VGL – FY2018 Results Announcement
Market Announcement
26 February 2019, Vista Group International Limited, Auckland, New Zealand.
_______________________________________________________________________________________________________________
Vista Group Produces Another Highlights Package
Annual result reflects 23% revenue growth – the 5
th
consecutive year above 20% –
increases EBITDA and improves operating cash position
[Auckland, NZ, 26 February 2019]: Vista Group International (NZX & ASX: VGL), announces its 2018 result today,
reporting impressive growth and profitability stats across its businesses. Matching the performance record the
global business and investor market has come to expect from this leading New Zealand tech sector company.
Continuing with its integration strategy across the film industry, Vista Group has shown significant success in its
drive toward achieving majority world market share across its movie industry sectors.
Vista Entertainment Solutions (‘Vista Cinema’), Vista’s founding and largest business, continued the journey with
1,013 new cinema sites (including 199 in China) installed in 2018. The cumulative total of Vista Cinema sites is now
7,202 (958 in China). This achievement took Vista Cinema’s share of the world’s large circuit market to 40% and
equates to revenue growth of 22%; excluding China Vista Cinema’s global market share has increased to 48%.
Improved operating leverage has also seen an increase in EBITDA of 2% percentage points to 31%. Strategically the
signing of integrated Group agreements with Cineworld Group and Odeon Cinemas Group provide a platform for
continued growth and deployment of other Group company products.
Movio, Vista Group’s business that delivers data-driven marketing and analytics solutions to the film industry,
delivered terrific growth with revenue up 47% and EBITDA up 74%. The Movio result included 122% growth for
Movio Media – the 2
nd
year of 100%+ growth – due to the growth in research revenue and the signing of Disney to
the Movio Media platform during 2018.
Additional businesses in the Group also contributed with the speed of their growth; Powster (providing creative
services to the film industry to engage users with entertainment content), created more than 1,750 online ‘movie
destinations’ representing growth of 31% on 2017 and resulting in a 52% lift in revenue and strong EBITDA.
Vista Group’s strategy has been to create technology-driven efficiencies in the film industry to benefit industry
participants. In 2018 Vista saw this strategy beginning to play out through movieXchange: MX Film is a new online
platform developed by Vista that delivers, from the cloud, movie promotional media directly from film distributor to
cinema exhibitors; MX Tickets enables online listing globally of movie showtimes information and via third party
partners, the sale of movie tickets.
On the product front, the transition to a fully cloud-based Vista Cinema moved significantly forward with the first
customer cinema sites deployed and running live.
“Vista Group Chief Executive, Kimbal Riley remarked that he, the Board and all at Vista are delighted with the 2018
result. “Our consistent growth, including our less mature businesses, and increased income and profitability can be
credited to our 700+ globally-located staff. Their hard work, engagement with our customers and determination to
deliver unprecedented technology solutions and services is our biggest strength. As a business we have a shared
vision to be the leader in software and data solutions across the film industry; our 2018 result is evidence that we
have a highly committed and connected team delivering on and progressing toward that vision.”
Vista Group will deliver a final dividend to its shareholders of 2.1 cents/share resulting in a total pay-out at the top
end of the policy range of 3.7 cents/share for 2018 and an increase of 27% on the previous year.
FINANCIAL HIGHLIGHTS
• 23% Revenue growth over FY2017 of $130.7m – the 5th consecutive year of 20%+ revenue growth
• 17% EBITDA(1) growth to $29.2m
• 150% Increase in operating cashflow to $27.4m
• 47% Revenue growth in Movio to $22.8m. 122% Revenue growth in Movio Media was exceptional
• 27% increase in FY2018 dividend with a final dividend of 2.1 cents per share representing a total pay-out at
the top end of the policy range at 50% of NPAT
• 26% increase in Earnings per share over the prior year
• 25% increase in Profit Before Tax (NPBT) over the prior year
OPERATIONAL HIGHLIGHTS
• Vista Group global leadership position in the cinema industry sustained with 40% market share of 20+
screens segment – 48.1% excluding China
• 1013 new Vista Cinema sites (including 199 sites in China) – another very strong year of site growth to a
cumulative 7,202 sites
• 24% growth in Vista Group annuity/recurring revenue to $79.9m – representing 61% of total revenue.
• 258 new Veezi sites to a cumulative 901 sites
• Very strong result from Movio – Movio Media starring with significant growth on the back of deals with
Disney and Fox
• Key large client agreements signed with super circuits – Aeon, Cineworld, Marcus, Odeon and Pathe
• Percentage of total revenue from SaaS(2) business across Vista Group increased from 25% in FY2017 to 32%
in 2018
• Outstanding improvement in collection of cash drives record operating cash flow
Rodney Hyde - Chief Financial Officer
Vista Group International Limited
Contact: +64 9 984 4570
---
vistagroup.co
VISTA GROUP INTERNATIONAL LIMITED
ANNUAL
FINANCIAL
STATEMENTS
2018
01 Management Commentary
04 Statement of Comprehensive Income
05 Statement of Changes in Equity
06 Statement of Financial Position
07 Statement of Cashflows
08 Notes to the Financial Statements
TABLE OF
CONTENTS
MANAGEMENT COMMENTARY
The Board and Management are pleased to present the following highlights and full year financial statements of
Vista Group International Limited (the ‘Company’ and its subsidiaries, collectively ‘Vista Group’), for the year ended
31 December 2018.
FINANCIAL HIGHLIGHTS
• 23% Revenue growth over FY2017 of $130.7m – the 5th consecutive year of 20%+ revenue growth.
• 17% EBITDA
(1)
growth to $29.2m.
• 150% Increase in operating cashflow to $27.4m.
• 47% Revenue growth in Movio to $22.8m. 122% Revenue growth in Movio Media was exceptional.
• 27% increase in FY2018 dividend with a final dividend of 2.1 cents per share representing a total pay-out at the
top end of the policy range at 50% of NPAT.
• Earnings per share increases by 26% over the prior year.
• Net Profit Before Tax (NPBT) increases 25% over the prior year.
OPERATIONAL HIGHLIGHTS
• Vista Group global leadership position in the cinema industry sustained with 40% market share of 20+ screens
segment – 48.1% excluding China.
• 1013 new Vista Cinema sites (including 199 sites in China) – another very strong year of site growth to a cumulative
7,202 sites.
• 24% growth in Vista Group annuity/recurring revenue to $79.9m – representing 61% of total revenue.
• 258 new Veezi sites to a cumulative 901 sites.
• Very strong result from Movio – Movio Media starring with significant growth on the back of deals with Disney
and Fox.
• Key large client agreements signed with super circuits – Aeon, Cineworld, Marcus, Odeon and Pathe.
• Percentage of total revenue from SaaS
(2)
business across Vista Group increased from 25% in FY2017 to 32% in 2018.
• Outstanding improvement in collection of cash drives record operating cash flow.
SEGMENT OVERVIEW
Cinema Segment
Vista Cinema delivered another impressive performance in FY2018 with 814 new cinema sites added. Revenue
growth of 22% and a 29% improvement in EBITDA
(1)
performance to $25.6m. Increasing operating leverage was
apparent with EBITDA % up 2 percentage points to 31% of revenue.
Vista Cinema’s focus on the large trans-national super circuits bore fruit in FY2018 with the signing of key contracts
within Asia Pacific, North America, and Europe. These agreements will provide a sound basis for continued growth
through 2019 and 2020.
In the USA, the competitive landscape simplified somewhat with the demise of a key large circuit competitor –
a number of whose customers switched to Vista Cinema.
On the product side, the transition to a fully cloud-based Vista Cinema product suite continued to gather
momentum with the first cloud customers going live during the 2nd half of 2018. In response to customer-led
requirements, the strategy to deliver cloud solutions that cater for customer’s varied deployment architectures
has been extremely well received. In addition, the provision of cloud-based solutions has generated interest in
managed service offerings – an incremental revenue opportunity for Vista Cinema.
Revenue from 3rd parties – adjacent vendors in the cinema ecosystem – grew to over $3m in FY2018, primarily
from hardware vendors and payment processors.
Veezi continues to build momentum with 258 additional sites added (including an additional 72 in China, our key Asia
Pacific focus for FY2018). Revenue growth was strong at 56% – driven by increase in sites, increase in revenue per
site, additional module uptake, and continuing growth in online ticket sales.
(1) EBITDA is defined earnings before net finance expense, income tax, depreciation and amortisation acquisition costs, capital gains/losses and
equity accounted results from associate companies.
(2) SaaS revenue is defined as revenue earned from solutions that are hosted by Vista Group, which typically attract a subscription revenue type.
01
ANNUAL FINANCIAL STATEMENTS 2018
Movio Segment
Movio delivered a terrific result with revenue up 47% to $22.8m and EBITDA
(1)
up 74% to $6.2m. Whilst Active
Moviegoer numbers remained relatively stable year-on-year, the increasingly more important Connected Moviegoers,
being those available to Movio Media’s digital campaign offering, grew 75% YOY, driving 89% growth in revenue per
Active Moviegoer in North America.
Movio Cinema revenue grew 17% over the prior year, increasing its global footprint to 53 countries, with LATAM
and EMEA regions providing growth with new customers from key markets, including Brazil, Germany, France
and Russia. Total connections across email, SMS, mobile push and digital channels increased by 22% to over
2.0 billion connections.
Movio Media revenue increased 122% in FY2018, driven by continued growth across all three product areas.
Research continues to impress having secured long-term agreements with Disney and Fox. The uptake of direct
email campaigns maintained steady growth with multiple film title engagements on behalf of Amazon Studios,
Paramount, Lionsgate, STX, Sony, Imax and Fox.
Most importantly, Movio Media made significant strides with its digital campaign offering, experiencing considerable
growth and providing advanced digital segments for the US film industry and publishers, with Viacom, Fox and STX
all executing multiple campaigns. Movio Media also successfully navigated the changes required under GDPR data
legislation, which took effect in May and launched Movio Media in the UK.
Additional Group Companies Segment
The Additional Group Companies segment comprises the businesses of Powster, MACCS, and Flicks, none of which
individually make up the more than 10% of revenue or profit threshold required for separate disclosure.
Powster continued its strong performance in terms of both revenue growth and EBITDA
(1)
. During FY2018, Powster
created over 1,750 movie destination websites representing growth of 31% on FY2017, attracting 422m total visitors.
With the appointment of a new CEO at the half year, MACCS has improved its performance in the latter stages
of FY2018. MACCS remains an unsatisfactory performer, however we are starting to see some green shoots of
improvement with new customer wins and a better delivery capability.
Flicks continued to focus on growth in Australia, investing heavily in marketing and sales. Results are encouraging
and Flicks broke through the 1 million unique visitors per month mark for the first time in December 2018.
Early Stage Investments
This segment comprises the businesses of Cinema Intelligence, Stardust and MovieXchange, all of which are
characterised as being in start-up phase. This segment represents businesses that are yet to generate sustainable
positive EBITDA
(1)
as Vista Group invests to bring them to market.
This segment generated revenue of $4.5m and EBITDA
(1)
of $0.4m in FY2018 – Revenue and EBITDA
(1)
were heavily
impacted by a mid-year spike in volume of tickets processed by MX Tickets.
(1) EBITDA is defined earnings before net finance expense, income tax, depreciation and amortisation acquisition costs, capital gains/losses and
equity accounted results from associate companies.
02
VISTA GROUP INTERNATIONAL LIMITED
FINANCIAL OVERVIEW
With the achievements in FY2018, Vista Group has achieved five consecutive years of 20% plus revenue growth.
Trading performance for FY2018 represents continuation of that growth with a 23% increase in revenue over
FY2017. This, coupled with an increase in EBITDA
(1)
of 17%, shows strength across the business and improvements
in operating leverage in the core businesses of Movio and Vista Cinema.
Annuity revenue continued to grow with annual maintenance, annual license income and 3rd party transaction
fees all showing good increases.
Administrative and operational expenses were well controlled and managed by the executive team.
During the year Vista Group implemented two new accounting standards from 1 January 2018. NZ IFRS 15 Revenue
from Contracts with Customers was adopted with no impact on revenue recognition across Vista Group. NZ IFRS
9 Financial Instruments required the recognition of an expected credit loss allowance against all receivables.
Favourable movements in the aging profile of receivables resulted in a net benefit of $0.3m during the period.
Vista Group continues to maintain a very strong balance sheet. Total trade receivables reduced despite a 23%
increase in revenue which illustrates a sustained focus on, and improvement in, receivables management. Intangible
assets increased as a result of the continued capitalisation of internally generated software ($7.9m) as Vista Group
continues to invest for the future. Investment in associates increased due to the increased equity position in Vista
China (added 7.9%).
Vista Group continues to produce positive cashflow from operating activities with operating cashflow up 150%
to $27.4m. Note that some one-off prepayments, against which no revenue has yet been recognised in FY2018,
have positively impacted the operating cashflow result. Cash reserves increased $13.4m from FY2017 after
dividends and other investing activities.
With the positive operating result, increasing balance sheet strength and strong cash position, Vista Group has
declared a final dividend of 2.1 cents per share ($3.5m) bringing the full FY2018 dividend to 3.7 cents per share
($6.1m) representing an increase of 26% in earnings per share.
(1) EBITDA is defined earnings before net finance expense, income tax, depreciation and amortisation acquisition costs, capital gains/losses and
equity accounted results from associate companies.
03
ANNUAL FINANCIAL STATEMENTS 2018
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018
SECTION
20182017
NZ$’000NZ$’000
Revenue2.1130,716106,623
Total revenue130,716106,623
Sales and marketing expenses8,4697,669
Operating expenses59,86651,676
Administration expenses38,28126,689
Acquisition expenses3.1, 7.4308960
Foreign currency gains (914)(770)
Total expenses 106,01086,224
Operating Profit24,70620,399
Finance costs(1,044)(680)
Finance income404350
Share of loss from associates3(3,021)(3,256)
Profit before tax21,04516,813
Tax expense8.1(8,011)(6,830)
Profit for the period 13,0349,983
Profit for the period is attributable to:
Owners of the parent12,2589,676
Non-controlling interests 776307
13,0349,983
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations, net of tax 1,1793,146
Items that will not be reclassified to profit and loss:
Excess income tax benefit on share-based payments
166-
Total comprehensive income for the period 14,37913,129
Total comprehensive income for the period is attributable to:
Owners of the parent13,52512,768
Non-controlling interests 854361
14,37913,129
Earnings per share for profit attributable to the equity holders of the parent
Basic (cents per share)6.2$0.07 $0.06
Diluted (cents per share) 6.2$0.07 $0.06
The above statement should be read in conjunction with the accompanying notes.
04
VISTA GROUP INTERNATIONAL LIMITED
SECTION
ATTRIBUTABLE TO THE OWNERS OF THE PARENT
TOTAL
NON-
CONTROLLING
INTERESTS
TOTAL
EQUITY
CONTRIBUTED
EQUITY
RETAINED
EARNINGS
FOREIGN
CURRENCY
RESERVE
SHARE-BASED
PAYMENT
RESERVE
NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000
Balance at 31 December 201757,82175,2062,1011,749136,87711,224148,101
Change in accounting policy7.7 -(1,295)--(1,295)(40)(1,335)
Restated total equity at
1 January 2018
57,82173,9112,1011,749135,58211,184146,766
Profit for the period-12,258--12,25877613,034
Other comprehensive income -1661,101-1,267781,345
Total comprehensive income -12,4241,101-13,52585414,379
Transactions with owners in
their capacity as owners:
Issue of equity-----1,9071,907
Non-controlling interest
change
19212--204(204)-
Share-based payments6.4841--1,5702,41162,417
Dividends paid6.3-(5,510)--(5,510)(563)(6,073)
VCL share based payment6.1524--(524)---
Balance at 31 December 2018 59,37880,8373,2022,795146,21213,184159,396
Balance at 1 January 2017 55,65471,281(991)1,695127,63910,728138,367
Profit for the period-9,676--9,6763079,983
Other comprehensive income --3,092-3,092543,146
Total comprehensive income -9,6763,092-12,76836113,129
Transactions with owners in
their capacity as owners:
Issue of equity
1,107---1,107-1,107
Share-based payments249--46671537752
Dividends paid-(5,751)--(5,751)(699)(6,450)
VCL share based payment811--(412)399-399
Acquisition of non-controlling
interests
-----797797
Balance at 31 December 2017 57,82175,2062,1011,749136,87711,224148,101
The above statement should be read in conjunction with the accompanying notes.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
05
ANNUAL FINANCIAL STATEMENTS 2018
SECTION
20182017
NZ$’000NZ$’000
CURRENT ASSETS
Cash34,35320,954
Trade and other receivables5.161,35371,119
Income tax receivable 919212
Total current assets96,62592,285
NON-CURRENT ASSETS
Property, plant and equipment5.55,3584,637
Investment in associates3.131,87926,066
Goodwill5.363,94762,844
Other intangible assets5.220,44116,061
Deferred tax asset8.22,8362,342
Total non-current assets 124,461111,950
Total assets221,086204,235
CURRENT LIABILITIES
Trade and other payables5.618,60214,769
Deferred revenue21,39623,751
Borrowings related party4.2-614
Income tax payable 3,7292,069
Total current liabilities43,72741,203
NON-CURRENT LIABILITIES
Borrowings related party4.2868-
Borrowings external4.211,07610,709
Deferred revenue4,4911,379
Contingent consideration7.4-908
Provisions508292
Deferred tax liability8.21,0201,643
Total non-current liabilities 17,96314,931
Total liabilities 61,69056,134
Net assets 159,396148,101
EQUITY
Contributed equity6.159,37857,821
Retained earnings80,83775,206
Foreign currency revaluation reserve3,2022,101
Share-based payment reserve6.42,7951,749
Total equity attributable to owners of the parent146,212136,877
Non-controlling interests 13,18411,224
Total equity 159,396148,101
For and on behalf of the Board who authorised these financial statements for issue on 26 February 2019.
Kirk Senior Chairman Susan Peterson Chair Audit and Risk Committee
The above statement should be read in conjunction with the accompanying notes.
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
06
VISTA GROUP INTERNATIONAL LIMITED
SECTION
20182017
NZ$’000NZ$’000
CASHFLOWS FROM OPERATING ACTIVITIES
Receipts from customers132,427105,143
Interest received5586
Payments to suppliers(96,034)(87,141)
Taxes paid(8,192)(6,784)
Interest paid (677)(259)
Net cash inflow from operating activities 27,57911,045
CASHFLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment5.5(2,488)(1,629)
Internally generated software and other intangibles5.2(7,914)(5,005)
Proceeds from disposal of intangibles1,388-
Related party loan advance – Numero3.2(1,270)(1,703)
Acquisition of a business, net of cash acquired-(7,545)
Contingent consideration paid7.4-(2,824)
Proceeds from Vista China transaction3.11658,301
Net cash applied to investing activities (10,119)(10,405)
CASHFLOWS FROM FINANCING ACTIVITIES
Loans and borrowings4.22136,475
Dividends paid to non-controlling interest(563)(699)
Dividends paid to the owners of the parent6.3(5,510)(5,751)
Net cash (applied to)/generated from financing activities (5,860)25
Net increase in cash 11,600665
Cash at the beginning of the year20,95421,338
Foreign exchange differences 1,799(1,049)
Cash at the end of the year 34,35320,954
The above statement should be read in conjunction with the accompanying notes.
STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 31 DECEMBER 2018
07
ANNUAL FINANCIAL STATEMENTS 2018
General information
The notes are consolidated into ten sections. Each section contains an introduction which is indicated by the
symbol above. The first section outlines general information about Vista Group International Limited (the Company
and its subsidiaries, collectively Vista Group) and guidance on how to navigate through this document.
Accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out throughout
the document where they are applicable. These policies have been consistently applied to all years presented,
unless otherwise stated. Accounting policies are identified by the symbol above.
Critical judgements and estimates in applying the accounting policies
Further details of the nature of these critical judgements and estimates may be found throughout the financial
statements as they are applicable and are identified by the symbol above.
Section 3.1 Vista China Page 11 Carrying value of investment in Vista China
Section 3.2 Numero Limited Page 14 Recoverability of loan to Numero Limited
Section 5.2 Intangible assets Page 17 Capitalisation of development costs
Section 5.4 Impairment testing Page 19 Assumptions used in testing Goodwill for impairment
Section 6.4 Share-based payments Page 24 Fair value and number of equity instruments
Section 8.2 Deferred income tax Page 40 Recognition of deferred tax asset
1. GENERAL INFORMATION
These financial statements are for Vista Group which is a company incorporated and domiciled in New Zealand,
and whose shares are publicly traded on the New Zealand Stock Exchange (NZX) and the Australian Securities
Exchange (ASX).
The Company is registered under the Companies Act 1993 and is an FMC reporting entity under Part 7 of the
Financial Markets Conduct Act 2013. The financial statements of Vista Group have been prepared in accordance
with the requirements of Part 7 of the Financial Markets Conduct Act 2013 and the NZX Main Board Listing Rules.
In accordance with the Financial Markets Conduct Act 2013, because financial statements are prepared and
presented for Vista Group, separate financial statements for the Company are not presented.
The principal activity of Vista Group is the sale, support and associated development of software for the film industry.
These financial statements were approved by the Directors on 26 February 2019.
2. FINANCIAL PERFORMANCE
This section outlines further details of Vista Group’s financial performance by building on information presented
in the statement of comprehensive income.
2.1 REVENUE
Vista Group recognises revenue when performance obligations have been settled. A performance obligation
is settled when the customer has received all of the benefits associated with the performance obligation.
The following sections detail the type of revenue recognised within each category. Effective from 1 January 2018,
Vista Group adopted NZ IFRS 15 Revenue from Contracts with Customers, this did not result in significant changes
in accounting policies related to the recognition of revenue. Refer to section 7.7 for details regarding the method
and timing of revenue recognition.
Product
Product revenue comprises different items across each of Vista Group’s operating segments. Within the Cinema
segment, product revenue relates primarily to fees charged for perpetual software licenses. The exception is the
VEEZI subscription-based software which is charged monthly.
Movio segment product revenue relates to annual access fees for cloud-hosted marketing and analytics platforms.
NOTES TO THE FINANCIAL STATEMENTS
08
VISTA GROUP INTERNATIONAL LIMITED
The Additional Group Companies segment recognises product revenue for perpetual licensing within the MACCS
business. Also within this segment, is the Powster business which includes website and marketing platform revenue
within the product category.
Maintenance
Maintenance services are billed in advance for a fixed term. Revenue is recorded within deferred revenue on the
statement of financial position and recognised on a straight-line basis over the term of the contract billing period,
as services are provided. Maintenance revenue relates to fees charged for support services and upgrades to
software applications.
Services
Services revenue comprises fees charged for value-add services which are one-off charges. Revenue is recognised
when the service is complete or on a stage of completion basis.
Development
Development revenue comprises the revenue associated with bespoke development effort as requested and paid
for by customers. This category includes revenue associated with development services to deliver the localisation
of Vista Group software under the reseller agreement with Vista China. This revenue is recognised on a stage of
completion basis as the performance obligations are delivered.
Hardware
Revenue from hardware is recognised at a point in time when delivery has been made and an invoice issued to
the customer. This category has been added in the 2018 financial statements due to the materiality of hardware
revenue recognised during the period.
Other revenue
Other revenue comprises revenue earned primarily from advertising and variable processing fees.
2018
RESTATED
2017
NZ$’000NZ$’000
Product62,84244,638
Maintenance43,26139,405
Services12,6659,947
Development8,22011,882
Hardware3,23176
Other497675
Revenue 130,716106,623
No individual customer exceeded 10% of revenue in 2018 or 2017.
2.2 OPERATING SEGMENTS
Vista Group operates in the vertical cinema/film market via four operating segments and a corporate segment.
The Chief Executive and the Board of Vista Group are considered to be the Chief Operating Decision Maker
(CODM) in terms of NZ IFRS 8 Operating Segments. These segments have been defined based on the reports
regularly reviewed by the CODM to make strategic decisions.
The Cinema segment includes software associated with cinema management via the Vista software suite of
products, plus the cloud based VEEZI product for smaller scale cinemas. The Movio segment includes Movio
Cinema and Movio Media that provide data analytics and campaign management. The Additional Group
Companies segment is an aggregation of the MACCS, Powster and Flicks businesses, none of which individually
exceed the 10% threshold for segment revenue or profitability that would require separate disclosure under NZ
IFRS 8. The Early Stage Investments segment includes businesses that are in the start-up phase of their life cycle.
In FY2018, this segment includes Stardust, MovieXchange and Share Dimension (Cinema Intelligence). Similar to
the Additional Group Companies segment, none of the businesses included in this segment individually exceed
the 10% threshold for segment revenue or profitability that would require separate disclosure under NZ IFRS 8.
09
ANNUAL FINANCIAL STATEMENTS 2018
MangeaMeamnetC o rCoyegaoanSn ag
CONTINUED
The Corporate segment contains the shared services functions associated with Vista Group International, being
legal, finance, and senior management. Revenue received from the associate company Vista Entertainment
Solutions (Shanghai) Limited (Vista China) is recognised within the corporate segment.
2018
CINEMAMOVIO
ADDITIONAL
GROUP
COMPANIES
EARLY STAGE
INVESTMENTSCORPORATETOTAL
NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000
Timing of revenue recognition
At a point in time31,6649,2911,8263,727-46,508
Over time50,76813,51313,2208165,89184,208
Total revenue82,43222,80415,0464,5435,891130,716
Operating expenses(40,669)(9,676)(7,289)(2,046)(186)(59,866)
Sales, general and administration expenses(17,828)(6,989)(6,433)(2,070)(9,274)(42,594)
Foreign currency gains/(losses)1,6321068013(917)914
EBITDA
(1)
25,5676,2451,404440(4,486)29,170
2017 RESTATED
CINEMAMOVIO
ADDITIONAL
GROUP
COMPANIES
EARLY STAGE
INVESTMENTSCORPORATETOTAL
NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000
Timing of revenue recognition
At a point in time
23,2825,7187,159741-36,900
Over time44,3509,7725,1664379,99869,723
Total revenue67,63215,49012,3251,1789,998106,623
Operating expenses(35,259)(7,575)(7,066)(1,357)(419)(51,676)
Sales, general and administration expenses(14,221)(4,361)(4,513)(1,572)(6,063)(30,730)
Foreign currency gains/(losses)1,68438(115)(15)(822)770
EBITDA
(1)
19,8363,592631(1,766)2,69424,987
A reconciliation of EBITDA
(1)
to operating profit before tax for the year is provided below as follows:
20182017
NZ$’000NZ$’000
EBITDA
(1)
29,17024,987
Depreciation and Amortisation (4,156)(3,628)
EBIT
(2)
25,01421,359
Finance income404350
Finance costs(1,044)(680)
Acquisition expenses(308)(960)
Share of loss from associates(3,021)(3,256)
Tax expense(8,011)(6,830)
Profit for the year 13,0349,983
(1) EBITDA is a non-GAAP measure and is defined as earnings before net finance costs, income tax, depreciation and amortisation, acquisition
costs, capital gains/losses and equity accounted results from associate companies.
(2) EBIT is a non-GAAP measure and is defined as earnings before net finance costs, income tax, acquisition costs, capital gains/losses and equity
accounted results from associate companies.
10
VISTA GROUP INTERNATIONAL LIMITED
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Revenue by domicile of entity
Vista Group recognises revenue within entities across several jurisdictions. Revenue is allocated to geographical
regions based on where the sale is recorded by each operating entity within Vista Group. Independent resellers are
used to promote Vista Group’s products in multiple jurisdictions. The revenues recognised via these independent
resellers are not allocated geographically, rather they are shown within the New Zealand and United Kingdom
jurisdictions based on the location of the transacting Vista Group entity.
The Other category in the tables below include entities in the Netherlands, Germany, Romania and South Africa.
The comparatives below have been restated to separately disclose Mexico.
DOMICILE OF ENTITY
2018
RESTATED
2017
NZ$’000NZ$’000
New Zealand34,28236,404
United States45,57433,722
United Kingdom27,74024,090
Mexico15,6745,416
Other7,4466,991
Revenue 130,716106,623
Non-current assets by domicile of entity
Non-current operating assets by location of the reporting entity are presented in the following table.
DOMICILE OF ENTITY
2018
RESTATED
2017
NZ$’000NZ$’000
New Zealand43,16435,492
United States8,6978,589
United Kingdom8,8229,789
Mexico11,38810,766
Other20,51121,248
Note that investment in associates are excluded from the non-current assets balance presented.
3. ASSOCIATE COMPANIES
3.1 VISTA CHINA
Vista China is an associate company that has been accounted for using the equity method in the financial statements.
Acquisition of a further 7.9% in Vista China
On 20 February 2018, Vista Group announced that it has signed agreements to reacquire an additional 7.9% of equity
in Vista China for $7.6m, from its partner, Beijing Weying Technology Co. Ltd (WePiao). These agreements were
subject to regulatory approval in China which was obtained in August 2018. This transaction, effective 24 August
2018, increased the total shareholding in Vista China to 47.5% and resulted in an increase to goodwill of $5.5m.
The amount payable to WePiao of $7.6m, for the purchase of the additional equity in Vista China, was offset
against remaining amounts owing from WePiao in respect of the initial transaction in 2016 of $8.7m. Further details
of this transaction are included in the 2016 annual report. To complete the transaction a further $0.2m in cash was
received from WePiao. Withholding taxes of $1.0m were unrecoverable and were expensed as acquisition costs in
the statement of comprehensive income.
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ANNUAL FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
A summary of the transaction flows is detailed below:
NZ$’000
WePiao receivable from initial transaction8,723
Amount offset against receivable(7,564)
Cash received from WePiao(165)
Withholding tax not recoverable(994)
The carrying value of the investment in the associate Vista China held by Vista Group is detailed below:
NZ$’000
Opening carrying amount26,066
Share Vista China loss prior to acquisition at 39.53%(1,094)
Carrying amount prior to additional investment 24,972
Vista Group additional investment 7.9%7,564
Carrying amount after additional investment32,536
Share of Vista China loss at 47.5%(657)
Carrying amount31,879
20182017
NZ$’000NZ$’000
Opening net assets28,72532,780
Loss for the period(4,150)(4,055)
Closing net assets 24,57528,725
Vista Group interest47.50%39.53%
Vista Group share11,67311,355
Goodwill20,20614,711
Carrying amount 31,87926,066
Carrying value of Vista China
An independent indicative valuation of Vista China was carried out at 31 December 2018 based on a Discounted
Cashflow method (DCF) and capitalisation of revenue (Revenue) method. Judgement was applied by management
to estimate the 5-year operating performance of Vista China upon which this valuation was based.
As summary of the key inputs and outcomes of the indicative valuation is presented below.
METHODINVESTMENTENTERPRISE VALUEVISTA GROUP SHARE AT 47.5%DISCOUNT RATE / MULTIPLE
Indicative valueVista China$107m – $127m$50.8m – $60.3mDiscount rate: 20% – 25%
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Vista China trading result
A summarised income statement for Vista China and a reconciliation to the equity accounted loss recognised
in Vista Group is detailed below. This has been amended to reflect adjustments made to align the associate
accounting policies to Vista Group accounting policies.
20182017
NZ$’000NZ$’000
Revenue 20,58317,259
Total expenses (24,563)(21,370)
Operating loss(3,980)(4,111)
Finance (expense)/income(170)56
Loss for the period (4,150)(4,055)
Vista Group equity accounted interest – through August 201839.53%39.53%
Vista Group equity accounted interest – 24 August 2018 to 31 December 201847.50%-
Vista Group equity accounted loss for the period(1,751)(1,603)
A summarised statement of financial position is presented below:
2018
RESTATED
2017
NZ$’000NZ$’000
Cash26,36631,178
Trade and other receivables11,58217,036
Total current assets37,94848,214
Total non-current assets1,315316
Total assets39,26348,530
Total liabilities(13,239)(18,719)
Effect of translation(1,449)(1,086)
Net assets24,57528,725
Related party balances
Related party transactions have been undertaken during FY2018 as defined under the reseller agreement.
The reseller agreement specifies transactions related to localisation work, support and maintenance fees and
payment for an exclusive 10 year distribution right for all Vista Group software with a right of renewal for
another 10 year period.
RECEIVABLE/
(PAYABLE)
RECEIVABLE/
(PAYABLE)
20182017
ENTITYNATURE OF TRANSACTIONSNZ$’000NZ$’000
Vista ChinaRelated party receivable6,83812,780
Vista ChinaRelated party payable(4,791)(3,199)
Net receivable 2,0479,581
During 2018, the related party receivable reduced by $5.9m subsequent to the receipt of the final tranche
of localisation revenue under the reseller agreement entered into in 2016.
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ANNUAL FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
Related party transactions for the year were as follows:
20182017
NZ$’000NZ$’000
Development fees3,8247,931
Maintenance fees2,0672,067
Service fees87-
Recoverable expenses(22)62
Total 5,95610,060
During 2018, Vista Group recognised $6.0m of revenue from Vista China (2017: $10.0m). The statement of financial
position includes $1.4m (2017: $7.3m) as deferred revenue for maintenance which will be recognised over the next year.
The related party receivable of $6.8m (2017: $12.8m) includes $5.6m (2017: $5.4m) for receivables owing prior
to the sale of a controlling stake in Vista China and $1.2m (2017: $7.3m) relates to amounts owing under the
reseller agreement between Vista Group and Vista China. Subsequent to year end, Vista Group and Vista China
have settled all outstanding related party amounts receivable and payable at 31 December 2018. As part of this
settlement, Vista Group agreed to forgo $0.8m of the related party receivable. This has been recognised in
administration expenses in the statement of comprehensive income.
All of the related party transactions during the year were made on normal commercial terms.
3.2 NUMERO LIMITED
Vista Group has a 50% interest in Numero Limited (Numero), an associate that is accounted for using the equity
method in the financial statements. Vista Group ceased to recognise further losses in FY2015 related to Numero
as accumulated losses would exceed Vista Group’s equity interest.
Recoverability of loan to Numero Limited
Management has applied judgement to estimate the amount recoverable from Numero Limited. Cashflow
estimates were projected based on a 5-year strategic business plan as approved by the Numero Board. As a result
of this analysis, a further provision of $1.3m (2017: $1.7m) was recognised in relation to advances made to Numero.
This brings the provision for impairment to $3.0m in total.
During the year, the loan and all other related party advances were converted into a loan facility from Vista Group
International Limited, with a term of 5 years and limit of $9.5m. The loan amount is unsecured, and no guarantees
are in place. Interest of 6% (2017: 10%) is charged against the loan under the loan agreement.
2018
RESTATED
2017
ENTITYNATURE OF TRANSACTIONSNZ$’000NZ$’000
Numero LimitedRelated party loan8,3862,621
Numero LimitedRelated party advance-4,495
Numero LimitedProvision for impairment(2,973)(1,703)
Total 5,4135,413
The types of related party transactions undertaken during the year relate to recharges for development work
undertaken and advances made.
20182017
NZ$’000NZ$’000
Recharges – license fees360329
Recharges – development fees531459
Recharges – other advances127653
Recharges – interest on loan252262
Total 1,2701,703
During the year, Numero made a loss of $2.1m, Vista Group’s share being $1.0m (2017: $1.0m).
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4. CASH, BORROWINGS AND CASH FLOWS
This section builds on information from the statement of cash flows and provides details on the cash and cash
equivalents held on the statement of financial position. This section also provides details of a range of financial risks
associated with these balances and how Vista Group manages these risks. Cash comprises cash at bank and on hand.
4.1 RECONCILIATION OF NET SURPLUS TO CASH FLOWS
SECTION
20182017
NZ$’000NZ$’000
Net profit after tax13,0349,983
Non-cash items:
Amortisation 5.22,4802,349
Depreciation5.51,6761,279
Share-based payment expense6.52,417752
Non-cash finance charges260318
Acquisition expenses3.1, 7.41,024399
Loss from investment in associates3.11,7513,256
Deferred tax1,007-
Foreign exchange movements(440)(487)
Expected credit loss7.7(257)-
Doubtful debt expense5.1(164)840
Net non-cash items 9,7548,706
Movements in working capital:
Increase in related party trade and other payables3.11,593508
Decrease in related party trade and other receivables,
net of deferred revenue
3.15,9426,231
Increase/(decrease) in trade and other payables2,457(4,713)
(Increase) in trade and other receivables, net of deferred revenue(5,037)(9,240)
(Decrease) in taxation receivable and payable(164)(430)
Net change in working capital 4,791(7,644)
Net cash inflow from operating activities 27,57911,045
The increase in trade and other receivables, net of deferred revenue, includes an adjustment of $8.7m related
to the WePiao receivable from 2017. Refer to section 3.1 for further detail.
4.2 BORROWINGS
Borrowings are initially recognised at fair value less directly attributable transaction costs and subsequently
measured at amortised cost using the effective interest method. Borrowing costs are expensed as incurred.
In November 2017, Vista Group established a senior facility agreement with ASB. The facility includes the previously
established NZD $2.0m commercial credit overdraft facility and the EUR €3.0m term loan as well as the USD $4.0m
term loan facility.
The NZD $2.0m commercial credit overdraft facility is used to fund working capital as required with no set expiry
date. The interest rate is floating and was 6.12% for 2018 (2017: 6.18%). At balance date, there was no draw down
against this facility.
The EUR €3.0m term loan was initially established in March 2014 to acquire 25.1% of the share capital of MACCS
International BV. The loan matures on 12 March 2020 and the current interest rate is 2.97% (2017: 3.03%) per annum.
The USD $4.0m term loan was established to fund part of the acquisition of Senda Direccion Technologica SA De
CV (Vista Latin America) in FY2017. The loan matures on 31 October 2021 and the current interest rate is 5.59% per
annum (2017: 4.44%).
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ANNUAL FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
Security for the senior facility agreement with ASB is secured by a general security agreement under which the
bank has a security interest in all Vista Group’s tangible assets. Covenants in place include a total equity and EBITDA
covenant which are reported quarterly. Vista Group has been fully compliant with all covenants for the year.
Related party borrowings include loans from minority shareholders for MACCS and Share Dimension. Amounts
related to Share Dimension are from the minority shareholder, Tanasescu Holdings and amount to $0.7m (2017:
$0.6m). The loan from Tanasescu Holdings matures on 30 April 2020 and the current interest rate is 5% per annum.
The loans from the MACCS minority shareholders amount to $0.2m (2017: nil) and expire on 30 April 2020 with a
current interest rate of 5% per annum. The loans are in place to contribute towards the working capital requirements.
