Virtuality Group Plc should be in the black by the year-end as interim losses fell despite increased development costs. The Leicester-based company still claims 80% of the worldwide immersive virtual reality out-of-home entertainment market. The rate of losses slowed during the first half to the point where the second quarter was profitable. Virtuality turned in interim net and pre-tax losses to June 30 of ú583,000, down from ú695,000 losses a year ago. Turnover was up 52% to ú6.3m. The entertainment business has reached what managing director Jon Waldern believed to be a critical mass of more than 1,000 installations in 30 countries. It has got to the stage now where third-party developers are producing software for the systems. Waldern said the company would like to become known as a publisher in the future, as well as a developer. In June a subsidiary of Philips Electronics NV became the company’s third major investor, after IBM Corp and Motorola Inc, when it subscribed for 1.3m shares, nearly all the placing, giving it 4.69% of the enlarged Virtuality equity (CI No 2,695). The placing raised ú2.4m net of expenses. Waldern had said in March that the company would have enough cash to see it through the year without any rights issues (CI No 2,625). Cash at the half-way stage stood at ú4.7m, down from ú5.3m a year ago. The company has 14 completed titles and a further eight under development, according to chairman David Payne. Development costs increased to ú1.3m from ú880,000 last time. The level of expenditure is likely to be the same in the second half, according to Payne. Away from fun and games, Ford Motor Co invested in 10 Virtuality machines costing ú200,000 for customers to test-drive cars without leaving the showroom (CI No 2,678). They will be unveiled at the Frankfurt motor show later this month. The technology business is the part involved in development of virtual reality software for the home, and negotiations are continuing with various potential partners to licence the component technologies from Virtuality in the areas of the Internet, set-top boxes and personal computer software, said Payne. Virtuality has agreements with IBM Corp and Atari Corp for the Elysium personal computer-based system and the Jaguar VR games system (CI No 2,668) respectively. Further announcements are due before Christmas, said Waldern. The current deputy executive chairman, Dennis Ohryn will move from one day a month to become full time executive chairman at the year-end. The company hopes to retain an input from David Payne after that time. Analysts were forecasting profits between ú150,000 and ú200,000 at the year-end. Virtuality pays no dividend.
