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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.50 | -0.25% | 203.00 | 202.50 | 203.00 | 203.00 | 199.40 | 200.00 | 11,214 | 11:13:06 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Manufacturing Industries,nec | 104.58M | -20.91M | -0.5303 | -3.82 | 79.83M |
From Apr 2019 to Apr 2024
TIDMFDEV
RNS Number : 9348D
Frontier Developments PLC
06 February 2018
Frontier Developments plc
Interim Results
Performance sustained following a record year
Frontier Developments plc (AIM: FDEV, "Frontier", the "Company"), a leading developer of video games based in Cambridge, UK has published its interim results for the 6 months to 30 November 2017.
Overview
Frontier has a proven track record of world-class video-game development in many different genres on many different platforms, delivered over multiple decades, using its own COBRA engine. In November 2016 Frontier completed its successful transition to a higher margin self-publishing business model when it launched its second high profile franchise, Planet Coaster, building on the continued success of its first, Elite Dangerous. Frontier's third game franchise, Jurassic World Evolution, based on the Jurassic Park/World movie franchise, will launch in summer 2018.
Frontier's ambition is to continue to create a self-publishing multi-franchise success story. Ongoing investment in people, organisation and facilities, supported by the proceeds from the GBP17.7 million strategic investment by Tencent completed in July 2017, will enable the business to continue scaling up by increasing the frequency of major releases.
For the six months to 30 November 2017, Frontier delivered a sustained level of performance compared to the record results achieved for financial year 2017 (the twelve months ended 31 May 2017), with revenue of GBP19.0 million in the period compared to GBP18.1 million for the six months to 30 November 2016 and GBP19.3 million for the six months to 31 May 2017. Both Elite Dangerous and Planet Coaster continue to perform well.
Financial Summary
Hot Features
Premium
Interim Interim Full results
results results for Financial
for Financial for Financial Year 2017
Year 2018 Year 2017 (12 months
(6 months (6 months to 31 May
to 30 November to 30 November 2017)
2017) 2016)
------------------ ---------------- ---------------- ---------------
Revenue GBP19.0m GBP18.1m GBP37.4m
------------------ ---------------- ---------------- ---------------
Operating Profit GBP3.0m GBP3.6m GBP7.8m
------------------ ---------------- ---------------- ---------------
Operating Margin
% 16% 20% 21%
------------------ ---------------- ---------------- ---------------
EBITDA* GBP6.0m GBP5.8m GBP12.7m
------------------ ---------------- ---------------- ---------------
EPS (basic) 8.0p 10.7p 22.7p
------------------ ---------------- ---------------- ---------------
Operating Cash GBP1.0m GBP2.2m GBP3.4m
Flow
------------------ ---------------- ---------------- ---------------
Net Cash Balance GBP29.1m GBP6.7m GBP12.6m
------------------ ---------------- ---------------- ---------------
*Earnings before interest, tax, depreciation and amortisation
Operational & Strategic Highlights
-- Elite Dangerous, which launched in December 2014, continues to expand and develop, with an increasing level of
story driven content. The audience for Elite Dangerous was further expanded in June 2017 with its release on the
Sony PlayStation 4 platform.
-- Planet Coaster, which launched in November 2016, continues to perform well. We have started to build a
successful Planet Coaster PDLC (paid downloadable content) business with multiple launches in the period; 5
separate PDLC 'add-on' products are available as of 6 February 2018.
-- Frontier's next major game franchise, based on the Jurassic World movie franchise, was revealed in August 2017;
Jurassic World Evolution will launch on PC, PlayStation 4 and Xbox One in summer 2018 alongside the movie launch
of Jurassic World: Fallen Kingdom.
-- GBP17.7 million was raised in July 2017 through a strategic investment from Tencent, a leading Internet and
interactive entertainment company based in China. This will improve and accelerate Frontier's growth into the key
Chinese market and help drive scale-up of the business.
-- In October 2017 the first Frontier Expo was held, a Frontier-specific event, with tickets available to the public,
which brought together Frontier's developers, player community members and media to spotlight major franchise
announcements, maximising awareness and further building Frontier's profile.
Financial Highlights
-- Total revenue of GBP19.0 million for H1 FY18 (the 6 months ended 30 November 2017) compared to GBP18.1 million
for H1 FY17.
