Final Results and Trading Update

RNS Number : 9099U

Immotion Group PLC

03 April 2019

 

3 April 2019

Immotion Group plc

("Immotion Group" or "the Group")

Final Results and Trading Update

Immotion Group (AIM:IMMO.L), the UK-based immersive virtual reality ("VR") out-of-home entertainment business, is pleased to announce, in line with market expectations, its audited final results for the year ended 31 December 2018 and an update on trading and strategy. Having invested heavily in 2018 we are now starting to see the results of our investment. Since year end the Group has signed two Content licensing deals, and has seen strong trading especially across its Concession Partners, and its own ImmotionVR stores. The recent fund raise will allow the Group to continue investing in growth as it begins to build on the foundations created in 2018.

Financial Highlights - 2018

·     Total revenue £2.9m

·     Revenue from continuing operations £1.9m

·     VR revenue increased twelve-fold in H2 to £1.2m

·     Total revenue from VR operations £1.3m

·     Total underlying EBITDA1 loss £2.2m

·     Total underlying loss2 before tax £2.9m

·     Total underlying loss2 per share 1.71p

Operational Highlights - 2018

·     Placing to raise £4.8m net proceeds and admission to the AIM market of the London Stock Exchange completed on 12 July 2018

·     Creation of 12 proprietary VR experiences and Content Management System

·     Developed first recognisable VR retail brand in UK with multiple sites and formats

·     Successfully opened 10 ImmotionVR centres (11 trading at end of the period)

·     Initial concession agreement secured with major partners such as Merlin Entertainments plc 

·     VR equipment sales revenue £0.5m in the period

Post period end highlights

·     Further placing raising £3.1m net of costs completed on 5 March 2019

·     Third party monetisation of content, with first two licensing deals signed in January 2019

·     Early 2019 trading in ImmotionVR centres encouraging, especially with the February half-term holiday week

·    Strong trading in key concession partner sites, with new Legoland Discovery Centre installations achieving sales well above management expectations

·     First SEA LIFE centre installation expected April 2019

·     Launch of "Swimming with Humpbacks" immersive experience - a world first

Background

Immotion Group is a leading UK-based immersive out-of-home entertainment business focused on VR experiences. The Group combines award winning CGI and live action content with cutting edge hardware to deliver an affordable and rewarding suite of immersive experiences. Working with leading entertainment, leisure and retail operators, the Group is able to deliver valuable ancillary revenue, and footfall to its ever-increasing customer base.

The Group has several channels to market, including:

·    Content creation and licensing - The Group creates and curates immersive content for its own operations as well as licensing these experiences to third parties.

·   Concession partners - The concession model enables the Group to work with established high-quality leisure operators with proven high footfall destinations. The Group provides, at its own cost, the VR experience and motion platforms and other hardware. The partner provides the site, staff and utilities. The Group and partner share the revenue on a pre-agreed basis.

·     ImmotionVR - ImmotionVR is the brand name for the Group's own Location Based Entertainment ("LBE") centres.

·    Sales - The Group sells VR equipment, together with quality VR experiences through distributors and to selected partners.

Chairman's Statement

The Group's first full year of trading, 2018, was a year of intense activity and investment, building the foundations of our plan to become a leading player in the out-of-home VR market.

During the year we invested heavily in the creation of a wide range of quality VR immersive experiences combined with motion platforms. This was essential to help unlock the various channels to market. We are now starting to see the benefit of this investment. We signed our first two content licensing deals in January 2019, and are enthused by the ongoing interest in licensing our experiences.

Early 2019 trading has been very encouraging, especially across our concession partner estate.

Sales across our ImmotionVR centres also saw solid growth, giving us confidence to explore opening larger centres on a selective basis, where we will work with key landlords in a more strategic manner.

We continue to work with our newly appointed distributors to develop our sales strategy, and look forward to the launch of a new 'attendant free' VR booth.

Having made a significant investment throughout 2018 in content creation, equipment sourcing, and establishing concession relationships, the Group is now able to more precisely focus its expenditure, leading to a reduction in its cost base and cash outflow. As we move through 2019, we will begin to capitalise on the significant investment and activity of 2018 to propel the Group to the next stage.

I would like to place on record the thanks of the Board to all our existing and new investors and, in particular, to those who supported us in the most recent fundraise despite all the uncertainties surrounding Brexit.

Chief Executive's Review of Strategy and Operations

I am pleased to report that, following a year of intense activity and investment, we are now in a position to start taking advantage of our efforts.  Strong early trading has encouraged us to focus on key growth areas, especially our concession partner relationships, and our ImmotionVR centres.

In what is a relatively new market we are quickly gaining traction and establishing ourselves as a key player in this exciting sector.

According to Greenlight Insights, the LBE market is forecast to grow from $1 billion at the end of 2018 to $12 billion by 2023, making up 11% of the forecast global VR market. Furthermore, it is now recognised as the fastest growing revenue sector for Brand Licensing according to LicensingSource.net.

We have now established several revenue generating channels to market, which we believe can underpin our strategy to become a leading player in this market.

Content Creation and Licensing

In order to become a serious player in this exciting market, the Group has developed a range of 12 high quality immersive experiences. In 2018, the Group invested circa £1.5m in creating these VR experiences. Immotion Group's heritage of content creation through its award-winning storytellers is important in our market as we believe people buy 'experiences' and not technology per se.

VR hardware manufacturers are now looking to license our experiences, and AAA brands are now engaging with us to produce immersive experiences for them. All testament that our content creation team are 'best in class'.

To date we have completed two license deals with LEKE. The first provides Immotion Group with 70% of all revenue generated.  The licensee must generate minimum revenue of £588,000 in the period to March 2020 for Immotion Group in order to maintain exclusivity. A further licensing agreement was signed in January 2019 for two experiences to be exploited in the Chinese market. This license guarantees a minimum revenue of £224,000 to the Group in the period to March 2021. Further license discussions are underway with other hardware manufacturers.

