The Vista Group International Ltd (ASX: VGL) share price will be on watch today after the company provided a COVID-19 update and revealed an organisational shake-up.
Vista Group is a New Zealand company that provides software and technology solutions across the global film industry sectors of distribution, exhibition, and consumer.
The company’s founding business is Vista Cinema which provides cinema management software in the exhibition sector. The group also has a number of other businesses, such as Movio, Veezi and Maacs, each providing technology solutions to clients in the global film industry. This includes cinema management solutions, film distribution software, intelligence solutions, box office reporting platforms, and campaign management software.
COVID-19 trading update
This morning, Vista provided an update on the impacts of COVID-19 on its business, along with the steps it is taking to address these impacts.
To begin with, Vista acknowledged that the pandemic continues to have a significant impact on the global film industry, including its customers.
Cinemas in most countries remain closed, while those that are open generally don’t have new content to show moviegoers due to studios having delayed the release of new films.
Nonetheless, Vista has continued to support customers during the lockdown and in preparation for potential reopening, it has undertaken a number of initiatives. This includes releasing a ‘cinema re-opening kit’ to really strong demand and working with cinemas in the US to re-configure mobile apps to enable the purchasing of snacks through kerb-site pick up.
The company noted that both Vista Cinema and Movio have been successful in winning new businesses during the pandemic period – mostly in Europe.
Balance sheet initiatives and further measures
As announced back in March, Vista Group has responded to the challenging environment by implementing a series of measures to strengthen its balance sheet. This includes cancelling its FY19 final dividend, company-wide pay cuts and reduced hours, and ending engagement with all non-essential contracting measures.
On top of this, the company also completed a NZ$65 million capital raise at an issue price of $1 per share.
In addition to these initiatives, the company announced this morning that it has undertaken a review of its business to determine the extent to which additional cost reduction measures are required.
As a result of this review, the company has begun consultation with its staff regarding a proposed new structure for the core Vista Group companies – Vista Group, Vista Cinema, and Movio. This would mean a new organisation structure worldwide – one with fewer employees.
If the restructure proceeds in its current form, the company expects to achieve annualised cost savings of between NZ$12 million and NZ$15 million.
Commenting on trading conditions, CEO Kimbal Riley said:
“We are operating in a situation where we do not know when our customers (80%+ of Vista Group customers are cinemas) will be able to reopen in a meaningful way. This has had, and continues to have, a significant impact on their businesses – and therefore ours.”
And as for the restructure, Mr Riley commented:
“We have therefore taken the decision to implement a restructure of all our core businesses (Vista Group, Vista Cinema, and Movio) in all our offices. Whilst this will have a significant impact on a number of people, we will ensure everyone is treated with the utmost respect and given appropriate support”.
The Vista Group share price rallied 23.36% yesterday despite no news out of the company, closing at $1.88. This takes Vista’s year-to-date loss to around 40%.
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Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Vista Group Intl. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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