Vista Group International Limited
Annual Report 2023

Plain-text annual report

Vista Group Annual Report 2023 Vista Group's purpose is to bring more people together to share the magic of cinema. This report is dated 27 February 2024 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 Highlights From our Chair and CEO Vista Group overview Key strategies for 2024 Group trading overview Sustainability Remuneration report Corporate governance Financial statements Independent auditor's report Directory Glossary of terms 4 6 16 18 30 36 48 62 92 139 145 146 Highlights Total Revenue $143.0m Recurring Revenue $124.0m SaaS Revenue $45.9m ARR $126.3m EBITDA $13.3m Net profit after tax -$13.6m Operating Cashflow1 (Including business transformation items) $9.0m 1 Operating Cashflow has been presented including $5.0m of payments associated with the business transformation and CEO transition. 6% 10% 20% 7% 25% 35% 27% 2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021 $143.0m $135.1m $98.1m $124.0m $112.3m $81.4m $45.9m $38.4m $27.8m $126.3m $118.0m $96.7m $13.3m $10.6m $6.5m -$13.6m -$20.9m -$9.9m $9.0m $12.4m $11.3m 4 Highlights • 5 From our Chair This has been a year of growing momentum as we have systematically transformed Vista Group to deliver greater value for our clients, people and shareholders. A year of transformation A key focus for 2023 has been the successful contributions to the success of Vista Group and transformation of Vista Group to enable faster our clients throughout the year. The passion and execution, support more clients in their success, energy from everyone in our team is fantastic, and to increase operational efficiency of our and we very much appreciate their support, business to drive sustainable and profitable dedication and hard work. growth. An important first step has been the appointment of Stuart Dickinson as our CEO. Stuart joined Vista Group in April and brings with him a proven track record of delivering significant transformative programmes of work. The transformational change that has been achieved under Stuart’s leadership and new strategy has already yielded significant value, including over $10.0m of annualised costs savings. Not only are more of our clients starting to unlock the many benefits of our Cloud offerings, but we have started to see an acceleration of execution delivery through the alignment of the operating structure, the creation of clearer roles and responsibilities for our people and greater streamlining of our go-to-market priorities. An outstanding business and team The results we have reported for the year are a reflection of the Vista Group’s underlying key strengths: • Strong and enduring client relationships. Looking ahead We continue to be keenly focused on supporting our clients to be successful. With clients now operating on our cloud-based offerings, and a strong pipeline of clients signed up to be onboarded in 2024, our primary focus will be ensuring a seamless transition experience for all. Vista Group is in a significant growth phase as we move the business and the industry to the cloud, and accordingly at this stage we are unable to declare a dividend. We are however confident that our continued investment in cloud technologies will not only unlock significant opportunities for our clients, but also help to deliver to you, as the shareholders, on our aspirations of 15%+ EBITDA margin and ARR of over $175.0m, in each case, by the end of 2025. After a careful review of our capex and business priorities, we were pleased to be able to bring forward our cash flow positive ambition to the fourth quarter of 2024. I would personally like to thank our shareholders for their continued support. The transformation that has been delivered over the past year • Strong annuity revenue and accelerating SaaS positions Vista Group strongly to drive solutions revenue. sustainable, profitable growth moving forward. • A leading global position in the film industry. We have an exciting year ahead. • A passionate and focused team. In addition to our Global Senior Leadership Team (GSLT), on behalf of the Board, I want to thank all of our people for all of their Ngā mihi nui. Susan Peterson Chair 6 From our Chair and CEO • 7 From our CEO I was excited to assume the CEO role of Vista Group in April and I am delighted with the progress we have made together so far. It is a privilege to lead a global company at an exciting time both for the business and our industry. Since joining Vista Group, I have spent time With this structure now in place, we will also with our team and met many of our clients and be simplifying our segment reporting moving shareholders, listening closely to their views on forward to focus on Cinema (which includes what Vista Group is doing right and how we can Vista Cinema, Veezi and Movio Cinema EQ) and improve. I have learned a huge amount through Film (which includes our Movio Media, Numero, this process and have been inspired by what I Maccs, Powster and Flicks solutions). have heard. Leaning on my previous experience, my initial focus has been to fully understand the value we are able to offer our different clients, across both the Cinema and Film components of our business, and within the wider film industry. I recognise a winning software offering demands that our value proposition to these important Cloud adoption I am pleased with the level of client adoption of Vista Cloud which has accelerated through 2023, with marquee clients such as Everyman Cinemas, Pathé, Major Cineplex, United Cinemas and Cinépolis' Yelmo Cine circuit in Spain all constituencies remains the driving ambition for committing to Vista Cloud. everyone at Vista Group. Our business transformation In July, we commenced the process to unify our seven operating businesses into a single SaaS-focused business. This structure enables us to more seamlessly serve our clients, offer more opportunities to our people, and align the business and culture to more successfully deliver on our strategy. We have seen an increased number of clients across the entire business making commitments and going live with our new technology. As we closed out 2023, 15 clients covering 121 sites in our newly defined Cinema segment have either started their cloud transformation through the adoption of our digital solutions, or have completed migration to Vista Cloud. In our newly defined Film segment, the acceleration of our next generation Mica distribution platform and The transformation process was completed in client adoption by distributors such as Angel December. We now have an integrated global Studios has been particularly pleasing. business model in place led by a refreshed GSLT. In addition to improving our business, our new, simplified operating structure will also enable us to be more efficient and grow operating leverage as the cloud transformation for our cinema clients accelerates. Change processes like this are never easy and it is a testament to the entire Vista Group team that momentum across client delivery, support, and on-boarding has continued successfully throughout. Our performance In July 2023, we brought forward our positive free cash flow ambition to the fourth quarter of 2024, a year ahead of our previous plans. We remain on track to reach this, along with ARR of over $175.0m by the end of 2025. Despite the headwinds of the writers and actors strike during the year, it is pleasing to see our revenue in the original guidance range at $143.0m (up 6% on the prior year), together with a solid EBITDA of $13.3m. It is also pleasing to see our cash usage (net of one-off 8 From our Chair and CEO • 9 transformation costs) drop from $1.2m per At a client operational level, our cloud solutions month in the first half to $0.6m in the second are designed to reduce client workload and half. In addition to our financial performance we also achieved a number of other key milestones and recognition during 2023. These are detailed on therefore their operating costs. Our cloud solutions also provide enhanced security confidence to our clients and an increased flexibility to innovate over time. page 13 of this report, but amongst the most As we provide critical infrastructure for pleasing was the award for 2degrees Employer cinemas and distributors, we implement each Supporting our strategy, we unveiled our refreshed Cinema go-to-market approach and cloud adoption journey at our 10th Vista Group conference, which was held in Auckland in February 2024. Bringing together a global portfolio of our clients for the conference we showcased our ecosystem and solution innovations, setting the agenda for a busy year. Sustainability journey In 2023, we published our first voluntary Climate-related Financial Disclosures report aligned with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). We have also completed scenario analysis to test the resilience of of the Year acknowledging our commitment to transition carefully. This approach to client care, In both our newly defined Cinema and Film our business model and strategy to climate team development and wellbeing. supported by our great relationships and a clear segments, we have a busy schedule of delivery change. Vista Group will publish further Supporting our clients' success The continued support of our clients is core to understanding from our clients of the value that we bring, ensures that we are successfully maintaining these relationships throughout the Vista Group. Today, almost half of the world’s cloud transition. enterprise cinemas (excluding China and India), driving over US$15b of global box office, and every major studio and distributor, use Vista Group solutions and technology. When movies such as Barbie, Oppenheimer, and Taylor Swift: The Eras Tour go on sale, our solutions seamlessly ticket and seat the moviegoers, while also enabling marketing, digital subscription, loyalty, and F&B experiences. When the money and box office needs to be counted, settled and the next sessions confirmed, our film distribution solutions enable this process. In 2023, the industry we serve experienced the highs of true event cinema with the global phenomena of “Barbenheimer” and the challenges of an extended writers and actors strike. For our cinema clients, the ability to leverage our solutions to help diversification of revenue, through our ability to support experiences that In late 2022, we launched Movio Cinema EQ which offers a smarter, faster, and more streamlined solution for cinemas to improve the way they market movies, create audience engagement, and drive upsell opportunities to moviegoers. The adoption of our Lumos digital channels and Movio marketing and loyalty solutions has accelerated in 2023 as our clients continue to build differentiation beyond the physical property and screen experiences. For our clients, the opportunity to move from a traditional infrastructure-based IT model is becoming more and more essential as clients know that the ability to adapt and innovate with new AI and general cloud technologies are critical aspects of their future success. Looking ahead Across the business, 2024 will be focused on building on the accelerated momentum we achieved at the end of 2023. incentivise attendance beyond the content With a clear understanding of cloud transition on screen (for example, through food and progress and adoption for our cinema clients beverage offerings, premiumisation and full we have refreshed a simplified set of strategic family entertainment centres), has never been objectives for 2024/25 across three pillars: more important. Vista Group has become a true strategic partner to fulfil these broader ambitions. • People: Stronger together. • Clients: Enabling our clients to thrive. • Solutions: Deliver remarkable cloud solutions. for our cloud-based solutions. This will enable details of our climate impacts in our Group our clients to gain the benefits of our latest Climate Statement in April 2024. software and, as more of our clients go live on Vista Cloud, we will realise more of our revenue, ARR, EBITDA and free cash flow ambitions. For our team, the opportunity to work together in our more integrated structure enables a greater level of collaboration and development opportunity, as well as faster decision making and execution acceleration. Our team works passionately and tirelessly to fulfil our purpose to power the moviegoer Whilst Vista Group itself is not a large carbon emitter, we recognise the meaningful opportunity we have to assist our clients to reduce their carbon footprint through smarter use of technology. We have continued to enhance our sustainability report, confirming our approach and progress. Integrated with our business strategy, our forward-looking sustainability framework is built around three pillars: experience and to help our clients to be more People: Stronger together. successful. In what has been a year filled with transformation, I would like to personally thank every one of our team members for their dedicated contribution to the success of Vista Group throughout the year. It is very much appreciated. I am excited about the year ahead and thank our shareholders for their trust placed in Vista Group. Ngā mihi nui, Stuart Dickinson CEO Trust: Building greater trust. Environment: Consuming responsibly and impactful innovation. During the year, we have continued to focus on improving inclusion and equality across the business with updated gender pay gap reporting as well as enhanced parental leave policies. Vista Group’s prioritisation of innovation extends beyond delivering best-in-class solutions to clients, as exemplified by our annual internal Innovation Cup. Supported by Microsoft, and with a focus on accelerating the delivery of AI tools to our Vista Group cloud clients, the outcomes of the 24-hour ‘sprint’ were impressive. 10 From our Chair and CEO • 11 Our recognition By fostering a collaborative environment with a collective focus on innovation, we have been able to achieve a wide range of milestones across the business. Many of these milestones were recognised through nominations and wins in several prestigious New Zealand awards in 2023. 2degrees Auckland Business Awards Employer of the Year NZ International Business Awards Best Large Business Finalist This award comes as a result of Vista Group’s Vista Group was announced as a finalist for the commitment to employee wellbeing and NZ International Business Awards Best Large development. Business category. TIN 100 Companies to Watch This award was presented to TIN 100 companies NZ International Business Awards Excellence in Innovation Finalist who demonstrated the largest revenue growth Vista Group was also announced as a finalist for in 2023. NZ Hi-Tech Company of the Year Finalist This recognition came as a result of Vista Group’s success as a global hi-tech company. Most Innovative Hi-Tech Software Solution Finalist the NZ International Business Awards Excellence in Innovation category. 2023 Mumbrella Publish Awards Website of the Year Nominee Flicks was nominated for Mumbrella’s Website of the Year award. This Australian award recognises websites that deliver innovative and Movio Cinema EQ was named as a finalist for the engaging website content with a high attention Most Innovative Software Solution at the NZ Hi- to detail. Tech Awards in 2023. This category recognised solutions demonstrating clear and noteworthy Prosple Top 100 Graduate Employers levels of innovation that set them up well for Vista Group was ranked 25 in Prosple’s Top 100 future success. Graduate Employers list. This recognises our commitment to graduate talent and attracting top-tier candidates. 46% Cinema market share1 1 Management estimate of Vista Cinema's percentage of the world market share (excluding China and India) for Cinema Exhibition Companies with 20+ screens. 12 Our recognition • 13 The industry our solutions support For the first time since 1998, the top 3 grossing movies internationally were original titles. Barbie Released July 2023 US$1.4b (#1) The Super Mario Bros. Movie Released April 2023 US$1.4b (#2) Oppenheimer Released July 2023 US$1.0b (#3) Moviegoers’ demand for the magic of cinema • Led by Barbie and Oppenheimer, July’s global Despite the successes of the first half of 2023, Instead, we saw numerous examples of the in 2023 remained as strong as ever. This year’s box office of US$4.5b was up 17% on the 2017- the latter half of the year saw challenges caused inverse, with titles slated to debut on streaming results relied less on franchises and sequels, 19 monthly average for July. The Domestic by a reduction in major movie releases largely services instead receiving theatrical releases. demonstrating a desire from moviegoers to market was up 11% on the 2017-19 average, due to the Writers Guild of America strike (2 Mean Girls, which was initially intended to debut see new and diverse stories. In fact, for the with the International market (excluding China) May - 26 September) and the SAG-AFTRA strike of Paramount+, most recently received a global first time since 1998, the top 3 grossing movies up 7% and China up 53%.2 (14 July - 9 November). internationally were original titles not part of a movie franchise, namely Barbie (US$1.4b), The Super Mario Bros. Movie (US$1.4b), and Oppenheimer (US$1.0b). Barbie and The Super Mario Bros. Movie are recognisable consumer products and reflect a growing trend of sourcing intellectual property from other sectors, notably including the video game industry. The middle of the year was particularly buoyant: • August achieved a global box office total of US$3.6b, 1% above the 2017-19 monthly average for August. By the end of August, cumulative global box office was US$24.6b, 9% behind the 2017-19 average, having caught up 8 percentage points from the end of June.2 The year also saw non-traditional movies make significant impacts. Taylor Swift: The Eras Tour set a worldwide record for a concert • In the Domestic market, the summer box office movie, grossing US$250m worldwide, while season (which runs from the first Friday in Renaissance: a Film by Beyoncé earned US$36m May until the Labour Day weekend) grossed worldwide. The faith-based movie, The Sound of US$4.0b, just 4% below the average of the Freedom earned US$250m worldwide, in part by 2017-19 domestic summer seasons.1 adopting an innovative ‘pay it forward’ ticketing strategy. The weekend of December 8 saw two Japanese specialty titles take the first (The Boy and the Heron) and third slots (Godzilla Minus One) in the domestic box office. According to The Numbers, in 2023, 74 titles were released in at least 2,500 domestic theatres. This compares favourably to the 65 titles in 2022, but still a long way off the average of 95 titles released on 2,500 domestic screens between 2017-19. The record 118-day actors’ strike caused several 2023 releases to be postponed because the leading actors were not permitted to promote their movies (most notably Dune: Part Two was delayed from November 2023 until March 2024). Ensuing production delays also postponed the release of many titles initially scheduled for release in 2024. However, opposing the pandemic trend, no major titles initially intended for theatrical release were sent directly to streaming in 2023. theatrical release instead, and has now grossed US$98m as of mid-February 2024. Disney also announced the theatrical release of Moana 2 in November 2024, following the decision to re-purpose plans for a TV series into a feature film. The Domestic market remained the top global market in 2023 with an estimated US$9.1b, up 21% year-on-year, but still 21% behind the 2017- 2019 average. Gower Street Analytics estimates 2023 Global box office hit US$33.9b through to December 2023. This represented a 31% gain on 2022, continuing global box office recovery. However, it remains 15% behind the average of the last three pre-pandemic years (2017-2019). 1 Source: Box Office Mojo 2 Source: Gower Street Analytics 14 The industry our solutions support • 15 Vista Group overview Our connected ecosystem supports the entire industry value chain Our purpose Vista Group's purpose is to bring more people together to share the magic of cinema. Our vision Vista Group's vision is for our digital ecosystem to connect the film industry and power the moviegoer experience. This purpose drives our team, fueling our Our unified, client-centred business model commitment to innovation and allowing us to brings together our brands to provide a more deliver significant value to the industry. As part integrated and innovative range of technology of our commitment, Vista Group undertook a solutions across the industry. We have significant organisational transformation in 2023, accelerated momentum throughout 2023, to align ourselves with the needs of our clients continuing to grow our ecosystem and support and remove the barriers to deeper collaboration the entire value chain of the film industry. and innovation. Our solutions empower industry stakeholders right from a film’s inception, all the way to its exhibition in cinemas, and subsequent box office reporting and moviegoer insights. Studio Distributor Exhibitor Moviegoer Digital creative for movies Studio marketing & research Box office reporting Film booking, content delivery & revenue management Movie & cinema information for moviegoers Independent cinema management system Enterprise cinema management system Scalable digital channel enablement Loyalty, moviegoer engagement & marketing 16 Vista Group overview • 17 Key strategies for 2024 Driven by Vista Group’s overarching purpose, our key strategies orient us to progress our ecosystem that connects the industry and powers the moviegoer experience. By bringing our people together and focusing on client success and innovation, our strategy will deliver tangible benefits for the industry and enhancements to transform the cinema experience. Strategy area Stronger together — OUR PEOPLE Objective Vibrant and unified culture, enabling our people to thrive Key priorities for 2024 • Evolve Vista Groups' culture post transformation • Implement an aligned, transparent framework for goals, performance and reward • Enable learning and development across the organisation to improve knowledge and development • Aligned, equipped and enabled teams to support our growth ambitions Enable our clients to thrive — Deliver remarkable cloud solutions — OUR CLIENTS OUR SOLUTIONS Exceptional service with clients at the heart of everything we do Connected, compelling, reliable, and secure solutions that our clients need and value • A refreshed client engagement and • Integrated product and platform success program across both our new development plans that support Cinema and Film segments our business strategy and client • A clear transformation pathway for objectives all our Cinema clients • Acceleration in our Cinema cloud • Deliver client onboarding projects onboarding process and commitments • Product and platform roadmap • Market coverage growth across our delivery Film solutions • Capacity expansion and maturity within SaaS platform operations including achievement of SOC 2 compliance in target solutions 18 Key strategies for 2024 • 19 a e r a s u c o f y g e t a r t S Key strategies for 2024 • 21 Strategy focus area: Deliver remarkable cloud solutions OPERATIONAL EXCELLENCE I want my team to serve our guests and operate our theatres as efficiently and effectively as possible MOVIEGOER ENGAGEMENT Allow me to drive incremental returns and boost moviegoer retention with tailored interfaces, communications and offers DIGITAL ENABLEMENT Allow me to scale to blockbuster moments and deliver amazing user experiences regardless of who builds my sales channels DATA EMPOWERMENT Reveal how I’m performing, why, and recommend what I should do to seize every opportunity CORE CONFIDENCE Let me focus on delivering exceptional operations and guest experiences, confident that I have world-class technology that doesn’t drain my resources or let me down Vista Cloud Some of the most significant benefits of our At the same time, Vista Cloud is a revolution organisational transformation come from uniting in the service we provide. We undertake the the Vista Cinema, Movio, and Numero product heavy lifting for our clients, maintaining a stable, and innovation teams. By removing the barriers secure, and scalable environment for them, and between these teams we are able to combine seamlessly delivering our latest enhancements our expertise, functionality, and data, resulting and innovations. This allows exhibitors to focus in a unified focus on delivering our objectives on delivering their ideal moviegoer experiences and product roadmap. Not only has this created as efficiently and effectively as possible. exciting new opportunities, but it has also allowed us to identify and remove duplication and devote greater resources to driving ‘what comes next’ for our industry and clients. Reassuringly familiar and radically superior, Vista Cloud propels exhibitors into the future Vista Cloud is our next generation solution for exhibitors, perfectly balancing the familiar with the new to provide all the capabilities of our industry-leading software with all of the advantages of a SaaS solution. Vista Cloud is an evolution of our existing Vista Cinema software, allowing exhibitors to achieve their desired outcomes with improved workflows and increased efficiency. "Vista Cloud is definitely the future and we look forward to exciting features being rolled out" Jeff Geiger, CEO at NCG Cinemas Vista Cloud is the ecosystem for exhibition success By harnessing the power of Vista Cinema, Movio, and Numero, Vista Cloud provides exhibitors with a complete picture of their business, along with the tools to take advantage of the opportunities in front of them. Built upon a robust core platform, Vista Cloud’s four capabilities are oriented around key exhibition drivers, as set out in the following diagram. Vista Cloud is the destination, clients direct their journey We recognise that exhibitors are at different stages of Cloud readiness, and have unique The journey to Vista Cloud As Vista Cloud continues to advance, more exhibition clients have commenced their journey, providing strong momentum toward our 2025 focuses and business objectives. For that reason, aspirations. we have designed an adoption and onboarding approach that allows exhibitors to adopt and implement elements of Vista Cloud at their preferred pace and path. Clients can commence their Cloud journey based on what their business needs are today, and to make the most of our innovation, they will have access to all features from previous stages as they progress. Vista Cloud OPERATIONAL EXCELLENCE Digital sales channel solutions DIGITAL ENABLEMENT MOVIEGOER EXPERIENCE Horizon DATA EMPOWERMENT 0 200 400 600 800 1000 1200 1400 1600 Live Now Live in 24/25 1 Clients currently negotiating an agreement for the service. Contracting1 US Investor Day2 2 Site momentum (Live or Signed) reported on page 62 of Vista Group’s US Investor Day presentation held on 13 September 2023. 