ANNUAL REPORT
& ACCOUNTS
FOR THE YEAR ENDED
31 DECEMBER 2020
IMMOTION
GROUP PLC
ANNUAL REPORT
AND ACCOUNTS
FOR THE YEAR ENDED
31 DECEMBER 2020
Contents
Page
Chairman’s Statement
Chief Executive’s Statement
Strategic Report
Risks and Uncertainties
Corporate and Social Responsibility Statement
Corporate Governance
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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1
Immotion
Group plc
Annual Report
& Accounts 2020
Chairman’s Statement
We have concluded that
the balance of 2021 should
be a period of measured
investment, as well as the
coming of age of our Group,
with the key short-term
objective being to
move the Group into
EBITDA profitability
and positive operating
cashflows.
S I R R O B I N M I L L E R
C H A I R M A N , 2 8 A P R I L 2 0 2 1
The only way to describe 2020 is a year of unprecedented
and unforeseeable challenges. The COVID-19 pandemic
caused restrictions and lockdowns, which effectively
closed our business for lengthy periods in 2020.
Rather than sailing into profitable waters in Spring 2020
as we had expected, we had to batten down the hatches
and move into survival mode, requiring very tough
decisions, particularly those which impacted
our people. However, thanks to the resilience of our team,
and the support of our shareholders, we have navigated
through what we all hope is the worst of the impact of
the COVID-19 pandemic on our business, though we are
not complacent.
Creative actions from our team saw two new divisions
emerge, ‘Let’s Explore’ and ‘Uvisan’. The combination
of these new revenue streams, and more importantly,
the ongoing recovery of our core Location Based
Entertainment (LBE) business, particularly as conditions
improve in the USA, and with the UK set to re-open in
mid-May 2021, has significantly boosted our confidence.
While the future currently looks considerably healthier,
we have reflected carefully on what risk appetite we have
in the short term, as well as the resources available to us.
We have concluded that the balance of 2021 should be
a period of measured investment, as well as the coming
of age of our Group, with the key short-term objective
being to move the Group into EBITDA profitability and
positive operating cashflows. With tight cost control,
our existing partner business should be a platform
for the overall profitability of our Group and our new
divisions should then provide further contribution.
We remain confident about the prospects for our core
LBE business. There is much still to go after in the
aquarium market, where we now have a very strong
reputation, particularly in the USA, with Mandalay Bay
and Clearwater Aquarium being two strong exemplars
of the way forward – larger, more fully integrated
attractions, which offer both economies of effort as well
as strong potential economics for both partners.
We will seek opportunities in the zoo market in earnest
in 2022, when hopefully we will have the pandemic
behind us. Our refined LBE model along with the global
opportunities that we believe remain for the growth of
our LBE business give us renewed belief in its future
potential, particularly in a post-pandemic environment.
‘Let’s Explore’ and ‘Uvisan’ are a testament to the
creativity and versatility of our team and enable us to
leverage our skills and central operating cost base.
‘Let’s Explore’ gives us a seasonal balance to our LBE
activities, with Q4 likely to be its strongest period by
far with both Black Friday and the holiday season.
Uvisan is seeking to capitalise on the greater attention
we expect organisations to pay to ensure safe working
conditions for their people and customers, and to
address workplace risks that were not considered
before the pandemic. This has the potential to become
a significant market. Early blue-chip enquiries for our
‘Cleanroom by Uvisan’ product, have been encouraging.
We look forward to watching these new activities evolve
alongside the expected recovery and future growth of
our core business. While there is still reason for caution,
we have demonstrated that we are single-minded,
creative and fleet of foot. While we can only play in the
conditions that prevail, we remain confident in our
ability to succeed.
Sir Robin Miller
Chairman, 28 April 2021
3
Immotion
Group plc
Annual Report
& Accounts 2020
Chief Executive’s Statement
We have
worked tirelessly
to position the
Group for a
strong recovery.
M A R T I N H I G G I N S O N
C H I E F E X E C U T I V E O F F I C E R ,
2 8 A P R I L 2 0 2 1
To say 2020 was a difficult year for the group would be
an understatement. The group’s core location based
entertainment (LBE) business suffered considerably due
to the lockdowns imposed as a result of the COVID-19
pandemic and the significant focus became the
mitigation of the effects of the pandemic.
We have worked tirelessly to position the Group for a
strong recovery from the pandemic and the current
outlook is considerably better as our key markets
have emerged or are due to emerge from lockdown.
I will first summarise the Group’s current position
and outlook as I feel this will be of more interest to our
shareholders, before turning my attention to a review of
2020’s performance.
TRADING POST PERIOD END & OUTLOOK
Despite a challenging January and February 2021,
impacted by the ongoing pandemic related restrictions,
March and April 2021 have seen a strong rebound
in revenue, led primarily by the USA Location Based
Entertainment business.
In March 2021 we saw our LBE revenues almost double
compared to February, with total unaudited Group
revenue in March 2021 of circa £440k. This momentum
along with the lifting of restrictions in Las Vegas, USA
(allowing 80% capacity as of 1 May 2021 and 100%
effective 1 June 2021); the UK business expected to come
back on stream in mid-May; and the busy summer
period should see our LBE revenues grow substantially.
This, along with contributions from our Home Based
Entertainment (HBE) and Uvisan divisions, should allow
us to move to profitability on a monthly basis at the
EBITDA level. The combination of an expected strong
summer for our LBE business, together with an expected
busy Q4 2021 for ‘Let’s Explore’ (which coincides with
a quieter quarter for LBE) will give some welcome
“seasonal” balance to our Group activities.
We have continued to maintain tight control of costs,
with monthly central overheads and salaries currently
running at circa £215k per month. This lower cost base
is now supporting three divisions. We have identified
further cost savings, particularly in occupancy costs and
we would expect those to come through in H2 2021.
Much of the required investment in assets and stock to
support our 2021 plan has already been made, which
should allow us, with careful management of our cash
resources, to be self-funded for the remainder of 2021.
We currently have paid in full for stock of a further
50 motion platforms (106 seats) for the LBE business.
To make these operational involves relatively small
spending on headsets and dressing of the sites, as well as
road transport of equipment from our warehouse to site.
In addition, we have in aggregate circa 12,000 fully paid
Let’s Explore Mega Packs in our UK and USA warehouses,
plus a further 34,000 units in production. Net of deposits
already paid, circa £130,000 remains to be paid over the
coming months, which we expect to be largely self-
funding from sales in that period. This approach has
enabled us to plan ahead and secure a significantly lower
unit product cost.
5
Immotion
Group plc
Annual Report
& Accounts 2020
Chief Executive’s Statement
LOCATION BASED ENTERTAINMENT (LBE)
Our core LBE business has begun to recover strongly,
driven largely by the improvement in the USA. With
COVID-19 restrictions easing and leisure venues set to
either re-open or ease restrictions (where already open),
we expect to have the large majority of our LBE sites
open for summer. We hope to see all our UK sites re-open
in mid-May 2021 and, so long as the overall pandemic
restrictions ease as currently expected, we would hope to
see a strong summer contribution driven by “staycations”
and pent-up consumer demand particularly in the UK.
In the USA, the majority of our LBE sites are already
trading and remaining COVID-19 related restrictions
are being relaxed. Importantly, the capacity restrictions
relating to our installation at Shark Reef Aquarium, Las
Vegas, were relaxed from 15 March 2021 and capacity is
now back at the same level permitted when we opened
the site in August 2020. This has, from April 2021, had a
positive impact on revenue and contribution from this
key site and with a further lifting of local restrictions due
on 1 May 2021 to 80% and then to 100% on 1 June 2021 we
expect to see further increases over the coming weeks
and months.
Trading began at our new 22-seat installation at
Clearwater Marine Aquarium, Florida, USA, on 22 March
2021 and the early uptake has been very strong, with high
levels of utilisation.
March 2021 saw our best result, in terms of turnover and
contribution, since October 2020, and we expect this to
grow again in April 2021 (with a full month back at 50%
capacity at Shark Reef Aquarium) and again in May 2021,
as the UK sites come back on stream, with peak seasonal
performance in the UK and USA expected in July and
August 2021.
In terms of new LBE sites, we remain focused on
deploying the VR platforms that we currently hold in
stock. We have recently installed new units into Virginia
Aquarium (4 seats) as well as increasing capacity at
our installations at Mystic Aquarium (up to 8 seats) and
OdySea Aquarium (up to 6 seats) ahead of the summer
season. We are also contracted to install 8 seats into Sea
Life Brighton in time for its reopening on 17 May 2021.
We remain focused on larger, more integrated installs,
with the focus for the remainder of 2021 being on quality
over quantity.
In Australia, in addition to our two existing sites, Sea
Life Sydney and Sea Life Melbourne, we have opened a
new tower coaster installation in the observation deck
on the Sydney Tower Eye and early trading has been
encouraging. This is a very prestigious and high traffic site.
Due to strategic changes at our site at Dubai Aquarium
we have decided to uninstall from that location and are
repatriating the equipment, which will be re-deployed
elsewhere. We continue to review our options for the
remaining three Middle East sites.
HOME BASED ENTERTAINMENT (HBE)
Let’s Explore has continued to make solid progress
with the product now launched in a number of new
territories, including USA and Canada. We have
re-organised the supply chain and made a substantial
forward commitment to stock. This has allowed us to
obtain substantial product cost reductions and to
plan ahead.
We took the opportunity in January and February 2021
to pull back on UK marketing as consumers recovered
from Christmas spending. In this period, we focused on
operational matters, planning for international roll out.
We soft launched in the USA in early March 2021, fulfilling
from the UK and we will be scaling up marketing in the
USA from early April 2021 as we begin shipping from our
fulfilment partner in Wisconsin.
Whilst margins in March 2021 were impacted as we sold
through of old stock at a significantly higher unit cost
as well as substantial international shipping charges,
it did allow us to prove USA demand before launching
with local distribution. All stock now on hand in the USA
and to be delivered to us going forward is at the new
significantly lower product cost, though we do still have
some of the higher cost stock in the UK to sell through.
With stock now in the USA, we are exploring selling
through our LBE Partner network. It is our intention to be
up and running with key US partners for the Summer
2021 season. We have also now started to sell on Amazon,
both in the UK and USA.
Further products have been added to the Let’s Explore
Oceans portfolio, including our new Explore the Oceans
78-page Augmented Reality book and Flashcard pack.
These new products join our Oceans book pack and
fossils, all of which offer the opportunity to increase
basket sizes and margin.
We have also tested advertising into territories further
afield to establish potential demand. Again, we have
fulfilled demand from the UK, which has impacted
margin, but this has been on a relatively small scale and
has been useful in informing our thoughts on which
territories to target. We are now examining how to
optimise distribution for these territories.
Whilst we are looking to build sales volumes through
the year, our focus will be on the key Christmas season
and Q4 2021 in particular, where our product is perfectly
suited as a Christmas and seasonal gift to be purchased
by parents, grandparents, relatives and friends.
7
Immotion
Group plc
Annual Report
& Accounts 2020
Chief Executive’s Statement
REVIEW OF 2020
The Group began 2020 full of optimism with EBITDA
profitability coming into clear sight and a plan for
further strong growth. As with all leisure businesses,
the pandemic hit us in March 2020 with the full force of
mandatory closures and worldwide lockdown.
Essentially, 2020 became about survival and, as the
lockdown gripped, we took the steps necessary to cut
costs (including salary cuts), manage cashflows and
obtain available government support in both the UK and
the USA. However, with no revenue for lengthy periods of
time we suffered very substantial losses and cash outflow
in the year. These are detailed in the financial review
which follows.
With a continued belief in the long-term prospects for
our business, we took the opportunity to strengthen
our balance sheet, with two equity fundraises following
the start of the pandemic. We are grateful to our core
shareholders for their support during what was a very
tough and uncertain time.
Our board and family members showed their faith and
determination by investing a further £500,000 into the
business, being almost half of the equity fundraise we
undertook in November 2020.
There were of course periods when the LBE business
was allowed to re-open and we did make progress.
The opening of our landmark site at Mandalay Bay
(albeit delayed, and with much restricted capacity) was
extremely pleasing. However, we also took the decision
not to rush to open some sites, and on the whole we took
a cautious approach being highly selective in making
new investment, recognising the need to maintain
cash reserves to enable us to manage our way through
extended periods of lockdown and disruption.
We continued to have faith in our core LBE business
model but also took the view that we needed to try to
innovate (albeit on a limited budget) and hence ‘Let’s
Explore’ and ‘Uvisan’ were born.
There is now a real sense of emerging from the darkness
and the focus must be on what lies ahead.
Our whole board wishes to put on record that the
professionalism of those that have worked tirelessly
throughout the period (often on a more than a full-time
basis and for reduced salary) and the grace, patience and
understanding of those that have been furloughed on
reduced income has been humbling.
UVISAN
Uvisan has continued to make good progress and has
now sold almost 50 cabinets into a range of sectors from
universities and schools through to the NHS. High profile
clients have included Aardman Animation, the studio
behind Wallace & Gromit; the British Film Institute; and a
number of well-known universities.
We have also appointed a number of re-sellers in the UK
and in Europe and in the coming months we will look at
potential distribution into the USA.
We have also developed ‘Cleanroom by Uvisan’ and have
a trial site with Chichester University. The university will
use the system to disinfect its state-of-the-art recording
studio and equipment (such as mixing and editing
desks) as well as cameras and related equipment.
The system uses fixed UV-C lights, along with a
proprietary safety and control system to provide rapid
disinfection of un-occupied rooms. This system can
achieve ambient and surface disinfection in less than
10 minutes, allowing for rapid and safe turnover of
rooms between user groups.
