Vista Group International Limited
Annual Report 2021

Plain-text annual report

Annual Report Vista Group International Limited 2021 Contents 02 07 08 10 26 34 42 80 Letter from the Chair and CEO Key strategies for 2022 Group overview Customer focused innovation Our climate, people and community Group trading overview Corporate governance Financial statements 129 Independent auditor’s report 134 Directory Our purpose Enhancing the moviegoer experience This report is dated 28 February 2022 and signed on behalf of Vista Group International Limited by Susan Peterson and Murray Holdaway. Susan Peterson Chair Murray Holdaway Director Dear Shareholder, Cinemas are open, blockbuster movies are being released and moviegoers are back enjoying the cinema experience. A year which began with some uncertainty has concluded with box office records tumbling around the world. In parallel, we are seeing a step change in the way that business is conducted globally as digitisation accelerates across all industries and more businesses adopt cloud technologies. Positioned at the intersection of technology and the moviegoing experience, Vista Group is ideally placed to support our customers as they tackle these challenges and realise the benefits of doing business using our platform. Against this backdrop, our business has performed strongly and we are delighted to have delivered a resilient set of financial results. We have delivered on each of the metrics we targeted at the half year. We delivered revenue at the top end of the range representing a 12% increase on 2020. We have also delivered 24% growth in recurring revenue and met our commitment to be cashflow positive in the second half of the year. Our careful financial discipline has also meant that we have been able to advance our Vista Cloud transition and look after our people in an increasingly competitive global labour market for technology talent. 2 Letter from the Chair and CEO • 3 Our team We have prioritised doing what we can to best support our people and create an inclusive, fair and flexible work environment that enables all of our people to realise their potential. This past year, we have actively explored different ‘ways of working’ and focussed heavily on what we can do to support the wellbeing of our people — in particular as they have largely been working from home. We implemented a trial ‘R&R Fridays’ where we are encouraging our global workforce to use their Friday afternoons to step away from in all of its forms, both visible and not. It includes differences that relate to gender, age, culture, ethnicity, race, disability, family status, language, religion, sexual orientation, gender identify, as well as differences in background, skills, work styles, perspective and experiences. Vista Group is a proud member of the New Zealand Champions of Change group, and we have signed up to 40:40:20 as a target to focus our efforts in increasing the representation of women across the Group. Our customers work and refresh. Early indications are that Our customers remain at the centre of R&R Fridays has been a terrific success with everything that we do. Though cinema circuits a fully engaged team and with productivity globally continue to work within restricted remaining unaffected. or controlled conditions, the increased supply of blockbuster movies has meant that Other initiatives include implementing a more cinemas have been open and are now employee share scheme for all non-executive enjoying improved financial performance. We look forward to a tremendously exciting 2022 as we build out our Digital and Cloud offerings, help more customers to be successful and capitalise on new opportunities. After the reporting date, we announced the acquisition of the Retriever cinema software business in the USA. This acquisition, though small in total revenue, increases the strength of Vista Cinema’s footprint in USA market and will speed the adoption of our SaaS solutions, with a commitment from the largest Retriever customer to transition to Vista Cloud during 2022. There is no better illustration than the success A further highlight for us has been the of Spider-Man: No Way Home, which was recently announced expansion of the Odeon released globally in December 2021. Even Cinemas Group relationship into Spain and with operating restrictions still in place in Portugal which will include the full range of many countries, Spider-Man: No Way Home our platform offerings — Vista Cinema, Movio, has become the 6th biggest movie of all Vista Digital, movieXchange, and Numero. time globally, the third biggest in the North American domestic market (displacing Avatar) Vista Group’s environmental and the #1 superhero movie in 19 countries. and social impact Innovation and growth We remain focused on lessening our impact on the environment for current Across the Group we’ve continued to progress and future generations. employees in New Zealand, USA, and the These improvements flow on to benefit our innovation agenda. An exciting milestone UK, and launching a refreshed leadership our studio and distributor customers too. was the first iteration of Vista Cloud becoming We are working with two specialist climate development program across the business — with personalised plans structured to challenge and excite our people to grow their leadership skills and experience. In the early months of the pandemic, the future relevance of the cinema experience was questioned as people took to streaming while in lockdown. This enabled other movie production ready in early December, and agencies to ensure we provide the right the continued innovation of Movio Madex information to our stakeholders and the wider and the new Movio Cinema EQ (which will community as TCFD Reporting comes into release later in 2022). force — but further, that we make meaningful and sustained efforts to reduce our carbon In a very competitive market for talent, it is distribution models to be tested. The results Numero and Maccs have continued to footprint over time. encouraging to see our eNPS scores continue are clear and the cinema experience has been deliver, with Numero now reporting from to climb, and our employee turnover rate reaffirmed as a cornerstone of the economic 35 territories in total, and the cloud-based We intend to report on our response to climate remaining comparatively low. model of blockbusters. The major studios have Mica (from Maccs) increasing customer change, in alignment with the standards of Another continued area of focus is diversity now all committed to an exclusive theatrical window, averaging 45 days, for the vast and inclusion. At Vista Group, diversity means majority (in some cases all) of their premium acknowledging, appreciating and celebrating content in 2022. all of the many ways that we are different numbers from 6 in 2020 to 17 at the end the Task Force on Climate-related Financial of 2021. It was also very pleasing to see Disclosures. More information about our the Flicks team launch into the UK as their social and environmental impact program success in Australasia created momentum is on page 28. with moviegoers and advertisers. 4 Letter from the Chair and CEO • 5 We also launched a Volunteer Day scheme so that our people can work on community initiatives and be able to “give back” to the community. We look forward to the results of that work over the coming years. Board changes We would like to take this opportunity to warmly thank James Ogden for his wonderful contibution to the success of Vista Group. James joined the Board shortly before Vista Group’s successful IPO in 2014 and, as he indicated previously, he won’t be standing for re-election at this year’s ASM. James has made an extremely valuable contribution and we are very grateful for his guidance and wisdom. We wish James The future Looking ahead, we are optimistic as digitisation and adoption of cloud technology accelerates across the world. Vista Group is well placed to take advantage of these global trends through Vista Cloud and the digital toolbox that our Vista Cinema and Movio businesses provide to help cinemas globally find operating efficiencies, expand their customer reach and enhance their moviegoer relationships. We look forward to a tremendously exciting 2022 as we build out our Digital and Cloud offering, help more customers to be successful and capitalise on new opportunities. all the very best for the future. Thank you for the trust that you place in James Miller, who joined us as an Vista Group and we hope that, wherever you are, you and your loved ones remain Independent Director in August 2021, will safe and well. assume the role of Chair of the Audit and Risk Committee at the conclusion of the ASM. Kind regards, Susan Peterson Chair Kimbal Riley CEO Vista Group’s key strategies 01 Support our customers to rebuild their business 02 Expand our core platform that delivers value to our customers and connects moviegoers 03 Create and invest in new opportunities 6 Key strategies for 2022 • 7 Group overview Our mission at Vista Group is to ‘enhance the moviegoer experience’. We know if we keep this experience at the centre of what we do, we will deliver value to our customer’s customer — the moviegoer. Vista Group’s platform serves the full value chain of the film industry, from production and distribution to cinema exhibition and the moviegoer. The graphic on the opposite page illustrates how Vista Group views its vertical market and the fit of its products. Our products follow the film from its creation through to screenings by cinemas for the moviegoer — 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 data aggregation and analysis that is required by the film industry is very significant. This provides many additional opportunities for our products such as Movio, Numero, and Powster. It has also created 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. We anticipate the global cinema market will continue to expand over time with the number of cinema screens increasing and box office revenue rebounding. Our platform enables our customers to respond well to key industry trends of premiumisation, and data-driven decisions and marketing. Vista Group’s businesses E R O OVIE G M M o v i o N u m e r o P o w s t e r + M a c cs F l i c k s E X H I B I TI O N Veezi Vista Cinema P R O D U C T I O N N D IS T RIB UTIO 8 Group overview • 9 Customer focused innovation We were delighted to see our cinema customers globally welcome moviegoers back in the second half of 2021. With a great love for cinema and film, our customers are at the heart of our innovation. We continue to evolve our products and bring new features and services to market. This digital transformation provides our customers with the most advanced technology and continues to position our platform as market leading within the film and cinema industry. We share some highlights from across the Group, showcasing the variety of innovation and technology delivered throughout the year. 10 Customer focused innovation • 11 Vista Cinema From our customers Vista Cinema + Studio Movie Grill The purpose of Vista Cinema is to empower a world of cinema. While the pandemic has been felt in all 100+ countries running our technology, the challenges have varied from market to market. The demand for touch-free service and payments has been consistent across markets, while other challenges such as labor shortages, which force exhibitors to operate with fewer employees, are occurring on a market-to-market basis. We recognise the importance of our role in supporting exhibitors through their recovery and have been hard at work to innovate around these new challenges. Our innovation falls under two areas, Vista Digital and Vista Cloud. Vista Digital gives moviegoers a seamless and personalised experience across a cinema exhibitor’s digital channels, including website, kiosk, and mobile applications. Vista Digital includes three offerings — Digital Platform, Lumos and Omnia — tailored to the different sizes and requirements of its various exhibitor customers. These offerings are differentiated largely by the level of configurability and degree of engagement with Vista Cinema’s in-house digital agency. Vista Digital delivers significant benefits to Vista Cinema’s exhibitor customers, including a true omnichannel experience — across their entire digital real estate — and cloud-based scaling that ensures all digital channels remain available during peak demand for movie tickets. Vista Cloud is our comprehensive, reliable, and secure cinema management solution. Vista Cloud removes the need for exhibitors to maintain on-premises, server-based software, and delivers an always- on, always updated, secure cloud-based solution. Vista Cloud allows cinemas to step away from the hygiene of running Cinema Technology and focus entirely on the moviegoer experience. More on Vista Cloud in the following pages. Our fantastic customer, Studio Movie Grill (SMG), creates premium moviegoing experiences for their moviegoers. They leverage advanced technologies like laser projection, and the sound systems to take guests on a big-screen adventure in their 212 screens across seven states. In the wake of the pandemic, moviegoers required a variety of ordering options for their comfort. Vista Cinema enables SMG to present their guests with the perfect balance of hospitality and self-service. Guests can order in advance on the robust Vista Mobile App or at the cinema with the user-friendly Vista Kiosk. For guests who enjoy a more personal touch, they can order from waitstaff once seated in the auditorium. The waitstaff enters orders in Vista Serve, an easy-to-use We use a wide array of Vista’s technology across our business, and Vista stepped up to the plate in a big way for us throughout the pandemic. From our guest facing channels, to our point of sale system, to our cloud hosting, we were able to rely on Vista heavily over the past year. They are the ultimate technology partner and enable us to continue improving the moviegoing experience for our guests. handheld device which is purpose built for Looking ahead, SMG is dedicated to dine-in cinema. Serve features cinema seat optimizing their digital channels and maps, automatic upselling, food coursing, operations to the highest quality. Their and the ability to beam orders straight to investment in the moviegoing experience the kitchen. It streamlines the process which and trail blazing spirit has led to their not only allows guests to indulge quicker, reputation as market leaders. They truly but also provides more opportunities to embody their mantra of “opening hearts increase spend. and minds one story at a time.” 12 Customer focused innovation • 13 The Vista Cloud journey Vista Cloud is live and running in the market! All capabilities have feature parity with our existing on-premise products and we’re pleased to confirm our first customer is benefiting from the new platform. Vista Digital continues to deliver benefits to our customers, a service we’re now enhancing with the launch of Vista’s latest Digital SaaS offerings: Vista Digital Platform, Lumos Web, App, and Kiosk. The focus for 2022 is to deliver further benefits for Vista Cloud customers and a Digital Channels • SaaS Web sales platform live with rapid scalability (Vista Digital Platform) • MVPs of SaaS Kiosk and Mobile Apps complete • First customers live with SaaS web ticketing Vista Cloud • SaaS platform live – All servers out of cinema and in the cloud platform that can scale optimally to support – Upgrades pushed automatically many more customers. – Ability to scale up and down based on demand – Monitoring and management tools to ensure world class service – Secure service • First customer onboarded and live on new platform What we’ve achieved to date Where we are now What’s coming in 2022 • Vista Cloud SaaS offering in market Digital Channels • Engagements with the next tranche of • New SaaS Kiosk and Mobile App products customers to onboard well underway in market and live with customers • Overall on track and within budget • Onboarding more customers to the new SaaS Web Ticketing product • Migrating Vista customers over to What we said we’d do in 2021 Vista Digital Platform • Customer benefits – Servers out of cinema – Head Office servers in cloud – Automated upgrades • Cloud engineering – Licensing platform Vista Cloud • Onboarding more Vista customers to Vista Cloud • Highlight particular areas of investment – Platform extensibility – Regional Integrations to broaden customer appeal – Rapid scalability for core services – Data analytics – Localisation support for fiscal compliance, custom integrations, etc. – Monitoring and management improvements – Cost efficiency improvements – Broadened offline support – Expanded automated testing – Expanded automation in the deployment pipeline 14 Customer focused innovation • 15 Vista Cloud Vista Digital • Lumos From our team Tristan Phipps & Tiga Seagar Head of Design + Product Design Director What has been the most exciting thing relating to the shift to Cloud? Being able to deliver innovations more quickly to customers. With customers on the same platform, we can be much more dynamic with how we design software. Not only are we able to work closely with customers and use real-time data to make decisions, but we also can scale out new solutions with continual improvements at every step. Customers will get proven solutions much quicker. No more upgrade windows. What has been a customer highlight? Whenever we undertake a big piece of work we always engage our customers to get their input, and Vista Cloud was no different. We talked with a lot of customers to understand how they’ve had to navigate recent obstacles and gain insights into the future of the cinema industry. Keeping an open dialogue allows us to innovate together. How has this enabled/grown your skills and capabilities? You can’t have diamonds without a bit of pressure. Everyone working on Vista Cloud has embraced a new approach to our software. The creation of Vista Cloud meant we had to rethink and redefine our values, processes, and drivers with the internal culture to adapt to meet the outcome. Through our collective growth, we’ve been able to unify the company and build a foundation that moves us towards our vision of ‘empowering a world of cinema’. Vista Cloud looks quite different. For the first time in Vista, we’ve aligned how we design our solutions and how we present them. Vista Cloud is a cumulative effort by many groups within Vista. From high impact things like a newly developed brand, behind the scenes architectural improvements like single sign-on, down to small details like each word being carefully curated. The result is a modern, unified experience that showcases the care and attention Vista puts into its platforms. Where do you see the future of the cloud experience going? Bringing all capabilities together is going to unlock new workflows that weren’t possible before. No more hunting through different products to get reports from various places, you’ll be able to access them all from Vista Cloud. Vista Cloud removes the hassle of a distributed product system and brings management and operations into one experience. Data and visualising data, so that users can make informed decisions, is going to define the Vista Cloud experience. 16 Customer focused innovation • 17 From our team Chris South VP Engineering What excites you most about the move to Cloud? There are a huge number of benefits but the most critical for me is that our customers get the latest version of our software, updated very regularly, meaning that they benefit from improvements and new features without delay. Vista’s software has always been the most powerful in the industry but customer uptake has lagged behind our releases due to customers seeing the upgrade process as being quite a big investment. Cloud removes that problem and means that our customers will benefit continuously. The flip side of this is that our engineers see the result of their work almost immediately — this is hugely satisfying and enables a faster feedback loop resulting in more targeted improvements. Overall, it’s simply better for everyone. What has been a customer highlight? We have seen hugely impressive strides forward in our quality assurance processes getting ready for the first customer going live in early 2022. For example, we’ve implemented more than 100 critical improvements that resulted from automated and manual QA processes — the quality of what we put out into Cloud will be great, and that’s a success story for every customer. What does this mean for our people in terms of growth (OR what opportunities does this provide to our employees)? I’ve mentioned the feedback loop benefit above but the other really huge opportunity is that we can use any technologies we like in our cloud deployments, so our engineers have the chance to learn and use the latest tech stacks which is hugely exciting. We’ve long been an on-premise product company and that brings with it a responsibility to move steadily forward and retain backwards compatibility for years in some cases. With Cloud, we can use best-in-class practices and toolsets, allowing our engineers to enjoy the latest technology! What have you done differently or started to do to set the teams up for success to deliver Cloud for our first customers? In the past we’ve always been aware that the software we build will likely not be adopted very quickly, due to the upgrade time barriers mentioned above. Also our customers’ IT teams would run and look after the software on-premise. So we’ve been distant from the impacts of our work in terms of both time and involvement. This has been utterly changed with Cloud — we are now fully in the mindset that everything we build will be used by customers almost immediately, and that we have to monitor, upgrade, fix, and optimise it on an ongoing basis. It’s a complete alteration to our business and impacts not only engineering, but the service teams, account management, finance, legal, marketing, everyone. It’s the single biggest change to the business that I believe Vista has ever gone through; it’s challenging, exciting, and completely the right move for Vista. John Burrows Technical Product Director What is your current role? How does that relate to our new Cloud environment? What excites you most about the move to Cloud? I am a Product Director and I’m responsible for our Digital (alongside Will Riley) and F&B offerings. This essentially means that I make sure our software is tailored to our markets’ needs. I do this by working with customers to identify what they need and then collaborate with our design and engineering teams to make it happen. Tell us a bit more about your career journey with Vista I started as a summer intern in 2014 and officially joined a year later as a graduate. I was the first Business Analyst intern that Vista employed. The dine-in cinema market was exploding and I quickly became a subject matter expert in this space. I later moved into the role of Product Director. The highlight of my career to date has been building our Serve product. Together with an amazing team we took Serve from non-existence, identified the problem/ need, tested with end users, right through to launching and marketing of that product which has gone on to be a much-loved Vista product. I recently relocated from Auckland to Los Angeles and am continuing working at Vista Group as a Product Director. From LA I’m able to work much more closely with our largest market and stay on the pulse of what our customers need. Through talking to customers before Cloud, we noted they spend so much of their time doing IT heavy admin but were bursting with knowledge and ideas of how to grow their business but didn’t have the time to execute. Vista Cloud gives them back time to focus on the things that’s important to them, delivering the best cinema experience to their guests. They could now expand their business offering and even add on modules from Vista as their trusted provider. Post pandemic, our customers are ready and expecting digital channels that are poised for this even more self-service world. Knowing that the move to Cloud is the right thing for our customers is comforting, plus there’s the bonus that our software is not only powerful, but stunning. I’m so proud of what we’ve created and how it’s pushing the boundaries of what cinema software can be. I genuinely believe we are moving our market forward with Cloud and Digital… and we’ve got plenty more to go. What would moving to Cloud mean for our employees? It provides us with an opportunity to do more exciting and challenging work. It will require a change in mindset moving to a real-time model but it’s an energising and important change. We deliver several SaaS products already and it’ll soon be everything we do. It provides employees with more ownership of their work and allows us to create software with a more agile culture — to test, improve, and deliver to meet our customers’ ever-changing needs. 18 Customer focused innovation • 19 Movio From our team Movio supports exhibitors, distributors, and studios to connect all moviegoers to their ideal movie so that everyone experiences the magic of cinema — and recent hardships reinforce the importance of a little cinematic magic in all our lives! Our customers told us that how they achieve this magic, must evolve. This guidance has focused Movio’s efforts during 2021, readying us for the years ahead. We are now testing an entire re-imagining of our foundation product for exhibitors. On track to release in the first half of 2022, our next- generation Movio Cinema EQ allows users to access AI-driven insights to inspire moviegoer engagement, embrace the platform’s full potential via its intuitive simplicity, and to complete their tasks faster than ever before. Our suite of distributors and studio-oriented audiences, campaign and research solutions are growing to meet these challenges. Madex, our moviegoer data exchange, is central to this, conceived to fulfill exhibitors’ and studios’ desire for innovative, data-driven ways to collaborate for the benefit of our industry. Though still in its early days, Madex is already becoming a vital companion to our longstanding Media and Research solutions. With the acceleration of digitisation across the film industry, Movio is entering a new phase. Just as we have done since our inception, our motivation remains helping our customers to be more successful and to bring more moviegoers to the movies. Jardine Chapman Graduate Software Engineer What is it like working at Movio? Working at Movio is an incredible experience where I have been exposed to many areas of the wider Vista Group. As a graduate engineer I have rotated through three different teams throughout the year where I have started from scratch in learning the technology and developed into a fully contributing team member. Each transition has been seamless, as I am constantly surrounded by brilliant and driven people who challenge me professionally to become better each day. Vista Group has a truly positive culture that offers mutual support, promotes trust, rewards employees’ efforts, and ensures that employees know their work is meaningful. I have great leaders and mentors who inspire me every day to be passionate and to love my job. The work we do is complex and never-ending, but every meeting, even the tough ones, is always dotted with a personal connection. I always want to see what's around the next corner and having the freedom to apply my learning to the work I do every day has been one of the best parts of working for Vista Group. Imagine waking up every day looking forward to getting back to work with the rest of your colleagues that you enjoy being around. That is how I feel about working for Vista Group. What has been the highlight of your time at Movio so far? The team culture at Movio is second to none, every positive moment and highlight from this year stems from the people. Each day I am encouraged to learn, to try something new, and engage socially. In particular, the mentoring and encouragement to be part of not only my team but of something larger. The culture Vista Group has acts as a catalyst to innovate, try new things, and not to be afraid of failures. I appreciate how open we are about what we learn, and how we try to push our knowledge out beyond the team. What do you think the future is for the cinema industry? The future for the cinema industry is exciting and constantly evolving. One thing is for certain though, Vista Group is a vital constant in the progression for the cinema industry which I am looking forward to being a part of. 20 Customer focused innovation • 21 Maccs Flicks Maccs provides market leading software solutions that manage the distribution of movies to cinemas. Maccs has released Mica, a cloud-based SaaS film distribution solution. Mica’s fast, user-friendly interface can be seamlessly accessed via smartphones, tablets and browsers and can be tailored to provide each distributor with a unique user experience. Mica uses a centralised worldwide database of cinemas which is available to all users. Updates are community driven (moderated by Maccs) providing up-to-date cinema site information on a global scale. With full multi-currency and multi-territory support, users from all over the world can book releases in any territory, allowing for the possibility of releasing a film globally from one application. Mica supports integrations with multiple film industry systems including a seamless integration with suppliers of content and security keys for digital cinema content, to enable users to see the exact status of the delivery of their films to cinema sites in real-time. Box office results are imported automatically from Numero and MaccsBox. Mica has integrations to a range of accounting systems including Exact, Visma and Xero. The software and these integrations provide the film distributor with full control of the distribution life cycle of a film; from film management through to booking, invoicing, reporting and financial measurement. Additional features include a visual planning tool with Google Maps integration and real-time social media statistics as well as extensive analytics tooling where users can create their own overviews and charts. The latest development of Mica is a self-service login for exhibitors. There, exhibitors can request bookings, view existing bookings and invoices, confirm holdovers, enter box office results, and update venue information. The result is a disruptive shift in the market, where exhibitors will ‘pull’ bookings instead of distributors ‘pushing’ bookings. Flicks connects people with great content. Now more than ever, the entertainment offering across cinema and streaming is stacked with amazing things to watch. Flicks removes the consumer pain point in managing what would otherwise be an overwhelming amount of choice. Flicks distils this diverse content landscape. It is a trusted destination to discover your next favourite movie or show, be it in cinemas or at home. Flicks’ focus is squarely on the consumer. The Flicks team is busy building: • a faster, native experience with iOS and Android apps (launching in early 2022) • features to better recommend movies • tools to help people track what is coming and notify them when it is out • more content and data points to assist consumer decision-making Alongside user growth, the aim is to see deeper user engagement with our customers. Despite cinema closures across New Zealand and Australia throughout the year impacting Flicks’ traditional advertiser base, revenue is up 22%. This has been driven largely by our partners in streaming, such as Neon/SKY New Zealand, Prime Video, Apple TV+, Disney+, and Binge Australia. In Q4, Flicks successfully launched in the UK and users are growing steadily. The Flicks platform now brings together showtimes from more than 1,400 cinemas, and streaming links from more than 30 platforms, across three domains – flicks.co.nz, flicks.com.au, and flicks.co.uk. 22 Customer focused innovation • 23 Augmented reality innovations Powster Customer examples Powster has continued to innovate within the augmented reality space, with technology allowing entertainment marketing teams to engage their audiences without a native app barrier. Utilising three AR technology areas; WebAR, Native AR viewers such as quicklook, and AR tools for live streaming. WebAR Candyman AR Native AR Viewer Liam Payne Sunshine Powster’s activation utilises first-to-market Liam Payne continues to push boundaries technology to give visitors to the Candyman on innovation in music with his newest film’s website an up-close-and-personal look partnership with Powster and Universal Music at Candyman himself. Upon visiting the mobile Group. His new release ‘Sunshine’ featured homepage for idareyou.candymanmovie.com, in Disney’s ‘Ron’s Gone Wrong’ will be the visitors can activate the immersive experience world’s first lyric video using native quicklook by saying “Candyman” five times into a virtual AR. Audiences everywhere can experience the mirror, just like the characters in the film do to song in a new way by being immersed in the summon Candyman. Available on your phone lyrics as the words from ‘Sunshine’ shine all or desktop, the experience takes over the around them. mobile camera and microphone and, as you say his name, bees from the film swarm your face before Candyman is revealed and the exclusive final trailer for the film is unlocked. Powster utilised Google Speech-to-Text software and integrated it with technology partner 8th Wall’s platform to make AR possible on a web browser, creating a one- of-a-kind experience. The voice-recognition software will recognise only the word “Candyman” in up to 120 dialects and six languages. 