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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 : 1259P
Frontier Developments PLC
06 February 2019
Frontier Developments plc
Interim Results
Record financial performance driven by Frontier's biggest launch to date
Frontier Developments plc (AIM: FDEV, "Frontier", the "Company"), a leading developer and publisher of video games based in Cambridge, UK has published its interim results for the 6 months to 30 November 2018.
Overview
Frontier, founded in 1994, 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. 2013 saw Frontier begin the transition to a higher margin self-publishing business model, combined with a strategy of growing a portfolio of game franchises over time and supporting, nurturing and enhancing each game franchise for many years after its launch.
December 2014 marked the release of Elite Dangerous, followed by Planet Coaster in November 2016 and in June 2018, Frontier launched Jurassic World Evolution, inspired by the Jurassic World film franchise. Frontier intends to continue to nurture and grow its portfolio, supporting existing franchises whilst investing in new titles. The development of Frontier's fourth game franchise is on track, with release planned for later in calendar year 2019.
For the six months to 30 November 2018 Frontier delivered a record financial performance, driven by the launch of Jurassic World Evolution in June 2018, Frontier's biggest launch to date, and the ongoing performance of Elite Dangerous and Planet Coaster. Frontier achieved revenue of GBP64.7 million in the period compared to GBP19.0 million for the six months to 30 November 2017.
Financial Summary
Hot Features
Premium
Interim results Interim results Full results
for Financial for Financial for Financial
Year 2019 Year 2018 Year 2018
(6 months to (6 months to (12 months
30 November 30 November to 31 May 2018)
2018) 2017)
Revenue GBP64.7m GBP19.0m GBP34.2m
---------------- ---------------- -----------------
Operating Profit GBP17.2m GBP3.0m GBP2.8m
---------------- ---------------- -----------------
Operating Margin % 27% 16% 8%
---------------- ---------------- -----------------
EBITDA* GBP21.7m GBP6.0m GBP9.4m
---------------- ---------------- -----------------
EPS (basic) 40.2p 8.0p 9.6p
---------------- ---------------- -----------------
Operating Cash Flow** GBP16.5m GBP1.0m (GBP2.8m)
---------------- ---------------- -----------------
Net Cash Balance GBP39.5m GBP29.1m GBP24.1m
---------------- ---------------- -----------------
*Earnings before interest, tax, depreciation and amortisation
** Operating profit excluding non-cash items, less investments in franchises and other intangible assets
Operational & Strategic Highlights
-- Jurassic World Evolution launched on PC, PlayStation 4 and Xbox One in June 2018 alongside the film release of Jurassic World: Fallen Kingdom. Jurassic World Evolution is Frontier's biggest launch to date, achieving 1 million base game unit sales in 5 weeks and 2 million base game units in seven months.
-- Planet Coaster, which launched in November 2016, continues to perform well, and has now passed 2 million base game units sold. Frontier's strategy of providing free updates alongside the creation of a PDLC (paid downloadable content) business has been successful; 9 separate PDLC 'add-on' products are available as of 6 February 2019.
-- Elite Dangerous, which launched in December 2014, continues to expand and develop. In December 2018 the Beyond series of free updates concluded with the release of Beyond - Chapter Four, introducing even more enhancements and features to further expand the Elite Dangerous gaming experience. Elite Dangerous has now sold over 3 million base game units*** since launch in December 2014.
-- The development of Frontier's fourth game franchise, based on the Company's own un-announced IP, is on track, with release planned for later in calendar year 2019.
-- In January 2019 Frontier celebrated 25 years of creativity, quality and innovation with a series of community events, culminating in a staff celebration event on 25 January 2019.
*** Previously the Company has reported "franchise units" for Elite Dangerous whereby the Elite Dangerous: Horizons expansion, sold at the same price as the base game, was also counted as one unit. The Company has now simplified unit reporting to state gross unit sales of the base game only.
Financial Highlights
-- Revenue increased by 240% to GBP64.7 million for H1 FY19 (the 6 months ended 30 November 2018) compared to GBP19.0 million for H1 FY18. The significant growth reflects the success of Jurassic World Evolution together with the ongoing performance of Elite Dangerous and Planet Coaster, in line with the Company's strategy.