Along with the UV disinfection cabinets, Uvisan now
has a more rounded offering. Uvisan already makes a
small contribution to our Group overheads and, with
‘Cleanroom from Uvisan’ coming on stream, we would
expect to see this grow in H2 and beyond.
9
Immotion
Group plc
Annual Report
& Accounts 2020
Chief Executive’s Statement
LOCATION BASED ENTERTAINMENT (LBE)
The growth of our partner estate stalled as the pandemic
took hold and the opening of our landmark site at Shark
Reef Aquarium, Mandalay Bay, Las Vegas was delayed
from April 2020 until early August 2020, as work on site
had to be halted when Las Vegas went into lockdown.
The bulk of our estate was shut for lengthy periods. In the
UK, we had three full months of lockdown in Q2 2020 and
a further period of lockdown in November 2020 with zero
revenue across all sites. In the USA, localised lockdowns
reduced our Q2 2020 trade to virtually nil, with a number
remaining closed until now. In the Middle East, all of our
sites were effectively closed from mid-March 2020 for the
remainder of the year.
The movement of our portfolio during 2020, and since
period end, can be summarised as follows:
Total
USA
UK
ROW
Sites
Headsets
Sites
Headsets
Sites
Headsets
Sites
Headsets
At 1 January 2020
Installed in 2020
Uninstalled in 2020
At 31 December 2020
Installed in 2021
Uninstalled in 2021
At 31 March 2021
46
10
(8)
48
2
(1)
49
302
103
(60)
345
32
(2)
375
20
7
(3)
24
1
(1)
24
99
84
(20)
163
28
(2)
189
16
3
(5)
14
-
-
14
142
19
(40)
121
-
-
121
10
-
-
10
1
-
11
61
-
-
61
4
-
65
Revenues at sites that re-opened in the year were initially
heavily impacted, particularly in the earlier stages of
the pandemic. This appears to have been in large part
the result of capacity and social distancing restrictions
imposed by the venues themselves.
In the USA, we have seen an improving picture with
easing of COVID-19 measures and we are hopeful that as
restrictions continue to be eased and attendances recover
to pre-pandemic levels we believe we should see a return
towards similar levels of revenue seen in the same periods
before the pandemic.
As of 31 March 2021, the operational status of our
installed base was as follows:
Total
USA
UK
ROW
Sites
Headsets
Sites
Headsets
Sites
Headsets
Sites
Headsets
At 31 March 2021
Fully Operational
Site Closed
Site Open but Installation
not Operating
49
26
18
5
375
213
139
23
24
19
-
5
189
166
-
23
14
-
14
-
121
-
121
-
11
7
4
-
65
47
18
-
HOME BASED ENTERTAINMENT (HBE) - Let’s Explore
We conceived of the idea for Let’s Explore in the depths of
the first UK lockdown. Given the uncertainty around the
length and impact of the pandemic and the fact that our
LBE business was shut in its entirety, we felt the need to
be proactive and create a hedge against our LBE business,
recognising that cash was very tight.
Using elements of our LBE business’s content and the
skills of our creative and marketing teams we designed
an interactive in-home product that aimed to be both fun
and educational. We put together interactive undersea
experiences using both VR and AR elements, all driven
from our holographic viewing cube.
Once the product was designed, we sourced all the
various elements (headsets, cubes, books, packaging,
etc). However, given our desire to launch for Christmas
2020, it was not possible to consolidate and source all the
elements at lowest cost or indeed to optimize the logistics.
We took a cautious approach to the amount of stock
we bought ahead of Christmas (again at the expense of
margin). Given long lead times from China by sea, there
were elements, such as headsets, that we had to air
freight to the UK when it became apparent that there was
substantial demand.
In addition, as we had decided to focus on digital
marketing only, there was little time to test and build up
our credentials with social media marketing partners,
such as Facebook, who limit advertising spend for new
advertisers.
We launched the Let’s Explore Oceans Mega Pack on 1
October 2020 and this was very well received with strong
reviews, selling circa 11,000 units before the year end,
generating £669,000 of revenue.
This early success gave us the belief that we should
develop the business further and we remain excited by its
prospects.
UVISAN
Uvisan was born out of the need to be able to safely and
effectively sanitise the VR headsets at our LBE sites. It was
clear that at a site such as Las Vegas where we need to
keep two batches of 36 headsets rotating every 10 minutes
that alcohol wipes would be just too laborious and time
consuming in addition to the risk of damaging equipment
and the environment.
UV light is a well-established means of disinfection, used
in many industries, including the food industry. (UV-C
light kills 99.9% of bacteria and viruses with the right
dosage). It is particularly well suited for rapid disinfection of
touched and shared equipment and is perfect for sensitive
electronic equipment that can be damaged by moisture or
abrasive substances.
Early on we undertook successful tests of our equipment
with third parties and were delighted when HP
recommended our cabinets for disinfecting their range of
VR headsets.
It was apparent to us that other businesses utilising VR
headsets would have the same need but that there could
be wider demand from those who use shared equipment
and spaces.
We began some soft marketing in August 2020 and found
that there was demand but clearly (and ironically) periods
of lockdown made this challenging. Nevertheless, we
had some early orders supplying schools, universities,
the creative industries and others.
Recent sales to a number of prestigious clients, including
Aardman and the NHS, have given the directors confidence
to expand this business division. A number of distribution
agreements have now been entered into for the UK and
Europe.
At the same time, we began looking at wider needs for rapid
disinfection and accordingly we began to develop what
has become “Cleanroom by UVISAN”. This is a whole room
UV-C disinfection system. For this to be a viable product, we
decided to develop a proprietary safety and control system.
We have worked to develop this product with Chichester
University and have now installed the prototype Cleanroom
system in their state-of-the-art audio suite.
Uvisan will shortly have the necessary CE and other
accreditations for its new ‘Cleanroom’ product. Along with
the UV disinfection cabinets the business now has a more
rounded offering. We now have a number of enquiries
from substantial blue chip counterparties regarding
potential ‘Cleanroom by Uvisan’ installations. Today, Uvisan
makes a small contribution to our Group overheads and
with Cleanroom we would expect to see this grow in H2
and beyond.
11
“
We look forward
to the year ahead
with renewed
optimism
”
Immotion
Group plc
Annual Report
& Accounts 2020
Chief Executive’s Statement
FINANCIAL REVIEW FOR THE YEAR ENDED
31 DECEMBER 2020
Total revenue for the year reduced to £2,848,000 (2019:
£3,606,000). Unsurprisingly, this decline was largely
driven by lockdowns in response to the pandemic and
the ongoing impact of lockdown periods – LBE segment
revenues declined by £857,000 to £2,075,000 (2019:
£2,932,000).
Let’s Explore, the in-home consumer product created in
response to the pandemic, generated revenue of £669,000
in the period from its launch on 1 October 2020 (2019: £nil).
A significant area of focus in the year was to secure
available governmental COVID-19 related financial
support in both the UK and USA to the fullest extent
possible. We received £479,000 in the year through the
UK Coronavirus Job Retention Scheme (included within
other income). We also received £119,000 as a loan through
the USA Paycheck Protection Program for which we have
received full forgiveness since the year end (and as such
no credit to the income statement has been made in the
2020 accounts).
Cost reductions were a key focus as the lockdowns in
the UK and USA took hold. Administrative expenses
(excluding depreciation, amortisation, impairment, share
based payments and one-off costs) fell to £2,731,000 (2019:
£3,591,000). Whilst the entirety of this reduction cannot
be attributed to actions taken in response to COVID-19 (a
programme of cost reductions was being implemented
late in 2019), the Group made further significant cost
savings resulting from temporary pay reductions for the
majority of staff and, regrettably a number of redundancies
were also made.
The Group made an adjusted EBITDA loss of £1,690,000
during the year (2019: £2,494,000).
Following an impairment review, the Directors decided to
write-off certain pieces of VR content created by the Group
historically, which are not expected to recover their carrying
value. This resulted in an impairment charge of £253,000 in
the year.
The Group’s loss after tax in the year was £4,732,000 (2019:
£5,415,000). The adjusted loss per share† was 1.17p (2019:
1.72p).
Overall cash inflow in the year was £1,190,000 being cash
outflow of £2,012,000 from operations, a £1,393,000 outflow
from investing activities and a £4,595,000 inflow from
financing activities.
Operating cash outflows in the year were £2,012,000
(2019: £2,246,000). The difference from EBITDA was
predominantly a result of net working capital outflows in
the period of £192,000 (of which £152,000 was the build-up
of stock for Let’s Explore and Uvisan) and the cash impact
of restructuring costs of circa £96,000.
Investing cash outflows reduced substantially to £1,393,000
(2019: £2,762,000). This was the result of substantial
reductions of both intangible and tangible asset additions,
in the case of the former due to our content creators being
on furlough for a substantial part of the year, and in the
case of the latter due to significantly fewer new partner
installations and associated spend in the period.
Net financing activities produced a cash inflow of
£4,595,000 (2019: £4,771,000) due in the main to the three
equity placings which took place in the year (net proceeds
of which were £5,012,000).
Net assets at the balance sheet date were £6,714,000
(2019: £6,275,000).
Whilst we are feeling as positive about our business and
the outlook as we have in over a year, I feel obligated in the
current environment to point out that there does remain
considerable uncertainty as to how the situation with
COVID-19 (and its variants) will evolve and what the
impact of that could be on our business.
As part of the preparation of our accounts, we are required to
consider these matters and Note 4 to the accounts details
our thought process in this regard. From our perspective
the key risk would come from further widespread and or
lengthy lockdowns, particularly as it impacts our key LBE
sites. At the time of writing that does not appear to be a
major risk in the USA which now accounts for the majority
of our LBE revenue and the UK remains set to re-open in
mid-May 2021.
CONCLUSION
I would particularly like to thank our fantastic team and
supportive shareholders, as we have come through a
period of huge challenge. Absent any material deteriora-
tion in the recovery from the pandemic conditions, we are
optimistic about the outlook for the remainder of 2021 and
are now seeing a strong recovery.
We have a plan for 2021, which should underpin our Group
becoming profitable and generating positive operating
cashflows, whilst reflecting the need for caution and the re-
sources available to us. Much of the investment to support
that plan has already been made and, with a strong recov-
ery underway, we will seek to manage our resources so that
our plans for the remainder of 2021 will be self-funding.
We look forward to the year ahead with renewed optimism
but are also cognisant of the fluid nature of the current
business environment and will adapt our plans as needed.
Having survived what has hopefully been the worst of the
pandemic, we are now intent on driving our business for-
ward with renewed vigour and optimism.
Martin Higginson
Chief Exectutive Officer, 28 April 2021
† Adjusted loss is the loss after taxation, adjusted for share based payments, impairment charges and restructuring costs.
13
Immotion
Group plc
Annual Report
& Accounts 2020
Strategic Report
Strategic
Report
LOCATION BASED ENTERTAINMENT: PARTNER SITES
Our LBE business primarily focuses on establishing
partnerships with high-footfall leisure destinations.
Immotion provides, at its own cost, VR hardware and
experiences to the operator and provides ongoing support.
The operator typically provides at its cost the site, staff
and utilities. The parties share the revenue generated
on a pre-agreed basis.
As we came into 2020, the LBE business was on a growth
trajectory and was beginning to attract the attention
of increasingly more partner sites. In January 2020, the
Group announced its deal with MGM Resorts to install
a 36-seat VR cinema with pre-show area into the Shark
Reef Aquarium at Mandalay Bay, Las Vegas, which would
become by far the Group’s biggest installation to date.
At the beginning of the year, the Group had 185 headsets
installed at partner sites. This figure had increased to 234
headsets with a further 122 contracted for installation by
the time COVID-19 restrictions took hold late in Q1. As at
31 December 2020, the Group had 278 partner headsets
installed, though due to COVID-19 restrictions only 145 of
these headsets were operational at that point in time.
Despite lockdowns and similar restrictions, we were able
to open several new partner sites in the second half of
the year, picking up where we left off with a focus on
aquariums, which historically have performed better for us
than any other cohort. In June, we installed into Oklahoma
Aquarium and Mystic Aquarium, in Connecticut, followed
in July. The uptake at Oklahoma was so positive that we
later doubled the number of headsets at that location to
8. In August, we completed our installation into the Shark
Reef Aquarium at Mandalay Bay (which we started in Q1
before the lockdown halted work). This installation was far
more ambitious than anything we had done previously and
the economics of the deal reflect this: Immotion receives
$4.50 per paying visitor into the aquarium, though current
temporary COVID-19 restrictions in Nevada have limited
throughput through our attraction.
Our primary key performance indicator (KPI) for our partner
business is the average revenue per installed headset per
week, which equated to £3291 during the period that sites
were operational in the year (2019: £3032).
Aquarium partner sites continued to outperform the overall
partner average, averaging £495 revenue per headset per
week during the period that sites were operational in the
year (2019: £476). We continue to focus on finding more
aquarium partners as well as other ‘edutainment’ locations
such as zoos, though the COVID-19 outbreak has inevitably
delayed contracted installations and stalled contract
negotiations to some extent with new partners.
LOCATION BASED ENTERTAINMENT:
IMMOTIONVR EXPERIENCE CENTRES
Under our ImmotionVR business model, the Group rents
space in retail and family entertainment destinations,
paying the costs of occupancy (rent, rates and utilities)
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.
Due to the superior returns on capital seen under the
partnership model, the Group continued to de-emphasise
ImmotionVR during the year, closing marginal sites and
not actively pursuing new sites.
At the end of the year, there were 57 installed headsets
(2019: 117 headsets) in operation across 5 ImmotionVR sites
(2019: 9 sites).