-- Gross profit margin of 69% (H1 FY17: 74%). The 5% reduction reflected a higher proportion of sales through
distribution partners and the launch of lower margin physical disc sales in the period.
-- Operating profit of GBP3.0 million at a margin of 16% (H1 FY17: GBP3.6 million, 20%), with the margin change
reflecting the reduction in gross profit margin.
-- Operating cash flow (operating profit excluding non-cash items, less investments in franchises and other
intangible assets) was an inflow of GBP1.0 million (H1 FY17: inflow of GBP2.2 million).
-- Cash balances increased by GBP16.5 million during the 6 month period to GBP29.1 million at 30 November 2017 (31
May 2017: GBP12.6 million, 30 November 2016: GBP6.7 million) following the GBP17.7 million strategic investment
by Tencent in July 2017.
Current Trading and Outlook
Both Elite Dangerous and Planet Coaster continue to perform well. Sales of Elite Dangerous in the first six months of the year benefitted from its release on Sony PlayStation 4 and the launch of physical disc sales on both Sony PlayStation 4 and Microsoft Xbox. Trading through the holiday period (Thanksgiving and Christmas) was in line with the Board's expectations, with both Elite Dangerous and Planet Coaster performing well in price promotion events.
Taking the above factors together, the Board anticipates that Elite Dangerous revenue will normalise down from the first half to the second half of the financial year as PlayStation 4 sales settle to a post-launch run-rate, but that underlying run-rate sales (including downloadable content) will sustain at healthy levels. As a consequence, the Board remains confident about achieving its expectations for the current financial year ending 31 May 2018.
The Board continues to anticipate that Frontier's next step-up in financial performance will be delivered by the launch of Jurassic World Evolution in summer 2018 on PC, PlayStation 4 and Xbox One. The Board continues to expect that revenue from this new franchise will fall into the financial year ending 31 May 2019, as the Jurassic World: Fallen Kingdom movie is released in June 2018. The Board therefore continues to anticipate that trading in the current financial year, the twelve months ending 31 May 2018, will principally be based on sales from the Elite Dangerous and Planet Coaster franchises.
David Braben, Chief Executive, said:
"Our strategy of supporting and nurturing our game franchises continues to deliver, with sales in the first half of the year sustaining last year's record breaking levels. Our extensive and expanding player community continues to enjoy the evolving story within Elite Dangerous and the endless creativity of Planet Coaster, particularly with the addition of the 'Spooky' and 'Adventure' add-on packs.
We look forward to our next major milestone; the release of Jurassic World Evolution, our third franchise, in summer 2018. Beyond this we are working on plans to further scale up our business to accelerate the frequency of our major releases".
This announcement contains inside information as defined in Article 7 of the Market Abuse Regulation (EU) 596/2014. The person responsible for making this announcement on behalf of the Company is Alex Bevis.
Enquiries:
Frontier Developments +44 (0)1223 394300
David Braben, CEO / David Walsh, COO / Alex Bevis, CFO
Liberum - Nomad and Joint Broker +44 (0)20 3100 2000
Neil Patel / Cameron Duncan
finnCap - Joint Broker +44 (0) 20 7220 0500
Matt Goode/Giles Rolls / Alice Lane
Tulchan Communications +44 (0) 20 7353 4200
James Macey White/Matt Low
About Frontier Developments plc
Frontier Developments plc, listed on the AIM stock market (AIM: FDEV), is a leading independent creator of self-published videogame franchises founded in 1994 by David Braben, co-author of the seminal 'Elite' game. Based in Cambridge, UK, Frontier uses its proprietary 'COBRA' game development technology to create innovative videogames for home consoles and personal computers. Frontier's LEI number: 213800B9LGPWUAZ9GX18.
www.frontier.co.uk
About Elite Dangerous
Elite Dangerous - available for Windows PC, Apple Macintosh, Microsoft Xbox One and Sony PlayStation 4 - is the definitive massively multiplayer space epic, bringing gaming's original open world adventure to the modern generation with a connected galaxy, evolving narrative and the entirety of the Milky Way re-created at its full galactic proportions.
www.elitedangerous.com
About Planet Coaster
Planet Coaster - available for Windows PC - builds on Frontier's genre-defining expertise with coaster park games, allowing players to create, manage and share coaster parks with friends and content creators around the world. Players can let their imaginations run wild to surprise, delight and thrill incredible crowds of park guests as they build their own coaster park empire.