-- Gross profit margin of 61% (H1 FY18: 69%). The reduction reflects royalties payable to Universal Games and Digital Platforms on sales of Jurassic World Evolution and physical disc sales of Jurassic World Evolution, which are lower margin than digital sales.
-- Operating profit of GBP17.2 million at a margin of 27% (H1 FY18: GBP3.0 million, 16%), with the growth in the percentage margin reflecting the substantial growth in revenue, albeit at lower gross profit margins.
-- Operating cash flow (operating profit excluding non-cash items, less investments in franchises and other intangible assets) increased to GBP16.5 million (H1 FY18: GBP1.0 million) due to the strong trading performance.
-- Cash balances increased by GBP15.4 million during the 6 month period to GBP39.5 million at 30 November 2018 (31 May 2018: GBP24.1 million).
Current Trading and Outlook
All three game franchises continue to perform well, following good trading performance during the competitive Holiday period incorporating Black Friday and Christmas price promotions. The Board is comfortable with analysts' revenue projections of GBP79 million to GBP88 million for the current financial year (FY19, the year ending 31 May 2019).
Frontier's strategy of continuing to grow its portfolio whilst supporting existing game franchises is delivering well. The development of Frontier's fourth game franchise, based on the Company's own un-announced IP, is on track, with release planned for later in calendar year 2019.
David Braben, Chief Executive, said:
"In January we celebrated our 25(th) anniversary, and I am very proud of all of our achievements during our first 25 years. In the last five years we have successfully transitioned from a trusted 'work-for'-hire' developer to an established self-publisher with a portfolio of three released games franchises, a substantial and world-class team, and strong partnerships. It's particularly pleasing that our most recent launch, Jurassic World Evolution, has been our biggest to date.
However, I believe we are still at the start of our journey; we have a lot of exciting opportunities ahead of us driven by our resources, capability and experience, our strong partnerships, and the widening opportunities for games companies within the ever-changing entertainment industry."
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 / 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
Matt Low / Deborah Roney
About Frontier Developments plc
Frontier Developments plc, listed on the AIM stock market (AIM: FDEV), is a leading independent creator of self-published video game franchises founded in 1994 by David Braben, co-author of the seminal Elite game. Based in Cambridge, Frontier uses its proprietary 'COBRA' game development technology to create innovative games, currently focusing on video game consoles and personal computers.
Frontier's LEI number: 213800B9LGPWUAZ9GX18.
www.frontier.co.uk
About Elite Dangerous
Elite Dangerous - available for Windows PC, 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 recreated 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 such as RollerCoaster Tycoon 3 and Thrillville. It further raises the bar for this popular genre, allowing players to let their imaginations run wild as they surprise, delight and thrill incredible crowds, and share their success with the world via the Steam Workshop community.
www.planetcoaster.com
About Jurassic World Evolution
Jurassic World Evolution - available for Windows PC, Microsoft Xbox One and Sony PlayStation 4 - evolves players' relationships with the Jurassic World film franchise, placing them in control of operations on the legendary island of Isla Nublar and the surrounding islands of the Muertes Archipelago. Players 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.jurassicworldevolution.com
Financial Review
TRADING
Total annual revenue in H1 FY19 (the six months to 30 November 2018) grew to GBP64.7 million (H1 FY18: GBP19.0 million). This record level of sales was achieved through the launch of Jurassic World Evolution in June 2018 combined with ongoing revenue contributions from Elite Dangerous and Planet Coaster, in line with the Company's strategy.
Frontier's strategy is to grow a portfolio of game franchises by launching, and then supporting, each game. In June 2018 Frontier achieved its biggest launch to date, releasing Jurassic World Evolution simultaneously on PC, PlayStation 4 and Xbox One alongside the theatrical release of Jurassic World: Fallen Kingdom. The game launched on the first day of E3 Expo, the biggest games industry event of 2018, following a major marketing programme which had included digital marketing campaigns, influencer focused engagement activity and digital pre-order sales from the end of March 2018. Following the successful launch in June 2018, Frontier has pursued its usual strategy of supporting and nurturing the game and engaging closely with the growing community of players, including the release of free updates incorporating enhancements requested by the community. Frontier has also added paid downloadable content (PDLC) for Jurassic World Evolution, with three packs available so far, to further stimulate existing players and encourage new players.