The primary key performance indicator (KPI) for
ImmotionVR centres is revenue per installed headset
per week. Excluding the sites which were permanently
closed during the period, ImmotionVR experience centres
generated an average revenue per headset per week of
£175 in the year (2019: £212).
1 The average revenue per headset per week of £329 ignores one partner site which had a large
number of headsets installed from remnant stock which would not otherwise have been used.
2 A small number of early partnership arrangements terminated during 2019 following
unsuccessful trials. Taking into account only the Partnership arrangements which were
installed at the end of the year, the revenue per headset per week was £303.
HOME BASED ENTERTAINMENT
Let’s Explore was a new initiative launched in response
to the pandemic and related lockdown which befell us.
During May 2020, we considered how the library of VR
content we have created could be used in a direct-to-
consumer offering, and the idea of Let’s Explore was born.
Our undersea content was particularly strong as a result of
our focus on aquarium partnerships in the LBE business,
hence our first Let’s Explore product had an Oceans theme.
It is our intent to add other genres, such as dinosaurs and
space, to create a wider product range.
The Let’s Explore Oceans Mega Pack is sold via the Group’s
LetsExplore.com website for £79.99 in the UK and includes
a smartphone-compatible VR headset, a holographic
cube and a hardback colour book. The headset is used
to view the ten VR movies and the cube is used to control
four augmented reality (AR) experiences, all of which are
included within our free-to-download iOS and Android apps.
Let’s Explore Oceans was launched in the UK on 1 October
2020 and its performance exceeded our initial expectations,
with 11,350 units sold and revenue of £669,000 between
launch and 31 December 2020.
In 2021, we have launched the Let’s Explore Oceans product
into further territories and have added additional products
within the oceans genre to expand our offering and give us
the scope to increase average order values.
A relationship has been established with a fulfilment house
in the USA to fulfil orders throughout the USA and Canada,
starting in April 2021. We are also selling into several other
international destinations and are looking to expand that
list throughout the year with the possibility of localised
products and proximate fulfilment houses where justified
by demand.
15
Immotion
Group plc
Annual Report
& Accounts 2020
Risks and Uncertainties
RISKS AND 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:
4
REVIEW
AND
EVALUATE
1
IDENTIFY
RISK
3
CREATE
MITIGATION
STRATEGY
2
ASSESS
IMPACT OF
RISK
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)
Failure to implement the
Group’s strategy
COVID-19 resulted in the
closure of all of the Group’s own
ImmotionVR and partner sites.
This, at times, 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 has developed its
Uvisan cleansing products which
can be deployed as needed at
ImmotionVR and partner sites to
sanitise VR headsets and other
equipment.
Through the launch of its Let’s
Explore products, the Group has
developed an alternative revenue
stream which reduces the Group’s
reliance on the out-of-home
market.
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.
17
Immotion
Group plc
Annual Report
& Accounts 2020
Risks and Uncertainties
RISK
POTENTIAL IMPACT
MITIGATION AND CONTROL
RISK
POTENTIAL IMPACT
MITIGATION AND CONTROL
Foreign exchange movements
Technological advances
within the industry
Competition
Cash requirement
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.
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.
The Group’s partnership model
and content creation require
capital expenditure in advance of
revenue generation.
Industry trends are monitored,
and the Group sends
representatives to key trade
shows to establish what new
products are coming to market.
It is the Group’s intention to
create barriers to entry in the
following ways:
(i) by building up an install base of
Immotion hardware on long term
contracts with quality partners;
(ii) by offering hardware and VR
experiences which are amongst
the best and most relevant in the
market; and
(iii) through the provision of
hardware and experiences at no
up-front cost to partners.
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 trade sufficient to
produce a positive operating
cash flow as well as the ability to
fund or part-fund ongoing capex
alongside debt facilities.
Martin Higginson
Chief Exectutive Officer, 28 April 2021
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, US Dollars and
Euros generated from operations
and settle liabilities denominated
in those currencies.
The Group has certain contracts
priced in foreign currencies
and also has employees and
operations based overseas paid in
foreign currencies. It is therefore
exposed to the risk that adverse
exchange rate movements could
cause its contribution from those
territories to be reduced (relative
to its reporting currency) resulting
in reduced profitability for the
Group.
The Group also procures VR
hardware and Let’s Explore
components in US dollars
and Euros. There is a risk that
the costs of such equipment
increases against the Group on a
Sterling basis.
19
Immotion
Group plc
Annual Report
& Accounts 2020
Corporate and Social Responsibility Report
The Group aims to
operate ethically
and be socially
responsible in
its actions.
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 is 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 developed,
with a manufacturer, a UV cleansing unit which can be used
to sterilise VR headsets between uses. These units, along with
other safety measures such as protective screens, are deployed
as required at both ImmotionVR and partner sites in response to
local conditions and requirements.
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.
• Regular reports and analysis on
investors and shareholders
• Annual Report
• Company website
• Shareholder circulars
• AGM
• RNS announcements
• Press releases
Without our employees we would not 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.
• 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
• Continual dialogue and review
of feedback from partner sites to
ensure satisfaction
• Dedicated teams for support to
ensure consumer concerns are
addressed
• 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
21
Our customers
Our relationship with our customers is
collaborative and we are in constant dialogue
to provide support 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.
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.
RELATIONSHIP WITH STAKEHOLDERS
Our suppliers
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 opposite sets out our key stakeholder groups,
their interests and how the Group engages with them.
Immotion
Group plc
Annual Report
& Accounts 2020
Corporate Governance Report
The necessary mix of
experience & skills.
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:
S I R R O B I N M I L L E R
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.
M A R T I N H I G G I N S O N
Co-Founder and 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, Monstermob 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 FastTrack 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.
D AV I D M A R K S
Co-Founder and Group Finance and
Executive 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.
R O D F I N D L E Y
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.
N I C H O L A S L E E
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.
BOARD MEETINGS
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.
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
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.
23
Immotion
Group plc
Annual Report
& Accounts 2020
Corporate Governance Report
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 or requires in
order for it to carry out its responsibilities under the AIM
Rules and the AIM Rules for Nominated Advisers. The
Disclosure Committee meets 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
NOMINATION COMMITTEE
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.
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.
ATTENDANCE
Directors’ attendance at meetings of the Board and its Committees during 2020 were as follows:
Martin Higginson
David Marks
Rod Findley
Sir Robin Miller
Nicholas Lee
Board
Audit
Disclosure
Nomination
Remuneration
Risk
14/14
14/14
8/14
8/14
9/14
-
3/3
-
3/3
3/3
-
-
-
-
-
-
-
-
-
-
-
-
-
2/2
2/2
-
1/1
-
1/1
1/1
Five of the fourteen 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:
https://immotion.co.uk/investors/corporate-governance/
FINANCIAL 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.
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: 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.
25
Immotion
Group plc
Annual Report
& Accounts 2020
Corporate Governance Report
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. The going concern basis of
accounting has therefore been adopted in preparing the
financial statements.
In reaching this conclusion, the Directors have considered
the financial position of the Group, together with its
forecasts and projections until 31 December 2022, taking
into account reasonably possible changes in trading
performance (more details on the assumptions made by
the Directors when preparing their forecasts can be found
in note 4 to the accounts).
Whilst the forecasts prepared did not indicate a
requirement for additional funding to enable the Group
to continue being able to operate as a going concern, the
Directors note that there is still considerable uncertainty
as to whether the assumptions made in preparing these
forecasts will turn out to be accurate. If there were to be
further lockdowns, they could have a material impact on
the Group’s ability to generate revenue from partner and
ImmotionVR sites. Should this happen, the Directors may
need to consider mitigating actions such as seeking any
government support available, identifying cost savings and
/ or seeking external finance in the form of debt or equity.
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 believes 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.
”
27
Immotion
Group plc
Annual Report
& Accounts 2020
Audit Committee Report
Ensuring the
appropriate financial
procedures.
THE AUDIT COMMITTEE, CHAIRED BY NICHOLAS LEE, MEETS AT LEAST TWICE
PER YEAR. SIR ROBIN MILLER ALSO SERVES ON THE AUDIT COMMITTEE.
(ii) The capitalisation of staff time spent creating VR and
AR content – the Group has a dedicated team of content
creators who have created a range of VR and AR content
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 satisfied that the Group’s
accounting policy was compliant with IAS 38.
(iii) The Audit Committee have reviewed the Group’s
application of IFRS 16 in relation to its property leases and
concluded that they are satisfied that the Group’s financial
statements are consistent with the requirements of IFRS 16.
(iv) The Audit Committee have reviewed the accounting
treatment applied to the new share options issued on 19
November 2020 and the cancellation of the majority of the
share options issued on 12 July 2018 and have concluded
that the Group’s financial statements are consistent with
the requirements of IFRS 2.
IMPACT OF NEW ACCOUNTING STANDARDS
ON FUTURE REPORTS
The new International Financial Reporting Standards (IFRS)
to be adopted by the Group from 1 January 2021 are set out
in note 3. They are not expected to have a material impact
on the Group.
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 three times during the year:
twice in the process of approving the 2019 accounts and
once to approve the 2020 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.
INTERNAL AUDIT
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.
Haysmacintyre LLP’s fees in the year in respect of audit
services were £60k (2019: £58k) and in respect of non-audit
services were £11k (2019: £26k) as detailed in note 9.
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.
INTERNAL CONTROLS
Nicholas Lee
Chairman of the Audit Committee, 28 April 2021
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.
EXTERNAL AUDITORS
The Audit Committee have reviewed the independence
and effectiveness of Haysmacintyre LLP, the Group’s
external auditors, and are satisfied in both respects.
29
Immotion
Group plc
Annual Report
& Accounts 2020
Remuneration Committee Report
Reviewing,
balancing &
incentivising.
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 2020 is shown in
the table below:
Salary
Consultancy
Benefits
Pension
2020
£
2020
£
Martin Higginson
45,250
122,250
David Marks
Rod Findley
Ian Liddell 1
155,033
114,890
-
-
-
-
Sir Robin Miller
21,563
15,000
Nicholas Lee
28,438
-
2020
£
7,327
-
32,144
-
-
-
2020
£
459
1,314
-
-
-
Total
2020
£
Total
2019
£
175,286
204,446
156,347
180,380
147,034
157,910
-
169,162
36,563
45,000
667
29,105
35,794
Total
365,174
137,250
39,471
2,440
544,335
792,692
1 Resigned 9th December 2019
SERVICE CONTRACTS
There are no Directors’ service contracts with notice periods in excess of 12 months.
DIRECTORS AND THEIR INTERESTS
The Directors’ beneficial interests in the Company were as follows:
28 April 2021
31 December 2020
31 December 2019
Shares of
£0.00040108663
Shares of
£0.00040108663
Shares of
£0.00040108663
Martin Higginson1
24,026,945
24,026,945
24,026,945
David Marks
Rod Findley
Sir Robin Miller
Nicholas Lee
10,292,663
10,292,663
9,767,580
10,584,349
10,584,349
10,084,349
385,000
241,743
385,000
241,743
350,024
241,743
1 Includes shares indirectly held in M Higginson’s personal pension scheme
The Directors hold share options in the Company as detailed below:
EMI Options
Unapproved Options
Martin Higginson
David Marks
Rod Findley
Total
Shares
6,578,921
6,578,921
Shares
Total
Shares
9,551,448
16,130,369
3,858,376
10,437,297
-
10,437,297
10,437,297
13,157,842
23,847,121
37,004,963
All of the above options were issued on 19 November 2020
and have an exercise price of 2.5 pence.
Other than 3,479,099 of R Findley’s options, which
automatically vest on 19 November 2021*, the above options
have the following vesting criteria:
(i) One-third of the options vest on the later of: 12 months
from the date of issue* and the 20th consecutive day
whereby the volume-weighted average price of the
Company’s shares is 5 pence or greater;
(ii) One-third of the options vest on the later of: 12 months
from the date of issue* and the 20th consecutive day
whereby the volume-weighted average price of the
Company’s shares is 7.5 pence or greater; and
(iii) One-third of the options vest on the later of: 12 months
from the date of issue* and the 20th consecutive day
whereby the volume-weighted average price of the
Company’s shares is 10 pence or greater.
*none of the options are exercisable during the first 12
months from the issue date except in the case of a change
of control of the company.
Sir Robin Miller
Chairman of the Remuneration Committee
31
Immotion
Group plc
Annual Report
& Accounts 2020
Directors’ Report
The
Directors’
Report.
THE DIRECTORS PRESENT THEIR REPORT AND AUDITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2020.
PRINCIPAL ACTIVITIES
The principal activities of the Group are: (i) the provision of
virtual reality (VR) experiences to partner sites on a revenue
share basis and in its own ImmotionVR sites; and (ii) the
sale of the Group’s Let’s Explore consumer product.
This last activity commenced on 1 October 2020.
The principal activity of the Company is that of a
holding company.
BOARD OF DIRECTORS
The Directors who served during the year were:
Martin Higginson
David Marks
Rodney Findley
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 12.
DIVIDENDS
No dividends were paid during the year (2019: £Nil). The
Board is not recommending the payment of a final
dividend in respect of the year ended 31 December 2020.
Adjusted loss per share from continuing operations in the
period was 1.17p (2019: 1.72p).
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. The going concern basis of
accounting has therefore been adopted in preparing the
financial statements.
In reaching this conclusion, the Directors have considered
the financial position of the Group, together with its
forecasts and projections until 31 December 2022, taking
into account reasonably possible changes in trading
performance (more details on the assumptions made by
the Directors when preparing their forecasts can be found
in note 4 to the accounts).