22 Key strategies for 2024 • 23 The Vista Cloud journey for our cinema clients CORE CONFIDENCE DATA EMPOWERMENT DIGITAL ENABLEMENT MOVIEGOER ENGAGEMENT OPERATIONAL EXCELLENCE Where we are now • Significant progress for onboarding readiness at scale. • Enhanced platform maturity with advanced proactive monitoring, offline, and rollback capabilities. • Launched Vista Oneview, our senior executive app, uniting data from Vista Cinema, Movio, and Numero. • 31 Horizon clients. • Six Oneview clients. • An enriched dashboard suite. What's coming in 2024 and beyond • Continued focus on onboarding and updating the platform at scale. • Ongoing emphasis on platform capability and maturity. • Expand the role of Horizon to become the central database for all Cinema solutions for our exhibitor clients. • Continue to grow Oneview’s scope and capabilities, including business performance summaries delivered by generative AI text-to-voice. • All Lumos sales channels live with clients, including Lumos Order and Lumos Kiosk. • 13 clients live with Lumos Web, four of which are also live with Lumos Mobile. • Build additional F&B functionality in APIs and Lumos channels. • Focus on Lumos+ delivery for bespoke browsing websites with out-of-the-box transaction flows. • Expand MovieXchange Film coverage and capability. • Lumos sales channels actively displacing legacy products. • Strong signing of clients to Vista Cloud and its digital solutions. • Enhanced user experience and features focused on improved productivity for cinema staff. • Movio Cinema EQ is now available for 90% of existing Movio clients, with over 50% active already. • Strong progress on EQ functionality, with 80% of Movio Cinema Classic features now included. • EQ unveiled a movie content library for efficient marketing campaigns, and tailored customer journeys to transactional behaviour. • Complete outcome parity in Movio Cinema EQ in order to commence deprecation of Movio Cinema Classic. • Maximise pricing flexibility and decision support to drive incremental profit on headline and targeted levels. • Strengthen film and attendance forecasting capabilities as a central utility for Vista Cloud. • Build APIs in essential areas where Vista Cloud does not currently have core focus. • New enhancements to EQ, including additional communication channels, generative AI to expedite draft campaigns, and insights to predict moviegoer lifetime value and churn. • New functionality to collect moviegoer sentiment on films, trailers, and their experience to augment behavioural data-efficient marketing campaigns, and tailored customer journeys to transactional behaviour. 24 Key strategies for 2024 • 25 Accelerated, holistic innovation Innovation has been at Vista Group's core since its inception in 1995. Over the past year we have organised ourselves to accelerate our pace, and to enhance the way our products solve our clients’ most pressing challenges. We were excited to deliver a number of innovations to our clients across the industry in 2023, including the introduction of Presale Comparisons to Numero, the launch of Mica’s Sales Planning Tool, and the launch of Lumos Order for a self-service food and beverage experience. 26 “The Presale Box Office Data and Comparison Reports offered by Numero have been a game changer for us. Having an accurate read on box office grosses in advance of the opening weekend for each of our films allows us to work with exhibitors to optimise programming and also provide audience purchase behaviour metrics that our marketing team can use to adjust campaigns. Ultimately, Numero’s Presales reporting helps us understand the demand for each of our films as it happens and maximise box office performance.” Andrew Cripps, President, International Distribution, Warner Bros. Studios Numero’s Presale Comparison and Analytics solution allows users to evaluate the performance of films, circuits, and theatres for any upcoming movie. These insights allow exhibitors to optimise programming and labour for each theatre in their circuit. Distributors can adjust marketing campaigns, seek additional showtimes, and accurately forecast both internally and with their creative partners. Mica’s Sales Planning tool launched in 2023, and is now used by the majority of Mica clients in the days, weeks, and months preceding a movie’s release. This functionality allows users to update thousands of booking proposals with just a few clicks, reducing work that can take minutes or hours in competitors’ software to only a few seconds. In the fourth quarter of 2023, Angel Studios utilised this feature to manage over 2,700 theatrical engagements of their release After Death. Lumos Order launched with its first client, Everyman Cinemas, in late 2023. This solution allows moviegoers to order food and beverages using self-service QR-codes from their seats. Lumos Order reduces the labour required to provide in-theatre dining and is highly integrated into the wider product suite of Vista Cloud, allowing moviegoers to redeem loyalty rewards and display their orders on the Vista Cloud kitchen management solutions. AI-driven solutions to empower our clients The following are examples of some of the ways in which Vista Group is harnessing artificial intelligence to benefit our clients: First Draft Movio Cinema EQ’s First Draft feature uses generative AI to automatically populate email communications with recommended text, adopting the unique tone of voice of the respective exhibitor’s brand. This allows movie marketers to save time drafting individual communications whilst allowing them to send more campaigns tailored to individual moviegoers. Interactive fan experiences Powster uses AI to enable studio clients to particular film with unique, sharable images. provide unique fan experiences which create Conversational AI additionally enhances emotive moviegoer engagement in the build-up connection by empowering interactive prior to a movie’s release. The application of experiences that facilitate dynamic conversations generative AI through photobooth experiences between fans and virtual characters. allows fans to craft their own original content, characterising themselves in the style of a Oneview/Microsoft 'podcast' commentary Oneview was chosen for Microsoft’s AI First Movers Program. For this program, we are using AI to create a brief ‘podcast’ commentary of key performance insights from the prior day’s business. This involves converting data in tables into a written script and then using text-to-speech to create a spoken version. The objective is to give senior executives audio highlights on their business' performance as they start their day. Moviegoer lifetime value and churn Vista Group’s Data Scientists have developed an algorithm to predict the likelihood of an individual loyalty member visiting a client’s cinema, and how much they are likely to spend in a future period (for example, over the next quarter). This information can be used in Movio Cinema EQ to devise marketing campaigns to increase moviegoer frequency and spend. The predictions for individual moviegoers can also be aggregated to give an overall projection of a program’s likely contribution to the business. 28 Key strategies for 2024 • 29 w e i v r e v o g n d a r t p u o r G i Group trading overview • 31 Group trading overview Vista Group continues to be the global leader in delivering software and data analytics solutions to the film industry with Vista Cinema and Movio, both number one globally in their respective markets. Total Revenue $143.0m 6% Recurring Revenue $124.0m 10% SaaS Revenue $45.9m 20% ARR $126.3m 7% EDITDA $13.3m 25% Net profit after tax -$13.6m 35% Operating Cashflow1 (Including business transformation items) $9.0m 27% 1 Operating Cashflow has been presented including $5.0m of payments associated with the business transformation and CEO transition. Vista Group had a strong trading performance This result underlines the key financial and in 2023. The film industry saw significant operating strengths of Vista Group: improvement in market conditions, with the more frequent release of blockbuster movies resulting in the global box office reaching US$34b. Vista Group's 2023 revenue of $143.0m was up 6% on 2022, with recurring revenue of $124.0m up 10% and SaaS revenue of $45.9m • Strong and enduring client relationships. • Strong annuity revenue and accelerating SaaS solutions revenue. • A leading global position in the film industry. • A passionate and focused team. up 20%. ARR closed at $126.3m up 7% on 2022. Vista Group continues to deliver new innovation Non-recurring revenue, primarily from new on-premise licences and hardware sales, was down 17% to $19.0m. EBITDA of $13.3m was up 25% on 2022, and up 32% after adjusting for foreign exchange. across each of its operating segments, focusing on SaaS solutions such as Mica, Movio Cinema EQ, Veezi, and Vista Cloud. Revenue NZ$m 2023 $143.0m 2022 $135.1m 2021 $98.1m 2020 $87.5m 2019 $144.5m 2018 $130.7m 2017 $106.6m 2016 $88.6m 32 Group trading overview • 33 Cinema Movio Additional Group Companies Cinema is the largest segment within Vista Movio is the second largest segment within Vista The Additional Group Companies (AGC) segment Group and represents over two thirds of Vista Group. A pure play SaaS business, it represents Group's total revenue. It provides almost half of 13% of Vista Group's total revenue. Movio’s comprises the businesses of two studio and distributor focused businesses - Numero and the world’s cinemas (outside China and India) purpose is to ‘connect everyone with their ideal Maccs - and two moviegoer focused businesses - with the technology platform to run multi-site, movie’ and it achieves this through a range of multi-screen and increasingly, multi-territory campaign, analytics and research products for cinema businesses. cinema exhibitors, studios and distributors. Cinema global market share of enterprise Movio Cinema usage continued to increase, with clients, excluding China and India, is 46% at connections of 4.7b by the year end, up from 31 December 2023. This now includes the 4.2b in 2022. The roll out of Movio Cinema EQ, removal of Cinemex sites noted in the interim the next generation AI enabled data analytics announcement. Total revenue for the Cinema segment was $97.7m, up 4% on 2022, with recurring revenue up 10% and SaaS revenue up 42% on 2022. The 2023 box office of US$34b was up 17% on 2022 and only 15% behind the 2017-2019 average. Innovative and diverse content in the second half of 2023, including the and campaign management solution, has been successful with transition plans for all clients complete by the end of 2023 and cost reduction plans to exit the Classic version now under way. Clients who have migrated to EQ are already seeing successful campaigns that reach more moviegoers and connect them with their ideal movies, saving cinema circuits time on their marketing and driving additional revenue growth ‘Barbenheimer’ phenomenon (both original opportunities through AI. content) and Taylor Swift: The Eras Tour, continues to prove the economic benefits of the theatrical release. Movio Research, which studios and distributors use to assess potential audiences, continues to be used widely as studio and distributor clients Client signings to Vista Cloud continue to search for their perfect audience. expand, with Pathé, Major Cineplex and United Cinemas joining the pipeline. Vista Group sees this as a strong market validation, with 15% of existing clients (by sites) now due to shift their businesses to Vista Cloud capabilities by the end of 2024. Everyman Cinemas in the United Movio Media, which helps studios and distributors access their potential digital audiences, continued to underperform in the second half of 2023 and is being reviewed for its portfolio fit going forward. Kingdom is now live on Vista Cloud's Digital For Movio, revenue was down 3% on 2022 due Enablement solution, and are due to complete to the roll off of the Fox contract following the their journey to Cloud in the second quarter merger of Disney and 21st Century Fox. of 2024. The pilot sites of Cineplex in Canada are now live on the Moviegoer Engagement capability with the roll out due to finish in the second quarter of 2024. With its focus on the independent market, Veezi is expanding its functionality and staying ahead of its competition. Powster and Flicks. Numero • Maccs Numero and Maccs, which form the key elements Vista Group's Film segment going forward, continue to improve their EBITDA performance, with recurring revenue up 21% and total revenue also up 22%. Maccs 10, the latest version of the on-premise theatrical distribution system, and Mica, the SaaS platform for studios and distributors to streamline their global cinema releases, continue to gain market traction, most recently adding Angel Studios to the client list. Numero continues to add global clients and extend its geographical coverage. Powster Revenue for Powster was up 15% on the previous year, driven by strong recurring showtimes platform revenue, up 25%, based on the increased range of movies released to the market. Creative revenue was down 10% on 2022 as Powster is one of the few Vista Group businesses that was directly impacted by the writers and actors strikes. Flicks Revenue for Flicks was up 28% for the full year driven by good traffic and advertising growth across its two key markets, Australia and New Zealand, with a good supporting role from early growth in the United Kingdom. 34 Group trading overview • 35 y t i l i i b a n a t s u S Sustainability • 37 Our sustainability approach Our FY23 sustainability progress As the world continues to face big challenges, Vista Group’s Board has overarching we recognise that we have our part to play responsibility for sustainability. The Board in making a difference to the world we provides strategic direction and guidance for connect with. In 2022, we developed our sustainability framework to complement Vista Group's strategy. Our purpose was to put a fresh focus on sustainability topics likely to our pathway. Oversight on the delivery of our approach is delegated to the ARC and NRC, who focus on specific areas of sustainability, including climate change, and make recommendations to the Board for consideration. affect Vista Group in our efforts towards Our framework is core to our sustainability a sustainable future. Our framework evolved during the year with the integration of our people priority—‘Stronger together’ (previously ‘Caring for our people and communities')—into our overarching Vista Group strategy. We will continue to approach. The focus areas assist our GSLT to inform and guide how we manage our business, and the targets hold us to account and drive us to deliver the positive impact we make on society and the planet. Our forward-looking framework is built around the following three pillars: evolve the framework and enhance initiatives • People: Stronger together. where we have the greatest potential to make • Trust: Building greater trust. During 2023 we focussed on continuing to build our foundations. This resulted in reviewing and updating a number of our targets to better align with our strategy. The table below outlines our progress for 2023 against our sustainability targets. TARGET STRONGER TOGETHER Aspire to 40:40:20 gender diversity (all 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 BUILDING GREATER TRUST FY23 PERFORMANCE AGAINST TARGET In progress Not achieved Not achieved In progress Our organisational transformation in 2023 was key in setting us up for future success – as a unified, streamlined and connected business. For our people, this provides greater clarity on our vision and strategy, simplified business processes and increased opportunities for growth and development. We expect to see improvement across all our people metrics in 2024 onwards. In progress Reported with actions being taken. No notifiable privacy breaches or critical security incidents Maintain annual Board governance roadshows Achieved Achieved Vista Group did not have any notifiable privacy breaches or critical security incidents impacting Vista Cloud during 2023. Our governance roadshows were held in March and well attended by investors, banks, and our major shareholders. In response to feedback received at the roadshows we have changed the frequency from annual to at least every 2 years. ISAE (NZ) 3000 / SAE 3150 controls assurance report for Vista Cinema (NZ equivalent to SOC 2 report) In progress Good progress was made during 2023 to uplift, formalise or in some instances implement policies and procedures. This work will continue into 2024 through our SOC 2 project. CONSUMING RESPONSIBLY & IMPACTFUL INNOVATION Verification of our 2022 baseline year greenhouse gas emissions by Toitū Envirocare Achieved Vista Group became a Toitū carbonreduce certified organisation in April 2023. a positive impact. • Environment: Consuming responsibly and impactful innovation. Publish first voluntary climate-related financial disclosure statement Achieved Vista Group published its first voluntary climate report in April 2023 aligned to the TCFD framework. This report is available on vistagroup.co.nz/investor-centre. Undertake climate change scenario analysis Achieved Integrate environmental expectations into Supplier Code of Conduct In progress 1600 – 2400 client sites on the platform by December 2025 In progress We will provide more detail about the process and outcomes of our analysis in the strategy section of our FY23 Group Climate Statement, to be published by 30 April 2024. This activity will continue into 2024 as we develop our climate ambitions and ensure our expectations of our value chain align. We have made good progress with significant signings for Vista Cloud announced during 2023. We have replaced this target with an aspirational target that better aligns with our strategy. The new target we will report on from FY24 is 100% of enterprise clients on cloud solutions by 2030. 38 Sustainability • 39 Sustainability framework Focus area STRONGER TOGETHER BUILDING GREATER TRUST CONSUMING RESPONSIBLY & IMPACTFUL INNOVATION • Create a unified and vibrant culture that enables our people to thrive • Clear lines of accountability, aligning individual objectives to our strategy • Consistent and equitable approach to performance and remuneration • Develop our people through career opportunities and learning activities • Improved and 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 practices critical systems and protecting data • Responsible business conduct and ethics • Maintaining an adequate and effective risk management and internal control system Targets • Aspire to 40:40:20 gender diversity (all • ISAE (NZ) 3000 / SAE 3150 controls • 100% of enterprise clients on cloud employees) by 2030 assurance report for Vista Cinema (NZ solutions by 2030 • An eNPS score aligned to the median for the technology sector • A wellbeing score aligned to the median for the technology sector • Invest in enhanced learning and development programmes • Report and take action to minimise the gender pay gap equivalent to SOC 2 report) • Publish our first Aotearoa New Zealand • No notifiable privacy breaches or critical Climate Standards aligned climate security incidents statement • Maintain Board governance roadshows, at • Maintain Toitū carbonreduce certification least every 2 years • Measure remaining Scope 3 operational GHG emission categories United nations sustainable development goals 40 Sustainability • 41 Stronger together Our people demographics In July 2023 we commenced an organisational We were pleased to be able to launch our online transformation to support our new vision and Learning Portal early in 2023, offering a huge strategy, drive greater client alignment, and range of content and courses to support growth deliver improved business sustainability. The and development. Key to the success of the transformation brought together Vista Group’s Learning Portal has been linking relevant courses business brands under a unified business model, to individual roles and teams, enabling our supported by a GSLT, with segment-based people to know what learning content to focus expertise focused on Vista Group’s film and on for their development. We also introduced cinema clients. With the organisational structure transformation concluding towards the end of 2023, we shifted our attention to the next phase; building a unified culture and aligning our global processes and initiatives. ‘Lunch and Learn’ sessions providing a range of content from technical skills and product information, through to key business operations and Vista Group “know how”. Finally, we have continued to expand our leadership development programmes, with face-to-face courses offered from new manager training through to executive Throughout the transformation, we have development. Our commitment to fostering a diverse and inclusive culture remains unwavering. We completed, and publicly reported, our first gender pay gap calculation in early 2023. We have been proactively reviewing all pay-related decisions with a gender lens to ensure fair and equitable outcomes. We also reviewed and significantly enhanced our parental leave policies across New Zealand, the United States, and the United Kingdom, which reflects our dedication to creating a workplace that prioritises the wellbeing of our employees and their families. continued to support our people through a range of actions and initiatives. Central to the change programme was enhanced frequency and quality of communications, providing regular updates through town hall meetings, newsletters, and on our intranet to ensure that key information was available and easily accessible. In addition, those directly impacted by the transformation received one on one communication and support through the process. Wellbeing and connection continued to be important for our people. Activities ranged from regular team check-ins and opportunities to come together at social events, through to increased tools, resources, and seminars on topics such as mindfulness. We will be refreshing and expanding on our wellbeing programmes as we move into 2024. Regional distribution New Zealand 366 United Kingdom United States Mexico Europe South Africa Australia Malaysia Brazil Total 88 76 70 67 34 7 4 4 716 Female representation Our People Our Board GSLT 2023 2022 2023 2022 2023 2022 30% (213 of 716) 32% (252 of 779) 33% (2 of 6) 33% (2 of 6) 9% (1 of 11) 27% (3 of 11) Age distribution 18 - 27 112 (16%) 28 - 37 304 (42%) 38 - 47 212 (30%) 48 - 57 68 (9%) 58 - 67 19 (3%) 68+ 1 (0%) See page 76 for details on the diversity objectives Vista Group is striving towards along with progress made in 2023. Gender pay gap 9.9% Vista Group has completed its annual gender Year on year the pay gap decreased slightly pay gap analysis across all permanent and from 10.1% to 9.9%. Vista Group continues to fixed term employees globally, and has been follow robust pay decision processes to ensure calculated as the difference between the median that men and women are paid the same amount pay of all female and male employees. for the same work undertaken (i.e. like for like gender pay). 