TIDMIMMO

RNS Number : 1353N

Immotion Group PLC

28 September 2021

28 September 2021

Immotion Group plc

("Immotion Group", the "Company" or the "Group")

Interim Results

Immotion Group plc (AIM:IMMO), the immersive entertainment group, is pleased to announce its interim results for the six months to 30 June 2021.

Highlights

   --    H1 2021 revenue GBP2.8m 
   --    Near breakeven result in H1 - EBITDA loss GBP31k 

-- Outstanding performance in Q3 - revenue circa GBP3m, estimated EBITDA circa GBP0.6m, adjusted PBT breakeven [1]

   --    Six consecutive months of underlying EBITDA profit (April-September) 
   --    Record Group results for June, July and August 
   --    H2 expected to be strongly cash generative.  Cash on hand GBP0.9m (30 June 2021: GBP0.6m) 
   --    Location Based Entertainment ("LBE") division - almost all sites now open and trading 
   --    H2 seeing growing revenue and contributions from Home Based Entertainment ("HBE") and Uvisan 
   --    New LBE zoo offering in production for spring 2022 launch 
   --    New HBE product - "Vodiac" - to be beta launched in Q4 2021 
   --    Uvisan received first significant NHS order for 64 cabinets 

Robin Miller, Chairman of Immotion Group said:

"Our H1 result is very encouraging, particularly as conditions in the early part of the period remained challenging to say the least. April saw us reach underlying EBITDA profit for the first time, and we have maintained this performance every month since. Our core Location Based Entertainment ("LBE") business has recovered strongly and enjoyed a buoyant summer period.

Following this, we have seen a very strong start to H2 and, accordingly, we expect Q3 to deliver overall Group revenue of circa GBP3m and EBITDA of GBP0.6m. Momentum is growing in our HBE and Uvisan businesses and this augurs well for Q4 when we believe, based on current performance, they will in aggregate deliver significant revenue, margin and net cash inflow.

Our LBE business will continue to focus on larger installations while creating new content to launch into the global zoo market - which we believe to be considerably larger than the aquarium market - in the early part of next year.

HBE, while continuing to build momentum with the "Let's Explore Oceans" range of content, will also be launching an exciting new product, "Vodiac", offering a much broader and deeper choice of channels.

Securing our first significant order for the NHS was a major milestone for Uvisan, our UV-C disinfection business. This, plus the ongoing pandemic and resultant heightened profile of workplace safety and hygiene, gives us confidence that demand for these products is going to be with us for the foreseeable future and provides a positive backdrop for growth.

The creation of the HBE and Uvisan divisions has provided us with two further significant growth opportunities and the early signs are very promising. This is a real testament to the team, its entrepreneurial spirit and determination not just to survive but to prosper.

In conclusion, we have confidence that there are plentiful growth opportunities ahead."

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014 ("MAR") as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

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)              Ben Good 
 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) 
 

Overview

We are delighted with the performance of our Group in H1. Despite a very challenging start to the year, the Group produced its best ever result with a small overall EBITDA loss for the first half of GBP31k on revenue of GBP2.8m.

This was an excellent outcome given that trading conditions in the first three months of the period were very challenging as COVID-19 restrictions persisted and many sites remained closed or severely impacted. In fact, the Group recorded an EBITDA loss of GBP0.2m in the first quarter.

We were delighted to see the Group finally reach underlying monthly EBITDA profit in each of the three months of the second quarter - this is a real landmark for the Group, emerging from the long periods of lockdowns to clearly demonstrate its potential.

Cost control remained a key focus and we implemented a small number of redundancies and have taken steps to reduce our occupancy costs. Administrative expenses (excluding depreciation, amortisation, impairment, share-based payments, profit/loss on asset disposals, restructuring costs and other exceptional items) fell to GBP1.4m (H1 2020: GBP1.5m), being an average of GBP235k per month. We expect administrative expenses to remain around this level but there may be, as would be expected, some degree of variable cost fluctuation as activity levels increase across the three businesses (e.g. travel and trade shows).

The difference between EBITDA and operating cash flow was almost entirely a result of total net working capital outflows of GBP0.8m in the period. This related in the main to an increase in trade and other receivables of GBP0.6m in the period that occurred naturally as the LBE business activity increased dramatically in Q2. Additionally, there was an overall reduction of trade and other payables of GBP0.2m as we caught up on liabilities that had built up during the lockdown period last year, including paying off all remaining overdue amounts to HMRC.

Inventories at period end were GBP163k (31 December 2020: GBP152k), primarily comprised of HBE stock held. In addition, the H1 closing balance sheet includes net HBE stock prepayments of GBP227k (comprised of stock in production/transit, less corresponding payments yet to be made). Having planned ahead, we should now be very well placed to capitalise on the key Q4 period.

Post period-end trading

The second half has begun very strongly with record results in July and August. September will be another strong month and, with the contribution of HBE and Uvisan now growing strongly, we expect overall Group revenue for Q3 to be circa GBP3.0m and underlying EBITDA to be circa GBP0.6m.