20182017
NZ$’000NZ$’000
Borrowings related party868614
Borrowings external11,07610,709
Total borrowings11,94411,323
The table below details the movement in borrowings during the year:
2018
NZ$’000
Borrowings related party:
Opening
614
Additional borrowing – MACCS minority shareholders213
Movement in foreign exchange41
Balance at 31 December 868
Borrowings external:
Opening
10,709
Movement in foreign exchange367
Balance at 31 December 11,076
5. ASSETS AND LIABILITiES
This section outlines further details of Vista Group’s financial performance by building on information presented
in the statement of financial position.
5.1 TRADE AND OTHER RECEIVABLES
SECTION
20182017
NZ$’000NZ$’000
Trade receivables44,29345,618
Sundry receivables3,87711,414
Accrued revenue4,8536,193
Prepayments2,9172,481
Related party loan – Numero3.25,4132,621
Related party advance – Numero-2,792
Total trade and other receivables 61,35371,119
Vista Group has recognised a loss of $0.2m (2017: $0.1m) in respect of bad debts during the year ended 31 December
2018. The impairment allowance included in trade receivables as at 31 December 2018 was $0.8m (2017: $1.0m).
The related party loan to Numero is presented net of the provision for impairment of $3.0m (2017: $1.7m) see section
3.2 for more detail. Included within trade receivables is a receivable from Vista China of $6.8m (2017: $12.8m) refer
to section 3.1 for further detail. The movement in sundry receivables is primarily due to the offset of the receivable
from WePiao of $8.7m (2017: $8.7m) for an additional 7.9% stake in Vista China. Refer to section 3.1 for more detail.
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The following table summarises the impact of doubtful debt and expected credit loss provision on the trade
receivables balance. See section 7.7 for more detail on the accounting policies that impact trade receivables:
20182017
NZ$’000NZ$’000
Trade receivables – gross46,19146,594
IFRS 9 expected credit loss provision(1,086)-
Doubtful debts provision (812)(976)
Trade receivables – net of provisions 44,29345,618
The movement in the provision for doubtful debts during the year was as follows:
20182017
NZ$’000NZ$’000
Opening balance(976)(110)
Bad debt written off179122
Change in provision(15)(988)
Closing balance (812)(976)
5.2 INTANGIBLE ASSETS
Intangible assets
Intangible assets are measured on initial recognition at cost. The cost of intangible assets acquired in a business
combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried
at cost less any accumulated amortisation and accumulated impairment losses.
Intangible assets with finite lives are amortised over their useful economic life. The amortisation period and the
amortisation method for an intangible asset with a finite life are reviewed at least at the end of each reporting
period. The amortisation expense on intangible assets with finite lives is recognised in the statement of
comprehensive income in the expense category that is consistent with the function of the intangible assets.
Development costs and internally generated software
Costs associated with maintaining computer software programmes are recognised as an expense within the
statement of comprehensive income as incurred. Development costs that are directly attributable to the design
and testing of identifiable and unique software products controlled by Vista Group are recognised as intangible
assets only when all of the following criteria are met:
• it is technically feasible to complete the software product so that it will be available for use;
• management intends to complete the software product and use or sell it;
• there is an ability to use or sell the software product;
• it can be demonstrated how the software product will generate probable future economic benefits;
• adequate technical, financial and other resources to complete the development and to use or sell the software
product are available; and
• the expenditure attributable to the software product during its development can be reliably measured.
Other development expenditures that do not meet this criteria are recognised as expenses as incurred within
operating expenses. Development costs previously recognised as an expense are not recognised as an asset
in a subsequent period.
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ANNUAL FINANCIAL STATEMENTS 2018
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Other intangible assets
Intellectual property has been acquired through business combinations and amounts spent subsequently. Customer
relationships include the purchase of existing customer bases via an existing license agreement or business
combination. Software licenses include the purchase of third-party software in the normal course of business.
Intangible assets are amortised on a straight-line basis over the following useful economic lives:
• Intellectual property: 4 to 15 years
• Customer relationships: 4 to 15 years
• Software licenses: 2.5 to 15 years
• Internally generated software: 3 to 5 years based on their estimated useful life
Refer to section 5.3 and 5.4 for goodwill measurement and impairment testing.
2018
INTERNALLY
GENERATED
SOFTWARE
SOFTWARE
LICENSES
INTELLECTUAL
PROPERTY
CUSTOMER
RELATIONSHIPSTOTAL
NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000
Gross carrying amount
Balance at 1 January9,7622,6452,1367,80822,351
Internally generated software7,888---7,888
Additions--26-26
Disposals---(3,076)(3,076)
Exchange differences79(19)19134213
Balance at year end17,7292,6262,1814,86627,402
Accumulated amortisation
Balance at 1 January(626)(1,068)(725)(3,871)(6,290)
Amortisation(1,261)(182)(257)(780)(2,480)
Disposals---1,7661,766
Exchange differences111(14)4543
Balance at year end(1,886)(1,239)(996)(2,840)(6,961)
Carrying amount at 31 December 201815,8431,3871,1852,02620,441
2017
INTERNALLY
GENERATED
SOFTWARE
SOFTWARE
LICENSES
INTELLECTUAL
PROPERTY
CUSTOMER
RELATIONSHIPSTOTAL
NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000
Gross carrying amount
Balance at 1 January
4,8142,3621,9407,27516,391
Acquisition through business
combinations
-52--52
Internally generated software4,937---4,937
Additions-5216-68
Exchange differences11179180533903
Balance at year end9,7622,6452,1367,80822,351
Accumulated amortisation
Balance at 1 January
(96)(816)(449)(2,241)(3,602)
Current year amortisation(529)(212)(340)(1,268)(2,349)
Exchange differences(1)(40)64(362)(339)
Balance at year end(626)(1,068)(725)(3,871)(6,290)
Carrying amount at 31 December 20179,1361,5771,4113,93716,061
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VISTA GROUP INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
On 23 March 2018, Vista Group announced the termination of the French market distribution agreement with Cote
Cine Group (CCG). This resulted in the disposal of the customer relationship previously recognised. A settlement
payment of $1.4m was received. A net gain on disposal of $29,000 was recognised within administrative expenses.
5.3 GOODWILL
The amount of goodwill initially recognised is dependent on the allocation of the purchase price to the fair value
of the identifiable assets acquired and the liabilities assumed. The determination of the fair value of the assets and
liabilities, particularly intangible assets is based, to a considerable extent, on management’s judgement.
20182017
NZ$’000NZ$’000
Gross carrying amount
Balance at 1 January
66,39853,839
Acquisition through business combinations-10,325
Exchange differences1,1032,234
Balance at year end 67,50166,398
Accumulated impairment
Balance 1 January(3,554)(3,554)
(3,554)(3,554)
Balance at year end 63,94762,844
Goodwill has been allocated to the following Cash Generating Units (CGU):
20182017
NZ$’000NZ$’000
Vista Entertainment Solutions Limited (VESL)24,41423,384
Virtual Concepts Limited (VCL) – (Movio)16,97016,970
MACCS International BV (MACCS)12,56412,459
Share Dimension BV (Cinema Intelligence)1,9721,959
Powster Limited (Powster)7,4237,468
Flicks.co.nz Limited (Flicks)604604
Goodwill at year end 63,94762,844
This is the lowest level at which goodwill is monitored for internal management reporting purposes. Value in
use calculations are used in determining the recoverable amount of each CGU. Management has projected the
cash flows for each CGU over a five-year period based on approved budgets for the first year. Determination of
appropriate post-tax cash flows, terminal growth rates and discount rates for the calculation of value in use is
subjective and requires a number of assumptions and estimates to be made, including growth in revenue and net
profit, timing and quantum of future capital expenditure, working capital, long term growth rates and the selection
of discount rates to reflect the risks involved.
5.4 IMPAIRMENT TESTING
Impairment testing of goodwill and other assets
Goodwill is not amortised and is tested for impairment annually irrespective of whether there is any indication of
impairment. If any such indication exists, then the asset’s recoverable amount is estimated. After initial recognition,
goodwill is measured at cost less any accumulated impairment losses.
Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable.
An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount. Impairment
losses are recognised in the statement of comprehensive income.
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CONTINUED
The recoverable amount of an asset is the greater of its value in use and its fair value less cost to sell. 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 (cash-generating
units or “CGU”). The allocation is made to those CGUs that are expected to benefit from the business combination
in which goodwill arose. In assessing value in use, 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.
Value in use is determined by discounting the future cash flows generated by each CGU. Cash flows were projected
based on a five-year strategic business plan as approved by the Board. The discount rate applied to future cash
flows for each CGU is detailed in the table below.
Critical judgements used in applying accounting policies and estimation uncertainty
The Board has carried out an annual impairment review of goodwill allocated to the CGUs in order to ensure that
recoverable amounts exceed aggregate carrying amounts. Value in use was determined by discounting the future
cash flows generated by each CGU. Cash flows were projected based on a 5 year business model for each CGU.
See below for key assumptions and sensitivity analysis. Information about estimates and judgements that have
the most significant effect on recognition and measurement of goodwill and intangible assets are provided below.
Actual results may be substantially different.
The Weighted Average Cost of Capital (WACC) is based upon CAPM methodology using market specific inputs.
The WACC for each CGU is reviewed annually.
The key assumptions used for the value in use calculation are as follows:
CGU
2018
REVENUE GROWTH
2019 – 2023WACC 2018
2017
REVENUE GROWTH
2018 – 2022WACC 2017
VESL6 – 13%9.7%4 – 13%9.0%
Movio19 – 30%9.7%18 – 27%9.0%
Flicks9 – 39%9.7%7 – 72%9.0%
MACCS11 – 26%11.5%10 – 27%11.5%
Powster7 – 26%12.0%7 – 67%12.0%
Cinema Intelligence20 – 45%12.6%25 – 68%12.6%
The terminal revenue growth rate for all CGUs is calculated based on the 2023 year and assumes continuous growth
of a minimum of projected inflation estimates of 2.5% (2017: 2.5%). The values assigned to the key assumptions
represent management’s assessment of future trends and are based on both external and internal sources.
Other factors considered when testing goodwill for impairment include:
• actual financial performance against budgeted financial performance;
• any material unfavourable operational and regulatory factors; and
• any material unfavourable economic outlook and market competition.
Impairment testing results
The calculations confirmed that there was no impairment of goodwill during the year (2017: $Nil). The Board believes
that any reasonable possible change in the key assumptions used in the calculations for all CGUs, with the exception
of MACCS and Cinema Intelligence, would not cause the carrying amount to exceed the recoverable amount.
The MACCS CGU impairment test is sensitive to WACC discount rate, revenue growth and terminal growth rate.
Detailed below is the amount by which each assumption would have to change to result in the recoverable amount
being equal to the carrying value. The relevant sensitivities in key assumptions are as follows:
• WACC discount rate: 1.7% increase
• Revenue growth: 0.7% reduction
• Terminal growth: 2.3% reduction
The Cinema Intelligence CGU demonstrates sensitivity to revenue assumptions. Assumptions used for the purpose
of assessing the value in use are premised upon the penetration of Cinema Intelligence software across Vista
Cinema sites over the next five years. Should the long-term penetration rate be lower than assumed, such that
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CONTINUED
average revenue growth over the 5-year period reduced by 4%, this would result in its value in use amount being
equal to its carrying value.
5.5 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment
losses. Cost includes expenditure that is directly attributable to the acquisition of the asset.
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount
of the item if it is probable that the future economic benefits embodied within the asset will flow to Vista Group
and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment
are recognised within the statement of comprehensive income as incurred.
Depreciation is provided on fixtures, fittings and computers. Depreciation is recognised in the statement of
comprehensive income to write off the cost of an item of property, plant and equipment, less any residual value,
over its expected useful life on the following basis:
• Fixtures and fittings: 6 to 14 years straight line
• Computer equipment: 2.5 to 6 years straight line
2018
FIXTURES &
FITTINGS
COMPUTER
EQUIPMENTTOTAL
NZ$’000NZ$’000NZ$’000
Gross carrying amount
Balance at 1 January
4,5903,5158,105
Additions1,1781,3102,488
Exchange differences454489
Balance at year end5,8134,86910,682
Accumulated depreciation
Balance at 1 January (1,399)(2,069)(3,468)
Current year depreciation(592)(1,084)(1,676)
Exchange differences(86)(94)(180)
Balance at year end(2,077)(3,247)(5,324)
Carrying amount at 31 December 20183,7361,6225,358
2017
FIXTURES &
FITTINGS
COMPUTER
EQUIPMENTTOTAL
NZ$’000NZ$’000NZ$’000
Gross carrying amount
Balance at 1 January
4,2003,6657,865
Assets no longer in use(219)(1,432)(1,651)
Acquisition through business combinations -5757
Additions4291,2001,629
Exchange differences18025205
Balance at year end4,5903,5158,105
Accumulated depreciation
Balance at 1 January
(1,255)(2,448)(3,703)
Assets no longer in use3721,2881,660
Current year depreciation(443)(836)(1,279)
Exchange differences(73)(73)(146)
Balance at year end(1,399)(2,069)(3,468)
Carrying amount at 31 December 20173,1911,4464,637
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ANNUAL FINANCIAL STATEMENTS 2018
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CONTINUED
5.6 TRADE AND OTHER PAYABLES
20182017
NZ$’000NZ$’000
Trade payables5,8244,413
Sundry accruals6,2653,988
Deferred lease incentives353419
Employee benefits6,1604,709
Employee benefits – VCL contingent consideration-1,240
Total trade and other payables 18,60214,769
Included in trade payables is a balance of $4.8m (2017: $3.2m) payable to the associate company Vista China.
See section 3.1 for detail.
5.7 EMPLOYEE BENEFIT PAYABLES AND ACCRUALS
Short term employee benefits
Accruals for wages, salaries, including non-monetary benefits, commissions and annual leave expected to be settled
within 12 months of the reporting date are recognised in respect of employees’ services up to the reporting date.
They are measured at the amounts expected to be paid using the remuneration rate expected to apply at the time
of settlement, on an undiscounted basis. Expenses for non-accumulating sick leave are recognised when the leave
is taken and are measured at the rates paid or payable.
Vista Group has pension obligations in respect of various defined contribution plans. Vista Group pays contributions
to publicly or privately administered pension insurance plans on a mandatory or contractual basis. Vista Group has no
further payment obligations once the contributions have been paid. The contributions are recognised as an employee
entitlement expense when they are due.
Employee expenses included in total expenses:
20182017
NZ$’000NZ$’000
Wages and salaries62,99952,190
Share-based payment expense2,417752
Defined contribution plans4,0282,987
Total employee benefits69,44455,929
5.8 RELATED PARTIES
Vista Group has various types of transactions with related parties. Refer to section 3.1 and 3.2 for details of
transactions with associate companies, Vista China and Numero. Refer to section 4.2 for details of related party
borrowings. Other related party transactions include transactions with key management personnel which are
detailed below:
Key management personnel transactions
Key management personnel include Vista Group’s Board of Directors (executive and non-executive) and senior
management. Senior management is defined as personnel that report directly to the Vista Group’s Chief Executive.
Key management personnel include 16 individuals (6 Directors and 10 Senior management) (2017: 14 being
6 Directors and 8 Senior management).
22
VISTA GROUP INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
The compensation paid to key management personnel includes the following amounts:
2018
RESTATED
2017
NZ$’000NZ$’000
Salaries including bonuses3,8353,351
Share-based payments721131
Dividends516639
Directors’ fees260233
Total5,3324,354
6. CAPITAL STRUCTURE
This section outlines Vista Group’s capital structure and details of share-based employee incentives which have
an impact on Vista Group’s equity.
Equity, reserves and dividend payments
Share capital represents the value of shares that have been issued. Incremental costs directly attributable to the
issue of ordinary shares are recognised as a deduction from equity. Retained earnings include all current and prior
period retained profits and losses. Dividend distributions payable to equity shareholders are included in trade and
other payables when the dividends have been approved by the Board on or before the end of the reporting period
but not yet distributed. All transactions with owners of the parent are recorded separately within equity.
All shares are ordinary authorised, issued and fully paid shares. They all have equal voting rights and share equally
in dividends and any surplus on winding up. The shares have no par value.
6.1 CONTRIBUTED EQUITY
During the 2018 financial year, 778,960 shares were issued (2017: 437,770). A total of 440,524 (2017: 144,901)
shares were issued for no consideration in respect to the final tranche of share-based payments related to VCL
contingent consideration (refer to section 7.4). A total of 338,436 shares were issued in respect to employee
incentives for no consideration (2017: 101,971).
2018201720182017
NO. OF SHARESNO. OF SHARES
000’S000’SNZ$’000NZ$’000
Shares issued and fully paid:
Beginning of the year164,75681,94057,82155,654
Ordinary shares issued during the year:
Powster contingent consideration-75-423
VCL contingent consideration441145524811
Employee incentives338102841249
Non-controlling interest change--192-
Vista Latin America acquisition-116-684
Total shares prior to share split 165,53582,37859,37857,821
Impact of two for one share split completed
November 2017
-82,378--
Total shares authorised at 31 December 165,535164,75659,37857,821
23
ANNUAL FINANCIAL STATEMENTS 2018
MangeaMeamnetC o rCoyegaoanSn ag
CONTINUED
6.2 EARNINGS PER SHARE AND DIVIDENDS
Earnings per share
Vista Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Parent by the weighted
average number of ordinary shares in issue during the year.
Diluted EPS reflects any commitments Vista Group has to issue shares in the future that would decrease EPS.
In 2018, these are in the form of share-based payments and performance rights. To calculate the impact, it is
assumed that share-based payments related to FY2018 earning targets are achieved and all the performance
rights are taken, therefore adjusting the weighted average number of shares.
The following reflects the income and share data used in the basic and diluted EPS computations:
20182017
NZ$’000NZ$’000
Profit attributable to ordinary shareholders of the Parent for basic earnings12,2589,676
Profit attributable to ordinary shareholders of the Parent adjusted for the effect
of dilution
12,2589,676
Weighted average number of shares in basic earnings per share165,305164,448
Shares deemed to be issued for no consideration in respect of share-based payments1,7721,082
Weighted average number of shares used in diluted earnings per share167,077165,530
EPS$0.07 $0.06
Diluted EPS$0.07 $0.06
6.3 DIVIDENDS
Vista Group paid two dividends during 2018. In March 2018, Vista Group paid a final dividend of 1.7 cents per share
(2017: 4.61) related to FY2017. In September 2018, Vista Group paid an interim dividend of 1.6 cents per share (2017:
2.4). Note that the dividend amounts per share quoted for 2017 were paid on the total shares on issue prior to the
2 for 1 share split in November 2017.
NO. OF
SHARES20182017
000’S
CENTS PER
SHARENZ$’000
CENTS PER
SHARENZ$’000
Dividends:
2018 Interim dividend – paid 27 September 2018165,5361.602,649
2017 Final dividend – paid 23 March 2018164,7571.742,861
2017 Interim dividend – paid 22 September 201782,378 2.401,977
2016 Interim and final dividend – paid 24 March 201781,940 4.613,777
6.4 SHARE-BASED PAYMENTS
Estimates related to share-based payments
Vista Group operates a number of equity settled, share-based payment schemes, under which it receives services
from employees as consideration for equity instruments of Vista Group. An independent valuation has been
completed for each share-based payment scheme to estimate the fair value of the performance rights allocated.
Management also make estimates annually about the number of performance rights expected to vest under each
share-based payment scheme.
