2023

VR Education (AIM: VRE; ESM: 6VR), a leading virtual reality ('VR') technology company focused on the education and virtual meeting space, today announces its audited final results for the year ended 31 December 2019 (‘FY 2019’).

Financial Highlights

• Revenue up 43% to €1.0m (FY 2018: €0.7m)
• In line with management expectations the EBITDA loss was €1.4m (FY 2018: loss of €1.5m)
• In line with management expectations the loss before tax was €1.9m (FY 2019: loss €4.9m)
• Net cash at 31 December 2019 was €1.3m with no debt.  Following subscription funds from HTC post period end, net cash position is c. €3.4m
• Loss per share of €0.01 (FY 2018: €0.03)

Operational Highlights 

• Continued sales of Showcase Experiences, the Group’s award-winning standalone content, with Raid on the Ruhr and Shuttle Commander launched during the year and Apollo 11 selected as a launch title for the new Oculus Quest
• ENGAGE platform selected by Facebook to become part of its ISV programme
• Commercial agreement with U.S. Space and Rocket Centre extended until 19 December 2020

Post Period End Highlights

• Partnership agreement with US-based VictoryXR, a world leader in VR and augmented reality content creation for schools and education
• HTC Vive Ecosystem Conference held virtually inside the ENGAGE platform in conjunction with HTC Corporation
• €3m investment from HTC Corporation and strategic partnership agreed for the distribution and licence of the Group’s ENGAGE platform globally through HTC enterprise sales channels

David Whelan, CEO of VR Education, said: “VR Education has positioned itself well in 2019 to identify and overcome many hurdles which had subdued growth to date and during the year ENGAGE became available on standalone devices such as the Oculus Quest, Pico VR and Vive Focus.  The availability of standalone devices is of paramount importance to potential customers and, with these now in the market and ENGAGE being platform agnostic, I believe the Group is now well placed to become a leader in immersive communications.

“The COVID-19 pandemic has transformed the Group’s fortunes as businesses, corporations and educational institutes globally are now seeking better alternatives to video-based communications due to limitations with collaborative tasks and the drawbacks of larger group communications via video as a medium. Our recently announced strategic partnership and investment from HTC places the Group in a strong position to accelerate the global adoption of the ENGAGE platform and create value for shareholders.”

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

Analyst Meeting

A meeting for analysts hosted by David Whelan (CEO) and Séamus Larrissey (CFO) will be held at 3pm today via Zoom.  Please contact Buchanan at [email protected] if you would like to receive the dial in details.

Final Results Presentation

A copy of the Final Results presentation with audio commentary from the management team will shortly be available on the Company’s website, http://www.vreducationholdings.com

- Ends -

For further information, please contact:

Notes to Editors

VR Education, together with its wholly owned subsidiary, is an early stage VR software and technology group based in Waterford, Ireland, dedicated to transforming the delivery methods of education and corporate training by utilising VR technologies to deliver fully immersive virtual learning experiences.  The Group's core focus is the development and commercialisation of its online virtual social learning and presentation platform called ENGAGE, which provides a platform for creating, sharing and delivering proprietary and third-party VR content for educational and corporate training purposes.

In addition to the ongoing development of the ENGAGE platform, the Group has also built two downloadable showcase VR experiences, being the award-winning Apollo 11 VR experience and the Titanic VR experience.

On 12 March 2018, VR Education listed on the AIM market of the London Stock Exchange and on the Enterprise Securities Market, a market regulated by Euronext Dublin.  For further information, please visit www.vreducationholdings.com

CHAIRMAN’S STATEMENT

I am pleased to present the Annual Report and Financial Statements of VR Education Holdings PLC, a company incorporated in the Republic of Ireland, for the year ended 31 December 2019 (‘FY-2019’).

Overview of the year

This is the second set of Financial Statements I am proud to present to shareholders following the successful fundraising and IPO in March 2018.

Revenues in FY-2019 grew by 43% to €1.0 million (FY-2018: €0.7 million) generating a gross profit margin of 61% and gross profit of €622k (FY-2018: €476k).

Review of the business

VR Education is dedicated to transforming education globally by providing new tools to educators and corporate trainers allowing them to provide high quality, low cost content in a virtual networked social learning environment.

Following the commercial launch of the ENGAGE platform (the Group’s proprietary VR education platform), in December 2018, the Group has actively developed and promoted this against technological and commercial headwinds, the latter mainly associated with Brexit in the UK.  Nevertheless, the perseverance of the management team has led the Group to recently sign, among others, two partnerships with HTC Corporation and Victory XR, based in Taiwan and the US respectively.

The Group also continues to produce award winning standalone content to showcase the potential of Virtual Reality / Augmented Reality (‘VR/AR’) as a tool for educational purposes.  The first release (Apollo 11 VR) has won multiple awards including a Time Warner award and was one of virtual reality’s first big hits when it was released on the Oculus Rift and the HTC Vive back in 2016.  A High Definition version of this experience was subsequently launched in November 2018.  This title has generated in excess of €1.6 million in revenues since its launch to the year end, one of the few VR titles that has broken the €1.0 million revenue mark.  Titanic VR and Shuttle Commander, launched in Q4 2018 and Q4 2019 respectively, continue to perform well and have together generated €0.6 million in revenues since their launch.

COVID-19

COVID-19 has had a significant impact on many companies across the globe and the Group is still feeling the effects of this.  Prior to the mandated lockdown put in place in the Republic of Ireland, the Group made the prudent decision for all of its employees to work remotely to ensure their safety.  This action has not had any negative effect on productivity within the Group as all our employees have remained dedicated and professional throughout this difficult period.

The global COVID-19 pandemic has generated significant demand for VR solutions and there have been high levels of interest for conferencing and collaboration tools.  The ENGAGE platform is the ideal tool to meet the needs of the remote working world and the Group has been working hard since the year end to ensure the platform is available to those who want to use it.

Future developments in the business

Since the year end, the Group has largely focused on expanding its distribution of the ENGAGE platform into the US and Asian markets.  A number of deals have been closed in the US with many more at varying stages in the sales cycle. Most progress has been made in the Asian market, where the HTC Vive Ecosystem Conference was held virtually inside the ENGAGE platform in conjunction with HTC Corporation (‘HTC’) on 19 March 2020 and the success of this event has created a significant number of further opportunities for the Group.

Following the HTC Vive Ecosystem Conference, a commercial agreement was entered into with HTC to grant them exclusive rights to resell the ENGAGE platform in Greater China on a revenue share basis, with a guaranteed minimum revenue each year for the Group from HTC.  Separately, in June 2020, HTC invested €3.0 million at a €12.0 million pre-money valuation to further the development of ENGAGE and to facilitate increased sales and marketing of the platform.

Demand for the Group's VR showcase experiences, comprising Apollo 11 VR, Titanic VR and Shuttle Commander, remain in line with management's expectations with a new experience expected to launch in H2-2020.

The recent impetus in global demand for the Group’s core product coupled with a strengthening of our balance sheet following our strategic partnership with HTC, provides the Board with confidence about the Group’s prospects for FY-2020 and beyond.

Your executive directors have done an outstanding job in maturing the company, upselling its products and securing vital commercial partnerships.  They have of course been greatly aided by the tireless efforts of a talented pool of staff, and I would like to extend my thanks to all of them.

