TIDMIMMO
RNS Number : 9918W
Immotion Group PLC
29 April 2021
29 April 2021
Immotion Group plc
("Immotion", the "Company" or the "Group")
Current Trading, Outlook and Full Year Results
Immotion Group (AIM:IMMO.L), the UK-based immersive
entertainment group, is pleased to provide an update on current
trading and to announce its results for the year ended 31 December
2020.
Highlights - Post Period End
-- Clear evidence of recovery in trading in core LBE business - led by US business
-- March saw highest monthly partner revenue to date
-- Unaudited Group revenue in March 2021 GBP440,000
(substantially greater than in January and February 2021
combined)
-- Further LBE revenue growth expected to follow in coming months:
o Permitted capacity in Las Vegas to be increased from 50% to
80% from 1 May and 100% from 1 June 2020
o Strong opening for 22-seat installation at Clearwater Aquarium
(23 March 2020)
o UK LBE business set to re-open on 17 May 2020
o UK and USA estates expected to be fully open for busy summer
period
-- Let's Explore launched in USA and Canada and on sale via Amazon in the UK and USA
-- Forward stock of Let's Explore product bought at substantially reduced cost per unit
-- Let's Explore now fulfilled locally in USA
-- Core product enhanced and range supplemented to drive increased basket sizes
-- Uvisan making good progress and contribution to central costs
-- Cleanroom by Uvisan - full room UV-C disinfection system to
launch in May - early enquiries from blue chip customers
Highlights - 2020
-- Results very heavily impacted by COVID-19 lockdowns and impact of social distancing
-- Revenue GBP2,848,000 (2019: GBP3,606,000)
-- EBITDA loss narrowed to GBP1,690,000 (2019: GBP2,494,000 loss)
-- LBE revenue declined from GBP2,932,000 in 2019 to GBP2,075,000 in 2020
-- Administrative expenses (before depreciation, amortisation,
impairment, share based payments and one-off costs) fell to
GBP2,731,000 (2019: GBP3,591,000)
-- Government grants and loans of GBP760,000 received
(GBP479,000 of grants taken to the income statement)
-- Two placings completed following start of pandemic - raising GBP2,362,000 net
-- Total adjusted loss* GBP4,189,000 (2019: GBP4,355,000)
-- Total adjusted loss* per share 1.17p (2019: 1.72p loss)
*Adjusted loss is the loss after taxation, adjusted for share
based payments, impairment charges and restructuring costs.
Chairman's Statement
The only way to describe 2020 is a year of unprecedented and
unforeseeable challenges. The COVID-19 pandemic caused restrictions
and lockdowns, which effectively closed our business for lengthy
periods in 2020.
Rather than sailing into profitable waters in Spring 2020 as we
had expected, we had to batten down the hatches and move into
survival mode, requiring very tough decisions, particularly those
which impacted our people. However, thanks to the resilience of our
team, and the support of our shareholders, we have navigated
through what we all hope is the worst of the impact of the COVID-19
pandemic on our business, though we are not complacent.
Creative actions from our team saw two new divisions emerge,
'Let's Explore' and 'Uvisan'. The combination of these new revenue
streams, and more importantly, the ongoing recovery of our core
Location Based Entertainment (LBE) business, particularly as
conditions improve in the USA, and with the UK set to re-open in
mid-May 2021, has significantly boosted our confidence.
While the future currently looks considerably healthier, we have
reflected carefully on what risk appetite we have in the short
term, as well as the resources available to us. We have concluded
that the balance of 2021 should be a period of measured investment,
as well as the coming of age of our Group, with the key short-term
objective being to move the Group into EBITDA profitability and
positive operating cashflows. With tight cost control, our existing
partner business should be a platform for the overall profitability
of our Group and our new divisions should then provide further
contribution.
We remain confident about the prospects for our core LBE
business. There is much still to go after in the aquarium market,
where we now have a very strong reputation, particularly in the
USA, with Mandalay Bay and Clearwater Aquarium being two strong
exemplars of the way forward - larger, more fully integrated
attractions, which offer both economies of effort as well as strong
potential economics for both partners. We will seek opportunities
in the zoo market in earnest in 2022, when hopefully we will have
the pandemic behind us. Our refined LBE model along with the global
opportunities that we believe remain for the growth of our LBE
business give us belief in its future potential, particularly in a
post-pandemic environment.
'Let's Explore' and 'Uvisan' are a testament to the creativity
and versatility of our team and enable us to leverage our skills
and central operating cost base. 'Let's Explore' gives us a
seasonal balance to our LBE activities, with Q4 likely to be its
strongest period by far with both Black Friday and the holiday
season.
Uvisan is seeking to capitalise on the greater attention we
expect organisations to pay to ensure safe working conditions for
their people and customers, and to address workplace risks that
were not considered before the pandemic. This has the potential to
become a significant market. Early blue-chip enquiries for our
'Cleanroom by Uvisan' product, have been encouraging.
We look forward to watching these new activities evolve
alongside the expected recovery and future growth of our core
business. While there is still reason for caution, we have
demonstrated that we are single-minded, creative and fleet of foot.
While we can only play in the conditions that prevail, we remain
confident in our ability to succeed.
Chief Executive's Report
To say 2020 was a difficult year for the Group would be an
understatement. The Group's core Location Based Entertainment (LBE)
business suffered considerably due to the lockdowns imposed as a
result of the COVID-19 pandemic and the significant focus became
the mitigation of the effects of the pandemic. We have worked
tirelessly to position the Group for a strong recovery from the
pandemic and the current outlook is considerably better as our key
markets have emerged or are due to emerge from lockdown. I will
first summarise the Group's current position and outlook as I feel
this will be of more interest to our shareholders, before turning
my attention to a review of 2020's performance.
Trading Post Period End & Outlook
Despite a challenging January and February 2021, impacted by the
ongoing pandemic related restrictions, March and April 2021 have
seen a strong rebound in revenue, led primarily by the USA Location
Based Entertainment business.
In March 2021 we saw our LBE revenues almost double compared to
February, with total unaudited Group revenue in March 2021 of circa
GBP440k. This momentum along with the lifting of restrictions in
Las Vegas, USA (allowing 80% capacity as of 1 May 2021 and 100%
effective 1 June 2021); the UK business expected to come back on
stream in mid-May; and the busy summer period should see our LBE
revenues grow substantially. This, along with contributions from
our Home Based Entertainment (HBE) and Uvisan divisions, should
allow us to move to profitability on a monthly basis at the EBITDA
level. The combination of an expected strong summer for our LBE
business, together with an expected busy Q4 2021 for 'Let's
Explore' (which coincides with a quieter quarter for LBE) will give
some welcome "seasonal" balance to our Group activities.
We have continued to maintain tight control of costs, with
monthly central overheads and salaries currently running at circa
GBP215k per month. This lower cost base is now supporting three
divisions. We have identified further cost savings, particularly in
occupancy costs and we would expect those to come through in H2
2021.
Much of the required investment in assets and stock to support
our 2021 plan has already been made, which should allow us, with
careful management of our cash resources, to be self-funded for the
remainder of 2021.
We currently have paid in full for stock of a further 50 motion
platforms (106 seats) for the LBE business. To make these
operational involves relatively small spending on headsets and
dressing of the sites, as well as road transport of equipment from
our warehouse to site.
In addition, we have in aggregate circa 12,000 fully paid Let's
Explore Mega Packs in our UK and USA warehouses, plus a further
34,000 units in production. Net of deposits already paid, circa
GBP130,000 remains to be paid over the coming months, which we
expect to be largely self-funding from sales in that period. This
approach has enabled us to plan ahead and secure a significantly
lower unit product cost.
Location Based Entertainment ( LBE)
Our core LBE business has begun to recover strongly, driven
largely by the improvement in the USA. With COVID-19 restrictions
easing and leisure venues set to either re-open or ease
restrictions (where already open), we expect to have the large
majority of our LBE sites open for summer. We hope to see all our
UK sites re-open in mid-May 2021 and, so long as the overall
pandemic restrictions ease as currently expected, we would hope to
see a strong summer contribution driven by "staycations" and
pent-up consumer demand particularly in the UK.
In the USA, the majority of our LBE sites are already trading
and remaining COVID-19 related restrictions are being relaxed.
Importantly, the capacity restrictions relating to our installation
at Shark Reef Aquarium, Las Vegas, were relaxed from 15 March 2021
and capacity is now back at the same level permitted when we opened
the site in August 2020. This has, from April 2021, had a positive
impact on revenue and contribution from this key site and with a
further lifting of local restrictions due on 1 May 2021 to 80% and
then to 100% on 1 June 2021 we expect to see further increases over
the coming weeks and months.
