Annual Report and Accounts 2020

Creating authentic worlds

Creating authentic worlds

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 with a growing team of over 560 talented people, 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.

Highlights & KPIs

Strategic Highlights

  • A fourth successful new game launch
    • Planet Zoo released successfully in November 2019, quickly establishing itself as a genre leader, reflecting its rich, authentic animal and management simulations, with the tools which enable players to craft and share the most beautiful creations with a large and growing game community
    • Over 1.0 million base game units sold in under six months
    • Strong engagement with free content and PDLC has helped to keep players active, attract new players and generate additional revenue, with the Arctic pack released just before Christmas, the South American pack at Easter and the Australia pack which launched in August, after the end of FY20
  • Frontier’s launch and nurture portfolio strategy continues to deliver
    • Frontier reduces risk by identifying opportunities to create genreleading games that build on its strengths and unique track record
    • Post-launch, Frontier nurtures its games for many years through community engagement and additional content
    • Elite Dangerous continues to grow, with the success of the recent Fleet Carriers update helping to achieve its highest ever player numbers. Elite Dangerous: Odyssey, our major new paid-for update to launch in calendar Q1 2021 (in FY21), was revealed in June 2020 to positive reception
    • Planet Coaster also continues to grow, making more revenue in FY20 than in FY19, wholly on PC. We have announced Planet Coaster is coming to Xbox One, PlayStation 4, Xbox Series X and PlayStation 5 later this year
    • Jurassic World Evolution benefitted from several PDLC packs in FY20, including the Jurassic World Evolution: Return to Jurassic Park pack at Christmas, our most successful PDLC to date, which continues to perform well. Jurassic World Evolution: Complete Edition is coming to the Nintendo Switch on 3 November 2020
    • Nearly 60% of revenue in FY20 was generated by Elite Dangerous, Planet Coaster and Jurassic World Evolution, illustrating the ongoing popularity of the Company’s games, and the success of Frontier’s launch and nurture strategy in generating strong returns over many years
    • Over 10 million base game units sold across our four titles as of 31 May 2020 (Elite Dangerous 3.5 million, Planet Coaster 2.5 million, Jurassic World Evolution 3.0 million and Planet Zoo 1.0 million)
  • Strategic progress with new IP licences and the addition of third‑party publishing
    • IP licence signed for annual releases of Formula 1® management games from 2022 onwards
    • IP licence signed with Games Workshop for a real-time strategy game based on the popular Warhammer Age of Sigmar brand
    • Frontier Foundry, our own games label for third-party publishing, started strongly with six games signed to date, including one already released, one more announced and more coming soon

Financial Highlights

  • Our major new game release in FY20 was a 100% own-IP title, Planet Zoo, which released exclusively on PC almost halfway through FY20, in November 2019, and is Frontier’s biggest selling game to date on PC during an equivalent time period
  • In comparison our major new game release in FY19 and our biggest selling game to date, Jurassic World Evolution, benefitted from a major existing global IP franchise and launched simultaneously on multiple platforms, releasing on PC, PlayStation 4 and Xbox One at the start of FY19 alongside the Jurassic World: Fallen Kingdom film in June 2018
  • Total revenue in FY20 was £76.1 million (FY19: £89.7 million). As expected the lower level of revenue year-on-year reflected the timing of releases during the two financial years and that Planet Zoo launched on the PC platform only
  • All four games, Elite Dangerous, Planet Coaster, Jurassic World Evolution and Planet Zoo, benefitted from Frontier’s ‘launch and nurture’ strategy in FY20, with each providing significant revenue contributions through both base game sales and paid-downloadable content (“PDLC”)
  • Strong trading performance delivered operating profit, as reported under IFRS, of £16.6 million for FY20 (FY19: £19.4 million), with operating profit margin maintained at 22% despite the lower level of revenue
  • Cash balances increased by £10.4 million during the year to £45.8 million (FY19: £35.3 million)
  • Full financial review on pages 31 to 33

Revenue (£m)

£76.1m

Operating Profit (£m)

£16.6m

Operating Margin (%)

22%

EBITBA* (£m)

£31.5m

EPS** (basic) (p)

41.3p

Operating cashflow*** (£m)

£13.6m

Net cash balance (£m)

£45.8m

* Earnings before interest, tax, depreciation and amortisation.
** FY19 restated for deferred tax adjustment as per note 2.
*** EBITDA excluding non-cash items less investments in game developments and game technology.

Statements

Frontier’s success is due to the hard work and skill of our talented team.

Frontier’s amazing team has delivered another great year of progress for the Company, which is particularly pleasing given the operational challenges that were presented by Covid-19 during the second half of the financial year.

David Gammon
Non-executive Chairman
PDF icon Chairmans-Statement-2020.pdf (230.21 KB) (230.21 KB)
Our vision is to be the most respected entertainment company in the world.