Richard Cooper
Chairman

15 June 2020

CHIEF EXECUTIVE’S REVIEW

Review of the Year

2019 has allowed VR Education to identify and overcome many hurdles which had subdued growth to date. I believe the Group is now well placed to become a leader in immersive communications.  The COVID-19 pandemic has transformed the Group’s fortunes as businesses, corporations and educational institutes globally are now seeking better alternatives to video-based communications due to limitations with collaborative tasks and the drawbacks of larger group communications via video as a medium.  Our recently announced strategic partnership with HTC will ensure that the Group has continued support for marketing, sales and business development as HTC will sell the ENGAGE platform exclusively in Greater China and non-exclusively in the rest of the world.  This partnership will serve to further both companies’ objectives and goals.

ENGAGE Hardware Milestone

2019 was also a transformative year for the Group as some key hardware hurdles were overcome.  ENGAGE became available on standalone devices such as the Oculus Quest, Pico VR and Vive Focus.  This was of critical importance as the previous two years proved that pitching a virtual training solution or communications tool to corporations using PC based equipment would not succeed as a major limiting issue for most companies is the ease of use of the VR device.

Up to recently, demos would involve setting up a PC or laptop with multiple cables before ENGAGE could be used.  This often proved cumbersome for potential customers with the perception that users would need some technical knowledge to achieve a good end-user experience.  During early 2019, the ENGAGE development team gained access to multiple standalone devices which allowed them to port ENGAGE to work cross- platform across all standalone devices and PC-based devices.  For the first time our business developers could simply pull a headset out of their bag and place the customer into the experience with minimum fuss.

XR Finally Becoming Mainstream

In my opinion, it cannot be understated how important standalone devices are to the success of the Extended Reality “XR” industry as a whole and manufacturers like Facebook/Oculus have not been able to keep up with demand.  Sales of the Oculus Quest headset have suffered from retail shortages since its release in March 2019 and continued shortages due to manufacturing issues caused by COVID-19 as many components are manufactured in China.  The Facebook/Oculus headset has sold extremely well and could possibly have sold more but sales were limited to one per person at retail stores and devices were not made available to business or education users as almost all stock was diverted to retail stores for the 2019 holiday period.  The impact of Covid-19 on global questioning of outsourcing manufacturing to China remains uncertain, but a wider manufacturing base is regarded by us as highly positive.

Facebook/Oculus ISV Programme

In October 2019, the Group’s ENGAGE platform was selected by Facebook to become part of its ISV programme which works with enterprise developers and software companies to engage with Oculus in order to accelerate customer adoption of VR solutions built for Oculus enterprise products.  As a result, following the roll-out of Oculus for Business which was scheduled for early 2020, VR Education's ENGAGE platform will, for the first time, be available via a special portal for Oculus enterprise clients to access and connect with.  In addition, the Group will be one of only a few select developers who will be able to provide services using Facebook equipment as well as receiving additional support from them.  This programme was originally set for release in early 2020 however due to the effect of COVID-19 on manufacturing and the limited number of devices available for enterprise users we have not seen a full deployment of this programme to date and dependent on progress by Facebook we hope it will now happen in H2-2020.

Platform Agnostic

Facebook/Oculus was not the only hardware manufacturer to release standalone devices during 2019 with HTC and Pico seeing releases of comparable headsets in mid-2019 and early 2020 respectively.  The ENGAGE team worked hard to support both the HTC Vive Focus Plus and Pico Neo 2 and the platform now has parity across all devices. Being platform agnostic, ENGAGE has mitigated some of the key challenges with resourcing devices however, stock is still limited across the world as manufacturing is only starting to recommence as China’s factories return to work post COVID-19 lockdown.

Showcase Experiences

During 2019 the Group continued to see strong sales of its showcase experiences Apollo 11 VR and Titanic VR on various VR platforms.  In the second half of 2019 the Group released its third showcase experience on PlayStation VR named “Shuttle Commander” which puts you in control for some of the Shuttle’s most famous missions.

Sales continued strongly across all platforms and the Group plans to release Shuttle Commander on PC- based VR devices and the Oculus Quest later in FY20.

In May 2019 the Group announced the signature of a deal with the US Rocket and Space Centre in Alabama for the installation of Apollo 11 VR as a ticketed exhibit.  This exhibit proved immensely popular with visitors and on conclusion of a successful trial period, the Group secured a twelve month extension of this deal which was signed in December 2019.

POST YEAR END HIGHLIGHTS

COVID-19 Effect

Throughout 2019 the ENGAGE platform became more popular with educators and corporations using it for small meetings and events.  The ENGAGE user base grew significantly in the latter part of 2019 as users got access to standalone devices and attended events held inside ENGAGE.  In the early part of 2020, as the COVID-19 pandemic took hold in China and Italy, the president of HTC China, Alvin Wang Graylin, attended one such event being held inside the ENGAGE platform and decided to contact VR Education.

At the time, HTC had just recently cancelled its annual Vive Developer Conference, which was due to be held on the Chinese mainland in March 2020 and HTC was seeking a way to provide the event virtually without the limitations of standard video-based platforms.  The ENGAGE team worked very closely with the HTC team in China for several weeks and on 19 March 2020 the complete HTC Vive Ecosystem Conference was held inside the ENGAGE platform with over one thousand attendees logged into the platform and over 1.1 million viewers watching the live stream throughout China.  The HTC Vive Ecosystem Conference was a great success as ENGAGE allowed users from within China to connect with the outside world in a fully networked virtual environment with keynote speakers from Qualcomm, China Mobile, Nvidia, X Prize and HTC to name a few.  Since this event, the Group has been inundated with requests for virtual events from various corporations and event groups and it is anticipated that the Group will see a growing market for this type of service in the future.

A huge number of large physical events have been cancelled due to the worldwide COVID-19 pandemic and, as a result of this continued disruption, the Group expects that the event space will evolve to a scenario where smaller groups will attend the physical event and there will be increased demand for virtual services.  Further opportunity for these types of services will arise with global business travel anticipated to reduce significantly, remote worker employment to become more normalised and the ever-increasing home school market to see accelerated growth in life under COVID-19.  The world has been forced online to complete simple tasks such as meetings, classes and events and people are now seeing the limitations of using current communication systems which broadcast video and audio.

Running a video conference call with more than six people is difficult as participants talk over each other quite often and users can become disengaged with the format as they sit and watch video.  Running virtual meetings and events inside the ENGAGE platform is as close as you can get to real life by sitting in a virtual room with virtual people interacting in a natural way.

ENGAGE also has major benefits with very low bandwidth requirements and its spatial recording systems allowing for the replay of events as if they were happening live and allowing users to move within the recording if needed.  As a comparison, an hour-long piece of content with up to 50 users all inside the ENGAGE platform being spatially recorded is only 80MB in size, whereas, an hour-long video recording from competitors like Zoom or Skype will be over 1GB for any type of quality recording.

Overall, it is the Group’s strong belief that following COVID-19, the world will be a very different place with business travel becoming less common, increasing numbers of remote workers and a sharp increase in the home school market.  The Group also believes the ENGAGE platform provides users with a better alternative to services like Microsoft Teams, Skye, Zoom and Adobe Connect and VR Education is now in a strong place to implement its plans, with strategic partnerships being made which place the Group in a prime position for this new era of global communications.