www.planetcoaster.com
About Jurassic World Evolution
Jurassic World Evolution - launching summer 2018 for Windows PC, Microsoft Xbox One and Sony PlayStation 4 - evolves players' relationship with the Jurassic World film franchise, placing them in control of operations on the legendary islands of Isla Nublar and the surrounding islands of the Muertes Archipelago. Players will create and manage their own Jurassic World as they bioengineer new dinosaur breeds, and construct attractions, containment and research facilities. Every choice leads to a different path and spectacular challenges arise when 'life finds a way'.
www.jurassicworldevolutiongame.com
Financial Review
TRADING
Total annual revenue in H1 FY18 (the six months to 30 November 2017) grew to GBP19.0 million (H1 FY17: GBP18.1 million) with sales of Elite Dangerous benefitting from its release on Sony Playstation 4 and physical disc on both Sony Playstation 4 and Microsoft Xbox. Planet Coaster also performed well in the period, through both sales of the game and sales of additional downloadable content. Self-publishing revenue accounted for 97% of sales (H1 FY17: 96%) with the balance being related to legacy work-for-hire business. In October 2017 we came to a settlement over the outstanding historic royalties owed by Atari on RollerCoaster Tycoon 3, payment of which is being made in instalments and will be completed by 31 May 2018.
Both of Frontier's existing franchises continue to perform well. For the calendar year 2017, and for the second year in a row, both Elite Dangerous and Planet Coaster achieved places in the annual "Top 100 Sellers" chart based on worldwide gross revenue on Steam (a leading PC digital distribution platform), with Planet Coaster achieving a top 40 position (consistent with 2016). As at 31 December 2017 cumulative sales of Elite Dangerous, which launched in December 2014, had exceeded 3.25 million franchise units and Planet Coaster, which launched in November 2016, had passed 1.4 million units.
Gross profit of GBP13.2 million was recorded in the period (H1 FY17: GBP13.5 million) with gross margin at 69% (H1 FY17: 74%). The largest element of cost of sales is the margin payable to our digital distribution partners. The reduction in gross margin percentage compared to the prior period reflected a higher proportion of sales through distribution partners and the launch of physical disc sales. Whilst margins on physical discs are lower they still make economic sense as they enable sales to an otherwise difficult to reach audience.
Gross research and development expenses in the period were GBP6.8 million (H1 FY17: GBP6.9 million) with the majority of spend being internal staff costs. Capitalisation of development costs on franchise assets and other intangibles accounted for GBP5.0 million in the six months to 30 November 2017 (H1 FY17: GBP4.9 million). Amortisation charges related to previously capitalised development costs grew to GBP2.8 million (H1 FY17: GBP1.9 million) following the launch of Planet Coaster in November 2016. Net research and development expenses recorded in the income statement in the year were therefore GBP4.6 million (H1 FY17: GBP3.9 million), being gross spend, less capitalised costs, plus amortisation charges.
Total sales, marketing and administrative expenses reduced to GBP5.6 million (H1 FY17: GBP5.9 million), although this included unrealised exchange gains on forward contracts of GBP0.3 million in H1 FY18 and losses of GBP0.9 million in H1 FY17. Adjusting for these non-cash items, total expense increased by approximately GBP1.0 million (20%) mainly due to increases in sales and marketing costs to support Frontier's self-publishing model.
Operating profit of GBP3.0 million was recorded in the period (H1 FY17: GBP3.6 million) representing an operating margin of 16% (H1 FY17: 20%). The margin reduction largely resulted from the lower gross margin percentage. EBITDA (earnings before interest, tax, depreciation and amortisation) increased slightly to GBP6.0 million (H1 FY17: GBP5.8 million).
Corporation tax charges in the period were minimal overall, consistent with the interim results for FY17. This was due to a combination of brought forward tax losses and Video Games Tax Relief. Full tax accounting will be performed for the full year results.
Profit after tax in the period was GBP2.9 million (H1 FY17: GBP3.6 million). Basic earnings per share was 8.0 pence (H1 FY17: 10.7 pence).
BALANCE SHEET AND CASH FLOW
The Company continued to run a robust balance sheet during the six month period to 30 November 2017, and this was further boosted by the strategic investment completed in July 2017.