8th Wall’s Face Effects works in the browser, on smartphones, and desktop computers with a webcam. The experience also made use of 8th Wall’s in-browser media recorder allowing users to capture the scary moment and download a video to be shared. AR Live Streaming Twitch Fairfax Powster has created the tools to allow Twitch streamers to augment their live streams with Twitch chat-controlled graphics. With minimal set up for the streamer entertainment brands can partner with Powster to allow chat to vote on virtual augmented reality outfits for the Twitch streamer. This innovation allows for entertainment brands to tap into live gaming broadcast audiences. With entertainment marketing teams planning their future plans for Metaverse engagement Powster has industry leading technologies to provide immediately available opportunities in the space. 24 Customer focused innovation • 25 Our climate, people and community As the world continues to face big challenges, we recognise that we have our part to play in making a difference to the world we connect with. We call that nga mea pai me nga tangata pai — doing good things with good people. This goes beyond integrating ESG into our governance and full TCFD reporting in FY22 — we’re doing that. This is about who we are. 26 Our climate, people and community • 27 Our climate Risk and opportunities One of the most critical issues facing our planet is the continued impact of climate change and the pressing need for action. We have a very light “climate impact” due to the nature of our businesses, however we are determined to reduce our carbon footprint over time. To that end, we have engaged two NZ specialists to assist our internal team — Toitū Envirocare and Te Whakahaere — to help guide us on our climate journey. Carbon Footprint In conjunction with Toitū Envirocare, we have kicked off a carbon footprint assessment. Our initial work shows that we produce relatively small amounts of carbon, but we are undertaking a full assessment and audit in 2022. We will be reporting our footprint annually, and more importantly, what our carbon reduction target is and the steps we are taking to meet that target. TCFD Reporting We are laying the groundwork now to prepare for mandatory TCFD Reporting in 2023. One of the foundations is to ensure that our existing risk management framework and policy appropriately reflects applicable climate related risks and we have engaged an external specialist to assist us with this. Te Whakahaere will assist us with climate modelling and our climate strategy. This work will continue into 2022 — and will expand our assessment of our key climate risks and opportunities as set out in the tables on the right. Key Risks RESTRICTED ACCESS TO CAPITAL REGULATORY RISK / INTERVENTION MARKET CAP IMPACTS - SHAREHOLDER MIGRATION LOSS OF CUSTOMER SITES ATTRACTING AND RETAINING TALENT RISK TYPE Transitional Transitional Transitional Physical Transitional LIKELIHOOD If no action, very likely If no action, likely If no action, very likely TIMEFRAME Short term Short to medium term Short term SCALE High Medium to high High Probable Short to long term Low to medium If no action, likely Short term Medium Key Opportunities ACQUISITION OF NEW CUSTOMERS SHAREHOLDER GROWTH / MARKET CAP LOWER FINANCING COSTS ATTRACTING AND RETAINING TALENT OPPORTUNITY TYPE Transitional Transitional Transitional Transitional LIKELIHOOD Possible Likely Already occurred (ASB) Likely TIMEFRAME Short to medium term Short to medium term Short term Short term SCALE High High Low Medium 28 Our climate, people and community • 29 Our people It has been a year of huge progress towards our strategic goals, despite many of us experiencing the challenges and uncertainties of lockdowns across the regions. Our people are our most important asset. Our ongoing focus to do everything we can to support them, ensuring their safety and wellbeing, has remained a high priority. Without our people, we could not have achieved what we have achieved this year. The competition for talent, particularly in the technology sector, has continued to increase, including as a result of travel restrictions and the trend towards rapid digitalisation in response to the pandemic. We have continued to focus on our employee proposition and on the engagement and retention of our team. The continuation of the Vista Group Recognition Scheme, our employee share scheme, and introduction of R&R Fridays are examples of our commitment to reward and motivate our team. We are continuing to make progress towards our Diversity and Inclusion objectives, with improvement in the representation of women at senior levels. The Board now has two female members, with Susan Peterson undertaking her role as Chair from 1 January 2021 and Claudia Batten’s appointment as an Independent Non-Executive Director from 1 January 2021. As of 31 December 2021, women made up 22% of the Executive Leadership Team and 43% of the Senior Leadership Team. Across our identified Emerging Leaders cohort, 35% are female. Female representation Age distribution 2021 2020 All employees Our Board Executive Leadership Team Senior Leadership Team 30% 31% 29% 17% 22% 10% 43% 44% 15 countries our people are resident in 32 languages spoken 18 – 24 8% 25 – 34 44% 35 – 44 32% 45 – 54 12% 55 – 64 4% Regional distribution NZ USA UK Europe Mexico Sth Africa Australia Malaysia 318 85 79 79 67 23 4 3 30 Our climate, people and community • 31 Wellbeing Our community To support wellbeing, we launched R&R Fridays in October, to give our team a better balance between personal and working life. We know from research that a healthier balance in life can make us more productive and happier overall. This sentiment has certainly been reflected in the positive feedback we have received since implementing this initiative. We also launched our flexible working policy, Working Well, to support our people and their wellbeing. Working Well provides our team members and managers with a set of principles to allow us to do our best work, whether from the office or anywhere else. Our Wellness Advocates have done their best to boost the wellbeing and morale of our team by organising speaker events, challenges, and competitions. Through a combination of online and in-person events, such as movie nights, Lunar New Year, Pink Shirt Day, May the 4th, Earth Day, and Mid-Winter Christmas (to name a few), we have been able to continue to connect, engage and celebrate as a team. We also sent care packages to those who had spent a long time in lockdown, a small gesture to show that we care. We continue to measure the engagement and wellbeing through monthly engagement surveys. Ensuring our team has a positive experience is a priority across the businesses. Many of our initiatives that support our people, both day-to-day and with their general wellbeing, come from the feedback received through our engagement surveys. Since the first survey of 2021, we have seen an increase of 22 eNPS points to a score of 40. This result, which is 11 points above the industry benchmark, is something of which we are very proud. This is important both for the attraction and retention of talent. It is important to us as a company and as individuals to contribute to our community. It will not only make a positive difference to our community, but also to our peoples’ wellbeing. Vista Foundation Charitable contributions As a New Zealand company that operates As part of our contribution to the community, globally in the film industry, Vista Group is every team member has a paid day off each passionate about supporting the New Zealand year to volunteer in a way they choose. film industry through the Vista Foundation There were many options — some teams (www.vistafoundation.co.nz) — established in planted trees, while Vicki Parry organised 2015 by Vista Group and its founders. for the Knowledge Services Team to assist During 2021, the Vista Foundation undertook Greenhithe Riding for the Disabled. a number of initiatives to help nurture We are determined to make a positive the continued growth and success of the difference in people’s lives and to foster New Zealand film industry — including: community initiatives across the world. Some • Picture – a collaboration with the Compton other examples from the past year include: School in Australia, designed to educate • EMEA donated to Medicinema to participants on the process of successfully managing a film project through to raise funds to bring Cinema to children in hospitals theatrical release. • Onscreen – providing resources to schools for film studies, alongside NCEA standards, culminating in films being submitted for judging to the Onscreen team. • 48 Hour Film Festival – The Vista • Some brave team members took part in Shave for a Cure — shaving to raise funds for the Leukemia & Blood Foundation • Our team had the option to donate to Auckland City Mission when choosing our Christmas gift in NZ Foundation will continue as the naming • Andrew Anderson ran Movember sponsor for this iconic event where teams for men’s health awareness • Rainbow Committee organised participation in the Sweat with Pride fundraiser and raised $3,670 back in June (up to 500) have to write, shoot, edit and produce a film within a 48 hour period. • University of Auckland Speaker Series – celebrated New Zealand director Jane Campion followed on from last years speaker, James Cameron, and provided insights on the film industry and the film making process. The Vista Foundation remains committed to it’s goal of fostering a viable, successful and inclusive local film industry in New Zealand. 32 Our climate, people and community • 33 Group trading overview Vista Group continues to be the global leader in delivering software and data analytics solutions to the film industry with core group companies, Vista Cinema and Movio, both number one globally in their respective market segments. Though revenue, profitability and cash performance for the financial year 2021 have been much improved, the Group and its customers continue to be significantly impacted by the pandemic. For much of the first half of 2021, cinemas around the world were only open on a limited capacity and it was not until April/May that blockbuster movies began to be in free release. Since then, even with the emergence of the Omicron variant, cinemas have largely remained open — often with some form of capacity restrictions (social distance seating or limited to operating hours) — and the release schedule of mainstream movies has been largely unchanged. Global box office at $21b was up 78% on 2020, but still just about half of pre-pandemic trading. Total Revenue $98m 12% Recurring Revenue $81m 24% SaaS Revenue $28m 16% EBITDA $7m +$18m Operating Cashflow $11m 277% Most encouraging, audiences have shown Recurring Revenue was up 24% to $81m their passion for big screen entertainment. — a sign of the continued strength of the Almost every movie in full release beat box maintenance and SaaS revenue streams of office expectations — Godzilla vs. Kong, Fast the Group and a key driver of future value. and Furious 9, Shang-Chi and The Legend Non-recurring revenue, primarily new of The Ten Rings, James Bond: No Time to on-premise licence sales in Vista Cinema, Die and Venom: Let There Be Carnage all was down 24% to $17m. outperformed early expectations. In spite of going to streaming on the same day in the larger markets, Black Widow performed very This result underlines the key financial and operating strengths of Vista Group: strongly in countries where it went ‘cinema • Consistent strong customer relationships first’ and brought to a head the difficulty of attracting big screen audiences to the small screen experience. Spider-Man: No Way Home, released in December 2021, is now the sixth biggest • Strong annuity revenue • Sustained underlined profitability • Positive operating cash generation • Leading global position in the film industry movie of all time even without a release in Vista Group continues to deliver new China, the third biggest in the US Domestic innovation across the Group, in particular in market and became the #1 superhero movie respect of Vista Cloud, Mica and Movio EQ. in 19 countries, many of whom had capacity restrictions. The movie also grossed more than $100m in IMAX theatres.1 Revenue The message from the moviegoer is clear — NZD millions its better in the cinema! Vista Group revenue was up 12% versus 2020, there was a strong turnaround in EBITDA — from a loss of $11m in 2020 to a profit of $7m in 2021 — and operating cash flow was positive $11m, up from $3m in 2020. The balance sheet remains healthy and Group cash at $60m at year end was ahead of forecast. 2021 2020 2019 2018 2017 2016 1 Sourced from Deadline $98.1 $87.5 $144.5 $130.7 $106.6 $88.6 34 Group trading overview • 35 Vista Cinema Enterprise: sites added Vista Cinema is the largest business within Vista Group and represents two thirds of total revenue. It provides more than 50% of the world’s cinemas (outside China and India) with the technology platform to run multi-site, multi-screen and increasingly, multi-territory cinema businesses. 2021 ended on a high with Spider-Man: Vista Cloud — Vista Cinema’s SaaS platform No Way Home breaking box office records for enterprise customers — was market ready globally. Even though Vista Cinema’s by the end of 2021 and went live with customers have been operating under various its first customer in early January 2022. forms of restrictions across the globe, the This represents both huge engineering effort consistent delivery of blockbuster movies from the technology team and a massive step from later in the first half of 2021 meant forward in the product offering for customers. cinema cashflows improved, though still As stated in late 2020, we are convinced that below pre-pandemic levels. There were the future, including the successful recovery no new material receiverships or managed of the industry, will demand new functionality administrations once the film slate held that can best be delivered through the SaaS firm. Though there were a handful of movies environment — one that is secure, scalable, that went to same-day release on streaming and provides seamless integration. services, this represented a small proportion of the total number of releases. Revenue was up 14% on 2020 to $67m, with recurring revenue up 31%. 800 600 400 200 0 -200 -400 -600 2015 2016 2017 2018 2019 2020 2021 Enterprise: total site count 8,000 6,000 4,000 2,000 0 2015 2016 2017 2018 2019 2020 2021 Direct India China 36 Group trading overview • 37 Cinema market share Vista Cinema percentage of the world market for Cinema Exhibition Companies with 20+ screens. 34% 51% worldwide excl. China 95% Canada 2,204 / 2,309 screens 52% USA 16,197 / 31,354 screens 98% Central America 7,370 / 7,525 screens 41% South America 2,330 / 5,730 screens 40% Europe 8,552 / 21,196 screens 67% India 1,894 / 2,816 screens 6% China 3,049 / 53,736 screens 21% Asia (ex China) 2,739 / 13,227 screens 59% Middle East 1,832 / 3,118 screens 92% Australasia 1,757 / 1,916 screens 85% Africa 701 / 824 screens 38 Group trading overview • 39 Movio Additional Group Companies Associate Movio is the second largest segment within Vista Group. A pure play SaaS business, it represents 15 percent of total revenue. Movio’s purpose is to ‘connect everyone with their ideal movie’ and it achieves this through a range of campaign, analytics and research products for cinema exhibitors, studios and distributors. During 2021, many exhibitors sought to maintain relationships with their guests even when their cinemas were closed or the number of new movie releases was limited. This saw strong use of the Movio Cinema product by customers in the second half of the year, which set an all-time record for email and SMS connections. By the end of the 2021, 3.2B connections had been made, significantly up on pre-pandemic levels of 2.3B. Studios and distributors use Movio Media to promote their movies to those moviegoers with a propensity to watch them. Here, Movio’s revenue depends on the number of movies released — especially in North America — rather than box office, and there were fewer than half the number of movies released in 2020 than in 2019. Movio Research, which studios and distributors use to assess potential audiences, was widely used in the second half as customers sought to understand returning moviegoers. Movio also spent 2021 completely reinventing its platform for exhibitors. Already in alpha testing, this next generation platform is designed with the new realities of cinema exhibition squarely in mind. In parallel, Movio is refining its solutions for studios and distributors to help establish a more seamless conduit between these stakeholders and exhibitors. Revenue was up 2% on 2020, with recurring revenue up 7%. Vista Group held one investment in an associate at year end. Vista China 2021 saw a much improved box office in China, primarily driven by local content, though the operating environment remains extremely tough and the outlook for the near term difficult. Operating and content restrictions continue to apply and are expected to last well into 2022. Vista China performed well in the second half of 2021, winning new customers to partially offset the loss of Dadi earlier in the year. Vista China remains disciplined in its cost management and cash burn. The Additional Group Companies segment comprises the businesses of two studio and distributor focussed businesses — Numero and Maccs — and two moviegoer focussed businesses — Powster and Flicks. Numero • Maccs Numero and Maccs performed well in 2021, with recurring revenue up 20% and total revenue up 14%. The success of Mica, the SaaS platform for studios and distributors to streamline their global cinema releases, continues to gain traction, particularly in North America, and now has 17 customers. Numero continues to add global customers and extend its geographical coverage. Powster Revenue for Powster was up 13% on the previous year, with the showtimes platform performing ahead of the box office recovery, growing at 25%. Creative work also picked up later in the year to be on par with 2020. Flicks Flicks was up 22% for the full year driven by solid support in key New Zealand and Australia market and launching flicks.co.uk in the United Kingdom. 40 Group trading overview • 41 Corporate governance This Corporate Governance statement has been prepared in accordance with NZX Listing Rule 3.8.1(a) and was approved by the Board of Vista Group on 28 February 2022. The information contained in this statement is current as at that date, unless otherwise noted. Vista Group is committed to high standards of governance. Vista Group’s key governance documents are available in the Investor Centre section of Vista Group’s website at www.vistagroup.co.nz — these include Vista Group’s constitution, the Corporate Governance Code (including the Code of Ethics, Audit and Risk Committee Charter and Nominations and Remuneration Committee Charter), Risk and Compliance Framework Summary, Continuous Disclosure Policy, Diversity and Inclusion Policy, Share Trading Policy and Modern Slavery Policy. The core of Vista Group’s governance framework is its commitment to protect and enhance the interests of its shareholders through high standards of governance, business behaviour and transparency. Vista Group’s governance framework ensures Board accountability to our shareholders and provides for an appropriate delegation of responsibilities to our CEO and our Executive Leadership Team (ELT). The Board reviews Vista Group’s governance policies and practices regularly to ensure compliance with NZX and ASX standards (Vista Group is an ASX Foreign Exempt Listed company) and reflects the governance expectations of its shareholders in New Zealand and Australia. As at the date of this Annual Report, Vista Group’s governance practices over the reporting period were in compliance with the NZX Corporate Governance Code and, whilst not required due to our ASX foreign-exempt listing status, the ASX Corporate Governance Principles and Recommendations (fourth edition). 42 Corporate governance • 43 Vista Group’s Board Board composition and characteristics The directors of Vista Group as at the date of this Annual Report are as follows: Non-Independent Non-Executive Directors (male) Executive Directors (male) 07 Board members Independent Non-Executive Directors (male) Independent Non-Executive Directors (female) During 2021, the Board continued to implement A brief profile, including the relevant qualifications its succession plan to achieve greater independent and experience, of each director is available in the governance. This involved: Board and Management section of Vista Group’s • Susan Peterson’s appointment as Independent Chair — with effect from 1 January 2021 website at www.vistagroup.co.nz. Vista Group’s constitution does not allow the • Kirk Senior stepping down as Executive Chair appointment of a director by a single shareholder and retiring as a Vista Group executive, but pursuant to NZX Listing Rule 2.4. The Vista Group continuing on the Board as a Non-Independent Board does not currently include a member of the Non-Executive Director — with effect from Future Director programme. 1 January 2021 • Claudia Batten’s appointment as an Independent Structure Director — with effect from 1 January 2021 The Board is structured to ensure that as a • Co-founder and Executive Director, Brian Cadzow, retiring from the Board and executive — with effect from 31 March 2021 • James Miller’s appointment as an Independent Director — with effect from 31 August 2021 collective group it has the skills, experience, knowledge, diversity and perspective to fulfil its purpose and responsibilities. The Board’s responsibilities are set out in Vista Group’s Corporate Governance Code which is available in the Investor Centre section of Vista Group’s website at www.vistagroup.co.nz. Susan Peterson BCom, LLB Independent Chair Claudia Batten BCom, LLB (Hons) Independent Director Murray Holdaway BSc, BCom Executive Director James Miller BCom, FCA Independent Director Cristiano (Cris) Nicolli BMS, FAICD Independent Director James Ogden BCA Hons, FCA, CFInstD Independent Director Kirk Senior BCom, CA Non-Independent Non-Executive Director 44 Corporate governance • 45 Board skills matrix The Board focuses on ensuring it takes advantage of, and benefits from, the diversity of skills, backgrounds and experiences of the individual directors and that its culture reflects Vista Group’s values. During the reporting period, the Nominations and Remuneration Committee (NRC) has assessed the skills of the Board and reviewed and updated the Board skills matrix. A summary of the Board skills matrix is set out on the opposite page. The refreshed skills matrix enables an assessment of skills and experience of individual directors, and how the directors work together as a whole. It is considered that addressing the level of skills and experience collectively is a better indicator of Board capability overall. Accordingly, the level of skills and experience is assessed collectively. The key skills and experience which individual directors contribute to the Vista Group’s Board are indicated in the director profiles in the Board and Management section of Vista Group’s website at www.vistagroup.co.nz. PROFICIENCY GUIDE Low Medium High CAPABILITY DESCRIPTION Software, cloud, online and operating platforms Expertise and experience in the development and delivery of software and digital solutions through on-premise, managed services, cloud and/or online platforms Digital product managment and marketing Expertise and experience in digital product marketing and management, including an understanding of technology trends and implications and the software and technology value chain Data Expertise in the collection, processing, and commercialisation of data and marketing applications, including the use of AI and experience with data protection legislation in Vista Group’s key international markets Strategy and development Expertise in corporate strategy and the developing early stage businesses, including strategic reviews, M&A and strategic partnerships Go-to-market and customer experience Deep customer insight and advocacy. Go-to-market expertise including direct sales, internet sales, new markets, and/or specific customer channel experience in the cinema, film, studio or media sectors Financial expertise Financial expertise with significant public company experience in finance, accounting, capital markets, credit markets, banking and investor relations Legal expertise Legal expertise with experience in corporate and commercial law, including legal, regulatory and compliance frameworks International markets Exposure to Vista Group’s key international markets outside of Australasia (North America, South America, EMEA, APAC) Listed company Depth of expertise on listed company boards, including experience in governance, compliance and risk management, sustainability, and health and safety People and culture Remuneration, retention, workforce planning, talent, culture and diversity and inclusion Film industry Depth of experience in the film industry, including in film exhibition and/or distribution 46 Corporate governance • 47 Independence and conflicts Five of Vista Group’s seven directors (Susan Peterson (Chair), Claudia Batten, James Miller, Cris Nicolli and James Ogden) are considered by the Board to be Independent Directors. This determination is made on the basis that these directors are Non-Executive Directors who are not substantial shareholders and who are free of any interest, business or other relationship Vista Group or, in respect of Kirk Senior and Murray Holdaway only, as an employee of Vista Group or one of its subsidiaries. Except for Murray Holdaway as a member of the ELT, none of the directors receives performance-based