The Group is in the process of opening up its experiences, reversioned as appropriate, to the home and educational markets via SpringboardVR with SonyVR and mobile channels to follow in the near future. The Directors believe the 'Swimming with Humpbacks' experience, the first in the Group's 'Blue Ocean' series, will be especially well received by this audience.

        Concessions

The concessions model enables the Group to work with established high-quality leisure operators with proven high footfall leisure destinations. We are pleased to report that our concession partners reported record trading during the recent February half-term holiday, up 68.8% on a like-for-like basis compared with the Christmas holiday week in 2018.

We rolled out our first revenue sharing partnership in 2018 and it was a significant achievement to develop a relationship with Merlin Entertainments plc ("Merlin"), one of the largest entertainment companies in the world.  The relationship with Merlin continues to show good progress with eight Legoland Discovery Centre ("LDC") sites now open (versus two sites at 31 December 2018).  Following successful trials, the two initial LDCs in Boston, USA, and Manchester, UK continue to trade well and the sites opened post period end are also showing very strong performance.

The total number of headsets within the Group's concession estate at the year end was 46, which has now increased significantly to 85, with most of the additional headsets being installed into Merlin's estate. The Group now has 44 headsets installed at Merlin LDCs with a further 12 scheduled and an additional 6 headsets going into a Legoland hotel in Germany. We have also agreed to install a further 18 headsets into three SEA LIFE centres as an initial trial. Whilst logistics can be a challenge, the Directors are confident of achieving the short-term target of 82 headsets with Merlin, and the on-going potential to roll out more headsets across the SEA LIFE centres post the initial three site trial (there are 52 SEA LIFE centres around the world).

In addition to Merlin we are developing a number of other partnerships in the entertainment space including Al Hokair, a major leisure and hotel group in the Middle East.  The first site will open in April 2019 in Abu Dhabi with 12 headsets, with a further site to follow in their flagship mall in Jeddah, Saudi Arabia.  Al Hokair has 90 sites throughout the Middle East.

With more entertainment sites in SEA LIFE, LDC, and a number of select Family Entertainment Centres ("FECs") we are confident that we now have a model in this sector which, when operated with the right partners, should provide a good return on investment, solid recurring revenues and is potentially very scalable.

ImmotionVR Centres

ImmotionVR is the brand name for the Group's own Location Based Entertainment VR centres. These are located in high footfall retail and leisure locations and are operated by the Group. Based on the Group's initial store in Bristol (opened in December 2017) we have begun to develop what the Directors believe is the UK's first recognised retail brand for immersive entertainment and today, all of our ImmotionVR centres boast five star Trip Advisor reviews. We believe this positions us to be involved in the evolution of retail and leisure experiences, driven by consumers' increasing desire for experiences and the needs of retail landlords to develop more rounded leisure and entertainment offerings, as online shopping takes an ever-increasing share of retail spend.

We have good working relationships in place with intu, Landsec and Hammerson. The Group now operates 11 LBE centres trading under the ImmotionVR brand.

ImmotionVR's flagship centre in Bristol has been fully operational since December 2017, and the Directors are encouraged by the progress made, and lessons learnt, during that time. Highlights include:

-      5 star reviews on Trip Advisor from the public

-      New online booking system and targeted marketing plan introduced in Bristol which, over the past six weeks, has accounted for circa 70% of revenue

-      Revenue and contribution in the year ended 31 December 2018 were £206k and £67k respectively

-      Comparing the February half term week in 2019, against the Christmas holiday week of 2018, we are pleased to report a 24.8% increase in revenue, a significant increase in such a short period of time

At our Bristol ImmotionVR centre, we are pleased at the number of returning customers, as well as the impact of our new marketing campaign.  We are further enthused at the uptake of our recent introduction of our new booking system and associated marketing plan. It is our intention to roll both the booking system and marketing plan out to all stores3 over the coming weeks. It is inevitable that it takes time to build up a repeat audience but as we have gained greater experience, we are refining our marketing approach to drive this audience.

The changing landscape now being faced by the retail sector has allowed us to seek a more collegiate approach with landlords and no long-term lease commitments. We also try to minimise irrecoverable shop fit-out costs, focusing where we can on moveable settings and, of course, equipment.

Having gained a huge amount of knowledge in the past year, and using proof of concept data from existing sites, the Group will look to selectively open further ImmotionVR centres in key cities.  We believe larger LBE centres will become an integral part of the shopping mall of the future.  Accordingly, we are in dialogue with owners of a number of larger sites where there may be an opportunity to be part of a larger LBE destination, encompassing a range of immersive experiences (including VR), particularly those with a competitive or social aspect, as well as food and beverage offerings. We will update the market as these discussions evolve.

Immotion Group's estate of ImmotionVR centres was comprised of 112 installed headsets at 31 December 2018 and is currently 129 across 11 sites in the UK and USA.

Hardware Sales

We have been working with our newly appointed distributors to develop our sales strategy. Whilst there is a lot of interest in the VR market, the demand is more for 'operator-light', or coin-operated VR machines, with a small footprint and quality experiences will drive sales into the long tail of FEC's. To this end we have developed a standalone 'free-roaming' VR booth able to offer a wide range of VR experiences. We will begin trials of this machine in the next few weeks.

We have also, on the back of working with larger strategic partners, decided to offer a more tailored solution. The Group is able to produce VR content and source motion platforms in line with their brand guidelines, thus giving it the ability to develop larger scale 'turnkey' solutions. The Directors believe this combined sales strategy allows the Company to deliver both volume sales, as well as a more refined higher-margin business model.

