Immotion Group plc (LON:IMMO) Share Price, RNS News and Interviews

News

Immotion Group revenue increased 230% during a year of recovery and progress

Immotion Group plc (LON:IMMO), the UK-based immersive entertainment group,has today announced its audited results for the year ended 31 December 2021 and to provide a Group update.

Highlights

· Group revenue increased 230% to £9.4m (2020: £2.8m)

· Group positive adjusted EBITDA of £0.9m (2020: £1.7m negative)

· Strong recovery from the Location Based Entertainment (“LBE“) business

· LBE revenue increased by 204% to £6.3m (2020: £2.1m) with H2 revenue of £4.0m (2020: £1.3m)

· Unaudited Q1 2022 LBE revenue increased threefold versus Q1 2021 (£1.8m v £0.6m) with April revenue expected to exceed £800k following buoyant Easter

· First large-scale zoo installation contract for a large 24 seat theatre style installation agreed and contract expected to be signed this week; plus one further USA zoo agreement for large installation at final contract stage and signature expected to follow shortly thereafter; strong pipeline of discussions and opportunities

· Strategic decision to focus on LBE and spin out both the Home Based Entertainment (“HBE“) and Uvisan divisions

Chairman’s Statement

Little more than a year ago the Company, along with many others, was suffering from declining or zero revenue as Covid-19, having caused the lockdown of many of the partner sites through which our core LBE business functioned, continued its seemingly unstoppable advance. The name of the game became survival via cost cutting, seeking all available government support and a decision to go direct to our audience with the Let’s Explore product and the related formation of our HBE division.

As the Chief Executive describes in his review below, the second half of 2021 turned out to be one of recovery and progress, particularly for LBE, at a much faster rate than we anticipated, as sites reopened and confidence returned, providing further opportunities to launch new sites at aquariums and now zoos. This, particularly in the United States, boosted our confidence in the potential of this part of our business as illustrated by very strong revenue and contribution growth to match.

It has also made us reconsider our strategy relating to our other two businesses, HBE and Uvisan, and we have come to the conclusion that we need to focus all our resources on LBE which has a strong pipeline.

We therefore intend to spin out HBE and Uvisan in the short term to enable us to be fully focused on LBE as we are confident that this compelling business model is highly scalable and can drive superior shareholder returns.

Chief Executive’s Review

Overview

2021 was a year of recovery and progress. The Group’s core LBE business recovered well despite conditions remaining challenging in the first half, particularly in Q1, as Covid-19 related closures and disruption continued.

H2 2021 saw a return to more normal trading conditions, as the majority of our LBE sites were reopened, restrictions at partner sites were eased, and attendances recovered towards pre-Covid levels. Overall, we were extremely pleased to be back in business with solid revenue performance, although we remained cautious when it came to expanding our core LBE estate as we sought to consolidate our finances and develop greater confidence in the market recovery.

As we ended the year, it was clear the LBE business had not only recovered, but was flourishing. This recovery, combined with increased demand from potential partner locations, has forced us to review our operations, allocation of resources and how we can best deliver maximum shareholder value.

Whilst we rightly took the decision in the middle of the Covid pandemic to launch two new businesses, HBE and Uvisan, as a way of hedging our position, we have decided it is in the best interest of our shareholders that we allocate all our resources to the LBE business. We believe this will maximise returns, and therefore we will be looking to spin out HBE and Uvisan, seeking external investment for both.

Outcome

The landscape continued to be challenging in 2021, although significantly less so than the previous year, and I am pleased to report overall Group revenue was £9.4m (2020: £2.8m), with adjusted positive EBITDA of £0.9m, a significant improvement on 2020, where we were in the throes of the pandemic and suffered a negative adjusted EBITDA of £1.7m. The split of revenue and EBITDA for 2021 was as follows:

	LBE	HBE	Uvisan	Head Office	Total
	£m	£m	£m	£m	£m
Revenue	6.3	2.5	0.5	0.1	9.4
Adjusted EBITDA^[1]	2.3	(0.4)	0.1	(1.0)	0.9

Further details of divisional performance are discussed in the Review of Operations below.

Outlook

The Board’s focus is now about driving growth of Group revenue and profit based on the following pillars of growth:

· Focus on core LBE business: Given renewed confidence and growth prospects.

· Uninterrupted trading position: Trading in 2021 was impacted by lockdowns and capacity restrictions affecting certain locations. We do not anticipate any further disruption in our key markets and we expect 2022 to be our first full year of trading without capacity restrictions at our Mandalay Bay site.

· Expansion of key locations: We have expanded capacity at our some of our best performing locations:

o Shark Reef at Mandalay Bay, Las Vegas, USA

o Sea Life London, UK

o Odysea Aquarium, Arizona, USA

· Additional new sites: We have a strong pipeline of new sites.

· Operational gearing: With a fixed cost base that we do not believe will increase proportionately with revenue, every new site’s contribution flows straight to the bottom line.

As our refocused business builds a track record of profitability and operating cash flow generation we can fund our plans by reinvesting the cash generated in order to further expand the business.

2022 has begun in a very promising fashion with Q1 Group revenue of £2.1m (2020: £0.8m). LBE revenue has tripled to £1.8m versus £0.6m in the same period in 2020. The growth in LBE revenues is continuing and, with a buoyant Easter period, we expect April LBE revenues to exceed £800k.

We are at a very advanced stage for the signing of our first major zoo installation which we expect to be this week, with an agreement for another large zoo installation in the USA also imminent.

We are also developing a new ‘plug and play’ solution for zoos; a containerised solution that can be delivered to site with minimum setup required. This will be particularly useful for many zoo sites that do not have available indoor space. We will look for a trial later in the year with a view to finessing and being ready to scale this additional model in 2023.

The combination of large purpose-built theatre solutions, including pre-show experiences, along with a modular solution and our existing mini theatre offering will allow us to address all potential partner opportunities and choose the appropriate model for each partner site.

Since the period end, we have added significantly to the portfolio in the first quarter including the expansion of some of our best performing sites: taking our installation at Shark Reef Aquarium at Mandalay Bay from 36 headsets to 48 headsets (along with a contract extension to 31 January 2024); and doubling our capacity at both Sea Life London (under a new three year contract) and Odysea Aquarium. These sites are illustrative of our future direction – larger installations which represent significant new key attractions for our partners, in high traffic, established destinations, driving significant revenue for both parties.

We believe that there remains significant potential in the aquarium sector, as we have seen by the scaling up of a number of our existing sites, as well as the active pipeline of new sites with new partners.

The combination of ‘on message’ proprietary content, immersive motion platform technology, and locations that deliver large and predictable footfall underpins our belief that we can achieve very significant enhancement in shareholder value moving forwards.

Naturally, uncertainties remain, not least the appalling situation in Ukraine, but it now feels like a wholly different trading picture compared to the same period last year.

