TIDMFDEV
RNS Number : 1317Y
Frontier Developments PLC
12 January 2022
Frontier Developments plc
Interim Results
H1 revenue up 33%. Well positioned for an exciting 2022.
Frontier Developments plc (AIM: FDEV, "Frontier", the "Company")
, a leading developer and publisher of video games based in
Cambridge, UK has published its unaudited interim results for the 6
months to 30 November 2021 ('H1 FY22') and provides a trading
update following the important Holiday season.
Financial Highlights
H1 FY22 H1 FY21 FY21
(6 months to (6 months (12 months
30 November 2021) to 30 November to 31 May
2020) 2021)
Revenue GBP49.1m GBP36.9m GBP90.7m
------------------- ----------------- ------------
EBITDA* GBP14.1m GBP15.5m GBP38.1m
------------------- ----------------- ------------
Operating Cash Flow** GBP0.7m GBP3.1m GBP12.2m
------------------- ----------------- ------------
Operating (Loss)/Profit (GBP1.3m) GBP6.9m GBP19.9m
------------------- ----------------- ------------
Operating Margin % (3%) 19% 22%
------------------- ----------------- ------------
EPS (basic) (4.2p) 15.0p 55.4p
------------------- ----------------- ------------
Net Cash Balance at GBP33.6m GBP34.9m GBP42.4m
period end
------------------- ----------------- ------------
*Earnings before interest, tax, depreciation and
amortisation
** EBITDA excluding non-cash items less investments in game
developments and Frontier's game technology
-- Revenue grew 33% over the comparative period to GBP49.1
million (H1 FY21: GBP36.9 million) through the release of Jurassic
World Evolution 2 in November 2021 and the ongoing performance of
our existing game portfolio
-- Gross profit margin of 63% reduced versus the comparative
period (H1 FY21: 71%) through a higher proportion of revenue
attracting IP licence royalties (Jurassic World Evolution 2) and
console physical discs sales of Jurassic World Evolution 2 which
achieve lower profit margins compared with digital sales
-- The combination of a lower gross profit margin percentage and
game release related marketing costs resulted in a slightly lower
EBITDA compared with the comparative period (GBP14.1 million in H1
FY22 versus GBP15.5 million in H1 FY21) with an operating cash
inflow in the period of GBP0.7 million (H1 FY21: GBP3.1
million)
-- Exceptional non-cash foreign exchange and amortisation
charges resulted in a small operating loss of GBP1.3 million in the
period (H1 FY21: profit of GBP6.9 million)
-- Net cash balance of GBP33.6 million at 30 November 2021 (31
May 2021: GBP42.4 million). The net cash outflow of GBP8.8 million
in the period was mainly due to an increase in working capital,
with significant net cash receipts for November sales receivable
from channel partners, including for the launch of Jurassic World
Evolution 2, in December 2021 and January 2022
Operational & Strategic Highlights
-- Our launch and nurture strategy continues to deliver, through
sustaining and growing our portfolio of genre-leading titles:
o Jurassic World Evolution 2 is the latest successful addition
to our portfolio, already selling nearly 1 million base game units
since release in November 2021
o Planet Coaster , Planet Zoo and Jurassic World Evolution all
continue to entertain existing players whilst attracting new ones,
with each title delivering material contributions to sales
throughout calendar 2021
o Elite Dangerous experienced a difficult calendar 2021
following the disappointing launch of the major Odyssey expansion
in May 2021. We continue to support the game and our passionate
players with development updates, and we have seen an upturn in
player sentiment as a result
-- Frontier Foundry, our own games label for third-party
publishing, continues to grow with a number of exciting titles in
discussion as well as those already signed. We have at least four
titles coming in calendar 2022 including FAR: Changing Tides and
Warhammer 40,000: Chaos Gate - Daemonhunters.