Reflecting on our progress since writing my last report in the summer of 2019, I am delighted with the achievements of our teams across all areas of our business, particularly through the challenges of Covid-19.

Regarding our internally developed game portfolio, we have further expanded our offering with another successful major game release, Planet Zoo, which has become our best-selling PC game, crossing 1 million base game units in less than six months. As usual we have supported all of our games with free and paid content, together with active community management, which has in turn delivered strong ongoing sales performance. As a result, all four titles delivered material contributions in FY20, and it was pleasing to pass a sales milestone for Frontier in the period with a combined total of 10 million base game units sold across our four titles since we listed.

David Braben
Founder & CEO
We start FY21 in excellent financial shape.

The combination of the ongoing financial performance of our first three titles, together with the successful launch of Planet Zoo in the year, yielded a strong set of financial results in FY20. In terms of both revenue and profit FY20 was Frontier’s second biggest ever year in our 26-year history, following the record set of results posted in FY19 through the launch of Jurassic World Evolution in June 2018. We start FY21 in excellent financial shape, with a strong portfolio of four existing games, an exciting roadmap to support those four games and develop new titles, the anticipated financial contribution from our Frontier Foundry games label, and our strongest ever cash position – £45.8 million as at 31 May 2020.

Alex Bevis
CFO & Company Secretary

2020 Annual Report – Key Sections

Our released titles

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 uniquely recreated by Frontier at its full galactic proportions. Elite Dangerous: Odyssey, arriving in Q1 2021, will mark the birth of a highly anticipated new era for the long-running definitive space simulation, allowing players to touch down on countless new planets powered by stunning new tech. See breathtaking new scenery and explore with unrestricted freedom from a first-person, feet-on-the-ground perspective, something we know many players are keen to see.

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 create the theme park of their dreams as they surprise, delight and thrill incredulous crowds, and share their success with the world via the Steam Workshop community. We look forward to expanding the Planet Coaster community even further with the additional release of Planet Coaster: Console Edition later in 2020.

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, construct attractions and containment and research facilities. Every choice leads to a different path and spectacular challenges arise when ‘life finds a way’. Frontier’s world-class team will further expand the Jurassic World Evolution player community with its release on the Nintendo Switch console on 3 November 2020.

PLANET ZOO – available for Windows PC – is the ultimate zoo sim, featuring authentic living animals who think, feel and explore the world players create around them. Planet Zoo allows players to experience a globe-trotting campaign or let their imagination run wild in the freedom of Sandbox mode, create unique habitats and vast landscapes, make big decisions and meaningful choices, and nurture their animals as they construct and manage a truly modern zoo where animal welfare and conservation comes first.

PDF icon Stategic-Report-2020.pdf (3.7 MB)81Spa311dF1

Our business model and strategy

INVEST

We invest our development resources in games with strong franchise potential, primarily on PC and console. In order to maximise the return on our core skills and assets we target game genres where we have established expertise and/or intellectual property within our teams. Audiences on the chosen platforms tend to value games that exhibit Frontier’s key development strengths.

DEVELOP

We use online channels to create and engage with player communities during game development, a practice which provides a valuable source of feedback, and these player communities provide excellent advocacy for each franchise prior to launch.

PUBLISH

With each of our franchises, we plan for the long term, and how best to support and sustain the audience for each one. A dedicated team monitors progress based on sentiment towards the games, the success of each of the distribution channels and platforms, and the uptake of additional content both free and paid, allowing us to reach the widest possible audience over time.

PDF icon Stategic-Report-2020.pdf (3.7 MB)81Spa311dF1

Our people

Frontier employs amazing people who are instrumental in making games that define genres, break boundaries and sell millions of copies to gamers around the world. We share a vision of developing, launching and nurturing world-class games that put both Frontier and the games industry itself at the forefront of the global entertainment industry.

PDF icon Stategic-Report-2020.pdf (3.7 MB)81Spa311dF1

Our impact

Since the founding of the company in 1994, Frontier has endeavoured to conduct business in a considerate, responsible and ethical manner. To do this, we have placed our key stakeholders – our people, our players, our partners and our investors – at the core of everything we do. We aim to be a leader in our industry for creating games which in themselves, and through the process of creating and nurturing them, resonate with the key environmental, social and governance (‘ESG’) principles of our stakeholders, as well as society as a whole.

PDF icon Stategic-Report-2020.pdf (3.7 MB)81Spa311dF1

Managing our risks

Over our long, successful track record of developing a wide variety of game genres in the work-for-hire model we developed many areas of unique technical expertise, as well as the understanding of how to identify and execute developments to succeed in very different game genres.