Review of Group Operations

Location Based Entertainment

Our LBE division recovered strongly in H2 of 2021 but the first half, and in particular Q1 2021, was heavily impacted by the Covid-19 pandemic. H1 revenue was £2.3m, an increase of 186% versus 2020 (£0.8m) and H1 divisional adjusted EBITDA was £0.9m (2020: £0.5m negative). The second half saw much more normalised trading conditions, as can be seen from the table below:

	H1 2021	H2 2021	FY 2021	H1 2020	H2 2020	FY 2020
	£000	£000	£000	£000	£000	£000
Revenue	2,302	4,001	6,303	806	1,269	2,075
Gross profit	1,000	1,769	2,769	70	259	329
Overhead	(439)	(473)	(912)	(617)	(681)	(1,298)
Other income	313	135	448	–	484	484
EBITDA^[2]	874	1,431	2,305	(547)	62	(485)

Notes: LBE revenue is the total charged to consumers (excluding VAT and sales taxes). Gross profit is revenue charged to consumers (net of VAT or sales taxes), less partners’ shares of revenue and other direct costs of delivering revenue.

Overhead includes direct and apportioned overhead and excludes Head Office (unallocated) overheads.

We installed 62 headsets across seven new sites in 2021, and 43 headsets were removed from predominantly underperforming sites for redeployment elsewhere, giving us a net increase of 19 headsets during the period and taking us to 364 installed headsets by the period end (302 in our partner estate and 62 in our ImmotionVR sites). These numbers reflect our cautious view of capital expenditure and also the initial focus of prospective partners on their own re-openings and recovery.

We currently have 402 headsets in operation (338 partner and 64 ImmotionVR) across 49 sites as shown in the table below:

	USA	UK	ROW	Total
As at 1 January 2021
Headsets	163	121	61	345
Sites	24	14	10	48

Net changes in 2021
Headsets	41	(16)	(6)	19
Sites	2	(1)	(1)	0

As at 31 December 2021
Headsets	204	105	55	364
Sites	26	13	9	48

Net changes 2022
Headsets	28	10	0	38
Sites	1	0	0	1

As at 26 April 2022
Headsets	232	115	55	402
Sites	27	13	9	49

The partner portfolio performed well with overall weekly average revenue per headset of £441^[3] compared to £329^[4] in 2020.

Average revenue per headset per week at our ImmotionVR sites was £284 in 2021 compared to £175 in 2020.

Home Based Entertainment

During the year progress was made in the HBE business. A distribution partnership was established in Australia, as well as direct to Amazon relationships in both the USA and Canada, to add to the already existing UK setup. Third party distribution centres were opened in the USA and Hong Kong allowing us to supply goods directly to North American and Asia Pacific customers.

Whilst sales increased to £2.5m the business was severely impacted by the global logistical problems resulting on occasion in much of the stock either being stuck at port or having to be air freighted at a significant cost to the business. We took the decision that we needed to turn bought stock into cash, but we also recognised there was a significant impact on the margin in doing so.

With the vast majority of stock sold during the period the team turned their attention to future years and how to grow the market. The idea of Vodiac arose following feedback from Let’s Explore customers. In the main they wanted to see more content, and a more user-friendly menu system.

Vodiac was ‘beta’ launched earlier this year. Initial feedback showed the need for an even greater library of content, as well as the need for the VR menu system to be fully operational whilst wearing the VR headset.

The concept of delivering a VR video streaming solution, combined with an affordable VR headset is a “big idea” and as such we accept if this business is to fulfil its ambitions it may be loss making for some time and is likely to consume significant capital. We have therefore taken the view that it is not appropriate to embark on this using Immotion’s balance sheet.

Uvisan

Uvisan made good progress in its first full year of trading. Revenue increased by 669 per cent to £477,000 (2020: £62,000). A small divisional profit of £67,000 was reported (2020: loss of £6,000).

In 2021, the business was focused on the sale of UVC sanitising cabinets (three size options) through our growing network of resellers and distributors, as well as direct. Notably, we signed our first distributor in the USA and one that covers both Australia and New Zealand.

We delayed the launch of Cleanroom, our room and surface sanitising system, whilst we put the finishing touches to our proprietary control system and app. We believe it has application in settings (both new build and retrofit) where hygiene is key – such as hospitals, laboratories and cleanroom manufacturing/engineering. We are also looking at its potential application for pathogen control in indoor farming facilities.

Whilst Uvisan made a promising start in 2022 having completed its first major customer delivery in the USA it will also require capital for growth, as such this too should not be done using Immotion’s balance sheet.

Financial review

Revenue for the year increased 230% to £9,391,000 (2020: £2,848,000). The Immotion Group’s H1 revenue was suppressed by Covid-19, with no revenue coming from its UK operations until leisure businesses were able to reopen on 17 May 2021. The table below shows the split of revenue between H1 and H2, and by segment:

	H1 2021	H2 2021	FY 2021
	£000	£000	£000
LBE	2,302	4,001	6,303
HBE	337	2,189	2,526
Uvisan	88	389	477
Other (inc licensing)	33	52	85
Total	2,760	6,631	9,391

The Group made gross profit in the period of £3,196,000 (2020: £466,000), a gross profit margin of 34.0% (2020: 16.4%).

The Group benefited from other income of £532,000 in the period (2020: £575,000), £503,000 of which came from Covid-19 government support packages (2020: £479,000) and £29,000 being sublease rents (2020: £96,000). Government support in the period included £235,000 relating to the forgiveness of both the 2020 and 2021 Paycheck Protection Program loans in the USA and £206,000 received under the UK government’s Coronavirus Job Retention Scheme.

Despite the significant growth in revenue, administrative expenses (excluding depreciation, amortisation, impairment, share based payments and one-off items) remained relatively flat at £2,820,000 (2020: £2,731,000).

The Group achieved a full year positive adjusted EBITDA^[5] result for the first time since its inception of £908,000 (2020: £1,690,000 negative).

The Group’s loss after tax reduced to £1,999,000 (2020: £4,732,000). The adjusted loss^[6] per share was 0.28p (2020: 1.17p).

The overall cash outflow in the period was £565,000 (2020: inflow of £1,190,000). The distinction between H1 and H2 trading illustrated above can also been seen in the cash flows for the respective periods with strong cash generated from operations in the second half, as shown in the table below:

	H1 2021	H2 2021	FY 2021
	£000	£000	£000
Opening cash	1,664	629	1,664
Operating activities	(847)	1,139	292
Investing activities	(278)	(539)	(817)
Financing activities	90	(130)	(40)
Closing cash	629	1,099	1,099

The operating cash inflow of £292,000 (2020: £2,012,000 outflow) was net of a working capital outflow of £725,000 (2020: £192,000 outflow). This was primarily driven by a £989,000 increase in trade and other receivables (including prepayments and accrued income), which itself resulted from the low levels of trading activity at year end 2020. This was partially offset by inflows of £49,000 and £215,000 in respect of inventories and trade and other payables (including deferred income) respectively.

Investing cash outflows reduced to £817,000 (2020: £1,393,000 outflow), largely a result of a cautious approach to capital expenditure in the period and the deployment of hardware which had been acquired prior to Covid-19.

The Group had a net financing cash outflow of £40,000 (2020: £4,595,000 inflow). During the year, the Group received net equity proceeds from an existing investor of £285,000 and received a Second Draw Paycheck Protection Program loan of £119,000. Loan and lease repayments (including rents payable under IFRS 16 leases) were £405,000.

Net assets at the balance sheet date were £5,720,000 (2020: £6,714,000).

Conclusion

Overall, we are satisfied with the progress we’ve made. The second half of 2021 underpinned our belief in the core LBE business, with 2022 to date providing further support for our decision to focus solely on this business as we move forward. We are seeing high levels of engagement from prospective partners, and with the new ‘plug and play’ solution in the wings we are confident we will have the tools at our disposal to continue a significant and rapid roll out of partner solutions.