remuneration from, or participates in, Vista Group’s employee share schemes. No director controls, or is an executive or other representative of an entity which controls, 5% or more of Vista Group’s voting securities. that would materially interfere with, or could The CEO is not a director of Vista Group. reasonably be seen to materially interfere with, the independent exercise of their judgement. None of Responsibilities the Independent Directors have been employed or retained, within the last three years, to provide material professional services to Vista Group. The Board is responsible for Vista Group’s strategic direction and operation and has delegated certain responsibilities to the CEO and the ELT. Vista Two of Vista Group’s seven directors (Kirk Senior Group’s Board is committed to creating long-term and Murray Holdaway) are not considered to value for shareholders and safeguarding the highest be Independent Directors. Kirk Senior held the standards of governance, corporate behaviour position of Executive Chair until he resigned as and accountability. Chair and as a member of the ELT with effect from 1 January 2021. Based on his previous ELT position, the Board has determined that Kirk Senior is not an Independent Director. Murray Holdaway is The Board’s responsibilities are set out in Vista Group’s Corporate Governance Code, and include: • selecting and, if necessary, replacing the CEO; the founder of Vista Group, holds 2.93% of Vista • ensuring that Vista Group has adequate Group’s ordinary shares, and is a member of the management to achieve its objectives and to ELT as Vista Group’s Chief Product Officer. Based support the CEO so that a satisfactory plan for on these factors, the Board has determined that management succession is in place; Murray Holdaway is not an Independent Director. • reviewing and approving the strategic, business Within the last 12 months, none of the directors and financial plans prepared by the ELT; were a partner, director, senior executive or • reviewing and approving certain material material shareholder of a firm that provided transactions, and making certain investment and material professional services to Vista Group or divestment decisions; any of its subsidiaries. None of the directors is a current or past senior employee or partner of Vista Group’s auditors PricewaterhouseCoopers. None of the directors has been, within the last three years, a material supplier to Vista Group or has any other material contractual relationship with Vista Group or any of its subsidiaries other than as a director of • approving and overseeing the administration of Vista Group’s technology development strategy; • monitoring Vista Group’s performance against its approved strategic, business and financial plans and overseeing Vista Group’s operating results; • ensuring Vista Group, the Board and the ELT’s The CEO’s performance is reviewed by the behaviour is consistent with the Code of Ethics, NRC regularly against objectives and measures including compliance with the constitution, set by the Board. The CEO’s performance was any relevant laws, the NZX Listing Rules and evaluated during the reporting period on this basis. regulations, and any relevant auditing and The NRC is also responsible for overseeing the 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; CEO’s evaluation of the ELT. Further details are contained in the Remuneration Report on page 63. Directors’ remuneration Full details regarding Vista Group’s remuneration of its directors is set out in the Remuneration Report • ensuring the quality and independence of Vista on page 63. Group’s external audit process; and • assessing from time to time Vista Group’s effectiveness in carrying out the functions listed above, and the other responsibilities of the Board. The terms of the delegation by the Board to the CEO and ELT are documented in Vista Group’s Corporate Governance Code and Delegated Financial Authority Manual. The CEO and ELT are responsible for: • developing and making recommendations to the Board on Vista Group strategies and associated initiatives; • managing and implementing strategies approved by the Board; • formulating and implementing policies and reporting procedures for management; • decision making compatible with Vista Group’s Delegated Financial Authority Manual; • managing business risk and implementing the Board approved risk management framework and ensuring compliance; and • the day-to-day leadership and management of Vista Group. The CEO and ELT have appropriate employment agreements setting out their roles and conditions of employment. 48 Corporate governance • 49 Governance at Vista Group 2021 governance calendar and attendance Vista Group’s 2021 governance calendar recording the meetings of the Board, Board Sub-Committee, Audit and Risk Committee (ARC), Nominations and Remuneration Committee (NRC), Disclosure Committee, and the Annual Meeting of Shareholders (ASM) is set out in the table below: Selection, nomination and appointment Induction and development Vista Group undertakes appropriate checks before All new directors participate in an induction appointing a director or putting forward any programme and receive significant induction candidate for election as a director in accordance materials so as to familiarise them with Vista with Vista Group’s governance processes. Group’s businesses and the international film All directors are elected by Vista Group’s industry in which those businesses operate. shareholders (other than directors appointed The Board receives regular briefings from by the Board to fill casual vacancies, who must management on Vista Group’s business operations, retire and stand for election at the next meeting changes to the operating environment, and health of shareholders) with rotation and retirement and safety and wellness matters. Board strategy MEETINGS Board Board Sub-Committee Disclosure Committee ARC NRC ASM JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC determined in accordance with the NZX Listing days are held during the year to consider matters All directors attended the 2021 ASM. Details regarding the directors’ attendance of the meetings of the Rules. The Board is responsible for considering and of strategic importance to Vista Group. Board, Board Sub-Committee, the ARC and the NRC during 2021 is set out in the table below: appointing directors to the Board after candidates have been identified by the NRC. The directors undertake appropriate training to remain current on how to best perform their Vista Group has a written agreement with each duties as directors of an issuer by attending director set out in a standard form letter of relevant courses, conferences and briefings. appointment containing the terms and conditions A Board education programme is being commenced of their appointment. In addition, Vista Group has in 2022 and directors are supported to continue also entered into a deed of indemnity and insurance their own professional development. which applies to each director, under which Vista Group indemnifies, and provides insurance to, directors in accordance with Vista Group’s constitution and the Companies Act 1993. It is fundamental to the Board that directors have and are committing sufficient time to perform their duties properly and effectively. The Board has considered this issue during the reporting period and is satisfied that, taking into account all of their commitments, each director had sufficient time to perform their Vista Group duties. MEETINGS Susan Peterson Claudia Batten1 Brian Cadzow2 Murray Holdaway James Miller3 Cris Nicolli James Ogden Kirk Senior BOARD ATTENDANCE BOARD BOARD SUB ARC NRC 100% 92% 50% 100% 80% 100% 100% 100% 1 Appointed to the Board on 1 January 2021 Board or Committee Member present Board or Committee Member not present Non-Committee Member present 2 Resigned from the Board on 31 March 2021 3 Appointed to the Board on 31 August 2021 Each Committee Charter provides that employees and Executive Directors can only attend Committee meetings at the invitation of the relevant Committee. 50 Corporate governance • 51 Reviewing performance Tenure The performance of the directors (individually Vista Group notifies shareholders each year of and collectively), and the effectiveness of their right to nominate a candidate for election as a Board processes and committees, are regularly director. Where any director election or re-election evaluated using a variety of methods, including is to occur at a shareholder meeting, the Notice questionnaires, Board discussion, and an evaluation of Meeting includes all information on candidates at the end of each Board meeting. A performance for director election or re-election that the Board review led by the Chair was carried out during the considers may be useful to provide to shareholders. reporting period. The next review will be carried out during 2022. As required by the NZX Listing Rules, directors must retire every three years and, if desired, seek re-election. The Board takes director tenure into account in considering whether a director is an Independent Director. The date of appointment and tenure of each director is set out in the table below: DIRECTOR APPOINTED 2003 CO-FOUNDER 2014 IPO 2015 2016 2017 2018 2019 2020 2021 TENURE Murray Holdaway 06 Aug 2003 Kirk Senior 03 Jun 2014 Susan Peterson 03 Jun 2014 James Ogden 03 Jun 2014 Cris Nicolli 17 Feb 2017 Claudia Batten 01 Jan 2021 James Miller 31 Aug 2021 18–19 yrs (co-founder) 7–8 yrs (since IPO) 7–8 yrs (since IPO) 7–8 yrs (since IPO) 4–5 yrs 1 yr 0–1 yr Although Murray Holdaway has served as a director since 2003, Murray’s deep understanding of Vista Group’s businesses and the film industry is considered a valuable addition to the Board’s skills matrix. Board committees The Board has two standing committees: the ARC (comprised of James Ogden (Chair), James Miller, Cris Nicolli and Kirk Senior) and the NRC (comprised of Cris Nicolli (Chair), Claudia Batten and James Ogden). Vista Group does not have a separate Nominations Committee, or a separate Remuneration Committee. Rather, the NRC fulfils the functions of both those Committees. The role and responsibilities of the ARC and NRC are set out in the Committee Charters that form part of Vista Group’s Corporate Governance Code which is available in the Investor Centre section of Vista Group’s website at www.vistagroup.co.nz. to provide governance oversight on short-term projects. As at the date of this statement, Vista Group has considered that no other standing committees are required. Committee charters Each standing committee operates in accordance with a written charter approved by the Board and reviewed as required and at least every two years. The committee charters form part of Vista Group’s Corporate Governance Code which is available on Vista Group’s website at www.vistagroup.co.nz. Directors’ Vista Group shareholdings The Board encourages the alignment of directors’ In response to the rapidly changing environment interests with those of shareholders and with caused by the pandemic, during the reporting Vista Group’s strategic aims. To improve this period the Board requested that the Disclosure alignment, the Board encourages directors to hold Committee convene each month in which a Board meeting was not scheduled in order shares in Vista Group. Further details of directors’ shareholdings in Vista Group are set out in to monitor Vista Group’s compliance with its Directors’ Disclosures on page 72. continuous disclosure obligations under the NZX Listing Rules and the Financial Markets Conduct Act 2013. The Disclosure Committee was constituted Access to advice and general counsel and company secretary under Vista Group’s Continuous Disclosure Directors may access such information and seek Policy and comprised of Cris Nicolli (Independent such independent advice as they consider necessary Director), the CEO, the CFO and the General Counsel and Company Secretary. Each committee focuses on specific areas of governance. Together, the committees strengthen the Board’s oversight of Vista Group. Committee meetings are scheduled to coordinate with the Board meeting cycle. Each committee reports to the Board at the subsequent Board meeting and makes recommendations to the Board for consideration as appropriate. Vista Group assesses on a regular basis whether additional standing or ad hoc committees are required. Additional temporary committees are established from time to time, including as required or desirable, individually or collectively, to fulfil their responsibilities and permit independent judgement in decision making. They are entitled to have access to internal and external auditors without management present and, with the Chair’s consent, seek independent professional advice at Vista Group’s expense. All directors have access to the advice and services of the General Counsel and Company Secretary for the purposes of the Board’s affairs. The General Counsel and Company Secretary was appointed on the joint approval of the CEO and the Chair. The General Counsel and Company Secretary is accountable to the Board, through the Chair, on all governance matters. 52 Corporate governance • 53 Assurance and managing risk Audit plan and role of the external auditor External audit policy PricewaterhouseCoopers is Vista Group’s current The Board’s framework for Vista Group’s external auditor and have served since its relationship with its external auditor is in the appointment in April 2015. The NZX Listing Rules External Audit Policy set out in the Corporate require rotation of the key audit partner at least Governance Code which is available on Vista every five years. Vista Group last rotated its key Group’s website. The External Audit Policy audit partner in January 2020 and, assuming that covers matters relating to the appointment of PricewaterhouseCoopers continue as Vista Group’s the auditor, the independence of the auditor, auditor, the next rotation is expected to occur in transparent dialogue with the auditor, rotation January 2025. Vista Group’s audit partner (Troy of the audit partner, reporting on audit fees and Florence) attended Vista Group’s 2021 Annual non-audit work. The ARC assists the Board in Meeting of Shareholders (ASM) and was available fulfilling its responsibility to ensure the quality to Vista Group’s shareholders to answer questions and independence of Vista Group’s external audit relevant to PricewaterhouseCoopers’ audit. process. Pursuant to the ARC Charter, the Board Details of the work (both audit and non-audit) undertaken by, and fees paid to, PricewaterhouseCoopers during 2021 are included in section 2.3 of the Financial Statements. The Board considers that due to the nature and quantum of the non-audit services work, has delegated the ARC the responsibility to monitor all aspects of the external audit of Vista Group’s affairs including: • considering the appointment of the auditor, audit fees and any issues on an auditor’s resignation or dismissal; the independence of PricewaterhouseCoopers • ensuring the independence, objectivity and is not compromised. effectiveness of the auditor; • reviewing the audit plan, nature and scope of the audit before commencement; • reviewing Vista Group’s letter of representation to the auditor; and • discussion with the auditor any problems, reservations or issues arising from the audit and referring matters of a material or serious nature to the Board. Audit conflict safeguard and resolution process It is the responsibility of the ARC to ensure audit independence. The committee ensures this by requiring the audit engagement partner to discuss any non-audit services provided by the external audit firm with the ARC Chair prior to the commencement of any non-audit services. The non- audit services will only be provided if both the audit engagement partner and ARC Chair agree that there are no reasonable threats to independence. As part of the external auditor’s reporting to the ARC, the external auditor is required to submit an annual independence report confirming their firm remains independent of Vista Group. This annual independence report documents any risks to independence and safeguards related to non- audit services. The ARC review this report, with any concerns raised with the Chair of the Board and Disclosure Committee (see page 56) to determine whether a market announcement is required. The external auditor’s report to shareholders discloses all non-audit services and any other relevant independence considerations. 54 Corporate governance • 55 Timely and balanced disclosure Business risks and internal processes Shareholders and markets Risk Health and safety Vista Group is committed to maintaining a fully the CEO or management requires disclosure Risk management is an integral part of Vista Vista Group operates under a Health and Safety informed market through effective communication on the NZX and ASX announcement platforms. Group’s businesses and as such, the CEO is and Wellness Policy that has been approved by the with the NZX and ASX, our shareholders and The Disclosure Committee is required to refer accountable for all risk across all Vista Group to Board. The CEO and ELT report to the Board on investors, analysts, media and other interested information regarding matters of fundamental ensure that it meets or exceeds applicable legal performance against the policy, policy initiatives parties. Vista Group provides all stakeholders with significance to Vista Group, including financial and regulatory requirements. The CEO and the and incident reporting. equal and timely access to material information that results, earning guidance, dividend policy is accurate, balanced, meaningful and consistent. determinations, transformational transactions, Commercial Director report material risks to the ARC. The ARC is responsible for overseeing, Whistleblowing Where Vista Group provides a new and substantive and significant resignation, to the Board (or where reviewing and providing advice to the Board on The Whistleblowing Policy forms part of the investor or analyst presentation, it ensures the the Board is not available an Approval Committee) Vista Group’s risk management policies and Corporate Governance Code and sets out presentation materials are released to the NZX for its determination. and ASX announcement platforms ahead of the presentation. Disclosures relating to the annual and interim financial statements must be reviewed by the Vista Group’s Continuous Disclosure Policy ARC before being approved by the Board. is designed to ensure this occurs in compliance Once approved for disclosure, the CFO or with Vista Group’s continuous disclosure General Counsel and Company Secretary is obligations under the NZX Listing Rules and responsible for releasing material information the Financial Markets Conduct Act 2013. on the NZX and ASX announcement platforms. The Continuous Disclosure Policy is available in the Investor Centre section of Vista Group’s website at www.vistagroup.co.nz. The Disclosure Committee is responsible for administering the Continuous Disclosure Policy Directors consider at each Board meeting whether there is any material information which should be disclosed to the market. Integrity of reporting and ensuring that Vista Group complies with its The CEO and the CFO are required each full year continuous disclosure obligations. The Disclosure to provide a letter of representation to the Board Committee comprises one Independent Director confirming that the financial statements have been (Cris Nicolli), the CEO, the CFO, and the General prepared in accordance with legal requirements, Counsel and Company Secretary. comply with generally accepted accounting practice The CEO, ELT and management are responsible for ensuring that all material information relating to their areas of responsibility is reported to the and present fairly, in all material respects, the financial position of Vista Group and the results of its operations and its cash flows. Disclosure Committee promptly and without delay. A letter of representation confirming those matters The Disclosure Committee is responsible for was received by the Board with respect to Vista determining whether information received from Group’s 2021 financial statements. processes. As such, the ARC undertook continuous the guidelines and procedures for reporting improvement of its risk management policies breaches of the Code of Ethics or any breach and strategies in Q4 2021. As part of that review, of a legal obligation or Vista Group policy. Vista Group engaged a third-party specialist who provided (and is continuing to provide) guidance as to Vista Group’s Risk Management Framework and related policies and documentation. The revised Risk Management Framework is available in the Investor Centre section of Vista Group’s website at www.vistagroup.co.nz. This continuing work will lead to the reformulation of Vista Group’s Risk Management Policy and its risk appetite tolerance metrics. As a result, we anticipate changes to employee KPIs as to risk, and for the relevant businesses to conduct risk and control assessments. This will lead to enhanced Management and Board reporting. Thereafter Vista Group will conduct an assurance audit which will lead to additional opportunities. 56 Corporate governance • 57 Engaging with investors. Acting ethically and responsibly Investor relations Annual Shareholders’ Meetings Vista Group is committed to open and effective Vista Group’s ASMs are held in New Zealand communication with its shareholders by providing at a time and location which aim to maximise comprehensive relevant information. participation by Vista Group’s shareholders. Vista Group communicates with its shareholders Vista Group’s 2021 ASM was held on 26 May 2021 across a number of forums, including the Investor and, primarily due to the uncertainty associated Centre section of Vista Group’s website, at the with the pandemic, was held online only. The ASM, in its Annual and Interim Reports, regular Notice of Meeting for the 2021 ASM was released information disclosures via the NZX and ASX on the NZX and ASX announcement platforms and announcement platforms, and analyst and posted on Vista Group’s website at least 20 working investor briefings and road shows. days prior to the ASM in accordance with the NZX Vista Group aims to provide clear communication Corporate Governance Code recommendation. of its strategic direction, including articulating its Vista Group’s 2022 ASM will be held on 26 May 2022 and is expected to take place in a hybrid format (in person and online), subject to health and safety considerations. strategic priorities. Website Vista Group’s website contains a comprehensive set of investor-related information and data including releases on the NZX and ASX announcement platforms, Annual Reports and Interim Reports, investor presentations, and shareholder meeting materials. Shareholders can direct any questions and comments they may have to Vista Group by contacting Vista Group’s CFO. Electronic communications We encourage all shareholders to provide email addresses to Vista Group’s share registrar, Link they are engaged or employed by Vista Group. The Code of Ethics covers, among other things, conflicts of interest and receipt of gifts. Market Services Limited, to enable them to The Code of Ethics sets out: receive shareholder communications and reports electronically. Communicating electronically is faster, more cost-effective and more environmentally sustainable. Most of Vista Group’s shareholders receive information electronically. However, we understand that this does not suit everyone and we also provide hard copy reports to shareholders who request to receive them. Electronic versions of Vista Group’s shareholder communications and reports are released on the NZX and ASX announcement platforms and are available in the Investor Centre section of Vista Group’s website at www.vistagroup.co.nz. The Vista Group Code of Ethics Vista Group’s Board has adopted the Corporate Governance Code which includes Vista Group’s Code of Ethics and plays a key role in establishing the framework by which directors and employees are expected to conduct themselves. The Code of Ethics is not intended to prescribe an exhaustive list of acceptable and non-acceptable behaviour, but rather to facilitate decisions that are consistent with Vista Group’s values, business goals and legal and policy obligations, thereby enhancing performance outcomes. Directors and employees are required to familiarise themselves with Vista Group’s values, as they govern their behaviour while • the practices necessary to maintain confidence in Vista Group’s integrity; • the practices necessary to take into account Vista Group’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 the ELT are expected to lead Vista Group 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 them. 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 Vista Group’s internal web portal for access by employees. 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. Except as provided in the Listing Rules, interested directors do not vote on any Board resolution for, and are not counted in a quorum for the consideration of, any matter in which that director is interested. 58 Corporate governance • 59 Diversity and inclusion 2021 Diversity and Inclusion Policy Vista Group values and respects the contributions, ideas and experiences of people from all backgrounds and is proud of its diversity, with employees from all around the world. Vista Group has a formal Diversity and Inclusion Policy, which is available in the Investor Centre section of its website at www.vistagroup.co.nz. The Diversity and Inclusion Policy sets out Vista Group’s commitment to achieving diversity in the attributes and experiences of the Board, the ELT and employees. Vista Group set the following diversity objectives for the year ended 31 December 2021: OBJECTIVE OUTCOME Ensuring there is a minimum of two females on the Board at all times. The Board now has two female members, with Susan Peterson undertaking her role as Chair from 1 January 2021 and Claudia Batten’s appointment as an Independent Non-Executive Director from 1 January 2021. Implementing a target of 40:40:201 across all roles and programmes (e.g. leadership training, recruitment shortlists etc.). This will not be fully achieved across the organisation in 2021, but progress will be reported on annually going forward. As of first of 31 December 2021, women made up 22% of the ELT and 43% of the SLT. Across our identified Emerging Leaders cohort, 35% are female. Females have made up 38% of all new hires in 2021. This outcome shows a movement towards achieving the 40:40:201 split across our Leaderships teams and programmes. Maintaining an inclusive culture and work environment to ensure different points of view and backgrounds are valued, and everyone feels safe and can bring their whole self to work Unconscious bias training has been issued globally. We continue to recognise and embrace cultural and social diversity in all offices by supporting open communication and celebrations to represent all. All employees communications are non-gender specific and recruitment process and content has been refreshed with neutral language. 1 40:40:20 reflects a 40% male/female split with the remaining unspecified to recognise that gender is non-binary and to ensure flexibility across other diversity areas of focus. Vista Group has continued to expand its cultural competency across regional offices such as Mexico City and Cape Town, whilst increasing the ethnic diversity of employees and leaders. In reflection of tight travel restrictions in New Zealand, Vista Group has decided to move its Māori cultural competency objective into 2022 as restrictions ease. Vista Group has identified the requirement to expand on our Rainbow Tick and in late 2021 created a partnership with Stonewall to create transformative change in the lives of LGBTQ+ community at Vista Group. See page 31 for disclosure regarding the gender diversity at 31 December 2021. 