Interim Results

VR Education (AIM: VRE; ESM: 6VR), a leading virtual reality ('VR') technology company focused on the education space, today announces its interim results for the six months ended 30 June 2019 (the 'Period' or 'H1 2019').

 

Financial Highlights

  • Revenue up 66% to €497k (H1 2018: €300k)
  • Revenue accelerated during H1 2019 and the Group is currently on track to meet FY 2019 expectations with a new Showcase Experience 'Shuttle Commander' due for release in Q4 2019
  • In line with management expectations the EBITDA result was unchanged at a loss of €0.9m (H1 2018: loss of €0.9m)
  • In line with management expectations the loss before tax was €1.2m, a significant improvement on last year (H1 2018: loss of €4.1m, including €2.9m non-cash items)
  • Net cash 30 June of €2.2m and Friday 20 September of €1.9m
  • Loss per share for the period of €0.01 (H1 2018: €0.02)

Operational Highlights

  • Commercial deals entered into with a number of parties on the ENGAGE platform
  • Apollo 11 VR educational experience selected to be part of the launch collection for Oculus Quest, Oculus' new all-in-one VR headset
  • Commercial agreement entered into with U.S. Space and Rocket Center in Huntsville, Alabama, one of the top aviation and aerospace museums in the USA and Alabama's top paid-for tourist attraction, for use of the Group's Apollo 11 VR experience in a major new attraction to celebrate the 50th anniversary of the moon landing

David Whelan, CEO of VR Education, said: "With an acceleration in revenue growth from the Group's experiences and with the release of new consumer-focused XR (encompassing virtual reality, augmented reality and mixed reality) standalone devices such as the Oculus Quest and HTC Vive Focus this year, VRE is now starting to see increased traction of its ENGAGE platform in the US and Asia.

We have always had a global outlook for our products and the technology they run-on, and with Brexit uncertainty we have concluded that our success in US and Asian markets will receive greater focus than the UK market. We are already receiving an increasing number of requests from American and Asian corporate customers to work with them to produce content for VR training programmes. Indeed, we are both focused and geared-up to aim for this marketplace.

In May 2019, the Group signed a revenue share agreement with the U.S. Space and Rocket Center, one of the top aviation and aerospace museums in the USA and this has generated significant monthly revenue starting late Q2 2019. The Group's outlook is positive as it seeks to grow the ENGAGE platform revenues while reducing its reliance on showcase experiences in the future.”

Investor and Analyst Meeting

A meeting for analysts will be held at 11.00 a.m. today at the offices of Buchanan, 107 Cheapside, London EC2V 6DN. A copy of the Interim Results presentation is available at the Company's website, http://www.vreducationholdings.com

An audio webcast of the analysts' meeting will be available later today:
https://webcasting.buchanan.uk.com/broadcast/5d7f44131e79456d8fcc52bb

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

 

Chief Executive's Review

I am pleased to report VR Education's interim results for the six-month period ended 30 June 2019 (the 'Period' or 'H1 2019').

H1 2019 has been a period of steady growth, progress and learning. H1 2019 revenues increased by 66% to €497k, largely driven by the ongoing success of the Group's previously released showcase experiences such as Apollo 11 VR and Titanic VR, which have sold well on a range of different platforms.

The increasing demand for the Group's showcase experiences is in line with the steady increase in adoption rates of VR, AR (augmented reality) and XR (cross reality) technologies as they become more mainstream. Apollo 11 VR was selected as a launch title on the Oculus Quest headset and demand for the title has been in line with expectations. HTC, the manufacturer of the Vive Focus standalone headset which is focused on the education and enterprise markets, continues to increase its presence in the EU and Asia.

ENGAGE

ENGAGE continues to grow and develop and, in June 2019, the Group completed the development of the stand-alone version of the platform for the Oculus Quest, which is now available to download via the Group's website. The Group is now completing work on delivering ENGAGE on HTC's standalone headset, the Vive Focus, which is focused on the education and enterprise markets, and continues to work closely with HTC as it increases its presence in the EU and Asian markets, to work together to deliver competitive and compelling offerings.

The commercialisation of ENGAGE has started with the signing of its first commercial clients since its release during the Christmas period in 2018, including an agreement with D'Carrick Co. Ltd. in South Korea in May 2019. In the current climate, however, the UK market spending on new technology in the education and training sectors has significantly reduced and, accordingly, the Group has moved its UK business development and marketing presence to refocus its efforts on the US and Asian markets, where there is early traction with the adoption of the ENGAGE platform. The Group will maintain a reduced UK business development department to ensure that it remains well placed for when demand increases in the UK market. This refocusing has resulted in a small shortfall in early revenue for the platform, however the Group is confident that it can make up this shortfall with commercial deals during the second half of the year. Progress is accelerating at present with much of this new interest coming from the release of the Quest version and a closer working relationship with HTC.