2022 has got off to a great start with very strong Easter trading. This combined with a strong pipeline of new partner sites and the summer season ahead of us gives the Board considerable confidence in the business and its future.

Immotion Group signs four new partner locations

Immotion Group plc (LON:IMMO), the UK-based immersive entertainment group, has announced the opening and signing of the following new partner sites in its core Location Based Entertainment business, scheduled to bring a total of 24 new seats into operation:

· Akron Zoo, Ohio, USA – Immotion has put a 6-seat installation into Akron Zoo. The attraction will open on 16 April 2022.

· Seattle Aquarium, Washington, USA – Started operations in late March.

· Sea Life Manchester – Manchester now joins the fold of installations in Sea Life venues, with six seats in a new three-year deal.

· New Aquarium site USA. The Company has signed and completed the installation this week of a new six seat mini-theatre, with operations scheduled to begin later this month, subject to state certification, under a three-year contract (cannot be named until state certification is received).

· Sea Life London – In addition to these new signings, Sea Life London, one of our top sites, has signed a new three-year deal, which will see the number of seats further expanded to 16 in a themed, mini-theatre style installation. Once complete this should take us into the peak summer period with double the capacity of last year.

Including the increased capacity at Odysea Aquarium and Shark Reef Aquarium, located inside Mandalay Bay Resort & Casino, this will bring the total number of new seats installed in 2022 to 42.

Following these installations, the Company will have 402 headsets operational across 49 sites.

Following the launch of our Gorilla Trek immersive experience at IAAPA in November last year, we are at an advanced stage of negotiations with a number of major zoos. We look forward to announcing some significant additional zoo signings in the coming weeks.

Results & Trading Update

Early trading in 2022 has been pleasing with unaudited revenue for the first quarter being more than double that of Q1 2021 at circa £2.0m compared to £0.8m for 2021 (Location Based Entertainment revenue was circa £1.8m compared to £0.6m in the same period last year). March revenue of circa £1.0m was bolstered by the US spring break and the increased capacity at Mandalay Bay.

The full year results for the year ending 31 December 2021 will be released to the market on 26 April 2022, at which stage we will update the market further on both the Home Based Entertainment and Uvisan operations, as well as progress in our core LBE division.

Subject to final audit, we expect the underlying financial results for 2021 to be EBITDA of circa £0.9m on total revenue of £9.4m.

Rod Findley, Group Commercial Director said:

“With our aquarium offering we have carved ourselves a category in which we believe we are the market leader. Our immersive films offer our partners the ability to both educate and entertain their customers in a new and unique way, while driving significant additional revenue for them. We are excited to be rolling this model out into the global zoo market.”

Martin Higginson, CEO, Immotion Group plc said:

“Delivering EBITDA of circa £0.9m on revenue of £9.4m compared to revenue of £2.8m and an EBITDA loss of £1.7m in 2020 shows the progress the Company has made.

“Trading in the first quarter of this year, especially in our Location Based Entertainment business, has been very encouraging. With unaudited Group revenues for the first quarter of 2022 more than double that of the same period last year we are poised for further solid year on year growth. It is great to be adding a further 24 headsets to the portfolio and to be hitting the 400 headset mark.

“The roll-out of our Gorilla Trek experience into Zoo partners is well underway, and with several sizeable theatre style installations in the wings we are confident the zoo market and other prospects will help us move closer towards the 500 headset mark.

“We look forward to updating the market on 26 April 2022 when we present the full year audited results for 2021.”

Immotion Group contract extension at Shark Reef Aquarium

Shark Reef Aquarium Expansion and Contract Extension

Immotion Group plc (LON:IMMO), the UK-based immersive entertainment group, has announced an expansion of capacity and a contract extension at Shark Reef Aquarium, inside Mandalay Bay Resort & Casino, Las Vegas, currently the Group’s largest installation.

This will see the theatre capacity increase to 48 seats from its current 36 seats, allowing greater customer throughput, especially at peak times. The current contract, which will also include the expanded capacity, will also be extended by a further 12 month period through to 31 January 2024. We envisage that the expanded theatre will be fully operational in March 2022, in time for USA Spring Break.

Capacity Expansion at Other Partner Sites

In addition to the expansion at Shark Reef Aquarium, capacity at another two of our strongest performing sites has been significantly expanded. Our installation at Sea Life London has been increased from 8 to 14 seats and we have also doubled the capacity of our installation at Odysea Aquarium (Scottsdale, Arizona) from 6 to 12 seats.

These expansions demonstrate the potential to make our installations a material generator of revenue for both the Group and its partners and to establish our installations as core integrated attractions in partners’ venues.

Trading Update

Summary

Further to the trading update on 16 December 2021, the Company is pleased to confirm that unaudited H2 revenue was circa £6.6m, a 135% increase compared to unaudited revenue of £2.8m in H1 (H2 2020: £2.0m).

H2 operating cash inflow was strong, with year-end cash on hand of £1.1m, almost double the £0.6m at the half year.

Location Based Entertainment (“LBE”)

Trading in our core LBE division in the second half of 2021 has been very encouraging with unaudited revenue of £4.0m, a 74% increase compared to £2.3m in H1, and a 207% increase compared to £1.3m H2 2020.

We opened two new sites in H2 and now have a total of 49 sites (373 headsets), with 57 per cent. of headsets now located in the USA. We continue to see new interest in our ‘Undersea Explorer’ theatre style offering for aquariums and are now in advanced discussions with a number of major zoos regarding the first installations of our new ‘Gorilla Trek’ VR Theatre and we expect our first signings in the coming weeks.

Home Based Entertainment (“HBE”)

We sold circa 35,000 units of our Let’s Explore Oceans product in 2021, generating unaudited revenue of £2.5m, a three-fold increase compared to £0.7m in 2020.

Whilst the sales growth was very encouraging, with the product selling out in the UK, both direct and via Amazon, and on Amazon in the USA, we were hit in the final six weeks of 2021 by very challenging logistics, which had a significant adverse impact on landed product costs. We also suffered with some stock not reaching its destination in time resulting in lost sales. The delayed stock, 5,000 units in total, will be sold throughout 2022.

The soft ‘beta’ launch of our Vodiac offering began late-December with invitations sent to the Let’s Explore Oceans users. We have seen over 4,350 downloads of the iOS and Android apps and over 1,250 premium VR video purchases so far. These data points have been used to further hone the headset offering which will go on sale this coming week. The product will be available online via Vodiac.com and Amazon, and through a number of new retail partners. The blend of direct to consumer, Amazon and retail should allow us to gather sufficient data as to how to best scale this business.

Uvisan

Uvisan’s total unaudited revenue for H2 was £0.4m (up from £0.1m in H1), demonstrating the value of our growing distributor and reseller network. We now have 12 resellers and 3 distributors, located in the UK, Europe and the USA. We are seeing growing demand for our UV sanitising cabinets.

As well as demand for our UV cabinets for sanitising a wide range of “touched” products, we see real opportunity in the enterprise, education and training XR headset and device market (virtual reality, augmented reality and mixed reality) which is set for huge growth in coming years. Accordingly, we will focus on building a network of partners with deep roots into that sector.

Despite a number of early enquiries, we chose to delay the launch of Cleanroom in order to refine its proprietary safety and control features and we continue to believe that it has significant potential in healthcare, office and other sectors, in both new build and refurbishment projects. We are now ready to work with our growing partner network to commercialise this product.