Equity settled long-term incentive scheme – Total Shareholder Return
During 2017, the Board approved the third annual issue of an equity settled Long-Term Incentive (LTI) scheme
implemented in 2015 for selected key management personnel (Participants). The plan is intended to focus
performance on achievement of key long-term performance metrics.
24
VISTA GROUP INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
The allocation of performance rights is based on a percentage of annual base salary, adjusted by a risk factor
calculated using the Monte Carlo valuation model. Performance rights are granted under the plan for no
consideration and carry no dividend or voting rights. Participation in the LTI scheme is at the Board’s discretion
and participants in the LTI scheme are not guaranteed participation from year to year.
The amount of performance rights that will vest depends on Vista Group’s relative Total Shareholder Return (TSR)
to shareholders. Vesting of performance rights is dependent upon Vista Group achieving relative TSR targets over
a two and three-year performance period, against all other NZX50 companies (excluding Vista Group), with 50% of
the value of rights allocated under each target. Vesting of the performance rights is defined by the following table:
PERCENTILE PERFORMANCE AGAINST NZX50 COMPANIESVESTING PERFORMANCE RIGHTS
Less than 50th percentileZero
50th – 75th percentile50% to 100% pro-rata on a straight-line basis
Greater than 75th percentile100%
TSR is measured by the change in TSR from the start date of the grant period until the end of the performance
period (two years and three years). The LTI scheme allows the carry forward of any performance rights that do not
vest in the first vesting period to be eligible to vest in the vesting period for the second tranche of performance
rights. The scale at which carried over rights may vest at the end of the tranche two vesting period shall
commence at the TSR percentile achieved in respect of the tranche one vesting period.
The fair value of rights granted is recognised as an administration expense in the statement of comprehensive
income with a corresponding increase in the employee share-based payments reserve. The fair value is measured
at grant date and amortised over the vesting periods. Vista Group has recognised $0.4m of employee expenses
during the year ended 31 December 2018 (2017: $0.8m) related to the three active LTI schemes.
The fair value of the rights granted is measured using Vista Group share price as at the grant date less the present
value of the dividends forecast to be paid prior to each vesting date. When performance rights vest, the amount
in the share-based payments reserve relating to those rights is transferred to share capital. When any granted
performance rights lapse upon participant termination, the amount in the share-based payments reserve relating
to those rights is transferred to retained earnings.
Below is a summary of performance rights granted at 31 December 2018 and 31 December 2017 under these schemes:
31 DECEMBER 2018
TOTAL VALUE OF GRANTED
PERFORMANCE RIGHTS
PERFORMANCE RIGHTS GRANTED
AT 31 DECEMBER 2018
GRANT DATEEXPIRY DATE$000’S000’S
TSR SCHEMES 2015–2017
1 January 20151 April 2018--
1 January 20161 April 2019413232
1 January 20161 April 2019413232
1 January 20171 April 2020364209
1 January 20171 April 2020364209
Total TSR Schemes 1,554882
31 DECEMBER 2017
TOTAL VALUE OF GRANTED
PERFORMANCE RIGHTS
PERFORMANCE RIGHTS GRANTED
AT 31 DECEMBER 2017
GRANT DATEEXPIRY DATE$000’S000’S
TSR SCHEMES 2015–2017
1 January 20151 April 2018248200
1 January 20161 April 2019413232
1 January 20161 April 2019413232
1 January 20171 April 2020364209
1 January 20171 April 2020364209
Total TSR Schemes 1,8021,082
25
ANNUAL FINANCIAL STATEMENTS 2018
MangeaMeamnetC o rCoyegaoanSn ag
CONTINUED
Equity settled long-term incentive scheme – 2018 LTI Scheme
During 2018, the Board approved a new equity settled LTI scheme (the 2018 LTI Scheme) for selected key
management personnel (participants). The 2018 LTI Scheme rewards performance rights to participants based
upon the achievement of Revenue and EBITDA performance targets. The plan is intended to focus performance
on achievement of key long-term performance metrics. The 2018 LTI Scheme differs to the 2015 – 2017 LTI schemes
which were based upon relative TSR achievement.
The allocation of performance rights is based on a percentage of annual base salary, adjusted by a risk factor
calculated using the Monte Carlo valuation model. Performance rights are granted under the plan for no
consideration and carry no dividend or voting rights. Participation in the 2018 LTI Scheme is at the Board’s
discretion and participants in the 2018 LTI Scheme are not guaranteed participation from year to year.
The amount of performance rights to vest depends on Vista Group’s performance against specified revenue and
EBITDA targets. The 2018 LTI Scheme identifies these targets over a three-year performance period, with vesting
split into 6 tranches, being one per year for each specified target, over the three-year performance period.
The fair value of rights granted is recognised as an administration expense in the statement of comprehensive
income with a corresponding increase in the employee share-based payments reserve. The fair value is measured
at grant date and amortised over the vesting periods. For the 2018 LTI Scheme Vista Group has recognised $0.6m
of employee expenses during the year ended 31 December 2018.
When performance rights vest, the amount in the share-based payments reserve relating to those rights are
transferred to share capital. Should any granted performance rights lapse upon participant termination, the
amount in the share-based payments reserve relating to those rights is transferred to retained earnings.
Below is a summary of performance rights granted under this scheme:
2018 LTI SCHEME
TOTAL VALUE OF GRANTED
PERFORMANCE RIGHTS
PERFORMANCE RIGHTS GRANTED
AT 31 DECEMBER 2018
GRANT DATEEXPIRY DATE$000’S000’S
1 January 20181 April 2020307109
1 January 20181 April 2021307109
1 January 20181 April 2022307111
Total 2018 LTI Scheme 921329
Equity settled incentive scheme – Group CEO Retention Scheme
During 2018, the Board approved a new equity settled retention scheme for the Vista Group CEO (the Vista Group
CEO Retention Scheme). The Vista Group CEO Retention Scheme is intended to align the Vista Group CEO with
shareholder interests and ensure continued retention.
The share rights vest to the Group CEO on an annual basis dependent on continued tenure with no further
performance requirements. Share rights are granted for no consideration and carry no dividend or voting rights
until vested.
The value of the share rights is considered in the Board setting of appropriate remuneration levels for the Group
CEO. The Vista Group CEO Retention Scheme vested 200,000 shares in April 2018 upon signing of the scheme
documentation. A further three tranches will vest in April 2019, 2020 and 2021.
The fair value of rights granted is recognised as an administration expense in the statement of comprehensive
income with a corresponding increase in the employee share-based payments reserve. The fair value is measured
at grant date and amortised over the vesting periods. For the Group CEO Retention Scheme, Vista Group has
recognised $1.2m of employee expenses during the year ended 31 December 2018.
When share rights vest, the amount in the share-based payments reserve relating to those rights is transferred
to share capital. Should any granted performance rights lapse upon CEO termination, the amount in the share-based
payments reserve relating to those rights is transferred to retained earnings.
26
VISTA GROUP INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
Below is a summary of performance rights granted under this scheme:
GROUP CEO RETENTION SCHEME
TOTAL VALUE OF GRANTED
PERFORMANCE RIGHTS
PERFORMANCE RIGHTS GRANTED
AT 31 DECEMBER 2018
GRANT DATEEXPIRY DATE$000’S000’S
30 April 201830 April 2019446150
30 April 201830 April 2020441150
30 April 201830 April 2021582200
Total Group CEO Retention Scheme1,469500
Equity settled long-term incentive scheme – Operating Segment Revenue Scheme
During 2018, the Board approved an equity settled LTI scheme for selected key management personnel
(participants) that is based upon the achievement of defined revenue targets (the Operating Segment Revenue
LTI Scheme). The Operating Segment Revenue LTI Scheme is intended to focus performance on achievement of
key long-term performance metrics with particular focus on the achievement of individual operating segment
revenue stretch objectives.
The allocation of performance rights is based on set annual amounts of shares to vest as revenue milestones are
achieved. Performance rights are granted under the plan for no consideration and carry no dividend or voting rights.
Participation in the Operating Segment Revenue LTI Scheme is at the Board’s discretion.
The amount of performance rights to vest depends on operating segment revenue performance against specified
targets. Upon the achievement of stated annual revenue targets, performance rights are allocated with vesting split
into 2 tranches. The first tranche (50%) to vest following a 12-month deferral period following performance rights
being issued and the second (50%) following an additional 12 months. In addition, there is a singular additional
long-term revenue hurdle set for the 2021 financial year.
The fair value of rights granted is recognised as an administration expense in the statement of comprehensive
income with a corresponding increase in the employee share-based payments reserve. The fair value is measured
at grant date and amortised over the vesting periods. For the Operating Segment Revenue LTI Scheme, Vista
Group has recognised $0.2m of employee expenses during the year ended 31 December 2018.
When performance rights vest, the amount in the share-based payments reserve relating to those rights are
transferred to share capital. Should any granted performance rights lapse upon participant termination, the
amount in the share-based payments reserve relating to those rights is transferred to retained earnings.
Below is a summary of performance rights granted under this scheme:
OPERATING SEGMENT REVENUE SCHEME
TOTAL VALUE OF GRANTED
PERFORMANCE RIGHTS
PERFORMANCE RIGHTS GRANTED
AT 31 DECEMBER 2018
GRANT DATEEXPIRY DATE$000’S 000’S
1 January 201831 January 202019453
1 January 201831 January 20217023
1 January 201831 January 202217660
1 January 201831 January 202317661
Total Operating Segment Revenue Scheme616197
27
ANNUAL FINANCIAL STATEMENTS 2018
MangeaMeamnetC o rCoyegaoanSn ag
CONTINUED
Below is a summary of the performance rights granted, exercised and forfeited during 2018 for all of the schemes
outlined above:
GRANT DATE
20182017
AVERAGE EXERCISE
PRICE PER
PERFORMANCE RIGHT
NUMBER OF
PERFORMANCE RIGHTS
AVERAGE EXERCISE
PRICE PER
PERFORMANCE RIGHT
NUMBER OF
PERFORMANCE RIGHTS
000’S000’S
As at 1 January$1.68 1,082$1.56 868
Granted during the year$2.94 1,226$1.70 418
Exercised during the year$2.27 (338)$1.22 (204)
Forfeited during the year$1.22 (63)--
As at 31 December$2.40 1,907$1.68 1,082
Virtual Concepts Limited (VCL) incentive scheme
Certain employees of VCL receive remuneration in the form of share-based payments contingent upon achieving
certain annual milestones as part of the acquisition of VCL. The cost is recognised within administration expenses
in the statement of comprehensive income, refer to section 7.4 for more details of the VCL incentive scheme.
6.5 EXPENSES ARISING FROM SHARE-BASED PAYMENT TRANSACTIONS
The expense recognised for employee services received during the year is shown in the following table and
is included within operating expenses:
20182017
NZ$’000NZ$’000
Expenses arising from VCL acquisition30538
Equity settled LTI scheme2,411715
Stardust equity settled scheme637
Total expense 2,4471,290
6.6 SHARE-BASED PAYMENT RESERVE
The share-based payment reserve is used to record any equity share-based incentives. The reserve value represents
the difference between the value at the time of allocation and the cash received incentives plus the equity component
of contingent consideration payable.
6.7 CAPITAL MANAGEMENT POLICIES AND PROCEDURES
Vista Group’s capital management objective is to provide an adequate return to its shareholders. This is achieved
by pricing products and services commensurately within the level of risk.
Vista Group monitors capital requirements to ensure that it meets its lending covenant obligations and to maintain
an efficient overall financing structure. At balance date, Vista Group maintains low levels of debt.
The amounts managed as capital by Vista Group for the reporting periods under review are summarised as follows:
20182017
NZ$’000NZ$’000
Consolidated shareholders’ funds159,396148,101
Consolidated assets221,086204,235
Capital ratio72%73%
28
VISTA GROUP INTERNATIONAL LIMITED
MangeaMeamnetC o rCoyegaoanSn ag
CONTINUED
7. BASIS OF PREPARATION/ACCOUNTING POLICIES
This section outlines the legislation and accounting standards which have been followed in the preparation of these
financial statements along with explaining the how the information has been aggregated.
7.1 KEY LEGISLATION AND ACCOUNTING STANDARDS
The financial statements of Vista Group have been prepared in accordance with Generally Accepted Accounting
Practice in New Zealand (NZ GAAP). Vista Group is a for-profit entity for the purposes of complying with NZ GAAP.
The financial statements comply with New Zealand equivalents to International Financial Reporting Standards
(NZ IFRS), other New Zealand financial reporting standards and authoritative notices that are applicable to entities
that apply NZ IFRS. The financial statements also comply with International Financial Reporting Standards (IFRS)
and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting
under IFRS.
The financial statements have been prepared on the basis of historical cost except for contingent consideration
which is measured at fair value.
7.2 BASIS OF CONSOLIDATION
Vista Group’s financial statements consolidate those of the Company and its subsidiaries as at 31 December 2018.
A subsidiary is an entity over which Vista Group has control. Control is achieved when Vista Group is exposed,
or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns
through its power to direct the activities of the investee.
Consolidation of a subsidiary begins when Vista Group obtains control over the subsidiary and ceases when Vista
Group loses control of the subsidiary. Income and expenses of a subsidiary acquired or disposed of during the year
are included within the statement of comprehensive income from the date Vista Group gains control until the date
Vista Group ceases to control the subsidiary. All subsidiaries have a reporting date of 31 December. In preparing the
financial statements, all inter-entity balances and transactions, and unrealised profits and losses, arising within the
consolidated entity have been eliminated in full. A change in the ownership interest of a subsidiary without a loss
of control is accounted for as an equity transaction.
Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss and net
assets that is not held by Vista Group. Vista Group attributes total comprehensive income or loss of subsidiaries
to the amounts of the Company and the non-controlling interests based on their ownership interests.
Vista Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with
equity owners of the group. A change in ownership interest results in an adjustment between the carrying amounts of
the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between
the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in
a separate reserve within equity attributable to the owners of the Company.
7.3 FOREIGN CURRENCY
Functional and presentation currency
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 to the nearest thousand dollars ($000).
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation, at year-end exchange rates, of monetary assets and liabilities denominated in foreign
currencies, are recognised in the statement of comprehensive income.
Foreign Currency Translation Reserve (FCTR)
The FCTR is used to record exchange differences arising from the translation of the financial statements of foreign
subsidiaries for consolidation purposes.
29
ANNUAL FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
7.4 BUSINESS COMBINATIONS
This section outlines how Vista Group has accounted for transactions to acquire new businesses and dispose
of an existing subsidiary and how this has impacted the financial statements.
Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether
equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary
comprises cash and the fair value of any asset or liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are,
with limited exceptions, measured initially at their fair values at the acquisition date. Vista Group recognises
any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value
or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the:
• consideration transferred,
• amount of any non-controlling interest in the acquired entity, and
• acquisition-date fair value of any previous equity interest in the acquired entity,
over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than
the fair value of the net identifiable assets of the subsidiary acquired, the difference is recognised directly in the
statement of comprehensive income as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted
to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate,
being the rate at which a similar borrowing could be obtained from an independent financier under comparable
terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability
are subsequently remeasured to fair value with changes recognised in the statement of comprehensive income.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously
held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising
from such remeasurement are recognised in the statement of comprehensive income.
Contingent consideration
During the year Vista Group settled the following amounts in contingent consideration:
20182017
CASHSHARESCASHSHARES
NZ$’000NZ$’000NZ$’000NZ$’000
Powster Limited (Powster)--1,955423
Ticketsoft--729-
Flicks.co.nz (Flicks)--140-
Total contingent consideration --2,824423
VISTA LATIN AMERICA
In August 2017, Vista Group completed the acquisition of a controlling stake of 60% of the equity in its long-term
Latin American business partner Vista Latin America. The purchase agreement included contingent consideration.
Contingent consideration is payable in cash within 10 days of the finalisation of the FY2018 accounts for Vista
Latin America, expected to be in March 2019. Contingent consideration is calculated based on achievement of
EBITDA performance over the FY2017 and FY2018 financial periods against specified performance targets. For the
purpose of quantifying the amount payable, an estimate was developed based on the expected performance of
the Vista Latin America business for the financial period specified. The assumptions used were validated by senior
management. At the acquisition date, the fair value of the contingent consideration was estimated to be $0.9m.
30
VISTA GROUP INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
At 31 December 2018, an assessment was made of the actual performance against the targets specified for
the contingent consideration to vest. The outcome of this assessment was that there would be no contingent
consideration paid to the former owners of Vista Latin America as the specified EBITDA targets were not achieved.
The contingent consideration recognised within the original business combination of $0.9m was therefore released
via the statement of comprehensive income within acquisition expenses.
VIRTUAL CONCEPTS LIMITED
The acquisition of the remaining 43% of Virtual Concepts Limited (VCL) (trading as Movio) in August 2014 included
contingent consideration that was payable to the former owners in the form of cash and shares. Contingent
consideration was payable in three tranches on 1 April 2016, 1 April 2017 and 1 April 2018. During the year the final
tranche was settled, amounting to $1.2m in cash and $0.5m in shares. At the reporting date, the fair value of the
remaining contingent consideration is nil (2017: $1.7m)
The table summarises the changes in estimates in the contingent consideration for VCL:
CONTINGENT CONSIDERATION AT 31 DECEMBER
20182017
NZ$’000NZ$’000
Amounts paid
Cash (current)
1,240348
Shares – Vista Group 524811
1,7641,159
Estimated liability
Cash (current)-1,240
Cash (non-current)--
Shares – Vista Group -524
Total estimated liability -1,764
7.5 GROUP COMPANIES
The results and financial position of all Vista Group entities (none of which has the currency of a hyper-inflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows;
(a) 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;
(b) income and expenses for each income statement and statement of other comprehensive income, are translated
at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of
the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on
the dates of the transactions);
(c) all resulting exchange differences are recognised in other comprehensive income; and
(d) goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised
in other comprehensive income.
Foreign exchange gains and losses that relate to borrowings are presented in the statement of comprehensive
income, within finance costs. All other foreign exchange gains and losses are presented in the statement of
comprehensive income on a net basis within other expenses.
