Vista Group International Limited
Annual Report 2022

Plain-text annual report

Vista Group Annual Report 2022 Our purpose Bring more people together to experience the magic of movies and cinema by creating the platform that connects the industry and powers the moviegoer experience This report is dated 28 February 2023 and signed on behalf of Vista Group International Limited by Susan Peterson and James Miller. Susan Peterson Chair James Miller Chair Audit and Risk Committee Contents Letter from the chair Group overview Key strategies for 2023 Sustainability Group trading overview Remuneration report Corporate governance Financial statements 5 8 12 42 58 64 78 110 Dear Shareholder, Welcome to Vista Group’s Annual Report for 2022. Over the course of the year, our team has been working hard to successfully execute our platform strategy, and we are delighted to be able to share these results with you. Supporting our clients’ success and others have committed to transition to Vista Cloud. As we provide business critical Supporting our clients to be more successful infrastructure for cinemas, we implement each sits at the heart of every decision we make transition carefully. This approach, supported at Vista Group. The operating environment by our great relationships and a clear across the world has continued to evolve understanding by our clients of the value that over the past year and, positioned at the we bring to their business, ensures that we are intersection of technology and the moviegoing successfully maintaining these relationships experience, Vista Group is ideally placed to throughout the platform transition. support our clients to successfully adapt to these changes. As a key part of the platform, we were delighted to launch Movio Cinema EQ in Our industry leading Vista Cloud SaaS November. EQ offers a smarter, faster and platform delivers innovation to our clients more streamlined solution for cinemas to more quickly and provides confidence that improve the way they market movies to their systems give their customers the best moviegoers. This launch also cemented possible experience. At an operational level, the powerful partnership of EQ and Vista our platform reduces our clients’ workload Digital. In the post-pandemic era, there has and, as a result, provides confidence to been a swing to purchasing tickets, food and our clients that they have the best systems beverage through digital channels. EQ and available at the lowest possible cost. Vista Digital provide our exhibitors with new Our Vista Cloud platform has ignited strong interest from cinemas who are excited about a SaaS future. In 2022, we welcomed the Australian circuit Wallis Cinema as our first client to go live on the platform. Since then, Cineplex (a major Canadian cinema circuit), and innovative ways to serve moviegoers via web, social, mobile and kiosk. We have included in this report stories from our clients who are experiencing the benefits that our platform has brought to their business. 4 Letter from the Chair • 5 Our performance keep their finger on the pulse of their business in real-time. The first phase of to sustain the productivity that our clients strategically important SaaS platform future demand, and our regular monthly team have been standout highlights. Kimbal is a At our October Investor Day, we talked our next-generation business intelligence surveys have consistently highlighted the wonderful colleague, mentor and friend for in greater detail about how our platform and decision support tools for the exhibition positive working culture that this initiative many and will be greatly missed. enables us to significantly increase our total industry, it combines theatre, movie and addressable market. We remain on track to moviegoer data from Vista, Numero and reach Annual Recurring Revenue of $175-205 Movio. million and deliver positive free cash flow in 2025. Madex, from Movio, is the audience exchange platform connecting film distributors and has created. We have also invested in a new learning management platform which will be rolled out to our team in early 2023. We are delighted that Stuart Dickinson will commence as our Group CEO in April 2023. Stuart is an experienced global technology We have continued to focus on encouraging executive, with more than 25 years of a happy and inclusive work environment where technology leadership experience, most It is pleasing to see our revenue ahead of cinema exhibitors with the ideal moviegoers diversity is embraced. This year, we have recently as APAC applications practice leader updated guidance at $135.1 million, together for each film. After an initial limited release, welcomed two more female members to the and New Zealand Country Manager of NYSE with a solid EBITDA of $10.6 million and our we’re excited to be expanding the reach and Executive Leadership Team; Sarah Lewthwaite listed DXC Technology (NYSE:DXC). Stuart cash result being consistent with forecast. capabilities of Madex in 2023. This enables (CEO, Movio), and Anna Ferguson (Chief has led significant transformation programmes These results reflect our key financial and cinemas to better understand where their People Officer, Vista Group). We have also in solutions and systems integration operating strengths which include our moviegoers are spending their time digitally now commenced reporting to understand internationally and we extend a very warm long-term client relationships, our leading so that they can look to connect with them in our gender pay gap and what steps we might welcome to him. position in the global film industry, our the most relevant way. This gives our clients take to bring transparency around any areas strong annuity-based revenue and sustained confidence that they are optimising their of opportunity. We are looking forward to a tremendously exciting 2023. Our team works passionately profitability. Moving forward, we will maintain marketing investment. our careful financial discipline so we can realise the operating leverage generated through our platform. It has been pleasing to see that cinema attendance across the globe continues to be strong, which is demonstrated by a number of box office highlights. Two of the most recognisable names in the business – Tom Cruise and James Cameron – marked their return to cinema in 2022 and, in doing so, shattered records. With titles like Avatar: The Way of Water, Top Gun: Maverick and Black Panther: Wakanda Forever bringing in record numbers in 2022, we expect to see large audiences enjoying a diverse film slate in 2023 that once again includes highly anticipated blockbusters. Looking ahead Sustainability journey We have our part to play in making a difference to the world in which we operate. We call that ngā mea pai me ngā tangata pai - doing good things with good people. We are pleased to share our first sustainability report, outlining our approach and progress thus far. Our forward-looking sustainability framework is built around three pillars: • People: Caring for our people and communities • Trust: Building greater trust • Environment: Impactful innovation and consuming responsibly. Due to the success of ‘R&R Friday’s’, the 4.5-day work week trial that we undertook In 2023, we will expand our capabilities to in 2021, we were delighted to make this further support our clients’ ongoing success. a permanent initiative as we continue to An example of this is Vista Oneview, a mobile encourage balance for our people. We found app that enables our cinema executives to that our dedicated team have been able We are also measuring our carbon footprint and tirelessly to fulfil our purpose to power and we intend to publish our first voluntary the moviegoer experience, and to help more carbon statement in 2023, using the standards of our clients to be more successful. I’d like of TCFD reporting. We are excited that our to personally thank each and every one Vista Cloud strategy will also assist our clients of our team members for their dedicated to reduce their carbon footprint. contribution throughout the year. Thank you for the trust you place in Vista Group and we hope that you and your loved ones remain safe and well. Ngā mihi nui. Executive changes In June 2022, Murray Holdaway, Vista’s co-founder, stepped down from his role of Chief Product Officer. Murray remains as a director on our Board and so we will continue to benefit from his deep understanding of the business and the industry. In December 2022, Kimbal Riley announced his retirement after five years as Group CEO and nearly a decade at the company overall. Susan Peterson On behalf of our Board and management Chair team, I would like to warmly thank Kimbal for all that he has contributed during his time at Vista. Kimbal’s leadership through the challenges that the pandemic presented the film industry and driving Vista Group’s 6 Letter from the Chair • 7 Group overview Our purpose is to bring more people together to experience the magic of movies and cinema by creating the platform that connects the industry and powers the moviegoer experience. Our businesses Full value chain of the film industry This purpose serves as the driving force behind the Vista Cloud SaaS platform, bringing intention to our innovation and delivering value to our clients’ customers - the moviegoer. Our 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 solutions. Our solutions 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. Production Distribution Exhibition Moviegoer Vista Cinema Movio Numero • Maccs Powster Flicks 8 Group overview • 9 A year of continued Annualised Recurring Revenue growth as industry-leading SaaS platform gains momentum Total revenue $135.1m Recurring revenue1 $112.3m SaaS revenue2 $38.4m ARR3 EBITDA4 $118m $10.6m Net profit after tax -$20.9m Operating cashflow $12.4m 38% 38% 38% 22% 63% -111% 10% 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 $135m $98m $88m $112m $81m $66m $38m $28m $24m $118m $97m $87m $11m $7m -$11m -$21m -$10m -$57m $12m $11m $3m 1 2 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. SaaS revenues are those derived from subscription-based cloud-hosted software, with the software located on externally provided servers. 3 ARR is Annualised Recurring Revenue, calculated as trailing 3 month recurring revenue multiplied by four. 10 4 EBITDA is defined as earnings before net finance costs, income tax, depreciation, amortisation, “other gains and losses” (see section 2.3 of the financial statements) and share of equity accounted results from associates. Group overview • 11 Key strategies for 2023 Our purpose-driven strategy is to build a sustainable platform that will connect the industry and power the moviegoer experience. The strategy means we can accelerate our innovation, empowering our clients to give moviegoers the fullest possible experience and motivate people to see movies more often. There are three key parts to our strategy: Expand our core platform that delivers value to our clients and connects moviegoers Support our clients to rebuild their business Create and invest in new opportunities 12 Key strategies for 2023 • 13 Key Strategies for 2023 Support our clients to rebuild their business 14 Key strategies for 2023 • 15 Building momentum Domestic1 box office records Dec 2021 – Dec 2022 Two of the top 5 highest grossing movies of all time were released post pandemic: 2022 demonstrated cinema exhibition’s resilience. Global box office was up 22% on prior year1, with North America – the highest grossing region - up 64% on 2021 and earning more than the prior two years combined.2 While there is further ground to make up, research proves that the most avid streamers are also the most enthusiastic cinemagoers3. The major studios have renewed their love affair with cinema, and analysis demonstrates that almost 100% of a major movie’s box office is achieved well within the new 45-day theatrical window standard. Studio executives are seeing the strengths of cinema and streaming providers co-existing, with the theatrical experience serving as a key part of the economic model of content development. Originally slated to have a streaming release, Magic Mike’s Last Dance shifted to a theatrical release, and Amazon’s “I’ve seen the data… A movie that opens in theaters performs five times as well as when it goes directly to streaming.” David Zaslav President and CEO of Warner Bros. Discovery “Theatrical still has the greatest impact. That sort of theatrical release, 45 days later to streaming, that’s working beautifully. The bigger the hit in theatres, the greater the impact in streaming. The path to monetization now is greater.” upcoming sports drama, Air, will have a Brian Robbins global theatrical release before premiering President and CEO of Paramount Pictures on Amazon Prime Video. “We’re back to the theatres. Around the world, people are going back to theatres ... we’re seeing, as a society, we need this. We need to go to movie theatres and have that experience.” James Cameron Director-Producer Avatar: The Way of Water Spider-Man: No Way Home Released December 2021 $814M USD (#3) Top Gun: Maverick Released May 2022 $718M USD (#5) Post pandemic records also set: Biggest 4th July opening weekend: Minions: The Rise of Gru - Released July 2022 | $123M USD Biggest Memorial Day opening weekend: Top Gun: Maverick - Released May 2022 | $160M USD Biggest November opening weekend ever: Black Panther: Wakanda Forever - Released November 2022 | $181M USD The 6th movie to ever cross $2 billion USD worldwide: Avatar: The Way of Water - Released December 2022 | $2.2B USD Source: Omdia Source: BMO 1 2 3 Source: Morning Consult 16 1. Domestic refers to box office reporting for the United States and Canada Key strategies for 2023 • 17 Global box office (US$m) 2015 - 2025 North America Western Europe Eastern Europe Middle East & Africa Latin America & The Caribbean Asia & Oceania (Ex China, India) Grand Total 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 Moviegoing desire is strong A 2022 survey conducted by BFI IMAX in the UK of 2,000 adults found that: • 56% feel more immersed and connected to a blockbuster film if they watch it in a cinema • 41% of adults regretted watching a blockbuster at home • 71% think the big screen experience is the main draw to watching a film at the cinema • 48% wish they went to the cinema more often. 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 l a u t c A t s a c e r o F 18 Key strategies for 2023 • 19 Source: Omdia Battle of the blockbusters There is a wealth of content to look forward to in 2023 and beyond. Blockbusters are once again competing for the prime release dates but there is also the return of variety of genres to appeal to a variety of moviegoers. Horror, comedy, rom-coms and awards friendly titles are all back in cinemas. 20 *Correct at time of printing Key strategies for 2023 • 21 From our clients Curzon | Vista Digital Curzon Cinema reopens with an enhanced user experience powered by Vista Digital. Curzon Cinemas is an independent cinema group based in the UK with 55 screens. Following the closure of their cinema doors in March 2020, Curzon didn’t want to merely survive the pandemic, but to bring about expansion once live screening commenced again. Partnering with Vista Digital for design services, web development, custom integrations, and loyalty reorganisation, Curzon aimed to unify its digital presence and offer consistent moviegoer experiences. Omnia, Vista’s in-house digital agency which leverages Vista Cloud technology to Loyalty and Subscriptions integrations into the video on demand (VOD) platform - as well as an innovative e-ticket, Living Ticket, which reflects live booking details and places moviegoers in control of their cinema experience. “In a very short time, we got what we needed from the Vista team: shared payments, revenue expansion, consolidated memberships, and a single user experience and brand,” said Leo Brend, Director of Technology at Curzon. “The process for booking tickets has never been smoother. The number of paid subscribers is growing fast.” build digital experiences, led the redesign. As a result, engaging with their members is Omnia’s skilled designers, developers, testers, easier than ever, and allows moviegoers to and all-round digital experts put together take full advantage of their incredible cinema a completely tailor-made digital design and VOD offering. Looking ahead, Curzon’s seamlessly integrating home and in-theatre website means the fundamentals of their cinema to support Curzon’s business goals business are now easily scalable, creating a and meet their vision. Curzon’s ambitious redesign required a depth of technical customisation only possible with Omnia and SaaS technology. It included cloud-hosting, an embedded payment connector, automation of film media content through MX Film and CDN, and a feature- rich membership section—with custom smooth pathway for effective expansion both within the UK and internationally. Curzon’s partnership with Vista will continue to support and advance their overall mission of transforming the moviegoer experience. 22 Key Strategies for 2023 Expand our core platform that delivers value to our clients and connects moviegoers 24 Key strategies for 2023 • 25 A platform to power the global industry As the industry and box office continues its positive trajectory, we have continued accelerating our platform strategy to empower the cinema of the future and enhance the moviegoer experience. MOVIO CINEMA EQ Connecting every moviegoer to their ideal movie VISTA DIGITAL Delivering the best digital experience for moviegoers VISTA CLOUD The future of cinema management Enhanced experience, measurable impact By delivering rapid innovation, a scalable experience, free of distraction. Here, EQ and secure platform, and efficient client improves the way cinemas market movies support experiences, the technical tasks to their audiences. of managing an on-premise software stack are largely removed for cinemas, meaning they can spend more time focusing on the moviegoer experience. The platform-based strategy enables us to significantly increase our total addressable market, drive operating leverage, see reduced working capital, and align revenue The platform's simple software solutions with client success. We’re on track with our fosters productivity, provides efficiencies platform progress and in 2023 we are looking to drive both attendance and spend, while forward to building on the momentum of its taking the guesswork out of targeted development. Client interest is strong and marketing. In a world where cinemas are our value proposition is clear. As we amplify data-rich and time poor, and with a broad the opportunity for our organisation we will entertainment landscape from TikTok to continue to provide technology that makes streaming, delivering targeted content is a measurable difference for our clients and the proven way for cinemas to cut through powers a better moviegoer experience. the noise and deliver a unique, immersive Our platform is transforming cinema operations for our exhibitor clients. From simple and serverless innovation with Vista Cloud, to rich digital experiences for moviegoers with Vista Digital, and streamlined marketing solutions with Movio Cinema EQ, our platform will power the industry globally. 26 Key strategies for 2023 • 27 The platform Movio Cinema EQ Movio launched their latest innovative SaaS product, Movio Cinema EQ, in November 2022. Building on Movio’s previous products, EQ offers a smarter, faster and more streamlined solution for cinemas to improve the way they market movies to moviegoers. The new solution harnesses more than a decade of movie marketing expertise, empowering cinemas to enhance their connection with moviegoers, drive guest engagement, and increase attendance and spend. EQ improves the experience for marketers and moviegoers, creating impactful marketing campaigns that draw from moviegoers’ habits and motivations, to reach cinemas’ target audiences with the right message at the optimal time. Turn to page 32 to hear Cineplexx Greece’s experience as an EQ client. Vista Digital Vista Digital is responding to the needs of moviegoers, offering a flexible and modern solution without compromising on security or reliability. With a focus on enhancing the moviegoer experience, Vista Digital enables clients to thrive in a digital-first environment, where we frequently see more than 70% of moviegoers choosing to transact, and with the expectation of a seamless digital experience. The self-service tools provide an overall richer experience and we’re bringing modern solutions to clients with Vista Digital, including Lumos, Vista’s sleek and configurable out-of-the box solution for websites, apps and kiosk; and Omnia, delivering a bespoke digital experience, tailored to a cinemas desired user interface and user experience. Hear more about Vista Digital from Vista Cinema’s Chief Revenue Officer, Mischa Kay, on page 35. Vista Cloud Vista Cloud is the future of cinema management. Its innovation maximises efficiency for clients in their everyday operations, providing a comprehensive, reliable, and secure solution that powers all areas of their business. In 2022 we welcomed our first clients to Vista Cloud, providing simple and serverless innovation that helps them ensure moviegoers enjoy the fullest possible experience. As the core of the platform, Vista Cloud sees a transfer of responsibility from the on-premise model of Vista Cinema to the SaaS world of cloud, which requires less maintenance, direct operation from clients and a simpler fee system. Vista Cloud today has outcome parity, ensuring broad market-fit and ease of adoption. It is a highly functional and reliable platform to build upon. Turn to page 30 to see the platform journey. 28 Key strategies for 2023 • 29 The platform journey Significant progress has been made on the Vista Cloud SaaS platform, and early adopters are getting the first experience of the best technology the market has to offer. Where are we now What’s coming in 2023 and beyond Movio Cinema EQ • 2022 target of seven Movio Cinema clients • EQ delivering full feature suite from Movio Cinema legacy platform migrated to EQ achieved • Learnings from Alpha and early Beta clients incorporated into next round of client onboarding • Additional Movio Cinema features delivered for EQ: Journeys and enhanced reporting • 15+ EQ clients confirmed for migration in next round of Beta • Strong offer – focus on Vista Digital technology roadmap delivering client value at scale • Lumos Mobile – live with first US client • Platform readiness – stability and manageability improvements made across the platform • Completing the suite – cloud identity, networking and security now integrated across entire product portfolio Vista Digital Vista Cloud • Additional EQ features: non-loyalty member targeting and multi-channel campaigns/Journeys, and additional marketing channels • Continuing to evolve AI segmentation and content creation to establish deeper & wider data profile of movie-going public • Complete migration of all remaining Movio Cinema clients to EQ and depreciate Movio Cinema legacy platform • Business development to onboard new Movio clients direct to EQ • Lumos Kiosk – live with first clients. Web and mobile channels actively displacing legacy products • Next-gen Digital – industry-leading moviegoer experiences and personalisation features to capture market share. • Onboarding readiness for scale – significant reduction in deployment time and effort to enable onboarding and updating the platform at scale to target adoption rates • Platform capability and maturity – essential modernisation of business critical services and offline capabilities to improve performance, reliability, manageability and cost to serve • Marketplace – initial commercial marketplace iteration, live and learning • Cloud benefits – enhanced user experience, productivity and decision support features to deliver continuous value for Cloud clients and motivate late adopters 30 Key strategies for 2023 • 31 From our clients Cineplexx Greece | Movio Cinema EQ A Movio client since 2019, and a Movio picture of how their campaigns are positively Cinema EQ client since October 2022, impacting moviegoer spend and behaviour. Cineplexx International were one of Movio’s early adopters of EQ. Cineplexx International is one of Europe’s most expansive chains, with over 60 cinemas in 12 European countries. As one of their first territories to transition to EQ, Cineplexx Greece has been enjoying both the business and operational benefits that the new product provides. For Cineplexx Greece and many other cinema circuits around the world, automated communications via EQ offer a new and improved level of efficiency and the ability to remain in consistent, positive contact with moviegoers. EQ’s new Journeys feature provides ultra-personalised campaigns to help cinemas regularly and effectively engage with Cineplexx Greece strives to enhance moviegoers. With access to pre-configured the moviegoing experience before the Journey templates, along with options to moviegoer steps foot into the cinema. As a formulate their own, Cineplexx Greece can comprehensive campaign management and leverage creative journeys such as Moviegoer’s targeted marketing solution, EQ has provided Birthday, New Member, and Last Transacted Cineplexx Greece with an improved toolkit to drive business results while minimising for building and implementing highly configuration time by their team. personalised campaigns. As Cineplexx Greece builds more campaigns EQ’s unique AI functionality allows Cineplexx to engage and connect with their moviegoers, Greece to benefit from a smarter, data-driven they look forward to the continued efficiency approach to their targeting. While in the past, EQ provides. Cineplexx Greece has relied on moviegoer lists based on age, gender, or genre, EQ's propensity algorithm