Uvisan now has an order book of circa £0.3m and we are looking forward to a year which should see substantial growth versus 2021.

Martin Higginson, CEO, Immotion Group plc said:

“To see our core LBE business bounce back so quickly clearly demonstrates its robustness and growth potential. We are absolutely delighted to be expanding capacity at a number of key sites, especially our largest installation at Shark Reef Aquarium, Mandalay Bay Resort & Casino which will now run through to at least January 2024.

“The launch of our new ‘Gorilla Trek’ VR theatre experience has been extremely well received and we look forward to signing up our first zoo partner in the coming weeks. This sector offers huge global roll out potential with many USA zoos boasting footfall well in excess of a million visitors per annum.

“Despite the logistical challenges, we sold circa 35,000 units of our Let’s Explore Oceans product, as well as gaining a new distribution partner in Australia. Vodiac will carry forward the key learning so far in order to provide a broader product offering to a wider audience. We believe there is a real opportunity to democratise the home VR video market. Our offering of a VR headset, combined with original and curated VR content at a sub £30 price tag will, we believe, allow us to build an audience of scale.

“Our Uvisan products continued to sell well, with a growing roster of distribution partners, including in Australia and the USA.

“Overall, we feel we have made good progress across the company and are looking forward with renewed confidence.”

Immotion Group to Unveil Groundbreaking Virtual Reality Experience, ‘Gorilla Trek’

Immotion Group plc (LON:IMMO), the UK-based immersive entertainment company, will announce today the launch of Gorilla Trek, a new live-action virtual reality experience, at the IAAPA trade show in Florida.

This exciting new VR experience will take guests to the rainforests of Rwanda on a mission to study one of nature’s most intriguing yet endangered animals – the mountain gorilla.

Immotion is proud to partner on this project with the Dian Fossey Gorilla Fund, the renowned gorilla conservation organization. Tara Stoinski, CEO of the Fund, guides the mission, giving unprecedented access and stunning insights into seldom-seen gorilla behaviors. Produced by Immotion’s Emmy Award-winning team, it is the world’s first 360º VR motion-platform experience to showcase the mountain gorillas of Rwanda.

Edutainment – the mixture of education and entertainment – is at the heart of the ‘Location Based Entertainment’ division’s work, whether it be educating guest about humpback whales in the South Pacific, or tiger sharks in the Bahamas, or generating awareness about ocean pollution. This, combined with our motion seats, sets Immotion’s work apart.

Rod Findley, President – Location Based Entertainment, Immotion Group, said: “To partner with the Dian Fossey Gorilla Fund is a dream come true for us. Education is important, but the engagement that you achieve when you lead the guests on a mission and tell them a compelling story is an order of magnitude greater.”

“We are confident that, as we expand our immersive theatre offerings to zoos around the world, having this caliber of project with the conservation pedigree of the Fund and Dr. Stoinski, will allow us to reach even more zoos and more guest worldwide with our message of hope and conservation.”

“In a given year over 700 million people worldwide visit zoos and aquariums, with our zoo initiative, jump-started by this amazing Gorilla Trek film, we are looking forward to significant new growth in zoos during the coming year, complemented by continued growth in the aquarium sector.”

Tara Stoinski, CEO of the Dian Fossey Gorilla Fund, said: “Creating this VR piece with Immotion was an amazing opportunity for us transport people to Rwanda to see the mountain gorillas close up and to understand the delicate balance that exists in our conservation efforts.”

Investors can see a trailer of the experience, along with a fly through of the proposed outdoor zoo encloser on the following video link: https://f.io/4FehFCFY

More News

Interviews

Immotion Group revenue to be very significantly ahead of that reported in H1 2021 (Interview)

Immotion Group plc (LON:IMMO), the international immersive entertainment company, has today updated the market on current trading.

The Group duly reports that it expects its unaudited H2 2021 revenue to be very significantly ahead of that reported in H1 2021. The Company expects revenue of circa £6.5m for the second half of 2021, compared to unaudited revenue of £2.8m in H1.

Furthermore, on the back of a profitable Q4 to date, the Company expects adjusted EBITDA* for the full year 2021 to be significantly ahead of the £0.6m (reported on 28 September 2021) for the first nine months of trading.

As anticipated, operating cashflow generation has been strong. The Group’s current cash balance is in excess of £1.2m compared to the £0.9m as at the last update on 28 September 2021.

*Adjusted EBITDA is stated before restructuring costs and share based payments.

CEO Martin Higginson caught up DirectorsTalk Interviews to discuss the current trading.

Martin explains the key drivers to its impressive growth, if new restrictions are impacting sales, the reaction at the the International Association of Amusement Parks and Attractions show for the new Gorilla Trek experience, taking on more staff, logistics challenges, Vodiac, Uvisan, and Martins thoughts on the year ahead.

https://vimeo.com/657329999

Location Based Entertainment (LBE)

The LBE business saw revenues surge in excess of 70% compared with H1 as almost all locations were reopened following the enforced closures earlier in the year as a result of the pandemic and, in particular, were able to benefit from the key summer trading period in USA and UK. Q4 2021 is expected to deliver a very satisfactory contribution despite it being the quieter seasonal period with strong trade during the Thanksgiving Holiday period in USA and the October half term holidays in the UK. Current trading is in line with our expectations and to date we have not seen any material impact as a result of further UK Covid-19 restrictions. It should also be noted the vast majority of our revenue in our LBE business is generated in the USA (two-thirds of total LBE revenue in H2 was generated in the USA).

Following the launch of the new zoo-targeted VR experience, ‘Gorilla Trek’ at the IAAPA trade show, in Florida, USA, in November 2021, the Company has seen considerable interest in this exciting new offering and is already in discussions with a number of blue-chip USA zoos for installations in H1 2022. Overall levels of enquiries and discussions for both the aquaria and zoo offerings are very encouraging for 2022.

Home Based Entertainment (HBE)

We expect the HBE division to generate revenue in excess of £2m for the H2 period, almost four times the revenue achieved in 2020. Revenue in Q4 2021 is expected to be in excess of £1.5m versus £0.7m in the same period in 2020, generating a good profit contribution despite the tough logistical challenges.

The growth in Amazon sales, both in the UK and USA has been considerable, with this channel now making up a significant and growing percentage of sales.

We sold in excess of 25,000 Let’s Explore Oceans Mega Packs between July and November 2021 (and in excess 28,000 in aggregate for the full year to-date). Given unprecedented challenges in global shipping and logistics, sales and margin have been considerably impacted by additional costs, including the massive challenge of getting stock in the right place at the right time. Logistic problems aside, we feel the demand for ‘in-home’ VR entertainment is very encouraging and gives us confidence to further develop the product range.

To this end, the Company’s new ‘in-home’ offering, ‘Vodiac’, a product specifically designed and priced to appeal to a mass market audience, with less seasonal demand, will be ‘soft’ launched in the coming weeks to its database of circa 40,000 ‘Let’s Explore Oceans’ customers who will be able to access it using their existing Let’s Explore headset. The Vodiac product will include a smartphone-compatible VR headset, seven free VR videos, 20 premium VR videos, and the ability to purchase further premium content from an extensive catalogue of VR videos across seven VR channels. Vodiac will be available to purchase via selected retailers, Amazon and direct from the Company in early February 2022.