Post Period End Activity and Outlook

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.

Our content creation and licensing team is focused on the monetisation of what it has created. Having delivered what the Directors believe to be some of the best VR experiences in the market today we see great potential in this channel.

New concession partner sites have opened since the year end in LDCs in Detroit, Chicago, Kansas City, Toronto, New York, and Phoenix. The initial results are very encouraging. We expect to see our first concession in SEA LIFE centres opening in April 2019 in Germany, with two expected to follow in Melbourne and Sydney, Australia.

Our first major concession site in the Middle East will open with Al Hokair.  This is expected to commence trading in April 2019 in Abu Dhabi.  Al Hokair has in excess of 90 sites across the region. We are currently in discussions with Al Hokair about the next site, in Jeddah, Saudi Arabia, which we expect will be a larger site, with a greater choice of immersive entertainment offerings.

Our ImmotionVR centres continue to grow in revenue and popularity. Whilst LBE is a relatively new market, the Directors believe that we have chosen the right market for our focus and with sector revenues forecast to hit $12 billion by 2023, we want to ensure we position ourselves to be a leading player in this sector. 

We have appointed distributors and installers for both the Middle East and UK markets and will be working closely with them to optimise our sales offering.

Having made the significant investment throughout 2018 in content creation, equipment sourcing, and establishing concession relationships, the Group is now looking to significantly reduce its cost base and reduce cash outflow from operations. As we move into 2019, we will begin to capitalise on the heavy investment of 2018 to propel the Group to the next stage of its development.  I look forward to providing more regular news and updates as we continue to execute on the successes we have achieved to date.

Financial Review

Total revenue for the period was £2.85m, of which £1.95m came from continuing operations (including £1.33m from VR related activity) and £0.91m from discontinued operations.

We ceased historic client activity in Japan during the year by transferring that business for nominal value to its Managing Director.  In H2, we effectively completed all legacy client work in the UK and consider that activity discontinued.

Overall, the underlying EBITDA loss was £2.22m, as a result of the investment in VR content production (and cessation of historic client work in the UK) and putting in place the central management and sales teams and infrastructure necessary to grow the Group's new core activities.  In short, the Group is now focused on achieving significant growth in scale of revenue to drive towards break even.  The Board is also very conscious of the Group's rapidly expanded fixed costs of operation and has begun to take steps post the end of the period to review and reduce these as appropriate.  The Board continues to look for further savings, particularly in property occupancy costs.

Overall cash outflow in the year was £0.58m.  Of the total, the cash outflow (before exceptional and IPO related items) from operations was £2.30m and the heavy investment in content, infrastructure and hardware for our Concession activities resulted in combined capital expenditure of £2.99m.

Net cash inflow from equity and debt funding (net of repayments) was £6.37m and £0.03m respectively, making a total inflow from financing activities of £6.40m in the period.

Growth in tangible fixed assets of £2.07m pre-dominantly reflected the investment in hardware for our ImmotionVR centres, as well as our concession operations.

Growth in intangible assets reflect the goodwill related to the three acquisitions made to create the Group as well as the investment in our proprietary content and software creation.

Net assets at period end were £6.20m and net current assets were £0.92m. 

Underlying loss per share² was 1.71p.  Total loss per share was 2.42p.

Sir Robin Miller, Chairman of Immotion Group, said:

"Immotion Group is quickly becoming a major player in the exciting world of Virtual Reality. Since flotation, the Group has secured partnerships with some serious entertainment businesses, including Merlin, the largest entertainment business in the world after Disney.

"The approach of creating cutting edge VR content, and blending this with cost effective motion platforms, has given the Group the ability to deliver a suite of immersive experiences at an affordable end price. The price paid by the end consumer is a vital ingredient in the long-term success of any business. Being able to achieve this, and deliver a sustainable margin is a credit to the team.

"We are thrilled at the recent content licensing deals, along with the sales performance of both our concession partners, and our ImmotionVR centres. We continue to hone our sales strategy and are excited at the upcoming launch of our 'attendant free' VR booth.

"We are very encouraged by the opportunities in front of us and we firmly believe that 2019 will be an exciting year for Immotion Group. We are very much focused on the delivery of revenue and profit and will continue to learn and adapt as the Group grows."

Martin Higginson, CEO of Immotion Group, 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."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014

Footnotes:

¹ Underlying EBITDA is stated before exceptional costs relating to the IPO in July 2018, other one-off items and costs relating to share based payments.

² Underlying loss before tax and loss per share are stated before exceptional costs relating to the IPO in July 2018, other one-off items, costs relating to share based payments and the impairment of intangible assets relating to discontinued operations.

³ Whilst the Group will operate a booking system in the ‘pop up’ ImmotionVR centres, these are seldom used due to the walk by nature of the store.

Enquiries:

 For further information please visit www.immotiongroup.co.uk, or contact:

Immotion Group	Martin Higginson	Tel: [phone]
WH Ireland Limited  (Nomad and Joint Broker)	Adrian Hadden Jessica Cave	Tel: [phone]
Shard Capital Partners LLP  (Joint Broker)	Damon Heath Erik Woolgar	Tel: [phone]
Leander Capital Partners (Joint Broker)	Alex Davies	Tel: [phone]
Newgate Communications (Financial PR)	Elisabeth Cowell Robin Tozer Tom Carnegie	Tel: [phone] [e-mail]

 