Intangible assets increased by GBP2.6 million in the six month period to GBP24.4 million at 30 November 2017 (31 May 2017: GBP21.9 million) as investments in franchise assets and other intangibles exceeded amortisation charges.
Tangible assets increased by GBP2.8 million to GBP3.5 million (31 May 2017: GBP0.7 million) through investment in the fit-out of Frontier's new leased building on the Cambridge Science Park. Works are scheduled to complete in early 2018 with a move-in scheduled in the spring, enabling all of Frontier's talented people to work together in a single purpose built facility.
Trade and other receivables of GBP3.4 million at 30 November 2017 were similar to the position at the end of the last financial period (31 May 2017: GBP2.9 million). At 30 November 2016 the balances were much higher (GBP9.6 million) as Planet Coaster released in that month.
Trade and other payables totalled GBP5.1 million (31 May 2017: GBP4.9 million). The high balance at 30 November 2016 (GBP7.7 million) was due to accrued distribution costs on Planet Coaster.
Total deferred income reduced slightly to GBP1.1 million at the period end (31 May 2017: GBP1.4 million).
Cash balances increased by GBP16.5 million during the period to GBP29.1 million (31 May 2017: GBP12.6 million). The increase in cash was mainly due to the GBP17.7 million strategic investment by Tencent which completed in July 2017. During the six months to 30 November 2017 operating cash flow (operating profit excluding non-cash items, less investments in franchises and other intangible assets) accounted for an inflow of GBP1.0 million (H1 FY17: an operating cash inflow of GBP2.2 million). The remaining significant factor on cash flow was the new building, which accounted for a cash outflow of GBP2.8 million.
Share Issues
Employees exercised options over 904,967 Ordinary Shares during the 6 months to the end of November 2017. 65,600 of these Ordinary Shares were transferred under arrangements with the Employee Benefit Trust with the remaining 839,367 Ordinary Shares being newly issued shares, which generated exercise proceeds for the Company of GBP1.5 million.
In July 2017 the company completed a strategic investment with Tencent Holdings Limited. Tencent acquired 3,386,252 newly issued Ordinary Shares at 523.2 pence per share generating proceeds of GBP17.7 million.
BOARD CHANGES
Following the strategic investment by Tencent, Frontier's Board invited James Mitchell, Chief Strategy Officer of Tencent, to become a Non-Executive Director in order to gain his insights into the Chinese market and the wider global entertainment industry. James was appointed on 19 September 2017.
6 months 6 months
to to 12 months
30 Nov 30 Nov to 31
2017 2016 May 2017
Notes GBP'000 GBP'000 GBP'000
------------------------------------ ------ --------- ----------- ----------
Revenue 6 18,990 18,074 37,363
Cost of sales (5,816) (4,618) (10,007)
------------------------------------ ------ --------- ----------- ----------
Gross profit 13,174 13,456 27,356
Research and development expenses (4,580) (3,949) (7,630)
Sales and marketing expenses (2,817) (1,213) (4,310)
Administrative expenses (2,816) (4,653) (7,624)
------------------------------------ ------ --------- ----------- ----------
Operating profit 2,961 3,641 7,792
Finance income 15 7 21
------------------------------------ ------ --------- ----------- ----------
Profit before tax 2,976 3,648 7,813
Income tax (34) (12) (102)
------------------------------------ ------ --------- ----------- ----------
Profit for the period attributable
to shareholders 2,942 3,636 7,711
------------------------------------ ------ --------- ----------- ----------
Earnings per share
Basic earnings per share 7 8.0 10.7 22.7
Diluted earnings per share 7 7.6 10.3 22.4
------------------------------------ ------ --------- ----------- ----------
CONSOLIDATED INCOME STATEMENT
All the activities of the Group are classified as continuing.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months 6 months
to to 12 months
30 Nov 30 Nov to 31
2017 2016 May 2017
GBP'000 GBP'000 GBP'000
------------------------------------- --------- ----------- ----------
Profit for the period 2,942 3,636 7,711
Other comprehensive income:
Exchange differences on translation
of foreign operations 4 58 57
-------------------------------------- --------- ----------- ----------
Total comprehensive income
for the period attributable
to the equity holders of the
parent 2,946 3,694 7,768
-------------------------------------- --------- ----------- ----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 Nov 31 May 30 Nov
2017 2017 2016
Notes GBP'000 GBP'000 GBP'000
-------------------------------- ------ --------- --------- ---------
Non-current assets
Intangible assets 8 24,433 21,871 19,675
Property, plant and equipment 9 3,533 696 275
-------------------------------- ------ --------- --------- ---------
27,966 22,567 19,950
-------------------------------- ------ --------- --------- ---------
Current assets
Trade and other receivables 3,400 2,941 9,584
Other short-term assets 515 510 154
Cash and cash equivalents 29,098 12,579 6,747
-------------------------------- ------ --------- --------- ---------
33,013 16,030 16,485
-------------------------------- ------ --------- --------- ---------
Total assets 60,979 38,597 36,435