Uvisan

We expect Uvisan, the Company’s UV-C disinfection business, to generate revenue of circa £400k for H2, an increase in excess of 400% versus H1. This includes a second container load of cabinets expected to be on route to our Australian distributor before year-end.

We also report that our order book for Q1 2022 has started strongly, with visibility on orders of circa $350k, including our largest single order ever from a new USA distributor.

Conclusion

With Group revenues expected to exceed £9m, compared to £2.8m for 2020, a three-fold increase, and a strongly profitable H2 we firmly believe that this has been a year of significant progress for the Company and we look forward with confidence.

Martin Higginson, Immotion Group CEO, said: “With full year revenues expected to exceed £9m we are pleased to be ending the year with a profitable business and cash in the bank. The surge in H2 revenues, expected to exceed £6.5m, a circa 230% increase on H1, is testament to the team, their drive and enthusiasm for our offerings.”

“This strong trading, combined with a successful IAAPA trade show for the LBE division, gives us renewed confidence for the year ahead.”

Immotion Group targets zoo revenues with “Blockbuster” Gorilla Trek Virtual Reality (Interview)

Immotion Group plc (LON:IMMO) Group Commercial Director Rod Findley joins DirectorsTalk Interviews to discuss he launch of Gorilla Trek, a new live-action virtual reality experience, at the IAAPA trade show in Florida.

Rod provides us with a little background on the current business with regard to aquariums, explains how they are now expanding its offering to zoos, talks us through the the potential market, how the offering will be housed and having had significant growth since coming out of the pandemic whether the company can sustain this type of growth.

https://vimeo.com/646795381

Immotion Group aims to become a leader in the Western market sector of the “Out of Home” virtual reality market, with the objective of creating recurring revenues from a large installed base of Virtual Reality headsets across partner sites and ImmotionVR experience centres.

Immotion posts impressive H1 results as demand of VR solutions soar (Interview)

Immotion Group plc (LON:IMMO), the immersive entertainment group, has announced its interim results for the six months to 30 June 2021.

CEO Martin Higginson joins DirectorsTalk Interviews to discuss interim results. Martin explains what has driven these impressive results, having recorded a solid six months of profits shares his thoughts on the rest of the year, growing sales from Let’s Explore Oceans, more on Vodiac, how the Uvisan product has developed, cash generation and how it will be utilised and can Immotion really continue to grow at this pace.

https://vimeo.com/616691893

Highlights

· H1 2021 revenue £2.8m

· Near breakeven result in H1 – EBITDA loss £31k

· Outstanding performance in Q3 – revenue circa £3m, estimated EBITDA circa £0.6m, adjusted PBT breakeven

· 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 £0.9m (30 June 2021: £0.6m)

· 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 £3m and EBITDA of £0.6m. 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.”

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 £31k on revenue of £2.8m.

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 £0.2m 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 £1.4m (H1 2020: £1.5m), being an average of £235k 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 £0.8m in the period. This related in the main to an increase in trade and other receivables of £0.6m 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 £0.2m 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 £163k (31 December 2020: £152k), primarily comprised of HBE stock held. In addition, the H1 closing balance sheet includes net HBE stock prepayments of £227k (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 £3.0m and underlying EBITDA to be circa £0.6m.

	Q1 2021 Unaudited £m	Q2 2021 Unaudited £m	Q3 2021 Estimate £m	YTD Estimate £m
Revenue	0.8	2.0	3.0	5.8

EBITDA	(0.2)	0.2	0.6	0.6

Adjusted PBT	(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 £0.9m, up from £0.6m 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 £2.3m and gross profit was £1.0m (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 Sites	Total Headsets	USA Sites	USA Headsets	UK Sites	UK Headsets	ROW Sites	ROW 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 Sites	Total Headsets	USA Sites	USA Headsets	UK Sites	UK Headsets	ROW Sites	ROW 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 £900k 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 £0.7m.

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 £0.3m (3,000 packs).

Though it resulted in a loss after product, marketing and fulfilment costs of circa £0.1m, 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 £253k 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 £300k, 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 £80 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 EBITDA breakeven in H1 a major milestone (Interview)

Immotion Group plc (LON:IMMO), the UK immersive entertainment company, has this morning confirmed that it expects its unaudited H1 results to show a near EBITDA breakeven outcome on revenue of circa £2.7m^*. As previously announced, June 2021 was our best ever monthly result with unaudited Group EBITDA of £126k on revenue of £850k (an uplift on the previously estimated figures), driven largely by the strong performance of the core Location-Based Entertainment business.

We caught up with CEO Martin Higginson to discuss today’s results.

https://vimeo.com/587702903

We are further pleased to confirm that the second half of 2021 has started very strongly with July being yet another record month. Unaudited Group revenue was £1m, with unaudited EBITDA at circa £200k, a considerable increase versus June, taking the company into overall EBITDA profitability for the year to date. The growth in revenue in July (versus June) has been driven by improved trading in our LBE division, which benefitted from school holidays in both the USA and UK, driving LBE revenue to £922k (vs £732k in June).

This demonstrates the operational gearing of our business, with the increase in Group EBITDA versus June resulting in the main from the increase of £190k in LBE revenue. In addition, it is noteworthy that neither June nor July results benefitted from the Coronavirus Job Retention Scheme or US equivalent scheme.

Our Home-Based Entertainment (“HBE”) division’s main focus is on building its distribution network in order to fulfil the busy Q4 period when we expect consumer intent and marketing activity to rise sharply.

Enquiries for Uvisan disinfection cabinets continue to grow and we expect to see a significant increase in its revenue in the coming months.

Overall, we remain very optimistic about the prospects for H2, assuming no material reversal in the easing of pandemic related restrictions.

As can be seen, the impact of our growing LBE revenue has a significant impact on our income statement and we remain focused not only on maximising the performance of our current LBE portfolio but also the opportunities for growth in 2022 and beyond.

Martin Higginson, Immotion Group CEO said: ” In the circumstances we are very pleased with H1’s result. Hitting circa EBITDA breakeven in H1 is a major milestone, especially on Covid impacted revenues of £2.7m. With July revenue of £1m, we are now seeing clear evidence of the potential of our business.”

“The second half of the year has started very strongly, and this augurs well for a strong H2. The trading environment is now unrecognisable compared to the start of the year, as clearly demonstrated by the rapid increase in revenue and EBITDA. The investment in proprietary content, along with the technology to operate larger scale VR theatres, is starting to pay dividends and we are now looking ahead and planning for accelerated growth in 2022 from the plentiful growth opportunities we believe are in front of us.”

* H1 EBITDA includes the benefit of other income of £399k, comprised primarily of £117k forgiveness of the 2020 Paycheck Protection Program loan in the USA and £206k grants from the Coronavirus Job Retention Scheme in the UK. The revenue figure of £2.7m does not include these items.

More Interviews

Question & Answers

Immotion Group looking forward to Q4 with renewed optimism (LON:IMMO)

Immotion Group plc (LON:IMMO) Chief Executive Officer Martin Higginson caught up with DirectorsTalk for an exclusive interview to discuss H1 results, their new zoo experience, a solid six months of profit, progress with Let’s Explore Oceans, Vodiac, Uvisan, cash generation and whether they can continue to grow at such a fast pace.