HTC Investment / Partnership

Due to the success of the virtual Vive Ecosystem Conference in March, HTC wanted to create a stronger relationship with VR Education and offered the Group a partnership which included not only investment but a strategic commercial agreement.  HTC has been one of the global leaders in the VR hardware space over the past five years, releasing many products in the VR industry.  VR Education believes that working alongside a leading VR technology Company such as HTC, achieving closer integration between teams on hardware and software development, means that the Group and the ENGAGE platform will stay ahead of the curve and its competitors when it comes to the latest in innovation and incorporating the next generation technologies.

The commercial partnership ensures that VR Education, which has primarily been a software technology company, now has sales, marketing and business development support from HTC with HTC having exclusivity in China and a non-exclusive agreement in place for the rest of the world.  This agreement includes a revenue share model for revenue generated globally with a fixed minimum quarterly payment amount of €75,000 per quarter, commencing from Q1 2021.

Victory XR Content Partnership

In April 2020, VR Education and VictoryXR agreed terms of a revenue share agreement, in which VictoryXR will import its extensive content library onto the ENGAGE platform and provide its services remotely to school children across the US. VictoryXR specialises in US-based science curriculum content and virtual animal dissections, both in the VR and AR space.  To date VictoryXR has created more than 240 unique VR and AR learning experiences spanning more than 50 different learning units.

Students using the ENGAGE platform will be both in physical schools and home schooled, including those whose access to traditional schooling has been impacted by COVID-19 due to lockdown.  Qualified educators will run live virtual classes via ENGAGE and additional educational content produced by VictoryXR will be available for replay via the ENGAGE platform.

Future Trading and Outlook

Many different aspects have come together over the past six months to accelerate the adoption of the ENGAGE platform. Some aspects were expected and planned for.  However, COVID-19 has accelerated all areas of the business in a way no one could have predicted just a few months ago.

When the Group looks at what has happened over the past six months, we see that VR mass adoption is finally starting to take place due to standalone devices becoming increasingly popular.

Telecommunications companies are also taking a vested interest in pushing XR to the masses as they seek to upsell their 4G customers to 5G subscriptions and see XR as a way to push this forward.  To this end VR Education has been working with Deutsche Telekom and Qualcomm Technologies with a partnership announced in December 2019 as new devices are set to be introduced to the market soon.

The Group now has a content partner with VictoryXR in the education space and a strong strategic partnership with HTC.

The COVID-19 pandemic has caused global disruption in all walks of life and forced the world to work online.  We expect companies and educational institutes will seek to drastically reduce costs post COVID-19 with physical events, workplaces and even schools becoming fully digital in the months and years to come.  The Group believes the ENGAGE platform is perfectly positioned to meet the needs of this new world as the seeds which were planted over the previous three years are now starting to grow and bear fruit.  We are confident for the future prospects of the Group and look forward to further updating shareholders as we progress through 2020.

David Whelan
Chief Executive Officer

15 June 2020

CHIEF FINANCIAL OFFICER’S REVIEW

I am pleased to report that revenue for the year was up 43% on the prior year from €716k to €1,024k, driven by the continued success of the showcase experiences on the PlayStation, Oculus and Steam platforms coupled with revenue generated from our newly released ENGAGE platform and our exhibition in the US Space and Rocket Center in Alabama.

EBITDA loss was €1.4 million compared to a loss of €1.5 million in the prior year, in line with management expectations.

Loss before tax was €1.9 million, in line with management expectations, compared to a loss in the prior year of €4.9 million.

Operating cashflows were a net outflow of €1.2 million for the period.  The current run-rate of staff costs and other ongoing costs is approximately €250k per month.

At the balance sheet date, trade and other receivables were €205k, marginally ahead of trade and other payables at €193k.  Trade receivables represented an average of 52 debtor days (2018: 92 days).

The Group’s cash position at 31 December 2019 was €1.3 million with no debt.  Following the receipt of subscription funds from HTC, the Group’s cash position was approximately €3.4m.

Séamus Larrissey
Chief Financial Officer

15 June 2020

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
for the Year Ended 31 December 2019

The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2019

The accompanying notes form an integral part of these financial statements.

COMPANY STATEMENT OF FINANCIAL POSITION
at 31 December 2019

The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2019

The accompanying notes form an integral part of these financial statements.

COMPANY STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2019

The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS
for the Year Ended 31 December 2019

The non-cash element of extinguishment costs and non-cash element of advisor warrants in the year ended 31 December 2018 reflect the fact that the group issued warrants to loan note holders, cumulative redeemable preference shareholders and advisors as part of the acquisition of Immersive VR Education Limited and the subsequent IPO transaction.

The accompanying notes form an integral part of these financial statements.

The non-cash element of extinguishment costs and non-cash element of advisor warrants in the year ended 31 December 2018 reflect the fact that the company issued warrants to loan note holders, cumulative redeemable preference shareholders and advisors as part of the acquisition of Immersive VR Education Limited and the subsequent IPO transaction.

The non-cash element of redemption of redeemable shares relates to the accounting treatment for the cancellation of unpaid redeemable shares during the year.

Notes to the Final Results

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

2022

VR Education (AIM: VRE; ESM: 6VR), a leading virtual reality ('VR') technology company focused on the education and virtual meeting space, today announces its audited final results for the year ended 31 December 2019 (‘FY 2019’).

Financial Highlights

• Revenue up 43% to €1.0m (FY 2018: €0.7m)
• In line with management expectations the EBITDA loss was €1.4m (FY 2018: loss of €1.5m)
• In line with management expectations the loss before tax was €1.9m (FY 2019: loss €4.9m)
• Net cash at 31 December 2019 was €1.3m with no debt.  Following subscription funds from HTC post period end, net cash position is c. €3.4m
• Loss per share of €0.01 (FY 2018: €0.03)

Operational Highlights 

• Continued sales of Showcase Experiences, the Group’s award-winning standalone content, with Raid on the Ruhr and Shuttle Commander launched during the year and Apollo 11 selected as a launch title for the new Oculus Quest
• ENGAGE platform selected by Facebook to become part of its ISV programme
• Commercial agreement with U.S. Space and Rocket Centre extended until 19 December 2020

Post Period End Highlights

• Partnership agreement with US-based VictoryXR, a world leader in VR and augmented reality content creation for schools and education
• HTC Vive Ecosystem Conference held virtually inside the ENGAGE platform in conjunction with HTC Corporation
• €3m investment from HTC Corporation and strategic partnership agreed for the distribution and licence of the Group’s ENGAGE platform globally through HTC enterprise sales channels

David Whelan, CEO of VR Education, said: “VR Education has positioned itself well in 2019 to identify and overcome many hurdles which had subdued growth to date and during the year ENGAGE became available on standalone devices such as the Oculus Quest, Pico VR and Vive Focus.  The availability of standalone devices is of paramount importance to potential customers and, with these now in the market and ENGAGE being platform agnostic, I believe the Group is now well placed to become a leader in immersive communications.

“The COVID-19 pandemic has transformed the Group’s fortunes as businesses, corporations and educational institutes globally are now seeking better alternatives to video-based communications due to limitations with collaborative tasks and the drawbacks of larger group communications via video as a medium. Our recently announced strategic partnership and investment from HTC places the Group in a strong position to accelerate the global adoption of the ENGAGE platform and create value for shareholders.”