-- Our team continues to grow, with over 250 people joining us
during 2021, taking us to a total headcount of 745 as at 31
December 2021. Our amazing people continue to operate positively
through the challenges posed by Coronavirus and, in particular, in
adapting so well to remote and hybrid working during the last 18
months
-- We are very well positioned for the future. This calendar
year will see us enter the incredible world of Formula 1 - a truly
global sport - with the first release for our annual F1 management
game franchise. Furthermore, it will see Foundry continuing to
build momentum to become a material contributor to the business,
and we will see the release of Universal Picture's hugely
anticipated Jurassic World Dominion film, and the expected
corresponding benefit to Jurassic World Evolution 2
Current Trading and Outlook
December is always an important month for sales in the games
industry, and we were pleased to achieve our highest ever December
revenue in 2021, as expected. Jurassic World Evolution 2 delivered
a strong second month of sales following its release in November
2021, and our existing portfolio of established titles all provided
solid contributions.
We start the calendar year with a great portfolio and an
exciting pipeline of new titles, through both our own internal
developments and through Frontier Foundry, working closely with
external partners. We are building valuable long-term relationships
with all of our partners and have some phenomenal projects in
development, which in time will further enrich our portfolio of
great games.
In the remaining five months of the current financial year (to
31 May 2022) we look forward to delivering two new games from
Frontier Foundry, FAR: Changing Tides (now confirmed for release on
1 March 2022) and Warhammer 40,000: Chaos Gate - Daemonhunters,
whilst supporting our existing portfolio with new content. Based on
current estimates for the remaining period, the Board have narrowed
the revenue guidance range for FY22 to GBP100 million to GBP120
million.
Looking a little further ahead, we have exciting plans for FY23
(the 12 months to 31 May 2023):
-- The first of our annual Formula 1(R) management games will
release during the 2022 F1 season (in FY23), as part of our
exclusive licence for Formula 1(R) management games
-- Jurassic World Evolution 2 is expected to benefit from the
release of the Jurassic World Dominion film in June 2022 (in FY23)
and all the promotional awareness that this film release will bring
to the game, with multiple exciting PDLC packs planned through the
year
-- Planet Zoo will also benefit from a continuing roadmap of new PDLC packs
-- Frontier Foundry, our games label for 3(rd) party publishing,
will release multiple new titles as it continues to grow
Our Warhammer Age of Sigmar IP real-time strategy game planned
for release during calendar 2023 will now release later in that
calendar year, falling in FY24. This change will further improve
the quality and longevity of the game, and overall make it more
successful. As a result of this scheduling adjustment, the Board
have revised the revenue guidance range for FY23 to GBP130 million
to GBP160 million, implying 18% to 45% annual growth from the
mid-point of FY22 guidance.
We have excellent prospects for sustainable long-term growth
based on the longevity of our existing portfolio and our future
development and publishing plans, underpinned by our world-class
and growing team.
David Braben, Chief Executive, said:
"We have had an unprecedented couple of years because of
Coronavirus and the resulting changes, both positive and negative.
We have seen increased sales and changes to purchasing patterns,
the acceleration of the transition towards interactive
entertainment and digital purchasing, and changes to production
that embrace home-working. Although Coronavirus challenges remain,
we believe we now have sound production processes that work in the
new hybrid world, as demonstrated by the on-time and high quality
delivery of the excellent Jurassic World Evolution 2, and this sets
us up for future success. Our team has done a fantastic job
adapting to all these challenges and finding new ways of working.
We have the potential for much greater growth in the next few years
as we reap the benefits of all the hard work we have done to adapt
to these changes and capitalise on a great portfolio of existing
games together with the exciting new franchises such as Formula
1(R) management games and our Warhammer Age of Sigmar real-time
strategy game. We are well set up with a great portfolio for an
exciting future."
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as amended by The
Market Abuse (Amendment) (EU Exit) Regulations 2019. The person
responsible for making this announcement on behalf of the Company
is Alex Bevis.
Enquiries :
Frontier Developments +44 (0)1223 394 300
David Braben, CEO
Alex Bevis, CFO
Liberum - Nomad and Joint Broker +44 (0)20 3100 2000
Neil Patel / Cameron Duncan
Jefferies - Joint Broker +44 (0)20 7029 8000
Max Jones / William Brown
Tulchan Communications +44 (0)20 7353 4200
Matt Low / Jordan McCulla / Olivia Lucas
About Frontier Developments plc
Frontier is a leading independent developer and publisher of
videogames founded in 1994 by David Braben, co-author of the iconic
Elite game. Based in Cambridge, Frontier uses its proprietary COBRA
game development technology to create innovative genre-leading
games, primarily for personal computers and videogame consoles. As
well as self-publishing internally developed games, Frontier also
publishes games developed by carefully selected partner studios
under its Frontier Foundry games label.