 
                   Q1 2021     Q2 2021    Q3 2021        YTD 
                 Unaudited   Unaudited   Estimate   Estimate 
                      GBPm        GBPm       GBPm       GBPm 
 
 Revenue               0.8         2.0        3.0        5.8 
 
 EBITDA              (0.2)         0.2        0.6        0.6 
 
 Adjusted PBT 
  [2]                (0.8)       (0.3)        0.0      (1.1) 
 

Despite the LBE division moving into its quieter period, we are confident of a profitable fourth quarter for the Group. The HBE division has seen a strong surge in revenue and margin in September and it will have plenty of stock at its disposal to deliver significant revenue, margin and cash inflow in Q4 if this trend continues. Uvisan has seen a growing order book from its reseller and distributor network and this is translating into growing revenue and contribution.

We expect H2 to be strongly cash generative, providing us with the flexibility to bring forward any stock or equipment orders to address international shipping concerns.

The Group currently has cash of GBP0.9m, up from GBP0.6m as at 30 June 2021, which reflects the extremely strong trading of the LBE business during the summer months.

We present below our review of the period and prospects for each division and the Group.

Location Based Entertainment ("LBE")

The Group outcome in H1 was driven in the main by the recovery of the LBE Business. We saw monthly revenue in this division grow almost six-fold from January to June as sites reopened and trading conditions improved.

Total revenue in this division in the period was GBP2.3m and gross profit was GBP1.0m (being total revenue less partner share and other direct costs of sales, including rent and payroll in our ImmotionVR sites).

We believe the result is a strong endorsement of the partner model and the substantial investment made pre-pandemic to establish and grow it.

Our current portfolio is presented in the table below. I am pleased to report that almost all of our locations have now re-opened and are trading, though we expect our Australian installations in Sydney (two sites) and Melbourne (one site) to remain closed for some time to come as lockdown continues in the states of New South Wales and Victoria.

 
                         Total               USA                 UK                ROW 
                    Sites   Headsets   Sites   Headsets   Sites   Headsets   Sites   Headsets 
 At 1 January 
  2021               48       345       24       163       14       121       10        61 
 
 Installed 
  in 2021             7        70        4        52        2        14        1        4 
 
 Uninstalled 
  in 2021            (4)      (27)      (1)      (2)       (2)      (21)      (1)      (4) 
 
 At 27 September 
  2021               51       388       27       213       14       114       10        61 
 

In the period we opened seven new locations (64 headsets) including the 22-headset installation at Clearwater Marine Aquarium, Florida which opened in March 2021 and has traded very well throughout the summer. We were pleased that the agreement in relation to Clearwater has now been extended through to March 2023.

The current operational status of our installed base is as follows:

 
                           Total               USA                 UK                ROW 
                      Sites   Headsets   Sites   Headsets   Sites   Headsets   Sites   Headsets 
 At 27 September 
  2021                 51       388       27       213       14       114       10        61 
 
 Fully operational     44       358       24       203       14       114        6        41 
 
 Site closed            3        14        -        -         -        -         3        14 
 
 Site open 
  but installation 
  not operating         4        16        3        10        -        -         1        6 
 

Throughout the period we suffered reduced capacity at Shark Reef Aquarium at Mandalay Bay, our flagship Las Vegas installation, due to local restrictions but these were finally removed from 1 July 2021 and this has had a significant positive impact on subsequent trading.

Since the period end, we have seen very strong trading in our LBE business in July and August with revenue in excess of GBP900k in both months, though we will see the significant seasonal slow-down kick in from September as school holidays have now ended in the USA and UK.

As can be seen from the summer period, our LBE business has now reached a tipping point where its contribution can generate significant overall monthly profit for the Group in the summer months. Even in the quieter months, we believe it should at its current scale, cover most if not all of the Group's fixed costs of operation. This combined with the busier period for HBE, as well as growing sales in Uvisan gives us a well-balanced portfolio of businesses.

The costs of operation in the LBE division should remain relatively stable with almost all gross profit from new sites now dropping straight to the EBITDA line. Even with our conservative depreciation policies on plant and equipment (we believe lifetimes of motion platforms are considerably longer than three years), new sites should add strongly to the PBT line.

We were, as previously advised, deliberately cautious this year in terms of new site openings. However, we are seeing healthy levels of enquiries from the aquarium sector, where we now enjoy a strong reputation.

We intend to launch in the zoo market in spring 2022. We have been filming new immersive, 360-degree, live action endangered species content in Africa, which we expect to unveil in Q4, when we also hope to announce initial partner zoos. We would expect installations to begin in time for spring 2022.

We believe the zoo market to be both global and several times the size of the aquarium sector, sharing the features that attracted us to the aquarium market: large numbers of high traffic, high quality potential partners, on a global basis.

For both aquariums and zoos, our focus will be where possible to open larger formats based on the know-how we have developed at Mandalay Bay, Clearwater Marine Aquarium and Sea Life Orlando. Where size allows these new installations will take the form of mini-theatres complete with pre-show areas. We want these to be exciting new core attractions for the partner sites, as well as delivering significant revenue for both parties.

In short, we believe there are plentiful growth opportunities for our LBE business which we are well placed to capitalise upon.

