Immotion
Group plc
Annual Report
& Accounts 2019
CONTENTS
2
Contents
Chairman’s statement
Chief Executive’s report
Strategic report
Corporate and social responsibility statement
Corporate governance report
Audit Committee report
Remuneration Committee report
Directors’ report
Directors’ responsibilities statement
Independent auditor’s report
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated statement of financial position
Consolidated statement of cash flows
Notes to the consolidated financial statements
Company statement of financial position
Company statement of changes in equity
Company statement of cash flows
Notes to the company financial statements
Directors, secretary and advisors
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78
CHAIRMAN’S STATEMENT
3
We saw considerable
success in winning
new high-quality
aquarium partners.
Given the nascent nature of our market, it
is likely that we will evolve and refine our
offering further seeking to become a more
integral part of our Partners’ offering where
possible.
Despite the uncertainties being caused
by COVID-19, we are confident that we
have passed the ‘forming and storming’
phase of our development and, once
normal trading conditions return, are set
for profitable growth and establishing
ourselves as a market leader in out of
home immersive ‘edutainment’ solutions.
We have taken the steps as described
above to help us navigate through this
crisis so that we can then capitalise on
the progress we have made to date when
some degree of normality returns.
period by strengthening our balance
sheet, protecting cash, reducing costs and
seeking all available Government support.
The totally unexpected pandemic should
not overshadow the achievements of
2019, a year of considerable progress
for Immotion. Our business had begun
to develop scale and, having invested
heavily in proprietary content, software
development and installations into
Partner sites, profitability and positive
operating cashflow were in clear sight.
Having clarified our strategy for this new
and exciting market, we were focused on
execution. We saw considerable success
in winning new high-quality aquarium
partners in both the USA and Europe
and saw a strong performance from this
cohort. This was a major endorsement
of our offering. There is still considerable
opportunity for growth in this segment
and the lessons learned will be applied to
a number of new sectors which we believe
share common features once normal
trading conditions return.
Recent events have, of course, been
dominated by COVID-19 and we, like
many businesses, have been very heavily
impacted. Whilst we are seeing some
early signs of the economies in the USA
and Europe re-opening, it will take some
time to understand the impact of the
new realities, including social distancing
requirements, on our Partners’ operations
in particular. We expect the disruption
will continue well into 2021, with gradual
improvement, and we have endeavoured
to equip ourselves for this challenging
Sir Robin Miller
Chairman
25 June 2020
Immotion Group plcAnnual Report & Accounts 2019 3
E N T E R T A I N
E D U C A T E
I N S P I R E
Immotion
Group plc
Annual Report
& Accounts 2019
CHIEF EXECUTIVE’S REPORT
4
4
As we have learned more about our
nascent marketplace, we have adjusted
our strategy accordingly. We had focused
fully on growing our Partnership model,
where we see significant opportunity
for our immersive ‘edutainment’
experiences, that fit with high traffic
destinations, operated by established
sector participants. We believe there is
a huge opportunity on a global basis
across aquariums, zoos, science centres,
museums and other selected high traffic
entertainment destinations.
Our decision to focus was fully vindicated
by progress up to the COVID-19 lockdown.
Our Partner offering gained significant
traction in the USA and Europe and
revenue grew strongly. Our ImmotionVR
sites also traded well, though we do not
intend to grow this part of our business
due to the significantly greater returns
seen from our Partner estate.
We ended 2019 with 303 installed
headsets, almost doubling our installed
base year on year from 158. The growth
was driven by Partner installations, which
increased from 46 to 185 at year end. At
the time of writing we have an installed
base of 332 headsets (234 Partner and 98
ImmotionVR), with a further 122 Partner
headsets contracted, giving visibility
through to 454 headsets.
Installed
Contracted
115
14
58
84
61
-
332
94
-
6
-
22
-
122
Total
209
14
64
84
83
-
454
2019 was a year of intense activity for the
Group and our first full year as a listed
company. It was only our second full year
of trading, since the creation of the Group
in December 2017.
USA
-Partners
-ImmotionVR
UK
-Partners
-ImmotionVR
ROTW
-Partners
-ImmotionVR
Total
Based on expected performance in normal pre COVID-19 trading conditions, this portfolio would, fully installed, have delivered monthly
EBITDA profit and positive operating cashflow based on our cash operating costs pre COVID-19.
We would expect that in the coming months we will install the contracted headsets (including 36 at Mandalay Bay) but much will
depend on the rate of Partner site re-openings, footfall levels, social distancing requirements and the overall level of public confidence
as lockdowns are lifted.
5
Partner Estate
Our Partner estate has grown from 46 headsets at the close of
2018 to 185 at year end 2019 and would reach 356 with the benefit
of contracted but not yet installed headsets.
We were pleased with the performance of our Partner estate
in 2019 and in particular the aquarium sites. Aquariums have
performed consistently strongly with average weekly gross
revenue per headset of £476 in the full year, versus £303 average
for the overall Partner estate in 2019.
Given the nature of our pipeline of new sites, we expect to see
the overall representation of the aquarium sector grow strongly.
These sites outperform other partner sites and we would expect
that this in normal circumstances would boost significantly the
overall average weekly revenue per headset for our Partner estate.
We have secured Partnerships with many top leisure groups
and leading aquariums in both Europe and the USA with the
following being particularly noteworthy: Merlin Entertainments,
MGM Resorts and Shedd Aquarium. We believe this is a
testament to the attraction of our Partner proposition.
Our initial offering to Partners was based on a small footprint,
typically two to six headsets and we looked at a range of sectors,
including more broadly-based entertainment venues. Led by
results, we have focused on the sectors above and have aimed
to develop VR experiences that are a good fit with Partners’
offerings (e.g. our Shark Dive and Swimming with Humpbacks
experiences, targeted at aquariums). This has allowed us to
narrow the range of content being produced and better focus
our content creation team. We have also developed theming and
branding alongside our hardware to better communicate with
potential audiences and ultimately to drive revenues.
We believe that the evidence from the aquarium sector suggests
that a focused offering for high traffic ‘edutainment’ verticals
will provide superior performance to more general leisure
entertainment sites for the following reasons:
-
-
-
Natural fit with Partner core offering
Lack of competing products at Partner venue
Less “wear out” factor for content as visits to these types
of venue are relatively infrequent
Accordingly, whilst we continue to seek further substantial
growth opportunities in the aquarium sector, we are developing
new products aimed at other global sectors which share similar
characteristics with aquariums. For example, our new dinosaur
experience will allow us to target zoos, science centres and
museums.
With the larger installations, the aim is to become more of an
integral part of the location rather than just a smaller ancillary
offering. Sea Life London exemplifies a more integrated offering
in a space constrained environment, with additional theming it
is a more natural element of the visitor journey. Mandalay Bay is
the exemplar of what can be done on a much larger scale, when
space permits, allowing a full pre-show area, with interactive and
immersive educational and fun exhibits.
We believe that these types of attractions will have much more
impact on visitors and allow much larger numbers of visitors to
enjoy the attraction, particularly during seasonal peaks, such as
school and summer holidays. The focus will be on blue chip, high
traffic Partners, where possible seeking longer deal terms and
‘share of gate’ revenues (akin to Mandalay Bay), which will drive
quality of earnings and mitigate risk.
Immotion
Group plc
Annual Report
& Accounts 2019
CHIEF EXECUTIVE’S REPORT
6
ImmotionVR
Item
£
Comments
Our ImmotionVR estate ended 2019 with 9 sites (117 headsets)
including a new site at The O2 in London. At present, all
ImmotionVR sites are closed and we will need to review these
as lockdowns are lifted. Ordinarily we would expect that they
would deliver a solid and profitable contribution across the year
but, unlike our Partner business, they have fixed salary and
(in a number of cases) fixed occupancy costs. Accordingly, their
viability will depend on the level of footfall when sites re-open
post COVID-19. Nevertheless, it was not part of the strategy to
grow this part of the business as we believe better returns on
investment are available in the Partner model.
Financial Review
Total revenue for the period was £3,624,000 (2018: £2,854,000)
of which £3,606,000 came from continuing operations (2018:
£1,948,000).
Revenue from VR activities grew from £1,326,000 in 2018 to
£2,932,000, increasing by 221 per cent.
The underlying EBITDA loss of £2,458,000 was in line with
expectations.
Gross margin from continuing operations increased from 26.3%
to 30.4%, resulting from the cessation of a number of loss making
ImmotionVR centres, pre-dominantly driven by the mix effect
of higher margin Partner business (essentially Immotion’s %
share of gross revenue). Margin in the Partner business was
39% and 13% in ImmotionVR (circa 20% excluding discontinued
sites). Overall margin is expected to climb strongly as the mix of
headsets moves in favour of the Partner business.
General and administration costs1 from continuing operations
were £3,591,000 (2018: £2,872,000). This represents a full year of
trading at greater scale. Despite the growth of our business, we
have sought to control costs. For example, we reduced the size
of the CGI studio team in Manchester as we focus on a narrower
range of content for the Partner business.
Restructuring and other one-off costs of £427,0002 largely
reflected the reduction of the studio team, many of whom were
long-serving employees. This is broken down as follows:
Payments
to former
director
Notice and
redundancy
payments
to former
employees
90,000
Including 6 months’ notice and ex gratia
payments
187,000
Relates to 17 employees
Payment to
Consultant
50,000
For advice in relation to re-structuring of
studio (settled in shares)
Other
100,000
427,000
Legal fees, employee relocation grants,
branch closures and other restructuring
costs.
After careful consideration, we have taken an impairment charge
of £458,000 against the carrying value of intangible assets.This
relates to early content developed when the Company was
focused on developing large volumes of diverse content for the
retail and family entertainment centre market and for use on
a diverse group of machine types. All content produced now is
focused on our key Partner vertical segments and on a limited
range of motion platforms.
Overall cash outflow in the year was £237,000. Cash outflow from
continuing operations was £2,246,000 including restructuring
costs of £377,000 (a further £50,000 of restructuring costs were
paid in shares to a consultant) and our continued expansion of the
business, both in terms of hardware deployed at partner sites and
further development of content and finishing of our proprietary
operating system, resulted in combined capital expenditure of
£3,841,000.
Tangible fixed asset additions of £2,883,000 reflected the roll
out of our Partner estate and the building of buffer stock of 136
headsets (seats) ahead of year end for the Q1 2020 deployment
schedule.
Intangible asset additions were £1,005,000 reflecting our further
investment in content, including the ongoing development of our
dinosaur content scheduled for release in H2 2020, as well as the
substantial completion of our proprietary software.
Net cash inflow from equity was £5,348,000 and net repayments
on debt funding (including IFRS 16 leases) represented £560,000.
Net assets at period end were £6,275,000.
Underlying loss per share was 1.72p3. Total loss per share was 2.12p.
1 Before depreciation, amortisation, impairment, share based payments, disposal losses
and restructuring costs.
2 Excludes discontinued operations
3 Adjusted for impairment charges, restructuring costs and share based payments
7
Post Period End Activity & Outlook
Following the equity fundraise of £2.85m in February 2020, the
Company was extremely well poised, not only with its honed
business model, but also with the imminent installation and
expected April 2020 opening of its large format installation into
MGM Resort’s Mandalay Bay aquarium in Las Vegas. Together with
other contracted installs then on hand, we expected to reach
EBITDA breakeven in April 2020 and achieve positive operating
cash flow shortly thereafter.
However, during March 2020, and as a direct result of the
COVID-19 pandemic, the vast majority of the Company’s Partner
sites and all of our own ImmotionVR sites closed, following local
and national government-imposed lockdowns. This has resulted
in the Group having no revenue. At the time of writing, it appears
that many sites will remain closed until at least 30 June 2020 and
revenue through to 30 June will be zero or minimal.
In addition to the impact on existing Partner and ImmotionVR
sites, the Company was unable to complete the major installation
at Mandalay Bay (36 headsets) which was well underway before
lockdown. Additionally, we were unable to install into a number
of other contracted Partner sites (in addition to Mandalay Bay, the
Company has a further 86 headsets contracted).
Beyond the contracted installs noted, we intend to invest very
selectively for the remainder of 2020 unless a more rapid recovery
emerges.
We remain optimistic about our growth prospects once more
normal trading conditions return and we believe that potential
Partners will continue to find our proposition compelling,
particularly as many may be capital constrained and looking to
re-build revenues. As we come out of lockdown and enter the
recovery phase, we will continue marketing to prospective new
Partners, particularly in the aquarium sector in both the USA
and Europe. We will be cautious as to entering new Partnerships,
being led by the extent of the wider recovery, as well as the quality
of opportunity and commercial terms that can be struck.
Whilst in lockdown, we have taken the opportunity to review our
recommended cleaning procedures and we are testing a new UV
cleaning unit that could be used to achieve rapid sterilisation of
headsets at Partner venues. Despite our view that family groups
tend to go on our motion platforms together (as they are in
clusters of 2-4 seats), we will also be working with Partners on any
local social distancing requirements.
We have also undertaken a broad range of actions to manage
the cost base and cash flow in light of the COVID-19 Pandemic
including pay cuts for the majority of staff, furloughing staff and
applications for the various government subsidies available. As a
result, total monthly central cash operating costs, including certain
costs normally capitalised have been reduced to circa £200,000
from circa £310,000.
In the USA, the Company has received a loan of $161,000 under
the Paycheck Protection Program, some or all of which should
be forgiven, with any remainder subject to a nominal interest rate
and repayable over two years. We have also applied for a loan
under the USA’s Economic Injury Disaster Loan programme.
In the UK, we have been receiving the furlough grant in respect
of those employees furloughed. We are also pursuing a loan
through the government’s Coronavirus Business Interruption
Loan Schemes.
We will continue to review all operating costs on an ongoing basis
so that we can if necessary, flex the total operating costs to activity
and revenue levels.
The Company also strengthened its balance sheet by
undertaking a further equity fundraise, completed in late May,
which raised £1.35m gross. This puts us in a stronger position
to ride out the economic storm resulting from the COVID-19
pandemic.
The period since mid-March has been extremely challenging and
we expect continued disruption for some time to come. We will
remain focused on costs and working with key partners as the
recovery takes hold. We believe we have built the foundations of
a valuable business and we will do all we can to emerge from the
other side of the current crisis.
Martin Higginson
Chief Executive Officer
25 June 2020
Immotion
Group plc
Annual Report
& Accounts 2019
STRATEGIC REPORT
8
Overview
During the year, the Group shifted its focus to our Partner model as we believe that it offers superior returns to our ImmotionVR
operations and we believe is scalable.
It became clear that the returns from cultivating a long-term, collaborative relationship with our leisure destination partners
would be far superior to that of a one-time hardware sale, and we made the decision during the year not to actively pursue
hardware sales but to cultivate partnerships instead.
We continue to operate our own ImmotionVR Experience Sites, having closed several unprofitable sites in the year.
The remaining sites are profitable and provide us with a valuable testbed and direct consumer feedback.
Our offering also evolved during the year – both visually through the upgrade of illuminated enclosures to make our installations
stand out, and technologically through upgraded VR headsets which operate wirelessly.
Having created a broad base of content in 2018, our content team was able to focus on the creation of new partner-targeted VR
experiences as well as creating content for third party clients which was a source of income for the Group during the year,
alongside content licensing income.
Further analysis of divisional performance follows.
The Group shifted its focus
to our Partner model
as we believe that
it offers superior
returns.
9
Partnerships
The Partnership model (referred
to as Concessions in the previous
Annual Report) sees the Group work
with established high-footfall leisure
destinations. Immotion provides, at its
cost, VR hardware and experiences to the
operator and provides ongoing support.
The operator typically provides the site,
staff and utilities. The parties share the
revenue on a pre-agreed basis.
During the year, the Group significantly
added to its Partner site base with
installations at Blackpool Tower, a further
ten LEGOLAND and LEGOLAND Discovery
Centre sites, five SEA LIFE centres including
their London and Sydney sites, and the
Dubai Aquarium and Underwater Zoo.
Aquariums were a particular area of focus
due to strong returns seen in that cohort,
with 14 aquarium installations taking place
during the year.
As at 31 December 2019, the Group had
185 Partnership headsets in operation
(2018: 46 headsets) at 37 locations
(2018: 7 locations).
£303
PER HEADSET
PER WEEK
Partner site
average
revenue per
headset per
week £303.