42 Sustainability • 43 Building greater trust We know that trust is key to our success. We strive to always do the right thing, and being transparent is fundamental to building trust. We are evolving from being a trusted software provider to being a trusted SaaS provider. Data security Strengthening our risk practises With Vista Cloud, our responsibility for data Effective management of risk is fundamental to security increases, so it is even more important achieving our strategic objectives. Following the we deliver a reliable and secure environment to refresh of our risk appetite statement and risk meet the expectations of our clients and retain management policy in 2022, we have continued their trust. to embed our risk management practices. Our business transformation saw the Our focus to continually uplift and strengthen appointment of Vista Group’s Chief Technology our practices has been complemented by Officer, who is responsible for our cybersecurity our review and enhancement of our control programme. This appointment provides framework in preparation for our SOC 2 Type strategic oversight of all our security practices 1 review. A key risk management focus in 2024 and ensures that we invest accordingly as we will be to apply our uplifted control assessment continue to strengthen our security posture programme for monitoring the effectiveness of across all of our software solutions. our controls. During 2023, we made good progress towards Turn to page 77 to read more about our risk our commitment to achieve certification against management and key risks. a globally recognised and independently audited cybersecurity compliance framework (such as SOC 2 Type 1) for Vista Cloud. This has seen us formalise and implement new policies and procedures and review and update our existing policies to ensure they align with our new business model. We will continue this programme of work, with a focus on achieving certification for Vista Cloud during 2024. 44 Sustainability • 45 Consuming responsibly and impactful innovation At Vista Group, we embrace our responsibility In 2022 we set a target to have 1600-2400 to operate sustainably and reduce the climate cinema client sites on Vista Cloud by 2025. impact of our business. Our environmental We have made good progress with a number of footprint is largely made up by office energy significant signings to Vista Cloud during 2023. consumption, third party data centres, business travel, technology consumables and shipping. We believe our purpose also extends to developing meaningful solutions that help our clients reduce the environmental impact of their businesses. Empowering our cinema clients As we upscale our data storage loads, we anticipate our carbon emissions for our cloud storage and hosted data centre services will increase for a period. To minimise this impact, we have been working to improve the efficiency of our various compute workloads, as well as progressing our containerisation strategy to increase the deployment density in Vista Cloud. Our platform is transforming cinema operations This means that we can run more workloads on for our clients and encouraging sustainability- the same—or less—infrastructure, decreasing focused behaviours with opportunities to reduce energy consumption per Vista Cloud client. their carbon footprint by being more energy and resource efficient. To further support us to reduce our carbon footprint, Vista Group has partnered with The serverless innovation of Vista Cloud and Microsoft Azure for hosting our cloud-based Movio Cinema EQ removes the need and costs platforms. Microsoft Azure have been carbon for our cinema clients to house on-site servers. neutral since 2012 and have made a commitment On-site servers require a constant power to be carbon negative by 2030. supply, a cooling system to avoid overheating, investment to maintain and upgrade, and ongoing e-waste disposal when the equipment lifecycle ends. Vista Cloud empowers our clients to invest more in other aspects of their business while also reducing their carbon footprint. Climate reporting and our carbon footprint In 2022, we established our operational greenhouse gas (GHG) emissions baseline year for measuring our carbon footprint. Our footprint covers Scope 1, Scope 2, and selected Scope 3 emissions from each of our entities around the world within our financial control. Our 2022 emissions inventory was verified by Toitū Envirocare and in April 2023 Vista Group became a Toitū carbonreduce certified organisation. To achieve this certification, we were required to measure our GHG emissions in accordance with ISO 14064-1 and the GHG protocol. In April 2023, we published our first annual Climate Report, a significant early step in our climate journey. The report was prepared on a voluntary basis and aligned with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). Along with our climate roadmap for the first two years, the report includes our 2022 GHG emissions inventory. Our 2022 Climate Report is available at vistagroup.co.nz/investor-centre. Vista Group is a climate-reporting entity under the Financial Markets Conduct Act 2013. The External Reporting Board published the Aotearoa New Zealand Climate Standards on 14 December 2022. These standards are mandatory for Vista Group to report against for the 2023 reporting period. During the year our focus has been on further developing our reporting to align to these standards by expanding the boundary of our GHG emissions inventory and conducting scenario analysis to identify the climate-related physical and transition risks and opportunities. This is so we better understand how climate change is currently impacting our business and how it may do so in the future. Vista Group is relying on the Financial Markets Conduct (Requirement to Include Climate Statements in Annual Report) Exemption Notice 2023.1 We intend to publish our first Aotearoa New Zealand Climate Standards aligned climate statement at vistagroup.co.nz/investor-centre by 30 April 2024. 1 This Exemption Notice provides relief to climate reporting entities from the requirement to include in the annual report a copy of or link to the climate statement. 46 Sustainability • 47 Remuneration report Letter from the Chair of the NRC Dear Shareholder, As Chair of the Nominations and Remuneration Committee (NRC), it is my pleasure to present Vista Group’s Remuneration Report for the year ended 31 December 2023. This has been a year of significant transformation for Vista Group as we seek to advance our vision and strategy, drive greater client alignment, and deliver improved financial performance. To initiate this Board led journey, we appointed Stuart Dickinson as Vista Group’s CEO in April 2023 and the subsequent formation of a new GSLT in August 2023, who have been critical, under Stuart’s leadership, in executing our transition towards a unified business model. In the wake of these structural changes, Vista Group’s Board remains committed to a remuneration strategy and framework that drives and rewards achievement of both short-term and medium-term goals. The alignment of incentives to key financial outcomes, coupled with non-financial goals, are aimed at delivering strong client and people outcomes while increasing sustainable shareholder value. The Board is committed to continue demonstrating an increased level of The NRC and the Board’s support from the People and Culture team in this transformative period has been invaluable in ensuring that the business and our people globally navigate these changes effectively while maintaining the goals set by the business. Vista Group operates in a very competitive global and local market for skills and capabilities. It is a Board priority to ensure the retention of key people and the attraction of new talent is reflected in the remuneration and employee benefits that form part of the value proposition and are aligned to the remuneration strategy. The approach is aimed at reward for achieving financial and non-financial performance that are aligned to shareholder value. Thank you for your continued support as we enter 2024 in a stronger position to deliver on our purpose of providing world-leading technology solutions to the global film industry. Regards, transparency in its remuneration policies, practices Cris Nicolli and reporting. The report outlines Vista Group’s remuneration strategy and approach, with a particular focus on the remuneration framework for the CEO and the GSLT. Chair of the Nominations and Remuneration Committee 48 Remuneration report • 49 Executive appointment and remuneration Employee remuneration SALARY BAND (NZ$) TOTAL GROUP EMPLOYEES Vista Group’s remuneration policy for the CEO The remuneration package of the CEO is approved and GSLT is based on the principles that the by the Board on the recommendation of the NRC. remuneration framework will: The remuneration packages of the GSLT (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 GSLT are benchmarked to market remuneration data to ensure competitiveness relative to Vista Group's comparable market peers. • 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; and • align with creating and increasing shareholder value. The NRC reviews Vista Group’s remuneration policy and principles on a regular basis. Total remuneration consists of fixed remuneration, short-term incentives (STI), and long-term incentives (LTI). STI and LTI are ‘at risk’ as outcomes are determined based on the achievement or otherwise of financial and non-financial performance based targets and conditions set annually by the Board on the recommendation of the NRC. The following table shows the number of employees whose remuneration and benefits for the year ended 31 December 2023 were within the specified bands above $100,000. The remuneration figures shown in the table include all monetary payments actually paid during the year ended 31 December 2023, including STI payments made in respect of the 2022 STI scheme. The table does not include amounts paid post 31 December 2023 that related to the year ended 31 December 2023, such as STI bonuses in respect of the 2023 STI scheme, or the value attributed to shares issued under LTI schemes during the year ended 31 December 2023. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 100,000 110,000 120,000 130,000 140,000 150,000 160,000 170,000 180,000 190,000 200,000 210,000 220,000 230,000 240,000 250,000 260,000 270,000 290,000 310,000 320,000 330,000 340,000 370,000 380,000 390,000 430,000 440,000 460,000 480,000 490,000 500,000 510,000 540,000 590,000 610,000 630,000 650,000 670,000 760,000 1,180,000 Total 109,999 119,999 129,999 139,999 149,999 159,999 169,999 179,999 189,999 199,999 209,999 219,999 229,999 239,999 249,999 259,999 269,999 279,999 299,999 319,999 329,999 339,999 349,999 379,999 389,999 399,999 439,999 449,999 469,999 489,999 499,999 509,999 519,999 549,999 599,999 619,999 639,999 659,999 679,999 769,999 1,189,999 60 61 67 50 35 41 21 21 16 12 11 9 3 6 4 4 2 1 1 1 4 1 1 2 1 2 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 453 50 Remuneration report • 51 Fixed remuneration Short-term incentives Long-term incentive scheme Fixed remuneration at Vista Group consists of base salary and country specific benefits. While flexibility Vista Group's STI is an at-risk incentive that may Vista Group’s LTI is a share scheme offered at the exists where specific circumstances require it, base salaries are typically reviewed annually. Vista Group be offered to an employee in respect of a specific discretion of the Board on the recommendation of provides a range of benefits to its employees specific to the country in which an employee is employed: year. The STI is set as a fixed percentage of the the NRC. The LTI is set as a fixed percentage of the COUNTRY BENEFITS New Zealand United States United Kingdom Netherlands South Africa Mexico Malaysia Romania – Kiwisaver contribution up to 3% – Health insurance – Life insurance – Employee assistance program – 401k contribution up to 2% – Health insurance – Life & long-term disability insurance – On site paid gym membership – Employee assistance program – Pension up to 4% – Health insurance – Employee assistance program – Perkbox: employee perks and benefits – Discounted gym memberships – Access to salary sacrifice scheme – Pension scheme – Health insurance – Employee assistance program – Perkbox: employee perks and benefits – Health insurance – Vitality flexible benefits – Employee assistance program – Perkbox: employee perks and benefits – Health insurance – Food coupons – Reimbursement for medical bills – Mobile phone allowance – Parking allowance – Private medical services – Subsidised optical – Subsidised gym membership The provision of fixed remuneration (comprising of a base salary and country specific benefits) is applied consistently across Vista Group, including for the CEO and GSLT. participating employee’s base salary. The STI participating employee’s base salary. The number outcomes are determined based on the achievement of rights granted to a participating employee is of financial and non-financial performance based determined based on the participation value divided targets applicable to the relevant employee. The by the volume weighted average price (VWAP) of STI, once achieved, is paid in cash. Vista Group’s shares over a specified period before The STI targets for the CEO and GSLT are set by the Board on the recommendation of the NRC. The key targets, percentages and terms of the 2023 STI scheme are set out in the table below: 2023 TARGETS HURDLE Recurring revenue/ total revenue Vista Group EBITDA cNPS eNPS Results of between 95% to 110% of the target equates to STI achievement of between 95% and 120% (capped). No STI is achieved below 95%. Results of between 90% to 110% of the target equates to STI achievement of between 90% and 120% (capped). No STI is achieved below 90%. If achieved, then 100% of the applicable STI is payable. If achieved, then 100% of the applicable STI is payable. The Board retains discretion over the final outcome of STIs, to allow appropriate adjustments where unanticipated circumstances impact performance, positively or negatively. the grant date. The share rights granted under the LTI are eligible to vest and convert into Vista Group shares based on the achievement or otherwise of certain targets and satisfaction of certain conditions over a specified number of years. Under the terms of the 2023 LTI schemes, half of the rights were 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 2023 LTI scheme, the Board granted the following awards to the CEO and GSLT members: Under the 2023 STI scheme, the Board granted the • Previous CEO: no rights granted. following awards to the CEO and GSLT members: • Present CEO: 48% of base salary. • Previous CEO: 48% of base salary, pro-rated to • Relevant GSLT members: Between 20%– 66% 10 April 2023. • Present CEO: 48% of base salary. • Relevant GSLT members: Between 20%– 40% of base salary. of base salary. 52 Remuneration report • 53 Retention schemes The CEO also participates in a Group CEO Retention Scheme. Under the terms of this scheme, the CEO is granted a specified number of rights that are eligible to vest annually based on continued tenure with Vista Group. In April 2023: • Previous CEO: 400,000 share rights vested, comprising the last tranche of the share rights granted in 2020 under the 2020 Group CEO Retention Scheme; and • Present CEO: 200,000 share rights were granted. Subject to the CEO’s continued tenure with Vista Group, 100,000 of these share rights are due to vest in April 2024, with the remaining 100,000 share rights due to vest in April 2025. 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. Grants under this scheme were made 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. • 2023: 300,000 share rights were granted under the 2023 Senior Leadership Retention Scheme. Subject to continued tenure of each participant, all 300,000 of the share rights are due to vest in April 2024. Breakdown of CEO pay for performance (2023) Stuart Dickinson commenced as CEO, replacing Kimbal Riley (previous CEO), on 11 April 2023. The table below represents the pay for performance remuneration expected to be received by the CEO relating to the 2023 financial year. These STI amounts and LTI shares will be settled in 2024. DESCRIPTION PERFORMANCE MEASURES STI 48% of base salary 30% weighting of Vista Group recurring revenue. Results of between 95% to 110% of the target equates to STI achievement of between 95% and 120% (capped). No STI is achieved below 95%. 40% weighting of Vista Group EBITDA. Results of between 90% to 110% of the target equates to STI achievement of between 90% and 120% (capped). No STI is achieved below 90%. 15% weighting on cNPS. If achieved, then 100% of the applicable STI is payable. 15% weighting on eNPS. If achieved, then 100% of the applicable STI is payable. The 2023 STI included a cash collection hurdle focused on receipts from clients keeping pace with, or exceeding, Vista Group's 2023 total revenue. An achievement of less than 95% would result in 50% of the total STI being forfeit. A result between 95% and 105% would equate to between a 95% and 105% (capped) STI multiplier to all of the above STI performance measures. % ACHIEVED AMOUNT ACHIEVED NZ$ 97.0% 87,300 100.0% 120,000 50.0% 22,500 75.0% 33,750 104.0% 10,542 TOTAL STI 91.4% 274,092 DESCRIPTION PERFORMANCE MEASURES % ACHIEVED NUMBER OF LTI SHARES VALUE OF LTI SHARES NZ$ LTI 2023 Group CEO Retention Plan1 100% weighting on continued tenure. An allocation of 100,000 rights are due to vest in April 2024. 100.0% 100,000 165,000 2023 LTI Plan1 50% weighting on Vista Group recurring revenue in 2023, 2024 and 2025. The threshold to achieve is 90% with pro- rata payment through to 100%. 72.7% 26,051 42,984 50% weighting on continued tenure to April 2024, April 2025 and April 2026. 100.0% 35,820 59,103 TOTAL LTI TOTAL STI & LTI 94.3% 161,871 267,087 92.8% 161,871 541,179 1 These rights convert to shares in April 2024. The share price at 31 December 2023 of $1.65 per share was used for calculating the value of the shares expected to be issued under the LTI schemes. 54 Remuneration report • 55 CEO remuneration Kimbal Riley retired as CEO on 11 April 2023. The total remuneration received by Kimbal Riley as CEO until In 2023, the current CEO was granted the following share rights and performance rights under the following 11 April 2023 was as follows, including under the STI and LTI schemes for the 2022 financial year: LTI schemes: YEAR 2023 2022 BASE SALARY¹ TAXABLE BENEFITS FIXED REMUNERATION STI² 2023 PARTIAL YEAR STI NUMBER OF LTI SHARES VALUE OF LTI SHARES NZ$3 TOTAL REMUNERATION LTI SCHEME NUMBER TYPE PERFORMANCE MEASURES 174,373 7,935 182,308 273,000 130,750 508,936 671,796 1,257,854 633,979 28,595 662,575 172,656 - 138,834 261,250 1,096,481 2023 Group CEO Retention Plan 100,000 Share rights 100% weighting on continued tenure to April 2024. VESTING DATE(S) VALUE OF LTI SHARES NZ$m1 April 2024 165,000 1 The 2023 base salary of the previous CEO was $625,000 in both 2023 and 2022. The values included in this table may represent additional amounts required to be paid under New Zealand legislation when an employee takes annual leave. 2 The STI, LTI shares represented in this table relate to amounts paid or shares issued rights settled in the relevant financial year (for example, the 2022 STI is reflected in 2023, being the year it was paid). 3 The share price on the date of vesting was used for calculating the value of shares issued. Stuart Dickinson commenced as CEO on 11 April 2023. The total remuneration received by Stuart Dickinson as CEO between 11 April 2023 and 31 December 2023 was as follows: YEAR 2023 BASE SALARY¹ TAXABLE BENEFITS FIXED REMUNERATION STI² SIGNING BONUS NUMBER OF LTI SHARES VALUE OF LTI SHARES NZ$2 TOTAL REMUNERATION 451,919 19,770 471,689 - 200,000 - - 671,689 1 The 2023 base salary of the CEO is $625,000. The value included in this table may represent additional amounts required to be paid under New Zealand legislation when an employee takes annual leave. 2 The STI, LTI shares represented in this table relate to amounts paid or shares issued rights settled in the relevant financial year (for example, the 2022 STI is reflected in 2023, being the year it was paid). The current CEO’s total remuneration for 2024, assuming 100% of LTI shares are issued, is expected to be: BASE SALARY TAXABLE BENEFITS FIXED REMUNERATION STI1 NUMBER OF LTI SHARES2 VALUE OF LTI SHARES NZ$3 TOTAL REMUNERATION YEAR 2024 100,000 Share rights 100% weighting on continued tenure to April 2025. April 2025 165,000 2023 LTI Plan 35,820 Performance rights 100% weighting on achievement of Vista Group 2023 recurring revenue target. 35,820 Performance rights 35,820 Performance rights 35,820 Share rights 35,820 Share rights 35,820 Share rights 100% weighting on achievement of Vista Group 2024 recurring revenue target. 100% weighting on achievement of Vista Group 2025 recurring revenue target. 100% weighting on continued tenure to April 2024. 100% weighting on continued tenure to April 2025. 100% weighting on continued tenure to April 2026. April 2024 59,103 April 2025 59,103 April 2026 59,103 April 2024 59,103 April 2025 59,103 April 2026 59,103 625,000 27,351 652,351 274,092 161,871 267,087 1,193,530 Total 414,920 684,618 1 This is the STI amount for 2023 expected to be paid to the CEO during 2024. See the table on page 55 for further details. 1 This assumes that the relevant performance measures are fully achieved and so 100% of the relevant Rights vest. The share price at 31 December 2023 of $1.65 per share was 2 This is the number of LTI shares for 2023 expected to be issued to the CEO during 2024. See the table on page 55 for further details. used for calculating the value of these LTI shares. 3 The share price at 31 December 2023 of $1.65 per share has been used for calculating the value of the LTI shares. The employment agreements of the CEO and GSLT do not include the ability to be paid a transaction bonus in the event of a takeover of Vista Group. 56 Remuneration report • 57 Share-based schemes Rights granted in 2023 2023 LTI Scheme: In April 2023, Vista Group granted 1,650,654 rights to GSLT and other selected senior management under this scheme. 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). Performance rights that do not vest are eligible to roll over and vest if targets in future years have been achieved. 2023 Senior Leadership Retention Scheme: In April 2023, Vista Group granted 300,000 rights to selected employees under this scheme. All rights will vest in April 2024, conditional on the continued tenure of the participants at the relevant vesting date. 2023 CEO Retention Scheme: In April 2023, Vista Group granted 200,000 rights to the CEO under this scheme. Subject to the CEO’s continued tenure with Vista Group, 100,000 of these share rights are due to vest in April 2024, with the remaining 100,000 share rights due to vest in April 2025. Share-based schemes with conditions met The following share-based schemes met the 2020 Group CEO Retention Scheme: In April 2020, required performance targets resulting in rights the previous CEO, Kimbal Riley, was granted vesting and converting into shares in the year ended 500,000 share rights under the Group CEO Retention Scheme, with vesting conditional on the CEO’s continued tenure. In April 2023, 400,000 Vista Group shares were issued to the previous CEO under this scheme. 2022 Vista Group Recognition Scheme: Vista Group granted 2,110,769 rights to all Vista Group employees based in New Zealand, the United Kingdom and the United States (excluding the CEO) to recognise the performance of employees. In April 2023, 1,851,062 Vista Group shares were issued to all participants still employed with Vista Group. 31 December 2023: 2021 & 2022 LTI Scheme: Vista Group granted: • 1,237,668 rights to GSLT and other selected senior management under the 2021 LTI Scheme in April 2021; and • 1,268,112 rights under the 2022 LTI Scheme in April 2022. 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). Performance rights that do not vest are eligible to roll over and vest if targets in future years have been achieved. In April 2023, 799,887 Vista Group shares were issued to participants following the vesting of: • 214,245 performance rights and 168,346 share rights under the 2021 LTI Scheme; and • 208,648 performance rights and 208,648 share rights under the 2022 LTI Scheme. 58 Remuneration report • 59 Performance rights outstanding 2023 director remuneration The total number of outstanding rights granted to Vista Group employees (less known leavers) at Director remuneration is paid from the total directors’ fee pool of $725,000 approved by Vista Group’s 31 December 2023 are detailed in the following table: shareholders at the ASM held on 26 May 2021. No increase to the fee pool is proposed for 2024. Directors’ fees in 2023 were calculated as set out below: 2024 VESTING YEAR 2025 261,615 - 330,930 330,930 TOTAL OUTSTANDING RIGHTS 261,615 661,860 2026 - - GRANT YEAR PLAN TYPE LTI Scheme LTI Scheme 2021 2022 2022 2023 2023 2023 Senior Leadership & Executive Retention Scheme 100,000 200,000 - 300,000 LTI Scheme 504,509 504,509 504,509 1,513,527 Senior Leadership & Executive Retention Scheme 250,000 - - 250,000 CEO Retention Scheme 100,000 100,000 - 200,000 Total rights able to vest 1,547,054 1,135,439 504,509 3,187,002 POSITION HELD Chair Director ARC Chair ARC member NRC Chair NRC member NZ$ 180,000 85,000 15,000 10,000 15,000 10,000 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 2023 are set out in the table below: DIRECTOR FURTHER DETAILS Susan Peterson Chair Claudia Batten Murray Holdaway James Miller Cris Nicolli Kirk Senior Total ARC Chair NRC Chair BOARD FEES NZ$ 180,000 85,000 85,000 85,000 85,000 85,000 ARC FEES NZ$ NRC FEES NZ$ TOTAL DIRECTOR FEES NZ$ - - - 15,000 10,000 10,000 - 180,000 10,000 - - 15,000 10,000 95,000 85,000 100,000 110,000 105,000 605,000 35,000 35,000 675,000 The total fees paid to directors of $675,000 is within the $725,000 directors’ fee pool approved at the ASM held on 26 May 2021. Directors are reimbursed for all reasonable and properly documented expenses incurred in performing their duties as Vista Group directors. No additional payments or benefits were received by directors during 2023. 