31
ANNUAL FINANCIAL STATEMENTS 2018
MangeaMeamnetC o rCoyegaoanSn ag
CONTINUED
Group information
The financial statements include the following subsidiaries:
NAMEPRINCIPAL ACTIVITY
COUNTRY OF
INCORPORATION
SHARE-
HOLDING
2018
SHARE-
HOLDING
2017
Vista Entertainment Solutions LimitedSoftware development
and licensing
New Zealand100%100%
Virtual Concepts LimitedHolding companyNew Zealand100%100%
Movio Limited Provision of online loyalty,
data analytics and marketing
New Zealand100%100%
Movio IncProvision of online loyalty,
data analytics and marketing
USA100%100%
MACCS International BV
Software development
and licensing
Netherlands50.1%50.1%
MACCS USSoftware licensingUSA50.1%50.1%
VPF HUB GmbhSoftware licensingGermany45.1%45.1%
Vista Entertainment Solutions (UK) LimitedSoftware licensingUnited Kingdom100%100%
Vista Entertainment Solutions (USA) IncSoftware licensingUSA100%100%
Vista Entertainment Solutions (Canada) LimitedNon-activeCanada100%100%
Vista Group LimitedNon-activeNew Zealand100%100%
Senda Direccion Technologica SA De CVSoftware licensingMexico60%0%
Senda DO Brasil servicos de tecnología LTDASoftware licensingBrazil60%0%
Book My Show LimitedInactiveNew Zealand74%74%
Book My Show (NZ) LimitedInactiveNew Zealand74%74%
Share Dimension BVSoftware development
and licensing
Netherlands50%50%
SC Share Dimension SRLSoftware developmentRomania50%50%
Flicks LimitedAdvertising salesNew Zealand100%100%
Powster Limited Marketing and creative
solutions
United Kingdom50%50%
Powster IncMarketing and creative
solutions
USA50%0%
Stardust Solutions LimitedApplication development
and licensing
New Zealand58.9%74.9%
Stardust Entertainment IncApplication licensing USA58.9%74.9%
MovieXchange International LimitedWeb platform development
and licensing
New Zealand100%100%
MovieXchange LimitedWeb platform licensingNew Zealand100%100%
Vista Entertainment Solutions (Spain), SLSoftware licensingSpain100%0%
Vista International Entertainment Solutions
South Africa (PTY) Limited
Software licensingSouth Africa100%100%
32
VISTA GROUP INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
7.6 INVESTMENT IN ASSOCIATE
Associates are those entities over which Vista Group is able to exert significant influence but which are not
subsidiaries or jointly controlled entities. Vista Group’s investment in an associate is accounted for using the equity
method. Under the equity method, the investment in an associate is initially recognised at cost. In the event of loss
of control of a subsidiary, resulting in an associate company, this is recognised initially at fair value. The carrying
amount of the investment in an associate is increased or decreased to recognise Vista Group’s share of the profit
or loss and other comprehensive income of the associate after the acquisition date. Dividends received or receivable
from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.
When Vista Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity,
including any other unsecured long-term receivables, Vista Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the other entity. Unrealised gains on transactions between
Vista Group and its associates are eliminated to the extent of Vista Group’s interest in these entities. Unrealised
losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The carrying amount of equity-accounted investments are tested for impairment in accordance with the policy
described in section 5.4.
The financial statements of the associate are prepared for the same reporting period as Vista Group.
When necessary, adjustments are made to bring the accounting policies in line with those of Vista Group.
7.7 ADOPTION OF NEW ACCOUNTING STANDARDS
New accounting standards adopted by Vista Group:
A number of new or amended standards become applicable for the current reporting period and Vista Group
has had to change its accounting policies as a result of adopting the following standards:
• NZ IFRS 15 Revenue from Contracts with Customers
• NZ IFRS 9 Financial Instruments
The impact of the adoption of these new standards is disclosed below.
NZ IFRS 15 Revenue from Contracts with Customers – impact of adoption
Vista Group adopted NZ IFRS 15 Revenue from Contracts with Customers from 1 January 2018, which resulted
in changes in accounting policies relating to the recognition of revenue.
Following a detailed review of Vista Group’s portfolio of contracts, management concluded that the implementation
of NZ IFRS 15 has no material impact on the way in which Vista Group recognises revenue. Therefore, there is no
requirement to restate revenue reported in prior periods. The details of the review process are outlined below.
Accounting policies have been amended to ensure that the five-step method, as defined in NZ IFRS 15, is applied
consistently to revenue recognition processes across Vista Group.
Process and policy
To assess the impact of NZ IFRS 15 on Vista Group, contracts within each segment were aggregated to create
portfolios of contracts. An individual contract from each portfolio was selected as being representative of
each unique contract type. For each contract type, the five-step method was applied to assess the impact
on revenue recognition.
The five-step method for recognising revenue from contracts with customers involves consideration of the following:
1. Identifying the contract with the customer;
2. Identifying performance obligations;
3. Determining the transaction price;
4. Allocating the transaction price to distinct performance obligations; and
5. Recognising revenue.
33
ANNUAL FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
The tables below provide further information on the application of NZ IFRS 15 across the major segments in Vista
Group. The segments detailed below represent 92% of Vista Group’s revenue for the year ended 31 December 2018.
Vista Cinema Segment
REVENUE TYPEDESCRIPTIONKEY JUDGEMENTSOUTCOME
TIMING OF REVENUE
RECOGNITION
Product –
Cinema
Perpetual ERP software
license targeted at larger
cinema circuits.
Determining the distinct
performance obligations
and whether items are
required to be bundled
to form a distinct
performance obligation.
Providing a software
license is a distinct
performance obligation
and is not required to
be bundled with other
performance obligations.
Point in time
Recognised at the
point in time when the
software goes live, which
is when the customer
is able to benefit from
using the software.
Product –
VEEZI
Subscription-based
software targeted at
small and independent
theatres. Revenue
includes a fixed monthly
fee plus a variable
component based on the
number of tickets sold.
Determining whether
a sales-based license
of intellectual property
exists. Determining
whether there is a
sales-based variable
component.
The subscription to
Veezi is a sales-based
license of intellectual
property. There is a
sales-based variable
component.
Point in time
Recognised at the end
of each month once the
sales-based variable
usage is known.
Maintenance –
Cinema
Basic support and
any enhancements
or upgrades to the
software.
No major judgement
required, other than
confirming the scope
and period of the
maintenance contract.
N/AOver time
Benefits are
simultaneously received
and consumed; revenue
is recognised over the
maintenance term.
Services &
Development
Value-add services,
implementation
services and bespoke
development of the
software.
Determining whether the
services & development
provided are a distinct
performance obligation.
The services &
development are a
distinct performance
obligation as they are
not highly dependent
or interrelated to other
performance obligations
in the contract.
Over time
Recognised when the
service is complete
or on a stage of
completion basis.
Movio Segment
REVENUE TYPEDESCRIPTIONKEY JUDGEMENTSOUTCOME
TIMING OF REVENUE
RECOGNITION
Product –
Cinema
Movio Cinema cloud-
hosted data, marketing
and analytics platform.
Customers are charged
an annual access fee to
platform plus a variable
component (see below).
Determining whether
the platform access is
a distinct performance
obligation.
Access to the platform
is a distinct performance
obligation and is not
required to be bundled
with other performance
obligations.
Over time
Platform access
is recognised over
time as benefits are
simultaneously received
and consumed.
Variable revenue based
on the number of active
members managed
and the number of
promotional messages
sent during a given
period.
Determining if a
usage-based license
of intellectual
property exists.
The variable revenue
is a usage-based license
of intellectual property.
Point in time
Variable license revenue
is recognised at the end
of each month once
usage-based quantities
are known.
34
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CONTINUED
REVENUE TYPEDESCRIPTIONKEY JUDGEMENTSOUTCOME
TIMING OF REVENUE
RECOGNITION
Product –
Media
Movio Media cloud-
hosted data, marketing
and analytics platform.
Determining whether
the platform access is
a distinct performance
obligation.
Access to the platform
is a distinct performance
obligation and is not
required to be bundled
with other performance
obligations.
Over time
Platform access
is recognised over
time as benefits are
simultaneously received
and consumed.
Targeted marketing
campaigns, digital
advertising and reports.
No major judgement
required.
N/APoint in time
Revenue is recognised
when the campaigns and
reports are completed.
Services Value-add services, data
scientist services and
setup & configuration.
Determining whether the
services provided are
a distinct performance
obligation.
The services are
distinct performance
obligations as they are
not highly dependent
or interrelated to other
performance obligations
in the contract.
Over time
Recognised when the
service is complete or
on a stage of completion
basis.
Additional Group Companies Segment
REVENUE TYPEDESCRIPTIONKEY JUDGEMENTSOUTCOME
TIMING OF REVENUE
RECOGNITION
Product –
Showtimes
Platform
Website and marketing
platform for feature
films, incorporating
Showtimes data.
Determining the distinct
performance obligations
and the requirements
to bundle performance
obligations.
Two distinct
performance obligations
exist; Platform creation
and incorporating
Showtimes data.
Point in time
Recognised at a point in
time when the Platform
is live and subsequently
when the Showtimes
data is incorporated.
Product –
MACCS
Perpetual theatrical
distribution software
for film distributors.
Determining the distinct
performance obligations
and whether they are
required to be bundled
as one performance
obligation.
Provision of the software
license is a distinct
performance obligation
but is required to
be bundled with
development where the
license is dependent on
the Development.
Point in time
Recognised at a point in
time when the territory
is live on the software,
and the customer is
able to benefit from
the software license.
Maintenance –
MACCS
Basic support and
any enhancements
or upgrades of the
software.
No major judgement
required, other than
confirming the scope
and period of the
maintenance contract.
N/AOver time
Benefits are
simultaneously received
and consumed; revenue
recognised over the
maintenance term.
Services &
Development
Value-add services,
implementation
services and bespoke
development of the
software.
Determining the distinct
performance obligation
and whether the
development is required
to be bundled to form
a distinct performance
obligation.
Where the services &
development are highly
interrelated to a license,
they are bundled with
the license as a single
performance obligation.
Otherwise, the services
& development are a
distinct performance
obligation.
Over time
Recognised when the
services & development
are complete or on
a stage of completion
basis.
35
ANNUAL FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
In terms of impact to the presentation of the financial statements, NZ IFRS 15 requires the disaggregation of
revenue to provide clear and meaningful information. For Vista Group, management concluded that presentation of
revenue in terms of the method of revenue recognition was most appropriate. Therefore, revenue is disaggregated
in the operating segments section (refer to section 2.2) as amounts recognised at a point in time and over time.
Critical judgements used in applying accounting policies and estimation uncertainty
Vista China Localisation
As disclosed in section 3.1, during FY2016 Vista Group entered into a reseller agreement with Vista China which
included a number of performance obligations to localise software products made by Vista Group. Management
has applied judgement and estimation in determining the stage of completion for each software product being
localised for the China market and the associated revenue for each obligation.
NZ IFRS 9 Financial Instruments – impact of adoption
NZ IFRS 9 Financial Instruments as it relates to Vista Group replaces the provisions of NZ IAS 39 that relate to the
recognition, classification, measurement and impairment of financial assets. The adoption of NZ IFRS 9 Financial
Instruments from 1 January 2018 resulted in changes in accounting policies and adjustments to the amounts
recognised in the financial statements. The new accounting policies are set out in the sections below along
with the impact to the financial statements.
Vista Group has applied NZ IFRS 9 retrospectively but has elected not to restate comparative information.
As a result, the comparative information provided continues to be accounted for in accordance with Vista Group’s
previous accounting policies.
Classification and measurement
NZ IFRS 9 impacts the following classifications of financial assets:
• Cash;
• Trade receivables;
• Loan and receivables to the associate company Numero; and
• Sundry receivables.
From 1 January 2018, Vista Group classifies its financial assets as being measured at amortised cost. Until December
2017, Vista Group classified its financial assets as loans and receivables. There was no change in the fair value of the
financial assets as a result of the reclassification.
At initial recognition, Vista Group measures a financial asset at its fair value plus transactions costs that are directly
attributable to the acquisition of the financial asset.
Impairment
From 1 January 2018, Vista Group assesses on a forward-looking basis, the expected credit losses associated with
its financial assets carried at amortised cost. The impairment methodology applied depends on whether there has
been a significant increase in credit risk.
In assessing whether there has been a significant increase in credit risk, Vista Group considers the forward looking
and previous financial history of counterparts to assess the probability of default or likelihood that full settlement
is not received.
For trade receivables, Vista Group applies the simplified approach permitted by NZ IFRS 9, which requires
expected lifetime losses to be recognised from initial recognition of the receivables.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan
with Vista Group, and a failure to make contractual payments for a period of greater than 180 days past due.
The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates.
Vista Group uses judgement in making these assumptions and selecting the inputs to impairment calculation,
based on Vista Group’s past history, existing market conditions as well as forward looking estimates at the end
of each reporting period. Details of key assumptions and judgements are included in each section below.
36
VISTA GROUP INTERNATIONAL LIMITED
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CONTINUED
Cash
While cash is subject to the impairment requirements of NZ IFRS 9, the identified impairment loss was immaterial.
Trade receivables
Vista Group’s trade receivables are subject to NZ IFRS 9’s expected credit loss model. Vista Group has applied
the NZ IFRS 9 simplified approach to measuring credit losses which uses a lifetime expected loss allowance for
all trade receivables. To measure expected credit losses, trade receivables have been grouped and reviewed on
the basis of the number of days past due. The expected credit loss has been calculated by considering the impact
of the following characteristics:
• The Baseline characteristic considers the age of each invoice and applies an increasing expected credit loss
estimate as the trade receivable ages.
• The Aging and Write off characteristics consider the history of write off related to the specific customer and the
relative size of aged debt to current debt. If the trade receivable aged over 180 days makes up more than 45%
of the total trade receivable for a specific customer, further provision for expected credit loss is added.
• The Country, Customer and Market characteristics consider the relative risk related to the country and/or region
within which the customer resides and makes an assessment of the financial strength of the customer and the
market position that Vista Group has achieved within that market.
The expected credit loss allowance as at 1 January 2018 was determined as follows for trade receivables:
1 JANUARY 2018
CURRENT
91-180 DAYS
PAST DUE
181-270 DAYS
PAST DUE
271-360 DAYS
PAST DUE
361+ DAYS
PAST DUETOTAL
NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000
Gross carrying amount21,87511,9372,7351,7288,31946,594
Baseline54884043410635
Aging and Write offs533456373471
Country, Customer and Market 51491513101229
Total expected credit loss rate0.50%1.17%3.25%6.48%10.63%2.87%
Expected credit loss allowance110140891128841,335
The expected credit loss allowance for trade receivables as at 31 December 2017 as reported in the annual report
reconciles to the opening expected credit loss allowance on 1 January 2018 as follows:
NZ$’000
Expected credit loss allowances for trade receivables
At 31 December 2017 – calculated under NZ IAS 39
976
Amounts restated through opening retained earnings1,335
Opening expected credit loss allowance as at 1 January 2018 – calculated under NZ IFRS 92,311
The expected credit loss allowance as at 31 December 2018 was determined as follows for trade receivables:
31 DECEMBER 2018
CURRENT
91-180 DAYS
PAST DUE
181-270 DAYS
PAST DUE
271-360 DAYS
PAST DUE
361+ DAYS
PAST DUETOTAL
NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000
Gross carrying amount32,1873,8412,1325447,48746,191
Baseline81293214374530
Aging and Write offs321811368402
Country, Customer and Market 4489291154
Total expected credit loss rate0.40%1.02%2.77%4.96%11.13%2.35%
Expected credit loss allowance1283959278331,086
37
ANNUAL FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
During the year the trade receivables position has improved resulting in a reduction in the expected credit loss
allowance of $0.2m. This amount was recognised during the year within administration expenses in the statement
of comprehensive income.
Loan to associate company Numero
The loan and outstanding receivables from Numero are subject to the requirements of NZ IFRS 9. For these
amounts, Vista Group has applied the general approach mandated under NZ IFRS 9 to assess the impairment
provision, which involves assessing the lifetime recoverability of these receivables as the credit risk has increased
since initial recognition.
Vista Group has considered reasonable and supportable information available to calculate the present value of
future cash flows of Numero based on a five-year period. Management judgement has been applied in determining
the inputs for future periods and the discount rate applied. This analysis calculated the amount of debt supportable
by Numero based on discounted future cash flows to be $5.4m at 31 December 2018, being no change from the
prior reporting period.
At 31 December 2018, Vista Group recognised an incremental provision for impairment of $1.3m bringing the
total amount provided for against the receivable from Numero to $3.0m. The provision combined with the gross
receivable of $8.4m results in a net loan receivable of $5.4m.
Sundry receivables
At balance date, Vista Group holds a total of $3.9m of Sundry receivables (2017: $11.4m). Management has applied
judgement to remove this balance from the impairment calculation as the counterparties are considered to have
a high level of certainty in terms of recoverability.
Impact of standards issued but not yet adopted by Vista Group
NZ IFRS 16 Leases
NZ IFRS 16 Leases will result in almost all leases being recognised in the statement of financial position, as the
distinction between operating leases and finance leases is removed. The standard is mandatory for reporting
periods beginning on, or after 1 January 2019. Vista Group does not intend to adopt the standard before its
mandatory effective date.
Under NZ IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration. Under NZ IAS 17, a lessee was required to make
a distinction between an operating lease (off balance sheet) and a finance lease (on balance sheet). NZ IFRS 16
now requires a lessee to recognise a lease liability reflecting the future lease payments and a ‘right-of-use’ asset for
almost all lease contracts. The statement of comprehensive income will be impacted by the recognition of an interest
expense and a depreciation expense with premise rental and office equipment expenses removed altogether.
For Vista Group, the impact will be primarily focused on the accounting for operating leases. As at the reporting
date, Vista Group has operating lease commitments of $24.4m. Upon adoption, NZ IFRS 16 will have a significant
impact upon Vista Group’s statement of financial position and statement of comprehensive income.
To calculate the impact of NZ IFRS 16 as at 1 January 2019, being the date of adoption, Vista Group’s management
has developed a detailed model. Management has had to apply judgement across several parameters that input
into this model as follows:
• The lease term including potential renewals for which Vista Group may have a right to exercise;
• The incremental borrowing rate that is used to discount lease assets and liabilities.
As a result of the calculations and the application of judgement within the model, management is able to quantify
the potential impact of NZ IFRS 16 based on the current lease arrangements across Vista Group. Management
expects that there will be material impact across the following line items in the statement of financial position:
• Recognition of right-of-use assets of $6.4m;
• Recognition of a lease liability $7.0m; and
• Decrease in opening retained earnings $0.6m.
38
VISTA GROUP INTERNATIONAL LIMITED
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CONTINUED
The expected impact on the statement of comprehensive income for the year ended 31 December 2019 across
the following lines items are estimated as follows:
• Increase in finance costs (recognised as interest expense) $0.3m;
• Increase in depreciation and amortisation expense $1.9m; and
• Decrease in premises and office equipment expenses recognised within administration expenses $2.5m.
Estimates are subject to change at the time of adoption and for the year ended 31 December 2019 due to:
• Any changes in managements judgements as they apply;
• Outcome of renewals under lease agreements;
• Any changes to existing leasing arrangement;
• New lease contracts entered into; and
• Finalisation of management’s judgements and changes to borrowing rates.
The implementation of NZ IFRS 16 has no cash impact to Vista Group as changes are limited to financial reporting
requirements only. Vista Group intends to implement the simplified transition approach as defined in the standard
for the year ended 31 December 2019 and will not restate comparative amounts for the period prior to adoption.
8. TAX
8.1 INCOME TAX EXPENSE
Income tax
The income tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss in the
statement of comprehensive income, except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in
equity, respectively.
The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at
the balance sheet date in the countries where Vista Group operates and generates taxable income. Management
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations
are subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to
be paid to the tax authorities.
20182017
NZ$’000NZ$’000
Income tax expense comprises:
Current tax expense9,1007,977
Deferred tax expense (section 8.2)(1,089)(1,147)
Tax expense8,0116,830
39
ANNUAL FINANCIAL STATEMENTS 2018
MangeaMeamnetC o rCoyegaoanSn ag
CONTINUED
Reconciliation of income tax expense
The relationship between the expected tax expense based on the domestic effective tax rate of the Company at 28%
(2017: 28%) and the reported tax expense in the statement of comprehensive income can be reconciled as follows:
20182017
NZ$’000NZ$’000
Profit before tax21,04516,813
Taxable income21,04516,813
Domestic tax rate for Vista Group International Limited28%28%
Expected tax expense5,8934,708
Foreign subsidiary company tax17099
Non-assessable income/non-deductible expenses8801,713
Prior period adjustment(50)127
Deferred tax assets no longer recognised1,007-
Other111183
Actual tax expense 8,0116,830
As at 31 December 2018, Vista Group has $12,886,073 (2017: $8,881,478) of imputation credits available for use
in subsequent reporting periods.