Trading began at our new 22-seat installation at Clearwater
Marine Aquarium, Florida, USA, on 22 March 2021 and the early
uptake has been very strong, with high levels of utilisation.
March 2021 saw our best result, in terms of turnover and
contribution, since October 2020, and we expect this to grow again
in April 2021 (with a full month back at 50% capacity at Shark Reef
Aquarium) and again in May 2021, as the UK sites come back on
stream, with peak seasonal performance in the UK and USA expected
in July and August 2021.
In terms of new LBE sites, we remain focused on deploying the VR
platforms that we currently hold in stock. We have recently
installed new units into Virginia Aquarium (4 seats) as well as
increasing capacity at our installations at Mystic Aquarium (up to
8 seats) and OdySea Aquarium (up to 6 seats) ahead of the summer
season. We are also contracted to install 8 seats into Sea Life
Brighton in time for its reopening on 17 May 2021.
We remain focused on larger, more integrated installs, with the
focus for the remainder of 2021 being on quality over quantity.
In Australia, in addition to our two existing sites, Sea Life
Sydney and Sea Life Melbourne, we have opened a new tower coaster
installation in the observation deck on the Sydney Tower Eye and
early trading has been encouraging. This is a very prestigious and
high traffic site.
Due to strategic changes at our site at Dubai Aquarium we have
decided to uninstall from that location and are repatriating the
equipment, which will be re-deployed elsewhere. We continue to
review our options for the remaining three Middle East sites.
Home Based Entertainment (HBE)
Let's Explore has continued to make solid progress with the
product now launched in a number of new territories, including USA
and Canada. We have re-organised the supply chain and made a
substantial forward commitment to stock. This has allowed us to
obtain substantial product cost reductions and to plan ahead.
We took the opportunity in January and February 2021 to pull
back on UK marketing as consumers recovered from Christmas
spending. In this period, we focused on operational matters,
planning for international roll out.
We soft launched in the USA in early March 2021, fulfilling from
the UK and we will be scaling up marketing in the USA from early
April 2021 as we begin shipping from our fulfilment partner in
Wisconsin.
Whilst margins in March 2021 were impacted as we sold through
old stock at a significantly higher unit cost as well as
substantial international shipping charges, it did allow us to
prove USA demand before launching with local distribution. All
stock now on hand in the USA and to be delivered to us going
forward is at the new significantly lower product cost, though we
do still have some of the higher cost stock in the UK to sell
through.
With stock now in the USA, we are exploring selling through our
LBE Partner network. It is our intention to be up and running with
key US partners for the Summer 2021 season. We have also now
started to sell on Amazon, both in the UK and USA.
Further products have been added to the Let's Explore Oceans
portfolio, including our new Explore the Oceans 78-page Augmented
Reality book and Flashcard pack. These new products join our Oceans
book pack and fossils, all of which offer the opportunity to
increase basket sizes and margin.
We have also tested advertising into territories further afield
to establish potential demand. Again, we have fulfilled demand from
the UK, which has impacted margin, but this has been on a
relatively small scale and has been useful in informing our
thoughts on which territories to target. We are now examining how
to optimise distribution for these territories.
Whilst we are looking to build sales volumes through the year,
our focus will be on the key Christmas season and Q4 2021 in
particular, where our product is perfectly suited as a Christmas
and seasonal gift to be purchased by parents, grandparents,
relatives and friends.
Uvisan
Uvisan has continued to make good progress and has now sold
almost 50 cabinets into a range of sectors from universities and
schools through to the NHS. High profile clients have included
Aardman Animation, the studio behind Wallace & Gromit; the
British Film Institute; and a number of well-known
universities.
We have also appointed a number of re-sellers in the UK and in
Europe and in the coming months we will look at potential
distribution into the USA.
We have also developed 'Cleanroom by Uvisan' and have a trial
site with Chichester University. The university will use the system
to disinfect its state-of-the-art recording studio and equipment
(such as mixing and editing desks) as well as cameras and related
equipment. The system uses fixed UV-C lights, along with a
proprietary safety and control system to provide rapid disinfection
of un-occupied rooms. This system can achieve ambient and surface
disinfection in less than 10 minutes, allowing for rapid and safe
turnover of rooms between user groups.
Along with the UV disinfection cabinets, Uvisan now has a more
rounded offering. Uvisan already makes a small contribution to our
Group overheads and, with 'Cleanroom from Uvisan' coming on stream,
we would expect to see this grow in H2 and beyond.
Review of 2020
The Group began 2020 full of optimism with EBITDA profitability
coming into clear sight and a plan for further strong growth. As
with all leisure businesses, the pandemic hit us in March 2020 with
the full force of mandatory closures and worldwide lockdown.
Essentially, 2020 became about survival and, as the lockdown
gripped, we took the steps necessary to cut costs (including salary
cuts), manage cashflows and obtain available government support in
both the UK and the USA. However, with no revenue for lengthy
periods of time we suffered very substantial losses and cash
outflow in the year. These are detailed in the financial review
which follows.
With a continued belief in the long-term prospects for our
business, we took the opportunity to strengthen our balance sheet,
with two equity fundraises following the start of the pandemic. We
are grateful to our core shareholders for their support during what
was a very tough and uncertain time.
Our board and family members showed their faith and
determination by investing a further GBP500,000 into the business,
being almost half of the equity fundraise we undertook in November
2020.
There were of course periods when the LBE business was allowed
to re-open and we did make progress. The opening of our landmark
site at Mandalay Bay (albeit delayed, and with much restricted
capacity) was extremely pleasing. However, we also took the
decision not to rush to open some sites, and on the whole we took a
cautious approach being highly selective in making new investment,
recognising the need to maintain cash reserves to enable us to
manage our way through extended periods of lockdown and
disruption.
We continued to have faith in our core LBE business model but
also took the view that we needed to try to innovate (albeit on a
limited budget) and hence 'Let's Explore' and 'Uvisan' were
born.
There is now a real sense of emerging from the darkness and the
focus must be on what lies ahead.
Our whole board wishes to put on record that the professionalism
of those that have worked tirelessly throughout the period (often
on a more than a full-time basis and for reduced salary) and the
grace, patience and understanding of those that have been
furloughed on reduced income has been humbling.
Location Based Entertainment (LBE)
The growth of our partner estate stalled as the pandemic took
hold and the opening of our landmark site at Shark Reef Aquarium,
Mandalay Bay, Las Vegas was delayed from April 2020 until early
August 2020, as work on site had to be halted when Las Vegas went
into lockdown.
The bulk of our estate was shut for lengthy periods. In the UK,
we had three full months of lockdown in Q2 2020 and a further
period of lockdown in November 2020 with zero revenue across all
sites. In the USA, localised lockdowns reduced our Q2 2020 trade to
virtually nil, with a number remaining closed until now. In the
Middle East, all of our sites were effectively closed from
mid-March 2020 for the remainder of the year.
The movement of our portfolio during 2020, and since period end,
can be summarised as follows:
Total USA UK ROW
Sites Headsets Sites Headsets Sites Headsets Sites Headsets
------ --------- ------ --------- ------ --------- ------ ---------
At 1 January
2020 46 302 20 99 16 142 10 61
------ --------- ------ --------- ------ --------- ------ ---------
Installed
in 2020 10 103 7 84 3 19 - -
------ --------- ------ --------- ------ --------- ------ ---------
Uninstalled
in 2020 (8) (60) (3) (20) (5) (40) - -
------ --------- ------ --------- ------ --------- ------ ---------
At 31 December
2020 48 345 24 163 14 121 10 61
------ --------- ------ --------- ------ --------- ------ ---------
Installed
in 2021 2 32 1 28 - - 1 4
------ --------- ------ --------- ------ --------- ------ ---------
Uninstalled
in 2021 (1) (2) (1) (2) - - - -
------ --------- ------ --------- ------ --------- ------ ---------
At 31 March
2021 49 375 24 189 14 121 11 65
------ --------- ------ --------- ------ --------- ------ ---------
Revenues at sites that re-opened in the year were initially
heavily impacted, particularly in the earlier stages of the
pandemic. This appears to have been in large part the result of
capacity and social distancing restrictions imposed by the venues
themselves.
In the USA, we have seen an improving picture with easing of
COVID-19 measures and we are hopeful that as restrictions continue
to be eased and attendances recover to pre-pandemic levels we
believe we should see a return towards similar levels of revenue
seen in the same periods before the pandemic.