2022 Diversity and Inclusion objectives Vista Group has placed a high priority on improving its diversity and ensuring it has an inclusive culture. Vista Group’s key diversity objectives in 2022 are: • To ensure there is a minimum of two females on the Board at all times. • To continue to focus on our 40:40:20 target across all roles and programmes, including annual reporting on progress. • To complete and report on a full Gender Pay Gap Analysis annually from January 2022. • To build our Māori cultural competency in our New Zealand leaders and employees. Proactively work to increase the representation of Māori and Pasifika in technology careers. • To continue to create and maintain an inclusive culture and work environment with a focus on ensuring women, ethnic minorities and those who identify as LGBTQ+ feel safe and able to bring their whole self to work. 60 Corporate governance • 61 Letter from the Chair of the NRC Remuneration report Executive remuneration Vista Group’s remuneration policy for the Total remuneration consists of fixed remuneration, CEO and ELT is based on the principles short-term incentives (STI), and long-term that the remuneration framework will: incentives (LTI). STI and LTI are ‘at risk’ as outcomes • be simple, clear and understandable by all stakeholders • be fair, equitable and flexible • support Vista Group attracting, retaining and engaging employees • reward targeted performance • create alignment with Vista Group’s values, culture and corporate strategy • appropriately reflect market conditions and the organisational context • align with creating and increasing shareholder value The NRC reviews Vista Group’s remuneration policy and principles on a regular basis. are determined based on the achievement or otherwise of financial and performance based targets and conditions set by the Board on the recommendation of the NRC. All Vista Group employees based in New Zealand, the United Kingdom and the USA (other than the CEO and ELT) are also eligible to participate in the Vista Group Recognition Scheme – a share rights scheme with vesting conditional only on continued tenure. The remuneration package of the CEO is approved by the Board, on the recommendation of the NRC. The remuneration packages of the ELT (other than the CEO), including fixed remuneration, STI and LTI objectives and achievement, are regularly reviewed by the NRC. The remuneration packages of the CEO and ELT are benchmarked to market remuneration data to ensure competitiveness relative to comparable market peers. As Chair of the Nominations and Remuneration Committee (NRC), it is my pleasure to present Vista Group’s Remuneration Report for the year ended 31 December 2021. The report outlines Vista Group’s remuneration strategy and approach, with a particular focus on the remuneration framework for the Group CEO and the Executive Leadership Team (ELT). Vista Group’s Board is committed to a remuneration framework that rewards targeted performance and the culture and leadership of looking after our people and our customers. The rewards are aligned to both short-term and medium-term goals to achieve key objectives and deliver sustainable value for shareholders. The Board is committed to demonstrating an increased level of transparency in its remuneration policies and practices. The NRC and Board are supported by the People and Culture team who have been influential in supporting the business and employees globally especially given the various impacts of the pandemic. Vista Group operates in a very competitive global and local market for skills and capabilities. It is a Board priority to ensure the retention of key employees and the attraction of new talent is reflected in the remuneration and employee benefits that form part of the value proposition and is aligned to the remuneration strategy and approach. I acknowledge the sacrifices made by the Group CEO, ELT and employees of Vista Group over the past two years and thank them for the manner in which they responded to the challenging environment faced. Regards, Cris Nicolli Chair of the Nominations and Remuneration Committee Vista Group International Limited 62 Corporate governance • 63 Employee remuneration Fixed remuneration The provision of fixed remuneration (comprising Long-term incentives The following table shows the number of Fixed remuneration consists of base salary and employees whose remuneration and benefits for benefits. Whilst flexibility exists where specific the year ended 31 December 2021 were within the circumstances require it, base salaries are typically specified bands above $100,000. The remuneration reviewed annually. Vista Group provides a range of figures shown in the table include all monetary benefits to its employees specific to the country in payments actually paid during the year ended which the employee works: 31 December 2021. The table does not include amounts paid post 31 December 2021 that related to the year ended 31 December 2021, such as STI bonuses. The table below includes the remuneration of Murray Holdaway as an Executive Director. SALARY BAND (NZ$) TOTAL GROUP EMPLOYEES COUNTRY BENEFITS New Zealand – Kiwisaver contribution up to 3% – Health insurance – Life insurance – Vista Group Recognition Scheme – Long service benefits 109,999 119,999 129,999 139,999 149,999 159,999 169,999 179,999 189,999 199,999 209,999 219,999 229,999 239,999 249,999 259,999 269,999 279,999 309,999 319,999 339,999 349,999 379,999 399,999 409,999 419,999 429,999 459,999 529,999 579,999 1,019,999 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 100,000 110,000 120,000 130,000 140,000 150,000 160,000 170,000 180,000 190,000 200,000 210,000 220,000 230,000 240,000 250,000 260,000 270,000 300,000 310,000 330,000 340,000 370,000 390,000 400,000 410,000 420,000 450,000 520,000 570,000 1,010,000 Total 64 59 53 41 25 18 23 18 20 8 4 5 7 6 2 6 3 1 3 2 3 1 1 1 1 1 1 1 1 1 1 1 USA – 401k contribution up to 2% – Health insurance (including dental and vision) – Life & accidental death & dismemberment insurance – Vista Group Recognition Scheme – Long-term disability insurance – On site paid gym membership – Flexible spending accounts United Kingdom – Royal London Pension up to 4% – Private medical health coverage for employee and their family + dental and eye care contributions – Vista Group Recognition Scheme – 24 hour Employee Assistance Program services – Perkbox, with free perks each month, plus access to range of high street discounts and rewards – Discounted gym memberships – Access to salary sacrifice scheme Netherlands – Perkbox with free perks each month, plus access to range of high street discounts and rewards South Africa – Private medical health coverage for employee and their family + dental and eye care contributions – 24 hour Employee Assistance Program services – Perkbox with free perks each month, plus access to range of high street discounts and rewards Mexico – Medical insurance – Food coupons Malaysia – Medical claims – reimbursement for medical bills – Mobile phone allowance – Parking allowance Romania – Private medical services – Half reimbursement for glasses and contact lenses (up to 450 RON) 318 – Half reimbursement of a monthly gym membership (up to 100 RON) of a base salary and country specific benefits) is consistent across all employees in Vista Group, including the CEO and ELT. Short-term incentives The STI are at-risk incentives that may be offered to an employee in respect of a specific year. The STI is set within a range as a fixed percentage of the participating employee’s base salary. The STI outcomes are determined based on the achievement or otherwise of financial and performance based targets applicable to the relevant employee. STI, once achieved, are paid in cash. The key targets, percentages and terms of the 2021 STI are set out in the table below: TARGETS % OF STI HURDLE 50% Recurring revenue/ total revenue Vista Group EBITDA 20% 80% achieved before 50% of applicable STI is payable, with achievement from 80% on a straight line to 100%. No overachievement is available. 70% achieved before 50% of applicable STI is payable, with achievement from 70% on a straight line to 100%. No overachievement is available. 15% 15% Customer net promoter score Employee net promoter score Achieved or not achieved. If achieved, then 100% of applicable STI is payable. Achieved or not achieved. If achieved, then 100% of applicable STI is payable. In 2021 the CEO’s STI was set by the Board at 50% of his base salary, and for ELT members the STI was set within a range of 20% – 40% of the relevant ELT member’s base salary. Vista Group’s LTI is a share rights scheme offered at the discretion of the Board on the recommendation of the NRC. The LTI is set as a fixed percentage of the participating employee’s base salary. The number of share rights granted to a participating employee is determined based on the participation value divided by the volume weighted average sale price of Vista Group’s shares over a specified period before the grant date. The share rights granted under the LTI are eligible to vest and convert into Vista Group shares based on the achievement or otherwise of certain targets and satisfaction of certain conditions over a specified number of years. Under the terms of the 2021 LTI scheme, one third of a participating employee’s share rights are eligible to vest each year of the three year term of the scheme based on: • the achievement of Vista Group recurring revenue targets set by the Board, with 100% of the share rights (one sixth of the total share rights) vesting on achievement of the target. • continued tenure with Vista Group, with 100% of the share rights (one sixth of the total share rights) vesting where the condition has been satisfied. Under the 2021 LTI scheme, the CEO’s LTI was set by the Board at 50% of his base salary, and for ELT members the LTI was set within a range of 20%-50% of the relevant ELT member’s base salary. The CEO also participates in the Group CEO Retention Scheme under the LTI scheme. Under the terms of the Group CEO Retention Scheme, the CEO is granted a specified number of share rights that are eligible to vest each year of the term of the scheme based on continued tenure with Vista Group. 200,000 share rights vested in April 2021, comprising the fourth tranche of the share rights granted in 2018 under the Group CEO Retention Scheme. Corporate governance • 65 Vista Group Recognition Scheme CEO remuneration The Vista Group Recognition Scheme (VGRS) is a share rights scheme offered to all Vista Group employees The total remuneration of the CEO in 2020 and 2021 is set out in the table below: POSITION YEAR CEO 2021 2020 BASE SALARY TAXABLE BENEFITS FIXED REMUNERATION STI (2020 TARGETS SETTLED IN 2021) LTI (VALUE OF SHARES VESTED) TOTAL REMUNERATION 425,000 371,9402 22,556 24,212 447,556 396,153 107,525 464,0001 1,019,081 22,860 158,944 577,957 1 The STI paid to the CEO in 2021 related to rights granted in 2018 under the Group CEO Retention Plan. 2 In response to the pandemic, during 2020 the CEO elected to take a 30% reduction to his base salary. The employment agreements of the ELT (including the CEO) do not include the ability to be paid a transaction bonus in the event of a takeover of Vista Group. Kimbal Riley was appointed as CEO with effect from April 2018. Matthew Cawte was appointed as CFO with effect from July 2019. based in New Zealand, the United Kingdom and the USA (excluding the CEO and ELT) to encourage retention and to recognise the performance of employees during the pandemic. VGRS participation is set at the greater of (i) a specified percentage of base salary; or (ii) a specified dollar amount. The number of share rights granted to a participating employee is determined based on participation value divided by the volume weighted average sale price of Vista Group’s shares over a specified period before the grant date. The share rights granted under the VGRS are eligible to vest after 12 months based on the continued tenure of the participating employee. The CEO was not eligible to participate in, and was not granted any share rights or issued any Vista Group shares under, the VGRS. Breakdown of CEO pay for performance (2021) POSITION DESCRIPTION PERFORMANCE MEASURES % ACHIEVED AMOUNT ACHIEVED NZ$ CEO STI 50% of base salary LTI TOTAL STI 2018 Group CEO Retention Plan 2021 LTI Plan1 TOTAL LTI TOTAL STI & LTI 50% weighting of Vista Group recurring revenue. 80% of the target must be achieved before 50% of the applicable STI is payable; with achievement increasing on a straight line basis to 100%. No over achievement possible. 20% weighting of Vista Group EBITDA. 70% of the target must be achieved before 50% of the applicable is STI payable; with achievement increasing on a straight line basis to 100%. No over achievement possible. 15% weighting on customer net promoter score. If achieved, then 100% of applicable STI payable. 15% weighting on employee net promoter score. If achieved, then 100% of applicable STI payable. 100% weighting on continued tenure. An allocation of 200,000 shares vested in 2021. 50% weighting on Vista Group recurring revenue in 2021, 2022 and 2023. The threshold to achieve is 90% with pro-rata payment through to 100%. 50% weighting on continued tenure in 2021, 2022 and 2023. 1 These rights convert to shares on 1 April 2022. A share price at 31 December 2021 has been used for this table. 81.3% $172,656 97.4% 93.0% $556,834 $729,490 66 Corporate governance • 67 Share-based schemes New schemes in 2021 Share-based schemes that lapsed The total number of outstanding rights granted to Vista Group employees at 31 December 2021 are detailed Performance rights outstanding In the year ended 31 December 2021, Vista Group The following schemes did not meet the required granted rights under the following employee share- performance targets resulting in the relevant rights based schemes: lapsing in the year ended 31 December 2021: 2021 LTI Scheme: Vista Group granted 1,237,668 rights to ELT and other select senior management. One third of a participating employee’s rights are eligible to vest each year of the three-year term of the scheme based on: • the achievement of Vista Group recurring revenue targets set by the Board, with 100% of the share rights (one sixth of the total share rights) vesting on achievement of the target. • continued tenure with Vista Group, with 100% of the share rights (one sixth of the total share rights) vesting where the condition has been satisfied. Share-based schemes with conditions met The following share-based schemes met the required performance targets resulting in rights vesting in the year ended 31 December 2021: • 2018 LTI Scheme: Vista Group granted 329,280 rights to the CEO, ELT and other senior management. Rights granted under this scheme vest annually over a three-year vesting period. The vesting of rights was conditional on the achievement of specified revenue and EBITDA targets. 164,640 rights have vested under this scheme in previous years. The remaining 164,640 rights lapsed during 2021 as a result of the 2020 targets having not been achieved. • 2019 LTI Scheme: Vista Group granted 275,310 rights to the CEO, ELT and other senior management. Rights granted under this scheme vest annually over a three-year vesting period. The vesting of rights was conditional on the achievement of specified revenue and EBITDA targets. No rights have vested under this scheme • Vista Group Recognition Scheme: The VGRS in previous years. All of the rights lapsed during was offered to all Vista Group employees based 2021 as a result of the 2021 targets having not in New Zealand, the United Kingdom and the been achieved. United States (other than the CEO) to encourage • 2019 Movio CEO (Variable) Scheme: Vista Group retention and to recognise the performance of employees during the pandemic. Vesting was conditional on continued tenure of the participating Vista Group employees. On 23 November 2021, 419 Vista Group employees were issued 2,410,683 Vista Group shares under the VGRS. Vista Group intends to offer the VGRS again in 2022. granted a variable amount of performance rights in 2019 to the Movio CEO. Rights granted under this scheme vest annually over a three- year vesting period. The vesting of rights was conditional on the achievement of specified revenue and EBITDA targets for Movio. No rights have vested under this scheme in previous years. All of the rights lapsed during 2021 as a result of • Group CEO Retention Plan: Rights under the 2021 targets having not been achieved. this award were granted in 2018 to the CEO conditional on continued tenure. In April 2021, 200,000 shares vested under the Group CEO Retention Plan. In 2020, the CEO was granted 500,000 share rights under the Group CEO Retention Scheme. 100,000 of these share rights will vest in April 2022 and 400,000 will vest in April 2023 conditional on the CEO’s continued tenure with Vista Group. in the table below: GRANT YEAR PLAN TYPE 2022 2023 2024 TOTAL 2020 2021 Group CEO Retention Plan 100,000 400,000 - 500,000 LTI Plan 412,556 412,556 412,556 1,237,668 Total outstanding rights 512,556 812,556 412,556 1,737,668 2021 director remuneration Director remuneration is paid from the total directors’ fee pool of $725,000 approved by Vista Group’s shareholders at the ASM held on 26 May 2021. No increase to the fee pool is proposed for 2022. Directors’ fees are calculated as set out below: POSITION HELD Chair Director ARC Chair ARC member NRC Chair NRC member The details of the total remuneration of, and the value of other benefits received by, each director of Vista Group during the year ended 31 December 2021 are set out in the table below: DIRECTOR FURTHER DETAILS BOARD FEES ARC FEES NRC FEES TOTAL DIRECTOR FEES1 EXECUTIVE REM Susan Peterson Chair 180,000 Claudia Batten Appointed 1 Jan 2021 85,000 Brian Cadzow Resigned 31 Mar 2021 24,437 Murray Holdaway - - - - - James Miller Appointed 31 Aug 2021 28,333 3,333 - 180,000 10,000 95,000 - - - - - 24,437 31,666 - 211,181 211,181 Cris Nicolli NRC Chair 85,000 10,000 15,000 110,000 James Ogden ARC Chair 85,000 15,000 10,000 110,000 Kirk Senior Total 85,000 10,000 - 95,000 572,770 38,333 35,000 646,103 1 Total director fees of $646,103 is within the $725,000 directors’ fee pool approved at the ASM on 26 May 2021. NZ$ $180,000 $85,000 $15,000 $10,000 $15,000 $10,000 TOTAL DIRECTOR COST 180,000 95,000 24,437 - - - - - 31,666 110,000 110,000 95,000 857,284 Directors are reimbursed for all reasonable and properly documented expenses incurred in performing their duties as Vista Group directors. With the exception of Murray Holdaway as an Executive Director, no additional payments or benefits were received by directors during 2021. As an Executive Director, Murray Holdaway is entitled to taxable benefits, including 3% employer KiwiSaver contributions on base salary, employer sponsored Southern Cross health insurance, and employer sponsored life insurance. 68 Corporate governance • 69 Directors’ disclosures Disclosure of directors’ interests Section 140(1) of the Companies Act 1993 requires a director of a company to disclose certain interests. Under subsection (2) a director can make disclosure by giving a general notice in writing to the Company of a position held by a director in another named company or entity. The particulars included in the Company’s Interests Register as at 31 December 2021 are set out in the table below: NAME OF DIRECTOR ENTITY NATURE OF GENERAL DISCLOSURE Susan Peterson Arvida Group Limited (NZX : ARV) Non-Executive Director NAME OF DIRECTOR ENTITY NATURE OF GENERAL DISCLOSURE James Miller The New Zealand Refining Company Limited (NZX:NZR) Non-Executive Director NZX Limited (NZX:NZX) Non-Executive Chair Mercury NZ Limited (NZX & ASX:MCY) Non-Executive Director Accident Compensation Corporation2 Non-Executive Chair Property for Industry Limited (NZX : PFI) Non-Executive Director, Chair of Audit and Risk Committee, and member of Remuneration Committee Cris Nicolli Empired Limited (ASX:EPD)3 Non-Executive Director, Chair of Nominations and Remuneration Committee Trustpower Limited (NZX : TPW)1 Xero Limited (ASX : XRO) Craigs Investment Partners Non-Executive Director, Chair of People and Remuneration Committee, and member of Audit and Risk Committee Non-Executive Director, Chair of People and Remuneration Committee and member of the Nominations Committee Non-Executive Director, member of the Audit and Risk Committee, Chair of People and Remuneration Committee Global Women Trustee Peterson Mellsop Family Trust Trustee and Beneficiary Claudia Batten Air New Zealand Limited (NZX:AIR) Non-Executive Director, member of Audit and Risk Committee Serko Limited (NZX : SKO) Non-Executive Chair Westpac New Zealand Limited Digital Adviser to the Board Murray Holdaway Invista Share Nominee Limited Director and Shareholder Playside Studios Limited Non-Executive Chair ReadCloud Limited Non-Executive Chair Kadasig Aid & Development (Not For Profit Charity) Treasurer Nicolli Holdings Pty Ltd (Family Investment) Director Nicolli Family Superannuation Fund Trustee James Ogden Summerset Group Holdings Limited (NZX : SUM) Foundation Life (NZ) Limited Non-Executive Director and Chair of Audit and Risk Committee Director and Chair of Audit and Compliance Committee NZ Markets Disciplinary Tribunal Member and Chair of Special Division Crown Forest Rental Trust Member of the Audit and Risk Committee Pencarrow Private Equity Fund Independent Chair of the Investment Committee Pencarrow Bridge Fund GP Limited (General Partner of the Pencarrow Bridge Fund) Director Kaha Software Limited Director and Beneficial Shareholder Kirk Senior Outpost Central Ltd (trading as Wildeye) Consultant Lido Cinema Limited Beneficial Shareholder Kirk Senior Pty Limited Director and Shareholder Auckland United Football Club The Awhero Nui Trust Holdaway and Geary Trust Chair Trustee Trustee Senior Family Super Fund Pty Limited Director and Shareholder Honey For Life Pty Ltd Kirk Senior Family Trust Shareholder Trustee 1 Susan Peterson retired from the Board of Trustpower Limited with effect from 22 September 2021. 2 James Miller retired from the Board of Accident Compensation Corporation with effect from 31 December 2021. 3 Cris Nicolli retired from the Board of Empired Limited with effect from 10 November 2021. 70 Corporate governance • 71 Directors’ and officers’ indemnities and insurance Directors’ Vista Group shareholdings Subsidiary companies The number of Vista Group shares in respect of The directors of subsidiaries of Vista Group at 31 December 2021 are listed in the table below: Company disclosures In accordance with Section 162 of the Companies which each director had an interest as at 31 January Act 1993 and the constitution, Vista Group 2022 is set out in the table below: indemnifies the directors in relation to potential liabilities and costs they may incur for acts or DIRECTOR NUMBER OF VISTA GROUP SHARES % OF SHARES ON ISSUE omissions in their capacity as directors. Vista Group Susan Peterson 122,271 0.053% also maintains directors’ and officers’ liability insurance that covers risks normally covered by such policies arising out of acts or omissions Claudia Batten – Murray Holdaway 6,786,000 of directors and employees in their capacity as James Miller directors. Certain actions are specifically excluded, for example, the incurring of penalties and fines which may be imposed in respect of breaches of the law. Cris Nicolli James Ogden Kirk Senior 74,500 87,152 522,996 861,936 – 2.966% 0.033% 0.038% 0.229% 0.377% Directors’ Vista Group share dealings During 2021, there were no disclosures required to be made in accordance with section 148 of the Companies Act 1993 and section 304 of the Financial Markets Conduct Act 2013. COMPANY NAME DIRECTORS FURTHER INFORMATION Flicks Limited New Zealand 100% Matthew Cawte, Kelvin Preston, Kimbal Riley No changes Maccs International B.V. Netherlands 100% Vista Entertainment Solutions (NL) B.V. No changes MovieXchange Limited New Zealand 100% Matthew Cawte, Kelvin Preston, Kimbal Riley Amalgamated with MovieXchange International Limited in 2021 Movio (IP) Limited New Zealand 100% Matthew Cawte, Kelvin Preston, Kimbal Riley No changes Movio Limited New Zealand 100% Matthew Cawte, Kelvin Preston, Kimbal Riley Amalgamated with Virtual Concepts Limited in 2021 Movio, Inc. United States 100% Matthew Cawte, Kelvin Preston, Kimbal Riley No changes Numero Limited New Zealand 100% Matthew Cawte, Kelvin Preston, Kimbal Riley No changes Numero (Aust) Pty Ltd Australia 100% Matthew Cawte, Kelvin Preston, Kimbal Riley, No changes Kirk Senior Powster, Inc. Powster Ltd United States 50% Kirk Senior, Steven Thompson No changes United Kingdom 50% Nicholas Patsides, Kimbal Riley, Kirk Senior, No changes Steven Thompson S.C. Share Dimension S.R.L. Romania 100% Share Dimension B.V. No changes Senda DO Brasil Serviços de Tecnológia LTDA. Brazil 60% Armando Mejias, Gustavo Ortega No changes Share Dimension B.V. Netherlands 100% Vista Entertainment Solutions (NL) B.V. No changes Vista (IP) Limited New Zealand 100% Matthew Cawte, Kelvin Preston, Kimbal Riley No changes Vista Entertainment Solutions Limited New Zealand 100% Matthew Cawte, Kelvin Preston, Kimbal Riley No changes Vista Entertainment Solutions (Asia) Sdn. Bhd. Malaysia 100% Matthew Cawte, Kelvin Preston, Kimbal Riley No changes Vista Entertainment Solutions (Canada) Limited Canada 100% Matthew Cawte, Kelvin Preston, Kimbal Riley No changes Vista Entertainment Solutions (NL) B.V. Netherlands 100% Matthew Cawte, Kelvin Preston, Kimbal Riley No changes Vista Entertainment Solutions (Spain), S.L.U. Spain 100% Matthew Cawte, Kelvin Preston, Kimbal Riley No changes Vista Entertainment Solutions (UK) Limited United Kingdom 100% Matthew Cawte, Kelvin Preston, Kimbal Riley No changes Vista Entertainment Solutions (USA), Inc. United States 100% Matthew Cawte, Kelvin Preston, Kimbal Riley No changes Vista Group Limited New Zealand 100% Kelvin Preston No changes Vista International Entertainment Solutions South Africa (Pty) Ltd South Africa 100% Matthew Cawte, Kelvin Preston, Kimbal Riley No changes Vista Latin America, S.A. de C.V. Mexico 60% Murray Holdaway, Kimbal Riley, Brian No changes Cadzow, Armando Mejias, Gustavo Ortega VPF Hub GmbH Germany 90% Sven Anderson No changes 72 Corporate governance • 73 Shareholder information Twenty largest shareholders Analysis of shareholdings as at 31 January 2022 Vista Group’s 20 largest shareholders and their shareholdings at 31 January 2022 are set out in the table below: RANK REGISTER NAME OF TOP 20 SHAREHOLDERS NUMBER OF SHARES % OF ISSUED SHARES Tea Custodians Limited 1 36,986,870 16.00% 1 2 3 4 5 6 7 8 9 NZL AUS AUS NZL AUS AUS NZL NZL NZL J P Morgan Nominees Australia Pty Limited Citicorp Nominees Pty Limited Citibank Nominees (NZ) Ltd 1 HSBC Custody Nominees (Australia) Limited National Nominees Limited National Nominees New Zealand Limited 1 Custodial Services Limited 17,575,479 14,036,453 11,049,462 9,265,237 8,368,749 7,794,922 7,501,118 New Zealand Superannuation Fund Nominees Limited 1 7,282,515 10 NZL 11 NZL Brian John Cadzow & Julie Ann Cadzow & Peter Allen Lewis Murray Lawrence Holdaway & Helen Rachel Geary & Stephen John Mcdonald 12 13 14 15 16 17 18 19 NZL NZL NZL NZL NZL NZL AUS NZL Bnp Paribas Nominees NZ Limited Bpss40 1 HSBC Nominees (New Zealand) Limited 1 Accident Compensation Corporation 1 New Zealand Depository Nominee Hobson Wealth Custodian Limited JPMORGAN Chase Bank 1 Bnp Paribas Noms Pty Ltd Bruce Alexander Wighton & Marianne Bachler & Peter John Clark 20 NZL Gregory James Trounson & Donald Mackenzie Gibson & Kathryn Mary Lee Trounson 7,049,065 6,786,000 6,724,516 6,510,183 6,353,504 5,106,647 5,022,344 4,355,548 3,780,309 3,668,995 2,763,883 7.60% 6.07% 4.78% 4.01% 3.62% 3.37% 3.24% 3.15% 3.05% 2.93% 2.91% 2.82% 2.75% 2.21% 2.17% 1.88% 1.63% 1.59% 1.20% SIZE OF HOLDING 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 50,000 50,001 to 100,000 > 100,000 Total NUMBER OF HOLDERS NUMBER OF SHARES HOLDING QUANTITY % 1,273 1,729 530 476 51 69 661,996 4,608,898 3,867,471 10,090,265 3,564,887 208,431,978 4,128 231,225,495 0.29% 1.99% 1.67% 4.36% 1.54% 90.14% 100.00% Substantial Product Holdings According to notices given under the Financial Markets Conduct Act 2013, the following persons were Substantial Product Holders in Vista Group ordinary shares at 31 December 2021 in respect of the number of voting securities set opposite their names: NAME OF SUBSTANTIAL PRODUCT HOLDER NUMBER OF SHARES Fisher Funds Management Limited FIL Limited Spheria Asset Management Pty Ltd 31,136,466 21,163,635 17,587,045 Total of top 20 shareholders Total shares on issue 177,981,799 231,225,495 76.97% 100.00% 1 Held through New Zealand Central Securities Depository Limited (NZCSD). NZCSD provides a custodial service that allows electronic trading of securities by its members. 