IMMOTION GROUP PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2018

		Year ended	Restated Year ended
		31 December	31 December
		2018	2017
	Note	£'000	£'000
Revenue - continuing operations		1,948	-
Cost of sales - continuing operations		(1,436)	-
		------------	------------
Gross profit		512	-
Administrative expenses- continuing operations		(4,264)	(175)
		--------------	--------------
Loss from Operations		(3,752)	(175)
Memorandum: Adjusted EBITDA		(2,360)	(114)
Depreciation		(405)	-
Amortisation		(178)	-
Share based payments		(137)	-
Acquisition & listing costs		(672)	(61)
		--------------	--------------
Loss from Operations		(3,752)	(175)
Finance costs		(57)	-
Finance income		2
		------------	------------
Loss before taxation and attributable to equity holders of the parent		(3,807)	(175)
Taxation		159	-
		------------	------------
Loss from continuing operations Discontinued operations (net of tax) Loss after taxation	8	(3,648) (175) ------------ (3,823)	(175) - ------------ (175)
Other comprehensive expense
Loss on translation of subsidiary		(16)	-
Loss after taxation and attributable to equity holders of the parent and total comprehensive income for the period		------------ (3,839)	------------ (175)
		======	======

IMMOTION GROUP PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2018

Loss per share
Basic (continuing)	4	(2.31)	(1.29)
Basic (discontinuing)		(0.11)	-
		======	======
		(2.42)	(1.29)
Earnings/(Loss) per share
Diluted (continuing)	4	(2.31)	(1.29)
Diluted (discontinuing)		(0.11)	-
		======	======
		(2.42)	(1.29)

IMMOTION GROUP PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2018

	Share capital	Share premium	Foreign Exchange Reserve	Retained (deficit)/ earnings	Total equity
	£'000	£'000	£'000	£'000	£'000
Issue of shares	-	3,704	-	-	3,704
Loss after tax and total comprehensive income	-	-	-	(175)	(175)
	--------------	--------------	--------------	--------------	--------------
Balance at 31 December 2017	-	3,704	-	(175)	3,529
	--------------	--------------	--------------	--------------	--------------
Issue of shares	26	6,786	-	-	6,812
Issue costs deducted from equity	-	(439)	-	-	(439)
Loss after tax	-	-	-	(3,823)	(3,823)
Equity settled share-based payments	-	-	-	137	137
Bonus Issue	52	(52)	-	-	-
Currency translation of overseas subsidiary	-	-	(16)	-	(16)
	--------------	--------------	--------------	--------------	--------------
Balance at 31 December 2018	78	9,999	(16)	(3,861)	6,200
	--------------	--------------	--------------	--------------	--------------

IMMOTION GROUP PLC                                                       

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2018

		31 December 2018		Restated 31 December 2017
ASSETS	Note	£'000		£'000
Non-current assets
Property, plant and equipment		1,574		493
Intangible fixed assets		4,038		2,895
		-----------------		-----------------
Total non-current assets		5,612		3,388
Current assets
Inventories		133		-
Trade and other receivables		1,410		866
Deferred tax asset		-		85
Cash and cash equivalents		711		769
		-----------------		-----------------
Total current assets		2,254		1,720
		-----------------		-----------------
Total assets		7,866		5,108
		=========		=========
LIABILITIES
Current liabilities
Trade and other payables		(886)		(1,160)
Loans and borrowings		(229)		(245)
Deferred tax liability		(26)		-
Contract liabilities		(189)		(62)
		-----------------		-----------------
Total current liabilities		(1,330)		(1,467)
		-----------------		-----------------
Non-current liabilities
Other payables		(54)		-
Loans		(218)		(112)
Deferred tax liability		(64)		-
		------------------		------------------
		(336)		(112)
		------------------		------------------
Total liabilities		(1,666)		(1,579)
		------------------		------------------
Total net assets		6,200		3,529
		=========		=========
Capital and reserves attributable to owners
of the parent
Share capital	7	78		-
Share premium		9,999		3,704
Foreign exchange reserve		(16)		-
Retained earnings/(deficit)		(3,861)		(175)
		------------------		------------------
Total equity		6,200		3,529
		=========		=========

The financial statements were approved by the Board and authorised for issue on 3 April 2019.

Martin Higginson                                                                   David Marks

CEO                                                                                  Finance Director

 

IMMOTION GROUP PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2018

			Year ended 31 December 2018 £'000		Year ended     31 December 2017 £'000
Cash flows from operating activities
Loss before tax including discontinued operations Adjustments for:			(3,982)		(175)
Share based payments			137		-
Depreciation on property plant and equipment			405		-
Depreciation on stock transfers			(20)		-
Amortisation of intangible assets			178		-
Impairment of intangible assets			231		-
Finance costs			57		-
Finance income			(2)
Foreign exchange on retranslation of fixed assets			(28)		-
Foreign exchange loss			(16)		-
Corporation tax paid			(13)		-
			-----------------		-----------------
Cash flows from operating activities before changes			(3,053)		(175)
in working capital
Increase in stocks			(133)		-
Increase in trade and other receivables			(458)		(12)
Increase in trade and other payables			168		163
			-----------------		-----------------
Cash (used)/generated in operations			(423)		151
Investing activities
Purchase of intangible assets			(1,524)		-
Purchase of property, plant and equipment			(1,542)		-
Disposals of property, plant and equipment			76		-
Cash on acquisition			-		202
			-----------------		-----------------
Net cash (used in)/generated from investing activities			(2,990)		202
Financing activities
Finance costs			(57)		-
Finance income			2
New loans and finance leases			179		-
Loan repayments			(89)		-
Issue of convertible loan stock			488		-
Issue of new share capital			6,324		591
Costs on issue of shares			(439)		-
			-----------------		-----------------
Net cash from financing activities			6,408		591
			-----------------		-----------------
Net (decrease)/increase in cash and cash equivalents			(58)		769
Cash and cash equivalents at beginning of the period			769		-
			------------------		------------------
Cash and cash equivalents at end of the period			711		769
			=========		=========