As of 31 March 2021, the operational status of our installed
base was as follows:
Total USA UK ROW
Sites Headsets Sites Headsets Sites Headsets Sites Headsets
------ --------- ------ --------- ------ --------- ------ ---------
At 31 March
2021 49 375 24 189 14 121 11 65
------ --------- ------ --------- ------ --------- ------ ---------
Fully operational 26 213 19 166 7 47
------ --------- ------ --------- ------ --------- ------ ---------
Site closed 18 139 - - 14 121 4 18
------ --------- ------ --------- ------ --------- ------ ---------
Site open
but installation
not operating 5 23 5 23 - - - -
------ --------- ------ --------- ------ --------- ------ ---------
Home Based Entertainment (HBE) - Let's Explore
We conceived of the idea for Let's Explore in the depths of the
first UK lockdown. Given the uncertainty around the length and
impact of the pandemic and the fact that our LBE business was shut
in its entirety, we felt the need to be proactive and create a
hedge against our LBE business, recognising that cash was very
tight.
Using elements of our LBE business's content and the skills of
our creative and marketing teams we designed an interactive in-home
product that aimed to be both fun and educational. We put together
interactive undersea experiences using both VR and AR elements, all
driven from our holographic viewing cube.
Once the product was designed, we sourced all the various
elements (headsets, cubes, books, packaging, etc.). However, given
our desire to launch for Christmas 2020, it was not possible to
consolidate and source all the elements at lowest cost or indeed to
optimize the logistics.
We took a cautious approach to the amount of stock we bought
ahead of Christmas (again at the expense of margin). Given long
lead times from China by sea, there were elements, such as
headsets, that we had to air freight to the UK when it became
apparent that there was substantial demand.
In addition, as we had decided to focus on digital marketing
only, there was little time to test and build up our credentials
with social media marketing partners, such as Facebook, who limit
advertising spend for new advertisers.
We launched the Let's Explore Oceans Mega Pack on 1 October 2020
and this was very well received with strong reviews, selling circa
11,000 units before the year-end, generating GBP669,000 of
revenue.
This early success gave us the belief that we should develop the
business further and we remain excited by its prospects.
Uvisan
Uvisan was born out of the need to be able to safely and
effectively sanitise the VR headsets at our LBE sites. It was clear
that at a site such as Las Vegas where we need to keep two batches
of 36 headsets rotating every 10 minutes that alcohol wipes would
be just too laborious and time consuming in addition to the risk of
damaging equipment and the environment.
UV light is a well-established means of disinfection, used in
many industries, including the food industry. (UV-C light kills
99.9% of bacteria and viruses with the right dosage). It is
particularly well suited for rapid disinfection of touched and
shared equipment and is perfect for sensitive electronic equipment
that can be damaged by moisture or abrasive substances.
Early on we undertook successful tests of our equipment with
third parties and were delighted when HP recommended our cabinets
for disinfecting their range of VR headsets.
It was apparent to us that other businesses utilising VR
headsets would have the same need but that there could be wider
demand from those who use shared equipment and spaces.
We began some soft marketing in August 2020 and found that there
was demand but clearly (and ironically) periods of lockdown made
this challenging. Nevertheless, we had some early orders supplying
schools, universities, the creative industries and others.
Recent sales to a number of prestigious clients, including
Aardman and the NHS, have given the directors confidence to expand
this business division. A number of distribution agreements have
now been entered into for the UK and Europe.
At the same time, we began looking at wider needs for rapid
disinfection and accordingly we began to develop what has become
"Cleanroom by UVISAN". This is a whole room UV-C disinfection
system. For this to be a viable product, we decided to develop a
proprietary safety and control system. We have worked to develop
this product with Chichester University and have now installed the
prototype Cleanroom system in their state-of-the-art audio
suite.
Uvisan will shortly have the necessary CE and other
accreditations for its new 'Cleanroom' product. Along with the UV
disinfection cabinets the business now has a more rounded offering.
We now have a number of enquiries from substantial blue chip
counterparties regarding potential 'Cleanroom by Uvisan'
installations. Today, Uvisan makes a small contribution to our
Group overheads and with Cleanroom we would expect to see this grow
in H2 and beyond.
Financial Review for the year ended 31 December 2020
Total revenue for the year reduced to GBP2,848,000 (2019:
GBP3,606,000). Unsurprisingly, this decline was largely driven by
lockdowns in response to the pandemic and the ongoing impact of
lockdown periods - LBE segment revenues declined by GBP857,000 to
GBP2,075,000 (2019: GBP2,932,000).
Let's Explore, the in-home consumer product created in response
to the pandemic, generated revenue of GBP669,000 in the period from
its launch on 1 October 2020 (2019: GBPnil).
A significant area of focus in the year was to secure available
governmental COVID-19 related financial support in both the UK and
USA to the fullest extent possible. We received GBP479,000 in the
year through the UK Coronavirus Job Retention Scheme (included
within other income). We also received GBP119,000 as a loan through
the USA Paycheck Protection Program for which we have received full
forgiveness since the year end (and as such no credit to the income
statement has been made in the 2020 accounts).
Cost reductions were a key focus as the lockdowns in the UK and
USA took hold. Administrative expenses (excluding depreciation,
amortisation, impairment, share based payments and one-off costs)
fell to GBP2,731,000 (2019: GBP3,591,000). Whilst the entirety of
this reduction cannot be attributed to actions taken in response to
COVID-19 (a programme of cost reductions was being implemented late
in 2019), the Group made further significant cost savings resulting
from temporary pay reductions for the majority of staff and,
regrettably a number of redundancies were also made.
The Group made an adjusted EBITDA loss of GBP1,690,000 during
the year (2019: GBP2,494,000).
Following an impairment review, the Directors decided to
write-off certain pieces of VR content created by the Group
historically, which are not expected to recover their carrying
value. This resulted in an impairment charge of GBP253,000 in the
year.
The Group's loss after tax in the year was GBP4,732,000 (2019:
GBP5,415,000). The adjusted loss per share* was 1.17p (2019:
1.72p).
Overall cash inflow in the year was GBP1,190,000 being cash
outflow of GBP2,012,000 from operations, a GBP1,393,000 outflow
from investing activities and a GBP4,595,000 inflow from financing
activities.
Operating cash outflows in the year were GBP2,012,000 (2019:
GBP2,246,000). The difference from EBITDA was predominantly a
result of net working capital outflows in the period of GBP192,000
(of which GBP152,000 was the build-up of stock for Let's Explore
and Uvisan) and the cash impact of restructuring costs of circa
GBP96,000.
Investing cash outflows reduced substantially to GBP1,393,000
(2019: GBP2,762,000). This was the result of substantial reductions
of both intangible and tangible asset additions, in the case of the
former due to our content creators being on furlough for a
substantial part of the year, and in the case of the latter due to
significantly fewer new partner installations and associated spend
in the period.
Net financing activities produced a cash inflow of GBP4,595,000
(2019: GBP4,771,000) due in the main to the three equity placings
which took place in the year (net proceeds of which were
GBP5,012,000).
Net assets at the balance sheet date were GBP6,714,000 (2019:
GBP6,275,000).
Whilst we are feeling as positive about our business and the
outlook as we have in over a year, I feel obligated in the current
environment to point out that there does remain considerable
uncertainty as to how the situation with COVID-19 (and its
variants) will evolve and what the impact of that could be on our
business.
As part of the preparation of our accounts, we are required to
consider these matters and Note 2 to this release details our
thought process in this regard. From our perspective the key risk
would come from further widespread and or lengthy lockdowns,
particularly as it impacts our key LBE sites. At the time of
writing that does not appear to be a major risk in the USA, which
now accounts for the majority of our LBE revenue and the UK remains
set to re-open in mid-May 2021.
Conclusion
I would particularly like to thank our fantastic team and
supportive shareholders, as we have come through a period of huge
challenge. Absent any material deterioration in the recovery from
the pandemic conditions, we are optimistic about the outlook for
the remainder of 2021 and are now seeing a strong recovery.
We have a plan for 2021, which should underpin our Group
becoming profitable and generating positive operating cashflows,
whilst reflecting the need for caution and the resources available
to us. Much of the investment to support that plan has already been
made and, with a strong recovery underway, we will seek to manage
our resources so that our plans for the remainder of 2021 will be
self-funding.