74 Corporate governance • 75 Other disclosures Stock exchange listings Takeover offer protocol Credit rating Vista Group’s ordinary shares are listed and quoted Vista Group’s Board has adopted a Takeover As at the date of this Annual Report, Vista Group on the NZX and on the ASX (as an ASX Foreign Response Manual that provides a comprehensive does not have a credit rating. Exempt Listing). Waivers from NZX or ASX framework to be followed in the event that Vista Group receives, or in anticipation of receiving, a takeover offer. Vista Group has established Vista Group did not apply for, was not granted, and relationships with appropriate professional advisers did not rely on, any waivers from the NZX or ASX to support Vista Group and the Board through any during the year ended 31 December 2021. takeover offer process. The Takeover Response Exercise of NZX powers Manual provides for the establishment of a response committee to take all necessary actions in respect The NZX did not exercise any of its powers under of a takeover offer. The response committee is NZX Listing Rule 9.9.3 in relation to Vista Group comprised of Independent Directors, excluding any during the year ended 31 December 2021. director that has a direct or indirect relationship, Registration as a foreign company Vista Group has registered with the Australian including with the bidder or any significant shareholder in Vista Group, that could reasonably influence the director’s decision making in respect Securities and Investments Commission as a foreign of the takeover offer. company and has been issued with the Australian Registered Body Number of 600 417 203. Dividends ASX disclosures Vista Group holds a foreign exempt listing on the ASX. As a requirement of admission Vista Group must make the following disclosures: Due to the impacts of the COVID-19 pandemic on the global film industry and, in turn, on Vista Group’s businesses, the Board resolved not to pay a dividend in respect of the 2021 financial year. The Board will revisit payment of dividends once the • Vista Group’s place of incorporation Board reasonably determines that the impacts of is New Zealand. • Vista Group is not subject to Chapters 6, 6A, 6B and 6C of the Australian Corporations Act 2001 dealing with the acquisition of shares (including substantial holdings and takeovers). the pandemic on the global film industry and Vista Group’s businesses have sufficiently subsided. Current Dividend policy: Vista Group’s dividend policy is to pay 30% to 50% of net profit after tax, subject to immediate and future growth opportunities and identified capital expenditure requirements. Net tangible assets Vista Group’s net tangible assets per share (excluding treasury stock) as at 31 December 2021 was $0.21883400, compared with $0.27469786 at 31 December 2020 (restated due to the US sales tax provision, see section 8.1 of the financial statements). Donations and lobbying Vista Group made donations of $127,000 during the 2021 financial year (2020: $103,399). This included a donation of $100,000 to the Vista Foundation. Vista Group does not make donations to political parties and did not make any donations to a political party during the year ended 31 December 2021. Vista Group does not make any expenditures for lobbying purposes and did not make any expenditures for lobbying purposes during the year ended 31 December 2021. Modern slavery and human trafficking statement Vista Group has published a joint statement (on behalf of itself and Vista Entertainment Solutions (UK) Limited) setting out the steps it has taken during the 2021 financial year, and the actions it will take during the 2022 financial year, to identify and mitigate potential modern slavery and human trafficking risks related to its business and in its supply chains. The statement is available in Investor Centre section of Vista Group’s website at www.vistagroup.co.nz. 76 Corporate governance • 77 Information about Vista Group ordinary shares Information for shareholders This statement sets out information about the rights, privileges that attach to Vista Group ordinary shares. Rights and privileges Share cancellation Under Vista Group’s constitution and the In certain circumstances, Vista Group shares could Companies Act 1993, each Vista Group share gives be cancelled by the Company through a reduction the holder a right to: • attend and vote at a meeting of shareholders, including the right to cast one vote per share on a poll on any resolution, such as a resolution to: – appoint or remove a director; – adopt, revoke or alter the constitution; – approve a major transaction (as that term is defined in the Companies Act 1993); of capital, share buy-back or other form of capital reconstruction approved by the Board and, where applicable, the shareholders. Sale of less than a Minimum Holding Vista Group may, at any time, give notice to a shareholder holding less than a Minimum Holding of shares (as that term is defined in the NZX Listing – approve the amalgamation of Vista Group under Rules) that if, at the end of three months after the section 221 of the Companies Act 1993; or – place Vista Group into liquidation; • receive an equal share in any distribution, including dividends, if any, authorised by the Board and declared and paid by Vista Group in respect of that share; date the notice is given, shares then registered in the name of the holder are less than a Minimum Holding, Vista Group may sell those shares on market (including through a broker acting on Vista Group’s behalf), and the holder is deemed to have authorised Vista Group to act on behalf • receive an equal share with other shareholders of the holder and to sign all necessary documents in the distribution of surplus assets in any relating to the sale. liquidation of Vista Group; • be sent certain information, including notices of meeting and Vista Group reports sent to shareholders generally; and • exercise the other rights conferred upon a shareholder by the constitution and the Companies Act 1993. Shareholder enquiries Shareholders can view their investment portfolio, change their address, supply their email, update their details or payment instructions by contacting Vista Group’s share registrar Link Market Services Limited (see Directory for contact details) with their CSN and FIN numbers. Investor information Vista Group’s website at www.vistagroup.co.nz provides information regarding Vista Group, its Board, CEO, ELT and businesses. The Investor Centre section of Vista Group’s website includes all regular investor communications and reports, information on Vista Group’s latest operating and financial results, dividend payments, news and share price. Electronic shareholder communication Shareholders that would like to receive Vista Group communications and reports electronically can do this by updating their details with Vista Group’s share registrar, Link Market Services Limited. Shareholders can contact Link Market Services using the contact details included in the Directory. 78 Corporate governance • 79 Financial statements Directors’ report The Board of Directors present the financial statements of Vista Group for the year ended 31 December 2021 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 Vista Group as at 31 December 2021 and the results of Vista 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 28 February 2022. Susan Peterson James Ogden Chair Chair Audit and Risk Committee Income statement For the year ended 31 December 2021 CONTINUING OPERATIONS Total revenue Cost to serve2 Gross profit Sales and marketing costs Research and development costs General and administration costs Foreign currency (losses) / gains Total operating expenses2 EBITDA3 Amortisation Depreciation Finance costs Finance income Share of equity accounted loss from associates and JVs Other gains and losses Loss before tax Taxation benefit Loss for the year Loss for the year is attributable to: Owners of the parent Non-controlling interests Loss for the year SECTION 2.1, 2.2 2.3 2.3 2.3 2.3 2.3 2.2 4.5 4.2, 4.7 4.3 2.3 5.1 2021 NZ$m 98.1 (36.4) 61.7 (9.3) (22.3) (23.1) (0.5) (55.2) 6.5 (7.8) (6.1) (2.0) 0.5 (2.0) (1.4) 2020 NZ$m Restated1 87.5 (37.5) 50.0 (9.8) (18.8) (33.6) 0.8 (61.4) (11.4) (7.3) (10.4) (2.2) 0.7 (3.0) (31.3) (12.3) (64.9) 2.4 (9.9) (9.8) (0.1) (9.9) 7.8 (57.1) (51.8) (5.3) (57.1) Basic and diluted earnings per share (cents) 6.2 ($0.04) ($0.24) 1 See section 8.1 for information of restatement of prior period US sales tax obligations. 2 See section 1.2 for information on the reclassification of cost to serve and total operating expenses. 3 EBITDA is a non-GAAP measure which is defined as earnings before net finance costs, income tax, depreciation, amortisation, “other gains and losses” (see section 2.3) and share of equity accounted results from associates and joint ventures. 80 The above statement should be read in conjunction with the accompanying notes. Financial statements • 81     Statement of other comprehensive income For the year ended 31 December 2021 SECTION Items that may be reclassified subsequently to the income statement1 Translation of foreign operations Items that will not be reclassified to the income statement Excess income tax benefit on share-based payments 5.1 Total other comprehensive income / (loss) Loss for the year Total comprehensive loss for the year Total comprehensive loss for the year is attributable to: Owners of the parent Non-controlling interests Total comprehensive loss for the year 1 Items of other comprehensive income will be reclassified to the income statement when specific conditions are met. 2021 NZ$m 2.3 0.6 2.9 (9.9) (7.0) (7.0) - (7.0) 2020 NZ$m Restated (2.9) - (2.9) (57.1) (60.0) (54.9) (5.1) (60.0) Statement of changes in equity For the year ended 31 December 2021 ATTRIBUTABLE TO THE OWNERS OF THE PARENT CONTRIBUTED EQUITY RETAINED EARNINGS FOREIGN CURRENCY RESERVE SHARE- BASED PAYMENT RESERVE 2021 SECTION $NZm $NZm NZ$m NZ$m NON- CONTROLLING INTERESTS TOTAL EQUITY NZ$m NZ$m TOTAL NZ$m Balance at 1 January 2021 126.0 33.1 (0.5) 1.3 159.9 1.9 161.8 Total comprehensive income movement: Loss for the year Other comprehensive income2 Total comprehensive income / (loss) Transactions with owners: Share-based payments 6.1, 6.5 Distribution on wind-up of subsidiary - 0.6 0.6 4.7 - (9.8) - (9.8) - - - 2.2 2.2 - - - - - 0.4 - (9.8) 2.8 (7.0) 5.1 - (0.1) 0.1 - - (0.1) (9.9) 2.9 (7.0) 5.1 (0.1) Balance at 31 December 2021 131.3 23.3 1.7 1.7 158.0 1.8 159.8 2020 Balance at 31 December 2019 Prior period adjustments1 8.1 61.8 - 85.8 (0.9) Restated balance at 1 January 2020 61.8 84.9 2.6 - 2.6 2.1 - 2.1 Total comprehensive income movement: Restated loss for the year1 8.1 Other comprehensive (loss) / income2 Total comprehensive loss Transactions with owners: Issue of equity Step acquisitions 6.1 6.1 Share-based payments 6.1, 6.5 Dividends paid - - - (51.8) - - (3.1) (51.8) (3.1) 62.3 0.6 1.3 - - - - - - - - - - - - - - (0.8) - 152.3 (0.9) 151.4 (51.8) (3.1) 11.2 163.5 - (0.9) 11.2 162.6 (5.3) 0.2 (57.1) (2.9) (54.9) (5.1) (60.0) 62.3 0.6 0.5 - - (2.8) - (1.4) 62.3 (2.2) 0.5 (1.4) Restated balance at 31 December 2020 126.0 33.1 (0.5) 1.3 159.9 1.9 161.8 1 See section 8.1 for information of restatement of prior period US sales tax obligations. 2 Items of other comprehensive income will be reclassified to the income statement when specific conditions are met. 82 The above statement should be read in conjunction with the accompanying notes. The above statement should be read in conjunction with the accompanying notes. Financial statements • 83   Statement of financial position As at 31 December 2021 CURRENT ASSETS Cash Trade and other receivables Net investment in sublease Income tax receivable Total current assets NON-CURRENT ASSETS Property, plant and equipment Lease assets Net investment in sublease Investment in associates and JVs Goodwill Other intangible assets Deferred tax asset Total non-current assets Total assets CURRENT LIABILITIES Borrowings - related parties Trade and other payables Lease liabilities Deferred revenue Contingent consideration Provisions Income tax payable Total current liabilities NON-CURRENT LIABILITIES 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 4.1 4.8 4.2 4.7 4.8 4.3 4.4 4.5 5.2 3.2 4.6 4.7 4.9 4.10 3.2 4.7 4.9 4.10 5.2 6.1 6.4 6.5 2021 NZ$m 60.4 36.5 0.5 2.2 99.6 4.0 15.6 2.2 11.6 55.7 39.8 14.6 143.5 243.1 0.6 18.7 4.8 20.5 - 2.8 0.2 47.6 16.2 17.8 0.4 0.4 0.9 35.7 83.3 159.8 131.3 23.3 1.7 1.7 158.0 1.8 159.8 2020 NZ$m Restated 67.1 38.6 - 1.1 106.8 4.8 20.8 - 13.6 54.7 35.1 16.9 145.9 252.7 - 17.9 3.3 19.0 0.4 3.8 0.4 44.8 18.1 19.7 0.5 0.1 7.7 46.1 90.9 161.8 126.0 33.1 (0.5) 1.3 159.9 1.9 161.8 Statement of cashflows For the year ended 31 December 2021 CASHFLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees COVID-19 related wage subsidies COVID-19 related tax deferrals 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 Interest received Payment of contingent consideration Step acquisitions - Maccs and Cinema Intelligence Net cash applied to investing activities CASHFLOWS FROM FINANCING ACTIVITIES Issue of ordinary shares Lease payments - principal elements Loan drawdown - ASB Loan repayment - ASB Loan drawdown - HSBC PPP Loan repayment - HSBC PPP Loan drawdown - related parties Loan repayment - related parties Loan establishment fees - ASB Dividends / liquidation proceeds paid to non-controlling interests Net cash (outflow) / inflow from financing activities Net (decrease) / increase in cash Cash at beginning of year Foreign exchange differences Cash at year end SECTION 2.3 3.1 3.1 4.2 4.5 6.1 4.7 3.2 3.2 3.2 3.2 3.2 2021 NZ$m 105.7 (92.2) 3.1 (2.2) (1.6) (1.5) 11.3 (0.9) (11.9) 0.2 (0.3) - (12.9) - (3.0) - - - (2.8) 0.6 - - (0.1) (5.3) (6.9) 67.1 0.2 60.4 2020 NZ$m 86.6 (90.9) 5.9 4.0 (0.9) (1.7) 3.0 (1.4) (12.8) 0.5 - (3.3) (17.0) 62.3 (5.6) 31.2 (24.1) 3.2 - - (0.9) (0.2) (1.4) 64.5 50.5 19.5 (2.9) 67.1 For and on behalf of the Board who approved these financial statements for issue on 28 February 2022. 84 The above statement should be read in conjunction with the accompanying notes. Susan Peterson Chair James Ogden Chair Audit and Risk Committee The above statement should be read in conjunction with the accompanying notes. Financial statements • 85                   Notes to the financial statements 1. Basis of preparation General information The notes are consolidated into eight sections. Each section contains an introduction which is indicated by the symbol on the left. 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 detailed throughout the document, where 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 year 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 2.1 Revenue provisioning Section 2.3 Recognition of government grants Section 4.1 Expected credit loss (ECL) provisioning Section 4.4 Impairment testing of goodwill Section 4.5 Capitalisation of development costs Section 5.2 Recognition of deferred tax assets Impairment testing of internally generated software is no longer classified as a significant accounting estimate in the current year, as Vista Group believe the risk of a material adjustment to the carrying amount occurring in the next financial year to be low. Impairment testing of Vista China is no longer classified as a significant accounting estimate in the current year, as no impairment review was required to be performed. 1.1 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 28 February 2022. 1.2 Summary of significant accounting policies Basis of preparation 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 at historical cost, except for contingent consideration which is measured at fair value. Representation of these financial statements Reclassifications from the presentation in the 2020 Annual Report have been made for total revenue within section 2.1, total operating expenses within the income statement and section 2.3, and the segmental analysis in section 2.2. These reclassifications have been made to better represent the nature of the revenue and costs of a SaaS business; how key performance indicators are measured; and to allow for improved comparability. There is no change in the total revenue or total operating expenses recognised for the 2020 year. Segment disclosures for the prior comparative year for the Cinema and Corporate segments has been reclassified to include the $2.2m (2020: $1.5m) maintenance revenues from Vista China (an associate company) within the Cinema segment. This represents a change in the definition of these segments. The prior year comparatives are also restated to include the material US sales tax obligations that were identified in the 2021 economic nexus sales tax study, which was completed in the second half of 2021. See section 8.1 for more details. Basis of consolidation Vista Group’s financial statements consolidate those of the Company and its subsidiaries as at 31 December 2021. 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 income statement 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 to 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. New accounting standards There are no new or amended standards and interpretations which have been adopted in the year ended 31 December 2021 that have a material impact on Vista Group. Following the publication of the IFRS IC agenda decision on Configuration or Customisation costs in a Cloud Computing Arrangement in March 2021, Vista Group has considered and concluded that there is no change of accounting policy required. Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2021 reporting year and have not been early adopted by Vista Group. These standards are not expected to have a material impact on Vista Group in the current or future reporting years, or on foreseeable future transactions. 86 Notes to the financial statements • 87 2. Financial performance This section outlines further details of Vista Group’s financial performance by building on information presented in the income statement. Revenue process and policy The following details Vista Group’s new approach to categorising revenue: REVENUE CATEGORY REVENUE TYPE SEGMENT DESCRIPTION 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. SaaS revenue Recurring revenue Vista recurring subscriptions – annual fee Vista Cinema Revenue by category SaaS revenue Non-SaaS revenue Recurring revenue Perpetual software Hardware Services & development - one off Other revenue Non-recurring revenue Total revenue1 2021 2020 NZ$m 27.8 53.6 81.4 5.4 1.5 9.5 0.3 16.7 98.1 % 83% 17% 100% NZ$m 23.9 41.6 65.5 6.2 3.3 11.9 0.6 22.0 87.5 % 75% 25% 100% 1 See section 1.2 for information on the reclassification of total revenue. No individual customer exceeded 10% of revenue in either the current or prior comparative year. Non-GAAP financial measures 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 revenues that are expected to give rise to recurring cash receipts that will continue until the service is cancelled. 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. SaaS revenues are those derived from subscription-based cloud-hosted software, with the software located on externally provided servers. Non-SaaS revenues are those derived from recurring revenue streams that are not cloud-hosted software. Vista recurring subscriptions – variable fee Vista Cinema Movio Cinema – annual fee Movio Movio Cinema – variable fee Movio Movio Research – platform fee Movio Maccs platforms – annual fee AGC (Maccs) Maccs platforms – variable fee AGC (Maccs) Numero platform AGC (Numero) TIMING OF REVENUE RECOGNITION Over time - Benefits are simultaneously received and consumed; revenue is recognised over the contract term. Point in time - Variable fees recognised at the end of each month once usage-based quantities are known. Over time - Platform access is recognised over time as benefits are simultaneously received and consumed. Point in time - Variable license revenue is recognised at the end of each month once usage-based quantities are known. Over time - Platform access is recognised over time as benefits are simultaneously received and consumed. Over time - Platform access is recognised over time as benefits are simultaneously received and consumed. A subscription for the right to access the Vista Cinema cloud-hosted software. Variable revenue based on the number of tickets sold. Movio Cinema cloud-hosted data, marketing and analytics platform. Customers are charged an annual access fee to the platform plus a variable component (see below). Variable revenue based on the number of active members managed and the number of promotional messages sent during a given period. Movio Research cloud-hosted data, marketing and analytics platform. A subscription for the right to access the Maccs platforms, including Maccs Box, DCHub and Theatrical Distribution Services. Variable revenue based on the use of Maccs platforms, including Maccs Box, DCHub and Theatrical Distribution Services. Point in time - Variable license revenue is recognised at the end of each month once usage-based quantities are known. A subscription for the right to access cloud- hosted regular box office reporting. Over time - Platform access is recognised over time as benefits are simultaneously received and consumed. 88 Notes to the financial statements • 89 REVENUE CATEGORY Non-SaaS revenue Recurring revenue REVENUE TYPE SEGMENT DESCRIPTION On-premise subscription fees Vista Cinema Maintenance Vista Cinema / AGC (Maccs & Numero) A subscription for the right to access on- premise software (i.e. not hosted on the cloud). This service includes the right to basic support and any enhancements or upgrades in the software. Basic support and any enhancements or upgrade to the software. Services & development - recurring Vista Cinema / Movio / AGC (Maccs) Annually committed bespoke development of software. TIMING OF REVENUE RECOGNITION Over time - Benefits are simultaneously received and consumed; revenue is recognised over the subscription term. Over time - Benefits are simultaneously received and consumed; revenue is recognised over the maintenance term. Over time - Recognised when the service or development is complete or on a stage of completion basis. Showtimes platform AGC (Powster) Website and marketing platform for feature films, incorporating Showtimes data. Point in time - Recognised when the platform is made available to the customer. Non-recurring revenue Perpetual software Vista Cinema / AGC (Maccs) Perpetual ERP software license targeted at larger cinema circuits. Movio Media – targeted campaigns Movio Website development AGC (Powster) Services & development – one off Vista Cinema / Movio / AGC (Maccs) Hardware Vista Cinema Targeted marketing campaigns, digital advertising and reports. Creation of websites for new films about to be released. Fees charged for one off value-add services, implementation services and bespoke development of software. Revenue from the one- off sale of hardware. 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. Point in time - Revenue is recognised when the campaigns and reports are completed. Point in time - Recognised when the website has been delivered to the customer. Over time - Recognised when the service or development is complete or on a stage of completion basis. Point in time - Recognised at a point in time when delivery has been made. Revenue provisioning (significant judgement / estimate) As a result of the COVID-19 pandemic, there has been an increased risk that Vista Group is not able to recover all amounts billed due to the financial distress of its customers. As NZ IFRS 15 Revenue from Contracts with Customers only permits revenue to be recognised when it is probable that Vista Group will collect the consideration, significant judgement has been applied with revenue recognised after 1 March 2020 (the month that COVID-19 pandemic forced worldwide cinema closures). Judgements made when provisioning for revenue include: • Concession discounts: Many of Vista Group’s core customers are located in regions which have been affected by the COVID-19 pandemic (such as North America, Europe and Asia), where the majority of cinemas were closed during 2020 and the first quarter of 2021. To ensure timely payment, or to facilitate support to customers, Vista Group granted concessions to payment terms or discounts to recurring fees. Vista Group has worked closely with its customer base to provide appropriate relief, whilst seeking to reserve its position in respect of amounts contractually owed. Concession discounts are recognised as a reduction to revenue when they have been agreed, or where the customer has a reasonable expectation of being entitled to a discount. At 31 December 2021, Vista Group has applied judgement when determining the customers who have a reasonable expectation to receive a concession discount. For agreed concession discounts, a reduction in revenue and trade receivables were recognised throughout the year. For expected concession discounts, a reduction in revenue was recognised with a corresponding recognition of a concession discount provision, as presented in section 4.1. • Credit risk provision (core businesses): Vista Group applied judgement by classifying all revenues recognised after 1 March 2020 as ‘variable consideration’, meaning that only the estimated consideration that will be received is permitted to be recognised as revenue. This judgement was made because on average the amount of consideration that Vista Group ultimately expects to collect will be less than the price stated in the contract. Such revenue provisioning estimates require significant judgement, with any under/over estimation in the consideration received being recognised as an adjustment to revenue in a subsequent reporting period. In doing this, Vista Group assesses each of its customers for any known risk that may impact the ability to collect the associated consideration and their ability to pay the amounts invoiced. Where these facts are known, judgement has been applied to assess the amount that is likely to be collected. At 1 July 2021, Vista Group determined the health of the cinema industry had improved, with the risk of worldwide closures being considered less likely. Accordingly, Vista Group determined revenue would cease being treated as ‘variable consideration’, with any risk of default being encompassed in the expected credit loss provision (recognised as an expense on the income statement). The only exception being where revenue is recognised for customers who are deemed to be a liquidation risk. For revenues recognised between 1 March 2020 and 30 June 2021, a credit risk provision will remain being calculated as a reduction in revenue and trade receivables (as presented in section 4.1) until all associated invoices have been cleared. • Credit risk provision (Additional Group Companies): Customers in this segment are predominantly studios, each of whom have more diversified revenues (i.e. video on demand, television etc.). These customers predominantly settled their invoices during the COVID-19 pandemic and were not anticipated to have the same level of collectability issues. Accordingly, only minimal provisioning has been required on a customer-by-customer basis (within the specific provision). See section 4.1 for further details of the revenue provisions at 31 December 2021, including how these provisions add to the expected credit loss (ECL) provisions to show the proportion of total provisions against trade receivables and accrued revenues. A sensitivity analysis of credit risk is also available in section 4.1. 90 Notes to the financial statements • 91 2.2 Operating segments Operating segment performance Vista Group operates in the vertical cinema/film market via the following three reportable segments and a corporate segment. • Cinema segment: Software associated with cinema management via the Vista software suite of products, plus the cloud- based Veezi product for smaller scale cinemas. This segment also includes movieXchange and Share Dimension B.V. (Cinema Intelligence). This segment now includes maintenance revenues from Vista China (an associate company), and the prior comparative year has been reclassified accordingly. • Movio segment: Includes the Movio Cinema and Movio Media products, both of which provide data analytics and campaign management. • Additional Group Companies segment (AGC): An aggregation of Maccs, Powster, Flicks and Numero. None of these businesses individually exceed the 10% threshold for segment revenue or profitability that would require separate disclosure under NZ IFRS 8 Operating Segments. • Corporate segment: The shared services functions associated with Vista Group, being legal, finance and senior management. The prior comparative year has been reclassified as maintenance revenues from Vista China (an associate company) is now recognised in the Cinema segment. The Chief Executive and Board of Vista Group are collectively considered to be the CODM in terms of NZ IFRS 8. These segments have been defined based on the reports regularly reviewed by the CODM to make strategic decisions. 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. New Zealand United States United Kingdom Mexico Other1 Total revenue 1 The other category includes entities in Australia, Brazil, Germany, Malaysia, Netherlands, Romania and South Africa. Non-current assets by domicile of entity Non-current operating assets2 by location of the reporting entity are presented in the following table. New Zealand United States United Kingdom Mexico Other1 Non-current assets2 2021 NZ$m 17.7 32.6 29.0 9.3 9.5 98.1 2021 NZ$m 62.1 18.2 11.6 11.5 13.9 2020 NZ$m 17.7 29.4 24.8 5.9 9.7 87.5 2020 NZ$m 59.6 21.4 10.0 10.8 13.6 117.3 115.4 2021 SaaS revenue Non-SaaS revenue Recurring revenue Non-recurring revenue Total revenue Cost to serve Gross profit Gross profit %2 Sales and marketing costs1 Research and development costs1 General and administration costs1 ECL credit Foreign currency (losses) / gains EBITDA2 EBITDA margin2 2020 SaaS revenue Non-SaaS revenue Recurring revenue Non-recurring revenue Total revenue Cost to serve Gross profit Gross profit %2 Sales and marketing costs1 Research and development costs1 General and administration costs1 ECL expense Foreign currency gains / (losses) EBITDA2 EBITDA margin2 CINEMA1 NZ$m MOVIO NZ$m AGC CORPORATE1 NZ$m NZ$m 8.9 44.3 53.2 13.3 66.5 (25.5) 41.0 62% (5.2) (15.7) (8.4) 2.8 (0.7) 13.8 21% 6.8 33.8 40.6 17.7 58.3 (26.6) 31.7 54% (6.7) (12.5) (10.1) (6.2) 1.3 (2.5) -4% 14.0 0.4 14.4 0.7 15.1 (5.1) 10.0 66% (2.7) (3.3) (2.3) 0.2 0.1 2.0 13% 13.5 - 13.5 1.3 14.8 (5.5) 9.3 63% (2.3) (3.0) (3.2) (0.6) (0.3) (0.1) -1% 4.9 8.9 13.8 2.7 16.5 (5.8) 10.7 65% (1.4) (3.3) (4.8) 0.1 - 1.3 8% 3.6 7.8 11.4 3.0 14.4 (5.4) 9.0 63% (0.8) (3.3) (5.0) (0.1) (0.1) (0.3) -2% - - - - - - - - - (10.7) - 0.1 (10.6) - - - - - - - - - (8.4) - (0.1) (8.5) % OF REVENUE 37% 9% 23% 27% 43% 11% 21% 31% TOTAL NZ$m 27.8 53.6 81.4 16.7 98.1 (36.4) 61.7 63% (9.3) (22.3) (26.2) 3.1 (0.5) 6.5 7% 23.9 41.6 65.5 22.0 87.5 (37.5) 50.0 57% (9.8) (18.8) (26.7) (6.9) 0.8 (11.4) -13% 1 The other category includes entities in Australia, Brazil, Germany, Malaysia, Netherlands, Romania and South Africa. 2 As required by NZ IFRS 8, non-current operating assets in the table above excludes deferred tax assets and investments in associates and joint ventures 1 See section 1.2 for information on the reclassification of the various operating expenditure lines and the segmental reclassification of Vista China maintenance revenue. 2 EBITDA is defined in the non-GAAP financial measures section on the following page. Gross profit % and EBITDA margin are calculated as gross margin over total revenue and EBITDA over total revenue, respectively. 92 Notes to the financial statements • 93 Non-GAAP financial measures Personnel costs EBITDA is a non-GAAP financial measure that the CODM uses to evaluate the financial performance of Vista Group and its operating segments, because it closely correlates to operating cashflows. It is defined as earnings before net finance costs, income tax, depreciation, amortisation, “other gains and losses” (see section 2.3) and share of equity accounted results from associates and joint ventures. A reconciliation is provided on the income statement. 