8.2 DEFERRED TAX ASSETS AND LIABILITIES
Recognition of deferred tax assets
The net deferred tax asset at balance date includes temporary timing differences and income tax losses
available to carry forward against future taxable 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.
Management applies judgement when reviewing current business plans and forecasts to ascertain the likelihood of
future taxable profits. The financial forecasts used in this assessment are the same as those used in the impairment
review of goodwill and other assets in section 5.4.
Deferred income tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising between
tax bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred
income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than
a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by
the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates,
except where the timing of the reversal of the temporary difference is controlled by Vista Group and it is probable
that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes
levied by the same taxation authority on either the same taxable entity or different taxable entities where there
is an intention to settle the balances on a net basis.
40
VISTA GROUP INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
Deferred taxes arising from temporary differences and unused tax losses can be summarised as follows:
2018
OPENING
BALANCE
ACQUIRED
AS PART OF
A BUSINESS
COMBINATION
RECOGNISED
IN INCOME
STATEMENT
CLOSING
BALANCE
NZ$’000NZ$’000NZ$’000NZ$’000
Trade and sundry receivables224-188412
Employee benefits474-1,1221,596
Property, plant and equipment(108)-(12)(120)
Other172-(122)50
Intangible assets(1,535)28247(1,260)
Unused tax losses1,472-(334)1,138
Deferred tax temporary asset699281,0891,816
2017
OPENING
BALANCE
ACQUIRED
AS PART OF
A BUSINESS
COMBINATION
RECOGNISED
IN INCOME
STATEMENT
CLOSING
BALANCE
NZ$’000NZ$’000NZ$’000NZ$’000
Trade and sundry receivables28-196224
Employee benefits422-52474
Property, plant and equipment(194)-86(108)
Other59-113172
Intangible assets(1,686)(74)225(1,535)
Unused tax losses997-4751,472
Deferred tax temporary asset/(liability)(374)(74)1,147699
9. FINANCIAL RISK MANAGEMENT
Vista Group is exposed to three main types of risks 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. Its focus includes
actively monitoring and securing Vista Group’s short to medium-term cash flows by minimising the exposure
to financial markets. The most significant financial risks to which Vista Group is exposed are described below.
9.1 FOREIGN CURRENCY RISK
Vista Group operates internationally and is exposed to foreign exchange risk in US Dollars (USD), Pounds Sterling
(GBP), Australian Dollars (AUD), Chinese Yuan Renminbi (CNY) and Euros (EUR). Foreign exchange risk arises
from future commercial transactions and recognised assets and liabilities denominated in a currency that is not
the functional currency of the relevant group entity.
To mitigate exposure to foreign currency risk, foreign currency cash flows are monitored in accordance with the
Vista Group’s risk management policies. Vista Group’s risk management policies include treasury management and
foreign exchange policies, the implementation of which is set and reviewed regularly by the Board. Vista Group’s
risk management procedures distinguish short-term foreign currency cash flows (due within 6 months) from
longer-term cash flows (due after 6 months). Where the amounts to be paid and received in a specific currency
are expected to largely offset one another, no further hedging activity is undertaken. The foreign exchange policy
allows for the use of hedging activity however no financial instruments were in use at balance date.
41
ANNUAL FINANCIAL STATEMENTS 2018
MangeaMeamnetC o rCoyegaoanSn ag
CONTINUED
Foreign currency denominated financial assets and liabilities which expose Vista Group to currency risk are disclosed
below. The amounts shown are those reported to key management translated into NZD at the closing rate:
USDGBPEURCNYAUD
NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000
31 DECEMBER 2018
Financial assets
Cash 19,5849,9451,566-1,905
Trade receivables 27,7493,8395,2285,8551,526
Sundry receivables 469-382--
Financial liabilities
Trade payables (1,358)(65)(82)(2,358)(4)
Sundry accruals(1,026)(518)(52)--
Borrowings (5,960)-(5,983)--
Net exposure 39,45813,2011,0593,4973,427
31 DECEMBER 2017
Financial assets
Cash
14,7313,6481,339-388
Trade receivables 22,9854,5193,81411,9341,269
Sundry receivables --5108,664-
Financial liabilities
Trade payables
(3,385)(88)(162)(1,375)-
Sundry accruals(872)(157)(5)(980)-
Borrowings (5,637)-(5,686)--
Contingent consideration (908)----
Net exposure 26,9147,922(190)18,2431,657
The following table illustrates the sensitivity of profit or loss and equity in regard to Vista Group’s financial assets
and liabilities affected by USD/NZD exchange rate, the GBP/NZD exchange rate, the EUR/NZD exchange rate,
the CNY/NZD exchange rate and the AUD/NZD exchange rate ‘all other things being equal’. It assumes a +/- 10%
change of the NZD to currency exchange rate for the year ended 31 December 2018 (2017: 10%). These percentages
have been determined based on the average market volatility in exchange rates in the previous 12 months. The
sensitivity analysis is based on Vista Group’s foreign currency financial instruments held at each reporting date.
PROFIT/EQUITY
USDGBPEURCNYAUD
NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000
31 December 2018
10% strengthening in NZD
(3,587)(1,200)(96)(318)(312)
10% weakening in NZD4,3841,467118388381
31 December 2017
10% strengthening in NZD
(2,447)(720)17(1,658)(151)
10% weakening in NZD2,991880(21)2,027184
Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions.
Nonetheless, the analysis above is considered to be representative of Vista Group’s exposure to market risk.
42
VISTA GROUP INTERNATIONAL LIMITED
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CONTINUED
9.2 INTEREST RATE RISK
Vista Group’s interest rate risk primarily arises from long-term borrowing, cash and advances to associates.
Borrowings and deposits at variable rates expose Vista Group to cash flow interest rate risk. Borrowings and
deposits at fixed rates expose Vista Group to fair value interest rate risk.
The following tables set out the interest rate repricing profile and current interest rate of the interest-bearing
financial assets and liabilities.
AS AT 31 DECEMBER 2018
EFFECTIVE
INTEREST
RATE
FLOATING
FIXED UP TO
3 MONTHS
FIXED UP TO
6 MONTHS
FIXED UP TO
5 YEARSTOTAL
NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000
Assets
Related party loan – Numero
6.0%---8,3868,386
Cash-34,353---34,353
34,353--8,38642,739
Liabilities
Borrowings
4.4%---(11,076)(11,076)
Borrowings related party5.0%---(868)(868)
---(11,944)(11,944)
Total exposure34,353--(3,558)30,795
Profit or loss is sensitive to higher/lower interest income/expense from cash as a result of changes in interest rates.
AS AT 31 DECEMBER 2018
EFFECTIVE
INTEREST RATE
+1%
EFFECTIVE
INTEREST RATE
-1%
NZ$’000NZ$’000
Cash344(344)
Related party loan – Numero84(84)
Borrowings(111)111
Borrowings related party(9)9
Total exposure308(308)
9.3 CREDIT RISK
Credit risk is the risk that a counterparty fails to discharge an obligation to Vista Group. Vista Group is exposed
to this risk for various financial instruments, for example trade and sundry receivables and deposits with financial
institutions and related parties. The maximum exposure to credit risk is limited to the carrying amount of financial
assets recognised at 31 December, as summarised in section 10.3.
Vista Group continuously monitors defaults of customers and other counterparties, identified either individually
or by Vista Group, and incorporates this information into its credit risk controls. Vista Group’s policy is to deal only
with creditworthy counterparties.
At 31 December, Vista Group has certain trade receivables that have not been settled by the contractual due
date but are not considered to be impaired because of the nature of contracts and/or the longevity of ongoing
customer relationships. The amounts at 31 December, analysed by the length of time past due, are:
20182017
NZ$’000NZ$’000
Not more than 3 months13,5286,664
Between 3 months and 4 months1,5858,202
Over 4 months12,26716,150
27,38031,016
43
ANNUAL FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
As at 31 December 2018, Vista Group holds a receivable from its associate company, Vista China, amounting
to $6.8m (2017: $12.8m) which is over 4 months past due. Subsequent to year end Vista Group and Vista China
have settled all outstanding related party amounts. Refer to section 3.1 for further details.
In respect of trade receivables, Vista Group is not exposed to any significant credit risk exposure to any single
counterparty or any group of counterparties having similar characteristics. Trade receivables consist of a large
number of customers in various industries and geographical areas. Based on historical information about customer
default rates, management considers the credit quality of trade receivables that are not past due or impaired
to be good.
Judgement has been applied to the recoverability of all trade receivables, with management confirming that
all amounts are deemed recoverable and are not impaired.
The credit risk for cash is considered negligible, since the counterparties are reputable banks with high quality
external credit ratings.
Advances to Numero are subject to credit risk and the extent of the recovery of the advances is dependent
on Numero achieving budgeted and forecasted growth.
9.4 LIQUIDITY RISK
Liquidity risk is the risk that Vista Group might be unable to meet its obligations. Vista Group’s objective is to
maintain a balance between continuity of funding and flexibility through monitoring of cash and the use of bank
overdrafts and bank loans (see section 4.2). Vista Group’s policy is that not more than 25% of borrowings should
mature in the next 12-month period. The related party borrowings of $0.9m (2017: $0.6m) will mature in greater
than one year at 31 December 2018. Vista Group assessed the concentration of risk with respect to refinancing its
debt as being low. Access to sources of funding is sufficiently available and debt maturing within 12 months can
be rolled over with existing lenders.
Vista Group has significant cash balances held as cash on hand of $34.4m. Vista Group’s dividend policy is to
distribute between 30% to 50% of net profit after tax subject to immediate and future growth opportunities and
identified capital expenditure requirements. At balance date Vista Group has a NZD $2m on-call credit facility
with the ASB, against which there has been no draw down.
The table below summarises the maturity profile of Vista Group’s non-derivative financial liabilities based
on contractual undiscounted payments.
SECTION
ON DEMAND
LESS THAN
3 MONTHS
3 TO 12
MONTHS
1 TO 5
YEARS> 5 YEARSTOTAL
NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000NZ$’000
2018
Trade payables5.6-5,824---5,824
Sundry accruals-3,978---3,978
Borrowings4.2---11,944-11,944
Interest on borrowings-122366711-1,199
Contingent consideration------
-9,92436612,655-22,945
2017
Trade payables
5.6-4,413---4,413
Sundry accruals-2,856---2,856
Borrowings4.2--61410,709-11,323
Interest on borrowings-77232824-1,133
Contingent consideration---908-908
-7,34684612,441-20,633
44
VISTA GROUP INTERNATIONAL LIMITED
MangeaMeamnetC o rCoyegaoanSn ag
CONTINUED
10. OTHER INFORMATION
10.1 EXPENSES
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received, and
all attached conditions will be complied with. Government grants are recognised within the statement of
comprehensive income as an offset to operating expenses.
During the year, Vista Group recognised a total of $3.2m (2017: $3.6m) of grants from Callaghan Innovation in
New Zealand and Ministry of Economic Affairs (WBSO) in the Netherlands to assist with Research and Development.
At balance date, there is a 10% retention amount related to 2018 grants of $0.3m yet to be paid and subject to
independent auditor review.
Auditor’s remuneration included in administration expenses
20182017
NZ$’000NZ$’000
Audit of financial statements
Audit and review of financial statements – PwC430314
Audit and review of financial statements – Scrutton Bland6230
Other services
Performed by PwC:
Review of R&D growth grant157
Advice on long-term employee incentive scheme248
Due diligence agreed upon procedures-13
Total other services3928
Total fees paid to auditor(s)531372
Other expenses
SECTION
20182017
NZ$’000NZ$’000
Included in administration expenses:
Depreciation 5.51,6761,279
Amortisation of intangible assets5.22,4802,349
Lease payments recognised as an operating lease expense3,5932,880
Vista Group has expensed $22.4m of aggregated research and development expenditure associated with
software research and development for 2018 (2017: $19.0m) within operating expenses in the statement
of comprehensive income.
10.2 OPERATING LEASES
Leased assets
All leases are operating leases. Leases in which a significant portion of the risks and rewards of ownership are
not transferred to Vista Group as a lessee are classified as an operating lease. Payments made under operating
leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income
on a straight-line basis over the period of the lease. Associated costs, such as maintenance and insurance, are
expensed as incurred in the statement of comprehensive income.
45
ANNUAL FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
Operating lease commitments
Vista Group has operating lease commitments in respect of property and equipment. The total future minimum
payments under non-cancellable operating leases were payable as follows:
20182017
NZ$’000NZ$’000
Less than one year4,5542,923
Between one and five years15,9873,758
More than five years3,829-
24,3706,681
10.3 FINANCIAL INSTRUMENTS
Financial instruments
The classification of financial assets and liabilities depends on the purpose for which the financial assets were
acquired. Management determines the classification of Vista Group’s financial assets and liabilities at initial recognition.
Vista Group’s financial assets for the periods covered by these financial statements are measured at amortised cost.
Vista Group measures all financial liabilities, with the exception of contingent consideration, at amortised cost in
the periods covered by these financial statements. Contingent consideration is measured at fair value. Contingent
consideration is classified as equity or a financial liability. Amounts classified as a financial liability are subsequently
remeasured to fair value with changes in the fair value recognised in the statement of comprehensive income.
(a) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They are included in current assets, except for loans and receivables with maturities greater
than 12 months after the balance sheet date. These are classified as non-current assets. Vista Group’s loans and
receivables comprise ‘trade and other receivables’ in the statement of financial position.
(b) Financial liabilities measured at amortised cost
Financial liabilities measured at amortised cost are non-derivative financial liabilities with fixed or determinable
payments that are not quoted in an active market. Trade and other payables, related party loans and borrowings
are classified as financial liabilities measured at amortised cost.
Recognition and derecognition
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or
have been transferred and Vista Group has transferred substantially all the risks and rewards of ownership. Financial
liabilities are derecognised if Vista Group’s obligations specified in the contract expire or are discharged or cancelled.
Measurement
At initial recognition, Vista Group measures a financial asset and liability at its fair value plus transaction costs that
are directly attributable to the acquisition of the financial asset.
After initial recognition, loans and receivables are subsequently carried at amortised cost using the effective
interest method. After initial recognition, financial liabilities are measured at amortised cost using the effective
interest method.
Impairment
Vista Group assesses at the end of each reporting period whether there is objective evidence that a financial asset
or group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment
losses are incurred only if there is objective evidence of impairment as a result of one or more events that
occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on
the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtor or group of debtors is experiencing significant
financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter
bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease
in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
46
VISTA GROUP INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
For loans and receivables, the amount of the loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows (excluding future credit losses that have not been
incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is
reduced and the amount of the loss is recognised in the statement of comprehensive income.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s
credit rating), the reversal of the previously recognised impairment loss is recognised in the statement of
comprehensive income.
Fair value of financial assets and liabilities
Vista Group’s financial assets and liabilities by category are summarised as follows:
Cash
Cash comprises cash at bank and on hand and its carrying value is equivalent to fair value.
Trade, related party and other receivables
These assets are short term in nature and are reviewed for impairment; the carrying value approximates their
fair value.
Trade, related party and other payables
These liabilities are mainly short term in nature with the carrying value approximating their fair value.
Related party loans
Fair value is estimated based on current market interest rates available for receivables of similar maturity and risk.
The interest rate is used to discount future cash flows.
Borrowings
Borrowings have fixed and floating interest rates. Fair value is estimated using the discounted cash flow model
based on a current market interest rate for similar products; the carrying value approximates their fair value.
Fair values
Vista Group’s financial instruments that are measured subsequent to initial recognition at fair values 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 – 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.
Level 3 – fair value measurements derived from valuation techniques that include inputs for the asset or liability
which are not based on observable market data.
There have been no transfers between levels or changes in the valuation methods used to determine the fair value
of the Group’s financial instruments during the period. As at 31 December 2018 Vista Group has no level 3 financial
instruments related to contingent consideration (2017: $0.9m).
47
ANNUAL FINANCIAL STATEMENTS 2018
MangeaMeamnetC o rCoyegaoanSn ag
CONTINUED
Financial instruments by category
20182017
NZ$’000NZ$’000
Financial assets measured at amortised cost
Cash34,35320,954
Trade receivables44,29345,618
Sundry receivables3,34310,611
Related party loan – Numero5,4132,621
Related party advance – Numero-2,792
87,40282,596
Financial liabilities measured at amortised cost
Trade payables
5,8244,413
Sundry accruals3,9782,856
Borrowings11,94411,323
Financial liabilities measured at fair value
Contingent consideration-908
21,74619,500
10.4 OTHER DISCLOSURES
Contingent liabilities
There were no contingent liabilities for Vista Group at 31 December 2018 (2017: $Nil).
Capital commitments
There were no capital commitments for Vista Group at 31 December 2018 (2017: $Nil).
Events after balance date
On 26 February 2019, the Board approved a fully imputed final dividend of 2.1 cents per share. The dividend record
date is 11 March 2019 with a payment date of 22 March 2019.
There have been no other events subsequent to 31 December 2018 which materially impact on the results
reported (2017: nil).
48
VISTA GROUP INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
T: +64 9 355 8000, F: +64 9 355 8001, pwc.co.nz
Independent auditor’s report
To the shareholders of Vista Group International Limited
We have audited the financial statements which comprise:
the statement of financial position as at 31 December 2018;
the statement of comprehensive income for the year then ended;
the statement of changes in equity for the year then ended;
the statement of cashflows for the year then ended; and
the notes to the financial statements, which include the principal accounting policies.
Our opinion
In our opinion, the accompanying financial statements of Vista Group International Limited (the
Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial
position of the Group as at 31 December 2018, its financial performance and its cash flows for the year
then ended in accordance with New Zealand Equivalents to International Financial Reporting
Standards (NZ IFRS) and International Financial Reporting Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand)
(ISAs (NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised)
Code of Ethics for Assurance Practitioners (PES 1) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Our firm carries out other services for the Group in the areas of related assurance services (R&D
growth grant schedule review) and advisory services in relation to the long term employee incentive
schemes. The provision of these other services has not impaired our independence as auditor of the
Group.
49
ANNUAL FINANCIAL STATEMENTS 2018
PwC
Our audit approach
Overview
An audit is designed to obtain reasonable assurance
whether the financial statements are free from material
misstatement.
Overall Group materiality: $1.1 million, which represents
approximately 5% of profit before tax.
We chose profit before tax as the benchmark because, in
our view, it is the benchmark against which the
performance of the Group is most commonly measured
by users, and is a generally accepted benchmark.
We have determined that there are three key audit
matters:
Carrying value of the investment in Vista
Entertainment Solutions Shanghai Limited (“Vista
China”)
Impairment testing of goodwill
Recoverability of loan to Numero Limited
(“Numero”)
Materiality
The scope of our audit was influenced by our application of materiality.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the financial statements as a whole as set out above. These,
together with qualitative considerations, helped us to determine the scope of our audit, the nature,
timing and extent of our audit procedures and to evaluate the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
Audit scope
We designed our audit by assessing the risks of material misstatement in the financial statements and
our application of materiality. As in all of our audits, we also addressed the risk of management
override of internal controls including among other matters, consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the financial statements as a whole, taking into account the structure of the Group, the
accounting processes and controls, and the industry in which the Group operates.