We look forward to the year ahead with renewed optimism but are
also cognisant of the fluid nature of the current business
environment and will adapt our plans as needed. Having survived
what has hopefully been the worst of the pandemic, we are now
intent on driving our business forward with renewed vigour and
optimism.
*Adjusted loss is the loss after taxation, adjusted for share
based payments, impairment charges and restructuring costs.
Enquiries:
For further information please visit www.immotion.co.uk , or
contact:
Immotion Group Martin Higginson Tel + 44 (0) 207
David Marks 220 1666
WH Ireland Limited Adrian Hadden Tel + 44 (0) 207
(Nomad and Joint Darshan Patel 220 1666
Broker) Matthew Chan
Alvarium Capital Alex Davies Tel: +44 (0) 207
Partners 195 1458
(Joint Broker)
Shard Capital Partners Damon Heath Tel: +44 (0) 20 7186
LLP Erik Woolgar 9900
(Co-Broker)
IMMOTION GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2020
Year ended Year ended
31 December 31 December
2020 2019
Note GBP'000 GBP'000
Revenue - continuing operations 2,848 3,606
Cost of sales - continuing operations (2,382) (2,509)
------------ ------------
Gross profit 466 1,097
Administrative expenses - continuing
operations (5,779) (6,524)
Other operating income 575 -
-------------- --------------
Loss from operations (4,738) (5,427)
Memorandum:
Adjusted EBITDA (1,690) (2,494)
Depreciation (1,751) (1,304)
Amortisation (719) (561)
Impairment of tangible and intangible
assets (253) (458)
Share based payments (194) (171)
Loss on disposal of fixed assets (35) (12)
Restructuring costs (96) (427)
-------------- --------------
Loss from operations (4,738) (5,427)
--------------------------------------- ----- --------------- ---------------
Finance costs (82) (108)
Finance income 2 4
------------ ------------
Loss before taxation and attributable
to equity holders of the parent (4,818) (5,531)
Taxation 86 84
------------ ------------
Loss from continuing operations (4,732) (5,447)
Discontinued operations (net of tax) - 32
------------ ------------
Loss after taxation (4,732) (5,415)
Other comprehensive expense
Loss on translation of subsidiary (35) (29)
Loss after taxation and attributable
to equity holders of the parent and
total comprehensive income for the ------------ ------------
period (4,767) (5,444)
====== ======
Year ended Year ended
31 December 31 December
2020 2019
GBP0.01 GBP0.01
Loss per share
Basic (continuing) 5 (1.33) (2.13)
Basic (discontinued) 0.00 0.01
====== ======
(1.33) (2.12)
Loss per share
Diluted (continuing) 5 (1.33) (2.13)
Diluted (discontinued) 0.00 0.01
====== ======
(1.33) (2.12)
IMMOTION GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AS AT 31 DECEMBER 2020
Foreign Retained
exchange (deficit)/
Share capital Share premium reserve earnings Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January 2019 78 9,999 (16) (3,861) 6,200
Issue of shares 37 5,684 - - 5,721
Issue costs deducted from
equity - (373) - - (373)
Loss after tax - - - (5,415) (5,415)
Equity settled share-based
payments - - - 171 171
Currency translation of
overseas subsidiary - - (29) - (29)
-------------- -------------- -------------- -------------- --------------
Balance at 31 December
2019 115 15,310 (45) (9,105) 6,275
-------------- -------------- -------------- -------------- --------------
Issue of shares 49 5,352 - - 5,401
Issue costs deducted from
equity - (389) - - (389)
Loss after tax - - - (4,732) (4,732)
Equity settled share-based
payments - - - 194 194
Currency translation of
overseas subsidiary - - (35) - (35)
-------------- -------------- -------------- -------------- --------------
Balance at 31 December
2020 164 20,273 (80) (13,643) 6,714
-------------- -------------- -------------- -------------- --------------
IMMOTION GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEARED 31 DECEMBER 2020
31 December 31 December
2020 2019
ASSETS Note GBP'000 GBP'000
Non-current assets
Property, plant and equipment 6 2,260 3,132
Intangible fixed assets 7 3,625 4,020
----------------- -----------------
Total non-current assets 5,885 7,152
Current assets
Inventories 152 -
Trade and other receivables 829 703
Contract assets 91 100
Cash and cash equivalents 1,664 474
----------------- -----------------
Total current assets 2,736 1,277
----------------- -----------------
Total assets 8,621 8,429
========= =========
LIABILITIES
Current liabilities
Trade and other payables (1,153) (1,060)
Loans and borrowings (175) (101)
Lease liabilities (231) (401)
Deferred tax liability - (27)
Contract liabilities (12) (14)
----------------- -----------------
Total current liabilities (1,571) (1,603)
----------------- -----------------
Non-current liabilities
Loans (160) (55)
Lease liabilities (176) (496)
------------------ ------------------
Total non-current liabilities (336) (551)
------------------ ------------------
Total liabilities (1,907) (2,154)
------------------ ------------------
Total net assets 6,714 6,275
========= =========
Capital and reserves attributable
to owners
of the parent
Share capital 8 164 115
Share premium 20,273 15,310
Foreign exchange reserve (80) (45)
Retained earnings/(deficit) (13,643) (9,105)
------------------ ------------------
Total equity 6,714 6,275
========= =========
The financial statements were approved by the Board and
authorised for issue on 28 April 2021
Martin Higginson David Marks
Chief Executive Officer Group Finance Director
IMMOTION GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2020
Year ended Year ended
31 December 31 December
2020 2019
GBP'000 GBP'000
Cash flows from operating activities
Loss before tax including discontinued
operations
Adjustments for: (4,818) (5,499)
Share based payments 194 171
Depreciation on property plant and
equipment 1,751 1,304
Depreciation on stock transfers - (2)
Loss on disposal of fixed assets 35 12
Amortisation of intangible assets 719 561
Impairment of tangible and intangible
assets 253 458
Finance costs 82 108
Finance income (2) (4)
Foreign exchange on retranslation
of fixed assets (72) (32)
Foreign exchange loss (35) (29)
Corporation tax repayment received 73 289
----------------- -----------------
Cash flows from operating activities
before changes (1,820) (2,663)
in working capital
(Increase)/Decrease in inventories (152) 133
(Increase)/Decrease in trade and other
receivables (132) 339
Increase/(Decrease) in trade and
other payables 92 (55)
----------------- -----------------
Cash used in operations (2,012) (2,246)
Investing activities
Purchase of intangible assets (545) (1,005)
Purchase of property, plant and equipment (1,069) (1,804)
Proceeds from disposals of property,
plant and equipment 159 15
Foreign exchange on retranslation
of fixed assets 62 32
----------------- -----------------
Net cash used in investing activities (1,393) (2,762)
Financing activities
Finance costs (82) (108)
Finance income 2 4
New loans and finance leases 302 87
Loan and finance lease repayments (615) (560)
Foreign exchange on retranslation (24) -
of financing
Issue of new share capital 5,401 5,721
Costs on issue of shares (389) (373)
----------------- -----------------
Net cash from financing activities 4,595 4,771
----------------- -----------------
Net increase/(decrease) in cash and
cash equivalents 1,190 (237)
Cash and cash equivalents at beginning
of the period 474 711
------------------ ------------------
Cash and cash equivalents at end of
the period 1,664 474
========= =========
Reconciliation of net cashflow to movement
in net debt: Year ended Year ended
31 December 31 December
2020 2019
GBP000 GBP000
Net increase/(decrease) in cash and cash
equivalents 1,190 (237)
New loans and finance leases (328) (1,166)
Repayment of loans and finance leases 615 560
Foreign exchange on retranslation of financing 24 -
----------------- -----------------
Movement in net funds in the year 1,501 (843)
Net debt/(funds) at 1 January (579) 264
----------------- -----------------
Net funds/(debt) at 31 December 922 (579)
========= =========
Breakdown of net funds/(debts)
Cash and cash equivalents 1,664 474
Loans and borrowings (335) (156)
Lease liabilities (407) (897)
----------------- -----------------
Net funds/(debts) at 31 December 922 (579)
========= =========
IMMOTION GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2020
1. GENERAL INFORMATION
Immotion Group plc is a public limited company incorporated and
domiciled in the United Kingdom. The address of the registered
office is East Wing, Ground Floor, The Victoria, MediacityUK,
Manchester, M50 3SP. The Group is listed on the Alternative
Investment Market (AIM) of the London Stock Exchange.
The principal activities of the Group during the year were the
provision of virtual reality (VR) experiences to partner sites and
via its own ImmotionVR sites; and the sale of the Let's Explore
virtual and augmented reality consumer product.