Frontier's LEI number: 213800B9LGPWUAZ9GX18.
www.frontier.co.uk
Interim Results Statement
MAJOR NEW RELEASES
Our biggest new release in the period was our latest
multiplatform game, Jurassic World Evolution 2, which released as
planned on 9 November 2021 on PC via Steam and the Epic Games
Store, PlayStation(R)5, Xbox Series X|S, PlayStation(R)4 and Xbox
One, with both digital and physical formats available to
PlayStation and Xbox players from day one.
The critical and audience reception from launch has been very
positive, thanks to the hard work of our talented people across our
development, publishing and support teams. Our player community are
enjoying the enhancements we have made, as well as the new content
that we have introduced, building on the strong foundations of
Jurassic World Evolution. Game reviews are very good - the scores
compiled by Opencritic show 67 reviews providing a Top Critic
Average score of 78.
Base game sales have reached almost 1 million units after 9
weeks from release, with strong sales in both November and
December. Sales rates as we start calendar 2022 are
encouraging.
PDLC is an important element of the post-launch strategy for
Jurassic World Evolution 2 as part of Frontier's proven launch and
nurture approach to game development and publication. Two
well-received PDLC packs have been released to date, with the
Deluxe Upgrade pack available at release and the Early Cretaceous
Pack launching a month later on 9 December 2021. Multiple exciting
PDLC packs are planned for 2022.
Significant sales of both the base game and PDLC are expected
from June 2022 when the Jurassic World Dominion film releases.
REVENUE
Total revenue in H1 FY21 grew to GBP49.1 million, 33% ahead of
the comparative period (H1 FY21: GBP36.9 million). Jurassic World
Evolution 2 was the main catalyst for growth, launching in the
final month of the period. Planet Zoo also delivered growth over
the comparative period, with revenue growing 14% through sales of
new and existing PDLC as well as sales of the base game. Planet
Coaster and Jurassic World Evolution delivered solid sales
performances during H1 FY22 against a tough comparative period
which included major new platform releases for each title: in
November 2020 Planet Coaster expanded onto Xbox Series X|S, Xbox
One, PlayStation 4 and PlayStation 5, and Jurassic World Evolution
released on Nintendo Switch. The overall sales performance of Elite
Dangerous in the period was below expectations following the
disappointing launch of Elite Dangerous: Odyssey in May 2021.
Frontier Foundry, our games label for 3(rd) party publishing,
launched innovative strategic shooter Lemnis Gate during the
period, with more material revenues expected in the second half of
the financial year from FAR: Changing Tides, now confirmed for
release on 1 March 2022, and Warhammer 40,000: Chaos Gate -
Daemonhunters.
PROFITABILITY
Gross profit of GBP30.8 million was recorded in the period (H1
FY21: GBP26.2 million) with gross profit margin at 63% (H1 FY21:
71%). The lower percentage margin resulted from a higher proportion
of revenue attracting IP licence royalties (Jurassic World
Evolution 2) and console physical discs sales of Jurassic World
Evolution 2 which achieve lower profit margins compared with
digital sales.
Gross research and development expenses in the period increased
by 41% to GBP22.2 million (H1 FY21: GBP15.8 million). The growth
resulted from a continued growth in headcount to support Frontier's
development plans, an increase in outsourced activity and
investments in Frontier Foundry partner developments.
Capitalisation of development costs on game developments and
game technology accounted for GBP15.8 million in the six months to
30 November 2021 (H1 FY21: GBP13.1 million). The percentage of
gross research and development costs which were capitalised in the
period was 71%, lower than the 83% recorded for H1 FY21 as more
development staff were working on free updates (as opposed to
chargeable content) during the recent period, notably the ongoing
post-release support for Elite Dangerous: Odyssey. Frontier's
normal expectations for capitalisation is 70-90% of gross
development spending.
R&D amortisation charges related to previously capitalised
development costs grew 73% to GBP12.2 million (H1 FY21: GBP7.0
million). Charges in H1 FY22 included a full six months of
amortisation for major expansion Elite Dangerous: Odyssey and one
month for Jurassic World Evolution 2, as well as an accelerated
amortisation charge for Lemnis Gate following its relatively low
sales performance at release.
