Virtual reality (VR) business Immotion Group (IMMO) dropped 8.8pc to 4.6p on Wednesday morning after announcing a total underlying loss of £2.9m in 2018, its first full year of trading. However, the drop, which puts Immotion’s market cap at £11.5m, comes despite the business placing the loss down to investing heavily in the project range since listing last July.
The £4.8m raised by the organisation upon entering AIM has allowed it to create several revenue streams. This includes a VR content creation and licencing arm and a concession arm that enables it to provide its VR experience and motion platform to leisure operators in high footfall destinations. It has also established an entertainment brand called ImmotionVR, which it has rolled out at numerous shopping centres, and a sales arm that allows it to sell VR equipment and experiences through distributors to partners.
In Tuesday’s results, the firm said it spent considerable amounts on creating VR content and putting in place the central management and sales teams and infrastructure needed to establish and grow these activities. This prompted a total underlying EBITDA loss of £2.2m for the year ended 31 December 2018 as well as a total underlying loss before tax of £2.9m and a total underlying loss per share 1.71p. Elsewhere, the business revealed total revenues of £2.9m for the period, alongside income from continuing operations of £1.9m and a twelve-fold increase in VR revenue to £1.2m.
Looking forward, Immotion said it will now be able to more precisely focus its expenditure, leading to a reduction in its cost base and cash outflow. The firm said it will also begin to capitalise on its significant historical investment and activity to propel its operations to the next stage.
‘Having put in place solid foundations, including a comprehensive range of VR experiences, a number of major concession partners, and a growing number of collegiate relationships with major retail landlords, the Group is well poised to start building a strong annuity revenue business,’ it added.
Immotion pointed to its progress so far this year as evidence of its increasing ability to monetise its offering. Since the end of the 2018 results period, it has signed two licencing deals, enjoyed strong trading at its ImmotionVR centres, and achieved sales well above expectations at its key concession partner sites. In particular, it is experiencing strong success at its Legoland Discovery Centre installations.
Looking forward, the business also recently raised a further £3.1m at 6p a share to accelerate its growth plans with a particular focus on hardware, content developments, and operational cashflow. It is also planning to launch its first ‘Swimming with Humpbacks’ installation in a Sea Life centre this month.
Chief executive Martin Higginson said: ‘I am pleased with the progress made to date. 2018 was very much a year of investment. In order to establish ourselves as a serious player, we needed to create a range of VR experiences as well as source a range of VR platforms on which these experiences could operate. There are many players, including some of the largest companies in the world, operating in the VR space and whilst Immotion Group is a relatively new entrant in this landscape, it has quickly established itself as a serious contender.
“Our ability to produce amazing VR experiences has given us the ability to secure partnership relationships with a number of leading entertainment companies, including Merlin. This is a credit to our respective teams. Understanding the end customer’s needs has seen the development of our Blue Ocean series of VR content, including ‘Swimming with Humpbacks’. This has allowed us to extend our relationship with Merlin through their SEA LIFE centres, as well as giving us the opportunity to deliver a new ancillary revenue generator to aquariums, zoos and museums.
‘An encouraging start to trading with both our own ImmotionVR centres and our concession partners has given us confidence in the potential of the concessions model as well as the appetite to look selectively for new sites. As one of the few VR companies actually generating revenues, we are genuinely enthused at the growth we are achieving. Our team continue to deliver amazing results, whether it’s creating new experiences, signing up new partners or opening new stores, they are a credit to the Group and themselves. I thank them for their continued hard work and belief in our goals.’