Immotion Group aims to be a leader in the western market sector of the out of home virtual reality market with the objective of creating recurring revenues from a large install base of virtual reality headsets across partner sites and ImmotionVR experience centres. With me today to discuss this morning’s interim results is Chief Executive Officer Martin Higginson.

Q1: Martin, you must be very pleased with H1 results, especially given the fact that the first quarter we were still very much in lockdown restrictions and to achieve to near breakeven results is pretty amazing. Add to that the Q3 performance, you must be thrilled. What’s driven this tremendous turnaround?

A1: To get where we’ve got to in Q1 and Q2 is really an amazing result. Quarter one, we lost a couple hundred thousand pounds, but obviously that’s to be expected, we were still very, very much in the throes of lockdown. Quarter two, was a meaningful seismic change for us, our locations started opening again, and it was really those locations opening, and opening very rapidly, in Q2 that actually allowed us to get to a breakeven position for the half year.

So really, really pleased, it’s a great position to be in for the company, especially having been through such a torrid time over the last 18 months.

Q2: Now, I see that you’ve launched a new zoo experience. Can you tell us more about that?

A2: We have the team out in Africa, in Rwanda, filming a brand new user experience, we’re really, really excited about this.

We’ve had a lot of inbound inquiries from zoos, I think it also gives us the chance to really get on the front foot with our mission in terms of being at the sort of bleeding edge of conservation, filming things that people are just not able to see in a zoo or an aquarium environment.

So, this will be another world first for us, it will be a fantastic product and we’re going to launch it at a trade show in the US in the next couple of months, so exciting times.

As I said, I think for zoos, this will be a great product for them, it will allow that their customers and visitors to see something that you would never be able to see within the zoo environment.

Q3: I also note that come the end of this month, you’ll have recorded a solid six months of profits. What are your thoughts on the rest of the year?

A3: First of all, to actually have six months of solid profitability under our belt is a great feeling. Obviously, leading a company that is profitable and continues to make profit is a much better place than, than where we’ve been.

So first of all, I’m thrilled, we’ve got an amazing team here, we’ve come through some difficult times, not only have we kept the team together, we’ve actually, I think, thrived, and prospered during this period. As we’ve come out of the pandemic, we’ve come out very, very quickly, we’ve made sure that all of our locations are up and running, having been mothballed for 18 months.

I think as we look forward, we look forward to a great degree of optimism, we’re now becoming much more of a rounded immersive entertainment group. We have our location-based operations, we have our home-based operations so I think overall we’re moving in the right direction and we look forward to Q4 with, as I said, really renewed optimism.

Q4: You state that you’ve seen growing sales from your Let’s Explore Oceans product, you must be thrilled at how this new division has evolved?

A4: Yes, it came very much out of the pandemic, we were closed in our locations, we needed to look at not only what would keep morale high, keep the team together, but also what else would we do without the assets that we had.

We came up with the idea to do Lets’ Explore Oceans, it was a great product, we got it launched very, very quickly, it came from sort of conception to reality within 12 weeks last year, we sold 11,000 units in the UK and generated circa £1 million of sales so it was a great start.

This year was really about building on those foundations, where else could we sell this in the world? How could we get it onto Amazon? How could we improve our distribution centres?

So, now we have an outsource distribution centres in China, which fulfils Australia, Singapore, New Zealand, where then have our outsource distribution centre in the UK and then we have one in the US that fulfils Canada and the US so three good sites. We’re also now on Amazon, both here in the UK and in the US and Canada, and we’re seeing sales grow very, very rapidly.

So I think as we look forward to Q4, the busiest period, we’re very well equipped and we’ve made sure that we’ve got stock in place. There’s been all the usual challenges around logistics with that, but we’ve done our best to make sure that the stock is in the right place and we can fulfil people’s orders for what we expect to be a very, very busy Christmas period.

Q5: Can you tell us a bit more about Vodiac?

A5: The Vodiac is really as a result of feedback from Let’s Explore Oceans customers. When we sold the product last year, the main observation from customers was that they wanted to see more content. When are you going to launch something new? Can we download more?

We’ve listened to that and this year, we’ve had the team looking at not only finishing some experiences that we had in our own arsenal but also where else can we source experiences. So, we’ve managed to source a lot of amazing experiences from adrenaline sports to nature and discovery, to relaxation and wellness to city tours so we’ve got a lot of new content.

Vodiac will have seven channels so customers will be able to choose from seven different channels, they’ll be able to choose the VR videos that they want to watch and this really is, again, another first for us in terms of delivering passive VR, VR movies, VR videos to the audience.

We’ll do this at a very aggressive pricing, we want to build audience share, we want to get something that is really an impulse buy, rather than just the occasional birthday present or a Christmas present as we maybe hadn’t had with Lets’ Explore.

So, this will sit alongside Lets’ Explore Oceans, but it is very much priced to go, it has got a much broader channel base so hopefully a much broader audience and with the pricing that we’re doing, it’ll be sub-£50, we’re hoping to build a sizable audience on a global basis quickly.

You’ll be able to rent additional movies and videos for a nominal sum so for the first time, we’re starting to build recurring revenues into that home-based entertainment division.

Q6: Your Uvisan product with 64 cabinets going to the NHS, it’s got a smile on your face on how it’s all been developed. What are your thoughts for the future for this part of the business?

A6: Well, first of all, it came out of lockdown as very much an accidental hero, we had to devise something that could cleanse headsets for ourselves. So again, an amazing team, we gave them the challenge, they reacted and excelled and came up with a great product that is now endorsed by the likes of Hewlett Packard, we’ve got recognition from the likes of Microsoft. So we’re really up there in terms of something that is of quality.

To have something like the NHS order 64 cabinets from us is just another tick in the box. I think what’s happened here is that we’ve been able to create a business within a business, it’s very solid, generates good cash for us, and I can see continued growth from this. The cash generation from this business will allow us to invest both in the location-based division and our home-based division.

So, yes, it’s absolutely fantastic, great work by the team and it’s really nice to have something that is, as I said, developed as an accidental hero.

Q7: You mentioned good cash generation, especially for Q4, what are your plans for the cash that’s being generated?

A7: First of all, to be in a position where we’re actually generating cash is a great position and the majority of our EBITDA revenues now are turning into cash so we can actually use those to invest in new locations and some more home based development.

Really the growth in Q1 is going to come from our locations, we want to open more zoos, we’ve got those earmarked and we’ve got inbound inquiries. It’s now about doing the due diligence on those zoos, making sure that we choose the right partners and the beautiful thing with zoos and aquariums is that they’ve already got lots of footfall so we’re looking for partners with plenty of footfall. We now know, having done a number of larger theatre style installations, what percentage of that footfall we can convert into paying customers.

So, we’re getting more and more data coming through that allows us to plan with a reasonable degree of accuracy as we move forward.

Q8: Now, it looks as though Immotion Group is developing into a great immersive entertainment company in what’s really still an embryonic market. Delivering profits so quickly is a major achievement but can you continue to grow at that kind of speed?

A8: We’ve never let ambition get in our way so we are, as a team, uber ambitious, we come out fighting after the pandemic, we’ve delivered profits very, very quickly post-pandemic and we’ve got some big plans for the business, as you touched on before.

We see this developing into an immersive entertainment group, we see that the world is going to change, there’s going to be a need in locations to give visitors the ability to see animals that they can’t see in captivity in VR, in 360 degree vision so I think that’s a real tick in the box.