There is a great deal of risk in the work-for-hire model, with the biggest issue being major changes at publishers, particularly when they became financially compromised. Moving to self-publish our own games allowed us to gain much greater commercial reward on the deployment of our development resources compared to our previous (pre-2013) work-for-hire business model, and addressed this key risk. The change of business model has enabled us to significantly grow our revenue and our profit margins, and generate cash, helping us to build a strong balance sheet.

PDF icon Stategic-Report-2020.pdf (3.7 MB)81Spa311dF1

Heading into the next era

Elite Dangerous is now in its seventh financial year since release in December 2014. Since launch we have continued to release expansions to the original Elite Dangerous game, simultaneously on PC, PlayStation 4 and Xbox One as those platforms have been added – Elite Dangerous launched on Xbox One in 2015 and came to PlayStation 4 in 2017.

On 3 June 2020 we unveiled Elite Dangerous: Odyssey, which is our major new paid-for update for Elite Dangerous, coming in Q1 calendar 2021 (in FY21).

PDF icon Stategic-Report-2020.pdf (3.7 MB)81Spa311dF1

Evolving coaster park simulation

Planet Coaster was successfully launched in November 2016 after a short beta period, achieving the global #1 position on the Steam distribution channel and continuing to sell strongly through the subsequent holiday period. In accordance with our strategy, we began to release free updates, each of which adds headline features but also expands and improves different creative and management aspects of the game.

We look forward to expanding the Planet Coaster community even further with the release of Planet Coaster: Console Edition later in 2020.

PDF icon Stategic-Report-2020.pdf (3.7 MB)81Spa311dF1

Return to Jurassic Park

Jurassic World Evolution, our first self-published licensed title, launched on 12 June 2018, at the start of FY19. It was our first self-published title (although not our first game) to debut simultaneously on PC, PlayStation 4 and Xbox One, and the first to benefit from a major marketing event by launching alongside the latest film in the franchise, Jurassic World: Fallen Kingdom, at the start of the biggest games industry show of the year – the Electronic Entertainment Expo (E3) in Los Angeles.

Frontier’s world-class team will further expand the Jurassic World Evolution player community with its release on the Nintendo Switch console on 3 November 2020 through the release of Jurassic World Evolution: Complete Edition.

PDF icon Stategic-Report-2020.pdf (3.7 MB)81Spa311dF1

Simulation runs wild

Frontier’s fourth self-published title, Planet Zoo, launched exclusively for PC on 5 November 2019. Planet Zoo rapidly established itself as the ultimate zoo simulation, becoming Frontier’s biggest selling PC game during an equivalent time period from release, crossing 1 million units in less than six months.

PDF icon Stategic-Report-2020.pdf (3.7 MB)81Spa311dF1

A proven track record

In March we announced a multi-year exclusive licence (the “Licence”) with Formula One Management to develop and publish PC and console management games annually for the FIA FORMULA ONE WORLD CHAMPIONSHIP™ (“F1”), the world’s most prestigious motor racing competition.

Under the terms of the Licence, Frontier has exclusive rights to develop and publish F1 management games worldwide for PC and console platforms, together with the rights for streaming services, with the first game expected to release for the 2022 F1 season. The Licence provides Frontier with the rights for four F1 seasons (2022 to 2025 inclusive), subject to the achievement of certain financial performance thresholds.

PDF icon Stategic-Report-2020.pdf (3.7 MB)81Spa311dF1

A whole new universe

In May 2020 Frontier announced an exclusive IP licence (the “Licence”) with Games Workshop to develop and publish a real-time strategy game within the rich and extensive world of Warhammer Age of Sigmar.

Warhammer Age of Sigmar is Games Workshop’s most recent iteration of the globally renowned fantasy setting in which the four Grand Alliances of Order, Chaos, Death and Destruction vie for control of the Mortal Realms. Unique and distinct in style, and endless in scope, this ever growing universe sits alongside the far future dystopia of Warhammer 40,000 as the most successful tabletop miniatures games in the world.

PDF icon Stategic-Report-2020.pdf (3.7 MB)81Spa311dF1

Our new games label for third party publishing

Frontier Foundry’s mission is simple: expand the Company’s excellent game portfolio by partnering with exciting developers. With our heritage as a developer, combined with our wealth of publishing experience, Frontier is perfectly placed to offer third-party studios expertise and guidance throughout the development cycle, delivering the vision its creators intended.

In June 2019 we announced our first deal with experienced developer Haemimont Games, and since then we have signed a further five titles, with two for release in FY21, three for FY22 and one for FY23. Over the next few years we plan to establish Frontier Foundry as a significant business, generating a material proportion of Frontier’s revenue and profit. Our initial target is to achieve five to six releases per year from FY23 onwards.

PDF icon Stategic-Report-2020.pdf (3.7 MB)81Spa311dF1

Annual Report and Accounts 2020

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