Our primary key performance indicator (KPI) for the Partnerships model is revenue per
installed headset per week. A number of Partnership arrangements terminated during
the year following an unsuccessful trial period. Taking into account only the Partnership
arrangements which were installed at the end of the year, the revenue per headset per
week was £303 (2018: £265) during the year.
Aquarium partner sites performed particularly well for us in the year, averaging £476
revenue per headset per week (vs the £303 overall partner average). This explains our
focus on the aquarium sector in the year, with 14 installations into aquariums during
the year. We have continued to secure more aquarium partners in 2020 and other
‘edutainment’ locations such as zoos, though the COVID-19 outbreak has delayed
contracted installations and stalled contract negotiations with further new Partners.
£476
PER HEADSET
PER WEEK
Aquarium partner
average revenue
per headset per
week £476.
Immotion
Group plc
Annual Report
& Accounts 2019
STRATEGIC REPORT
10
ImmotionVR Experience
Centres
Under our ImmotionVR business model,
the Group rents space in retail and family
entertainment destinations, paying the
costs of occupancy and staff. Customers
are typically charged £6 for a single
experience, £10 for a fifteen-minute pass,
£20 for a thirty-minute pass or £30 for a
one-hour pass. Bookings can be made in
advance via the ImmotionVR website.
Due to the superior returns on capital seen
under the Partnership model, the Group
de-emphasised ImmotionVR during the
year, closing unprofitable sites but not
actively pursuing new sites to the same
extent as in 2018. Three new sites were
opened in the year in Glasgow, Brighton
and a flagship site in London at The O2.
ImmotionVR
average
revenue per
headset per
week £212.
£212
PER HEADSET
PER WEEK
The primary key performance indicator (KPI) for ImmotionVR centres is revenue per
installed headset per week. During the year, the Group’s experience centres generated
revenue per headset per week of £212 (2018: £255).
At the end of the year, there were 117 installed headsets (2018: 112) in operation across 9 ImmotionVR sites (2018: 11 sites).
Town/City
Bristol
Manchester
Castleford
Cardiff
Thousand Oaks, California
Birmingham
Glasgow
Brighton
London
Venue
Cabot Circus
Arndale
Xscape
St David’s
The Oaks
Star City
Intu Braehead
Churchill Square
The O2
Headsets
17
8
11
15
14
8
12
15
17
117
Date Opened
December 2017
June 2018
July 2018
August 2018
October 2018
November 2018
January 2019
May 2019
July 2019
Risks & Uncertainties
The Group has a Risk Committee to identify and
monitor risks which could threaten the Group’s
operations. The Risk Committee meets at least
once each year and is comprised of the Audit
Committee and the Finance Director.
The Risk Committee has the power to call on
Executive Directors and senior management
for the purposes of seeking information as well
as making recommendations.
The Group’s process for managing risks is as follows:
Identify Risk
Review & Evaluate
Assess impact of Risk
Create Mitigation Strategy
11
The risks are those which the Board considers, as at the date of this report, are the most critical to the continued operation of the
Group. The risks described do not represent the totality of the risks facing the Group and should not be relied on as such by any person
considering any investment decision in relation to the Company’s ordinary shares.
Risk
Potential Impact
Mitigation and Control
Impact of
COVID-19
(and future
pandemics)
COVID-19 has resulted in the closure of all of the Group’s own
ImmotionVR and partner sites. This has reduced the Group’s revenue
to nil and had a material impact on the Group’s 2020 performance.
There is currently no certainty as to how long COVID-19 will remain an
issue and the risk of a future pandemic of similar or greater proportions
cannot be ruled-out.
The Group is working on cleansing and distancing solutions
which can be deployed at ImmotionVR and partner sites
as the COVID-19 lockdown is lifted. The Group is also
investigating alternative revenue streams which could reduce
the Group’s reliance on the out-of-home market.
Failure to
implement
the Group’s
strategy
A failure to implement the Group’s strategy may have an adverse impact
on its business, financial and other conditions, profitability and results
of operations. There can be no assurance that the Group will be able to
maintain or grow its financial performance to anticipated future levels.
The Group has regular Board meetings as well as constant
communication with senior management to monitor and
refine progress against its targets.
Weekly KPIs are distributed to senior management to enable
them to monitor performance.
Technological
advances
within the
industry
Any industry which is heavily reliant on technology is prone to rapid
change with new entrants and ideas continuously changing the market.
There is a risk that the technologies adopted by the Group could
become obsolete or uncompetitive which could have a material adverse
impact on its prospects. Additionally, advances in hardware may require
the Group to incur additional capital expenditure that is not currently
foreseen, which could have an adverse material impact on the cash
position of the Group, and potentially trigger the requirement for further
capital.
Industry trends are monitored, and the Group sends
representatives to key trade shows to establish what new
products are coming to market.
Competition
The Group may be challenged by new or incumbent competitors (which
could include well resourced, international players in the entertainment
industry) which, in comparison with the Group, have greater market
presence or brand recognition, access to more popular and/or engaging
content, superior financial resources, economies of scale or lower cost
bases, or the ability to withstand or respond more swiftly to changes in
market conditions.
It is the Group’s intent to build up a large install base of
Immotion hardware which will create a barrier to entry.
Another key focus is to ensure that the Group’s hardware and
VR experiences are amongst the best and most relevant in
the market.
Provision of hardware and experiences at no up-front cost to
partners creates a further barrier to entry.
Cash
requirement
The Group’s partnership model and content creation require capital
expenditure in advance of revenue generation.
Foreign
exchange
movements
Political
uncertainty
The Group has certain contracts priced in foreign currencies and also
has employees based overseas paid in foreign currencies. It is therefore
exposed to the risk that adverse exchange rate movements could
cause its costs to increase (relative to its reporting currency) resulting in
reduced profitability for the Group.
The Group also procures VR hardware in US dollars. There is a risk that
the costs of such equipment increases against the Group on a Sterling
basis.
The current political climate – Brexit trade discussions between the UK
and the European Union, and the “trade war” with China in the USA –
give rise to some uncertainty in rela tion to our supply chain including
tariffs on items we import into the USA and trade with European
customers.
Martin Higginson
Chief Executive Officer
25 June 2020
Cash forecasts are maintained and regularly updated.
The Group endeavours to allocate resources into opportunities
which give the most effective payback.
The Group aims to support its cash flow with debt financing
where practical.
The Group is focused on reaching a level of installed headsets
sufficient to produce a positive operating cash flow as well as
the ability to fund or part-fund ongoing capex alongside debt
facilities.
The Group does not use speculative financial instruments to
hedge against potential currency loss.
The Group has foreign currency accounts which it uses to hold
funds in Sterling and US Dollars generated from operations
and settle liabilities denominated in those currencies.
Working with its suppliers, the Group is seeking ways to
reduce the cost of hardware.
The Group continue to monitor the political environment and
will take action to protect or strengthen the Group’s position
as circumstances change.
Immotion
Group plc
Annual Report
& Accounts 2019
CORPORATE AND SOCIAL
RESPONSIBILITY STATEMENT
12
The Group aims to operate ethically and be socially responsible in its actions. Below are a number of the approaches through which
this is achieved.
Business Conduct, Ethics and Anti-Corruption
It is the Group’s policy to conduct business in an honest way and without the use of corrupt practices or acts of bribery to obtain an
unfair advantage.
The Group operates an Anti-Bribery and Anti-Corruption Policy which is given to all staff. The Group has a zero-tolerance approach to
bribery and corruption and any breach of the policy results in disciplinary action which may include dismissal.
Health & Safety
The safety of staff and customers at our ImmotionVR experience centres and at our partners’ sites are of paramount importance. The
Group conducts regular audits of its ImmotionVR sites with a significant focus on health & safety practices.
In response to the threat of COVID-19, the Group is developing, with a manufacturer, a UV cleansing unit which could be used to
sterilise VR headsets between uses. These units, along with other safety measures such as protective screens, will be deployed post-
lockdown at both ImmotionVR and partner sites in response to local conditions and requirements.
Relationship with Stakeholders
Section 172 of the Companies Act 2006 requires that the Directors act in a way that they consider, in good faith, would most likely
promote the long-term success of the business, taking into consideration the interests of its shareholders and other stakeholders.
The table sets out our key stakeholder groups, their interests and how the Group engages with them.
13
Stakeholder
Why we engage
How we engage
Our shareholders
Our employees
We maintain and value regular dialogue with
our shareholders throughout the year and
place great importance on our relationship
with them. We know that our investors expect
a comprehensive insight into the financial
performance of the Group, and awareness of
long-term strategy and direction. As such, we
aim to provide high levels of transparency and
clarity of our results and long-term strategy
and to build trust in our future plans.
Without our employees we wouldn’t have a
business. Effective employee engagement
leads to a happier, healthier workforce who are
invested in the success of the Group. We strive
to address any employee concerns regarding
working conditions, health and safety, training
and development, as well as workforce
diversity. Engagement with our employees
starts from the top and is driven effectively
throughout the Group.
• Regular reports and analysis on investors and
shareholders
• Annual Report
• Company website
• Shareholder circulars
• AGM
• RNS announcements
• Press releases
• Evaluation and feedback processes for employees
and management
• Competitive rewards packages
• Encouraging employee training and development
• Online staff directory and intranet
• Board level access and a relatively flat
organisational structure.
Regulatory bodies
The Group’s operations are subject to a
wide range of laws, regulations, and listing
requirements including data protection, tax,
employment, environmental and health and
safety legislation, along with contractual terms.
• Company website
• RNS announcements
• Annual Report
• Direct contact with regulators
• Compliance updates at Board Meetings
• Consistent risk review
• Liaison with professional advisors
Our customers
Our suppliers
Our relationship with our partners is
collaborative and we are in constant dialogue
to provide support and analytics as required.
We listen to and engage with our customers on
a regular basis to ensure that we understand
their needs and can provide solutions that
address them. We work hard to ensure that
customer concerns are dealt with in a timely
and professional manner.
• Continual dialogue and review of feedback from
customers to ensure satisfaction
• Dedicated teams for support and account
management to ensure consumer concerns are
addressed
We have a number of key suppliers with
whom we have built strong relationships. We
establish effective engagement channels to
ensure our relationships remain collaborative
and forward focused, and to foster
relationships of mutual trust and loyalty.
• Taking a collaborative approach to problem
solving with our suppliers
• Clear parameters are given, backed-up by written
agreements where required, to ensure the Group
and supplier’s actions are co-ordinated
CORPORATE GOVERNANCE REPORT
14
14
The Board
The Board is comprised of three Executive Directors and two Non-Executive Directors. Both of the Non-Executive Directors are
deemed to be independent.
The three Executive Directors are full time and are contracted to work for a minimum of forty hours per week. The two Non-Executive
Directors are expected to devote such time as is necessary for proper performance of their duties.
The Board are of the view that the Directors have the necessary mix of experience, skills and personal qualities to enable the Group to
deliver its strategy, although there is currently no gender diversity. The Board’s composition is kept under continuous review.
The Directors are encouraged to undertake any activities or further training they deem necessary in order to keep their skills and
knowledge relevant to the business.
Details of the current Directors, their roles and background are as follows:
Sir Robin Miller
Non-Executive Chairman
Robin has extensive PLC experience
spanning many years, particularly in
the media sector. He was formerly Chief
Executive (1985-1998 and 2001-2003)
and Chairman (1998-2001) of Emap Plc,
a leading international media group in
consumer and trade publishing, commercial radio, music TV
channels and events. Robin is currently Non-Executive Chairman
of Digitalbox Plc and Non-Executive Director of Edge VCT,
Premier Sports Holdings plc, Dennis Maps Ltd and Crash Media
Group Ltd.
Martin Higginson
Co-Founder and Group Chief
Executive Officer
Martin is a seasoned Technology, Media
and Telecoms (TMT) entrepreneur. He has
set up sold and listed multiple businesses.
His first business, a BMX magazine, was
sold to IPC Magazines in 1982. Following
three years with IPC he left to set up his own publishing and
telecoms business Megafone. This was subsequently sold to
Scottish Power Plc. During his time with Scottish Power he joined
its subsidiary, Scottish Telecom, as Managing Director of the
Internet and Interactive division, including Internet ISP Demon
Internet. Following the flotation of Thus Plc (formerly Scottish
Telecom) Martin moved on to establish Monstermob Group Plc
which listed on AIM in 2003. Over a three year period it grew to
become a Top 50 AIM listed business with a market capitalisation
of £192m. This business was sold to Zed Worldwide in late
2006. Martin has subsequently founded a range of businesses
including Cityblock Plc, a luxury student accommodation
business which was privatised and sold to management in 2009;
NetPlayTV Plc, an interactive TV gaming business which boasted
exclusive partnerships with Virgin Media, Channel Five, and
ITV; and Digitalbox Plc, a digital media business. Digitalbox was
ranked as a Sunday Times Tech Track 100 Company in 2016 and
2017 and listed on AIM in February 2019. Martin holds the position
of Non-Executive Director of Digitalbox Plc and has previously
held Non-Executive Director positions with Legend Plc and
Cupid Plc.
Immotion Group plcAnnual Report & Accounts 2019 David Marks
Co-Founder and Group Finance
Director
David began his career with Arthur
Andersen in its corporate recovery &
restructuring department, during which
time he was involved in some of the
largest and most complex restructuring
assignments in the UK at the time. David then pursued a career
in corporate finance and M&A, initially with UBS and latterly
with Deutsche Bank. In 2001 David was appointed as a Partner
responsible for making private equity investment at Nikko
Principal Investments Limited, the European Principal Finance
arm of Nikko Cordial, one of Japan’s largest securities businesses.
David subsequently joined AIM-listed Monstermob Group Plc,
initially as a Non-Executive Director and subsequently as Group
Finance Director. He steered the Company as it rapidly expanded
internationally across Europe, USA and Asia. David has also been
involved in a number of early stage ventures as both an investor
and board member and with Martin created Digitalbox Group
which was a member of the UK Fast Track 100 in both 2016 and
2017. David has an honours degree in Law from the University
of Glasgow and is a member of the Institute of Chartered
Accountants of Scotland.
Nicholas Lee
Group Non-Executive Director
Nicholas has extensive capital markets
experience and is actively involved in AIM.
Having read Engineering at St. John’s
College, Cambridge, he commenced his
career at Coopers & Lybrand where he
qualified as a chartered accountant. He
joined Dresdner Kleinwort, where he worked in the corporate
finance department advising a range of companies across
a number of different sectors. When he left in 2009, he was
a Managing Director and Head of Investment Banking for
Dresdner Kleinwort’s hedge fund/alternative asset manager
clients. He now holds a number of directorships of public
companies.
15
Rod Findley
Group Commercial Director
Rod has over 20 years’ experience as a
director, writer and creative director
and has won a range of awards for his
creative work. He has a Bachelor of
Arts degree from McGill University in
Montreal and an MFA in Film at USC.
He is founder and CEO of C.2K Entertainment Inc, which was
acquired by Immotion Group on 21 December 2017. Thanks
to his strong reputation for creating narratives and engaging
consumers using pioneering technology, Rod has delivered
campaigns (broadcast, digital and print) for major brands
such as Toshiba, Sony, Guthy-Renker and Canon. International
broadcasters NHK and WoWoW have broadcast his long-form
documentary and narrative work. Rod began using the power of
virtual reality with major projects on behalf of Toyota and AbbVie.
The Board typically meets once every two months to discuss
significant matters including strategic decisions and performance.
The Company’s day-to-day operations are managed by the
Executive Directors. Any Director needing independent
professional advice in the furtherance of his duties may obtain this
advice at the expense of the Company.
The Company Secretary also attends meetings of the Board, takes
minutes and circulates them shortly thereafter. The Company
Secretary is also responsible for coordinating Board meetings and
circulating Board papers in advance.
CORPORATE GOVERNANCE REPORT
16
16
The Board has established Audit, Disclosure, Nomination, Remuneration and Risk Committees with formally delegated duties and
responsibilities, details of which are provided below.
Audit Committee
Nomination Committee
The Audit Committee is chaired by Nicholas Lee and meets
at least twice per year. Sir Robin Miller also serves on the Audit
Committee. The Audit Committee’s responsibilities include:
(i) ensuring that appropriate financial reporting procedures are
properly maintained and reported on;
The Nomination Committee is chaired by Sir Robin Miller and has
been established to identify and nominate, for the approval of the
Board, candidates to fill Board vacancies as and when they arise.