This strategy of support and nurture post-launch also continues on Elite Dangerous and Planet Coaster. Elite Dangerous, which launched in December 2014, continues to expand and develop. In December 2018 the Beyond series of free updates concluded with the release of Beyond - Chapter Four, introducing even more enhancements and features to further expand the Elite Dangerous gaming experience. Planet Coaster, which launched in November 2016, also continues to perform well. Frontier's strategy of providing free updates alongside the creation of a PDLC (paid downloadable content) business has been successful; 9 separate PDLC 'add-on' products are available for Planet Coaster as of 6 February 2019.
In terms of base game unit sales, as reported in the trading statement on 15 January 2019, all three game franchises have recently crossed major thresholds, with Jurassic World Evolution and Planet Coaster each passing 2 million base game units sold, and Elite Dangerous exceeding 3 million base game units sold. Previously, the Company reported "franchise units" for Elite Dangerous whereby the Elite Dangerous: Horizons expansion, sold at the same price as the base game, was also counted as one unit. The Company has now simplified unit reporting to state gross unit sales of the base game only. For comparative purposes cumulative franchise units for Elite Dangerous are now over 4.3 million.
Frontier's games are performing well in an increasingly competitive market. In the annual Top 100 Sellers chart based on worldwide gross revenue on Steam (a leading PC digital distribution platform), Jurassic World Evolution achieved a "gold" position (in the 13(th) to 24(th) chart position range) and Planet Coaster achieved a "bronze" position (in the 41(st) to 100(th) chart position range).
As expected, price promotions have been, and are expected to be, an effective sales tool for all three franchises, particularly when combined with community announcements, free updates and the release of paid content.
PROFITABILITY
Gross profit of GBP39.3 million was recorded in the period (H1 FY18: GBP13.2 million) with gross margin at 61% (H1 FY18: 69%). The significant growth in gross profit resulted from the increase in revenue achieved from the launch of Jurassic World Evolution. The reduction in gross margin percentage to 61% reflects the royalties payable to Universal Games and Digital Platforms on sales of Jurassic World Evolution and physical disc sales of Jurassic World Evolution which are lower margin than digital sales.
Gross research and development expenses in the period increased to GBP10.4 million, compared to GBP6.8 million in the first six months, and GBP9.1m in the second six months, of the last financial year (FY18, the 12 months ending 31 May 2018). The continued growth reflects further investment to support Frontier's franchise portfolio strategy, through increases in internal staff combined with greater levels of outsourced activity. As at 30 November 2018, Frontier had grown its total headcount to 422 staff compared to 344 at 30 November 2017.
Capitalisation of development costs on franchise assets and other intangibles accounted for GBP5.6 million in the six months to 30 November 2018 (H1 FY18: GBP5.0 million, H2 FY18: GBP8.4m). The percentage of gross research and development costs which were capitalised reduced, therefore, to 54% compared to 84% for the whole of the last financial year. This reduction resulted mainly from the interaction of two factors. Firstly, the Company refined the application of its capitalisation accounting policy with effect from 1 June 2018, such that only development activity associated with new chargeable products would be capitalised (subject to the usual criteria set out under accounting standard IAS 38). Secondly, during the six month period to 30 November 2018 a substantial number of Frontier's development team were engaged on the Beyond series of free updates for Elite Dangerous (which concluded in December 2018) and a number of free updates for Jurassic World Evolution and Planet Coaster. Whilst costs for those activities were not capitalised during the period as they were developments of existing released products rather than new products, Frontier believes that investment in free updates is an important part of its strategy in supporting and nurturing games after launch. The Company anticipate a higher percentage of costs will be capitalised in 2019 as a greater proportion of staff will work on development activity associated with new chargeable products, including paid downloadable content (PDLC) for existing game franchises.
Amortisation charges related to previously capitalised development costs grew to GBP4.0 million (H1 FY18: GBP2.8 million, H2 FY18: GBP3.2 million) following the launch of Jurassic World Evolution in June 2018.
Net research and development expenses recorded in the income statement in the period were GBP8.8 million (H1 FY18: GBP4.6 million, H2 FY18: GBP3.9 million), being gross spend, less capitalised costs, plus amortisation charges. The increase is therefore due to the combination of factors described above (a higher level of gross spend, a lower proportion of those costs being capitalised and an increase in amortisation charges).