These financial statements are presented in pounds sterling
because that is the currency of the primary economic environment in
which the Group operates. Foreign operations are included in
accordance with the policies set out in note 2.
2. ACCOUNTING POLICIES
Principal accounting policies
The Company is a public company incorporated and domiciled in
the United Kingdom. The principal accounting policies applied in
the preparation of these consolidated financial statements are set
out below. These policies have been consistently applied to all the
periods presented, unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards, International
Accounting Standards and Interpretations (collectively IFRS) issued
by the International Accounting Standards Board (IASB) as adopted
by the European Union ("adopted IFRSs") and those parts of the
Companies Act 2006 which apply to companies preparing their
financial statements under IFRSs. The financial statements are
presented to the nearest round thousand (GBP'000) except when
otherwise indicated.
Basis of Consolidation
The Group comprises a holding company and a number of individual
subsidiaries and all of
these have been included in the consolidated financial
statements in accordance with the principles of acquisition
accounting as laid out by IFRS 3 Business Combinations.
Going concern
The Group incurred a loss after taxation of GBP4,732,000 for the
year and an operating cash outflow of GBP2,012,000. The loss in the
year and the continuation post year end of the operational
disruption and economic uncertainty created by COVID-19 lockdowns
indicate the existence of a material uncertainty which may cast
significant doubt on the Group's ability to continue as a going
concern unless losses after taxation are reduced significantly
and/or new equity funds raised as required.
The Directors have prepared forecasts covering the period to
December 2022, assessing the trading projections and cash flow
taking into consideration the continued impact of COVID-19. The
projections include:
-- the anticipated reopening of partner and ImmotionVR sites as
lockdowns are lifted with revenue from each site projected to be
50% of pre-COVID levels in 2021 and 75% in 2022;
-- no further lockdowns affecting partner and ImmotionVR sites;
-- selective opening of a small number of new partner sites;
-- forecasted revenue and contribution of Let's Explore; and
-- the impact of government support packages available in the UK and USA.
Whilst the forecasts prepared did not indicate a requirement for
additional funding to enable the Group to continue being able to
operate as a going concern, the Directors note that there is still
considerable uncertainty as to whether the assumptions made in
preparing these forecasts will turn out to be accurate. If there
were to be further lockdowns, they could have a material impact on
the Group's ability to generate revenue from partner and ImmotionVR
sites. Should this happen, the Directors may need to consider
mitigating actions available to them which are likely to include
the pursuit of any government support available, identifying cost
savings and/or seeking external finance in the form of debt or
equity.
Based on the forecast prepared, the Directors believe that it
remains appropriate to prepare the financial statements on a going
concern basis.
The financial statements do not include any adjustments that
would result from the going concern basis of preparation being
inappropriate.
Business combinations and goodwill
Acquisitions of subsidiaries and business are accounted for
using the acquisition method. The assets and liabilities and
contingent liabilities of the subsidiaries are measured at their
fair value at the date of acquisition. Any excess of acquisition
over fair values of the identifiable net assets acquired is
recognised as goodwill. Goodwill arising on consolidation is
recognised as an asset and reviewed for impairment twice annually.
Any impairment is recognised immediately in profit or loss accounts
and is not subsequently reversed. Acquisition related costs are
recognised in the income statement as incurred.
Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured as the fair value of the
consideration received or receivable, excluding discounts, rebates,
value added tax and other sales taxes. The following criteria must
also be met before revenue is recognised:
Partners
Partner revenue is recognised on the date which the sale to the
customer takes place. The Group acts as the principal in the
transaction and therefore recognises the revenue charged to the end
user in full with the concession partners' shares deducted as a
cost of sale.
Hardware Sales
Revenue from the sale of goods is recognised when all of the
following conditions are satisfied:
-- the Group has transferred the significant risks and rewards of ownership to the buyer;
-- the Group retains neither continuing managerial involvement
to the degree usually associated with ownership nor effective
control over the goods sold;
-- the amount of revenue can be reliably measured;
-- it is probable that the Group will receive the consideration due under the transaction; and
-- the costs incurred or to be incurred in respect of the transaction can be reliably measured.
Hardware sales revenue is normally recognised on the date that
the hardware is delivered to the customer. In the event that a
customer is not ready to take delivery of the hardware and have
requested a delayed delivery date, the Group applies the specifics
of IFRS 15 Bill-and-Hold arrangements. Revenue is then recognised
in advance of delivery. Under the Bill-and-Hold arrangements:
-- the goods are complete and ready for collection;
-- the goods are separately identified from the Group's other
stock and are not used to fulfil any other areas;
-- the customer has specifically requested that the goods be held pending collection; and
-- normal payment terms apply to the Bill-and-Hold arrangement.
Let's Explore
Revenue is recognised on sales of the Let's Explore products in
the period in which the corresponding order is placed and paid for.
A provision for future refunds is deducted from revenue each
period.
Content
Revenue from a contract to provide services is recognised in the
period in which the services are provided in accordance with the
stage of completion of the contract when all of the following
conditions are satisfied:
-- the amount of revenue can be measured reliably;
-- it is probable that the Group will receive the consideration due under the contract;
-- the performance obligations of the contract at the end of the
reporting period can be measured reliably; and
-- the costs incurred and the costs to complete the contract can be measured reliably.
Content licensing revenue is recognised on the date on which the
related sale of that content by the licensee takes place where
agreements do not provide for new or updated content to be
supplied. Where Immotion Group is committed under licensing
agreements to producing new content, or material updates, revenue
is recognised over the period of the agreement. No element of
financing is deemed present as the sales are made with standard
credit terms of 30 days which is consistent with market practice.
The Group does not expect to have any contracts where the period
between the transfer of the promised services or goods to the
customer and payment by the customer exceeds one year. As a
consequence, the Group does not adjust any of the transaction
prices for the time value of money.
Leases
The Company assesses whether a contract is or contains a lease,
at inception of a contract. The Company recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
agreements in which it is the lessee, except for short-term leases
(defined as leases with a lease term of 12 months or less) and
leases of low value assets. In the latter cases, the Company
recognises the lease payments as an operating expense on a
straight-line basis over the term of the lease unless another
systematic basis is more representative of the time pattern in
which economic benefits from the leased asset are consumed.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the Group uses its incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability comprise fixed lease payments (including in-substance
fixed payments), less any lease incentives.
The lease liability is included in Payables in the Statement of
Financial Position.
The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability (using
the effective interest method) and by reducing the carrying amount
to reflect the payments made.
The right-of-use assets comprise the initial measurement of the
corresponding lease liability, lease payments made at or before the
commencement day and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation and
impairment losses.
Right-of-use assets are depreciated over the shorter period of
lease term and useful life of the underlying asset. If a lease
transfers ownership of the underlying asset or the cost of the
right-of-use asset reflects that the Group expects to exercise a
purchase option, the related right-of-use asset is depreciated over
the useful life of the underlying asset. The depreciation starts at
the commencement date of the lease.
The right-of-use assets are included in the tangible fixed
assets in the Statement of Financial Position.
The Group applies IAS 36 to determine whether a right-of-use
asset is impaired and accounts for any identified impairment losses
where applicable.
Foreign currency
The individual financial statements of each group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each group company are expressed in pound sterling,
which is the functional currency of the Group, and the
presentational currency for the consolidated financial
statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the Group
company's functional currency (foreign currencies) are recorded at
rates of exchange prevailing on the dates of the transactions. At
the reporting date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the reporting date. Non-monetary items carried at
fair value that are denominated in foreign currencies are
translated at the rates prevailing at the date when the fair value
was determined. Non-monetary items that are measured in terms of
historical cost in foreign currency are not retranslated. Exchange
differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are included in profit or loss for
the period. Exchange differences arising on the retranslation of
non-monetary items carried at fair value are included in profit or
loss for the period except for differences arising on the
retranslation of non-monetary items in respect of which gains and
losses are recognised directly in equity. For such non- monetary
items, any exchange component of the gain or loss is also
recognised directly in equity.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the reporting date.
Income and expense items are translated at the average exchange
rates for the period, unless exchange rates fluctuate significantly
during the period, in which case the exchange rates at the date of
transactions are used. Exchange differences arising, if any, are
classified as equity and transferred to the Group's translation
reserve. Such translation differences are recognised as income and
expense in the period of the disposal of the operation. 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 rates.
