VR entertainment group ‘delighted’ with first half performance
Revenues at Immotion Group have risen in the six months to June 30, 2022, standing at £4.420m, up from £2.335m the previous year.
And the Salford-based virtual reality entertainment group, managed to cut pre-tax losses for the period, which were down from £1.03m in 2021, to £328,000.
During the reporting period the group achieved entry into zoo market with three partner site openings in Milwaukee County Zoo and Pittsburgh Zoo (July) and Chester Zoo (August).
An in principle agreement was reached, subject to contract, to sell Uvisan, its equipment sanitising business, for an estimated cash consideration of £100,000. Also, an in principle agreement has been reached for a £250,000 third party investment for the Home Based Entertainment (HBE) business in exchange for 51% ownership of this business.
Uvisan and HBE are now classed as discontinued operations and reported as such for the first half. Continuing operations consist of the Location Based Entertainment (LBE) business along with its direct costs and group overheads.
Today’s announcement included an outlook for the current period, in which the group said it expects revenue from continuing operations in the third quarter to be approximately £3.4m and adjusted EBITDA of approximately £0.7m, resulting in total revenue for the nine months ended 30 September 2022 of approximately £7.8m and EBITDA of £1.2m from continuing operations.
The first three zoo installations featuring the new ‘Gorilla Trek’ offering have been well received by partners and guests alike and Immotion has learnt a lot from these early installations and will use the knowledge gained to further develop and hone its offering.
The second half of 2022, as expected, started very strongly with excellent trading across the estate in the summer months of July and August. The group will see the normal seasonal slow-down from September, as school holidays have ended in both the USA and UK.
CEO, Martin Higginson, said: “We are delighted with the performance of the business in H1, delivering £4.4m of revenue from continuing operations. H1 2022 revenue also exceeded that of H2 2021, which is traditionally our stronger half of the year.
“Unaudited gross profit from continuing operations was £2m – being total revenue less partner share and other direct costs of sales, including rent and payroll for our ImmotionVR sites. This is double the same period in 2021, with margins rising to 46% from 44% in H1 2021. EBITDA from continuing operations in the period was £0.5m (H1 2021: £0.2m, which was inclusive of £0.3m of COVID government grants).
“The loss before tax from continuing operations narrowed to £0.3m (H1 2021: £1.1m loss). The H1 2022 result is net of depreciation and amortisation of £0.7m (2021: £1.0m). The reduction in this charge reflects the prudent approach we have taken historically to depreciation of all plant and equipment, much of which, whilst still in use, has already been fully depreciated.”
He added: “With the benefit of several years of operating experience now under our belt, we are confident that the actual useful life of our key hardware such as motion platforms is comfortably in excess of the three years over which we have been depreciating it in full.
“Whilst this cautious approach has much to commend it, we believe on reflection that this has tended to provide an overly pessimistic picture of our trading results at EBIT level and as such we have changed the basis of the VR cinema pod depreciation to a seven-year useful life.
“This change is based on a combination of historical data and hardware testing and has been applied to relevant assets on hand at or acquired after 1 January 2022. Prior periods have not been restated in respect of this policy change.
“Our estate has grown from 364 headsets (across 48 sites) at the beginning of the year to 414 headsets (across 50 sites) as 30 June 2022. As at today’s date the group has 476 headsets (across 52 sites).
“This increase in seats has been driven both by an increase in the number of seats at established sites such as Shark Reef Aquarium at Mandalay Bay, OdySea Aquarium and SEA LIFE London (32 seats in aggregate); and new installations, predominantly the 70 headsets in aggregate installed across our first three zoo partner sites in July and August 2022.
“With known install opportunities for the remainder of the year, we remain confident of exceeding 500 installed headsets by year end.”