To coincide with the Company’s Annual General Meeting later today, Immotion Group plc (LON:IMMO) has provided an update on recent trading.
DirectorsTalk caught up with CEO Martin Higginson to discuss the update. Martin explains how the company has moved quickly into profitability after COVID, moving to larger theatre type installs, new locations, expectations for revenues, Let’s Explore packs, CE certification for UVisan and also shares his view on why you might want to invest in the company.
All figures stated below are unaudited.
Following continued strong growth in revenues, the Group achieved a small EBITDA profit in May 2021 followed by a substantial EBITDA profit in June 2021. This has been driven by further significant growth in the revenue of our Location Based Entertainment (LBE) sites.
Each of the last three months have seen record revenue in our LBE business: £402k in April, £457k in May, and June is expected to be in excess of £600k.
Total Group revenue for June (including Home Based Entertainment (HBE) and Uvisan) is expected to be over £700k and this should result in underlying EBITDA of circa £100k.
With the busy summer months ahead of us, and further installs in the pipeline, we expect Q3 to be a period of very strong trading.
Location based Entertainment (LBE)
Almost all of our LBE sites are now back in operation. We currently have 280 headsets in operation at our partner sites and 67 headsets in operation at our five UK-based ImmotionVR Centres, all of which have now re-opened. Only eight sites (39 headsets) remain non-operational. Based on current guidance, we would hope that the majority of these sites will be operational again by the end of July.
The summer season (Q3) has historically been the busiest period for the LBE business and, with a strong ‘staycation’ summer season looking likely in both UK and USA, we expect a very strong period of trading.
We are pleased to report that, following the very successful launch of our 22-seat installation at Clearwater Marine Aquarium, Florida, USA, we have a number of discussions ongoing regarding larger LBE formats and we hope to announce a number of new installations in the coming weeks. This larger format with mini theatre and pre-show will be our main area of focus as we move forward and we believe both Clearwater and Mandalay Bay demonstrate that this offering can provide a new core attraction for partner sites, as well as delivering significant revenues for both parties.
With a stock of fully paid motion platforms, we are well placed to undertake these installations with reduced incremental cash investment. We continue to refine our larger format offering, including planning for launch into the zoo market, which we believe is significantly larger than the aquarium market.
Home Based Entertainment (HBE)
Revenue in our HBE division (Let’s Explore) is in in line with our expectations, with the main focus being on preparation for the busy Q4 period. The consumer “intent” in the Q4 period is dramatically increased as we saw in 2020, when we sold circa 11,000 units. We therefore believe that Q4 which includes Black Friday, Thanksgiving and Christmas, should support significant sales volumes.
With trading now established on Amazon in the UK, the USA and Canada, this division should be well set to capitalise on this busy period. As previously announced, we have forward purchased 34,000 units of stock with substantial deposits already paid, ensuring significantly reduced product cost and the ability to plan ahead.
Uvisan continues to develop its re-seller network and is delivering a monthly contribution to the Group’s fixed costs based on sales of its UV cleaning cabinets alone. We continue active discussions with potential re-sale partners and will update as appropriate.
In addition, the CE certification for “Cleanroom by Uvisan” is now complete and this will allow us to begin to market this product in earnest through our own efforts and those of our growing re-seller network.
The strong recovery of our LBE business underpins our confidence in our core business model. Demand from aquariums remains strong, and the move to larger immersive theatre style installations and entry into the zoo market should provide ample growth opportunities for the foreseeable future.
Our cash position remains satisfactory and with considerable investment already made in motion platforms and Let’s Explore Oceans stock, along with the move to profitability, we feel we are well placed to take advantage of the opportunities that lie ahead of us.
We anticipate a strong and profitable summer season in our LBE business. As we move into Q4 we should benefit from a larger LBE estate and HBE’s peak season, as well as continued progress from Uvisan. Accordingly, we are looking forward to a strong second half.
With plentiful growth opportunities available, we now look forward to H2 and beyond with renewed confidence.
Withdrawal of AGM Resolution
Following discussions with a small number of significant shareholders, the Company has decided to withdraw Resolution 5 from today’s AGM. Resolution 5 was a special resolution which, if passed, would have given the directors of the Company the authority to dis-apply pre-emption rights when allotting shares in certain circumstances.
The withdrawal of Resolution 5 does not affect the validity of the remainder of the Resolutions to be proposed at the AGM later today and all proxy votes already submitted in respect of the remaining Resolutions remain valid.
Martin Higginson, Immotion Group CEO said: “The bounce back in our Location Based Entertainment revenues is extremely encouraging. Demand for larger installations is gaining traction in both the aquarium and zoo markets, and with these delivering greater revenue per location, we have ample growth opportunities in front of us for the foreseeable future.”
“The move into profitability is a major milestone for the business and one, given the last 14 months, which we are very glad to see arrive. As we add new sites, we should begin to see a substantial impact on overall profitability”
“I am extremely proud of the team at Immotion, we have battled through one of the worst periods for business in living memory and have, in my view, come out leaner, wiser and fitter.”
“With growing revenues and a number of new installations on the horizon we are looking forward, with confidence, to what we believe will be an incredibly busy summer season.”