-------------------------------- ------ --------- --------- ---------
Current liabilities
Trade and other payables (5,125) (4,894) (7,743)
Deferred income (230) (459) (406)
Current tax liabilities (747) (747) (15)
Provisions (275) (275) -
-------------------------------- ------ --------- --------- ---------
(6,377) (6,375) (8,164)
-------------------------------- ------ --------- --------- ---------
Net current assets 26,636 9,655 8,321
-------------------------------- ------ --------- --------- ---------
Non-current liabilities
Provisions - - (275)
Deferred income (919) (927) (1,166)
-------------------------------- ------ --------- --------- ---------
(919) (927) (1,441)
-------------------------------- ------ --------- --------- ---------
Total liabilities (7,296) (7,302) (9,605)
-------------------------------- ------ --------- --------- ---------
Net assets 53,683 31,295 26,830
-------------------------------- ------ --------- --------- ---------
Equity
Share capital 10 192 171 171
Share premium account 33,845 14,601 14,496
Equity reserve 303 972 911
Foreign exchange reserve (12) (4) (3)
Retained earnings 19,355 15,555 11,255
-------------------------------- ------ --------- --------- ---------
Total equity 53,683 31,295 26,830
-------------------------------- ------ --------- --------- ---------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign Retained Total
Share Capital Share premium Equity reserve exchange earnings equity
GBP'000 account GBP'000 GBP'000 reserve GBP'000 GBP'000 GBP'000
At 1 June 2016 170 14,476 579 (61) 7,600 22,764
Profit for the
period - - - - 3,636 3,636
Other
comprehensive
income:
Exchange
differences
on translation
of foreign
operations - - - 58 - 58
Total
comprehensive
income for the
period - - - 58 3,636 3,694
----------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------
Issue of share
capital
net of expenses 1 20 - - - 21
Share-based
payment
charges - - 340 - - 340
Share-based
payment
transfer
relating to
option lapses - - (19) - 19 -
EBT share
inflows from
issues and/or
purchases - - 11 - - 11
EBT share
outflows
from option
exercises - - - - - -
----------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------
At 30 November
2016 171 14,496 911 (3) 11,255 26,830
----------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------
Profit for the
period - - - - 4,075 4,075
Other
comprehensive
income:
Exchange
differences
on translation
of foreign
operations - - - (1) - (1)
---------------- ---------------- ---------------- ---------------- ---------
Total
comprehensive
income for the
period - - - (1) 4,075 4,074
----------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------
Issue of share
capital
net of expenses - 105 - - - 105
Share-based
payment
charges - - 347 - - 347
Share-based
payment
transfer
relating to
option lapses - - (225) - 225 -
EBT share
inflows from
issues and/or
purchases - - (329) - - (329)
EBT share
outflows
from option
exercises - - 268 - - 268
----------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------
At 31 May 2017 171 14,601 972 (4) 15,555 31,295
----------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------
Profit for the
period - - - - 2,942 2,942
Other
comprehensive
income:
Exchange
differences
on translation
of foreign
operations - - - (8) 12 4
----------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------
Total
comprehensive
income for the
period - - - (8) 2,954 2,946
----------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------
Issue of share
capital
net of expenses 21 19,244 - - - 19,265
Share-based
payment
charges - - 325 - - 325
Share-based
payment
transfer
relating to
option lapses - - (846) - 846 -
EBT share
inflows from
issues and/or
purchases - - (263) - - (263)
EBT share
outflows
from option
exercises - - 115 - - 115
----------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------
At 30 November
2017 192 33,845 303 (12) 19,355 53,683
----------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------
CONSOLIDATED STATEMENT OF CASHFLOWS
6 months 6 months
to to 12 months
30 Nov 30 Nov to 31
2017 2016 May 2017
GBP'000 GBP'000 GBP'000
----------------------------------------- --------- --------- ----------
Cash generated from operations 788 (1,892) 4,184
Taxes received/(paid) (40) 167 456
Cashflow from operating activities 748 (1,725) 4,640
----------------------------------------- --------- --------- ----------
Investing activities
Purchase of property, plant and
equipment (2,960) (96) (633)
Expenditure on intangible assets
(excluding capitalised development
costs) (401) (103) (157)
Interest received 15 7 21
Cashflow from investing activities (3,346) (192) (769)
----------------------------------------- --------- --------- ----------
Financing activities
Proceeds from issue of share capital 19,265 20 125
Employee Benefit Trust net investment (148) 11 (50)
Cashflow from financing activities 19,117 31 75
----------------------------------------- --------- --------- ----------
Net change in cash and cash equivalents
from continuing operations 16,519 (1,886) 3,946
Cash and cash equivalents at beginning
of period 12,579 8,610 8,610
Exchange differences on cash and
cash equivalents - 23 23
Cash and cash equivalents at end
of period 29,098 6,747 12,579
----------------------------------------- --------- --------- ----------
The accompanying notes form part
of this financial information.