finds and targets the most relevant audience based on their past movie-watching behaviour. This takes the guesswork out of their targeted marketing and is particularly valuable for the regular email newsletters Cineplexx Greece send to their customers, enabling them to dynamically automate personalised content that entices more people to go to the movies. With EQ enabling a laser focus on the moviegoer experience and a new approach to their marketing, Cineplexx Greece are now able to increase engagement, and get a clearer “Our mission is to provide a premium moviegoing experience for our customers, which builds a long-term relationship between us. That starts with relevant and personalised communications that maximise customer engagement and drive visitation. With EQ, the process to achieve this has been significantly streamlined, as has our ability to understand who is visiting and why. We’re looking forward to many more successful campaigns with EQ, reaching more moviegoers and connecting them with their ideal movies.” Mag. Christof Papousek Managing Partner – CINEPLEXX International 32 From our leaders Sarah Lewthwaite | CEO, Movio Mischa Kay | Chief Revenue Officer, Vista Cinema proven that Movio's data science and dynamic marketing tools deliver incremental attendance and spend. With EQ, we will make this even easier for our clients, taking the guesswork out of their targeted marketing, ensuring that moviegoers enjoy the most personalised experience, and that our clients are delivering the most value back to their bottom line. Discuss the strength of EQ within the context of the platform. The Vista Group platform is an unbeatable combination of products that will enable cinemas to deliver integrated digital experiences to their guests. While EQ empowers cinemas to deliver highly targeted, data-driven campaigns across several digital marketing channels, the partnership with Vista Cloud and Vista Digital will take that strategy one step further. Cinemas will be able to begin personalising their sales channels, such as their website and kiosk, with Movio-driven recommendations and targeted offers. This push and pull of data, campaigns and offers in near-real time across the products within the platform, will ensure that the guest experience is enriched at all touchpoints. This is only possible for our clients that implement EQ as part of their strategy. What movie are you most excited to see in cinema this year? The Little Mermaid: I just hope cinemas offer a singalong version! What is your vision for Movio Cinema EQ? EQ will reshape how cinemas market to moviegoers. We've taken all that we've learnt and built over the past decade, and have reinvented Movio to be a faster, simpler and smarter platform. With Movio's revolutionary data science capabilities at its core, and a newly imagined user experience, EQ will automatically help cinema marketers to surface and connect with the right audience segment no matter what the film, stage of release cycle, or KPI they are focused on. What impact will EQ have for clients and the wider industry? EQ will help marketers who may be increasingly stretched for time and resources deliver impactful marketing campaigns at all digital touchpoints, with ease. We've What is your vision for Cloud and Digital? For Vista Cloud it is as simple as empowering cinema teams to focus on operating the best possible exhibition business they can. Vista Cloud is the cinema management product we’ve always wanted to provide – rapid innovation cycles, fully managed upgrades, and enhanced support capabilities wrapped up in a secure, reliable service. Vista Digital goes a step further by not only providing the best digital tools for cinema, but also focusing in on the moviegoer experience; how we build digital channels that encourage repeat behaviour, reduce abandoned transactions, and create upsell opportunities is at the forefront of our thinking behind Vista Digital. What impact will these solutions have for clients and the wider industry? We believe that the products we build these two products we are able to provide solutions to cinemas and moviegoers alike that no other software can come even close to achieving. I am particularly excited to see what’s possible as these product offers evolve. What movie are you most excited to see in cinema this year? empower cinemas to be their very best as There are so many great films coming out this they can focus on the business of the movies year. First place in terms of my excitement and we take care of the rest. We can do much goes to the second instalment of Dune, of the heavy lifting in the background while but I am looking forward to Beau is Afraid, our clients and the wider industry focuses on Oppenheimer, Mission Impossible: Dead recovering the box office. How does Movio Cinema EQ complement Vista Digital? Reckoning, Indiana Jones, John Wick 4, and Scream 6. Oh, and unashamedly, Barbie – the teaser trailer is a play on 2001: A Space Odyssey, so I have to assume we are in for a Movio Cinema EQ and Vista Digital were wild ride on that one. made for each other, the perfect partnership delivering moviegoer insights and experiences through data and technology. By combining 34 Key strategies for 2023 • 35 Key strategies for 2023 Create and invest in new opportunities 36 Key strategies for 2023 • 37 Innovation for the future of cinema We’re excited to be delivering innovation to our clients and the industry in 2023. The new capabilities we have to offer support the mission of our core platform and strengthen our purpose. Vista Oneview Madex Vista Oneview is the home of clarity for executive cinema leaders. A mobile app that enables leaders to keep their finger on the pulse of their business in real-time. Oneview harnesses the best of Vista Group, uniting theatre, movie and moviegoer data from Vista, Movio and Numero in a contextually relevant way. Users will be able to easily absorb insights, effortlessly trigger actions to rapidly drive performance and remain connected to their cinemas. This app marks the first phase of our next-generation business intelligence and decision support tools for the exhibition industry and we are excited to get it into the hands of our cinema clients in 2023. Madex is an audience exchange platform connecting film distributors and cinemas with the ideal moviegoers for each film. After an initial limited release, we’re excited to be expanding the reach and capabilities of Madex in 2023. The platform enables distributors to access and build highly-targeted audiences for every theatrical release – sourced from cinema loyalty programmes – with AI-driven propensity tied to similar movies people have seen. An added benefit, cinemas can now connect with moviegoers where they are spending more of their time digitally, including YouTube, Facebook, Instagram, Snapchat, and Twitter, while maintaining a highly targeted audience to maximise their digital spend. Vista Oneview Madex 38 Key strategies for 2023 • 39 From our leaders Matthew Liebmann | Chief Innovation Officer, Vista Group Gabriel Swartland | SVP, Client Services, Movio data to make operations more efficient and effective in these cost-constrained times. And second, to measure, monitor and enhance the experience exhibitors deliver to their guests. How is Vista Oneview showcasing Vista Group’s innovation for our clients’ benefit? Oneview is the first Vista Group product developed specifically for cinema CEOs and their executives. A mobile app, it allows these leaders to keep their finger on the pulse of their moviegoer, theatre and movie performance in real time and on the go by combining Vista, Numero and Movio data in one platform for the first time. What areas of innovation will most benefit our cinema clients and moviegoers? How do you see the cinema industry evolving this year and beyond? We must consider two drivers: are people willing to return to the cinema, and is there a large and diverse slate of movies to watch when they do? In 2022, Top Gun: Maverick, Delivering an ‘experience’ has never been Avatar: The Way of Water, Minions: The more critical for cinema, and that experience Rise of Gru, Elvis, The Lost City, Smile, and must address how the movie is shown, the Everything Everywhere All At Once proved that theatre itself and the people operating it. Our various segments will return. The movie slate technological innovations must enable our for 2023 already looks substantially better clients to identify and attract moviegoers, with more movies still to be scheduled. So, the streamline transactional workflows and building blocks are there for a really exciting empower lean front-line teams to consistently year for the industry and moviegoers alike. deliver outstanding service within amazing How will the role of data evolve for the industry this year? Our industry has primarily used data for facilities. What movie are you most excited to see in cinema this year? marketing: to identify audience segments Without doubt, Indiana Jones and the Dial of and connect them to their ideal movies. I see Destiny. this expanding in two ways. First, harnessing What Movio innovations is Madex leveraging to increase its effectiveness and user experience? Movio's propensity algorithm sits at the heart of Madex's targeting and segmentation functionality. The algorithm uses moviegoer past behaviour to determine the likelihood to watch a given film, and ranks the potential audience accordingly. This innovation has delivered great conversions for Movio's cinema partners for some time, and it keeps getting smarter. It also unlocks behavioural- based insights and tactics for studios, helping them market more effectively and more efficiently. How is Madex benefitting studios, cinemas and, in turn, moviegoers? exchange for moviegoers sharing their data is quite straightforward. Cinemas collect only the necessary data points that will help them deliver a premium level of personalised Connecting to moviegoers where they are service that moviegoers have come to expect. is essential. Madex has direct integrations By understanding how people spend their with all the major social and digital platforms time and money at the cinema, which touch which enables cinemas and studios to put the points they use and when, cinemas are able to right message, in the right format in front of influence attendance and drive that movie- the right moviegoer. Moviegoers expect this going habit. level of personalisation when it comes to the marketing messages they receive and with tools like Madex, cinemas and studios can ensure their marketing budgets are well spent. What role does data play in powering the moviegoer experience and encouraging people to see movies more frequently? It all starts with the data. We are fortunate that being in a leisure industry, the value What movie are you most excited to see in cinema this year? I love a Mission Impossible film so I'm excited about the next one, and I can't wait for Dune later in the year. The film I'm most excited about is Oppenheimer from Christopher Nolan. He is a genius filmmaker, and the prospect of something so cinematic AND original is what I cannot wait for. 40 Key strategies for 2023 • 41 Sustainability 42 Sustainability • 43 Sustainability Our sustainability approach Sustainability Journey As the world continues to face big challenges, Vista Group’s Board of Directors has Looking ahead to 2023 our focus will continue to be on building our foundations. we recognise that we have our part to play in overarching responsibility for sustainability. making a difference to the world we connect They provide strategic direction and with. We call that ngā mea pai me ngā guidance for our pathway and have adopted tangata pai - doing good things with good our framework. Oversight on the delivery people. During 2022, we decided to put a fresh focus on sustainability topics likely to affect Vista Group in our efforts towards a sustainable future. We began developing a sustainability strategy that initially complements, then of our approach is delegated to the Audit and Risk Committee and Nominations and Remuneration Committee, who focus on specific areas of sustainability, including climate change, and make recommendations to the Board for consideration. will be embedded into the Vista Group The framework is core to our approach. The strategy. We are excited to provide our first focus areas assist our Executive Leadership sustainability report, which outlines the Team to inform and guide how we manage our topics that are most important to us now, our business, and the targets hold us to account progress in 2022 and our future ambitions. and drive us to deliver the positive impact In September 2022, we engaged an independent consultant to guide us in developing our sustainability strategy and framework. This process involved a series of workshops where members of our executive and senior leadership teams analysed key material topics for the technology industry we make on society and the planet. Our forward-looking framework is built around the following three pillars that supports our purpose-driven strategy to build a sustainable platform that will connect the industry and power the moviegoer experience: • People: Caring for our people and and considered day to day feedback from our communities stakeholders. This allowed us to articulate the • Trust: Building greater trust topics we value as critical to Vista Group and our stakeholders and refine our aspirations. Our framework will evolve as we continue the conversation with our stakeholders, which will enable us to enhance initiatives where we have the greatest potential to make a positive impact. • Environment: Impactful innovation and consuming responsibly. Consuming responsibly & impactful innovation • Verification of baseline year greenhouse gas emissions by Toitū • Publish first voluntary climate-related financial disclosure statement • Undertake climate change scenario analysis • Continue to implement process improvement for greenhouse gas data capture Building greater trust • ISAE (NZ) 3000 / SAE 3150 assurance review finalised – Vista Cinema • Board Governance roadshow Caring for our people and communities • Report and take action to minimise the gender pay gap 44 Sustainability • 45 Sustainability framework Caring for our people and communities • Health, safety and wellbeing is an integral part of our everyday business and culture • Provide an engaging employment experience where our people can grow and excel • Diversity that reflects our communities • Safe, supportive and inclusive culture • Consistent and equitable approach in measuring performance and potential Building greater trust Consuming responsibly & impactful innovation • Improved & highly reliable cinema • Understand, measure and reduce Vista - branded digital channels Group’s carbon footprint • Maintaining an effective governance and • Through innovation assist our clients to decision-making structure reduce their carbon footprint • Continuous improvement to safeguard • Develop responsible procurement critical systems and protecting data practices • Responsible business conduct and ethics • Maintaining an adequate and effective risk management and internal control system • Aspire to 40/40/20 gender diversity (all • ISAE (NZ) 3000 / SAE 3150 controls • 1600 – 2400 client sites on the platform employees) by 2030 • An eNPS score ≥45 • A wellbeing score >50 • Expand leadership development and mentoring programmes to all regions • Report and take action to minimise the gender pay gap assurance report for Vista Cinema (NZ by December 2025 equivalent to SOC 2 report) • Publish first voluntary climate-related • No notifiable privacy breaches or critical financial disclosures for FY22 security incidents • Integrate environmental expectations • Maintain annual Board governance into Supplier Code of Conduct roadshows Priorities Focus areas Targets United Nations Sustainable Development Goals 46 Sustainability • 47 Caring for our people and communities 2022 was a great year, with a clear strategy and direction and more of our people returning to the office again, we built momentum towards achieving our goal of becoming a cloud-based company. Our people are at the heart of our ongoing global Executive Leadership Team also had the As inflation rates steadily increase across out to our employees in early 2023, with an success, and we take care to ensure they opportunity to meet together in person again the globe and with energy prices soaring in initial focus on a best practice onboarding engage meaningfully with their work, connect for the first time since the borders opened. Europe, the cost of living has been a real experience for our new joiners. with our purpose and have opportunities for growth and development. We take pride in the positive culture we have fostered and in the level of commitment and engagement of our people. Vista Group has continued to increase our high employee engagement, with an employee net promoter score (eNPS) of +49, up from 42 in 2021, which is now in the top quartile in the technology industry. The ethnic diversity of our people was highlighted through the course of the year with local events throughout the year. Highlights included Diwali, the Hindu festival of light, in Auckland and Día de los Muertos, also known as Day of the Dead, in our Mexico City and Los Angeles offices. Celebrations such as these are led by our employees for their colleagues, with a focus on building a our Work Well programme, it has also been occasions and fostering inclusion. great to see our people returning to the office again to connect and collaborate. Across all our locations, there have been a range of activities to welcome our people back to the office - from group wide meetings, strategy sessions, development workshops, team events and social activities. In late 2022, the Following an initial trial of a 4.5 day working week, we are pleased to now have made this a permanent benefit to our people. It has proved to have a significant positive impact on general wellbeing while maintaining a high level of productivity. concern to our people. To address this, Vista Group paid a cost-of living bonus to our most impacted employees to help alleviate some of that cost. The bonus was paid in additional to the annual salary review. It is important to us as a company and as individuals to contribute to our communities. In 2022, Vista Group donated $85,000 to the Vista Foundation. The Vista Foundation undertakes initiatives to nurture the continued Despite these external challenges, Vista Group growth and success of the New Zealand film has maintained great people experience by industry and is the naming sponsor of the looking after and growing our people while 48Hours film festival. trying to secure additional talent to deliver our Together with our people, we contributed $8,200 to support the humanitarian response We have increased the investment in the in Ukraine, $4,800 by participating in Sweat growth and development of our people, with Pride, and provided both financial and introducing new learning and development competition preparedness support to the initiatives, from leadership development and Lynfield College robotics team. coaching through to wellbeing workshops. We have also invested in a new learning management platform which will be rolled While we continue to offer flexibility through shared understanding of culturally significant strategic goals. 48 Sustainability • 49 From our people Vicki Parry Documentation Manager What are the values of Vista that to make the change to further develop the resonated with you when you started? company’s global presence is exciting to me. Like many New Zealand technical writers, I came into the field purely by chance. Eleven years ago, after deciding to pursue a career in technical writing, I joined Vista in one of their few technical writer roles. The recruiter had spoken highly of Vista, the family vibe, and the people-focused culture. Those attributes were important to me and still are. What is a project you’ve been proud to work on at Vista? There is always a sense of drive and commitment from our people across our strategic and objective projects. However, I felt an incredible sense of pride in being part of the collaborative effort across the organisation to develop the Covid-19 Cinema Reopening Kit. All aspects of the business Since then, Vista’s family has grown were considered and included, ensuring we immensely. However, the culture and feeling supported our clients to recover from the of being family have survived, along with impact of the pandemic. my sense of satisfaction at working for a successful company. For me, feeling I am part of something significant is essential. What is it that still excites you about Vista? What are you looking forward to in 2023? The importance of well-constructed documentation is often overlooked. However, Vista is fortunate to have a team of highly- skilled technical writers in our Knowledge I have seen Vista go from being privately Services team. I’m looking forward to seeing owned to being a publicly-listed group of their work showcased in our Vista Cloud companies. We found our way through the and Veezi Help Centres. Providing good global pandemic and have moved from being publicly accessible documentation, delivered an on-premise solution to a cloud offering. as a modern, pleasant reading experience, There has been a lot of change, and I recognise that further change is required to see the platform grow into a mature cloud software solution. Being part of a New Zealand headquartered company determined improves client satisfaction and enhances Vista’s marketing efforts. It also allows for feedback and data analytics and reduces pressure on our customer support teams by deflecting customer service calls. Galina Vidrio Uribe Graphic Designer What aspects of the company drew you to Cinemark. We created the concept, the look Vista Group? What charmed me the most was the different ways Vista Group has an impact on the client and feel, and the graphics and put them all together into a mail layout. It was a great experience. journey. At every step of the way, Vista takes What are you most looking forward to into account everyone who is involved in working on in 2023? I am thrilled about working on Movio Cinema EQ and discovering this new phase. I am also excited to keep learning about Movio templates and how they are used in other countries. In short, I want to keep learning, improving, and growing. the cinema experience - from the software powering the day to day management of cinemas, to the moviegoers' experience of watching a movie. What parts of your role at Movio excite you? What I like about working at Movio are the points of contact with moviegoers, the way the platform takes care of loyalty information, and email communications (or Facebook campaign, SMS), and how we put it all together into reports, graphics, and numbers, and more. As a graphic designer, I am into the behind- the-scenes of email development: coding. I also love movie posters, and Movio allows me to explore more design skills such as animation. What is a project in LATAM that you’ve been proud to work on at Movio? If I had to choose a project, it would be the development of the digital layout for 50 Sustainability • 51 Demographics Regional distribution Female representation New Zealand United States United Kingdom Mexico Europe South Africa Australia Malaysia 371 101 92 91 81 33 6 4 Our people Our board1 Executive leadership team Senior leadership team2 2022 2021 2022 2021 2022 2021 2022 2021 32% (252) 30% (192) 33% (2) 29% (2) 27% (3) 22% (2) 37% (3) 43% (3) Age distribution Languages spoken 33 10.1% Gender pay gap 20 - 28 192 (25%) 29 - 37 294 (38%) 38 - 46 191 (24%) 47 - 55 70 (9%) 56 - 64 29 (4%) 65 - 73 3 (0%) 16 Countries our people reside in Vista Group has an established process to permanent and fixed term employees globally, ensure that men and women are paid the which compared the median hourly rates and same amount for the same work undertaken. variable pay of men and women. This includes reviewing and adjusting, where needed, pay decisions at the point of recruitment, remuneration reviews and promotions, to ensure that pay is fair and equitable. Based on a weighted average of the size of each location, Vista Group’s global gender pay gap is 10.1%. The detailed analysis of the gender gap by location, pay quartile and job level has been reviewed to assess root In addition, a comprehensive gender pay gap causes as well as actions and initiatives to analysis was completed in 2022 across all lower the gap. 1. James Ogden retired from the Board at the 2022 ASM 2. The composition of the senior leadership team has been adjusted from 7 to 8 individuals in line with the change in our business. However, we have continued to have 3 females in that cohort. Sustainability • 53 Building greater trust We know that a key to success for everything we do is trust. We strive to do the right thing in everything that we do. Being transparent is fundamental to building trust. During 2022 we delivered an Investor Day to provide investors and stakeholders with an overview of key corporate governance developments, an update on our strategy and industry outlook, and an opportunity to ask questions and interact with our Board and Executive Leadership Team. Data security Strengthening our risk practises Companies are facing a growing threat Effective management of risk is fundamental landscape, making information and data to achieving our strategic objectives. In late security a top priority. With Vista Cloud, 2021, we engaged a third-party specialist responsibility for data security increases, to provide guidance on Vista Group’s risk so it’s even more important we deliver a management framework and policies. This reliable and secure environment to meet engagement continued into 2022 and resulted the expectations of our clients and retain in a refreshed risk appetite statement and risk their trust. management policy approved by the Vista Vista Cinema has engaged an independent Group Board in May. qualified auditor to provide an assurance To support the continuous improvement of opinion on its information security our risk management practices, we introduced management in accordance with the two newly created Group risk roles to lead the requirements of ISAE (NZ) 3150 – Assurance implementation of our refreshed policy, and to Engagements on Controls. This is a voluntary provide guidance and support to the business assurance review that focuses on the systems on security compliance. and controls we have in place to meet the Trust Services Criteria: security, availability, and confidentiality. The report will provide assurance to our clients, regulators and other stakeholders on the management of our security standards. This report will also provide us with insight on areas for In addition, we assessed our risk management platform for suitability, and members of our executive and senior leadership teams participated in a series of risk and control assessment workshops. Turn to page 93 to hear more about our risk improvement so we can continue to strengthen management and key risks. our practices. 