60 Remuneration report • 61 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 27 February 2024. The information contained in this statement is current as at that date, unless otherwise noted. Vista Group is committed to high standards At the date of this Annual Report, Vista Group’s of governance. The core of Vista Group’s governance framework is its commitment to protect and enhance the interests of its shareholders through high standards of governance, business behaviour and transparency. Vista Group’s governance framework ensures Board accountability to our shareholders and provides for an appropriate delegation of responsibilities to our CEO and our GSLT. The Board reviews Vista Group’s governance policies and practices regularly to ensure compliance with NZX and ASX standards (Vista Group is an ASX Foreign Exempt Listed company) and reflects the governance expectations of its shareholders in New Zealand and Australia. governance practices over the reporting year were in compliance with the NZX Corporate Governance Code and, while not required due to our ASX foreign-exempt listing status, were also in compliance with the ASX Corporate Governance Principles and Recommendations (fourth edition). Vista Group has reported against the NZX Corporate Governance Code dated 1 April 2023. A table setting out where the principles and recommendations in the NZX Corporate Governance Code are addressed in this annual report is included on pages 90 and 91. 62 Corporate governance • 63 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 Executive Directors (male) Non-Independent Non-Executive Directors (male) Six Board members Independent Non-Executive Directors (male) Independent Non-Executive Directors (female) James Miller BCom, FCA Cristiano (Cris) Nicolli BMS, FAICD Kirk Senior BCom, CA Independent Director Independent Director Non-Independent Non-Executive Director A brief profile, including the relevant qualifications and experience, of each director can be found at 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. Board 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 website at vistagroup.co.nz/investor-centre. 64 Corporate governance • 65 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 year, the NRC assessed the It is considered that addressing the level of skills skills of the Board and reviewed the Board skills and experience collectively is a better indicator matrix. A summary of the Board skills matrix is set of Board capability overall. Accordingly, the level out on the opposite page. of skills and experience is assessed collectively. The Board skills matrix enables an assessment of The key skills and experience which individual skills and experience of individual directors, and directors contribute to the Vista Group’s Board can how the directors work together as a whole. be found at vistagroup.co.nz/board-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 66 Corporate governance • 67 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. Two of Vista Group’s six directors (Kirk Senior • material supplier to Vista Group or has any other and Murray Holdaway) are not considered to material contractual relationship with Vista Group be Independent Directors. Kirk Senior held the or any of its subsidiaries other than as a director position of Executive Chair until he resigned as of Vista Group or, in respect of Kirk Senior and Chair and as an executive with effect from 1 January Murray Holdaway only, as an employee of Vista 2021. Considering all relevant factors, including Group or one of its subsidiaries (within the past his previous executive position, the Board has three years); or determined that Kirk Senior is not an Independent Director. Murray Holdaway is the co-founder of Vista Group, holds 2.87% of Vista Group’s ordinary shares, and was Vista Group’s Chief Product Officer until he resigned as an executive in 2022. Considering all relevant factors, the Board has determined that Murray Holdaway is not an Independent Director. None of the directors are a: • recipient of performance-based remuneration from, or participating in, Vista Group’s employee share schemes. No director controls, or is an executive or other representative of an entity which controls, 5% or more of Vista Group’s voting securities. The Board considers that the roles of the Chair and the CEO should remain separate. The CEO is not a director of Vista Group and the Chair is • partner, director, senior executive or material independent of the CEO. shareholder of a firm that provided material professional services to Vista Group or any of its subsidiaries (within the past twelve months); • current or past senior employee or partner of Vista Group’s auditor PwC; 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 GSLT. 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: Strategy and planning • Selecting and, if necessary, replacing the CEO; • Ensuring that Vista Group has adequate management to achieve its objectives and to support the CEO so that a satisfactory plan for management succession is in place; • Reviewing and approving the strategic, business and financial plans prepared by the GSLT; • Reviewing and approving certain material transactions, and making certain investment and divestment decisions; and • Approving and overseeing the administration of Vista Group’s technology development strategy. Financial performance and integrity • Ensuring the quality and independence of Vista Group’s external audit process. The terms of the delegation by the Board to the CEO and GSLT are documented in Vista Group’s Corporate Governance Code and Delegated Financial Authority Manual. The CEO and GSLT are responsible for: • developing and making recommendations to the Board on Vista Group strategies and associated initiatives; • managing and implementing strategies approved by the Board; • formulating and implementing policies and reporting procedures for management; • decision making compatible with Vista Group’s Delegated Financial Authority Manual; • managing business risk and implementing the Board approved risk management framework and ensuring compliance; and • the day-to-day leadership and management of Vista Group. The CEO and GSLT have appropriate employment agreements setting out their roles and conditions of • Monitoring Vista Group’s performance against its employment. approved strategic, business and financial plans and overseeing Vista Group’s operating results. Code of ethics The CEO’s performance is reviewed by the NRC regularly against objectives and measures set by the Board on the recommendation of the NRC. The CEO’s performance was evaluated during • Ensuring Vista Group, the Board and the GSLT’s the reporting year on this basis. The NRC is also behaviour is consistent with the Code of Ethics, responsible for overseeing the CEO’s evaluation including compliance with the constitution, any of the GSLT. Further details are contained in the applicable laws and regulations, NZX Listing Remuneration Report. Rules, and any relevant auditing and accounting principles; and Directors’ remuneration • Implementing, and from time to time reviewing, the Code of Ethics, to foster high standards of ethical conduct and personal behaviour, and hold accountable those directors, managers, or other employees who engage in unethical behaviour. Full details regarding Vista Group’s remuneration of its directors are set out in the Remuneration Report on page 61. 68 Corporate governance • 69 Governance at Vista Group Selection, nomination and appointment Induction and development 2023 governance calendar and attendance Vista Group undertakes appropriate checks before All new directors participate in an induction Vista Group’s 2023 governance calendar is set out in the table below: appointing a director or putting forward any programme and receive significant induction candidate for election as a director in accordance materials so as to familiarise them with Vista with Vista Group’s governance processes. Group’s businesses and the international film All directors are elected by Vista Group’s industry in which those businesses operate. shareholders (other than directors appointed by The Board receives regular briefings from the Board, who must retire and stand for election management on Vista Group’s business operations, at the next meeting of shareholders) with rotation changes to the operating environment, health and and retirement determined in accordance with the safety, and other wellness matters. Board strategy NZX Listing Rules. The Board is responsible for days are held during the year to consider matters considering and appointing directors to the Board of strategic importance to Vista Group. after candidates have been identified by the NRC. Vista Group provides regular development Vista Group has a written agreement with each opportunities for directors through Director director set out in a standard form letter of Education Sessions. During 2023, Vista Group appointment containing the terms and conditions hosted a Director Education Session where of their appointment. In addition, Vista Group has external experts presented on the topic of the also entered into a deed of indemnity and insurance future of responsible usage of AI. Outside of which applies to each director, under which Director Education Sessions, the directors Vista Group indemnifies, and provides insurance undertake appropriate training to remain to, directors in accordance with Vista Group’s current on how to best perform their duties constitution and the Companies Act 1993. as directors of an issuer by attending 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 year 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 With the exception of Murray Holdaway due to sickness, all directors attended the 2023 ASM. Details regarding the directors’ attendance of the 2023 governance meetings is set out in the table below: MEETINGS BOARD ATTENDANCE BOARD BOARD SUB ARC NRC Susan Peterson Claudia Batten Murray Holdaway James Miller Cris Nicolli Kirk Senior 100% 100% 91% 100% 100% 100% Board or Committee Member present Non-Committee Member present Each Committee Charter provides that employees and non-member Executive Directors can only attend Committee meetings at the invitation of the Chair of the relevant Committee. 70 Corporate governance • 71 Reviewing performance The performance of the directors (individually and collectively), and the effectiveness of Board processes and committees, are regularly evaluated using a variety of methods, including questionnaires, Board discussion, and an evaluation at the end of each Board meeting. A performance review led by the Chair was carried out during the reporting year. The next review will be carried out during 2024. 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 2023 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 20–21 yrs (co-founder) 9–10 yrs (since IPO) 9–10 yrs (since IPO) 6–7 yrs 3 yrs 2-3 yrs 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. Board committees The Board has two standing committees: the ARC and the NRC. The members of those committees are set out in the tables below: 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 established from time to time, including as required to provide governance oversight on short-term projects. At the date of this statement, Vista Group has determined that no standing committees are required other than the Disclosure Committee. 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 vistagroup.co.nz/investor-centre. Directors’ shareholdings in Vista Group Vista Group does not have a separate Nominations The Board encourages the alignment of directors’ Committee or a separate Remuneration Committee. interests with those of shareholders and with Vista Rather, the NRC fulfils the functions of both those Group’s strategic aims. To improve this alignment, committees. The role and responsibilities of the ARC the Board encourages directors to hold shares and NRC are set out in the Committee Charters that in Vista Group, with the final determination left form part of Vista Group’s Corporate Governance to individual directors' personal circumstances. Code which is available at vistagroup.co.nz/investor-centre. Further details of directors’ shareholdings in Vista Group are set out in Directors’ Disclosures The Disclosure Committee was constituted in 2020 under Vista Group’s Continuous Disclosure Policy and is comprised of Cris Nicolli (Independent Director), the General Counsel and Company Secretary, the CEO and the CFO. The Disclosure Committee convenes 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. Each committee focuses on specific areas of governance. Together, the committees strengthen the Board’s oversight of Vista Group. Committee meetings are scheduled to coordinate with the Board meeting cycle. Each committee reports to the Board at the subsequent Board meeting and makes recommendations to the Board for consideration and approval as appropriate. Vista Group assesses on a regular basis whether additional standing or ad hoc committees are required. Additional temporary committees are on page 84. Access to advice together with the 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 without management present and, with the Chair’s consent, seek independent professional advice at Vista Group’s expense. All directors have access to the advice and services of the General Counsel and Company Secretary for the purposes of the Board’s affairs. The General Counsel and Company Secretary was appointed on the joint approval of the CEO and the Chair. The General Counsel and Company Secretary is accountable to the Board, through the Chair, on all governance matters. 72 Corporate governance • 73 Assurance and managing risk Timely and balanced disclosure Audit plan and role of the external auditor • ensuring the independence, objectivity and Shareholders and markets PwC is Vista Group’s current external auditor and has served since its appointment in April 2015. The NZX Listing Rules require rotation of the key effectiveness of the auditor; • reviewing the audit plan, nature and scope of the audit before commencement; audit partner at least every five years. Vista Group • reviewing Vista Group’s letter of representation to last rotated its key audit partner in January 2020 the auditor; and and, assuming that PwC continue as Vista Group’s • discussion with the auditor of any problems, auditor, the next rotation is expected to occur in reservations, or issues arising from the audit and January 2025. Vista Group’s audit partner, Troy referring matters of a material or serious nature Florence, attended Vista Group’s 2023 ASM and to the Board. was available to Vista Group’s shareholders to answer questions relevant to PwC’s audit. Details of the work (both audit and non-audit) undertaken by, and fees paid to, PwC during Audit conflict safeguard and resolution process It is the responsibility of the ARC to ensure 2023 are included in section 2.3 of the Financial audit independence. The committee ensures this Statements. The Board considers that due to the nature and quantum of the non-audit services work, the independence of PwC is not compromised. External audit policy The Board’s framework for Vista Group’s relationship with its external auditor is in the External Audit Policy set out in the Corporate Governance Code which is available at vistagroup.co.nz/investor-centre. The External Audit Policy covers matters relating to the appointment of the auditor, the independence of the auditor, transparent dialogue with the auditor, rotation of the audit partner, reporting on audit fees and non-audit work. The ARC assists the Board in fulfilling its responsibility to ensure the quality and independence of Vista Group’s external audit process. Pursuant to the ARC Charter, the 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; 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 PwC 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 73) to determine whether any market announcement is required. The external auditor’s report to shareholders on page 139 discloses all non-audit services and any other relevant independence considerations. Vista Group is committed to maintaining a fully The Disclosure Committee is required to refer informed market through effective communication information regarding matters of fundamental with the NZX and ASX, shareholders and investors, significance to Vista Group, including financial analysts, media and other interested parties. results, earnings guidance, dividend policy Vista Group provides all stakeholders with equal determinations, transformational transactions, and and timely access to material information that is significant resignations, to the Board (or where the accurate, balanced, meaningful and consistent. Board is not available, an Approval Committee) for Where Vista Group provides a new and substantive its determination. investor or analyst presentation, it ensures the presentation materials are released to the NZX and ASX announcement platforms ahead of the presentation. Disclosures relating to the annual and interim financial statements must be reviewed by the ARC before being approved by the Board. Once approved for disclosure, the CFO or the General Vista Group’s Continuous Disclosure Policy is Counsel and Company Secretary is responsible for designed to ensure material information is released releasing material information on the NZX and ASX to the NZX and ASX announcement platforms announcement platforms. Directors consider at in compliance with Vista Group’s continuous each Board meeting whether there is any material disclosure obligations under the NZX Listing Rules information which should be disclosed to the and the Financial Markets Conduct Act 2013. market. The Continuous Disclosure Policy is available at vistagroup.co.nz/investor-centre. Integrity of reporting 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 General Counsel and Company Secretary, the CEO and the CFO. The CEO and GSLT are responsible for ensuring that all material information relating to their areas of responsibility is reported to the Disclosure Committee promptly and without delay. The Disclosure Committee is responsible for determining whether information received from the CEO or GSLT requires disclosure on the NZX and ASX announcement platforms. 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 and present fairly, in all material respects, the financial position of Vista Group and the results of its operations and its cash flows. A letter of representation confirming those matters was received by the Board with respect to Vista Group’s 2023 financial statements. 74 Corporate governance • 75 Diversity and inclusion policy Risk management 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 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 GSLT and employees. Vista Group set the following diversity objectives for the year ended 31 December 2023: OBJECTIVE OUTCOME Ensuring there is a minimum of two females on the Board at all times Progressing towards our aspiration of 40:40:201 gender diversity (across all employees by 2030) Vista Group has maintained a gender representation on its Board, with Susan Peterson as Chair and Claudia Batten as an Independent Non-Executive Director. At 31 December 2023, women comprised 9% of the GSLT. Women comprised 29% of all new hires in 2023. In addition, of those participating in leadership development programmes, 29% have been women in 2023. The focus area for leadership development was in the engineering department where the female representation is lower than in other parts of the business. Vista Group will continue to drive leadership development training to support its transformation efforts. This outcome shows a movement towards achieving the 40:40:20 split across leadership teams and programmes. Report on a full Gender Pay Gap analysis annually and actions undertaking to minimise the gap 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 9.9%. 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. Continuing to create and maintain an inclusive culture and work environment with a focus on women, ethnic minorities and those who identify as LGBTQI+ Vista Group actively works with its local leaders and affiliation groups to promote and support inclusive work practices and to embrace the diversity of our people. This has included celebrating key cultural events such as International Women’s Day, Pride Month, Matariki, Diwali and Día de los Muertos (Day of the Dead). A key element of many of our events 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 43 for disclosure regarding the gender diversity at 31 December 2023. Risk management is an integral part of Vista Group. 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. Key risks The CEO and GSLT are responsible for ensuring compliance with the risk management framework and promoting a culture of good risk practices. Our people 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. Risk assessments are carried out by the GSLT and other 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 and the high-level mitigation strategies and activities for each risk. 76 Corporate governance • 77 KEY RISKS MITIGATION STRATEGIES AND ACTIVITIES KEY RISKS MITIGATION STRATEGIES AND ACTIVITIES HEALTH, SAFETY AND WELLBEING • Board oversight through monthly health, safety and wellbeing PLATFORM STABILITY AND DATA SECURITY • Board oversight through the Chief Technology Officer security Ability to protect our people’s health, safety and wellbeing. report against Vista Group policies • Dedicated Work Well programme to support our people's wellbeing • 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 • Board oversight through reporting of compliance related Ability to identify and manage new, changed or reinterpreted laws and regulations, as our global operations increases the complexity of compliance. Instances of non- compliance could result in brand and reputational loss, along with litigation, fines and financial loss. programmes • Policies and procedures covering key regulatory and compliance areas • Global legal team provides input on emerging changes and potential business impacts ATTRACT AND RETAIN TALENT • Board oversight by the Nominations and Remuneration Ability to attract, develop and retain skilled people in a highly competitive industry to be able to deliver on our strategy. Committee through the People & Culture report • Succession planning for senior leadership and critical roles • Leadership development and mentoring programme • Focus on people value proposition through proactive communication strategy internally and externally ACCESS TO CAPITAL AND CAPITAL MANAGEMENT • Board oversight of capital allocation and budgeting Our ability to raise capital when required and to appropriately allocate capital as we invest and transition to the platform. • Capital Allocation Policy approved by the Board • Long-term forecasting through the financial strategic plan • Maintain a strong relationship with our investors and banking partners DATA PRIVACY • Board oversight through reporting of compliance related Vista Group’s global footprint exposes us to various global data privacy laws and regulations. Failure to comply with the applicable laws and regulations and protect personal data, through how Vista Group collects, uses and processes personal data and information, could result in financial penalties, regulatory intervention and reputational damage. programmes • Group policies relating to data protection, data retention and IT and information security • Multi-jurisdictional Data Protection Officer provides support and independent assurance • Awareness training on data privacy and security • ISAE (NZ) 3000 / SAE 3150 assurance report (equivalent to SOC 2 Type 1) in progress for Vista Cloud STRATEGY EXECUTION • Board approved strategy and oversight through regular Inability to execute our strategic initiatives that leads to reputational impacts and reduced revenue growth. reporting on initiatives and challenges • Executive sponsorship and accountability for strategic initiatives • Programme review for improving operational alignment to strategic initiatives Failure to maintain security controls and processes which expose Vista Group to cyber-attacks, a loss of service or unplanned outages of applications, disrupting clients’ businesses leading to client churn and/or reputational damage. report • Approved suite of IT related policies • External parties for independent testing • Continuous monitoring of platforms • 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 1) in progress for Vista Cloud ADVERSE GLOBAL EVENTS • Board oversight through the CEO report Vista Group’s global footprint in 100+ countries means it is exposed it to a variety of global economic and political headwinds, such as pandemics, geopolitical instability, and changes in regulatory policy. This could disrupt operations, change consumer behaviours, potentially threaten the safety of our people and adversely impact revenue and underlying profitability. • Maintaining sufficient capital reserves • Regular financial oversight and monitoring across our markets • External advisors provide insights and guidance on jurisdictional and market activity • Regular liaison with clients on emerging industry and regional trends • Business continuity plan to respond to significant operational events ENVIRONMENTAL (INCLUDING CLIMATE) • Board