Reconciliation of operating profit
to cash generated from operations
6 months 6 months
to to 12 months
30 Nov 30 Nov to 31
2017 2016 May 2017
GBP'000 GBP'000 GBP'000
----------------------------------------- --------- --------- ----------
Operating profit 2,961 3,641 7,792
Depreciation and amortisation 2,997 2,109 4,864
----------------------------------------- --------- --------- ----------
EBITDA 5,958 5,750 12,656
----------------------------------------- --------- --------- ----------
Capitalised development costs (5,035) (4,864) (9,647)
Movement in unrealised exchange
(gains)/losses on forward contracts (271) 932 (337)
Share-based payment expenses 325 340 687
----------------------------------------- --------- --------- ----------
Operating cashflow 977 2,158 3,359
----------------------------------------- --------- --------- ----------
Net changes in working capital:
Change in inventories - 9 9
Change in trade and other receivables (713) (7,140) (479)
Change in trade and other payables 524 3,079 1,293
Change in provisions - 2 2
----------------------------------------- --------- --------- ----------
Cash generated from operations 788 (1,892) 4,184
----------------------------------------- --------- --------- ----------
NOTES TO THE FINANCIAL INFORMATION
1. CORPORATE INFORMATION
Frontier Developments plc 'the Group' develops video games for the interactive entertainment sector.
The Company is a public limited company and is incorporated and domiciled in the United Kingdom.
The address of its registered office is 306 Science Park, Milton Road, Cambridge CB4 0WG.
The Group's operations are based in the UK and its North American subsidiary, Frontier Developments Inc, in the US.
The condensed, consolidated interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 May 2017 were approved by the Board of Directors on 5 September 2017 and delivered to the Registrar of Companies. The Auditors Report was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.
2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE
Basis of preparation
The consolidated interim financial statements should be read in conjunction with the financial statements for the year ended 31 May 2017.
The financial information of Frontier Developments plc has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' (IAS 34).
The financial information has been prepared under the historical cost convention, except for financial instruments held at fair value. The financial information is presented in Sterling, the presentation and functional currency for the Group and Company. All values are rounded to the nearest thousand pounds (GBP'000) except when otherwise indicated.
Going concern basis
The Group's forecasts and projections, taking account of current cash resources and reasonably possible changes in trading performance, support the conclusion that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, a period of not less than 12 months from the date of approval of these financial statements. The Group therefore continues to adopt the going concern basis in preparing its financial statements.
3. ACCOUNTING POLICIES
The consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the Group's most recent annual financial statements for the year ended 31 May 2017.
4. ACCOUNTING ESTIMATES AND KEY JUDGEMENTS
When preparing the interim financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurements of assets, liabilities, income and expenses. The actual results may differ from these estimates.
The judgements, estimates and assumptions applied in the interim financial statements, including the key sources of estimation uncertainty, were the same as those applied in the Group's last annual financial statements for the year ended 31 May 2017.