The Nomination Committee will meet as required. Nicholas Lee
also serves on the Nomination Committee.
(ii) meeting with the Group’s auditors to discuss matters of
relevance, including risk issues;
(iii) ensuring the internal controls of the Group are properly
maintained;
(iv) reviewing the financial statements prior to issue to the
shareholders;
(v) reviewing reports from the Group’s auditors;
(vi) reviewing and approving the scope and content of the
Group’s annual risk assessment programme and the annual
audit; and
(vii) monitoring the independence of the external auditors.
The Group’s Finance Director and the external auditors attend
meetings of the Audit Committee by invitation. The Committee
also holds separate meetings with the auditors as appropriate.
The Group does not have an internal audit function as this is not
considered appropriate given the scale of the Group’s operations.
However, the Group operates internal peer review with the scope
of evaluating and testing the Group’s internal control procedures
to standardise processes around best practice. Any significant
issues are reported to the Chair of the Audit Committee and
shared with the external auditors as appropriate.
Disclosure Committee
The Disclosure Committee is chaired by Martin Higginson
and has been established to ensure compliance with the AIM
Rules and the Market Abuse Regulations (MAR) concerning the
management of inside information. The Disclosure Committee
works closely with the Board to ensure that the Company’s
nominated adviser is provided with any information it reasonably
requests in order for it to carry out its responsibilities under
the AIM Rules and the AIM Rules for Nominated Advisers. The
Disclosure Committee meet as required. David Marks and
Sir Robin Miller also sit on the Disclosure Committee.
Remuneration Committee
The Remuneration Committee is chaired by Sir Robin Miller
and meets at least once per year. Nicholas Lee also serves
on the Remuneration Committee. The Remuneration
Committee’s responsibilities include reviewing the performance
of the Executive Directors, setting their remuneration levels,
determining the payment of bonuses and considering the
grant of options under the share option schemes. Martin
Higginson and David Marks will also attend the Remuneration
Committee but shall not be involved in decisions regarding
their own remuneration and, other than providing input to the
Non-Executives, shall not have a vote on the Remuneration
Committee.
Members of the Remuneration Committee do not participate in
decisions concerning their own remuneration.
Whilst the Quoted Companies Alliance Corporate Governance
Code suggests that the Chairman of the Board should not also
chair the Remuneration Committee, given that Sir Robin Miller
is only one of two independent Non-Executives, it is considered
appropriate by the Group for him to serve in this position.
Risk Committee
The Company has a Risk Committee, comprised of the Audit
Committee and the Finance Director, which meets at least once
each year. The committee examines the key risks that impact
the Company and assesses the adequacy of the Company’s
mitigation strategies. It has the power to call on Executive
Directors and senior management for the purposes of seeking
information as well as making recommendations.
Immotion Group plcAnnual Report & Accounts 2019 17
Attendance
Directors’ attendance at meetings of the Board and its Committees during 2019 were as follows:
Board
Audit
Disclosure
Nomination
Remuneration
Risk
Martin Higginson
David Marks
Rod Findley
Ian Liddell
(resigned 9th December 2019)
Sir Robin Miller
Nicholas Lee
9/9
9/9
4/9
5/9
5/9
5/9
-
2/2
-
-
2/2
2/2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1/1
1/1
-
1/1
-
-
1/1
1/1
Three of the nine Board meetings which took place during the year were to approve specific transactions via a duly appointed sub-
committee of Martin Higginson and David Marks and therefore the attendance of the other directors was not required.
No formal meetings of the Nomination or Disclosure Committees took place during the year.
The Board keep under review the effectiveness of its performance, the performance of the Committees and the performance of
individual Directors. It is the view of the Board that no changes to the composition of the Board are required at the current time.
Compliance with Corporate Governance Codes
As an AIM-quoted company, the Company is required to apply a
recognised corporate governance code and demonstrate how it
complies with that code and where it departs from it.
The Directors of the Company have taken the decision to apply
the Quoted Companies’ Alliance Corporate Governance Code
(the “QCA Code”).
As far as the Directors are aware, the Company is fully compliant
with the principles of the QCA Code other than the Chairman of
the Board also being chair of the Remuneration Committee.
Full details of the QCA Code’s ten principles and the steps the
Company takes to adhere to them can be found at:
www.immotion.co.uk/investors/corporate-governance/
The Directors of
the Company have
formally taken the
decision to apply the
QCA Code.
18
18
Financial Controls
Going Concern
The Board has overall responsibility for the Group’s system of
internal financial control and for reviewing its effectiveness.
The purpose of the system of control is to manage rather than
eliminate the risk of failure to achieve business objectives and
can only provide reasonable, but not absolute, assurance against
misstatement or loss.
The Audit Committee keeps the Company’s internal controls and
risk management systems under review.
The Finance Director is the executive within the Group responsible
for day-to-day financial management of the Group’s affairs and its
internal accounting.
Risk Management Review
Risk management is ultimately the responsibility of the Board
but is overseen by the Risk Committee. The Group’s key risks
are recorded in a risk register and those risks together with their
respective mitigants, controls and corrective actions are reviewed
regularly by the Risk Committee.
Shareholder Relations
The Company regularly updates its investor relations website
which can be found at: www.immotion.co.uk/investors.
The Company is happy to engage directly with shareholders
to answer any questions they have where it is possible to do
so without releasing price-sensitive information. The investor
relations website includes details of how to contact the Company
by email and telephone.
At the time of approving the financial statements, the Directors
have 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,
taking into consideration the recent placings together with
its forecasts and projections for 18 months from the reporting
date, and taking into account reasonably possible changes in
trading performance. The going concern basis of accounting has
therefore been adopted in preparing the financial statements.
However, the Directors note that there may be material
uncertainty in relation to going concern due to the effects of
COVID-19 and the impact of ongoing losses.
Long-Term Viability Statement
At the time of approving the financial statements, the Directors
are of the opinion that the Group will be in a position to continue
in operation and to meet its liabilities as they fall due.
The Directors’ expectations are based on assessment of the
Group’s current financial position, financial projections over the
next 18 months, and the principal risks facing the Group.
Key assumptions made in coming to this view include:
(i) that the assumptions made in preparing the Group’s
financial projections will come to fruition which include the
expected future installations into partner sites;
(ii) that no unforeseen risks affect the Group; and
(iii) that there is a gradual recovery from COVID-19 to historical
trading levels.
CORPORATE GOVERNANCE REPORT
19
Culture
The Directors recognise the importance of creating a corporate culture which is consistent with the Group’s business models and strategy.
Virtual Reality has a broad appeal and is enjoyed by people of all genders and ages. It is the Group’s intention that its non-discriminatory
policy when hiring staff will produce a workforce as diverse as its customer base, increasing the value of feedback from within the
organisation.
The Group is geographically spread with operations in the UK and USA, and partner sites further afield. It is therefore crucial that
knowledge sharing across regions is facilitated and encouraged.
The Group encourages an environment of openness and debate and welcomes all feedback from within.
Each department within the Group prepares a weekly report of key issues which are circulated amongst the Executive Directors and
senior management, a process which facilitates internal feedback and knowledge sharing.
The Board believe that the current culture is appropriate to enable the Group to deliver its strategy, though they also recognise that it
is inevitable that there is always room for improvement in this area and any new initiatives to facilitate communication and promote
diversity will be implemented as required.
The Directors recognise
the importance of
creating a corporate
culture which is
consistent with the
Group’s business
models and strategy.
AUDIT COMMITTEE REPORT
20
20
The Audit Committee is chaired by Nicholas Lee and meets at least twice per year. Sir Robin Miller also serves on the Audit Committee.
The Audit Committee’s responsibilities include:
(i) ensuring that appropriate financial reporting procedures are properly maintained and reported on;
(ii) meeting with the Group’s auditors to discuss matters of relevance, including risk issues;
(iii) ensuring the internal controls of the Group are properly maintained;
(iv) reviewing the financial statements prior to issue to the shareholders;
(v) reviewing reports from the Group’s auditors;
(vi) reviewing and approving the scope and content of the Group’s annual risk assessment programme and the annual audit; and
(vii) monitoring the independence of the external auditors.
The Group’s Finance Director and the external auditors attend meetings of the Audit Committee by invitation. The Committee also
holds separate meetings with the auditors as appropriate.
The Audit Committee met twice during the year to approve the 2018 accounts and the 2019 interim accounts
Significant Accounting Issues
The main accounting issues which the Audit Committee focused their attention on during the period were:
(i) The carrying value of the Group’s goodwill and intangible assets – the Audit Committee have reviewed the goodwill and
intangible assets on the Group’s balance sheet in the context of future earnings expected to be generated from those assets.
The decision has been taken to fully impair certain VR experiences developed or partially developed where their expected future
earnings are expected to be negligible.
(ii) The capitalisation of staff time spent creating VR experiences – the Group has a dedicated team of VR content creators who have
created a range of VR experiences during the period which are generating revenue for the group and are expected to continue
doing so. Where the conditions of IAS 38 are met, the Group capitalises internal and external costs associated with development of
these experiences as intangible assets. The Audit Committee concluded that they were comfortable that the Group’s accounting
policy was compliant with IAS 38.
(iii) The first time adoption of IFRS 16 – the Audit Committee have reviewed the Group’s adoption of IFRS 16 in relation to its property
leases and concluded that they are comfortable that the Group’s financial statements are consistent with the requirements of
IFRS 16.
Immotion Group plcAnnual Report & Accounts 2019 21
Impact of New Accounting Standards on Future Reports
The new International Financial Reporting Standards (IFRS) to be adopted by the Group from 1 January 2020 are set out in note 3.
They are not expected to have a material impact on the Group.
Internal Audit
External Auditors
The Group does not have an internal audit function as this is not
considered appropriate given the scale of the Group’s operations,
however the Group operates internal peer review with the scope
of evaluating and testing the Group’s internal control procedures
to standardise processes around best practice. Any significant
issues are reported to the Chair of the Audit Committee and
shared with the external auditors as appropriate.
The Audit Committee have reviewed the independence and
effectiveness of Haysmacintyre LLP, the Group’s external auditors,
and are satisfied in both respects.
Haysmacintyre LLP’s fees in the year in respect of audit services
were £58k (2018: £53k) and in respect of non-audit services were
£26k (2018: £111k) as detailed in note 8.
Internal Controls
The Board has overall responsibility for the Group’s system of
internal financial control and for reviewing its effectiveness.
The purpose of the system of control is to manage rather than
eliminate the risk of failure to achieve business objectives and
can only provide reasonable, but not absolute, assurance against
misstatement or loss.
The Audit Committee keeps the Company’s internal controls and
risk management systems under review.
The Finance Director is the executive within the Group responsible
for day-to-day financial management of the Group’s affairs and its
internal accounting.
Haysmacintyre LLP have signified their willingness to continue in
office and a resolution to reappoint Haysmacintyre LLP as auditor
to the Company will be proposed at the AGM.
Nicholas Lee
Chairman of the Audit Committee
25 June 2020
Immotion
Group plc
Annual Report
& Accounts 2019
REMUNERATION COMMITTEE REPORT
22
The Remuneration Committee determines the remuneration packages for Executive Directors and other senior employees and keeps
the Group’s policy on pay and benefits under review generally.
The Remuneration Committee will keep under review the long-term incentivisation of Executive Directors and senior employees,
balancing the need to control costs while ensuring that pay and benefits offered by the Group are appropriate for attracting and
retaining high calibre staff.
The Committee will continue to have due regard to remuneration reports from independent sources, to the guidance of its professional
advisers and to good practice generally.
Directors’ Remuneration
Directors’ remuneration for the year of 2019 is shown in the table below:
Salary
2019
£
Consultancy
2019
£
Severance
2019
£
Benefits
2019
£
Pension
2019
£
Total
2019
£
Total
2018
£
M Higginson
145,000
50,000
D Marks
179,200
R Findley
132,577
I Liddell 1
136,782
-
-
-
R Miller
30,000
15,000
N Lee
35,000
A Ritchie
-
-
-
-
-
-
30,000
-
-
-
8,266
1,180
204,446
263,807
-
1,180
180,380
237,369
5,842
-
138,419
130,561
-
-
-
-
2,380
169,162
54,128
-
45,000
22,865
794
35,794
16,742
-
-
10,763
658,559
65,000
30,000
14,108
5,534
773,201
736,235
1 Resigned 9th December 2019
There are no Directors’ service contracts with notice periods in excess of 12 months.
23
Directors & their Interests
The Directors’ beneficial interests in the Company were as follows:
M Higginson 1
D Marks
R Findley
25 June 2020
Shares of
£0.00040108663
31 December 2019
Shares of
£0.00040108663
31 December 2018
Shares of
£0.00040108663
24,026,945
24,026,945
23,109,514
9,767,580
9,767,580
9,767,580
10,084,349
10,084,349
9,501,016
I Liddell (resigned 9 December 2019)
4,902,857
4,902,857
4,902,857
R Miller
N Lee
350,024
241,743
350,024
241,743
350,024
241,743
1 Includes shares indirectly held in M Higginson’s pension scheme
The Directors hold share options in the Company as detailed below:
M Higginson
D Marks
R Findley
I Liddell (resigned 9 December 2019) 1
EMI Options
Shares
Unapproved Options
Shares
1,950,000
1,750,000
-
-
-
-
1,250,000
666,667
Total
Options
1,950,000
1,750,000
1,250,000
666,667
3,700,000
1,916,667
5,616,667
All of the above options were issued on 12 July 2018.
The options have the following vesting criteria:
(i) One-ninth of the options vest on 12 July 2019;
(ii) One-ninth of the options vest on 12 July 2020;
(iii) One-ninth of the options vest on 12 July 2021;
(iv) One-third of the options vest on announcement of the 2019 Annual Report, subject to performance criteria being met; and
(v) One-third of the options vest on announcement of the 2020 Annual Report, subject to performance criteria being met.
1
I Liddell was originally issued 1,000,000 EMI Options but, following his resignation as a director, 333,333 options lapsed and the
remainder became unapproved. The remaining options comprise all of the options with vesting criteria (i), (ii) and (iii) and half
of the options with vesting criteria (iv) and (v).
Sir Robin Miller
Chairman of the Remuneration Committee
25 June 2020
Immotion
Group plc
Annual Report
& Accounts 2019
DIRECTORS’ REPORT
24
The Directors present their report and audited financial statements for the year ended 31 December 2019.
Principal Activities
Dividends
The principal activities of the Group are: (i) the provision of virtual
reality (VR) experiences to partner sites; and (ii) the sale of VR
experiences in its own ImmotionVR sites.
No dividends were paid during the year (2018: £Nil). The Board is
not recommending the payment of a final dividend in respect of
the year ended 31 December 2019.
The principal activity of the Company is that of a holding
company.
Earnings per Share
Board of Directors
The Directors who served during the year were:
Martin Higginson
David Marks
Rodney Findley
Ian Liddell (resigned 9 December 2019)
Sir Robin Miller
Nicholas Lee
Future Developments
The Company has chosen in accordance with section 414C(11) of
the Companies Act 2006 to include the disclosure of likely future
developments in the Chief Executive’s Statement on pages 4 to 7.
Loss per share in the period from continuing operations was 2.13p
(2018: 2.31p) and diluted loss per share from continuing operations
in the period was 2.13p (2018: 2.31p).
Underlying loss per share from continuing operations in the
period was 1.72p (2018: 1.80p) and diluted underlying profit per
share from discontinued operations in the period was 0.01p (2017:
0.09p).
Going Concern
At the time of approving the financial statements, the Directors
have 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, taking into
consideration the recent placing, together with its forecasts and
projections for 18 months from the reporting date that take into
account reasonably possible changes in trading performance.
The going concern basis of accounting has therefore been
adopted in preparing the financial statements.
25
Post Balance Sheet Events
Research & Development
On 12th February 2020, the Company issued 39,310,339 new
ordinary shares at a price of £0.0725 per share, raising gross
proceeds of £2.85m via a placing.
On 27th May 2020, the Company issued 54,062,200 new ordinary
shares at a price of £0.025 per share, raising gross proceeds of
£1.35m via a placing.