The home-based stuff, again, we’ll continue to develop Let’s Explore, we’ll broaden that, but with Vodiac, we can offer the seven channels to the consumer so a much broader offering.

So, we’ve got plenty of ambitions, we’re planning this carefully and methodically so it’s not about sort of overtrading, this is about really planning with military precision.

I think we’ve got a lot of things in place, but to be doing that from a profitable base, feels very good at this moment.

Immotion Group capturing demand for Virtual Reality theatres and entertainment (LON:IMMO)

Immotion Group plc (LON:IMMO) Chief Executive Officer Martin Higginson caught up with DirectorsTalk for an exclusive interview to discuss nearing EBITDA breakeven, main drivers of growth and the progress of their Home-Based Entertainment products.

Q1: Now, Immotion Group has just reported EBITDA breakeven, or very close to it, for the first half of 2021. You must be very pleased to achieve this result, given the circumstances?

A1: The first half of 2021 was an absolute nightmare. Obviously, we were still very much in the throes of COVID and through a combination I think of i) probably entrepreneurial spirit ii) strict cost control and I think iii) opening up of our out of home businesses culminating in an excellent June has really driven us to this result of turnover of sort of circa £2.7 million. To have got to close to EBITDA breakeven I think is a major milestone for the company.

Q2: You recently reported June was a record month, with EBITDA circa £100,000, I see it’s come in at 120,000 in July is even better with revenue over £1 million and EBITDA circa £200,000. What have been the main drivers?

A2: Most of this has been driven by our out of home activities and it was always going to be this really, as the sites reopened, they’ve not only just reopened, but they’ve reopened with a real sort of vengeance. We’ve seen massive footfall in the majority of our sites.

June was good, we reported prudent circa £100,000 a few weeks ago, that’s now come in, we’ve got all the figures in and that’s £120, 000 so that’s great. As we look at July, again, still being relatively prudent, but we can see that revenues will be in excess of £1 million, we can see that EBITDA will be around £250,000 mark so a marked improvement on June, all driven really by out of home activity.

This was always going to be the case, we invested heavily at the outset when we set about creating the company, investing in delivering proprietary content, quality content, also doing a lot of the technical heavy lifting, making sure that we could strip costs out, making sure that we could run the sort of VR theatres with motion platforms at scale.

Those are really now starting to pay dividends as we go forward.

Q3: Clearly hitting £1 million revenue a month mark, it shows that you’ve bounced back. When you compare this figure to the H1 revenues of £2.7 million, you can clearly see it. How do you feel about the future given this amazing recovery?

A3: I think you can clearly see, £2.7 million in the first half of 2021 and obviously a lot of that was driven by a great June, you can really start to see where the business should be operating in terms of monthly revenues and monthly EBITDA so that really gives us confidence.

I think with an incredibly busy inbound inquiry list of quality partners wanting the larger theatre installed, we’re very, very excited, not only about the rest of 2021, where we can start seeing what’s happening in early August, we’re very pleased with early results there. We can start seeing new sites potentially coming on board, inquiries coming in, and all of this really helps to underpin not only the rest of the year, but also as we move forward to 2022.

Q4: Now, I know in lockdown, you introduced two new products, they’re Home-Based Entertainment, Let’s Explore Ocean pack and Uvisan. What’s the update on these businesses?

A4: I think both are good. I think that there’s two things really, when you’re in the middle of a crisis, as we were in lockdown, it is important that we looked for additional revenue sources, we looked for things that were going to drive morale with the team and we looked for things that would generate some cash. Back then, it was all about survival and the company was in a survival mode.

I think we’re now the other side of that so I think in terms of the in-home business, in terms of Let’s Explore, all of this is geared up for a Q4 activity, the cost of the product is £70-odd, $100, it is a considered purchase and it is a considered purchase that will culminate in a lot of activity around Q4 period.

We sold 11,000 boxes last year, and that was just in the UK only so now we’re in the US, Canada, Australia, the UK, and a number of other key markets. We expect sales to be considerably higher, we’ve got the stock, we’ve now got good distribution, both in Amazon and Google and through Facebook so we’re excited about the Q4 prospects of that business.

Uvisan, we’re seeing a lot of activity, we’re seeing a lot of, again, inbound inquiries coming from some quality partners so we expect those revenues to start ticking up over the coming months, albeit both are non-core really.

Our main focus really over the last six months has been getting our locations-based operations back up and running, they’ve all been mothballed for over 12 months. So, our key focus for the last few months is really getting those back up and running, getting them generating cash, and if you look at July’s number of £1 million of revenue, you can see that the investment and the time that we’ve put in, to getting those up and running has actually paid dividends in the £200,000 EBITDA.

Q5: It does look as though you going places now, and I can see that the operational gearing of the business is kicking in too. Do you expect this to continue or are there more costs to be added as you scale?

A5: We’re very confident about cost controls that we’ve now got in our business, and as we get better at it, obviously it comes with the more you practice, the better we get, but as we get better at it, we think we can really start homing in on that operational gearing.

Now, you saw from the increase in July, basically compared to June, how that has really impacted the EBITDA number and I think we’ll start seeing more and more of that. We think we can add a lot more turnover to our business without necessarily having to increase staff numbers or costs considerably.

So, I think of that profit contribution that we make, I think a lot of that will flow straight to the bottom right-hand corner.

Q6: So, in summary, big focus on the location business, will you need to raise more cash at all?

A6: Well, at the moment, we’re very happy. We were in a position where we are generating, EBITDA profitability, ignoring capital expenditure, which whilst you can’t ignore that, but just putting that to one side for a second, we’re actually generating cash within the business. If we then use that cash that we’re generating to help fund CapEx, that will really help drive the business.

So we’re not intending to raise cash in the short term to medium term future, we think we’ve got enough stock of machines, we’ve got enough cash, we’re generating cash so I think we’re in a very good place at the moment.

As I said, we’re very excited about not only the rest of 2021, but what the order book is starting to look like for 2022.

Q7: Finally, what risks keep you awake at night?

A7: Well, there’s always that niggle at the back of your mind about the pandemic and all the rest of it. I do think Immotion Group has been lucky or fortunate or good planning that we’ve got boots on the ground in the USA so our main business is in the USA, followed by the UK.

We’ve got some outliers in Australia, and Australia is suffering with lockdown on and off, 90% of our business in the US/UK focused. So, as a consequence, with the amount of vaccinations being rolled out in both those territories, we are confident as you possibly can be that we’re in a good place.

What keeps you awake at night? We want to grow this, we want to grow fast, we’ve got big ambitions for the business. It’s really about just taking control of that and it’s just making sure that we remain focused as a business, if we remain focused as a team and as a business then I think we can deliver some great shareholder value in the coming months and years.

Immotion Group Q&A: In a very good position for building growth (LON:IMMO)

Immotion Group plc (LON:IMMO) Chief Executive Officer Martin Higginson caught up with DirectorsTalk for an exclusive interview to discuss reaching EBITDA profitability, moving to larger theatre-type installs, the appetite for new locations, expectation for revenues & profits and whether it’s good time to invest in the company.

Q1: I know the pre-pandemic, Immotion Group were poised to move into profitability but you must be very pleased to have done it so quickly now following the easing of lockdown restrictions?