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

Analyst Meeting

A meeting for analysts hosted by David Whelan (CEO) and Séamus Larrissey (CFO) will be held at 3pm today via Zoom.  Please contact Buchanan at [email protected] if you would like to receive the dial in details.

Final Results Presentation

A copy of the Final Results presentation with audio commentary from the management team will shortly be available on the Company’s website, http://www.vreducationholdings.com

- Ends -

For further information, please contact:

Notes to Editors

VR Education, together with its wholly owned subsidiary, is an early stage VR software and technology group based in Waterford, Ireland, dedicated to transforming the delivery methods of education and corporate training by utilising VR technologies to deliver fully immersive virtual learning experiences.  The Group's core focus is the development and commercialisation of its online virtual social learning and presentation platform called ENGAGE, which provides a platform for creating, sharing and delivering proprietary and third-party VR content for educational and corporate training purposes.

In addition to the ongoing development of the ENGAGE platform, the Group has also built two downloadable showcase VR experiences, being the award-winning Apollo 11 VR experience and the Titanic VR experience.

On 12 March 2018, VR Education listed on the AIM market of the London Stock Exchange and on the Enterprise Securities Market, a market regulated by Euronext Dublin.  For further information, please visit www.vreducationholdings.com

CHAIRMAN’S STATEMENT

I am pleased to present the Annual Report and Financial Statements of VR Education Holdings PLC, a company incorporated in the Republic of Ireland, for the year ended 31 December 2019 (‘FY-2019’).

Overview of the year

This is the second set of Financial Statements I am proud to present to shareholders following the successful fundraising and IPO in March 2018.

Revenues in FY-2019 grew by 43% to €1.0 million (FY-2018: €0.7 million) generating a gross profit margin of 61% and gross profit of €622k (FY-2018: €476k).

Review of the business

VR Education is dedicated to transforming education globally by providing new tools to educators and corporate trainers allowing them to provide high quality, low cost content in a virtual networked social learning environment.

Following the commercial launch of the ENGAGE platform (the Group’s proprietary VR education platform), in December 2018, the Group has actively developed and promoted this against technological and commercial headwinds, the latter mainly associated with Brexit in the UK.  Nevertheless, the perseverance of the management team has led the Group to recently sign, among others, two partnerships with HTC Corporation and Victory XR, based in Taiwan and the US respectively.

The Group also continues to produce award winning standalone content to showcase the potential of Virtual Reality / Augmented Reality (‘VR/AR’) as a tool for educational purposes.  The first release (Apollo 11 VR) has won multiple awards including a Time Warner award and was one of virtual reality’s first big hits when it was released on the Oculus Rift and the HTC Vive back in 2016.  A High Definition version of this experience was subsequently launched in November 2018.  This title has generated in excess of €1.6 million in revenues since its launch to the year end, one of the few VR titles that has broken the €1.0 million revenue mark.  Titanic VR and Shuttle Commander, launched in Q4 2018 and Q4 2019 respectively, continue to perform well and have together generated €0.6 million in revenues since their launch.

COVID-19

COVID-19 has had a significant impact on many companies across the globe and the Group is still feeling the effects of this.  Prior to the mandated lockdown put in place in the Republic of Ireland, the Group made the prudent decision for all of its employees to work remotely to ensure their safety.  This action has not had any negative effect on productivity within the Group as all our employees have remained dedicated and professional throughout this difficult period.

The global COVID-19 pandemic has generated significant demand for VR solutions and there have been high levels of interest for conferencing and collaboration tools.  The ENGAGE platform is the ideal tool to meet the needs of the remote working world and the Group has been working hard since the year end to ensure the platform is available to those who want to use it.

Future developments in the business

Since the year end, the Group has largely focused on expanding its distribution of the ENGAGE platform into the US and Asian markets.  A number of deals have been closed in the US with many more at varying stages in the sales cycle. Most progress has been made in the Asian market, where the HTC Vive Ecosystem Conference was held virtually inside the ENGAGE platform in conjunction with HTC Corporation (‘HTC’) on 19 March 2020 and the success of this event has created a significant number of further opportunities for the Group.

Following the HTC Vive Ecosystem Conference, a commercial agreement was entered into with HTC to grant them exclusive rights to resell the ENGAGE platform in Greater China on a revenue share basis, with a guaranteed minimum revenue each year for the Group from HTC.  Separately, in June 2020, HTC invested €3.0 million at a €12.0 million pre-money valuation to further the development of ENGAGE and to facilitate increased sales and marketing of the platform.

Demand for the Group's VR showcase experiences, comprising Apollo 11 VR, Titanic VR and Shuttle Commander, remain in line with management's expectations with a new experience expected to launch in H2-2020.

The recent impetus in global demand for the Group’s core product coupled with a strengthening of our balance sheet following our strategic partnership with HTC, provides the Board with confidence about the Group’s prospects for FY-2020 and beyond.

Your executive directors have done an outstanding job in maturing the company, upselling its products and securing vital commercial partnerships.  They have of course been greatly aided by the tireless efforts of a talented pool of staff, and I would like to extend my thanks to all of them.

Richard Cooper
Chairman

15 June 2020

CHIEF EXECUTIVE’S REVIEW

Review of the Year

2019 has allowed VR Education to identify and overcome many hurdles which had subdued growth to date. I believe the Group is now well placed to become a leader in immersive communications.  The COVID-19 pandemic has transformed the Group’s fortunes as businesses, corporations and educational institutes globally are now seeking better alternatives to video-based communications due to limitations with collaborative tasks and the drawbacks of larger group communications via video as a medium.  Our recently announced strategic partnership with HTC will ensure that the Group has continued support for marketing, sales and business development as HTC will sell the ENGAGE platform exclusively in Greater China and non-exclusively in the rest of the world.  This partnership will serve to further both companies’ objectives and goals.

ENGAGE Hardware Milestone

2019 was also a transformative year for the Group as some key hardware hurdles were overcome.  ENGAGE became available on standalone devices such as the Oculus Quest, Pico VR and Vive Focus.  This was of critical importance as the previous two years proved that pitching a virtual training solution or communications tool to corporations using PC based equipment would not succeed as a major limiting issue for most companies is the ease of use of the VR device.

Up to recently, demos would involve setting up a PC or laptop with multiple cables before ENGAGE could be used.  This often proved cumbersome for potential customers with the perception that users would need some technical knowledge to achieve a good end-user experience.  During early 2019, the ENGAGE development team gained access to multiple standalone devices which allowed them to port ENGAGE to work cross- platform across all standalone devices and PC-based devices.  For the first time our business developers could simply pull a headset out of their bag and place the customer into the experience with minimum fuss.

XR Finally Becoming Mainstream

In my opinion, it cannot be understated how important standalone devices are to the success of the Extended Reality “XR” industry as a whole and manufacturers like Facebook/Oculus have not been able to keep up with demand.  Sales of the Oculus Quest headset have suffered from retail shortages since its release in March 2019 and continued shortages due to manufacturing issues caused by COVID-19 as many components are manufactured in China.  The Facebook/Oculus headset has sold extremely well and could possibly have sold more but sales were limited to one per person at retail stores and devices were not made available to business or education users as almost all stock was diverted to retail stores for the 2019 holiday period.  The impact of Covid-19 on global questioning of outsourcing manufacturing to China remains uncertain, but a wider manufacturing base is regarded by us as highly positive.