Whilst the forecasts prepared did not indicate a
requirement for additional funding to enable the Group
to continue being able to operate as a going concern, the
Directors note that there is still considerable uncertainty
as to whether the assumptions made in preparing these
forecasts will turn out to be accurate. If there were to be
further lockdowns, they could have a material impact on
the Group’s ability to generate revenue from partner and
ImmotionVR sites. Should this happen, the Directors may
need to consider mitigating actions such as seeking any
government support available, identifying cost savings and/
or seeking external finance in the form of debt or equity.
TREASURY OPERATIONS AND
FINANCIAL INSTRUMENTS
PAYMENT OF SUPPLIERS
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 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.
The Group’s principal financial instrument is cash, the main
purpose of which is to fund the Group’s operations.
DIRECTORS’ INDEMNITY
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 26
to the consolidated financial statements.
RESEARCH & DEVELOPMENT
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.
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.
POLITICAL DONATIONS
The Group did not make any political donations during
2020 (2019: £Nil).
EARNINGS PER SHARE
POST BALANCE SHEET EVENTS
EMPLOYEE POLICIES
Loss per share in the period from continuing operations
was 1.33p (2019: 2.13p) and diluted loss per share from
continuing operations in the period was 1.33p (2019: 2.13p).
On 31 March 2021, the Company issued 6,000,000 ordinary
shares at a price of 5 pence each following an approach
from an existing institutional investor, yielding £300,000
before expenses.
The Group has established employment policies which are
compliant with current legislation and codes of practice.
The Group is an equal opportunities employer.
33
Immotion
Group plc
Annual Report
& Accounts 2020
Directors’ Report
SIGNIFICANT SHAREHOLDINGS
As at 31 December 2020, the following shareholders owned
3% or more of the Company:
Shareholder
Shares
%
Stonehage Fleming
38,035,010
9.29%
Unicorn AIM VCT
29,137,930
7.11%
Rathbone Nominees Limited
28,093,140
6.86%
Martin Higginson1
Samuel Higginson
24,026,945
5.87%
17,694,330
4.32%
Herald Investment Trust
12,896,551
3.15%
1 Includes shares indirectly held in M Higginson’s pension scheme
As at 28 April 2021, the following shareholders owned 3% or
more of the Company:
Shareholder
Shares
%
Stonehage Fleming
38,035,010
9.15%
Rathbone Nominees Limited
34,093,140
8.20%
Unicorn AIM VCT
Martin Higginson1
Samuel Higginson
29,137,930
7.01%
24,026,945
5.87%
17,694,330
4.26%
Herald Investment Trust
12,896,551
3.10%
1 Includes shares indirectly held in M Higginson’s pension scheme
MATTERS COVERED IN THE CHAIRMAN’S STATEMENT
AND FINANCIAL STATEMENTS
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 28 April 2021
and signed on its behalf
Martin Higginson
Director
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 14 and 15) and the
Chief Executive’s Statement (on pages 4 to 12) and within
the notes to the Financial Statements.
ANNUAL GENERAL MEETING
The Company’s Annual General Meeting will be held on 30
June 2021.
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.
The Directors’
Responsibilities
Statement
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 IFRSs 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 IFRSs are 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 assume 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.
35
Immotion
Group plc
Annual Report
& Accounts 2020
Independent Auditor’s Report
Independent
Auditors’
Report.
OPINION
We have audited the financial statements of Immotion
Group Plc (the ‘parent company’) and its subsidiaries
(the ‘group’) for the year ended 31 December 2020 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:
• give a true and fair view of the state of the group’s and of
the parent company’s affairs as at 31 December 2020 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.
MATERIAL UNCERTAINTY RELATED TO
GOING CONCERN
In auditing the financial statements, we have concluded
that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is
appropriate. In our evaluation of the directors’ assessment
of the entity’s ability to continue to adopt the going
concern basis of accounting, we considered the inherent
risks to the group and the parent company’s business
model and reviewed the directors’ assessment of how
those risks affect the group and the parent company’s
financial resources or ability to continue operations
over the period to 31 December 2022. We considered
the likely cash inflows and outflows over this period and
assessed the risk that the group and the parent company
would be unable to meet their liabilities as they fall due.
We scrutinised the reasonableness of management’s
assumptions applied to the cash flow projections and
sensitised such projections against various scenarios which
could come to realisation. We reviewed and appropriately
challenged management’s going concern assessment.
We also considered post balance sheet date performance
and the historical accuracy of management forecasting to
assess the credibility of the going concern assessment.
We draw attention to Note 4 in the financial statements,
which indicates that the group incurred a loss after taxation
of £4,732,000 during the year ended 31 December 2020.
The COVID-19 outbreak has had a significant impact on
the group’s ability to generate revenue, while the timing
and extent to which normal trading conditions will resume
remains highly uncertain. As stated in Note 4, these facts,
along with other matters described in note 4, 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.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
As part of designing our audit, we determined materiality
and assessed the risks of material misstatement in the
financial statements. In particular, we considered areas
where subjective judgement was exercised by the directors,
for example in respect of significant accounting estimates
that involved making assumptions and considering future
events that are inherently uncertain. We also assessed
the risk of management override of controls, including
evaluating whether there was evidence of bias by the
directors that represented a risk of material misstatement
due to fraud. We tailored the scope of our audit to ensure
that we performed sufficient work to be able to give an
opinion on the financial statements as a whole, taking
into account the structure of the group and the parent
company, the accounting processes and controls, and the
industry in which they operate.
Our audit scope included the statutory audit of each
of the group’s subsidiaries incorporated in the United
Kingdom for the year ended 31 December 2020 except
C.2K Entertainment Inc. and those outlined below that
are exempt from statutory audit. These subsidiary audits
were performed to subsidiary level materiality which was
calculated for each entity 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
Limited, were exempt from audit by virtue of S479A of
Companies Act 2006 and were audited to group materiality.
KEY AUDIT MATTERS
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.
KEY AUDIT MATTER
HOW OUR SCOPE ADDRESSED THIS 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 or in accordance with
IFRS 15.
Impairment of goodwill
The group has goodwill arising from previous
acquisitions with a carrying value £2,438,000 held on
its balance sheet. Given the financial performance
of the group during the year ended 31 December
2020, there is a risk as to the valuation of goodwill
arising during previous acquisitions and whether any
impairment is required.
Our audit work included, but was not restricted to,
the following:
• 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
• Substantive procedures on a sample of revenue
transactions, including a review of those around the
reporting date to assess appropriate cut off has been
applied.
Our audit work included, but was not restricted to, the
following:
• Reviewing and assessing the impairment reviews
prepared by management and challenging their
underlying assumptions;
• Reviewing and assessing future budgets and
cash flow forecasts a review of the application of
appropriate sensitivities;
• Making enquiries of management and assessing
expected future performance and potential growth
in the business.
37
Immotion
Group plc
Annual Report
& Accounts 2020
Independent Auditor’s Report
KEY AUDIT MATTER
HOW OUR SCOPE ADDRESSED THIS MATTER
Capitalisation of development costs
The group recognises material software and content
developments costs as an intangible asset, rather
than expenditure. Given that such capitalisation and
ongoing recognition is a matter of judgement, we
considered this area to be a key audit matter.
Our audit work included, but was not restricted to,
the following:
• 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.
OUR APPLICATION OF MATERIALITY
not express any form of assurance conclusion thereon.
The scope and focus of our audit was influenced by our
risk 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 £68,800, determined by reference to 1.5% of the group’s
net loss. Based on the benchmarks used in the annual
report, the net loss is considered a primary measure used
by the shareholders in assessing the performance of the
group and is a generally accepted auditing benchmark.
We have reported to the audit committee any corrected
or uncorrected misstatements arising exceeding £3,440.
Performance materiality was set at £51,600, being 75%
of materiality.
Materiality for the parent company was set at £6,200,
determined by reference to 1.5% of the parent company’s net
loss. Based on the benchmarks set by the shareholders in
assessing the performance of the parent company, net loss
is considered a primary measure and is a generally accepted
auditing benchmark. We have reported to the audit
committee any corrected or uncorrected misstatements
arising exceeding £310. Performance materiality was set at
£4,650, being 75% of materiality.
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
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.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE
COMPANIES ACT 2006
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.
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
regulatory requirements related to the AIM Rules, and
we considered the extent to which non-compliance
might have a material effect on the financial statements.
We also considered those laws and regulations that
have a direct impact on the preparation of the financial
statements such as the Companies Act 2006, income tax,
payroll tax and sales tax.
• 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.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities
statement set out on page 35, 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.
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.
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities,
including fraud is detailed below:
EXPLANATION AS TO WHAT EXTENT THE AUDIT
WAS CONSIDERED CAPABLE OF DETECTING
IRREGULARITIES, INCLUDING FRAUD.
Based on our understanding of the company and
industry, we identified that the principal risks of non-
compliance with laws and regulations related to
We evaluated management’s incentives and
opportunities for fraudulent manipulation of the
financial statements (including the risk of override of
controls) and determined that the principal risks were
related to posting inappropriate journal entries to
revenue and management bias in accounting estimates.
Audit procedures performed by the engagement team
included:
• We obtained an understanding of how the group
complies with the AIM regulations through discussions
with management;
• Inspecting correspondence and filings with tax
authorities;
• Discussions with management including consideration
of known or suspected instances of non-compliance
with laws and regulations;
• Evaluating management’s controls designed to
prevent and detect irregularities;
• Identifying and testing journals, in particular
journal entries posted with unusual account
combinations, postings by unusual users or with
unusual descriptions; and
• Challenging assumptions and judgements made by
management in their critical accounting estimates.
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 parent 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.
Christopher Cork
(Senior Statutory Auditor)
For and on behalf of Haysmacintyre LLP
Statutory Auditors of 10 Queen Street Place, London, EC4R 1AG
28 April 2021
39
Immotion
Group plc
Annual Report
& Accounts 2020
Consolidated Statement of Comprehensive Income
for the Year Ended 31 December 2020
Note
7
8
9
11
12
13
Revenue - continuing operations
Cost of sales - continuing operations
Gross Profit
Administrative expenses – continuing operations
Other operating income
Loss from operations
Memorandum:
Adjusted EBITDA
Depreciation
Amortisation
Impairment of tangible and intangible assets
Share based payments
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 subsidary
Loss after taxation and attributable to equity
holders of the parent and total comprehensive
income for the period
Year ended
31 December 2020
Year ended
31 December 2019
£’000
2,848
(2,382 )
466
(5,779 )
575
(4,738 )
(1,690 )
(1,751 )
(719 )
(253 )
(194 )
(35 )
(96 )
£’000
3,606
(2,509 )
1,097
(6,524 )
-
(5,427 )
(2,494 )
(1,304 )
(561 )
(458 )
(171 )
(12 )
(427 )
(4,738 )
(5,427 )
(82 )
2
(4,818 )
86
(4,732 )
-
(4,732 )
(108 )
4
(5,531 )
84
(5,447 )
32
(5,415 )
(35 )
(29 )
(4,767 )
(5,444 )
Year ended
31 December 2020
Year ended
31 December 2019
Note
£0.01
£0.01
Loss per share
Basic (continuing)
Basic (discontinued)
Loss per share
Diluted (continuing)
Diluted (discontinued)
14
14
(1.33 )
0.00
(1.33 )
(1.33 )
0.00
(1.33 )
The notes on pages 46 to 77 form part of the group financial statements.
(2.13 )
0.01
(2.12 )
(2.13 )
0.01
(2.12 )
41
Immotion
Group plc
Annual Report
& Accounts 2020
Consolidated Statement of Changes in Equity
for the Year Ended 31 December 2020
Consolidated Statement of Financial Position
as at 31 December 2020
31 December 2020
31 December 2019
Note
£’000
£’000
Share
capital
Share
premium
Foreign
exchange
reserve
Retained
(deficit)/
earnings
Total
equity
£’000
£’000
£’000
£’000
£’000
Balance at 1 January 2019
Issue of shares
Issue costs deducted from equity
Loss after tax
Equity settled share-based payments
Currency translation of overseas subsidary
78
37
-
-
-
-
9,999
(16 )
(3,861 )
6,200
5,684
(373 )
-
-
-
-
-
-
-
-
-
5,721
(373 )
(5,415 )
(5,415 )
171
171
(29 )
-
(29 )
Balance at 31 December 2019
115
15,310
(45 )
(9,105 )
6,275
Issue of shares
49
5,352
Issue costs deducted from equity
Loss after tax
Equity settled share-based payments
Currency translation of overeas subsidary
-
-
-
-
(389 )
-
-
-
-
-
-
-
-
-
5,401
(389 )
(4,732 )
(4,732 )
194
194
(35 )
-
(35 )
Balance at 31 December 2020
164
20,273
(80 )
(13,643 )
6,714
The notes on pages 46 to 77 form part of the group financial statements.
ASSETS
Non-current assets
Property, plant and equipment
Intangible fixed assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Contract assets
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
Loans
Lease liabilities
Total non-current liabilities
Total liabilities
Total net assets
15
16
17
18
19
20
21
21
21
26
22
21
21
Capital and reserves attributable to owners of the parent
Share capital
Share premium
Foreign exchange reserve
Retained earnings / (deficit)
Total equity
28
30
30
30
The financial statements were approved by the Board and authorised for issue on 28 April 2021
Martin Higginson
David Marks
Chief Executive Officer
Group Finance Director
The notes on pages 46 to 77 form part of the group financial statements.
