VR firm Immotion sinks after unveiling £3m growth placing (IMMO)

Immotion Group (LSE:IMMO) dropped 16.4pc to 6.8p on Tuesday morning after launching a £3m placing. At 6p per share, the raise takes place at a significant discount to the 10p per share the virtual reality player entered the market at last July. The money will be used to accelerate Immotion’s growth plans, specifically covering hardware, content development, and operational cashflow.

Immotion installs virtual reality ‘experience centres’ in hotels and entertainment centres around the world alongside concessions in shopping centres. These allow users to simulate things like car racing, space, and dinosaurs using cinema pods as well as providing more education-focused experiences.

As of 31 December, Immotion had brought 152 of its headsets into operation, developed 12 content experiences, launched in the US, and secured major partnerships with Merlin and the Rank and Al Hokair groups. However, in Tuesday’s update, the firm said it wants to strengthen its balance sheet so it can, among other things, capitalise on the growing interest in shopping mall leisure as retailing continues to suffer.

The company also said it wishes to take advantage of some very large concession partner opportunities ‘beyond its original expectations’. It believes this will help it to build a leading position in what it calls the Out of Home VR market. Several of Immotion’s directors will take part in the placing, subscribing to nearly £570,000 worth of shares.

On the raise, the company’s chief executive Martin Higginson said: ‘The significant increased demand from Concession Partners has allowed the Company to undertake a fundraise to fuel this potential growth. Longer term agreements with high-quality leisure partners will build visible, recurring revenues.  As well as increasing our installed Partner base, we are rolling-out more high-quality VR content, which is key to opening doors with new operators. Notably, the development of this high-quality content has allowed us to secure our two content licensing agreements with LEKE VR, another significant milestone for the Company.

‘We believe we are well placed to take advantage of the opportunities ahead of us, and remain extremely confident that Immotion Group is set to become the leading out of home immersive VR operator in the world. We look forward to providing further updates on our progress as they develop.’

Elsewhere in Tuesday’s update, Immotion announced a series of contract wins in a trading update. Following a successful trial, the business has agreed on a roll-out of its cinematic platforms with several Merlin Entertainments subsidiaries. This includes the Lego Discovery Centre, LEGOLAND, and SeaLife brands.

The company also expects to install an additional 200 headsets this year. Most of these will be at concessions, but several are expected to be smaller ‘machine sales’ to places like leisure arcades and family entertainment centres. Elsewhere, Immotion said it has signed an additional VR experience licence for the Chinese market. This will generate minimum revenues of £224,000.

All-in-all, the firm said overall 2018 trading was in line with market expectations. As at 31 December, the company had unaudited net current assets of £1m.

Higginson added: ‘The commercial success of our recent trials, which are being converted into long-term agreements, has shown our ability to deliver revenue for our partners. This, together with the positive feedback from the paying public and the discussions we are having with shopping malls and leisure operators around the world, demonstrates that there is a growing demand for our superior out of home immersive experiences.’

Author: Daniel Flynn

Disclaimer: The author does not own shares in the company mentioned in this article

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