2.3 Expenses and other income Reclassification of expenses on the income statement Accruals for personnel costs, 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. Costs to serve are the direct costs incurred in deriving Vista Group’s revenue. Examples of such costs include hosting, technical staff, transaction fees and the cost of hardware. Other gains and losses Sales and marketing costs are those costs incurred by Vista Group in directly selling or marketing its products, including associated personnel costs, sales commissions, trade shows and customer conferences. This measure is calculated differently to prior reported years, where a significant portion of personnel costs were classified as part of the ‘administration expense’ designation. Research and development costs include staffing and supplier costs directly associated with the researching, developing and maintaining Vista Group’s software platforms. These costs are net of development costs which meet the criteria of being capitalised as an intangible asset. General and administration costs are the overhead costs incurred by Vista Group that are not directly associated with costs to serve, sales and marketing costs, or research and development costs. Amortisation and depreciation are separated from this category to improve a reader’s understanding of the financial statements. See section 1.2 for information on the reclassification of the various operating expenditure lines. Total cost to serve and operating expenses The table below provides a breakdown of the various types of expenditure incurred within ‘cost to serve’ and ‘operating expenses’. Direct cost of sales (excl. hardware and personnel) Hardware cost of sales1 Personnel costs Share-based payment expense Defined contribution plans and employee insurances Capitalised development Government grants Computer equipment and software Marketing costs Travel related costs ECL (credit) / expense Bad debt expense Foreign currency gains / (losses) Auditor's remuneration Other operating expenses Total cost to serve and operating expenses 1 Hardware cost of sales solely relate to the Cinema segment. SECTION 6.5 4.5 4.1 4.1 2021 NZ$m 11.2 1.3 68.0 5.2 6.7 (12.6) (5.2) 3.2 1.1 1.1 (3.1) 0.7 0.5 0.5 13.0 91.6 2020 NZ$m 11.0 3.0 69.4 0.5 7.1 (12.8) (8.5) 3.8 2.6 1.2 6.9 1.0 (0.8) 0.5 14.0 98.9 ‘Other gains and losses’ are excluded from operating expenses and EBITDA because they result from non-cash activities, or are not derived in the ordinary course of business. They have been disclosed separately in order to improve a reader’s understanding of the financial statements. Acquisition expenses Impairment charges Restructuring costs Sales tax expense Total other gains and losses SECTION 8.1 2021 NZ$m - (0.7) - (0.7) (1.4) 2020 NZ$m (0.2) (28.4) (2.1) (0.6) (31.3) Vista Group completed a US sales tax economic nexus study in 2021 which revealed sales taxes should have been charged to US-based customers (see sections 4.10 and 8.1 for further details). The associated cost is considered one-off and exceptional in nature, as it would not have been incurred if Vista Group collected the taxes from the customers. Impairment charges in 2021 relate to the subleased premises in Los Angeles, where the amount being received is less than the cost negotiated prior to the COVID-19 pandemic (see section 4.8). This impairment charge is attributable to the Cinema segment. Impairment charges in 2020 were a reduction of $11.6m to goodwill, $1.8m to intangible assets, $1.3m investment in Stardust and $13.7m investment in Vista China. Impairment charges relating to goodwill and investments in associates are attributable to the Corporate segment. Impairment charges relating to the investment in Vista China is attributable to the Cinema segment. Of the impairment charges relating to intangible assets, $1.2m related to Cinema, $0.4m related to Movio and $0.2m related to the AGC segments. In June 2020, Vista Group announced it had begun consultation with its New Zealand and United Kingdom based staff around a proposed new structure for its core businesses (Vista Cinema, Movio and the Corporate segments). This consultation period concluded in July 2020. 94 Notes to the financial statements • 95 Auditor’s remuneration included in administration costs Audit of financial statements Audit and review of financial statements - PwC Total audit fees 2021 NZ$m 0.5 0.5 2020 NZ$m 0.5 0.5 Vista Group engaged PwC to perform non-audit services relating to: • Assurances services: Relating to a review of R&D growth grants $nil (2020: $15k). • Advisory services: Tax advisory relating to long-term employee incentive schemes and CEO remuneration benchmarking $22k (2020: $89k). Fees paid to other audit firms for the audit of local subsidiary financial statements was less than $0.1m (2020: less than $0.1m). The non-audit services provided by these firms totalled $0.4m, and were all provided to Vista Group entities not audited by these firms (2020: less than $0.1m). Government grants (significant judgement / estimate) Government grants are recognised when there is reasonable assurance that the grant will be received and all attached conditions will be complied with. Government grants are recognised in the income statement within operating expenses on a systematic basis over the periods in which Vista Group recognises the related costs that the grants are intended to compensate. Grants relating to capitalised development are included within the cost of the developed intangible asset recognised. Total government grants recognised in the income statement during the year were $5.2m (2020: $8.5m). The cash amount of grants received during the year was $3.1m. Details of these grants are as follows: • HSBC PPP loan: In 2020, Vista Group entered into a US$2.0m loan arrangement with HSBC as part of the US Government paycheck protection program (PPP). This loan was a US Government designed incentive for businesses impacted by the COVID-19 pandemic to keep staff employed. Vista Group was entitled to apply for this loan to be forgiven if all employees were kept on the payroll for at least eight weeks and the money was used for payroll, rent, mortgage interest, or utilities. Forgiveness of this loan was obtained in 2021. Accordingly, the NZ$2.8m loan was de-recognised in 2021 with the associated credit being classified as a government grant within other income. • Wage subsidies: Vista Group received $0.3m of wage subsidies during the year from various governments (2020: $5.9m) which has been fully recognised in the income statement in the year they were received. The purpose of these subsidies was to help incentivise businesses to retain as many employees as possible. • Research & development grants: Vista Group enrolled to receive the New Zealand Research & Development Tax Incentive (RDTI) during the year. Vista Group believes it is entitled to this grant and has fulfilled the conditions, however the application is yet to be made and it also needs to be reviewed by the government departments administering the schemes. At 31 December 2021, Vista Group applied judgement by accruing $2.3m, which represents the amount Vista Group are reasonably assured will be received. Of this amount, $2.1m has been recognised as a government grant in the income statement, and $0.2m has been recognised as an offset to capitalised development in the statement of financial position. In the prior year, Vista Group recognised $2.6m of grants from Callaghan Innovation in New Zealand (Callaghan) and Ministry of Economic Affairs (WBSO) in Netherlands to assist with research and development. 3. Cash flows and borrowings This section outlines further details of Vista Group’s cash flows and liquidity. 3.1 Cash flows Reconciliation of net profit to operating cash flows Loss for the year Non-cash items: Amortisation Depreciation Impairment charges Share-based payment expense Deferred tax expense Non-cash finance charges Share of equity accounted loss from associates and JVs Unrealised foreign currency gains ECL (credit) / expense Movement in revenue provision - concession discounts Movement in revenue provision - credit risk Movement in other provisions Net non-cash items Movements in working capital: Increase in related party trade and other payables SECTION 4.5 4.2, 4.7 2.3 6.5 5.1 4.3 2.3 4.1 4.1 4.10 Decrease / (increase) in related party trade and other receivables, net of deferred revenue (Decrease) / increase in trade and other payables Decrease / (increase) in trade and other receivables, net of deferred revenue Increase in net taxation receivable Net change in working capital Net cash inflow from operating activities COVID-19 pandemic related tax deferrals 2021 NZ$m (9.9) 7.8 6.1 0.7 5.2 (3.9) - 2.0 1.5 (3.1) (4.1) 2.7 (0.7) 14.2 0.5 1.8 (0.9) 7.2 (1.6) 7.0 11.3 2020 NZ$m Restated (57.1) 7.3 10.4 28.4 0.5 (8.3) 0.5 3.0 (0.8) 6.9 5.7 6.3 1.9 61.8 0.6 (0.6) 4.9 (6.6) - (1.7) 3.0 To enable the reader to better understand the composition of the net cash inflow from operating activities on the statement of cash flows, the following items have been disaggregated from cash payments to suppliers and cash taxes paid. Government assistance - NZ PAYE tax deferral Government assistance - NZ loss carry back scheme COVID-19 related tax deferrals Vista Group repaid all PAYE tax deferrals in 2021 that were provided by the NZ Government. 2021 NZ$m (2.2) - (2.2) 2020 NZ$m 2.2 1.8 4.0 96 Notes to the financial statements • 97 3.2 Borrowings 4. Assets and liabilities Borrowings are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Borrowing costs are expensed as incurred. This section outlines further details of Vista Group’s financial performance by building on information presented in the statement of financial position. Carrying amount of borrowings Balance at 1 January Repayments during the year Drawdowns during the year PPP loan forgiveness during the year Movement in foreign exchange Total borrowings at year end Represented by: Borrowings - external Borrowings - related parties Total borrowings at year end Summary of debt facilities 2021 NZ$m 18.1 - 0.6 (2.8) 0.9 16.8 16.2 0.6 16.8 2020 NZ$m 10.9 (24.1) 34.4 - (3.1) 18.1 18.1 - 18.1 4.1 Trade and other receivables Carrying amount of trade and other receivables Trade receivables Accrued revenues Revenue provision - concession discount Revenue provision - credit risk ECL provision Sundry receivables Prepayments Vista China acquisition deposit Total trade and other receivables Trade receivables SECTION 2.1 2.1 2021 NZ$m 38.9 4.6 (1.4) (8.9) (4.6) 4.2 3.3 0.4 36.5 2020 NZ$m 47.5 5.9 (5.5) (6.2) (7.7) 1.7 2.5 0.4 38.6 FACILITY PROVIDER REASON FOR LOAN EXPIRY DATE INTEREST RATE DEBT DRAWN (NZ$m) CURRENT LIMIT (NZ$m) 2021 2020 2021 2020 Included within trade receivables in 2020 is a receivable from Vista China of $1.8m (current year: $nil), see section 8.2 for further details of Vista China related party transactions. Jan 2023 52.0 1.57% 1.40% 16.2 15.4 Accrued revenues Accrued revenues are contract assets related to revenue that are recognised on customer contracts where Vista Group’s performance obligations have been fully satisfied, but billing is not contractually due until a subsequent date. The movement in accrued revenues during the year was as follows: ASB - revolving credit General commercial / Future acquisitions / SaaS project ASB - overdraft Working capital On demand HSBC - PPP loan Working capital Repaid Related parties Working capital On demand Total borrowings at year end 2.0 - 0.6 54.6 4.78% - 4.00% 4.59% 1.00% - - - 0.6 - 2.7 - A line fee of 1.0% is also paid on the credit limit of the ASB revolving credit facility. ASB facilities are secured by an interest in Vista Group’s tangible assets. Agreed covenants include: • Gearing ratio of not greater than 2.5 times. • Interest cover of equal or greater than 3.0 times. • A rolling 12 month normalised EBITDA of the charging group not being less than 50% of Vista Group at 31 December 2020; 60% at 30 June 2021; 70% at 31 December 2021; and 80% from 31 March 2022. Vista Group has been compliant with all ASB covenants for both the current and prior reporting years. Vista Group has no reason to believe that it will not be compliant with these covenants for at least the next 12 months. The HSBC PPP loan was forgiven during the current year. See section 2.3 for more details. The related party loan has been provided by the co-shareholder of Powster which is unsecured, incurs interest at 4% per annum and is repayable on demand. 16.8 18.1 Balance at 1 January Amounts included in opening balance released in the current year Additional accrued revenues recognised during the year Exchange movements Accrued revenues at year end ECL provisioning (significant judgement / estimate) 2021 NZ$m 5.9 (5.0) 3.5 0.2 4.6 2020 NZ$m 13.2 (10.3) 3.0 - 5.9 For trade receivables and accrued revenues, Vista Group applies the simplified approach permitted by NZ IFRS 9 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Trade receivables and accrued revenues 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. 98 Notes to the financial statements • 99                     To measure ECL, trade receivables and accrued revenues have been grouped and reviewed based on the number of days past due. The ECL has been calculated by considering the impact of the following characteristics: • The baseline characteristic considers the age of each invoice and applying an increasing ECL 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 makes up more than 45% of the total trade receivable for a specific customer, a further provision for ECL 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. The COVID-19 pandemic has resulted in a significant level of risk that Vista Group is not able to recover all trade receivables and accrued revenues due to its customers’ financial distress, including where those customers suffer insolvency. Accordingly, Vista Group applied additional judgement in determining the ECL provision at 31 December 2021. • Specific provision: All customer invoices and accrued revenues have been reviewed with a specific provision made for customers that are known to have liquidity / solvency issues, or where the debt is older than 180 days. At 31 December 2021, Vista Group applied judgement by including a 10% insolvency risk for all Cinema or Movio segment customers. This percentage has been reduced from the 15% rate applied at 31 December 2020, as the outlook for our customers has improved with circa 87% of global cinemas now open and Hollywood movie content now being released. Vista Group has also noted the number of customers being forced into chapter 11 bankruptcy, or liquidation, appears to be lower than industry experts reported may eventuate. • General provision: Vista Group applies an ECL matrix to its trade receivables and accrued revenues to determine its general ECL provision. This matrix was prepared using historical loss rates, updated to also include both the current and future economic environment (both of which are largely unknown). To avoid double counting, the specific and general ECL provisions are calculated after deducting the associated amount recognised as a revenue provision (see section 2.1 for more details). The movement in the ECL provision during the year was as follows: Balance at 1 January Bad debts written off Change in provision ECL provision at year end 2021 NZ$m 7.7 (0.7) (2.4) 4.6 The table below illustrates how the carrying value of the ECL has been derived: 2021 Net trade receivables and accrued revenues1 Baseline Aging, write offs and collection Country, customer and market ECL - general provision ECL - specific provision Total ECL provision 0-90 DAYS NZ$m 25.4 0.5 - 0.1 0.6 1.9 2.5 91-180 DAYS NZ$m 181-270 DAYS NZ$m 271-360 DAYS 361+ DAYS NZ$m NZ$m 4.0 0.1 - - 0.1 0.5 0.6 1.3 0.1 - - 0.1 0.1 0.2 1.1 0.1 - - 0.1 - 0.1 1.8 - 0.1 - 0.1 1.1 1.2 2020 NZ$m 1.2 (1.0) 7.5 7.7 TOTAL NZ$m 33.6 0.8 0.1 0.1 1.0 3.6 4.6 General provision effective rate 2.4% 2.5% 7.7% 9.1% 5.6% 3.0% 1 Net trade receivables and accrued revenue includes the impact of concession discounts and credit risk provisioning. 2020 Net trade receivables and accrued revenues1 Baseline Aging, write offs and collection Country, customer and market ECL - general provision ECL - specific provision Total ECL provision 0-90 DAYS NZ$m 25.8 0.2 2.3 0.1 2.6 0.1 2.7 91-180 DAYS NZ$m 181-270 DAYS NZ$m 271-360 DAYS 361+ DAYS NZ$m NZ$m 6.8 0.1 0.4 - 0.5 - 0.5 4.3 0.1 0.2 - 0.3 0.2 0.5 2.9 0.1 0.3 - 0.4 1.7 2.1 TOTAL NZ$m 41.7 0.5 3.2 0.1 3.8 3.9 7.7 9.1% 1.9 - - - - 1.9 1.9 - General provision effective rate 10.1% 7.4% 7.0% 13.8% 1 Net trade receivables and accrued revenue includes the impact of concession discounts and credit risk provisioning. Total revenue and ECL provisioning The below table highlights the proportion of total provisioning made against trade receivables and accrued revenues. Vista Group believe that cumulative ECL and revenue provisions of 34.3% was a reasonable level to provide against trade receivables and accrued revenues in such an uncertain time. Trade receivables and accrued revenues Revenue provision - concession discount Revenue provision - credit risk ECL provision Total provisioning 2021 NZ$m 43.5 1.4 8.9 4.6 14.9 2020 NZ$m 53.4 5.5 6.2 7.7 19.4 Total provisioning effective rate 34.3% 36.3% One of the key judgements was that 10% of core business receivables may not be collectible. The following illustrates the sensitivity of this judgement. 2021 Revenue provision - concession discount Revenue provision - credit risk ECL provision Total provisioning of trade receivables and accrued revenues Total provisioning effective rate 5% JUDGEMENT 10% JUDGEMENT 15% JUDGEMENT NZ$m NZ$m NZ$m 1.4 8.7 3.7 13.8 31.7% 1.4 8.9 4.6 14.9 34.3% 1.4 9.1 5.5 16.0 36.8% 100 Notes to the financial statements • 101 4.2 Property, plant and equipment 4.3 Investment in associates and joint ventures Property, plant and equipment are measured at cost less accumulated depreciation and impairment charges. Cost includes expenditure that is directly attributable to the acquisition of the asset. Associates are entities which 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. 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: Joint ventures are entities 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. • Fixtures and fittings 7 to 10 years, or the term of any associated property lease • Computer equipment 2 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. Carrying amount of property, plant and equipment 2021 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 Property, plant and equipment at 31 December 2021 2020 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 Property, plant and equipment at 31 December 2020 102 FIXTURES & FITTINGS NZ$m COMPUTER EQUIPMENT NZ$m 6.4 0.1 (1.4) 0.2 5.3 (2.9) (0.8) 1.4 - (2.3) 3.0 7.9 0.6 (2.3) 0.2 6.4 (2.3) (2.7) 2.3 (0.2) (2.9) 3.5 4.3 0.8 (3.1) 0.3 2.3 (3.0) (1.1) 3.0 (0.2) (1.3) 1.0 3.5 0.8 (0.1) 0.1 4.3 (1.8) (1.1) 0.1 (0.2) (3.0) 1.3 TOTAL NZ$m 10.7 0.9 (4.5) 0.5 7.6 (5.9) (1.9) 4.4 (0.2) (3.6) 4.0 11.4 1.4 (2.4) 0.3 10.7 (4.1) (3.8) 2.4 (0.4) (5.9) 4.8 Investments in both associates and joint ventures are accounted for using the equity method of accounting, after initially being recognised at cost. Equity accounted results continue to reflect depreciation based on the original cost of the assets. In the event of loss of control of a subsidiary, resulting in an associate company, the carrying amount of the associate 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 is tested for impairment in accordance with NZ IAS 28 Investments in Associates and Joint Ventures, where an impairment review is completed at the end of any reporting period if (and only if) there is objective evidence of impairment. Paragraph 41A of the standard defines the loss events that would trigger an impairment review in any reporting period. 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  INVESTMENT TYPE COUNTRY OF REGISTRATION COUNTRY OF BUSINESS 2021 2020 HOLDING PERCENTAGE Vista Entertainment Solutions (Shanghai) Limited Associate China China 47.5% 47.5% Stardust Solutions Limited Joint Venture New Zealand United States - 43.8% During the current year, the Board of Stardust resolved to discontinue Stardust’s operations. The carrying value of Stardust in these financial statements was already nil. The following disclosures have been reduced from prior years as Vista Group no longer consider Vista China or Stardust to be a material component of Vista Group’s market capitalisation. Carrying value of associates and joint ventures Opening net assets Loss for the year Capital contributed by other shareholders Closing net assets Vista Group weighted average shareholding Share of closing net assets Goodwill Accumulated impairment charges Carrying value of associates and JVs at year end STARDUST VISTA CHINA 2021 NZ$m 2.6 (2.9) 0.3 - - - - - - 2020 NZ$m 2.3 (0.6) 0.9 2.6 48.5% 1.3 - (1.3) - 2021 NZ$m 14.9 (4.2) - 10.7 47.5% 5.1 20.2 (13.7) 2020 NZ$m 20.8 (5.9) - 14.9 47.5% 7.1 20.2 (13.7) 11.6 13.6 Notes to the financial statements • 103 Share of equity accounted losses 4.4 Goodwill Loss for the year Vista Group weighted average shareholding Vista Group share of equity accounted losses VISTA CHINA 2021 NZ$m (4.2) 47.5% (2.0) 2020 NZ$m (5.9) 47.5% (2.8) The 2020 share of equity accounted losses of $3.0m included $0.2m from Stardust. Vista Group applies judgement converting Vista China’s results to align with their NZ IFRS accounting policies. In the current year, this included a 100% ECL provision against the $3.3m (CNY14.3m) shareholder loan Vista China provided to Beijing Weying Technology Co. Ltd (“Weying”) (see section 8.2). Excluding this judgement, the Vista China loss for the year would have been $0.9m. 2021 impairment testing of Vista China At 31 December 2021, Vista Group reviewed its net investment in Vista China for objective evidence of impairment and concluded this definition was not met. In accordance with NZ IAS 28, no impairment review was performed at 31 December 2021. 2020 impairment testing of Vista China (significant judgement / estimate) At 30 June 2020, Vista Group reviewed its net investment in Vista China for objective evidence of impairment and concluded this definition was met due to significant adverse effects in the Chinese cinema industry. For example, all cinemas either had been, or continued to be, closed for an undetermined period due to the COVID-19 pandemic. This resulted in a decline of Vista China’s cash inflows and Vista Group expected Vista China to have sustained effects in their medium-term cash inflows as the business recovered from the pandemic. Accordingly, an independent valuation of Vista China was prepared by an external valuation expert using a combined discounted cash flow (DCF) and capitalisation of revenue method. This combined approach represents a fair value less costs to dispose (FVLCD) methodology which uses level 3 fair value measurements. The key inputs applied by the external valuation expert into the valuation models were: • Revenue multiple: a range of 2.0x to 2.5x, based on Vista Group’s historical trading multiples. • Discount rate applied in DCF: a range of 13.0-16.0%, based on authoritative studies into the rates of return required by venture capital firms of China-based companies. • Exit multiple applied in DCF terminal growth: 2.5x, based on the upper end of the revenue multiple range, as by 2030 Vista China is assumed to be well established in the Chinese market. • Revenue compound annual growth rate (CAGR) applied in DCF: Between 2019 and 2030, the effective revenue CAGR is 3.5%. A control discount of 10.0% and selling costs of 2.0% of Vista Group’s 47.5% stake were applied to the valuation. To be cautious in a time of such uncertainty, Vista Group applied judgement by applying the lower end of the valuation range. The result of this external valuation was Vista Group’s equity accounted carrying value of Vista China ($28.3m) exceeded its recoverable amount ($14.6m) by $13.7m and therefore a corresponding impairment charge has been recognised in the income statement. 2020 impairment testing of Stardust (significant judgement / estimate) At 30 June 2020, Vista Group reviewed its net investment in Stardust for objective evidence of impairment and concluded this definition was met due to significant financial difficulty in the joint venture. This was due to a combination of the revenue streams yet to be commercialised; an unsuccessful search for external investors; the COVID-19 pandemic environment; and the reliance on existing shareholders to continue cash funding of the business operations. Due to the above objective evidence of impairment, Vista Group determined there were no reasonable valuation techniques that would indicate this entity to have any value. Accordingly, Vista Group determined the recoverable amount as $nil with an impairment charge of $1.3m being recognised on the income statement. 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 management judgement. Goodwill is not amortised and is tested for impairment annually irrespective of whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. After initial recognition, goodwill is measured at cost less any accumulated impairment charges. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment charge is recognised if the carrying amount of an asset exceeds its recoverable amount. Impairment charges are recognised in the income statement. The recoverable amount of an asset is the greater of its value in use (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 (i.e. Cash Generating Units, or 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. Carrying amount of goodwill Gross carrying amount Balance at 1 January Numero acquisition Exchange differences Gross carrying amount at year end Accumulated impairment Balance at 1 January Impairment charges recognised during the year Accumulated impairment at year end Goodwill at year end Goodwill by CGU Vista Entertainment Solutions Limited (VESL) Virtual Concepts Limited (Movio) MACCS International BV (Maccs) Powster Limited (Powster) Flicks.co.nz Limited (Flicks) Numero Limited (Numero) Goodwill at year end 2021 NZ$m 69.9 - 1.0 70.9 (15.2) - (15.2) 55.7 2021 NZ$m 26.0 17.0 5.5 6.4 0.2 0.6 55.7 2020 NZ$m 73.5 (2.7) (0.9) 69.9 (3.6) (11.6) (15.2) 54.7 2020 NZ$m 25.1 17.0 5.7 6.1 0.2 0.6 54.7 The above CGUs are business operations at their lowest level where goodwill is monitored for internal management reporting purposes. On 3 December 2020, Vista Group acquired the remaining 50.0% stake in Cinema Intelligence. In the current year, Cinema Intelligence has been integrated with VESL as the future cash inflows can no longer be segregated from VESL. For this reason, Cinema Intelligence is now included within the VESL CGU. 104 Notes to the financial statements • 105         2021 impairment testing of goodwill (significant judgement / estimate) 2020 impairment testing of goodwill (significant judgement / estimate) Vista Group completed its annual impairment review of goodwill under a VIU method at 31 August 2021, as the review is required to be completed at the same time each year. The review concluded there was no impairment of goodwill or other assets during the year. Key inputs into the VIU models include: • Cash flows projected based on management approved 5-year business models for each CGU. • Discount rate determined by an independent adviser using the Capital Asset Pricing Model (CAPM) methodology of determining the weighted average cost of capital (WACC), using market specific inputs. • Long-term growth rate (LTGR) determined by an independent adviser, being the 2025 consumer price inflation (CPI) of the country each CGU is headquartered (source: The Economist Intelligence Unit). • Terminal growth being calculated at 2026 applying the LTGR. The key assumptions used for the VIU calculation are as follows: CGU VESL Movio Flicks Maccs Powster Numero 5-YEAR REVENUE CAGR PRE-TAX WACC LONG-TERM GROWTH RATE 2021 VIU 2020 VIU 2021 VIU 2020 VIU 2021 VIU 2020 VIU 20.4% 18.5% 44.7% 14.4% 15.7% 29.8% 5.9% 6.3% 9.0% 6.9% 6.2% 15.5% 14.4% 15.4% 19.0% 14.4% 14.1% 18.6% 14.8% 15.5% 17.4% 15.2% 15.2% 17.2% 2.0% 2.0% 2.0% 2.2% 1.7% 1.8% 2.0% 2.0% 2.0% 2.0% 1.5% 2.0% The 5-year revenue CAGR has increased from the prior year due to the comparative being a lower base number, as well as it becoming clearer of how each CGU will emerge from the COVID-19 pandemic. Both the Flicks and Numero revenue growth is considered riskier than other CGUs, as they include growth from a Board approved expansion into new markets (Flicks), or a reliance on obtaining cinema data from a key cinema chain (Numero). Accordingly, an additional premium has been applied to the WACC of these CGUs. Based on previous experience, Vista Group applied judgement in determining a reasonably possible change in the key assumptions in the VIU models. Specifically pertaining to the reduced revenue CAGR, prudence has been applied in the VIU models as neither expenditure (direct or indirect) nor capital expenditure are reduced, which would likely occur if revenues did not grow at anticipated growth levels. The CGUs that would result in a potential impairment scenario are as follows: CGU VESL Movio Flicks Maccs Powster Numero AMOUNT THE VIU EXCEEDS THE CARRYING VALUE NZ$m  INPUT REQUIRED FOR THE VIU TO EQUATE TO THE CARRYING VALUE REVENUE CAGR WACC GROWTH RATE 115.0 27.1 6.3 2.6 12.3 10.1 17.4% 15.3% 38.7% 13.6% 12.3% 23.3% Not sensitive Not sensitive Not sensitive 16.3% Not sensitive Not sensitive Not sensitive Not sensitive Not sensitive Not sensitive Not sensitive Not sensitive Vista Group completed a review for indicators of impairment at 31 December 2021, with no such indicators being found. At 30 June 2020, Vista Group concluded the COVID-19 pandemic was an indicator of impairment which required an impairment review of goodwill and other assets. With cinemas either not being open, or able to function to capacity, the COVID-19 pandemic had directly impacted all parts of the cinema industry. For each of the Vista Group’s CGUs, their short-term revenue streams were directly impacted through lower demand from cinemas, studios and distributors. This impairment review was performed using a VIU method, as Vista Group applied judgement on determining a VIU method was highly probable to result in a higher recoverable amount than a FVLCD method. Key inputs into the VIU models are the same as the 2021 annual impairment review, with variables included in that section. The CGU’s resulting in an impairment charge were Flicks ($0.4m), Maccs ($7.1m), Powster ($1.3m) and Numero ($2.8m). Full details of the 2020 impairment review, including sensitivity disclosures, are included in the 2020 Annual Report. 