Vista ready to pay out dividends

Murray Holdaway, Vista Entertainment CEO.

Vista International Group shareholders have been told to expect 20 per cent to 30 per cent revenue growth again this financial year and the start of dividend payments after the movie industry software company spent north of $10 million on new acquisitions this year.

At the annual general meeting in Auckland yesterday, group chief executive Murray Holdaway said the acquisitions will provide a revenue lift for the 2016 financial year in line with the 39 per cent achieved in 2015, but is also likely to mean earnings before interest, tax, depreciation and amortisation doesn't grow at the same rate as revenue.

He said the board had three options for the expected excess cash the company will have at the end of this financial year: starting to pay dividends, as indicated earlier; more acquisitions; investing in creating technology to keep the company ahead of its competitors.

The board has a policy of paying out between 30 per cent and 50 per cent of net profit subject to immediate and future growth opportunities.

Holdaway said no new acquisitions were on the horizon as he wanted to bed down the ones the company had made this year and he expected the spare cash would go to a mix of research and development and dividend payments.

Acquisitions included completion of the deal for Ticketsoft, the next largest competitor to its core cinema software product; a 50 per cent share of Dutch-based cinema analytics company Share Dimension; a 50 per cent investment in Powster, a UK-based movie website and marketing platform provider; and 100 per cent of New Zealand and Australia movie guide Flicks.

Holdaway said one of the key metrics from the 2015 financial performance was the rise in annual recurring revenue, which was now around 60 per cent of overall revenue.

"Software companies are often like rockets that are good at going up but when they run out of fuel crash quickly. Annual recurring revenue builds resilience and lets us glide instead of going up and down," he said.

Vista Entertainment Solutions, which sells software to larger cinemas and has a 38per cent global market share, remains the biggest earner for the business, accounting for up to 70 per cent of revenue.

"When we went to market, a lot of people thought we couldn't grow that business but in fact growth has been significant at more than 20 per cent," Holdaway said.

Regulatory approval is still being sought for its China partnership with WePaio (owned by We Chat/Ten Cent Group) announced in March. Director Brian Cadzow said it was a "tortuous process" but one its partner was working hard to progress.

China is the world's fastest-growing cinema market and its box office revenue is forecast to overtake the US by 2017. Vista will receive around $38 million in cash in the next two years from the WePaio deal, which will see it invest in Vista China and take a 2 per cent stake in the overall group.

"The rationale for this deal is that there are 2000 cinemas in China and we have one sales rep. It's hard to scale by ourselves," Holdaway said. "The strategy we hope is to have a small part of a much bigger pie."

- BusinessDesk