Total sales, marketing and administrative expenses increased to GBP13.3 million (H1 FY18: GBP5.6 million, H2 FY18: GBP7.2 million). This substantial increase resulted mainly from three factors: 1) higher marketing costs to support the launch of Jurassic World Evolution in June 2018; 2) higher bonus costs, as the bonus scheme is based on profit, which was significant in the period; 3) higher facilities costs following the move into new premises in April 2018.
Operating profit of GBP17.2 million was recorded in the period (H1 FY18: GBP3.0 million) representing an operating margin of 27% (H1 FY18: 16%). The substantial increase in both profit and profit margin reflected the strong sales performance in the period. EBITDA (earnings before interest, tax, depreciation and amortisation) also increased substantially to GBP21.7 million (H1 FY18: GBP6.0 million).
Total corporation tax charges in the income statement for the period totalled GBP1.9 million, which would imply an effective tax rate of 11% on the GBP17.3 million of pre-tax profits recorded. However, the Company estimates that the taxable profits generated in the period were actually almost completely offset by brought forward tax losses combined with tax deductions related to staff share option gains recorded up to 30 November 2018. The net movement in tax related balances on the Company's balance sheet during the period represented a tax charge of only GBP0.1m. The reason that a tax charge of GBP1.9 million was recorded in the income statement compared to the GBP0.1m balance sheet movement is largely due to a GBP1.9 million tax accounting charge adjustment related to staff share options. In accordance with accounting standard IAS 12, the benefit of tax deductible share option gains in excess of the cumulative IFRS 2 accounting charges related to those gains must be credited directly to reserves rather than being taken through the income statement, which generated this GBP1.9 million credit directly to reserves instead of to the income statement. The Group expects to provide additional details on its tax status in the FY19 financial statements.
Profit after tax in the period was GBP15.4 million (H1 FY18: GBP2.9 million) and total comprehensive income, including the credit for the element of share option tax deductible amount taken directly to equity, was GBP17.3 million (H1 FY18: GBP2.9 million). Basic earnings per share was 40.2 pence (H1 FY18: 8.0 pence).
BALANCE SHEET AND CASH FLOW
The Company further strengthened its balance sheet during the period through the cash inflows generated by the launch of Jurassic World Evolution, together with ongoing performance of Elite Dangerous and Planet Coaster.
Intangible assets increased by GBP1.7 million during the period to GBP30.9 million at 30 November 2018 (31 May 2018: GBP29.2 million) as investments in franchise assets and other intangibles exceeded amortisation charges. Tangible assets increased by GBP0.8 million to GBP5.8 million (31 May 2018: GBP5.0 million) through investment in the fit-out of the remaining space in Frontier's leased building on the Cambridge Science Park, first occupied in April 2018.
Trade and other receivables of GBP6.5 million at 30 November 2018 were similar to the position at the end of the last financial period (31 May 2018: GBP6.7 million). Trade and other payables totalled GBP10.9 million at 30 November 2018 (31 May 2018: GBP5.9 million). The increase was due to higher accrued bonus charges (the bonus scheme is based on profit performance) and accrued royalty and commission costs. Total deferred income reduced slightly to GBP3.5 million at the period end (31 May 2018: GBP4.3 million).
Cash balances increased by GBP15.4 million during the period to GBP39.5 million (31 May 2018: GBP24.1 million). The increase in cash was mainly due to the strong trading performance in the period. During the six months to 30 November 2018 operating cash flow (operating profit excluding non-cash items, less investments in franchises and other intangible assets) accounted for an inflow of GBP16.5 million (H1 FY18: an operating cash inflow of GBP1.0 million).
In September 2018 the Frontier Developments plc Employee Benefit Trust (the "EBT"), which is included within Frontier's consolidated accounts, acquired 466,173 ordinary shares of 0.5p each in the Company ("Ordinary Shares") at an average price of GBP10.70 per Ordinary Share, therefore investing GBP5.0 million. These Ordinary Shares are to be held in the EBT and are intended to be used to satisfy the exercise of share options by employees. The EBT is a discretionary trust for the benefit of the Company's employees, including the Directors of the Company.
