Vista Group to raise $40m, freeze dividends in push for growth
Vista Group International, the cinema software developer and film distribution company, will freeze dividend payments for at least two years and raise up to $40 million of new capital in a drive for international growth.
The Auckland-based company plans to sell between 37.2 million and 41.4 million of shares at an indicative price range of $2.10 to $2.70 in an initial public offer, according to the prospectus lodged with the Companies Office. Vista is looking to raise up to a total of $100.3 million,, with existing shareholders keeping between 45 percent and 49 percent of the company. The new capital will be used to repay debt and fund the acquisition of controlling stakes in two investments, Movio and MACCS, with about $15.4 million set aside for future acquisitions and developments.
Unlike some other high-tech companies that are forecasting losses in a push for global growth, Vista expects to be profitable, though it doesn't plan to pay any dividends for at least the next two years.
"Our success and profitability to date has provided the Vista Group with an exciting opportunity to not only substantially grow its traditional business in cinema, but also to begin the transition from a cinema software company to a much broader film industry software company," chairman Kirk Senior said in a letter to investors. "The group has a history of paying dividends, however at this stage we do not intend to pay a dividend until at least 2016 as we focus our capital on accelerating our software and data analytics growth within the film industry."
The freeze on dividend payments implies Vista will retain between $2.4 million and $4.05 million in 2015 which would have been set aside for investors based on a dividend policy of distributing between 30 percent and 50 percent of profit. The company's existing shareholders have been paid dividends of $10.4 million between 2009 and 2013 on profit of $18.5 million, and have taken another $3.5 million distribution for the 2014 year, which is forecast to deliver profit of $3.4 million.
The prospectus show Vista's recurring revenues have doubled since 2009, with turnover in the 2013 financial year standing at $38.7 million to produce earnings before interest, tax, depreciation and amortisation of almost $9 million. Forecast revenues in the current financial year are expected to grow to $49.9 million and again to $61.5 million in the 2015 financial year, to produce forecast Ebitda of $13.2 million and net profit after tax of $8.1 million.
Based on the lower and upper bounds of the valuation range, those projections give the company an enterprise value to Ebitda ratio of between 15.7 and 19.6 times in 2014 and between 11.1 and 13.8 times in 2015.
Of the new funds raised, Vista intends to spend $9.3 million exercising an option to acquire a further 25 percent stake in MACCs, giving it 50 percent of the largest provider of movie distribution software outside the US. Vista will also spend $4 million to take the remaining 43 percent stake in Virtual Concepts, which owns Movio, a marketing data and campaign management platform for cinemas, and has set aside a provision of $4.6 million if the company meets earn-out targets.
Some $2.6 million of new capital will be spent on Numero, a new venture in the data analytics field, and $3.9 million on offer expenses.
Founded in 1996, Vista employs 250 staff in New Zealand, Australia, the US, China, UK and the Netherlands. Eligible employees will be gifted $1000 worth of shares, and an allocation of shares at a 20 percent discount will also be offered to employees. If fully subscribed the share offer will make up 0.5 percent of the total share capital.
The final price will be announced on July 16, with the offer opening the following day and running to August 1. The company expects to list on the NZX on August 11. The company is seeking a secondary listing on the ASX.