54 Consuming responsibly and impactful innovation At Vista Group, we embrace our responsibility with Microsoft Azure for hosting our cloud- to operate sustainably and reduce the climate based platforms. Microsoft Azure have been impact of our business. Our environmental carbon neutral since 2012 and have made a footprint is relatively small and is largely made commitment to be carbon negative by 2030. up by office energy consumption, third party Microsoft Azure provides us with the capability data centres, business travel, technology to measure and monitor the carbon emissions consumables and shipping. We are working produced from our data centre usage. towards reducing our footprint even further. Our commitment extends to developing solutions that help our clients reduce the environmental impact of their businesses. Empowering our cinema clients Our platform is transforming cinema operations for our clients, encouraging sustainability-focused behaviours, through opportunities to reduce their carbon footprint by being more energy and resource efficient. The serverless innovation of Vista Cloud and Movio Cinema EQ removes the need and costs for our cinema clients to house on-site servers. On-site servers require a constant power supply, a cooling system to avoid overheating, investment to maintain and upgrade and ongoing e-waste disposal when the equipment lifecycle ends. This empowers clients to invest more in other aspects of their business while also reducing their carbon footprint. Our target is to have 1600-2400 cinema client sites on our SaaS platform by 2025. As we upscale our data storage loads, we anticipate our carbon emissions will increase for a period. To support us to reduce our carbon footprint, Vista Group have partnered Innovation for the future of our planet with living ticket The environmental impact of one movie ticket may not seem much but consider: if all 1.244 billion admissions reported in the USA and Canada in 2019 were printed on regular tickets1 and connected end-to-end, it would stretch more than half the distance between Earth and the Moon. Besides the costs to cinemas for acquiring the paper, printers, and energy needed to print, it also puts the environment at risk through deforestation and inefficient waste management. Ticketing has moved through several phases, from tickets purchased at the box office and PDFs printed at home, to online bookings with counter/kiosk pick up, but electronic ticketing is gaining popularity. The upward trend in moviegoer preference for remote sales channels can be attributed to this. With more and more moviegoers booking in advance either via web or cinema apps to avoid queues at the counter and prevent physical contact, the use of electronic tickets throughout the entire cinema trip is becoming increasingly common. Our carbon footprint In 2022 we established our emissions baseline year for measuring our carbon footprint. During the year we’ve been working with Toitū Envirocare (Toitū) and an independent consultant to better understand our value chain and our ability to capture data to measure our greenhouse gas emissions (GHGs). Our footprint covers GHGs from each of our entities around the world within our financial control. Measuring and reporting on our footprint will allow us to be transparent with our stakeholders, and enable us to make informed decisions and impactful progress on managing our GHGs reduction. To ensure the integrity of our GHGs, we have engaged Toitū to certify our 2022 baseline year emissions. The certification is in accordance with ISO 14064-1 guidelines and will be independently verified annually to maintain our certification. We intend to publish our first voluntary carbon statement in 2023. The External Reporting Board published the Aotearoa New Zealand Climate Reporting Standards on 14 December 2022. These standards will be mandatory for Vista Group to report against from the 2023 reporting period. Living Ticket -Paperless ticketing has multiple advantages for our cloud hosted clients. Paperless ticketing has multiple advantages for our cloud hosted clients. Not only does Living Ticket lessen environmental damage, it provides saving costs, and going paperless In next year’s sustainability report, we will frees cinema managers and floor staff from report on our carbon emissions and climate low-value tasks like stocking paper, replacing risks and opportunities in accordance with paper rolls, and printer troubleshooting. these climate reporting standards. 56 1 Ticket size considered 2" x 5.25" Sustainability • 57 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. Total Revenue $135.1m 38% Recurring Revenue1 $112.3m 38% SaaS Revenue2 $38.4m 38% ARR3 Vista Group recorded strong revenue growth of 38% to $135.1m and corresponding $118m $22m improvements in EBITDA. EDITDA4 $10.6m 63% Net profit after tax -$20.9m -111% Operating Cashflow $12.4m 10% 1 Recurring revenue is the portion of revenues that are expected to give rise to recurring cash receipts that will continue until the service is canceled. 2 SaaS revenues are those derived from subscription-based cloud-hosted software, with the software located on externally provided servers. 3 ARR is Annualised Recurring Revenue, calculated as trailing 3 month recurring revenue multiplied by four. 4 EBITDA is defined as earnings before net finance costs, income tax, depreciation, amortisation, “other gains and losses” (see section 2.3 of the financial statements) and share of equity accounted results from associates. The trading performance for 2022 was strong EBITDA of $10.6m was up 63% on 2021, and the industry and Vista Group have seen a and up 131% after adjusting for expected significant improvement in market conditions credit loss provisions and foreign exchange. over 2021, with the more regular release of blockbusters and global box office hitting $29b. Vista Group revenue of $135.1m was up 38% on 2021 with recurring revenue and SaaS revenue also up 38%. ARR closed at $118m up 22% on 2021. Non-recurring revenue, primarily new on-premise licences and hardware sales in Vista Cinema, was up 37% to $23m. A sizeable portion of the hardware sales were driven by a one-off requirement for upgrading client technology around the Retriever acquisition. This result underlines the key financial and operating strengths of Vista Group: • Consistent strong client relationships • Strong annuity revenue • Sustained underlined profitability • Leading global position in the film industry Vista Group continues to deliver new innovation across each of its operating segments, particularly in respect of Movio Cinema EQ, Vista Digital and Vista Cloud. Revenue NZD millions 2022 2021 2020 2019 2018 2017 2016 $135.1 $98.1 $87.5 $144.5 $130.7 $106.6 $88.6 58 Group trading overview • 59 Vista Cinema Movio Vista Cinema is the largest segment within Movio is the second largest segment within Vista Group and represents over two thirds Vista Group. A pure play SaaS business, of Vista Group's total revenue. It provides it represents about 15% of Vista Group's more than 50% of the world’s cinemas total revenue. Movio’s purpose is to ‘connect (outside China and India) with the technology everyone with their ideal movie’ and it platform to run multi-site, multi-screen achieves this through a range of campaign, and increasingly, multi-territory cinema analytics and research products for cinema businesses. exhibitors, studios and distributors. Much like 2021 ending on a high with In 2022, there was a steady increase in the Spider-Man: No Way Home, 2022 closed use of Movio Cinema, which allows cinema with Avatar: The Way of Water breaking circuits to connect more effectively with their new box office expectations globally. With moviegoers, with connections of 4.2b by the box office in key markets between 70-80%, year end, significantly up from a busy 2021. Vista Cinema client activity was returning to pre-pandemic levels and supported strong revenue growth. The overall health of the client base has been improving, and although it may still take a while before the industry passes 2019 box office levels, receivables and cash management remain a key focus. In Decemeber 2022, Vista Group signed trade agreements with key client Cineworld as part of its chapter 11 process in the United States, under which Cineworld committed to continue to use Vista Group Solutions. The Vista Cloud SaaS platform celebrated its first full year of successful operations. Two large client contracts were signed during 2022 Movio Cinema EQ, the replacement for Movio Cinema, was successfully launched late in the year and live with seven clients by the end of 2022. EQ greatly increases the breadth and depth of the moviegoer analytics and extensively automates the moviegoer engagement process, saving clients time and money in an area where they are resource and expertise constrained. Movio Research, which studios and distributors use to assess potential audiences, continues to be used widely as studio and distributor clients search for their perfect audience. and represent 10% of Vista Cinema’s total site Movio Media, which helps studios and count. Significant technology progress has distributors access their potential digital been made on the SaaS platform, particularly audiences, remains subdued early in the year, with Vista Digital tools, allowing clients new but increased with the wider range of movies robust ways to engage their moviegoers. Spend released later in the second half of 2022. on the platform now represents the majority of Vista Group’s innovation investment. For Movio, revenue was up 32% on 2021, with recurring revenue up 27%. For Vista Cinema, revenue was up 41% on prior year to $93.5m, with recurring revenue up 42%. Additional Group Companies The Additional Group Companies segment comprises the businesses of two studio and distributor focused businesses - Numero and Maccs - and two moviegoer focused businesses - Powster and Flicks. Numero • Maccs Numero and Maccs performed well in 2022, with recurring revenue up 22% and total revenue up 24%. Maccs 10, the latest version of the on premise theatrical distribution system, is being rolled out across the client base and Mica, the SaaS platform for studios and distributors to streamline their global cinema releases, continues to expand, particularly in North America. Numero continues to add global clients and extend its geographical coverage. Powster Revenue for Powster was up 42% on the previous year, driven by strong showtimes platform revenue based on the increased range of movies released to the market. Creative content also improved by 31% as studio marketing budgets matched the improved box office. Flicks Revenue for Flicks was up 22% for the full year driven by good growth in both New Zealand and the United Kingdom, with a consistent performance in the Australian market. 60 Group trading overview • 61 Cinema market share Vista Cinema percentage of the world market for Cinema Exhibition Companies with 20+ screens. 33% 51% Worldwide excl. China 43% Europe 9,199 / 21,499 91% Canada 2,142 / 2,348 50% USA 15,074 / 30,362 95% Central America 7,033 / 7,408 42% South America 2,385 / 5,675 22% Asia 2,986 / 13,548 67% Middle East 2,034 / 3,044 90% Australasia 1,799 / 1,997 81% Africa 652 / 803 62 Source derived from management estimates Group trading overview • 63 Remuneration report Letter from the Chair of the NRC As Chair of the Nominations and Remuneration Vista Group operates in a very competitive Committee (NRC), it is my pleasure to present global and local market for skills and Vista Group’s Remuneration Report for the year capabilities. It is a Board priority to ensure ended 31 December 2022. the retention of key employees and the 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). 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. The approach is aimed at reward for achieving financial and Vista Group’s Board continues to be committed non-financial performance that are aligned to to a remuneration framework that is aligned to shareholder value. reward for achieving targeted performance and the culture and leadership of looking after our people and our clients. 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 Regards, to demonstrating an increased level of transparency in its remuneration policies, practices and reporting. The NRC and the Board are supported by the People and Culture team who have been Cris Nicolli influential in supporting the business and employees globally especially given the varied economic and industry impacts. Chair of the Nominations and Remuneration Committee Vista Group International Limited 64 Renumeration report • 65 Executive appointment and remuneration Employee remuneration Vista Group’s remuneration policy for the CEO performance based targets and conditions set by The following table shows the number of employees paid during the year ended 31 December 2022, and Executive Leadership Team is based on the the Board on the recommendation of the NRC. whose remuneration and benefits for the year ended including 2021 STI payments. The table does not principles that the remuneration framework will: All Vista Group employees based in New Zealand, 31 December 2022 were within the specified bands include amounts paid post 31 December 2022 • be simple, clear and understandable by all stakeholders • be fair, equitable and flexible • support Vista Group attracting, retaining and engaging employees • reward targeted performance – financial and non-financial • create alignment with Vista Group’s values, culture and corporate strategy • appropriately reflect market conditions and the organisational context the United Kingdom and the USA (other than the CEO and ELT) in March 2022 were also eligible to participate in the Vista Group Recognition Scheme – a share rights scheme with vesting conditional only on continued tenure until April 2023. 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 • align with creating and increasing data to ensure competitiveness relative to shareholder value. comparable market peers. The NRC reviews Vista Group’s remuneration policy and principles on a regular basis. In 2022 Vista Group and a third party specialist firm conducted a comprehensive and robust Chief Executive search process in line with the Total remuneration consists of fixed remuneration, Nomination and Remuneration Committee Charter, short-term incentives (STI), and long-term leading to the appointment of incoming Chief incentives (LTI). STI and LTI are ‘at risk’ as Executive, Stuart Dickinson. outcomes are determined based on the achievement or otherwise of financial and non-financial above $100,000. The remuneration figures shown that related to the year ended 31 December 2022, in the table include all monetary payments actually such as STI bonuses. SALARY BAND (NZ$) TOTAL GROUP EMPLOYEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 100,000 110,000 120,000 130,000 140,000 150,000 160,000 170,000 180,000 190,000 200,000 210,000 220,000 230,000 240,000 250,000 260,000 270,000 280,000 290,000 310,000 340,000 370,000 400,000 410,000 420,000 430,000 450,000 480,000 510,000 640,000 980,000 1,060,000 Total 109,999 119,999 129,999 139,999 149,999 159,999 169,999 179,999 189,999 199,999 209,999 219,999 229,999 239,999 249,999 259,999 269,999 279,999 289,999 299,999 319,999 349,999 379,999 409,999 419,999 429,999 439,999 459,999 489,999 519,999 649,999 989,999 1,069,999 44 54 53 35 31 19 15 17 10 7 11 3 5 3 4 1 1 1 1 1 2 1 3 1 1 1 1 1 2 1 1 1 1 336 66 Renumeration report • 67 Fixed remuneration Fixed remuneration consists of base salary and benefits. While flexibility exists where specific circumstances require it, base salaries are typically reviewed annually. Vista Group provides a range of benefits to its employees specific to the country in which the employee works: COUNTRY BENEFITS COUNTRY BENEFITS New Zealand United States • Kiwisaver contribution up to 3% • Health insurance • Life insurance • Vista Group Recognition Scheme • Long service benefits • Cost of Living Bonus for those on lower incomes • 4.5 day working week • Volunteer day • 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 (employee sponsored) • Volunteer day • Employee Assistance Programme (w/24 hr. mental health crisis support) • Cost of Living Bonus for those on lower incomes • 4.5 day working week 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 • Cost of Living Bonus for those on lower incomes • 4.5 day working week • Volunteer Day Netherlands • Perkbox with free perks each month, plus access to range of high street discounts and rewards • Cost of Living Bonus for those on lower incomes • 4.5 day working week • Volunteer day South Africa • Private medical health coverage for employee and their family + dental and eye care contributions • 24 hour Employee Assistance Programme services • Perkbox with free perks each month, plus access to range of high street discounts Mexico Malaysia Romania and rewards • Cost of Living Bonus for those on lower incomes • 4.5 day working week • Volunteer day • Medical insurance • Food coupons • Cost of Living Bonus for those on lower incomes • 4.5 day working week • Volunteer day • Medical claims – reimbursement for medical bills • Mobile phone allowance • Parking allowance • Cost of Living Bonus for those on lower incomes • 4.5 day working week • Volunteer day • Private medical services • Half reimbursement for glasses and contact lenses (up to 450 RON) • Half reimbursement of a monthly gym membership (up to 100 RON) • Cost of Living Bonus for those on lower incomes • 4.5 day working week • Volunteer day The provision of fixed remuneration (comprising of a base salary and country specific benefits) is consistent across all employees in Vista Group, including the CEO and ELT. 68 Renumeration report • 69 Short-term incentives Long-term Incentive Scheme Retention Schemes Recognition Scheme The STI are at-risk incentives that may be Vista Group’s LTI is a share scheme offered at the The CEO also participates in a Group CEO The 2022 Vista Group Recognition Scheme (VGRS) offered to an employee in respect of a specific discretion of the Board on the recommendation of Retention Scheme. Under the terms of this scheme, is a board discretionary share scheme that was year. The STI is set within a range as a fixed the NRC. The LTI is set as a fixed percentage of the the CEO is granted a specified number of rights offered in 2022 to all Vista Group employees based percentage of the participating employee’s base participating employee’s base salary. The number that are eligible to vest annually based on continued in New Zealand, the United Kingdom and the United salary. The STI outcomes are determined based of rights granted to a participating employee is tenure with Vista Group. In April 2022, 100,000 States (excluding the CEO) to encourage retention on the achievement of financial and non-financial determined based on the participation value divided share rights were vested, comprising the first and to recognise the performance of employees. performance based targets applicable to the by the volume weighted average sale price of Vista tranche of the share rights granted in 2020 under VGRS participation was set at the greater of 7.5% relevant employee. STI, once achieved, are paid Group’s shares over a specified period before the the Group CEO Retention Scheme. Subject to the of base salary, or NZ$7,500. The number of rights continued tenure of the CEO, 400,000 share rights granted to a participating employee was determined are due to vest in April 2023. 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 rights granted under the VGRS are eligible to vest in April 2023 based on the continued tenure of the participating employees. Certain employees also participate in a Senior Management & Executive Retention Scheme. Under the terms of this scheme, the relevant participants are granted a specified number of rights that are eligible to vest each year of the term of the scheme based on continued tenure with Vista Group. In 2022, 300,000 share rights were granted under this scheme. Subject to continued tenure of each participant, 100,000 of those share rights are due to vest in April 2024 with the remaining 200,000 share rights due to vest in April 2025. in cash. The key targets, percentages and terms of the 2022 STI are set out in the table below: TARGETS % OF STI HURDLE 50% Recurring revenue/ total revenue Vista Group EBITDA 20% 15% Customer net promoter score 15% Employee net promoter score Results of between 95% to 110% of the target equates to STI achievement of between 95% and 120%. No STI is achieved below 95%, nor are any stretch elements available above 120% achievement. Results of between 90% to 110% of the target equates to STI achievement of between 90% and 120%. No STI is achieved below 90%, nor are any stretch elements available above 120% achievement. If achieved, then 100% of the applicable STI is payable. If achieved, then 100% of the applicable STI is payable. In 2022, the CEO’s STI was set by the Board at 48% 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. 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 and 2022 LTI schemes, half of the rights are classified as ‘share rights’, with the other half classified as ‘performance rights’. One third of these share rights and performance rights are eligible to vest each year of the three year term of the scheme based on: • Share Rights: continued tenure with Vista Group, with rights vesting annually when the condition has been satisfied (annually representing one sixth of the total LTI). • Performance Rights: achievement of Vista Group recurring revenue targets set by the Board, with vesting annually on achievement of the target, assuming also continued tenure (annually representing one sixth of the total LTI). Under the 2022 LTI scheme, the CEO’s LTI was set by the Board at 48% of his base salary, and for ELT members the LTI was set within a range of 20%-66% of the relevant ELT member’s base salary. 70 Renumeration report • 71 Breakdown of CEO pay for performance (2022) CEO remuneration The table below represents the pay for performance remuneration received, or expected to be received The total remuneration received by the CEO between 1 January 2022 and 31 December 2022 by the CEO relating to the 2022 financial year. Settlement of parts of this table are anticipated to be (including the comparative period) is as follows: YEAR 2022 2021 BASE SALARY¹ 633,979 425,000 TAXABLE BENEFITS FIXED REMUNERATION 28,595 22,556 662,575 447,556 STI² 172,656 107,525 LTI & OTHER RIGHTS² TOTAL REMUNERATION 261,250 464,000 1,096,481 1,019,081 1 The 2022 base salary of the CEO is $625,000. The value included in this table represents additional amounts required to be paid under New Zealand legislation when an employee takes annual leave. 2 The STI, LTI & Other Rights represented in this table relate to amounts / rights settled in the relevant financial year (for example, the 2021 STI is reflected in 2022, being the year it was settled). The employment agreements of the CEO and ELT do not include the ability to be paid a transaction bonus in the event of a takeover of Vista Group. settled in 2023. DESCRIPTION PERFORMANCE MEASURES % ACHIEVED AMOUNT ACHIEVED NZ$ STI 50% of base salary LTI & other rights TOTAL STI 2020 Group CEO Retention Scheme1 2021 LTI Plan1 50% weighting of Vista Group recurring revenue. Results of between 95% to 110% of the target equates to STI achievement of between 95% and 120%. No STI is achieved below 95%, nor are any stretch elements available above 120% of the target. 20% weighting of Vista Group EBITDA. Results of between 90% to 110% of the target equates to STI achievement of between 90% and 120%. No STI is achieved below 90%, nor are any stretch elements available above 120% of the target. 15% weighting on customer net promoter score. If achieved, then 100% of applicable STI payable. If not achieved, no STI is payable. 15% weighting on employee net promoter score. If achieved, then 100% of applicable STI payable. If not achieved, no STI is payable. 100% weighting on continued tenure. An allocation of 400,000 of rights are due to vest in April 2023. 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. 91.0% $273,000 2022 LTI Scheme1 50% weighting on Vista Group recurring revenue in 2022, 2023 and 2024. The threshold to achieve is 90% with pro- rata payment through to 100%. 50% weighting on continued tenure in 2022, 2023 and 2024. TOTAL LTI & OTHER RIGHTS 100.0% $773,583 TOTAL STI, LTI & OTHER RIGHTS 97.5% $1,046,582 1 These rights convert to shares in April 2023. A share price at 31 December 2022 has been used for calculating the value of the shares expected to be issued under the share schemes. 