Showcase experiences

In May 2019 the Group announced the signing of a commercial agreement with the US Rocket and Space Center in Huntsville, Alabama, to display its Apollo 11 VR showcase as an add-on experience to visitors at the centre. Since its installation this showcase has been well received with solid ticket sales of which the Group receives a significant proportion of the revenue generated. The Group believes that this type of commercial agreement can be replicated elsewhere, and it continues to have ongoing discussions with a number of other large museums and institutions about its software library.

VRE anticipates that in Q4 2019 it will release this year's large VR showcase experience called 'Shuttle Commander', which will be made available initially on PlayStation's VR headset, a platform with a user base of more than 4.2 million users. PlayStation's VR headset has by far the largest addressable market for such VR experiences and its store has been where a significant proportion of the Group's revenues to date have been generated. The Group's existing VR showcase experiences, Apollo 11 VR and Titanic VR, performed well on this platform generating significant revenues in the first quarter of their initial releases on PlayStation and the Board expects 'Shuttle Commander' to appeal to the same demographic.

'Shuttle Commander' will allow users to take part in the Hubble Space Telescope missions first hand with accurate recreations of the space missions, shuttle cockpit and Hubble Space Telescope. Users will get to join the crew on the space shuttle missions and assist in the deployment and servicing of the Hubble Space Telescope. They will also get to experience how this remarkable apparatus changed our understanding of the universe around us through science visualisation segments, based on actual data discovered by the Hubble Space Telescope over the past three decades. Additionally, users will get to fly the space shuttle in an accurate physics-based landing simulation and take control of the Canada Arm in space as they witness the Earth pass below during a full day/night cycle.

Current trading and outlook

It is pleasing to see that the Group's showcase experiences continue to generate revenues which are significantly increased on H1 2018.  In addition, the Group's commercialisation of its ENGAGE platform is also gaining momentum, mainly in the US and Asian markets.  While the Group has had a challenging time in the UK, it has taken decisive steps to resolve this matter and push forward its goal of widespread adoption of VR technologies for education and training. It is early days for this new medium, however VRE is well-placed with a compelling software offering for those who wish to push the boundaries of learning and personal development.

We believe 2020 is poised for substantial growth in the VR market with new hardware manufacturers coming into this space.  We are receiving an increasing number of requests from potential corporate customers to work with them to produce content for VR training programmes. The Group continues to work tirelessly to address these new opportunities and aims to lead the way during 2020 and beyond.

 

David Whelan
Chief Executive Officer

23 September 2019

 

Financial Review

Revenue for the half year is up 66% on the prior half year to €497k (H1 2018: €300k), driven by the continued success of the Apollo 11 VR and Titanic VR experiences, revenue from commercial agreements entered into on the ENGAGE platform and early stage revenue from the commercial agreement entered into with the US Space and Rocket Center.

EBITDA loss was €0.9m comparable to the prior year period (H1 2018: loss of €0.9m).  The primary cost driver for the EBITDA loss is salary and associated costs, currently approximately €0.2m per month.

  • Loss before tax was €1.2m, in line with management expectations, compared to a loss in the prior year of €4.1m which was driven by the inclusion of a non-cash fair value loss arising on derivative financial liabilities of €2.6m and extinguishment costs of €0.3m.
  • Operating cashflows after €0.5m of capex were a net outflow of €1.2m for the period. The current cash burn rate, net of revenue received, is approximately €0.2m per month.
  • At 30 June 2019, the Group had a strong cash position with net cash of €2.2m. The Group's cash position as at 20 September 2019 stood at €1.9m.