A1: Yes, we are extremely pleased to be in this position, it’s been a tough old 14/16 months for us and the business and everybody involved at the company. So, to actually reach EBITDA profitability is a key milestone for the business and something that we were on the brink of moving into last year.

I think, as I said in the statement, what the pandemic has taught us is a lot of different things, we’ve definitely come out of it leaner, meaner, and fitter as a business. I think moving into EBITDA profitability, both in May and significantly in June is, as I said, a key milestone and it just really starts setting the foundations for the way forward.

Q2: I see that you moved to larger theatre-type installs, can you talk us through the logic of this?

A2: Last year, we installed a big theatre installation at Mandalay Bay which is part of the MGM Resorts operation in Las Vegas and that has gone down really, really successfully. Even during the pandemic, as we’ve started to see things open, we’ve really started to see that blossom.

Recently, the last probably eight weeks, we installed a 22 seat theatre-style installation with pre-show at Clearwater Aquarium in Florida in the USA, and that’s performed exceptionally well, far better than I think we anticipated and even the partners anticipated.

So, that’s really given us the confidence to do what we always really intended to do, which was instal larger theatre-style immersive theatre, complete with pre-show. What I mean by the pre-show is, we have a number of interactive areas ranging from little booths where you can take selfies of yourself in a shark cage, to sounds of the sea, which is whale songs, to the anatomy of sharks and whales. So it gives people, while they’re waiting, something to interact with completely immersive and obviously, the pinnacle of the show is the VR movie in itself so you’ve got a 6 minute movie.

I think for our partners, it means we become an integral part of the faculty and I think that’s really helped us increase revenues, increase throughput, increase utilisation and I think we’re now starting to say that this is the way forward.

One of the things our team did last year is we actually worked out how to sync a whole bunch of headsets so 60/70 headsets together through one computer so that’s allowed us to remove computers from each motion platform and operate them through one centralised computer. So, that means we’ve reduced cost of the installation and therefore it’s much more economically viable for us to do these larger installs.

Q3: What’s the appetite for new locations for your offering? You gave a hint in your statement to new sign-ups so do you expect more this year?

A3: Yes, we certainly expect to do it a few more this year.

We’ve had a lot of inbound inquiries and I think it’s about being selective in the ones that we choose. We’re certainly looking for sites with good foot fall and I think the big difference with the larger installs is i) we need to look for space, ii) we need to look for partners that want to work with us on this and that have got plenty of football.

If we’ve got the footfall, then we know that a decent percentage of those will go and do the VR experience so it’ll be profitable for them and profitable for us. The 50/50 arrangement that we have in place with our partners really works, it means they’re committed, we’re committed, minimal staff levels for a large theatre so it’s highly profitable for them and for us and I think it really, really works.

Obviously, the pandemic has really focused the minds of a lot of aquariums and now, as we move into zoos too because they’ve had a real tough time over the last 14/16 months, they’ve had little or no revenue coming through the door. So, we can actually offer a great new revenue source, a great new source of entertainment, and a new attraction for some of these faculties as well really underpinning their revenues as we move forward.

Q4: Now, I see from the statement that the LBE business has bounced back with a vengeance. So, with summer holiday season upon, do you expect revenues and profits to grow further?

A4: We achieved over £700,000 group revenue, £600,000 of that has just come from the Location Based Entertainment division so you can really see how that’s increased since March, as we’ve opened up more sites, and we started opening up some of the larger theatre-type operations. All of this is without the benefit of the summer holidays.

As we go into this week, certainly in the US, we see the kids are off school, summer holidays, July 4th is really the start of their summer season so we’re expecting a nice tick-up, certainly in the US and I think that will be followed by a good tick-up in, in the UK as well.

I think this year is very much going to be a year of staycations, both in the US and the UK, so I think we’ll get the benefit of that and hopefully we’ll start seeing some US/UK travel corridors open, which we believe will give us a very good Q4 period because I think that will become the destination of UK families as we move towards Christmas for their holidays.

Q5: Just looking to the other side of your business, you sold a lot of Let’s Explore packs last Christmas, do you expect the pattern to be repeated this Christmas?

A5: Yes, last year was really about scrambling this thing together, we needed to produce something, we were in the middle of the pandemic, we used a lot of the assets that we had and we produced the Let’s Explore pack.

What we’ve managed to do this year is source product better, get it produced in China and make sure the supply chain is much smoother and that’s helped us significantly reduce the cost of goods and improve margin.

What we’re now looking forward to this Christmas is really planned and structured sale and obviously, the difference between this year and last year, last year we were only in the UK, we sold 11,000 units in the UK this year. This year, we’re in the US and Canada, Australia, South Africa, Singapore, and a number of other territories around the world and we’re in Amazon in the UK and the US and Canada.

So I think, yes, we’re looking forward with confidence to Q4 period and it’s very clear that that that is what drives intent. So, with a heightened intent, our cost of acquiring a customer reduces and therefore our margins increase so there’s a lot of focus on the Q4 period for Let’s Explore team.

Q6: You mentioned that you’ve got the CE certification for your clean room product from UVisan, what are your sales expectations for this product?

A6: Well, getting the CE certification is a key driver in actually us being able to sell Cleanroom so now we’ve got that we can start sort of offering it out to customers. We’ve got a number of interested parties, some large, some small, we’ve also got a number of distributors that are talking to us about wanting exclusivity in certain territories.

So, it’s still early days, but we’re very, very hopeful and the good thing with UVisan really is i) it’s solved a problem for us in terms of how do we cleanse headsets and ii) it actually allowed us to develop a business and start generating cash at a time when the generation of cash was important.

What we’ve also managed to end up with is an accidental business really, we’ve got something that customers outside of the company want this, it’s now generating solid contribution each month and we think that can increase over the coming months.

So, we’re very pleased with what we’ve ended up with and, as I said, it’s become an accidental hero but a very welcomed one all the same.

Q7: So all in all, you must be very pleased with the progress that you’ve made and with the move to EBITDA profitability. With the business now generating cash, do you think that it’s a good time to invest in Immotion Group?

A7: We’ve got cash in the bank, we’ve got machines that are bought and paid for, we’ve got headsets of which the vast majority of deposits are paid for and will be self-financing, we’ve got a good order book in front of us and we’re generating cash.

So, I think all in all, having been through, as I said, a torrid time through the pandemic, we’re now in a very, very good position and it’s now about building for growth rather than financing losses and things like that.

So, personally, I’m very pleased to have reached this milestone. I think from an investor point of view, I think now we can start developing the business and start building on those blocks to really create something that has great reach and depths of value.

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Immotion Group revenue increased 230% during a year of recovery and progress

Immotion Group signs four new partner locations

Immotion Group contract extension at Shark Reef Aquarium

Immotion Group to Unveil Groundbreaking Virtual Reality Experience, ‘Gorilla Trek’

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Immotion Group revenue to be very significantly ahead of that reported in H1 2021 (Interview)

Immotion Group targets zoo revenues with “Blockbuster” Gorilla Trek Virtual Reality (Interview)

Immotion posts impressive H1 results as demand of VR solutions soar (Interview)

Immotion Group EBITDA breakeven in H1 a major milestone (Interview)

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Immotion Group looking forward to Q4 with renewed optimism (LON:IMMO)

Immotion Group capturing demand for Virtual Reality theatres and entertainment (LON:IMMO)

Immotion Group Q&A: In a very good position for building growth (LON:IMMO)

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