72 Renumeration report • 73 Share-based schemes Share schemes in 2022 In the year ended 31 December 2022, Vista Group granted rights under the following employee share-based schemes: 2022 LTI Scheme: Vista Group granted 1,268,112 Share-based schemes with conditions met rights to ELT and other selected senior management The following share-based schemes met the under this scheme during 2022. Half of the rights required performance targets resulting in rights are classified as ‘share rights’, with the other half vesting in the year ended 31 December 2022: classified as ‘performance rights’. One third of these share rights and performance rights are eligible to vest each year of the three year term of the scheme based on: • 2021 LTI Scheme: Vista Group granted 1,237,668 rights to ELT and other selected senior management under this scheme in 2021. Half of the rights are classified as 'share rights', with the • Share Rights: continued tenure with Vista Group, other half classified as 'performance rights'. One with rights vesting annually when the condition third of these share rights and performance rights has been satisfied (annually representing one sixth are eligible to vest each year of the three-year of the total LTI). term of the scheme based on: • Performance Rights: achievement of Vista Group • Share Rights: continued tenure with Vista recurring revenue or total revenue targets set by Group, with rights vesting annually when the Board, with vesting annually on achievement the condition has been satisfied (annually of the target, assuming also continued tenure representing one sixth of the total LTI). (annually representing one sixth of the total LTI). Performance rights that do not vest are eligible to • Performance Rights: achievement of Vista Group recurring revenue or total revenue vest of the scheme. 2022 Senior Management & Executive Retention Scheme: Vista Group granted 300,000 rights to selected employees under this scheme during 2022. Of these, 100,000 will vest in April 2024, and targets set by the Board, with vesting annually on achievement of the target, assuming also continued tenure (annually representing one sixth of the total LTI). Performance rights that do not vest are eligible to vest of the scheme. 200,000 will vest in April 2025, conditional on the In April 2022, 336,611 Vista Group shares were continued tenure of the participants at the relevant issued to participating ELT following the vesting vesting date. 2022 Vista Group Recognition Scheme: Vista Group granted 2,110,769 share rights to all Vista Group employees based in New Zealand, the United Kingdom and the United States (excluding the CEO) to encourage retention and to recognise the performance of employees. These share rights will vest in April 2023, conditional on the continued tenure of the participants at the relevant vesting date. 74 of 194,871 share rights and 141,740 performance rights under the scheme. • 2020 Group CEO Retention Scheme: In 2020, the CEO was granted 500,000 share rights under the Group CEO Retention Scheme with vesting conditional on the CEO’s continued tenure. In April 2022, 100,000 Vista Group shares were issued to the CEO following the vesting of 100,000 share rights under the scheme, and 400,000 share rights will vest in April 2023 conditional on the continued tenure of the CEO. Performance rights outstanding The total number of outstanding rights granted to Vista Group employees (less known leavers) at 31 December 2022 are detailed in the following table: GRANT YEAR PLAN TYPE 2023 2024 2025 OUTSTANDING RIGHTS 2020 2021 2022 2022 2022 Group CEO Retention Scheme LTI Scheme LTI Scheme Vista Group Recognition Scheme Senior Management & Executive Retention Scheme 400,000 382,591 417,296 1,863,113 - 336,692 417,296 - - - 400,000 719,283 417,296 1,251,888 - 1,863,113 - 100,000 200,000 300,000 Total outstanding rights 3,063,000 853,988 617,296 4,534,284 The table above does not include the Group CEO Retention Scheme for the incoming CEO, as the grant is contingent on commencement of employment. Renumeration report • 75 2022 director remuneration Director remuneration is paid from the total directors’ fee pool of $725,000 approved by Vista Group’s shareholders at the ASM held on 26 May 2021. No increase to the fee pool is proposed for 2023. Directors’ fees are calculated as set out below: POSITION HELD Chair Director ARC Chair ARC member NRC Chair NRC member The details of the total remuneration of, and the value of other benefits received by, each director of Vista Group during the year ended 31 December 2022 are set out in the table below: DIRECTOR FURTHER DETAILS Susan Peterson Chair Claudia Batten Murray Holdaway2 James Miller Retired as Chief Product Officer in June 2022 Appointed ARC Chair in May 2022 BOARD FEES ARC FEES NRC FEES TOTAL DIRECTOR FEES1 EXECUTIVE REM 180,000 85,000 42,500 - - - 85,000 12,997 - 180,000 10,000 95,000 - - 42,500 181,430 223,930 - - 97,997 Cris Nicolli NRC Chair 85,000 10,000 15,000 110,000 James Ogden Retired in May 2022 34,274 6,048 4,032 44,355 Kirk Senior Total 85,000 10,000 - 95,000 596,774 39,046 29,032 664,852 181,430 846,282 NZ$ $180,000 $85,000 $15,000 $10,000 $15,000 $10,000 TOTAL DIRECTOR COST 180,000 95,000 - - - - 97,997 110,000 44,355 95,000 1 Total director fees of $664,852 is within the $725,000 directors’ fee pool approved 2 Murray Holdaway retired from his executive role as Chief Product Officer in June 2022. He remained as a director of Vista Group from that date. 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 in his previous position of Chief Product Officer until his retirement from that role in June 2022, no additional payments or benefits were received by directors during 2022. In his position of Chief Product Officer, Murray Holdaway was entitled to taxable benefits, including 3% employer KiwiSaver contributions on base salary, employer sponsored Southern Cross health insurance, and employer sponsored life insurance. 76 Renumeration report • 77 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 2023. The information contained in this statement is current as at that date, unless otherwise noted. Vista Group is committed to high standards Vista Group’s governance framework ensures of governance. Vista Group’s key governance documents are available in the Investor Centre section of Vista Group’s website at www.vistagroup. Board accountability to our shareholders and provides for an appropriate delegation of responsibilities to our CEO and our Executive Leadership Team (ELT). co.nz/investor-centre - these include The Board reviews Vista Group’s governance Vista Group’s constitution, the Corporate policies and practices regularly to ensure Governance Code (including the Code of compliance with NZX and ASX standards Ethics, Audit and Risk Committee Charter (Vista Group is an ASX Foreign Exempt and Nominations and Remuneration Listed company) and reflects the governance Committee Charter), Risk and Compliance expectations of its shareholders in New Framework Summary, Continuous Disclosure Zealand and Australia. Policy, Diversity and Inclusion Policy, Share Trading Policy, Modern Slavery Statement 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. 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). 78 Corporate governance • 79 Vista Group’s Board Board composition and characteristics The directors of Vista Group as at the date of this Annual Report are as follows: Susan Peterson BCom, LLB Independent Chair Claudia Batten BCom, LLB (Hons) Independent Director Murray Holdaway BSc, BCom Executive Director James Miller BCom, FCA Cristiano (Cris) Nicolli BMS, FAICD Kirk Senior BCom, CA Independent Director Independent Director Non-Independent Non-Executive Director Executive Directors (male) Non-Independent Non-Executive Directors (male) Six board members Independent Non-Executive Directors (male) Independent Non-Executive Directors (female) During 2022, the Board continued to implement its succession plan to achieve greater independent governance. This involved: • Independent Director, James Ogden retiring from the Board after 8 years of service – with effect from 26 May 2022; and Structure The Board is structured to ensure that as a 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 • Murray Holdaway retiring as a Vista Group website at www.vistagroup.co.nz/investor-centre. executive, but continuing on the Board as an Executive Director – with effect from June 2022. A brief profile, including the relevant qualifications and experience, of each director can be found at www.vistagroup.co.nz/board-management. Vista Group’s constitution does not allow the appointment of a director by a single shareholder pursuant to NZX Listing Rule 2.4. 80 Corporate governance • 81 Board skills matrix Capability description Proficiency guide: Low Medium High 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 It is considered that addressing the level of skills Remuneration Committee (NRC) has assessed the and experience collectively is a better indicator skills of the Board and reviewed and updated the of Board capability overall. Accordingly, the level Board skills matrix. A summary of the Board skills of skills and experience is assessed collectively. matrix is set out on the opposite page. The key skills and experience which individual The refreshed skills matrix enables an assessment directors contribute to the Vista Group’s Board of skills and experience of individual directors, and can be found at www.vistagroup.co.nz/board- how the directors work together as a whole. management. Six board members Capabilities 1. Software, Cloud, Online and Operating Platforms 2. Digital product management and marketing 3. Data 4. Strategy and development 5. Go-to-market in international markets 6. Financial Expertise 7. Listed company 8. People and culture 9. Film Industry 10. Sustainability 1. Expertise and experience in the development and delivery of software and digital solutions through on-premise, managed services, cloud and/or online platforms 2. Expertise and experience in digital product marketing and management, including an understanding of technology trends and implications and the software and technology value chain 3. 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 4. Expertise in corporate strategy and the developing early stage businesses, including strategic reviews, M&A and strategic partnerships 5. Deep customer insight and advocacy. Go-to-market expertise including direct sales, internet sales, new markets, and/or specific customer channel experience in the technology, cinema, film, studio or media sectors in Vista Group's key international markets (North America, South America, EMEA, APAC) 6. Financial expertise with significant public company experience in finance, accounting, capital markets, credit markets, banking and investor relations. 7. Depth of expertise on listed company boards, including experience in governance, compliance and risk management and health and safety 8. Remuneration, retention, workforce planning, talent, culture and diversity and inclusion 9. Depth of experience in the film industry, including in film exhibition and/or distribution 10. Deep understanding of the environmental, social and governance considerations in a strategic and operational context and the applicable legislative framework, including the TCFD 82 Corporate governance • 83 Independence and conflicts Responsibilities Four of Vista Group’s six directors (Susan Peterson (Chair), Claudia Batten, James Miller and Cris Nicolli) 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 that would materially interfere with, or could reasonably be seen to materially interfere with, the independent exercise of their judgement. None of 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 Risk and Audit direction and operation and has delegated certain responsibilities to the CEO and the ELT. Vista Group’s Board is committed to creating long-term value for shareholders and safeguarding the highest standards of governance, corporate behaviour and accountability. The Board’s responsibilities are set out in Vista Group’s Corporate Governance Code, and include: • ensuring the quality and independence of Vista Group’s external audit process 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 Two of Vista Group’s six directors (Kirk Senior current or past senior employee or partner of Vista Strategy and Planning and Murray Holdaway) are not considered to be Group’s auditors PricewaterhouseCoopers. None of • selecting and, if necessary, replacing the CEO initiatives; Independent Directors. Kirk Senior held the position the directors has been, within the last three years, of Executive Chair until he resigned as Chair and a material supplier to Vista Group or has any other as a member of the ELT with effect from 1 January material contractual relationship with Vista Group 2021. Based on his previous ELT position, the or any of its subsidiaries other than as a director of Board has determined that Kirk Senior is not an Vista Group or, in respect of Kirk Senior and Murray Independent Director. Murray Holdaway is the Holdaway only, as an employee of Vista Group co-founder of Vista Group, holds 2.91% of Vista or one of its subsidiaries. None of the directors Group’s ordinary shares, and was a member of the receives performance-based remuneration from, ELT as Vista Group’s Chief Product Officer until he or participates in, Vista Group’s employee share resigned as a member of the ELT in 2022. Based schemes. No director controls, or is an executive on these factors, the Board has determined that or other representative of an entity which controls, Murray Holdaway is not an Independent Director. 5% or more of Vista Group’s voting securities. Within the last 12 months, none of the directors The Board considers that the roles of the Chair were a partner, director, senior executive or and the CEO must be separate. The CEO is material shareholder of a firm that provided not a director of Vista Group and the Chair is material professional services to Vista Group or independent of the CEO. any of its subsidiaries. None of the directors is a • ensuring that Vista Group has adequate • managing and implementing strategies approved management to achieve its objectives and to by the Board; support the CEO so that a satisfactory plan for management succession is in place • formulating and implementing policies and reporting procedures for management; • reviewing and approving the strategic, business and financial plans prepared by the ELT • decision making compatible with Vista Group’s Delegated Financial Authority Manual; • reviewing and approving certain material transactions, and making certain investment and • managing business risk and implementing the Board approved risk management framework and divestment decisions ensuring compliance; and • approving and overseeing the administration of Vista Group’s technology development strategy • the day-to-day leadership and management of Vista Group. Financial Performance and Integrity The CEO and ELT have appropriate employment • monitoring Vista Group’s performance against its approved strategic, business and financial plans agreements setting out their roles and conditions of employment. and overseeing Vista Group’s operating results The CEO’s performance is reviewed by the Code of Ethics • ensuring Vista Group, the Board and the ELT’s behaviour is consistent with the Code of Ethics, including compliance with the constitution, any applicable laws and regulations, NZX Listing Rules, and any relevant auditing and accounting principles • implementing, and from time to time reviewing, NRC regularly against objectives and measures set by the Board. The CEO’s performance was evaluated during the reporting period on this basis. The NRC is also responsible for overseeing the CEO’s evaluation of the ELT. Further details are contained in the Remuneration Report on page 64. Directors’ remuneration the Code of Ethics, to foster high standards of Full details regarding Vista Group’s remuneration of ethical conduct and personal behaviour, and hold its directors are set out in the Remuneration Report accountable those directors, managers or other on page 64. employees who engage in unethical behaviour 84 Corporate governance • 85 Governance at Vista Group Selection, nomination and appointment Induction and development 2022 governance calendar and attendance Vista Group undertakes appropriate checks before All new directors participate in an induction Vista Group’s 2022 governance calendar recording the meetings of the Board, Board Sub-Committee, appointing a director or putting forward any programme and receive significant induction Audit and Risk Committee (ARC), Nominations and Remuneration Committee (NRC), Disclosure Committee, candidate for election as a director in accordance materials so as to familiarise them with Vista and the Annual Meeting of Shareholders (ASM) is set out in the table below: 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 determined in accordance with the NZX Listing days are held during the year to consider matters Rules. The Board is responsible for considering and of strategic importance to Vista Group. appointing directors to the Board after candidates have been identified by the NRC. Vista Group provides regular development opportunities for directors through Director Vista Group has a written agreement with each Education Sessions. During 2022, Vista Group director set out in a standard form letter of hosted two Director Education Sessions where appointment containing the terms and conditions external experts presented on the topics of building of their appointment. In addition, Vista Group has high performance cultures and cybersecurity trends also entered into a deed of indemnity and insurance and practices. Outside of the Director Education which applies to each director, under which Sessions, the directors undertake appropriate Vista Group indemnifies, and provides insurance training to remain current on how to best perform to, directors in accordance with Vista Group’s their duties as directors of an issuer by attending constitution and the Companies Act 1993. relevant courses, conferences and briefings. 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. JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC MEETINGS Board Board Sub-Committee Disclosure Committee ARC NRC ASM All directors attended the 2022 ASM. Details regarding the directors’ attendance of the meetings of the Board, Board Sub-Committee, the ARC and the NRC during 2022 is set out in the table below: MEETINGS BOARD ATTENDANCE BOARD BOARD SUB ARC NRC Susan Peterson Claudia Batten Murray Holdaway James Miller 2 Cris Nicolli James Ogden 1 Kirk Senior 3 100% 100% 100% 100% 100% 100% 100% Board or Committee Member present Non-Committee Member present 1 James Ogden retired from the Board on 26 May 2022 2 James Miller appointed to Chair of the ARC on 26 May 2022 3 Kirk Senior appointed as committee member of the NRC on 26 May 2022 Each Committee Charter provides that employees and Executive Directors can only attend Committee meetings at the invitation of the Chair of the relevant Committee. 86 Corporate governance • 87 Reviewing performance Board committees The performance of the directors (individually and collectively), and the effectiveness of Board processes The Board has two standing committees: the ARC established from time to time, including as required and committees, are regularly evaluated using a variety of methods, including questionnaires, Board and the NRC. The members of those committees to provide governance oversight on short-term discussion, and an evaluation at the end of each Board meeting. A performance review led by the Chair are set out in the tables below: was carried out during the reporting period. The next review will be carried out during 2023. Tenure Vista Group notifies shareholders each year of their right to nominate a candidate for election as a director. Where any director election or re-election is to occur at a shareholder meeting, the Notice of Meeting includes all information on candidates for director election or re-election that the Board considers may be useful for shareholders to receive. As required by the NZX Listing Rules, directors must retire every three years and, if desired, seek re-election. In accordance with NZX Corporate Governance Code recommendation, 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 2022 TENURE Murray Holdaway 06 Aug 2003 Kirk Senior 03 Jun 2014 Susan Peterson 03 Jun 2014 Cris Nicolli 17 Feb 2017 Claudia Batten 01 Jan 2021 James Miller 31 Aug 2021 19–20 yrs (co-founder) 8–9 yrs (since IPO) 8–9 yrs (since IPO) 5–6 yrs 2 yrs 18 months Although Murray Holdaway has served as a director since 2003, as a co-founder of Vista Group, Murray’s deep understanding of Vista Group’s businesses and the film industry is considered a valuable addition to the Board’s skills matrix. ARC Director James Miller (Chair) Cris Nicolli Kirk Senior NRC Director Cris Nicolli (Chair) Claudia Batten Kirk Senior Independence Independent Independent Non-Independent Independence Independent Independent Non-Independent projects. As at the date of this statement, Vista Group has determined 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 at least every two years. The committee charters form part of Vista Group’s Corporate Governance Code which is available at www.vistagroup.co.nz/investor-centre. Vista Group does not have a separate Nominations Directors’ Vista Group shareholdings Committee, or a separate Remuneration Committee. The Board encourages the alignment of directors’ Rather, the NRC fulfils the functions of both those interests with those of shareholders and with Vista committees. The role and responsibilities of the ARC Group’s strategic aims. To improve this alignment, and NRC are set out in the Committee Charters that the Board encourages directors to hold shares form part of Vista Group’s Corporate Governance in Vista Group, with final determination left to Code which is available at www.vistagroup.co.nz/ investor-centre. The Disclosure Committee was constituted in 2020 under Vista Group’s Continuous Disclosure Policy and is comprised of Cris Nicolli (Independent Director), the CEO, the CFO and the General Counsel and Company Secretary. The Disclosure Committee convene each month in which a Board meeting does not occur in order to monitor Vista Group’s compliance with its continuous disclosure obligations under the NZX Listing Rules and the Financial Markets Conduct Act 2013. individual director’s personal circumstances. Further details of directors’ shareholdings in Vista Group are set out in Directors’ Disclosures on page 100. Access to advice and general counsel and company secretary Directors may access such information and seek such independent advice as they consider necessary 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 Each committee focuses on specific areas of without management present and, with the Chair’s governance. Together, the committees strengthen consent, seek independent professional advice at the Board’s oversight of Vista Group. Committee Vista Group’s expense. 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 and approval as appropriate. Vista Group assesses on a regular basis whether additional standing or ad hoc committees are required. Additional temporary committees are 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. 88 Corporate governance • 89 Assurance and managing risk Audit plan and role of the external auditor External audit policy PricewaterhouseCoopers is Vista Group’s The Board’s framework for Vista Group’s current external auditor and has 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 at every five years. Vista Group last rotated its key www.vistagroup.co.nz/investor-centre. The audit partner in January 2020 and, assuming that External Audit Policy covers matters relating to PricewaterhouseCoopers continue as Vista Group’s the appointment of the auditor, the independence auditor, the next rotation is expected to occur in of the auditor, transparent dialogue with the January 2025. Vista Group’s audit partner (Troy auditor, rotation of the audit partner, reporting Florence) attended Vista Group’s 2022 Annual on audit fees and non-audit work. The ARC assists Meeting of Shareholders (ASM) and was available the Board in fulfilling its responsibility to ensure the to Vista Group’s shareholders to answer questions quality and independence of Vista Group’s external relevant to PricewaterhouseCoopers’ audit. audit process. Pursuant to the ARC Charter, the Details of the work (both audit and non- audit) undertaken by, and fees paid to, PricewaterhouseCoopers during 2022 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, the independence of PricewaterhouseCoopers is not compromised. Board has delegated the ARC the responsibility of monitoring 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; • ensuring the independence, objectivity and 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 of 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 that PricewaterhouseCoopers remains independent of Vista Group. This annual independence report documents any risks to independence and safeguards related to non-audit services. The ARC reviews this report, with any concerns raised with the Chair of the Board and Disclosure Committee (see page 89) to determine whether any market announcement is required. The external auditor’s report to shareholders discloses all non-audit services and any other relevant independence considerations. 