oversight through the Audit and Risk Committee of Failure to support or transition to a lower carbon economy could lead to regulatory impacts and reputational damage. climate initiatives • Board approved climate-related disclosures • Risk Management framework and continuous improvement • Carbon emissions measurement and assurance programme • Climate roadmap to align with the Aotearoa New Zealand Climate Standards FILM AND CINEMA INDUSTRY DISRUPTIONS • Board oversight through the CEO report Reduction in content made available for theatrical release, delays in film production, material reduction of the theatrical window, sustained poor box office performance resulting in reduced revenue growth for Vista Group. • Maintaining sufficient capital reserves • Global diversification of clients and global vs localised content reducing exposure in a single market 78 Corporate governance • 79 Engaging with investors Investor relations Annual Shareholders’ Meetings Electronic communications Vista Group is committed to open and effective Vista Group encourages shareholders to attend All shareholders are encouraged to provide The Code of Ethics sets out: communication with its shareholders by providing ASMs and to ask questions of the Chair, Board, comprehensive relevant information. GSLT 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 vistagroup.co.nz/investor-centre, regular information disclosures via the NZX and ASX • 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; announcement platforms, at the ASM, Investor Days • shareholders are notified at least 20 working and Governance Roadshows, in its Annual Reports days prior to the ASM in accordance with NZX and Interim Reports, and investor and analyst Corporate Governance Code recommendation; briefings. and Vista Group aims to provide clear communication of its strategic direction, including articulating its • shareholder voting is conducted via a poll, and shareholders may vote in person, electronically strategic priorities. Investor Centre or by proxy. Vista Group’s 2023 ASM was held on 25 May 2023 and took place in a hybrid format (in person and Vista Group’s dedicated Investor Centre website online). The Notice of Meeting for the 2023 ASM (vistagroup.co.nz/investor-centre) includes a was released on the NZX and ASX announcement comprehensive set of investor-related information platforms and posted on Vista Group’s website and data including releases on the NZX and ASX at least 20 working days prior to the ASM in announcement platforms, Annual Reports and accordance with NZX Corporate Governance Code Interim Reports, investor presentations, and recommendation. shareholder meeting materials. Vista Group’s 2024 ASM will be held on 21 May Shareholders can direct any questions and 2024 and is again expected to take place in a comments they may have to Vista Group by hybrid format. contacting Vista Group’s CFO. email 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. • 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 GSLT are expected to lead Vista Group according to the Code of Ethics and to Electronic versions of Vista Group’s shareholder ensure that the standards set out in the Code of communications and reports are released on the Ethics are communicated to the people who report NZX and ASX announcement platforms and are to them. available at vistagroup.co.nz/investor-centre. Vista Group's Code of Ethics The Code of Ethics, which was adopted and is regularly reviewed by the Board, plays a key role in establishing the framework by which everyone at Vista Group is expected to conduct themselves. The Code of Ethics is not intended to prescribe an exhaustive list of acceptable and non-acceptable behaviour, but rather to facilitate decisions that are consistent with Vista Group’s values, business goals, and legal and policy obligations, thereby enhancing performance outcomes. Directors and employees are required to familiarise themselves with Vista Group’s values, as they govern their behaviour while they are engaged or employed by Vista Group. Any person who becomes aware of a breach or suspected breach of the Code of Ethics is required to report it immediately in accordance with the policy. Training on the Code of Ethics is delivered to all employees through Vista Group’s online learning management system. Training is reinforced through regular reminders from the People and Culture team across the business. The Code of Ethics is provided to new employees as part of their induction materials. A copy of the Code of Ethics can be found at vistagroup.co.nz/investor-centre. 80 Corporate governance • 81 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 at 31 December 2023 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 Xero Limited (ASX : XRO) Non-Executive Director Mercury NZ Limited (NZX & ASX: MCY) Non-Executive Director Ryman Healthcare Ltd (NZX: RYM) Non-Executive Director Craigs Investment Partners Non-Executive Director Cris Nicolli Playside Studios Limited (ASX: PLY) Non-Executive Chair Global Women Trustee ReadCloud Limited (ASX: RCL) Non-Executive Chair Peterson Mellsop Family Trust Trustee and Beneficiary Claudia Batten Air New Zealand Limited (NZX:AIR) Non-Executive Director Serko Limited (NZX : SKO) Non-Executive Chair Kadasig Aid & Development (Not For Profit Charity) Treasurer Nicolli Holdings Pty Ltd (Family Investment) Director Nicolli Family Superannuation Fund Trustee Wonderful Investments Limited Director and Shareholder Kirk Senior Outpost Central Ltd (trading as Wildeye) Consultant 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 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 82 Corporate governance • 83 Directors’ disclosures Other disclosures Directors’ and officers’ indemnities and insurance Stock exchange listings Takeover offer protocol Donations and lobbying Vista Group’s ordinary shares are listed and quoted Vista Group’s Board has adopted a Takeover Vista Group made donations of $21,000 during the In accordance with section 162 of the Companies on the NZX and on the ASX (as an ASX Foreign Response Manual that provides a comprehensive 2023 financial year (2022: $135,000). Registration as a foreign company Vista Group, that could reasonably influence the Vista Group has published a statement setting out Act 1993 and the constitution, Vista Group Exempt Listing). indemnifies the directors in relation to potential liabilities and costs they may incur for acts or Waivers from NZX or ASX omissions in their capacity as directors. Vista Group Vista Group did not apply for, was not granted, and also maintains directors’ and officers’ liability did not rely on, any waivers from the NZX or ASX insurance that covers risks normally covered by during the year ended 31 December 2023. 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 at 31 January 2024 is set out in the table below: DIRECTOR NUMBER OF VISTA GROUP SHARES % OF SHARES ON ISSUE Susan Peterson 122,271 0.052% 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 2023. Vista Group has registered with the Australian Securities and Investments Commission as a foreign company and has been issued with the Australian Registered Body Number of 600 417 203. ASX disclosures Vista Group holds a foreign exempt listing on the Claudia Batten – – ASX. As a requirement of admission Vista Group Murray Holdaway 6,786,000 James Miller Cris Nicolli Kirk Senior 74,500 87,152 861,936 2.872% 0.032% 0.037% 0.365% Directors’ Vista Group share dealings During 2023, 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. 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). 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 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 2023. process. The Takeover Response Manual provides Vista Group does not make any expenditures for the establishment of a response committee to for lobbying purposes and did not make any take all necessary actions in respect of a takeover expenditures for lobbying purposes during the year offer. The response committee is comprised of ended 31 December 2023. Independent Directors, excluding any director that has a direct or indirect relationship, including with the bidder or any significant shareholder in Modern slavery and human trafficking statement director’s decision making in respect of the takeover offer. Dividends the steps it has taken during the 2023 financial year, and the actions it will take during the 2024 financial year, to identify and mitigate potential modern slavery and human trafficking risks related to its Vista Group is currently investing in the cloud-based business and in its supply chains. The statement is platform with free cash flows for either investment available at vistagroup.co.nz/investor-centre. or dividends only expected from 2025. Credit rating Subsidiary companies The directors of subsidiaries of Vista Group at At the date of this Annual Report, Vista Group does 31 December 2023 are listed in the table set out not have a credit rating. at page 136. Net tangible assets Vista Group’s net tangible assets per share (excluding treasury stock) at 31 December 2023 was $0.00550281 (2022: $0.08662386). 84 Corporate governance • 85 Shareholder information Twenty largest shareholders Analysis of shareholdings at 31 January 2024 Vista Group’s 20 largest shareholders and their shareholdings at 31 January 2024 are set out in the table below: RANK REGISTER NAME OF TOP 20 SHAREHOLDERS NZL Tea Custodians Limited1 AUS Citicorp Nominees Pty Limited NZL Bnp Paribas Nominees NZ Limited Bpss401 AUS J P Morgan Nominees Australia Pty Limited NZL Accident Compensation Corporation1 NZL HSBC Nominees (New Zealand) Limited1 AUS HSBC Custody Nominees (Australia) Limited NZL New Zealand Superannuation Fund Nominees Limited1 NZL Custodial Services Limited NUMBER OF SHARES % OF ISSUED SHARES 40,799,338 17.27% 25,492,238 10.79% 16,492,193 6.98% 15,225,441 6.44% 11,399,941 4.83% 11,125,061 4.71% 9,834,556 4.16% 9,585,052 4.06% 7,356,850 3.11% 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 % 1,000 1,251 421 404 65 69 503,103 3,270,522 3,140,991 8,330,123 4,466,613 216,531,690 3,210 236,243,042 0.21% 1.38% 1.33% 3.53% 1.89% 91.66% 100.00% Substantial Product Holdings According to notices given under the Financial Markets Conduct Act 2013, the following persons were Substantial Product Holders in Vista Group ordinary shares at 31 December 2023 in respect of the number NZL Brian John Cadzow & Julie Ann Cadzow & Peter Allen Lewis 7,049,065 2.98% of voting securities set opposite their names: NZL Murray Lawrence Holdaway & Helen Rachel Geary & Stephen John Mcdonald 6,786,000 2.87% NAME OF SUBSTANTIAL PRODUCT HOLDER NUMBER OF SHARES % OF ISSUED SHARES NZL New Zealand Depository Nominee AUS Mirrabooka Investments Limited NZL Hobson Wealth Custodian Limited NZL Pt Booster Investments Nominees Limited 6,302,639 2.67% 4,452,426 1.88% 3,960,900 1.68% 3,702,508 1.57% Fisher Funds Management Limited Spheria Asset Management Pty Ltd FIL Limited Pinnacle Investment Management Group Limited 34,805,332 32,466,361 21,163,635 12,226,076 14.73% 13.74% 8.96% 5.18% NZL Bruce Alexander Wighton & Marianne Bachler & Wighton Bachler Trustee Limited 3,668,995 1.55% On 12 January 2024, FIL Limited announced that it had reduced its holding in Vista Group to 17,691,949 AUS Bnp Paribas Noms Pty Ltd 2,928,403 1.24% ordinary shares. NZL Gregory James Trounson & Donald Mackenzie Gibson & Kathryn Mary Lee Trounson 2,763,883 1.17% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 NZL Kimbal Harrison Riley 20 NZL JPMORGAN Chase Bank1 Total of top 20 shareholders Total shares on issue 1,852,665 0.78% 1,774,079 0.75% 192,552,233 81.51% 236,243,042 100.00% 1 Held through New Zealand Central Securities Depository Limited (NZCSD). NZCSD provides a custodial service that allows electronic trading of securities by its members. 86 Corporate governance • 87 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; 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 – adopt, revoke, or alter the constitution; 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 Rules) that if, at the end of three months after the 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. – approve a major transaction (as that term is defined in the Companies Act 1993); – approve the amalgamation of Vista Group under section 221 of the Companies Act 1993; or – place Vista Group into liquidation. • receive an equal share in any distribution, including dividends, if any, authorised by the Board and declared and paid by Vista Group in respect of that share; • 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 vistagroup.co.nz provides information regarding Vista Group, its Board, CEO, GSLT 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. 88 Corporate governance • 89 NZX Corporate Governance Code The following table sets out where the relevant principles and recommendations in the NZX Corporate Governance Code are addressed in this Annual Report. PRINCIPLE / RECOMMENDATION SECTION TITLE LOCATION PRINCIPLE / RECOMMENDATION SECTION TITLE LOCATION 1.1 Code of ethics Vista Group's Code of Ethics Page 81 4.1 Continuous disclosure policy The Continuous Disclosure Policy is available at vistagroup.co.nz/investor-centre. PRINCIPLE 1 – ETHICAL STANDARDS PRINCIPLE 4 – REPORTING & DISCLOSURE 1.2 Financial product dealing policy The Code of Ethics is available within the Corporate Governance Code & Appendices at vistagroup.co.nz/investor-centre. The Share Trading Policy is available at vistagroup.co.nz/investor-centre. 2.1 Board charter Board structure Page 65 PRINCIPLE 2 – BOARD COMPOSITION & PERFORMANCE The Corporate Governance Code is available at vistagroup.co.nz/investor-centre. 2.2 Board appointment and nomination Selection, nomination and appointment 2.3 Director agreements Selection, nomination and appointment 2.4 Board composition and characteristics (a) Director profiles, tenure and ownership interests (b) Director meeting attendance Board skills matrix Tenure 2023 governance calendar and attendance (c) Director independence Independence and conflicts 2.5 Diversity policy Diversity and inclusion policy Page 70 Page 70 Page 65 Page 66 Page 72 Page 71 Page 68 Page 76 2.6 Director training Induction and development 2.7 Director performance Reviewing performance 2.8 Majority independent directors Independence and conflicts 2.9 Independent chair Independence and conflicts 2.10 Chair / CEO separation Independence and conflicts 3.1 Audit committee PRINCIPLE 3 – BOARD COMMITTEE Board committees Committee charters 3.2 Attendance at audit committee by employees by invitation 2023 governance calendar and attendance 3.3 Remuneration committee 3.4 Nomination committee Board committees Committee charters Board committees Committee charters The Diversity & Inclusion Policy is available at vistagroup.co.nz/investor-centre. Page 70 Page 72 Page 68 Page 68 Page 68 Page 73 The ARC Charter is available within the Corporate Governance Code & Appendices at vistagroup.co.nz/investor-centre. Page 71 Page 73 The NRC Charter is available within the Corporate Governance Code & Appendices at vistagroup.co.nz/investor-centre. Page 73 The NRC Charter is available within the Corporate Governance Code & Appendices at vistagroup.co.nz/investor-centre. Vista Group does not have a separate Nominations Committee, or a separate Remuneration Committee. See the “Board committees” section on page 73 of this report for a full explanation of this exception. 3.5 Other standing committees Board committees 2023 governance calendar and attendance 3.6 Takeover protocol Takeover offer protocol Page 73 Page 71 Page 85 4.2 Code of ethics, charters and policies on website 4.3 Balanced, clear and objective financial reporting 4.4 Non-financial disclosure The Code of Ethics, Board and Committee Charters and related policies are available within the Corporate Governance Code & Appendices at vistagroup.co.nz/investor-centre. The Financial Statements set out on pages 92 – 138. The Climate-related Financial Disclosures Report is available at vistagroup.co.nz/investor-centre. PRINCIPLE 5 – REMUNERATION 5.1 Director remuneration policy 2023 director remuneration Page 61 The Directors Remuneration Policy is available within the Corporate Governance Code & Appendices at vistagroup.co.nz/investor-centre. 5.2 Executive remuneration policy Executive appointment and remuneration Page 50 5.3 CEO remuneration Breakdown of CEO pay for performance (2023) CEO remuneration PRINCIPLE 6 – RISK MANAGEMENT 6.1 Risk management Risk management Page 55 Page 56 Page 77 The Risk & Compliance Framework Summary is available at vistagroup.co.nz/investor-centre. 6.2 Health and safety risks Risk management PRINCIPLE 7 – AUDITORS 7.1 Audit framework External audit policy Page 77 Page 74 The External Audit Policy is available within the Corporate Governance Code which is available at vistagroup.co.nz/investor-centre. 7.2 External auditor attends annual meeting 7.3 Internal audit Audit plan and role of the external auditor Page 74 Audit conflict safeguard and resolution process Page 74 PRINCIPLE 8 – SHAREHOLDER RIGHTS & RELATIONS 8.1 Investor website Investor Centre Page 80 8.2 Shareholder communications Electronic communications 8.3 Right to vote 8.4 Pro rata offers Rights and privileges Available at vistagroup.co.nz/investor-centre. Page 81 Page 88 N/A during the reporting period 8.5 Notice of meeting Annual Shareholders’ Meetings Page 80 90 Corporate governance • 91 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 2023 and the independent position of Vista Group at 31 December 2023 auditor’s report. and the results of Vista Group’s operations The Directors are responsible, on behalf of the Company, for presenting these consolidated For and on behalf of the Board of Directors financial statements in accordance with who approved these financial statements for applicable New Zealand legislation and issue on 27 February 2024. and cash flows for the year. Generally Acceptable Accounting Practices (NZ GAAP) in New Zealand in order to present Susan Peterson Chair James Miller Chair, Audit and Risk Committee 92 Financial statements • 93 Statement of other comprehensive income For the year ended 31 December 2023 Items that may be reclassified subsequently to the income statement1 Translation of foreign operations 0.7 2.3 SECTION 2023 NZ$m 2022 NZ$m Items that will not be reclassified to the income statement Excess income tax expense on share-based payments 6.1 Total other comprehensive income Loss for the year Total comprehensive loss for the year Total comprehensive loss for the year is attributable to: Owners of the parent Non-controlling interests Total comprehensive loss for the year 1 Items of other comprehensive income will be reclassified to the income statement when specific conditions are met. (0.2) 0.5 (13.6) (13.1) (13.4) 0.3 (13.1) (0.4) 1.9 (20.9) (19.0) (19.7) 0.7 (19.0) Income statement For the year ended 31 December 2023 CONTINUING OPERATIONS Total revenue Cost to serve Gross profit Sales and marketing costs Research and development costs General and administration costs Foreign currency gains Total operating expenses EBITDA1 Amortisation Depreciation Finance costs Finance income Share of equity accounted loss from associate Other gains and losses Loss before tax Taxation benefit Loss for the year Loss for the year is attributable to: Owners of the parent Non-controlling interests Loss for the year SECTION 2.1, 2.2 2.3 2.3 2.3 2.3 2.2 4.5 4.2, 4.7 2.3 5.1 2023 NZ$m 143.0 (53.3) 89.7 (15.3) (28.4) (32.8) 0.1 (76.4) 13.3 (13.0) (6.9) (2.7) 1.0 - (9.2) (17.5) 3.9 (13.6) (13.9) 0.3 (13.6) 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) Basic and diluted earnings per share (dollars) 6.2 ($0.06) ($0.09) 1 EBITDA is a non-GAAP measure which is defined as earnings before net finance costs, income tax, depreciation, amortisation, “other gains and losses” (see section 2.3) and share of equity accounted results from associates. 94 The above statement should be read in conjunction with the accompanying notes. The above statement should be read in conjunction with the accompanying notes. Financial statements • 95   Statement of changes in equity For the year ended 31 December 2023 Statement of financial position As at 31 December 2023 CONTRIBUTED EQUITY RETAINED EARNINGS FOREIGN CURRENCY RESERVE SHARE- BASED PAYMENT RESERVE TOTAL EQUITY ATTRIBUTABLE TO OWNERS NON- CONTROLLING INTERESTS TOTAL EQUITY 2023 SECTION NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m Balance at 1 January 2023 135.0 1.9 3.8 5.3 146.0 2.0 148.0 Total comprehensive income movement: Loss for the year - (13.9) Other comprehensive (loss) / income1 (0.2) - Total comprehensive (loss) / income (0.2) (13.9) - 0.7 0.7 - - - (13.9) 0.5 0.3 (13.6) - 0.5 (13.4) 0.3 (13.1) Transactions with owners: Share-based payments 6.1, 6.5 Dividends paid 5.7 - - - - - (2.5) - 3.2 - - (0.8) 3.2 (0.8) Balance at 31 December 2023 140.5 (12.0) 4.5 2.8 135.8 1.5 137.3 2022 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 Share-based payments 6.1, 6.5 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 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 Income tax receivable Total current assets NON-CURRENT ASSETS Contract assets Property, plant and equipment Lease assets Net investment in sublease Goodwill Other intangible assets Deferred tax asset Total non-current assets Total assets CURRENT LIABILITIES Borrowings Trade and other payables Lease liabilities Deferred revenue Provisions Contingent consideration Income tax payable Total current liabilities NON-CURRENT LIABILITIES Borrowings Lease liabilities Deferred revenue Provisions Contingent consideration 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 For, and on behalf of, the Board who approved these financial statements for issue on 27 February 2024. 96 The above statement should be read in conjunction with the accompanying notes. The above statement should be read in conjunction with the accompanying notes. SECTION 4.1 4.1 4.1 4.2 4.7 4.8 4.4 4.5 5.2 3.2 4.6 4.7 4.9 4.10 4.11 3.2 4.7 4.9 4.10 4.11 5.2 6.1 6.4 6.5 2023 NZ$m 28.5 38.4 4.1 0.4 71.4 0.5 3.2 8.7 - 57.7 54.8 24.1 149.0 220.4 1.0 22.3 5.5 26.7 1.2 0.5 0.1 57.3 17.6 7.0 0.5 0.1 - 0.6 25.8 83.1 137.3 140.5 (12.0) 4.5 2.8 135.8 1.5 137.3 2022 NZ$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 0.6 1.4 0.4 54.1 17.6 13.3 0.4 0.1 1.5 0.1 33.0 87.1 148.0 135.0 1.9 3.8 5.3 146.0 2.0 148.0 Susan Peterson Chair James Miller Chair, Audit and Risk Committee Financial statements • 97         Statement of cashflows For the year ended 31 December 2023 CASHFLOWS FROM OPERATING ACTIVITIES Receipts from clients Payments to suppliers and employees SECTION Payments associated with the business transformation and CEO transition 2.3 Taxes received 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 Contingent consideration paid Retriever acquisition, net of cash acquired Net cash applied to investing activities CASHFLOWS FROM FINANCING ACTIVITIES Lease payments - principal elements Loan drawdown - RDTI loan Loan repayment - related parties Dividends 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 3.1 4.2 4.5 4.11 4.7 3.2 3.2 2023 NZ$m 149.2 (132.8) (5.0) 0.1 (2.5) 9.0 (0.8) (19.5) 1.1 (1.3) - (20.5) (5.3) 0.5 (0.1) (0.8) (5.7) (17.2) 46.0 (0.3) 28.5 2022 NZ$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 Notes to the financial statements 1. Basis of preparation General information The notes are consolidated into eight sections. Each section contains an introduction which is indicated by the symbol on the left. The first section outlines general information about Vista Group International Limited (the Company and its subsidiaries, collectively Vista Group) and guidance on how to navigate through this document. Material accounting policies Material 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. Various accounting policies disclosed in the prior year financial statements have been removed from this document, as they are not deemed material to the reader of these financial statements. Accounting policies are identified by the symbol above. Significant accounting judgements and sources of estimation uncertainty Significant accounting judgements are those judgements that Vista Group makes when applying its accounting policies that may have a significant effect on amounts that are recognised in these financial statements. Significant sources of estimation uncertainty relate to assumptions and estimates made at the end of the current reporting year that have a risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year. In applying its accounting policies, Vista Group continually evaluates judgements and estimates based on experience and other factors, including expectations of future events that may have an impact on Vista Group. All judgements and estimates made are believed to be reasonable, based on the most current set of circumstances available to Vista Group. Actual results may differ from the judgements and estimates applied. Significant accounting judgements and estimates made by Vista Group in the preparation of these financial statements are outlined within the following financial statement notes: Section 2.3 Recognition of Government grants Section 4.1 Revenue and expected credit loss (ECL) provisioning Section 4.4 & 4.5 Impairment testing of goodwill and intangible assets Section 4.5 Capitalisation of development costs Section 5.2 Recognition of deferred tax assets Recognition of Government grants has been included as a significant judgement in 2023 due to a US$2.0m claim from the US Government associated to wage costs incurred during the pandemic. While Vista Group believes it is eligible to make this claim, due to its complexity and various procedural factors, Vista Group applied judgement by not recognising this grant in the 2023 financial year. Impairment testing of associate companies is no longer classified as a significant source of estimation uncertainty as Vista Group has continued to recognise a nil carrying value to Vista China. The carrying amount of net investment in sublease is no longer classified as a significant source of estimation uncertainty as there were no sublease arrangements in place at 31 December 2023. 