COVID-19 is a developing situation and as at the date of signing
the financial statements, the Group is unable to generate any
revenue. COVID-19 is considered to be a non-adjusting post
Statement of Financial Position event and no adjustment is made
in the financial statements as a result.
The rapid development and fluidity of the COVID-19 virus make it
difficult to predict the ultimate impact at this stage. In line with
most experts, we believe that the impact of the virus outbreak
will be material on the general economy. This has already had a
material impact on the Group’s financial performance and will
continue to do so until lockdown is lifted at Partner sites and they
can re-open. Thereafter the level of revenue will depend on overall
footfall at Partner sites and the impact of any social distancing
requirements or general consumer demand for the Group’s
experiences. Management has modelled various scenarios on
the impact of COVID-19 and how to mitigate the risks but there is
considerable uncertainty as to the timing of any recovery to more
normal trading conditions.
Treasury Operations & Financial Instruments
The Group operates a centralised treasury function which is
responsible for managing liquidity, interest and foreign currency
risks associated with the Group’s activities.
The Group’s principal financial instrument is cash, the main
purpose of which is to fund the Group’s operations.
The Group has various other financial assets and liabilities such
as trade receivables and trade payables naturally arising from its
operations.
The Group’s exposure and approach to capital and financial risk,
and approach to managing these is set out in note 25 to the
consolidated financial statements.
During the year the Group invested in research and development
in order to continue its development of a content management
system and VR experiences. The Group has claimed R&D tax
credits where eligible.
Employee Engagements
The Group engages with its employees regularly in numerous
ways including via an intranet which is a source of key
information which staff can access as required. Details of
the Group’s performance are shared with all employees at
appropriate times using these methods.
Employee Policies
The Group has established employment policies which are
compliant with current legislation and codes of practice.
The Group is an equal opportunities employer.
Payment of Suppliers
The Group’s policy is to pay suppliers in accordance with the
relevant contractual terms between the Group and the supplier.
Where no specific terms are agreed, the Group’s standard policy
is 30 days.
Directors’ Indemnity
The Company’s Articles of Association provide, subject to the
provisions of UK legislation, an indemnity for Directors and
officers of the Company in respect of liabilities they may incur
in the discharge of their duties or in the exercise of their powers,
including any liabilities relating to the defence of any proceedings
brought against them which relate to anything done or omitted,
or alleged to have been done or omitted, by them as officers or
employees of the Company. Appropriate directors’ and officers’
liability insurance cover is in place in respect of all the Directors.
Directors’ Conflicts of Interest
In the event that a Director becomes aware that they, or their
connected parties, have an interest in an existing or proposed
transaction involving the Group, they will notify the Board in
writing or at the next Board meeting.
Immotion
Group plc
Annual Report
& Accounts 2019
DIRECTORS’ REPORT
26
Significant Shareholdings
As at 31 December 2019, the following shareholders owned 3% or
more of the Company:
As at 25 June 2020, the following shareholders owned 3% or more
of the Company:
Shareholder
Shares
%
Shareholder
Shares
%
Unicorn AIM VCT
24,999,999
8.74%
Unicorn AIM VCT
29,137,930
7.68%
Martin Higginson 1
24,026,945
8.40%
Cavendish Asset Management -
AIM Fund
27,217,510
Cavendish Asset Management -
AIM Fund
17,967,510
6.28%
Rathbone Nominees Limited
26,218,772
7.17%
6.91%
Rathbone Nominees Limited
17,938,067
6.27%
Martin Higginson 1
24,026,945
6.33%
Leonie Dobbie
12,633,607
4.41%
Herald Investment Trust
12,896,551
3.40%
Rod Findley
10,084,349
3.52%
Leonie Dobbie
12,633,607
David Marks
9,767,580
3.41%
Downing ONE VCT
12,137,931
3.33%
3.20%
1 Includes shares indirectly held in M Higginson’s pension scheme
Political Donations
The Group did not make any political donations during 2019
(2018: £Nil).
Matters Covered in the Chairman’s Statement
& Financial Statements
Certain matters which are required to be disclosed in the
Directors’ Report (such as review of the business and future
developments) have been omitted as they are included within
the Strategic Report (on pages 8 to 11) and the Chief Executive’s
Statement (on pages 4 to 7) and within the notes to the Financial
Statements.
Annual General Meeting
The Company’s Annual General Meeting will be held
later in the year.
Statement as to Disclosure of Information to
the Auditor
As far as the Directors are aware they have each taken all
necessary steps to make themselves aware of any relevant audit
information and to establish that the auditor is aware of that
information.
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the Companies
Act 2006.
Auditors
Haysmacintyre LLP have signified their willingness to continue in
office and a resolution to reappoint Haysmacintyre LLP as auditor
to the Company will be proposed at the AGM.
Approved by the Board on 25 June 2020 and signed on its
behalf by.
Martin Higginson
Director
DIRECTORS’ RESPONSIBILITIES STATEMENT
27
The Directors are responsible for preparing the Strategic Report, Directors’ Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to
prepare the financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European
Union and applicable law. Under company law the Directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Company and the
Group for that period.
In preparing these financial statements, the Directors are
required to:
•
select suitable accounting policies and then apply them
consistently;
• make judgments and accounting estimates that are
reasonable and prudent;
•
state whether IFRS as adopted by the European Union have
been followed subject to any material departures disclosed
and explained in the financial statements;
• provide additional disclosures when compliance with
specific requirements in IFRS is insufficient to enable users
to understand the impact of particular transactions, other
events and conditions on the Company’s and the Group’s
financial position and financial performance; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company and
the Group will continue in business.
Financial statements are published on the Group’s website in
accordance with legislation in the United Kingdom governing
the preparation and dissemination of financial statements, which
may vary from legislation in other jurisdictions. The maintenance
and integrity of the corporate and financial information on the
Group’s website is the responsibility of the Directors. The Directors’
responsibility also extends to the ongoing integrity of the financial
statements contained therein. The work carried out by the
auditors does not include consideration of the maintenance and
the integrity of the website and accordingly the auditor accepts
no responsibility for any changes that have occurred to the
financial statements when they are presented on the website.
Immotion
Group plc
Annual Report
& Accounts 2019
INDEPENDENT AUDITOR’S REPORT TO THE
SHAREHOLDERS OF IMMOTION GROUP PLC
28
Opinion
Material Uncertainty Related to Going Concern
We have audited the financial statements of Immotion Group
Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the
year ended 31 December 2019 which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated
and Parent Company Statement of Financial Position, the
Consolidated and Parent Company Statement of Changes
in Equity, the Consolidated and Parent Company Cash Flow
Statements and notes to the financial statements, including
a summary of significant accounting policies. The financial
reporting framework that has been applied in their preparation
is applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
We draw attention to Note 4 in the financial statements, which
indicates that the Group incurred a loss after taxation of £5,415k
and had a net cash outflow of £237k during the year ended 31
December 2019. The recent COVID-19 outbreak has affected the
Group’s ability to generate revenue, and it is difficult to predict at
this stage the duration of disruption to sales activity. The Directors
have modelled scenarios and may seek additional funding to
provide sufficient cash to mitigate the risks provided by COVID-19.
As stated in Note 4, these facts, along, with other matters
may indicate that a material uncertainty exists that may cast
significant doubt on the Group’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
• give a true and fair view of the state of the group’s and of the
Key Audit Matters
parent company’s affairs as at 31 December 2019 and of the
group’s loss for the year then ended;
• have been properly prepared in accordance with IFRSs as
adopted by the European Union; and
• have been prepared in accordance with the requirements of
the Companies Act 2006.
Basis for Opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the financial statements
section of our report. We are independent of the group in
accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
In addition to the matter described in the material uncertainty
related to going concern section, we determined the matters
described below to be the key audit matters to be communicated
in our report.
Key Audit Matter: Revenue Recognition
There is a risk that group revenue, comprising the sale of content,
partner revenue, VR revenue and hardware, is not recognised in
line with the accounting policies in note 4 in accordance with
IFRS 15.
How the matter was addressed in the audit
Our audit work included, but was not restricted to:
• Considering the stated accounting policies in respect of
revenue recognition and whether these are consistent with
IFRS 15;
• A detailed review of how revenue is recognised;
• A review of the judgments made; and
•
Testing a sample of transactions recorded either side of the
balance sheet date for correct application of cut-off.
No material misstatements were identified as a result of the audit
procedures performed.
29
Our Application of Materiality
The scope and focus of our audit was influenced by our
assessment and application of materiality. We define materiality
as the magnitude of misstatement that could reasonably be
expected to influence the economic decisions of the users of
the financial statements. We use materiality to determine the
scope of our audit and the nature, timing and extent of our audit
procedures and to evaluate the effect of misstatements, both
individually and on the financial statements as a whole.
Materiality for the Financial Statements as a whole was set at
£74,000, determined by reference to Group loss. We report to the
Audit Committee any corrected or uncorrected misstatements
arising exceeding £3,700. Performance materiality was set
at £55,500, being 75% of materiality. This was considered an
appropriate level of materiality given the focus on revenue
generating activities.
An Overview of the Scope of Our Audit
Our audit scope included the audit of each of the subsidiaries for
the year ended 31 December 2019 except C.2K Entertainment
Inc. Our audit work for the audited subsidiaries therefore covered
revenue, loss and assets and liabilities. The subsidiary audits were
performed to subsidiary level materiality which was calculated
for each subsidiary with reference to their respective loss and was
lower than Group materiality in each case. C.2K Entertainment
Inc was audited to Group materiality. The subsidiaries, Immotion
Limited and Ranger Rob UK Limited, were exempt from audit
by virtue of S479A of Companies Act 2006 and were audited to
Group materiality.
Key Audit Matter: Impairment of Goodwill and
Other Intangibles
There is a risk as to the valuation of goodwill and other separately
identifiable intangible assets arising during previous acquisitions
at 31 December 2019 and the need for impairment.
How the matter was addressed in the audit
Our audit work included, but was not restricted to:
• Reviewing and assessing the impairment review prepared by
management and challenging the assumptions;
• Reviewing and assessing future budgets and cash flow
forecasts; and
• Making enquiries of management and assessing expected
future performance and potential growth in the future.
Our audit work did not identify any material errors in the
valuation of goodwill and other separately identifiable
intangible assets.
Key Audit Matter: Capitalisation of Development
Costs
There is a risk that the capitalised software development costs
may have been capitalised without meeting the relevant
recognition criteria of IAS 38 ‘intangible assets’.
How the matter was addressed in the audit
Our audit work included, but was not restricted to:
• Reviewing and assessing the criteria for capitalising
development costs under IAS 38 and ensuring these had
been met;
• Reviewing and assessing the methodology of calculating
development costs;
• Reviewing and assessing the client’s impairment review of
each ongoing project at the year end and assessment of
whether they meet the criteria of an intangible asset; and
• Reviewing and assessing management’s rationale for
capitalising costs and consideration of whether there is
sufficient indication of future economic benefits to
justify capitalisation.
Immotion
Group plc
Annual Report
& Accounts 2019
INDEPENDENT AUDITOR’S REPORT TO THE
SHAREHOLDERS OF IMMOTION GROUP PLC
30
Other Information
The directors are responsible for the other information. The other
information comprises the information included in the annual
report, other than the financial statements and our auditor’s
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there
is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Matters on Which We are Required to Report by
Exception
In the light of the knowledge and understanding of the group
and the parent company and its environment obtained
in the course of the audit, we have not identified material
misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
•
•
•
adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
the parent company financial statements are not in
agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law
are not made; or
• we have not received all the information and explanations we
require for our audit.
Opinions on Other Matters Prescribed by the
Companies Act 2006
Responsibilities of Directors
In our opinion, based on the work undertaken in the course
of the audit:
•
•
the information given in the strategic report and the directors’
report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been
prepared in accordance with applicable legal requirements.
As explained more fully in the directors’ responsibilities
statement, set out on page 27, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent company’s
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate
the group or the parent company or to cease operations, or have
no realistic alternative but to do so.
31
Auditor’s Responsibilities for the Audit of the
Financial Statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of the
financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Use of Our Report
This report is made solely to the company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might
state to the company’s members those matters we are required
to state to them in an Auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the
company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
Laura Mott (Senior Statutory Auditor)
For and on behalf of Haysmacintyre LLP, Statutory Auditors
10 Queen Street Place, London EC4R 1AG
25 June 2020
Immotion
Group plc
Annual Report
& Accounts 2019
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME FOR THE YEAR ENDED 31 DECEMBER 2019
32
Revenue – continuing operations
Cost of sales – continuing operations
Gross profit
Note
7
Administrative expenses– continuing operations
Loss from Operations
8
Memorandum:
Adjusted EBITDA
Depreciation
Amortisation
Impairment of intangible assets
Share based payments
Acquisition & listing costs
Loss on disposal of fixed assets
Restructuring costs
Loss from Operations
Finance costs
Finance income
Loss before taxation and attributable to
equity holders of the parent
Taxation
Loss from continuing operations
Discontinued operations (net of tax)
Loss after taxation
Other comprehensive expense
Loss on translation of subsidiary
Loss after taxation and attributable to equity holders
of the parent and total comprehensive income for the period
Earnings/(Loss) per share (pence)
Basic (continuing)
Basic (discontinuing)
Earnings/(Loss) per share (pence)
Diluted (continuing)
Diluted (discontinuing)
10
11
12
32
13
13
Year ended
Year ended
31 December
31 December
2019
£’000
3,606
(2,509 )
1,097
(6,524 )
(5,427 )
(2,494 )
(1,304 )
(561 )
(458 )
(171 )
-
(12 )
(427 )
2018
£’000
1,948
(1,436 )
512
(4,264 )
(3,752 )
(2,360 )
(405 )
(178 )
-
(137 )
(672 )
-
-
(5,427 )
(3,752)
(108 )
4
(5,531 )
84
(5,447 )
32
(5,415 )
(57 )
2
(3,807 )
159
(3,648 )
(175 )
(3,823 )
(29 )
(16 )
(5,444 )
(3,839 )
(2.13 )
0.01
(2.12 )
(2.13 )
0.01
(2.12 )
(2.31 )
(0.11 )
(2.42 )
(2.31 )
(0.11 )
(2.42 )
The notes on pages 37 to 70 form part of the group financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
33
Share
capital
£’000
Share
premium
£’000
Foreign
exchange
reserve
£’000
Retained
(deficit)/
earnings
£’000
Balance at 1 January 2018
Issue of shares
Issue costs deducted from equity
Loss after tax
Equity settled share-based payments
Bonus Issue
Currency translation of overseas
subsidiary
Balance at 31 December 2018
Issue of shares
Issue costs deducted from equity
Loss after tax
Equity settled share-based payments
Currency translation of overseas
subsidiary
-
26
-
-
-
52
-
78
37
-
-
-
-
3,704
6,786
(439 )
-
-
(52 )
-
9,999
5,684
(373 )
-
-
-
Balance at 31 December 2019
115
15,310
-
-
-
-
-
-
(16 )
(16 )
-
-
-
-
(29 )
(45 )
(175 )
-
-
(3,823 )
137
-
-
(3,861 )
-
-
(5,415 )
171
-
(9,105)
The notes on pages 37 to 70 form part of the group financial statements.