IMMOTION GROUP PLC

CONSOLIDATED STATEMENT OF CASH FLOWS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2018

Reconciliation of net cashflow to movement in net debt:	Year ended	Year ended
	31 December 2018	31 December 2017
	£000	£000
Net (decrease)/increase in cash and cash equivalents	(58)	769
New loans and finance leases	(179)	-
Repayment of loans	89	-
Loans acquired on acquisition	-	(357)
	-----------------	-----------------
Movement in net funds in the year	(148)	412
Net funds at 1 January	412	-
	-----------------	------------------
Net funds at 31 December	264	412
	=========	=========

 

IMMOTION GROUP PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2018

1.         GENERAL INFORMATION

 Immotion Group plc is a public limited company incorporated and domiciled in the United Kingdom. The address of the registered office is East Wing, Ground Floor, The Victoria, Mediacity, Manchester, M50 3SP. The Company is listed on AIM of the London Stock Exchange.

The principal activity of the Group during the year was the production of virtual reality content, experiences, equipment and software design.

These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates. Foreign operations are included in accordance with the policies set out in note 2.

2.         ACCOUNTING POLICIES

Principal accounting policies

The Company is a public company incorporated and domiciled in the United Kingdom. The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs") and those parts of the Companies Act 2006 which apply to companies preparing their financial statements under IFRSs. The financial statements are presented to the nearest round thousand (£'000) except when otherwise indicated.

Basis of Consolidation

The Group comprises a holding company and a number of individual subsidiaries and all of                                                                            these have been included in the consolidated financial statements in accordance with the principles of acquisition accounting as laid out by IFRS 3 Business Combinations.

Prior year restatement

A prior year adjustment has been processed to recognise the acquisition of VR Acquisition (Holdings) Limited in 2017 given Immotion Group Plc had control and the substance of the transaction was that Immotion Group Plc owned 100% of the shares on 31 December 2017. This has resulted in an increased investment of £910k in the Company financial statements and the recognition of goodwill on VR Acquisition (Holdings) in the comparative figures.

An adjustment to costs of £61k incorrectly reducing the share premium at 31 December 2017 has been included.

Going concern

The Group incurred a loss after taxation of £3,823k for the year and a net cash outflow of £58k. If losses after taxation are not reduced significantly and/or new equity funds raised as required, this may result in a material uncertainty about the Group's ability to continue as a going concern. To this end, on 1 March 2019, the Group raised £3.3m (before costs) through an additional issue of shares for cash.

The directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. In reaching this conclusion the directors have considered the financial position of the Group, it's cash, liquidity position and borrowing facilities together with its forecasts and projections for 18 months from the reporting date that take into account possible changes in trading performance. The going concern basis of accounting has therefore been adopted in preparing the financial statements.

IMMOTION GROUP PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2018

2.          ACCOUNTING POLICIES (continued)

Business combinations and goodwill

Acquisitions of subsidiaries and business are accounted for using the acquisition method. The assets and liabilities and contingent liabilities of the subsidiaries are measured at their fair value at the date of acquisition. Any excess of acquisition over fair values of the identifiable net assets acquired is recognised as goodwill. Goodwill arising on consolidation is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in profit or loss accounts and is not subsequently reversed. Acquisition related costs are recognised in the income statement as incurred.

            Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Hardware Sales

Revenue from the sale of goods is recognised when all of the following conditions are satisfied:

· the Group has transferred the significant risks and rewards of ownership to the buyer;

· the Group retains neither continuing managerial involvement to the degree usually associated with     ownership nor effective control over the goods sold;

· the amount of revenue can be reliably measured;

· it is probably that the Group will receive the consideration due under the transaction; and

· the costs incurred or to be incurred in respect of the transaction can be reliably measured.

Client Services

Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:

·    the amount of revenue can be measured reliably;

·    it is probable that the Group will receive the consideration due under the contract;

·    the stage of completion of the contract at the end of the reporting period can be measured reliably; and

·    the costs incurred and the costs to complete the contract can be measured reliably.

Retail revenue is recognised on the date which the sale to the customer takes place.

Concessions revenue is recognised on the date which the sale to the customer takes place. The Group acts as the principal in the transaction and therefore recognises the revenue charged to the end user in full with the concession partners' shares deducted as a cost of sale.

Hardware sales revenue is normally recognised on the date that the hardware is delivered to the customer. In the event that a customer is not ready to take delivery of the hardware and have requested a delayed delivery date, the Group applies the specifics of IFRS 15 Bill-and-Hold arrangements. Revenue is then recognised in advance of delivery. Under the Bill-and-Hold arrangements:

·   The goods are complete and ready for collection;

·   The goods are separately identified from the Group's other stock and are not used to fulfil any other areas;

·   The customer has specifically requested that the goods be held pending collection.

·   Normal payment terms apply to the Bill-and-Hold arrangement.

IMMOTION GROUP PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2018

2.          ACCOUNTING POLICIES (continued)

No element of financing is deemed present as the sales are made with standard credit terms of 30 days which is consistent with market practice. The Group does not expect to have any contracts where the period between the transfer of the promised services or goods to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.

Leases

Lease are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance expenses and a reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss.

Rentals payable under operating leases are charged to the statement of comprehensive income on a straight-line basis over the term of the relevant lease.

Foreign currency

The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group company are expressed in pound sterling, which is the functional currency of the Group, and the presentational currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the Group Company's functional currency (foreign currencies) are recorded at rates of exchange prevailing on the dates of the transactions. At the reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of the gain or loss is also recognised directly in equity.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group's translation reserve. Such translation differences are recognised as income and expense in the period in which the operation is disposed of. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rates.

Intangible assets

Intangible assets include goodwill arising on the acquisition of subsidiaries and represents the difference between the fair value of the consideration payable and the fair value of the net assets that have been acquired. The residual element of Goodwill is not being amortised but is subject to an annual impairment review.