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 27 February 2024. 98 The above statement should be read in conjunction with the accompanying notes. Notes to the financial statements • 99       1.2 Summary of material accounting policies Basis of preparation The financial statements of Vista Group have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (NZ GAAP). Vista Group is a for-profit entity for the purposes of complying with NZ GAAP. The financial statements comply with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS), other New Zealand financial reporting standards and authoritative notices that are applicable to entities that apply NZ IFRS. The financial statements also comply with International Financial Reporting Standards (IFRS Accounting Standards) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS Accounting Standards. 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 2023. 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. Impact of climate-related matters on these financial statements Vista Group continues to assess the impact of climate change on its business along with plans to set targets and to reduce its emissions. The current commitments made by Vista Group are detailed within the 2022 Climate-related Financial Disclosures Report, located at vistagroup.co.nz/investor-centre. The main emission commitments include: 1. Setting reduction targets for Scope 2 and selected Scope 3 operational emission categories; 2. Measuring and setting reduction targets across remaining Scope 3 operational emission categories; and 3. Reducing Scope 2 and 3 operational emissions in line with science-aligned targets. When preparing these financial statements, Vista Group determined there were no material impacts from climate-related matters on the financial statements, including sources of estimation uncertainty or significant judgements. New IFRS accounting standards Certain new IFRS accounting standards and interpretations have been published that are not mandatory for the 31 December 2023 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. No new or amended standards and interpretations have been adopted in the 2023 financial year that have a material impact on Vista Group. 2. Financial performance 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 2023 2022 NZ$m 45.9 78.1 124.0 4.5 3.7 10.2 0.6 19.0 143.0 % 87% 13% 100% NZ$m 38.4 73.9 112.3 6.3 6.2 10.0 0.3 22.8 135.1 % 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 classification 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. 100 Notes to the financial statements • 101 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 client. 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 client 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. 102 Notes to the financial statements • 103 2.2 Operating segments Current operating segments 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 Retriever client contracts acquired in 2022, 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’s CEO. Vista Group’s CEO is 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 during the 2023 financial year. Future operating segments Reports regularly reviewed by the CODM to make strategic decisions will change in the 2024 financial year to align to the newly transformed business. The operating segments will therefore change to as follows. • Cinema segment: Software products predominantly sold to the cinema industry, including Vista Cinema, Veezi, Share Dimension and movieXchange (each previously included within the old Cinema segment), and also includes Movio Classic and Movio Cinema EQ (previously included within the Movio segment). • Film segment: Software products predominantly sold to film studios and distributors, including Maccs and Numero (both being box office reporting software products), Movio Research and Movio Media (each previously included within the old Movio segment), Powster and Flicks. Unaudited future operating segmental results which contain historical comparative values will be published on Vista Group’s investor website vistagroup.co.nz/investor-centre shortly after these financial statements have been published. 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. See section 2.1 for definitions of recurring revenue, non-recurring revenue, SaaS revenue and non-SaaS revenue. 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. Current operating segment performance1 2023 SaaS revenue Non-SaaS revenue Recurring revenue Non-recurring revenue Total revenue Cost to serve Hardware cost of sales Gross profit Gross profit %2 Sales and marketing costs Research and development costs General and administration costs Movement in ECL provision through P&L3 Foreign currency gains / (losses) EBITDA2 EBITDA margin2 2022 SaaS revenue Non-SaaS revenue Recurring revenue Non-recurring revenue Total revenue Cost to serve Hardware cost of sales Gross profit Gross profit %2 Sales and marketing costs Research and development costs General and administration costs Movement in ECL provision through P&L3 Foreign currency (losses) / gains EBITDA2 EBITDA margin2 CINEMA NZ$m MOVIO NZ$m AGC NZ$m CORPORATE NZ$m TOTAL NZ$m % OF REVENUE 20.2 63.3 83.5 14.2 97.7 (35.8) (2.6) 59.3 61% (10.3) (19.7) (9.5) 0.4 0.4 20.6 21% 14.2 61.6 75.8 17.7 93.5 (31.5) (4.7) 57.3 61% (9.0) (19.7) (10.2) 1.0 (0.1) 19.3 21% 17.2 1.0 18.2 1.1 19.3 (6.1) - 13.2 68% (2.7) (3.5) (2.0) 0.1 (0.1) 5.0 26% 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% 8.5 13.8 22.3 3.7 26.0 (8.8) - 17.2 66% (2.3) (5.2) (6.4) 0.2 (0.2) 3.3 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% - - - - - - - - - - (15.6) - - (15.6) - - - - - - - - (0.2) - (15.5) - - (15.7) 45.9 78.1 124.0 19.0 143.0 (50.7) (2.6) 89.7 63% (15.3) (28.4) (33.5) 0.7 0.1 13.3 9% 38.4 73.9 112.3 22.8 135.1 (45.9) (4.7) 84.5 63% (14.3) (27.6) (33.6) 1.0 0.6 10.6 8% 35% 11% 20% 23% 34% 11% 20% 25% 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 on page 104. Gross profit % and EBITDA margin are calculated as gross profit over total revenue and EBITDA over total revenue, respectively. 3 The movement in ECL provision through P&L represents the reduction in the prior year ECL provision which has been recognised in the income statement, as the associated cash has either been received, or is now considered highly probable to be received. This value is reported in section 4.1. 104 Notes to the financial statements • 105 Revenue by domicile of entity Total cost to serve and operating expenses 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 jurisdictions based on the location of the transacting Vista Group entity. New Zealand United States United Kingdom Mexico Other1 Total revenue SECTION 2023 NZ$m 26.3 51.8 38.3 12.5 14.1 2022 NZ$m 27.6 50.8 34.2 10.9 11.6 2.1 143.0 135.1 1 The other category includes entities in Australia, Brazil, 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 2023 NZ$m 69.3 20.7 8.5 12.3 14.1 2022 NZ$m 65.3 26.4 10.2 12.4 14.4 124.9 128.7 1 The other category includes entities in Australia, Brazil, Malaysia, Netherlands, Romania and South Africa. 2 As required by NZ IFRS 8, non-current operating assets in the table above exclude deferred tax assets. 2.3 Expenses and other income Total cost to serve and operating expenses 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. 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 sales 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 Group auditor remuneration Other operating expenses SECTION 6.5 4.5 2.3 4.1 4.1 2.3 2023 NZ$m 15.6 2.6 90.9 3.2 9.7 (18.7) (0.6) 6.1 2.0 2.5 (2.3) 1.6 (0.1) 0.6 16.6 2022 NZ$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 Total cost to serve and operating expenses 129.7 124.5 Government grants (significant accounting judgement) 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 $0.6m (2022: $0.2m). Details of these grants are as follows: • Employee Retention Credit (ERC): Vista Group has made an ERC claim with the US Government which could refund up to US$2.0m of wage costs incurred during the pandemic. While Vista Group believes it is eligible to make this claim, due to its complexity and various procedural factors, Vista Group applied judgement when determining reasonable assurance will only likely be achieved when the claim has been accepted, meaning no ERC claim was recognised in the 2023 financial year. • Research & development grants: Vista Group recognised $1.8m of Government grants associated to the New Zealand Research & Development Tax Incentive (RDTI) (2022: $nil). The amount recognised on the income statement was $0.4m (2022: $nil) and the amount recognised as an offset to capitalised intangible asset costs was $1.4m (2022: $nil). Vista Group determines claims under the RDTI are reasonably probable when a general approval has been approved by the Inland Revenue. Auditor’s remuneration Included within general and administration costs are the following costs paid to Vista Group’s auditor, PwC: • Audit services: For the audit and review of Vista Group’s financial statements $0.6m (2022: $0.5m). • Non-audit services relating to advisory services: Workshop facilitation in relation to sustainability and climate change strategy and reporting $5k (2022: $33k). Fees paid to other audit firms for the audit of local subsidiary financial statements was less than $0.1m (2022: less than $0.1m). The non-audit services provided by these firms total $0.9m and were all provided to Vista Group entities not audited by these firms (2022: $0.6m). 106 Notes to the financial statements • 107 Other gains and losses ‘Other gains and losses’ are excluded from operating expenses and EBITDA because they result from non-cash activities, or are not derived in the ordinary course of business. They have been disclosed separately in order to improve a reader’s understanding of the financial statements. Acquisition expenses Business transformation costs CEO transition costs Fair value movements on contingent consideration Impairment charges - Contract assets Impairment charges - Internally generated software Impairment charges - Retriever client contracts Impairment reversal / (charges) - Sublease asset Impairment charges - Vista China intangibles Impairment charges - Vista China investment Total other gains and losses SECTION 4.11 4.1 4.5 4.5 4.8 4.5 4.3 2023 NZ$m - (5.4) (1.1) 1.1 (0.2) (1.8) (2.4) 0.6 - - (9.2) 2022 NZ$m (0.2) - - - - - - (1.5) (1.3) (8.9) (11.9) • Business transformation costs: On 6 July 2023, Vista Group announced it had begun consultation with its people around a proposed business transformation designed to streamline operations into a single business approach and reduce the global workforce by 6-8%. These costs are considered unusual as they are non-recurring in nature and have been presented separately to ensure the reader can better project future cashflows. Included within business transformation costs is $4.5m of payments made (or expected to be made) to employees after their role was disestablished; $0.6m of other directly related project costs; and a $0.3m provision for office move costs. • CEO transition costs: To help facilitate a seamless CEO transition where momentum has been maintained, Vista Group’s Board agreed to a cross-over consulting arrangement with the incoming and departing CEOs. These incremental costs have been presented separately to ensure the reader can better project future cashflows. • Impairment charges: These have been presented separately within other gains and losses as they generally relate to fair value movements or are non-cash related. More detail on each is provided within the identified section. The total cash outflow relating to the business transformation and CEO transition total $5.0m. A further $1.0m is expected to be settled in cash and $0.5m through share awards, both in the 2024 financial year. 3. Cash flows and borrowings This section outlines further details of Vista Group’s cash flows and liquidity. 3.1 Cash flows Reconciliation of net profit to operating cash flows Loss for the year Non-cash items: Amortisation Depreciation Impairment charges Fair value movements in contingent consideration Share-based payment expense Deferred tax benefit Non-cash finance charges Share of equity accounted loss from associate Unrealised foreign currency gains Movement in ECL provision and bad debts through the income statement Movement in revenue provision - concession discounts Movement in revenue provision - credit risk Movement in other provisions Net non-cash items Movements in working capital: Decrease in related party trade and other payables Decrease / (increase) in related party trade and other receivables, net of deferred revenue (Decrease) / increase in trade and other payables, including contingent consideration Decrease in trade and other receivables, net of deferred revenue Decrease in net taxation receivable Net change in working capital Net cash inflow from operating activities SECTION 4.5 4.2, 4.7 2.3 2.3 6.5 5.1 4.1 4.1 4.1 4.10 2023 NZ$m (13.6) 2022 NZ$m (20.9) 13.0 6.9 3.8 (1.1) 3.2 (6.0) 0.2 - (0.2) (2.3) (0.8) (4.1) 0.6 13.2 (0.4) 1.4 (2.8) 10.5 0.7 9.4 9.0 11.5 5.7 11.7 - 4.5 (4.4) 0.2 2.7 (1.8) (1.0) (0.6) (3.8) (0.4) 24.3 (0.8) (1.5) 8.2 2.0 1.1 9.0 12.4 108 Notes to the financial statements • 109 3.2 Borrowings 4. Assets and liabilities Borrowings are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Borrowing costs are expensed as incurred. This section outlines further details of Vista Group’s financial performance by building on information presented in the statement of financial position. Carrying amount of borrowings Balance at 1 January Repayments during the year Drawdowns during the year Movement in foreign exchange Total borrowings at year end Represented by: Current portion Non-current portion Total borrowings at year end Summary of debt facilities FACILITY PROVIDER REASON FOR LOAN EXPIRY DATE CURRENT LIMIT NZ$m 2023 NZ$m 18.1 (0.1) 0.5 0.1 18.6 1.0 17.6 18.6 2022 NZ$m 16.8 (0.1) - 1.4 18.1 0.5 17.6 18.1 INTEREST RATE DEBT DRAWN (NZ$m) 4.1 Trade and other receivables Carrying amount of trade and other receivables Trade receivables Sundry receivables Prepayments Total trade and other receivables 2023 NZ$m 31.5 2.2 4.7 38.4 2022 NZ$m 31.6 1.2 3.6 36.4 No balances relating to Vista China are included within trade receivables (2022: $1.4m, which was fully provisioned). See section 8.1 for further details of Vista China related party transactions. Contract assets 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. 2023 2022 2023 2022 The movement in contract assets during the year was as follows: ASB - revolving credit General commercial / Future acquisitions Jan 2026 40.0 7.43% 6.96% 17.6 17.6 ASB - overdraft Working capital On demand 2.0 10.13% Related parties Working capital On demand NZ Government - RDTI loan Government grants Dec 2024 0.5 0.5 4.00% - 8.73% 4.00% - - 0.5 0.5 - 0.5 - Total borrowings at year end 18.6 18.1 ASB facilities A line fee of 1.45% is also paid on the credit limit of the ASB revolving credit facility. ASB facilities are secured by an interest in Vista Group's tangible assets and are not linked to any climate-related targets. 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. Other borrowings 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. Cash repayments of $0.1m were made to the co-shareholder in both the current and prior year. The New Zealand Government have provided a $0.5m RDTI loan during the year which is linked to the RDTI Government grant (see section 2.3). This loan is interest free and repayable when the RDTI claim has been processed. Balance at 1 January Amounts included in opening balance released in the current year Additional contract assets recognised during the year Impairment charges Exchange movements Contract assets at year end Represented by: Current portion Non-current portion Contract assets at year end SECTION 2.3 2023 NZ$m 5.3 (4.5) 3.8 (0.2) 0.2 4.6 4.1 0.5 4.6 2022 NZ$m 4.6 (4.5) 4.9 - 0.3 5.3 4.9 0.4 5.3 110 Notes to the financial statements • 111       Revenue provisioning (significant estimation uncertainty) The movement in the ECL provision during the year was as follows: During the pandemic period, Vista Group was required to assess its trade receivable and contract asset balances for revenue related provisions as follows: • Credit risk provision: During the initial impact of the pandemic (March 2020 to June 2021), Vista Group applied ‘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. All receivables relating to this period, but still on balance sheet at 31 December 2023 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. Trade receivable and contract asset balances relating to the post-pandemic period do not require significant credit risk provisioning, and concession discounts are less common with $nil recognised at 31 December 2023 (2022: $0.8m). Included within total revenue is $3.1m relating to a reversal of prior period revenue provisioning, where the performance obligations were performed in a prior period (2022: $0.4m). ECL provisioning (significant estimation uncertainty) 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. Vista Group applied additional judgement in determining the ECL provision: • 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 caution while the cinema industry was recovering by prudently including an additional 10% insolvency risk ECL provision to all Cinema or Movio segment clients. At 31 December 2023, Vista Group determined no additional insolvency risk ECL provision was required due to observations around the cinema industry, and strong collections from clients in 2023. • 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). Balance at 1 January Bad debts written off Movement in provision through the income statement Movement in provision through deferred revenue Exchange differences ECL provision at year end 2023 NZ$m 4.4 (1.6) (0.7) (0.7) 0.1 1.5 The table below illustrates how the carrying value of the ECL has been derived: 2023 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$m 33.2 0.1 - 0.1 0.2 0.2 0.4 91-180 DAYS NZ$m 181-270 DAYS NZ$m 271-360 DAYS NZ$m 2.6 0.8 0.3 - - - - 0.3 0.3 - - - - 0.1 0.1 - - - - 0.1 0.1 361+ DAYS NZ$m 0.7 - - - - 0.6 0.6 2022 NZ$m 4.6 (0.6) (0.4) - 0.8 4.4 TOTAL NZ$m 37.6 0.1 - 0.1 0.2 1.3 1.5 General provision effective rate 0.6% 0.0% 0.0% 0.0% 0.0% 0.5% 2022 Net trade receivables and contract assets1 Baseline Aging, write offs and collection Country, client and market ECL - general provision ECL - specific provision Total ECL provision 30.4 0.4 - 0.1 0.5 1.5 2.0 4.1 0.1 - - 0.1 0.5 0.6 3.1 0.1 0.1 - 0.2 0.5 0.7 2.0 - - - - 0.1 0.1 1.7 - 0.1 - 0.1 0.9 1.0 41.3 0.6 0.2 0.1 0.9 3.5 4.4 General provision effective rate 1.6% 2.4% 6.5% 0.0% 5.9% 2.2% 1 Net trade receivables and contract assets have been adjusted for the impact of concession discounts and credit risk provisioning. Total revenue and ECL provisioning The below table highlights the proportion of total provisioning made against trade receivables and contract assets. Vista Group believes that cumulative ECL and revenue provisions of 6.5% was a reasonable level to provide against trade receivables and contract assets. Trade receivables and contract assets Revenue provision - concession discounts Revenue provision - credit risk ECL provision Total provisioning Total provisioning effective rate 2023 NZ$m 38.6 - 1.0 1.5 2.5 6.5% 2022 NZ$m 47.2 0.8 5.1 4.4 10.3 21.8% 112 Notes to the financial statements • 113 4.2 Property, plant and equipment Carrying amount of property, plant and equipment 2023 Gross carrying amount Balance at 1 January Additions Disposals Balance at year end Accumulated depreciation Balance at 1 January Current year depreciation Disposals Exchange differences Balance at year end Property, plant and equipment at 31 December 2023 2022 Gross carrying amount Balance at 1 January Additions Disposals Exchange differences Balance at year end Accumulated depreciation Balance at 1 January Current year depreciation Disposals Exchange differences Balance at year end Property, plant and equipment at 31 December 2022 Depreciation on assets is charged on a straight-line basis as follows: • Fixtures and fittings: 3 to 14 years, or the term of any associated property lease. • Computer equipment: 1.5 to 5 years. FIXTURES & FITTINGS NZ$m COMPUTER EQUIPMENT NZ$m 5.0 0.1 (0.6) 4.5 (2.4) (0.7) 0.6 (0.1) (2.6) 1.9 5.3 - (0.5) 0.2 5.0 (2.3) (0.5) 0.5 (0.1) (2.4) 2.6 3.4 0.7 (0.6) 3.5 (1.3) (1.5) 0.6 - (2.2) 1.3 2.3 2.1 (1.2) 0.2 3.4 (1.3) (1.2) 1.1 0.1 (1.3) 2.1 TOTAL NZ$m 8.4 0.8 (1.2) 8.0 (3.7) (2.2) 1.2 (0.1) (4.8) 3.2 7.6 2.1 (1.7) 0.4 8.4 (3.6) (1.7) 1.6 - (3.7) 4.7 4.3 Investment in associates Associates are entities which Vista Group has significant influence but does not have 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 IFRS accounting standards 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 2023 HOLDING % 2022 HOLDING % Vista Entertainment Solutions (Shanghai) Limited (Vista China) Impairment of Vista China Associate China China 47.5% 47.5% In accordance with NZ IAS 28, Vista Group concluded on 30 June 2022 that there was objective evidence of impairment in its investment in Vista China due to there being a ‘significant financial difficulty of the associate’ (subsection 41A(a)). This was due to the Chinese Government’s continued ‘zero-covid’ public health response, including broad based lockdowns across many major cities, negatively impacting the Chinese cinema industry and box office in 2022. At the beginning of June 2022 lockdowns were eased with the box office in China showing modest signs of recovery. Accordingly, Vista Group concluded on 30 June 2022 that the entire carrying value was impaired, with an impairment charge of $8.9m being recognised (see section 2.3). At both 31 December 2022 and 31 December 2023, Vista Group reviewed its investment in Vista China for objective evidence that its fair value may be materially higher than its nil carrying value. No such objective evidence was noted. See section 8.1 for more details on Vista China’s significant related party transactions. 4.4 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. 114 Notes to the financial statements • 115 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 Cinema Movio Limited (Movio) Maccs International BV (Maccs) Powster Ltd (Powster) Flicks Limited (Flicks) Numero Limited (Numero) Goodwill at year end 2023 NZ$m 72.3 0.6 72.9 (15.2) (15.2) 57.7 2023 NZ$m 27.6 17.0 5.8 6.5 0.2 0.6 57.7 2022 NZ$m 70.9 1.4 72.3 (15.2) (15.2) 57.1 2022 NZ$m 27.6 17.0 5.6 6.1 0.2 0.6 57.1 2023 impairment testing of goodwill (significant estimation uncertainty) Vista Group completed its annual goodwill impairment review under a VIU method at 31 August 2023 (same month as prior years). The review concluded there was no impairment of goodwill or other assets, with key inputs into the VIU models including: • Cash flows: projected based on management approved 5-year business models for each CGU. • Discount rate: determined by an independent adviser using a capital asset pricing model methodology of determining the weighted average cost of capital (WACC), using market specific inputs. • Long-term growth rate (LTGR): determined by an independent adviser. • Terminal growth: being calculated at 2027 applying the LTGR of 2.0%. Specific VIU inputs, along with values required for the recoverable amount to equate to the carrying value are included in the table below: REVENUE CAGR IN YEAR 5 EBITDA MARGIN IN YEAR 5 AMOUNT THE VIU EXCEEDS THE CARRYING VALUE (NZ$m) PRE-TAX WACC APPLIED TO THE 2023 VIU VALUE APPLIED TO THE 2023 VIU VALUE REQUIRED FOR NIL HEADROOM VALUE APPLIED TO THE 2023 VIU VALUE REQUIRED FOR NIL HEADROOM 44.9 47.2 0.8 4.4 19.5 8.7 15.8% 16.8% 19.7% 16.9% 16.7% 18.7% 13.2% 8.6% 14.3% Not sensitive 14.4% 7.1% 8.9% 2.3% 11.7% Not sensitive 14.1% Not sensitive 26.4% 39.1% 23.6% 34.9% 31.2% 23.3% 22.4% 18.6% 20.0% 29.3% 14.7% 6.4% CURRENT CGU Vista Cinema Movio Flicks Maccs Powster Numero No CGUs were sensitive to the pre-tax WACC or the LTGR. The revenue Compound Annual Growth Rate (CAGR) in year 5 is a function of the management approved 5-year business model. When calculating the reduced revenue CAGR required for an impairment scenario to exist, there have been no adjustments to the costs or capital expenditure in the 5-year business models – despite this being a probable reaction to help address profitability and cash flows. 