We performed full scope audits of the financially significant subsidiaries of the Group. In addition,
we also performed specific audit procedures over certain balances and transactions of the holding
company, other subsidiaries and associates.
50
VISTA GROUP INTERNATIONAL LIMITED
PwC
The full scope audits and specific audit procedures were undertaken by PwC New Zealand and were
performed at a materiality level calculated with reference to a proportion of the Group materiality
appropriate to the relative financial scale of the subsidiary concerned.
Key audit matters
Key audit matters are those matters that, in our professional judgment, 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.
Key audit matter
How our audit addressed the key audit
matter
Carrying value of the investment in Vista
Entertainment Solutions Shanghai Limited
(“Vista China”)
As disclosed in Note 3.1, the carrying value of
the Group’s investment in Vista China amounts
to $31.8 million, including goodwill of $20.2
million. The Group uses the equity method of
accounting for its investment.
Management undertook an assessment of the
fair value of goodwill and of its investment in
Vista China to assess whether there had been
any impairment. This assessment involved
significant management judgement in
determining key assumptions and estimates
and included consideration of:
The recent trading performance of Vista
China and the 2019 budget;
The forecast revenue growth rates and cash
flows for the following 4 years of the overall
5 year forecast period;
An indicative valuation conducted by an
independent expert based on
management’s budget and forecasts; and
Assumptions relating to a minority
discount.
The assessment concluded that there was no
impairment of the investment.
Our audit procedures in relation to the carrying
value of the investment in Vista China included
the following:
We held discussions with management,
including those outside of the Vista finance
function, to gain an understanding of the
strategy and performance to date of Vista
China;
We reviewed Board meeting minutes to
identify any events or conditions that indicate
potential impairment of the investment;
We considered the report prepared by
management’s independent expert on their
indicative valuation assessment undertaken
as at 31 December 2018. We also compared
this current assessment to the valuation
undertaken by the same independent expert
in 2016 and 2017;
We engaged our own expert to consider the
valuation methodology utilised by
management’s independent expert and the
key assumptions made, in particular the
revenue growth rate, discount rate and
minority discount. Our expert’s assessment
included comparing the indicative valuation
determined by management’s independent
expert with the valuation indicated by an
external share broker.
We have no matters to report as a result of our
procedures.
51
ANNUAL FINANCIAL STATEMENTS 2018
PwC
Impairment testing of goodwill
Note 5.3 of the financial statements provides
details of the goodwill balance of $63.9 million
as at 31 December 2018.
Management perform an annual assessment to
determine whether there is any impairment of
goodwill, as disclosed in Note 5.4.
A value in use methodology was utilised to
determine the recoverable amount of each cash
generating unit (CGU) using discounted cash
flows (DCF) and then compare this amount
with the carrying amount of the associated net
assets, including goodwill, of each CGU as at
31 December 2018. The estimated cash flows
used in the DCF model were based on the 2019
budget and forecast cash flows for the
following four years.
The valuations involve the application of
significant judgment in forecasting future
business performance and determining certain
key assumptions and estimates, in particular:
Revenue growth rates for the 5 year
forecast period;
The long term growth rates for cash flows
beyond the 5 year forecast period; and
The appropriate discount rate for each
CGU.
Changes in these assumptions might lead to
changes in the carrying value of goodwill. The
risk is greater for the goodwill attributed to the
Share Dimension BV (“Cinema Intelligence”)
and MACCS International BV (“MACCS”)
CGUs where the headroom compared to
carrying amount is lower than the for the other
CGUs.
Management concluded that goodwill was not
impaired as at 31 December 2018. However,
the valuation of the Cinema Intelligence and
MACCS CGUs were both sensitive to
reasonably possible changes in revenue growth
assumptions and the MACCS CGU was also
sensitive to reasonably possible changes in the
discount rate and such changes could result in
an impairment, as disclosed in Note 5.4 of the
financial statements.
Our audit procedures in relation to impairment
testing of goodwill included the following:
We gained an understanding of the business
processes and controls applied by
management in assessing whether there was
any impairment of goodwill.
We held discussions with management,
including those outside of the Vista finance
function, about the performance of each CGU
and whether there were any events or
circumstances that indicated the carrying
amount of the CGU, including goodwill, was
impaired.
We tested the calculation of the DCF model,
including the inputs and the mathematical
accuracy and compared the resulting
balances to the relevant net assets of each
CGU.
We assessed the key estimates and
assumptions made by management in the
CGUs’ DCF models, by performing the
following procedures:
o Obtained an understanding of how
management prepared its budget and
forecasts and the associated review and
approval processes;
o Assessed management’s ability to
accurately forecast by comparing
historical forecasts to actual results;
o Compared growth rates used over the 5
year forecast period to historical growth
rates and board approved budgets as well
as challenging whether the historical
growth rates are sustainable as the
businesses mature; an d
o Obtained and evaluated management’s
sensitivity analysis to ascertain the impact
of reasonably possible changes. We also
performed our own sensitivity analysis on
the impact of changing key assumptions to
consider whether any reasonably possible
changes could result in impairment of
goodwill.
52
VISTA GROUP INTERNATIONAL LIMITED
PwC
For the Cinema Intelligence and MACCS
CGUs we also performed the following
procedures:
o Considered the performance of those
CGUs and gained an understanding of
strategic and operational initiatives being
undertaken through discussions with
management, including those outside of
the Vista finance function;
o Assessed the extent to which revenue in
the 2019 budget is contracted and agreed
a sample of forecast amounts to signed
customer contracts; and
o Engaged our own expert to evaluate the
discount rates and terminal growth rates
used in the CGUs’ DCF model by
comparing with those of similar market
participants.
We reviewed the disclosures in note 5.4 to the
financial statements to ensure they are compliant
with the requirements of the accounting
standards.
We have no matters to report as a result of our
procedures.
Recoverability of loan to Numero Limited
(“Numero”)
The Group has $5.4 million of related party
loans receivable from its associate, Numero at
31 December 2018, as disclosed in note 3.2.
This balance is net of a provision of $3.0
million.
Management assessed the recoverability of the
loan receivable from Numero by estimating the
present value of Numero’s future cash flows
based on the 2019 budget and forecasts for the
following four years. Judgement has been
applied in determining the inputs for future
cash flows, and the discount rate applied.
Management concluded that it was appropriate
to recognise an incremental impairment
provision of $1.3 million at 31 December 2018,
bringing the total amount provided against the
loan receivable to $3.0 million, as disclosed in
Note 7.7.
Our audit procedures in relation to the
recoverability of the loan to Numero included the
following:
We gained an understanding of the business
processes and controls applied by
management in assessing the recoverability
of the loan receivable.
We held discussions with Vista Group and
Numero management about Numero’s
performance and whether there were any
events or circumstances that indicated that
the carrying value of the loan was impaired.
We tested the calculation of the discounted
cash flow model, including the inputs and the
mathematical accuracy.
We assessed the key estimates and
assumptions made by management in the
discounted cash flow model, by performing
the following procedures:
53
ANNUAL FINANCIAL STATEMENTS 2018
PwC
o Obtained an understanding of how
Numero management prepared its 2019
budget and forecasts and the associated
review and approval processes, including
approval of the budget by the Vista Board;
o Assessed Numero management’s ability to
accurately forecast by comparing
historical forecasts to actual results;
o Considered the extent to which revenue in
the 2019 budget is contracted and agreed
a sample to signed customer contracts;
o Compared the growth rates used over the
5 year forecast period to historical growth
rates, board approved budgets and other
strategic and operational initiatives being
undertaken, as well as challenging
whether the historical growth rates are
sustainable as the business matures;
o Evaluated the discount rate used in the
model by comparing it with the implied
effective interest rate in the loan; and
o Performed our own sensitivity analysis on
the impact of changing key assumptions to
consider whether any reasonably possible
changes could result in impairment of the
loan receivable.
We have no matters to report as a result of our
procedures.
Information other than the financial statements and auditor’s report
The Directors are responsible for the annual report. Our opinion on the financial statements does not
cover the other information included in the annual report and we do not express any form of assurance
conclusion on the other information. At the time of our audit, there was no other information
available to us.
In connection with our audit of the financial statements, 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.
54
VISTA GROUP INTERNATIONAL LIMITED
PwC
Responsibilities of the Directors for the financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of
the financial statements in accordance with NZ IFRS and IFRS, and for such internal control as the
Directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole,
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (NZ) and ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the
External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for -assurance-practitioners/auditors-responsibilities/audit-
report-1/
This description forms part of our auditor’s report.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been
undertaken so that we might state those matters which we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our
audit work, for this report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Leopino Foliaki.
For and on behalf of:
Chartered Accountants
26 February 2019
Auckland
55
ANNUAL FINANCIAL STATEMENTS 2018
VISTA GROUP INTERNATIONAL LIMITED
Level 3, 60 Khyber Pass Road
Newton, Auckland 1023
Phone: +64 9 984 4570
Email: info@vistagroup.co.nz
Website: www.vistagroup.co
---
VISTA GROUP 2018 FULL YEAR RESULTS
26 February 2019
AGENDA
VISTA GROUP SUMMARY
KIMBAL RILEY
GROUP CHIEF EXECUTIVE
FINANCIAL RESULTS
RODNEY HYDE
CHIEF FINANCIAL OFFICER
OPERATIONAL HIGHLIGHTS
KIMBAL RILEY
GROUP CHIEF EXECUTIVE
WILL PALMER
CEO MOVIO
OUTLOOK
Q+A
VISTA GROUP SUMMARY
A bumper year as Vista Group continues to deliver consistently strong
growth and profit.
•23%increase in Revenue –the 5th consecutive year of 20%+ growth
•Increase in operating leverage (EBITDA % of revenue)in both Cinema
(+6%) and Movio(+18%)
•21%increase in Operating Profit
•150%increase in Operating Cash Flow
•24%increase in Recurring Revenue to $79.9m –61% of Total Revenue
•26% increase in Earnings Per Share from $0.06 in 2017 to $0.07
•29% CAGR for revenue since the IPO in 2014.
3
VISTA GROUP 2018 HIGHLIGHTS
•Balance sheet remains very strong with low debt and a strong
cash position
•Vista Cinema global market share of 20+ screens segment
increased to 40%
•Signed integrated Group agreements with leading global
Cinema Circuits –Cineworld and Odeon
•Core businesses –Vista Cinema and Movio-deliver stellar
performances –Movioa standout
•SaaS
1
revenue represent 32%of Total Revenue in 2018,
up from 25% in 2017.
1 SaaS revenue is defined as revenue earned from solutions that are hosted by Vista Group, which typically attract a subscription revenue type.
4
FINANCIAL HIGHLIGHTS
RECURRING REVENUE
$79.9m
(up 24%)
OPERATING PROFIT
$24.7m
(up 21%)
TOTAL REVENUE
$130.7m
(up 23%)
OPERATING CASHFLOW
$27.6m
(up 150%)
FINALDIVIDEND
2.10
CENTS P/SHARE
(Total FY18 dividend up 27%)
EBITDA
1
$29.2m
(up 17%)
1
EBITDA is a Non-GAAP measure and is defined as earnings before net finance expense, income tax, depreciation, amortisation, acquisition costs and equity-accounted results from
associate companies. Expenses related to the VCL deferred consideration is also excluded. This is consistent with the measureused in the Prospectus
dated 3 July 2014. Depreciation and amortisationin 2018 $4.2m (2017: $3.6m).
5
VISTA GROUP -5 YEAR REVENUE
0.
35.
70.
105.
140.
20142015201620172018
$ MILLIONS
+$18.2M
+$23.2M
+$18.0M
+$24.1M
29%
CAGR 2014-2018
6
FINANCIAL RESULTS
7
TRADING PERFORMANCE
•Another year of 20%+ Revenue Growth
•Profit and EBITDA
1
improvements.
1
EBITDA is a Non-GAAP measure and is defined as earnings before net finance expense, income tax, depreciation, amortisation, acquisition costs and equity-accounted results from associate companies.
Expenses related to the VCL deferred consideration is also excluded. This is consistent with the measure used in the Prospectus dated 3 July 2014. Depreciation and amortisationin 2018 $4.2m (2017: $3.6m).
For twelve months ended
NZ$m31 Dec 201831 Dec 2017% CHANGE
Revenue130.7106.623%
Expenses106.987.023%
Foreign exchange losses / (gains)(0.9)(0.8)
Operating Profit24.720.421%
Net finance revenue / (costs)(0.7)(0.3)
Share of loss from associates (3.0)(3.3)
Profit Before Tax21.016.825%
Net Profit attributable to Vista Group Shareholders12.39.727%
NZ$m2018 Actual2017 Actual
EBITDA
1
29.225.017%
8
OPERATING SEGMENTS
9
ADDITIONAL GROUP COMPANIES
CINEMA
MOVIO
ASSOCIATES
EARLY STAGE INVESTMENTS
10
OPERATING SEGMENTS
2018
NZ$M
CinemaMovio
Additional Group
Companies
Early Stage
Investments
CorporateTotal
Revenue
82.422.815.04.55.9130.7
EBITDA
1
25.66.21.40.4(4.5)29.2
EBITDA % of revenue
31%27%9%10%(76%)22%
2017
NZ$M
Cinema
Movio
Additional Group
Companies
Early Stage
Investments
CorporateTotal
Revenue
67.615.512.31.210.0106.6
EBITDA
1
19.83.60.6(1.8)2.725.0
EBITDA % of revenue
29%23%5%(150%)27%23%
•Cinema segment revenue grew 22% and EBITDA
1
29%, demonstrating improved operating leverage.
•Moviodelivered exceptional 2
nd
half performance driving overall revenue increase of 47% and EBITDA
1
increase of 74%.
•Improved operating margin leverage in largest segments, Cinema (+6%), Movio(+18%).
•China localisationrevenue is reported in the Corporate segment but the cost of delivery is embedded within Vista Cinema and Movio.
China localisationwork is now complete in 2018.
Note: EBITDA
1
is a Non-GAAP measure and is defined as earnings before net finance expense, income tax, depreciation, amortisation, acquisition costs and equity-accounted results from associate companies.
Expenses related to the VCL deferred consideration is also excluded. This is consistent with the measure used in the Prospectus dated 3 July 2014. Depreciation and amortisationin 2018 $4.2m (2017: $3.6m).
11
FINANCIAL POSITION
•Strong balance sheet maintained, giving
capacity to take advantage of new
opportunities and development as well as
support dividend program.
•Cash increased $13.4m due to strong
operating cash flows.
•Receivables has reduced $9m despite an
increase in revenues of 23%.
•Increase in intangibles driven by further
capitalisationof internally generated software.
•Increase in investment in associate is due
to 7.9% equity purchase in Vista China
during 2018.
NZ$M
CURRENT ASSETS
31 Dec 201831 Dec 2017
Cash & short term deposits
34.421.0
Trade & other receivables62.371.3
96.692.3
NON CURRENT ASSETS
Plant & equipment5.44.6
Investment in associate
31.926.1
Intangibles87.281.2
124.5112.0
TOTAL ASSETS
221.1204.2
Current liabilities43.741.2
Non current liabilities
Loans11.910.7
Deferred tax and consideration6.04.2
18.014.9
NET ASSETS
159.4148.1
Share capital59.457.8
Retained earnings
80.875.2
Reserves6.03.8
Non controlling interests13.211.2
TOTAL EQUITY
159.4148.1
12
CASH FLOW
•Increase in receipts from customers driven by
YOY revenue increase combined with improved
debtor recovery.
•Investment in internally generated software
consistent with Vista Group's strategy
to continue to invest in projects to improve
our products and provide a platform for
future growth.
•2017 final dividend paid in March and 2018
interim dividend paid in September.
•Other investing activities in 2018 is
predominately purchase of PP&E. This
is less than 2017 due to the absence of
business acquisition payments and contingent
consideration paid.
NZ$M
31 Dec 201831 Dec 2017
Receipts from customers
132.4105.1
Cash was applied to:
Payments to suppliers & staff(96.0)(87.1)
Tax & interest(8.8)(7.0)
(104.8)(94.1)
NET CASH FLOWSFROM OPERATING ACTIVITIES
27.611.0
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in internally generated software(7.9)(5.0)
Other investing activities(2.2)(5.4)
(10.1)(10.4)
CASH FLOWS FROM FINANCING ACTIVITIES
Loans and borrowings
0.26.5
Dividends paid(6.1)(6.5)
(5.9)0.0
NET MOVEMENT IN CASH HELD
11.60.7
Foreign exchange differences1.8(1.0)
CASH BALANCE
34.421.0
DIVIDEND PROPOSAL
•The directors have resolved to pay a final dividend at the top of the policy
range (50%) and that the dividend will carry full imputation credits
•The value of the final dividend will be 2.10 cents per share representing a
total payment of $3.5m
•The record date for the dividend is 5pm on Monday, 11 March 2019 with
the payment date set for Friday, 22 March 2019
•This is in addition to the interim dividend declared and paid in September
2018 of 1.60 cents per share, a total payment of $2.6m
•Total FY18 dividend 27% increase on FY17.
13
14
VISTA GROUP
OPERATIONAL HIGHLIGHTS
CINEMA SEGMENT
Vista Cinema provides cinema management software to the world’s largest
cinema exhibitors
•1013 new sites in 2018 (including 199 sites in China).
•Total now 7,202 (161 sites removed from count at half year in France). Total in China now 958.
•Vista Cinema now has customers in 97 countries.
•Market share globally of 20+ screen segment at 40%.
•Excluding China -market share of 20+ screen segment is 48.1%.
•First cloud deployed customers live and in production.
•Additional revenue stream from 3
rd
parties approaching $3.5m.
$82.4M
REVENUE
GROWTH +22%
13%
GROWTH IN TOTAL
SITES TO 7,202
31%
EBITDA%
(UP BY 6%)
$25.6M
EBITDA
GROWTH +29%
'-
300
600
900
1,200
201320142015201620172018
NEW SITES ADDED
existing customersnew customersacquisitions
0
2,000
4,000
6,000
8,000
201320142015201620172018
TOTAL SITE COUNT
0
15
CINEMA SEGMENT -CONTINUED
14%
INCREASE IN SITE
REVENUE TO
$588P.MTH
59%
INCREASE
IN ARR TO
$6.35M
40%
GROWTH IN
CONTRACTED
SITES TO 901
56%
REVENUE
GROWTH
Provides cinema management software to the world’s independent cinema
exhibitors
•258 new sites bring total site numbers to 901 –including China.
•China now with 93 sites, an increase of 72 over 2017.
•14% increase in revenue per site compared to 2017.
•USA continues to be strongest market for Veeziwith over 500 sites.
•Veezinow present in 36 countries.
0
250
500
750
1,000
201320142015201620172018
VEEZI –TOTAL SITE COUNT
0
150
300
450
600
750
201320142015201620172018
AVERAGE REVENUE PER MONTH
16
CINEMA SEGMENT -CONTINUED
Drivers for growth
•Strong focus on trans-national ‘super-circuits’ validated by recent wins
•Significant interest in cloud version of Vista and increasing opportunities for
managed service arrangements
•Continued product innovation into new areas such as F&B, data warehouse,
Omnichannel, CXM
•Competitive wins –globally
•Expansion from beach-heads in new markets –Brazil, Italy, Japan, France
•Continued demand in Latin America, Eastern Europe, and Africa
•Additional revenue streams from ecosystem –hardware, payment processors etc.
•Veeziexperiencing growing interest from customers transitioning from ‘vanilla’
POS solutions.