Total
equity
£’000
3,529
6,812
(439 )
(3,823 )
137
-
(16 )
6,200
5,721
(373 )
(5,415 )
171
(29 )
6,275
Immotion
Group plc
Annual Report
& Accounts 2019
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AS AT 31 DECEMBER 2019
34
ASSETS
Non-current assets
Property, plant and equipment
Intangible fixed assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Loans and borrowings
Lease liabilities
Deferred tax liability
Contract liabilities
Total current liabilities
Non-current liabilities
Other payables
Loans
Lease liabilities
Deferred tax liability
Total liabilities
Total net assets
Capital and reserves attributable to owners
of the parent
Share capital
Share premium
Foreign exchange reserve
Retained deficit
Total equity
31 December
31 December
2019
£’000
2018
£’000
Note
14
15
16
17
18
19
19
19
24
20
19
19
19
24
26
28
28
28
3,132
4,020
7,152
-
803
474
1,277
8,429
(1,060 )
(101 )
(401 )
(27 )
(14 )
(1,603 )
-
(55 )
(496 )
-
(551)
(2,154 )
6,275
115
15,310
(45 )
(9,105 )
6,275
1,574
4,038
5,612
133
1,410
711
2,254
7,866
(886 )
(229 )
-
(26 )
(189 )
(1,330 )
(54 )
(218 )
-
(64 )
(336 )
(1,666 )
6,200
78
9,999
(16 )
(3,861 )
6,200
The financial statements were approved by the Board and authorised for issue on 25 June 2020
Martin Higginson
Chief Executive Officer
David Marks
Group Finance Director
The notes on pages 37 to 70 form part of the group financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
35
Cash flows from operating activities
Loss before tax including discontinued operations
Adjustments for:
Share based payments
Depreciation of property plant and equipment
Depreciation of stock transfers
Loss on disposal of fixed assets
Amortisation of intangible assets
Impairment of intangible assets
Finance costs
Finance income
Foreign exchange on retranslation of fixed assets
Foreign exchange loss
Corporation tax received/(paid)
Cash flows from operating activities before changes in working capital
Decrease / (Increase) in inventories
Decrease / (increase) in trade and other receivables
(Decrease) / Increase in trade and other payables
Cash used in operations
Investing activities
Purchase of intangible assets
Purchase of property, plant and equipment
Disposals of property, plant and equipment
Foreign exchange on retranslation of fixed assets
Net cash used in investing activities
Financing activities
Finance costs
Finance income
New loans and finance leases
Loan repayments
Issue of convertible loan stock
Issue of new share capital
Costs on issue of shares
Net cash from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
Year ended
Year ended
31 December
31 December
2019
£’000
(5,499 )
171
1,304
(2 )
12
561
458
108
(4 )
(32 )
(29 )
289
(2,663 )
133
339
(55 )
(2,246 )
(1,005 )
(2,883 )
15
32
(3,841 )
(108 )
4
1,166
(560 )
-
5,721
(373 )
5,850
(237 )
711
474
2018
£’000
(3,982 )
137
405
(20 )
-
178
231
57
(2 )
(28 )
(16 )
(13 )
(3,053 )
(133 )
(458 )
168
(3,476 )
(1,542 )
(1,524 )
76
-
(2,990 )
(57 )
2
179
(89 )
488
6,324
(439 )
6,408
(58 )
769
711
Immotion
Group plc
Annual Report
& Accounts 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
36
Reconciliation of net cash flow to movement in net debt:
Net (decrease) / increase in cash and cash equivalents
New loans and finance leases
Repayment of loans
Movement in net funds in the year
Net funds at 1 January
Net (debt) / funds at 31 December
Breakdown of net (debt) / funds
Cash and cash equivalents
Loans and borrowings
Lease liabilities
Net (debt) / funds at 31 December
Year ended
31 December 2019
£000
Year ended
31 December 2018
£000
(237 )
(1,166 )
560
(843 )
264
(579 )
474
(156 )
(897 )
(579 )
(58 )
(179 )
89
(148 )
412
264
711
(447 )
-
264
The notes on pages 37 to 70 form part of the group financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
37
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 Group is listed on the Alternative
Investment Market (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 4.
2. STANDARDS, AMENDMENTS & INTERPRETATIONS ADOPTED IN THE CURRENT FINANCIAL YEAR
ENDED 31 DECEMBER 2019
The accounting policies adopted are consistent with those of the previous financial year except for the following new and amended
standards and interpretations during the year that are applicable to the Group.
IFRS 16 is effective from 1 January 2019. The standard eliminates the classification of leases as either operating or finance leases and
introduces a single accounting model. Lessees are required to recognise a right-of-use asset and related lease liability for their operating
leases and show depreciation of leased assets and interest on lease liabilities separately in their income statement. IFRS 16 requires the
Group to recognise substantially all of its operating leases on the balance sheet.
The Group adopted IFRS 16 effective 1 January 2019 on a modified retrospective basis. Accordingly, prior year financial information has
not been restated and will continue to be reported under IAS 17: Leases. The right-of-use asset and lease liability have initially been
measured at the present value of remaining lease payments, with the right-of-use asset being subject to certain adjustments.
When applying IFRS 16, the Group has applied the following practical expedients, on transition date:
•
•
•
Reliance on the previous identification of a lease (as provided by IAS 17) for all contracts that existed on the date of initial
application;
Exclusion of initial direct costs from the measurement of the right-of-use asset at the date of initial application;
The accounting for operating leases with a remaining term of less than 12 months as at 1 January 2019 as short-term leases.
Immotion
Group plc
Annual Report
& Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2019
38
The following table reconciles the opening balance for the lease liabilities as at 1 January 2019 based on the operating lease obligations
as at 31 December 2018:
Loss for the period to 31 December 2019:
Add back: notional interest charged on finance leases
Add back: depreciation on right-of-use asset
Less: rent which would have been charged before transition:
Revised loss for the period to 31 December 2019:
Additional profit/(loss) gained as a result of transition:
£’000
(5,415 )
53
349
(396 )
(5,409 )
6
The following table reconciles the minimum lease commitments disclosed in the Group’s financial statements as at 31 December 2018
to the amount of lease liabilities on 1 January 2019:
Minimum operating lease commitment at 31 December 2018:
Less: short term leases not recognised under IFRS 16
Less: leases terminated before 31 December 2019
Less: service charge commitments
Undiscounted lease payments:
Less: effect of discounting using the incremental borrowing rate as at the
date of initial application
Lease liabilities recognised at 1 January 2019
New leases in 2019
Interest for year to 31 December 2019
Rental payments for 12 months to 31 December 2019
Lease liability at 31 December 2019
£’000
1,338
(53 )
(51 )
(155 )
1,079
(132 )
947
223
53
(396 )
827
3. NEW AND REVISED IFRS STANDARDS IN ISSUE BUT NOT YET EFFECTIVE
Definition of Material – Amendments to IAS 1 and IAS 8 (effective 1 January 2020)
The IASB has made amendments to IAS 1, ‘Presentation of Financial Statements’, and IAS 8, ‘Accounting Policies, Changes in
Accounting Estimates and Errors’, which use a consistent definition of materiality throughout International Financial Reporting
Standards and the Conceptual Framework for Financial Reporting, to clarify when information is material and incorporate some of the
guidance in IAS 1 about immaterial information.
In particular, the amendments clarify:
a) That the reference to obscuring information addresses situations in which the effect is similar to omitting or misstating that
information, and that an entity assesses materiality in the context of the financial statements as a whole, and;
b) The meaning of ‘primary users of general purpose financial statements’ to whom those financial statements are directed, by
defining them as ‘existing and potential investors, lenders and other creditors’ that must rely on general purpose financial
statements for much of the financial information they need.
The amendment is not expected to have a material impact on the Group.
39
4. 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.
Going concern
The Group incurred a loss after taxation of £5,415k for the year and
a net cash outflow of £237k. The loss in the year and the post year
end operational disruption and economic uncertainty created
by COVID-19 lockdowns indicate the existence of a material
uncertainty which may cast significant doubt on the Group’s
ability to continue as a going concern unless losses after taxation
are reduced significantly and/or new equity funds raised
as required.
On 12 February 2020, the Group raised £2.85 million (before costs)
through an additional issue of shares for cash. On 27 May 2020,
the Group raised a further £1.35 million (before costs) through an
additional issue of shares for cash.
The Directors have prepared forecasts covering the period to
December 2021, assessing the trading projections and cash flow
excluding the potential impact of COVID-19 which is considered
below. The projections include the likely headset roll out and the
revenue that will be generated should the Group meet
their projections.
The uncertainty as to the future impact on the Group of the
recent COVID-19 outbreak has been considered as part of the
Directors’ consideration of the going concern basis of preparation.
All revenue generating activity ceased during March 2020 for an
indeterminate period of time and, as such, the Group is currently
generating almost no revenue. Lockdown has to date resulted
in the Group stopping the installation of any new equipment at
new Partner sites.
The Directors have modelled various scenarios for when
lockdown may be lifted and have modelled the potential impact
on sales and the results of the Group, again covering the period
to December 2021. In preparing this analysis, a number of
scenarios were modelled ranging from the lockdown ending on
1 July 2020 to the lockdown ending on 1 September 2020, with a
reduction in forecast sales ranging from 30% to 50% for the rest
of 2020. In each scenario, mitigating actions within the control
of management have been modelled. However, it is difficult to
predict the overall outcome and impact of COVID-19 at this stage.
The models prepared showed that there may be a requirement
for additional funding to continue being able to operate as
a going concern. This was a significant factor in the Group’s
decision to raise additional funds on 27 May 2020.
The Directors note the commitment to provide financial support
made by the UK Government for UK businesses, including a
£330bn funding package. Whilst there remains uncertainty
around this, the Directors believe that the Group would qualify for
financial assistance schemes within this package. The Group has
obtained funding through the Paycheck Protection Program in
the USA.
Based on the models prepared and the indications (as noted
above with the two fundraises post year-end) regarding the
ability to obtain further funding, the Directors believe that it
remains appropriate to prepare the financial statements on a
going concern basis.
The financial statements do not include any adjustments that
would result from the basis of preparation being inappropriate.
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 twice 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:
Immotion
Group plc
Annual Report
& Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2019
40
Partners
Partner 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 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 probable 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.
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 orders;
the customer has specifically requested that the goods be
held pending collection; and
normal payment terms apply to the
Bill-and-Hold arrangement.
Content
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 performance obligations 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.
Content revenue is recognised on the date which the sale to the
customer takes place. The Group considers the performance
obligations to have been transferred upon delivery of the service.
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
The Group assesses whether a contract is or contains a lease,
at inception of a contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
agreements in which it is the lessee, except for short-term leases
(defined as leases with a lease term of 12 months or less) and
leases of low value assets. For these leases, the Group recognises
the lease payments as an operating expense on a straight-line
basis over the term of the lease unless another systematic basis
is more representative of the time pattern in which economic
benefits from the leased asset are consumed.
The lease liability is initially measured at the present value of the
lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the Group uses its incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability comprise fixed lease payments (including in-substance
fixed payments), less any lease incentives.
The lease liability is included in Payables in the Statement of
Financial Position.
The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability (using the
effective interest method) and by reducing the carrying amount
to reflect the payments made.
The right-of-use assets comprise the initial measurement of the
corresponding lease liability, lease payments made at or before
the commencement day and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation
and impairment losses.
Right-of-use assets are depreciated over the shorter period
of lease term and useful life of the underlying asset. If a lease
transfers ownership of the underlying asset or the cost of the
right-of-use asset reflects that the Group expects to exercise a
purchase option, the related right-of-use asset is depreciated over
the useful life of the underlying asset. The depreciation starts at
the commencement date of the lease.
The right-of-use assets are included in the tangible fixed assets in
the Statement of Financial Position.
The Group applies IAS 36 to determine whether a right-of-use
asset is impaired and accounts for any identified impairment
losses where applicable.
41
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 of disposal of the operation.
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 twice-annual
impairment review.
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.
Immotion
Group plc
Annual Report
& Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2019
42
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 the project to be completed. Internally
generated intangible assets are amortised over their estimated
useful lives, being 3 years from completion of development.
Other 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.
The Group always recognises lifetime expected credit losses for
trade receivables and amounts due on contracts with customers.
The expected credit losses on these financial assets are estimated
based on the Group’s historical credit loss experience, adjusted for
facts that are specific to the debtors, general economic conditions
and an assessment of both the current as well as the forecasted
conditions at the reporting date, including time value of money
where appropriate. Lifetime expected credit losses are losses
which will result from all possible default events over the expected
life of a financial instrument.
Contract liabilities
Contract liabilities comprise payments in advance of revenue
recognition and revenue deferred due to contract performance
obligations not completed. They are classified as current liabilities
if the contract performance 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 & 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 & 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.
Trade payables
Trade payables are initially recognised as financial liabilities
measured at fair value, and subsequent to initial recognition
measured at amortised cost.
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.
43
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 27.
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 & 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 equipmen t
33% straight line
Leasehold property
Over term of lease / 33%
straight line retail premises
Plant & equipment
33% straight line
Fixtures & fittings
20% to 33% straight line
IFRS 16 right of
use assets
Over term of lease
Impairment of Assets
Impairment tests on goodwill are undertaken twice-annually.
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 is charged to the
statement of comprehensive income. Impairment charges are
included under administrative expenses within the consolidated
statement of comprehensive income.
Immotion
Group plc
Annual Report
& Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2019
44
5. CRITICAL ACCOUNTING ESTIMATES &
JUDGMENTS
In the application of the Group’s accounting policies, which
are described in note 4, the Directors are required to make
judgments, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions
are based on experience and other factors considered to be
relevant. Actual results may differ from these estimates. The
estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future periods
if the revision affects both current and future periods.
The following are the critical judgments and estimations that
the Directors have made in the process of applying the Group’s
accounting policies and that have the most significant effect on
the amounts recognised in the financial statements.
Taxation & 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.
45
Critical accounting judgments
Revenue recognition
The revenue for the sale of hardware is recognised once the
benefits and control of these items are no longer with the
Group and are instead with the customer. Revenue is recognised
under the specifics of IFRS 15 Bill-and-Hold arrangements for
VR Hardware that was not delivered to the customer by the
year-end. Management exercise judgment to consider when
the risks have been transferred to the customer.
Project revenue is recognised in proportion to the Group’s
estimate of project completion at period end. Estimating
project completion requires management judgment as to the
percentage complete at period end and the amount of
revenue to be recognised.
Recoverability criteria for capitalisation of development
expenditure
The Group recognises costs incurred on development projects
as an intangible asset which satisfies the requirements of IAS 38.
The calculation of the costs incurred includes the percentage of
time spent by certain employees on the development project.
The decision whether to capitalise and how to determine the
period of economic benefit of a development project requires
an assessment of the commercial viability of the project and the
prospect of selling the project to new or existing customers.
An assessment is made as to the future economic benefits of the
project and whether an impairment is needed.
Impairment of goodwill
Impairment of the valuation of the goodwill relating to the
acquisition of subsidiaries is considered twice annually for
indicators of impairment to ensure that the asset is not
overstated within the financial statements. The twice annual
impairment assessment in respect of goodwill requires estimates
of the value in use (or fair value less costs to sell) of subsidiaries to
which goodwill has been allocated. As a result, estimates of future
cash flows are required, together with an appropriate discount
factor for the purpose of determining the present value of those
cash flows.
R&D tax credits
Uncertainties exist in relation to the interpretation of complex tax
legislation, changes in tax laws and the amount and timing of
future taxable income. This could necessitate future adjustments
to taxable income and expenses already recorded.
At the year-end date, tax liabilities and assets reflect
management’s judgments in respect of the application of
the tax regulations, in particular the R&D tax regulations and
management’s estimate of the future amounts that will
be settled.
In assessing our year-end tax liability, the Group has made a
provisional assessment as to the likely amount of development
expenditure that will be eligible under each of the HMRC’s large
company and SME R&D tax credit schemes.
Critical accounting estimates
Amortisation of intangible assets
The periods of amortisation adopted to write down capitalised
intangible assets and capitalised staff costs requires judgments
to be made in respect of estimating the useful lives of the
intangible assets to determine an appropriate amortisation rate.
Capitalised development costs are being amortised on a straight-
line basis over the period during which economic benefits are
expected to be received, which has been estimated at 3 years.
Depreciation
The useful economic lives of tangible fixed assets are based on
management’s judgment and experience. When management
identifies that actual useful economic lives differ materially from
the estimates used to calculate deprecation, that charge is added
retrospectively. Due to the significance of tangible fixed assets
to the Group, variances between actual and estimated useful
economic lives could impact on the operating results
both positively and negatively.
Share based payments expense
Non-market performance and service conditions are included in
the assumptions about the number of options that are expected
to vest. At the end of each reporting period the Group revises
its estimates of the number of options that are expected to vest
based on the non-market vesting conditions. It recognises the
impact of the revision to the original estimates, if any, in the
consolidated statement of comprehensive income,
with a corresponding adjustment to equity.
This requires a judgment as to how many options will meet
the future vesting criteria as well as the judgments required in
estimating the fair value of the options.
IFRS 16 discount rates
The Group estimates an appropriate discount rate based on an
incremental rate of borrowing for the calculation of the IFRS 16
right-of-use assets. This requires judgment as to an appropriate
discount rate.