BOARD CHANGES
On 5 September 2018, David Walsh, Chief Operating Officer and Executive Director, transitioned to a Non-Executive Director role, in order to focus his attention on a start-up opportunity outside of the games industry. Following this transition the Board of Directors comprises four Non-Executive Directors (including the Chairman) and three Executive Directors.
CONSOLIDATED INCOME STATEMENT
6 months 6 months 12 months
to to to 31 May
30 Nov 2018 30 Nov 2017 2018
Notes GBP'000 GBP'000 GBP'000
------------------------------------ ------ ------------- -------------- -----------
Revenue 6 64,656 18,990 34,192
Cost of sales (25,387) (5,816) (10,092)
------------------------------------ ------ ------------- -------------- -----------
Gross profit 39,269 13,174 24,100
Research and development expenses (8,786) (4,580) (8,500)
Sales and marketing expenses (5,523) (2,817) (6,076)
Administrative expenses (7,749) (2,816) (6,724)
------------------------------------ ------ ------------- -------------- -----------
Operating profit 17,211 2,961 2,800
Finance income 107 15 81
------------------------------------ ------ ------------- -------------- -----------
Profit before tax 17,318 2,976 2,881
Income tax 7 (1,880) (34) 713
------------------------------------ ------ ------------- -------------- -----------
Profit for the period attributable
to shareholders 15,438 2,942 3,594
------------------------------------ ------ ------------- -------------- -----------
Earnings per share
Basic earnings per share 8 40.2 8.0 9.6
Diluted earnings per share 8 38.1 7.6 9.1
All the activities of the Group are classified as continuing.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months 6 months 12 months
to to to 31 May
30 Nov 2018 30 Nov 2017 2018
GBP'000 GBP'000 GBP'000
-------------------------------------------- ------------- -------------- -----------
Profit for the period 15,438 2,942 3,594
Other comprehensive income:
Tax credits on share options taken
directly to equity 1,855 - -
Exchange differences on translation
of foreign operations (3) 4 2
--------------------------------------------- ------------- -------------- -----------
Total comprehensive income for the
period attributable to the equity holders
of the parent 17,290 2,946 3,596
--------------------------------------------- ------------- -------------- -----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 Nov
2018 31 May 2018 30 Nov 2017
Notes GBP'000 GBP'000 GBP'000
-------------------------------- ------ --------- ------------ ------------
Non-current assets
Intangible assets 9 30,875 29,197 24,433
Property, plant and equipment 10 5,761 4,966 3,533
Deferred tax assets 754 - -
-------------------------------- ------ --------- ------------ ------------
37,390 34,163 27,966
-------------------------------- ------ --------- ------------ ------------
Current assets
Trade and other receivables 6,520 6,733 3,400
Other short-term assets 537 523 515
Cash and cash equivalents 39,457 24,124 29,098
-------------------------------- ------ --------- ------------ ------------
46,514 31,380 33,013
-------------------------------- ------ --------- ------------ ------------
Total assets 83,904 65,543 60,979
-------------------------------- ------ --------- ------------ ------------
Current liabilities
Trade and other payables (10,891) (5,920) (5,125)
Deferred income (2,807) (3,634) (230)
Current tax liabilities (869) - (747)
Provisions (7) (11) (275)
-------------------------------- ------ --------- ------------ ------------
(14,574) (9,565) (6,377)
-------------------------------- ------ --------- ------------ ------------
Net current assets 31,940 21,815 26,636
-------------------------------- ------ --------- ------------ ------------
Non-current liabilities
Deferred income (696) (690) (919)
-------------------------------- ------ --------- ------------ ------------
(696) (690) (919)
-------------------------------- ------ --------- ------------ ------------
Total liabilities (15,270) (10,255) (7,296)
-------------------------------- ------ --------- ------------ ------------
Net assets 68,634 55,288 53,683
-------------------------------- ------ --------- ------------ ------------
Equity
Share capital 11 194 193 192
Share premium account 34,389 34,132 33,845
Equity reserve (3,590) 780 303
Foreign exchange reserve (15) (12) (12)
Retained earnings 37,656 20,195 19,355
-------------------------------- ------ --------- ------------ ------------
Total equity 68,634 55,288 53,683
-------------------------------- ------ --------- ------------ ------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
Share premium exchange Retained
Share Capital account Equity reserve reserve earnings Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 June 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 net cash
outflow from
issues and/or
purchases
of shares - - (263) - - (263)
EBT net cash
inflow from
option
exercises - - 115 - - 115