Net research and development expenses recorded in the income
statement in the period grew 91% to GBP18.6 million (H1 FY21:
GBP9.7 million), being gross spend of GBP22.2 million, less
capitalised costs of GBP15.8 million, plus amortisation charges of
GBP12.2 million.
Sales and marketing expenses in the period were GBP7.5 million
(H1 FY21: GBP3.4 million) with the largest element of the increase
from the launch of Jurassic World Evolution 2. Administrative
expenses were GBP6.0 million in the period (H1 FY21: GBP6.1
million).
Exceptional non-cash foreign exchange and amortisation charges,
together with a lower gross profit margin percentage, higher net
R&D expenses (including some one-off items) and game release
related marketing costs resulted in a small operating loss of
GBP1.3 million in the period (H1 FY21: profit of GBP6.9
million).
A net zero corporation tax charge was recorded in the income
statement for the period (H1 FY21: GBP0.6 million), since for the
full financial year enhanced deductions from the Video Game Tax
Relief scheme are expected to offset tax charges on profits. The
Group expects to provide additional corporation tax disclosures in
the FY22 financial statements.
A loss after tax of GBP1.7 million was recorded in the period
(H1 FY21: profit of GBP5.8 million). Basic earnings per share was a
loss of 4.2 pence (H1 FY21: profit of 15.0 pence).
BALANCE SHEET AND CASH FLOW
The Company continues to benefit from a strong balance sheet,
with cash balances of GBP33.6 million at 30 November 2021 (31 May
2021: GBP42.4 million; 30 November 2020: GBP34.9 million). The
majority of the GBP8.8 million reduction in cash during the period
was due to an increase in net working capital at the end of the
period related to the release of Jurassic World Evolution 2. Trade
and other receivables grew by GBP14.1 to GBP27.8 million at 30
November 2021 (31 May 2021: GBP13.7 million), with trade and other
payables increasing by GBP5.4 million to GBP20.2 million (31 May
2021: GBP14.8 million). This working capital increase is expected
to unwind during the second half of the financial year.
Although cash balances reduced in the period, Frontier recorded
an overall operating cash inflow of GBP0.7 million in the period
(H1 FY21: GBP3.1 million), defined as EBITDA excluding non-cash
items less investments in game developments and Frontier's game
technology.
CONSOLIDATED INCOME STATEMENT
6 months to 6 months to 12 months
30 November 30 November to 31 May
2021 2020 2020
Notes GBP'000 GBP'000 GBP'000
------------------------------------------- ------ ------------- ------------- -----------
Revenue 6 49,116 36,907 90,688
Cost of sales (18,326) (10,747) (27,538)
------------------------------------------- ------ ------------- ------------- -----------
Gross profit 30,790 26,160 63,150
------------------------------------------- ------ ------------- ------------- -----------
Research and development expenses (18,593) (9,717) (22,025)
Sales and marketing expenses (7,503) (3,432) (7,269)
Administrative expenses (6,037) (6,133) (13,940)
------------------------------------------- ------ ------------- ------------- -----------
Operating (loss)/profit (1,343) 6,878 19,916
------------------------------------------- ------ ------------- ------------- -----------
Finance costs (310) (423) (731)
------------------------------------------- ------ ------------- ------------- -----------
(Loss)/Profit before tax (1,653) 6,455 19,185
------------------------------------------- ------ ------------- ------------- -----------
Income tax - (646) 2,373
------------------------------------------- ------ ------------- ------------- -----------
(Loss)/Profit for the period attributable
to shareholders (1,653) 5,809 21,558
------------------------------------------- ------ ------------- ------------- -----------
Earnings per share
Basic earnings per share 7 (4.2p) 15.0 55.4
Diluted earnings per share 7 (4.2p) 14.4 53.3
All the activities of the Group are classified as continuing
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months to 6 months to 12 months
to
30 November 30 November 31 May 2021
2021 2020
GBP'000 GBP'000 GBP'000
---------------------------------------- ------------ ------------ ------------
(Loss)/Profit for the period (1,653) 5,809 21,558
Other comprehensive income:
Exchange differences on translation of
foreign operations (12) 13 23
---------------------------------------- ------------ ------------ ------------
Total comprehensive (loss)/income for