Facebook/Oculus ISV Programme

In October 2019, the Group’s ENGAGE platform was selected by Facebook to become part of its ISV programme which works with enterprise developers and software companies to engage with Oculus in order to accelerate customer adoption of VR solutions built for Oculus enterprise products.  As a result, following the roll-out of Oculus for Business which was scheduled for early 2020, VR Education's ENGAGE platform will, for the first time, be available via a special portal for Oculus enterprise clients to access and connect with.  In addition, the Group will be one of only a few select developers who will be able to provide services using Facebook equipment as well as receiving additional support from them.  This programme was originally set for release in early 2020 however due to the effect of COVID-19 on manufacturing and the limited number of devices available for enterprise users we have not seen a full deployment of this programme to date and dependent on progress by Facebook we hope it will now happen in H2-2020.

Platform Agnostic

Facebook/Oculus was not the only hardware manufacturer to release standalone devices during 2019 with HTC and Pico seeing releases of comparable headsets in mid-2019 and early 2020 respectively.  The ENGAGE team worked hard to support both the HTC Vive Focus Plus and Pico Neo 2 and the platform now has parity across all devices. Being platform agnostic, ENGAGE has mitigated some of the key challenges with resourcing devices however, stock is still limited across the world as manufacturing is only starting to recommence as China’s factories return to work post COVID-19 lockdown.

Showcase Experiences

During 2019 the Group continued to see strong sales of its showcase experiences Apollo 11 VR and Titanic VR on various VR platforms.  In the second half of 2019 the Group released its third showcase experience on PlayStation VR named “Shuttle Commander” which puts you in control for some of the Shuttle’s most famous missions.

Sales continued strongly across all platforms and the Group plans to release Shuttle Commander on PC- based VR devices and the Oculus Quest later in FY20.

In May 2019 the Group announced the signature of a deal with the US Rocket and Space Centre in Alabama for the installation of Apollo 11 VR as a ticketed exhibit.  This exhibit proved immensely popular with visitors and on conclusion of a successful trial period, the Group secured a twelve month extension of this deal which was signed in December 2019.

POST YEAR END HIGHLIGHTS

COVID-19 Effect

Throughout 2019 the ENGAGE platform became more popular with educators and corporations using it for small meetings and events.  The ENGAGE user base grew significantly in the latter part of 2019 as users got access to standalone devices and attended events held inside ENGAGE.  In the early part of 2020, as the COVID-19 pandemic took hold in China and Italy, the president of HTC China, Alvin Wang Graylin, attended one such event being held inside the ENGAGE platform and decided to contact VR Education.

At the time, HTC had just recently cancelled its annual Vive Developer Conference, which was due to be held on the Chinese mainland in March 2020 and HTC was seeking a way to provide the event virtually without the limitations of standard video-based platforms.  The ENGAGE team worked very closely with the HTC team in China for several weeks and on 19 March 2020 the complete HTC Vive Ecosystem Conference was held inside the ENGAGE platform with over one thousand attendees logged into the platform and over 1.1 million viewers watching the live stream throughout China.  The HTC Vive Ecosystem Conference was a great success as ENGAGE allowed users from within China to connect with the outside world in a fully networked virtual environment with keynote speakers from Qualcomm, China Mobile, Nvidia, X Prize and HTC to name a few.  Since this event, the Group has been inundated with requests for virtual events from various corporations and event groups and it is anticipated that the Group will see a growing market for this type of service in the future.

A huge number of large physical events have been cancelled due to the worldwide COVID-19 pandemic and, as a result of this continued disruption, the Group expects that the event space will evolve to a scenario where smaller groups will attend the physical event and there will be increased demand for virtual services.  Further opportunity for these types of services will arise with global business travel anticipated to reduce significantly, remote worker employment to become more normalised and the ever-increasing home school market to see accelerated growth in life under COVID-19.  The world has been forced online to complete simple tasks such as meetings, classes and events and people are now seeing the limitations of using current communication systems which broadcast video and audio.

Running a video conference call with more than six people is difficult as participants talk over each other quite often and users can become disengaged with the format as they sit and watch video.  Running virtual meetings and events inside the ENGAGE platform is as close as you can get to real life by sitting in a virtual room with virtual people interacting in a natural way.

ENGAGE also has major benefits with very low bandwidth requirements and its spatial recording systems allowing for the replay of events as if they were happening live and allowing users to move within the recording if needed.  As a comparison, an hour-long piece of content with up to 50 users all inside the ENGAGE platform being spatially recorded is only 80MB in size, whereas, an hour-long video recording from competitors like Zoom or Skype will be over 1GB for any type of quality recording.

Overall, it is the Group’s strong belief that following COVID-19, the world will be a very different place with business travel becoming less common, increasing numbers of remote workers and a sharp increase in the home school market.  The Group also believes the ENGAGE platform provides users with a better alternative to services like Microsoft Teams, Skye, Zoom and Adobe Connect and VR Education is now in a strong place to implement its plans, with strategic partnerships being made which place the Group in a prime position for this new era of global communications.

HTC Investment / Partnership

Due to the success of the virtual Vive Ecosystem Conference in March, HTC wanted to create a stronger relationship with VR Education and offered the Group a partnership which included not only investment but a strategic commercial agreement.  HTC has been one of the global leaders in the VR hardware space over the past five years, releasing many products in the VR industry.  VR Education believes that working alongside a leading VR technology Company such as HTC, achieving closer integration between teams on hardware and software development, means that the Group and the ENGAGE platform will stay ahead of the curve and its competitors when it comes to the latest in innovation and incorporating the next generation technologies.

The commercial partnership ensures that VR Education, which has primarily been a software technology company, now has sales, marketing and business development support from HTC with HTC having exclusivity in China and a non-exclusive agreement in place for the rest of the world.  This agreement includes a revenue share model for revenue generated globally with a fixed minimum quarterly payment amount of €75,000 per quarter, commencing from Q1 2021.

Victory XR Content Partnership

In April 2020, VR Education and VictoryXR agreed terms of a revenue share agreement, in which VictoryXR will import its extensive content library onto the ENGAGE platform and provide its services remotely to school children across the US. VictoryXR specialises in US-based science curriculum content and virtual animal dissections, both in the VR and AR space.  To date VictoryXR has created more than 240 unique VR and AR learning experiences spanning more than 50 different learning units.

Students using the ENGAGE platform will be both in physical schools and home schooled, including those whose access to traditional schooling has been impacted by COVID-19 due to lockdown.  Qualified educators will run live virtual classes via ENGAGE and additional educational content produced by VictoryXR will be available for replay via the ENGAGE platform.

Future Trading and Outlook

Many different aspects have come together over the past six months to accelerate the adoption of the ENGAGE platform. Some aspects were expected and planned for.  However, COVID-19 has accelerated all areas of the business in a way no one could have predicted just a few months ago.

When the Group looks at what has happened over the past six months, we see that VR mass adoption is finally starting to take place due to standalone devices becoming increasingly popular.