90 Corporate governance • 91 Timely and balanced disclosure Risk management Shareholders and markets Vista Group is committed to maintaining a fully the CEO, ELT or management requires disclosure informed market through effective communication on the NZX and ASX announcement platforms. with the NZX and ASX, our shareholders and The Disclosure Committee is required to refer investors, analysts, media and other interested information regarding matters of fundamental parties. Vista Group provides all stakeholders with significance to Vista Group, including financial equal and timely access to material information that results, earning guidance, dividend policy is accurate, balanced, meaningful and consistent. determinations, transformational transactions, Where Vista Group provides a new and substantive investor or analyst presentation, it ensures the presentation materials are released to the NZX and significant resignations, to the Board (or where the Board is not available, an Approval Committee) for its determination. and ASX announcement platforms ahead of Disclosures relating to the annual and interim the presentation. Vista Group’s Continuous Disclosure Policy is designed to ensure material information is released to the NZX and ASX announcement platforms in compliance with Vista Group’s continuous disclosure obligations under the NZX Listing Rules and the Financial Markets Conduct Act 2013. The Continuous Disclosure Policy is available at www.vistagroup.co.nz/investor-centre. The Disclosure Committee is responsible for administering the Continuous Disclosure Policy and ensuring that Vista Group complies with its continuous disclosure obligations. The Disclosure Committee comprises one Independent Director (Cris Nicolli), the CEO, the CFO, and the General Counsel and Company Secretary. financial statements must be reviewed by the ARC before being approved by the Board. Once approved for disclosure, the CFO or General Counsel and Company Secretary is responsible for releasing material information on the NZX and ASX announcement platforms. Directors consider at each Board meeting whether there is any material information which should be disclosed to the market. Integrity of reporting The CEO and the CFO are required each full year to provide a letter of representation to the Board confirming that the financial statements have been prepared in accordance with legal requirements, comply with generally accepted accounting practice The CEO, ELT and management are responsible and present fairly, in all material respects, the for ensuring that all material information relating financial position of Vista Group and the results of to their areas of responsibility is reported to the its operations and its cash flows. Disclosure Committee promptly and without delay. The Disclosure Committee is responsible for determining whether information received from A letter of representation confirming those matters was received by the Board with respect to Vista Group’s 2022 financial statements. Risk management is an integral part of Vista Group’s businesses. The Board has established a Risk Management Framework which is designed to identify material financial and non-financial risks that may impact our ability to achieve our strategic objectives. The ARC is responsible for overseeing, reviewing, and providing advice to the Board on areas of focus. The ELT is responsible for ensuring compliance with the risk management framework and promoting a culture of good risk practices. All Vista employees have a responsibility to apply good risk management practices in their day-to-day work, by following business parameters set through policies, procedures, systems and controls. The Board seeks regular independent assurance and advice on the effectiveness of the framework and risk and control management. Key risks Risk assessments are carried out by our ELT and senior leadership teams annually in accordance with Vista Group’s Risk Management Policy. A risk assessment includes identification of material risks, assessment of the consequences and likelihood of the risk and development of controls to achieve a level of residual risk that is within Board defined tolerances based on the Board approved risk appetite statement. The following table outlines some of Vista Group’s key business risks following the latest refresh of its risk register and the mitigation strategies and activities for each risk. 92 Corporate governance • 93 Key Risks Mitigation strategies and activities Key Risks Mitigation strategies and activities Health, safety and wellbeing • Board oversight through monthly health, safety and Platform stability and data security • External parties for independent testing Protecting our employee’s health, safety and wellbeing report. wellbeing as the risk of physical illness and • Dedicated Work Well programme to support mental health effects from Covid-19 remain, employee wellbeing. combined with the workforce impacts of delivering to our Cloud strategy. • A global network of volunteer Wellness Advocates that support their peers and lead wellbeing initiatives. • Flexible work arrangements including 4.5-day work week. Regulatory compliance • Policies and procedures covering key regulatory and Ability to identify and manage new, changed compliance areas. or reinterpreted laws and regulations, as our • Global legal team provides input on emerging global operations increases the complexity of changes and potential business impacts. compliance. Instances of non-compliance could result in brand and reputational loss, along with litigation, fines and financial loss. Attract and retain talent • Succession planning for senior leadership and Ability to attract, develop and retain skilled critical roles. employees in a highly competitive industry to • Leadership development and mentoring programme. be able to deliver on our strategy. • Focus on employee value proposition through proactive communication strategy internally and externally. Access to capital and capital management • Maintain a strong relationship with our investors and Our ability to raise capital when required and to banking partners. appropriately allocate capital as we invest and • Oversight of capital allocation and budgeting by the transition to the platform. Board. • Rigorous Capital Allocation Policy approved by the Board. • Long-term forecasting through the financial strategic plan. Data privacy Vista Group’s global footprint exposes us to • Multi-jurisdictional Data Protection Officer provides support and independent assurance. various global data privacy laws and regulations. • Staff awareness training on data privacy and Failure to comply with the applicable laws and regulations and protect personal data, through how Vista collects, uses and processes personal data and information, could result in financial penalties, regulatory intervention and reputational damage. 94 security. • Relevant Group policies relating to data protection, data retention and IT and information security. • Roadmap to enhance data governance practices. Failure to maintain security controls and • Continuous monitoring of platforms processes which expose the Group to cyber-attacks, a loss of service or unplanned outages of applications, disrupting clients’ businesses leading to client churn and/or reputational damage. • Incident management and response process • Data hosted in Microsoft Azure & Amazon Web Services data centres. • Enterprise grade security tools and applications. • ISAE(NZ)3000/SAE 3150 assurance report (equivalent to SOC 2 Type I) in progress for Vista Cinema. Strategy execution • Executive sponsorship and accountability for Inability to execute our strategic initiatives strategic initiatives. that leads to reputational impacts and reduced • Program review for improving operational alignment revenue growth. to strategic initiatives. • Board approved strategy and oversight from regular reporting on progress and challenges. Adverse global events • Maintaining sufficient capital reserves Vista Group’s global footprint in 100+ countries • Regular financial oversight and monitoring across exposes us to a variety of global economic our markets and political headwinds, such as pandemics, • External advisors provide insights and guidance on geopolitical instability, and changes in regulatory jurisdictional and market activity. policy. This could disrupt operations, change consumer behaviours, potentially threaten the safety of our people and adversely impact revenue and our underlying profitability. • Regular liaison with clients on emerging industry and regional trends Environmental (including climate) • Development of a sustainability programme Failure to support or transition to a lower carbon • Enhanced Risk Management framework economy could lead to regulatory impacts and reputational damage. • Carbon emissions measurement and assurance programme • Review and oversight of climate initiatives by the Audit and Risk Committee. Corporate governance • 95 Engaging with investors Investor relations Annual Shareholders’ Meetings Electronic communications Vista Group is committed to open and effective Vista Group encourages shareholders to attend its We encourage all shareholders to provide email The Code of Ethics sets out: communication with its shareholders by providing ASMs and to ask questions of the Chair, Board, ELT comprehensive relevant information. and auditor, including as follows: Vista Group communicates with its investors across a number of forums, including the Investor Centre section of Vista Group’s website, regular information disclosures via the NZX and ASX announcement platforms, at the ASM, Investor • Vista Group takes into consideration the geographical spread of its shareholders, Vista Group carefully plans the timing and format of its ASM to allow as many shareholders as possible to attend and participate; Day and Governance Roadshows, in its Annual • shareholders are notified at least 20 working Reports and Interim Reports, and investor and days prior to the ASM in accordance with NZX analyst briefings. Corporate Governance Code recommendation; Vista Group aims to provide clear communication of its strategic direction, including articulating its strategic priorities. Investor Centre and • shareholder voting is conducted via a poll, and shareholders may vote in person, electronically or by proxy. addresses to Vista Group’s share registrar, Link Market Services Limited, to enable them to 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 so 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 at www.vistagroup.co.nz/investor-centre. • 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 Vista Group’s 2022 ASM was held on 26 May 2022 The Vista Group Code of Ethics suspected breach of the Code of Ethics is required Vista Group’s website has a dedicated Investor and took place in a hybrid format (in person and Centre. Vista Group’s Investor Centre includes a online). The Notice of Meeting for the 2022 ASM comprehensive set of investor-related information was released on the NZX and ASX announcement and data including releases on the NZX and ASX platforms and posted on Vista Group’s website announcement platforms, Annual Reports and at least 20 working days prior to the ASM in Interim Reports, investor presentations, and accordance with NZX Corporate Governance Code shareholder meeting materials. recommendation. Shareholders can direct any questions and Vista Group’s 2023 ASM will be held on 25 May comments they may have to Vista Group by 2023 and is again expected to take place in a hybrid contacting Vista Group’s CFO. format. The Code of Ethics, which was adopted and is policy. The Code of Ethics is provided to new regularly reviewed by the Board, plays a key role in employees as part of their induction materials and establishing the framework by which directors and the current version is maintained on Vista Group’s employees are expected to conduct themselves. internal web portal for access by employees. to report it immediately in accordance with the The Code of Ethics is not intended to prescribe an The Code of Ethics outlines the Board’s policy on exhaustive list of acceptable and non-acceptable conflicts of interest. Where conflicts of interest do behaviour, but rather to facilitate decisions that are exist, directors excuse themselves from discussions consistent with Vista Group’s values, business goals and do not exercise their right to vote in respect of and legal and policy obligations, thereby enhancing such matters. Except as provided in the NZX Listing performance outcomes. Directors and employees Rules, interested directors do not vote on any Board are required to familiarise themselves with Vista resolution for, and are not counted in a quorum Group’s values, as they govern their behaviour while for the consideration of, any matter in which that they are engaged or employed by Vista Group. director is interested. 96 Corporate governance • 97 Diversity and inclusion 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 prohibits and will not tolerate discrimination on the grounds of personal characteristics such as age, ethnic origin, marital status, religion, gender identity, sexual orientation or social origin. Vista Group has a formal Diversity and Inclusion Policy, which is available at www.vistagroup.co.nz/investor-centre. 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 2022: OBJECTIVE OUTCOME OBJECTIVE OUTCOME Ensuring there is a minimum Vista Group has maintained a gender balance on its Board, with Susan Continuing to create and We actively work with our local leaders and affiliation groups to promote of two females on the Board Peterson as Chair and Claudia Batten as an Independent Non-Executive maintain an inclusive culture and support inclusive work practices and embrace the diversity of our at all times Director. Implementing a target of As of 31 December 2022, women made up 30% of the Executive 40:40:201 across all roles Leadership Team and 37% of the Senior Leadership Team. and programmes (e.g. leadership training, recruitment shortlists etc.) Women have made up 40% of all new hires in 2022, an improvement on 38% in 2021, and 29% of all promotions have been appointed to women. In addition, of those participating in leadership development programmes, 38% have been women in 2022. This outcome shows a movement towards achieving the 40:40:20 split across our leadership teams and programmes. Gender Pay Gap analysis A comprehensive Gender Pay Gap analysis has been completed across all permanent and fixed term employees globally, which compared the median hourly rates and variable pay of men and women. Based on a weighted average of the size of each location, Vista Group’s global gender pay gap is 10.1%. The detailed analysis of the gender gap by location, pay quartile and job level has been reviewed to assess root causes as well as actions and initiatives to lower the gap. To build our Māori We have continued to build on partnerships with organisations, such cultural competency in as Tupu Toa, to assist us in increasing cultural awareness as well as to our New Zealand leaders increase access to technology careers for Māori and Pasifika peoples. Working with Tupu Toa, we have an intern join Vista in the 2022 cohort and look forward to continuing to support those wishing to pursue a tech pathway. and employees. Proactively work to increase the representation of Māori and Pasifika in technology careers 98 and work environment with people across Vista Group. This has included: celebrating key cultural a focus on women, ethnic events such as international Womens Day, Pride Month, Matariki, Diwali, minorities and those who Día de los Muertos (Day of the Dead). A key element of many of our events identify as LGBTQ+ is to provide education and raise awareness across the organisation. We continue to be an accredited Rainbow Tick organisation as well as a Global Women partner and a member of Champions for Change. 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. See page 53 for disclosure regarding the gender diversity as at 31 December 2022. 2023 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 2023 are to: • ensure there is a minimum of two females on the Board at all times; • progress towards our aspiration of 40:40:20 gender diversity (across all employees) by 2030; • report on a full Gender Pay Gap Analysis annually and actions undertaking to minimise the gap; • develop framework and commence collecting data to enable reporting on Ethnic Pay Gap; and • 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. Corporate governance • 99 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 2022 are set out in the table below: NAME OF DIRECTOR ENTITY NATURE OF GENERAL DISCLOSURE NAME OF DIRECTOR ENTITY NATURE OF GENERAL DISCLOSURE Susan Peterson Arvida Group Limited (NZX : ARV) Non-Executive Director James Miller Channel Infrastructure NZ Limited (NZX: CHI) Non-Executive Chair Mercury NZ Limited (NZX & ASX:MCY) Non-Executive Director Property for Industry Limited (NZX:PFI)1 Non-Executive Director, Chair of Audit and Risk Committee, and member of Remuneration Committee Xero Limited (ASX : XRO) Craigs Investment Partners 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 Wonderful Investments Limited Director and Shareholder Murray Holdaway Kaha Software Limited Director and Beneficial Shareholder Lido Cinema Limited Beneficial Shareholder Auckland United Football Club The Awhero Nui Trust Holdaway and Geary Trust Chair Trustee Trustee 1 Susan Peterson retired from the Board of Property for Industry Limited on 15 December 2022. NZX Limited (NZX:NZX) Non-Executive Chair Mercury NZ Limited (NZX & ASX:MCY) Non-Executive Director Cris Nicolli Playside Studios Limited (ASX: PLY) Non-Executive Chair ReadCloud Limited (ASX: RCL) Non-Executive Chair Kadasig Aid & Development (Not For Profit Charity) Treasurer Nicolli Holdings Pty Ltd (Family Investment) Director Nicolli Family Superannuation Fund Trustee Kirk Senior Outpost Central Ltd (trading as Wildeye) Consultant Kirk Senior Pty Limited Director and Shareholder Senior Family Super Fund Pty Limited Director and Shareholder Honey For Life Pty Ltd Kirk Senior Family Trust Shareholder Trustee 100 Corporate governance • 101 Directors’ disclosures Company disclosures Directors’ and officers’ indemnities and insurance In accordance with section 162 of the Companies Act 1993 and the constitution, Vista Group indemnifies the directors in relation to potential liabilities and costs they may incur for acts or omissions in their capacity as directors. Vista Group also maintains directors’ and officers’ liability insurance that covers risks normally covered by such policies arising out of acts or omissions of directors and employees in their capacity as 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. Directors’ Vista Group shareholdings The number of Vista Group shares in respect of which each director had an interest as at 31 January 2023 is set out in the table below: DIRECTOR NUMBER OF VISTA GROUP SHARES % OF SHARES ON ISSUE Susan Peterson 122,271 0.0524% Claudia Batten – Murray Holdaway 6,786,000 – 2.91% 0.0319% 0.0374% 74,500 87,152 861,936 0.37% James Miller Cris Nicolli Kirk Senior Directors’ Vista Group share dealings During 2022, 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. Subsidiary companies The directors of subsidiaries of Vista Group at 31 December 2022 are listed in the table below: 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 No changes Movio (IP) Limited New Zealand 100% Matthew Cawte, Kelvin Preston, Kimbal Riley No changes Movio Limited Movio, Inc. New Zealand 100% Matthew Cawte, Kelvin Preston, Kimbal Riley No changes 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% Kimbal Riley, Steven Thompson Director resignations: Nicholas Patsides, Kirk Senior 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 Huang Swee Lin 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 102 Corporate governance • 103 Shareholder information Twenty largest shareholders Vista Group’s 20 largest shareholders and their shareholdings at 31 January 2023 are set out in the table below: Analysis of shareholdings as at 31 January 2022 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 RANK REGISTER NAME OF TOP 20 SHAREHOLDERS NZL Tea Custodians Limited 1 AUS J P Morgan Nominees Australia Pty Limited AUS Citicorp Nominees Pty Limited NZL Bnp Paribas Nominees NZ Limited Bpss4011 NZL Accident Compensation Corporation1 AUS HSBC Custody Nominees (Australia) Limited NZL National Nominees New Zealand Limited 1 NZL New Zealand Superannuation Fund Nominees Limited1 NUMBER OF SHARES % OF ISSUED SHARES 38,842,987  16.66% 18,256,616 7.83% 16,837,721 7.22% 11,823,509 5.07% 11,806,494 5.06% 9,744,457  4.18% 9,201,525  3.95% 7,414,661 3.18% 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 % 1,119 1,501 481 451 64 80 567,537 4,000,726 3,527,906 9,486,422 4,379,029 211,230,473 3,696 233,192,093 0.24% 1.72% 1.51% 4.07% 1.88% 90.58% 100.00% NZL Brian John Cadzow & Julie Ann Cadzow & Peter Allen Lewis 7,049,065 3.02% Substantial Product Holdings NZL Murray Lawrence Holdaway & Helen Rachel Geary & Stephen John Mcdonald 6,786,000 2.91% NZL Custodial Services Limited AUS Bnp Paribas Noms Pty Ltd NZL HSBC Nominees (New Zealand) Limited 1 NZL New Zealand Depository Nominee NZL JPMORGAN Chase Bank1 NZL Hobson Wealth Custodian Limited 6,731,917  2.89% 6,528,418  2.80% 6,184,971 2.65% 5,975,983  2.56% 4,924,383  2.11% 4,377,318 1.88% According to notices given under the Financial Markets Conduct Act 2013, the following persons were Substantial Product Holders in Vista Group ordinary shares as at 31 December 2022 in respect of the number of voting securities set opposite their names: NAME OF SUBSTANTIAL PRODUCT HOLDER Fisher Funds Management Limited FIL Limited Spheria Asset Management Pty Ltd NUMBER OF SHARES 34,805,332 21,163,635 32,466,361 NZL Bruce Alexander Wighton & Marianne Bachler & Peter John Clark 3,668,995  1.57% NZL PT Booster Investments Nominees Limited AUS National Nominees Limited 3,136,949 1.35% 2,845,240 1.22% On 25 January 2023, Accident Compensation Corporation announced that it had commenced having a substantial product holding in Vista Group, holding 11,781,494 ordinary shares. 20 NZL Gregory James Trounson & Donald Mackenzie Gibson & Kathryn Mary Lee Trounson 2,763,883  1.19% Total of top 20 shareholders Total shares on issue 184,901,092 79.29% 233,192,093  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. 104 Corporate governance • 105 Other disclosures Stock exchange listings Takeover offer protocol Net tangible assets Vista Group’s ordinary shares are listed and quoted Vista Group’s Board has adopted a Takeover on the NZX and on the ASX (as an ASX Foreign Response Manual that provides a comprehensive Exempt Listing). Waivers from NZX or ASX Vista Group did not apply for, was not granted, and did not rely on, any waivers from the NZX or ASX during the year ended 31 December 2022. Exercise of NZX powers The NZX did not exercise any of its powers under NZX Listing Rule 9.9.3 in relation to Vista Group during the year ended 31 December 2022. framework to be followed in the event that Vista Group receives, or anticipates receiving, a takeover offer. Vista Group has established relationships with appropriate professional advisers to support Vista Group and the Board through any takeover offer process. The Takeover Response Manual provides for the establishment of a response committee to take all necessary actions in respect of a takeover offer. The response committee is comprised of Independent Directors, excluding any director that has a direct or indirect relationship, including with the bidder or any significant shareholder in Vista Group, that could reasonably influence the Registration as a foreign company director’s decision making in respect of the Vista Group has registered with the Australian Securities and Investments Commission as a foreign Dividends takeover offer. company and has been issued with the Australian Registered Body Number of 600 417 203. ASX disclosures As stated in the 2022 Investor Day, Vista Group is currently investing in the cloud-based platform with free cash flows for either investment or dividends only expected from 2025. Vista Group holds a foreign exempt listing on the ASX. As a requirement of admission Vista Group Credit rating must make the following disclosures: • Vista Group’s place of incorporation 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). As at the date of this Annual Report, Vista Group does not have a credit rating. Vista Group’s net tangible assets per share (excluding treasury stock) as at 31 December 2022 was $0.08662386, compared with $0.21883400 at 31 December 2021. Donations and lobbying Vista Group made donations of $135,000 during the 2022 financial year (2021: $127,000), including $85,000 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 2022. 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 2022. Modern slavery and human trafficking statement Vista Group has published a joint statement (on behalf of itself and Vista Entertainment Solutions Limited and Vista Entertainment Solutions (UK) Limited) setting out the steps it has taken during the 2022 financial year, and the actions it will take during the 2023 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 at www.vistagroup.co.nz/investor-centre. 106 Corporate governance • 107 Information about Vista Group ordinary shares Information for shareholders This statement sets out information about the rights and privileges that attach to Vista Group ordinary shares. Rights and privileges Share cancellation Shareholder enquiries 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); – approve the amalgamation of Vista Group under 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 section 221 of the Companies Act 1993; or Rules) that if, at the end of three months after the – place Vista Group into liquidation; 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 of the holder and to sign all necessary documents relating to the sale. • 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; • receive an equal share with other shareholders in the distribution of surplus assets in any 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. 