Home Based Entertainment ("HBE")

We launched our HBE division with sales of Let's Explore Oceans ("LEO") commencing in mid-October 2020, selling only in the UK market. In Q4 2020, we sold circa 11,000 LEO packs and recorded revenue of circa GBP0.7m.

We always expected the LEO product to be highly seasonal, so H1 2021 was, as expected, a quieter period. For a gift type product at its price point the LEO pack was always likely to see a drop in consumer intent to purchase post-Christmas.

Accordingly, in H1 we have sought to expand the global marketing and sales of the product, delivering to a number of key countries, including USA, Canada, Australia, as well as the UK, recording revenue of GBP0.3m (3,000 packs).

Though it resulted in a loss after product, marketing and fulfilment costs of circa GBP0.1m, this period has given us an enormous amount of learning ahead of the key Q4 period for this year and enabled us to identify the most lucrative potential global markets for Q4 2021 as well as continue development of additional experiences.

Our focus for the remainder of this year will be USA, Canada, UK and Australia. With stock on hand, and stock already purchased for delivery in coming weeks, we have the potential in Q4 to sell circa 28,000 units. Having planned forward we have secured stock at substantially lower unit cost than 2020, so that even allowing for increased shipping costs in the current shipping crisis, we are well placed.

To ensure we can supply our target markets as effectively as possible, we have established third party logistics and fulfilment relationships in the UK, USA and China and we also began trading on Amazon in both the USA and UK and we are seeing growing volumes through these channels.

Customer acquisition remains our most material cost of sale and we expect this to fall in the Q4 period when demand is strongest and customer intent high. Our key marketing channels are social media sites, which allows us to access a huge addressable market very rapidly. Amazon is obviously a key channel in its own right which complements our social media activity.

We have seen a substantial uptick in the HBE business post period end, with aggregate revenue for July and August of GBP253k and improving, positive margins (after product cost, customer acquisition and fulfilment). September to date has been very strong with revenue on target to end the month at circa GBP300k, again with strong margins.

This augurs well for the balance of the year. As noted above, between stock on hand and orders placed we have circa 28,000 pieces of LEO stock, with substantial deposits having already been paid on un-delivered stock. If the metrics seen in the last few weeks continue - with average order values of in excess of GBP80 and strong margins per unit being achieved - we should see very substantial revenue, margin and net cash inflow in Q4 from this division.

As far as 2022 is concerned, we will be continuing to finesse the LEO product, whilst also launching a lower price point product, "Vodiac". The new offering will boast a number of VR channels allowing us to offer a range of VR video content, both on a free and rental basis. The broadening of content, verticals and lower price point should allow us to expand significantly the potential audience. The new content, which will include our "Dinosaur Safari", will also be made available to all existing LEO users and in good time for new users opening their parcels, which will likely be concentrated around the Christmas and festive holiday season.

Uvisan

This is Uvisan's first full year of trading and H1 saw it make good progress, delivering a small but profitable contribution.

The versatility of our UV-C cabinet meant we supplied a number of sectors including education (with particular success with universities), leisure, media and healthcare, with some high-profile counterparties, including our first supplies into the NHS.

It is pleasing to note that our UV-C disinfection cabinet meets the cleaning criteria of both Microsoft (HoloLens) and Hewlett Packard for their range of VR headsets (we are specifically recommended by HP as one of only two recommended UV-C disinfection products for their headsets).

The emphasis in the period for Uvisan was very much on growing the reseller and distributor base and we are pleased to now have a network of 10 active resellers which, we believe, will benefit us in terms of volume moving forwards. We signed an exclusive distribution agreement for Australia and New Zealand and are pleased to report that the first container of product will be arriving there imminently. We continue to sign new agreements (including our first agreements for the USA) with partners who we believe have deep knowledge of, and customer relationships in, their vertical channels.

The global installed base of headsets is forecast to grow massively, particularly in training and education settings, and we intend to be a product of choice for businesses and organisations wanting hassle free and safe disinfection of their valuable headset fleets.

The second half will see a substantial increase in revenue as cabinet orders on hand from the reseller network begin to be fulfilled.

We chose to delay the launch of "Cleanroom by Uvisan" pending an official launch at a number of major healthcare related conferences which we are attending in the coming months.

Additionally, we are complementing the product range so that we can cater to a wider range of needs and budgets. We are looking to include UV-C air filtering equipment and static light arrays in our range, which we believe will give us a wider addressable audience and better equip us to compete for large healthcare and other public sector opportunities.

The objective in the coming 18 months is to grow Uvisan into a specialist in UV-C based disinfection rather than an opportunistic reseller of the cabinets. We believe that the heightened focus on disinfection as a result of the continuing COVID-19 pandemic and the growth of VR and AR headset use provide a very supportive backdrop.

Outlook

Whilst not beyond doubt, it does now appear that the likelihood of protracted lockdowns because of the COVID-19 pandemic has diminished. The period since March 2021 has demonstrated the true potential of our LBE business and we will look to grow this significantly in 2022 as we launch our new zoo product and increasingly seek to focus on larger 'dial-moving' sites.

We believe there are huge growth opportunities in front of us in both the aquarium and zoo sectors and with a more stable environment we will look to accelerate growth as we move into 2022.