Tangible assets
Property, plant and equipment are stated at cost net of
accumulated depreciation and provision for impairment. Depreciation
is provided on all property plant and equipment, at rates
calculated to write off the cost less estimated residual value, of
each asset on a straight-line basis over its expected useful
life.
The residual value is the estimated amount that would currently
be obtained from disposal of the asset if the asset were already of
the age and in the condition expected at the end of its useful
economic life.
The method of depreciation for each class of depreciable asset
is:
VR Hardware - 33% straight line
Computer equipment - 33% straight line
Leasehold property - Over term of lease
Leasehold property improvements - Over term of lease
Plant & Equipment - 33% straight line
Fixtures & Fittings - 20% to 33% straight line
IFRS 16 right of use assets - Over term of lease
Intangible assets
Intangible assets include goodwill arising on the acquisition of
subsidiaries and represents the difference between the fair value
of the consideration payable and the fair value of the net assets
that have been acquired. The residual element of goodwill is not
being amortised but is subject to twice-annual impairment
review.
Also included within intangible assets are various assets
separately identified in business combinations (such as customer
lists) to which the Directors have ascribed a commercial value and
a useful economic life. The ascribed value of these intangible
assets is being amortised on a straight-line basis over their
estimated useful economic life, which is considered to be 3
years.
Internally generated intangible assets
An internally-generated intangible asset arising from the
Group's development activities is capitalised and held as an
intangible asset in the statement of financial position when the
costs relate to a clearly defined project; the costs are separately
identifiable; the outcome of such a project has been assessed with
reasonable certainty as to its technical feasibility and its
ultimate commercial viability; the aggregate of the defined costs
plus all future expected costs in bringing the product to market is
exceeded by the future expected sales revenue; and adequate
resources are expected to exist to enable the project to be
completed. Internally generated intangible assets are amortised
over their estimated useful lives, being 3 years from completion of
development. Other development expenditure is recognised as an
expense in the income statement in the period in which it is
incurred.
Impairment of assets
Impairment tests on goodwill are undertaken twice-annually. The
recoverable value of goodwill is estimated on the basis of value in
use, defined as the present value of the cash generating units with
which the goodwill is associated. When value in use is less than
the book value, an impairment is recorded and is irreversible.
Other non-financial assets are subject to impairment tests
whenever circumstances indicate that their carrying amount may not
be recoverable. Where the carrying value of an asset exceeds its
estimated recoverable value (i.e. the higher of value in use and
fair value less costs to sell), the asset is written down
accordingly. Where it is not possible to estimate the recoverable
value of an individual asset, the impairment test is carried out on
the asset's cash-generating unit. The carrying value of property,
plant and equipment is assessed in order to determine if there is
an indication of impairment. Any impairment is charged to the
statement of comprehensive income. Impairment charges are included
under administrative expenses within the consolidated statement of
comprehensive income.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Costs comprise direct materials and, where applicable,
direct labour costs and overheads that have been incurred in
bringing the inventories to their present location and condition.
Net realisable value represents the estimated selling price less
all estimated costs of completion and costs to be incurred in
marketing, selling and distribution.
Financial instruments
The Group classifies financial instruments, or their component
parts, on initial recognition as a financial asset, a financial
liability or an equity instrument.
The Group always recognises lifetime expected credit losses for
trade receivables and amounts due on contracts with customers. The
expected credit losses on these financial assets are estimated
based on the Group's historical credit loss experience, adjusted
for facts that are specific to the debtors, general economic
conditions and an assessment of both the current as well as the
forecasted conditions at the reporting date, including time value
of money where appropriate. Lifetime expected credit losses are
losses which will result from all possible default events over the
expected life of a financial instrument.
Contract assets
Contract assets are recognised when the Group has satisfied a
performance obligation but cannot recognise a receivable until
other obligations are satisfied. Contract assets represent a right
to payment that is conditional on further performance while
receivables represent an unconditional right to payment.
Contract liabilities
Contract liabilities comprise payments in advance of revenue
recognition and revenue deferred due to contract performance
obligations not being completed. They are classified as current
liabilities if the contract performance obligations are due to be
completed within one year or less (or in the normal operating cycle
of the business if longer). If not, they are presented as
non-current liabilities. Contract liabilities are recognised
initially at fair value and subsequently at amortised cost.
Trade and other receivables
Trade and other receivables are measured at initial recognition
at fair value, and subsequently measured at amortised cost using
the effective interest method. A provision is established when
there is objective evidence that the Group will not be able to
collect all amounts due. The amount of any provision is recognised
in profit or loss.
Cash and cash equivalents
Cash and cash equivalents are recognised as financial assets.
They comprise cash held by the Group and short-term bank deposits
with an original maturity date of three months or less.
Trade payables
Trade payables are initially recognised as financial liabilities
measured at fair value, and subsequent to initial recognition are
measured at amortised cost.
Bank borrowings
Interest bearing bank loans, overdrafts and other loans are
recognised as financial liabilities and recorded at fair value, net
of direct issue costs. Finance costs are accounted for on an
amortised cost basis in the income statement using the effective
interest rate.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deduction of all its
liabilities. Equity instruments issued by the Company are recorded
at the proceeds received net of direct issue costs.
Share based payments
Where share options are awarded to employees, the fair value of
the options at the date of grant is charged to the statement of
comprehensive income on a straight-line basis over the vesting
period. Non-market vesting conditions are taken into account by
adjusting the number of options expected to vest at each statement
of financial position date so that, ultimately, the cumulative
amount recognised over the vesting period is based on the number of
options that eventually vest. Market vesting conditions are
factored into the fair value of the options granted. The cumulative
expense is not adjusted for failure to achieve a market vesting
condition.
Where share options are cancelled due to employees leaving the
Group's employment before they have vested, cumulative share based
payment expenses recognised in respect of those employees are
reversed through the statement of comprehensive income.
Where share options are replaced the fair value of the replaced
options at the date of grant continues to be recognised through the
statement of comprehensive income in addition to a charge equating
to the incremental value of the new options granted.
Fair value is calculated either using the Monte-Carlo model or
Black-Scholes model.
Pensions
The pension schemes operated by the Group are defined
contribution schemes. The pension cost charge represents the
contributions payable by the Group.
Taxation and deferred taxation
Corporation tax payable is provided on taxable profits at
prevailing rates.
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the balance sheet
differs from its tax base, except for differences arising on:
-- the initial recognition of goodwill; and
-- the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting nor taxable profit.
Recognition of deferred tax assets is restricted to those
instances where it is probable that future taxable profit will be
available against which the asset can be utilised. The amount of
the asset or liability is determined using tax rates that have been
enacted or substantively enacted by the balance sheet date and are
expected to apply when the deferred tax liabilities/(assets) are
settled/(recovered).
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- the same taxable Group company; or
-- different Group entities which intend either to settle
current tax assets and liabilities on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax assets
or liabilities are expected to be settled or recovered.
Government grants
The Group recognises government grants when it has reasonable
assurance that it will comply with the relevant conditions and the
grant will be received.
Grants related to income are recognised in the profit and loss
account in line with the recognition of the expenses that the
grants are intended to compensate. Such grants are presented as
income and are not deducted from the related expenditure.
Grants related to assets are presented as deferred income and
are amortised over the useful life of the asset.
Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Executive Directors, who are
responsible for allocating resources and assessing performance of
the operating segments.
A business segment is a group of assets and operations, engaged
in providing products or services that are subject to risks and
returns that are different from those of other operating
segments.
A geographical segment is engaged in providing products or
services within a particular economic environment that are subject
to risks and returns that are different from those of segments
operating in other economic environments. The Executive Directors
assess the performance of the operating segments based on the
measures of revenue, profit before taxation (PBT) and profit after
taxation (PAT). Central overheads are not allocated to business
segments.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
In the application of the Group's accounting policies, which are
described in note 2, the Directors are required to make judgments,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on experience and
other factors considered to be relevant. Actual results may differ
from these estimates. The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the
revision affects only that period, or in the period of the revision
and future periods if the revision affects both current and future
periods.
The following are the critical judgments and estimations that
the Directors have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised in the financial statements.
Critical accounting judgments
Revenue recognition
The revenue for the sale of hardware is recognised once the
benefits and control of these items are no longer with the Group
and are instead with the customer. Revenue is recognised under the
specifics of
IFRS 15 Bill-and-Hold arrangements for Hardware that was not
delivered to the customer by the year-end. Management exercise
judgment to consider when the risks have been transferred to the
customer.
