takeover committee, and the likely composition and
implementation of an independent takeover committee.
The Company has considered its position in relation to
actions required in the event of a takeover offer for the
Company. The Company has established relationships
with appropriate legal and equity market advisors
to support the Company through any offer process.
The Company has considered the establishment of
a response team to manage any process and ensure
that all obligations under the Listing Rules and other
regulatory frameworks are met.
Principle 4 –
Reporting & disclosure
“The board should demand integrity in financial and
non financial reporting, and in the timeliness and
balance of corporate disclosures.”
Recommendation 4.1 – An issuer’s board should have
a written continuous disclosure policy.
The Company is subject to the disclosure requirements
of the laws in New Zealand and Australia and is required
to comply with the Listing Rules. As the Company has
a foreign exempt listing on the ASX, the Company is
required to immediately provide ASX with all of the
information that it provides to NZX that is, or is to be,
made public.
The Company is committed to notifying the market
through full and fair disclosure to the NZX and ASX
of any material information related to its business that
is required to be disclosed by the Listing Rules. The
Company is mindful of the need to keep stakeholders
informed through a timely, clear and balanced
approach which communicates both positive and
negative news. These notifications are also
available on the Company’s website.
The Company is also required to comply with the
periodic disclosure requirements under the Listing Rules.
The Company has adopted a Continuous Disclosure
Policy which establishes procedures that are aimed
at ensuring that the Directors and all employees of
the Company are aware of and fulfil their disclosure
obligations under the Listing Rules. A copy of the
Company’s Continuous Disclosure Policy is available
on the Company’s website.
33
Annual Report 2019
The Continuous Disclosure Policy has been
communicated internally to ensure that it is strictly
adhered to by the Board and the Company’s employees.
Information on the Disclosure Committee constituted
under the Continuous Disclosure Policy is set out
in Recommendation 3.5 above.
Recommendation 4.2 – An issuer should make its code
of ethics, board and committee charters and the policies
recommended in the NZX Code, together with any other
key governance documents, available on its website.
As mentioned on page 37, the Investor Centre section of
the Company’s website (vistagroup.co) includes copies
of the following corporate governance documents:
• Constitution
• Corporate Governance Code and Appendices
(referred to in this corporate governance statement
as the Code), including:
- Code of Ethics
- ARC Charter
- NRC Charter
• Diversity and Inclusion Policy
• Continuous Disclosure Policy
• Share Trading Policy
• Risk and Compliance Framework Summary
Recommendation 4.3 – Financial reporting should
be balanced, clear and objective. An issuer should
provide non-financial disclosure at least annually,
including considering environmental, economic and
social sustainability factors and practices. It should
explain how operational and non-financial targets
are measured. Non-financial reporting should be
informative, include forward looking assessments,
and align with key strategies and metrics monitored
by the board.
The Company provides financial reports and associated
investor presentations which are balanced and provide
an objective view on the performance of the Company.
The Company has established a risk framework
focused on strategic issues within the business which
is regularly updated and reviewed by the Audit
and Risk Committee along with a health and safety
reporting process to ensure non-financial measures
important to the business are an integral part of
the operational management of the Company.
The Company is looking to evolve its disclosure of
non-financial information for future reporting periods.
Principle 5 –
Remuneration
“The remuneration of directors and executives should
be transparent, fair and reasonable.”
Recommendation 5.1 – An issuer should recommend
director remuneration to shareholders for approval
in a transparent manner. Actual director remuneration
should be clearly disclosed in the issuer’s annual report.
Shareholders have approved the Directors’ fees in
aggregate for all Directors at $500,000 per annum
for the non-executive Directors. The actual amount
of fees paid in the past year was $280,000.
Full disclosure of Directors’ remuneration is set out
at page 41.
The Chair of the Board is remunerated through the
executive remuneration structure. The Independent
Directors receive $85,000 per annum each.
Independent Directors also receive an additional
$10,000 where they chair a committee, and $5,000
where they are a committee member (without being
the chair). The executive Directors, including the
Chair of the Board receive remuneration from the
Company and do not receive Directors’ fees. Directors
are also entitled to be paid for reasonable travel,
accommodation and other expenses incurred by
them in connection with their attendance at Board
or shareholder meetings, or otherwise in connection
with the Company’s business.
Recommendation 5.2 – An issuer should have a
remuneration policy for remuneration of directors
and officers, which outlines the relative weightings
of remuneration components and relevant
performance criteria.
The Board recognises it is desirable that executives’
(including executive Directors’) remuneration should
include an element dependent upon the performance
of both the Company and the individual.
Executive remuneration currently comprises
three components: fixed remuneration, short term
performance incentives (STI) and a long term
performance incentive (LTI). This is to ensure
appropriate weighting of incentives between short
and longer-term performance, and to align executive
packages with longer-term shareholder value.
Fixed remuneration:
Fixed remuneration consists of base salary and benefits.
Recommendation 5.3 – An issuer should disclose
the remuneration arrangements in place for the CEO
in its annual report. This should include disclosure
of the base salary, short term incentives and long
term incentives and the performance criteria used
to determine performance based payments.
The elements of the current CEO’s remuneration are
set out below:
FOR YEAR ENDED 31-DEC-2019
Remuneration
Salary and fees
Southern Cross
Taxable benefits (1)
Subtotal
Pay for performance
STI (2)
LTI (3)
Subtotal
Total remuneration
425,000
2,854
18,352
446,206
91,550
1,296,272
1,387,822
1,834,028
(1) Taxable benefits relate to medical insurance coverage and
employer kiwisaver contributions.
(2) STI for FY2018 performance paid in FY2019.
(3) The CEO received 150,000 shares in May of 2019 as part of the
CEO LTI incentive scheme and 96,760 shares in April 2019 from
vesting under the 2016, 2017 and 2018 LTI grants.
Executive short term performance incentives:
The short term performance incentive is an annual
risk performance bonus which is either a specific
percentage of each executive’s base salary or a set
value. The weightings of the STI in relation to fixed
remuneration range from 15% to 60%. The STI is
based on financial performance measures (revenue
and earnings) of the Company, the business unit
that the relevant executive is accountable for (75% to
90%) and strategic personal goals (10% to 25%). The
executives’ right to short term performance incentives
is conditional on the performance of the individual and
the Company and is assessed annually by the NRC.
Executive long-term incentive plan:
The Company established a long term incentive
plan for executives, senior managers and staff in
2015. The LTI Plan aims to align the interests of key
employees with those of shareholders, by providing
a proportion of remuneration on an ‘at-risk’ basis
aligned to the achievement of defined performance
targets. Grants have been made through 2015 to 2019
with a commencement date of 1 January in each of
those years. In 2018 along with the base LTI scheme,
two additional schemes were established, one for the
new Vista Group CEO and one for specific operating
segment staff. These all had a commencement date
of 1 January 2019.
• Tranche two of the 2016 grants vested on 1 April
2019 and 367,909 shares were issued representing
a 54% vesting rate.
• Tranche one of the 2017 grant on the vested
on 1 April 2019 and 190,950 shares were issued
representing a 98% vesting rate.
• Tranche one of the 2018 grant vested on 1 April 2019
and 54,880 shares were issued representing a 100%
vesting rate.
• Tranche two of the 2018 grant vested on 1 April 2019
and 54,880 shares were issued representing a 100%
vesting rate.
• Under the Group CEO retention plan 150,000 shares
vested in April 2019.
• Under the segmental results plan 43,085 shares
vested in 2019.
The next vesting dates are:
• 1 April 2020 for tranche 2 of the 2017 grants
• 1 April 2020 for tranche 3 and 4 of the 2018 grants
• 1 April 2020 for tranche 1 and 2 of the 2019 grants
• 6 March 2020 for various tranches of the segmental
results plan
• 30 April 2020 for tranche 3 of the Group CEO
retention plan grant.
The Company’s remuneration policy is set out in the
Code, which is available on the Company’s website.
34
Vista Group International Limited
35
Annual Report 2019
DESCRIPTION OF CEO REMUNERATION FOR PERFORMANCE
FOR THE YEAR ENDED 31 DECEMBER 2019
PLAN DESCRIPTION
PERFORMANCE
MEASURES
PERFORMANCE
AWARDED AGAINST
PLAN
0%
0%
0%
STI Set at 30%
for at risk
pay.
35% weighting of Vista Group
EBITDA vs budget. Threshold
to achieve is 90% with pro-rata
payment through to 100%.
Over-achievement to 120%
is possible.
25% weighting of Vista Group
Revenue vs budget. Threshold
to achieve is 95% with pro-rata
payment through to 100%.
Over-achievement to 120%
is possible.
15% weighting of Vista Group
Profit Before Tax vs Budget.
Threshold to achieve is 90%
with pro-rata payment through
to 100%. Over-achievement to
120% is possible
25% weighting of strategic
goals set by the Board.
LTI The CEO received an allocation of 34,002 shares
in the Company under the 2019 grant of the
Executive LTI Plan.
Principle 6 –
Risk management
“Directors should have a sound understanding of the
material risks faced by the issuer and how to manage
them. The Board should regularly verify that the issuer
has appropriate processes that identify and manage
potential and material risks.”
Recommendation 6.1 – An issuer should have a risk
management framework for its business and the issuer’s
board should receive and review regular reports.
A framework should also be put in place to manage
any existing risks and to report the material risks facing
the business and how these are being managed.
Risk Framework
The identification and effective management of the
Company’s risks are a priority of the Board. The CEO
is accountable for all operational and compliance risk
across all of the Company’s operations and businesses.
The CFO and Commercial Director have management
accountability for the effective implementation of the
Board approved Risk Framework (as defined below)
across all of the Company’s businesses.
The Company has in place an overarching Operating
Risk and Compliance Framework (Risk Framework),
supported by operating risk and compliance policies
that aim to ensure that the Company, its Directors
and employees will comply with relevant regulatory
requirements such as New Zealand and Australian laws,
Listing Rules, ASX listing rules applicable to an ASX
Foreign Exempt Listing and relevant codes of practice.
The purpose of the Risk Framework is to ensure a
consistent approach to operating and compliance risk
across all the Company’s businesses in all geographies
where the Company operates. The Risk Framework sets
out the specific areas for which the CEO, Commercial
Director and CFO are accountable.
As outlined previously, the Board has established an
Audit and Risk Committee whose primary objective
is to assist the Board in fulfilling its responsibilities.
The Audit and Risk Committee’s responsibilities are
set out in Recommendation 3.1 above.
In addition to the Risk Framework, the Code provides
that the Audit and Risk Committee will regularly report
to the Board on the operation of the Company’s risk
management and internal control processes, and
provide sufficient information to the Board to allow
the Board to report annually to shareholders and
stakeholders on risk identification, management
procedures and relevant internal controls of the
Company. In addition to reporting on the existing risk
register during the financial year ended 31 December
2019, the Company undertook a project with a risk
consultant to update the risk register and prepare a
new reporting framework for the Board. This project
will be completed by mid 2020 with the new report
forming the basis of reporting in future periods. Senior
management report regularly on the established Risk
Register and provide updates to the Risk Register.
Recommendation 6.2 – An issuer should disclose
how it manages its health and safety risks and should
report on their health and safety risks, performance
and management.
The Company operates under a Health and Safety
and Wellness Policy that has been approved by the
Board. A report is provided by senior management to
the Board on performance against the policy, policy
initiatives and incident reporting.
68.2%
Review of Risk Framework
Principle 7 –
Auditors
“The board should ensure the quality and independence
of the external audit process.”
Recommendation 7.1 – The board should establish
a framework for the issuer’s relationship with its
external auditors. This should include procedures:
a. for sustaining communication with the issuer’s
external auditors;
b. to ensure that the ability of the external auditors
to carry out their statutory audit role is not impaired,
or could reasonably be perceived to be impaired;
c. to address what, if any, services (whether by type
or level) other than their statutory audit roles may
be provided by the auditors to the issuer; and
d. to provide for the monitoring and approval by the
issuer’s audit committee of any service provided
by the external auditors to the issuer other than
in their statutory audit role.
The Board’s framework for the Company’s relationship
with its external auditors is in the External Audit
Policy set out in the Code, which is available on the
Company’s website. The External Audit Policy covers
matters relating to the appointment of auditors, the
independence of auditors, transparent dialogue with
auditors, rotation of the audit leader, reporting on
audit fees and non-audit work.
The Audit and Risk Committee assists the Board in
fulfilling its responsibility to ensure the quality and
independence of the Company’s external audit process.
Pursuant to the Audit and Risk Committee Charter, the
Board has delegated the Audit and Risk Committee
the responsibility to monitor all aspects of the external
audit of the Company’s affairs including:
• considering the appointment of auditors, audit
fees and any issues on an auditor’s resignation
or dismissal;
• discussing with auditors, before the commencement
of each audit, the nature and scope of their audit;
• reviewing auditors’ service delivery plan;
• reviewing the Company’s letter of representation
to auditors; and
• discussing with auditors any problems, reservations,
or issues arising from the audit and referring matters
of a material or serious nature to the Board.
Recommendation 7.2 – The external auditor should
attend the issuer’s Annual Meeting to answer questions
from shareholders in relation to the audit.
The external auditor attends the annual shareholders’
meeting. Shareholders are given a reasonable
opportunity at the meeting to ask the auditor questions
relevant to the conduct of the audit, the audit report,
the Company’s accounting policies and the
independence of the auditor.
Recommendation 7.3 – Internal audit functions should
be disclosed.
While the Company does not have an internal audit
function, the Company fosters a culture of excellence
in all areas of risk management and takes all operating
and compliance risk obligations seriously.
The CEO is accountable for all operational and
compliance risks across all of the Company’s operations
and businesses. The CFO is accountable for the effective
implementation of the Risk Framework across all of the
Company’s businesses.
All individual employees of the Company are
accountable for their personal compliance with the
Risk Framework and supporting policies. At the time
of employment, all new staff are required to confirm
that they have read and are aware of the Company’s
policies. On an annual basis, all staff are required to
re-confirm awareness of and adherence to policies.
Principle 8 –
Shareholder rights & relations
“The board should respect the rights of shareholders
and foster constructive relationships with shareholders
that encourage them to engage with the issuer.”
Recommendation 8.1 – An issuer should have a website
where investors and interested stakeholders can access
financial and operational information and key corporate
governance information about the issuer.
The Investor Centre section of the Company’s
website, provides information to shareholders and
investors about the Company. The website includes
copies of past annual reports, results announcements,
media releases and general company information.
It also includes copies of relevant policies and of
the corporate governance documents in the Code,
referred to in Recommendation 4.2.
36
Vista Group International Limited
37
Annual Report 2019
Recommendation 8.3 – Shareholders should have the
right to vote on major decisions which may change the
nature of the company in which they are invested.
The Company will comply with its obligations
under the Companies Act 1993 to obtain shareholder
approval under a special resolution for any major
transactions. The Company will also comply with
Listing Rule requirements to obtain shareholder
approval for any transaction, or a series of transactions,
that would significantly change, either directly or
indirectly, the nature of the Company’s business
or involves a gross value above 50% of the average
market capitalisation of the Company.
Recommendation 8.4 – If seeking additional equity
capital, issuers of quoted equity securities should offer
further equity securities to existing equity security
holders of the same class on a pro rata basis, and
on no less favourable terms, before further equity
securities are offered to other investors.
The Company has not sought additional equity capital
during the year ended 31 December 2019.
Recommendation 8.5 – The board should ensure
that the notices of annual or special meetings of
shareholders is posted on the issuer’s website as
soon as possible and at least 20 working days
prior to the meeting.
Once the date of the annual shareholders’ meeting
is confirmed, the Company notifies the market by
way of announcements made to the NZX and ASX.
This notification is also available on the Company’s
website. The Company provides notice of the annual
shareholders’ meeting to shareholders in accordance
with the requirements of the Companies Act 1993 and
the Listing Rules. The notice is sent to shareholders,
notified to the market by way of announcements
made to the NZX and ASX and made available on
the Company’s website at least 20 working days
prior to the date of the meeting.
Recommendation 8.2 – An issuer should allow
investors the ability to easily communicate with
the issuer, including providing the option to receive
communications from the issuer electronically.
Although the Company does not have a formal
shareholder communications policy, it does take
appropriate steps to keep shareholders informed
about its activities and to listen to issues or
concerns raised by shareholders.
Fundamental to the Company’s provision of
information to shareholders is the management of
its continuous disclosure obligations which ensures
all shareholders have access to important Company
information. In addition to lodging this Company
information with the NZX and the ASX, the Company
uses its website to make available to shareholders
information about the Company and its activities.
Shareholders have the option of electing to receive
all shareholder communications, including dividend
statements, by email. Shareholders are advised that
the Annual Report is available on the Company’s
website in accordance with the requirements of the
Companies Act 1993, the Financial Markets Conduct
Act 2013 and associated regulations. The Company
provides a printed copy of the Annual Report only
to shareholders who have specifically elected to
receive a printed copy.
All announcements made to the NZX and the ASX
are available to shareholders by email notification
where a shareholder has provided the Company’s
Share Registry with an email address, and elects
to be notified of all such announcements.
The Company’s Share Register is managed
and maintained by Link Market Services Limited.
Shareholders can access their shareholding
details or make enquiries about their current
shareholding electronically by contacting Link
Market Services Limited.
A section of the Code is dedicated to shareholder
participation. This section of the Code is designed to:
• highlight the Board’s accountability to shareholders;
• encourage shareholders to use the annual general
meeting to ask questions and make comments on
the performance of the Company;
• highlight that the Board welcomes input from
shareholders and encourages shareholders to
submit questions in writing prior to the annual
general meeting, so that an informed answer
can be given at that meeting; and
• indicate that the Board will ensure that the
Company’s external auditors are available for
questioning by shareholders at the annual
shareholders’ meeting.
38
Vista Group International Limited
Disclosures
Directors
The names of the Company’s Directors in office during the financial year and as at the date of this report are as follows:
K Senior, BCom, CA (Executive Chair of the Board), re-elected May 2019
B Cadzow, BCom, (Executive Director)
M Holdaway, BSc, BCom (Executive Director)
C Nicolli, BMBS, FAICD (Independent Director), re-elected May 2019
J Ogden, BCA Hons, FCA, CFInstD (Independent Director)
S Peterson, BCom, LLB (Independent Director)
Directors were in office for this entire period unless otherwise stated.
Stock exchange listings
The Company’s ordinary shares are listed and quoted on the NZX and on the ASX (as an ASX Foreign Exempt Listing).
Entries recorded in the interests register
The Company maintains an Interests Register in accordance with the Companies Act 1993 and the Financial
Markets Conduct Act 2013 and associated regulations. The following are particulars of entries made in the Interests
Register during the year ended 31 December 2019.
Directors’ interests, Directors’ disclosed interests, or cessations of interest, in the following entities pursuant
to section 140 of the Companies Act 1993 during the year ended 31 December 2019.
NAME OF DIRECTOR
ENTITY
Kirk Senior
Kirk Senior Pty Limited
NATURE OF GENERAL DISCLOSURE
Director and Shareholder
Senior Family Super Fund Pty Limited
Director and Shareholder
Kirk Senior Family Trust
Honey For Life Pty Ltd
Trustee
Shareholder
Outpost Central Ltd (trading as Wildeye)
Board Advisor and Option Holder
Brian Cadzow
B&J Associates Consulting Limited
Director and Shareholder
Invista Share Nominee Limited
Director and Shareholder
B&J Cadzow Family Trust
A J Cadzow Trust
K A Cadzow Trust
Waiotahi Trust
Grandma’s Trust
Titirangi Golf Club Inc.
Trustee
Trustee
Trustee
Trustee
Trustee
Board member
Vista has provided some limited sponsorship
to the Titirangi Golf Club Inc.