In our HBE and Uvisan businesses we have the potential for two further high growth businesses which we believe can contribute significantly to the Group and complement our LBE division.

Against this backdrop we currently feel very optimistic about our prospects for the remainder of 2021 and beyond.

IMMOTION GROUP PLC

INTERIM CONSOLIDATED INCOME STATEMENT

for the six months ended 30 June 2021

 
                                                   Unaudited    Unaudited       Audited 
                                          Notes   Six months   Six months     12 months 
                                                          to           to            to 
                                                     30 June      30 June   31 December 
                                                          21           20            20 
                                                     GBP'000      GBP'000       GBP'000 
 
 Revenue                                      3        2,760          818         2,848 
 
 Cost of sales                                       (1,781)        (789)       (2,382) 
                                                     _______      _______       _______ 
 Gross profit                                            979           29           466 
 
 Other income                                 4          399          308           575 
 
 Administrative expenses                             (2,779)      (2,867)       (5,779) 
                                                     _______      _______       _______ 
 Operating loss                                      (1,401)      (2,530)       (4,738) 
 
 Memorandum: 
  Adjusted EBITDA                                       (31)      (1,212)       (1,690) 
 Amortisation                                          (313)        (352)         (719) 
 Depreciation                                          (787)        (851)       (1,751) 
  Share based payments                                 (291)         (64)         (194) 
 Impairment of tangible and intangible 
  assets                                                 (1)            -         (253) 
 Profit / (loss) on disposal 
  of fixed assets                                         11         (24)          (35) 
 Restructuring costs                        5           (42)         (27)          (96) 
 Exceptional income                         6             53            -             - 
                                                      ______       ______        ______ 
 Loss from operations                                (1,401)      (2,530)       (4,738) 
---------------------------------------  ------  -----------  -----------  ------------ 
 
 Finance costs                                          (26)         (45)          (82) 
  Finance income                                           -            1             2 
                                                      ______       ______        ______ 
 Loss before taxation                                (1,427)      (2,574)       (4,818) 
 
 Tax credit                                               12           58            86 
                                                      ______       ______        ______ 
 Loss for the period after taxation                  (1,415)      (2,516)       (4,732) 
                                                    ========     ========      ======== 
 Other comprehensive income / 
  (expense) for the period 
 
 Profit / (loss) on translation 
  of subsidiary                                         (20)           67          (35) 
 
 Total comprehensive expense 
  for the period                                     (1,435)      (2,449)       (4,767) 
                                                    ========     ========      ======== 
 
 Earnings per share                           7      GBP0.01      GBP0.01       GBP0.01 
 Basic EPS                                            (0.34)       (0.77)        (1.33) 
 Diluted EPS                                          (0.34)       (0.77)        (1.33) 
 

IMMOTION GROUP PLC

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 June 2021

(unaudited)

 
 
                                                                      Foreign 
                                     Share      Share    Retained    exchange       Total 
                                   capital    premium    earnings     reserve      equity 
                                   GBP'000    GBP'000     GBP'000     GBP'000     GBP'000 
 
 Balance at 31 December 
  2019                                 115     15,310     (9,105)        (45)       6,275 
 
 Total comprehensive expense 
  for the period                         -          -     (2,516)           -     (2,516) 
 
 Currency translation 
  of overseas subsidiary                 -          -           -          67          67 
 Issue of new shares                    37      4,164           -           -       4,201 
 Issue costs deducted 
  from equity                            -      (328)           -           -       (328) 
                                         - 
 Share based payment expense             -          -          64           -          64 
                                     _____      _____       _____       _____       _____ 
 Balance at 30 June 2020               152     19,146    (11,557)          22       7,763 
                                     _____      _____       _____       _____       _____ 
 
 Total comprehensive expense 
  for the period                         -          -     (2,216)           -     (2,216) 
 
 Issue of new shares                    12      1,188           -           -       1,200 
 Issue costs deducted 
  from equity                            -       (61)           -           -        (61) 
 
 Share based payment expense             -          -         130           -         130 
 
   Currency translation 
   of overseas subsidiary                -          -           -       (102)       (102) 
                                     _____      _____       _____       _____       _____ 
 Balance at 31 December 
  2020                                 164     20,273    (13,643)        (80)       6,714 
                                     _____      _____       _____       _____       _____ 
 
   Total comprehensive expense 
   for the period                        -          -     (1,415)           -     (1,415) 
 
 Currency translation 
  of overseas subsidiary                 -          -           -        (20)        (20) 
 
 Issue of new shares                     3        297           -           -         300 
 
 Issue costs deducted 
  from equity                            -       (14)           -           -        (14) 
 
 Share based payment expense             -          -         291           -         291 
 
                                     _____      _____       _____       _____       _____ 
 Balance at 30 June 2021               167     20,556    (14,767)       (100)       5,856 
                                     _____      _____       _____       _____       _____ 
 
 

IMMOTION GROUP PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 30 June 2021

 
                                               Unaudited      Unaudited       Audited 
                                    Notes   30 June 2021   30 June 2020   31 Dec 2020 
                                                 GBP'000        GBP'000       GBP'000 
 ASSETS 
 Non-current assets 
 Property, plant and equipment                     1,444          2,638         1,954 
 Right of use assets                                 207            580           306 
 Intangible assets                    8            3,448          3,971         3,625 
                                                  ______         ______        ______ 
 Total non-current assets                          5,099          7,189         5,885 
                                                  ______         ______        ______ 
 
