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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Frontier Developments Plc | LSE:FDEV | London | Ordinary Share | GB00BBT32N39 | ORD 0.5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
4.80 | 3.52% | 141.00 | 141.40 | 143.60 | 144.20 | 132.20 | 132.20 | 173,813 | 16:35:27 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Manufacturing Industries,nec | 104.58M | -20.91M | -0.5303 | -2.67 | 55.74M |
Date | Subject | Author | Discuss |
---|---|---|---|
06/9/2018 06:20 | vworlds_cambridge5 Sep '18 - 21:53 - 3499 of 3506 Interesting. Can you provide any specifics. | staverly | |
06/9/2018 04:24 | Frontier Development disappointing earnings is the nature of an upcoming video game developer. | walbrock82 | |
06/9/2018 04:14 | As p1nkfish just pointed out, it is investing in the future assets of the company. There are a number of things they might invest in under game development, staff training, game engine development, AR software etc. It makes more sense to class this as investment in assets rather than operating costs. Thanks dsct and makw61 for your explanations, very helpful! I am going to email frontier regarding notifying the market as to what happened with the fourth franchise. If only to know if they will. I will let you know if they reply. | endion | |
05/9/2018 22:40 | Expenses in the development of a future asset, invested therein. | p1nkfish | |
05/9/2018 21:51 | Thanks so much, both of you for helping with that.I was reading the report and everything sat OK with me until I got to that part. I know that capitalising costs which would normally be an operating expense can be used as accounting trickery to flatter profits but I just couldn't wrap my head around it in this instance and wasn't sure if it was aggressive. I do still wonder why the change from operating activity to investing activity. I'm still on the sidelines for now and will watch closely tomorrowThanks again :) | unnavailable | |
05/9/2018 21:37 | dsct, your example explains the accounting nicely, but there is no impact on tax paid. firstly the costs would be allowable in the year of spend whether capitalised or not (tax comps do not strictly follow the accounting treatment hence why we have deferred tax). Secondly the losses in option 1 would be carried forward and offset against future profits so you would have nil tax year 1, £1m year 2 and £2m year 3. I think most capitalised costs are amortised in the year of launch, but it's not entirely clear tbh. Some costs will relate to development of their in-house COBRA engine and may be amortised over longer periods i guess? I do feel the company are not the greatest communicators, but in the longer term that shouldn't matter too much. Still the biggest holding in my portfolio; hopefully we may see some institutional buying if the post-results roadshow goes well. | makw61 | |
05/9/2018 21:26 | Costs of game development are capitalised pre-launch and shown as intangible assets in the balance sheet. The costs can then be matched with the revenue from the game when it launches by amortising (writing off) the capitalised balance so that it then becomes a cost in the P&L. In effect the costs are deferred and not recognised in P&L until such time as the associated revenue is recognised. So, costs incurred in developing JWE during the year ended 31 May 2018 (aka FY18), which will mainly be developers' salaries, are not expensed in the P&L for that year as the game didn't launch until after the year end (digital launch was 12 June 2018). Instead the costs are just parked in the balance sheet. They will be expensed in FY19. Equally pre-order sales are not recognised but parked in the balance sheet under deferred income (which increased from £0.5m to £3.6m in terms of the current liabilities balance - this is a good thing btw!). This is the correct accounting treatment and is effectively mandated by international accounting standards (aka IFRS). Obviously the cash in respect of these costs has left the business so it appears as an outflow in the cash flow statement. As it is effectively spend on software it is correctly shown as an outflow under investing activities. Previously it had been shown as an operating outflow so this is simply a change in where the figure is shown within the cash flow statement. No change in overall cashflow. Capitalising costs increases earnings and amortisation reduces it. It's all just timing differences. As the number of franchises grows it is likely capitalisation and amortisation will roughly cancel out. | makw61 | |
05/9/2018 21:20 | @Unnavailabe #3497 / #3498 As far as I'm aware, and hopefully someone more knowledgeable will correct me if wrong. Rather than include all the expense of developing a game in one(?) year, the costs (or part of them), are classed as an Asset, so can be depreciated over a number of years. As a very simplistic example (i.e. no other figures!), if you developed a game from scratch, costing £15m to create, and it was expected to earn you £10m a year for 3 years. Option 1 (No capitalization) Y1: £15m loss (nil tax) Y2: £10m profit (20% tax = £2m) Y3: £10m profit (20% tax = £2m) Y4: £10m profit (20% tax = £2m) Option 2 (capitalized costs) Y1: £15m capitalized (nil tax) Y2: £10m profit - £5m Depreciation (20% tax = £1m) Y3: £10m profit - £5m Depreciation (20% tax = £1m) Y4: £10m profit - £5m Depreciation (20% tax = £1m) So a £3m tax bill instead of £6m. I too questioned "Capitalised development costs have been reclassified from operating activities to investing activities". Again, as far as I know, this is only a movement within the balance sheet, so no effect on the Profit and Loss. There should be an explanation of this in the next Annual Report. I suppose there is the possibility that these costs can be depreciated over a longer period. | dsct | |
