VGL
04/03/2016 10:14
JOINTV
PRICE SENSITIVE
REL: 1014 HRS Vista Group International Limited
JOINTV: VGL: VGL - New venture in China with Tencent affiliate - WePiao
Market Announcement
04 March 2016, Vista Group International Limited, Auckland, New Zealand
Vista Group establishes new venture in China with Tencent affiliate - WePiao.
Vista Group International Limited (Vista Group) and its Chinese subsidiary,
Vista Entertainment Solutions Limited, Shanghai (Vista China), confirm that
they have signed an agreement with Beijing Weying Technology Co, Limited
(WePiao) to create a new venture to take advantage of the expanding China
film market. In addition to its participation in the Chinese business, WePiao
will subscribe for up to 2.0% of new shares to be issued in Vista Group at
the volume weighted average price of Vista shares in the month preceding this
announcement.
Under the terms of the agreement, which are both confidential and conditional
on regulatory approval, Vista Group will provide the new venture with the
distribution rights to all of the existing Vista Group software including
Vista Cinema, Veezi, Movio, MACCS and Numero. This is expected to enable the
acceleration of Vista Cinema's growth strategy in China for its core cinema
product and its cloud based product, Veezi, which is ideally suited to the
large number of smaller cinemas in China. It will also provide a launch
platform for the Movio, MACCS and Numero software in what is the world's
fastest growing cinema market. WePiao will acquire existing shares in Vista
China from Vista Group as well as subscribing for new shares.
These terms will be transacted as follows:
- WePiao acquiring shares in Vista China from Vista Group (for cash)
- WePiao subscribing for new shares in Vista China to provide growth capital
for the business
- As a result Vista China will cease to be a subsidiary under the proposed
new venture arrangement and will be equity accounted for going forward
- Vista China entering a long term distribution agreement with Vista Group
for the existing Vista Group software and paying upfront fees for these
rights as well as ongoing annual maintenance and royalty fees
- Vista China securing the support of WePiao and the wider Wechat/Tencent
Group to help grow its presence in the China film market
- WePiao subscribing for up to 2.0% of new shares in Vista Group.
At current exchange rates, the transaction will generate cash to Vista Group
in the first year in excess of NZ$30m, with the cash paid for the
subscription of the 2.0% in Vista Group additional to this. In year 2 there
are additional up-front fees paid and beyond that, additional annual
maintenance fees. From a financial perspective the cash received will be
reported as proceeds and capital profits on the shares sold in Vista China,
license revenue (for the up-front fees) and ongoing recurring annual
maintenance revenue. Under the agreement, Vista China is expected to continue
to generate returns to Vista Group through its future success in the China
market.
Vista Group CEO Murray Holdaway is excited by the opportunities that the new
venture will create and says, "Vista has been committed to the China market
for some time and this combination will enable us to support and grow our
existing cinema customer base, provide a wider range of services to the China
market and ensure we can become a significant supplier to the fastest growing
film market in the world. The new venture with WePiao and its corporate
owners Wechat and Tencent, through their market position, is expected to
enable us to achieve growth that Vista by itself could not".
The CEO Of WePiao Mr Lin has said of the transaction, "It is very good to
partner with the world's leading supplier of software in the film industry
and we are looking forward to bringing our Chinese market capability and
influence to the business in China to accelerate the growth in the fast
growing film and cinema sector of the Chinese economy. We also look forward
to potential cooperation with Vista Group in other markets in the future".
It is important to note that the establishment of the new venture remains
subject to Chinese regulatory approvals for the investment by WePiao in Vista
China. Completion of the transaction is subject to those regulatory
approvals. It is anticipated that the approvals will take between one and
three months. The transaction is also subject to WePiao being satisfied with
its due diligence on Vista China (although Vista understands this work to be
substantively complete) and no interim period warranty breaches occurring.
Vista Group will continue to update the market as appropriate and required.
Brian Cadzow
Director - Commercial and Legal
Vista Group International Ltd
Contact: +64 9 984 4570
About WePiao
Founded and headquartered in Beijing, WePiao is backed by Tencent Holdings
Limited, along with the China Cultural Investment Fund and other investors,
including some leading Chinese cinema chains. WePiao brings scale in the
form of its smart phone ticketing application, which is embedded in the
WeChat messaging app. The backing of WeChat (the largest standalone messaging
app in the world with more than 600 million monthly active users, mainly in
China) will provide a much greater ability to connect with film audiences and
the entertainment industry in general.
About Vista Group International:
Vista Group International (Vista Group) is a public company, listed on both
the New Zealand and Australian stock exchanges (NZX: ASX: VGL). Vista Group
provides cinema management, film distribution and customer analytics software
to companies across the global film industry. Cinema management software
provided by Vista Entertainment Solutions is the core business of Group.
Veezi, MACCS, Movio, Numero and Share Dimension products leverage the success
of this platform into other parts of the film industry; from production and
distribution, to cinema exhibition and through to the movie-goer experience.
It is estimated that in excess of a billion cinema tickets are processed
every year through Vista products. Vista Group has over 350 staff across
seven offices in New Zealand (Auckland headquarters), Australia, the USA, the
UK, the Netherlands and China.
About Vista Entertainment Solutions, Shanghai:
Vista Entertainment Solutions Ltd, Shanghai (Vista China) is a Wholly Foreign
Owned Entity (WFOE) based in Shanghai and is a 100% subsidiary of the Vista
Group. It currently has the distribution rights for Vista Cinema and Veezi in
China and holds a license in China to allow the use of that software in the
regulated Chinese cinema market. Vista China has been continuing to expand
its market share in the growing Chinese cinema market.
End CA:00278810 For:VGL Type:JOINTV Time:2016-03-04 10:14:57
