IMMO.L Regulatory News (IMMO)

Immotion Group plc

("Immotion", the "Company" or the "Group")

End of year Trading Update

Immotion Group, the UK-based immersive entertainment group, is pleased to update the market on current trading.

Despite current Covid-19 challenges, the Company has seen un-audited revenue increase steadily in recent weeks. The Group launched Let's Explore Oceans ("LEO") in mid-October and total group revenue for October was £369k and November was £573k, an increase of 21%, and 87% respectively compared to September (prior to the launch of LEO).

Home Based Entertainment

Since the launch in mid-October 2020, sales of the Home Based Entertainment product, LEO have exceeded expectations with total units sold up to and including 22 December, of over 11,000 generating total retail sales, including VAT, exceeding £800,000.

Following the recent placing, announced on 19 November 2020, the Company has now secured further stock, as well as identifying an outsourced fulfilment facility, allowing it to target a launch of the product in the USA in the second half of February 2021.

The product is now manufactured entirely in China, with complete boxes being supplied direct to our fulfilment houses. This process will significantly reduce product costs as the Group moves forward.

We are very encouraged by this launch and we will look to expand both geographically and product wise on a measured basis in 2021, so that we will be well placed to maximise the opportunity around Christmas 2021.

Location Based Entertainment

The Location Based Entertainment ("LBE") business continues to be impacted by the Covid-19 pandemic, and whilst our UK operations are now closed again as a result of recent UK Government requirements, we have seen one further USA site re-open since our last update (and none closed). Whilst capacities remain restricted in many, we are, in the circumstances, encouraged by demand. The Nevada state authorities have recently limited user numbers to 25% of normal capacity in certain attractions, which will be reviewed in mid-January 2021. This will inevitably impact our revenues in this location significantly in this period.

Operations in the two Merlin locations in Australia - Melbourne and Sydney - remain open and are now entering their busier summer period.

Costs have, where possible, been reduced in the LBE business, and where locations that are operated by the Company (IVR locations in the UK and the two UK partner sites operated by Immotion) have been closed due to Covid-19 restrictions, staff will be placed on furlough.

Despite the current trading challenges, we continue to see a healthy level of enquiries regarding possible new installations post Q1 2021 and have a number of active dialogues ongoing. We remain focused on larger sites but will remain cautious and selective before committing to new sites.

Whilst the short-term impact of Covid-19 is very frustrating, we remain confident that demand will be very strong for our LBE offering when any sort of normality returns. This would result in very substantial uplifts in revenue and contribution from our LBE business.

Uvisan

We continue to sell disinfection cabinets under our Uvisan brand with the business making a good contribution in December 2020.

We are pleased that Uvisan is now recommended by Hewlett Packard for disinfection of all of its virtual and mixed reality headset range. The recommendation came after weeks of extensive testing by the tech giant.

In the New Year, Uvisan will also launch a new room disinfection product, utilising ambient UV light for the rapid disinfection of room surfaces. This will incorporate proprietary control and security features.

Summary

2020 has clearly been a tough year for the Company. As a direct result of the pandemic, much of the expected revenue in its LBE business did not materialise. The Company is hopeful that revenues will return rapidly towards normalised levels once the Covid-19 vaccine has been widely rolled out and lockdown restrictions ease.

When sites are open, and customers are allowed to attend, revenue is encouraging and certainly supports our view that when normality returns this business will see a very strong bounce back. Consumers (and families in particular) in our view will be ready for new experiences after so many months of restrictions.

The creation of the 'Let's Explore' product, starting with LEO has allowed the Company to create an in home business division and revenue stream to complement the LBE division which has proved helpful during the pandemic. This innovative product allows people to enjoy all the immersive and educational elements of the Immotion offering, albeit without the motion, in the comfort of their own home. Sales have to date been very encouraging, and the Company looks forward to opening new territories starting with the USA in 2021, as well as launching new content offerings.

Uvisan has emerged from our own requirements and we are seeking to nurture it into a more fully formed UV disinfection business, whilst minimising capital commitment and management time. Awareness of the product continues to grow and we now have a good range of supportive customers to endorse the product. We will look to raise the profile and scale of the business as we go into 2021.

Overall, we have sought to reduce costs where we can and will continue to do so. Our LBE business, particularly in a post Covid-19 world, and the early success of LEO, give us confidence in the Group's prospects.

The next few months will certainly be challenging but we remain vigilant on costs and we will take steps available to us to protect cash, which as at 21 December 2020, amounted to circa £1.9m.

We will continue to seek to balance caution with investment and growth.

Martin Higginson, Group CEO - Immotion Group plc said: "2020 has been an extremely testing year, one we will be glad to see the back of. Like many entertainment businesses our LBE sites have seen their revenues hit as closures and restrictions were imposed upon them as a result of the Covid-19 pandemic."

"We have reduced costs significantly in this division, and where possible, we have taken advantage of the furlough grants. We have reduced costs to a sustainable level and are confident that once normality does return our LBE business should see a very significant bounce back and along with Let's Explore drive the Group to profitability."

"The creation and launch of the 'Let's Explore' Home Based Entertainment product has been extremely well received, allowing the Company to create a new and profitable business division. To date, we have only been able to sell the product in the UK, where we have been extremely encouraged by early sales. Selling over 11,000 units and generating retail sales in excess of £800,000 in a couple of months is a credit to the team. Following the recent placing we have been able to strengthen our supply chains, reducing the cost of goods significantly, as well as opening up fulfilment and sales in the USA as of mid-February 2021."

"We continue to look at ways of enhancing this offering, both in terms of breadth with further genres and depth, with both 'in-app' and additional basket purchased content, and products for existing genres. We believe that this, combined with further geographic spread will allow us to grow this business division substantially."

"Sales from our Uvisan range of cabinets continue to grow. Recommendation from HP is fantastic news and a testament to the team's hard work, and ingenuity."

"With the recent fund raise we have, we believe, ensured we have sufficient cash reserves to see us not only through the current crisis, but to take the company into profitability."

"I would like to thank all the staff at Immotion for their unfaltering dedication and hard work. I would also like to thank all the shareholders of the Company for their continued belief in the management and the Company."

Enquiries:

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

This Announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 ("MAR"). In addition, market soundings (as defined in MAR) were taken in respect of the Placing with the result that certain persons became aware of inside information (as defined in MAR), as permitted by MAR. This inside information is set out in this Announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of such inside information relating to the Company and its securities.

**ENDS**