05/9/2018 20:53 | @beckaroo The fourth franchise movie tie-in was mentioned in various articles and interviews, and also in Frontier job adverts. Factored into the share price unfortunately. | vworlds_cambridge | |
05/9/2018 20:33 | 'Capitalised development costs have been reclassified from operating activities to investing activities'. And that...What effect if any does this have on reported earnings? | unnavailable | |
05/9/2018 20:20 | 'Capitalisation of development costs on franchise assets and other intangibles accounted for GBP13.4 million in the period (FY17: GBP9.6 million), with development costs of Jurassic World Evolution being the largest element'. Can someone help me with what that means exactly. | unnavailable | |
05/9/2018 20:17 | Did Frontier ever say that the next title (2020 release) would be a film franchise and not their own IP or were people just guessing it would because of JWE? I have looked back at previous results and trading statements and can’t see any mention of this. | beckaroo | |
05/9/2018 19:45 | If the film franchise game had been cancelled, rather than delayed, surely the broker coverage would have focused on this and moved price targets down considerably! | shanklin | |
05/9/2018 18:38 | They can't state it because it's all down to Universal. No one is happy about it but this is not a new project that may get binned but a hugely successful franchise which has delayed the next instalment by 12 months | square1 | |
05/9/2018 18:19 | Thanks for clarifying, but where is it stated that the FY 2021 title is the movie tie-in? Obviously very reassuring if that's the case. | vworlds_cambridge | |
05/9/2018 18:07 | Looking on the bright side, after the HY1 2019 results in February the headlines should be something like 'Revenues increase 3 fold over HY1 2018 results' - just from the sales of JWE that are already known to have happened. | mark4231 | |
05/9/2018 17:58 | Yes must emphasize that it is only delayed, not cancelled. We could end up getting two releases next year. The reaction today is bizarre. | liam1om | |
05/9/2018 17:55 | New franchise wasn't cancelled just delayed due to film launch delay. Film franchise will be the FY 2021 title | square1 | |
05/9/2018 17:25 | Luckily I'd been in for a long time but that's the stock market for you ! | panic investor | |
05/9/2018 17:16 | Yes, I think that they would have said otherwise if the franchise hadn't been cancelled. Happy to be proved wrong though! They should also have released the news about the franchise earlier, rather than burying it in the results. A lot of people invested in the past couple of months, based on the expectation of (as previously announced) another big movie tie-in. The long-term potential is still good, though, but lots of work required to release the old fifth franchise next year. At least there won't be any royalties to pay... | vworlds_cambridge | |
05/9/2018 17:02 | I sold most of mine the day they didn't come up with the new title when the new game was released - I held the remainder which was a mistake, I sold those this morning - the story changed and I didn't abide 100% with my own rules therefore I lost more than I should have :-( - they have not been very good with the truth here by the looks of things | panic investor | |
05/9/2018 16:55 | They said it was a popular title I recall therefore I reckon it was cancelled | panic investor | |
05/9/2018 16:42 | Hi dsct, revenue is net of VAT. Steam fees are part of cost of sales (in fact the major part of cost of sales per the financial review section). Not sure on royalties - there would have been few if any in the period. Presumably cost of sales i would guess but the Jurassic royalties won't hit P&L until H1 of FY19. ATB | makw61 | |
05/9/2018 16:13 | Not sure what the delayed franchise is, but the share price has definitely been 'shaken, not stirred' today ! I was out when the sub 850p occurred, but then put in a cheeky limit-order at that price as a trading buy, with the aim to sell (or very closely monitor) when 1000p hit again. Not-dealt and now cancelled, but will think about doing similar tomorrow, once todays news has been digested by after-hours readers. It's disheartening to read the excellent analysis on here, correlate my own figures (and views), and then for it all to be ignored by 'The Market' ! If anyone can help with my previous request it would be appreciated: "I'm presuming the revenue is net to FDEV (i.e. less VAT, Steam fees, royalties etc.). Unless anyone here can confirm what's included in Revenue and Cost of Sales, I may ask the company for clarification." @endion. Although it's been many years, the mozzies I remember, but the beach crocodiles weren't in Scotland when I visited ! lol. Enjoy it, whereever you are :o) | dsct |
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