4.5 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 charges. 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 income statement as incurred. Development – capitalised: Internally developed software is capitalised as an intangible asset when they meet the recognition criteria of NZ IAS 38 Intangible Assets (see below). 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. Other intangible assets Intangible assets are amortised on a straight-line basis over the following useful economic lives: • Intellectual property 4 to 15 years • Customer relationships 4 to 15 years • Software licenses 2 to 15 years • Internally generated software 2.5 to 5 years based on their estimated useful life. Capitalisation of development costs (significant judgement / estimate) 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. 106 Notes to the financial statements • 107 2021 impairment testing of internally generated software Vista Group reviewed the carrying value of its internally generated software assets for indicators of impairment at 31 December 2021. No such indicators were noted. In accordance with NZ IAS 36 Impairment of Assets, no impairment review was performed at 31 December 2021. 2020 impairment testing of internally generated software (significant judgement / estimate) At 30 June 2020, Vista Group reviewed all internally generated software assets for impairment. When doing so, significant judgement was required to determine the recoverable amount of each asset (estimated to be the future economic benefits that would be derived). The delta between the recoverable amount (calculated using a VIU method) and the carrying value of each asset was recognised as an impairment charge in 2020. The recoverable amount for the portion of internally generated software for which an impairment charge was recognised is $1.8m. The discount rate applied in present valuing was 2.4%, which equated to Vista Group’s cost of ASB debt (inclusive of the line fee) at 30 June 2020. Carrying amount of intangible assets 2021 Gross carrying amount Balance at 1 January Additions Disposals Exchange differences Balance at year end Accumulated amortisation Balance at 1 January Current year amortisation Disposals Exchange differences Balance at year end Intangible assets at 31 December 2021 2020 Gross carrying amount Balance at 1 January Additions Numero acquisition Impairment charges Balance at year end Accumulated amortisation Balance at 1 January Current year amortisation Impairment charges Balance at year end Intangible assets at 31 December 2020 INTERNALLY GENERATED SOFTWARE SOFTWARE LICENSES INTELLECTUAL PROPERTY CUSTOMER RELATIONSHIPS NZ$m NZ$m NZ$m NZ$m 38.1 12.6 (0.1) - 50.6 (9.4) (6.4) 0.1 - (15.7) 34.9 27.5 12.8 - (2.2) 38.1 (4.6) (5.2) 0.4 (9.4) 28.7 4.9 - (0.1) (0.2) 4.6 (2.1) (0.5) 0.1 0.1 (2.4) 2.2 2.5 - 2.4 - 4.9 (1.3) (0.8) - (2.1) 2.8 2.7 - (0.1) - 2.6 (1.7) (0.2) 0.1 - (1.8) 0.8 2.4 - 0.3 - 2.7 (1.4) (0.3) - (1.7) 6.8 - (0.8) - 6.0 (4.2) (0.7) 0.8 - (4.1) 1.9 5.5 - 1.3 - 6.8 (3.2) (1.0) - (4.2) 1.0 2.6 TOTAL NZ$m 52.5 12.6 (1.1) (0.2) 63.8 (17.4) (7.8) 1.1 0.1 (24.0) 39.8 37.9 12.8 4.0 (2.2) 52.5 (10.5) (7.3) 0.4 (17.4) 35.1 4.6 Trade and other payables Carrying amount of trade and other payables Trade payables Sundry accruals Employee benefits Total trade and other payables 2021 NZ$m 2.1 7.0 9.6 18.7 2020 NZ$m 5.0 3.5 9.4 17.9 Included in trade payables is a balance of $1.2m (2020: $0.7m) payable to the associate company Vista China, see section 8.2 for further details of Vista China related party transactions. 4.7 Lease assets and lease liabilities Vista Group predominantly leases property for fixed periods of 1-7 years, but these leases often 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. The lease term is reassessed if an option is actually exercised (or not exercised) or if Vista Group becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee. 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. If Vista Group is reasonably certain to exercise a purchase option, the lease asset is depreciated over the underlying asset’s useful life. Vista Group elected to apply NZ IFRS 16 Leases to all short-term leases. 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. Vista Group received COVID-19 pandemic related rent concessions through deferral of lease payments. The concession is in the form of the lease payments being rescheduled rather than reduced, thus the consideration for the lease did not change. Vista Group assessed that since the deferral is proportionate, it is not considered as a lease modification. Accordingly, the lease liability was adjusted, and any corresponding gain was recognised at the time when the deferral was granted. Cash additions for the year were $11.9m (2020: $12.8m), with $0.9m being a trade payable at 31 December 2021, and $0.2m being accrued as a receivable for the RDTI (see section 2.3). 108 Notes to the financial statements • 109 Carrying amount of lease assets Carrying amount of net investment in sublease asset Balance at 1 January Additions during the year Adjustments in respect of assumed lease term Current year depreciation Amounts derecognised due to sublease Exchange differences Lease assets at year end 2021 NZ$m 20.8 2.4 (0.5) (4.2) (3.3) 0.4 15.6 2020 NZ$m 21.8 7.4 (1.2) (6.6) - (0.6) 20.8 The prior year lease asset includes $0.7m relating to extension options that Vista Group had taken up. No lease extension options have been included in the current year lease asset. Balance at 1 January Additions during the year Lease payments received (including interest) Exchange differences Net investment in sublease at year end Represented by: Current portion Non-current portion Net investment in sublease at year end 2021 NZ$m - 2.7 (0.1) 0.1 2.7 0.5 2.2 2.7 2020 NZ$m - - - - - - - - Carrying amount of lease liabilities Balance at 1 January Additions during the year Adjustments in respect of assumed lease term Interest expense relating to lease liabilities Repayment of lease liabilities (including interest) Exchange differences Lease liabilities at year end Maturity of lease liabilities Less than one year One to five years More than five years Lease liabilities at year end 2021 NZ$m 23.0 2.4 (0.5) 0.8 (3.8) 0.7 22.6 2021 NZ$m 4.8 17.8 - 22.6 2020 NZ$m 23.5 7.4 (1.3) 0.8 (6.4) (1.0) 23.0 2020 NZ$m 3.3 17.9 1.8 23.0 4.8 Net investment in sublease asset When Vista Group acts as a sublessor, it determines at the inception of the contract whether the lease is a finance lease (where the lease transfers substantially all the risks and rewards incidental to ownership of the underlying asset) or an operating lease (any lease that does not fit the criteria of a finance lease). A sublease that fits the finance lease criteria is recognised as an asset by present valuing all future lease payments. The sublease asset reduces on receipt of future lease payments. Unwinding of the present valued subleased asset is recognised on the income statement as finance income. At the end of each reporting period, the subleased asset is tested for impairment. A gain or loss is recognised at the start of the sublease where there is a difference between the value of the sublease and the amount of the existing lease asset that is derecognised. A sublease that fits the criteria as an operating lease is not recognised as an asset, instead it is recognised as other income on the income statement when the receipt is contractually due. On 11 August 2021, Vista Group agreed to sublease a portion of its Los Angeles premises for the remainder of its leased term (30 June 2026). Maturity of net investment in sublease asset Less than one year One to five years More than five years Total undiscounted lease payments receivable Unearned finance income Net investment in sublease at year end 4.9 Deferred revenues 2021 NZ$m 0.6 2.3 - 2.9 (0.2) 2.7 2020 NZ$m - - - - - - Deferred revenues are contract liabilities related to revenue that are recognised on customer contracts where Vista Group’s performance obligations have not been fully satisfied. The following table represents the revenues recognised during the year relating to carried forward deferred revenue, as well as the additional deferred revenues recognised at year end where the performance obligations are yet to be satisfied. Balance at 1 January Revenue recognised from performance obligations satisfied in the year Additional deferred revenues from unsatisfied performance obligations Exchange movements Deferred revenues at year end Represented by: Current portion Non-current portion Deferred revenues at year end 2021 NZ$m 19.5 (17.7) 18.9 0.2 20.9 20.5 0.4 20.9 2020 NZ$m 23.1 (21.0) 16.9 0.5 19.5 19.0 0.5 19.5 110 Notes to the financial statements • 111   4.10 Provisions A provision is a liability of uncertain timing or amount and is recognised when: • Vista Group has a present obligation (legal or constructive) as a result of a past event; • It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and • A reliable estimate can be made of the amount of the obligation. Carrying amount of provisions US sales taxes Organisation restructuring Lease dilapidations Onerous contracts Other Total provisions at year end Represented by: Current Non-current Total provisions at year end Movement in provisions Balance at 1 January US sales taxes Organisation restructuring Movement in lease dilapidations Onerous contracts Other Total provisions at year end US sales tax provision SECTION 8.1 SECTION 8.1 2021 NZ$m 2.8 - 0.4 - - 3.2 2.8 0.4 3.2 2021 NZ$m 3.9 0.8 (0.1) (0.1) (0.8) (0.5) 3.2 2020 NZ$m Restated 2.0 0.1 0.5 0.8 0.5 3.9 3.8 0.1 3.9 2020 NZ$m Restated 1.9 0.7 0.1 (0.1) 0.8 0.5 3.9 One of the primary markets for Vista Group’s products is the United States. Sales tax obligations in the United States can arise in individual states where Vista Group is deemed to have a sales tax nexus. With the assistance of external US sales tax experts, Vista Group completed an economic nexus study during H2 2021. This involved a full review of all sales in each state from the end of 2018 (the date when states were able to first legislate nexus testing) to determine if an economic sales tax nexus was triggered. The result of the economic nexus review was that Vista Group had an obligation for Vista Group to register and collect sales tax in some states. The total obligation is estimated to be $2.8m (of which $1.3m relates to 2019, $0.7m relates to 2020 and $0.8m relates to 2021). Vista Group are now working with the relevant state sales tax authorities to settle these obligations and registering in the states identified. As the identified sales tax obligation at 31 December 2020 of $2.0m is considered to be a material prior year error, Vista Group were required to correct the error in these financial statements by restating the comparative amounts in the year the error occurred (see section 8.1 for details on the prior year restatement). The following represents the provision (net of any reasonably expected penalty or tax waivers) at the end of each reporting period: Balance at 1 January Sales tax expense Use of money interest Exchange differences US sales tax provision at year end 5. Taxation 2021 NZ$m 2.0 0.5 0.1 0.2 2.8 2020 NZ$m Restated 1.3 0.8 0.1 (0.2) 2.0 2019 NZ$m Restated - 1.2 0.1 - 1.3 This section outlines details of the income tax expense incurred by Vista Group and the deferred taxes recognised on the statement of financial position. 5.1 Income tax expense The income tax expense for the year comprises current and deferred tax. Taxation is recognised in the income statement, except when it relates to items recognised directly in equity (in which case the income tax is recognised in the statement of comprehensive income). Income tax expense is based on tax rates and regulations enacted, or substantively enacted at the balance date, in the jurisdiction in which the respective entity operate. Composition of income tax expense Current tax expense Deferred tax expense Total tax benefit Reconciliation of income tax expense SECTION 5.2 2021 NZ$m 1.5 (3.9) (2.4) 2020 NZ$m Restated 0.5 (8.3) (7.8) The relationship between the expected tax expense based on the domestic effective tax rate of the Company at 28% (2020: 28%) and the reported tax expense in the income statement can be reconciled as follows: Loss before tax Domestic tax rate for Vista Group International Limited Expected tax benefit Foreign subsidiary company tax Non-assessable income / non-deductible expenses Prior year adjustments Excess income tax benefit on share-based payments Other Total tax benefit Effective tax rate 2021 NZ$m (12.3) 28% (3.4) - 0.2 0.1 0.6 0.1 (2.4) 20% 2020 NZ$m Restated (64.9) 28% (18.2) 0.4 9.0 (0.1) - 1.1 (7.8) 12% At 31 December 2021, Vista Group has $11.5m (2020: $12.0m) of imputation credits available for use in subsequent reporting years. Vista Group also had $0.7m (2020: $0.8m) of unused tax losses for which no deferred tax asset has been recognised, as they did not meet the recognition criteria. 112 Notes to the financial statements • 113       5.2 Deferred tax assets and liabilities 6. Capital structure Deferred tax is recognised for 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 end of the year. 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. Recognition of deferred tax assets (significant judgement / estimate) Deferred tax at year end 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 4.4. Deferred taxes can be summarised as follows: 2021 Trade and other receivables Property, plant and equipment Lease assets Intangible assets Employee benefits Lease liabilities Unused tax losses Other Deferred tax net asset at 31 December 2021 2020 Trade and other receivables Property, plant and equipment Lease assets Intangible assets Employee benefits Lease liabilities Unused tax losses Other Deferred tax net asset at 31 December 2020 ACQUIRED AS PART OF A BUSINESS COMBINATION RECOGNISED IN OTHER COMPREHENSIVE INCOME RECOGNISED IN INCOME STATEMENT NZ$m NZ$m NZ$m OPENING BALANCE NZ$m CLOSING BALANCE NZ$m 4.8 (0.9) (4.9) (1.9) 1.5 5.5 4.6 0.5 9.2 0.2 (0.1) (4.4) (1.3) 1.1 4.8 1.7 0.1 2.1 - - - - - - - - - - - - (1.2) - - - - (1.2) - - - - 0.6 - - - 0.6 - - - - - - - - - (1.3) (1.1) 1.1 0.3 0.1 0.1 5.3 (0.6) 3.9 4.6 (0.8) (0.5) 0.6 0.4 0.7 2.9 0.4 8.3 3.5 (2.0) (3.8) (1.6) 2.2 5.6 9.9 (0.1) 13.7 4.8 (0.9) (4.9) (1.9) 1.5 5.5 4.6 0.5 9.2 Represented below are the gross deferred tax assets and liabilities; and deferred taxes offset in a single tax jurisdiction where Vista Group has a legally enforceable right to set off current tax assets against current tax liabilities when settling the corresponding amounts due. Deferred tax asset Deferred tax liability Deferred tax net asset GROSS DEFERRED TAXES OFFSET DEFERRED TAXES 2021 NZ$m 21.2 (7.5) 13.7 2020 NZ$m 16.9 (7.7) 9.2 2021 NZ$m 14.6 (0.9) 13.7 2020 NZ$m 16.9 (7.7) 9.2 Vista Group applied judgement in 2021 by determining substantially all of the deferred tax liability could legally be offset with the deferred tax asset when settling the corresponding amounts due. 114 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. Components of equity Contributed equity: 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. All transactions with owners of the parent are recorded separately within share capital. 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: All current and prior year 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 year 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: This 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 incentives received, plus the equity component of contingent consideration payable. 6.1 Contributed equity During the 2021 financial year, 231,225,495 shares were in issue (2020: 228,614,812). The following reflects where these shares were allocated: Shares issued and fully paid: Balance at 1 January Ordinary shares issued during the year: 2020 placement and rights issue (net of costs) Employee incentives Tax benefit on share-based payments Step acquisition - Maccs Step acquisition - Cinema Intelligence MILLIONS OF SHARES NZ$m 2021 2020 2021 2020 228.6 166.4 126.0 61.8 - 2.6 - - - 61.9 0.3 - - - - 4.7 0.6 - - 62.3 1.3 - 3.2 (2.6) Total contributed equity at year end 231.2 228.6 131.3 126.0 On 16 April 2020, Vista Group announced a $25.0m placement and a 1 for 4.37 rights issue, which cumulatively resulted in 61,946,951 additional ordinary shares being issued at $1.05 per share. The combined impact was that Vista Group raised a total of $65.1m, before $2.8m expenses and as a result Vista Group’s share capital increased by $62.3 million. On 25 September 2020, Vista Group announced it had acquired the remaining 49.9% stake in Maccs for cash consideration totalling $2.0 million. As prior to the transaction Maccs was already controlled by Vista Group, this transaction is adjusted through equity rather than being recognised as a business combination. The $3.2 million adjustment is the delta between the $2.0 million cash consideration and the previously held $5.2 million non-controlling interest balance. On 3 December 2020, Vista Group announced it had acquired the remaining 50.0% stake Cinema Intelligence for cash consideration totalling $1.3 million. As prior to the transaction Cinema Intelligence was already controlled by Vista Group, this transaction is adjusted through equity rather than being recognised as a business combination. The $2.6 million adjustment is the delta between the $1.3 million cash consideration and the previously held -$1.3 million non-controlling interest balance. Notes to the financial statements • 115                       6.2 Earnings per share Share-based payment expense Vista Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. The share-based payment expense relating to each scheme is as follows: Basic EPS is calculated by dividing the profit or loss attributable to owners of the parent by the weighted average number of ordinary shares in issue during the year. Diluted EPS is determined by adjusting the profit or loss attributable to owners of the parent and the weighted average number of ordinary shares in issue during the year for the effects of all dilutive potential ordinary shares, which for Vista Group comprise share rights and performance rights. Potential ordinary shares are treated as dilutive when their conversion to ordinary shares would decrease EPS or increase the loss per share. NUMBER OF SHARES (MILLIONS) Weighted average ordinary shares for basic EPS (millions) Effect of dilution: Share options and awards (millions) Weighted average ordinary shares adjusted for the effect of dilution Loss for the year attributable to owners of the parent (NZ$m) Basic and diluted EPS (cents) 2021 229.0 1.7 230.7 (9.8) ($0.04) 2020 Restated 213.8 3.9 217.7 (51.8) ($0.24) On 16 April 2020, Vista Group issued 61,946,951 new ordinary shares of $1.05 each through a placement and rights issue. Accordingly, the prior comparative year weighted average ordinary shares (basic and diluted) has been adjusted by a bonus factor of 1.0870, based on the ratio of: • an adjusted closing share price of $1.4900 per share on 20 April 2020, the business day before the shares started trading ex- rights; and • the theoretical ex-rights price at that date of $1.3708 per share. 6.3 Dividends No dividends were paid during the year (2020: $nil). 6.4 Foreign currency reserve Items included in the financial statements of each of Vista Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the Functional Currency). The financial statements are presented in New Zealand Dollars (NZD), which is Vista Group’s presentation currency. All financial information has been presented rounded as millions of dollars (NZ$m). 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. 6.5 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 total operating expenses, based on Vista Group’s estimate of equity instruments that will eventually vest. At each balance date, Vista Group revise the estimated number of equity instruments expected to vest as a result of the 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. The share-based payment reserve is used to record any equity share-based incentives. Retention Scheme - Vista Group Recognition Scheme Retention Scheme - Group CEO Retention Scheme - Senior management LTI Scheme - Group Results LTI Scheme - Movio CEO (Variable) Total share-based payment expense Summary of performance rights 2021 NZ$m 3.8 0.5 0.6 0.6 (0.3) 5.2 The movement in the number of performance rights outstanding is summarised in the following table: RETENTION SCHEMES LONG-TERM INCENTIVE SCHEMES NUMBER OF RIGHTS (MILLIONS) VISTA GROUP RECOGNITION GROUP CEO SENIOR MANAGEMENT GROUP RESULTS At 1 January 2020 Granted Lapsed Exercised At 31 December 2020 Granted Lapsed Exercised - 2.9 - - 2.9 - (0.5) (2.4) 0.4 0.5 - (0.2) 0.7 - - (0.2) - - - - - 0.6 - - 0.5 - (0.2) (0.1) 0.2 0.7 (0.3) - At 31 December 2021 - 0.5 0.6 0.6 TSR 0.2 - (0.2) - - - - - - SEGMENTAL RESULTS MOVIO CEO (VARIABLE) 0.2 - (0.1) (0.1) - - - - - 0.3 - (0.2) - 0.1 - (0.1) - - 2020 NZ$m 0.4 0.4 - - (0.3) 0.5 1.6 3.4 (0.7) (0.4) 3.9 1.3 (0.9) (2.6) 1.7 The share price of awards on the date of exercise in 2020 was $1.00 for the Group Results and Group CEO schemes, and $2.88 for the Segmental Results scheme. The share price of awards on the date of exercise in 2021 was $2.32 for the Group CEO scheme and $2.59 for the Vista Group Recognition Scheme. As all rights convert into shares on the vesting date, no shares can be ‘exercisable’. As all rights are granted at nil cost, the weighted average exercise price of the rights is always $nil. The weighted average contractual life of the outstanding performance rights is 1.2 years (2020: 1.0 year). Assumptions The assumptions below were applied when using the Black-Scholes and Monte Carlo option pricing models to determine the fair value of rights granted: ASSUMPTION Share price on grant date (NZ$) Vesting period (months) 2021 SENIOR MANAGEMENT $2.12 15-39 GROUP RESULTS $2.12 15-39 2020 VISTA GROUP RECOGNITION $1.75 12 GROUP CEO $1.98 20-32 As all rights are granted at nil cost, the exercise price is always $nil and therefore no volatility or risk-free rates are required. For schemes granted in 2021, the expected dividend yield was assumed to be $nil (2020: $nil) and are assumed to be 100% achieved (2020: 100%). 116 Notes to the financial statements • 117   Retention schemes At 31 December 2021, Vista Group were operating the following retention schemes: • Group CEO: The Board approved awards to be issued under this scheme in 2018 and 2020 to the Vista Group CEO. The share rights vest on an annual basis. • Senior Management: The Board approved awards to be issued under this scheme in 2021 to eligible senior management. The share rights are split into three tranches and vest annually over a three-year period. Awards under each of these schemes are designed to promote alignment with shareholder’s interests and ensure continued retention. Share rights are granted for no consideration and carry no dividend or voting rights until vested. These awards are contingent on continued tenure, with no further performance obligations. The fair value of interests awarded was determined using the Black-Scholes option pricing model. Long-term incentive schemes At 31 December 2021, Vista Group were operating the following long-term incentive schemes: • Group Results: The Board approved awards to be issued under this scheme in 2018, 2019 and 2021 to eligible senior management. The scheme identifies specific financial targets (i.e. revenue, recurring revenue and EBITDA) and other non- financial targets (i.e. customer and employee net promoter scores) over a three-year performance period. These performance rights are split into three tranches per financial target and vest annually over a three-year period. The fair value of interests awarded under this scheme was determined using the Black-Scholes option pricing model. Awards under long-term incentive schemes are designed to incentivise sustained performance over the long-term and to promote alignment with shareholders’ interests. These schemes allow the carry forward of any performance rights that do not vest in each vesting period to be eligible to vest in future vesting periods. Rights are granted for no consideration and carry no dividend or voting rights until vested. The vesting of interests granted is subject to the option holder continuing to be an employee. Prior year schemes Each of the following schemes related to prior year awards which have no rights eligible to vest at 31 December 2021. Details of these schemes are available in the 2020 annual report. • Total Shareholder Return (TSR): Awards granted between 2015 and 2017. • Segmental Results: Awards granted in 2018. • Movio CEO (Variable): Awards granted in 2019. All rights under this scheme lapsed at 31 December 2021 due to the specified financial metrics not being achieved. • Vista Group Recognition: Awards granted in 2020. Rights under this scheme vested on 23 November 2021. 7. Financial risk management Vista Group is exposed to three main types of risk in relation to financial instruments, which are 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. 7.1 Capital management The following table summarises the capital of Vista Group: Borrowings – external Borrowings – related parties Equity Total capital 2021 NZ$m 16.2 0.6 159.8 176.6 2020 NZ$m Restated 18.1 - 161.8 179.9 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. 7.2 Foreign currency risk Vista Group operates internationally and is primarily exposed to foreign exchange risk in US Dollars (USD), Pounds Sterling (GBP), Euros (EUR), Chinese Yuan Renminbi (CNY) 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 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 six months) from longer-term cash flows (due after six 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, and although Vista Group use its debt facilities as a natural hedge, no other financial instruments have been used (i.e. derivatives). Foreign currency denominated financial assets and liabilities which expose Vista Group to currency risk are disclosed in the following table. The amounts shown are those reported to key management translated into NZD at the closing rate. 2021 Financial assets Cash Trade receivables Sundry receivables Net investment in sublease Financial liabilities Borrowings Trade payables Sundry payables Lease liabilities Net foreign currency risk USD NZ$m 15.7 26.3 0.3 2.7 (16.2) (1.4) (2.2) (11.3) 13.9 GBP NZ$m 3.3 5.8 0.5 - (0.6) (1.6) (0.3) (4.1) 3.0 EUR NZ$m 3.4 4.0 0.2 - - 1.0 (0.5) (0.6) 7.5 CNY NZ$m - - - - - - - - - AUD NZ$m 1.1 2.3 - - - - - - 3.4 118 Notes to the financial statements • 119   2020 Financial assets Cash Trade receivables Sundry receivables Financial liabilities Borrowings Trade payables Sundry payables Lease liabilities Contingent consideration Net foreign currency risk USD NZ$m 13.2 32.8 0.4 (18.1) (4.4) (0.7) (13.6) (0.3) 9.3 GBP NZ$m 1.8 4.3 0.5 - (0.4) (0.2) (2.3) - 3.7 EUR NZ$m 1.4 5.2 0.2 - (0.2) (0.2) (0.8) - 5.6 CNY NZ$m - 2.2 - - - - - - 2.2 AUD NZ$m 1.0 2.5 - - - - - (0.1) 3.4 The following table illustrates the sensitivity of profit or loss and equity in regard to Vista Group’s financial assets and liabilities affected by exchange rates with ‘all other things being equal’. It assumes a +/- 10% change of the NZD to currency exchange rate for the year ended 31 December 2021 (2020: 10%). The sensitivity analysis is based on Vista Group’s foreign currency financial instruments held at each reporting date. 2021 10% strengthening in NZD 10% weakening in NZD 2020 10% strengthening in NZD 10% weakening in NZD USD NZ$m (1.3) 1.5 (2.1) 2.5 GBP NZ$m (0.3) 0.3 (0.5) 0.7 EUR NZ$m (0.7) 0.8 (0.6) 0.7 CNY NZ$m - - (0.2) 0.2 AUD NZ$m (0.3) 0.4 (0.3) 0.4 Exposure to foreign exchange rates varies 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. 7.3 Interest rate risk Vista Group’s interest rate risk primarily arises from long-term borrowing, lease liabilities and cash. 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 NZ$m FIXED UP TO 3 MONTHS FIXED UP TO 6 MONTHS FIXED UP TO 5 YEARS NZ$m NZ$m NZ$m 0.6% 3.5% 1.6% 4.0% 4.0% 35.4 7.0 6.5 - - - - - - - - - - - - 11.5 2.7 (16.2) (0.6) (22.6) TOTAL NZ$m 60.4 2.7 (16.2) (0.6) (22.6) 35.4 7.0 6.5 (25.2) 23.7 2021 Financial assets Cash Net investment in sublease Financial liabilities Borrowings - external Borrowings - related party Lease liabilities Net interest risk 120 2020 Financial assets Cash Financial liabilities Borrowings - external Lease liabilities Net interest risk EFFECTIVE INTEREST RATE FLOATING NZ$m FIXED UP TO 3 MONTHS FIXED UP TO 6 MONTHS FIXED UP TO 5 YEARS NZ$m NZ$m NZ$m TOTAL NZ$m 0.5% 32.1 7.0 28.0 - 67.1 2.2% 3.9% - - - - - (1.2) (18.1) (21.8) (18.1) (23.0) 32.1 7.0 26.8 (39.9) 26.0 Profit or loss is sensitive to higher / lower interest income / expense from cash as a result of changes in interest rates. 2021 Cash Net investment in sublease Borrowings - external Borrowings - related party Lease liabilities Sensitised net interest risk 7.4 Credit risk EFFECTIVE INTEREST RATE +1% EFFECTIVE INTEREST RATE -1% NZ$m 0.6 - (0.2) - (0.2) 0.2 NZ$m (0.6) - 0.2 - 0.2 (0.2) Credit risk is the risk that a counterparty fails to discharge an obligation to Vista Group. Vista Group is predominantly exposed to this risk for trade receivables and accrued revenues. The maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at 31 December, as summarised in section 7.6. 