the period attributable to the equity
holders of the parent (1,665) 5,822 21,581
---------------------------------------- ------------ ------------ ------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 NOVEMBER 2021
(REGISTERED COMPANY NO: 02892559)
30 November
30 November 2021 2020 31 May 2021
Notes GBP'000 GBP'000 GBP'000
------------------------------- ------ ----------------- ------------- ------------
Non-current assets
Intangible assets 8 73,508 58,940 71,318
Property, plant and equipment 9 6,967 5,854 6,078
Right-of-use asset 20,296 21,920 21,108
Deferred tax asset 384 6,175 384
101,155 92,889 98,888
------------------------------- ------ ----------------- ------------- ------------
Current assets
Trade and other receivables 27,845 14,979 13,741
Current tax asset 2,511 2,377 6,468
Cash and cash equivalents 33,561 34,892 42,423
63,917 52,248 62,632
------------------------------- ------ ----------------- ------------- ------------
Total assets 165,072 145,137 161,520
------------------------------- ------ ----------------- ------------- ------------
Current liabilities
Trade and other payables (20,167) (11,940) (14,768)
Lease liability (1,440) (1,337) (1,419)
Deferred income (1,327) (1,972) (2,180)
Current tax liabilities - (684) -
(22,934) (15,933) (18,367)
------------------------------- ------ ----------------- ------------- ------------
Net current assets 40,983 36,315 44,265
------------------------------- ------ ----------------- ------------- ------------
Non-current liabilities
Provisions (49) (34) (41)
Lease liability (20,008) (21,530) (20,739)
Deferred income - (230) -
Other payables (8,825) (7,184) (9,219)
Deferred tax liabilities - (4,038) -
(28,882) (33,016) (29,999)
------------------------------- ------ ----------------- ------------- ------------
Total liabilities (51,816) (48,949) (48,366)
------------------------------- ------ ----------------- ------------- ------------
Net assets 113,256 96,188 113,154
------------------------------- ------ ----------------- ------------- ------------
Equity
Share capital 10 197 196 197
Share premium account 36,368 35,772 36,079
Equity reserve (8,635) (9,529) (9,351)
Foreign exchange reserve (11) (9) 1
Retained earnings 85,337 69,758 86,228
Total equity 113,256 96,188 113,154
------------------------------- ------ ----------------- ------------- ------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Foreign
Share premium Equity exchange Retained Total
Capital account reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 May 2020 195 34,589 (925) (22) 62,897 96,734
------------------------------------- --------- --------- --------- ---------- ---------- ---------
Profit for the period - - - - 5,809 5,809
Other comprehensive income:
Exchange differences on translation
of foreign operations - - - 13 - 13
------------------------------------- --------- --------- --------- ---------- ---------- ---------
Total comprehensive income
for the period - - - 13 5,809 5,822
------------------------------------- --------- --------- --------- ---------- ---------- ---------
Issue of share capital net
of expenses 1 1,183 - - - 1,184
Share-based payment charges - - 1,045 - - 1,045
Share-based payment transfer
relating to option exercises
and lapses - - (1,052) - 1,052 -
EBT cash outflows from share
purchases - - (10,000) - - (10,000)
EBT net cash inflows from
option exercises - - 1,403 - - 1,403
------------------------------------- --------- --------- --------- ---------- ---------- ---------
At 30 November 2020 196 35,772 (9,529) (9) 69,758 96,188
------------------------------------- --------- --------- --------- ---------- ---------- ---------
Profit for the period - - - - 15,749 15,749
Other comprehensive income:
Exchange differences on translation
of foreign operations - - - 10 - 10
------------------------------------- --------- --------- --------- ---------- ---------- ---------
Total comprehensive income
for the period - - - 10 15,749 15,759
------------------------------------- --------- --------- --------- ---------- ---------- ---------
Issue of share capital net
of expenses 1 307 - - - 308
Share-based payment charges - - 1,110 - - 1,110
Share-based payment transfer
relating to option exercises
and lapses - - (718) - 718 -
EBT cash outflows from share
purchases - - - - - -
EBT net cash inflows from
option exercises - - (214) - - (214)
Deferred tax movements posted
directly to reserves - - - - 3 3