2,260
3,625
5,885
152
829
91
1,664
2,736
8,621
(1,153 )
(175 )
(231 )
-
(12 )
(1,571 )
(160 )
(176 )
(336 )
(1,907 )
6,714
164
20,273
(80 )
(13,643 )
6,714
3,132
4,020
7,152
-
703
100
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
43
Immotion
Group plc
Annual Report
& Accounts 2020
Consolidated Statement of Cash Flows
for the Year Ended 31 December 2020
Year ended
Year ended
31 December 2020
31 December 2019
£’000
£’000
Cash flows from operating activities
Loss before tax including discontinued operations
(4,818 )
(5,499 )
Adjustments for:
Share based payments
Depreciation on property plant and equipment
Depreciation on stock transfers
Loss on disposal of fixed assets
Amortisation of intangible assets
Impairment of tangible and intangible assets
Finance costs
Finance income
Foreign exchange on retranslation of fixed assets
Foreign exchange loss
Corporation tax repayment received
194
1,751
-
35
719
253
82
(2 )
(72 )
(35 )
73
171
1,304
(2 )
12
561
458
108
(4 )
(32 )
(29 )
289
Cash flows from operating activities before changes in working capital
(1,820 )
(2,663 )
(Increase) / Decrease in inventories
(Increase) / Decrease in trade and other receivables
Increase / (Decrease) in trade and other payables
(152 )
(132 )
92
133
339
(55 )
Cash used in operations
(2,012 )
(2,246 )
Investing activities
Purchase of intangible assets
Purchase of property, plant and equipment
Proceeds from disposals of property, plant and equipment
Foreign exchange on retranslation of fixed assets
Net cash used in investing activities
Financing activities
Financing costs
Finance income
New loans and finance leases
Loan and finance lease repayments
Foreign exchange on retranslation of financing
Issue of new share capital
Costs on issue of shares
Net cash from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
(545 )
(1,069 )
159
62
(1,393 )
(82 )
2
302
(615 )
(24 )
5,401
(389 )
4,595
1,190
474
1,664
(1,005 )
(1,804 )
15
32
(2,762 )
(108 )
4
87
(560 )
-
5,721
(373 )
4,771
(237 )
711
474
Year ended
31 December 2020
Year ended
31 December 2019
£’000
£’000
Reconciliation of net cashflow to movement in net debt:
Net increase/(decrease) in cash and cash equivalents
New loans and finance leases
Repayment of loans and finance leases
Foreign exchange on retranslation of financing
Movement in net funds in the year
Net debt / (funds) at 1 January
Net funds / (debt) at 31 December
Breakdown of net funds / (debts)
Cash and cash equivalents
Loans and borrowings
Lease liabilities
Net funds / (debts) at 31 December
The notes on pages 46 to 77 form part of the group financial statements.
1,190
(328 )
615
24
1,501
(579 )
922
1,664
(335 )
(407 )
922
(237 )
(1,166 )
560
-
(843 )
264
(579 )
474
(156 )
(897 )
(579 )
45
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2020
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, MediaCityUK, Manchester, M50 3SP.
The Group is listed on the Alternative Investment Market
(AIM) of the London Stock Exchange.
The principal activities of the Group during the year
were the provision of virtual reality (VR) experiences to
partner sites and via its own ImmotionVR sites; and the
sale of the Let’s Explore virtual and augmented reality
consumer product.
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.
Leases – amendment to IFRS 16 (effective for annual
accounting periods commencing 1 July 2020)
The IASB issued an amendment to IFRS 16 Leases to
make it easier for lessees to account for COVID-19-related
rent concessions such as rent holidays and temporary
rent reductions. The amendment exempts lessees
from having to consider individual lease contracts to
determine whether rent concessions occurring as a
direct consequence of the COVID-19 pandemic are lease
modifications and allows lessees to account for such rent
concessions as if they were not lease modifications. It
applies to COVID-19-related rent concessions that reduce
lease payments due on or before 30 June 2021. Early
adoption has not been chosen by the Group and it is
not anticipated that the Group will choose this option in
2021. However, that will depend to an extent on how the
COVID-19 pandemic unfolds in 2021 and on the type and
amount of any concessions obtained from landlords of
properties that are accounted for under IFRS 16.
2. STANDARDS, AMENDMENTS AND INTERPRETATIONS
ADOPTED IN THE CURRENT FINANCIAL YEAR ENDED 31
DECEMBER 2020
4. ACCOUNTING POLICIES
Principal accounting policies
The principal accounting policies adopted in the
preparation of these consolidated financial statements
are consistent with those followed in the preparation
of the Group’s annual audited consolidated financial
statements for the year ended 31 December 2019, except
for any new and revised IFRSs effective 1 January 2020.
None of the new IFRSs and IFRS amendments effective
on 1 January 2020 have had a material impact on the
consolidated financial statements of the Group.
3. NEW AND REVISED IFRS STANDARDS IN ISSUE BUT
NOT YET EFFECTIVE
Insurance Contracts – amendment to IFRS 4
(effective 1 January 2021)
This amendment by the IASB relates to the accounting
for insurance and is not expected to have a material
impact on the Group.
Interest Rate Benchmark Reform – Phase 2
(effective 1 January 2021)
In August 2020, the IASB issued Interest Rate Benchmark
Reform—Phase 2, which amends IFRS 9 Financial
Instruments, IAS 39 Financial Instruments: Recognition
and Measurement, IFRS 7 Financial Instruments:
Disclosures, IFRS 4 Insurance Contracts and IFRS
16 Leases. These amendments address issues that might
affect financial reporting after the reform of an interest
rate benchmark. These amendments are not expected to
have a material impact on the Group.
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 £4,732,000
for the year and an operating cash outflow of £2,012,000.
The loss in the year and the continuation post year end
of the 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.
The Directors have prepared forecasts covering the
period to December 2022, assessing the trading
projections and cash flow taking into consideration the
continued impact of COVID-19. The projections include:
• the anticipated reopening of partner and ImmotionVR
sites as lockdowns are lifted with revenue from each
site projected to be 50% of pre-COVID levels in 2021
and 75% in 2022;
• no further lockdowns affecting partner and
ImmotionVR sites;
• selective opening of a small number of new
partner sites;
• forecasted revenue and contribution of
Let’s Explore; and
• the impact of government support packages available
in the UK and USA.
Whilst the forecasts prepared did not indicate a
requirement for additional funding to enable the Group
to continue being able to operate as a going concern, the
Directors note that there is still considerable uncertainty
as to whether the assumptions made in preparing these
forecasts will turn out to be accurate. If there were to be
further lockdowns, they could have a material impact
on the Group’s ability to generate revenue from partner
and ImmotionVR sites. Should this happen, the Directors
may need to consider mitigating actions available to
them which are likely to include the pursuit of any
government support available, identifying cost savings
and/or seeking external finance in the form of debt or
equity.
Based on the forecast prepared, 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 going concern 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:
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 areas;
• the customer has specifically requested that the goods
be held pending collection; and
• normal payment terms apply to the Bill-and-Hold
arrangement.
47
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2020
Let’s Explore
borrowing rate.
Revenue is recognised on sales of the Let’s Explore
products in the period in which the corresponding order
is placed and paid for. A provision for future refunds is
deducted from revenue each period.
Content
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.
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 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 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 licensing revenue is recognised on the date on
which the related sale of that content by the licensee
takes place where agreements do not provide for new
or updated content to be supplied. Where Immotion
Group is committed under licensing agreements to
producing new content, or material updates, revenue
is recognised over the period of the agreement. 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 Company assesses whether a contract is or contains
a lease, at inception of a contract. The Company
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. In the latter cases, the Company
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
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.
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 the 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.
Tangible assets
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
Computer equipment
Leasehold property
- 33% straight line
- 33% straight line
- Over term of lease
Leasehold property improvements - Over term of lease
ascribed a commercial value and a useful economic life.
The ascribed value of these intangible assets is being
amortised on a straight-line basis over their estimated
useful economic life, which is considered to be 3 years.
Internally generated intangible assets
An internally-generated intangible asset arising from the
Group’s development activities is capitalised and held as
an intangible asset in the statement of financial position
when the costs relate to a clearly defined project; the
costs are separately identifiable; the outcome of such a
project has been assessed with reasonable certainty as
to its technical feasibility and its ultimate commercial
viability; the aggregate of the defined costs plus all
future expected costs in bringing the product to market
is exceeded by the future expected sales revenue; and
adequate resources are expected to exist to enable 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.
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.
Plant & Equipment
Fixtures & Fittings
- 33% straight line
- 20% to 33% straight line
Inventories
IFRS 16 right of use assets
- Over term of lease
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
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.
49
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2020
Financial instruments
Bank borrowings
Interest bearing bank loans, overdrafts and other loans
are recognised as financial liabilities and recorded at
fair value, net of direct issue costs. Finance costs are
accounted for on an amortised cost basis in the income
statement using the effective interest rate.
Equity instruments
An equity instrument is any contract that evidences a
residual interest in the assets of an entity after deduction
of all its liabilities. Equity instruments issued by the
Company are recorded at the proceeds received net of
direct issue costs.
Share based payments
Where share options are awarded to employees, the fair
value of the options at the date of grant is charged to
the statement of comprehensive income on a straight-
line basis over the vesting period. Non-market vesting
conditions are taken into account by adjusting the
number of options expected to vest at each statement of
financial position date so that, ultimately, the cumulative
amount recognised over the vesting period is based
on the number of options that eventually vest. Market
vesting conditions are factored into the fair value of the
options granted. The cumulative expense is not adjusted
for failure to achieve a market vesting condition.
Where share options are cancelled due to employees
leaving the Group’s employment before they have
vested, cumulative share based payment expenses
recognised in respect of those employees are reversed
through the statement of comprehensive income.
Where share options are replaced the fair value of the
replaced options at the date of grant continues to be
recognised through the statement of comprehensive
income in addition to a charge equating to the
incremental value of the new options granted.
Fair value is calculated either using the Monte-Carlo
model or Black-Scholes model, details of which are given
in note 29.
Pensions
The pension schemes operated by the Group are
defined contribution schemes. The pension cost charge
represents the contributions payable by the Group.
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 assets
Contract assets are recognised when the Group has
satisfied a performance obligation but cannot recognise
a receivable until other obligations are satisfied. Contract
assets represent a right to payment that is conditional
on further performance while receivables represent an
unconditional right to payment.
Contract liabilities
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 (or in the normal operating cycle
of the business if longer). If not, they are presented as
non-current liabilities. Contract liabilities are recognised
initially at fair value and subsequently at amortised cost.
Trade and other receivables
Trade and other receivables are measured at initial
recognition at fair value, and subsequently measured
at amortised cost using the effective interest method. A
provision is established when there is objective evidence
that the Group will not be able to collect all amounts
due. The amount of any provision is recognised in profit
or loss.
Cash and cash equivalents
Cash and cash equivalents are recognised as financial
assets. They comprise cash held by the Group and short-
term bank deposits with an original maturity date of
three months or less.
Trade payables
Trade payables are initially recognised as financial
liabilities measured at fair value, and subsequent to initial
recognition are measured at amortised cost.
Taxation and deferred taxation
Corporation tax payable is provided on taxable profits at
prevailing rates.
Deferred tax assets and liabilities are recognised where
the carrying amount of an asset or liability in the balance
sheet differs from its tax base, except for differences
arising on:
• the initial recognition of goodwill; and
• the initial recognition of an asset or liability in a
transaction which is not a business combination and
at the time of the transaction affects neither
accounting nor taxable profit.
Recognition of deferred tax assets is restricted to those
instances where it is probable that future taxable profit
will be available against which the asset can be utilised.
The amount of the asset or liability is determined using
tax rates that have been enacted or substantively
enacted by the balance sheet date and are expected to
apply when the deferred tax liabilities/(assets) are settled/
(recovered).
Deferred tax assets and liabilities are offset when the
Group has a legally enforceable right to offset current
tax assets and liabilities and the deferred tax assets and
liabilities relate to taxes levied by the same tax authority
on either:
• the same taxable Group company; or
• different Group entities which intend either to settle
current tax assets and liabilities on a net basis, or to
realise the assets and settle the liabilities
simultaneously, in each future period in which
significant amounts of deferred tax assets or liabilities
are expected to be settled or recovered.
Government grants
The Group recognises government grants when it
has reasonable assurance that it will comply with the
relevant conditions and the grant will be received.
Grants related to income are recognised in the profit and
loss account in line with the recognition of the expenses
that the grants are intended to compensate. Such grants
are presented as income and are not deducted from the
related expenditure.
Grants related to assets are presented as deferred
income and are amortised over the useful life of the
asset.
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.
5. CRITICAL ACCOUNTING ESTIMATES AND 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.
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 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.
Revenue from the sale of Let’s Explore packages is
recognised on receipt of payment, which is a condition
for an order to be accepted. At each accounting date
provision is made for refunds to be made for orders
received and paid for, prior to the accounting date. This
provision is based on past experience of the level of
refund applications received.
Partner revenue is accounted for on the basis that the
Group acts as the principal in the transactions between
partners and customers. Gross sales of services by
partners to end customers are reported to the Group
regularly and are included within the Group’s turnover
without any deductions.
Project revenue is recognised in proportion to the
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.
51
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2020
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 depreciation, 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.
Where options are cancelled, followed by the grant of
new options at or close to the time of the cancellations, a
key judgment, based on the reasons for the cancellations
and the new issues, is made as to the extent to which
the new options granted are modifications of, or
replacements for, the cancelled options, or new 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.
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 the 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 when economic benefits are expected to be
received, which has been estimated at 3 years.
Depreciation
6. SEGMENTAL INFORMATION
A segmental analysis of revenue and expenditure for the year ended 31 December 2020 is below. Immotion Group Plc
changed its internal reporting during the year ended 31 December 2020 and the segmental analysis has been prepared
on a different basis to 2019. The 2019 comparative analysis has been amended in line with the segments adopted
in 2020.