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. 108 Corporate governance • 109 Financial statements Directors’ report The Board of Directors present the financial consolidated financial statements that present statements of Vista Group for the year ended fairly, in all material respects, the financial 31 December 2022 and the independent position of Vista Group as at 31 December auditor’s report thereon. 2022 and the results of Vista Group’s The Directors are responsible, on behalf of the Company, for presenting these consolidated operations and cash flows for the year then ended. financial statements in accordance with For and on behalf of the Board of Directors applicable New Zealand legislation and who approved these financial statements for Generally Acceptable Accounting Practices issue on 28 February 2023. (NZ GAAP) in New Zealand in order to present Susan Peterson Chair James Miller Chair, Audit and Risk Committee 110 Financial statements • 111 Statement of other comprehensive income For the year ended 31 December 2022 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 (expense) / benefit on share-based payments 7.1 Total other comprehensive income 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. 2022 NZ$m 2.3 (0.4) 1.9 (20.9) (19.0) (19.7) 0.7 (19.0) 2021 NZ$m 2.3 0.6 2.9 (9.9) (7.0) (7.0) - (7.0) Income statement For the year ended 31 December 2022 CONTINUING OPERATIONS Total revenue Cost to serve Gross profit Sales and marketing costs Research and development costs General and administration costs Foreign currency gains / (losses) Total operating expenses EBITDA1 Amortisation Depreciation Finance costs Finance income Share of equity accounted loss from associate Other gains and losses Loss before tax Taxation benefit Loss for the year Loss for the year is attributable to: Owners of the parent Non-controlling interests Loss for the year SECTION 2.1, 2.2 2.3 2.3 2.3 2.3 2.3 2.2 5.5 5.2, 5.7 5.3 2.3 6.1 2022 NZ$m 135.1 (50.6) 84.5 (14.3) (27.6) (32.6) 0.6 (73.9) 10.6 (11.5) (5.7) (2.1) 0.8 (2.7) (11.9) (22.5) 1.6 (20.9) (21.4) 0.5 (20.9) 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) (12.3) 2.4 (9.9) (9.8) (0.1) (9.9) Basic and diluted earnings per share (cents) 7.2 ($0.09) ($0.04) 1 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. 112 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 • 113   Statement of changes in equity For the year ended 31 December 2022 Statement of financial position As at 31 December 2022 CONTRIBUTED EQUITY RETAINED EARNINGS FOREIGN CURRENCY RESERVE SHARE- BASED PAYMENT RESERVE TOTAL EQUITY ATTRIBUTABLE TO OWNERS NON- CONTROLLING INTERESTS TOTAL EQUITY 2022 SECTION $NZm $NZm NZ$m NZ$m NZ$m NZ$m NZ$m Balance at 1 January 2022 131.3 23.3 1.7 1.7 158.0 1.8 159.8 Total comprehensive income movement: Loss for the year - (21.4) Other comprehensive (loss) / income1 (0.4) - Total comprehensive (loss) / income (0.4) (21.4) Transactions with owners: Retriever acquisition 3 Share-based payments 7.1, 7.5 Dividends paid 3.2 0.9 - - - - - 2.1 2.1 - - - Balance at 31 December 2022 135.0 1.9 3.8 - - - - 3.6 - 5.3 (21.4) 1.7 (19.7) 3.2 4.5 - 0.5 0.2 (20.9) 1.9 0.7 (19.0) - - 3.2 4.5 (0.5) (0.5) 146.0 2.0 148.0 2021 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 income1 - (9.8) - 0.6 - 2.2 Total comprehensive income / (loss) 0.6 (9.8) 2.2 Transactions with owners: Share-based payments 7.1, 7.5 Distribution on wind-up of subsidiary 4.7 - - - - - Balance at 31 December 2021 131.3 23.3 1.7 - - - 0.4 - 1.7 (9.8) 2.8 (7.0) 5.1 - (0.1) (9.9) 0.1 2.9 - - (0.1) (7.0) 5.1 (0.1) 158.0 1.8 159.8 1 Items of other comprehensive income will be reclassified to the income statement when specific conditions are met. CURRENT ASSETS Cash Trade and other receivables Contract assets Net investment in sublease Income tax receivable Total current assets NON-CURRENT ASSETS Contract assets Property, plant and equipment Lease assets Net investment in sublease Investment in associate 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 Contingent consideration Provisions Deferred tax liability Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity Retained earnings Foreign currency reserve Share-based payment reserve Total equity attributable to owners of the parent Non-controlling interests Total equity SECTION 5.1 5.1 5.8 5.1 5.2 5.7 5.8 5.3 5.4 5.5 6.2 4.2 5.6 5.7 5.9 3 5.10 4.2 5.7 5.9 3 5.10 6.2 7.1 7.4 7.5 2022 NZ$m 46.0 36.4 4.9 - 1.3 88.6 0.4 4.7 12.3 1.2 - 57.1 53.0 17.8 146.5 235.1 0.5 23.6 5.3 22.3 1.4 0.6 0.4 54.1 17.6 13.3 0.4 1.5 0.1 0.1 33.0 87.1 148.0 135.0 1.9 3.8 5.3 146.0 2.0 148.0 2021 NZ$m 60.4 31.9 4.6 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 1.8 159.8 114 The above statement should be read in conjunction with the accompanying notes. For, and on behalf of, the Board who approved these financial statements for issue on 28 February 2023. The above statement should be read in conjunction with the accompanying notes. Susan Peterson Chair James Miller Chair, Audit and Risk Committee         Statement of cashflows For the year ended 31 December 2022 CASHFLOWS FROM OPERATING ACTIVITIES Receipts from clients Payments to suppliers and employees Pandemic related wage subsidies Pandemic related tax deferrals Taxes received / (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 Retriever acquisition, net of cash acquired Net cash applied to investing activities CASHFLOWS FROM FINANCING ACTIVITIES Lease payments - principal elements Loan repayment - HSBC PPP Loan drawdown - related parties Loan repayment - related parties Dividends / liquidation proceeds paid to non-controlling interests Net cash applied to financing activities Net decrease in cash Cash at beginning of year Foreign exchange differences Cash at year end SECTION 4.1 5.2 5.5 3, 5.5 5.7 4.2 4.2 4.2 2022 NZ$m 131.5 (117.6) - - 0.4 (1.9) 12.4 (2.1) (16.8) 0.4 - (3.3) (21.8) (5.1) - - (0.1) (0.5) (5.7) (15.1) 60.4 0.7 46.0 2021 NZ$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 Notes to the financial statements 1. Basis of preparation General information The notes are consolidated into nine 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 5.1 Revenue and expected credit loss (ECL) provisioning Section 5.3 Impairment testing of associate companies Section 5.4 Impairment testing of goodwill Section 5.5 Capitalisation of development costs Section 5.8 Carrying amount of net investment in sublease Section 6.2 Recognition of deferred tax assets Recognition of Government grants is no longer classified as a significant source of estimation uncertainty. Most areas of uncertainty in prior years have been settled in full, with judgement only now required for the 2022 New Zealand Research & Development Tax Incentive (RDTI). No accrual has been made for the RDTI scheme due to Vista Group not yet having reasonable assurance that it will be received. Any amount received is highly likely to be capitalised in full as an intangible asset. 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 NZX Main Board (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, separate financial statements for the Company are not presented because group financial statements are prepared and presented for the Company and its subsidiaries. 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 2023. 116 The above statement should be read in conjunction with the accompanying notes. Notes to the financial statements • 117       1.2 Summary of significant accounting policies 2. Financial performance 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. Basis of consolidation Vista Group’s financial statements consolidate those of the Company and its subsidiaries as at 31 December 2022. 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 2022 that have a material impact on Vista Group. Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2022 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. This section outlines further details of Vista Group’s financial performance by building on information presented in the income statement. 2.1 Revenue Vista Group recognises revenue when performance obligations have been settled. A performance obligation is settled when the client has received all the benefits associated with the performance obligation. Revenue by category SaaS revenue Non-SaaS revenue Recurring revenue Perpetual software Hardware Services & development - one off Other revenue Non-recurring revenue Total revenue1 2022 2021 NZ$m 38.4 73.9 112.3 6.3 6.2 10.0 0.3 22.8 135.1 % 83% 17% 100% NZ$m 27.8 53.6 81.4 5.4 1.5 9.5 0.3 16.7 98.1 % 83% 17% 100% 1 No individual client 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. This categorisation of revenue is also expected to help investors understand the nature of Vista Group’s revenue. 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. Non-GAAP financial information does not have a standardised meaning prescribed by NZ GAAP and therefore may not be comparable to similar financial information presented by other entities. 118 Notes to the financial statements • 119 Revenue process and policy The following details Vista Group’s approach to categorising revenue: REVENUE CATEGORY REVENUE TYPE SEGMENT DESCRIPTION SaaS revenue Recurring revenue Vista recurring subscriptions – annual fee Vista Cinema 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. Clients 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. REVENUE CATEGORY Non-SaaS revenue Recurring revenue REVENUE TYPE SEGMENT DESCRIPTION On-premise subscription fees Vista Cinema 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. Maintenance Vista Cinema / AGC (Maccs & Numero) 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 client. 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. 120 Notes to the financial statements • 121 2.2 Operating segments Operating segment performance1 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 the recently acquired Retriever client contracts, movieXchange and Share Dimension products, and maintenance revenues from Vista China (an associate company). • 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, people and culture, marketing and Vista Group Chief Executive. 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 SECTION 2022 NZ$m 27.6 50.8 34.2 10.9 11.6 2.1 135.1 1 The other category includes entities in Australia, Brazil, Germany, Malaysia, Netherlands, Romania and South Africa. Non-current assets by domicile of entity Non-current operating assets2 by location of the reporting entity are presented in the following table. New Zealand United States United Kingdom Mexico Other1 Non-current assets2 1 The other category includes entities in Australia, Brazil, Germany, Malaysia, Netherlands, Romania and South Africa. 2 As required by NZ IFRS 8, non-current operating assets in the table above excludes deferred tax assets and investments in associates. 2022 NZ$m 65.3 26.4 10.2 12.4 14.4 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 2022 SaaS revenue Non-SaaS revenue Recurring revenue Non-recurring revenue Total revenue Cost to serve Gross profit Gross profit %2 Sales and marketing costs Research and development costs General and administration costs ECL benefit Foreign currency (losses) / gains EBITDA2 EBITDA margin2 2021 SaaS revenue Non-SaaS revenue Recurring revenue Non-recurring revenue Total revenue Cost to serve Gross profit Gross profit %2 Sales and marketing costs Research and development costs General and administration costs ECL benefit Foreign currency (losses) / gains EBITDA2 EBITDA margin2 CINEMA NZ$m MOVIO NZ$m AGC NZ$m CORPORATE NZ$m TOTAL NZ$m % OF REVENUE 14.2 61.6 75.8 17.7 93.5 (36.2) 57.3 61% (9.0) (19.7) (10.2) 1.0 (0.1) 19.3 21% 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% 17.5 0.8 18.3 1.6 19.9 (6.9) 13.0 65% (2.9) (3.7) (1.9) - 0.4 4.9 25% 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% 6.7 11.5 18.2 3.5 21.7 (7.5) 14.2 65% (2.2) (4.2) (6.0) - 0.3 2.1 10% 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% - - - - - - - (0.2) - (15.5) - - (15.7) - - - - - - - - - (10.7) - 0.1 (10.6) 38.4 73.9 112.3 22.8 135.1 (50.6) 84.5 63% (14.3) (27.6) (33.6) 1.0 0.6 10.6 8% 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% 37% 11% 20% 25% 37% 9% 23% 27% 1 The CODM does not regularly review assets and liabilities for each reportable segment. 2 EBITDA is defined in the non-GAAP financial measures section below. Gross profit % and EBITDA margin are calculated as gross margin over total revenue and 128.7 117.3 EBITDA over total revenue, respectively. Non-GAAP financial measures 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, and therefore is considered useful to investors. 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. A reconciliation is provided on the income statement. Non-GAAP financial information does not have a standardised meaning prescribed by NZ GAAP and therefore may not be comparable to similar financial information presented by other entities. 122 Notes to the financial statements • 123 2.3 Expenses and other income Classification of expenses on the income statement Costs to serve are the incremental direct cash costs incurred in deriving Vista Group’s revenue. Examples of such costs include hosting, technical staff, transaction fees and the cost of hardware. 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 client conferences. 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 as they are non-cash costs, and it also allows Vista Group’s non-GAAP financial measure, EBITDA (as defined in section 2.2) to be presented clearly on the income statement. 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 benefit 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 7.5 5.5 2.3 5.1 5.1 2.3 2022 NZ$m 15.8 4.7 81.8 4.5 8.2 (15.9) (0.2) 5.2 2.1 3.3 (1.0) 0.6 (0.6) 0.5 15.5 124.5 2021 NZ$m 11.2 1.3 68.0 5.2 6.7 (12.6) (5.2) 3.2 1.1 1.1 (3.1) 0.7 0.5 0.5 13.0 91.6 Personnel costs Accruals for personnel costs, including non-monetary benefits, commissions and annual leave expected to be settled within 12 months of the reporting date are recognised in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid using the remuneration rate expected to apply at the time of settlement, on an undiscounted basis. Expenses for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. Vista Group has pension obligations in respect of various defined contribution plans. Vista Group pays contributions to publicly or privately administered pension insurance plans on a mandatory or contractual basis. Vista Group has no further payment obligations once the contributions have been paid. The contributions are recognised as an employee entitlement expense when they are due. Other gains and losses ‘Other gains and losses’ are excluded from operating expenses and EBITDA because they result from non-cash activities, or are not derived in the ordinary course of business. They have been disclosed separately in order to improve a reader’s understanding of the financial statements. Acquisition expenses Impairment charges - Vista China investment Impairment charges - Vista China intangibles Impairment charges - Sublease asset Sales tax expense Total other gains and losses SECTION 5.3 5.5 5.7, 5.8 5.10 2022 NZ$m (0.2) (8.9) (1.3) (1.5) - (11.9) 2021 NZ$m - - - (0.7) (0.7) (1.4) • Impairment charges - Sublease asset: The impairment charge in 2022 relates to the Vista Cinema subleased premises in Los Angeles, where the subtenant vacated the premises with 4 years of the sublease term remaining. Impairment charges in 2021 relate to the Vista Cinema leased premises in Los Angeles, where Vista Group agreed to sublease a portion of the lease at an amount which was less than the cost negotiated prior to the pandemic. • Sales tax expense: Vista Group completed a US sales tax economic nexus study in 2021 which revealed sales taxes should have been charged to US-based clients. The associated cost was considered one-off and exceptional in nature, as it would not have been incurred if Vista Group collected the taxes from the clients. Auditor’s remuneration included in administration costs Audit and review of financial statements - PwC Total fees paid to the auditor of Vista Group Vista Group engaged PwC to perform non-audit services relating to: 2022 NZ$m 0.5 0.5 2021 NZ$m 0.5 0.5 • Advisory services: Workshop facilitation in relation to sustainability and climate change strategy and reporting $33k (2021: $nil). Tax advisory relating to long-term employee incentive schemes and CEO benchmarking $nil (2021: $22k). Fees paid to other audit firms for the audit of local subsidiary financial statements was less than $0.1m (2021: less than $0.1m). The non-audit services provided by these firms totalled $0.6m, and were all provided to Vista Group entities not audited by these firms (2021: $0.4m). 124 Notes to the financial statements • 125 Government grants 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 $0.2m (2021: $5.2m). The cash amount of grants received during the year was $2.3m (2021: $3.1m). Details of these grants are as follows: • Wage subsidies: Vista Group received $0.2m (2021: $0.3m) of wage subsidies during the year from various governments which has been fully recognised in the income statement in the year received. • HSBC PPP loan: Forgiveness of the US Government paycheck protection program (PPP) loan was obtained in 2021, with the $2.8m loan being de-recognised in 2021 with the associated credit being classified as a Government grant within other income. See page 96 of the Vista Group 2021 Annual Report for more details. • Research & development grants: Vista Group enrolled to receive the RDTI in 2021 and applied judgement by accruing $2.1m in the prior year as a Government grant on the income statement. The cash for this grant was received in 2022. At 31 December 2022, Vista Group was working with external experts to prepare general approvals to make a claim under the 2022 RDTI grant. Vista Group determined that reasonable assurance for this grant could not be obtained until the general approvals were accepted. Any amount received under this scheme is highly likely to be capitalised as an intangible asset. 3. Retriever acquisition On 16 February 2022, Vista Group announced it had acquired the assets of US entertainment software company Retriever Software Inc. (‘Retriever’). Vista Cinema acquired Retriever’s software and client relationships, with an offer of employment to all current Retriever employees. This transaction resulted in Vista Cinema adding over 100 new clients – further strengthening its market share in the US and cementing its position as the leading cinema software provider in the US market. Using the concentration test approach the transaction was classified as an asset acquisition, rather than a business combination, because substantially all of the value in the transaction related to a single asset, being the acquired client contracts. The fair value of the net assets acquired, along with the components that form consideration, are as follows: SECTION NZ$m 4. Cash flows and borrowings This section outlines further details of Vista Group’s cash flows and liquidity. 4.1 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 associate Unrealised foreign currency (losses) / gains ECL benefit Movement in revenue provision - concession discounts Movement in revenue provision - credit risk Movement in other provisions Net non-cash items Movements in working capital: SECTION 5.5 5.2, 5.7 2.3 7.5 6.1 5.3 5.1 5.1 5.1 5.10 Fair value of the net assets acquired Client contracts Net assets acquired Total consideration satisfied by: Cash consideration VGL share consideration Contingent cash consideration Total consideration 5.5 7.1 9.6 9.6 3.3 3.2 3.1 9.6 (Decrease) / increase in related party trade and other payables (Increase) / decrease in related party trade and other receivables Increase / (decrease) in trade and other payables (including contingent consideration) Decrease in trade and other receivables, net of deferred revenue Decrease / (increase) in net taxation receivable Net change in working capital Net cash inflow from operating activities On the date of acquisition, 1,529,987 shares in Vista Group were issued to the vendors of Retriever. Contingent cash consideration of $3.1m is assumed to be 100% earned and is comprised of the following two earn-outs. • 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 clients over the 24 month period post completion. At 31 December 2022, the contingent consideration liability had reduced to $2.9m due to movements in the USD exchange rate and due to elements of the earnouts no longer considered likely to be achieved. Acquisition costs in this transaction were $0.2m, which have been included on the income statement within other gains and losses (see section 2.3). The carrying value and financial performance of the Retriever client contracts are recognised within the Cinema segment (see section 2.2). 126 Notes to the financial statements • 127 2022 NZ$m (20.9) 11.5 5.7 11.7 4.5 (4.4) 0.2 2.7 (1.8) (1.0) (0.6) (3.8) (0.4) 24.3 (0.8) (1.5) 8.2 2.0 1.1 9.0 12.4 2021 NZ$m (9.9) 7.8 6.1 0.7 5.2 (3.9) - 2.0 1.5 (3.1) (4.1) 2.7 (0.7) 14.2 0.5 1.8 (0.9) 7.2 (1.6) 7.0 11.3 4.2 Borrowings 5. Assets and liabilities Borrowings are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Borrowing costs are expensed as incurred. This section outlines further details of Vista Group’s financial performance by building on information presented in the statement of financial position. Carrying amount of borrowings Balance at 1 January Repayments during the year Drawdowns during the year PPP loan forgiveness during the year Movement in foreign exchange Total borrowings at year end Represented by: Borrowings - external Borrowings - related parties Total borrowings at year end Summary of debt facilities 2022 NZ$m 16.8 (0.1) - - 1.4 18.1 17.6 0.5 18.1 2021 NZ$m 18.1 - 0.6 (2.8) 0.9 16.8 16.2 0.6 16.8 5.1 Trade and other receivables Carrying amount of trade and other receivables Trade receivables Revenue provision - concession discount Revenue provision - credit risk ECL provision Sundry receivables Prepayments Vista China acquisition deposit Total trade and other receivables Trade receivables 2022 NZ$m 41.4 (0.8) (5.1) (4.4) 1.2 3.6 0.5 36.4 2021 NZ$m 38.9 (1.4) (8.9) (4.6) 4.2 3.3 0.4 31.9 Included within trade receivables is a receivable from Vista China of $1.4m (31 December 2021: $nil), with the full amount fully provisioned within the credit risk revenue provision. FACILITY PROVIDER REASON FOR LOAN EXPIRY DATE CURRENT LIMIT NZ$m INTEREST RATE DEBT DRAWN (NZ$m) 2022 2021 2022 2021 Contract assets ASB - revolving credit General commercial / Future acquisitions Jan 2026 40.0 6.96% 1.57% 17.6 16.2 ASB - overdraft Working capital Related parties Working capital On demand On demand Total borrowings at year end 2.0 0.5 42.5 8.73% 4.00% 4.78% 4.00% - 0.5 - 0.6 18.1 16.8 A line fee of 1.45% is also paid on the credit limit of the ASB revolving credit facility. With the ASB revolving credit facility due for maturity in January 2023, Vista Group agreed to new terms in June 2022. The facility has been extended by three years with a reduced credit limit of $42.0m (including the overdraft facility). Details are provided in the table above. ASB facilities are secured by an interest in Vista Group's tangible assets. Agreed covenants include: • Gearing ratio of not greater than 2.5 times. • Interest cover of equal or greater than 3.0 times. • A rolling 12 month normalised EBITDA of the charging group not being less than 80% of Vista Group. Vista Group has been compliant with all ASB covenants for both the current and prior reporting years. Vista Group has no reason to believe that it will not be compliant with these covenants for at least the next 12 months. The related party loan has been provided by the co-shareholder of Powster. This is unsecured, incurs interest at 4% per annum and is repayable on demand. Contract assets primarily relate to Vista Group’s rights to consideration for performance obligations completed but not billed at the reporting date. Vista Group also recognises contract assets for ‘costs to fulfil a contract’ (i.e. Vista Cloud implementation costs), where direct costs are incurred with the performance obligations being settled over time. The movement in contract assets during the year was as follows: Balance at 1 January Amounts included in opening balance released in the current year Additional contract assets recognised during the year Exchange movements Contract assets at year end 2022 NZ$m 4.6 (4.5) 4.9 0.3 5.3 2021 NZ$m 5.9 (5.0) 3.5 0.2 4.6 128 Notes to the financial statements • 129         Revenue provisioning (significant judgement / estimate) Vista Group has assessed receivables for revenue related provisions as follows: • Credit risk provision: During the initial impact of the pandemic, Vista Group was required to apply ‘variable consideration’ rules when recognising revenue from each of its clients. This was because 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. These variable consideration rules meant only the estimated consideration that will be received was permitted to be recognised as revenue. 