------------------------------------- --------- --------- --------- ---------- ---------- ---------
At 31 May 2021 197 36,079 (9,351) 1 86,228 113,154
------------------------------------- --------- --------- --------- ---------- ---------- ---------
(Loss)/Profit for the period - - - - (1,653) (1,653)
Other comprehensive income:
Exchange differences on translation
of foreign operations - - - (12) - (12)
------------------------------------- --------- --------- --------- ---------- ---------- ---------
Total comprehensive loss for
the period - - - (12) (1,653) (1,665)
------------------------------------- --------- --------- --------- ---------- ---------- ---------
Issue of share capital net
of expenses - 289 - - - 289
Share-based payment charges - - 1,175 - - 1,175
Share-based payment transfer
relating to option exercises
and lapses - - (762) - 762 -
EBT cash outflows from share
purchases - - - - - -
EBT net cash inflows from
option exercises - - 303 - - 303
------------------------------------- --------- --------- --------- ---------- ---------- ---------
At 30 November 2021 197 36,368 (8,635) (11) 85,337 113,256
------------------------------------- --------- --------- --------- ---------- ---------- ---------
CONSOLIDATED STATEMENT OF CASHFLOWS
6 months to 6 months to 12 months
30 November 30 November to 31 May
2021 2020 2021
GBP'000 GBP'000 GBP'000
----------------------------------------- ------------- ------------- -----------
Cash generated from operations 5,368 11,597 38,916
Taxes received 3,957 38 38
Cashflow from operating activities 9,325 11,635 38,954
----------------------------------------- ------------- ------------- -----------
Investing activities
Purchase of property, plant and
equipment (1,779) (488) (1,375)
Expenditure on intangible assets (15,969) (13,515) (31,502)
Interest received 14 27 48
Cashflow from investing activities (17,734) (13,976) (32,829)
----------------------------------------- ------------- ------------- -----------
Financing activities
Proceeds from issue of share capital 289 1,184 1,492
Employee Benefit Trust cash outflows
from share purchases - (10,000) (10,000)
Employee Benefit Trust cash inflows
from option exercises 303 1,403 1,189
Payment of principal element of
lease liabilities (709) (669) (1,377)
Payment of interest element of
lease liabilities (325) (365) (691)
Interest paid - (88) (88)
Cashflow from financing activities (442) (8,535) (9,475)
----------------------------------------- ------------- ------------- -----------
Net change in cash and cash equivalents
from continuing operations (8,851) (10,876) (3,350)
Cash and cash equivalents at beginning
of period 42,423 45,751 45,751
Exchange differences on cash and
cash equivalents (11) 17 22
Cash and cash equivalents at end
of period 33,561 34,892 42,423
----------------------------------------- ------------- ------------- -----------
The accompanying notes form part of this financial information.
Reconciliation of operating profit to cash
generated from operations
6 months to 6 months to 12 months
30 November 30 November to 31 May
2021 2020 2021
GBP'000 GBP'000 GBP'000
----------------------------------------- ------------- ------------- -----------
Operating (loss)/profit (1,343) 6,878 19,916
Depreciation and amortisation 15,481 8,616 18,167
----------------------------------------- ------------- ------------- -----------
EBITDA 14,138 15,494 38,083
----------------------------------------- ------------- ------------- -----------
Movement in unrealised exchange
(gains)/losses on forward contracts 1,224 (298) (223)
Share-based payment expenses 1,175 1,045 2,155
----------------------------------------- ------------- ------------- -----------
Operating cashflow before movements
in working capital 16,537 16,241 40,015
----------------------------------------- ------------- ------------- -----------
Net changes in working capital:
Change in trade and other receivables (14,105) (2,397) (1,233)
Change in trade and other payables 2,929 (2,254) 119
Change in provisions 7 7 15
----------------------------------------- ------------- ------------- -----------
Cash generated from operations 5,368 11,597 38,916
----------------------------------------- ------------- ------------- -----------
NOTES TO THE FINANCIAL INFORMATION
1. CORPORATE INFORMATION
Frontier Developments plc (the 'Company') along with its
subsidiaries (together 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, registered number 02892559. 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
the US.