IMMOTION GROUP PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2018

2.          ACCOUNTING POLICIES (continued)

Also included within intangible assets are various assets separately identified in business combinations (such as customer lists) to which the Directors have ascribed a commercial value and a useful economic life. The ascribed value of these intangible assets is being amortised on a straight-line basis over their estimated useful economic life, which is considered to be 3 years.

Internally generated intangible assets

An internally-generated intangible asset arising from the Group's development activities is capitalised and held as an intangible asset in the statement of financial position when the costs relate to a clearly defined project; the costs are separately identifiable; the outcome of such a project has been assessed with reasonable certainty as to its technical feasibility and its ultimate commercial viability; the aggregate of the defined costs plus all future expected costs in bringing the product to market is exceeded by the future expected sales revenue; and adequate resources are expected to exist to enable to project to be complete. Internally generated intangible assets are amortised over their useful lives, between 3 and 10 years from completion of development. Where the internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the income statement in the period in which it is incurred.

Inventories

Inventories are stated at the lower of cost and net realisable value. Costs comprise direct materials and, where applicable, direct labour costs and overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

Financial instruments

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument.

Contract liabilities

Contract liabilities comprise payments in advance of revenue recognition and revenue deferred due to contract performance obligation not being completed. They are classified as current liabilities if the contract performance obligations payments are due to be completed within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Contract liabilities are recognised initially at fair value and subsequently at amortised cost.

Trade and other receivables

Trade and other receivables are measured at initial recognition at fair value, and subsequently measured at amortised cost using the effective interest method. A provision is established when there is objective evidence that the Group will not be able to collect all amounts due. The amount of any provision is recognised in profit or loss.

Cash and cash equivalents

Cash and cash equivalents are recognised as financial assets. They comprise cash held by the Group and short-term bank deposits with an original maturity date of three months or less.

Loss recognised previously in equity is included in profit or loss for the period. Dividends are recognised in the income statement when the right to receive payment has been established.

Trade payables

Trade payables are initially recognised as financial liabilities measured at fair value, and subsequent to initial recognition measured at amortised cost.

IMMOTION GROUP PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2018

2.         ACCOUNTING POLICIES (continued)

Bank borrowings

Interest bearing bank loans, overdrafts and other loans are recognised as financial liabilities and recorded at fair value, net of direct issue costs. Finance costs are accounted for on an amortised cost basis in the income statement using the effective interest rate.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deduction of all its liabilities. Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.

Share based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the statement of comprehensive income on a straight-line basis over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of options expected to vest at each statement of financial position date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

Fair value is calculated either using the Monte-Carlo model or Black-Scholes model, details of which are given in note 26.

Pensions

The pension schemes operated by the Group are defined contribution schemes. The pension cost charge represents the contributions payable by the Group.

Property, plant and equipment

Property, plant and equipment are stated at cost net of accumulated depreciation and provision for impairment. Depreciation is provided on all property plant and equipment, at rates calculated to write off the cost less estimated residual value, of each asset on a straight-line basis over its expected useful life. The residual value is the estimated amount that would currently be obtained from disposal of the asset if the asset were already of the age and in the condition expected at the end of its useful economic life.

The method of depreciation for each class of depreciable asset is:

VR Hardware                                        - 33% straight line

Computer equipment                             - 33% straight line

Leasehold property                                - 10% straight line

Plant & Equipment                                - 33% straight line

Fixtures & Fittings                                 - 33% straight line

Impairment of Assets

Impairment tests on goodwill are undertaken annually at the balance sheet date. The recoverable value of goodwill is estimated on the basis of value in use, defined as the present value of the cash generating units with which the goodwill is associated. When value in use is less than the book value, an impairment is recorded and is irreversible.

Other non-financial assets are subject to impairment tests whenever circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its estimated recoverable value (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly. Where it is not possible to estimate the recoverable value of an individual asset, the impairment test is carried out on the asset's cash-generating unit. The carrying value of property, plant and equipment is assessed in order to determine if there is an indication of impairment. Any impairment

IMMOTION GROUP PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2018

2.    ACCOUNTING POLICIES (continued)

 is charged to the statement of comprehensive income. Impairment charges are included under administrative expenses within the consolidated statement of comprehensive income. 

Taxation and deferred taxation

            Corporation tax payable is provided on taxable profits at prevailing rates.

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its tax base, except for differences arising on:

·      the initial recognition of goodwill; and

·      the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit.

Recognition of deferred tax assets is restricted to those instances where it is probable that future taxable profit will be available against which the asset can be utilised. The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

·      the same taxable Group company; or

·      different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Executive Directors, who are responsible for allocating resources and assessing performance of the operating segments.

A business segment is a group of assets and operations, engaged in providing products or services that are subject to risks and returns that are different from those of other operating segments.

A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments. The Executive Directors assess the performance of the operating segments based on the measures of revenue, profit before taxation (PBT) and profit after taxation (PAT). Central overheads are not allocated to business segments.

