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It's an awe inspiring, beautiful, vast place; with 400 billion star systems, planets, moons and asteroid fields just waiting to be explored and exploited.

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Frontier announces listing on the London Stock Exchange's AIM

Frontier Developments plc has applied for admission to the Alternative Investment Market (AIM) on the London Stock Exchange with a market capitalisation of approximately £39.4 million. 


Frontier Developments plc (“Frontier” or the “Company”), a leading independent developer of video games with studios in Cambridge, UK and Halifax, Canada, has applied for admission to the Alternative Investment Market (AIM) on the London Stock Exchange with a market capitalisation of approximately £39.4 million.

The Company has raised £4.0 million through a placing of new Ordinary Shares (the “Placing”), arranged by Canaccord Genuity (“Canaccord”). Trading in Frontier shares is expected to start on Monday 15 July 2013.

This follows a pre-IPO fundraising in June that raised £2.8 million. Frontier is debt free, had £7.2 million of cash as at 31 May 2013, and has entered into a revolving credit facility with Barclays Bank plc for £3.0 million, so is in a strong position to take its business to the next stage.

The business

• Leading independent developer of video games - based in Cambridge, UK and Halifax, Canada

• Founded in 1994 by David Braben, co-author of the seminal Elite game, the Company has an experienced management and development team that has consistently delivered high quality, innovative games in a continually evolving industry

• Frontier’s proprietary “Cobra” technology powers its efficient, cross-platform software development spanning personal computers, tablets, smartphone and videogame consoles across a wide variety of game genres

• Strong track record of successfully leveraging its software technology in games for several decades, with titles including RollerCoaster Tycoon 3, LostWinds, Kinectimals, Kinect Disneyland Adventures and Coaster Crazy games

• Expansion of games into the mainstream entertainment industry and advent of digital distribution on all platforms brings significant opportunity

• Funds raised will allow Frontier to expand its current profitable business and further extend the features and platforms supported by its proprietary software development platform Cobra

• Cobra development will be undertaken in conjunction with development of its Elite: Dangerous title, in a move that will enable Frontier to ultimately license key elements of its technology and related services to third parties

Admission details

• Frontier will have a market capitalisation, at the placing price of 127p per share, of approximately £39.4 million following Admission

• Dealings are expected to commence on AIM at 8.00am, Monday 15 July 2013. (Ticker symbol: FDEV)

• Canaccord Genuity is the Nominated Adviser and Broker to Frontier and acted as sole Bookrunner to the Placing.

David Braben, CEO of Frontier Developments, said:

We are very excited to be listing our Company at a time of such strong momentum in the business and the sector. This placing of Frontier shares, combined with our recent oversubscribed funding round, is a strong endorsement both of the opportunities we have identified, and our team’s ability to deliver on the next round of enhancements to our business to make the most of those opportunities. It gives us the necessary financial impetus to continue operating at the forefront of the continually evolving and expanding global games market.

Terms used in this announcement have the same meanings as those defined in the Company's Admission Document. 

About Frontier Developments

Frontier was founded in 1994 by David Braben, co-author of the seminal Elite game. The Group has 227 full-time employees and operations in Cambridge, UK and Halifax, Nova Scotia, Canada. Frontier has a proven track record of software technology development and innovation spanning several decades of rapid technological change. Frontier has leveraged its technology to develop innovative videogames across a wide variety of different game genres and platforms, and has established relationships with globally renowned partners.

At the end of 2012, Frontier also raised £1.6 million via Kickstarter, the crowd funding service. The funds were raised specifically to develop Elite: Dangerous – the latest sequel to the Elite game that CEO David Braben originally co-authored, published in 1984. Elite was one of the first home computer games to use 3D graphics and the first to employ an open-world ‘sandbox’ gameplay model. Its revolutionary 3D graphics ensured that the game created the modern space flight simulation genre and influenced gaming as a whole.