Revenue from the sale of Let's Explore packages is recognised on
receipt of payment, which is a condition for an order to be
accepted. At each accounting date provision is made for refunds to
be made for orders received and paid for, prior to the accounting
date. This provision is based on past experience of the level of
refund applications received.
Partner revenue is accounted for on the basis that the Group
acts as the principal in the transactions between partners and
customers. Gross sales of services by partners to end customers are
reported to the Group regularly and are included within the Group's
turnover without any deductions.
Project revenue is recognised in proportion to the estimate of
project completion at period end. Estimating project completion
requires management judgment as to the percentage complete at
period end and the amount of revenue to be recognised.
Recoverability criteria for capitalisation of development
expenditure
The Group recognises costs incurred on development projects as
an intangible asset which satisfies the requirements of IAS 38. The
calculation of the costs incurred includes the percentage of time
spent by certain employees on the development project. The decision
whether to capitalise and how to determine the period of economic
benefit of a development project requires an assessment of the
commercial viability of the project and the prospect of selling the
project to new or existing customers. An assessment is made as to
the future economic benefits of the project and whether an
impairment is needed.
Impairment of goodwill
Impairment of the valuation of the goodwill relating to the
acquisition of subsidiaries is considered twice annually for
indicators of impairment to ensure that the asset is not overstated
within the financial statements. The twice annual impairment
assessment in respect of goodwill requires estimates of the value
in use (or fair value less costs to sell) of subsidiaries to which
goodwill has been allocated. As a result, estimates of future cash
flows are required, together with an appropriate discount factor
for the purpose of determining the present value of those cash
flows.
R&D tax credits
Uncertainties exist in relation to the interpretation of complex
tax legislation, changes in tax laws and the amount and timing of
future taxable income. This could necessitate future adjustments to
taxable income and expenses already recorded.
At the year-end date, tax liabilities and assets reflect
management's judgments in respect of the application of the tax
regulations, in particular the R&D tax regulations and
management's estimate of the future amounts that will be
settled.
In assessing the year-end tax liability, the Group has made a
provisional assessment as to the likely amount of development
expenditure that will be eligible under each of the HMRC's large
company and SME R&D tax credit schemes.
Critical accounting estimates
Amortisation of intangible assets
The periods of amortisation adopted to write down capitalised
intangible assets and capitalised staff costs requires judgments to
be made in respect of estimating the useful lives of the intangible
assets to determine an appropriate amortisation rate. Capitalised
development costs are being amortised on a straight-line basis over
the period when economic benefits are expected to be received,
which has been estimated at 3 years.
Depreciation
The useful economic lives of tangible fixed assets are based on
management's judgment and experience. When management identifies
that actual useful economic lives differ materially from the
estimates used to calculate deprecation, that charge is added
retrospectively. Due to the significance of tangible fixed assets
to the Group, variances between actual and estimated useful
economic lives could impact on the operating results both
positively and negatively.
Share based payments expense
Non-market performance and service conditions are included in
the assumptions about the number of options that are expected to
vest. At the end of each reporting period the Group revises its
estimates of the number of options that are expected to vest based
on the non-market vesting conditions. It recognises the impact of
the revision to the original estimates, if any, in the consolidated
statement of comprehensive income, with a corresponding adjustment
to equity. This requires a judgment as to how many options will
meet the future vesting criteria as well as the judgments required
in estimating the fair value of the options.
Where options are cancelled, followed by the grant of new
options at or close to the time of the cancellations, a key
judgment, based on the reasons for the cancellations and the new
issues, is made as to the extent to which the new options granted
are modifications of, or replacements for, the cancelled options,
or new options.
IFRS 16 discount rates
The Group estimates an appropriate discount rate based on an
incremental rate of borrowing for the calculation of the IFRS 16
right-of-use assets. This requires judgment as to an appropriate
discount rate.
4. SEGMENTAL INFORMATION
A segmental analysis of revenue and expenditure for the year
ended 31 December 2020 is below. Immotion Group Plc changed its
internal reporting during the year ended 31 December 2020 and the
segmental analysis has been prepared on a different basis to 2019.
The 2019 comparative analysis has been amended in line with the
segments adopted in 2020.
Location Home Head Total
Based Entertainment Based Entertainment office
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 2,075 669 104 2,848
Cost of sales (1,746) (573) (63) (2,382)
Administrative expenses* (1,298) (134) (1,299) (2,731)
Other operating income 484 - 91 575
Operating loss (485) (38) (1,167) (1,690)
Amortisation (442) (81) (196) (719)
Depreciation (1,593) - (158) (1,751)
Impairment (37) - (216) (253)
Loss on disposal (35) - - (35)
Restructuring costs (77) - (19) (96)
Share based payments - - (194) (194)
Finance costs (50) - (32) (82)
Finance income - - 2 2
Taxation - - 86 86
------------- ------------- ------------- -------------
Loss for the year (2,719) (119) (1,894) (4,732)
======= ======= ======= =======
*Administrative expenses exclude depreciation, amortisation,
impairment, loss on disposal, restructuring costs and share based
payments.
All operations are continuing.
A segmental analysis of revenue and expenditure for the year
ended 31 December 2019 is below:
LBE HBE Head Total Dis-continued Total
office continuing operations
operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 2,932 - 674 3,606 18 3,624
Cost of sales (2,157) - (352) (2,509) 18 (2,491)
Administrative
expenses* (1,554) - (2,037) (3,591) - (3,591)
Operating
(loss)/profit (779) - (1,715) (2,494) 36 (2,458)
Amortisation (143) - (418) (561) - (561)
Depreciation (1,038) - (266) (1,304) - (1,304)
Impairment - - (458) (458) - (458)
Loss on disposal (18) - 6 (12) - (12)
Restructuring
costs (109) - (318) (427) (4) (431)
Share based
payments - - (171) (171) - (171)
Finance costs - - (108) (108) - (108)
Finance income - - 4 4 - 4
Tax - - 84 84 - 84
------------- ------------- ------------- ------------- ------------- -------------
(Loss)/Profit
for the year (2,087) - (3,360) (5,447) 32 (5,415)
======= ======= ======= ======= ======= =======
*Administrative expenses exclude depreciation, amortisation,
impairment, loss on disposal, restructuring costs and share based
payments.
The segmental analysis above reflects the parameters applied by
the Board when considering the Group's monthly management
accounts.
The table below splits revenue, assets and capital expenditure
by location:
External revenue by location External revenue by
of customer location of customer
31 December 31 December 31 December 31 December
2020 2020 2019 2019
Continuing Discontinued Continuing Discontinued
GBP'000 GBP'000 GBP'000 GBP'000
United Kingdom 1,395 - 1,599 -
United States of
America 1,176 - 1,031 18
Australia 124 - 187 -
United Arab Emirates 38 - 55 -
China 35 - 156 -
Saudi Arabia 35 - 62 -
Netherlands 27 - 422 -
Germany 13 - 83 -
France 5 - 5 -
Japan - - 5 -
Estonia - - 1 -
------------- ------------- ------------- -------------
2,848 - 3,606 18
====== ====== ====== ======
Net tangible capital
Total assets by location expenditure by location
31 December 31 December 31 December 31 December
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
United Kingdom 6,901 6,437 266 1,182
United States of
America 1,542 1,698 813 1,358
United Arab Emirates 56 95 6 83
Saudi Arabia 50 82 - 96
Australia 35 52 8 73
Germany 22 43 - 65
China 9 14 - 17
France 6 8 2 9
---------- ------------- ------------- -------------
8,621 8,429 1,095 2,883
====== ====== ====== ======
5. EARNINGS PER SHARE
2020 2019
GBP'000 GBP'000
The earnings per share is based on
the following:
Continuing post tax loss attributable
to shareholders (4,732) (5,447)
Discontinued post tax loss attributable
to shareholders - 32
========== ==========
Basic weighted average number of shares 356,941,188 255,564,704
Diluted weighted average number of
shares 356,941,188 255,564,704
========== ==========
GBP0.01 GBP0.01
Basic loss per share (1.33) (2.12)
Diluted loss per share (1.33) (2.12)
========== ==========
Continuing loss per share (1.33) (2.13)
Continuing diluted loss per share (1.33) (2.13)
========== ==========
Discontinued earnings per share - 0.01
Discontinued diluted earnings per
share - 0.01
========== ==========
Adjusted loss: continuing operations (4,189) (4,391)
Adjusted earnings: discontinued operations - 36
========== ==========
Basic weighted average number of shares 356,941,188 2 55,564,704
Diluted weighted average number of
shares 356,941,188 265,290,288
========== ==========
GBP0.01 GBP0.01
Basic adjusted loss per share (1.17) (1.72)
Diluted adjusted loss per share (1.17) (1 . 72)
========== ==========
Basic adjusted loss per share: continuing
operations (1.17) (1.73)
Diluted adjusted loss per share: continuing
operations (1.17) (1.73)
========== ==========
Basic adjusted earnings per share:
discontinued operations - 0.01
Diluted adjusted earnings per share:
discontinued operations - 0.01
========== ==========
Earnings/(Loss) per ordinary share has been calculated using the
weighted average number of shares in issue during the relevant
financial periods. IAS 33 requires presentation of diluted EPS when
a company could be called upon to issue shares that would decrease
earnings per share or increase the loss per share. The exercise
price of the outstanding share options is significantly more than
the average and closing share price. Therefore, as per IAS33 the
potential ordinary shares are disregarded in the calculation of
diluted EPS.