Immotion
Group plc
Annual Report
& Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2019
46
6. SEGMENTAL INFORMATION
A segmental analysis of revenue and expenditure for the year ended 31 December 2019 is below. Immotion Group Plc has
changed its internal reporting during the year ended 31 December 2019 and the segmental analysis is therefore prepared
on a different basis to 2018.
Revenue
Cost of sales
Administrative expenses*
VR
£’000
1,241
(1,081 )
(385 )
Immotion Partners Hardware Content
£’000
£’000
£’000
Head
Office
£’000
Total
Continuing Discontinued
Operations
Operations
£’000
£’000
1,585
(964 )
(1,169 )
106
(112 )
-
649
(352 )
(175 )
25
-
(1,862 )
3,606
(2,509 )
(3,591 )
18
18
-
Total
£’000
3,624
(2,491 )
(3,591 )
Operating (loss) / profit
(225 )
(548 )
(6 )
122
(1,837 )
(2,494 )
36
(2,458 )
Amortisation
Depreciation
Impairment
Loss on disposal
Restructuring costs
Share based payments
Finance costs
Finance income
Tax
(32 )
(462 )
-
(18 )
(52 )
-
-
-
-
(111 )
(576 )
-
-
(57 )
-
-
-
-
-
-
-
-
-
-
-
-
-
(314 )
(65 )
(458 )
6
(244 )
-
-
-
-
(104 )
(201 )
-
-
(74 )
(171 )
(108 )
4
84
(561 )
(1,304 )
(458 )
(12 )
(427 )
(171 )
(108 )
4
84
-
-
-
-
(4 )
-
-
-
-
(561 )
(1,304 )
(458 )
(12 )
(431 )
(171 )
(108 )
4
84
(Loss)/Profit for the year
(789 )
(1,292 )
(6 )
(953 )
(2,407 )
(5,447 )
32
(5,415 )
* Administrative expenses exclude amortisation, depreciation, impairment, loss on disposal, restructuring costs and share based payments.
A segmental analysis of revenue and expenditure for the year ended 31 December 2018 is below:
VR
Experiences
£’000
Client
Services
£’000
Head
Office
£’000
Continuing Discountinued
Operations
Operations
£’000
£’000
Total
1,326
(1,233 )
(726 )
(633 )
(93 )
(357 )
-
-
-
-
-
622
(203 )
(304 )
-
-
(1,842 )
1,948
(1,436 )
(2,872 )
115
(1,842 )
(2,360 )
-
-
-
-
-
-
-
(85 )
(48 )
(672 )
(137 )
(57 )
2
159
(178 )
(405 )
(672 )
(137 )
(57 )
2
159
906
(473 )
(292 )
141
(231 )
-
(85 )
-
-
-
-
Total
2018
£’000
2,854
(1,909 )
(3,164 )
(2,219 )
(409 )
(405 )
(757 )
(137 )
(57 )
2
159
Revenue
Cost of sales
Administrative expenses*
Operating (loss) / profit
Amortisation
Depreciation
Acquisition and listing costs
Share based payments
Finance costs
Finance income
Tax
(Loss) / Profit for the year
(1,083 )
115
(2,680 )
(3,648 )
(175 )
(3,823 )
* Administrative expenses exclude depreciation, amortisation, share based payments and acquisition and listing costs.
The segmental analysis above reflects the parameters applied by the Board when considering the Group’s monthly
management accounts.
47
The table below splits revenue, assets and capital expenditure by location:
External revenue by
location of customer
External revenue by
location of customer
31
December
2019
31
December
2019
31
December
2018
31
December
2018
Continuing Discontinuing Continuing Discontinuing
£’000
£’000
£’000
£’000
1,599
1,031
422
187
156
83
62
55
5
5
1
-
-
-
3,606
-
18
-
-
-
-
-
-
-
-
-
-
-
-
18
790
636
-
-
49
-
48
136
49
-
16
224
-
-
1,948
221
-
230
-
-
(6)
-
-
449
-
-
-
8
4
906
Total assets by location
Net tangible capital
expenditure by location
31
December
2019
£’000
31
December
2018
£’000
31
December
2019
£’000
31
December
2018
£’000
6,437
1,698
52
14
43
82
95
8
7,032
834
-
-
-
-
-
-
1,182
1,358
73
17
65
96
83
9
1,033
491
-
-
-
-
-
-
8,429
7,866
2,883
1,524
United Kingdom
United States of America
Netherlands
Australia
China
Germany
Saudi Arabia
United Arab Emirates
Japan
France
Estonia
Spain
Eire
Switzerland
United Kingdom
United States of America
Australia
China
Germany
Saudi Arabia
United Arab Emirates
France
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2019
48
48
7. REVENUE
Revenue by stream is split:
ImmotionVR
Partners
Hardware
Content
Client Services
Other
2019
£000
1,241
1,585
106
649
-
25
3,606
2018
£000
608
186
532
-
622
-
1,948
The Group had certain customers whose revenue individually represented 10% or more of the Group’s total revenue.
For the year ended 31 December 2019, two customers accounted for 27% and 12% of the revenue respectively
(2018: one customer accounted for 19% of the revenue).
8. LOSS FROM OPERATIONS
This is arrived at after charging:
Continuing operations
Staff costs (see note 9)
Acquisition and listing costs
Depreciation of property, plant & equipment
Amortisation of intangible fixed assets
Impairment of intangible assets
Operating lease expense - property
Foreign exchange differences
Discontinuing operations
Impairment of intangible assets
Auditors’ remuneration in respect of the Company
Audit of the Group and subsidiary undertakings
Auditors’ remuneration - non-audit services - accounting service fees
Auditors’ remuneration - non-audit services -taxation fees
Auditors’ remuneration - corporate finance fees
2019
£000
4,003
-
1,304
561
458
267
10
-
12
46
13
13
-
84
2018
£000
3,151
672
405
178
-
523
38
231
11
42
20
10
81
164
Immotion Group plcAnnual Report & Accounts 2019
49
9. STAFF COSTS
Staff costs for all employees, including Directors consist of:
Wages and salaries
Social security costs
Pensions
Share based payment charge
2019
£000
3,405
387
40
3,832
171
4,003
2018
£000
2,641
351
22
3,014
137
3,151
The Group incurred termination costs of £277k (2018: £nil) during the year.
Staff costs above include £513k capitalised in 2019 (2018: £735k) as development costs (see note 15).
The average number of employees of the group during the year was as follows:
Directors
Management and administration
ImmotionVR
Operations
Sales and Marketing
Content and software development
Directors’ Detailed Emoluments
Details of individual Directors’ emoluments for the year are as follows:
Number
Number
6
14
50
7
3
19
99
5
13
16
3
4
20
61
M Higginson
D Marks
R Findley
I Liddell *
R Miller
A Ritchie
N Lee
Salary
2019
£’000
Consultancy
2019
£’000
Severance
2019
£’000
Benefits
2019
£’000
Pension
2019
£’000
Total
2019
£’000
145
179
132
137
30
-
35
658
50
-
-
-
15
-
-
65
-
-
-
30
-
-
-
30
8
-
6
-
-
-
-
14
1
1
-
3
-
-
1
6
204
180
138
170
45
-
36
773
Total
2018
£’000
264
237
130
54
22
11
17
735
* Ian Liddell resigned as a director of the Group on 9 December
2019
All pension contributions represent payments into defined
contribution schemes. The principal benefits relate to health
insurance.
Annual Report
& Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2019
5050
The Executive Directors have service contracts with the Company which are terminable by the Company or relevant director on
6 months’ notice.
£127k of the share-based payment expense relates to the directors (2018: £72k).
The Directors of the company on 25 June 2020 and at the statement of financial position date, and their interests in the issued
ordinary share capital of the Company as at those dates were as follows:
Martin Higginson
David Marks
Rod Findley
Ian Liddell *
Sir Robin Miller
Nicholas Lee
25/06/2020
24,026,945
9,767,580
10,084,349
-
350,024
241,743
Shares of £0.00040108663
31/12/2019
31/12/2018
6.33%
2.57%
2.66%
-
0.09%
0.06%
24,026,945
8.40%
23,109,514
9,767,580
3.41%
9,767,580
10,084,349
3.52%
9,501,016
-
-
4,902,857
350,024
0.12%
350,024
241,743
0.08%
241,743
11.83%
5.00%
4.86%
2.51%
0.18%
0.12%
* Ian Liddell resigned as a director during the year.
Immotion Group plc
Shares of £0.00040108663
51
Details of the options over the Company’s shares held by the directors are as follows:
Martin Higginson
Martin Higginson
Martin Higginson
Martin Higginson
Martin Higginson
David Marks
David Marks
David Marks
David Marks
David Marks
Rod Findley
Rod Findley
Rod Findley
Rod Findley
Rod Findley
Options
held at 31
December
no.
Exercise
price
£
Date of Grant
650,000
650,000
216,666
216,667
216,667
583,333
583,334
194,444
194,444
194,445
416,666
416,667
138,889
138,889
138,889
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
12/07/2018
12/07/2018
12/07/2018
12/07/2018
12/07/2018
12/07/2018
12/07/2018
12/07/2018
12/07/2018
12/07/2018
12/07/2018
12/07/2018
12/07/2018
12/07/2018
12/07/2018
Exercise
period
2030*
2031**
12/07/2029
12/07/2030
12/07/2031
2030*
2031**
12/07/2029
12/07/2030
12/07/2031
2030*
2031**
12/07/2029
12/07/2030
12/07/2031
Type of Option
EMI Option
EMI Option
EMI Option
EMI Option
EMI Option
EMI Option
EMI Option
EMI Option
EMI Option
EMI Option
Non-Stat. Option
Non-Stat. Option
Non-Stat. Option
Non-Stat. Option
Non-Stat. Option
* Earlier of expiry of employment or 10 years after announcement of results for year ended 31 December 2019.
** Earlier of expiry of employment or 10 years after announcement of results for year ended 31 December 2020.
Further information on share options is included in note 27.
The market price of the shares at 31 December 2019 was 6.40p with a quoted range from 1 January 2019 to 31 December 2019 of 4.61p
to 11.70p. The options at 2019 vest as above based on performance criteria detailed in note 27.
10. FINANCE COSTS
Loan note interest
Other interest
IFRS 16 lease charges
11. FINANCE INCOME
Other interest
2019
£000
-
55
53
108
2019
£000
4
4
2018
£000
3
54
-
57
2018
£000
2
2
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2019
5252
12. TAXATION ON LOSS FROM ORDINARY ACTIVITIES
R&D tax credit
Adjustment in respect of prior periods
Foreign taxation
Deferred tax movement
Tax credit for the year
2019
£000
(80 )
59
1
(64 )
(84 )
2018
£000
(347 )
13
-
175
(159 )
The tax assessed for the year differs from the standard rate of corporation tax in the UK applied to the loss before tax.
Loss on ordinary activities before tax - continuing operations
Loss on ordinary activities before tax - discontinued operations
Total loss on ordinary activities before tax
Loss on ordinary activities at the standard rate of corporation tax
2019
£000
(5,531 )
32
5,499
2018
£000
(3,807 )
(175 )
(3,982 )
in the UK of 19% (2018: 19%)
(1,045 )
(757 )
Effects of:
Fixed asset differences
Expenses not deductible for tax purposes
Additional deduction for R&D expenditure
Adjustments to prior periods
Deferred tax not recognised
Adjust closing deferred tax to average rate of tax
Tax credit for the year
57
556
(35 )
59
310
14
(84 )
23
255
(150 )
13
485
(28 )
(159 )
Changes to the UK corporation tax rates were substantively enacted as part of the Finance Bill 2016 (on 6 September 2016).
These included reductions to the main rate to reduce the rate to 17% from 1 April 2020. Deferred taxes at the balance sheet date have
been measured using these enacted tax rates and reflected in these financial statements.
In November 2019, the Prime Minister announced the intention to cancel the future reduction in corporation tax rate from 19% to 17%
which was confirmed in the Chancellor’s budget in March 2020. This announcement does not constitute substantive enactment and
therefore deferred taxes at the balance sheet date continue to be measured at the enacted tax rate of 17%.
There were unused tax losses of £6.2m at the 31 December 2019. No deferred tax asset has been recognised due to the uncertainty
surrounding future profits.
Immotion Group plcAnnual Report & Accounts 2019
53
13. EARNINGS PER SHARE
The earnings per share is based on the following:
Continuing earnings post tax loss attributable to shareholders
Discontinued earnings post tax loss attributable to shareholders
2019
£000
(5,447)
32
2018
£000
(3,648 )
(175 )
Basic weighted average number of shares
Diluted weighted average number of shares
255,564,704
255,564,704
158,136,544
158,136,544
Basic earnings per share
Diluted earnings per share
Continuing earnings per share
Continuing diluted earnings per share
Discontinued earnings per share
Discontinued diluted earnings per share
Underlying loss: continuing operations
Underlying profit: discontinued operations
£0.01
(2.12)
(2.12)
(2.13)
(2.13)
0.01
0.01
£’000
(4,391)
36
£0.01
(2.42 )
(2.42 )
(2.31 )
(2.31 )
(0.11 )
(0.11 )
£’000
(2,838 )
140
Basic weighted average number of shares
Diluted weighted average number of shares
255,564,704
265,290,288
158,136,544
164,025,259
Basic underlying loss per share
Diluted underlying loss per share
Basic underlying loss per share: continuing operations
Diluted underlying loss per share: continuing operations
Basic underlying earnings per share: discontinued operations
Diluted underlying earnings per share: discontinued operations
£0.01
(1.72 )
(1.72 )
(1.73 )
(1.73 )
0.01
0.01
£0.01
(1.71 )
(1.71 )
(1.80 )
(1.80 )
0.09
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, impairment charges and restructuring costs.
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2019
54
14. TANGIBLE FIXED ASSETS
Cost
Balance at 1 January 2018
Additions
Transfers to inventory
Foreign exchange
Balance at 1 January 2019
Impact of change in accounting policy
Balance at 1 January 2019 (adjusted balance)
Additions
Transfers from inventory
Transfers to inventory
Disposals
Foreign exchange
Balance at 31 December 2019
Accumulated depreciation
Balance at 1 January 2018
Depreciation charge on owned assets
Depreciation charge on financed assets
Transfers to inventory
Foreign exchange adjustment
Balance at 1 January 2019
Depreciation charge on owned assets
Depreciation charge on financed assets
Transfers to inventory
Disposals
Foreign exchange adjustment
Balance at 31 December 2019
Net Book Value
At 31 December 2019
At 31 December 2018
At 31 December 2017
Leasehold
Property
£’000
Equipment
£’000
158
245
-
2
405
-
405
159
-
-
(17 )
(1 )
546
-
65
-
-
-
65
146
-
-
(5 )
(1 )
205
341
340
158
310
1,263
(76 )
39
1,536
-
1,536
1,499
147
(6 )
(38 )
(20 )
3,118
-
248
75
(20 )
23
326
725
71
2
(26 )
(18 )
1,080
2,038
1,210
310
Fixtures and
IFRS 16
Right-of-
Fittings Use asset
£’000
£’000
Total
£’000
493
1,524
(76 )
43
1,984
1,079
3,063
1,663
147
(6 )
(55 )
(22 )
-
-
-
-
-
1,079
1,079
-
-
-
-
-
1,079
4,790
-
-
-
-
-
-
-
349
-
-
(7)
-
330
75
(20 )
25
410
884
420
2
(31 )
(27 )
342
1,658
737
-
-
3,132
1,574
493
25
16
-
2
43
-
43
5
-
-
-
(1 )
47
-
17
-
-
2
19
13
-
-
-
(1 )
31
16
24
25
Immotion Group plcAnnual Report & Accounts 2019
55
The net book value of assets held under finance leases or hire purchase contracts, included above, are £803k (2018: £137k) relating to VR
Hardware. The depreciation charge on these assets was £420k (2018: £75k).