17
MOVIO SEGMENT
122%
GrowthinMovio
Media revenue
89%
growth in total revenue
per active moviegoers
in North America
to 86 cents
46%
growth in Global total
revenue per active
moviegoers to 51 cents
22%
growth in connection
messages sent
to 2.2bn
2018 PERFORMANCE METRICS
Global leader in data-driven marketing to provide products and services to cinema
exhibitors, film studios and their media agencies and other specialists in film advertising.
Purpose: to connect moviegoers with their ideal movie
•The MovioCinema business grew 17%, increasing its global footprint to 53 countries. Achievements included the
successful deployment of two of the leading Brazilian exhibitors; and the launch of innovative pricing, with 22
customers agreeing to accept a compounding annual increase in return for access to Movio'sfuture innovation.
•The MovioMedia business grew revenue 122%. This was driven by growth in research revenue, with the addition
of Disney, Direct email campaign revenue and the successful launch of a digital campaign solution.
•Moviosuccessfully navigated the changes in data legislation (GDPR) in the EU, ensuring continued uninterrupted
service across the region.
•Total connections (email, SMS, mobile push and digital) increased 22%, with more that 2B personalised
communications made in 2018.
•Rule of 40 for SaaS: Movio'sRevenue Growth of 46% + EBITDA Margin of 27% = a combined score of 73.
$6.2M$22.8M
EBITDA
GROWTH +74%
REVENUE
GROWTH +47%
18
MOVIO SEGMENT
Growth Strategy
Increase Volume -Active Moviegoers:
•Moviobrand refresh focused on demonstrable uplift exhibitors experience using Movio, with a view to engaging
with the C-level of the remaining top 15 global exhibitors not currently licensing Movio’ssoftware and services.
•Deploy non-member solution allowing exhibitors to build moviegoer profiles based on online ticket purchases of
non loyalty members.
Increase Revenue Per Active Moviegoer
•Successful adoption of ‘Innovation Pricing’, providing all MovioCinemas latest innovation for a compounding
annual increase circa 7% including CPI. Currently 22 exhibitors have agreed.
•Productisationof the MovioMedia Digital Campaign platform, enabling rapid deployment of digital marketing
campaigns coupled with the ability to scale sales.
Active Moviegoers
(Millions)
Revenue /ActiveMoviegoer
(NZ cents)
Region
2017201820172018
USA
24204586
Rest of World21252322
Global45453551
19
ADDITIONAL GROUP COMPANIES SEGMENT
World leading film marketing products
•Excellent revenue growth (52%) delivered
strong EBITDA
•Created 31% more movie destination sites
(1,750) in 2018
•LA Studio well established –12 people –
PowsterLabs offer to studios generating
good interest
•Promising early signs with products on
Facebook Messenger –very good user
engagement, strong pipeline of prospects.
Provides world leading theatrical distribution
software
•Pleasing improvement 2nd half over
1st half –though full year result still
not acceptable
•Stronger delivery performance enables
focus on new business with 3 new customer
wins in 2nd half
•Joined up customer propositions with
Numerounder development
•6,000+ cinema sites delivering weekly
audited box office results to MACCSBox.
Movie and cinema review and showtime guide
•Unique visitors up 24% to 8.2m across
New Zealand and Australia
•2
nd
half 44% ahead of 1
st
half as impact of
marketing spend and deployment of sales
resource in Sydney felt
•140% increase in advertising revenue in
Australia
•Extending the lead as the largest
independent movie site in Australasia.
$15M
REVENUE
GROWTH +22%
$1.4M
EBITDA
GROWTH +123%
20
EARLY STAGE INVESTMENTSSEGMENT
Social app to share video reaction to movies
and TV shows
•Additional external investment moves
Stardust to Associate company status in
2019
•2
nd
half 2018 focus was to enhance app to
increase user engagement and retention
•1
st
half 2019 will see relaunch and
marketing push
•Positive signs of studio interest in quality
of users on Stardust.
Software to optimisefilm forecasting and
scheduling
•Excellent revenue growth (80%) reduces
EBITDA loss close to break even for full year
•Penetration of Vista customer base at 6% -
big runway ahead
•Key integrations with Vista products in beta –
with Film Manager, and with MovieTeam
•Starting 2019 with pilots in 2 significant Vista
customers in APAC.
A platform to share film digital assets & enable
new cinema ticketing sales channels to access
cinema exhibitors
•MX Film good progress –servicing 8,000+
screens with content –and integrating with
group companies to deliver consistent film
database
•MX Tickets travelling steadily –boosted mid-
year by one-off volume spike –now servicing
10 live ticketing partners worldwide
•MX collecting showtimes from key large and
small customers –millions of showtimes each
month.
$4.5M
REVENUE
GROWTH +285%
$0.4M
EBITDA
+$2.2M
21
ASSOCIATE COMPANIES
Box office tracking and reporting product
•International business (outside USA) progressing well with increased coverage and positive EBITDA
•New country dashboards live in: Argentina, Bolivia, Indonesia, Malaysia, Mexico, Netherlands, Nigeria,
Paraguay, Singapore, and Uruguay
•In 2019 Numerowill launch further dashboards in Europe and Latin America
•USA coverage significantly increased –2,400 sites reporting
•Revenue growth overall strong
•Numerorequires ongoing support from Vista Group –provision made for all advances during 2018.
22
ASSOCIATE COMPANIES
Performance
•Revenue of $NZD20.6m, 19% increase over 2017.
•199 new sites added –41% from existing customers. Total now 958 sites.
•Vista China market share of 20+ screens segment estimated as 17%.
•Top 5 circuit Stellar now rolling out –Vista China will have 3 of the top 5 circuits as customers when rollout is complete.
•Total of 93 Veezisites, 72 added in 2018.
•Impressive local product add-ons built by Vista China team –Wechatmini-programs, 3
rd
party integration products.
China film industry
•China box office revenue in 2018 grew 9% over 2017 –adding RMB5billion of ticket sales. Local productions accounted
for 61% of the box office.
•Government has proposed a funding plan to expand cinema building in tier 3 and 4 cities –in particular in the west of China.
•Continued domination by 3
rd
party ticket sellers –Maoyanand Tao Piaopiaoremain the top 2.
•Cinema building continues apace in China –18% increase in 2018.
Update on structure
•The transaction to acquire 7.9% of Vista China was completed in August –Vista Group and Weyingnow each hold 47.5%,
and staff the remaining 5%.
•As previously announced additional transactions are contemplated which will lead to Vista Group being able to consolidate.
•We will update on the status of these transactions during the first half of 2019.
23
OUTLOOK
•Recurring revenue base coupled with strong pipeline across Vista Group is expected
to support a 6
th
consecutive year of revenue growth in the region of 20% (excluding
consolidation of Vista China)
•Very exciting outlook for Movio–in particular MovioMedia, with strong growth
expected and a significant runway ahead
•Large cross Vista Group agreements completed in 2018 provide a strong basis for
Vista Cinema through 2019 and 2020
•Vista China expected to continue to win new circuit customers, and make increased
Veezisales in 2019
•Improved performance from MACCS and Numeroexpected to underpin better
results from other segments
•2018 was a strong year for the global film industry with box office approaching or
exceeding records in most countries, and continued growth in screens and cinema
sites. The slate for 2019 is well rated by most observers.
24
25
QUESTIONS
IMPORTANT NOTICE
This presentation has been prepared by Vista Group International Limited (“Vista Group”).
Information in this presentation:
•is provided for general information purposes only, does not purport to be complete or comprehensive,and is
notanofferor invitation for subscriptionorpurchaseof, orsolicitationofanofferto buy or subscribe for,financial
productsin Vista Groupor anyofits related companies;
•does not constitutea recommendation orinvestmentor any other typeofadvice, and may not be relied upon in
connection with any purchase or saleoffinancial products in Vista Group or anyofits related companies;
•should be read in conjunction with, and is subject to, Vista Group’s financial statements, market releases and
informationavailableon Vista Group’s website (www.vistagroup.co.nz)and on NZX Limited’s website (www.nzx.com)
under ticker code VGL;
•may include projections or forward looking statements about Vista Groupand its related companiesand the
environmentsin whichtheyoperate. Such forward-looking statements are based onsignificant assumptions and
subjective judgements which are inherently subject torisks, uncertainties and contingencies outsideofVista Group’s
control. Although Vista Group’s management may indicate and believe the assumptions underlying the forward looking
statements are reasonable, any assumptions could prove inaccurate or incorrect and, therefore, there can be no
assurance that the results contemplated in the forward looking statements will be realised.Vista Group’s actual results or
performance may differ materially from any suchforward lookingstatements;and
•may include statements relating tothepast performanceofVista Group and/or its related companies, whichare not,
andshould not be regarded as,a reliable indicatoroffuture performance.
While all reasonable care has been taken in compiling this presentation, Vista Groupand its related companies, and their
respective directors, employees, agents and advisersaccept no responsibility for any errors or omissions.NoneofVista
Group or its related companies, or anyoftheir respective directors, employees, agents or advisers makes any representation
or warranty, express or implied, as to the accuracy or completenessofthe information in this presentation or as to the
existence, substance or materialityofany information omitted from this presentation.
Unless otherwise stated, all information in this presentation isexpressedat the dateofthis presentationand all currency
amounts are in NZ dollars.
26
27
THANK YOU
---
MARKET ANNOUNCEMENT
26 February 2019, Vista Group International Ltd, Auckland, New
Zealand
Vista Group – NZX Appendix 1
Reporting Period12months to31 December 2018
Previous Reporting Period12months to31 December 2017
Revenue from ordinary activities130,716$ 22.6%
13,034$ 30.6%
12,258$ 26.7%
20182017
0.633$ 0.602$
Final DividendAmount per security
Record Date for Dividends11 March, 2019
Dividend Payment Date22 March, 2019
CommentsRefer also to other documents released (reviewed financial
statements, market announcement, results presentation and
Appendix 7)
The 2018 full year result for Vista Group represents strong
growth in revenue and shows the strength of Vista Group in
producing consistent revenue growth, sustained profit
growth, with improved operating leverage in its largest
operating segments - Cinema and Movio, and a positive
operating cashflow.
NZ 2.1 cents per shareNZ 0.82 cents per share
Net profit / (loss) attributable to security
holders
Imputed amount per
security
Net Tangible Assets per share
Net tangible assets per share
Amount $000's
NZ$
Percentage change
%
Net Profit / (Loss) from ordinary activities
after tax attributable to security holders
---
MARKET ANNOUNCEMENT
26 February 2019, Vista Group International Ltd, Auckland, New
Zealand
Vista Group – NZX Appendix 7
The Appendix 7 details required under the NZX listing rules are contained on the following
page.
Rodney Hyde, Chief Financial Officer
Vista Group International
Contact +64 9 984 4570
APPENDIX 7 – NZSX Listing Rules
Number of pages including this one
(Please provide any other relevant
NZSX Listing Rule 7.12.2. For rights, NZSX Listing Rules 7.10.9 and 7.10.10. details on additional pages)
For change to allotment, NZSX Listing Rule 7.12.1, a separate advice is required.
Full name
of Issuer
Name of officer authorised toAuthority for event,
make this noticee.g. Directors' resolution
Contact phoneContact fax
numbernumberDate
Nature of event
BonusIf ticked,Rights Issue
Tick as appropriateIssuestate whether:Taxable/ Non TaxableConversionInterestRenouncable
Rights IssueCapitalCallDividendIf ticked, stateFull
non-renouncablechange
X
whether:InterimYear
X
SpecialDRP Applies
EXISTING securities affected by this
If more than one security is affected by the event, use a separate form.
Description of theISIN
class of securities
If unknown, contact NZX
Details of securities issued pursuant to this eventIf more than one class of security is to be issued, use a separate form for each class.
Description of theISIN
class of securities
If unknown, contact NZX
Number of Securities toMinimumRatio, e.g
be issued following eventEntitlement 1 for 2 for
Conversion, Maturity, CallTreatment of Fractions
Payable or Exercise Date
Tick ifprovide an
pari passuORexplanation
Strike price per security for any issue in lieu or dateof the
Strike Price available.ranking
Monies Associated with EventDividend payable, Call payable, Exercise price, Conversion price, Redemption price, Application money.
Source of
Amount per securityPayment
(does not include any excluded income)
Excluded income per security
(only applicable to listed PIEs)
SupplementaryAmount per security
Currencydividendin dollars and cents
details -
NZSX Listing Rule 7.12.7
Total monies
TaxationAmount per Security in Dollars and cents to six decimal places
In the case of a taxable bonusResident Imputation Credits
issue state strike priceWithholding Tax(Give details)
ForeignFDP Credits
Withholding Tax(Give details)
Timing(Refer Appendix 8 in the NZSX Listing Rules)
Record Date 5pmApplication Date
For calculation of entitlements -Also, Call Payable, Dividend /
Interest Payable, Exercise Date,
Conversion Date.
Notice DateAllotment Date
Entitlement letters, call notices,For the issue of new securities.
conversion notices mailedMust be within 5 business days
of application closing date.
OFFICE USE ONLY
Ex Date:
Commence Quoting Rights:Security Code:
Cease Quoting Rights 5pm:
Commence Quoting New Securities:Security Code:
Cease Quoting Old Security 5pm:
11 March, 201922 March, 2019
$$0.008167
New Zealand DollarsNil
$3,476,254
Date Payable
Nil
Enter N/A if not
applicable
NZVGLE0003S1
In dollars and cents
Revenue Reserves
$0.021000
(09) 984 457026022019
Ordinary Shares
EMAIL: announce@nzx.com
Notice of event affecting securities
Vista Group International Limited
Rodney HydeDirectors Resolution
---
Media Release
_________________________________________________
Vista Group Produces Another Highlights Package
Annual result reflects 23% revenue growth – the 5
th
consecutive year above 20% –
increases EBITDA and improves operating cash position
[Auckland, NZ, 26 February 2019]: Vista Group International (NZX & ASX: VGL), announces its 2018 result today,
reporting impressive growth and profitability stats across its businesses. Matching the performance record the
global business and investor market has come to expect from this leading New Zealand tech sector company.
Continuing with its integration strategy across the film industry, Vista Group has shown significant success in its
drive toward achieving majority world market share across its movie industry sectors.
Vista Entertainment Solutions (‘Vista Cinema’), Vista’s founding and largest business, continued the journey with
1,013 new cinema sites (including 199 in China) installed in 2018. The cumulative total of Vista Cinema sites is now
7,202 (958 in China). This achievement took Vista Cinema’s share of the world’s large circuit market to 40% and
equates to revenue growth of 22%; excluding China Vista Cinema’s global market share has increased to 48%.
Improved operating leverage has also seen an increase in EBITDA of 2% percentage points to 31%. Strategically the
signing of integrated Group agreements with Cineworld Group and Odeon Cinemas Group provide a platform for
continued growth and deployment of other Group company products.
Movio, Vista Group’s business that delivers data-driven marketing and analytics solutions to the film industry,
delivered terrific growth with revenue up 47% and EBITDA up 74%. The Movio result included 122% growth for
Movio Media – the 2
nd
year of 100%+ growth – due to the growth in research revenue and the signing of Disney to
the Movio Media platform during 2018.
Additional businesses in the Group also contributed with the speed of their growth; Powster (providing creative
services to the film industry to engage users with entertainment content), created more than 1,750 online ‘movie
destinations’ representing growth of 31% on 2017 and resulting in a 52% lift in revenue and strong EBITDA.
Vista Group’s strategy has been to create technology-driven efficiencies in the film industry to benefit industry
participants. In 2018 Vista saw this strategy beginning to play out through movieXchange: MX Film is a new online
platform developed by Vista that delivers, from the cloud, movie promotional media directly from film distributor to
cinema exhibitors; MX Tickets enables online listing globally of movie showtimes information and via third party
partners, the sale of movie tickets.
On the product front, the transition to a fully cloud-based Vista Cinema moved significantly forward with the first
customer cinema sites deployed and running live.
“Vista Group Chief Executive, Kimbal Riley remarked that he, the Board and all at Vista are delighted with the 2018
result. “Our consistent growth, including our less mature businesses, and increased income and profitability can be
credited to our 700+ globally-located staff. Their hard work, engagement with our customers and determination to
deliver unprecedented technology solutions and services is our biggest strength. As a business we have a shared
vision to be the leader in software and data solutions across the film industry; our 2018 result is evidence that we
have a highly committed and connected team delivering on and progressing toward that vision.”
Vista Group will deliver a final dividend to its shareholders of 2.1 cents/share resulting in a total pay-out at the top
end of the policy range of 3.7 cents/share for 2018 and an increase of 27% on the previous year.
FINANCIAL HIGHLIGHTS
• 23% Revenue growth over FY2017 of $130.7m – the 5th consecutive year of 20%+ revenue growth
• 17% EBITDA(1) growth to $29.2m
• 150% Increase in operating cashflow to $27.4m
• 47% Revenue growth in Movio to $22.8m. 122% Revenue growth in Movio Media was exceptional
• 27% increase in FY2018 dividend with a final dividend of 2.1 cents per share representing a total pay-out at
the top end of the policy range at 50% of NPAT
• 26% increase in Earnings per share over the prior year
• 25% increase in Profit Before Tax (NPBT) over the prior year
OPERATIONAL HIGHLIGHTS
• Vista Group global leadership position in the cinema industry sustained with 40% market share of 20+
screens segment – 48.1% excluding China
• 1013 new Vista Cinema sites (including 199 sites in China) – another very strong year of site growth to a
cumulative 7,202 sites
• 24% growth in Vista Group annuity/recurring revenue to $79.9m – representing 61% of total revenue.
• 258 new Veezi sites to a cumulative 901 sites
• Very strong result from Movio – Movio Media starring with significant growth on the back of deals with
Disney and Fox
• Key large client agreements signed with super circuits – Aeon, Cineworld, Marcus, Odeon and Pathe
• Percentage of total revenue from SaaS(2) business across Vista Group increased from 25% in FY2017 to 32%
in 2018
• Outstanding improvement in collection of cash drives record operating cash flow
[ENDS]
Vista Group International Ltd (Vista Group) is a public company, founded in New Zealand in the mid 1990’s and
listed on both the New Zealand and Australian stock exchanges in 2014 (NZX & ASX: VGL). The Group provides
software and additional technology solutions across the global film industry.
Cinema management software is provided by founding company Vista Entertainment Solutions
(‘Vista Cinema’); Movio (the authority in moviegoer data analytics), Veezi (cloud-based software for the
Independent Cinema Market), movieXchange (‘MX ‘ – connecting the movie industry to simplify the supply of film
media for promotion and the sale of movie tickets), Maccs (film distribution software), Numero (box office
reporting software for film distributors and cinemas), Cinema Intelligence (business intelligence solutions),
Powster (creative studio and marketing platform for movie studios) and Flicks (moviegoer ‘go to’ portal for movie
information), provide an innovative range of complementary products across additional film industry sectors, from
production and distribution, to cinema exhibition through to the moviegoer experience.
Vista Group has offices located in New Zealand (Auckland HQ), Sydney, Cape Town, London, the Netherlands,
Romania, Shanghai, Beijing, Los Angeles, and Mexico City.
Website: www.vistagroup.co
LinkedIn: www.linkedin.com/company/vista-group-limited
Source: Vista Group International Ltd, Auckland, NZ
Press Contacts:
For Vista Group International/NZ
Christine Fenby
christine.fenby@vista.co; +64 21 727 006
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.