Kaha Software Limited
Director and Beneficial Shareholder
Murray Holdaway
Invista Share Nominee Limited
Director and Shareholder
Holdaway and Geary Trust
The Awhero Nui Trust
Lido Cinema Limited
Kaha Software Limited
Trustee
Trustee
Beneficial Shareholder
Director and Beneficial Shareholder
39
Annual Report 2019
NAME OF DIRECTOR
ENTITY
NATURE OF GENERAL DISCLOSURE
Shareholdings of Directors at 31 December 2019
EMPLOYEE REMUNERATION (NZD$)
STAFF NUMBERS
Cris Nicolli
Nicolli Holdings Pty Ltd (Family Investment)
Nicolli Family Superannuation Fund
Director
Trustee
Other Levels (ASX OLV)
Director – member of the NRC & ARC
Kadasig Aid & Development (not for profit charity)
Treasurer
Empired Limited (ASX APD)
James Ogden
Summerset Group Holdings Limited
Pencarrow Private Equity Fund
Director
Director
Independent Member of the Investment
Committee
Pencarrow Bridge Fund GP Limited
(General Partner of the Pencarrow Bridge Fund)
Director
Crown Forest Rental Trust
Member of the Audit and Risk Committee
NZ Markets Disciplinary Tribunal
Foundation Life (NZ) Limited
Member
Director
Susan Peterson
Xero Limited
Director – Chair of PRC
Property for Industry Limited
PFI No 1 Limited
Trustpower Limited
Director – Chair ARC and member
of the Remuneration Committee
Director
Director – Chair of Nomination and
Governance Committee and member
of the Remuneration Committee
ASB Bank Limited
NZ Markets Disciplinary Tribunal
Director
Member
Peterson Mellsop Family Trust
Trustee and Beneficiary
Organic Initiative Limited
Director, Chair and Shareholder
Share dealings of Directors:
Directors disclosed, pursuant to section 148 of the Companies Act 1993 and section 304 of the Financial Markets
Conduct Act 2013, acquisitions and disposals of relevant interests in the Company shares during the year ended
31 December 2019.
DATE OF
ACQUISI TION
OR DISPOSAL
NAME OF
DIRECTOR
NO & CLASS OF
SHARES ACQUIRED
OR (DISPOSED)
NATURE OF
RELEVANT INTEREST
CONSIDERATION PAID
OR RECEIVED
27 February 2019 Murray Holdaway
(350,000) Beneficial as trustees of the Holdaway
($1,540,000)
Geary Trust
27 February 2019 Brian Cadzow
(650,000) Beneficial as trustee of the B&J Cadzow
($2,860,000)
Family Trust
27 February 2019 Kirk Senior
(600,000) Beneficial – Director and Shareholder of
Kirk Senior Pty Limited as trustee of the
Senior Family Trust
($2,640,000)
2 April 2019
Kirk Senior
15,820
26 June 2019
Kirk Senior
7,389
Beneficial – Director and Shareholder of
Kirk Senior Pty Limited as trustee of the
Senior Family Trust
Acquired as part
of LTI Scheme
Beneficial – Director and Shareholder of
Kirk Senior Pty Limited as trustee of the
Senior Family Trust
Acquired as part
of LTI Scheme
40
Vista Group International Limited
NAME OF DIRECTOR
DIRECTLY HELD
Murray Holdaway
Brian Cadzow
Kirk Senior
James Ogden
Susan Peterson
Cris Nicolli
HELD BY
ASSOCIATED
PERSONS
5,737,449
5,906,207
618,049
380,000
88,906
30,000
Remuneration of Directors:
Details of the total remuneration of, and the value
of other benefits received by, each Director of the
Company during the financial year ended 31 December
2019 are as follows:
DIRECTOR
FEES
REMUNERATION
Murray Holdaway
Brian Cadzow
Kirk Senior
James Ogden
Susan Peterson
Cris Nicolli
$95,000
$95,000
$90,000
$292,678
$124,048
$460,022
Employee remuneration:
The following table shows the number of employees
whose remuneration and benefits for the year ended
31 December 2019 were within the specified bands
above $100,000. The remuneration figures shown in
the table include all monetary payments actually paid
during the course of the year ended 31 December
2019. The table does not include amounts paid post
31 December 2019 that related to the year ended
31 December 2019, such as short-term incentive
scheme bonuses. The table below includes the
remuneration of Murray Holdaway, Brian Cadzow
and Kirk Senior. No Director of a subsidiary receives
or retains any remuneration or other benefits from
the Company for acting as such.
100,000 -
110,000
110,001 -
120,000
120,001 -
130,000
130,001 -
140,000
140,001 -
150,000
150,001 -
160,000
160,001 -
170,000
170,000 -
180,000
180,001 -
190,000
190,001 -
200,000
200,001 -
210,000
210,001 -
220,000
220,001 -
230,000
230,001 -
240,000
240,001 -
250,000
250,001 -
260,000
260,001 -
270,000
270,001 -
280,000
290,001 -
300,000
310,001 -
320,000
340,001 -
350,000
370,001 -
380,000
450,001 -
460,000
460,001 -
470,000
470,001 -
480,000
510,001 -
520,000
560,001 -
570,000
570,001 -
580,000
600,001 -
610,000
55
36
39
22
25
8
11
5
5
7
2
3
1
6
2
1
2
1
2
1
2
2
1
1
1
2
1
1
1
Total
246
Analysis of shareholdings at 28 February 2020
RANGE
1 – 1,000
NUMBER OF
HOLDERS
ISSUED
CAPITAL
ISSUED
CAPITAL %
1,071
601,487
0.36
1,001 – 5,000
1,234
3,165,952
5,001 – 10,000
406
3,068,247
1.90
1.84
10,001 – 50,000
287
5,850,742
3.52
50,001 – 100,000
30
2,120,202
1.27
Greater than 100,000
57
151,590,960
91.10
3,085
166,397,590
100
41
Annual Report 2019
Gregory James Trounson & Donald Mackenzie Gibson & Kathryn Mary Lee Trounson
2,202,786
410,728
760,684
184,537
175,631
1,531,580
Twenty largest shareholders at 28 February 2020
RANK INVESTOR NAME
New Zealand Central Securities Depository Limited
J P Morgan Nominees Australia Pty Limited
Brian John Cadzow & Julie Ann Cadzow & Peter Allen Lewis
Murray Lawrence Holdaway & Helen Rachel Geary & Stephen John Mcdonald
HSBC Custody Nominees (Australia) Limited
Investment Custodial Services Limited
Bruce Alexander Wighton & Marianne Bachler & Peter John Clark
Citicorp Nominees Pty Limited
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
New Zealand Depository Nominee Limited
FNZ Custodians Limited
Custodial Services Limited
Custodial Services Limited
David Maxwell Smith & Lara Kelly Smith
National Nominees Limited
Pt Booster Investments Nominees Limited
Sylvia Choi & Haohua Wang
Mirrabooka Investments Limited
Kimbal Harrison Riley
20
Smith Family Holdings Ltd
NUMBER
OF SHARES
PERCENTAGE
HOLDING
90,894,094
54.62
11,789,737
5,906,207
5,737,449
4,309,236
3,126,593
2,985,756
2,440,991
2,015,860
1,887,671
1,567,782
1,362,802
1,229,914
1,186,787
1,017,117
777,296
700,000
672,670
650,000
7.09
3.55
3.45
2.59
1.88
1.79
1.47
1.32
1.21
1.13
0.94
0.82
0.74
0.71
0.61
0.47
0.42
0.40
0.39
Substantial Product Holders:
Performance Rights:
According to notices given under the Financial
Markets Conduct Act 2013, the following persons
were Substantial Product Holders in the Company
at 31 December 2019 in respect of the number of
voting securities set opposite their names:
The Company issued a total of 411,860 performance
rights under the LTI Plan in the 2015 grant to a number
of employees. In April 2017 203,342 vested and 3,976
lapsed in the first tranche. In April 2018 138,436 vested
with 43,718 having lapsed.
142,460,748
85.60%
NAME OF SUBSTANTIAL
PRODUCT HOLDER
FIL Limited
NUMBER
OF SHARES
15,389,491
Investment Services Group Limited
11,187,345
Fisher Funds Management Limited
20,317,387
Harbour Asset Management Limited and
Jarden Securities Limited (previously
named First NZ Capital Securities Limited)
19,269,453
Commonwealth Bank of Australia
8,405,701
Options:
Nil
The Company issued 461,576 performance rights under
the LTI Plan in the 2016 grant to a number of employees.
In April 2018 230,788 were eligible to vest but with the
vesting rate at 0% these were been carried over to 2019
in accordance with the terms of the LTI Plan. In April
2019, 367,909 vested with 93,667 having lapsed.
The Company issued 418,010 performance rights under
the LTI Plan in the 2017 grant to a number of employees.
In April 2019, 190,950 vested and 3,895 carried over to
2020 in accordance with the terms of the LTI Plan.
The Company issued 328,390 performance rights
under the LTI Plan in the 2018 grant to a number of
employees. In April 2019, 190,760 vested with two
additional tranches due in 2020 and 2021.
In addition to the original LTI Plan the Company issued
700,000 rights under the Group CEO retention scheme,
with 200,000 vested during 2018 and 150,000 in 2019.
There are 350,000 rights outstanding at period end.
There was also an operating segment revenue scheme established during 2018. In this scheme 197,194 performance
rights were issued with the rights eligible for vesting from April 2020 to April 2023. The table below shows the
grants and outstanding rights at 31 December 2019:
GRANT YEAR
PLAN TYPE
TSR
Group results
2020
205,894
VESTING YEAR
2021
-
-
164,640
Group CEO retention
150,000
200,000
Segmental results
54,834
Group results
Movio CEO (variable)
-
-
25,072
183,540
187,432
2022
2023
OUTSTANDING
RIGHTS
-
-
-
-
91,770
92,767
-
-
-
125,360
-
50,271
205,894
164,640
350,000
205,266
275,310
330,470
2017
2018
2018
2018
2019
2019
Total
The vesting of each tranche is subject to the Company
achieving certain performance hurdles contained
within the LTI Plan. Upon vesting each performance
right will entitle the holder to one ordinary share.
Numero (Aus) Pty Ltd, Book My Show Ltd, Book
My Show (NZ) Ltd, Share Dimension B.V., S.C. Share
Dimension S.R.L. and Vista Latin America, S.A. de C.V.
- Kimbal Harrison Riley: Vista Entertainment
Auditor fees:
The Company confirmed the re-appointment of
PricewaterhouseCoopers as its auditor at its annual
shareholder meeting on 29 May 2019. The amount
payable to PricewaterhouseCoopers by the Company
and its subsidiaries for audit and non-audit services
work for the financial year ended 31 December 2019
is disclosed in note 2.3 to the financial statements.
The Board considers that due to the nature and
quantum of the non-audit services work the auditors’
independence is not compromised.
Waivers:
The Company did not apply for, nor did it have granted,
nor did it rely on any waivers from the NZX during
the financial year ended 31 December 2019.
Subsidiary company Directors:
The following people held office as Directors of
subsidiary companies at 31 December 2019:
- Kirk Senior: Vista Entertainment Solutions Ltd, Virtual
Concepts Ltd, Movio Ltd, MovieXchange International
Ltd, MovieXchange Ltd, Vista Entertainment Solutions
(USA) Inc., Movio Inc., Numero (Aust) Pty Ltd,
Powster Ltd, Powster Inc., Share Dimension B.V., S.C.
Share Dimension S.R.L. and Stardust Solutions Ltd.
- Murray Lawrence Holdaway: Vista Entertainment
Solutions (Spain). S.L.U., Vista International
Entertainment Solutions South Africa (PTY) Ltd,
Book My Show Ltd, Book My Show (NZ) Ltd, MACCS
International B.V., Vista Latin America, S.A. de C.V.
and Vista Entertainment Solutions (Shanghai) Ltd.
Solutions Ltd, Flicks Ltd, Numero Ltd, MovieXchange
International Ltd, MovieXchange Ltd, Vista
Entertainment Solutions (Canada) Ltd, Vista
Entertainment Solutions (UK) Ltd, Vista Entertainment
Solutions (NL) B.V., Vista Entertainment Solutions
(Spain). S.L.U., Vista International Entertainment
Solutions South Africa (PTY) Ltd, Vista Entertainment
Solutions (Asia) Sdn Bhd, Maccs International
B.V., Powster Ltd, Stardust Solutions Ltd, Stardust
Entertainment, Inc., Vista Latin America, S.A. de C.V.
and Vista Entertainment Solutions (Shanghai) Ltd.
- Kelvin James Preston: Vista Entertainment Solutions
(NL) B.V., Vista Entertainment Solutions (Spain). S.L.U.
and Vista Entertainment Solutions (Asia) Sdn Bhd.
- Armando Mejias: Vista Latin America, S.A. de C.V.
and Senda DO Brasil Servios de Tecnologia LTDA.
- Gustavo Ortega: Vista Latin America, S.A. de C.V.
and Senda DO Brasil Servios de Tecnologia LTDA.
- Steven Geoffry Thompson: Powster Ltd, Powster,
Inc. and Stardust Solutions Ltd.
- Nicholas Patsides: Powster Ltd.
- Derek Geoffrey Forbes: Stardust Solutions Ltd and
Stardust Entertainment, Inc.
- Lubertus H. Huls: Maccs International B.V.
- Mathieu H.W. van As: Maccs International B.V.
- Rajesh Chandrakant Balpande: Book My Show Ltd
and Book My Show (NZ) Ltd.
- Sven Andresen: VPF Hub GmbH.
- Lawrence Wang: Vista Entertainment Solutions
(Shanghai) Ltd.
- (David) Lin Ning: Vista Entertainment Solutions
- Brian John Cadzow: Vista Entertainment Solutions
(Shanghai) Ltd.
Ltd, Virtual Concepts Ltd, Movio Ltd, Vista Group Ltd,
Flicks Ltd, Numero Ltd, Vista Entertainment Solutions
(USA) Inc., Movio, Inc., Vista Entertainment Solutions
(Canada) Ltd, Vista Entertainment Solutions (UK) Ltd,
- Chen Haifeng: Vista Entertainment Solutions
(Shanghai) Ltd.
- Huang Swee Lin: Vista Entertainment Solutions
(Asia) Sdn Bhd.
42
Vista Group International Limited
43
Annual Report 2019
Financial statements
Financial statements
Statement of comprehensive income
For the year ended 31 December 2019
SECTION
2.1, 2.2
2.3
2.3
2.3
5.3
2.3
6.1
6.2
Total revenue
Sales and marketing expenses
Operating expenses
Administration expenses
Acquisition expenses
Foreign currency gains
Total expenses
Operating profit
Finance costs
Finance income
Share of loss from associates and joint ventures
Capital gains and losses
Profit before tax
Tax expense
Profit for the year
Profit for the year is attributable to:
Owners of the parent
Non-controlling interests
Profit for the year
Other comprehensive income
Items that will not be reclassified subsequently to profit and loss:
Excess income tax benefit on share-based payments
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations, net of tax
Total other comprehensive income
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
Owners of the parent
Non-controlling interests
Total comprehensive income for the year
2019
NZ$m
144.5
9.5
68.2
45.5
0.1
(0.1)
2018
NZ$m
130.7
8.5
59.9
38.3
0.3
(1.0)
123.2
106.0
21.3
(1.7)
0.6
(2.2)
0.4
18.4
(5.6)
12.8
10.8
2.0
12.8
-
(0.6)
(0.6)
12.2
10.2
2.0
12.2
24.7
(1.0)
0.3
(3.0)
-
21.0
(8.0)
13.0
12.3
0.7
13.0
0.2
1.2
1.4
14.4
13.6
0.8
14.4
Earnings per share for profit attributable to the owners of the parent
Basic earnings per share (cents)
Diluted earnings per share (cents)
7.2
7.2
$0.07
$0.06
$0.07
$0.07
The above statement should be read in conjunction with the accompanying notes.
45
Annual Report 2019
Directors’ report
The Board of Directors present the financial statements
of the Group for the year ended 31 December 2019
and the independent auditor’s report thereon.
The directors are responsible, on behalf of the Company,
for presenting these consolidated financial statements
in accordance with applicable New Zealand legislation
and generally acceptable accounting practices in
New Zealand in order to present consolidated financial
statements that present fairly, in all material respects,
the financial position of the Group as at 31 December
2019 and the results of the Group’s operations and
cash flows for the year then ended.
For and on behalf of the Board of Directors who
approved these financial statements for issue
on 27 February 2020.
Kirk Senior
Executive Chair
27 February 2020
James Ogden
Chair Audit and Risk Committee
27 February 2020
44
Vista Group International Limited
Statement of changes in equity
For the year ended 31 December 2019
Statement of financial position
As at 31 December 2019
ATTRIBUTABLE TO THE OWNERS OF THE PARENT
CONTRIBUTED
EQUITY
RETAINED
EARNINGS
FOREIGN
CURRENCY
RESERVE
SHARE-BASED
PAYMENT
RESERVE
SECTION
NZ$m
NZ$m
NZ$m
NZ$m
Balance at 1 January 2019
Accounting policy change
8.4
Restated total equity
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their
capacity as owners:
Non-controlling interest change
Share-based payments
Dividends paid
7.5
7.3
Balance at 31 December 2019
Balance at 1 January 2018
Accounting policy change
Restated total equity
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their
capacity as owners:
Issue of equity
Non-controlling interest change
Share-based payments
Dividends paid
VCL share-based payment
7.5
7.3
59.4
-
59.4
-
-
-
-
2.4
-
61.8
57.8
-
57.8
-
-
-
-
0.2
0.9
-
0.5
80.9
(0.4)
80.5
10.8
-
10.8
-
-
(5.5)
85.8
75.2
(1.3)
73.9
12.3
0.2
12.5
-
-
-
(5.5)
-
3.2
-
3.2
-
(0.6)
(0.6)
-
-
-
2.6
2.1
-
2.1
-
1.1
1.1
-
-
-
-
-
Balance at 31 December 2018
59.4
80.9
3.2
The above statement should be read in conjunction with the accompanying notes.
2.8
-
2.8
-
-
-
-
(0.7)
-
2.1
1.7
-
1.7
-
-
-
-
-
1.6
-
(0.5)
2.8
NON-
CONTROLLING
INTERESTS
TOTAL
EQUITY
NZ$m
NZ$m
13.1
(0.1)
13.0
2.0
-
2.0
(1.3)
-
(2.5)
11.2
11.2
-
11.2
0.7
0.1
0.8
1.9
(0.2)
-
(0.6)
-
13.1
159.4
(0.5)
158.9
12.8
(0.6)
12.2
(1.3)
1.7
(8.0)
163.5
148.0
(1.3)
146.7
13.0
1.4
14.4
1.9
-
2.5
(6.1)
-
159.4
TOTAL
NZ$m
146.3
(0.4)
145.9
10.8
(0.6)
10.2
-
1.7
(5.5)
152.3
136.8
(1.3)
135.5
12.3
1.3
13.6
-
0.2
2.5
(5.5)
-
146.3
CURRENT ASSETS
Cash
Trade and other receivables
Income tax receivable
Total current assets
NON-CURRENT ASSETS
Property, plant and equipment
Lease assets
Investment in associates and joint ventures
Goodwill
Other intangible assets
Deferred tax asset
Total non-current assets
Total assets
CURRENT LIABILITIES
Borrowings – related party
Trade and other payables
Lease liabilities
Deferred revenue
Contingent consideration
Income tax payable
Total current liabilities
NON-CURRENT LIABILITIES
Borrowings – related party
Borrowings – external
Lease liabilities
Deferred revenue
Provisions
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Retained earnings
Foreign currency reserve
Share-based payment reserve
Total equity attributable to owners of the parent
Non-controlling interests
Total equity
SECTION
5.1
5.2
5.8
5.3
5.4
5.6
6.2
4.2
5.7
5.8
5.9
4.2
4.2
5.8
5.9
6.2
7.1
7.5
2019
NZ$m
19.5
56.2
2.0
77.7
7.3
21.8
31.6
69.9
27.4
7.9
165.9
243.6
0.2
13.2
6.1
22.9
0.4
1.7
44.5
0.7
10.9
17.4
0.2
0.6
5.8
35.6
80.1
163.5
61.8
85.8
2.6
2.1
152.3
11.2
163.5
2018
NZ$m
34.4
61.4
0.8
96.6
5.4
-
31.9
63.9
20.5
2.8
124.5
221.1
-
18.6
-
21.4
-
3.7
43.7
0.9
11.1
-
4.5
0.5
1.0
18.0
61.7
159.4
59.4
80.9
3.2
2.8
146.3
13.1
159.4
For and on behalf of the Board who authorised these financial statements for issue on 27 February 2020.
Kirk Senior Chairman
James Ogden Chair Audit and Risk Committee
The above statement should be read in conjunction with the accompanying notes.
46
Vista Group International Limited
47
Annual Report 2019
Statement of cashflows
For the year ended 31 December 2019
Notes to the financial statements
CASHFLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Interest received
Payments to suppliers
Taxes paid
Interest paid
Net cash inflow from operating activities
CASHFLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Purchase of internally generated software and other intangibles
Proceeds from disposal of intangibles
Related party loan advance – Numero
Derecognition of Stardust cash balances
Numero acquisition, net of cash acquired
Vista China acquisition deposit
Vista China dividends received
Vista China 2018 transaction proceeds
Net cash applied to investing activities
CASHFLOWS FROM FINANCING ACTIVITIES
Lease payments (principal elements)
Loans and borrowings
Dividends paid to non-controlling interests
Dividends paid to the owners of the parent
Net cash applied to financing activities
Net (decrease)/increase in cash
Cash at beginning of year
Foreign exchange differences
Cash at end of year
The above statement should be read in conjunction with the accompanying notes.
SECTION
4.1
5.2
5.6
5.3
5.3
3
5.1, 5.3
5.3
5.8
7.3
2019
NZ$m
143.6
-
(118.0)
(9.1)
(1.0)
15.5
(4.1)
(12.6)
-
(0.7)
(1.5)
0.2
(0.4)
0.4
-
(18.7)
(3.7)
-
(2.5)
(5.5)
(11.7)
(14.9)
34.4
-
19.5
2018
NZ$m
132.4
0.1
(96.0)
(8.2)
(0.7)
27.6
(2.5)
(7.9)
1.4
(1.3)
-
-
-
-
0.2
(10.1)
-
0.2
(0.6)
(5.5)
(5.9)
11.6
21.0
1.8
34.4
General information
The notes are consolidated into ten sections. Each section contains an introduction which is indicated by the symbol
above. The first section outlines general information about Vista Group International Limited (the Company and
its subsidiaries, collectively Vista Group) and guidance on how to navigate through this document.
Accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out throughout
the document where they are applicable. These policies have been consistently applied to all years presented,
unless otherwise stated. Accounting policies are identified by the symbol above.
Significant accounting judgements and sources of estimation uncertainty
Significant accounting judgements are those judgements that Vista Group makes when applying its accounting
policies that may have a significant effect on amounts that are recognised in these financial statements.
Significant sources of estimation uncertainty relate to assumptions and estimates made at the end of the current
reporting period that have a risk of resulting in a material adjustment to the carrying amounts of assets and
liabilities within the next financial year.
In applying its accounting policies, Vista Group continually evaluates judgements and estimates based on experience
and other factors, including expectations of future events that may have an impact on Vista Group. All judgements
and estimates made are believed to be reasonable based on the most current set of circumstances available to
Vista Group. Actual results may differ from the judgements and estimates applied.
Significant accounting judgements and estimates made by Vista Group in the preparation of these financial
statements are outlined within the following financial statement notes:
Section 3
Fair value of intangible assets acquired in a business combination
Section 5.3 Carrying value of investment in Vista China
Section 5.3
Initial fair value of joint venture companies
Section 5.5 Assumptions used in testing goodwill for impairment
Section 5.6 Capitalisation of development costs
Section 6.2 Recognition of deferred tax assets
The fair value measurement of equity-settled transactions with employees is no longer considered to be a significant
accounting judgement, as the risk of significant differences is considered remote.
The recoverability of the loan to Numero Limited (Numero) is no longer considered to be a source of estimation
uncertainty, because at 31 December 2019, Numero is now recognised as a subsidiary of Vista Group (see section 3)
with this loan eliminating on consolidation.
48
Vista Group International Limited
49
Annual Report 2019
1. General information
These financial statements are for Vista Group which is a company incorporated and domiciled in New Zealand,
and whose shares are publicly traded on the New Zealand Stock Exchange (NZX) and the Australian Securities
Exchange (ASX).
The Company is registered under the Companies Act 1993 and is an FMC reporting entity under Part 7 of the
Financial Markets Conduct Act 2013. The financial statements of Vista Group have been prepared in accordance
with the requirements of Part 7 of the Financial Markets Conduct Act 2013 and the NZX Main Board Listing Rules.
In accordance with the Financial Markets Conduct Act 2013, because financial statements are prepared and
presented for Vista Group, separate financial statements for the Company are not presented.
The principal activity of Vista Group is the sale, support and associated development of software for the film
industry. These financial statements were approved by the Board on 27 February 2020.
2. Financial performance
This section outlines further details of Vista Group’s financial performance by building on information presented
in the statement of comprehensive income.
2.1 Revenue
Vista Group recognises revenue when performance obligations have been settled. A performance obligation
is settled when the customer has received all the benefits associated with the performance obligation.
The following details revenue types recognised within each category:
Product
Product revenue comprises different items across each of Vista Group’s operating segments. Within the Cinema
segment, product revenue relates primarily to fees charged for perpetual software licenses. The exception is the
Veezi subscription-based software which is charged monthly.
Movio segment product revenue relates to annual access fees for cloud-hosted marketing and analytics platforms.
The Additional Group Companies segment recognises product revenue for perpetual and recurring licensing
(Maccs); and the website/marketing platform revenue (Powster).
Maintenance
Maintenance services are billed in advance for a fixed term. Revenue is recorded within deferred revenue on
the statement of financial position and recognised on a straight-line basis over the term of the contract billing
period, as services are provided. Maintenance revenue relates to fees charged for support services and upgrades
to software applications.
Service
Service revenue relates to fees charged for value-add services which are one-off charges. Revenue is recognised
when the service is complete or on a stage of completion basis.
Development
Development services are revenues associated with bespoke development effort as requested and paid for by
customers. This category includes revenue associated with development services to deliver the localisation of Vista
Group software under the reseller agreement with Vista China. This revenue is recognised on a stage of completion
basis as the performance obligations are delivered.
Hardware
Revenue from hardware is recognised at a point in time when delivery has been made.
Other revenue
Other revenue comprises revenue earned primarily from advertising and variable processing fees.
Process and policy
The tables below provide further information on the application of NZ IFRS 15 Revenue from Contracts with
Customers, across the most significant revenue streams of Vista Group.
Vista Cinema Segment
REVENUE TYPE
DESCRIPTION
KEY JUDGEMENTS
OUTCOME
Product
– Cinema
Non-recurring revenue
Perpetual ERP software
license targeted at larger
cinema circuits.
Determining the distinct
performance obligations
and whether items are
required to be bundled
to form a distinct
performance obligation.
Providing a software
license is a distinct
performance obligation
and is not required to
be bundled with other
performance obligations.
TIMING OF REVENUE
RECOGNITION
Point in time
Recognised at the
point in time when the
software goes live, which
is when the customer
can benefit from using
the software.
Determining whether
a sales-based license
of intellectual property
exists. Determining
whether there is a
sales-based variable
component.
The subscription to Veezi
is a sales-based license
of intellectual property.
There is a sales-based
variable component.
Point in time
Recognised at the end
of each month, once
the sales-based variable
usage is known.
Product
– Veezi
Maintenance
– Cinema
Recurring revenue
Subscription-based
software targeted at small
and independent theatres.
Revenue includes a
fixed monthly fee plus
a variable component
based on the number
of tickets sold.
Recurring revenue
Basic support and
any enhancements or
upgrades to the software.
N/A
No major judgement
required, other than
confirming the scope
and period of the
maintenance contract.
Services &
Development
Non-recurring revenue
Value-add services,
implementation
services and bespoke
development of
the software.
Determining whether
the services and
development
provided are a distinct
performance obligation.
Services & development
are a distinct performance
obligation as they are
not highly dependent
or interrelated to other
performance obligations
in the contract.
Over time
Benefits are
simultaneously received
and consumed; revenue
is recognised over the
maintenance term.
Over time
Recognised when the
service/development is
complete or on a stage
of completion basis.
Movio Segment
REVENUE TYPE
DESCRIPTION
KEY JUDGEMENTS
OUTCOME
TIMING OF REVENUE
RECOGNITION
Product
– Cinema
Recurring revenue
Movio Cinema cloud-
hosted data, marketing
and analytics platform.
Customers are charged
an annual access fee to
platform plus a variable
component (see below).
Recurring revenue
Variable revenue based
on the number of active
members managed and
the number of promotional
messages sent during
a given period.
Determining whether
the platform access is
a distinct performance
obligation.
Access to the platform
is a distinct performance
obligation and is not
required to be bundled
with other performance
obligations.
Over time
Platform access
is recognised over
time as benefits are
simultaneously received
and consumed.
Determining if a
usage-based license
of intellectual
property exists.
The variable revenue
is a usage-based license
of intellectual property.
Point in time
Variable license revenue
is recognised at the end
of each month once
usage-based quantities
are known.
50
Vista Group International Limited
51
Annual Report 2019
Notes to the financial statementsContinued
Movio Segment – continued
REVENUE TYPE
DESCRIPTION
KEY JUDGEMENTS
OUTCOME
TIMING OF REVENUE
RECOGNITION
Product
– Media
Recurring revenue
Movio Media cloud-hosted
data, marketing and
analytics platform.
Determining whether
the platform access is
a distinct performance
obligation.
Access to the platform
is a distinct performance
obligation and is not
required to be bundled
with other performance
obligations.
Over time
Platform access
is recognised over
time as benefits are
simultaneously received
and consumed.
Non-recurring revenue
Targeted marketing
campaigns, digital
advertising and reports.
No major judgement
required.
N/A
Services
Non-recurring revenue
Value-add services, data
scientist services and
setup & configuration.
Determining whether the
services provided are
a distinct performance
obligation.
The services are
distinct performance
obligations as they are
not highly dependent
or interrelated to other
performance obligations
in the contract.
Additional Group Companies Segment
REVENUE TYPE
DESCRIPTION
KEY JUDGEMENTS
OUTCOME
Product
– Showtimes
Platform
Recurring revenue
Website and marketing
platform for feature
films, incorporating
showtimes data.
Determining the distinct
performance obligations
and the requirements
to bundle performance
obligations.
Two distinct
performance obligations
exist; platform creation
and incorporating
showtimes data.
Product
– Maccs
Non-recurring revenue
Perpetual theatrical
distribution software
for film distributors.
Determining the distinct
performance obligations
and whether they are
required to be bundled
as one performance
obligation.
Provision of the
software license is a
distinct performance
obligation but is required
to be bundled with
development where the
license is dependent
on the development.
Maintenance
– Maccs
Recurring revenue
Basic support and
any enhancements or
upgrades of the software.
N/A
No major judgement
required, other than
confirming the scope
and period of the
maintenance contract.
Services &
Development
Non-recurring revenue
Value-add services,
implementation
services and bespoke
development of the
software.
Determining the distinct
performance obligation
and whether the
development is required
to be bundled to form
a distinct performance
obligation.
Where the services &
development are highly
interrelated to a license,
they are bundled with
the license as a single
performance obligation.
Otherwise, the services
and development are
a distinct performance
obligation.
Point in time
Revenue is recognised
when the campaigns
and reports are
completed.
Over time
Recognised when the
service is complete
or on a stage of
completion basis.
TIMING OF REVENUE
RECOGNITION
Point in time
Recognised at a point in
time when the platform
is live and subsequently
when the showtimes
data is incorporated.
Point in time
Recognised at a point in
time when the territory
is live on the software,
and the customer is
able to benefit from
the software license.
Over time
Benefits are
simultaneously received
and consumed; revenue
recognised over the
maintenance term.
Over time
Recognised
when the services
and development are
complete or on a stage
of completion basis.
Product
Maintenance
Recurring revenue
Product
Services
Development
Hardware
Other
Non-recurring revenue
Total revenue
2019
NZ$m
41.1
47.1
88.2
30.2
14.9
5.4
5.5
0.3
56.3
144.5
%
61%
39%
100%
2018
NZ$m
36.4
43.3
79.7
26.4
12.7
8.2
3.2
0.5
51.0
130.7
%
61%
39%
100%
Recurring and non-recurring revenues are non-GAAP financial measures that the Chief Operating Decision Maker
(CODM) uses to help evaluate the financial performance of Vista Group and its operating segments. Recurring
revenue is the portion of product and maintenance revenues that are expected to continue in the future. Unlike
non-recurring revenues, these revenues are predictable, stable and can be expected to occur at regular intervals
going forward with a relatively high degree of certainty.
No individual customer exceeded 10% of revenue in either the current or prior comparative year.
The timing of when recurring and non-recurring revenues are recognised in these financial statements is shown below:
At a point in time
Over time
Total revenue
2019
2018
RECURRING
REVENUE
NON-RECURRING
REVENUE
RECURRING
REVENUE
NON-RECURRING
REVENUE
NZ$m
17.5
70.7
88.2
NZ$m
36.7
19.6
56.3
NZ$m
16.0
63.7
79.7
NZ$m
30.5
20.5
51.0
2.2 Operating segments
Vista Group operates in the vertical cinema/film market via four reportable segments and a corporate segment.
The Chief Executive and the Board of Vista Group are collectively considered to be the CODM in terms of
NZ IFRS 8 Operating Segments. These segments have been defined based on the reports regularly reviewed
by the CODM to make strategic decisions.
Cinema segment
Software associated with cinema management via the Vista software suite of products, plus the cloud based
Veezi product for smaller scale cinemas.
Movio segment
Includes the Movio Cinema and Media products, both of which provide data analytics and campaign management.
Additional Group Companies segment (AGC)
An aggregation of Maccs, Powster, Flicks, plus the addition of Numero from 14 October 2019 (see section 3).
None of these businesses individually exceed the 10% threshold for segment revenue or profitability that would
require separate disclosure under NZ IFRS 8.
The Early Stage Investments segment (ESI)
An aggregation of MovieXchange, Share Dimension (Cinema Intelligence) and Stardust until 25 February 2019
(see section 5.3). Like the AGC segment, none of the businesses included in this segment individually exceed
the 10% threshold for segment revenue or profitability that would require separate disclosure under NZ IFRS 8.
Corporate segment
The shared services functions associated with Vista Group, being legal, finance, and senior management. Revenue
received from the associate company Vista China is recognised within this segment.
Full legal names of each entity can be obtained from section 8.3.
52
Vista Group International Limited
53
Annual Report 2019
Notes to the financial statementsContinued
2019
Timing of revenue recognition
At a point in time
Over time
Total revenue
Revenue growth(5)
Operating segment performance
Recurring revenue
Non-recurring revenue
Total revenue
Operating expenses
Sales, marketing and admin expenses
Foreign currency gains/(losses)
EBITDA(3)
EBITDA margin(5)
2018
Timing of revenue recognition
At a point in time
Over time
Total revenue
Revenue growth(5)
Operating segment performance
Recurring revenue
Non-recurring revenue
Total revenue
Operating expenses
Sales, marketing and admin expenses
Foreign currency gains/(losses)
EBITDA (as previously reported)(6)
Impact of NZ IFRS 16(6)
EBITDA (adjusted for NZ IFRS 16)(6)
CINEMA
NZ$m
MOVIO
NZ$m
AGC
NZ$m
ESI(1,2)
CORPORATE
NZ$m
NZ$m
39.2
57.1
96.3
17%
50.0
46.3
96.3
(47.7)
(18.0)
0.3
30.9
32%
CINEMA
NZ$m
31.7
50.8
82.5
22%
43.7
38.8
82.5
(40.7)
(17.8)
1.6
25.6
2.7
28.3
9.5
16.2
25.7
13%
19.8
5.9
25.7
(10.6)
(8.4)
0.1
6.8
26%
MOVIO
NZ$m
9.3
13.5
22.8
47%
17.8
5.0
22.8
(9.7)
(7.0)
0.1
6.2
0.2
6.4
3.9
13.7
17.6
17%
14.0
3.6
17.6
(7.5)
(6.5)
(0.3)
3.3
19%
AGC
1.6
1.3
2.9
-
2.0
2.0
-36%
-66%
2.4
0.5
2.9
(2.2)
(2.0)
-
(1.3)
2.0
-
2.0
(0.2)
(10.4)
-
(8.6)
ESI
CORPORATE
NZ$m
NZ$m
NZ$m
1.8
13.2
15.0
22%
12.5
2.5
15.0
(7.3)
(6.4)
0.1
1.4
0.7
2.1
14%
3.7
0.8
4.5
-
5.9
5.9
286%
-41%
3.6
0.9
4.5
(2.0)
(2.1)
-
0.4
-
0.4
9%
2.1
3.8
5.9
(0.2)
(9.3)
(0.8)
(4.4)
-
(4.4)
TOTAL
NZ$m
54.2
90.3
144.5
11%
88.2
56.3
144.5
(68.2)
(45.3)
0.1
31.1
22%
TOTAL
NZ$m
46.5
84.2
130.7
23%
79.7
51.0
130.7
(59.9)
(42.6)
1.0
29.2
3.6
32.8
25%
EBITDA margin (adjusted for NZ IFRS 16)(5,6)
34%
28%
To assist the readers’ understanding of these financial statements, the revenues of each segment have been split
to show both recurring and non-recurring revenues.
Movio derives $0.7m inter-segment revenues from the Cinema segment (2018: $0.5m) and $0.2m from Numero
since its inclusion in the AGC segment. These revenues are not included in the above tables as they eliminate
on consolidation.
Reconciliation of EBITDA(3) to profit before tax
EBITDA(3)
Depreciation and amortisation
EBIT(4)
Finance income
Finance costs
Acquisition expenses
Share of loss from associates and joint ventures
Capital gains and losses
Profit before tax
2019
NZ$m
31.1
(9.7)
21.4
0.6
(1.7)
(0.1)
(2.2)
0.4
18.4
2018
NZ$m
29.2
(4.2)
25.0
0.3
(1.0)
(0.3)
(3.0)
-
21.0
(1) Includes results of Numero from 14 October 2019, the date control was obtained through the step acquisition (see section 3).
(2) Includes results of Stardust until 25 February 2019, at which date the entity no longer meets the requirements for control (see section 5.3).
(3) EBITDA is a non-GAAP measure and is defined as earnings before net finance costs, income tax, depreciation and amortisation, acquisition
expenses, capital gains/losses, impairment losses and equity accounted results from associates and joint venture companies.
(4) EBIT is a non-GAAP measure and is defined as earnings before net finance costs, income tax, acquisition expenses, capital gains/losses,
impairment losses and equity accounted results from associate and joint venture companies.
(5) Revenue growth and EBITDA margin are non-GAAP measures which the CODM regularly reviews. EBITDA margin is calculated as EBITDA
over total revenue.
(6) On first-time implementation of NZ IFRS 16 Leases, Vista Group elected to not restate the comparative year values. To assist the readers’
understanding of the year on year EBITDA trading growth, the prior year segment disclosures have been reported showing both the values
reported in the prior year financial statements (‘as previously reported’) and to show the EBITDA as if NZ IFRS 16 had also been adopted
in the prior year (‘adjusted for NZ IFRS 16’). See section 8.4 for more details on first time adoption of NZ IFRS 16.
Revenue by domicile of entity
Vista Group recognises revenue within entities across several jurisdictions. Revenue is allocated to geographical
regions based on where the sale is recorded by each operating entity within Vista Group. Independent resellers
are used to promote Vista Group’s products in multiple jurisdictions. The revenues recognised via these
independent resellers are not allocated geographically, rather they are shown within the New Zealand and
United Kingdom jurisdictions based on the location of the transacting Vista Group entity.
The Other category in the tables below include entities in the Netherlands, Germany, Malaysia, Romania and
South Africa.
New Zealand
United States
United Kingdom
Mexico
Other
Total revenue
2019
NZ$m
28.9
54.5
34.4
15.7
11.0
144.5
2018
NZ$m
34.3
45.6
27.7
15.7
7.4
130.7
54
Vista Group International Limited
55
Annual Report 2019
Notes to the financial statementsContinued
Non-current assets by domicile of entity
Non-current operating assets by location of the reporting entity are presented in the following table.
New Zealand
United States
United Kingdom
Mexico
Other
2019
NZ$m
55.7
25.7
12.5
11.7
20.8
RESTATED
2018
NZ$m
41.6
8.5
8.8
11.4
19.5
As required by NZ IFRS 8, the table above excludes deferred tax assets (the comparatives have been restated
accordingly). Investment in associates are excluded from the non-current assets balance presented.
2.3 Expenses
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received, and all
attached conditions will be complied with. Government grants are recognised within the statement of comprehensive
income as an offset to operating expenses.
During the year, Vista Group recognised a total of $4.2m (2018: $3.2m) of grants from Callaghan Innovation in
New Zealand and Ministry of Economic Affairs (WBSO) in Netherlands to assist with research and development.
At balance date, there is a 10% retention amount related to 2019 grants of $0.4m (2018: $0.3m) yet to be paid
and subject to independent auditor review.
Auditor’s remuneration included in administration expenses
Audit of financial statements
Audit and review of financial statements – PwC
Audit of subsidiary financial statements – Scrutton Bland
Total audit fees
2019
NZ$m
0.5
-
0.5
2018
NZ$m
0.4
0.1
0.5
Vista Group engaged PwC to perform non-audit services relating to assurance services (review of R&D growth grants
schedule $15k (2018: $15k)), advisory services relating to long-term employee incentive schemes $7k (2018: $24k)
and the preparation of an immaterial subsidiary’s financial statements $12k (2018: $nil). The cumulative cost for these
engagements was less than $0.1m (2018: less than $0.1m).
Capital gains and losses
Capital gain – derecognition of Stardust
Capital gain – step acquisition of Numero
Total capital gains and losses
SECTION
5.3
3
2019
NZ$m
0.1
0.3
0.4
2018
NZ$m
-
-
-
Other expenses
Sales and marketing expenses are those costs incurred by Vista Group in directly selling or marketing its products,
along with the associated personnel costs.
Operating expenses include those costs incurred by Vista Group in running its business operations. Such costs
include hosting, research, maintenance, development and the associated personnel costs. Vista Group has expensed
$25.4m of aggregated software related research and development expenditure (2018: $22.4m) within this operating
expense line.
Administration expenses include the overhead costs incurred by Vista Group that are not directly associated with
sales, marketing or costs incurred in running its business operations.
Included in administration expenses:
Depreciation of property, plant & equipment
Depreciation of lease assets
Amortisation of intangible assets
SECTION
5.2
5.8
5.6
2019
NZ$m
2.1
3.9
3.7
2018
NZ$m
1.7
-
2.5
3. Business combinations
This section outlines how Vista Group has accounted for transactions when acquiring its associated company
(Numero) and the disposal of an existing subsidiary (Stardust). The were no business combinations that
completed in 2018.
Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether
equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary
comprises cash and the fair value of any asset or liability resulting from a contingent consideration arrangement.
Identifiable assets acquired as well as any liabilities and contingent liabilities assumed in a business combination
are, with limited exceptions, measured initially at their fair values at the acquisition date. Vista Group recognises
any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or
at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
Goodwill represents the excess of purchase considerations over the fair value of net assets acquired in a business
combination. Goodwill is allocated to cash generating units (CGUs), which are the lowest level of assets for which
separately identifiable cash flows can be attributed. See section 5.4 for more detail on the components of goodwill
recognised. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value at the date of exchange. The discount rate applied is the entity’s incremental
borrowing rate (being the rate at which a similar borrowing could be obtained from an independent financier
under comparable terms and conditions).
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability
are subsequently remeasured to fair value with changes recognised in the statement of comprehensive income.
If a business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held
equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from
such remeasurement are recognised in the statement of comprehensive income.
56
Vista Group International Limited
57
Annual Report 2019
Notes to the financial statementsContinued
Significant accounting judgement – Fair value of intangible assets acquired
in a business combination
The fair value of the acquired intangible assets of Numero are to be performed by external valuation experts
as these fair values are likely to be significant. Due to this acquisition only completing late in 2019, the valuation
of the acquired intangible assets has yet to be finalised and therefore the acquired net assets have been reported
on a provisional basis.
Numero step acquisition
On 14 October 2019, Vista Group announced it had acquired the remaining 50% stake in Numero. This transaction
results in Vista Group obtaining control of Numero and therefore has been consolidated into Vista Group’s results
from the date of the transaction.
Numero provides an aggregated Box Office reporting platform that delivers the film industry and media clean,
fast and effective Box Office information. Management consider this consolidation transaction to be a natural
progression due to the similarity of its business model to that of the rest of Vista Group.
The share purchase agreement includes contingent consideration with components payable in cash of $0.1m and
up to 20,000 Vista Group shares. The contingent consideration is payable once certain 2020 and 2021 EBITDA and
revenue performance targets are achieved. Vista Group determined the fair value of the shares contingent on these
performance targets was $nil, as they are not considered likely to be earned.
Due to the recency of the Numero transaction, the fair value of net assets acquired are provisional. In accordance
with NZ IFRS 3 Business Combinations, these fair values will be finalised and adjusted within 12 months of completing
the transaction.
The provisional goodwill currently includes the customer contracts and IP, which are still being measured by
an external valuation expert. Provisional goodwill, after removing the acquired intangibles, will be attributable
to future growth in Numero obtained from future operating synergies and the ability to leverage Vista Group’s
existing infrastructure and customer network. Lastly, the provisional goodwill will include a portion relating to
the assembled workforce, which do not meet the NZ IAS 38 Intangible Assets criteria of intangible assets.
While the total receivables on the date of acquisition were $9.1 million, Vista Group concluded the previously
recognised provision for impairment of $3.6 million at 30 June 2019 remained appropriate, meaning the fair value
of the receivables were $5.5 million. This fair value is confirmed using a 5-year Discounted Cash Flow (DCF) of
Numero’s future cash flows, which is a level 3 fair value measurement technique as per the fair value hierarchy
set out in section 10.2. As this step acquisition resulted in a change in control, a non-taxable capital gain of
$0.3m was recognised, calculated as follows:
Fair value of the 50.0% of Numero acquired by Vista Group
Less: equity accounted carrying value of Numero
Capital gain on step acquisition of Numero
2019
NZ$m
0.3
-
0.3
Business combinations completed during the year
Fair value of net liabilities acquired
Cash
Trade and other receivables
Trade and other payables
Deferred revenue
Lease assets
Lease liabilities – current
Net liabilities acquired
Provisional goodwill
Total consideration
Consideration is satisfied by:
Cash consideration
Cash contingent consideration
Derecognition of receivables owed to Vista Group
Fair value of previously held equity interest
Total consideration
Net cash outflow arising on acquisition
Cash consideration
Cash acquired
Net cash inflow
Contribution to Vista Group since control was obtained
Revenue
EBITDA
Results of the acquired subsidiary for the year ended 31 December 2019
Revenue
EBITDA
None of Vista Group’s acquisitions have goodwill that is deductible for taxation purposes.
NUMERO
NZ$m
0.3
0.4
(0.7)
(0.1)
0.1
(0.1)
(0.1)
6.1
6.0
0.1
0.1
5.5
0.3
6.0
(0.1)
0.3
0.2
0.6
(0.1)
2.2
(0.3)
58
Vista Group International Limited
59
Annual Report 2019
Notes to the financial statementsContinued
4. Cash flows and borrowings
This section builds on information from the statement of cashflows. Cash comprises cash at bank and on hand.
4.1 Reconciliation of net profit to operating cash flows
Profit for the year
Non-cash items:
Amortisation
Depreciation
Share-based payment expense
Non-cash finance charges
Acquisition expenses
Capital gains and losses
Share of loss from investment in associates and joint ventures
Deferred tax
Foreign exchange movements
Expected credit loss expense
Net non-cash items
SECTION
5.6
5.2, 5.8
7.5
2.3
5.3
5.1
Movements in working capital:
(Decrease)/increase in related party trade and other payables
Decrease in related party trade and other receivables, net of deferred revenue
Increase in trade and other payables
Increase in trade and other receivables, net of deferred revenue
Decrease in taxation receivable and payable
Net change in working capital
Net cash inflow from operating activities
2019
NZ$m
12.8
3.7
6.0
1.7
0.7
0.1
(0.4)
2.2
-
(0.2)
(0.7)
13.1
(4.7)
6.0
0.6
(8.8)
(3.5)
(10.4)
15.5
4.2 Borrowings
Borrowings are initially recognised at fair value less directly attributable transaction costs and subsequently
measured at amortised cost using the effective interest method. Borrowing costs are expensed as incurred.
2019
NZ$m
0.9
10.9
11.8
0.2
11.6
11.8
Borrowings – related party
Borrowings – external
Total borrowings
Current
Non-current
Total borrowings
60
Vista Group International Limited
2018
NZ$m
13.0
2.5
1.7
2.5
0.3
1.0
-
1.8
1.0
(0.5)
(0.5)
9.8
1.6
5.9
2.5
(5.0)
(0.2)
4.8
27.6
2018
NZ$m
0.9
11.1
12.0
-
12.0
12.0
The table below details the movement in borrowings during the year:
Borrowings – related party:
Opening
Additional borrowing – Maccs minority shareholders
Movement in foreign exchange
Balance at 31 December
Borrowings – external:
Opening
Movement in foreign exchange
Balance at 31 December
2019
NZ$m
0.9
-
-
0.9
11.1
(0.2)
10.9
2018
NZ$m
0.6
0.2
0.1
0.9
10.7
0.4
11.1
A schedule of all debt facilities is shown below:
FACILITY PROVIDER
REASON FOR LOAN
EXPIRY DATE
2019
2018
LIMIT (m)
2019
2018
INTEREST RATE
DEBT DRAWN (NZ$m)
ASB – term loan
ASB – term loan
ASB – revolving credit
ASB – overdraft
Maccs acquisition
Jan 2023
Vista Latam acquisition Jan 2023
Jan 2023
Future acquisitions/
SaaS project
Working capital
Jan 2023
2.50%
4.27%
3.81%
2.97%
5.59%
€3.0
US$4.0
n/a
NZ$41.0
6.08%
6.12%
NZ$2.0
5.0
5.9
-
-
Total borrowings – external
Maccs
Share Dimension
Working capital
Working capital
Apr 2020
Jul 2022
5.00%
5.00%
5.00%
5.00%
Total borrowings – related party
NZ$54.0
10.9
€0.1
€0.4
0.5
0.2
0.7
0.9
5.1
6.0
-
-
11.1
0.2
0.7
0.9
On 31 January 2020, Vista Group entered into a refinancing arrangement with ASB to assist in funding the SaaS
transformation project, the 2020 Vista China step acquisition and any future acquisition related opportunities.
All ASB facilities are secured by a general security agreement under which the bank has a security interest
in all Vista Group’s tangible assets. Agreed covenants include:
• EBITDA of the charging group not being less than 80% of Vista Group;
• Gearing ratio of not greater than 2.5 times; and
• Interest cover of equal or greater than 3.0 times.
Vista Group has been compliant with all covenants for both the current and prior reporting periods.
Related party borrowings include loans from minority shareholders for Maccs and Share Dimension.
61
Annual Report 2019
Notes to the financial statementsContinued
5. Assets and liabilities
This section outlines further details of Vista Group’s financial performance by building on information presented
in the statement of financial position.
5.1 Trade and other receivables
Trade and other receivables at 31 December were as follows:
Trade receivables
Sundry receivables
Accrued revenue
Prepayments
Vista China acquisition deposit
Related party loan – Numero
Total trade and other receivables
SECTION
5.3
2019
NZ$m
35.4
3.8
13.2
3.4
0.4
-
56.2
2018
NZ$m
44.3
3.9
4.9
2.9
-
5.4
61.4
The prior year related party loan to Numero was presented net of a provision for impairment of $3.0m. An additional
provision for impairment of $0.6m was recognised in 2019 prior to Vista Group obtaining control of Numero.
Subsequent to this date, both the related party loan and impairment provision eliminate on consolidation.
See section 3 for further details of the Numero step acquisition.
Included within trade receivables is a receivable from Vista China of $0.9m (2018: $6.8m), see section 5.3 for
further details.
Accrued revenues are recognised with regard to customer contracts where Vista Group’s performance obligations
have been fully satisfied, but billing is not contractually due until a subsequent date.
Included within trade and other receivables is a $0.4m (RMB2.0m) deposit paid to WePiao as part of the proposed
Vista China step acquisition (see section 5.3 for further details).
The following table summarises the impact of the expected credit loss provision on the trade receivables balance.
See section 10.2 for further details on the accounting policies that impact trade receivables:
Trade receivables – gross
Expected credit loss – general provision
Expected credit loss – specific provision
Trade receivables – net of provisions
The movement in the expected credit loss provision during the year was as follows:
Balance at 1 January
Bad debts written off
Change in provision
Expected credit loss provision at 31 December
2019
NZ$m
36.6
(0.4)
(0.8)
35.4
2019
NZ$m
1.9
(1.4)
0.7
1.2
2018
NZ$m
46.2
(1.1)
(0.8)
44.3
2018
NZ$m
1.0
(0.2)
1.1
1.9
The expected credit loss provision for trade receivables has been measured using the same techniques as the prior
year, determined as follows:
CURRENT
91-180 DAYS
PAST DUE
181-270 DAYS
PAST DUE
271-360 DAYS
PAST DUE
361+ DAYS
PAST DUE
31 DECEMBER 2019
Gross carrying amount
Baseline
Aging and write offs
Country, customer and market
General provision
Specific provision
0
Total ECL provision
NZ$m
28.7
0.1
-
0.1
0.2
-
0.2
General provision effective rate
0.7%
0
NZ$m
NZ$m
NZ$m
NZ$m
3.8
-
-
-
-
-
-
-
2.6
0.1
-
-
0.1
0.1
0.2
3.8%
0.8
-
-
-
-
0.3
0.3
-
0.7
-
0.1
-
0.1
0.4
0.5
14.3%
31 DECEMBER 2018
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
CURRENT
91-180 DAYS
PAST DUE
181-270 DAYS
PAST DUE
271-360 DAYS
PAST DUE
361+ DAYS
PAST DUE
Gross carrying amount
Baseline
Aging and write offs
Country, customer and market
General provision
Specific provision
Total ECL provision
General provision effective rate
0
32.3
0.1
-
-
0.1
0.3
0.4
0.3%
3.8
-
-
-
-
-
-
-
2.1
0.1
-
-
0.1
0.1
0.2
4.8%
0.5
-
-
-
-
-
-
-
The movement in accrued revenues during the year was as follows:
Accrued revenues at 1 January
Amounts included in opening balance released in the current year
Additional accrued revenue recognised at year end
Exchange movements
Accrued revenue at 31 December
7.5
0.4
0.4
0.1
0.9
0.4
1.3
12.0%
2.4%
2019
NZ$m
4.9
(4.9)
13.1
0.1
13.2
2018
NZ$m
6.2
(5.9)
4.4
0.2
4.9
TOTAL
NZ$m
36.6
0.2
0.1
0.1
0.4
0.8
1.2
1.1%
TOTAL
NZ$m
46.2
0.6
0.4
0.1
1.1
0.8
1.9
5.2 Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset.
Depreciation on assets is charged on a straight-line basis to allocate the differences between their original cost
and the residual values over their estimated useful lives, as follows:
• Fixtures and fittings
7 to 10 years, or the term of any associated property lease
• Computer equipment
3 to 5 years
The residual values and useful lives of assets are reviewed and adjusted if appropriate. If an asset’s carrying
amount is greater than its estimated recoverable amount, the carrying amount is immediately written down
to its recoverable amount.
62
Vista Group International Limited
63
Annual Report 2019
Notes to the financial statementsContinued
The carrying amount of property, plant and equipment is represented as follows:
2019
Gross carrying amount
Balance at 1 January
Additions
Disposals
Exchange differences
Balance at year end
Accumulated depreciation
Balance at 1 January
Current year depreciation
Disposals
Exchange differences
Balance at year end
Carrying amount at 31 December 2019
2018
Gross carrying amount
Balance at 1 January
Additions
Exchange differences
Balance at year end
Accumulated depreciation
Balance at 1 January
Current year depreciation
Exchange differences
Balance at year end
Carrying amount at 31 December 2018
FIXTURES &
FITTINGS
NZ$m
COMPUTER
EQUIPMENT
NZ$m
TOTAL
NZ$m
5.8
2.8
(0.3)
(0.4)
7.9
(2.1)
(0.9)
0.3
0.4
(2.3)
5.6
4.9
1.3
(2.5)
(0.2)
3.5
(3.2)
(1.2)
2.5
0.1
(1.8)
1.7
10.7
4.1
(2.8)
(0.6)
11.4
(5.3)
(2.1)
2.8
0.5
(4.1)
7.3
FIXTURES &
FITTINGS
NZ$m
COMPUTER
EQUIPMENT
NZ$m
TOTAL
NZ$m
4.6
1.2
-
5.8
(1.4)
(0.6)
(0.1)
(2.1)
3.7
3.5
1.3
0.1
4.9
(2.1)
(1.1)
-
(3.2)
1.7
8.1
2.5
0.1
10.7
(3.5)
(1.7)
(0.1)
(5.3)
5.4
5.3 Investment in associates and joint ventures
Associates are all entities over which the Vista Group has significant influence but not control or joint control.
This is generally the case where Vista Group holds between 20% and 50% of the voting rights.
Joint ventures are all entities over which Vista Group has a joint arrangement where two or more of the parties
have joint control of the arrangement and have rights to the net assets of the arrangement.
Investments in both associates and joint ventures are accounted for using the equity method of accounting,
after initially being recognised at cost.
In the event of loss of control of a subsidiary, resulting in an associate company, the investment is recognised
initially at fair value. The carrying amount of the investment in an associate is increased or decreased to recognise
Vista Group’s share of the profit or loss and other comprehensive income of the associate after the acquisition
date. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the
carrying amount of the investment.
When Vista Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity,
including any other unsecured long-term receivables, Vista Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the other entity. The carrying amount of equity-accounted
investments are tested for impairment in accordance with the policy described in section 5.5.
64
Vista Group International Limited
The financial statements of associates and joint ventures are prepared for the same reporting period as Vista
Group. When necessary, adjustments are made to bring the accounting policies in line with those of Vista Group.
Holdings in associates and joint ventures
The principal associates and joint ventures all have share capital consisting solely of ordinary shares. None of these
entities are considered strategic to Vista Group’s core operations.
NAME OF ENTITY
Vista Entertainment Solutions
(Shanghai) Limited
Stardust Solutions Limited
ASSOCIATE OR
JOINT VENTURE
COUNTRY OF
INCORPORATION
PRINCIPAL PLACE
OF BUSINESS
HOLDING PERCENTAGE
2019
2018
Associate
Joint Venture New Zealand
China
China
USA
47.5%
55.9%
47.5%
58.9%
At 31 December 2018, Vista Group recognised its 50.0% stake in Numero as an associated company.
Significant estimation uncertainty – Carrying value of investment in Vista China
An independent valuation of Vista China at 31 December 2019 has been prepared by an external valuation expert
using a combined DCF and capitalisation of revenue method to ensure Vista China’s carrying value does not exceed
its recoverable amount. The external valuation expert also considered the implied $106.4m (RMB500.0m) equity
valuation from the proposed transaction between Vista Group and WePiao (more detail provided below in this
section). This combined approach represents a fair value less costs to dispose (FVLCD) methodology.
The key inputs applied by the external valuation expert into the valuation models were:
• Discount rate: a range of 20-25% (2018: 20-25%), based on authoritative studies into the rates of return required
by venture capital firms of China-based companies.
• Revenue multiple range of 4.00x to 5.00x (2018: 4.25x to 5.25x), based on a study of 83 listed ‘Application
Software’ companies in China, adjusted for outliers (below 20th percentile, or above 80th percentile).
Judgement was applied by management in estimating the 5-year operating performance of Vista China upon
which this valuation was based, which forecasts Vista China revenues to grow at a CAGR of 11.8% from 2019 to
2024. The values applied by management were cross-checked by the external valuation expert to other externally
published sources, with the associated risks being reflected in their adopted discount rate range.
When completing the FVLCD calculation, a 10% control discount and an assumed 2% transaction cost were applied.
The result of this external valuation was that Vista Group’s equity accounted carrying value of Vista China did not
exceed the recoverable amount.
Proposed Vista China step acquisition
On 20 December 2019, Vista Group announced that it had agreed to acquire a further 14.5% stake in Vista China.
The initial cash consideration will include cash payments of RMB26.3m and US$5.2m. Further cash of RMB10.0m
will be payable 12 months after completion. The acquisition implies an equity valuation of Vista China of $106.4m
(RMB500.0m). Consideration for this transaction is to be funded through a combination of existing cash resources
and an enhanced ASB revolving credit facility.
At 31 December 2019, this step acquisition was subject to approval from the relevant Chinese regulatory authorities
which is expected to be obtained during the first half of 2020.
Management consider China to be a very good long-term market prospect for Vista Group with 12 of the world’s
top 20 cinema exhibitor chains operating in the Chinese market; continued strong box office growth; and cinemas
being built at such a rate that by 2021, China is expected to have almost double the number of US cinema screens.
This step acquisition will enable Vista Group to have greater control over the strategic direction of Vista China
and to take advantage of the opportunities that arise in that market.
Vista Group have paid a deposit of NZ$0.4m (RMB2.0m) to WePiao, which is included within trade and other
receivables (see section 5.1) at 31 December 2019. This deposit is fully refundable should an adverse ruling be obtained
from the regulators. Should the acquisition complete, the consideration payable will be reduced by this deposit.
65
Annual Report 2019
Notes to the financial statementsContinued
Significant Accounting judgement – Initial fair value of joint venture companies (Stardust)
Summarised financial position
On 25 February 2019, Vista Group entered into agreements that resulted in Stardust no longer meeting the
requirements for control under NZ IFRS 10 Consolidated Financial Statements. Under the terms of the amended
shareholders’ agreement, Vista Group no longer has an entitlement to appoint a majority of the Directors, nor
to solely appoint the CEO. Holding two of the four Board seats enables Vista Group to exercise joint control over
Stardust and therefore classifies this entity as a joint venture. Vista Group ceased to consolidate Stardust as of
25 February 2019 with its shareholding remaining unchanged at 58.9%.
On 25 February 2019, the carrying value of Stardust’s net assets were $3.2m, of which $1.5m consisted of cash
at bank. The fair value of the retained 58.9% shareholding in Stardust required judgement with the intellectual
property being calculated using a ‘cost to replace’ valuation model (a level 3 fair value measurement technique).
Vista Group recognised a $0.1m gain on deconsolidation, calculated as follows:
Fair value of the 58.9% of Stardust retained by Vista Group
Less: carrying value of net assets of Stardust
Add: carrying value of non-controlling interests
Capital gain on deconsolidation of Stardust
Income tax expense
Capital gain on deconsolidation of Stardust
2019
NZ$m
2.0
(3.2)
1.3
0.1
-
0.1
Numero step acquisition
On 14 October 2019, Vista Group obtained control of Numero by acquiring a further 50% shareholding, taking Vista
Group’s holding to 100%. From the date of acquisition, Numero is no longer accounted for as an associated entity
and is instead fully consolidated into Vista Group’s results. For more information on this transaction, see section 3.