 Current assets 
  Inventories                                        163              -           152 
 Trade and other receivables          9            1,412            577           829 
 Contract assets                                      91             91            91 
 Cash and cash equivalents                           629          1,811         1,664 
                                                  ______         ______        ______ 
 Total current assets                              2,295          2,479         2,736 
                                                  ______         ______        ______ 
 Total assets                                      7,394          9,668         8,621 
                                                  ______         ______        ______ 
 LIABILITIES 
 Current liabilities 
 Trade and other payables            10            (959)          (947)       (1,153) 
 Finance leases                                    (222)          (340)         (231) 
 Loans                                             (140)          (180)         (175) 
 Deferred tax                                          -            (7)             - 
 Contract liabilities                                (6)           (12)          (12) 
                                                 _______        _______       _______ 
 Total current liabilities                       (1,327)        (1,486)       (1,571) 
                                                 _______        _______       _______ 
 Total current net assets                            968            993         1,165 
 
 Non-current liabilities 
 Loans                                             (153)           (95)         (160) 
  Finance leases                                    (58)          (324)         (176) 
  Other payables                                       -              -             - 
                                                 _______        _______       _______ 
 Total non-current liabilities                     (211)          (419)         (336) 
 
                                                 _______        _______       _______ 
 TOTAL NET ASSETS                                  5,856          7,763         6,714 
                                                 _______        _______       _______ 
 
 CAPITAL AND RESERVES 
  ATTRIBUTABLE TO EQUITY HOLDERS 
  OF THE PARENT 
 Issued share capital                11              167            152           164 
 Share premium account                            20,556         19,146        20,273 
 Foreign exchange reserve                          (100)             22          (80) 
 Retained earnings                              (14,767)       (11,557)      (13,643) 
                                                 _______        _______       _______ 
                                                   5,856          7,763         6,714 
                                                 _______        _______       _______ 
 

IMMOTION GROUP PLC

CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 30 June 2021

 
                                                     Unaudited               Unaudited            Audited 
                                                    Six months              Six months          12 months 
                                                            to                      to                 to 
                                                  30 June 2021            30 June 2020        31 Dec 2020 
                                                       GBP'000                 GBP'000            GBP'000 
 OPERATING ACTIVITIES 
 Loss before tax                                       (1,427)                 (2,574)            (4,818) 
 
 Adjustments for: 
 Share based payments                                      291                      64                194 
 Depreciation                                              787                     851              1,751 
 (Profit) / loss on disposal of fixed 
  assets                                                  (11)                      24                 35 
 Amortisation                                              313                     352                719 
 Impairment of intangible assets                             1                       -                253 
 Finance costs                                              26                      45                 82 
 Finance income                                              -                     (1)                (2) 
 Foreign exchange on retranslation 
  of fixed assets                                         (25)                   (101)               (72) 
 Foreign exchange (loss) / gain                           (20)                      67               (35) 
 Taxation (paid) / refunded                                (3)                       -                 73 
                                                         _____                   _____              _____ 
 Operating loss before changes in 
  working capital and provisions                          (68)                 (1,273)            (1,820) 
 
 Increase in stocks                                       (10)                       -              (152) 
 (Increase) / decrease in trade and 
  other receivables                                      (569)                     173              (132) 
 Increase / (decrease) in trade and 
  other payables                                         (200)                   (113)                 92 
                                                         _____                   _____              _____ 
 Cash used in operating activities                       (847)                 (1,213)            (2,012) 
                                                         _____                   _____              _____ 
 INVESTING ACTIVITIES 
 Purchase of property, plant and equipment               (217)                   (931)            (1,069) 
 Purchase of intangible assets                           (138)                   (288)              (545) 
 Disposals of property, plant and 
  equipment                                                 27                      54                159 
 Foreign exchange on retranslation 
  of fixed assets                                           50                       -                 62 
                                                         _____                   _____              _____ 
 Cash consumed by investing activities                   (278)                 (1,165)            (1,393) 
                                                         _____                   _____              _____ 
 FINANCING ACTIVITIES 
 Finance costs                                            (26)           (45)                        (82) 
 Finance income                                              -                       1                  2 
 New Loans and finance leases                              116            174                         302 
 Loan repayments                                         (154)                    (55)               (95) 
 Finance lease repayments                                (124)                   (233)              (520) 
 Foreign exchange on retranslation 
  of financing                                             (8)                       -               (24) 
 Issue of ordinary shares                                  300                   4,201              5,401 
 Costs on issue of shares                                 (14)                   (328)              (389) 
                                                         _____                   _____              _____ 
   Cash generated by financing activities                   90                   3,715              4,595 
 
 
 (DECREASE) / INCREASE IN CASH AND 
  CASH                                                 (1,035)                   1,337              1,190 
  EQUIVALENTS                                  ---------------         ---------------    --------------- 
 
 Cash and cash equivalents brought 
  forward                                                1,664                     474                474 
                                                         _____                   _____              _____ 
 CASH AND CASH EQUIVALENTS CARRIED 
  FORWARD                                                  629                   1,811              1,664 
                                                         _____                   _____              _____ 
 
 

IMMOTION GROUP PLC

NOTES TO THE INTERIM REPORT

for the six months ended 30 June 2021

   1.     Corporate information 

The interim consolidated financial statements of the Group for the period ended 30 June 2021 were authorised for issue in accordance with a resolution of the directors on 27 September 2021. Immotion Group plc ("the Company") is a Public Limited Company quoted on AIM, incorporated in England and Wales. The interim consolidated financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.