Telecommunications companies are also taking a vested interest in pushing XR to the masses as they seek to upsell their 4G customers to 5G subscriptions and see XR as a way to push this forward.  To this end VR Education has been working with Deutsche Telekom and Qualcomm Technologies with a partnership announced in December 2019 as new devices are set to be introduced to the market soon.

The Group now has a content partner with VictoryXR in the education space and a strong strategic partnership with HTC.

The COVID-19 pandemic has caused global disruption in all walks of life and forced the world to work online.  We expect companies and educational institutes will seek to drastically reduce costs post COVID-19 with physical events, workplaces and even schools becoming fully digital in the months and years to come.  The Group believes the ENGAGE platform is perfectly positioned to meet the needs of this new world as the seeds which were planted over the previous three years are now starting to grow and bear fruit.  We are confident for the future prospects of the Group and look forward to further updating shareholders as we progress through 2020.

David Whelan
Chief Executive Officer

15 June 2020

CHIEF FINANCIAL OFFICER’S REVIEW

I am pleased to report that revenue for the year was up 43% on the prior year from €716k to €1,024k, driven by the continued success of the showcase experiences on the PlayStation, Oculus and Steam platforms coupled with revenue generated from our newly released ENGAGE platform and our exhibition in the US Space and Rocket Center in Alabama.

EBITDA loss was €1.4 million compared to a loss of €1.5 million in the prior year, in line with management expectations.

Loss before tax was €1.9 million, in line with management expectations, compared to a loss in the prior year of €4.9 million.

Operating cashflows were a net outflow of €1.2 million for the period.  The current run-rate of staff costs and other ongoing costs is approximately €250k per month.

At the balance sheet date, trade and other receivables were €205k, marginally ahead of trade and other payables at €193k.  Trade receivables represented an average of 52 debtor days (2018: 92 days).

The Group’s cash position at 31 December 2019 was €1.3 million with no debt.  Following the receipt of subscription funds from HTC, the Group’s cash position was approximately €3.4m.

Séamus Larrissey
Chief Financial Officer

15 June 2020

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
for the Year Ended 31 December 2019

The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2019

The accompanying notes form an integral part of these financial statements.

COMPANY STATEMENT OF FINANCIAL POSITION
at 31 December 2019

The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2019

The accompanying notes form an integral part of these financial statements.

COMPANY STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2019

The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS
for the Year Ended 31 December 2019

The non-cash element of extinguishment costs and non-cash element of advisor warrants in the year ended 31 December 2018 reflect the fact that the group issued warrants to loan note holders, cumulative redeemable preference shareholders and advisors as part of the acquisition of Immersive VR Education Limited and the subsequent IPO transaction.

The accompanying notes form an integral part of these financial statements.

The non-cash element of extinguishment costs and non-cash element of advisor warrants in the year ended 31 December 2018 reflect the fact that the company issued warrants to loan note holders, cumulative redeemable preference shareholders and advisors as part of the acquisition of Immersive VR Education Limited and the subsequent IPO transaction.

The non-cash element of redemption of redeemable shares relates to the accounting treatment for the cancellation of unpaid redeemable shares during the year.

Notes to the Final Results

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

2021

VR Education (AIM: VRE; ESM: 6VR), a leading virtual reality ('VR') technology company focused on the education and virtual meeting space, today announces its audited final results for the year ended 31 December 2019 (‘FY 2019’).

Financial Highlights

• Revenue up 43% to €1.0m (FY 2018: €0.7m)
• In line with management expectations the EBITDA loss was €1.4m (FY 2018: loss of €1.5m)
• In line with management expectations the loss before tax was €1.9m (FY 2019: loss €4.9m)
• Net cash at 31 December 2019 was €1.3m with no debt.  Following subscription funds from HTC post period end, net cash position is c. €3.4m
• Loss per share of €0.01 (FY 2018: €0.03)

Operational Highlights 

• Continued sales of Showcase Experiences, the Group’s award-winning standalone content, with Raid on the Ruhr and Shuttle Commander launched during the year and Apollo 11 selected as a launch title for the new Oculus Quest
• ENGAGE platform selected by Facebook to become part of its ISV programme
• Commercial agreement with U.S. Space and Rocket Centre extended until 19 December 2020

Post Period End Highlights

• Partnership agreement with US-based VictoryXR, a world leader in VR and augmented reality content creation for schools and education
• HTC Vive Ecosystem Conference held virtually inside the ENGAGE platform in conjunction with HTC Corporation
• €3m investment from HTC Corporation and strategic partnership agreed for the distribution and licence of the Group’s ENGAGE platform globally through HTC enterprise sales channels

David Whelan, CEO of VR Education, said: “VR Education has positioned itself well in 2019 to identify and overcome many hurdles which had subdued growth to date and during the year ENGAGE became available on standalone devices such as the Oculus Quest, Pico VR and Vive Focus.  The availability of standalone devices is of paramount importance to potential customers and, with these now in the market and ENGAGE being platform agnostic, I believe the Group is now well placed to become a leader in immersive communications.

“The COVID-19 pandemic has transformed the Group’s fortunes as businesses, corporations and educational institutes globally are now seeking better alternatives to video-based communications due to limitations with collaborative tasks and the drawbacks of larger group communications via video as a medium. Our recently announced strategic partnership and investment from HTC places the Group in a strong position to accelerate the global adoption of the ENGAGE platform and create value for shareholders.”

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

Analyst Meeting

A meeting for analysts hosted by David Whelan (CEO) and Séamus Larrissey (CFO) will be held at 3pm today via Zoom.  Please contact Buchanan at [email protected] if you would like to receive the dial in details.

Final Results Presentation

A copy of the Final Results presentation with audio commentary from the management team will shortly be available on the Company’s website, http://www.vreducationholdings.com

- Ends -

For further information, please contact:

Notes to Editors

VR Education, together with its wholly owned subsidiary, is an early stage VR software and technology group based in Waterford, Ireland, dedicated to transforming the delivery methods of education and corporate training by utilising VR technologies to deliver fully immersive virtual learning experiences.  The Group's core focus is the development and commercialisation of its online virtual social learning and presentation platform called ENGAGE, which provides a platform for creating, sharing and delivering proprietary and third-party VR content for educational and corporate training purposes.

In addition to the ongoing development of the ENGAGE platform, the Group has also built two downloadable showcase VR experiences, being the award-winning Apollo 11 VR experience and the Titanic VR experience.

On 12 March 2018, VR Education listed on the AIM market of the London Stock Exchange and on the Enterprise Securities Market, a market regulated by Euronext Dublin.  For further information, please visit www.vreducationholdings.com

CHAIRMAN’S STATEMENT

I am pleased to present the Annual Report and Financial Statements of VR Education Holdings PLC, a company incorporated in the Republic of Ireland, for the year ended 31 December 2019 (‘FY-2019’).

Overview of the year

This is the second set of Financial Statements I am proud to present to shareholders following the successful fundraising and IPO in March 2018.

Revenues in FY-2019 grew by 43% to €1.0 million (FY-2018: €0.7 million) generating a gross profit margin of 61% and gross profit of €622k (FY-2018: €476k).

Review of the business

VR Education is dedicated to transforming education globally by providing new tools to educators and corporate trainers allowing them to provide high quality, low cost content in a virtual networked social learning environment.