Location
Based
Home
Based
Head
Office
Total
Entertainment Entertainment
Revenue
Cost of Sales
Administrative expenses*
Other operating income
Operating loss
Amortisation
Depreciation
Impairment
Loss on disposal
Restructuring costs
Share based payments
Finance costs
Finance income
Taxation
£’000
£’000
£’000
£’000
2,075
(1,746 )
(1,298 )
484
669
(573 )
(134 )
-
104
(63 )
(1,299 )
91
2,848
(2,382 )
(2,731 )
575
(485 )
(38 )
(1,167 )
(1,690 )
(442 )
(1,593 )
(37 )
(35 )
(77 )
-
(50)
-
-
(81 )
-
-
-
-
-
-
-
-
(196 )
(158 )
(216 )
-
(19 )
(194 )
(32 )
2
86
(719 )
(1,751 )
(253 )
(35 )
(96 )
(194 )
(82 )
2
86
Loss for the year
(2,719 )
(119 )
(1,894 )
(4,732 )
*Administrative expenses exclude depreciation, amortisation, impairment, loss on disposal, restructuring costs and share based payments.
All operations are continuing.
53
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2020
A segmental analysis of revenue and expenditure for the year ended 31 December 2019 is below:
LBE
HBE
Head
Office
Total Discontinued
Total
continuing
operations
operations
£’000
£’000
£’000
£’000
£’000
£’000
Revenue
Cost of sales
2,932
(2,157 )
-
-
674
(352 )
3,606
(2,509 )
18
18
3,624
(2,491 )
Administrative expenses*
(1,554 )
-
(2,037 )
(3,591 )
-
(3,591 )
Operating (loss) / profit
(779 )
-
(1,715 )
(2,494 )
36
(2,458 )
Amortisation
Depreciation
Impairment
Loss on disposal
Restructuring costs
Share based payments
Finance costs
Finance income
Tax
(143 )
(1,038 )
-
(18 )
(109 )
-
-
-
-
-
-
-
-
-
-
-
-
-
(418 )
(266 )
(458 )
6
(318 )
(171 )
(108 )
4
84 8
(561 )
(1,304 )
(458 )
(12 )
(427 )
(171 )
(108 )
4
4
-
-
-
-
(4 )
-
-
-
-
(561 )
(1,304 )
(458 )
(12 )
(431 )
(171 )
(108 )
4
84
(Loss) / Profit for the year
(2,087 )
-
(3,360 )
(5,447 )
32
(5,415 )
*Administrative expenses exclude depreciation, amortisation, impairment, loss on disposal, restructuring costs and share based payments.
The segmental analysis above reflects the parameters applied by the Board when considering the Group’s monthly management accounts.
The table below splits revenue, assets and capital expenditure by location:
External revenue by location
External revenue by location
of customer
of customer
2020
Continuing
2020
Discontinued
2019
Continuing
2019
Discontinued
£’000
£’000
£’000
£’000
1,395
1,176
124
38
35
35
27
13
5
-
-
2,848
-
-
-
-
-
-
-
-
-
-
-
-
1,599
1,031
187
55
156
62
422
83
5
5
1
-
18
-
-
-
-
-
-
-
-
-
3,606
18
Total assets
by location
Net tangible capital
expenditure by location
2020
£’000
6,901
1,542
56
50
35
22
9
6
2019
£’000
6,437
1,698
95
82
52
43
14
8
2020
£’000
266
813
6
-
8
-
-
2
2019
£’000
1,182
1,358
83
96
73
65
17
9
8,621
8,429
1,095
2,883
United Kingdom
United States of America
Australia
United Arab Emirates
China
Saudi Arabia
Netherlands
Germany
France
Japan
Estonia
United Kingdom
United States of America
United Arab Emirates
Saudi Arabia
Australia
Germany
China
France
55
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2020
7. REVENUE
Revenue by stream is split:
Location Based Entertainment
Home Based Entertainment
Head Office
2020
£’000
2,075
669
104
2,848
2019
£’000
2,826
-
780
3,606
The Group had certain customers whose revenue individually represented 10% or more of the Group’s total revenue.
For the year ended 31 December 2020, two customers accounted for 23% and 20% of the revenue respectively
(2019: two customers accounted for 27% and 12% respectively).
8. OTHER OPERATING INCOME
UK Government grants: Coronavirus Job Retention Scheme
Rent receivable
9. LOSS FROM OPERATIONS
This is arrived at after charging:
Continuing operations
Staff costs (see note 10)
Depreciation of property, plant & equipment
Amortisation of intangible fixed assets
Impairment of intangible and tangible assets
Short-term lease expense
Foreign exchange differences
Auditors’ remuneration
Auditors’ remuneration in respect of the Company
Audit of the Group and subsidiary undertakings
Auditors’ remuneration – non-audit services – review of interim accounts
Auditors’ remuneration – non-audit services –taxation fees
Restructuring costs
Business restructuring
COVID-19 effects - redundancies and aborted projects
2020
£’000
479
96
575
2020
£’000
2,932
1,751
719
253
102
-
13
47
11
-
71
16
80
96
2019
£’000
-
-
-
2019
£’000
4,003
1,304
561
458
267
10
12
46
13
13
84
427
-
427
10. STAFF COSTS
Staff costs for all employees, including Directors consist of:
Wages and salaries
Social security costs
Pensions
Share based payment charge
2020
£’000
2,414
293
31
2,738
194
2,932
2019
£’000
3,405
387
40
3,832
171
4,003
Staff costs above include termination costs of £69k (2019: £277k) during the year.
Staff costs above include £326k capitalised in 2020 (2019: £513k) as development costs (see note 16).
The average number of employees of the group
during the year was as follows:
2020
2019
Directors
Management and administration
Retail
Operations
Sales and Marketing
Content and software development
5
14
37
13
7
10
86
6
14
50
7
3
19
99
Directors’ detailed emoluments
Details of individual Directors’ emoluments for the year are as follows:
Martin Higginson
David Marks
Rod Findley
Ian Liddell*
Sir Robin Miller
Nicholas Lee
Salary Consultancy
Benefits
Pension
2020
£’000
2020
£’000
2020
£’000
2020
£’000
Total
2020
Total
2019
£’000
£’000
45
155
115
-
22
28
365
122
-
-
-
15
-
137
7
-
32
-
-
-
39
1
1
-
-
-
1
3
175
156
147
-
37
29
204
180
158
170
45
36
544
793
All pension contributions represent payments into defined contribution schemes. The principal benefits relate to
health insurance.
*Ian Liddell resigned as a director of the Group on 9 December 2019.
The Executive Directors have service contracts with the Company which are terminable by the Company or relevant
director on 6 months’ notice.
57
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2020
£120k of the share-based payment expense in 2020 relates to the directors (2019: £127k).
The Directors of the company on 28 April 2021 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:
Shares of £0.00040108663
28/04/2021
31/12/2020
31/12/2019
Martin Higginson
24,026,945
5.78%
24,026,945
5.87%
24,026,945
8.40%
David Marks
Rod Findley
Sir Robin Miller
Nicholas Lee
10,292,663
2.48%
10,292,663
2.51%
9,767,580
10,584,349
2.55%
10,584,349
2.58%
10,084,349
385,000
0.09%
385,000
0.09%
350,024
3.41%
3.52%
0.12%
241,743
0.06%
241,743
0.06%
241,743
0.08%
Details of the options over the Company’s shares held by the directors are as follows:
13. 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
2020
£’000
65
(6 )
-
27
86
2019
£’000
80
(59 )
(1 )
64
84
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
2020
£’000
4,818
-
4,818
2019
£’000
5,531
32
5,499
Type of Option
31 December 2020
£
grant
period
Options held at
Exercise Price
Date of
Exercise
Total loss on ordinary activities before tax
Martin Higginson
EMI Option
Martin Higginson
Non-EMI Option
David Marks
David Marks
Rod Findley
EMI Option
Non-EMI Option
Non-EMI Option
6,578,921
9,551,448
6,578,921
3,858,376
10,437,297
0.025
0.025
0.025
0.025
0.025
19/11/2020
19/11/2020
19/11/2020
19/11/2021
19/11/2021
19/11/2021
19/11/2020
19/11/2021
19/11/2020
19/11/2021
All of the above options were issued as replacements for options issued on 12th July 2018 which were surrendered on
19th November 2020. None of the above options may be exercised before 19th November 2021. Further information on
share options is included in note 29. The market price of the shares at 31 December 2020 was 4.15p with a quoted range
from 1 January 2020 to 31 December 2020 of 1.25p to 8.75p.
11. FINANCE COSTS
Other interest
IFRS 16 lease charges
12. FINANCE INCOME
Other interest
2020
£’000
43
39
82
2020
£’000
2
2
2019
£’000
55
53
108
2019
£’000
4
4
Loss on ordinary activities at the standard rate of
corporation tax in the UK of 19% (2019: 19%)
915
1,045
Effects of:
Fixed asset differences
Expenses not deductible for tax purposes
R&D tax credits
Adjustments to prior periods
Deferred tax not recognised
Adjust closing deferred tax to average rate of tax
Tax credit for the year
(14 )
(149 )
65
(6 )
(725 )
-
86
(57 )
(556 )
35
(59 )
(310 )
(14 )
84
The UK Finance Act 2020 received royal assent on 22 July 2020. This legislation maintained the UK corporation tax
rate at the same level as in the year commencing 1 April 2019 at 19% for the years commencing 1 April 2020 and
1 April 2021. Deferred taxes at the balance sheet date have been measured using these enacted tax rates.
In the 2021 budget statement issued on 3 March 2021 the UK Government announced its intention to raise the
corporation tax rate from 19% to 25% for the year commencing 1 April 2023. As this measure has not been enacted
it has not been taken into account in calculating the deferred tax position at 31 December 2020.
There were unused tax losses of £13.9m at 31 December 2020 (£10.7m at 31 December 2019). No deferred tax asset
has been recognised due to the uncertainty surrounding future profits.
59
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2020
14. EARNINGS PER SHARE
The earnings per share is based on the following:
Continuing post tax loss attributable to shareholders
Discontinued post tax loss attributable to shareholders
2020
£’000
(4,732 )
-
2019
£’000
(5,447 )
32
Basic weighted average number of shares
Diluted weighted average number of shares
356,941,188
356,941,188
255,564,704
255,564,704
Basic loss per share
Diluted loss per share
Continuing loss per share
Continuing diluted loss per share
Discontinued earnings per share
Discontinued diluted earnings per share
Adjusted loss: continuing operations
Adjusted earnings: discontinued operations
£0.01
£0.01
(1.33 )
(1.33 )
(1.33 )
(1.33 )
-
-
(4.189 )
-
(2.12 )
(2.12 )
(2.13 )
(2.13 )
0.01
0.01
(4.391 )
36
Basic weighted average number of shares
Diluted weighted average number of shares
356,941,188
356,941,188
255,564,704
265,290,288
Basic adjusted loss per share
Diluted adjusted loss per share
Basic adjusted loss per share: continuing operations
Diluted adjusted loss per share: continuing operations
Basic adjusted earnings per share: discontinued operations
Diluted adjusted earnings per share: discontinued operations
£0.01
(1.17 )
(1.17 )
(1.17 )
(1.17 )
-
-
£0.01
(1.72 )
(1.72 )
(1.73 )
(1.73 )
0.01
0.01
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.
Adjusted loss is the loss after taxation, adjusted for share based payments, impairment charges and restructuring costs.
15. PROPERTY, PLANT AND EQUIPMENT
Cost
£’000
£’000
£’000
£’000
Leasehold
Property
Fixtures,
Fittings &
Equipment
IFRS 16
Right-of-use
Asset
Total
At 1 January 2019
Additions
Transfers from inventory
Transfers to inventory
Disposals
Foreign exchange
At 31 December 2019
At 1 January 2020
Additions
Disposals
Impairment cost
Foreign exchange
405
159
-
-
(17 )
(1 )
546
546
50
(123 )
(94 )
1
1,579
1,504
147
(6 )
(38 )
(21 )
3,165
3,165
1,019
(53 )
-
(39 )
1,079
-
-
-
-
-
3,063
1,663
147
(6 )
(55 )
(22 )
1,079
4,790
1,079
26
(284 )
-
(15 )
4,790
1,095
(460 )
(94 )
(53 )
At 31 December 2020
380
4,092
806
5,278
Accumulated depreciation
At 1 January 2019
Depreciation charge on owned assets
Depreciation charge on financed assets
Transfers to inventory
Disposals
Foreign exchange adjustment
At 31 December 2019
At 1 January 2020
Depreciation on owned assets
Depreciation on financed assets
Disposals
Impairment depreciation
Foreign exchange
At 31 December 2020
Net Book Value
At 31 December 2020
At 31 December 2019
At 31 December 2018
65
146
-
-
(5 )
(1 )
205
205
156
-
(71 )
(64 )
-
226
154
341
340
345
738
71
2
(26 )
(19 )
1,111
1,111
1,189
66
(29 )
-
(45 )
-
-
349
-
-
(7 )
342
342
-
340
(166 )
-
(16 )
410
884
420
2
(31 )
(27 )
1,658
1,658
1,345
406
(266 )
(64 )
(61 )
2,292
500
3,018
1,800
2,054
1,234
306
737
-
2,260
3,132
1,574
61
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2020
The net book value of assets held under finance leases or hire purchase contracts, included above, is £306k (2019: £803k)
relating to VR Hardware and property leases. The depreciation charge on these assets was £406k (2019: £420k).