Carrying value of associates and joint ventures
Opening net assets
Net assets of Stardust at 25 Feb 2019
Loss for the year
Dividends declared
Closing net assets
Vista Group interest
Vista Group’s share
Goodwill
Carrying values
STARDUST
VISTA CHINA
2019
NZ$m
-
3.2
(0.9)
-
2.3
55.9%
1.3
0.2
1.5
2018
NZ$m
-
-
-
-
-
-
-
-
-
2019
NZ$m
24.6
-
(2.3)
(1.5)
20.8
47.5%
9.9
20.2
30.1
2018
NZ$m
28.7
-
(4.1)
-
24.6
47.5%
11.7
20.2
31.9
On 24 November 2019, Stardust raised an additional $0.4m of cash funding from two of the existing shareholders,
both of whom are related parties of Vista Group. The transaction was completed at fair value using a valuation of
US$32.31 per share and dilutes Vista Group’s ownership stake from 58.9% to 55.9%.
The carrying value of Vista Group’s share of Numero on the date control of the entity was obtained was $nil
(31 December 2018: $nil).
A summarised statement of financial position of Vista Group’s material associates and joint ventures at 31 December
2019 is presented below:
Cash
Trade and other receivables
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
Effect of translation
Net assets
VISTA CHINA
2019
NZ$m
12.6
14.4
27.0
3.0
30.0
(7.9)
-
(7.9)
(1.3)
20.8
2018
NZ$m
26.4
11.6
38.0
1.3
39.3
(13.2)
-
(13.2)
(1.5)
24.6
Summarised trading results
A summarised statement of comprehensive income of Vista Group’s material associates and joint ventures, and
a reconciliation to the equity accounted losses recognised in Vista Group is detailed below. Unless stated otherwise,
all profits/losses are derived from continuing operations and there was no movement in other comprehensive income.
Adjustments have been applied to align the associate and joint venture company accounting policies to those of
Vista Group.
Revenue
Total expenses
Loss for the year
Vista Group equity accounted interest – through August 2018
Vista Group equity accounted interest – through December 2019
Vista Group equity accounted loss for the year
VISTA CHINA
2019
NZ$m
19.2
(21.5)
(2.3)
-
47.5%
(1.0)
Related parties
Vista Group’s associate and joint venture related party balances are detailed in the table below:
Related party receivable
Related party payable
Related party loan
Provision for impairment
Net receivable/(payable)
NUMERO(1)
VISTA CHINA
STARDUST(1)
2019
NZ$m
-
-
-
-
-
2018
NZ$m
-
-
8.4
(3.0)
5.4
2019
NZ$m
0.9
(0.1)
-
-
2018
NZ$m
6.8
(4.8)
-
-
2019
NZ$m
0.1
(0.4)
-
-
0.8
2.0
(0.3)
(1) Numero has been classified as a subsidiary of Vista Group from 14 October 2019, while Stardust was classified as a subsidiary until
25 February 2019. The tables above reflect the transactions that occurred while these entities were not classified as a subsidiary.
2018
NZ$m
20.6
(24.7)
(4.1)
39.5%
47.5%
(1.8)
2018
NZ$m
-
-
-
-
-
66
Vista Group International Limited
67
Annual Report 2019
Notes to the financial statementsContinued
Vista Group’s associate and joint venture related party transactions were as follows:
Goodwill has been allocated to the following CGUs:
Development fees
Vista China acquisition deposit
Maintenance, licence, service fees
Interest on loan
Dividend to Vista Group(2)
Other advances
Total related party transactions
NUMERO(1)
VISTA CHINA
STARDUST(1)
2019
NZ$m
2018
NZ$m
0.3
-
0.2
0.2
-
-
0.7
0.5
-
0.4
0.3
-
0.1
1.3
2019
NZ$m
-
0.4
(0.8)
-
(0.7)
0.3
(0.8)
2018
NZ$m
(3.8)
-
(2.2)
-
-
-
(6.0)
2019
NZ$m
2018
NZ$m
-
-
-
-
-
(0.1)
(0.1)
-
-
-
-
-
-
-
(1) Numero has been classified as a subsidiary of Vista Group from 14 October 2019, while Stardust was classified as a subsidiary until
25 February 2019. The tables above reflect the transactions that occurred while these entities were not classified as a subsidiary.
(2) Of the $0.7m dividend received from Vista China, $0.4m had been received in cash by 31 December 2019. The remaining balance will
reduce the consideration payable on the proposed Vista China acquisition.
During the period, Vista Group recognised $2.0m of revenue from Vista China (2018: $5.9m). At the end of the
period, $nil remains as deferred revenue (2018: $1.5m).
On 30 January 2019, Vista China provided a retention accommodation loan of $4.3m (RMB20.0m) to the CEO
of Vista China. This loan is interest free, secured against equity in Vista China and matures on 30 January 2022.
As part of the step acquisition of Vista China, on 23 December 2019 Vista China provided a shareholder loan of
$3.0m (RMB14.3m) to WePiao. This loan is expected to be repaid with proceeds from the proposed transaction,
which is awaiting regulatory approval.
5.4 Goodwill
The amount of goodwill initially recognised is a function of the allocated purchase price to the fair value of the
identifiable net assets acquired. The determination of the net assets fair value, particularly intangible assets,
is to a considerable extent based on judgement.
A summary of movements in goodwill is detailed below:
Gross carrying amount
Balance at 1 January
Additions – Numero
Exchange differences
Gross carrying amount at year end
Accumulated impairment
Balance at 1 January
Accumulated impairment at year end
Goodwill at 31 December
SECTION
3
2019
NZ$m
67.5
6.1
(0.1)
73.5
(3.6)
(3.6)
69.9
2018
NZ$m
66.4
-
1.1
67.5
(3.6)
(3.6)
63.9
Vista Entertainment Solutions Limited (VESL)
Virtual Concepts Limited (Movio)
Maccs International BV (Maccs)
Share Dimension BV (Cinema Intelligence)
Powster Limited (Powster)
Flicks.co.nz Limited (Flicks)
Numero Limited (Numero)
Goodwill at 31 December
SECTION
3
2019
NZ$m
24.4
17.0
12.3
1.9
7.6
0.6
6.1
69.9
2018
NZ$m
24.4
17.0
12.5
2.0
7.4
0.6
-
63.9
The above CGUs are the lowest level at which goodwill is monitored for internal management reporting purposes.
Value in use (VIU) calculations are used in determining the recoverable amount of each CGU. Cash flows were
projected based on a 5-year business model for each CGU, including Board approved 2020 budgets. Determination
of appropriate post-tax cash flows, terminal growth rates and discount rates for the calculation of VIU is subjective and
requires significant judgement to determine the growth in revenue and EBITDA, timing and quantum of future capital
expenditure, working capital, long-term growth rates and the selection of discount rates to reflect the risks involved.
5.5 Impairment testing
Impairment testing of goodwill and other assets
Goodwill is not amortised and is tested for impairment annually irrespective of whether there is any indication of
impairment. If any such indication exists, then the asset’s recoverable amount is estimated. After initial recognition,
goodwill is measured at cost less any accumulated impairment losses.
Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable.
An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount. Impairment
losses are recognised in the statement of comprehensive income.
The recoverable amount of an asset is the greater of its VIU and its FVLCD, however in line with NZ IAS 36
Impairment of Assets, FVLCD is only determined where VIU would result in an impairment. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows
which are largely independent of the cash inflows from other assets or groups of assets (CGUs). The allocation
is made to those CGUs that are expected to benefit from the business combination in which goodwill arose.
In assessing VIU, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Significant estimation uncertainty – Assumptions used in testing goodwill for impairment
Vista Group has carried out an annual impairment review of goodwill allocated to the CGUs in order to ensure
that recoverable amounts exceed aggregate carrying amounts. VIU was determined by discounting the future
cash flows generated by each CGU. Cash flows were projected based on a 5-year business model for each
CGU, including Board approved 2020 budgets. Information about estimates and judgements that have the
most significant affect on recognition and measurement of goodwill and intangible assets are provided below.
Actual results may be substantially different.
The discount rate is determined using the Capital Asset Pricing Model (CAPM) methodology of determining the
weighted average cost of capital (WACC), using market specific inputs. Vista Group’s WACC is reviewed annually.
68
Vista Group International Limited
69
Annual Report 2019
Notes to the financial statementsContinued
The key assumptions used for the VIU calculation are as follows:
CGU
VESL
Movio
Flicks
Maccs
Powster
Cinema Intelligence
Numero
REVENUE CAGR
PRE-TAX WACC
POST-TAX WACC
2020 – 2024
2019 – 2023
10.7%
17.0%
14.3%
10.9%
12.6%
26.3%
20.7%
8.6%
26.2%
14.4%
16.8%
10.6%
31.3%
N/A
2019
12.8%
13.3%
16.1%
14.1%
16.4%
14.6%
17.5%
2018
12.5%
12.4%
11.9%
13.7%
14.1%
15.3%
N/A
2019
10.4%
10.4%
13.5%
11.8%
13.9%
11.8%
13.5%
2018
9.7%
9.7%
9.7%
11.5%
12.0%
12.6%
N/A
The terminal growth rate for all CGUs is calculated based on the 2024 year and assumes continuous growth
of a minimum of projected inflation estimates of 2.5% (2018: 2.5%). The values assigned to the key assumptions
represent Vista Group’s assessment of future trends and are based on both external and internal sources.
Other factors considered when testing goodwill for impairment include actual financial performance against
budgeted financial performance; any material unfavourable operational and regulatory factors; and any material
unfavourable economic outlook and market competition.
Vista Group’s impairment review concluded there was no impairment of goodwill or other assets during the year
(2018: $nil).
Sensitivity testing
Based on previous experience, Vista Group applied judgement in determining a reasonably possible change in
the key assumptions (sensitised rates) in the VIU models. The CGUs that would result in a potential impairment
scenario are as follows:
• Maccs – the VIU recoverable amount for this CGU is the same as the carrying value (i.e. no headroom). In isolation,
this means an adverse change of the revenue CAGR to 10.0% would result in an impairment charge of $1.3m;
an increase of the pre-tax WACC to 16.0% would result in an impairment charge of $2.3m; and a reduction
of the terminal growth rate to 0.5% would result in an impairment charge of $0.9m.
• Numero – the VIU recoverable amount for this CGU exceeds the carrying amount by $3.6m. A reduction in
the revenue CAGR to 18.6% would result in no headroom. Neither the discount rate nor terminal growth rate
are considered sensitive for this CGU.
5.6 Other intangible assets
Intangible assets
Intangible assets are measured on initial recognition at cost. The cost of intangible assets acquired in a business
combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried
at cost less any accumulated amortisation and accumulated impairment losses.
Intangible assets with finite lives are amortised over their useful economic life. The amortisation period and the
amortisation method for an intangible asset with a finite life are reviewed at least annually.
Development costs and internally generated software
Maintenance
Costs associated with maintaining computer software programmes are recognised as an expense within the
statement of comprehensive income as incurred.
Development – capitalised
Internally developed software is capitalised as an intangible asset when they meet the recognition criteria
of NZ IAS 38 (see following page).
Development – other
Other development expenditures that do not meet the recognition criteria are classified as operating expenses as
incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Significant accounting judgement – Capitalisation of development costs
Development costs that are directly attributable to the design and testing of identifiable and unique software
products controlled by Vista Group are only recognised as intangible assets when all the following criteria are met:
• it is technically feasible to complete the software product so that it will be available for use;
• management intends to complete the software product and use or sell it;
• there is an ability to use or sell the software product;
• it can be demonstrated how the software product will generate probable future economic benefits;
• adequate technical, financial and other resources to complete the development and to use or sell the software
product are available; and
• the expenditure attributable to the software product during its development can be reliably measured.
Other intangible assets
Intellectual property that has been acquired through business combinations and amounts spent subsequently.
Customer relationships include the purchase of existing customer bases via an existing license agreement
or business combination.
Software licenses include the purchase of third-party software in the normal course of business.
Intangible assets are amortised on a straight-line basis over the following useful economic lives:
• Intellectual property
• Customer relationships
• Software licenses
4 to 15 years
4 to 15 years
2.5 to 15 years
• Internally generated software
3 to 5 years based on their estimated useful life.
The carrying amount of other intangible assets is represented as follows:
2019
Gross carrying amount
Balance at 1 January
Additions
Disposals – deconsolidation of Stardust
Exchange differences
Balance at year end
Accumulated amortisation
Balance at 1 January
Amortisation
Exchange differences
Balance at year end
INTERNALLY
GENERATED
SOFTWARE
SOFTWARE
LICENSES
INTELLECTUAL
PROPERTY
CUSTOMER
RELATIONSHIPS
NZ$m
NZ$m
NZ$m
NZ$m
17.7
11.7
(1.9)
-
27.5
(1.9)
(2.7)
-
(4.6)
2.6
-
-
(0.1)
2.5
(1.3)
(0.2)
0.2
(1.3)
2.2
0.2
-
-
2.4
(1.0)
(0.4)
-
(1.4)
4.9
0.7
-
(0.1)
5.5
(2.7)
(0.4)
(0.1)
(3.2)
TOTAL
NZ$m
27.4
12.6
(1.9)
(0.2)
37.9
(6.9)
(3.7)
0.1
(10.5)
Carrying amount at 31 December 2019
22.9
1.2
1.0
2.3
27.4
70
Vista Group International Limited
71
Annual Report 2019
Notes to the financial statementsContinued
2018
Gross carrying amount
Balance at 1 January
Additions
Disposals
Exchange differences
Balance at year end
Accumulated amortisation
Balance at 1 January
Amortisation
Disposals
Exchange differences
Balance at year end
INTERNALLY
GENERATED
SOFTWARE
SOFTWARE
LICENSES
INTELLECTUAL
PROPERTY
CUSTOMER
RELATIONSHIPS
NZ$m
NZ$m
NZ$m
NZ$m
9.8
7.9
-
-
17.7
(0.6)
(1.3)
-
-
2.6
-
-
-
2.6
(1.1)
(0.2)
-
-
2.1
-
-
0.1
2.2
(0.7)
(0.3)
-
-
(1.9)
(1.3)
(1.0)
7.8
-
(3.0)
0.1
4.9
(3.9)
(0.7)
1.8
0.1
(2.7)
TOTAL
NZ$m
22.3
7.9
(3.0)
0.2
27.4
(6.3)
(2.5)
1.8
0.1
(6.9)
Carrying amount at 31 December 2018
15.8
1.3
1.2
2.2
20.5
On 23 March 2018, Vista Group announced the termination of the French market distribution agreement with Cote
Cine Group (CCG). This resulted in the disposal of the customer relationship previously recognised. A settlement
payment of $1.4m was received.
5.7 Trade and other payables
Trade payables
Sundry accruals
Deferred lease incentives
Employee benefits
Total trade and other payables
2019
NZ$m
0.3
6.6
-
6.3
13.2
2018
NZ$m
5.8
6.3
0.3
6.2
18.6
Included in trade payables is a balance of $0.1m (2018: $4.8m) payable to the associate company Vista China.
See section 5.3 for detail.
Employee benefits
Accruals for wages, salaries, including non-monetary benefits, commissions and annual leave expected to be
settled within 12 months of the reporting date are recognised in respect of employees’ services up to the reporting
date. They are measured at the amounts expected to be paid using the remuneration rate expected to apply at the
time of settlement, on an undiscounted basis. Expenses for non-accumulating sick leave are recognised when the
leave is taken and are measured at the rates paid or payable.
Vista Group has pension obligations in respect of various defined contribution plans. Vista Group pays contributions
to publicly or privately administered pension insurance plans on a mandatory or contractual basis. Vista Group
has no further payment obligations once the contributions have been paid. The contributions are recognised
as an employee entitlement expense when they are due.
Employee expenses included in total expenses:
Wages and salaries
Share-based payment expense
Defined contribution plans
Total employee benefits
5.8 Lease assets & liabilities
2019
NZ$m
71.2
1.6
5.1
77.9
2018
NZ$m
63.0
2.4
4.0
69.4
Recognition and measurement of Vista Group’s leasing activities
Vista Group predominantly leases property for fixed periods of 1-7 years, but may have extension options. These
extension options are usually at the discretion of Vista Group and are included in the measurement of the lease
asset if management is reasonably certain the extension will be exercised. Lease terms are negotiated on an
individual basis and contain a variety of terms and conditions. However, these lease agreements do not impose
any covenants.
Prior to 31 December 2018, leases of property, plant and equipment were classified as operating leases. Payments
made under operating leases (net of any incentives received from the lessor) were charged to profit or loss on
a straight-line basis over the period of the lease.
From 1 January 2019, leases are recognised as a right of use asset (lease asset) and a corresponding lease liability
at the date at which the leased asset is available for use by Vista Group. Each lease payment is allocated between
the liability and finance cost. The finance cost is charged to profit or loss over the lease period. The lease asset
is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include
the net present value of the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable; and
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the lessee’s incremental borrowing rate, being the rate that the lessee
would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic
environment with similar terms and conditions.
Lease assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs; and
• restoration costs.
See section 8.4 for more information on adjustments recognised on adoption of NZ IFRS 16, practical expedients
applied and the impact of first-time adoption on these financial statements.
72
Vista Group International Limited
73
Annual Report 2019
Notes to the financial statementsContinued
Lease assets
Vista Group lease assets predominantly comprise property leases. Key movements relating to lease balances are
presented below:
6. Taxation
This section outlines further details of the income tax expenses incurred by Vista Group, as well as the deferred
taxes recognised on the statement of financial position.
Balance at 1 January
Additions due to first-time adoption of NZ IFRS 16
Additions during the year
Depreciation charges
Exchange differences
Lease assets at 31 December
Lease liabilities
The maturity of the lease liabilities is as follows:
Less than one year
One to five years
More than five years
Total lease liabilities
2019
NZ$m
-
6.1
19.3
(3.9)
0.3
21.8
2019
NZ$m
6.1
13.5
3.9
23.5
The total interest expense on lease liabilities and the total cash outflow for the year was $0.6m and $3.7m, respectively.
5.9 Deferred revenue
Deferred revenues are recognised on payments received from customers for which the correlating performance
obligations have yet to be satisfied by Vista Group.
The following table represents the revenues recognised in the current year relating to carried forward deferred
revenue, as well as the additional deferred revenue recognised at 31 December where the performance obligations
are yet to be satisfied.
2019
NZ$m
25.9
(20.7)
17.5
0.4
23.1
22.9
0.2
23.1
2018
NZ$m
25.1
(18.6)
15.9
3.5
25.9
21.4
4.5
25.9
Total deferred revenue at 1 January
Revenue recognised from performance obligations satisfied in the current year
Additional deferred revenues from unsatisfied performance obligations
Exchange movements
Total deferred revenue at 31 December
Represented by:
Current portion
Non-current portion
Total deferred revenues
74
Vista Group International Limited
6.1 Income tax expense
Income tax
The income tax expense for the year comprises current and deferred tax. Taxation is recognised in profit or loss
in the statement of comprehensive income, except when it relates to items recognised directly in equity (in which
case the income tax is recognised in equity). Income tax expense is based on tax rates and regulation enacted,
or substantively enacted at the balance sheet date, in the jurisdiction in which the group entities operate.
Income tax is comprised of:
Current tax expense
Deferred tax expense
Total tax expense
SECTION
6.2
2019
NZ$m
5.6
-
5.6
2018
NZ$m
8.8
(0.8)
8.0
Reconciliation of income tax expense
The relationship between the expected tax expense based on the domestic effective tax rate of the Company at 28%
(2018: 28%) and the reported tax expense in the statement of comprehensive income can be reconciled as follows:
Profit before tax (taxable income)
Domestic tax rate for the Company
Expected tax expense
Foreign subsidiary company tax
Non-assessable income/non-deductible expenses
Prior period adjustment
Deferred tax assets no longer recognised
Other
Total tax expense
Effective tax rate
2019
NZ$m
18.4
28%
5.2
(0.1)
0.4
(1.0)
-
1.1
5.6
30%
2018
NZ$m
21.0
28%
5.9
0.2
0.9
(0.1)
1.0
0.1
8.0
38%
As at 31 December 2019, Vista Group has $16.0m (2018: $12.9m) of imputation credits available for use in subsequent
reporting periods. Vista Group also has $0.4m (2018: $3.4m) of unused tax losses for which no deferred tax asset
has been recognised, as they do not meet the recognition criteria.
6.2 Deferred tax assets and liabilities
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred
tax is based on the expected manner of realisation of the carrying amount of assets and liabilities, using tax rates
enacted or substantially enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised.
75
Annual Report 2019
Notes to the financial statementsContinued
Significant estimation uncertainty – Recognition of deferred tax assets
The net deferred tax asset at balance date includes temporary timing differences and income tax losses available
to carry forward against future profits. A deferred tax asset is recognised on losses, only when it is considered
probable that sufficient taxable profits will be available to utilise the losses in the near future. Vista Group applies
judgement when reviewing current business plans and forecasts to ascertain the likelihood of future taxable profits.
The financial forecasts used in this assessment are the same as those used in the impairment review of goodwill
and other assets in section 5.5.
7. Capital structure
This section outlines Vista Group’s capital structure, earnings per share and share-based employee incentives
which have an impact on Vista Group’s equity.
Contributed equity
Contributed equity represents the value of shares that have been issued. Incremental costs directly attributable
to the issue of ordinary shares are recognised as a deduction from equity.
Deferred taxes arising from temporary differences and unused tax losses can be summarised as follows:
All transactions with owners of the parent are recorded separately within share capital.