 

Séamus Larrissey
Chief Financial Officer

23 September 2019

 

Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2019

 NoteUnaudited
Six months
ended
30 June 2019
Unaudited
Six months
ended
30 June 2018
Continuing Operations   
    
Revenue 497,362300,110
Cost of Sales (217,699)(95,749)
    
Gross Profit 279,663204,361
    
    
Administrative Expenses  (1,448,633) (1,400,165)
    
Operating Loss (1,168,970)(1,195,804)
    
Fair value (loss) / gain arising on derivatives   
financial liabilities -(2,638,063)
Extinguishment Costs -(267,971)
Finance Costs (3,597)(29,086)
    
Loss before Income Tax (1,172,567)(4,130,924)
    
Income Tax Credit --
    
Loss for the Year from continuing operations (1,172,567)(4,130,924)
Loss per share   
Basic from continuing operations4(0.01)(0.02)

 

Consolidated Statement of Financial Position
As at 30 June 2019

 NoteUnaudited
as at
30 June 2019
Unaudited
as at
30 June 2018
Audited
as at
31 Dec 2018
Non-Current Assets    
Property, Plant & Equipment 152,17468,11659,541
Intangible Assets21,205,227612,421956,550
  1,357,401680,5371,016,091
     
Current Assets    
Trade and other receivables 289,932128,108394,114
Cash and short term deposit 2,220,7974,932,9813,485,186
  2,510,7295,061,0893,879,300
     
Total Assets 3,868,1305,741,6264,895,391
     
Equity and Liabilities    
     
Equity Attributable to Shareholders    
Issued share capital 193,136193,136193,136
Share premium 21,587,53921,587,53921,587,539
Other reserves (11,300,902)(10,733,760)(11,314,729)
Retained earnings (6,938,317)(5,548,980)(5,765,750)
     
Total Equity 3,541,4565,497,9354,700,196
     
Non-Current Liabilities    
Operating lease liabilities 44,522--
     
     
Current Liabilities    
Trade and other payables 246,434243,691195,195
Operating lease liabilities 35,718--
  282,152243,691 195,195
     
Total Liabilities 326,674243,691 195,195
     
Total Equity and Liabilities 3,868,1305,741,6264,700,196

 

Consolidated Statement of Changes in Equity
At 30 June 2019

Attributable to Equity Shareholders
 Share
Capital
Share
Premium
Other
Reserves
Retained
Earnings
Total
      
Balance at 1 January 2018-----
Loss for the period---(4,130,924)(4,130,924)
Issue of ordinary shares193,13621,587,539--21,780,675
Issue costs---(596,212)(596,212)
Acquisition of subsidiary--(11,106,184)(821,844)(11,908,028)
Share option expense--352,424-352,424
Balance at 30 June 2018193,13621,587,539(10,733,760)(5,548,980)5,497,935

 

Attributable to Equity Shareholders
 Share
Capital
Share
Premium
Other
Reserves
Retained
Earnings
Total
      
Balance at 1 January 2019193,136 21,587,539 (11,314,729) (5,765,750) 4,700,196
Loss for the period---(1,172,567)(1,172,567)
Share option expense--13,827-13,827
Balance at 30 June 2019193,136 21,587,539 (11,300,902) (6,938,317) 3,541,456

 

Consolidated Statement of Cash Flows
For six month period ended 30 June 2019

 Unaudited
Six months
ended
30 June
2019
Unaudited
Six months
ended
30 June
2018
Cash Flows from Operating Activities  
Loss before income tax(1,172,567)(4,130,924)
Adjustments to reconcile loss before tax to net cash flows:  
Depreciation39,015 36,621
Amortisation231,807-
Fair value loss arising on derivative financial liabilities- 2,638,063
Finance Costs3,597 29,086
Non-cash element of advisor warrants-112,381
Non-cash element of investor warrants-174,651
Share Option Expense13,827 14,902
Movement in redeemable shares- 25,000
Movement in Trade & Other Receivables104,182 110,207
Movement in Trade & Other Payables51,239 (114,328)
 (728,900)(1,104,341)
Bank interest & other charges paid(3,597)(29,086)
   
Net cash used in operating activities(732,497)(1,133,427)
   
Cash Flows from Investing Activities  
Purchases of property, plant & equipment(34,137)(30,059)
Payments to develop Intangible Assets(480,482)(176,630)
Cash acquired on acquisition of subsidiary-86,801
   
Net cash used in investing activities(514,619)(119,888)
   
Cash Flows from Financing Activities  
Proceeds from issuance of ordinary shares-6,180,046
Payment of operating lease liabilities(17,273)-
   
Net cash (used) / generated from financing activities(17,273)6,180,046
   
Net (decrease) / increase in cash and cash equivalents(1,264,389)4,926,731
   
Cash and cash equivalents at beginning of period3,485,1866,250
   
Cash and cash equivalents at the end of period2,220,7974,932,981

 

Notes to the Interim Report

The notes are available in the printable pdf of the results. To download it, please click here.