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 assess each of its clients 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. Judgement was applied in determining the period that the variable consideration rules were appropriate. This period was deemed to be between 1 March 2020 (the month the pandemic forced worldwide cinema closures) and 30 June 2021 (the date Vista Group determined the health of the industry had sufficiently improved, with the risk of worldwide closures being considered less likely). Any receivables where the revenue relates to 1 July 2021 onwards are assessed for an expected credit loss (ECL) provision. All receivables relating to revenue earned between 1 March 2020 to 30 June 2021, but still on balance sheet at 31 December 2022 have incurred a 100% revenue provision. An exception is made for any clients which have agreed and are adhering to a payment plan, or if recovery of the debt is considered highly probable. These balances have not been written off as Vista Group continues to seek recovery of these amounts owed. • Concession discounts: To ensure timely payment from clients, or to facilitate support to clients during the pandemic, Vista Group granted concessions to payment terms or discounts to recurring fees. Concession discounts are recognised as a reduction to revenue when they have been agreed, or where the client has a reasonable expectation of being entitled to a discount. Such discounts were less common in the current year with a provision of $0.8m being recognised as a provision at 31 December 2022. ECL provisioning (significant judgement / estimate) For trade receivables and contract assets, 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 contract assets 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. To measure ECL, trade receivables and contract assets 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 applies 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 client 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 client, a further provision for ECL is added. • The country, client and market characteristics consider the relative risk related to the country and / or region within which the client resides and assesses the financial strength of the client and the market position that Vista Group has achieved within that market. To avoid double counting, the specific and general ECL provisions are calculated after deducting the associated amount recognised as a revenue provision. Due to clients still recovering from the pandemic, Vista Group applied additional judgement in determining the ECL provision at 31 December 2022. • Specific provision: All client invoices and contract assets have been reviewed with a specific provision made for clients that are known to have liquidity / solvency issues, or where the debt is older than 180 days. Vista Group takes into account any forward-looking information (such as macro-economic variables) when applying the provision to each specific client. At 31 December 2022, Vista Group applied judgement by including a 10% (2021: 10%) insolvency risk for all Cinema or Movio segment clients. • General provision: Vista Group applies an ECL matrix to its trade receivables and contract assets 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). The movement in the ECL provision during the year was as follows: Balance at 1 January Bad debts written off Change in provision Exchange differences ECL provision at year end 2022 NZ$m 4.6 (0.6) (0.4) 0.8 4.4 The table below illustrates how the carrying value of the ECL has been derived: 2022 Net trade receivables and contract assets1 Baseline Aging, write offs and collection Country, client and market ECL - general provision ECL - specific provision Total ECL provision 0-90 DAYS NZ$m 30.4 0.4 - 0.1 0.5 1.5 2.0 91-180 DAYS NZ$m 181-270 DAYS NZ$m 4.1 0.1 - - 0.1 0.5 0.6 3.1 0.1 0.1 - 0.2 0.5 0.7 271-360 DAYS NZ$m 2.0 - - - - 0.1 0.1 361+ DAYS NZ$m 1.7 - 0.1 - 0.1 0.9 1.0 2021 NZ$m 7.7 (0.7) (2.4) - 4.6 TOTAL NZ$m 41.3 0.6 0.2 0.1 0.9 3.5 4.4 General provision effective rate 1.6% 2.4% 6.5% 0.0% 5.9% 2.2% 2021 Net trade receivables and contract assets1 Baseline Aging, write offs and collection Country, client and market ECL - general provision ECL - specific provision Total ECL provision 25.4 0.5 - 0.1 0.6 1.9 2.5 4.0 0.1 - - 0.1 0.5 0.6 1.3 0.1 - - 0.1 0.1 0.2 1.1 0.1 - - 0.1 - 0.1 1.8 - 0.1 - 0.1 1.1 1.2 33.6 0.8 0.1 0.1 1.0 3.6 4.6 General provision effective rate 2.4% 2.5% 7.7% 9.1% 5.6% 3.0% 1 Net trade receivables and contract assets have been adjusted for the impact of concession discounts and credit risk provisioning. 130 Notes to the financial statements • 131 Total revenue and ECL provisioning 5.2 Property, plant and equipment The below table highlights the proportion of total provisioning made against trade receivables and contract assets. Vista Group believes that cumulative ECL and revenue provisions of 21.8% was a reasonable level to provide against trade receivables and contract assets. Trade receivables and contract assets Revenue provision - concession discounts Revenue provision - credit risk ECL provision Total provisioning Total provisioning effective rate 2022 NZ$m 47.2 0.8 5.1 4.4 10.3 21.8% 2021 NZ$m 43.5 1.4 8.9 4.6 14.9 34.3% A key judgement was that 10% of core business receivables may not be collectible. The following illustrates the sensitivity of this judgement. 5% JUDGEMENT 10% JUDGEMENT 15% JUDGEMENT 2022 NZ$m NZ$m Revenue provision - concession discount Revenue provision - credit risk ECL provision Total provisioning Total provisioning effective rate 0.8 4.9 3.8 9.5 20.1% 0.8 5.1 4.4 10.3 21.8% NZ$m 0.8 5.2 5.0 11.0 23.3% 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. Depreciation on assets is charged on a straight-line basis to allocate the differences between their original cost and the residual values over their estimated useful lives, as follows: • Fixtures and fittings 3 to 14 years, or the term of any associated property lease • Computer equipment 1.5 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 2022 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 2022 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 FIXTURES & FITTINGS NZ$m COMPUTER EQUIPMENT NZ$m 5.3 - (0.5) 0.2 5.0 (2.3) (0.5) 0.5 (0.1) (2.4) 2.6 6.4 0.1 (1.4) 0.2 5.3 (2.9) (0.8) 1.4 - (2.3) 3.0 2.3 2.1 (1.2) 0.2 3.4 (1.3) (1.2) 1.1 0.1 (1.3) 2.1 4.3 0.8 (3.1) 0.3 2.3 (3.0) (1.1) 3.0 (0.2) (1.3) 1.0 TOTAL NZ$m 7.6 2.1 (1.7) 0.4 8.4 (3.6) (1.7) 1.6 - (3.7) 4.7 10.7 0.9 (4.5) 0.5 7.6 (5.9) (1.9) 4.4 (0.2) (3.6) 4.0 132 Notes to the financial statements • 133 5.3 Investment in associates 2022 impairment testing of Vista China (significant judgement / estimate) Associates are entities which Vista Group has significant influence but not control or joint control. This is generally where Vista Group holds between 20% and 50% of the voting rights. Investments in associates utilise 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. 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. Impairment losses on equity-accounted investments may be reversed if there is objective evidence that investment has a value greater than the carrying amount. The financial statements of associates 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 Vista Group has one associate company which has share capital consisting of ordinary shares. NAME OF ENTITY  INVESTMENT TYPE COUNTRY OF REGISTRATION COUNTRY OF BUSINESS 2022 2021 HOLDING PERCENTAGE The Chinese Government's continued 'zero-covid' public health response, including broad based lockdowns across many major cities, has negatively impacted the cinema industry and box office in China in 2022. The majority of Vista China's revenue is directly related to box office performance, and as a result revenue was significantly impacted in 2022. At the beginning of June 2022 lockdowns were eased with the box office in China showing early signs of recovery. However, the situation in China remains uncertain and, based on the forecast box office through to the end of 2023, Vista China is expected to continue to face significant challenges going forward. At 30 June 2022, Vista Group reviewed its investment in Vista China for objective evidence of impairment. In accordance with NZ IAS 28, Vista Group has concluded that this definition was met due to there being a 'significant financial difficulty of the associate' (subsection 41A(a)). Based on the information available and the continued uncertainty in the market in China, Vista Group has estimated the recoverable amount of its investment in Vista China at this time to be nil (using both the value in use and fair value less cost of disposal approaches). The key assumptions in determining the recoverable amount are the forecast cash flows that are expected on the assumption that there are no significant increases in cinema attendance for the remainder of 2022 and that in 2023 the business activity returned to the 2021 level, which lead to an expectation of the net cash outflows over this period eroding the value of the investment. An impairment charge of $8.9m has been recognised on the income statement (see section 2.3). There have been no subsequent indicators of a reversal of this impairment. 2021 impairment testing of Vista China At 31 December 2021, Vista Group reviewed its net investment in Vista China for objective evidence of impairment and concluded this definition was not met. In accordance with NZ IAS 28, no impairment review was performed at 31 December 2021. Associate China China 47.5% 47.5% Vista Entertainment Solutions (Shanghai) Limited Carrying value of associates Opening net assets Loss for the year1 Closing net assets Vista Group weighted average shareholding Share of closing net assets Goodwill Opening accumulated impairment charges Impairment charges during the year Carrying value of associates at year end Share of equity accounted losses Loss for the year1 Vista Group weighted average shareholding Vista Group share of equity accounted losses 2022 NZ$m 10.7 (5.7) 5.0 47.5% 2.4 20.2 (13.7) (8.9) - 2022 NZ$m (5.7) 47.5% (2.7) 2021 NZ$m 14.9 (4.2) 10.7 47.5% 5.1 20.2 (13.7) - 11.6 2021 NZ$m (4.2) 47.5% (2.0) 1 Due to the carrying value of Vista China being nil at 30 June 2022, only losses up to 30 June 2022 are equity accounted. Subsequent losses after this date are neither reported above, nor equity accounted. 134 Notes to the financial statements • 135 5.4 Goodwill The amount of goodwill initially recognised is a function of the allocated purchase price to the fair value of the identifiable net assets acquired. The determination of the net assets fair value, particularly intangible assets, is to a considerable extent based on 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 fair value less costs to dispose (FVLCD). In accordance with NZ IAS 36 Impairment of Assets, FVLCD is only determined where the VIU would result in an impairment charge. 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 Exchange differences Gross carrying amount at year end Accumulated impairment Balance at 1 January Accumulated impairment at year end Goodwill at year end Goodwill by CGU Vista Entertainment Solutions Limited (VESL) Movio Limited (Movio) Maccs International BV (Maccs) Powster Ltd (Powster) Flicks Limited (Flicks) Numero Limited (Numero) Goodwill at year end 2022 NZ$m 70.9 1.4 72.3 (15.2) (15.2) 57.1 2022 NZ$m 27.6 17.0 5.6 6.1 0.2 0.6 57.1 2021 NZ$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 The above CGUs are business operations at their lowest level where goodwill is monitored for internal management reporting purposes. 2022 impairment testing of goodwill (significant judgement / estimate) Vista Group completed its annual impairment review of goodwill under a VIU method at 31 August 2022, 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. • Terminal growth being calculated at 2027 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 2022 VIU 2021 VIU 2022 VIU 2021 VIU 2022 VIU 2021 VIU 24.8% 18.6% 49.0% 17.0% 24.0% 34.4% 20.4% 18.5% 44.7% 14.4% 15.7% 29.8% 18.4% 15.9% 19.5% 16.7% 16.8% 17.8% 14.4% 15.4% 19.0% 14.4% 14.1% 18.6% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.2% 1.7% 1.8% 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 67.8 37.1 7.3 4.0 11.4 6.8 22.6% 14.5% 44.0% 16.4% 22.5% 31.9% Not sensitive Not sensitive Not sensitive Not sensitive Not sensitive Not sensitive Not sensitive Not sensitive Not sensitive Not sensitive Not sensitive Not sensitive The 5-year revenue CAGR is a function of the management approved 5-year business models prepared for each CGU. When calculating the reduced revenue CAGR required for an impairment scenario to exist, there have been no adjustments to the costs included in the 5-year business models – despite this being a probable reaction to help address profitability. 136 Notes to the financial statements • 137         5.5 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 • Client relationships 2.5 to 15 years • Software licenses 2 to 10 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. 2022 impairment testing of internally generated software Vista Group reviewed the carrying value of its internally generated software assets for indicators of impairment at 30 June 2022 and determined all intangible assets owned by Vista Group relating to Vista China specific software was fully impaired. An impairment charge of $1.3m has been recognised on the income statement during the year (see section 2.3). Vista Group also reviewed the carrying value of its internally generated software assets for indicators of impairment at 31 December 2022 and no other indicators of impairment were noted. In accordance with NZ IAS 36, no impairment review was performed at 31 December 2022. Carrying amount of intangible assets 2022 Gross carrying amount Balance at 1 January Additions Disposals Impairment charges Exchange differences Balance at year end Accumulated amortisation Balance at 1 January Current year amortisation Disposals Impairment charges Exchange differences Balance at year end Intangible assets at 31 December 2022 2021 Gross carrying amount Balance at 1 January Additions Disposals Exchange differences Balance at year end Accumulated amortisation Balance at 1 January Current year amortisation Disposals Exchange differences Balance at year end Intangible assets at 31 December 2021 INTERNALLY GENERATED SOFTWARE SOFTWARE LICENSES INTELLECTUAL PROPERTY CLIENT RELATIONSHIPS NZ$m NZ$m NZ$m NZ$m 50.6 15.9 (1.3) (0.5) - 64.7 (15.7) (8.9) 1.3 (0.8) - (24.1) 40.6 38.1 12.6 (0.1) - 50.6 (9.4) (6.4) 0.1 - (15.7) 34.9 4.6 - (0.1) - - 2.6 - - - - 4.5 2.6 (2.4) (0.6) 0.1 - - (2.9) 1.6 4.9 - (0.1) (0.2) 4.6 (2.1) (0.5) 0.1 0.1 (2.4) 2.2 (1.8) (0.2) - - 0.1 (1.9) 0.7 2.7 - (0.1) - 2.6 (1.7) (0.2) 0.1 - (1.8) 0.8 6.0 9.6 - - 0.6 16.2 (4.1) (1.8) - - (0.2) (6.1) 10.1 6.8 - (0.8) - 6.0 (4.2) (0.7) 0.8 - (4.1) 1.9 TOTAL NZ$m 63.8 25.5 (1.4) (0.5) 0.6 88.0 (24.0) (11.5) 1.4 (0.8) (0.1) (35.0) 53.0 52.5 12.6 (1.1) (0.2) 63.8 (17.4) (7.8) 1.1 0.1 (24.0) 39.8 Cash additions for the year were $16.8m for internally generated software (inclusive of a $0.9m 2021 trade payable) and $3.3m for the Retriever client relationships (remaining $6.3m was settled with Vista Group shares, or relates to contingent consideration, see section 3). Cash additions for the year ended 31 December 2021 were $11.9m, with $0.9m being a trade payable at 31 December 2021, and $0.2m being accrued as a receivable for the RDTI. 138 Notes to the financial statements • 139 5.6 Trade and other payables Carrying amount of trade and other payables Trade payables Sundry accruals Employee benefits Total trade and other payables 2022 NZ$m 7.7 5.4 10.5 23.6 2021 NZ$m 2.1 7.0 9.6 18.7 Included in trade payables is a balance of $0.4m (2021: $1.2m) payable to the associate company Vista China, see section 9.1 for further details of Vista China related party transactions. 5.7 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. Vista Group applies 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. Lease assets are generally 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. Carrying amount of lease assets Balance at 1 January Additions during the year Adjustments in respect of assumed lease term Current year depreciation Amounts derecognised due to sublease Impairment charges Exchange differences Lease assets at year end 2022 NZ$m 15.6 1.8 (1.5) (4.0) - - 0.4 12.3 2021 NZ$m 20.8 2.4 (0.5) (4.2) (2.6) (0.7) 0.4 15.6 Lease assets at year end also include the property that was formerly subleased, as discussed in note 5.8. Following termination of this sublease the net investment in the sublease balance now represents a right of use asset of Vista Group. This has not been included in the table above as the circumstances of this lease asset are distinct from the other lease assets. Carrying amount of lease liabilities Balance at 1 January Additions during the year Adjustments in respect of assumed lease term Interest expense relating to lease liabilities Repayment of lease liabilities (including interest) Exchange differences Lease liabilities at year end Maturity of lease liabilities Less than one year One to five years More than five years Lease liabilities at year end 2022 NZ$m 22.6 1.8 (1.5) 0.8 (5.9) 0.8 18.6 2022 NZ$m 5.3 13.3 - 18.6 2021 NZ$m 23.0 2.4 (0.5) 0.8 (3.8) 0.7 22.6 2021 NZ$m 4.8 17.8 - 22.6 140 Notes to the financial statements • 141   5.8 Net investment in sublease asset Maturity of net investment in sublease asset When Vista Group acts as a sublessor, it determines at the inception of the contract whether the lease is a finance lease (where the lease transfers substantially all the risks and rewards incidental to ownership of the underlying asset) or an operating lease (any lease that does not fit the criteria of a finance lease). A sublease that fits the finance lease criteria is recognised as an asset by present valuing all future lease payments. The sublease asset reduces on receipt of future lease payments. Unwinding of the present valued subleased asset is recognised on the income statement as finance income. At the end of each reporting period, the subleased asset is tested for impairment. A gain or loss is recognised at the start of the sublease where there is a difference between the value of the sublease and the amount of the existing lease asset that is derecognised. A sublease that fits the criteria as an operating lease is not recognised as an asset, instead it is recognised as other income on the income statement when the receipt is contractually due. Carrying amount of net investment in sublease asset (significant judgement / estimate) Balance at 1 January Additions during the year Impairment charges Lease payments received (including interest) Exchange differences Net investment in sublease at year end Represented by: Current portion Non-current portion Net investment in sublease at year end 2022 NZ$m 2.7 - (1.5) (0.1) 0.1 1.2 - 1.2 1.2 2021 NZ$m - 2.7 - (0.1) 0.1 2.7 0.5 2.2 2.7 In 2021, Vista Group subleased part of its leased premised in Los Angeles and recognised the net investment in sublease asset. In 2022, the subtenant vacated these premises with 4 years of the sublease term remaining. Prior to the end of 2022 the sublease was terminated. Vista Group reviewed the sublease asset for impairment at 30 June 2022 and again at 31 December 2022 following the subtenant vacating the premises. As a result, an impairment of $0.9m was recognised at 30 June 2022. A further impairment of $0.6m was recognised at 31 December 2022 due to a reassessment of the recoverable amount. Vista Group has rights under the sublease agreement, which it intends to vigorously pursue, including the ability to enforce continued payment of rent until a new subtenant is found and recovery of associated costs. The recoverable amount under this sublease was calculated using a probability-weighted evaluation of the most probable outcomes. The recoverable amount is sensitive to the length of time it may take to find a replacement subtenant, along with the rental amount per square foot achieved. The range of impairment charges that could be recognised under all likely scenarios was $nil to $1.8m, meaning any delta from the $1.5m impairment charge recognised not anticipated to be material. Following termination, the sublease asset reverted to being a lease asset of Vista Group. This balance continues to be presented separately from other lease assets as the circumstances of this lease asset are distinct from the other lease assets. Less than one year One to five years Total undiscounted lease payments receivable Unearned finance income Net investment in sublease at year end 5.9 Deferred revenues 2022 NZ$m - 1.5 1.5 (0.3) 1.2 2021 NZ$m 0.6 2.3 2.9 (0.2) 2.7 Deferred revenues are contract liabilities related to revenue that are recognised on client contracts where Vista Group’s performance obligations have not been fully satisfied. The following table represents the revenues recognised during the year relating to carried forward deferred revenue, as well as the additional deferred revenues recognised at year end where the performance obligations are yet to be satisfied. Balance at 1 January Revenue recognised from performance obligations satisfied in the year Additional deferred revenues from unsatisfied performance obligations Exchange movements Deferred revenues at year end Represented by: Current portion Non-current portion Deferred revenues at year end 2022 NZ$m 20.9 (20.3) 21.7 0.4 22.7 22.3 0.4 22.7 2021 NZ$m 19.5 (17.7) 18.9 0.2 20.9 20.5 0.4 20.9 142 Notes to the financial statements • 143 5.10 Provisions A provision is a liability of uncertain timing or amount and is recognised when: • Vista Group has a present obligation (legal or constructive) as a result of a past event; 6. Taxation This section outlines details of the income tax expense incurred by Vista Group and the deferred taxes recognised on the statement of financial position. • it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and 6.1 Income tax expense • a reliable estimate can be made of the amount of the obligation. Carrying amount of provisions The income tax expense for the year comprises current and deferred tax. Taxation is recognised in the income statement, except when it relates to items recognised directly in equity (in which case the income tax is recognised in the statement of other comprehensive income). Income tax expense is based on tax rates and regulation enacted, or substantively enacted at the balance date, in the jurisdiction in which the respective entity operates. US sales taxes Lease dilapidations Total provisions at year end Represented by: Current Non-current Total provisions at year end Movement in provisions Balance at 1 January US sales taxes Organisation restructuring Movement in lease dilapidations Onerous contracts Other Total provisions at year end US sales tax provision 2022 NZ$m 0.3 0.4 0.7 0.6 0.1 0.7 2022 NZ$m 3.2 (2.5) - - - - 0.7 2021 NZ$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 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 the second half of 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 to register and collect sales tax in some states. The total obligation was estimated in the prior year to be $2.8m (of which $1.3m related to 2019, $0.7m related to 2020 and $0.8m related to 2021) with $2.1m being settled in cash in the current year and $0.4m being released to the income statement. Composition of income tax expense Current tax expense Deferred tax expense Total tax benefit Reconciliation of income tax expense SECTION 6.2 2022 NZ$m 2.8 (4.4) (1.6) 2021 NZ$m 1.5 (3.9) (2.4) The relationship between the expected tax expense based on the domestic effective tax rate of the Company at 28% (2021: 28%) and the reported tax expense in the income statement can be reconciled as follows: Loss before tax Domestic tax rate for Vista Group International Limited Expected tax benefit Foreign subsidiary company tax Non-assessable income / non-deductible expenses Prior year adjustments Other Total tax benefit Effective tax rate 2022 NZ$m (22.5) 28% (6.3) (0.1) 5.7 (0.5) (0.4) (1.6) 7% 2021 NZ$m (12.3) 28% (3.4) - 0.2 0.1 0.7 (2.4) 20% At 31 December 2022, Vista Group had $11.2m (2021: $11.5m) of imputation credits available for use in subsequent reporting years. Vista Group also had $1.1m (2021: $0.7m) of unused tax losses for which no deferred tax asset has been recognised, as they did not meet the recognition criteria. 144 Notes to the financial statements • 145   6.2 Deferred tax assets and liabilities 7. Capital structure Deferred tax is recognised for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax is based on the expected manner of realisation of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the end of the year. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Recognition of deferred tax assets (significant judgement / estimate) Deferred tax at year end includes temporary timing differences and income tax losses available to carry forward against future profits. A deferred tax asset is recognised on losses, only when it is considered probable that sufficient taxable profits will be available to utilise the losses in the near future. Vista Group applies judgement when reviewing current business plans and forecasts to ascertain the likelihood of future taxable profits. The financial forecasts used in this assessment are the same as those used in the impairment review of goodwill and other assets in section 5.4. Deferred taxes can be summarised as follows: RECOGNISED IN OTHER COMPREHENSIVE INCOME RECOGNISED IN INCOME STATEMENT NZ$m NZ$m OPENING BALANCE NZ$m CLOSING BALANCE NZ$m 3.5 (2.0) (3.8) (1.6) 2.2 5.6 9.9 (0.1) 13.7 4.8 (0.9) (4.9) (1.9) 1.5 5.5 4.6 0.5 9.2 - - - - (0.4) - - - (0.4) - - - - 0.6 - - - 0.6 (0.9) (0.2) 1.1 0.6 1.4 (1.8) 4.0 0.2 4.4 (1.3) (1.1) 1.1 0.3 0.1 0.1 5.3 (0.6) 3.9 2022 NZ$m 17.8 (0.1) 17.7 2.6 (2.2) (2.7) (1.0) 3.2 3.8 13.9 0.1 17.7 3.5 (2.0) (3.8) (1.6) 2.2 5.6 9.9 (0.1) 13.7 2021 NZ$m 14.6 (0.9) 13.7 2022 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 2022 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 Deferred tax net asset is represented by: Deferred tax asset Deferred tax liability Deferred tax net asset 146 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. 