Adjusted loss is the loss after taxation, adjusted for share
based payments, impairment charges and restructuring costs.
6. PROPERTY, PLANT AND EQUIPMENT
Fixtures, IFRS 16 Right-of-Use Total
Leasehold Fittings Asset
Property & Equipment
Cost GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2019 405 1,579 1,079 3,063
Additions 159 1,504 - 1,663
Transfers from inventory - 147 - 147
Transfers to inventory - (6) - (6)
Disposals (17) (38) - (55)
Foreign exchange (1) (21) - (22)
---------- ----------- -------------- ---------------
At 31 December 2019 546 3,165 1,079 4,790
---------- ------------ -------------- ---------------
At 1 January 2020 546 3,165 1,079 4,790
Additions 50 1,019 26 1,095
Disposals (123) (53) (284) (460)
Impairment cost (94) - - (94)
Foreign exchange 1 (39) (15) (53)
--------- -------------- -------------- ---------------
At 31 December 2020 380 4,092 806 5,278
--------- -------------- -------------- ---------------
Accumulated depreciation
At 1 January 2019 65 345 - 410
Depreciation charge
on owned assets 146 738 - 884
Depreciation charge
on financed assets - 71 349 420
Transfers to inventory - 2 - 2
Disposals (5) (26) - (31)
Foreign exchange adjustment (1) (19) (7) (27)
----------- ----------- -------------- ---------------
At 31 December 2019 205 1,111 342 1,658
----------- ----------- -------------- ---------------
At 1 January 2020 205 1,111 342 1,658
Depreciation on owned
assets 156 1,189 - 1,345
Depreciation on financed
assets - 66 340 406
Disposals (71) (29) (166) (266)
Impairment depreciation (64) - - (64)
Foreign exchange - (45) (16) (61)
------------- -------------- -------------- ---------------
At 31 December 2020 226 2,292 500 3,018
------------- -------------- -------------- ---------------
Net Book Value
At 31 December 2020 154 1,800 306 2,260
===== ===== ===== ======
At 31 December 2019 341 2,054 737 3,132
===== ===== ===== ======
At 31 December 2018 340 1,234 - 1,574
===== ===== ===== ======
The net book value of assets held under finance leases or hire
purchase contracts, included above, is GBP306k (2019: GBP803k)
relating to VR Hardware and property leases. The depreciation
charge on these assets was GBP406k (2019: GBP420k).
The net book value of owned and leased assets included in
property, plant and equipment in the Statement of Financial
Position is as follows:
2020 2019
GBP'000 GBP'000
Tangible fixed assets owned 1,954 2,329
Tangible fixed assets subject to hire purchase
and finance lease arrangements 306 803
----------- ------------
2,260 3,132
===== ======
Information about the leased assets is summarised below:
2020 2019
GBP'000 GBP'000
Equipment - 66
IFRS 16 leased property 306 737
--------- ------------
306 803
===== ======
The depreciation charge in respect of the leased assets is as
follows:
2020 2019
GBP'000 GBP'000
Equipment 66 71
IFRS 16 leased property 340 349
----------- ------------
406 420
===== ======
7. INTANGIBLE ASSETS
Development Goodwill Other Total
Costs Arising Intangible
on
Consolidation Assets
Cost GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2019 1,506 2,438 504 4,448
Additions 970 - 35 1,005
Impairment (494) - - (494)
Foreign exchange (9) - - (9)
------------- ------------- ------------ ---------------
At 31 December 2019 1,973 2,438 539 4,950
------------- ------------ ------------ ---------------
At 1 January 2020 1,973 2,438 539 4,950
Additions 539 - 6 545
Impairment (332) - - (332)
Foreign exchange (9) - - (9)
------------- ------------- ------------ ---------------
At 31 December 2020 2,171 2,438 545 5,154
------------- ------------ ------------ ---------------
Accumulated amortisation
At 1 January 2019 94 - 316 410
Amortisation 455 - 106 561
Impairment (36) - - (36)
Foreign exchange (5) - - (5)
------------ ------------ ------------ ---------------
At 31 December 2019 508 - 422 930
------------- ------------- ------------ ---------------
At 1 January 2020 508 - 422 930
Amortisation 614 - 105 719
Impairment (109) - - (109)
Foreign exchange (11) - - (11)
------------ ----------- ------------ ---------------
At 31 December 2020 1,002 - 527 1,529
------------ ------------ ------------ ---------------
Net Book Value
At 31 December 2020 1,169 2,438 18 3,625
====== ====== ====== =======
At 31 December 2019 1,465 2,438 117 4,020
====== ====== ====== =======
At 31 December 2018 2 2,438 455 2,895
====== ====== ====== =======
Other intangible assets comprise website development and
trademark costs. Amortisation is charged over periods ranging
between 2 and 10 years.
Goodwill and impairment
The carrying value of goodwill in respect of 31 December 31 December
each entity acquired is as follows: 2020 2019
GBP'000 GBP'000
Immotion Studios Limited (previously Studio
Liddell Limited) 1,252 1,252
C.2K Entertainment Inc. 748 748
Immotion Limited (previously VR Acquisition
(Holdings) Limited) 438 438
------------- -------------
2,438 2,438
====== ======
The Group is obliged to test goodwill annually for impairment,
or more frequently if there are indications that goodwill and
indefinite life intangibles might be impaired, due to the goodwill
deemed to have an indefinite useful life. In order to perform this
test, management is required to compare the carrying value of the
relevant cash generating unit ("CGU") including the goodwill with
its recoverable amount. The recoverable amount of the CGU is
determined from a value in use calculation. It is considered that
any reasonably possible changes in the key assumptions would not
result in an impairment of the present carrying value of the
goodwill.
Immotion Studios Limited, C.2K Entertainment Inc. and Immotion
Limited were acquired in relation to the Location Based
Entertainment segment. The Location Based Entertainment segment has
been assessed as a CGU when conducting impairment reviews.
Location Based Entertainment
The recoverable amount of the Location Based Entertainment
segment has been determined from a review of the current and
anticipated performance. In preparing these projections, a discount
rate of 10% (based on the Group's weighted average cost of capital)
has been applied to forecast earnings for 2021, 2022 and 2023. The
discount rate was based on the Company's cost of capital as
estimated by management.
8. SHARE CAPITAL
31 December 31 December
2020 2019
GBP'000 GBP'000
Called up share capital
Allotted, called up and fully paid
409,538,083 Ordinary shares of 0.040108663
pence each 164 115
(2019: 286,165,544 ordinary shares)
====== ======
Shares issued during the year ended 31 December 2020:
Date Description No. of shares Price per Gross share Cash received
share value
GBP GBP GBP
Placing on
12 February 2020 AIM 39,310,339 0.0725 2,850,000 2,850,000
Placing on
22 May 2020 AIM 54,062,200 0.0250 1,351,555 1,351,555
Placing on
25 November 2020 AIM 30,000,000 0.0400 1,200,000 1,200,000
Total 123,372,539 5,401,555 5,401,555
At 31 December
2019 286,165,544 16,289,011 13,073,887
At 31 December
2020 409,538,083 16,289,011 13,073,887
Cash received does not include costs relating to share issues.
In the year to 31 December 2020, costs of GBP389k were incurred
relating to share issues and these costs were charged against share
premium.
9. POST BALANCE SHEET EVENTS
On 31 March 2021, the Company issued 6,000,000 ordinary shares
at a price of 5 pence each following an approach from an existing
institutional investor, raising GBP300,000 gross of expenses.
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END
FR FFFELSLITFIL
(END) Dow Jones Newswires
April 29, 2021 02:00 ET (06:00 GMT)
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