Following the commercial launch of the ENGAGE platform (the Group’s proprietary VR education platform), in December 2018, the Group has actively developed and promoted this against technological and commercial headwinds, the latter mainly associated with Brexit in the UK.  Nevertheless, the perseverance of the management team has led the Group to recently sign, among others, two partnerships with HTC Corporation and Victory XR, based in Taiwan and the US respectively.

The Group also continues to produce award winning standalone content to showcase the potential of Virtual Reality / Augmented Reality (‘VR/AR’) as a tool for educational purposes.  The first release (Apollo 11 VR) has won multiple awards including a Time Warner award and was one of virtual reality’s first big hits when it was released on the Oculus Rift and the HTC Vive back in 2016.  A High Definition version of this experience was subsequently launched in November 2018.  This title has generated in excess of €1.6 million in revenues since its launch to the year end, one of the few VR titles that has broken the €1.0 million revenue mark.  Titanic VR and Shuttle Commander, launched in Q4 2018 and Q4 2019 respectively, continue to perform well and have together generated €0.6 million in revenues since their launch.

COVID-19

COVID-19 has had a significant impact on many companies across the globe and the Group is still feeling the effects of this.  Prior to the mandated lockdown put in place in the Republic of Ireland, the Group made the prudent decision for all of its employees to work remotely to ensure their safety.  This action has not had any negative effect on productivity within the Group as all our employees have remained dedicated and professional throughout this difficult period.

The global COVID-19 pandemic has generated significant demand for VR solutions and there have been high levels of interest for conferencing and collaboration tools.  The ENGAGE platform is the ideal tool to meet the needs of the remote working world and the Group has been working hard since the year end to ensure the platform is available to those who want to use it.

Future developments in the business

Since the year end, the Group has largely focused on expanding its distribution of the ENGAGE platform into the US and Asian markets.  A number of deals have been closed in the US with many more at varying stages in the sales cycle. Most progress has been made in the Asian market, where the HTC Vive Ecosystem Conference was held virtually inside the ENGAGE platform in conjunction with HTC Corporation (‘HTC’) on 19 March 2020 and the success of this event has created a significant number of further opportunities for the Group.

Following the HTC Vive Ecosystem Conference, a commercial agreement was entered into with HTC to grant them exclusive rights to resell the ENGAGE platform in Greater China on a revenue share basis, with a guaranteed minimum revenue each year for the Group from HTC.  Separately, in June 2020, HTC invested €3.0 million at a €12.0 million pre-money valuation to further the development of ENGAGE and to facilitate increased sales and marketing of the platform.

Demand for the Group's VR showcase experiences, comprising Apollo 11 VR, Titanic VR and Shuttle Commander, remain in line with management's expectations with a new experience expected to launch in H2-2020.

The recent impetus in global demand for the Group’s core product coupled with a strengthening of our balance sheet following our strategic partnership with HTC, provides the Board with confidence about the Group’s prospects for FY-2020 and beyond.

Your executive directors have done an outstanding job in maturing the company, upselling its products and securing vital commercial partnerships.  They have of course been greatly aided by the tireless efforts of a talented pool of staff, and I would like to extend my thanks to all of them.

Richard Cooper
Chairman

15 June 2020

CHIEF EXECUTIVE’S REVIEW

Review of the Year

2019 has allowed VR Education to identify and overcome many hurdles which had subdued growth to date. I believe the Group is now well placed to become a leader in immersive communications.  The COVID-19 pandemic has transformed the Group’s fortunes as businesses, corporations and educational institutes globally are now seeking better alternatives to video-based communications due to limitations with collaborative tasks and the drawbacks of larger group communications via video as a medium.  Our recently announced strategic partnership with HTC will ensure that the Group has continued support for marketing, sales and business development as HTC will sell the ENGAGE platform exclusively in Greater China and non-exclusively in the rest of the world.  This partnership will serve to further both companies’ objectives and goals.

ENGAGE Hardware Milestone

2019 was also a transformative year for the Group as some key hardware hurdles were overcome.  ENGAGE became available on standalone devices such as the Oculus Quest, Pico VR and Vive Focus.  This was of critical importance as the previous two years proved that pitching a virtual training solution or communications tool to corporations using PC based equipment would not succeed as a major limiting issue for most companies is the ease of use of the VR device.

Up to recently, demos would involve setting up a PC or laptop with multiple cables before ENGAGE could be used.  This often proved cumbersome for potential customers with the perception that users would need some technical knowledge to achieve a good end-user experience.  During early 2019, the ENGAGE development team gained access to multiple standalone devices which allowed them to port ENGAGE to work cross- platform across all standalone devices and PC-based devices.  For the first time our business developers could simply pull a headset out of their bag and place the customer into the experience with minimum fuss.

XR Finally Becoming Mainstream

In my opinion, it cannot be understated how important standalone devices are to the success of the Extended Reality “XR” industry as a whole and manufacturers like Facebook/Oculus have not been able to keep up with demand.  Sales of the Oculus Quest headset have suffered from retail shortages since its release in March 2019 and continued shortages due to manufacturing issues caused by COVID-19 as many components are manufactured in China.  The Facebook/Oculus headset has sold extremely well and could possibly have sold more but sales were limited to one per person at retail stores and devices were not made available to business or education users as almost all stock was diverted to retail stores for the 2019 holiday period.  The impact of Covid-19 on global questioning of outsourcing manufacturing to China remains uncertain, but a wider manufacturing base is regarded by us as highly positive.

Facebook/Oculus ISV Programme

In October 2019, the Group’s ENGAGE platform was selected by Facebook to become part of its ISV programme which works with enterprise developers and software companies to engage with Oculus in order to accelerate customer adoption of VR solutions built for Oculus enterprise products.  As a result, following the roll-out of Oculus for Business which was scheduled for early 2020, VR Education's ENGAGE platform will, for the first time, be available via a special portal for Oculus enterprise clients to access and connect with.  In addition, the Group will be one of only a few select developers who will be able to provide services using Facebook equipment as well as receiving additional support from them.  This programme was originally set for release in early 2020 however due to the effect of COVID-19 on manufacturing and the limited number of devices available for enterprise users we have not seen a full deployment of this programme to date and dependent on progress by Facebook we hope it will now happen in H2-2020.

Platform Agnostic

Facebook/Oculus was not the only hardware manufacturer to release standalone devices during 2019 with HTC and Pico seeing releases of comparable headsets in mid-2019 and early 2020 respectively.  The ENGAGE team worked hard to support both the HTC Vive Focus Plus and Pico Neo 2 and the platform now has parity across all devices. Being platform agnostic, ENGAGE has mitigated some of the key challenges with resourcing devices however, stock is still limited across the world as manufacturing is only starting to recommence as China’s factories return to work post COVID-19 lockdown.

Showcase Experiences

During 2019 the Group continued to see strong sales of its showcase experiences Apollo 11 VR and Titanic VR on various VR platforms.  In the second half of 2019 the Group released its third showcase experience on PlayStation VR named “Shuttle Commander” which puts you in control for some of the Shuttle’s most famous missions.

Sales continued strongly across all platforms and the Group plans to release Shuttle Commander on PC- based VR devices and the Oculus Quest later in FY20.

In May 2019 the Group announced the signature of a deal with the US Rocket and Space Centre in Alabama for the installation of Apollo 11 VR as a ticketed exhibit.  This exhibit proved immensely popular with visitors and on conclusion of a successful trial period, the Group secured a twelve month extension of this deal which was signed in December 2019.