116 4.5 Other intangible assets Development costs and internally generated software (significant accounting judgement) Development – capitalised: Internally developed software is capitalised as an intangible asset when it meets the recognition criteria of NZ IAS 38 Intangible Assets, which includes evidence that the expenditure can be reliably measured, and the development is: • technically feasible; • likely to be completed and then used or sold; • likely to generate probable future economic benefits; and • Vista Group will have adequate technical, financial and other resources available to complete the development. Development – other: Other development expenditures that do not meet the NZ IAS 38 capitalisation recognition criteria are classified as operating expenses as incurred. Maintenance: Costs associated with maintaining computer software programmes are recognised as an expense within the income statement as incurred. 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. Carrying amount of intangible assets 2023 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 2023 INTERNALLY GENERATED SOFTWARE SOFTWARE LICENSES INTELLECTUAL PROPERTY CLIENT RELATIONSHIPS SECTION NZ$m NZ$m NZ$m NZ$m 2.3 2.3 64.7 18.7 (0.7) (2.0) 0.2 80.9 (24.1) (10.7) 0.7 0.2 - (33.9) 47.0 4.5 2.6 16.2 - - - 0.1 4.6 (2.9) (0.6) - - - (3.5) 1.1 - - - (0.1) 2.5 (1.9) (0.2) - - - (2.1) 0.4 - - (2.4) 0.2 14.0 (6.1) (1.5) - - (0.1) (7.7) 6.3 TOTAL NZ$m 88.0 18.7 (0.7) (4.4) 0.4 102.0 (35.0) (13.0) 0.7 0.2 (0.1) (47.2) 54.8 Notes to the financial statements • 117         2022 Gross carrying amount Balance at 1 January Additions Disposals Impairment charges Exchange differences Balance at year end Accumulated amortisation Balance at 1 January Current year amortisation Disposals Impairment charges Exchange differences Balance at year end Intangible assets at 31 December 2022 INTERNALLY GENERATED SOFTWARE SOFTWARE LICENSES INTELLECTUAL PROPERTY CLIENT RELATIONSHIPS SECTION NZ$m NZ$m NZ$m NZ$m 2.3 2.3 50.6 15.9 (1.3) (0.5) - 64.7 (15.7) (8.9) 1.3 (0.8) - (24.1) 40.6 4.6 - (0.1) - - 2.6 - - - - 4.5 2.6 (2.4) (0.6) 0.1 - - (2.9) 1.6 (1.8) (0.2) - - 0.1 (1.9) 0.7 6.0 9.6 - - 0.6 16.2 (4.1) (1.8) - - (0.2) (6.1) 10.1 TOTAL NZ$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 Internally generated software additions for the year of $18.7m include an accrual of $0.8m for an RDTI Government grant (see section 2.3). The total cash outflow for the year was therefore $19.5m. Internally generated software additions for the prior year of $15.9m exclude a 2021 trade payable of $0.9m. The total cash outflow for the prior year was therefore $16.8m. Impairment of intangible assets (significant estimation uncertainty) Vista Group reviewed the carrying value of its internally generated software for indicators of impairment and recognised the following impairment changes: • Capitalised development: Due to a change in the expectations of the Madex product, the carrying value has been fully impaired resulting in an impairment charge of $1.8m being recognised within ‘other gains and losses’ (see section 2.3). • Retriever client contracts: On 16 February 2022, Vista Group announced it acquired the client relationships assets of Retriever Software Inc. (Retriever). The fundamental driver behind this transaction was to sign their largest North American client to Vista Cloud, which has created significant intrinsic value in assisting Vista Cloud’s development. The secondary driver was to transfer their smaller clients to the Veezi platform. Vista Group progressed with the closure of the Retriever legacy platform on 31 July 2023 which resulted in a higher client churn rate than anticipated. An impairment review was performed using a multi-excess earnings method (MEEM), which is a FVLCD model that uses level 3 fair value measurement techniques. This model concluded that the $8.0m carrying value exceeded the $5.6m recoverable amount by $2.4m. Vista Group has recognised the $2.4m as an impairment charge within ‘other gains and losses’ (see section 2.3). The key inputs applied to the MEEM include: Future cash flows: 5-year revenue CAGR Future cash flows: Direct costs WACC LTGR RATE ASSUMED SENSITIVITY APPLIED IMPAIRMENT CHARGE ADJUSTMENT IF SENSITIVITY IS APPLIED 4.4% 46.0% 17.0% 2.5% +/- 1.0% +/- 5.0% +/- 2.0% +/- 1.0% +/- $0.1m +/- $0.4m +/- $0.5m +/- $0.1m • Vista China intangibles: In the prior year, 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 were fully impaired. This resulted in an impairment charge of $1.3m being recognised in the prior year. 4.6 Trade and other payables Carrying amount of trade and other payables Trade payables Sundry accruals Employee benefits Total trade and other payables 2023 NZ$m 7.6 4.4 10.3 22.3 2022 NZ$m 7.7 5.4 10.5 23.6 No balances relating to Vista China are included within trade payables (2022: $0.4m). See section 8.1 for further details of Vista China related party transactions. 4.7 Lease assets and lease liabilities Carrying amount of lease assets Balance at 1 January Additions during the year Additions relating to previously subleased premises 4.8 Adjustments in respect of assumed lease term SECTION Current year depreciation Exchange differences Lease assets at year end 2023 NZ$m 12.3 0.3 1.8 (1.3) (4.7) 0.3 8.7 2022 NZ$m 15.6 1.8 - (1.5) (4.0) 0.4 12.3 Lease assets at year end also include the property that was formerly subleased, as discussed in section 4.8. Following termination of this sublease the net investment in the sublease balance now represents a right of use asset of Vista Group. This subleased asset will revert to a subleased asset once a new tenant is occupying the space. Vista Group predominantly leases property for fixed periods of 1-7 years. Carrying amount of lease liabilities Balance at 1 January Additions during the year Adjustments in respect of assumed lease term Interest expense relating to lease liabilities Repayment of lease liabilities (including interest) Exchange differences Lease liabilities at year end Maturity of lease liabilities Less than one year One to five years More than five years Lease liabilities at year end 2023 NZ$m 18.6 0.3 (1.3) 0.7 (6.0) 0.2 12.5 2023 NZ$m 5.5 7.0 - 12.5 2022 NZ$m 22.6 1.8 (1.5) 0.8 (5.9) 0.8 18.6 2022 NZ$m 5.3 13.3 - 18.6 118 Notes to the financial statements • 119   4.8 Net investment in sublease asset 4.10 Provisions When Vista Group acts as a sublessor, it determines at the inception of the contract whether the lease is a finance lease (where the lease transfers substantially all the risks and rewards incidental to ownership of the underlying asset) or an operating lease (any lease that does not fit the criteria of a finance lease). A sublease that fits the finance lease criteria is recognised as an asset by present valuing all future lease payments. The sublease asset reduces on receipt of future lease payments. Unwinding of the present valued subleased asset is recognised on the income statement as finance income. At the end of each reporting period, the subleased asset is tested for impairment. A gain or loss is recognised at the start of the sublease where there is a difference between the value of the sublease and the amount of the existing lease asset that is de-recognised. A sublease that fits the criteria as an operating lease is not recognised as an asset, instead it is recognised as other income on the income statement when the receipt is contractually due. Carrying amount of net investment in sublease asset Balance at 1 January Impairment reversal / (charge) Amounts reclassified to right of use assets Lease payments received (including interest) Exchange differences Net investment in sublease at year end SECTION 2.3 4.7 2023 NZ$m 1.2 0.6 (1.8) - - - 2022 NZ$m 2.7 (1.5) - (0.1) 0.1 1.2 In the prior year, the subtenant of Vista Group’s Los Angeles premises abandoned their sublease with 4 years remaining on its term. Prior to the end of 2022 the sublease was terminated. Vista Group reviewed the sublease asset for impairment at 31 December 2022 and recognised an impairment charge on the income statement of $1.5m (see section 2.3). Following termination of the sublease, the asset reverted to being a right of use asset of Vista Group, presented separately as Vista Group was pursuing a new subtenant. At 30 June 2023, these assets were re-presented together as Vista Group started using the space and it was at that time considered unlikely to be re-sublet on its own. At 31 December 2023, Vista Group had found a new subtenant for this office space with the new sublease expected to commence in March 2024. The net result is a $0.6m impairment reversal being recognised at 31 December 2023. The new sublease asset will be reclassified from lease assets and recognised as a sublease asset in 2024, when a new tenant is occupying this space. 4.9 Deferred revenues Deferred revenues are contract liabilities related to revenue that are recognised on client contracts where Vista Group’s performance obligations have not been fully satisfied. The following table represents the revenues recognised during the year relating to carried forward deferred revenue, as well as the additional deferred revenues recognised at year end where the performance obligations are yet to be satisfied. Balance at 1 January Revenue recognised from performance obligations satisfied in the year Additional deferred revenues from unsatisfied performance obligations Exchange movements Deferred revenues at year end Represented by: Current portion Non-current portion Deferred revenues at year end 120 2023 NZ$m 22.7 (21.4) 25.4 0.5 27.2 26.7 0.5 27.2 2022 NZ$m 20.9 (20.3) 21.7 0.4 22.7 22.3 0.4 22.7 A provision is a liability of uncertain timing or amount and is recognised when Vista Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Carrying amount of provisions US sales taxes Business transformation constructive obligations Lease dilapidations Total provisions at year end Represented by: Current Non-current Total provisions at year end Movement in provisions Balance at 1 January US sales taxes SECTION 2.3 SECTION Business transformation constructive obligations 2.3 Lease dilapidations Total provisions at year end More detail on the business transformation is included in section 2.3. 2023 NZ$m - 0.8 0.5 1.3 1.2 0.1 1.3 2023 NZ$m 0.7 (0.3) 0.8 0.1 1.3 2022 NZ$m 0.3 - 0.4 0.7 0.6 0.1 0.7 2022 NZ$m 3.2 (2.5) - - 0.7 Notes to the financial statements • 121   4.11 Contingent consideration 5. Taxation Contingent consideration is an obligation for Vista Group to transfer additional consideration to the vendor of a business acquisition if future events occur or conditions are met. A contingent consideration liability is initially measured at fair value on the acquisition date and is remeasured to fair value at each reporting date, with changes included in the income statement in the year of remeasurement. Movement in contingent consideration Balance at 1 January Retriever acquisition - revenue earn-out Retriever acquisition - transition earn-out Amounts settled in cash during the year SECTION Movements in fair value through the income statement 2.3 Exchange movements Total contingent consideration at year end Represented by: Current Non-current Total contingent consideration at year end 2023 NZ$m 2.9 - - (1.3) (1.1) - 0.5 0.5 - 0.5 2022 NZ$m - 1.5 1.6 - - (0.2) 2.9 1.4 1.5 2.9 The acquisition price for Retriever included contingent cash consideration through the following earn-outs: • Revenue earn-out: $1.5m was payable before 30 April 2023 if specific revenue targets were achieved. In the current year Vista Group settled $1.3m of this earn-out in cash. • Transition earn-out: $1.6m remains payable in Q1 2024 based on the retention and integration of key clients to Vista Group’s platforms. Vista Group project $0.5m of this earn-out will be achieved and ultimately payable. Vista Group recognised a fair value gain of $1.1m in the current year relating to the reduction in these contingent cash consideration liabilities (see section 2.3). See section 4.5 for details of the $2.4m impairment charge relating to the Retriever client contracts (intangible asset). This section outlines details of the income tax expense incurred by Vista Group and the deferred taxes recognised on the statement of financial position. 5.1 Income tax expense The income tax expense for the year comprises current and deferred tax. Taxation is recognised in the income statement, except when it relates to items recognised directly in equity (in which case the income tax is recognised in the statement of other comprehensive income). Income tax expense is based on tax rates and regulation enacted, or substantively enacted at the balance date, in the jurisdiction in which the respective entity operates. Composition of income tax expense Current tax expense Deferred tax benefit Total taxation benefit Reconciliation of income tax expense SECTION 5.2 2023 NZ$m 2.1 (6.0) (3.9) 2022 NZ$m 2.8 (4.4) (1.6) The relationship between the expected tax expense based on the domestic effective tax rate of the Company at 28% (2022: 28%) and the reported tax expense in the income statement can be reconciled as follows: Loss before tax Domestic tax rate for Vista Group International Limited Expected taxation benefit Foreign subsidiary company tax Non-assessable income / non-deductible expenses Prior year adjustments Other Total taxation benefit Effective tax rate 2023 NZ$m (17.5) 28% (4.9) 0.1 0.4 (0.2) 0.7 (3.9) 22% 2022 NZ$m (22.5) 28% (6.3) (0.1) 5.7 (0.5) (0.4) (1.6) 7% At 31 December 2023, Vista Group had $10.9m (2022: $11.2m) of imputation credits available for use in subsequent reporting years. Vista Group also had $3.2m (2022: $1.1m) of unused tax losses for which no deferred tax asset has been recognised, as they did not meet the recognition criteria. 122 Notes to the financial statements • 123   5.2 Deferred tax assets and liabilities 6. Capital structure This section outlines Vista Group’s capital structure, earnings per share and share-based employee incentives which have an impact on Vista Group’s equity. Components of equity Contributed equity: Represents the value of shares that have been issued. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity. All transactions with owners of the parent are recorded separately within share capital. All shares are ordinary, authorised, issued and fully paid shares. They all have equal voting rights and share equally in dividends and any surplus on winding up. The shares have no par value. Retained earnings: All current and prior year retained profits and losses. Dividend payments: Dividends payable to equity shareholders are included in trade and other payables when the dividends have been approved by the Board on or before the end of the reporting year but not yet distributed. Foreign currency reserve: This reserve is used to record cumulative translation differences on the assets and liabilities of foreign operations. The cumulative translation differences are recycled to the income statement on disposal of the foreign operation. Share-based payment reserve: This reserve is used to record any equity share-based incentives. The reserve value represents the difference between the value at the time of allocation and the cash incentives received, plus the equity component of contingent consideration payable. 6.1 Contributed equity At 31 December 2023, there were 236,243,042 shares in issue (2022: 233,192,093). 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 Excess income tax expense on share-based payments MILLIONS OF SHARES NZ$m 2023 2022 2023 2022 233.2 231.2 135.0 131.3 - 3.0 - 1.5 0.5 - - 5.7 (0.2) 3.2 0.9 (0.4) Total contributed equity at year end 236.2 233.2 140.5 135.0 Vista Group issued 1,529,987 shares on 16 February 2022 which formed part of the consideration transferred for the Retriever asset acquisition. 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 for the asset to be utilised. Recognition of deferred tax assets (significant estimation uncertainty) Deferred tax at year end includes temporary timing differences and income tax losses available to carry forward against future profits. A deferred tax asset is recognised on losses, only when it is considered probable that sufficient taxable profits will be available to utilise the losses in the near future. Vista Group applies judgement when reviewing current business plans and forecasts to ascertain the likelihood of future taxable profits. The financial forecasts used in this assessment are the same as those used in the impairment review of goodwill and other assets in section 4.4. Deferred taxes can be summarised as follows: 2023 Trade and other receivables Property, plant and equipment Lease assets Intangible assets Employee benefits Lease liabilities Available tax losses Other Deferred tax net asset at 31 December 2023 2022 Trade and other receivables Property, plant and equipment Lease assets Intangible assets Employee benefits Lease liabilities Available tax losses Other Deferred tax net asset at 31 December 2022 Deferred tax net asset is represented by: Deferred tax asset Deferred tax liability Deferred tax net asset OPENING BALANCE NZ$m 2.6 (2.2) (2.7) (1.0) 3.2 3.8 13.9 0.1 17.7 3.5 (2.0) (3.8) (1.6) 2.2 5.6 9.9 (0.1) 13.7 RECOGNISED IN OTHER COMPREHENSIVE INCOME NZ$m - - - - (0.2) - - - (0.2) - - - - (0.4) - - - (0.4) RECOGNISED IN INCOME STATEMENT CLOSING BALANCE NZ$m (1.6) (0.5) 0.5 0.4 (0.1) (0.7) 7.4 0.6 6.0 (0.9) (0.2) 1.1 0.6 1.4 (1.8) 4.0 0.2 4.4 2023 NZ$m 24.1 (0.6) 23.5 NZ$m 1.0 (2.7) (2.2) (0.6) 2.9 3.1 21.3 0.7 23.5 2.6 (2.2) (2.7) (1.0) 3.2 3.8 13.9 0.1 17.7 2022 NZ$m 17.8 (0.1) 17.7 The deferred tax asset of $21.3m recognised for available tax losses relate to the New Zealand ($19.6m), United States ($0.9m), Netherlands ($0.5m) and United Kingdom ($0.3m) tax jurisdictions. As none of these jurisdictions impose an expiry date on tax losses, and due to management prepared 5-year business models projecting a return to profitability, Vista Group applied judgement in determining it is probable that these tax losses will be utilised. 124 Notes to the financial statements • 125             6.2 Earnings per share 6.5 Share-based payments Vista Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date. 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 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. 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 (millions) Loss for the year attributable to owners of the parent (NZ$m) Basic and diluted EPS (dollars) 6.3 Dividends No dividends were paid during the year (2022: $nil). 6.4 Foreign currency reserve 2023 235.4 3.2 238.6 (13.9) ($0.06) 2022 232.9 4.5 237.4 (21.4) ($0.09) Items included in the financial statements of each of Vista Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the Functional Currency). The financial statements are presented in New Zealand Dollars (NZD), which is Vista Group’s presentation currency. All financial information has been presented rounded as millions of dollars (NZ$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. Share-based payment expense 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 (Executive Retention) LTI Scheme - Share Rights (LTI Share Rights) LTI Scheme - Performance Rights (LTI Performance Rights) Total share-based payment expense Summary of performance rights The movement in the number of rights outstanding is summarised in the following table: MILLIONS OF RIGHTS VGRS GROUP CEO EXECUTIVE RETENTION LTI - SHARE RIGHTS RETENTION SCHEMES At 1 January 2022 Granted Lapsed / Forfeited Vested / Exercised At 31 December 2022 Granted Lapsed / Forfeited Vested / Exercised At 31 December 2023 - 2.1 (0.2) - 1.9 - - (1.9) - 0.5 - - (0.1) 0.4 0.2 - (0.4) 0.2 - 0.3 - - 0.3 0.3 - - 0.6 0.5 0.6 - (0.2) 0.9 0.8 (0.2) (0.3) 1.2 2023 NZ$m 0.8 0.3 0.5 0.9 0.7 3.2 PERFORMANCE SCHEMES LTI - PERFORMANCE RIGHTS 0.7 0.6 (0.1) (0.2) 1.0 0.8 (0.2) (0.4) 1.2 2022 NZ$m 2.5 0.3 0.2 0.8 0.7 4.5 TOTAL 1.7 3.6 (0.3) (0.5) 4.5 2.1 (0.4) (3.0) 3.2 The share price of awards on the date of vesting in 2023 was $1.23 for the Group CEO scheme, and $1.32 for the VGRS, LTI Share Rights / LTI Performance Rights schemes. 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 Performance Rights schemes. 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 1.0 years (2022: 0.7 years). 126 Notes to the financial statements • 127   Fair value assumptions 7. 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 no cost, the exercise price is always $nil and therefore no volatility or risk-free rates are required. • For schemes granted in 2023, no dividend yield has been assumed (2022: nil) and the awards are assumed to be 100% achieved (2022: 100%). Retention schemes At 31 December 2023, Vista Group was operating the following retention schemes: ASSUMPTION GROUP CEO Share price on grant date (NZ$) Vesting period (months) $1.51 13-25 2023 EXECUTIVE RETENTION $1.47 16 LTI SHARE RIGHTS $1.37 13-37 VGRS $1.83 13 2022 EXECUTIVE RETENTION $1.80 25-37 LTI SHARE RIGHTS $1.86 13-37 • Group CEO: 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 was not included in the summary of performance rights until employment commenced in April 2023. • Executive Retention: The Board approved awards to be issued under this scheme in 2023 and 2022 to select senior management. These awards are subject to continued tenure of each participant, with all awards granted in 2023 due to vest in April 2024. The 2022 award has 100,000 share rights 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 2023 and 2022 to eligible senior management. The share rights are split into three tranches and vest annually over a three-year period. • 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 vested in full in April 2023 to all participants still employed. 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 2023, Vista Group was operating the following performance schemes: • LTI Performance Rights: The Board approved awards to be issued under this scheme in both 2023 and 2022 to eligible senior management. The scheme requires achievement of recurring revenue targets set by the Board with vesting occurring 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. 7.1 Capital management The following table summarises the capital of Vista Group: Borrowings Equity Total capital 2023 NZ$m 18.6 137.3 155.9 2022 NZ$m 18.1 148.0 166.1 Vista Group’s policy is to use a mixture of capital raised on the NZX / ASX exchanges and borrowing facilities to meet anticipated funding requirements. These borrowings together with cash generated from operations, are loaned internally, or contributed as equity to certain subsidiaries. 7.2 Foreign currency risk Vista Group operates internationally and is exposed to foreign exchange risk in US Dollars (USD), Pounds Sterling (GBP), Euros (EUR), and Australian Dollars (AUD). Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the functional currency of the relevant group entity. To mitigate exposure to foreign currency risk, foreign currency cash flows are monitored in accordance with Vista Group’s risk management policies. Vista Group’s risk management policies include treasury management and foreign exchange policies, the implementation of which is set and reviewed regularly by the Board. Vista Group’s risk management procedures distinguish short- term foreign currency cash flows (due within 6 months) from longer-term cash flows (due after 6 months). Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken. The foreign exchange policy allows for the use of hedging activity, and although Vista Group uses its debt facilities as a natural hedge, no other financial instruments have been used (i.e. derivatives). Foreign currency denominated financial assets and liabilities which expose Vista Group to currency risk are disclosed in the following table. The amounts shown are those reported to key management translated into NZD at the closing rate. 2023 Financial assets Cash Trade receivables Sundry receivables Financial liabilities Borrowings Trade payables Sundry payables Lease liabilities Contingent consideration Net foreign currency risk USD NZ$m 13.1 20.5 0.4 (17.5) (3.1) (1.4) (7.5) (0.5) 4.0 GBP NZ$m 2.9 5.2 0.5 (0.5) (0.4) (0.4) (1.0) - 6.3 EUR NZ$m 1.7 6.6 - - (0.1) (0.1) (0.3) - 7.8 AUD NZ$m 1.0 1.2 - - - (0.1) - - 2.1 128 Notes to the financial statements • 129 2022 Financial assets Cash Trade receivables Sundry receivables Net investment in sublease Financial liabilities Borrowings Trade payables Sundry payables Lease liabilities Contingent consideration Net foreign currency risk USD NZ$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 AUD NZ$m 0.5 1.3 - - - (0.3) (0.1) - - 1.4 The following table illustrates the sensitivity of profit or loss and equity in regard to Vista Group’s financial assets and liabilities affected by exchange rates with ‘all other things being equal’. It assumes a +/- 10% change of the NZD to currency exchange rate for each year presented. The sensitivity analysis is based on Vista Group’s foreign currency financial instruments held at each reporting date. 2023 10% strengthening in NZD 10% weakening in NZD 2022 10% strengthening in NZD 10% weakening in NZD USD NZ$m (0.4) 0.4 (0.2) 0.2 GBP NZ$m (0.6) 0.7 (0.5) 0.6 EUR NZ$m (0.7) 0.9 (0.6) 0.7 AUD NZ$m (0.2) 0.2 (0.1) 0.2 Exposure to foreign exchange rates varies during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of Vista Group’s exposure to market risk. 7.3 Interest rate risk Vista Group’s interest rate risk primarily arises from long-term borrowing, lease liabilities and cash. Borrowings and deposits at variable rates expose Vista Group to cash flow interest rate risk. Borrowings and deposits at fixed rates expose Vista Group to fair value interest rate risk. The following tables set out the interest rate repricing profile and current interest rate of the interest-bearing financial assets and liabilities: 2023 Financial assets Cash Financial liabilities Borrowings Lease liabilities Net interest risk 2022 Financial assets Cash Net investment in sublease Financial liabilities Borrowings Lease liabilities Net interest risk EFFECTIVE INTEREST RATE FLOATING NZ$m FIXED UP TO 3 MONTHS FIXED UP TO 6 MONTHS FIXED UP TO 5 YEARS NZ$m NZ$m NZ$m TOTAL NZ$m 3.5% 23.5 5.0 7.1% 4.1% - - - - 23.5 5.0 - - (0.3) (0.3) 2.3% 6.3% 7.0% 4.0% 22.0 11.0 5.0 - - - - - - - - - - 28.5 (18.6) (12.2) (30.8) 8.0 1.2 (18.1) (18.6) (18.6) (12.5) (2.6) 46.0 1.2 (18.1) (18.6) 22.0 11.0 5.0 (27.5) 10.5 Profit or loss is sensitive to higher / lower interest income / expense from cash as a result of changes in interest rates. 