---------------- -------------- ---------------- --------------- ---------------- ---------------- -------------
At 30 November
2017 192 33,845 303 (12) 19,355 53,683
---------------- -------------- ---------------- --------------- ---------------- ---------------- -------------
Profit for the
period - - - - 651 651
Total
comprehensive
income
for the period - - - - 651 651
---------------- -------------- ---------------- --------------- ---------------- ---------------- -------------
Issue of share
capital
net of
expenses 1 287 - - - 288
Share-based
payment
charges - - 667 - - 667
Share-based
payment
transfer
relating to
option lapses - - (190) - 190 -
At 31 May 2018 193 34,132 780 (12) 20,195 55,288
---------------- -------------- ---------------- --------------- ---------------- ---------------- -------------
Profit for the
period - - - - 15,438 15,438
Other
comprehensive
income:
Tax credits on
share options
taken directly
to equity 1,855 1,855
Exchange
differences on
translation of
foreign
operations - - - (3) - (3)
---------------- -------------- ---------------- --------------- ---------------- ---------------- -------------
Total
comprehensive
income
for the period - - - (3) 17,293 17,290
---------------- -------------- ---------------- --------------- ---------------- ---------------- -------------
Issue of share
capital
net of
expenses 1 257 - - - 258
Share-based
payment
charges - - 706 - - 706
Share-based
payment
transfer
relating to
option lapses - - (168) - 168 -
EBT net cash
outflow from
issues and/or
purchases
of shares - - (5,000) - - (5,000)
EBT net cash
inflow from
option
exercises - - 92 - - 92
---------------- -------------- ---------------- --------------- ---------------- ---------------- -------------
At 30 November
2018 194 34,389 (3,590) (15) 37,656 68,634
---------------- -------------- ---------------- --------------- ---------------- ---------------- -------------
CONSOLIDATED STATEMENT OF CASHFLOWS
6 months 6 months 12 months
to to to 31 May
30 Nov 2018 30 Nov 2017 2018
GBP'000 GBP'000 GBP'000
---------------------------------------------------- ------------- ------------- -----------
Cash generated from operations 26,726 5,823 10,252
Taxes received/(paid) 79 (40) (41)
Cashflow from operating activities 26,805 5,783 10,211
---------------------------------------------------- ------------- ------------- -----------
Investing activities
Purchase of property, plant and equipment (1,182) (2,960) (4,660)
Expenditure on intangible assets (5,747) (5,436) (13,503)
Interest received 107 15 81
Cashflow from investing activities (6,822) (8,381) (18,082)
---------------------------------------------------- ------------- ------------- -----------
Financing activities
Proceeds from issue of share capital 258 19,265 19,553
Employee Benefit Trust net investment (4,908) (148) (148)
Cashflow from financing activities (4,650) 19,117 19,405
---------------------------------------------------- ------------- ------------- -----------
Net change in cash and cash equivalents from
continuing operations 15,333 16,519 11,534
Cash and cash equivalents at beginning of
period 24,124 12,579 12,579
Exchange differences on cash and cash equivalents - - 11
Cash and cash equivalents at end of period 39,457 29,098 24,124
---------------------------------------------------- ------------- ------------- -----------
The accompanying notes form part of this financial
information.
Reconciliation of operating profit to cash
generated from operations
6 months 6 months 12 months
to to to 31 May
30 Nov 2018 30 Nov 2017 2017
GBP'000 GBP'000 GBP'000
---------------------------------------------------- ------------- ------------- -----------
Operating profit 17,211 2,961 2,800
Depreciation and amortisation 4,455 2,997 6,567
---------------------------------------------------- ------------- ------------- -----------
EBITDA 21,666 5,958 9,367
---------------------------------------------------- ------------- ------------- -----------
Movement in unrealised exchange (gains)/losses
on forward contracts (311) (271) 287
Share-based payment expenses 706 325 992
---------------------------------------------------- ------------- ------------- -----------
Operating cashflow before movements in working
capital 22,061 6,012 10,646
---------------------------------------------------- ------------- ------------- -----------
Net changes in working capital:
Change in trade and other receivables 213 (713) (4,069)
Change in trade and other payables 4,456 524 3,939
Change in provisions (4) - (264)
---------------------------------------------------- ------------- ------------- -----------
Cash generated from operations 26,726 5,823 10,252
---------------------------------------------------- ------------- ------------- -----------
NOTES TO THE FINANCIAL INFORMATION
1. CORPORATE INFORMATION
Frontier Developments plc 'the Group' develops and publishes 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 26 Science Park, Milton Road, Cambridge CB4 0FP.