2019
Trade and sundry receivables
Employee benefits
Property, plant and equipment
Lease assets
Lease liabilities
Intangible assets
Unused tax losses
Other
Deferred tax temporary net asset
Represented by:
Deferred tax asset
Deferred tax liability
Deferred tax temporary net asset
2018
Trade and sundry receivables
Employee benefits
Property, plant and equipment
Intangible assets
Unused tax losses
Other
Deferred tax temporary net asset
Represented by:
Deferred tax asset
Deferred tax liability
Deferred tax temporary net asset
ACQUIRED
AS PART OF
A BUSINESS
COMBINATION
INITIAL
RECOGNITION
OF NZ IFRS 16
OPENING
BALANCE
RECOGNISED
IN OCI
RECOGNISED
IN INCOME
STATEMENT
CLOSING
BALANCE
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
0.4
1.6
(0.1)
-
-
(1.3)
1.1
0.1
1.8
-
-
-
-
-
-
-
-
-
-
-
-
(1.5)
1.8
-
-
-
0.3
-
-
-
-
-
-
-
-
-
(0.2)
(0.5)
-
(2.9)
3.0
-
0.6
-
-
0.2
1.1
(0.1)
(4.4)
4.8
(1.3)
1.7
0.1
2.1
7.9
(5.8)
2.1
ACQUIRED
AS PART OF
A BUSINESS
COMBINATION
INITIAL
RECOGNITION
OF NZ IFRS 16
OPENING
BALANCE
RECOGNISED
IN OCI
RECOGNISED
IN INCOME
STATEMENT
CLOSING
BALANCE
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
0.2
0.5
(0.1)
(1.5)
1.5
0.2
0.8
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.2
-
-
-
-
0.2
0.2
0.9
-
0.2
(0.4)
(0.1)
0.8
0.4
1.6
(0.1)
(1.3)
1.1
0.1
1.8
2.8
(1.0)
1.8
All shares are ordinary, authorised, issued and fully paid shares. They all have equal voting rights and share equally
in dividends and any surplus on winding up. The shares have no par value.
Retained earnings
Retained earnings include all current and prior period retained profits and losses.
Dividend payments
Dividends payable to equity shareholders are included in trade and other payables when the dividends have been
approved by the Board on or before the end of the reporting period but not yet distributed.
Foreign currency reserve
This reserve is used to record cumulative translation differences on the assets and liabilities of foreign operations.
The cumulative translation differences are recycled to the income statement on disposal of the foreign operation.
Share-based payment reserve
The share-based payment reserve is used to record any equity share-based incentives. The reserve value
represents the difference between the value at the time of allocation and the cash received incentives plus
the equity component of contingent consideration payable.
7.1 Contributed equity
During the 2019 financial year, 861,704 shares were issued (2018: 778,960). The following reflects where these
shares were allocated:
Shares issued and fully paid:
Beginning of the year
Ordinary shares issued during the year:
VCL contingent consideration
Employee incentives
Non-controlling interest change
MILLIONS OF SHARES
2019
2018
NZ$m
2019
165.5
164.8
59.4
-
0.9
-
0.4
0.3
-
-
2.4
-
61.8
2018
57.8
0.5
0.9
0.2
59.4
Total contributed equity at end of the year
166.4
165.5
76
Vista Group International Limited
77
Annual Report 2019
Notes to the financial statementsContinued
7.2 Earnings per share
Vista Group presents basic and diluted earnings per share (EPS) data for its ordinary shares.
Basic EPS is calculated by dividing the profit or loss attributable to owners of the parent by the weighted average
number of ordinary shares in issue during the year.
Diluted EPS is determined by adjusting the profit or loss attributable to owners of the parent and the weighted
average number of ordinary shares in issue during the year for the effects of all dilutive potential ordinary shares,
which for Vista Group comprise share-based payments and performance rights. Potential ordinary shares are
treated as dilutive when their conversion to ordinary shares would decrease EPS or increase the loss per share.
7.5 Share-based payments
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments
at the grant date. The fair value includes the effect of market based vesting conditions.
The fair value determined at the grant date of the equity-settled share-based payments is expensed evenly
over the vesting period within administration expenses, based on our estimate of equity instruments that will
eventually vest. At each balance sheet date, we revise our estimate of the number of equity instruments expected
to vest as a result of the effect of non-market based vesting conditions. The impact of the revision of the original
estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with
a corresponding adjustment to the share-based payment reserve.
NUMBER OF SHARES (MILLIONS)
The share-based payment reserve is used to record any equity share-based incentives.
Weighted average ordinary shares for basic earnings per share
Effect of dilution:
Share options and awards
Weighted average ordinary shares adjusted for the effect of dilution
Profit attributable to owners of the parent (NZ$m)
Basic earnings per share (cents)
Diluted earnings per share (cents)
7.3 Dividends
The following reflects the dividends paid by Vista Group during the year:
2019
166.1
1.3
167.4
10.8
$0.07
$0.06
2018
165.3
1.8
167.1
12.3
$0.07
$0.07
DIVIDEND
PAYMENT DATE
2019 interim dividend
2018 final dividend
2018 interim dividend
2017 final dividend
27 September 2019
22 March 2019
27 September 2018
23 March 2018
7.4 Foreign currency reserve
Functional and presentation currency
VISTA GROUP
NUMBER OF SHARES
(MILLIONS)
NZ$ PER SHARE
NZ$m
166.4
165.5
165.5
164.8
$0.0120
$0.0210
$0.0160
$0.0174
2.0
3.5
2.6
2.9
Items included in the financial statements of each of Vista Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the Functional Currency). The financial statements
are presented in New Zealand Dollars (NZD), which is Vista Group’s presentation currency. All financial information
has been presented rounded as millions of dollars (NZ$m).
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation, at year-end exchange rates, of monetary assets and liabilities denominated in foreign
currencies, are recognised in the statement of comprehensive income.
Share-based payment expense
The share-based payment expense relating to each scheme is as follows:
LTI Scheme – Group Results
LTI Scheme – Total Shareholder Return
LTI Scheme – Segmental Results
LTI Scheme – Movio CEO (Variable)
Retention Scheme – Group CEO
Total share-based payment expense
2019
NZ$m
0.4
0.1
0.1
0.5
0.6
1.7
2018
NZ$m
0.6
0.4
0.2
-
1.3
2.5
In the prior year, judgement was applied in assuming the non-market conditions of all awards on grant date would
be 100% achieved. In line with NZ IFRS 2 Share-based Payment, this assumption was revised at 31 December 2019
which resulted in a lower share-based payment expense being recognised in the current year.
Summary of performance rights
The movement in the number of performance rights outstanding is summarised in the following table:
NUMBER OF RIGHTS
(MILLIONS)
GROUP
RESULTS
At 1 January 2018
Granted
Forfeited
Exercised
At 1 January 2019
Granted
Forfeited
Exercised
At 31 December 2019
-
0.3
-
-
0.3
0.4
-
(0.2)
0.5
LONG-TERM INCENTIVE SCHEMES
TSR
1.1
-
(0.1)
(0.1)
0.9
-
(0.1)
(0.6)
0.2
SEGMENTAL
RESULTS
MOVIO CEO
(TERMINAL)
MOVIO CEO
(VARIABLE)
-
0.2
-
-
0.2
-
-
-
0.2
-
-
-
-
-
0.3
(0.3)
-
-
-
-
-
-
-
0.4
(0.1)
-
0.3
RETENTION
SCHEME
GROUP CEO
TOTAL
-
0.7
-
(0.2)
0.5
-
-
(0.1)
0.4
1.1
1.2
(0.1)
(0.3)
1.9
1.1
(0.5)
(0.9)
1.6
The share price of awards on the date of exercise for the Group Results scheme was $4.85 (2018: none exercised);
the TSR scheme was $4.85 (2018: $2.86); and the Group CEO scheme was $5.54 (2018: $3.00).
At the end of the year, no rights are exercisable as all are issued when they vest (2018: none). As all rights are
granted at nil cost, the weighted average exercise price of the rights at all times is $nil (2018: $nil).
The weighted average contractual life of the outstanding performance rights is 1.2 years (2018: 1.1 years).
In the current year, awards in the TSR scheme and both Movio CEO schemes were forfeited as the required
performance targets were not achieved, resulting in the associated share-based payment expense being reversed.
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Vista Group International Limited
79
Annual Report 2019
Notes to the financial statementsContinued
Assumptions
The below assumptions were applied when using the Black-Scholes and Monte Carlo option pricing models
to determine the fair value of rights granted in both the current and prior year:
ASSUMPTION
GROUP
RESULTS
MOVIO CEO
(TERMINAL)
MOVIO CEO
(VARIABLE)
GROUP
RESULTS
SEGMENTAL
RESULTS
GROUP CEO
Share price on grant date (NZ$)
Vesting period (months)
$3.78
12-36
$5.53
19-31
$5.53
9-33
$2.88
12-36
$2.88
25-61
$3.00
0-36
2019
2018
As all performance rights are granted at nil-cost, the exercise price is nil and therefore no volatility or risk-free rates
are required.
The expected dividend yield for each of the above schemes was assumed to be less than 1%.
LTI Scheme – Segmental Results
This scheme was approved by the Board with awards issued in 2018. Awards under this scheme are granted to selected
key management personnel to help incentivise sustained performance over the long-term and to promote alignment
with shareholders’ interests. The scheme identifies operating segment targets over a five-year service period.
Performance rights are granted under the plan for no consideration and carry no dividend or voting rights.
The amount of performance rights to vest depends on operating segment performance against specified targets.
Upon the achievement of stated targets, performance rights are allocated with vesting split into 2 tranches
The first tranche (50%) to vest following a 12-month deferral period following performance rights being issued
and the second (50%) following an additional 12 months.
The vesting of interests granted to employees is subject to the option holder continuing to be an employee.
The fair value of interests awarded under this scheme was determined using a Black-Scholes option pricing model.
Vista Group determined the required performance targets of all new rights granted would be 100% achieved.
LTI Scheme – Movio CEO (Terminal)
The assumed December 2021 proportion of Movio/Vista Group revenues applied to the Movio CEO (Terminal)
scheme was 22%.
LTI Scheme – Group Results
This scheme was approved by the Board with awards issued in both 2018 and 2019. Awards under this scheme are
granted to eligible employees meeting criteria determined by the Board to help incentivise sustained performance
over the long-term and to promote alignment with the shareholders’ interests. The scheme identifies revenue and
EBITDA targets over a three-year performance period, with vesting split into 6 tranches, being one per year for
each specified target.
This scheme allows the carry forward of any performance rights that do not vest in each vesting period to be
eligible to vest in future vesting periods.
Performance rights are granted under the plan for no consideration and carry no dividend or voting rights.
The vesting of interests granted to employees is subject to the option holder continuing to be an employee.
The fair value of interests awarded under this scheme was determined using the Black-Scholes option pricing model.
LTI Scheme – Total Shareholder Return (TSR)
This scheme was approved by the Board with awards issued between 2015 and 2017. Awards under this scheme are
granted to eligible employees meeting criteria determined by the Board to help incentivise sustained performance
over the long-term and to promote alignment with the shareholders’ interests. The amount of performance rights
that vest is contingent on Vista Group’s relative TSR over a two and three-year performance period, against all
other NZX50 companies (excluding Vista Group), with 50% of the value of rights allocated under each target.
Vesting of the performance rights is defined by the following table:
PERCENTILE PERFORMANCE AGAINST NZX50 COMPANIES
VESTING PERFORMANCE RIGHTS
Less than 50th percentile
50th – 75th percentile
Greater than 75th percentile
Zero
50% to 100% pro-rata on a straight-line basis
100%
The measurement of TSR is determined from the start date of the grant period until the end of the performance
period (two years and three years). This scheme allows the carry forward of any performance rights that do not
vest in the first vesting period to be eligible to vest in the vesting period for the second tranche of performance
rights. The scale at which carried over rights may vest at the end of the tranche two vesting period shall
commence at the TSR percentile achieved in respect of the tranche one vesting period.
Performance rights are granted under the plan for no consideration and carry no dividend or voting rights.
The vesting of interests granted to employees is subject to the option holder continuing to be an employee.
The fair value of interests awarded under this scheme was determined using a Monte Carlo pricing model.
80
Vista Group International Limited
This scheme was approved by the Board with awards issued in 2019. Awards under this scheme are granted to the
Movio CEO to ensure continued retention, incentivise sustained performance over the long-term and to promote
alignment with shareholders’ interests.
The grant of shares under this scheme is activated only when Movio exceeds both revenue and EBITDA targets,
each year over a three-year performance period. In addition, the shares will only vest if Vista Group’s average
market capitalisation exceeds $1.1 billion over a three-month period until December 2021. 50% of the shares vest
within 30 days of the targets being achieved (December 2021) and 50% after a further 12 months.
Performance rights are granted under the plan for no consideration and carry no dividend or voting rights.
The vesting of interests granted is subject to the option holder continuing to be an employee. The fair value of
interests awarded under this scheme was determined using a Monte Carlo simulation (using 100,000 trials) to predict
Vista Group’s future share price.
LTI Scheme – Movio CEO (Variable)
This scheme was approved by the Board with awards issued in 2019. Awards under this scheme are granted to the
Movio CEO to ensure continued retention, incentivise sustained performance over the long-term and to promote
alignment with shareholders’ interests. The share rights vest on an annual basis dependent on continued tenure
along with annual Movio revenue and EBITDA targets.
The allocation of performance rights is determined by the proportion of increased Vista Group market
capitalisation that is attributable to Movio which vest annually over a three-year period. This scheme allows
50% of any performance rights to be eligible to vest in the next vesting period should the annual targets not
be achieved.
The calculation of Movio’s approximated market capitalisation is determined as a proportion of Movio revenues
to those of Vista Group.
Performance rights are granted under the plan for no consideration and carry no dividend or voting rights.
The vesting of interests granted is subject to the option holder continuing to be an employee. The fair value of
interests awarded under this scheme was determined using a Monte Carlo simulation (using 100,000 trials) to predict
Vista Group’s future share price and the resulting number of shares that are predicted to vest.
Retention Scheme – Group CEO
This scheme was approved by the Board with awards issued in 2018. Awards under this scheme are granted to the
Vista Group CEO to align with shareholders’ interests and ensure continued retention.
The share rights vest on an annual basis dependent on continued tenure with no further performance requirements.
Share rights are granted for no consideration and carry no dividend or voting rights until vested.
The Vista Group CEO Retention Scheme vested 200,000 shares in April 2018 upon signing of the scheme
documentation, with an additional 150,000 vesting in April 2019. A further two tranches will vest in April 2020
and 2021.
The fair value of interests awarded under this scheme was determined using the Black-Scholes option pricing model.
81
Annual Report 2019
Notes to the financial statementsContinued
8. Basis of preparation & accounting policies
This section outlines the legislation and accounting standards which have been followed in the preparation of these
financial statements along with explaining how the information has been aggregated.
8.1 Key legislation and accounting standards
The financial statements of Vista Group have been prepared in accordance with Generally Accepted Accounting
Practice in New Zealand (NZ GAAP). Vista Group is a for-profit entity for the purposes of complying with NZ GAAP.
The financial statements comply with New Zealand equivalents to International Financial Reporting Standards
(NZ IFRS), other New Zealand financial reporting standards and authoritative notices that are applicable to entities
that apply NZ IFRS. The financial statements also comply with International Financial Reporting Standards (IFRS)
and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting
under IFRS.
The financial statements have been prepared on a historical cost basis except for contingent consideration which
is measured at fair value.
8.2 Basis of consolidation
Vista Group’s financial statements consolidate those of the Company and its subsidiaries as at 31 December 2019.
A subsidiary is an entity over which Vista Group has control. Control is achieved when Vista Group is exposed,
or has rights to variable returns from its involvement with the investee and has the ability to affect those returns
through its power to direct the activities of the investee.
Consolidation of a subsidiary begins when Vista Group obtains control over the subsidiary and ceases when Vista
Group loses control of the subsidiary. Income and expenses of a subsidiary acquired or disposed of during the year
are included within the statement of comprehensive income from the date Vista Group gains control until the date
Vista Group ceases to control the subsidiary. All subsidiaries have a reporting date of 31 December. In preparing
the financial statements, all inter-entity balances and transactions, and unrealised profits and losses, arising within
the consolidated entity have been eliminated in full. A change in the ownership interest of a subsidiary without
a loss of control is accounted for as an equity transaction.
Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss and net
assets that is not held by Vista Group. Vista Group attributes total comprehensive income or loss of subsidiaries
to the amounts of the Company and the non-controlling interests based on their ownership interests.
Vista Group treats transactions with non-controlling interests that do not result in a loss of control as transactions
with equity owners of the group. A change in ownership interest results in an adjustment between the carrying
amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary.
Any difference between the amount of the adjustment to non-controlling interests and any consideration paid
or received is recognised in a separate reserve within equity attributable to the owners of the Company.
8.3 Group companies
The results and financial position of all Vista Group entities (none of which has the currency of a hyper-inflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows;
a)
b)
assets and liabilities for each statement of financial position presented are translated at the closing rate at the
date of that statement of financial position;
income and expenses for each income statement and statement of other comprehensive income, are
translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the
rate on the dates of the transactions);
c)
all resulting exchange differences are recognised in other comprehensive income; and
d)
goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised
in other comprehensive income.
Foreign exchange gains and losses that relate to borrowings are presented in the statement of comprehensive
income, within finance costs. All other foreign exchange gains and losses are presented in the statement of
comprehensive income on a net basis within other expenses.
Group information
These financial statements consolidate the following subsidiaries of the Company:
NAME
PRINCIPAL ACTIVITY
Book My Show Limited
Book My Show (NZ) Limited
Flicks Limited
Maccs International B.V.
Inactive
Inactive
COUNTRY OF
INCORPORATION
New Zealand
New Zealand
SHAREHOLDING
2019
2018
74%
74%
74%
74%
Advertising sales
New Zealand
100%
100%
Software development
and licensing
Netherlands
50%
50%
Maccs US
Software licensing
United States
50%
50%
MovieXchange International Limited
Web platform development
and licensing
New Zealand
100%
100%
MovieXchange Limited
Web platform licensing
New Zealand
100%
100%
Movio Limited
Movio, Inc.
Numero Limited
Numero (Aust) Pty Ltd
Powster, Inc.
Powster Ltd
Provision of online loyalty,
data analytics and marketing
Provision of online loyalty,
data analytics and marketing
New Zealand
100%
100%
United States
100%
100%
Holding company
New Zealand
Australia
100%
100%
50%
50%
Software development
and licensing
Marketing and creative
solutions
Marketing and creative
solutions
United States
50%
50%
United Kingdom 50%
50%
S.C. Share Dimension S.R.L.
Software development
Romania
Senda DO Brasil Serviços de Tecnológia LTDA.
Software licensing
Brazil
Share Dimension B.V.
Software development
and licensing
Netherlands
50%
60%
50%
50%
60%
50%
Virtual Concepts Limited
Holding company
New Zealand
100%
100%
Vista Entertainment Solutions Limited
Software development
and licensing
New Zealand
100%
100%
Vista Entertainment Solutions (Asia) Sdn. Bhd.
Software licensing
Vista Entertainment Solutions (Canada) Limited Inactive
Malaysia
Canada
100%
-
100%
100%
Vista Entertainment Solutions (NL) B.V.
Software licensing
Netherlands
100%
-
Vista Entertainment Solutions (Spain), S.L.U.
Inactive
Spain
100%
100%
Vista Entertainment Solutions (UK) Limited
Software licensing
United Kingdom 100%
100%
Vista Entertainment Solutions (USA), Inc.
Software licensing
United States
100%
100%
Vista Group Limited
Inactive
New Zealand
100%
100%
Vista International Entertainment Solutions
South Africa (Pty) Ltd
Software licensing
South Africa
100%
100%
Vista Latin America, S.A. de C.V.(1)
Software licensing
VPF Hub GmbH
Inactive
Mexico
Germany
60%
45%
60%
45%
(1) Prior to its name change in 2019, previously known as Senda Dirección Tecnológica S.A. de C.V.
82
Vista Group International Limited
83
Annual Report 2019
Notes to the financial statementsContinued
8.4 Adoption of new accounting standards
Impact of new standards adopted by Vista Group
A number of new or amended standards became applicable for the current reporting period. The only new
or amended standard that had a significant impact on Vista Group’s accounting policies was the first-time
adoption of NZ IFRS 16.
NZ IFRS 16 Leases
NZ IFRS 16 is effective for annual reports beginning on or after 1 January 2019. Vista Group has adopted
NZ IFRS 16 using the modified retrospective transition approach. Under this approach, the cumulative effect of
initially applying NZ IFRS 16 is recognised as an adjustment to retained earnings at 1 January 2019. Comparative
figures for the year ended 31 December 2018 are not restated but instead continue to reflect the accounting
policies under NZ IAS 17 Leases.