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. At 31 December 2021, Vista Group has certain trade receivables and accrued revenues that have not been settled by the contractual due date. These are not considered to be impaired because of the nature of contracts and / or the longevity of ongoing customer relationships. At balance date, the overdue trade receivables, net of all provisioning (concession discounts, credit risk provisions and ECL), are below. Not more than 6 months Between 6 months and 9 months Over 9 months Overdue trade receivables and accrued revenues (net of provisioning) Trade receivables consist of many customers in various industries and geographical areas. 2021 NZ$m 3.4 1.1 1.6 6.1 2020 NZ$m 6.3 3.8 0.8 10.9 Judgement has been applied to the recoverability of all trade receivables and accrued revenues, with Vista Group determining that the net balances receivable is recoverable and not impaired (see sections 2.1 and 4.1 for more detail of how judgement has been applied, including the impact of the COVID-19 pandemic). One of the key judgements was that 10% of core business receivables may not be collectable. A sensitivity analysis of this judgement is presented in section 4.1. Vista Group has financial assets classified and measured at amortised cost that are subject to the ECL model requirements of NZ IFRS 9 (see section 4.1 for the ECL recognised on trade receivables and accrued revenues balances). The credit risk for cash is considered negligible since the counterparties are reputable banks with high quality external credit ratings. Notes to the financial statements • 121 7.5 Liquidity Risk Financial instruments by category 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 loans. Vista Group’s policy is that not more than 25% of borrowings should mature within the next 12-month period. Vista Group are engaging with ASB (the debt facility provider) to extend the debt facilities beyond their current expiry date of January 2023. Vista Group assessed the concentration of risk with respect to refinancing its debt as being low. At 31 December 2021, Vista Group had cash balances totalling $60.4m, along with $37.8m undrawn on its ASB revolving credit facility. Forecasts show that this level of cash and undrawn loans will be sufficient for Vista Group to continue operations for at least the next 12 months (representing the minimum requirement for going concern purposes). The table below summarises the maturity profile of Vista Group’s non-derivative financial liabilities based on contractual undiscounted payments. 2021 Trade payables Sundry payables Borrowings - external Borrowings - related parties Interest on borrowings Lease liabilities Total liquidity risk 2020 Trade payables Sundry payables Borrowings - external Interest on borrowings Lease liabilities Contingent consideration Total liquidity risk LESS THAN 3 MONTHS 3 TO 12 MONTHS 1 TO 5 YEARS > 5 YEARS NZ$m NZ$m NZ$m NZ$m 2.1 5.9 - - 0.1 1.2 9.3 5.0 3.3 - 0.1 0.8 0.1 9.3 - - - 0.6 0.3 3.6 4.5 - - - 0.3 2.5 0.3 3.1 - - 16.2 - 0.1 17.8 34.1 - - 18.1 0.5 17.9 - 36.5 - - - - - - - - - - - 1.8 - 1.8 TOTAL NZ$m 2.1 5.9 16.2 0.6 0.5 22.6 47.9 5.0 3.3 18.1 0.9 23.0 0.4 50.7 7.6 Financial instruments Fair value of financial assets and liabilities Vista Group carried out a fair value assessment of its financial assets and liabilities at 31 December 2021 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 after initial recognition at fair value are grouped into levels based on the degree to which the fair value is observable: 2021 Cash Trade receivables Sundry receivables Net investment in sublease Total financial assets Borrowings - external Borrowings - related parties Trade payables Sundry payables Lease liabilities Total financial liabilities 2020 Cash Trade receivables Sundry receivables Total financial assets Borrowings - external Trade payables Sundry payables Lease liabilities Contingent consideration Total financial liabilities FINANCIAL ASSETS AT AMORTISED COST FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH P&L FINANCIAL LIABILITIES AT AMORTISED COST NZ$m 60.4 24.0 4.2 2.7 91.3 - - - - - - 67.1 28.1 1.7 96.9 - - - - - - NZ$m NZ$m - - - - - - - - - - - - - - - - - - - 0.4 0.4 - - - - - 16.2 0.6 2.1 5.9 22.6 47.4 - - - - 18.1 5.0 3.3 23.0 - 49.4 TOTAL NZ$m 60.4 24.0 4.2 2.7 91.3 16.2 0.6 2.1 5.9 22.6 47.4 67.1 28.1 1.7 96.9 18.1 5.0 3.3 23.0 0.4 49.8 Vista Group’s financial assets and liabilities by category are summarised as follows: • Cash: Held at carrying value which also equates to fair value. • Trade, related party and other receivables: Assets that are generally short-term in nature and are reviewed for impairment. The carrying value approximates their fair value. • Net investment in sublease: A receivable from a sublessee that is initially measured on a present value basis using the underlying lease incremental borrowing rate, and subsequently held at amortised cost. This asset is impairment tested and the carrying value approximates the fair value. • Borrowings: Initially are held at fair value but adjusted to amortised cost by any borrowing costs. Interest rates are generally Level 1 Fair value measurements derived from quoted prices in active markets for identical assets. fixed. 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. Vista Group’s policy is that no speculative trading in financial instruments may be undertaken. • Trade, related party and other payables: Liabilities that are generally short-term in nature with the carrying value approximating their fair value. • Lease liabilities: Liabilities arising from a lease are initially measured on a present value basis using the lessee 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. 122 Notes to the financial statements • 123                                       8. Other disclosures 8.1 Restatement of prior year errors During the current year, Vista Group completed a United States economic nexus study to determine whether it was required to withhold and return sales taxes in each individual state (see section 4.10). As the identified sales tax obligation of $2.8m included a material prior year error, Vista Group were required to correct the error in these financial statements by restating the comparative amounts in the year the error occurred. The following tables show how the comparative disclosures have been restated from the 2020 Annual Report. Restated income statement and statement of other comprehensive income Other related party transactions The following table represents amounts due to and from related parties, excluding key management personnel. AMOUNTS OWED BY RELATED PARTIES AMOUNTS OWED TO RELATED PARTIES Associates and joint ventures 2021 NZ$m - 2020 NZ$m 1.8 2021 NZ$m (1.2) Vista Group’s associate and joint venture related party transactions were as follows: ASSOCIATES AND JOINT VENTURES SECTION 2.3 5.1 2020 NZ$m (30.7) 7.6 (56.7) ADJUSTMENT 2020 RESTATED NZ$m (0.6) 0.2 (0.4) NZ$m (31.3) 7.8 (57.1) Receiving of services Rendering of services Total related party transactions 2021 NZ$m (2.5) 2.9 0.4 2020 NZ$m (0.7) 2020 NZ$m (0.8) 1.8 1.0 Other gains and losses Taxation benefit Loss for the year Restated statement of financial position 2019 NZ$m MOVEMENT 2019 RESTATED NZ$m NZ$m 2020 NZ$m MOVEMENT 2020 RESTATED NZ$m NZ$m Assets Income tax receivable 2.0 0.4 2.4 0.4 0.7 1.1 Liabilities Provisions (current) Equity - (1.3) (1.3) (1.8) (2.0) (3.8) Retained earnings (85.8) 0.9 (84.9) (34.4) 1.3 (33.1) Details of significant related party transactions of Vista Group • Vista Group recognised $2.2m of maintenance revenue from Vista China during the year (2020: $1.5m), which is recognised in the Cinema segment. The prior comparative year has been represented to also include this revenue within the Cinema segment. Details of significant related party transactions of Vista China • On 30 January 2019, Vista China provided a retention accommodation loan of $4.6m (CNY20.0m) to the CEO of Vista China. This loan is interest free and partially secured against equity in Vista China. It was due to mature on 30 January 2022 but has been extended to 3 February 2023. • On 23 December 2019, Vista China provided a shareholder loan of $3.3m (CNY14.3m) to Weying. This loan has matured and is now repayable on demand by the Vista China Board. Vista China and Weying are currently assessing options for the settlement of this loan. Vista Group applied judgement at 31 December 2021 by including a 100% ECL provision against this balance (see section 4.3). 8.2 Related parties 8.3 Group companies Vista Group has various types of transactions with related parties. Section 3.2 contains details of related party borrowings, with other related party transactions detailed below. Key management personnel transactions Key management personnel include Vista Group’s Board (executive and non-executive), CEO and the Executive Leadership Team (defined as personnel that report directly to the Vista Group’s Chief Executive). Key management personnel include 17 individuals (7 Directors and 10 Executive Leadership Team members) (2020: 16 individuals, being 6 Directors and 10 Executive Leadership Team members). Salaries including bonuses Share-based payments Director fees Total key management personnel transactions 2021 NZ$m 3.9 0.5 0.6 5.0 2020 NZ$m 4.5 0.2 0.3 5.0 No dividends were paid to key management personnel on their Vista Group shareholdings during the year (2020: $nil). 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 (NZD) are translated into the presentation currency as follows: • 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 of the 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); • all resulting exchange differences are recognised in other comprehensive income; and • 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 are presented in the income statement on a net basis within other expenses. 124 Notes to the financial statements • 125         8.4 Going concern These financial statements have been prepared on a going concern basis, which requires the Board to have reasonable grounds to believe that Vista Group will be able to pay their debts as and when they become due. The minimum requirement by NZ IAS 1 Presentation of Financial Statements being at least, but not limited to, twelve months from the end of the reporting period. Vista Group has prepared cash flow projections factoring in a continued impact of the COVID-19 pandemic, covering a period of at least twelve months after these consolidated financial statements have been authorised for issue. This takes into account forecast revenue, operating cash flows, forecast capital expenditure and Vista Group’s liquidity position. At 31 December 2021, Vista Group had $98.2m in liquidity, with $60.4m in cash and $37.8m of undrawn ASB debt facilities. In addition to this, Vista Group’s EBITDA for the year has returned to being positive and cash balances have increased in H2 2021. The ASB facilities are due to mature in January 2023 and we have no reason to believe these will not be renewed. Should they not be renewed, Vista Group has sufficient cash to repay the current $16.2m of drawn debt while also continuing operations. The success of global vaccine rollouts and the release of new movie content during the year has enabled approximately 87% of global cinemas to open by 31 December 2021. Against the background of a strong box office, the emergence of the Omicron strain of COVID-19 is expected to lead to an increase in restrictions on many ‘out of home’ activities across many countries over the coming months. Though this is not currently expected to lead to the widespread venue closures that occurred in early 2020, restrictions may lead to some short-term delays to the film release schedule in early 2022. Given the strength of moviegoer support for new releases and well managed compliance and tracing at cinemas venues, the outlook for the 2022 box office remains positive. Based on the assumption that cinemas remain open in key markets, Vista Group projects it will continue to comply with its ASB facility covenant requirements. As a result of how unpredictable the COVID-19 pandemic has been on Vista Group and its customers, the Board continues to take a cautious approach in provisioning against its accounts receivables and accrued revenues. The 34% cumulative provisions for discounts, credit risk and ECL (as detailed in section 4.1) is Vista Group’s best estimate of the balances that are unlikely to be recovered. Vista Group considered the impacts of the COVID-19 pandemic to its subsidiary businesses and assessed its goodwill and other assets for impairment. Vista Group also reviewed Vista China (an associate company) for loss events that might result in an impairment loss. Neither review resulted in an impairment charge at the 31 December 2021. Due to the above, the Board determined the going concern basis of accounting was appropriate in the preparation of these consolidated financial statements. 8.5 Capital commitments There were no capital commitments for Vista Group at 31 December 2021 (31 December 2020: $nil). Group information These financial statements consolidate the following subsidiaries of the Company: MovieXchange International Limited2 Inactive MovieXchange Limited2 Web platform licensing New Zealand 100% 100% NAME Book My Show Limited1 Book My Show (NZ) Limited1 Flicks Limited Maccs International B.V. Maccs US1 Movio (IP) Limited Movio Limited2 Movio, Inc. Numero Limited Numero (Aust) Pty Ltd Powster, Inc. Powster Ltd PRINCIPAL ACTIVITY Inactive Inactive COUNTRY OF INCORPORATION New Zealand New Zealand SHAREHOLDING 2021 - - 2020 74% 74% Advertising sales New Zealand 100% 100% Software development & licensing Software licensing Netherlands 100% 100% United States New Zealand - - 100% 100% Distributor of intellectual property New Zealand 100% 100% Data analytics & marketing New Zealand 100% 100% Data analytics & marketing United States 100% 100% Holding company New Zealand 100% 100% Software development & licensing Australia 100% 100% Marketing & creative solutions United States Marketing & creative solutions United Kingdom 50% 50% 50% 50% 100% 100% 60% 60% S.C. Share Dimension S.R.L. Software development Senda DO Brasil Serviços de Tecnológia LTDA. Software licensing Romania Brazil Share Dimension B.V. Software development & licensing Netherlands 100% 100% Virtual Concepts Limited2 Holding company New Zealand - 100% Vista (IP) Limited Vista Entertainment Solutions Limited Distributor of intellectual property Software development & licensing Vista Entertainment Solutions (Asia) Sdn. Bhd. Software licensing Vista Entertainment Solutions (Canada) Limited Inactive New Zealand 100% 100% New Zealand 100% 100% Malaysia Canada 100% 100% 100% 100% Vista Entertainment Solutions (NL) B.V. Software licensing Netherlands 100% 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. Software licensing VPF Hub GmbH Inactive Mexico Germany 60% 90% 60% 90% 1 Subsidiary company voluntarily liquidated during 2021. 2 Subsidiary company amalgamations during 2021 include: MovieXchange International Limited amalgamating with MovieXchange Limited and Virtual Concepts Limited amalgamating with Movio Limited. The remaining amalgamated entities are MovieXchange Limited and Movio Limited. 126 Notes to the financial statements • 127 8.6 Events after balance date Retriever acquisition On 16 February 2022, Vista Group announced the acquisition of US entertainment software company Retriever Software, Inc. (‘Retriever’), demonstrating strong belief in the cinema market following pandemic-related disruption. Vista Cinema will acquire all Retriever’s software, intellectual property and customers, with an offer of employment to all current employees. Employees will continue to work from Retriever’s existing premises in Owosso, Michigan and Denver, Colorado. This transaction will see Vista Cinema add over 100 new customers further strengthening its market share in the US and cementing its position as the leading cinema software provider in that market. Due to the proximity of this Retriever acquisition to the release of this Annual Report, Vista Group have yet to determine whether this acquisition will be classified as a business combination, or an asset acquisition. In accordance with NZ IFRS 3 Business Combinations, Vista Group have classified the accounting for this transaction as provisional. Disclosures not able to be made in this Annual Report (such as the fair values of assets acquired) will be included in the 2022 Interim and Annual Reports. Total consideration for this acquisition will be up to a maximum of US$6.525m and consists of: • Cash on completion date (US$2.2m); • 1,529,987 shares in Vista Group being issued to the vendor on completion date (US$2.2m); • Between US$0.5m and US$1.0m contingent cash consideration payable before 30 April 2023, based on specific post- completion revenue targets; and • Up to US$1.125m contingent cash consideration payable based on the retention and integration of key customers over the 24 month period post completion. Vista Group expect the net assets acquired to predominantly consist of customer contracts, intellectual property and leased assets. Goodwill will also be recognised should this acquisition be deemed a business combination (none of which would be deductible for tax purposes). Other events after balance date There were no other significant events between balance date and the date these financial statements were authorised for issue. Independent auditor’s report To the shareholders of Vista Group International Limited 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 2021, 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). the statement of financial position as at 31 December 2021; the income statement for the year then ended; What we have audited The Group's financial statements comprise: • • • • • • the statement of changes in equity for the year then ended; the statement of cashflows for the year then ended; and the statement of other comprehensive income for the year then ended; the notes to the financial statements, which include significant accounting policies and other explanatory information. 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. Independence We are independent of the Group in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for 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 CEO remuneration benchmarking and tax advisory services in relation to long term employee incentive schemes. The provision of these other services has not impaired our independence as auditor of the Group. 128 Independent auditor's report • 129 PricewaterhouseCoopers, PwC Tower, 15 Customs Street West, Private Bag 92162, Auckland 1142 New Zealand T: +64 9 355 8000, www.pwc.co.nz 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. Description of the key audit matter How our audit addressed the key audit matter Revenue, trade receivables and accrued revenue provisions Section 4.1 of the financial statements provides details of various provisions totalling $14.9 million at 31 December 2021 that are recognised in relation to Vista Group’s trade receivables and accrued revenues balances. Section 2.1 also provides details of the accounting treatment of these provisions. Due to the impact of the ongoing COVID-19 pandemic on Vista Group’s customers there is significant estimation uncertainty regarding the amount that may be collected for Vista Group’s products and services. Vista Group has entered into price concession arrangements and has had collection challenges. Further concessions and write- offs are probable and therefore management has made provisions for these outcomes. Management considered the requirements of the accounting standards to assess whether the provisions should be recognised as expenses or as a reduction to revenue. This requires judgement regarding the circumstances related to each of Vista Group’s revenue arrangements. Management assessed the recoverability of receivables, which involved judgements in relation to assessing the credit risk of the associated customers and expected future cash flows based on payment history, age of the debt, agreed and proposed payment plans and concessions, whether the customer is in a form of insolvency, and other information from communications with the customers. Given the level of uncertainty and judgement in this area, the amounts finally collected for the receivables and accrued revenue may be materially different to the net balances recognised. Our audit focused on this area as a key audit matter due to the value of the net trade and other receivables balance and the provisions within that balance, the judgement involved in the application of the accounting standards, the significant estimation uncertainty as a result of the ongoing COVID-19 pandemic and level of judgement involved in determining the appropriate provisions. Our audit procedures in relation to revenue concession and receivables (trade receivables and accrued revenue) provisions included the following: • We assessed management’s analysis of the appropriate accounting treatment for the provisions by reference to the relevant accounting standards; • We gained an understanding of management’s approach to developing the assumptions and provisioning method, and the business processes and controls applied by management in relation to revenue concessions, revenue credit risk and receivables provisioning; • We obtained the calculation performed by management which includes key assumptions and estimates used by management for revenue concessions, revenue credit risk and receivables provisioning; • We tested on a sample basis the accuracy of the provisioning model, including the inputs, the mathematical accuracy of the calculations and consistency with management’s intended methodology; • On a sample basis we obtained evidence of the communications with customers to establish whether Vista Group had entered into payment plan and/or price concession arrangements; • We held discussions with account managers at the local entity level to gain an understanding of selected customers’ financial condition, ability to make payments, and recent payment history; • We assessed the reasonableness of the total provision by performing an analysis of the ageing profile of the gross and net receivable balances at 31 December 2021; • We considered the projected time to settle the outstanding net balance based on the recent average monthly cash collections; • We performed lookback procedures on the provisions for the 31 December 2020 balances of a sample of customers, which were estimated using a similar approach to the current provisions, and assessed the accuracy of those provisions based on subsequent cash collections; • We considered the possible impact of events after year- end, including cash collections and new information regarding the financial condition of customers on a sample basis; and • We assessed the adequacy of disclosures in the financial statements, including the description of significant assumptions and the possibility of collections being different to those assumptions. We have no matters to report as a result of our procedures. Description of the key audit matter How our audit addressed the key audit matter Impairment testing of goodwill Section 4.4 of the financial statements provides details of the goodwill balance of $55.7 million as at 31 December 2021, which comprised balances in six cash generating units (CGUs). The impairment tests were performed as at 31 August 2021, which is the established time for the annual impairment tests for Vista Group. Management utilised a value in use (VIU) methodology to determine the recoverable amount of each CGU using discounted cash flows models. These VIUs were then compared to the carrying amount of the associated net assets, including goodwill, of each CGU as at 31 August 2021. The estimated cash flows used in the VIU model were based on the management approved 5- year business models. Although it is becoming clearer how each CGU will emerge from the ongoing COVID-19 pandemic, the valuations continue to 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 five year forecast period; • The long term growth rates for cash flows beyond the five year forecast period; and • The appropriate discount rate for each CGU. A further assessment of indicators of impairment was made as at 31 December 2021. No impairments were recognised. Our audit focused on this area as a key audit matter due to the value of the goodwill balance, the quantum of the prior year impairment charge and the level of judgement involved in assessing the recoverable amount of each CGU. Our audit procedures in relation to management’s impairment testing of goodwill at 31 August 2021 included the following: • We gained an understanding of the business processes and controls applied by management in performing the impairment tests; • We tested the calculations of the VIU model, including the inputs and the mathematical accuracy and compared the resulting balances to the relevant net assets of each CGU; • We assessed the key estimates and assumptions made by management in the CGUs’ VIU models, by performing the following procedures: − Obtained an understanding of how management prepared its plans and forecasts and the associated review and approval processes; − Assessed management’s ability to accurately forecast by comparing historical forecasts to actual results; − Assessed the growth rates used over the five year forecast period including how management considered the impact of the ongoing COVID-19 pandemic in the forecasted cash flows; − 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 across a reasonable range of changes in the discount rate, forecasted cash flows and terminal growth rates; and − Engaged our own experts to evaluate the long term growth rates and discount rates used in the VIU models by comparing with those of similar market participants, to evaluate the reasonableness of the implied valuation multiples, and to review the audit work we performed; and • We assessed the adequacy of disclosures in the financial statements. We also obtained and assessed management’s assessment of impairment indicators at year-end. We have no matters to report as a result of our procedures. 130 PwC 2 PwC Independent auditor's report • 131 3 Our audit approach Overview Overall group materiality: $1.07 million, which represents approximately 5% of weighted average profit/loss before tax over the past three years, excluding capital gains, restructuring costs, intangible assets impairment charges and sales tax expenses that occurred during this three year period. We chose weighted average profit/loss before tax over the past three years and to adjust it as described above as the benchmark because, in our view, it provides a more stable measure of the Group's performance by moderating the impact of the ongoing COVID-19 pandemic and other irregular items. We selected transactions and balances to audit based on their materiality to Vista Group, rather than determining the scope of procedures to perform by auditing only specific subsidiaries or locations. Impairment testing of goodwill As reported above, we have two key audit matters, being: • Revenue, trade receivables and accrued revenue provisions • Both of these key audit matters are affected to varying degrees by the economic uncertainty created by the ongoing COVID-19 pandemic. These uncertainties have been reflected in management’s approach and our audit procedures, as described in the key audit matters. As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. 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. Materiality The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance about whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. 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. How we tailored our group audit scope 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. Other information The Directors are responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon. In connection with our audit of the financial statements, 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. We have nothing to report in this regard. 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/assurance-standards/auditors-responsibilities/audit-report-1/ This description forms part of our auditor’s report. 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 Troy Florence. For and on behalf of: Chartered Accountants 28 February 2022 Auckland 132 PwC 4 PwC Independent auditor's report • 133 5 Directory Directors Susan Peterson • Chair Claudia Batten Murray Holdaway James Miller Cris Nicolli James Ogden Kirk Senior Registered office Shed 12, City Works Depot 90 Wellesley St West Auckland 1010 New Zealand Phone +64 9 984 4570 Nature of business Provision of management solutions for the film industry Company number 1353402 ARBN Auditor Solicitors 600 417 203 PricewaterhouseCoopers Level 27, PwC Tower 15 Customs Street West Auckland 1010 New Zealand Chapman Tripp Level 34, PwC Tower DLA Piper Level 4 Hudson Gavin Martin Level 16 15 Customs Street West 20 Customhouse Quay 45 Queen Street Auckland 1010 Wellington 6011 Auckland 1010 Share registry New Zealand Australia Link Market Services Ltd Link Market Services Ltd Level 30, PwC Tower Level 12, 680 George St 15 Customs Street West Sydney Auckland 1010 NSW 2000 Bankers New Zealand ASB Bank Limited ASB North Wharf 12 Jellicoe St Auckland 1010 HSBC 188 Quay St Auckland 1010 134 • Corporate information Vista Group International Limited Shed 12, City Works Depot 90 Wellesley St West Auckland 1010 New Zealand +64 9 984 4570 info@vistagroup.co.nz vistagroup.co 

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