The net book value of owned and leased assets included as “Tangible fixed assets” in the Statement of Financial Position is as follows:
Tangible fixed assets owned
Leased tangible fixed assets
Information about the leased assets is summarised below:
Equipment
IFRS 16 leased property
Depreciation charge in respect of the leased assets is as follows:
Equipment
IFRS 16 leased property
2019
£’000
2,329
803
3,132
2019
£’000
66
737
803
2019
£’000
71
349
420
Immotion
Group plc
Annual Report
& Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2019
56
15. INTANGIBLE FIXED ASSETS
Development
Costs
£’000
Goodwill
Arising on
Consolidation
£’000
Other
Intangible
Assets
£’000
Cost
Balance at 1 January 2018
Additions
Foreign exchange
Balance at 1 January 2019
Additions
Impairment
Foreign exchange
Balance at 31 December 2019
Accumulated amortisation
Balance at 1 January 2018
Amortisation
Impairment
Foreign exchange
Balance at 1 January 2019
Amortisation
Impairment
Foreign exchange
Balance at 31 December 2019
Net Book Value
At 31 December 2019
At 31 December 2018
At 31 December 2017
2
1,493
11
1,506
970
(494 )
(9 )
1,973
-
93
-
1
94
455
(36 )
(5 )
508
1,465
1,412
2
2,438
-
-
2,438
-
-
-
2,438
-
-
-
-
-
-
-
-
-
2,438
2,438
2,438
Total
£’000
2,895
1,542
11
4,448
1,005
(494 )
(9 )
455
49
-
504
35
-
-
539
4,950
-
85
231
-
316
106
-
-
-
178
231
1
410
561
(36 )
(5 )
422
930
117
4,020
188
455
4,038
2,895
Other intangible assets comprise £74k (2018: £148k) relating to identifiable relations between acquired companies and associated
client base with the remaining £43k of other intangible assets relating to website development costs.
Amortisation is charged over a period between 2 and 10 years.
GOODWILL AND IMPAIRMENT
The carrying value of goodwill in respect of each cash generating unit is as follows:
Immotion Studios Limited (previously Studio Liddell Limited)
C.2K Entertainment Inc.
Immotion Limited (previously VR Acquisition (Holdings) Limited)
31 December
2019
£’000
31 December
2018
£’000
1,252
748
438
2,438
1,252
748
438
2,438
57
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.
The Directors have assessed the post balance sheet impact of COVID-19 on the valuation of goodwill, and this is discussed further
in note 31
.
Immotion Studios Limited
The recoverable amount of Immotion Studios Limited has been determined from a review of the current and anticipated
performance of this unit. In preparing this projection, a discount rate of 10% (based on the weighted average cost of capital) has been
applied to forecast earnings for 2020 , 2021 and 2022. The discount rate was based on the Company’s cost of capital as estimated
by management.
C.2K Entertainment Inc.
The recoverable amount of C.2K Entertainment Inc has been determined from a review of the current and anticipated performance
of this unit. In preparing this projection, a discount rate of 10% (based on the weighted average cost of capital) has been applied to
forecast earnings for 2020, 2021 and 2022. The discount rate was based on the Company’s cost of capital as estimated by management.
Immotion Limited
The recoverable amount of Immotion Limited has been determined from a review of the current and anticipated performance of this
unit. In preparing this projection, a discount rate of 10% (based on the weighted average cost of capital) has been applied to forecast
earnings for 2020, 2021 and 2022. The discount rate was based on the Company’s cost of capital as estimated by management.
16. INVENTORIES
Inventory
2019
£000
-
-
2018
£000
133
133
Inventories recognised in cost of sales during the year was £8k (2018: £396k). The Directors considered no impairment of inventory
necessary as at 31 December 2019 (2018: £Nil).
17. TRADE & OTHER RECEIVABLES
Trade receivables
Prepayments and accrued income
Other receivables
Tax recoverable
31 December
2019
£’000
31 December
2018
£’000
161
428
134
80
803
443
381
238
348
1,410
Immotion
Group plc
Annual Report
& Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2019
58
18. CASH AND CASH EQUIVALENTS
Cash at bank
19. LIABILITIES
Current liabilities
Trade payables
Social security and other taxes
Accruals
Other payables
Loans
Lease liabilities
Non-current liabilities
Other loans
Amounts payable under hire purchase agreements
Other payables
2019
£’000
474
474
2018
£’000
711
711
31 December
2019
£’000
31 December
2018
£’000
361
132
285
282
101
401
1,562
55
496
-
551
329
77
245
235
177
52
1,115
147
71
54
272
HMRC
The Group has an arrangement with HMRC relating to a tax liability from an Employee Benefit Trust scheme of the subsidiary company
Immotion Studios Limited. The liability was agreed at £169k on 27 September 2018. Under the agreement with HMRC, the liability is
payable in monthly instalments over 2 years, with interest at 4.25%. The final payment falls due on 26 September 2020. The amount
payable as at 31 December 2019 was £59k.
20. CONTRACT LIABILITIES
Contract liabilities
2019
£’000
14
14
2018
£’000
189
189
Contract liabilities comprise payments in advance of revenue recognition and revenue deferred due to contract performance
obligations not being completed. They are classified as current liabilities if the contract performance obligations are due to be
completed within one year or less. All of these liabilities are expected to be recognised in the subsequent financial year.
59
21. LOANS
The Group has the following loan arrangements in place as at 31 December 2019:
Lending Crowd
On 7 March 2018 an agreement was completed between Immotion Studios Limited and Edinburgh Alternative Finance Limited for
the advance of a Lending Crowd loan of £250,000. The loan is repayable, by monthly instalments, with interest at a fixed rate of 7.66%.
The final payment was paid in March 2020. This loan was secured. The total amount payable as at 31 December 2019 was £23k.
Bank of America
An agreement dated 15 October 2012 for a revolving line of credit of $300,000 was completed between the subsidiary C.2K
Entertainment Inc., and the Bank of America with a loan modification on 10 August 2018. The loan is repayable, by monthly
instalments, and is secured, with interest payable at a fixed rate of 7.79%. The final payment falls due on 15 August 2021 and
the amount payable as at 31 December 2019 was £133k of which £55k is payable after 31 December 2020.
Amounts falling due within one year
Lending Crowd loan
Bank of America loan
Amounts falling due 1-2 years
Lending Crowd loan
Bank of America loan
31 December
2019
£’000
31 December
2018
£’000
23
78
101
-
55
55
89
88
177
23
124
147
22. HIRE PURCHASE & FINANCE LEASES
Lombard Technology Services Limited
On 24 April 2018 a loan agreement was completed between the Group and Lombard Technology Services Limited for the sale and
leaseback of equipment valued at £194k. The loan is repayable by monthly instalments with the final payment falling due in March
2021. The total amount payable under the loan agreement is £179k including interest costs. The total amount payable as at
31 December 2019 was £71k of which £15k is payable after 31 December 2019.
The Group adopted IFRS 16 for the year ended 31 December 2019, the effects of which can be seen in note 23.
Future minimum lease payments fall as follows:
Within 1 year
Between 1-5 years
31 December
2019
£’000
31 December
2018
£’000
401
496
897
52
71
123
Immotion
Group plc
Annual Report
& Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2019
60
23. LEASES
Group as a lessee
The Group has leasing arrangements for their operations.
Lease liabilities are due as follows:
Not later than one year
Between one year and five years
Balance at 31 December 2019
Contractual undiscounted cash flows are due as follows:
Not later than one year
Between one year and five years
Balance at 31 December 2019
There is not considered to be any significant liquidity risk by the Group in respect of
leases.
The following amounts in respect of leases, where the Group is a lessee, have been
recognised in profit or loss:
Interest expense on lease liabilities
Expenses relating to short-term leases
24. DEFERRED TAX
Balance at 1 January 2019
Deferred tax credit in the year
Balance at 31 December 2019
The deferred tax provision comprises:
Timing differences
Unutilised tax losses
Deferred tax on intangibles
The expected net reversal of deferred tax in 2020 is £27k.
2019
£’000
345
481
826
2019
£’000
368
450
818
2019
£’000
53
267
Total
£’000
(90 )
63
(27 )
31 December 2019
£’000
31 December 2018
£’000
-
-
(27 )
(27 )
(38 )
-
(52 )
(90 )
61
25. FINANCIAL RISK MANAGEMENT
The Group is exposed to risks that arise from its use of financial instruments. These financial instruments are within the current assets
and current liabilities shown on the face of the statement of financial position and comprise the following:
Credit risk
The Group is exposed to credit risk primarily on its trade receivables, which are spread over a range of different streams of revenue.
The Group maintains its cash reserves at a reputable bank. It is group policy to assess the credit risk of each new customer before
entering into binding contracts.
The maximum exposure to credit risk is represented by the carrying value in the statement of financial position as shown in note 18.
The credit risk on liquid funds is low as the funds are held at a bank with a high credit rating assigned by international credit agencies.
Current financial assets
Trade receivables
Other receivables
Cash and cash equivalents
The table below illustrates the due date of trade receivables:
Current
31 – 60 days
61 – 90 days
91 – 120 days
121 and over
The table below illustrates the geographical location of trade receivables:
United Kingdom
Japan
China
Middle East
Australia
USA
Europe
31 December 2019
£’000
31 December 2018
£’000
161
134
474
769
443
238
711
1,392
31 December
2019
£’000
31 December
2018
£’000
124
23
11
3
-
161
347
52
29
4
11
443
31 December
2019
£’000
31 December
2018
£’000
63
-
5
3
29
50
11
161
65
54
52
52
-
35
185
443
Immotion
Group plc
Annual Report
& Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2019
62
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and repayments of its liabilities.
The Group’s policy is to ensure that it will have sufficient cash to allow it to meet its liabilities when they become due and so cash
holdings may be high during certain periods throughout the period.
Other than the loans referred to in Note 21, the Group currently has no bank borrowing or overdraft facilities.
The Group’s policy in respect of cash and cash equivalents is to limit its exposure by reducing cash holding in the operating units
and investing amounts that are not immediately required in funds that have low risk and are placed with a reputable bank.
Cash at bank and cash equivalents
31 December
2019
£’000
31 December
2018
£’000
At the year end the Group had the following cash balances:
474
711
Cash at bank comprises Sterling cash deposits held within Coutts & Co, as well as a US Dollar account with the
Bank of America for C.2K Entertainment Inc.
All monetary assets and liabilities within the group are denominated in the functional currency of the operating unit in
which they are held. All amounts stated at carrying value equate to fair value.
Financial liabilities at amortised cost
Trade payables
Accruals
Contract liabilities
Finance leases
Loans
The table below illustrates the maturities of trade payables:
Current
31 - 60 days
61 - 90 days
91 - 120 days
121 and over
31 December 2019
£’000
31 December 2018
£’000
361
285
14
897
156
1,713
329
245
189
123
324
1,210
31 December 2019
£’000
31 December 2018
£’000
321
24
6
-
10
361
231
75
2
4
17
329
63
The table below shows the maturities of financial liabilities:
Trade payables
Accruals
Contract liabilities
Finance leases
Loans
Carrying
amount
£’000
6 months
or less
£’000
6-12
months
£’000
1 or
more year
£’000
361
285
14
897
156
1,713
361
285
14
181
52
893
-
-
-
220
49
269
-
-
-
496
55
551
Capital disclosures and risk management
The Group’s management define capital as the Group’s equity share capital and reserves.
The Group’s objective when maintaining capital is to safeguard its ability to continue as a going concern, so that in due course it can
provide returns for shareholders and benefits for other stakeholders.
The Group manages its capital structure and makes adjustments to it in the light of changes in the business and in economic
conditions. In order to maintain or adjust the capital structure, the Group may from time to time issue new shares, based on working
capital and product development requirements and current and future expectations of the Company’s share price.
Share capital is used to raise cash and as direct payments to third parties for assets or services acquired.
Market risk
Interest rate risk
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group
considers the interest rates available when deciding where to place cash balances. The Group has borrowings in both the USA and
the UK. Borrowings require approval by the Board, and whilst this does not protect the Group from the risk of paying excess rates,
the Board can ensure the Group are achieving competitive rates.
Foreign currency risk
Foreign exchange transaction risk arises when individual Group operations enter into transactions denominated in a currency other
than the functional currency. The main areas of exposure are: (i) losses made by the Group’s US based subsidiary, C.2K Entertainment
Inc; and (ii) the purchase of VR hardware in US Dollars. Once the Group becomes profitable, which was within reach prior to the
outbreak of COVID-19, the US Dollar deficit at C.2K Entertainment Inc will be a less significant risk to the Group, and any surplus US
Dollars generated can be used to fund US Dollar denominated capital expenditure for the Group, further mitigating currency risk.
Immotion
Immotion
Group plc
Group plc
Annual Report
Annual Report
& Accounts 2019
& Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2019
64
26. SHARE CAPITAL
Called up share capital
Allotted, called up and fully paid
286,165,544 Ordinary shares of 0.040108663 pence each
(2018: 195,351,590 ordinary shares)
Shares issued during the year ended 31 December 2019:
Date
Description
No. of shares
31 December
2019
£’000
31 December
2018
£’000
115
115
78
78
Price per
Share
£
Gross
share
value
£
Cash
received
£
1 March 2019
5 August 2019
31 October 2019
16 December 2019
Total
At 31 December 2018
At 31 December 2019
Placing on AIM
54,999,994
0.0600
3,300,000
3,300,000
Placing on AIM
35,111,107
0.0675
2,370,000
2,370,000
Shares issued as
payment for services
Shares issued as
payment for services
147,059
0.0680
10,000
555,794
0.0720
40,000
-
-
90,813,954
195,351,590
286,165,544
5,720,000
5,670,000
10,569,011
7,403,887
16,289,011
13,073,887
Cash received does not included costs relating to share
issues. In the year to 31 December 2019, costs of £373k
were incurred relating to share issues and these costs
were charged against share premium. Shares issued
on 31 October 2019 and 16 December 2019 were
shares in lieu of fees.
65
27. SHARE BASED PAYMENTS
During 2018, the Group issued options over 11,008,750 Ordinary shares.
Time Based Shares
These options have been valued using the Black-Scholes pricing model. The share options in issue expire in 3 years, with the
judgment in the model that all participants will exercise their right to sell a year after they have fully vested.
Vesting period
Share price at grant
Exercise price
Expected volatility
Risk free rate
2 years
12p
10p
53.6%
0.74%
3 years
12p
10p
55.4%
0.75%
4 years
12p
10p
57.1%
0.89%
Expected volatility has been determined by reference to the fluctuations in the Group’s share price between the formation of its
current group structure and the grant date of the share options.
Vesting date
Number of Options
Estimated fair value
2019 charge
12 July 2019
12 July 2020
12 July 2021
1,034,302
1,034,305
1,034,309
4.7p
5.5p
6.2p
Less options cancelled in 2019
25,705
28,405
21,356
75,466
(8,467)
66,999
EBITDA Condition
These options have been valued using the Black-Scholes pricing model spread over the vesting period.
Vesting date
2.97 years
3.97 years
Share price at grant
Exercise price
Expected volatility
Risk free rate
12p
10p
55.3%
0.75%
12p
10p
57.0%
0.88%
Expected volatility has been determined by reference to the fluctuations in the Group’s share price between the formation of its
current group structure and the grant date of the share options.
Vesting date
Number of Options
Estimated fair value
2019 charge
Year 1 EBITDA
Year 2 EBITDA
1,244,456
1,244,458
5.5p
6.2p
Less options cancelled in 2019
37,073
27,720
64,793
(11,659)
53,134
Immotion
Group plc
Annual Report
& Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2019
66
Share price Condition
These options have been valued using the Monte Carlo pricing model.
Vesting date
2.97 years
3.97 years
Share price at grant
Exercise price
Expected volatility
Risk free rate
12p
10p
55.3%
0.75%
12p
10p
57.0%
0.88%
Expected volatility has been determined by reference to the fluctuations in the Group’s share price between the formation of its
current group structure and the grant date of the share options.
Vesting date
Number of Options
Estimated fair value
2019 charge
Year 1 EBITDA
Year 2 EBITDA
1,411,125
1,411,128
4.9p
5.2p
Less options cancelled in 2019
33,029
23,249
56,278
(10,126)
46,152
No options over Ordinary shares were exercised in the period.
The time-based conditions vest over a period of 3 years. 50% of
the EBITDA condition options in issue are measured against
an EBITDA forecast for the period ending 31 August 2019.
The remaining 50% are measured against an EBITDA
forecast for the period ending 31 August 2020.
50% of the share-based options are subjection to the condition
that they will vest in full provided the average share price of
the Group has increased by at least 50% versus the exercise
price during any one month period between the date of grant
and the date falling six weeks following the announcement
of the financial results of the Group for the period ending
31 December 2019. The remaining 50% of options shall vest in
full provided the share price of the Group has increased by 25%
versus the Year 1 Share Price Target during any one-month
period between the date of grant and the date falling six weeks
following the announcement of the financial results of the Group
for the year ending 31 December 2020.