5. SIGNIFICANT EVENTS AND TRANSACTIONS
There were no significant events or transactions in the interim period (1 June 2017 to 30 November 2017) which were not included within the interim financial statements. There have been no significant events or transactions during the period from the end of the interim period to the day preceding the date of this report (1 December 2017 to 5 February 2018).
6. SEGMENT INFORMATION
The Group identifies operating segments based on internal management reporting that is regularly reviewed by the chief operating decision maker and reported to the Board. The chief operating decision maker is the Chief Executive Officer.
Management information is reported as one operating segment, being revenue from self-published franchises and other revenue streams such as royalties and licensing.
The Group does not provide any information on the geographical location of sales as the majority of revenue is through 3rd party distribution platforms which are responsible for the sales data of consumers.
All of the Group's non-current assets are held within the UK.
All material revenue is categorised as either self-publishing revenue or other revenue.
6 months 12 months
to to
6 months to 30 Nov 31 May
30 Nov 2017 2016 2017
GBP'000 GBP'000 GBP'000
----------------- ------------- --------- ----------
Self-publishing
revenue 18,471 17,302 36,357
Other revenue 519 772 1,006
----------------- ------------- --------- ----------
18,990 18,074 37,363
----------------- ------------- --------- ----------
7. EARNINGS PER SHARE
The calculation of the basic earnings per share is based
on the profits attributable to the shareholders of Frontier
Developments plc divided by the weighted average number
of shares in issue during the year.
6 months 6 months
to to 12 months
30 Nov 30 Nov to 31
2017 2016 May 2017
------------------------------------------------ ----------- -------------- -----------
Profit attributable to shareholders
(GBP'000) 2,942 3,636 7,711
Weighted average number of shares 36,659,973 33,880,435 33,943,972
------------------------------------------------ ----------- -------------- -----------
Basic earnings per share (pence) 8.0 10.7 22.7
------------------------------------------------ ----------- -------------- -----------
The calculation of the diluted earnings per share is
based on the profits attributable to the shareholders
of Frontier Developments plc divided by the weighted
average number of shares in issue during the year as
adjusted for the dilutive effect of share options.
6 months 6 months
to to 12 months
30 Nov 30 Nov to 31
2017 2016 May 2017
------------------------------------------------ ----------- -------------- -----------
Profit attributable to shareholders
(GBP'000) 2,942 3,636 7,711
Diluted weighted average number
of shares 38,580,165 35,341,966 34,446,017
------------------------------------------------ ----------- -------------- -----------
Diluted earnings per share (pence) 7.6 10.3 22.4
------------------------------------------------ ----------- -------------- -----------
The reconciliation of average number of Ordinary Shares
used for basic and diluted earnings per share is as
follows:
6 months 6 months
to to 12 months
30 Nov 30 Nov to 31
2017 2016 May 2017
------------------------------------------------ ----------- -------------- -----------
Weighted average number of shares 36,659,973 33,880,435 33,943,972
Dilutive effect of share options 1,920,192 1,461,531 502,045
------------------------------------------------ ----------- -------------- -----------
Diluted average number of shares 38,580,165 35,341,966 34,446,017
------------------------------------------------ ----------- -------------- -----------
8. INTANGIBLE ASSETS
Intangible assets comprise capitalised development tools
and self-published software from internal development activities
and acquired software licences.