The net book value of owned and leased assets included in property, plant and equipment in the Statement of Financial
Position is as follows:
Tangible fixed assets owned
Tangible fixed assets subject to hire purchase and finance lease arrangements
Information about the leased assets is summarised below:
Equipment
IFRS 16 leased property
The depreciation charge in respect of the leased assets is as follows:
Equipment
IFRS 16 leased property
2020
£’000
1,954
306
2,260
2020
£’000
-
306
306
2020
£’000
66
340
406
2019
£’000
2,329
803
3,132
2019
£’000
66
737
803
2019
£’000
71
349
420
16. INTANGIBLE ASSETS
Development
Costs
Goodwill
Arising on
Consolidation
Other
Intangible
Assets
Total
Cost
£’000
£’000
£’000
£’000
At 1 January 2019
Additions
Impairment
Foreign exchange
1,506
970
(494 )
(9 )
2,438
-
-
-
At 31 December 2019
1,973
2,438
At 1 January 2020
Additions
Impairment
Foreign exchange
1,973
539
(332 )
(9 )
2,438
-
-
-
504
35
-
-
539
539
6
-
-
4,448
1,005
(494 )
(9 )
4,950
4,950
545
(332 )
(9)
As at 31 December 2020
2,171
2,438
545
5,154
Accumulated amortisation
At 1 January 2019
Amortisation
Impairment
Foreign exchange
At 31 December 2019
At 1 January 2020
Amortisation
Impairment
Foreign exchange
94
455
(36 )
(5 )
508
508
614
(109 )
(11 )
At 31 December 2020
1,002
-
-
-
-
-
-
-
-
-
-
Net Book Value
At 31 December 2020
1,169
2,438
At 31 December 2019
1,465
2,438
316
106
-
-
422
422
105
-
-
410
561
(36 )
(5 )
930
930
719
(109 )
(11 )
527
1,529
18
117
3,625
4,020
At 31 December 2018
2
2,438
455
2,895
Other intangible assets comprise website development and trademark costs.
Amortisation is charged over periods ranging between 2 and 10 years.
63
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2020
Goodwill and impairment
The carrying value of goodwill in respect of each entity acquired is as follows:
Immotion Studios Limited (previously Studio Liddell Limited)
C. 2K Entertainment Inc.
Immotion Limited (previously VR Aquisition (Holdings) Limited)
2020
£’000
1,252
748
438
2,438
2019
£’000
1,252
748
438
2,438
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.
Immotion Studios Limited, C.2K Entertainment Inc. and Immotion Limited were acquired in relation to the Location
Based Entertainment segment. The Location Based Entertainment segment has been assessed as a CGU when
conducting impairment reviews.
Location Based Entertainment
The recoverable amount of the Location Based Entertainment segment has been determined from a review of the
current and anticipated performance. In preparing these projections, a discount rate of 10% (based on the Group’s
weighted average cost of capital) has been applied to forecast earnings for 2021, 2022 and 2023. The discount rate was
based on the Company’s cost of capital as estimated by management.
17. INVENTORIES
Inventory
2020
£’000
152
152
2019
£’000
-
-
Inventories recognised in cost of sales during the year was £196k (2019: £8k).
The Directors consider that no impairment of inventory is necessary as at 31 December 2020 (2019: £Nil).
18. TRADE AND OTHER RECEIVABLES
31 December 2020
31 December 2019
Trade receivables
Prepayments and accrued income
Other receivables
Tax recoverable
£’000
£’000
102
595
67
65
829
161
328
134
80
703
The Group has elected not to make a provision of expected credit losses due to its historical low incidence of bad debts.
19. CONTRACT ASSETS
31 December 2020
31 December 2019
Accured Income
£’000
91
£’000
100
20. CASH AND CASH EQUIVALENTS
31 December 2020
31 December 2019
Cash at bank
£’000
1,664
£’000
474
21. LIABILITIES
31 December 2020
31 December 2019
Current liabilities
Trade payables
Social security and other taxes
Accruals
Other payables
Loans
Hire purchase and lease liabilities
Non-current liabilities
Loans
Hire purchase and lease liabilities
£’000
£’000
594
149
263
147
175
231
361
132
285
282
101
401
1,559
1,562
160
176
336
55
496
551
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 initially agreed at £169k on 27 September 2018. Under
the agreement with HMRC, the liability was to be paid in monthly instalments over 2 years, with interest at 4.25%. As
a consequence of a review of such loan charges by the UK Government HMRC confirmed during 2020 that Immotion
Studios Limited could suspend the payment of the agreed instalments with effect from the April 2020 payment, as the
total paid would probably cover the liability under the revised legislation. An application has been submitted by Immo-
tion Studios Limited to HMRC under the Disguised Remuneration Repayment Scheme (2020) but to date HMRC have
not confirmed the revised liability. The liability in the Group balance sheet at 31 December 2020 of £39k is the amount
payable as at 31 March 2020 under the initial arrangement of 2018. The liability is included within social security and
other taxes (2019 - £59k).
65
Contract liabilities comprise payments in advance of revenue recognition and revenue deferred due to contract
Amounts falling due within one year
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2020
22. CONTRACT LIABILITIES
Contract liabilities
2020
£’000
12
12
2019
£’000
14
14
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.
23. LOANS
The Group has the following loan arrangements in place as at 31 December 2020:
Lending Crowd
On 7 March 2017 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 was repayable, by monthly instalments, with
interest at 7.66%, and the final payment was made in March 2020.
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, repayable by
monthly instalments, is secured, with interest payable at a fixed rate of 7.79%. The final payment falls due on 15 August
2021. The amount payable at 31 December 2020 was £54k.
SBA Economic Injury Disaster Loan
An agreement dated 3 July 2020 was completed between the subsidiary C.2K Entertainment, Inc., and the Bank
of America, for a loan of $150,000 under the USA Government’s Small Business Administration (SBA) Disaster Loan
Scheme, to assist with recovery from the effects of the COVID-19 pandemic. Repayments commence on 3 July 2021 at
a fixed sum of $731 per month. This loan is secured, interest is charged at a fixed rate of 3.75% pa, and repayment of the
loan in full is due by 3rd July 2050. The liability at 31 December 2020 was $153k (£112k), including interest. No loan capital
repayment is required until after 31 December 2021.
Paycheck Protection Program
An agreement dated 1 May 2020 was completed between the subsidiary C.2K Entertainment, Inc., and the Bank of
America, for a loan of $160,580 advanced under the USA Government’s Paycheck Protection Program, a program
designed to assist USA businesses recover from the effects of the COVID-19 pandemic. Under the program as long as
the loan is applied to expenditure specified in USA legislation, the loan can be forgiven partially or in full.
Forgiveness applications can be made 6 months after the loan advance and an application for forgiveness of this loan
has been submitted to the Bank of America. As confirmation of forgiveness has not been received the loan balance at
31 December 2020 is included in current liabilities. In the event that full or partial forgiveness is not confirmed the Bank
of America will issue terms for the repayment of the loan. The repayment term would be either 2 or 5 years from the
date of the advance and the interest rate would be fixed at 1% pa. This is an unsecured loan. The amount included in
current liabilities at 31 December 2020, including interest, is $162k (£119k).
Bounce Back Loan Scheme
An agreement dated 28 August 2020 was completed between Immotion Group Plc and Coutts & Co., for a loan of
£50,000 to be advanced on 9 September 2020 under the UK Government’s Bounce Back Loan Scheme for small
companies affected by the COVID-19 pandemic. Repayments commence on 9 September 2021 and full repayment is
due by 9 September 2026 at the latest. This loan is unsecured and repayment is guaranteed by the UK Government. The
liability at 31 December 2020, including interest was £50k, of which £48k is payable after 31 December 2021.
2020
£’000
2019
£’000
-
54
119
2
175
-
112
48
160
23
78
-
-
101
55
-
-
55
Lending Crowd
Bank of America
Paycheck Protection Program
Bounce Back Loan Scheme
Amounts falling due after one year
Bank of America
SBA Economic Injury Disaster Loan
Bounce Back Loan Scheme
24. HIRE PURCHASE FINANCE
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 pay-
ment falling due in March 2021. The total amount payable under the loan agreement was £179k including interest costs.
The amount payable as at 31 December 2020 under this hire purchase arrangement was £15k. This is included within the
Group’s hire purchase and finance lease liabilities detailed below.
Hire purchase liabilities are due as follows:
Within 1 year
Between 1-5 years
2020
£’000
15
-
15
2019
£’000
56
15
71
67
Contractual undiscounted cash flows are due as follows:
£’000
£’000
Not later than one year
Between one year and five years
All the lease liabilities are over right-of-use assets.
259
181
440
368
450
818
Current financial assets
Trade receivables
Other receivables
Cash and cash equivalents
There is not considered to be any significant liquidity risk by the Group in respect of leases.
The table below illustrates the due date of trade receivables:
The following amounts in respect of leases, where the Group is a lessee, have been recognised in profit or loss:
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2020
25. LEASES
Group as a lessee
The group has leasing arrangements for its operations.
Lease liabilities are due as follows:
Within 1 year
Between 1-5 years
At 31 December 2020
2020
£’000
216
176
392
2019
£’000
345
481
826
Interest expense on lease liabilities
Expenses relating to short-term leases
26. DEFERRED TAX LIABILITY
Balance at 1 January
Deferred tax credit in the year
Balance at 31 December
The deferred tax provision comprises:
2020
£’000
39
102
2020
£’000
27
(27 )
-
2019
£’000
53
267
2019
£’000
90
(63 )
27
Deferred tax on intangibles
-
27
27. 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 Group has elected not to make a provision of expected credit
losses due to its historical low incidence of bad debts.
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.
31 December 2020
31 December 2019
£’000
£’000
102
67
1,664
1,833
161
134
474
769
31 December 2020
31 December 2019
£’000
£’000
41
19
4
3
35
102
124
23
11
3
-
161
Current
31 - 60 days
61 - 90 days
91 - 120 days
121 and over
The table below illustrates the geographical location of trade receivables:
31 December 2020
31 December 2019
£’000
£’000
United Kingdom
China
Middle East
Australia
USA
Europe
14
41
-
7
25
15
102
63
5
3
29
50
11
161
69
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2020
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 23, 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 equivalents
At the year end the Group had the following cash balances:
2020
£’000
1,664
2019
£’000
474
Cash at bank comprises cash deposits held within Coutts & Co in various currencies, principally sterling, as well as US Dollar
accounts 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
Finance leases & hire purchase
Loans
The table below illustrates the maturities of trade payables:
Current
31 - 60 days
61 - 90 days
91 - 120 days
121 and over
2020
£’000
594
407
335
1,336
2020
£’000
152
179
37
32
194
594
2019
£’000
361
897
156
1,414
2019
£’000
321
24
6
-
10
361
The table below shows the maturities of financial liabilities:
Trade payables
Finance leases
Loans
Carrying
amount
£’000
6 months
or less
£’000
6-12
months
£’000
1 or more
years
£’000
594
407
335
1,336
400
121
159
680
194
110
16
320
-
176
160
336
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 equipment in US Dollars. Once the Group becomes prof-
itable, 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.
71
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2020
28. SHARE CAPITAL
Called up share capital
Allotted, called up and fully paid
409,538,083 Ordinary shares of 0.040108663 pence each
(2019: 286,165,544 ordinary shares)
Shares issued during the year ended 31 December 2020:
2020
£’000
2019
£’000
164
115
Date
Description
No. of
shares
Price per Gross share
Cash
share
value
received
£
£
£
12 February 2020
Placing on AIM
22 May 2020
Placing on AIM
25 November 2020
Placing on AIM
Total
39,310,339
54,062,200
30,000,000
123,372,539
0.0725
2,850,000
2,850,000
0.0250
1,351,555
1,351,555
0.0400
1,200,000
1,200,000
5,401,555
5,401,555
At 31 December 2019
286,165,544
16,289,011
13,073,887
At 31 December 2020
409,538,083
21,690,566
18,475,442
Cash received does not include costs relating to share issues. In the year to 31 December 2020, costs of £389k were incurred
relating to share issues and these costs were charged against share premium.
The type of options and the principles and assumptions employed in the valuation of the 2018 options are as follows.
Time Based Shares
These options over Ordinary shares have been valued using the Black-Scholes pricing model. The share options in issue
fully vest 3 years after the grant date. For valuation purposes the judgment made in the model is that all participants will
exercise their right to sell their shares a year after they have fully vested.
Expected Period of Award
2 years
3 years
4 years
Share price at grant
Exercise price
Expected volatility
Risk free rate
12p
10p
53.6%
0.74%
12p
10p
55.4%
0.75%
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
12 July 2019
12 July 2020
12 July 2021
EBITDA Condition Shares
Number of
Estimated
2020 charge
options
fair value
£’000
989,860
989,860
989,862
4.7p
5.5p
6.2p
-
15
21
36
29. SHARE BASED PAYMENTS
These options have been valued using the Black-Scholes pricing model spread over the vesting period.
In order to incentivise and reward employees on 12th July 2018 the Group established a share option scheme for key
employees. By 2020 it became clear that the 2018 scheme was not appropriate for the current Group circumstances and
was unlikely to provide the incentives envisaged in 2018. A new 2020 share option scheme was therefore established on 19
November 2020. Employees issued with 2020 share scheme options on 19 November 2020 surrendered all share options
received under the 2018 scheme.
Details following, for both the 2018 and 2020 schemes, show:
• the number of share options in issue at 31 December 2020,
• the key assumptions used for calculating the 2020 share based payment expense,
• the 2020 expense for each of the share option types in issue.
Expected Period of Award
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.