Adjustments recognised on adoption of NZ IFRS 16
On adoption of NZ IFRS 16, Vista Group recognised lease liabilities in relation to leases which had previously been
classified as ‘operating leases’ under the principles of NZ IAS 17. These liabilities were measured at the present
value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 January
2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 January 2019
was 5.4%. Vista Group held no finance leases at 31 December 2018.
A reconciliation of operating lease commitments at 31 December 2018 to the lease liability recognised at 1 January
2019 is shown below:
Operating lease commitments disclosed as at 31 December 2018
Discounted using the lessee’s incremental borrowing rate at the date of initial application
Different treatment of leases not yet commenced to which Vista Group are committed(1)
Different treatment of extensions and incentives
Lease liability recognised as at 1 January 2019
Classified as:
Less than one year
One to five years
More than five years
Lease liability recognised as at 1 January 2019
NZ$m
24.3
(0.6)
(18.3)
1.8
7.2
3.4
3.3
0.5
7.2
(1) Vista Group committed to a 7-year property lease in Los Angeles which was only available for use in 2019, therefore was not included
as a lease liability at 1 January 2019.
The lease assets predominantly comprise property leases which were measured on a retrospective basis as if the
new rules had always been applied.
Practical expedients applied
In applying NZ IFRS 16 for the first time, Vista Group has used the following practical expedients permitted
by the standard:
• use of a single discount rate to leases with reasonably similar characteristics;
• use of hindsight in determining a lease term;
• reliance on previous assessments on whether leases are onerous; and
• exclusion of initial direct costs for the measurement of the lease asset at the date of initial application.
Vista Group has also elected not to reassess whether a contract contains a lease at the date of initial application.
Instead, for contracts entered into before the transition date, Vista Group relied on its assessment made applying
NZ IAS 17 and IFRIC 4 Determining Whether an Arrangement Contains a Lease.
Impact of NZ IFRS 16 on these financial statements
On first time implementation of NZ IFRS 16, Vista Group elected not to restate the comparative year values.
The following summarised primary statements detail the impact of NZ IFRS 16 on the current year, as well as the prior
year, should Vista Group have elected to restate its comparative values.
31 DEC 2019
ADJUSTED FOR
NZ IFRS 16
IMPACT OF
NZ IFRS 16
31 DEC 2019
EXCLUDING
NZ IFRS 16
31 DEC 2018
ADJUSTED FOR
NZ IFRS 16
STATEMENT OF FINANCIAL
POSITION (EXTRACT)
Cash
Other current assets
Total current assets
Property, plant and equipment
Lease assets
Deferred tax asset
Other non-current assets
Total non-current assets
Total assets
Trade and other payables
Lease liabilities
Other current liabilities
Total current liabilities
Lease liabilities
Deferred tax liability
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Contributed equity
Retained earnings
Foreign currency reserve
Share-based payment reserve
Total equity attributable to
owners of the parent
Non-controlling interests
Total equity
NZ$m
NZ$m
NZ$m
19.5
58.2
77.7
7.3
21.8
7.9
128.9
165.9
243.6
13.2
6.1
25.2
44.5
17.4
5.8
12.4
35.6
80.1
-
-
-
-
21.8
4.8
-
26.6
26.6
-
6.1
-
6.1
17.4
4.4
-
21.8
27.9
163.5
(1.3)
61.8
85.8
2.6
2.1
152.3
11.2
163.5
-
(1.1)
-
-
(1.1)
(0.2)
(1.3)
19.5
58.2
77.7
7.3
-
3.1
128.9
139.3
217.0
13.2
-
25.2
38.4
-
1.4
12.4
13.8
52.2
164.8
61.8
86.9
2.6
2.1
153.4
11.4
164.8
IMPACT OF
NZ IFRS 16
NZ$m
-
-
-
-
6.1
1.8
-
7.9
7.9
(0.3)
3.4
-
3.1
3.8
1.5
-
5.3
8.4
31 DEC 2018
PREVIOUSLY
REPORTED
NZ$m
34.4
62.2
96.6
5.4
-
2.8
116.3
124.5
221.1
18.6
-
25.1
43.7
-
1.0
17.0
18.0
61.7
NZ$m
34.4
62.2
96.6
5.4
6.1
4.6
116.3
132.4
229.0
18.3
3.4
25.1
46.8
3.8
2.5
17.0
23.3
70.1
158.9
(0.5)
159.4
59.4
80.5
3.2
2.8
145.9
13.0
158.9
-
(0.4)
-
-
(0.4)
(0.1)
(0.5)
59.4
80.9
3.2
2.8
146.3
13.1
159.4
84
Vista Group International Limited
85
Annual Report 2019
Notes to the financial statementsContinued
STATEMENT OF
COMPREHENSIVE INCOME
(EXTRACT)
Total revenue
Operating expenses
Administration expenses
Other expenses
Total expenses
Operating profit
Finance costs
Finance income
Share of loss from associates
and joint ventures
Capital gains and losses
Profit before tax
Tax expense
Profit for the year
Other comprehensive income
Total comprehensive income
for the year
Earnings per share for profit
attributable to the equity
holders of the parent
Basic earnings per share (cents)
Diluted earnings per share (cents)
31 DEC 2019
ADJUSTED FOR
NZ IFRS 16
NZ$m
144.5
68.2
45.5
9.5
123.2
21.3
(1.7)
0.6
(2.2)
0.4
18.4
(5.6)
12.8
(0.6)
IMPACT OF
NZ IFRS 16
NZ$m
-
-
0.2
-
0.2
(0.2)
(0.6)
-
-
-
(0.8)
(0.1)
(0.9)
-
31 DEC 2019
EXCLUDING
NZ IFRS 16
31 DEC 2018
ADJUSTED FOR
NZ IFRS 16
NZ$m
144.5
68.2
45.3
9.5
123.0
21.5
(1.1)
0.6
(2.2)
0.4
19.2
(5.5)
13.7
(0.6)
NZ$m
130.7
59.9
37.5
7.8
105.2
25.5
(1.3)
0.3
(3.0)
-
21.5
(8.0)
13.5
1.4
12.2
(0.9)
13.1
14.9
IMPACT OF
NZ IFRS 16
NZ$m
-
-
(0.8)
-
(0.8)
0.8
(0.3)
-
-
-
0.5
-
0.5
-
0.5
31 DEC 2018
PREVIOUSLY
REPORTED
NZ$m
130.7
59.9
38.3
7.8
106.0
24.7
(1.0)
0.3
(3.0)
-
21.0
(8.0)
13.0
1.4
14.4
$0.07
$0.06
-
$0.01
$0.07
$0.07
$0.07
$0.07
-
-
$0.07
$0.07
Other than the reclassification of the principal portion of operating lease payments to financing activities,
NZ IFRS 16 had no other significant impact on the cash flow statement.
A reconciliation of EBITDA to profit before tax for the period is as follows:
31 DEC 2019
ADJUSTED FOR
NZ IFRS 16
IMPACT OF
NZ IFRS 16
31 DEC 2019
EXCLUDING
NZ IFRS 16
31 DEC 2018
ADJUSTED FOR
NZ IFRS 16
IMPACT OF
NZ IFRS 16
31 DEC 2018
PREVIOUSLY
REPORTED
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
EBITDA(1)
Depreciation and amortisation
EBIT(2)
Finance income
Finance costs
Acquisition expenses
Share of loss from associates
and joint ventures
Capital gains and losses
Profit before tax
31.1
(9.7)
21.4
0.6
(1.7)
(0.1)
(2.2)
0.4
18.4
3.7
(3.9)
(0.2)
-
(0.6)
-
-
-
(0.8)
27.4
(5.8)
21.6
0.6
(1.1)
(0.1)
(2.2)
0.4
19.2
32.8
(7.0)
25.8
0.3
(1.3)
(0.3)
(3.0)
-
21.5
3.6
(2.8)
0.8
-
(0.3)
-
-
-
0.5
29.2
(4.2)
25.0
0.3
(1.0)
(0.3)
(3.0)
-
21.0
A reconciliation of segmental EBITDA(1) for the period is as follows:
31 DEC 2019
ADJUSTED FOR
NZ IFRS 16
IMPACT OF
NZ IFRS 16
31 DEC 2019
EXCLUDING
NZ IFRS 16
31 DEC 2018
ADJUSTED FOR
NZ IFRS 16
IMPACT OF
NZ IFRS 16
31 DEC 2018
PREVIOUSLY
REPORTED
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
Cinema
Movio
Additional Group Companies
Early Stage Investments
Corporate
Vista Group EBITDA(1)
30.9
6.8
3.3
(1.3)
(8.6)
31.1
2.7
0.2
0.7
0.1
-
3.7
28.2
6.6
2.6
(1.4)
(8.6)
27.4
28.3
6.4
2.1
0.4
(4.4)
32.8
2.7
0.2
0.7
-
-
3.6
25.6
6.2
1.4
0.4
(4.4)
29.2
(1) EBITDA is a non-GAAP measure and is defined as earnings before net finance costs, income tax, depreciation and amortisation, acquisition
expenses, capital gains/losses, impairment losses and equity accounted results from associates and joint venture companies.
(2) EBIT is a non-GAAP measure and is defined as earnings before net finance costs, income tax, acquisition expenses, capital gains/losses,
impairment losses and equity accounted results from associate and joint venture companies.
A reconciliation of non-current assets by domicile of entity is as follows:
New Zealand
United States
United Kingdom
Mexico
Other
31 DEC 2019
ADJUSTED FOR
NZ IFRS 16
IMPACT OF
NZ IFRS 16
31 DEC 2019
EXCLUDING
NZ IFRS 16
31 DEC 2018
ADJUSTED FOR
NZ IFRS 16
IMPACT OF
NZ IFRS 16
31 DEC 2018
PREVIOUSLY
REPORTED
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
55.7
25.7
12.5
11.7
20.8
2.0
15.1
3.2
0.2
1.3
53.7
10.6
9.3
11.5
19.5
42.5
10.3
10.8
11.5
20.8
0.9
1.8
2.0
0.1
1.3
41.6
8.5
8.8
11.4
19.5
Impact of standards issued but not yet effective
The IASB have issued IFRS 17 Insurance Contracts, as well as various amendments to existing international
accounting standards. IFRS 17 is mandatory for reporting periods on, or after 1 January 2021. Vista Group does not
intend to adopt this standard before its mandatory date.
Vista Group’s financial reporting will be presented in accordance with these new and amended standards when they
become mandatory, however none are expected to have a material impact on Vista Group’s consolidated results.
86
Vista Group International Limited
87
Annual Report 2019
Notes to the financial statementsContinued
9. Financial risk management
Vista Group is exposed to three main types of risks in relation to financial instruments, being market (foreign
currency risk and interest rate risk), credit and liquidity.
Vista Group’s risk management framework is set by the Board and implemented by management. The framework
focus includes actively monitoring and securing Vista Group’s short to medium-term cash flows by minimising
the exposure to financial markets. The most significant financial risks to which Vista Group is exposed are
described below.
9.1 Capital management
The following table summarises the capital of Vista Group:
Borrowings – related party
Borrowings – external
Equity
Total capital
2019
NZ$m
0.9
10.9
163.5
175.3
2018
NZ$m
0.9
11.1
159.4
171.4
Vista Group’s policy is to use a mixture of capital raised on the NZX/ASX exchanges and borrowing facilities to meet
anticipated funding requirements. These borrowings together with cash generated from operations, are loaned
internally or contributed as equity to certain subsidiaries.
9.2 Foreign currency risk
Vista Group operates internationally and is exposed to foreign exchange risk in US Dollars (USD), Pounds Sterling
(GBP), Euros (EUR), Chinese Yuan Renminbi (RMB) and Australian Dollars (AUD). Foreign exchange risk arises
from future commercial transactions and recognised assets and liabilities denominated in a currency that is not
the functional currency of the relevant group entity.
To mitigate exposure to foreign currency risk, foreign currency cash flows are monitored in accordance with the
Vista Group’s risk management policies. Vista Group’s risk management policies include treasury management and
foreign exchange policies, the implementation of which is set and reviewed regularly by the Board. Vista Group’s
risk management procedures distinguish short-term foreign currency cash flows (due within 6 months) from
longer-term cash flows (due after 6 months). Where the amounts to be paid and received in a specific currency
are expected to largely offset one another, no further hedging activity is undertaken. The foreign exchange policy
allows for the use of hedging activity however no hedging arrangements have been used in either the current
or prior year.
Foreign currency denominated financial assets and liabilities which expose Vista Group to currency risk are disclosed
below. The amounts shown are those reported to key management translated into NZD at the closing rate.
USD
NZ$m
GBP
NZ$m
EUR
NZ$m
RMB
NZ$m
AUD
NZ$m
AT 31 DECEMBER 2019
Financial assets
Cash
Trade receivables
Sundry receivables
Financial liabilities
Trade payables
Sundry payables
Borrowings – external
Borrowings – related party
Contingent consideration
Net exposure
AT 31 DECEMBER 2018
Financial assets
Cash
Trade receivables
Sundry receivables
Financial liabilities
Trade payables
Sundry payables
Borrowings – external
Borrowings – related party
Net exposure
11.5
25.6
0.5
(0.2)
(2.0)
(5.9)
-
(0.3)
29.2
19.6
27.8
0.5
(1.4)
(1.0)
(6.0)
-
39.5
2.8
3.0
0.6
-
(1.2)
-
-
-
5.2
9.9
3.8
-
-
(0.5)
-
-
13.2
2.0
5.0
0.3
(0.1)
(0.5)
(5.0)
(0.9)
-
0.8
1.6
5.2
0.4
(0.1)
-
(5.1)
(0.9)
1.1
-
0.8
0.4
-
-
-
-
-
1.2
-
5.9
-
(2.4)
-
-
-
0.8
1.8
-
-
-
-
-
(0.1)
2.5
1.9
1.5
-
-
-
-
-
3.5
3.4
The following table illustrates the sensitivity of profit or loss and equity in regard to Vista Group’s financial assets
and liabilities affected by the USD/NZD exchange rate, the GBP/NZD exchange rate, the EUR/NZD exchange rate,
the RMB/NZD exchange rate and the AUD/NZD exchange rate ‘all other things being equal’. It assumes a +/- 10%
change of the NZD to currency exchange rate for the year ended 31 December 2019 (2018: 10%). The sensitivity
analysis is based on Vista Group’s foreign currency financial instruments held at each reporting date.
31 DECEMBER 2019
10% strengthening in NZD
10% weakening in NZD
31 DECEMBER 2018
10% strengthening in NZD
10% weakening in NZD
PROFIT/EQUITY
USD
NZ$m
GBP
NZ$m
EUR
NZ$m
RMB
NZ$m
AUD
NZ$m
(2.6)
3.2
(3.6)
4.4
(0.5)
0.6
(1.2)
1.5
(0.1)
0.1
(0.1)
0.1
(0.1)
0.1
(0.3)
0.4
(0.2)
0.3
(0.3)
0.4
Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions.
Nonetheless, the analysis above is considered to be representative of Vista Group’s exposure to market risk.
88
Vista Group International Limited
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Annual Report 2019
Notes to the financial statementsContinued
9.3 Interest rate risk
Vista Group’s interest rate risk primarily arises from long-term borrowing, lease liabilities, cash and advances
to associates. Borrowings and deposits at variable rates expose Vista Group to cash flow interest rate risk.
Borrowings and deposits at fixed rates expose Vista Group to fair value interest rate risk.
The following tables set out the interest rate repricing profile and current interest rate of the interest-bearing
financial assets and liabilities:
EFFECTIVE
INTEREST RATE
FLOATING
FIXED UP TO
3 MONTHS
FIXED UP TO
6 MONTHS
FIXED UP TO
5 YEARS
NZ$m
NZ$m
NZ$m
NZ$m
TOTAL
NZ$m
AT 31 DECEMBER 2019
Financial assets
Cash
Financial liabilities
Borrowings – external
Borrowings – related party
Lease liabilities
Contingent consideration
Net exposure
AT 31 DECEMBER 2018
Financial assets
Related party loan – Numero
Cash
Financial liabilities
Borrowings – external
Borrowings – related party
Net exposure
-
19.5
4.1%
5.0%
3.9%
-
6.0%
-
4.4%
5.0%
-
-
-
-
19.5
-
34.4
-
-
34.4
-
-
-
(0.1)
-
(0.1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19.5
(10.9)
(0.9)
(23.4)
(0.4)
(35.6)
8.4
-
(11.1)
(0.9)
(3.6)
(10.9)
(0.9)
(23.5)
(0.4)
(16.2)
8.4
34.4
(11.1)
(0.9)
30.8
Profit or loss is sensitive to higher/lower interest income/expense from cash as a result of changes in interest rates.
AT 31 DECEMBER 2019
Cash
Borrowings – external
Borrowings – related party
Lease liabilities
Contingent consideration
Net exposure
EFFECTIVE
INTEREST RATE
+1%
EFFECTIVE
INTEREST RATE
-1%
NZ$m
NZ$m
0.2
(0.1)
-
(0.2)
-
(0.1)
(0.2)
0.1
-
0.2
-
0.1
9.4 Credit risk
Credit risk is the risk that a counterparty fails to discharge an obligation to Vista Group. Vista Group is exposed
to this risk for various financial instruments, for example trade and sundry receivables and deposits with financial
institutions and related parties. The maximum exposure to credit risk is limited to the carrying amount of financial
assets recognised at 31 December, as summarised in section 10.2.
Vista Group continuously monitors defaults of customers and other counterparties, identified either individually
or by Vista Group and incorporates this information into its credit risk controls. Vista Group’s policy is to deal only
with credit-worthy counterparties.
At 31 December, Vista Group has certain trade receivables that have not been settled by the contractual due
date but are not considered to be impaired because of the nature of contracts and/or the longevity of ongoing
customer relationships. The amounts at 31 December, analysed by the length of time past due, are:
Not more than 6 months
Between 6 months and 9 months
Over 9 months
Total credit risk
2019
NZ$m
3.8
2.6
1.5
7.9
2018
NZ$m
3.8
2.1
8.0
13.9
In respect of trade receivables, Vista Group is not exposed to any significant credit risk exposure to any single
counterparty or any group of counterparties having similar characteristics. Trade receivables consist of many
customers in various industries and geographical areas. Based on historical information about customer default
rates, management considers the credit quality of trade receivables that are not past due or impaired to be good.
Judgement has been applied to the recoverability of all trade receivables, with management confirming that the
net balances receivable (excluding the expected credit loss provision) are deemed recoverable and not impaired.
Vista Group has financial assets classified and measured at amortised cost that are subject to the expected credit
loss model requirements of NZ IFRS 9 Financial Instruments (see section 5.1 for the expected credit loss recognised
on trade receivable balances). The credit risk for cash is considered negligible, since the counterparties are
reputable banks with high quality external credit ratings.
At 31 December 2019, due to Numero now being a controlled subsidiary of Vista Group, advances from Vista Group
are no longer subject to credit risk due to the balances eliminating on consolidation.
9.5 Liquidity risk
Liquidity risk is the risk that Vista Group might be unable to meet its obligations. Vista Group’s objective is to
maintain a balance between continuity of funding and flexibility through monitoring of cash and the use of bank
overdrafts and bank loans (see section 4). Vista Group’s policy is that not more than 25% of borrowings should
mature in the next 12-month period. Of the $0.9m related party borrowings balance at 31 December 2019, $0.7m
will mature in greater than one year. Vista Group assessed the concentration of risk with respect to refinancing its
debt as being low. Access to sources of funding is sufficiently available and debt maturing within 12 months can
be rolled over with existing lenders.
Vista Group has significant cash balances held as cash on hand of $19.5m. Vista Group’s dividend policy is to
distribute between 30% to 50% of net profit after tax attributable to owners of the parent, subject to immediate
and future growth opportunities and identified capital expenditure requirements. At balance date, Vista Group has
an NZD $2m overdraft facility with ASB, which remains undrawn. Subsequent to balance date, Vista Group agreed
to extended revolving credit facilities with ASB, primarily to fund the SaaS transformation project and to facilitate
the step-acquisition of Vista China (see section 4.2).
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Notes to the financial statementsContinued
The table below summarises the maturity profile of Vista Group’s non-derivative financial liabilities based
on contractual undiscounted payments.
ON DEMAND
LESS THAN
3 MONTHS
3 TO 12
MONTHS
NZ$m
NZ$m
NZ$m
1 TO 5
YEARS
NZ$m
> 5 YEARS
NZ$m
TOTAL
NZ$m
AT 31 DECEMBER 2019
Trade payables
Sundry payables
Borrowings – external
Borrowings – related party
Interest on borrowings
Lease liabilities
Contingent consideration
Total liquidity risk
AT 31 DECEMBER 2018
Trade payables
Sundry payables
Borrowings – external
Borrowings – related party
Interest on borrowings
Total liquidity risk
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.3
5.6
-
-
0.1
1.5
-
7.5
5.8
4.0
-
-
0.1
9.9
-
-
-
0.2
0.4
4.6
0.4
5.6
-
-
-
-
0.4
0.4
-
-
10.9
0.7
0.8
13.5
-
25.9
-
-
11.1
0.9
0.7
12.7
-
-
-
-
-
3.9
-
3.9
-
-
-
-
-
-
0.3
5.6
10.9
0.9
1.3
23.5
0.4
42.9
5.8
4.0
11.1
0.9
1.2
23.0
10. Other information
10.1 Related parties
Vista Group has various types of transactions with related parties. Refer to section 5.3 for details of transactions
with associate and joint venture companies. Refer to section 4.2 for details of related party borrowings. Other
related party transactions include transactions with key management personnel which are detailed below.