The Group's operations are based in the UK and its North American subsidiary located in the US, Frontier Developments Inc.
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 2018 were approved by the Board of Directors on 5 September 2018 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 2018.
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 2018.
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 2018.
5. SIGNIFICANT EVENTS AND TRANSACTIONS
There were no significant events or transactions in the interim period (1 June 2018 to 30 November 2018) 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 2018 to 5 February 2019).
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
6 months to to to
30 Nov 2018 30 Nov 2017 31 May 2018
GBP'000 GBP'000 GBP'000
----------------- ------------- ------------- -------------
Self-publishing
revenue 64,512 18,471 32,644
Other revenue 144 519 1,548
----------------- ------------- ------------- -------------
64,656 18,990 34,192
----------------- ------------- ------------- -------------
7. INCOME TAX
In accordance with IAS 34, the tax charge in the period is consistent with the expected effective tax rate for the full year of 11%.
GBP'000
Tax at 19% on the taxable profits generated
during the period (after estimated tax deductions) 2,687
------------------------------------------------------ --------
Less brought forward tax losses utilised in
the period (1,818)
------------------------------------------------------ --------
Less the value of the deferred tax asset recognised
in the period for losses carried forward (754)
------------------------------------------------------ --------
Add back tax credits taken directly to the reserves
for tax deductible share option gains in excess
of the cumulative IFRS 2 accounting charges
related to those gains 1,855
------------------------------------------------------ --------
Less a prior period related tax refund (90)
------------------------------------------------------ --------
Net tax charge in the income statement 1,880
------------------------------------------------------ --------
Profit before tax 17,318
------------------------------------------------------ --------
Effective tax rate 11%
------------------------------------------------------ --------
8. 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 period, adjusted for shares held within the Employee Benefit Trust.
6 months 6 months 12 months
to to to 31 May
30 Nov 2018 30 Nov 2017 2018
----------------------------------------------- ------------- ------------- -----------
Profit attributable to shareholders (GBP'000) 15,438 2,942 3,594
Weighted average number of shares 38,436,040 36,659,973 37,519,639
----------------------------------------------- ------------- ------------- -----------
Basic earnings per share (pence) 40.2 8.0 9.6
----------------------------------------------- ------------- ------------- -----------
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 period as adjusted for shares held within the Employee Benefit Trust and the dilutive effect of share options.
6 months 6 months 12 months
to to to 31 May
30 Nov 2018 30 Nov 2017 2018
----------------------------------------------- ------------- ------------- -----------
Profit attributable to shareholders (GBP'000) 15,438 2,942 3,594
Weighted average number of shares 40,486,893 38,580,165 39,485,283
----------------------------------------------- ------------- ------------- -----------
Diluted earnings per share (pence) 38.1 7.6 9.1
----------------------------------------------- ------------- ------------- -----------
The reconciliation of average number of Ordinary Shares used for basic and diluted earnings per share is as follows:
6 months 6 months 12 months
to to to 31 May
30 Nov 2018 30 Nov 2017 2018
----------------------------------- ------------- ------------- -----------
Weighted average number of shares 38,436,040 36,659,973 37,519,639
Dilutive effect of share options 2,050,853 1,920,192 1,965,644
----------------------------------- ------------- ------------- -----------
Diluted average number of shares 40,486,893 38,580,165 39,485,283
----------------------------------- ------------- ------------- -----------
9. INTANGIBLE ASSETS
Intangible assets comprise capitalised development tools and self-published software
from internal development activities and acquired software licences.