In the event that the Year 1 Share Price Target was not met in
the relevant performance period, then only 50% of the relevant
Options will vest provided the average share price of the Group
has increased by 75% versus the exercise price during any one-
month period prior to the Performance Year 2 vesting date.
During the year, 2,594,667 options were cancelled.
Warrants
In 2018, the Group issued warrants over 1,488,500 Ordinary shares. These warrants have been valued using the Black-Scholes
pricing model.
Date of grant
12th July 2018
Share price at grant date
Expected volatility
Risk free rate
10p
34%
0.74%
Expected volatility has been determined by reference to the
fluctuations in the Group’s share price between the formation
of its current group structure and the grant date of the share
options. A charge of £4,282 has been included in the year ended
31 December 2019. 677,000 of these warrants expired on 31
December 2019.
6767
28. RESERVES
Full details of movements in reserves are set out in the consolidated statement of changes in equity. The following describes the
nature and purpose of each reserve within owners’ equity:
Share premium: Amount subscribed for share capital in excess of nominal value.
Retained earnings: Cumulative net gains and losses recognised in the consolidated statement of comprehensive income.
Foreign exchange reserve: Reserve arising on translation of the Group’s overseas subsidiary.
29. CAPITAL COMMITMENTS
At 31 December 2019 and 31 December 2018 there were no capital commitments.
30. RELATED PARTY TRANSACTIONS
Purchases
Name of related party
Services
Relationship
Lanton Investments Ltd
Consultancy
Owned and controlled by a director of Immotion Group Plc
M Capital Investment Properties Ltd
Consultancy
Robin Miller Consultants Ltd
Consultancy
Related party owned and controlled by a director of Immotion
Group Plc
Related party owned and controlled by a director of Immotion
Group Plc
Samuel Higginson
Consultancy
Adult son of a director of Immotion Group Plc
Digitalbox Group Ltd
Legal service
Digitalbox Publishing Ltd
Office and Staff
Directors and shareholders of Immotion Group Plc are also
directors and shareholders of Digitalbox Group Ltd.
Directors and shareholders of Immotion Group Plc are also
directors and shareholders of Digitalbox Group Ltd, the parent
company of Digitalbox Publishing Limited.
Immotion
Group plc
Annual Report
& Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2019
68
Lanton Investments Ltd
M Capital Investment Properties Limited
Robin Miller Consultants Ltd
Samuel Higginson
Digitalbox Publishing Limited
Digitalbox Group Limited
Costs invoiced
Amounts outstanding
2019
£’000
2018
£’000
2019
£’000
2018
£’000
-
63
15
50
17
-
163
205
9
37
-
30
145
444
-
-
1
-
5
-
6
-
-
1
-
-
-
1
Income
Name of related party
Services
Relationship
Digitalbox Group Ltd
Provision of staff
Directors and shareholders of Immotion Group Plc, are also
directors and shareholders of Digitalbox Group Ltd
David Marks
Interest on loan
Ian Liddell
Interest on loan
D Marks is a director of Immotion Group Plc
and Immotion Studios Limited
I Liddell was a director of Immotion Group Plc until
9th December 2019
Emma Stanyon
Interest on loan
E Stanyon is the adult step-daughter of M Higginson,
director of Immotion Group Plc and Immotion Studios Ltd
69
Income invoiced to related parties
Digitalbox Group Limited
David Marks loan
Ian Liddell loan
Emma Stanyon loan
Expensed in the year
Amounts in receivables
2019
£’000
2018
£’000
2019
£’000
2018
£’000
-
1
-
-
1
3
1
-
-
4
-
15
10
8
33
-
15
10
8
33
The key management personnel are considered to be the Board of Directors. Their remuneration is disclosed in detail in note 9.
Key management were remunerated £773k (2018: £735k) in the year ended 31 December 2019.
The key management hold 5.62m of share options realising a charge of £127k (2018: £72k) in the year.
31. POST BALANCE SHEET EVENTS
On 12th February 2020, the Company issued 39,310,339 new ordinary shares at a price of £0.0725 per share, raising gross proceeds of
£2.85m via a placing.
On 27th May 2020, the Company issued 54,062,200 new ordinary shares at a price of £0.025 per share, raising gross proceeds of £1.35m
via a placing.
COVID-19 is a developing situation and as at the date of signing the financial statements, the Group is unable to generate any revenue.
COVID-19 is considered to be a non-adjusting post Statement of Financial Position event and no adjustment is made in the financial
statements as a result.
The rapid development and fluidity of the COVID-19 virus make it difficult to predict the ultimate impact at this stage. In line with most
experts, we believe that the impact of the virus outbreak will be material on the general economy. This has already had a material
impact on the Group and will continue to do so until lockdown procedures are lifted allowing the Group to generate revenue again.
Management has modelled various scenarios on the impact of COVID-19.
For the purposes of the interim accounts to 30 June 2020, management will reassess the carrying value of goodwill for impairment.
This assessment will include consideration of the ongoing impact of COVID-19. Following this assessment, any necessary provision will
be made which may be up to the full value of the goodwill.
Immotion
Group plc
Annual Report
& Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2019
70
32. DISCONTINUED OPERATIONS
2019
continuing
operations
£’000
2019
discontinuing
operations
£’000
Revenue
Cost of sales
Gross profit
Administrative expenses
Loss from Operations
Finance costs
Finance income
Loss before taxation and attributable
to equity holders of the parent
Taxation
Loss after taxation
Other comprehensive expense
Loss on translation of subsidiary
Loss after taxation and attributable to
equity holders of the parent and total
comprehensive income for the period
3,606
(2,509 )
1,097
(6,524 )
(5,427 )
(108 )
4
(5,531 )
84
(5,447 )
(29 )
(5,476 )
18
18
36
(4 )
32
-
-
32
-
32
-
32
Cash flows from discontinued operations for 2019 are as follows:
Operating cash flows
Investing cash flows
Financing cash flows
Continuing
£’000
Discontinuing
£’000
(2,268 )
(3,841 )
5,850
22
-
-
Cash flows from discontinued operations for 2018 are as follows:
Operating cash flows
Investing cash flows
Financing cash flows
Continuing
£’000
Discontinuing
£’000
(3,652 )
(2,990 )
6,408
176
-
-
2019
Total
£’000
3,624
(2,491 )
1,133
(6,528 )
(5,395 )
(108 )
4
(5,499)
84
(5,415)
(29 )
(5,444 )
Total
£’000
(2,246 )
(3,841 )
5,850
Total
£’000
(3,476 )
(2,990 )
6,408
33. SUBSIDIARY UNDERTAKINGS
Ranger Rob UK Limited, company number 09511044, and Immotion Limited, company number 11054174, were exempt from
undergoing an audit for year ended 31 December 2019 by virtue of S479A of Companies Act 2006.
COMPANY STATEMENT OF FINANCIAL
POSITION AS AT 31 DECEMBER 2019
71
Fixed assets
Investments
Intangible fixed assets
Current assets
Trade and other receivables
Cash and cash equivalents
III
IV
V
VI
Payables: amounts falling due within one year
Net current assets
Total assets less total liabilities
Capital and reserves
Called up share capital
Share premium account
Retained reserves
Shareholders’ funds
VII
VIII
At 31
December 2019
£’000
At 31
December 2018
£’000
3,113
24
3,137
4,261
323
4,584
(123 )
4,461
7,598
115
15,310
(7,827 )
7,598
3,113
37
3,150
6,053
515
6,568
(60 )
6,508
9,658
78
9,999
(419 )
9,658
The Company has taken advantage of the exemptions allowed under section 408 of the Companies Act 2006 and has not presented
its income statement in these financial statements. The Group loss for the year included a loss on ordinary activities after tax of £7,579k
(2018: £495k) in respect of the Company which is dealt with in the financial statements of the Parent Company.
The financial statements were approved by the Board and authorised for issue on 25 June 2020
Martin Higginson
Chief Executive Officer
David Marks
Group Finance Director
The notes on pages 74 to 77 form part of the Company financial statements.
Immotion
Group plc
Annual Report
& Accounts 2019
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
72
Share
Capital
£’000
Share
Premium
£’000
Retained
reserves
£’000
Total
Equity
£’000
Balance at 1 January 2018
-
3,704
(61 )
3,643
Issue of shares
Issue costs deducted from equity
Loss after tax
Equity settled share-based payments
Bonus issue
26
-
-
-
52
6,786
(439 )
-
-
(52 )
-
-
(495 )
137
-
6,812
(439 )
(495 )
137
-
31 December 2018
78
9,999
(419 )
9,658
Issue of shares
Issue costs deducted from equity
Loss after tax
Equity settled share-based payments
37
-
-
-
5,684
(373 )
-
-
-
-
(7,579 )
171
5,721
(373 )
(7,579 )
171
31 December 2019
115
15,310
(7,827 )
7,598
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
73
Cash flows from operating activities
Loss before tax
Adjustments for:
Share based payments
Amortisation of intangible assets
Corporation tax paid
Cash flows from operating activities before changes in working capital
(Increase) / Decrease in trade and other receivables
Increase / (Decrease) in trade and other payables
Cash generated/used in operations
Investing activities
Purchase of intangible assets
Net cash absorbed from investing activities
Financing activities
Issue of new share capital (net of costs)
Issue of convertible loan stock
Net cash from financing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
Reconciliation of net cashflow to movement in net funds:
Net (decrease) / increase in cash and cash equivalents
New loans and finance leases
Repayment of loans
Movement in net funds in the year
Net funds at 1 January
Net funds at 31 December
The notes on pages 74 to 77 form part of the Company financial statements
Year ended
31 December 2019
£’000
Year ended
31 December 2018
£’000
(7,579 )
(482 )
171
30
-
(7,378 )
1,792
63
(5,523 )
(17 )
(17 )
5,348
-
5,348
(192 )
515
323
(192 )
-
-
(192 )
515
323
137
12
(13 )
(346 )
(5,928 )
(102 )
(6,030 )
(49 )
(49 )
5,885
488
6,373
(52 )
567
515
(52 )
-
-
(52 )
567
515
Immotion
Group plc
Annual Report
& Accounts 2019
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
74
I. ACCOUNTING POLICIES
The separate financial statements of the Company are presented as required by the Companies Act 2006. As permitted by the Act
the separate financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by
the European Union. The principal accounting policies adopted are the same as those set out in note 4 to the consolidated financial
statements except as noted below:
Valuation of investments
Investments in subsidiaries are stated at cost less any provision for impairment in value.
II. OPERATING LOSS
The auditor remuneration for audit and other services is disclosed in note 8 to the consolidated financial statements.
The average number of employees of the company during the year was 8 (2018: 5) and total staff costs were £594,124 (2018: £186,400).
Directors remuneration is disclosed in note 9 to the consolidated financial statements.
The Company operating loss is stated after a provision of £7,354,000 against amounts due from other group companies.
75
III. FIXED ASSET INVESTMENTS
31 December 2019
£’000
31 December 2018
£’000
Subsidiary undertakings
Cost
Balance at 1 January 2019
Additions
Disposals
Balance at 31 December 2019
Provisions
Balance at 1 January 2019
Balance at 31 December 2019
Carrying value of investments
3,113
-
-
3,113
-
-
3,113
3,113
-
-
3,113
-
-
3,113
At the year end the Company had the following subsidiaries:
Subsidiary name
Class of shares
Proportion of ownership
Registered office
Immotion Studios Limited
Ordinary
Immotion Limited
Ordinary
C.2K Entertainment Inc
Ordinary
Immotion VR Limited
Ordinary
Ranger Rob UK Limited
Ordinary
100%
100%
100%
100%
100%
East Wing, Ground Floor
The Victoria, Mediacity,
Manchester, M50 3SP
East Wing, Ground Floor
The Victoria, Mediacity,
Manchester, M50 3SP
1607 Gayley Avenue,
Los Angeles, California,
CA 90024
East Wing, Ground Floor
The Victoria, Mediacity,
Manchester, M50 3SP
East Wing, Ground Floor
The Victoria, Mediacity,
Manchester, M50 3SP
Immotion
Group plc
Annual Report
& Accounts 2019
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
76
Subsidiary name
Principal activity
Immotion Studios Limited
Virtual reality content, software design and development
Immotion Limited
Intermediate holding company
C.2K Entertainment Inc
Virtual reality equipment, experiences and legacy marketing solutions’ consultancy
Immotion VR Limited
Virtual reality equipment and experiences
Ranger Rob UK Limited
Group subsidiary with limited trading
IV. INTANGIBLE FIXED ASSETS
Software Cost
Balance at 1 January 2019
Additions
Balance at 31 December 2019
Accumulated amortisation
Balance at 1 January 2019
Amortisation charge
Balance at 31 December 2019
Net Book Value
At 31 December 2019
At 31 December 2018
V. RECEIVABLES: due within one year
Amounts owed by group undertakings
Other receivables
Prepayments and accrued income
VI. CASH & CASH EQUIVALENTS
Cash at bank and in hand
Total
£’000
49
17
66
12
30
42
24
37
31 December 2019
£’000
31 December 2018
£’000
4,204
27
30
4,261
5,984
18
51
6,053
31 December 2019
£’000
31 December 2018
£’000
323
323
515
515
77
VII. PAYABLES: amounts falling due within one year
Trade payables
Accruals
Other tax and social security
VIII. SHARE CAPITAL
31 December 2019
£’000
71
31 December 2018
£’000
21
28
24
123
22
17
60
Details of the Company’s share capital and the movements in the period can be found in Note 26 to the consolidated
financial statements.
IX. SHARE OPTIONS
Share Option Scheme
Details of the share options outstanding at 31 December 2019 can be found in Note 27.
X. RESERVES
Details of the reserves can be found in Note 28.
XI. RELATED PARTY TRANSACTIONS
Details of the Company’s related party transactions can be found in Note 30 to the consolidated financial statements.
XII. POST BALANCE SHEET EVENTS
On 12th February 2020, the Company issued 39,310,339 new ordinary shares at a price of £0.0725 per share, raising gross proceeds of
£2.85m via a placing.
On 27th May 2020, the Company issued 54,062,200 new ordinary shares at a price of £0.025 per share, raising gross proceeds of £1.35m
via a placing.
COVID-19 is a developing situation and as at the date of signing the financial statements, the Group is unable to generate any revenue.
COVID-19 is considered to be a non-adjusting post Statement of Financial Position event and no adjustment is made in the financial
statements as a result.
The rapid development and fluidity of the COVID-19 virus make it difficult to predict the ultimate impact at this stage. In line with most
experts, we believe that the impact of the virus outbreak will be material on the general economy. This has already had a material
impact on the Group and will continue to do so until lockdown procedures are lifted allowing the Group to generate revenue again.
Management has modelled various scenarios on the impact of COVID-19.
For the purposes of the interim accounts to 30 June 2020, management will reassess the carrying value of the Company’s
intercompany receivables and its investment in subsidiaries for impairment. This assessment will include consideration of
the ongoing impact of COVID-19. Following this assessment, any necessary provision will be made which may be up to
the full value of these assets.
Immotion
Group plc
Annual Report
& Accounts 2019
DIRECTORS, SECRETARY AND ADVISORS
78
Directors
Rodney Findley
Martin Higginson
Nicholas Lee
David Marks
Sir Robin Miller
Company Secretary
Daniel Wortley
Registered Office
East Wing, Ground Floor
The Victoria
MediaCityUK
M50 3SP
Company Number
10964782
Registrars
Nominated Adviser and Broker
Joint Brokers
Independent Auditors
Solicitors
Country of Incorporation of
Parent Company
Legal Form
Domicile
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
B62 8HD
WH Ireland Limited
24 Martin Lane
London
EC4R 0DR
Shard Capital Partners LLP
23rd Floor,
20 Fenchurch Street
London
EC3M 3BY
Alvarium Capital Partners Limited
1st Floor, 10 Old Burlington Street
London
W1S 3AG
Haysmacintyre LLP
10 Queen Street Place
London
EC4R 1AG
DWF LLP
Central Square South
Orchard Street
Newcastle
NE1 3AZ
England and Wales
Public Limited Company
United Kingdom
ANNUAL REPORT
& ACCOUNTS
2019