Key management personnel transactions
Key management personnel include Vista Group’s Board (executive and non-executive) and senior management.
Senior management is defined as personnel who report directly to the Vista Group’s Chief Executive. Key management
personnel include 18 individuals (6 Directors and 12 senior management) (2018: 16 individuals, being 6 Directors
and 10 senior management).
The compensation paid to key management personnel includes:
Salaries including bonuses
Share-based payments
Director fees
Total key management personnel transactions
2019
NZ$m
5.6
1.2
0.3
7.1
2018
NZ$m
3.8
0.7
0.3
4.8
Dividends paid to key management personnel on their Vista Group shareholdings amounted to $0.6m (2018: $0.5m).
10.2 Financial instruments
Financial instruments
Financial instruments recognised in the statement of financial position include cash, receivables and payables,
lease assets and liabilities, contingent consideration and borrowings. Vista Group’s policy is that no speculative
trading in financial instruments may be undertaken.
Fair value of financial assets and liabilities
Vista Group carries out a fair value assessment of its financial assets and liabilities at 31 December 2019 in
accordance with NZ IFRS 9. Accordingly, financial instruments are classified as either measured at amortised cost,
fair value through other comprehensive income or fair value through profit or loss.
Vista Group’s financial instruments that are measured subsequent to initial recognition at fair value are grouped
into levels based on the degree to which the fair value is observable:
Level 1
Fair value measurements derived from quoted prices in active markets for identical assets.
Level 2
Level 3
Fair value measurements derived from inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly or indirectly.
Fair value measurements derived from valuation techniques that include inputs for the asset or liability
which are not based on observable market data.
There have been no transfers between levels or changes in the valuation methods used to determine the fair value
of the Group’s financial instruments during the year. As at 31 December 2019, the only financial instrument carried
at fair value using level 3 measurements is contingent consideration. Level 3 measurements were also applied in the
initial recognition of associates/joint ventures and net assets acquired as part of a business combination.
Vista Group’s financial assets and liabilities by category are summarised as follows:
Cash
Cash comprises cash at bank and on hand and its carrying value equates to fair value.
Trade, related party and other receivables
These assets are short-term in nature and are reviewed for impairment; the carrying value approximates fair value.
Trade, related party and other payables
These liabilities are mainly short-term in nature with the carrying value approximating fair value.
Borrowings
Borrowings have fixed and floating interest rates. Fair value is estimated using the DCF model based on a current
market interest rate for similar products; the carrying value approximates fair value.
Lease assets and liabilities
Assets and liabilities arising from a lease are initially measured on a present value basis using the lessee’s
incremental borrowing rate.
Contingent consideration
These liabilities typically arise from a business combination or a reacquired right. Fair value of elements greater
than 12 months are determined on a present value basis using the Vista Group’s incremental borrowing rate.
Expected credit losses
For trade receivables, Vista Group applies the simplified approach permitted by NZ IFRS 9, which requires
expected lifetime losses to be recognised from initial recognition of the receivables.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan
with Vista Group, and a failure to make contractual payments for a period of greater than 180 days past due.
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Notes to the financial statementsContinued
To measure expected credit losses, trade receivables have been grouped and reviewed based on the number of days
past due. The expected credit loss has been calculated by considering the impact of the following characteristics:
• The baseline characteristic considers the age of each invoice and applies an increasing expected credit loss
estimate as the trade receivable ages.
• The aging and write off characteristics consider the history of write off related to the specific customer and the
relative size of aged debt to current debt. If the trade receivable aged over 180 days past due makes up more
than 45% of the total trade receivable for a specific customer, further provision for expected credit loss is added.
• The country, customer and market characteristics consider the relative risk related to the country and/or region
within which the customer resides and assesses the financial strength of the customer and the market position
that Vista Group has achieved within that market.
Judgement has been applied to remove sundry receivables from the expected credit loss calculation as the
counterparties are considered to have a high level of certainty in terms of recoverability.
Financial instruments by category
FINANCIAL ASSETS
AT AMORTISED
COST
FINANCIAL
INSTRUMENTS
AT FAIR VALUE
THROUGH PROFIT
OR LOSS
FINANCIAL
LIABILITIES AT
AMORTISED COST
TOTAL CARRYING
VALUE
NZ$m
NZ$m
NZ$m
NZ$m
AT 31 DECEMBER 2019
Cash
Trade receivables
Sundry receivables
Total financial assets
Trade payables
Sundry payables
Borrowings – external
Borrowings – related party
Lease liabilities
Contingent consideration
Total financial liabilities
AT 31 DECEMBER 2018
Cash
Trade receivables
Sundry receivables
Total financial assets
Trade payables
Sundry payables
Borrowings – external
Borrowings – related party
Total financial liabilities
19.5
35.4
2.9
57.8
-
-
-
-
-
-
-
34.4
44.3
8.8
87.5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.4
0.4
-
-
-
-
-
-
-
-
-
-
-
-
-
0.3
5.6
10.9
0.9
23.5
-
41.2
-
-
-
-
5.8
4.0
11.1
0.9
21.8
19.5
35.4
2.9
57.8
0.3
5.6
10.9
0.9
23.5
0.4
41.6
34.4
44.3
8.8
87.5
5.8
4.0
11.1
0.9
21.8
10.3 Other disclosures
Contingent liabilities
There were no contingent liabilities for Vista Group at 31 December 2019 (2018: $nil).
Capital commitments
There were no capital commitments for Vista Group at 31 December 2019 (2018: $nil).
Events after balance date
On 31 January 2020, Vista Group entered into a refinancing arrangement with ASB to assist in funding the SaaS
transformation project, the 2020 Vista China step acquisition and any future acquisition related opportunities.
See section 4.2 for further details.
On 30 January 2020, the spread of novel coronavirus (COVID-19) was declared a public health emergency by
the World Health Organisation. As this declaration was made after the reporting period, Vista Group does not
believe it constitutes an ‘Adjustable Event’, as defined in NZ IAS 10 Events after the Reporting Period. Vista Group
will continue to monitor the impact of COVID-19 on both Vista Group and the proposed step acquisition of Vista
China, but at the date of this report it is too early to determine the full impact this virus may have on Vista Group.
Should this public health emergency continue for a prolonged period of time this has the potential to have
a material adverse financial impact on Vista China.
On 27 February 2020, the Board approved a fully imputed final dividend of 2.10 cents per share. The dividend
record date is 13 March 2020 with a payment date of 27 March 2020.
There have been no other events subsequent to 31 December 2019 which materially impact on the results reported.
These financial statements are those that
were issued and approved on 27 February
2020. Subsequent to their issue, on 17
March 2020 Vista Group announced it has
cancelled payment of the final dividend.
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Notes to the financial statementsContinued
Independent auditor’s report
Independent auditor’s report
To the shareholders of Vista Group International Limited
Our audit approach
Overview
the statement of financial position as at 31 December 2019;
We have audited the financial statements which comprise:
•
•
•
•
•
the statement of comprehensive income for the year then ended;
the statement of changes in equity for the year then ended;
the statement of cashflows for the year then ended; and
the notes to the financial statements, which include significant accounting policies.
Our opinion
In our opinion, the accompanying financial statements of Vista Group International Limited (the
Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial
position of the Group as at 31 December 2019, its financial performance and its cash flows for the year
then ended in accordance with New Zealand Equivalents to International Financial Reporting
Standards (NZ IFRS) and International Financial Reporting Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand)
(ISAs (NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised)
Code of Ethics for Assurance Practitioners (PES 1) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Our firm carries out other services for the Group in the areas of related assurance services (R&D
growth grant schedule review), advisory services in relation to long term employee incentive schemes
and preparation of an immaterial subsidiary’s financial statements. The provision of these other
services has not impaired our independence as auditor of the Group.
An audit is designed to obtain reasonable assurance whether the financial
statements are free from material misstatement.
Overall Group materiality: $0.95 million, which represents approximately
5% of profit before tax.
We chose profit before tax as the benchmark because, in our view, it is the
benchmark against which the performance of the Group is most commonly
measured by users and is a generally accepted benchmark.
We have determined that there are three key audit matters:
• Carrying value of the investment in Vista Entertainment Solutions
Shanghai Limited ("Vista China")
Impairment testing of goodwill
•
• Classification of Research and development costs between
capitalisation and expenditure
Materiality
The scope of our audit was influenced by our application of materiality.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the financial statements as a whole as set out above. These,
together with qualitative considerations, helped us to determine the scope of our audit, the nature,
timing and extent of our audit procedures and to evaluate the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
Audit scope
We designed our audit by assessing the risks of material misstatement in the financial statements and
our application of materiality. As in all of our audits, we also addressed the risk of management
override of internal controls including among other matters, consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the financial statements as a whole, taking into account the structure of the Group, the
accounting processes and controls, and the industry in which the Group operates.
We performed full scope audits of the financially significant subsidiaries of the Group. In addition, we
also performed specific audit procedures over certain balances and transactions of the holding
company, other subsidiaries and associates.
The full scope audits and specific audit procedures were undertaken by PwC New Zealand and were
performed at a materiality level calculated with reference to a proportion of the Group materiality
appropriate to the relative financial scale of the subsidiary concerned.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current year. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
T: +64 9 355 8000, F: +64 9 355 8001, pwc.co.nz
PwC
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Key audit matter
How our audit addressed the key audit matter
Key audit matter
How our audit addressed the key audit matter
Our audit procedures in relation to the carrying value
of the investment in Vista China included the
following:
• We held discussions with management, including
those outside of the Vista finance function, to gain
an understanding of the strategy and performance
to date of Vista China;
• We reviewed Board meeting minutes to identify
any events or conditions that indicate potential
impairment of the investment;
• We considered the report prepared by
management’s independent expert on their
valuation assessment undertaken as at
31 December 2019. We also compared this current
assessment to the valuation undertaken by the
same independent expert in 2016, 2017 and 2018;
and
• We engaged our own expert to consider the
valuation methodology utilised by management’s
independent expert and the key assumptions made,
in particular the revenue growth rate, discount
rate, transaction costs and control discount. Our
expert’s assessment included comparing the
valuation determined by management’s
independent expert with the valuation indicated by
an external share broker.
We have no matters to report as a result of our
procedures.
Carrying value of the investment in Vista
Entertainment Solutions Shanghai
Limited ("Vista China")
As disclosed in Note 5.3, the carrying
value of the Group’s investment in Vista
China amounts to $30.1 million, including
goodwill of $20.2 million. The Group uses
the equity method of accounting for its
investment.
Management undertook an assessment of
the recoverable value of goodwill and of its
investment in Vista China to assess
whether there had been any impairment.
This assessment involved significant
management judgement in determining
key assumptions and estimates and
included consideration of:
• The recent trading performance of
Vista China and the 2020 budget;
• The forecast revenue growth rates and
cash flows for the following 4 years of
the overall 5 year forecast period;
• An independent business valuation
conducted by an independent expert
which complies with the provisions of
Advisory Engagement Standard No 2
Independent Business Valuation
Engagements, issued by the Chartered
Accountants Australia and New
Zealand; and
• Assumptions relating to a control
discount and transaction costs.
Our audit focused on this area due to the
value of the Group’s investment in Vista
China, and the level of judgement involved
in assessing the recoverable amount of the
investment.
The assessment concluded that there was
no impairment of the investment.
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Vista Group International Limited
Impairment testing of goodwill
Note 5.4 of the financial statements
provides details of the goodwill balance of
$69.9 million as at 31 December 2019.
Management perform an annual
assessment to determine whether there is
any impairment of goodwill, as disclosed
in Note 5.5.
A value in use (VIU) methodology was
utilised to determine the recoverable
amount of each cash generating unit
(CGU) using discounted cash flows. This
VIU was then compared to the carrying
amount of the associated net assets,
including goodwill, of each CGU as at
31 December 2019. The estimated cash
flows used in the VIU model were based
on the 2020 Board approved budget and
forecast cash flows for the following four
years.
The valuations involve the application of
significant judgement in forecasting future
business performance and determining
certain key assumptions and estimates, in
particular:
• Revenue growth rates for the 5 year
forecast period;
• The long term growth rates for cash
flows beyond the 5 year forecast
period; and
• The appropriate discount rate for each
CGU.
Changes in these assumptions might lead
to changes in the carrying value of
goodwill. The risk is greater for the
goodwill attributed to the MACCS
International BV (“MACCS”) and Numero
Limited (“Numero”) CGUs where the
headroom compared to carrying amount is
lower than for the other CGUs.
Our audit focused on this area due to the
value of the goodwill balance, and the level
of judgement involved in assessing the
recoverable amount of each CGU.
Our audit procedures in relation to impairment testing
of goodwill included the following:
• We gained an understanding of the business
processes and controls applied by management in
assessing whether there was any impairment of
goodwill;
• We held discussions with management, including
those outside of the Vista finance function, about
the performance of each CGU and whether there
were any events or circumstances that indicated
the carrying amount of the CGU, including
goodwill, was impaired;
• We tested the calculation of the VIU model,
including the inputs and the mathematical
accuracy and compared the resulting balances to
the relevant net assets of each CGU; and
• We assessed the key estimates and assumptions
made by management in the CGUs’ VIU models, by
performing the following procedures:
o Obtained an understanding of how
management prepared its budget and forecasts
and the associated review and approval
processes;
o Assessed management’s ability to accurately
forecast by comparing historical forecasts to
actual results;
o Compared growth rates used over the 5 year
forecast period to historical growth rates and
board approved budgets as well as challenging
whether the historical growth rates are
sustainable as the businesses mature;
o Obtained and evaluated management’s
sensitivity analysis to ascertain the impact of
reasonably possible changes in key
assumptions. We also performed our own
sensitivity analysis on the impact of changing
key assumptions to consider whether any
reasonably possible changes could result in
impairment of goodwill; and
o Engaged our own experts to evaluate the
discount rates and terminal growth rates used
in the CGUs’ VIU models by comparing with
those of similar market participants.
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Annual Report 2019
Key audit matter
Management concluded that goodwill was
not impaired as at 31 December 2019.
However, the valuation of the MACCS and
Numero CGUs were both sensitive to
reasonably possible changes in revenue
growth assumptions and the MACCS CGU
was also sensitive to reasonably possible
changes in the discount rate and terminal
growth rate, and such changes could result
in an impairment, as disclosed in Note 5.5
of the financial statements
Classification of research and
development costs between capitalisation
and expenditure
As disclosed in Note 5.6 the Group has
capitalised $11.7 million of costs incurred
in the development of its software in the
year (FY18 $7.9 million).
As disclosed in Note 2.3 the Group has
recognised $25.4 million of research
expenditure in profit or loss in FY19
(FY18 $22.4 million).
The Group’s research and development
personnel are involved in the research,
development and maintenance of the
Group’s software products.
Our audit focused on this area due to the
magnitude of the research and
development spend and the judgement
involved in assessing whether the costs
meet the criteria detailed in the
accounting standard (NZ IAS 38
Intangible Assets) that require
capitalisation, or whether they should be
expensed.
Management determined the most
significant of these judgements to be the:
• Separately identifiable criteria; and
• Economic feasibility criteria.
How our audit addressed the key audit matter
• For the MACCS and Numero CGUs we also
performed the following procedures:
o Considered the performance of those CGUs and
gained an understanding of strategic and
operational initiatives being undertaken
through discussions with management,
including those outside of the Vista finance
function; and
o Assessed the extent to which revenue in the
2020 budget is contracted and agreed a sample
of forecast amounts to signed customer
contracts.
We have no matters to report as a result of our
procedures.
In responding to the significant judgements involved
in determining whether research and development
spend has been recognised in accordance with the
accounting standard, our audit procedures included:
• Updating our understanding of management’s
process for assessing how much of the research and
development spend has met all of the NZ IAS 38
recognition criteria;
• Obtaining the detailed analysis of the Group’s
research and development spend for the year
allocated by project and tested the reconciliation of
amounts reported to accounting and payroll
records;
• For a sample of capitalised projects and for a
sample of expensed projects:
o We held discussions with management,
including research and development personnel,
to discuss the nature of work being completed
and their assessment of the areas of judgement
for each, in particular whether and how the
software was separately identifiable and the
economic feasibility of each project selected;
o Assessed the nature of the projects against the
requirements of NZ IAS 38 to determine if they
were capital in nature; and
o For capitalised costs we reviewed management’s
papers which detail how the NZ IAS 38
recognition criteria are met.
We have no matters to report as a result of our
procedures.
Information other than the financial statements and auditor’s report
The Directors are responsible for the annual report. Our opinion on the financial statements does not
cover the other information included in the annual report and we do not and will not express any form
of assurance conclusion on the other information. At the time of our audit, there was no other
information available to us.
In connection with our audit of the financial statements, if other information is included in the annual
report, our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the
other information that we obtained prior to the date of this auditor’s report, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
Responsibilities of the Directors for the financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of
the financial statements in accordance with NZ IFRS and IFRS, and for such internal control as the
Directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole,
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (NZ) and ISAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the
External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-
report-1/
This description forms part of our auditor’s report.
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Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been
undertaken so that we might state those matters which we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our
audit work, for this report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Leopino Foliaki.
For and on behalf of:
Chartered Accountants
27 February 2020
Auckland
Corporate information
Directors
Registered
office
Kirk Senior
Murray Holdaway
Brian Cadzow
Susan Peterson
James Ogden
Cris Nicolli
Level 3
60 Khyber Pass Road
Grafton
Auckland, 1023
New Zealand
Phone +64 9 984 4570
Nature of business
Company number
ARBN
Provision of management solutions for the film industry
1353402
600 417 203
Auditor
PricewaterhouseCoopers
Solicitors
Level 22
188 Quay St
Auckland, 1010
New Zealand
Chapman Tripp
35 Albert Street
Auckland, 1010
DLA Piper
Hudson Gavin Martin
50-64 Customhouse Quay
Level 8
Wellington, 6140
2 Commerce Street
Auckland, 1010
Share registry
New Zealand
Australia
Link Market Services Ltd
Link Market Services Ltd
Level 11, Deloitte Centre
Level 12, 680 George St
80 Queen Street
Sydney
Auckland, 1010
NSW, 2000
Bankers
New Zealand
UK
ASB Bank Limited
Bank of New Zealand
HSBC Bank PLC
ASB North Wharf
Deloitte Centre
2nd Floor, 62-76 Park St
12 Jellicoe Street
80 Queen Street
London, SE1 9DZ
Auckland, 1010
Auckland, 1010
PwC
102
Vista Group International Limited
103
Annual Report 2019
Annual meeting
The Company’s Annual Meeting of shareholders
will be held in Auckland on 28 May 2020 at 3:00pm.
A notice of Annual Meeting and Proxy Form will be
circulated to shareholders in April 2020.
Donations
The Company made donations of $114,246 (2018 –
$121,251) during the 2019 financial year. This included
a donation of $100,000 to the Vista Foundation.
Exercise of NZX disciplinary powers
NZX did not exercise any of its powers under NZX
Listing Rule 5.4.2 in relation to the Company during
the 2019 financial year.
Credit rating
The Company has no credit rating.
Vista Group office locations
V Vista Cinema
M Movio
CI Cinema Intelligence
N Numero
M Maccs
F Flicks
P Powster
New Zealand
60 Khyber Pass Road, Newton, Auckland, 1023
30 St Benedicts Street, Eden Terrace, Auckland, 1010
V F
M
335 N. Maple Drive, Suite 150, Beverly Hills, California 90210
V M M CI N
P
V M
P
V
V
M
CI
CI
CI
N
USA
UK
126 North La Brea Avenue, Los Angeles, California 90036
The Aircraft Factory, 100 Cambridge Grove, Hammersmith, London W6 0LE
Unit G, Bagel Factory, 24 White Post Lane, London E9 5SZ
South Africa
Suite 801, The Point, 76 Regent Road, Sea Point, Cape Town 8005
Mexico
Camino a Santa Teresa 187-C PISO 4, OFICINA 9, Colonia Parques del Pedregal
C.P. 14010 Tlalpan
Netherlands
Verlengde Hereweg 163, 9721 AN Groningen
WeWork, Weteringschans 165 C, 1017 XD Amsterdam
Romania
Stirbei Voda 104-106, Bucharest, Romania
Bv. Cetatil 7, Timisoara, Romania
Australia
Studio, Level 2, 21 Shepherd Street, Chippendale NSW 2008, Sydney
104
Vista Group International Limited
Vista Group International Limited
Level 3, 60 Khyber Pass Road
Newton, Auckland 1023
Phone: +64 9 984 4570
Email: info@vistagroup.co.nz
Website: www.vistagroup.co