IMMOTION GROUP PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2018

3.       SEGMENTAL INFORMATION

A segmental analysis of revenue and expenditure for the period is:

		VR Experiences		Client Services	Head Office	Total continuing operations	Discontinued operations	Total 2018
		£'000		£'000	£'000	£'000	£'000	£'000
Revenue		1,326		622	-	1,948	906	2,854
Cost of sales		(1,233)		(203)	-	(1,436)	(473)	(1,909)
Administrative expenses*		(726)		(304)	(1,842)	(2,872)	(292)	(3,164)
Operating (loss)/profit			(633)	115	(1,842)	(2,360)	141	(2,219)
Amortisation		(93)		-	(85)	(178)	(231)	(409)
Depreciation		(357)		-	(48)	(405)	-	(405)
Acquisition and listing costs		-		-	(672)	(672)	(85)	(757)
Share based payments		-		-	(137)	(137)	-	(137)
Finance costs		-		-	(57)	(57)	-	(57)
Finance income		-		-	2	2	-	2
Tax		-		-	159	159	-	159
		-------------		-------------	-------------	-------------	-------------	-------------
(Loss)/Profit for the year		(1,083)		115	(2,680)	(3,648)	(175)	(3,823)
		======		======	======	======	======	======

*Administrative expenses exclude depreciation, amortisation, exceptional costs and acquisition and listing costs.

For the period to 31 December 2017, all costs were head office costs.

The segmental analysis above reflects the parameters applied by the Board when considering the Group's monthly management accounts. For the period to 31 December 2017, no revenue was generated. All costs related to head office costs in the UK.

IMMOTION GROUP PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2018

3.    SEGMENTAL INFORMATION (continued)

	External revenue by location of customer		Total assets by location		Net tangible capital expenditure by location
	31 December 2018 Continuing	31 December 2018 Discontinuing	31 December 2018	31 December 2017	31 December 2018	31 December 2017
	£'000	£'000	£'000	£'000	£'000	£'000
United Kingdom	790	221	7,032	4,618	1,033	-
United States of America	636	-	834	490	491	-
Japan	49	449	-	-	-	-
United Arab Emirates	136	-	-	-	-	-
China	49	-	-	-	-	-
Saudi Arabia	48	-	-	-	-	-
Spain	224	-	-	-	-	-
Estonia	16	-	-	-	-	-
Netherlands	-	230	-	-	-	-
Eire	-	8	-	-	-	-
Switzerland	-	4	-	-	-	-
Germany	-	(6)	-	-	-	-
	-------------	-------------	-------------	-------------	-------------	-------------
	1,948	906	7,866	5,108	1,524	-
	======	======	======	======	======	======

IMMOTION GROUP PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2018

4.	EARNINGS PER SHARE
		2018	2017
		£'000	£'000
	The earnings per share is based on the following:
	Continuing earnings post tax loss attributable to shareholders	(3,648)	(175)
	Discontinued earnings post tax loss attributable to shareholders	(175)	-
		==========	==========
	Basic weighted average number of shares	158,136,544	13,536,541
	Diluted weighted average number of shares	158,136,544	13,536,541
		==========	==========
		£0.01	£0.01
	Basic earnings per share	(2.42)	(1.29)
	Diluted earnings per share	(2.42)	(1.29)
		==========	==========
	Continuing earnings per share	(2.31)	(1.29)
	Continuing diluted earnings per share	(2.31)	(1.29)
		==========	==========
	Discontinued earnings per share	(0.11)	-
	Discontinued diluted earnings per share	(0.11)	-
		==========	==========
	Underlying loss: continuing operations	(2,838)	(114)
	Underlying loss: discontinued operations	140	-
		==========	==========
	Basic weighted average number of shares	158,136,544	13,536,541
	Diluted weighted average number of shares	164,025,259	13,536,541
		==========	==========
		£0.01	£0.01
	Basic underlying loss per share	(1.71)	(0.84)
	Diluted underlying loss per share	(1.71)	(0.84)
		==========	==========
	Basic underlying loss per share: continuing operations	(1.80)	(0.84)
	Diluted underlying loss per share: continuing operations	(1.80)	(0.84)
		==========	==========
	Basic underlying earnings per share: discontinued operations	0.09	-
	Diluted underlying earnings per share: discontinued operations	0.09	-
		==========	==========

  

Earnings/(Loss) per ordinary share has been calculated using the weighted average number of shares in issue during the relevant financial periods. IAS 33 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease earnings per share or increase the loss per share. The exercise price of the outstanding share options is significantly more than the average and closing share price. Therefore, as per IAS33 the potential ordinary shares are disregarded in the calculation of diluted EPS. 

Underlying loss is the loss after taxation, adjusted for share based payments, acquisition and listing costs, and impairment of intangible assets relating to discontinuing operations.

IMMOTION GROUP PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2018

5.	TANGIBLE FIXED ASSETS
				Leasehold Property		Equipment			Fixtures and Fittings		Total
				£'000		£'000			£'000		£'000
	Cost
	Balance at 1 January 2017			-		-			-		-
	Additions on acquisition of subsidiary			158		310			25		493
				---------		---------			--------------		---------------
	Balance at 1 January 2018			158		310			25		493
	Additions			245		1,263			16		1,524
	Transfers to inventory			-		(76)			-		(76)
	Foreign exchange			2		39			2		43
				---------		---------			--------------		---------------
	Balance at 31 December 2018			405		1,536			43		1,984
				---------		---------			--------------		---------------
	Accumulated depreciation
	Balance at 1 January 2017			-		-			-		-
	Deprecation on acquired assets			-		-			-		-
				----------			---------			--------------			---------------
	Balance at 1 January 2018			-		-			-		-
	Depreciation charge on owned assets			65		248			17		330
	Depreciation charge on financed assets					75					75
	Transfers to inventory			-		(20)			-		(20)
	Foreign exchange adjustment			-		23			2		25
				---------		---------			--------------		---------------
	Balance at 31 December 2018			65		326			19		410
				---------		---------			--------------		---------------
	Net Book Value
	At 31 December 2018			340		1,210			24		1,574
				=====		=====			=====		=====
	At 31 December 2017			158		310			25		493
				=====		=====			=====		======
	At 31 December 2016			-		-			-		-
				=====		=====			=====		======

The net book value of assets held under finance leases or hire purchase contracts, included above, are £137k (2017: £nil) relating to VR Hardware. The depreciation charge on these assets was £75k (2017: £nil).