   2.     Statement of Accounting policies 
   2.1   Basis of Preparation 

The entities consolidated in the half year financial statements of the Company for the six months to 30 June 2021 comprise the Company and its subsidiaries (together referred to as "the Group").

The interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual audited consolidated financial statements for the year ended 31 December 2020.

The directors are satisfied that, at the time of approving the consolidated interim financial statements, it is appropriate to adopt a going concern basis in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRS") as adopted by the European Union.

   2.2   Accounting Policies 

The interim results announcement has been prepared in accordance with IFRS, International Accounting Standards and Interpretations issued by the International Accounting Standards Board, as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS. The consolidated financial statements have been prepared under the historical cost convention.

The principal accounting policies adopted in the preparation of these interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual audited consolidated financial statements for the year ended 31 December 2020, except for the new and revised IFRSs effective 1 January 2021. None of the new IFRS and IFRS amendments effective on 1 January 2021 have had a material impact on the interim consolidated financial statements of the Group.

The preparation of these consolidated half year financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates in preparing these consolidated half year financial statements.

Going concern - at the time of approving the interim financial statements, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence. The going concern basis of accounting has therefore been adopted in preparing the interim financial statements.

In reaching this conclusion, the Directors considered the financial position of the Group and prepared forecasts to 31 December 2022, taking into account reasonably possible changes in trading.

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 remains considerable uncertainty as to the impact that the ongoing COVID-19 pandemic could have on the Location Based Entertainment business in particular. If there were to be further lockdowns, for example, this 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 such as seeking any government support available, identifying cost savings and/or seeking external finance in the form of debt or equity.

Impairment of intangible assets and goodwill - recoverable amounts are based on value in use calculations using management's best estimate of future performance. On the basis of the forecast cash flows prepared it is concluded

that no impairment of intangible assets and goodwill is required.

   2.2   Accounting Policies (continued) 

Government grants and assistance - the Group has applied IAS 20 - Accounting for Government Grants and Disclosure of Government Assistance - in relation to Government grants received in the period to 30 June 2021 (further details in Note 4).

In accordance with IAS 20 the accruals' method of accounting has been adopted.

-- grants in recognition of specific expenses are recognised in profit or loss in the same period as the relevant expenses;

-- grants related to depreciable assets are recognised in profit or loss over the periods and in the proportions in which depreciation expense on those assets is recognised; and

-- grants related to non-depreciable assets which require the fulfilment of certain obligations are recognised in profit or loss over the periods that bear the cost of meeting the obligations.

   3      Segmental Information 

The Group's primary reporting format for segmental information is business segments which reflect the management reporting structure in the Group. There have been no changes to the segments employed within the period.

 
                                          Location         Home Based                                Total 
                               Based Entertainment      Entertainment                             6 months 
                                             (LBE)              (HBE)        Head Office        to 30 June 
                                                                                                      2021 
                                           GBP'000            GBP'000            GBP'000           GBP'000 
 Revenue                                     2,302                337                121             2,760 
 Cost of sales                             (1,302)              (436)               (43)           (1,781) 
 Government grants                             313                 57                 14               384 
 Rent income                                     -                  -                 15                15 
 Admin expenses*                             (439)              (343)              (627)           (1,409) 
                                  ----------------   ----------------   ----------------   --------------- 
 Operating profit / (loss)                     874              (385)              (520)              (31) 
 
 Amortisation                                (255)               (47)               (11)             (313) 
 Depreciation                                (717)                  -               (70)             (787) 
 Profit on disposal of 
  fixed assets                                  11                  -                  -                11 
 Impairment of tangible 
  and intangible assets                        (1)                  -                  -               (1) 
 Restructuring costs                           (3)               (39)                  -              (42) 
 Exceptional income                              -                  -                 53                53 
 Finance costs                                   -                  -               (26)              (26) 
 Finance income                                  -                  -                  -                 - 
 Share based payments                            -                  -              (291)             (291) 
 Taxation                                        -                  -                 12                12 
                                  ----------------   ----------------   ----------------     ------------- 
 Loss for the period                          (91)              (471)              (853)           (1,415) 
                                  ----------------   ----------------   ----------------      ------------ 
 

6 months to 30 June 2021

*Administrative expenses exclude depreciation, amortisation, impairment, profit on disposal of fixed assets, exceptional income, restructuring costs and share based payments.

Revenue in the Head Office segment is comprised of income from Uvisan and licensing of the Group's content to third parties.