2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE
Basis of preparation
The consolidated interim financial statements have been prepared
in accordance with International Accounting Standard 34 'Interim
Financial Reporting' (IAS 34), as issued by the International
Accounting Standards Board (IASB) and as adopted by the UK, and the
disclosure requirements of the Listing Rules.
The consolidated interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the
Companies Act 2006, and have not been audited or reviewed by the
Company's auditors.
The consolidated interim financial statements should be read in
conjunction with the financial statements for the year ended 31 May
2021.
Statutory accounts for the year ended 31 May 2021 were approved
by the Board of Directors on 8 September 2021 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.
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.
Impact of COVID-19 on going concern
The Board continuously monitor the performance of the Groups
operational activities and the expected future prospects. As well
as reviewing the current market trends and a number of downside
scenarios, including any mitigations, the Board have assessed the
ability to continue as a going concern during the pandemic. The
results of this assessment is that the Group would be able to
withstand significant changes in trading behaviour and still be
able to continue operationally.
The Group benefits from a strong cash position, continued demand
for products and no negative impacts on debtor recoverability.
Therefore the Board are satisfied that the financial statements are
prepared under the going concern basis.
3. ACCOUNTING POLICIES
Except for the application for UK-adopted international
accounting standards, for which there are no material differences
from International Financial Reporting Standards as issued by the
IASB and adopted by the EU when applied to the Group, 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
2021.
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 2021.
5. SIGNIFICANT EVENTS AND TRANSACTIONS
There were no significant events or transactions in the interim
period (1 June 2021 to 30 November 2021) 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 2021 to 11 January 2022).
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 and publishing 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 third-party
distribution platforms which are responsible for the sales data of
consumers. The cost to develop this information internally would be
excessive.
All of the Group's non-current assets are held within the
UK.
All material revenue is categorised as either publishing revenue
or other revenue. Other revenue mainly related to royalty
income.
The Group typically satisfies its performance obligations at the
point that the product becomes available to the customer and
payment has been received up front.
6 months to
6 months to 30 November 12 months to
30 November 2021 2020 31 May 2021
GBP'000 GBP'000 GBP'000
-------------------- ------------------ ------------- -------------
Publishing revenue 49,016 36,818 90,471
Other revenue 100 89 217
-------------------- ------------------ ------------- -------------
49,116 36,907 90,688
-------------------- ------------------ ------------- -------------
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 period.
6 months to 6 months to 12 months
to
30 November 30 November 31 May 2021
2021 2020
Profit attributable to shareholders
(GBP'000) (1,653) 5,809 21,558
Weighted average number of shares 39,162,921 38,779,241 38,909,932
Basic earnings per share (pence) (4.2) 15.0 55.4
------------------------------------- ------------ ------------ -------------
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 the dilutive effect of
share options.
6 months to 6 months to 12 months
to
30 November 30 November 31 May 2021
2021 2020
Profit attributable to shareholders
(GBP'000) (1,653) 5,809 21,558
Diluted weighted average number
of shares 39,162,921 40,469,204 40,471,633
Diluted earnings per share (pence) (4.2) 14.4 53.3
------------------------------------- ------------ ------------ -------------
The reconciliation of average number of Ordinary Shares used for
basic and diluted earnings per share is as follows:
6 months to 6 months to 12 months to
30 November 30 November 31 May 2021
2021 2020
Weighted average number of shares 39,162,921 38,779,241 38,909,932
Dilutive effect of share options - 1,689,963 1,561,701
Diluted average number of shares 39,162,921 40,469,204 40,471,633
----------------------------------- ------------ ------------ -------------
The dilutive effect of share options is nil for the 6 months to
30 November 2021 because a loss was recorded for that period.
8. INTANGIBLE ASSETS
Game technology Game developments Third-party IP licences Total
software
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ---------------- ------------------ ------------ ------------ --------
Cost
At 31 May 2020 9,158 72,328 1,093 10,824 93,403
Additions 1,529 11,602 384 - 13,515
Transfers - (347) 347 - -
------------------------------------ ---------------- ------------------ ------------ ------------ --------
At 30 November 2020 10,687 83,583 1,824 10,824 106,918
Additions 6,322 13,536 236 361 20,455
------------------------------------ ---------------- ------------------ ------------ ------------ --------
At 31 May 2021 17,009 97,119 2,060 11,185 127,373
Additions 1,254 14,557 158 - 15,969
At 30 November 2021 18,263 111,676 2,218 11,185 143,342
------------------------------------ ---------------- ------------------ ------------ ------------ --------
Amortisation
At 31 May 2020 5,589 33,007 803 1,336 40,735
Amortisation charges 699 6,350 194 - 7,243
------------------------------------ ---------------- ------------------ ------------ ------------ --------
At 30 November 2020 6,288 39,357 997 1,336 47,978
Amortisation charges 770 7,077 230 - 8,077
------------------------------------ ---------------- ------------------ ------------ ------------ --------
At 31 May 2021 7,058 46,434 1,227 1,336 56,055
Amortisation charges 1,058 11,115 229 1,377 13,779
------------------------------------ ---------------- ------------------ ------------ ------------ --------
At 30 November 2021 8,116 57,549 1,456 2,713 69,834
------------------------------------ ---------------- ------------------ ------------ ------------ --------
Net Book Value
Net book value at 30 November 2021 10,147 54,127 762 8,472 73,508
Net book value at 31 May 2021 9,951 50,685 833 9,849 71,318
------------------------------------ ---------------- ------------------ ------------ ------------ --------
Net book value at 30 November 2020 4,399 44,226 827 9,488 58,940
------------------------------------ ---------------- ------------------ ------------ ------------ --------
Net book value at 31 May 2020 3,569 39,321 290 9,488 52,668
------------------------------------ ---------------- ------------------ ------------ ------------ --------
9. TANGIBLE ASSETS
Fixtures Computer Leasehold Total
and Fittings Equipment Improvements
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------------- ----------- -------------- --------
Cost
At 31 May 2020 863 2,781 5,358 9,002
Additions - 488 - 488
------------------------------- -------------- ----------- -------------- --------
At 30 November 2020 863 3,269 5,358 9,490
Additions - 887 - 887
------------------------------- -------------- ----------- -------------- --------
At 31 May 2021 863 4,156 5,358 10,377
Additions - 1,779 - 1,779
------------------------------- -------------- ----------- -------------- --------
At 30 November 2021 863 5,935 5,358 12,156
------------------------------- -------------- ----------- -------------- --------
Depreciation
At 31 May 2020 396 1,999 681 3,076
Charge for the period 75 318 167 560
------------------------------- -------------- ----------- -------------- --------
At 30 November 2020 471 2,317 848 3,636
Charge for the period 75 420 168 663
------------------------------- -------------- ----------- -------------- --------
At 31 May 2021 546 2,737 1,016 4,299
Charge for the period 75 648 167 890
------------------------------- -------------- ----------- -------------- --------
At 30 November 2021 621 3,385 1,183 5,189
------------------------------- -------------- ----------- -------------- --------
Net Book Value
Net book value at 30 November
2021 242 2,550 4,175 6,967
-------------------------------
Net book value at 31 May 2021 317 1,419 4,342 6,078
------------------------------- -------------- ----------- -------------- --------
Net book value at 30 November
2020 392 952 4,510 5,854
------------------------------- -------------- ----------- -------------- --------
Net book value at 31 May 2020 467 782 4,677 5,926
------------------------------- -------------- ----------- -------------- --------
10. SHARE CAPITAL
Nominal Value
Number GBP
------------------------------------------------ ----------- --------------
At 1 June 2020 38,911,810 194,559
------------------------------------------------ ----------- --------------
Shares issued on option exercises and warrants 377,047 1,885
------------------------------------------------ ----------- --------------
At 30 November 2020 39,288,857 196,444
------------------------------------------------ ----------- --------------
Shares issued on option exercises and warrants 54,747 274
------------------------------------------------ ----------- --------------
At 31 May 2021 39,343,604 196,718
------------------------------------------------ ----------- --------------
Shares issued on option exercises and warrants 49,651 248
------------------------------------------------ ----------- --------------
At 30 November 2021 39,393,255 196,966
------------------------------------------------ ----------- --------------
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END
IR VFLFFLFLXBBF
(END) Dow Jones Newswires
January 12, 2022 02:00 ET (07:00 GMT)
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