7.1 Contributed equity At 31 December 2022, there were 233,192,093 shares in issue (2021: 231,225,495). The following reflects where these shares were allocated: Shares issued and fully paid: Balance at 1 January Ordinary shares issued during the year: Shares issued as part of Retriever asset acquisition Employee incentives Tax (expense) / benefit on share-based payments MILLIONS OF SHARES NZ$m 2022 2021 2022 2021 231.2 228.6 131.3 126.0 1.5 0.5 - - 2.6 - 3.2 0.9 (0.4) - 4.7 0.6 Total contributed equity at year end 233.2 231.2 135.0 131.3 Vista Group issued 1,529,987 shares on 16 February 2022 which formed part of the consideration transferred for the Retriever asset acquisition (see section 3). Notes to the financial statements • 147                     7.2 Earnings per share Vista Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to owners of the parent by the weighted average number of ordinary shares in issue during the year. Diluted EPS is determined by adjusting the profit or loss attributable to owners of the parent and the weighted average number of ordinary shares in issue during the year for the effects of all dilutive potential ordinary shares, which for Vista Group comprise share 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. Earnings per share calculation 7.5 Share-based payments Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date. The fair value includes the effect of market based vesting conditions. The fair value determined at the grant date of the equity-settled share-based payments is expensed evenly over the vesting period within total operating expenses, based on Vista Group’s estimate of equity instruments that will eventually vest. At each balance date, Vista Group revises 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. NUMBER OF SHARES (MILLIONS) Share-based payment expense 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) 7.3 Dividends No dividends were paid during the year (2021: $nil). 7.4 Foreign currency reserve 2022 232.9 4.5 237.4 (21.4) ($0.09) 2021 229.0 1.7 230.7 (9.8) ($0.04) Items included in the financial statements of each of Vista Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the Functional Currency). The financial statements are presented in New Zealand Dollars (NZD), which is Vista Group’s presentation currency. All financial information has been presented rounded as millions of dollars (NZ$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 income statement. The share-based payment expense relating to each scheme is as follows: Vista Group Recognition Scheme (VGRS) Group CEO Retention Scheme (Group CEO) Senior Management & Executive Retention Scheme (Exec Retention) LTI Scheme - Share Rights (LTI - Share Rights) LTI Scheme - Performance Rights (LTI - Perf Rights) LTI Scheme - Movio CEO (LTI - Movio CEO) Total share-based payment expense Summary of performance rights 2022 NZ$m 2.5 0.3 0.2 0.8 0.7 - 4.5 The movement in the number of performance rights outstanding is summarised in the following table: NUMBER OF RIGHTS (MILLIONS) VGRS GROUP CEO EXEC RETENTION LTI - SHARE RIGHTS LTI - PERF RIGHTS LTI - MOVIO CEO RETENTION SCHEMES PERFORMANCE SCHEMES At 1 January 2021 Granted Lapsed Exercised At 31 December 2021 Granted Lapsed Exercised At 31 December 2022 2.9 - (0.5) (2.4) - 2.1 (0.2) - 1.9 0.7 - - (0.2) 0.5 - - (0.1) 0.4 - - - - - 0.3 - - - 0.6 (0.1) - 0.5 0.6 - (0.2) 0.2 0.7 (0.2) - 0.7 0.6 (0.1) (0.2) 0.3 0.9 1.0 0.1 - (0.1) - - - - - - 2021 NZ$m 3.8 0.5 - 0.6 0.6 (0.3) 5.2 TOTAL 3.9 1.3 (0.9) (2.6) 1.7 3.6 (0.3) (0.5) 4.5 The share price of awards on the date of vesting in 2022 was $1.87 for the Group CEO scheme, and $1.86 for the LTI - Share Rights / LTI - Perf Rights schemes. The share price of awards on the date of vesting in 2021 was $2.59 for the VGRS and $2.32 for the Group CEO scheme. No shares under these schemes are ‘exercisable’, as all rights convert into shares on the vesting date. As all rights are granted at nil cost, the weighted average exercise price of all rights is $nil. The weighted average contractual life of the outstanding performance rights is 0.7 years (2021: 1.2 years). 148 Notes to the financial statements • 149   Fair value assumptions 8. Financial risk management When using the Black-Scholes pricing model to determine the fair value of rights granted, the following assumptions were applied: • 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 2022, the expected dividend yield was assumed to be $nil (2021: $nil) and are assumed to be 100% achieved (2021: 100%). Retention schemes At 31 December 2022, Vista Group was operating the following retention schemes: ASSUMPTION VGRS EXEC RETENTION LTI - SHARE RIGHTS LTI - SHARE RIGHTS 2022 2021 Share price on grant date (NZ$) Vesting period (months) $1.83 13 $1.80 25-37 $1.86 13-37 $2.12 15-39 • VGRS: The Board approved awards to be issued under this scheme in 2022 to permanent staff based in New Zealand, United Kingdom and United States. These rights vest in full after a 13 month period. • Exec Retention: The Board approved awards to be issued under this scheme in 2022 to select senior management. Subject to continued tenure of each participant, 100,000 of those share rights are due to vest in April 2024 with the remaining 200,000 share rights due to vest in April 2025. • LTI - Share Rights: The Board approved awards to be issued under this scheme in both 2022 and 2021 to eligible senior management. The share rights are split into three tranches and vest annually over a three-year period. • Group CEO (current): The Board approved awards to be issued under this scheme in 2020 to the Vista Group CEO. The share rights vest on an annual basis with 400,000 due to vest to the current Group CEO in April 2023. • Group CEO (incoming): On 9 December 2022, Vista Group announced the appointment of Stuart Dickinson as Vista Group’s new Chief Executive Officer with effect from 11 April 2023. As part of the employment agreement, the Board agreed to terms on a retention scheme with 200,000 share rights, with 50% vesting in April 2024 and 50% in April 2025. This grant is not included in the summary of performance rights until employment commences in April 2023. 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. Performance schemes At 31 December 2022, Vista Group was operating the following performance schemes: • LTI - Perf Rights: The Board approved awards to be issued under this scheme in both 2021 and 2022 to eligible senior management. The scheme requires achievement of recurring revenue targets set by the Board with vesting annually over three years, on achievement of the target and continued tenure. The fair value of interests awarded under this scheme was determined using the Black-Scholes option pricing model, with the share price on grant date and vesting periods aligning to those of the LTI – Share Rights scheme. Awards under performance schemes are designed to ensure continued retention, 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 awards are also contingent on continued tenure. 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. 8.1 Capital management The following table summarises the capital of Vista Group: Borrowings – external Borrowings – related parties Equity Total capital 2022 NZ$m 17.6 0.5 148.0 166.1 2021 NZ$m 16.2 0.6 159.8 176.6 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. 8.2 Foreign currency risk Vista Group operates internationally and is exposed to foreign exchange risk in US Dollars (USD), Pounds Sterling (GBP), Euros (EUR), Chinese Yuan Renminbi (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 6 months) from longer-term cash flows (due after 6 months). Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken. The foreign exchange policy allows for the use of hedging activity, and although Vista Group uses 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. 2022 Financial assets Cash Trade receivables Sundry receivables Net investment in sublease Financial liabilities Borrowings Trade payables Sundry payables Lease liabilities Contingent consideration Net foreign currency risk USD NZ$m 11.3 26.2 0.5 1.2 (17.6) (5.5) (1.3) (10.2) (2.9) 1.7 GBP NZ$m 3.0 5.6 0.5 - (0.5) (0.1) (0.6) (2.9) - 5.0 EUR NZ$m 1.4 5.6 - - - (0.1) (0.3) (0.4) - 6.2 CNY NZ$m - 1.4 - - - (0.4) - - - 1.0 AUD NZ$m 0.5 1.3 - - - (0.3) (0.1) - - 1.4 150 Notes to the financial statements • 151 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 Although the net foreign currency risk for USD financial assets of $1.7m are naturally hedged by the $17.6m USD denominated ASB loan (with exchange gains or losses being recognised in the income statement), components of the exchange movements in the USD denominated financial assets are recognised in the: • Foreign currency reserve: where the assets are held in a USD functional currency entity; or • Income statement: where the assets are held in a non-USD functional currency entity. The following table illustrates the sensitivity of profit or loss and equity in regard to Vista Group’s financial assets and liabilities affected by exchange rates with ‘all other things being equal’. It assumes a +/- 10% change of the NZD to currency exchange rate for each year presented. The sensitivity analysis is based on Vista Group’s foreign currency financial instruments held at each reporting date. 2022 10% strengthening in NZD 10% weakening in NZD 2021 10% strengthening in NZD 10% weakening in NZD USD NZ$m (0.2) 0.2 (1.3) 1.5 GBP NZ$m (0.5) 0.6 (0.3) 0.3 EUR NZ$m (0.6) 0.7 (0.7) 0.8 CNY NZ$m (0.1) 0.1 - - AUD NZ$m (0.1) 0.2 (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. 8.3 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 2022 Financial assets Cash Net investment in sublease Financial liabilities Borrowings - external Borrowings - related party Lease liabilities Net interest risk 2021 Financial assets Cash Net investment in sublease Financial liabilities Borrowings - external Borrowings - related party Lease liabilities Net interest risk TOTAL NZ$m 46.0 1.2 (17.6) (0.5) (18.6) 22.0 11.0 5.0 - - - - - - - - - - - - 8.0 1.2 (17.6) (0.5) (18.6) 22.0 11.0 5.0 (27.5) 10.5 35.4 7.0 6.5 - - - - - - - - - - - - 11.5 2.7 (16.2) (0.6) (22.6) 60.4 2.7 (16.2) (0.6) (22.6) 35.4 7.0 6.5 (25.2) 23.7 2.3% 6.3% 7.0% 4.0% 4.0% 0.6% 3.5% 1.6% 4.0% 4.0% Profit or loss is sensitive to higher / lower interest income / expense from cash as a result of changes in interest rates. 2022 Cash Net investment in sublease Borrowings - external Borrowings - related party Lease liabilities Sensitised net interest risk EFFECTIVE INTEREST RATE +1% EFFECTIVE INTEREST RATE -1% NZ$m 0.5 - (0.2) - (0.2) 0.1 NZ$m (0.5) - 0.2 - 0.2 (0.1) 152 Notes to the financial statements • 153 8.4 Credit risk 8.5 Liquidity Risk Credit risk is the risk that a counterparty fails to discharge an obligation to Vista Group. Vista Group is predominantly exposed to this risk for trade receivables and contract assets. The maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at 31 December, as summarised in section 8.6. Vista Group continuously monitors defaults of clients and other counterparties, identified either individually or by Vista Group, and incorporates this information into its credit risk controls. At 31 December 2022, Vista Group has certain trade receivables and contract assets that have not been settled by the contractual due date but are not considered to be impaired because of the nature of contracts and / or the longevity of ongoing client relationships. At balance date, the overdue trade receivables, net of all provisioning (concession discounts, credit risk provisions and ECL), are below. Not more than 6 months Between 6 months and 9 months Over 9 months Overdue trade receivables and contract assets (net of provisioning) Trade receivables consist of many clients in various industries and geographical areas. 2022 NZ$m 3.5 2.4 2.6 8.5 2021 NZ$m 3.4 1.1 1.6 6.1 Judgement has been applied to the recoverability of all trade receivables and contract assets, with Vista Group determining that the net balances receivable are recoverable and not impaired. See section 5.1 for more detail of how judgement has been applied, including a sensitivity analysis of the key judgement where 10% of core business receivables may not be collectable. 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 5.1 for details on how ECL has been recognised on trade receivables and contract asset balances. The credit risk for cash is considered negligible since the counterparties are reputable banks with high quality external credit ratings. Liquidity risk is the risk that Vista Group might be unable to meet its obligations when they fall due. 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 assessed the concentration of risk with respect to refinancing its debt as being low. At 31 December 2022, Vista Group had cash balances totalling $46.0m, along with $24.4m undrawn on its ASB revolving credit facility. Forecasts show that this level of cash and undrawn loans will be sufficient for Vista Group to continue operations for at least the next 12 months (representing the minimum requirement for going concern purposes). The table below summarises the maturity profile of Vista Group’s non-derivative financial liabilities based on contractual undiscounted payments. 2022 Trade payables Sundry payables Borrowings - external Borrowings - related parties Interest on borrowings Lease liabilities Contingent consideration Total liquidity risk 2021 Trade payables Sundry payables Borrowings - external Borrowings - related parties Interest on borrowings Lease liabilities Total liquidity risk LESS THAN 3 MONTHS 3 TO 12 MONTHS 1 TO 5 YEARS > 5 YEARS NZ$m NZ$m NZ$m NZ$m 7.7 4.9 - - 0.4 1.3 - 14.3 2.1 5.9 - - 0.1 1.2 9.3 - - - 0.5 1.1 4.0 1.4 7.0 - - - 0.6 0.3 3.6 4.5 - - 17.6 - 3.0 13.3 1.5 35.4 - - 16.2 - 0.1 17.8 34.1 - - - - - - - - - - - - - - - TOTAL NZ$m 7.7 4.9 17.6 0.5 4.5 18.6 2.9 56.7 2.1 5.9 16.2 0.6 0.5 22.6 47.9 8.6 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 2022 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: Level 1 Fair value measurements derived from quoted prices in active markets for identical assets. Level 2 Level 3 Fair value measurements derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly. Fair value measurements derived from valuation techniques that include inputs for the asset or liability which are not based on observable market data. Vista Group’s policy is that no speculative trading in financial instruments may be undertaken. 154 Notes to the financial statements • 155 Financial instruments by category FINANCIAL ASSETS AT AMORTISED COST FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH P&L FINANCIAL LIABILITIES AT AMORTISED COST 2022 Cash Trade receivables Sundry receivables Net investment in sublease Total financial assets Borrowings - external Borrowings - related parties Trade payables Sundry payables Lease liabilities Contingent consideration Total financial liabilities 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 NZ$m 46.0 31.6 1.2 1.2 80.0 - - - - - - - 60.4 24.0 4.2 2.7 91.3 - - - - - - NZ$m NZ$m - - - - - - - - - - 1.4 1.4 - - - - - - - - - - - - - - - - 17.6 0.5 7.7 4.9 18.6 - 49.3 - - - - - 16.2 0.6 2.1 5.9 22.6 47.4 TOTAL NZ$m 46.0 31.6 1.2 1.2 80.0 17.6 0.5 7.7 4.9 18.6 1.4 50.7 60.4 24.0 4.2 2.7 91.3 16.2 0.6 2.1 5.9 22.6 47.4 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’s 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 fixed. • 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’s incremental borrowing rate. • Contingent consideration: These liabilities typically arise from a business combination or a reacquired right. Fair value of elements greater than 12 months are determined on a present value basis using the Vista Group’s incremental borrowing rate. 9. Other information 9.1 Related parties Vista Group has various types of transactions with related parties. Section 4.2 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) and the Executive Team (defined as personnel that report directly to the Vista Group’s Chief Executive). Key management personnel at 31 December 2022 include 17 individuals (6 Directors and 11 Executive Team members) (2021: 17 individuals, being 7 Directors and 10 Executive Team members). Salaries including bonuses Share-based payments Director fees Total key management personnel transactions 2022 NZ$m 5.5 0.5 0.7 6.7 No dividends were paid to key management personnel on their Vista Group shareholdings during the year (2021: $nil). Other related party transactions The following table represents amounts due to and from related parties, excluding key management personnel. AMOUNTS OWED BY RELATED PARTIES AMOUNTS OWED TO RELATED PARTIES Associate company 2022 NZ$m 1.4 2021 NZ$m - Vista Group’s associate company related party transactions were as follows: Receiving of services Rendering of services Total related party transactions 2022 NZ$m (0.4) 2022 NZ$m (0.2) 2.4 2.2 Details of significant related party transactions of Vista Group Vista Cinema recognised $0.9m of maintenance revenue from Vista China during the year (2021: $2.2m). 2021 NZ$m 3.9 0.5 0.6 5.0 2021 NZ$m (1.2) 2021 NZ$m (2.5) 2.9 0.4 156 Notes to the financial statements • 157                                           9.2 Group companies 9.3 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 the current market, covering a period of at least twelve months after these 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 2022, Vista Group had $70.4m in liquidity, with $46.0m in cash and $24.4m of undrawn ASB revolving credit and overdraft facilities. In addition to this, Vista Group’s EBITDA and operating cash flows for the year have remained positive. The ASB facilities have also been renewed and are now due to mature in January 2026. Due to the above, the Board determined that the going concern basis of accounting is appropriate in the preparation of these financial statements. 9.4 Capital commitments There were no capital commitments for Vista Group at 31 December 2022 (31 December 2021: $nil). 9.5 Events after balance date Subsequent to balance date, Vista Group obtained confirmation from the Inland Revenue that key RDTI general approval applications had been approved. At the date of these financial statements being released, the resulting claims available to Vista Group on 2022 costs were still being calculated, but were expected to be up to $1.0m. It is highly likely the finalised claim will be capitalised as an offset to capitalised development costs (intangible assets). There were no other significant events between balance date and the date these financial statements were authorised for issue. 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. • 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. Group information These financial statements consolidate the following subsidiaries of the Company: NAME Flicks Limited Maccs International B.V. MovieXchange Limited Movio (IP) Limited Movio Limited Movio, Inc. Numero Limited PRINCIPAL ACTIVITY Advertising sales COUNTRY OF INCORPORATION SHAREHOLDING 2022 2021 New Zealand 100% 100% Software development & licensing Netherlands 100% 100% Web platform licensing 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% Numero (Aust) Pty Ltd Software development & licensing Australia 100% 100% Powster, Inc. Powster Ltd Marketing & creative solutions United States Marketing & creative solutions United Kingdom S.C. Share Dimension S.R.L. Software development Senda DO Brasil Serviços de Tecnológia LTDA. Software licensing Romania Brazil 50% 50% 50% 50% 100% 100% 60% 60% Share Dimension B.V. Vista (IP) Limited Software development & licensing Netherlands 100% 100% Distributor of intellectual property New Zealand 100% 100% Vista Entertainment Solutions Limited Software development & licensing New Zealand 100% 100% Vista Entertainment Solutions (Asia) Sdn. Bhd. Software licensing Vista Entertainment Solutions (Canada) Limited Inactive 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% 0% 60% 90% 158 Notes to the financial statements • 159 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 2022, 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 2022; the income statement for the year then ended; the statement of other comprehensive income 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 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 area of workshop facilitation in relation to sustainability and climate change strategy and reporting. The provision of this other service has not impaired our independence as auditor of the Group. 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 Impairment testing of goodwill Section 5.4 of the financial statements provides details of the goodwill balance of $57.1 million as at 31 December 2022, which comprised balances in six cash generating units (CGUs). The impairment tests were performed as at 31 August 2022, 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 flow models. These VIUs were then compared to the carrying amount of the associated net assets, including goodwill, of each CGU as at 31 August 2022. The estimated cash flows used in the VIU models were based on the management approved five year business plans. While the current year saw a recovery from the impacts of the 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 2022. No impairments were recognised. Our audit focused on this area as a key audit matter due to the value of the goodwill balance, and the level of judgement involved in assessing the recoverable amount of each CGU. Our audit procedures in relation to management’s impairment testing of goodwill at 31 August 2022 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 models, including the inputs and 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; - Held discussions with management for each CGU to gain an understanding of the business strategies, forecast assumptions and risks for the CGUs; - Obtained and evaluated management’s sensitivity analysis to ascertain the impact of reasonably possible changes in key assumptions; and - Engaged our own expert to evaluate the long term growth rates and discount rates used in the VIU models by comparing with those of similar market participants, and to evaluate the reasonableness of the implied valuation multiples; 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. PricewaterhouseCoopers, PwC Tower, 15 Customs Street West, Private Bag 92162, Auckland 1142 New Zealand T: +64 9 355 8000, www.pwc.co.nz PwC 161 160 Independent auditor's report • 161 Description of the key audit matter How our audit addressed the key audit matter Revenue and expected credit loss provisioning Section 5.1 of the financial statements provides details of various provisions totalling $10.3 million at 31 December 2022 that are recognised in relation to Vista Group’s trade receivables and contract asset balances. There is significant estimation uncertainty regarding the amount that may be collected for Vista Group’s products and services, particularly due to the quantum of the gross trade receivables, contract assets and provisions, and the ageing of the receivables and the residual impact of the COVID-19 pandemic. Management assessed the recoverability of trade receivables and contract assets, 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 trade receivables and contract assets 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 and contract assets balances and the provisions within those balances, the significant estimation uncertainty as a result of the residual impact of the COVID-19 pandemic on the cinema industry and the level of judgement involved in determining the appropriate provisions. Our audit procedures in relation to the provisions against trade receivables and contract assets included the following: ● 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 expected credit loss provisioning; ● We obtained the calculation performed by management which includes key assumptions and estimates used by management for revenue concessions, revenue credit risk and expected credit loss 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; ● We obtained assessments from 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 provisions by performing an analysis of the ageing profile of the gross and net trade receivable balances as at 31 December 2022 and comparing to the 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 2021 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 or write- offs; ● 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. Our audit approach Overview Overall group materiality: $1.01 million, which represents approximately 0.75% of total revenues. We chose total revenues as the benchmark because, in our view, it is a key financial statement metric used in assessing the performance and growth of the Group and it is a generally accepted benchmark. In recent years our approach to determining materiality has been to use an adjusted three year weighted average profit/loss before tax measure as the benchmark. We have changed our approach this year because this would have resulted in a materiality level that is below the level we consider would affect economic decisions of users of the financial statements. Using revenue as the benchmark this year results in a similar overall materiality level to previous years, which we consider is appropriate. 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. As reported above, we have two key audit matters, being: ● ● Revenue and expected credit loss provisioning Impairment testing of goodwill 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. PwC 162 162 PwC 163 Independent auditor's report • 163 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 2023 Auckland PwC 164 PwC 165 164 Independent auditor's report • 165 Directory Directors Susan Peterson • Chair Claudia Batten Murray Holdaway James Miller Cris Nicolli 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 Hudson Gavin Martin Level 16 Level 34, PwC Tower 45 Queen Street 15 Customs Street West Auckland 1010 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 166 • 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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