   3.     Segment Information (continued) 
 
                External revenue by location         Location of assets           Net tangible capital 
                         of customer                                                  expenditure by 
                                                                                         location 
                                                                                        of assets 
                 30 Jun      30 Jun     31 Dec    30 Jun    30 Jun    31 Dec    30 Jun    30 Jun    31 Dec 
                   2021        2020       2020      2021      2020      2020      2021      2020      2020 
                GBP'000     GBP'000    GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
 
 USA              2,090         301      1,176     1,920     1,988     1,542       182       692       813 
 UK                 327         345      1,395     5,361     7,449     6,901        29       239       266 
 Australia          163          85        124        26        41        35         6         -         8 
 Canada              44           -          -         -         -         -         -         -         - 
 China               33           7         35         6        12         9         -         -         - 
 Saudi 
  Arabia             20          29         35        34        65        50         -         -         - 
 UAE                 17          39         38        32        74        56         -         -         6 
 Other               66          12         45        15        39        28         -         -         2 
                  _____       _____      _____     _____     _____     _____     _____     _____     _____ 
 Total            2,760         818      2,848     7,394     9,668     8,621       217       931     1,095 
                  _____       _____      _____     _____     _____     _____     _____     _____     _____ 
 

The Group had certain customers whose revenue individually represented 10% or more of the Group's total revenue. For the six months ended 30 June 2021, two customers accounted for 31% and 20% of the revenue respectively.

   4      Other Income 
 
                                                  Unaudited          Unaudited            Audited 
                                                 Six months         Six months          12 months 
                                                         to                 to                 to 
                                                    30 June            30 June          31 Dec 20 
                                                         21                 20 
                                                    GBP'000            GBP'000            GBP'000 
 
 UK and USA national & local government 
  COVID-19 relief programmes                            384                259                479 
 Property rentals                                        15                 49                 96 
                                           ----------------   ----------------   ---------------- 
                                                        399                308                575 
                                           ----------------   ----------------   ---------------- 
 

The Group is satisfied that it has met all the conditions relating to grants received and that no liability for repayment of any of the grants exists.

   5      Restructuring costs 
 
                                           Unaudited          Unaudited            Audited 
                                          Six months         Six months          12 months 
                                                  to                 to                 to 
                                             30 June            30 June          31 Dec 20 
                                                  21                 20 
                                             GBP'000            GBP'000            GBP'000 
 
 Business restructuring                          (2)                 13                 16 
 COVID-19 effects - redundancies 
  and aborted projects                            44                 14                 80 
                                    ----------------   ----------------   ---------------- 
                                                  42                 27                 96 
                                    ----------------   ----------------   ---------------- 
 
   6      Exceptional income 
 
                                             Unaudited          Unaudited            Audited 
                                            Six months         Six months          12 months 
                                                    to                 to                 to 
                                               30 June            30 June          31 Dec 20 
                                                    21                 20 
                                               GBP'000            GBP'000            GBP'000 
 
 Liability to HMRC for Loan Charge 
  taxation revised                                  53                  0                  0 
                                      ----------------   ----------------   ---------------- 
 

As a result of the Loan Charge review commissioned by the UK Government in 2019 the Group's liability to HMRC for Loan Charge taxation, and interest thereon, was reduced by a total of GBP53k. Confirmation of this reduction was received from HMRC in March 2021.

   7      Earnings per share 

The calculation of the group basic and diluted loss per ordinary share is based on the following data:

 
                                                 Unaudited              Unaudited                          Audited 
                                                Six months             Six months                        12 months 
                                                        to                     to                               to 
                                                   30 June                30 June                        31 Dec 20 
                                                        21                     20 
                                                   GBP'000                GBP'000                          GBP'000 
 The earnings per share is based 
  on the following: 
 
 Continuing earnings post tax 
  loss attributable to shareholders                (1,415)                (2,516)                          (4,732) 
 
 Discontinued earnings post tax                          -                      -                                - 
  attributable to shareholders 
 
                                                 =========         ==============                       ========== 
                                                    ======                                                    ==== 
 Basic weighted average number 
  of shares                                    412,738,083            328,286,069                      356,941,188 
 Diluted weighted average number 
  of shares                                    412,738,083            328,286,069                      356,941,188 
                                                 =========        ==============                    ============== 
                                                  ===== 
 
                                                   GBP0.01                GBP0.01                          GBP0.01 
 Basic earnings per share                           (0.34)                 (0.77)                           (1.33) 
 Diluted earnings per share                         (0.34)                 (0.77)                           (1.33) 
                                                 =========              =========                        ========= 
 

Earnings per ordinary share has been calculated using the weighted average number of shares in issue during the period. The weighted average number of equity shares in issue in the period to 30 June 2021 was 412,738,083.