POST YEAR END HIGHLIGHTS

COVID-19 Effect

Throughout 2019 the ENGAGE platform became more popular with educators and corporations using it for small meetings and events.  The ENGAGE user base grew significantly in the latter part of 2019 as users got access to standalone devices and attended events held inside ENGAGE.  In the early part of 2020, as the COVID-19 pandemic took hold in China and Italy, the president of HTC China, Alvin Wang Graylin, attended one such event being held inside the ENGAGE platform and decided to contact VR Education.

At the time, HTC had just recently cancelled its annual Vive Developer Conference, which was due to be held on the Chinese mainland in March 2020 and HTC was seeking a way to provide the event virtually without the limitations of standard video-based platforms.  The ENGAGE team worked very closely with the HTC team in China for several weeks and on 19 March 2020 the complete HTC Vive Ecosystem Conference was held inside the ENGAGE platform with over one thousand attendees logged into the platform and over 1.1 million viewers watching the live stream throughout China.  The HTC Vive Ecosystem Conference was a great success as ENGAGE allowed users from within China to connect with the outside world in a fully networked virtual environment with keynote speakers from Qualcomm, China Mobile, Nvidia, X Prize and HTC to name a few.  Since this event, the Group has been inundated with requests for virtual events from various corporations and event groups and it is anticipated that the Group will see a growing market for this type of service in the future.

A huge number of large physical events have been cancelled due to the worldwide COVID-19 pandemic and, as a result of this continued disruption, the Group expects that the event space will evolve to a scenario where smaller groups will attend the physical event and there will be increased demand for virtual services.  Further opportunity for these types of services will arise with global business travel anticipated to reduce significantly, remote worker employment to become more normalised and the ever-increasing home school market to see accelerated growth in life under COVID-19.  The world has been forced online to complete simple tasks such as meetings, classes and events and people are now seeing the limitations of using current communication systems which broadcast video and audio.

Running a video conference call with more than six people is difficult as participants talk over each other quite often and users can become disengaged with the format as they sit and watch video.  Running virtual meetings and events inside the ENGAGE platform is as close as you can get to real life by sitting in a virtual room with virtual people interacting in a natural way.

ENGAGE also has major benefits with very low bandwidth requirements and its spatial recording systems allowing for the replay of events as if they were happening live and allowing users to move within the recording if needed.  As a comparison, an hour-long piece of content with up to 50 users all inside the ENGAGE platform being spatially recorded is only 80MB in size, whereas, an hour-long video recording from competitors like Zoom or Skype will be over 1GB for any type of quality recording.

Overall, it is the Group’s strong belief that following COVID-19, the world will be a very different place with business travel becoming less common, increasing numbers of remote workers and a sharp increase in the home school market.  The Group also believes the ENGAGE platform provides users with a better alternative to services like Microsoft Teams, Skye, Zoom and Adobe Connect and VR Education is now in a strong place to implement its plans, with strategic partnerships being made which place the Group in a prime position for this new era of global communications.

HTC Investment / Partnership

Due to the success of the virtual Vive Ecosystem Conference in March, HTC wanted to create a stronger relationship with VR Education and offered the Group a partnership which included not only investment but a strategic commercial agreement.  HTC has been one of the global leaders in the VR hardware space over the past five years, releasing many products in the VR industry.  VR Education believes that working alongside a leading VR technology Company such as HTC, achieving closer integration between teams on hardware and software development, means that the Group and the ENGAGE platform will stay ahead of the curve and its competitors when it comes to the latest in innovation and incorporating the next generation technologies.

The commercial partnership ensures that VR Education, which has primarily been a software technology company, now has sales, marketing and business development support from HTC with HTC having exclusivity in China and a non-exclusive agreement in place for the rest of the world.  This agreement includes a revenue share model for revenue generated globally with a fixed minimum quarterly payment amount of €75,000 per quarter, commencing from Q1 2021.

Victory XR Content Partnership

In April 2020, VR Education and VictoryXR agreed terms of a revenue share agreement, in which VictoryXR will import its extensive content library onto the ENGAGE platform and provide its services remotely to school children across the US. VictoryXR specialises in US-based science curriculum content and virtual animal dissections, both in the VR and AR space.  To date VictoryXR has created more than 240 unique VR and AR learning experiences spanning more than 50 different learning units.

Students using the ENGAGE platform will be both in physical schools and home schooled, including those whose access to traditional schooling has been impacted by COVID-19 due to lockdown.  Qualified educators will run live virtual classes via ENGAGE and additional educational content produced by VictoryXR will be available for replay via the ENGAGE platform.

Future Trading and Outlook

Many different aspects have come together over the past six months to accelerate the adoption of the ENGAGE platform. Some aspects were expected and planned for.  However, COVID-19 has accelerated all areas of the business in a way no one could have predicted just a few months ago.

When the Group looks at what has happened over the past six months, we see that VR mass adoption is finally starting to take place due to standalone devices becoming increasingly popular.

Telecommunications companies are also taking a vested interest in pushing XR to the masses as they seek to upsell their 4G customers to 5G subscriptions and see XR as a way to push this forward.  To this end VR Education has been working with Deutsche Telekom and Qualcomm Technologies with a partnership announced in December 2019 as new devices are set to be introduced to the market soon.

The Group now has a content partner with VictoryXR in the education space and a strong strategic partnership with HTC.

The COVID-19 pandemic has caused global disruption in all walks of life and forced the world to work online.  We expect companies and educational institutes will seek to drastically reduce costs post COVID-19 with physical events, workplaces and even schools becoming fully digital in the months and years to come.  The Group believes the ENGAGE platform is perfectly positioned to meet the needs of this new world as the seeds which were planted over the previous three years are now starting to grow and bear fruit.  We are confident for the future prospects of the Group and look forward to further updating shareholders as we progress through 2020.

David Whelan
Chief Executive Officer

15 June 2020

CHIEF FINANCIAL OFFICER’S REVIEW

I am pleased to report that revenue for the year was up 43% on the prior year from €716k to €1,024k, driven by the continued success of the showcase experiences on the PlayStation, Oculus and Steam platforms coupled with revenue generated from our newly released ENGAGE platform and our exhibition in the US Space and Rocket Center in Alabama.

EBITDA loss was €1.4 million compared to a loss of €1.5 million in the prior year, in line with management expectations.

Loss before tax was €1.9 million, in line with management expectations, compared to a loss in the prior year of €4.9 million.

Operating cashflows were a net outflow of €1.2 million for the period.  The current run-rate of staff costs and other ongoing costs is approximately €250k per month.

At the balance sheet date, trade and other receivables were €205k, marginally ahead of trade and other payables at €193k.  Trade receivables represented an average of 52 debtor days (2018: 92 days).

The Group’s cash position at 31 December 2019 was €1.3 million with no debt.  Following the receipt of subscription funds from HTC, the Group’s cash position was approximately €3.4m.

Séamus Larrissey
Chief Financial Officer

15 June 2020

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
for the Year Ended 31 December 2019

The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2019

The accompanying notes form an integral part of these financial statements.

COMPANY STATEMENT OF FINANCIAL POSITION
at 31 December 2019

The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2019

The accompanying notes form an integral part of these financial statements.

COMPANY STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2019