About Cobra
Frontier’s Cobra software technology has been developed and evolved since 1988. Initially conceived as a solution for the problem of easily porting the same game across different target hardware devices, Cobra today supports multi-core CPU and GPU architectures of PC, console, tablet and smartphone with a modular, high performance system offering of state of the art efficiency and visual fidelity that is applicable across a wide range of game genres.

Cobra incorporates a framework which enables rapid development of powerful game creation tools, which offer the ability to view, tweak and review changes to content (e.g. animations, audio, 3D models etc.) on target platforms in a live game session running on that platform, without the intervention of a programmer.

For more details on Cobra see

History of Frontier
David Braben co-authored the seminal “Elite” game in 1982 (published in 1984) with Ian Bell. Elite was one of the first home computer games to use 3D graphics and the first to employ an open-world ‘sandbox’ game play model. Its revolutionary 3D graphics ensured that the game created the modern space flight simulation genre and influenced gaming as a whole.

Frontier was founded in 1994 by David Braben to carry forward his ground-breaking work and development ethos. Since then, it has used its proprietary ‘Cobra’ development technology to build a track record of genre defining games that have been critically acclaimed and sold millions of copies.

Sector information
The video games sector has grown significantly over the last few years. The target audience of the video games sector has extended from the traditional younger male focus, with women players outnumbering men in some age ranges. In 2004, the game industry as a whole generated $25.4 billion. In June 2012, the global video game market was valued at $78.5 billion.

Some major video game releases have eclipsed major movie openings in revenue terms. Activision’s “Call of Duty: Black Ops II” reached US$1 billion in 15 days – faster than the top-selling movie “Avatar” – and grossed over $500 million within 24 hours of going on sale, beating the previous record (also held by a game) putting it top of the list for the highest-ever opening weekend if it were a movie.

Smart phones and tablets are catching up in performance terms with video game consoles, helped by their annual product life cycles compared to the typical six year life cycle of a dedicated games console.

It is expected that spending on online games on smart phones and tablets will equal spending on both PC and console by the end of 2013.

Key players in the console world have recently announced their new generation of consoles, each of which will provide a multimedia centre with Cloud and streaming technologies, offering a more holistic entertainment experience than their previous incarnations. The Xbox One and PlayStation 4 are both expected to be on sale by the end of the year with Nintendo’s Wii U having been released in late 2012.

The games industry is made up of developers, publishers, platform holders (like Sony, Microsoft and Nintendo), distributors, retailers, and secondary service providers. In broad terms, developers are the people that create the games and publishers those that publish them. Recently the distinction has become blurred, as the route to market is now open to developers directly in the digital space. Platform holders are still key, as they control access to their platforms (Microsoft with their Xbox platform and Sony with their PlayStation platform, for example).

Expanding audience and diversifying demographics
The number of gamers worldwide has grown rapidly from the initial core video game console audience due to the availability of increasingly powerful smart phones and tablets with dedicated online App Stores. Downloads from Apple’s App Store have increased from 25 billion in March 2012, to 40 billion by January 2013 and 50 billion by May 2013.

The majority of App downloads are games. The App Store opened in July 2008 with 500 apps and has grown to now include over 850,000 apps which are currently being downloaded at a rate of more than 800 apps per second and over 2 billion per month. Apple has paid out over $9 billion to developers over that period.

The growth in gamers worldwide has also triggered a marked diversification to encompass increased casual and social gaming in addition to “hard-core gaming”, extending the demographics and play patterns of those who can be considered ‘gamers’.

Digital distribution
In video games and other industries like film, music, and TV, direct digital distribution of products to customers is rapidly becoming significant as physical retail channels recede. From 2013-2017, worldwide video games sales overall (console and mobile) are forecast to continue to grow at an annual rate of 6.5 per cent., with console games alone growing at 5 per cent. year on year. Worldwide, around 25 billion apps were downloaded on the Apple’s App Store in the 14 month period to May 2013 alone. It is predicted that the digital revenue of Electronic Arts, one of the world’s largest game publishers, will surpass physical game sales in 2013. The total US digital games market grew 39 per cent. between January 2012 and January 2013. In 2012, UK digital download sales of games exceeded those of music, TV and film put together.