2018 Scheme
Unexpired options at 1 January 2020
Option cancellations 2020
Options surrendered 19 November 2020
Unexpired options at 31 December 2020
Number
8,414,083..
(400,000)
(7,066,750)
947,333
Vesting date
Year 1 EBITDA target
Year 2 EBITDA target
The unexpired options over Ordinary shares at 31 December 2020 were all issued to Group employees who have since
ceased to be employed by the Group.
Number of
Estimated
2020 charge
options
fair value
£’000
1,261,124
1,261,124
5.5p
6.2p
18
28
46
73
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2020
Share Price Condition Shares
These options have been valued using the Monte Carlo pricing model.
Expected Period of Award
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%
0.88%
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
Estimated
2020 charge
options
fair value
£’000
Year 1 share price target
Year 2 share price target
1,261,126
1,261,127
4.9p
5.2p
16
23
39
The amount charged in 2020 of £121k on the 2018 Scheme options includes £108k in respect of options that were
surrendered on 19 November 2020 and replaced by new options issued the same day – details below.
2020 Scheme
Options issued 19 November 2020
Unexpired options at 31 December 2020
Time Based Shares
Number
55,981,867
55,981,867
These options over Ordinary shares have been valued using the Black-Scholes pricing model. The share options in issue
vest 1 year after the grant date. For valuation purposes the judgment made in the model is that all participants will exercise
their right to sell their shares a year after they have fully vested.
Expected Period of Award
Share price at grant
Exercise price
Expected volatility
Risk free rate
2 years
4.40p
2.50p
61.0%
0.0%
Expected volatility has been determined by reference to the historic share price volatilities of comparable listed companies.
Vesting date
Number of
Estimated
2020 charge
options
fair value
£’000
19 November 2021
3,479,099
2.32
9
9
Share Price Condition Shares
These options have been valued using the Monte Carlo pricing model.
Expected Period of Award
1 year
3 years
4 years
Share price at grant
Exercise price
Expected volatility
Risk free rate
4.4p
2.5p
71%
0.0%
4.4p
2.5p
66.0%
0.0%
4.4p
2.5p
63.0%
0.0%
Expected volatility has been determined by reference to the historic share price volatilities of comparable listed companies.
Vesting date
Year 1 share price target
Year 3 share price target
Year 4 share price target
Number of
Estimated
2020 charge
options
fair value
£’000
17,500,920
17,500,922
17,500,926
2.07p
1.57p
1.34p
42
11
6
59
No options over Ordinary shares were exercised in the period.
During the year, 400,000 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. 677,000 of these warrants expired on 31 December 2019 leaving a balance at
31 December 2020 of 811,500 unexpired warrants.
Date of grant
Share price at grant date
Expected volatility
Risk free rate
12 July 2018
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 warrants. A charge of £5k has been included in
the year ended 31 December 2020.
75
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2020
30. 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.
31. CAPITAL COMMITMENTS
At 31 December 2020 and 31 December 2019 there were no capital commitments.
32. RELATED PARTY TRANSACTIONS
Purchases
Income
Name of related party
Services
Relationship
David Marks
Interest on loan
D Marks is a director of Immotion Group Plc and
Immotion Studios Limited
Income invoiced to related parties
2020
£’000
2019
£’000
2020
£’000
2019
£’000
Expensed in the year
Amounts in receivables
David Marks loan
1
1
16
15
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 £544k (2019: £793k) in the year ended 31 December 2020.
The key management held 37m of share options realising a charge of £120k (2019: £127k) in the year.
Name of related party
Services
Relationship
33. POST BALANCE SHEET EVENTS
M Capital Investment Properties Ltd
Consultancy
Related party owned and controlled by a director of
Immotion Group Plc
On 31 March 2021, the Company issued 6,000,000 ordinary shares at a price of 5 pence each following an approach from an
existing institutional investor, raising £300,000 gross of expenses.
Robin Miller Consultants Ltd
Consultancy
Related party owned and controlled by a director of
Immotion Group Plc
34. 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 2020 by virtue of S479A of Companies Act 2006.
Digitalbox Publishing Ltd
Office and staff
Directors and shareholders of Immotion Group Plc
were also directors and shareholders of Digitalbox Plc,
the parent company of Digitalbox Publishing Limited
Huddled Group Ltd
Fulfilment and
M Higginson is a director and shareholder of
postage
Huddled Group Ltd
Costs invoiced
Amounts outstanding
2020
£’000
2019
£’000
2020
£’000
2019
£’000
M Capital Investment Properties Ltd
Robin Miller Consultants Ltd
Samuel Higginson
Digitalbox Publishing Ltd
Huddled Group Ltd
122
15
-
2
88
63
15
50
17
-
227
145
4
1
-
-
16
21
-
1
-
5
-
6
77
Immotion
Group plc
Annual Report
& Accounts 2020
Company Statement of Financial Position
as at 31 December 2020
Company Statement of Changes in Equity
for the Year Ended 31 December 2020
31 December 2020
31 December 2019
£’000
£’000
Balance at 1 January 2019
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 1 year
VII
Net current assets
Payables: amounts falling due in more than 1 year
VIII
Total assets less total liabilities
Capital and reserves
Called up share capital
Share premium account
Retained reserves
Shareholders funds
3,113
4
3,117
4,694
1,185
5,879
(127 )
5,752
(48 )
8,821
164
20,273
(11,616 )
8,821
3,113
24
3,137
4,261
323
4,584
(123 )
4,461
-
7,598
115
15,310
(7,827 )
7,598
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 £3,983k (2019: £7,579k) 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 28 April 2021
Martin Higginson
David Marks
Chief Executive Officer
Group Finance Director
The notes on pages 81 to 84 form part of the Company financial statements.
Share
Capital
£’000
Share
Premium
£’000
Retained
Reserves
£’000
Total
Equity
£’000
78
37
-
-
-
9,999
(419 )
9,658
5,684
(373 )
-
-
-
-
(7,579 )
171
5,721
(373 )
(7,579 )
171
Issue of shares
Issue costs deducted from equity
Loss after tax
Equity setteled share-based payments
Balance at 31 December 2019
115
15,310
(7,827)
7,598
Issue of shares
Issue costs deducted from equity
Loss after tax
Equity settled share-based payments
49
-
-
-
5,352
(389 )
-
-
-
-
(3,983 )
194
5,401
(389 )
(3,983 )
194
Balance at 31 December 2020
164
20,273
(11,616 )
8,821
The notes on pages 81 to 84 form part of the Company financial statements.
79
Immotion
Group plc
Annual Report
& Accounts 2020
Company Statement of Cash Flows
for the Year Ended 31 December 2020
Cash flows from operating activities
Loss before tax
Adjustments for:
Share based payments
Amortisation of intangible assets
Year ended
31 December 2020
Year ended
31 December 2019
£’000
(3,983 )
194
21
£’000
(7,579 )
171
30
Cash flows from operating activities before changes in working capital
(3,768 )
(7,378 )
(Increase) / decrease in trade and other receivables
Increase in trade and other payables
Cash used in operations
Investing activities
Purchase of intangible assets
Net cash absorbed from investing activities
Financing activities
New loans advanced
Issue of new share capital
Costs on issue of shares
Net cash from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at the end of the period
Reconciliation of net cashflow to movement in net debt:
Net increase / (decrease) in cash and cash equivalents
New loans and finance leases
Movement in net debt in the year
Net debt at 1 January
Net debt at 31 December
The notes on pages 81 to 84 form part of the Company financial statements.
(433 )
2
(4,199 )
(1 )
(4,200 )
50
5,401
(389 )
5,062
862
323
1,185
862
(50 )
812
323
1,185
1,792
63
(5,523 )
(17 )
(17 )
-
5,721
(373 )
5,348
(192 )
515
323
(192 )
-
(192 )
515
323
Notes to the Company Financial Statements
for the Year Ended 31 December 2020
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’s remuneration for audit and other services is disclosed in note 9 to the consolidated financial statements.
The average number of employees of the company during the year was 8 (2019: 8) and total staff costs were £504,403 (2019:
£594,124). Directors’ remuneration is disclosed in note 10 to the consolidated financial statements.
The Company operating loss is stated after a provision of £3,707k (2019: £7,354k) against amounts due from other group
companies. The provision carried forward at 31 December 2020 was £11,061k (£7,354k at 31 December 2019).
III. FIXED ASSET INVESTMENTS
31 December 2020
31 December 2019
£’000
£’000
Subsidiary undertakings
Cost
Balance at 1 January 2020
Additions
Disposals
Balance at 31 December 2020
Provisions
Balance at 1 January 2020
Balance at 31 December 2020
3,113
-
-
3,113
-
-
3,113
-
-
3,113
-
-
Carrying value of investments
3,113
3,113
At the year end, the Company had the following direct subsidiaries:
Subsidiary name
Class of Shares
Proportion of
Registered office
ownership
Immotion Studios Limited
Ordinary
100%
East Wing, Ground Floor, The Victoria,
MediaCityUK, Manchester, M50 3SP
Immotion Limited
Ordinary
100%
East Wing, Ground Floor, The Victoria,
MediaCityUK, Manchester, M50 3SP
C. 2K Entertainment Inc
Ordinary
100%
1067 Gayley Avenue, Los Angeles,
California, CA 90024, USA
Let’s Explore Media Limited
Ordinary
100%
East Wing, Ground Floor, The Victoria,
MediaCityUK, Manchester, M50 3SP
81
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Company Financial Statements
for the Year Ended 31 December 2020
At the year end, the Company had the following indirect subsidiaries:
V. RECEIVABLES: due within one year
Subsidiary name
Class of Shares
Proportion of
Registered office
ownership
Immotion VR Limited
Ordinary
100%
East Wing, Ground Floor, The Victoria,
MediaCityUK, Manchester, M50 3SP
Ranger Rob UK Limited
Ordinary
100%
East Wing, Ground Floor, The Victoria,
MediaCityUK, Manchester, M50 3SP
Subsidiary name
Principal activity
Immotion Studios Limited
Virtual reality content, software design and development
Immotion Limited
Intermediate holding company
C.2K Entertainment Inc
Location Based Entertainment
Immotion VR Limited
Location Based Entertainment
Let’s Explore Media Limited
In home virtual reality equipment and experiences
Ranger Rob UK Limited
Group subsidiary with limited trading
Amounts owed by group undertakings
Other receivables
Prepayments and accrued income
VI. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
The Company is obliged to review investment values annually for impairment. In order to perform this test, management
is required to compare the carrying value of the relevant cash generating unit (“CGU”) 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 investments.
The recoverable amount of each subsidiary has been determined from a review of the current and anticipated
performance of the business segment to which it serves or was originally acquired to serve. In preparing this projection,
a discount rate of 10% (based on the weighted average cost of capital) has been applied to forecast earnings for 2021, 2022
and 2023. The discount rate was based on the Company’s cost of capital as estimated by management.
VII. PAYABLES: amounts falling due within 1 year
Trade payables
Accruals
Other tax and social security
Other payables
Loan - Coutts & Co.
IV. INTANGIBLE FIXED ASSETS
Software Cost
At 1 January 2020
Additions
At 31 December 2020
Accumulated amortisation
At 1 January 2020
Amortisation charge
At 31 December 2020
Net Book Value
At 31 December 2020
At 31 December 2019
Total
£’000
66
1
67
42
21
63
4
24
VIII. PAYABLES: amounts falling due in more than 1 year
Loan - Coutts & Co.
Details of this loan are contained in note 23 to the consolidated financial statements.
2020
£’000
4,594
27
73
4,694
2020
£’000
1,185
1,185
2020
£’000
50
38
36
1
2
127
2020
£’000
48
2019
£’000
4,204
27
30
4,261
2019
£’000
323
323
2019
£’000
71
28
24
-
-
123
2019
£’000
-
83
Immotion
Group plc
Annual Report
& Accounts 2020
Notes to the Company Financial Statements
for the Year Ended 31 December 2020
Directors, Secretary and Advisors
IX. SHARE CAPITAL
Details of the Company’s share capital and the movements in the period can be found in Note 28 to the consolidated
financial statements.
X. SHARE OPTIONS
Details of the share options outstanding at 31 December 2020 can be found in Note 29 to the consolidated
financial statements.
XI. RESERVES
Details of the reserves can be found in Note 30 to the consolidated financial statements.
XII. RELATED PARTY TRANSACTIONS
Directors
Rodney Findley
Martin Higginson
Nicholas Lee
David Marks
Sir Robin Miller
Comapany Secretary and Registered Office
Daniel Wortley
Immotion Group Plc
East Wing, Ground Floor, The Victoria,
MediaCityUK, Manchester M50 3SP
Company Number
10964782
Registrars
Neville Registrars Limited
Neville House, Steelpark Road
Halesowen B62 8HD
Details of the Company’s related party transactions can be found in Note 32 to the consolidated financial statements.
Nominated Advisor and Broker
WH Ireland Limited
XIII. POST BALANCE SHEET EVENTS
On 31 March 2021, the Company issued 6,000,000 ordinary shares at a price of 5 pence each following an approach from an
existing institutional investor.
Joint Broker
Independent Auditors
Solicitors
24 Martin Lane, London EC4R 0DR
Alvarium Capital Partners Limited
1st Floor, 10 Burlington Street,
London W1S 3AG
Haysmacintyre LLP
10 Queen Street Place,
London EC4R 1AG
Freeths LLP
3rd Floor, 100 Wellington Street,
Leeds LS1 4LT
Country of Incorporation of Parent Company
England and Wales
Legal Form
Domicile
Public Limited Company
United Kingdom
ANNUAL REPORT
& ACCOUNTS
FOR THE YEAR ENDED
31 DECEMBER 2020