Development tools and
licences Self-published software Third party software Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------------------------- ------------------------ --------------------- ---------
Cost
At 31 May 2017 4,537 30,676 344 35,557
Additions - arising from
capitalised
development expenses and
purchases 424 4,611 - 5,035
At 30 November 2017 4,961 35,287 344 40,592
-------------------------- -------------------------- ------------------------ --------------------- ---------
Additions - arising from
capitalised
development expenses and
purchases 506 7,878 84 8,468
At 31 May 2018 5,467 43,165 428 49,060
-------------------------- -------------------------- ------------------------ --------------------- ---------
Additions - arising from
capitalised
development expenses and
purchases 649 4,961 137 5,747
At 30 November 2018 6,116 48,126 565 54,807
-------------------------- -------------------------- ------------------------ --------------------- ---------
Amortisation
At 31 May 2017 3,479 10,029 178 13,686
Amortisation charges 474 2,337 63 2,874
At 30 November 2017 3,953 12,366 241 16,560
-------------------------- -------------------------- ------------------------ --------------------- ---------
Amortisation charges 475 2,764 64 3,303
At 31 May 2018 4,428 15,130 305 19,863
-------------------------- -------------------------- ------------------------ --------------------- ---------
Amortisation charges 182 3,817 70 4,069
At 30 November 2018 4,610 18,947 375 23,932
-------------------------- -------------------------- ------------------------ --------------------- ---------
Net book value at 30
November
2018 1,506 29,179 190 30,875
-------------------------- -------------------------- ------------------------ --------------------- ---------
Net book value at 31 May
2018 1,039 28,035 123 29,197
-------------------------- -------------------------- ------------------------ --------------------- ---------
Net book value at 30
November
2017 1,008 22,921 103 24,032
-------------------------- -------------------------- ------------------------ --------------------- ---------
Net book value at 31 May
2017 1,058 20,647 166 21,871
-------------------------- -------------------------- ------------------------ --------------------- ---------
10. 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 2017 115 898 - 394 1,407
Additions - 167 - 2,793 2,960
At 30 November 2017 115 1,065 - 3,187 4,367
Additions - 150 - 1,550 1,700
Transfer 459 307 3,971 (4,737) -
At 31 May 2018 574 1,522 3,971 - 6,067
------------------------------- -------------- ----------- -------------- ----------------- ---------
Additions 10 266 906 - 1,182
Disposals - - (1) - (1)
At 30 November 2018 584 1,788 4,876 - 7,248
------------------------------- -------------- ----------- -------------- ----------------- ---------
Depreciation
At 31 May 2017 106 605 - - 711
Charge for the period 1 122 - - 123
At 30 November 2017 107 727 - - 834
------------------------------- -------------- ----------- -------------- ----------------- ---------
Charge for the period 18 187 62 - 267
At 31 May 2018 125 914 62 - 1,101
------------------------------- -------------- ----------- -------------- ----------------- ---------
Charge for the period 1 147 238 - 386
At 30 November 2018 126 1,061 300 - 1,487
------------------------------- -------------- ----------- -------------- ----------------- ---------
Net book value at 30 November
2018 458 727 4,576 - 5,761
------------------------------- -------------- ----------- -------------- ----------------- ---------
Net book value at 31 May 2018 449 608 3,909 - 4,966
------------------------------- -------------- ----------- -------------- ----------------- ---------
Net book value at 30 November
2017 8 338 - 3,187 3,533
------------------------------- -------------- ----------- -------------- ----------------- ---------
Net book value at 31 May 2017 9 293 - 394 696
------------------------------- -------------- ----------- -------------- ----------------- ---------
11. SHARE CAPITAL
Nominal Value
Number GBP
------------------------------------------------ ----------- --------------
At 1 June 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
------------------------------------------------ ----------- --------------
Shares issued on option exercises and warrants 146,150 731
------------------------------------------------ ----------- --------------
At 31 May 2018 38,602,298 193,012
------------------------------------------------ ----------- --------------
Shares issued on option exercises and warrants 138,070 690
------------------------------------------------ ----------- --------------
At 30 November 2018 38,740,368 193,702
------------------------------------------------ ----------- --------------
12. 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 2018 31 May 2018 30 Nov 2017
GBP'000 GBP'000 GBP'000
--------------------------------------- -------------- -------------- ------------
Forward exchange contracts - held for
trading (66) (373) 205
---------------------------------------- -------------- -------------- ------------
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(END) Dow Jones Newswires
February 06, 2019 02:00 ET (07:00 GMT)
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