Devices now have their own associated App Store eco-systems which allow discovery of content, direct digital download to the device and integrated billing mechanisms; for example Apple’s App Store, Microsoft’s Xbox Live and Windows Store, Google Play, Amazon Appstore, Nintendo’s eShop and Sony’s Play Station Network. These eco-systems coupled with the increase in smart phone and tablet games and the industry move towards digital distribution has removed significant barriers to entry for smaller developers to access the market directly on a similar footing to traditional game publishers.

Frontier’s Cobra technology
The Group’s software technology, known as “Cobra”, has been developed and evolved since 1988. It was initially conceived as a solution for the problem of easily porting the same game across different target hardware devices.

Over the years, continued investment has, the Directors believe, kept Cobra at the leading edge of game development technologies, supporting today’s multi-core CPU and GPU architectures of PC, console, tablet and smart phone devices with a modular, high performance system offering of state of the art efficiency and visual fidelity that is applicable across a wide range of game genres. It is supplemented with licensed-in middleware for “commodity” uses as appropriate, such as audio and UI functions.

Cobra facilitates clean, structured code, where the game logic only needs one set of verification at the beta stage of the project – greatly reducing the amount of testing time required for additional platform versions of a game. This allows Frontier to maximise the performance extracted from all supported hardware platforms and has allowed the Group to deliver industry-leading innovations and efficient multi-platform development.

Cobra also incorporates a sophisticated framework which enables rapid development of powerful game creation tools, which offer the ability to view, tweak and review changes to content (e.g. animations, audio, 3D models etc.) on target platforms in a live game session running on that platform, without the intervention of a programmer. This ability to rapidly iterate allows projects using Cobra to maximise the impact of skilled developers on any game project, so that the finished product can be of the highest possible quality.

Most recently, the Group has added Cloud-based analytic capability to Cobra, whereby Frontier’s code running on commodity servers interacts with the game to provide data-driven game rules and information gathering. This facilitates full play through tracking, sophisticated A-B tests, player segmentation and friends’ lists as well as the usual leader-board and achievement functionality.

The Group intends to continue to develop its publication and self-publishing businesses. Frontier is frequently presented with revenue generating projects and opportunities, however the Group is currently forced to prioritise work due to capacity restrictions. The proposed admission to AIM will allow Frontier to increase scale, thus enabling the Group to take advantage of more opportunities and to benefit from further economies of scale.

The Group intends to further increase revenues by offering new functionality and new platform support to its Cobra technology. It will work with third party developers and publishers and others to offer for license the Cobra technology (or elements thereof), thus enabling new business models for the Group.

The necessary high level software components to create valuable functionality exist within the Group today in some form, and will first be brought together within the Elite: Dangerous game.

Current trading, operational trends and prospects of Frontier
Gross revenues (including sub-contractor recharges) for the unaudited period to May 2013 are to be around £12.1 million with EBITDA of £2.8 million and profit for the period after tax of circa £1 million. As at 31 May 2013, the Group had net cash of £7.2 million. The lower year-on-year gross revenue number reflects a lessened reliance on third party sub-contractors which have historically been recharged at nil margin. Excluding recharged third party sub-contractor costs, revenues are anticipated to improve year on year. Ignoring share based compensation and IPO costs, EBITDA for the 12 months to May 2013 shows an improvement compared with 2012.

The Group expects to continue to benefit from a low tax base from research and development and Video Games Tax Relief incentives. Frontier expects to maintain its work with major publishers and platform owners and to continue to invest in its proprietary Cobra technology and self published games.

Board of Directors
David John Braben (Founder and CEO), 49
David was the founding shareholder of Frontier in January 1994 and is the co-author of Elite. David has over 30 years’ experience in the gaming industry. David is also a founding trustee of the Raspberry Pi Foundation, a charity which aims to inspire a new generation of children to get interested in computer science through the use of a credit-card sized computer that plugs into your TV and a keyboard. David was formerly a Non-Executive director of Phonetic Arts, a Cambridge-based company focussed on speech synthesis that was acquired by Google in December 2010. David is a member of the BAFTA games committee, a Fellow of the Royal Academy of Engineering and the Chairman of Skill set University Approvals Board. David joined the Board in January 1994.