IMMOTION GROUP PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2018

6.	INTANGIBLE ASSETS	Development	Goodwill	Other
	GROUP	Costs	Arising on	Intangible
			Consolidation	Assets	Total
		£'000	£'000	£'000	£'000
	Cost
	Balance at 1 January 2017	-	-	-	-
	Additions	2	2,438	455	2,895
		-------------	-------------	------------	---------------
	Balance at 1 January 2018	2	2,438	455	2,895
	Additions	1,493	-	49	1,542
	Foreign exchange	11	-	-	11
		-------------	-------------	------------	---------------
	Balance at 31 December 2018	1,506	2,438	504	4,448
		-------------	------------	------------	---------------
	Accumulated amortisation
	Balance at 1 January 2017	-	-	-	-
	Additions	-	-	-	-
		-------------	-------------	------------	---------------
	Balance at 1 January 2018	-	-	-	-
	Amortisation	93	-	85	178
	Impairment	-		231	231
	Foreign exchange	1	-	-	1
		------------	-----------	------------	---------------
	Balance at 31 December 2018	94	-	316	410
		-----------	------------	------------	---------------
	Net Book Value
	At 31 December 2018	1,412	2,438	188	4,038
		======	======	======	=======
	At 31 December 2017	2	2,438	455	2,895
		======	======	======	=======
	At 31 December 2016	-	-	-	-
		======	======	======	======

Other intangible assets comprise £151k (2017: £455k) relating to identifiable relations between acquired companies and associated client base with the remaining £37k of other intangible assets relate to website development costs.

Amortisation is charged over a period between 5 and 10 years.

GOODWILL AND IMPAIRMENT
The carrying value of goodwill in respect of each cash generating unit is as follows:
						31 December 2018	31 December 2017
						£'000	£'000
Studio Liddell Limited						1,252	1,252
C.2K Entertainment Inc.						748	748
VR Acquisition (Holdings) Limited						438	438
						-------------	-------------
						2,438	2,438
						======	=======

IMMOTION GROUP PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2018

6.   INTANGIBLE FIXED ASSETS (continued)

The Group is obliged to test goodwill annually for impairment, or more frequently if there are indications that goodwill and indefinite life intangibles might be impaired, due to the goodwill deemed to have an indefinite useful life. In order to perform this test, management is required to compare the carrying value of the relevant cash generating unit ("CGU") including the goodwill with its recoverable amount. The recoverable amount of the CGU is determined from a value in use calculation. It is considered that any reasonably possible changes in the key assumptions would not result in an impairment of the present carrying value of the goodwill.

7.		SHARE CAPITAL		31 December 2018		31 December 2017
			£'000		£'000
	Called up share capital
	Allotted, called up and fully paid
	195,351,590 Ordinary shares of 0.00040108663 pence each		78		-
	(2017: 46,415 ordinary shares at 0.01p)
			------------		------------
			78		-
			======		======

Shares issued during the year ended 31 December 2018:

Date	Description	No. of shares	Price per share	Gross share value	Cash received
			£	£	£
1 February 2018	Issue of 1p shares	3,908	100	390,800	390,800
23 March 2018	Issue of 1p shares	70	100	7,000	7,000
23 March 2018	Issue of 1p shares	364	100	36,400	36,400
23 April 2018	Issue of 1p shares	76	157.61	11,978	11,978
14 May 2018	Issue of 1p shares	158	157.61	24,902	24,902
14 May 2018	Issue of 1p shares	634	157.61	99,925	99,925
22 June 2018	Bonus issue - 100:1	5,162,500	-	51,625	-
22 June 2018	Sub-division - 0.01 to 0.005	5,214,125	-	-	-
9 July 2018	Sub-division - 0.05 to 0.00040108663p	119,571,718	-	-	-
12 July 2018	Placing on AIM shares of 0.00040108663p	57,500,000	0.10	5,750,000	5,750,000
12 July 2018	Conversion of loan stock to shares of 0.00040108663p	7,851,622	0.06	491,487	491,487
Total		195,305,175		6,864,117	6,812,493
At 31 December 2017		46,415		3,704,894	591,394
At 31 December 2018		195,351,590		10,569,011	7,403,887

Cash received does not included costs relating to share issues. In the year to 31 December 2018, costs of £439k were incurred relating to share issues and these costs were charged against share premium.

IMMOTION GROUP PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2018

8.   DISCONTINUED OPERATIONS

	2018 continuing operations	2018 discontinuing operations	Total 2018
	£'000	£'000	£'000
Revenue	1,948	906	2,854
Cost of sales	(1,436)	(473)	(1,909)
	------------	------------	------------
Gross profit	512	433	945
Administrative expenses	(4,264)	(608)	(4,872)
	--------------	--------------	--------------
Loss from Operations	(3,752)	(175)	(3,927)
Finance costs	(57)	-	(57)
Finance income	2		2
	------------	------------	------------
Loss before taxation and attributable to equity holders of the parent	(3,807)	(175)	(3,982)
Taxation	159	-	159
	------------	------------	------------
Loss after taxation	(3,648)	(175)	(3,823)
Other comprehensive expense
Loss on translation of subsidiary	(16)	-	(16)
Loss after taxation and attributable to equity holders of the parent and total comprehensive income for the period	------------ (3,664)	------------ (175)	------------ (3,839)
	======	======	======
Cash flows from discontinued operations are as follows:
	Continuing	Discontinuing	Total
	£'000	£'000	£'000
Operating cash flows	(599)	176	(423)
Investing cash flows	(2,990)	-	(2,990)
Financing cash flows	6,408	-	6,408
	------------	------------	------------

 

END

 

 

FR ITMRTMBIMBAL