Development tools and Self-published software Third party software Total
licences GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------------------------ ------------------------ ------------------------ ---------
Cost
At 31 May 2016 3,966 21,600 1,102 26,668
Additions - arising from
capitalised development
expenses and purchases 271 4,593 103 4,967
At 30 November 2016 4,237 26,193 1,205 31,635
------------------------- ------------------------ ------------------------ ------------------------ ---------
Additions - arising from
capitalised development
expenses and purchases 300 4,483 54 4,837
At 31 May 2017 4,537 30,676 1,259 36,472
------------------------- ------------------------ ------------------------ ------------------------ ---------
Additions - arising from
capitalised development
expenses and purchases 424 4,611 401 5,436
At 30 November 2017 4,961 35,287 1,660 41,908
------------------------- ------------------------ ------------------------ ------------------------ ---------
Amortisation
At 31 May 2016 2,605 6,374 999 9,978
Amortisation charges 437 1,507 38 1,982
At 30 November 2016 3,042 7,881 1,037 11,960
------------------------- ------------------------ ------------------------ ------------------------ ---------
Amortisation charges 437 2,148 56 2,641
At 31 May 2017 3,479 10,029 1,093 14,601
------------------------- ------------------------ ------------------------ ------------------------ ---------
Amortisation charges 474 2,337 63 2,874
At 30 November 2017 3,953 12,366 1,156 17,475
------------------------- ------------------------ ------------------------ ------------------------ ---------
Net book value at 30
November
2017 1,008 22,921 504 24,433
------------------------- ------------------------ ------------------------ ------------------------ ---------
Net book value at 31 May
2017 1,058 20,647 166 21,871
------------------------- ------------------------ ------------------------ ------------------------ ---------
Net book value at 30
November
2016 1,195 18,312 168 19,675
------------------------- ------------------------ ------------------------ ------------------------ ---------
Net book value at 31 May
2016 1,361 15,226 103 16,690
------------------------- ------------------------ ------------------------ ------------------------ ---------
9. TANGIBLE ASSETS
Assets
in the
Fixtures Computer Leasehold course
and Fittings Equipment Improvements of construction Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------------- ----------- -------------- ----------------- ---------
Cost
At 31 May 2016 235 1,576 4 - 1,815
Additions - 96 - - 96
At 30 November 2016 235 1,672 4 - 1,911
----------------------- -------------- ----------- -------------- ----------------- ---------
Additions 1 141 - 394 536
Disposals (121) (916) (4) - (1,041)
----------------------- -------------- ----------- -------------- ----------------- ---------
At 31 May 2017 115 897 - 394 1,406
----------------------- -------------- ----------- -------------- ----------------- ---------
Additions - 167 - 2,793 2,960
At 30 November 2017 115 1,064 - 3,187 4,366
----------------------- -------------- ----------- -------------- ----------------- ---------
Depreciation
At 31 May 2016 213 1,294 4 - 1,511
Charge for the period 11 114 - - 125
At 30 November 2016 224 1,408 4 - 1,636
----------------------- -------------- ----------- -------------- ----------------- ---------
Charge for the period 3 112 - - 115
Disposals (121) (916) (4) - (1,041)
----------------------- -------------- ----------- -------------- ----------------- ---------
At 31 May 2017 106 604 - - 710
----------------------- -------------- ----------- -------------- ----------------- ---------
Charge for the period 1 122 - - 123
At 30 November 2017 107 726 - - 833
----------------------- -------------- ----------- -------------- ----------------- ---------
Net book value at 30
November 2017 8 338 - 3,187 3,533
----------------------- -------------- ----------- -------------- ----------------- ---------
Net book value at 31
May 2017 9 293 - 394 696
----------------------- -------------- ----------- -------------- ----------------- ---------
Net book value at 30
November 2016 11 264 - - 275
----------------------- -------------- ----------- -------------- ----------------- ---------
Net book value at 31
May 2016 22 282 - - 304
----------------------- -------------- ----------- -------------- ----------------- ---------
10. SHARE CAPITAL
Nominal
Value
Number GBP
----------------------------------- ----------- --------
At 1 June 2016 34,096,781 170,484
Shares issued on option exercises
and warrants 15,748 79
----------------------------------- ----------- --------
At 30 November 2016 34,112,529 170,563
----------------------------------- ----------- --------
Shares issued on option exercises
and warrants 118,000 590
----------------------------------- ----------- --------
At 31 May 2017 34,230,529 171,153
Shares issued to Tencent Holdings
Limited 3,386,252 16,931
Shares issued on option exercises
and warrants 839,367 4,197
----------------------------------- ----------- --------
At 30 November 2017 38,456,148 192,281
----------------------------------- ----------- --------
11. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS
Foreign Currency Forward Contracts
The Group used foreign exchange forward contracts to mitigate exchange rate exposure arising from forecast sales in US Dollars. The forward contracts are considered by management to be part of economic hedge arrangements but have not been formally designated.
All forward contracts are held at fair value through the profit and loss by reference to the exchange rate at the balance sheet date.
30 Nov 31 May 30 Nov
2017 2017 2016
GBP'000 GBP'000 GBP'000
---------------------------- ---------- ---------- ---------
Forward exchange contracts
- held for trading 205 (70) (1,339)
----------------------------- ---------- ---------- ---------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UVSARWUAURAR
(END) Dow Jones Newswires
February 06, 2018 02:00 ET (07:00 GMT)
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