David Ranken Gammon (Non-Executive Chairman), 52
David has over 15 years’ of experience as an investment banker having worked for Baring Securites, Salomon Brothers, Robert Fleming & Co and Credit Lyonnais. Since 2001, David has focused on developing, advising and investing in disruptive high growth technology companies. In 1988, David founded Rockspring, an advisory and investment firm where he continues to be CEO today. Advisory clients include Marshall of Cambridge (Holdings) Limited, Deepmind Technologies Limited and Hawkwood Capital LLP.

As well as his advisory role David is also a non-executive director at LoQ plc and Imaginatik plc. Previous experience includes non-executive directorships at real-time location technology specialist, Ubisense Trading Limited, BGlobal plc, Amino Technologies plc and, Director and acting CFO at Envisional Solutions Limited. David was appointed to the Board in February 2012 and appointed Chairman of Frontier in June 2012.

David John Walsh (Chief Operating Officer), 49
David has over 25 years’ experience of engineering and commercial management roles in high-growth technology companies. In 2001 David joined Frontier from ARM, the London/NASDAQ listed microprocessor IP licensing company where he served for six years, helping to grow the company and as Director of Software Systems setting up a division of the company to facilitate adoption of the architecture in key target market segments. In 2012, David established and became President of Frontier Developments Inc., Frontier’s wholly owned Canadian subsidiary, and he also serves as a board member of the Entertainment Software Association of Canada. David joined the Board in October 2000.

Jonathan Francis Watts (Chief Creative Officer), 44
Jonny has over 26 years’ experience in gaming. He joined the Company in 1998 from Sensible Software, and over the course of his career has been involved in all aspects of the creation of 23 published games such as Sensible Soccer, Cannon Fodder, Roller Coaster Tycoon 3, Kinectimals, LostWinds, Kinect Disneyland Adventures and Kinect Star Wars. Jonny’s titles span the full range from independent development to 400- person projects, encompass a diverse range of genres, and together have been enjoyed by over 34 million people worldwide. Jonny holds Zoology and Computer Science degrees, is an active member of BAFTA including serving as a judge for five years and on the BAFTA Young Designer committee. Jonathan joined the Board in February 2012.

Jonathan Simon Milner (Non-Executive Director), 48
Jonathan is an experienced entrepreneur and business leader with a background in genetic research. In 1998, he founded Abcam with David Cleevely and Professor Tony Kouzarides, to supply the rapidly growing market for antibodies and other life science reagents. As CEO, Jonathan was instrumental in building Abcam, which now has a market capitalisation of c.£904 million. Jonathan is an active supporter of the Cambridge, UK business community. He is also a non-executive director of Horizon Discovery, a personalised genomics company. Jonathan joined the Board in November 2012.

Neil Robert Armstrong (Chief Financial Officer and Company Secretary), 49
Neil is a chartered accountant (ACA) with over 24 years’ experience. He has previously held positions as Finance Director or financial controller with Skillshare International, the International Institute for Environment and Development, Cowells Arrow Bingo Company, Cinram UK Limited and Dane & Company Limited.

Reasons for the Placing and use of proceeds
Frontier intends to use its AIM quotation and the Funding to facilitate the implementation of its strategy in the following ways:

• Fund development of its Cobra technology – the Company intends to invest in its organic growth by extending its technology platform to move towards licensing key elements of its technology and related services to third parties.

• Elite: Dangerous – Frontier will use some of the proceeds of the Placing to supplement the development of its self-published game, Elite: Dangerous. The Directors believe that this game will display the functionality of Frontier’s technology offering for both customers and platform eco-system owners.

• Working capital – the Company will use a portion of the proceeds of the Placing to strengthen its working capital position in particular for its overseas office.

• Acquisition capital – the Directors are focused on growing the Company organically but the Admission will give Frontier the currency to consider making acquisitions, should they arise in the future.


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