   8.     Intangible Assets 
 
                                                  Goodwill 
                         Other intangible          acquired   Development 
                                   assets    on acquisition         costs     Total 
                                  GBP'000           GBP'000       GBP'000   GBP'000 
 
    Cost 
    At 1 January 2021                 545             2,438         2,166     5,149 
    Additions                           5                 -           133       138 
    Foreign exchange 
     adjustment                         -                 -           (6)       (6) 
                                    _____             _____         _____     _____ 
    At 30 June 2021                   550             2,438         2,293     5,281 
                                    _____             _____         _____     _____ 
    Amortisation 
    At 1 January 2021                 527                 -           997     1,524 
    Charge                             10                 -           303       313 
    Foreign exchange 
     adjustment                         -                 -           (4)       (4) 
                                    _____             _____         _____     _____ 
    At 30 June 2021                   537                 -         1,296     1,833 
                                    _____             _____         _____     _____ 
 
    Net book value 
 
    30 June 2021                       13             2,438           997     3,448 
                                    _____             _____         _____     _____ 
 
    31 December 2020                   18             2,438         1,169     3,625 
                                    _____             _____         _____     _____ 
 

Development costs are fully amortised on a straight-line basis over 3 years.

For projects which are still underway and are not ready to be used no amortisation has been charged.

Other intangible assets are being amortised principally over a period of 3 years. Domains are amortised over 10 years. Websites and trademarks are amortised over 2 years.

Goodwill is not amortised.

Amortisation is charged to administrative costs in the Statement of Comprehensive Income.

   9.     Trade and other receivables 
 
                                             Unaudited          Unaudited            Audited 
                                            Six months         Six months          12 months 
                                                    to                 to                 to 
                                               30 June            30 June          31 Dec 20 
                                                    21                 20 
                                               GBP'000            GBP'000            GBP'000 
 
 Trade receivables                                 364                107                102 
 Accrued income 
  Prepayments:                                     290                  8                 71 
  - Home Based Entertainment stock 
   in production/transit                           351                  -                288 
  - Other                                          248                233                235 
 Corporation tax                                    81                118                 65 
 Other receivables                                  78                111                 68 
                                      ----------------   ----------------   ---------------- 
                                                 1,412                577                829 
                                      ----------------   ----------------   ---------------- 
 
   10.     Trade and other payables 
 
                                             Unaudited          Unaudited            Audited 
                                            Six months         Six months          12 months 
                                                    to                 to                 to 
                                               30 June            30 June          31 Dec 20 
                                                    21                 20 
                                               GBP'000            GBP'000            GBP'000 
 
 Trade payables                                    500                415                594 
 Accruals                                          280                164                263 
 Payroll taxes and social security                  50                206                146 
 Other payables                                    129                162                150 
                                      ----------------   ----------------   ---------------- 
                                                   959                947              1,153 
                                      ----------------   ----------------   ---------------- 
 
   11.   Share Capital 
 
 Called up share capital                       No.        Value 
  Allotted, issued and fully                            GBP'000 
  paid 
 
 
 Ordinary shares of 0.040108663 
  pence each                         415,538,083            167 
                                     =============   ========== 
 

Shares issued in the 6 month period to 30 June 2021:

 
 Date                   Description                                                      Gross share           Cash received 
                                                     No shares   Price/share                   value 
                                                                         GBP                     GBP                     GBP 
                     Issue of shares 
                     of 0.040108663p 
 26.03.2021                     each                 6,000,000          0.05                 300,000                 300,000 
                                       -----------------------                 ---------------------   --------------------- 
                                                     6,000,000                               300,000                 300,000 
                                                   ===========                            ==========               ========= 
 As at 30 June 2020                                379,538,083                            20,490,582              17,275,440 
 As at 31 December 2020                            409,538,083                            21,690,582              18,475,440 
 As at 30 June 2021                                415,538,083                            21,990,582              18,775,440 
 
   12.    Related party transactions 

M J Higginson, a director of Immotion Group plc, is a director and controlling shareholder of M Capital Investment Properties Limited. Services to the value of GBP47,167 (year to 31 December 2020: GBP122,250) were invoiced in the period by M Capital Investment Properties Limited to Immotion Group plc. At 30 June 2021, Immotion Group plc owed GBPNil (31 December 2020: GBP4,125) to M Capital Investment Properties Limited.

R Miller, a director of Immotion Group plc, is a director of Robin Miller Consultants Ltd. In the period, services totalling GBP7,500 (year to 31 December 2020: GBP15,000) were billed to Immotion Group plc from Robin Miller Consultants Ltd. At 30 June 2021, GBP1,250 (31 December 2020: GBP1,250) was owing from Immotion Group Plc to Robin Miller Consultants Ltd.

M J Higginson, a director of Immotion Group plc, is a director and shareholder in Huddled Group Limited. Services to the value of GBP16,407 (year to 31 December 2020: GBP88,182) were invoiced in the period by Huddled Group Limited to the Group. At 30 June 2021, the Group owed GBPNil (31 December 2020: GBP15,452) to Huddled Group Limited.

D Marks, a director of Immotion Group plc, was advanced a loan in a prior period by the subsidiary Immotion Studios Limited. Interest is currently charged on the loan at 2% per annum. At 30 June 2021, D Marks owed GBP15,831 (31 December 2020: GBP15,678) inclusive of interest, to the Group.

The total amounts paid to key management personnel during the period was GBP284,363 (year to 31 December 2020: GBP544,335). The key management personnel are considered to be the directors of Immotion Group plc.

[1] Adjusted PBT excludes share-based payments

[2] Adjusted PBT excludes share-based payments

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September 28, 2021 02:00 ET (06:00 GMT)

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