2023 Cash Borrowings Lease liabilities Sensitised net interest risk EFFECTIVE INTEREST RATE +1% EFFECTIVE INTEREST RATE -1% NZ$m 0.3 (0.2) (0.1) - NZ$m (0.3) 0.2 0.1 - Vista Group’s bank deposits are predominantly held with top tier Australasian banks and HSBC. 130 Notes to the financial statements • 131 7.4 Credit risk 7.5 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 7.6. 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 2023, Vista Group has certain trade receivables and contract assets that have not been settled by their 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 (representing those over 90 days), 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) SECTION 4.1 4.1 4.1 2023 NZ$m 2.3 0.7 0.3 3.3 2022 NZ$m 3.5 2.4 2.6 8.5 Trade receivables consist of many clients in various geographical areas, but predominantly within the cinema and film industry. 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 4.1 for more detail of how judgement has been applied. Vista Group has financial assets classified and measured at amortised cost that are subject to the ECL model requirements of NZ IFRS 9. See section 4.1 for 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 2023, Vista Group had cash balances of $28.5m, along with $24.4m undrawn on its ASB revolving credit and overdraft facilities. Forecasts show that this level of cash and undrawn loans will be sufficient for Vista Group to continue operations for at least the next 12 months (representing the minimum requirement for going concern purposes). The table below summarises the maturity profile of Vista Group’s non-derivative financial liabilities based on contractual undiscounted payments. 2023 Borrowings Trade payables Sundry payables Interest on borrowings Lease liabilities (including interest) Contingent consideration Total liquidity risk 2022 Borrowings Trade payables Sundry payables Interest on borrowings Lease liabilities (including interest) Contingent consideration Total liquidity risk LESS THAN 3 MONTHS NZ$m - 7.6 4.0 0.4 1.8 0.5 14.3 - 7.7 4.9 0.4 1.7 - 14.7 3 TO 12 MONTHS 1 TO 5 YEARS > 5 YEARS NZ$m 1.0 - - 1.2 5.3 - 7.5 0.5 - - 1.1 5.5 1.4 8.5 NZ$m 17.6 - - 1.5 8.8 - 27.9 17.6 - - 3.0 16.8 1.5 38.9 NZ$m - - - - - - - - - - - - - - TOTAL NZ$m 18.6 7.6 4.0 3.1 15.9 0.5 49.7 18.1 7.7 4.9 4.5 24.0 2.9 62.1 7.6 Financial instruments Fair value of financial assets and liabilities Vista Group undertook a fair value assessment of its financial assets and liabilities at 31 December 2023 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. During the current year, there have been no transfers between fair value measurement levels. The contingent consideration of the Retriever asset acquisition is subsequently fair valued using level 3 measurements, such as the probability Vista Group deem the earnouts are likely to be earned and movements in exchange. 132 Notes to the financial statements • 133 Financial instruments by category FINANCIAL ASSETS AT AMORTISED COST FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH P&L FINANCIAL LIABILITIES AT AMORTISED COST 2023 Cash Trade receivables Sundry receivables Total financial assets Borrowings Trade payables Sundry payables Lease liabilities Contingent consideration Total financial liabilities 2022 Cash Trade receivables Sundry receivables Net investment in sublease Total financial assets Borrowings Trade payables Sundry payables Lease liabilities Contingent consideration Total financial liabilities NZ$m 28.5 31.5 2.2 62.2 - - - - - - 46.0 31.6 1.2 1.2 80.0 - - - - - - NZ$m NZ$m - - - - - - - - 0.5 0.5 - - - - - - - - - 2.9 2.9 - - - - 18.6 7.6 4.0 12.5 - 42.7 - - - - - 18.1 7.7 4.9 18.6 - 49.3 Vista Group’s financial assets and liabilities by category are summarised as follows: • Cash: Held at carrying value which also equates to fair value. 8. Other information 8.1 Related parties Vista Group has various types of transactions with related parties. Section 3.2 contains details of related party borrowings, with other related party transactions detailed below. Key management personnel transactions Key management personnel include Vista Group’s Board and the Global Senior Leadership Team (GSLT), which represent the personnel who report directly to the Vista Group’s CEO. Key management personnel at 31 December 2023 include 17 individuals (6 Directors and 11 GSLT members) (2022: 17 individuals, being 6 Directors and 11 GSLT members). Salaries (including bonuses) Share-based payments Director fees Total key management personnel transactions Other related party transactions 2023 NZ$m 6.2 1.3 0.7 8.2 The following table represents amounts due to and from related parties, excluding key management personnel. Associate company AMOUNTS OWED BY RELATED PARTIES AMOUNTS OWED TO RELATED PARTIES 2023 NZ$m - 2022 NZ$m 1.4 2023 NZ$m - Vista Group’s associate company related party transactions were as follows: Receiving of services Rendering of services Total related party transactions ASSOCIATE COMPANY 2023 NZ$m (0.3) - (0.3) 2022 NZ$m 5.5 0.5 0.7 6.7 2022 NZ$m (0.4) 2022 NZ$m (0.2) 2.4 2.2 • Trade, related party and other receivables: Assets that are generally short-term in nature and are reviewed for impairment. The Details of significant related party transactions of Vista Group 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. Vista Cinema recognised $1.2m of maintenance revenue from Vista China during the year (2022: $0.9m). Details of significant related party transactions of Vista China On 18 December 2023, the Board of Vista China resolved to terminate their reseller agreement with Vista Group and to waive the below related party loans: • Vista China CEO retention accommodation loan: This $4.5m (CNY 20.0m) loan was provided by Vista China to the CEO of Vista • Trade, related party and other payables: Liabilities that are generally short-term in nature with the carrying value approximating China on 30 January 2019. their fair value. • Weying shareholder loan: This $3.2m (CNY 14.3m) loan was provided by Vista China to Weying, who are a 47.5% shareholder • Lease liabilities: Liabilities arising from a lease are initially measured on a present value basis using the lessee’s incremental of Vista China. 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. In prior years, Vista Group has attributed a 100% ECL provision on these loans when determining the appropriate carrying value of Vista China, and any equity accounted results recognised from Vista China. Vista Group has also attributed $nil carrying value to Vista China since 30 June 2022. 134 Notes to the financial statements • 135                                   8.2 Group companies These financial statements consolidate the following subsidiaries of the Company: COMPANY NAME COUNTRY OF INCORPORATION DIRECTORS Flicks Limited New Zealand Maccs International B.V. Netherlands Matthew Cawte, Kelvin Preston, Stuart Dickinson Vista Entertainment Solutions (NL) B.V. FURTHER INFORMATION Resignation of Kimbal Riley. Appointment of Stuart Dickinson SHAREHOLDING 2023 2022 100% 100% No changes 100% 100% PRINCIPAL ACTIVITY Advertising sales Software development & licensing MovieXchange Limited MovieXchange Limited New Zealand None New Zealand Kelvin Preston Inactive Amalgamated into Vista Group (NZ) Limited - 100% Newly incorporated entity to preserve brand name 100% - Movio (IP) Limited New Zealand None Movio Limited New Zealand None Movio Limited New Zealand Kelvin Preston Inactive Software development & licensing Resignation of Kimbal Riley. Appointment of Stuart Dickinson Amalgamated into Vista Group (IP) Limited Amalgamated into Vista Group (NZ) Limited Newly incorporated entity to preserve brand name Resignation of Kimbal Riley. Appointment of Stuart Dickinson Resignation of Kimbal Riley. Appointment of Stuart Dickinson Resignation of Kimbal Riley. Appointment of Stuart Dickinson Resignation of Kimbal Riley. Appointment of Stuart Dickinson - - 100% 100% 100% - 100% 100% 100% 100% 100% 100% 50% 50% 50% 50% No changes 100% 100% No changes 60% 60% No changes 100% 100% Amalgamated into Vista Group (IP) Limited Resignation of Kimbal Riley. Appointment of Stuart Dickinson - 100% 100% 100% Resignation of Kimbal Riley. Appointment of Stuart Dickinson 100% 100% Data analytics & marketing Holding company Marketing & creative solutions Marketing & creative solutions Software development Software licensing Software development & licensing Software licensing Inactive Movio, Inc. United States Numero Limited New Zealand Numero (Aust) Pty Ltd Australia Powster, Inc. United States Matthew Cawte, Kelvin Preston, Stuart Dickinson Matthew Cawte, Kelvin Preston, Stuart Dickinson Matthew Cawte, Kelvin Preston, Stuart Dickinson, Kirk Senior Stuart Dickinson, Steven Thompson Powster Ltd United Kingdom Stuart Dickinson, Steven Thompson S.C. Share Dimension S.R.L. Senda DO Brasil Serviços de Tecnológia LTDA. Share Dimension B.V. Romania Share Dimension B.V. Brazil Armando Mejias, Gustavo Ortega Netherlands Vista Entertainment Solutions (NL) B.V. Vista (IP) Limited New Zealand None Malaysia Canada Vista Entertainment Solutions (Asia) Sdn. Bhd. Vista Entertainment Solutions (Canada) Limited Matthew Cawte, Kelvin Preston, Stuart Dickinson, Huang Swee Lin Matthew Cawte, Kelvin Preston, Stuart Dickinson COMPANY NAME Vista Entertainment Solutions (NL) B.V. Vista Entertainment Solutions (Spain), S.L.U. Vista Entertainment Solutions (UK) Limited Vista Entertainment Solutions (USA), Inc. Vista Entertainment Solutions Limited Vista Entertainment Solutions Limited Vista Group (IP) Limited COUNTRY OF INCORPORATION Netherlands DIRECTORS Matthew Cawte, Kelvin Preston, Stuart Dickinson Spain Kelvin Preston, Kimbal Riley United Kingdom United States Matthew Cawte, Kelvin Preston, Stuart Dickinson Matthew Cawte, Kelvin Preston, Stuart Dickinson New Zealand None PRINCIPAL ACTIVITY Software licensing Inactive Software licensing Software licensing New Zealand Kelvin Preston Inactive New Zealand Matthew Cawte, Kelvin Preston, Stuart Dickinson Distributor of intellectual property Vista Group (NZ) Limited New Zealand Matthew Cawte, Kelvin Preston, Stuart Dickinson Software licensing SHAREHOLDING FURTHER INFORMATION 2023 2022 Resignation of Kimbal Riley. Appointment of Stuart Dickinson 100% 100% Resignation of Kimbal Riley and appointment of Stuart Dickinson and Matthew Cawte underway Resignation of Kimbal Riley. Appointment of Stuart Dickinson 100% 100% 100% 100% Resignation of Kimbal Riley. Appointment of Stuart Dickinson 100% 100% Amalgamated into Vista Group (NZ) Limited - 100% 100% 100% 100% - - - Newly incorporated entity to preserve brand name Amalgamated with Movio (IP) Limited on 1 December 2023, re-named from Vista (IP) Limited to Vista Group (IP) Limited Amalgamated with Movio Limited and MovieXchange Limited on 1 December 2023, re-named from Vista Entertainment Solutions Limited to Vista Group (NZ) Limited Vista Group Limited New Zealand Kelvin Preston, Stuart Dickinson Inactive Appointment of Stuart Dickinson 100% 100% Vista International Entertainment Solutions South Africa (Pty) Ltd Vista Latin America, S.A. de C.V. South Africa Matthew Cawte, Kelvin Preston, Stuart Dickinson Software licensing Resignation of Kimbal Riley. Appointment of Stuart Dickinson 100% 100% Mexico Murray Holdaway, Kimbal Riley, Brian Cadzow, Armando Mejias, Gustavo Ortega Software licensing No changes 60% 60% 136 Notes to the financial statements • 137 Other information 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. 8.3 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 2023, Vista Group had $52.9m in cash liquidity, with $28.5m 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 are accretive. The ASB facilities are 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. 8.4 Capital commitments There were no capital commitments for Vista Group at 31 December 2023 (2022: $nil). 8.5 Events after balance date In February 2024, Vista Group reached a conditional agreement to sublease a portion of its Los Angeles premises from March 2024 to July 2026. This will result in a balance sheet reclassification of approximately $1.2m (from lease asset to a subleased asset) in 2024. Vista Group considered the lease asset for impairment at 31 December 2023 and determined no further impairment charge or reversal was required. There were no other significant events between balance date and the date these financial statements were approved for issue. Independent auditor’s report To the shareholders of Vista Group International Limited Our opinion In our opinion, the accompanying financial statements of Vista Group International Limited (the Company), including its subsidiaries (Vista Group), present fairly, in all material respects, the financial position of Vista Group as at 31 December 2023, 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 Accounting Standards (IFRS Accounting Standards). What we have audited Vista Group's financial statements comprise: ● ● ● ● ● ● the statement of financial position as at 31 December 2023; the income statement for the year then ended; the statement of other comprehensive income for the year then ended; the statement of changes in equity for the year then ended; the statement of cashflows for the year then ended; and the notes to the financial statements, comprising material accounting policy information 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 Vista 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 Vista 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 Vista 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. PricewaterhouseCoopers, 15 Customs Street West, Private Bag 92162, Auckland 1142, New Zealand T: +64 9 355 8000, pwc.co.nz 138 Independent auditor's report • 139 Description of the key audit matter How our audit addressed the key audit matter Description of the key audit matter How our audit addressed the key audit matter Impairment testing of goodwill Section 4.4 of the financial statements provides details of the goodwill balance of $57.7 million as at 31 December 2023, which comprised balances in six cash generating units (CGUs). The impairment tests were performed as at 31 August 2023, 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 2023. The estimated cash flows used in the VIU models were based on the management approved five year business plans. The valuations involve the application of significant judgement in forecasting future business performance and determining certain key assumptions and estimates, in particular: ● Revenue growth rates and EBITDA margins for the five year forecast period; 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 2023. No impairment charges 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 and estimation involved in assessing the recoverable amount of each CGU. PwC 140 Our audit procedures in relation to management’s impairment testing of goodwill at 31 August 2023 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 for the material impairment tests: − 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; Held discussions with management for each CGU to gain an understanding of the business strategies, forecast assumptions and risks for the CGUs, including the implications from the current business transformation and progress with product and platform developments; Assessed the revenue and expense growth rates used over the five year forecast period in light of the discussions and other supporting information from management; Obtained and evaluated management’s sensitivity analysis to ascertain the impact of reasonably possible changes in key assumptions; and Engaged our own expert to assess whether the long term growth rates and discount rates used in the VIU models are reasonable. − − − − − ● We assessed the adequacy of disclosures in the financial statements. We also obtained and assessed management’s assessment of impairment indicators at year-end. Revenue and expected credit loss provisioning Section 4.1 of the financial statements provides details of various provisions totalling $2.5 million at 31 December 2023 that are recognised in relation to Vista Group’s trade receivables and contract assets balances. There is significant estimation uncertainty regarding the amount that may be collected for Vista Group’s products and services. While ageing has improved, the quantum of gross trade receivables, contract assets and provisions remains highly material. 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 receivables and contract assets balances and the provisions within those balances, and the significant estimation uncertainty as a result of 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 / or recent payment history; ● We assessed the reasonableness of the total provisions, by understanding the reasons for changes in provisioning rates, performing an analysis and sensitivity check of the ageing profile of the gross and net trade receivable balances as at 31 December 2023 and comparing to the 31 December 2022 balances; ● We calculated the projected time to settle the outstanding net balance, based on the recent average monthly cash collections, and assessed whether this indicated collection issues; ● We performed lookback procedures on the provisions for the 31 December 2022 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 the effect of credit notes issued after year-end and customers that have entered a formal insolvency process; and 140 PwC 141 Independent auditor's report • 141 Description of the key audit matter How our audit addressed the key audit matter ● 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: $1.07 million, which represents 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 Vista Group and it is a generally accepted benchmark. 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: ● ● Impairment testing of goodwill Revenue and expected credit loss provisioning 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 Vista Group, the accounting processes and controls, and the industry in which Vista Group operates. Other information The Directors are responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the financial statements The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of the financial statements in accordance with NZ IFRS and IFRS Accounting Standards, 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 Vista 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 Vista 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. PwC 142 142 PwC 143 Independent auditor's report • 143 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. Directory The engagement partner on the audit resulting in this independent auditor’s report is Troy Florence. Directors Susan Peterson • Chair For and on behalf of: Chartered Accountants 27 February 2024 Auckland Registered office Shed 12, City Works Depot Claudia Batten Murray Holdaway James Miller Cris Nicolli Kirk Senior 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 600 417 203 PricewaterhouseCoopers Level 27, PwC Tower 15 Customs Street West Auckland 1010 Solicitors New Zealand Chapman Tripp Hudson Gavin Martin Level 34, PwC Tower Level 16 15 Customs Street West 45 Queen Street 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 PwC 144 144 Directory • 145 Glossary of terms AGC AMPTP API ARC ARR ASM ASX Additional Group Companies segment of Vista Group. The Alliance of Motion Picture and Television Producers. Application Programming Interface, a way for two or more software applications to communicate with each other. The Audit and Risk Committee of Vista Group. Annualised Recurring Revenue, which is a KPI calculated as trailing three month Recurring Revenue multiplied by four. The Annual Shareholders' Meeting. Australian Securities Exchange, which is the stock exchange Vista Group is dual listed as an ASX Foreign Exempt Listing. Barbenheimer The simultaneous theatrical release of two films, Warner Bros. Pictures' Barbie and Universal Pictures' Oppenheimer, on July 21, 2023. Board CAGR The Board of Directors of Vista Group. Compound Annual Growth Rate. Cash Usage Cash Usage is a non-GAAP measure which is calculated using the net movement in cash held, less cash applied to business acquisitions / earn-outs, and less cash used to settle exceptional items included within “other gains and losses”. CGU Client cNPS CODM CSN Cash Generating Unit. End users of Vista Group's solutions and services. Client Net Promoter Score, a client loyalty and satisfaction measurement. The Chief Operating Decision Maker, which is Vista Group's CEO. Common Shareholder Number. Directors The Directors of Vista Group International Limited whose names are set out on page 64. Distributor Domestic Box Office EBITDA ECL eNPS Enterprise Cinema EPS ERC A company responsible for marketing and distribution of a film for cinema exhibition. The distribution company may be the same as, or different from, the production company. The gross box office revenue from North America (United States and Canada). 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. Expected Credit Loss. Employee Net Promoter Score, an employee loyalty and satisfaction measurement. A cinema exhibitor company with 20+ screens. Earnings per share. Employee Retention Credit. Exhibitor A cinema exhibitor company. Exhibition The public screening of a movie or a film's release in cinemas. F&B FCF Food and beverage. Free Cash Flow is a non-GAAP measure which is calculated using the net movement in cash held, less cash applied to business acquisitions / earn-outs, and less cash used to settle exceptional items included within “other gains and losses”. Film Industry The film industry or motion picture industry comprises the technological and commercial institutions involved in the production, distribution, and exhibition of films. Faster Identification Number. Fair Value Less Costs to Dispose. General Data Protection Regulation, as defined by Regulation (EU) 2016/679. Green house gases. The Global Senior Leadership Team of Vista Group, comprising the people that report directly to Vista Group's CEO. FIN FVLCD GDPR GHG GSLT 146 Horizon Vista's cloud-based data warehouse and business intelligence solution. IAS International Accounting Standards. IFRS Accounting Standards International Box Office IPO KPI LTGR LTI Lumos International Financial Reporting Standards. The global gross box office revenue, excluding Domestic Box Office. Initial Public Offering of Vista Group International Limited's shares in 2014. Key Performance Indicator. Long-Term Growth Rate. Long-Term Incentive. Vista Cloud's suite of digital sales channels. Moviegoer A person who goes to the cinema. NCI Non-controlling interest. Non-GAAP Financial information that does not have a standardised meaning prescribed by NZ GAAP. NRC Nominations and Remuneration Committee. NZ GAAP Generally Accepted Accounting Practice in New Zealand. NZ IFRS New Zealand equivalents to International Financial Reporting Standards. NZX New Zealand Exchange Main Board, which is the stock exchange on which Vista Group is primarily listed. Other gains and losses PwC RDTI Recurring Revenue SaaS Items that, by virtue of the nature and incidence, have been disclosed separately in order to draw attention of the reader of the financial statements. For example, they may include (but are necessarily limited to) profits or losses arising on the acquisition/disposal of an operation, fair value movements through the income statement, restructuring costs, movements in contingent consideration, or impairment charges. Vista Group's auditor, PricewaterhouseCoopers. Research & Development Tax Incentive. 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. Software as a Service, which allows users to connect to and use cloud-based software over the internet. SaaS Revenue Revenues derived from subscription-based cloud-hosted software, with the software located on externally provided servers. SAG-AFTRA The Screen Actors Guild-American Federation of Television and Radio Artists. SOC 2 Type 1 The Service Organisation Control Type 1, which is a cybersecurity compliance framework. STI Studio TCFD Theatrical Short-term incentive. A major entertainment company that makes films. Taskforce on Climate-Related Financial Disclosures. A movie specifically made to be shown in a theatre or cinema, as opposed to a made-for-television film, or a film released directly to video or streaming. VGRS Vista Group Recognition Scheme. Vista Group Vista Group International Limited and its subsidiaries (collectively Vista Group). VIU WACC WGA Value in Use. Weighted Average Cost of Capital. Writers Guild of America. Writers and Actors Strike The strikes arising as a result of the labour dispute between SAG-AFTRA and AMPTP which occurred between 14 July - 9 November 2023 and the labour dispute between WGA and AMPTP which occurred between 2 May - 27 September 2023. Glossary of terms • 147 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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