Annual Report and Accounts 2017
Evolving our Business
Frontier’s objective of transitioning to a business-to-consumer video game developer with multiple self-published revenue generating franchises has been successfully completed.
The launch of our second franchise, Planet Coaster, combined with continued strong performance from Elite Dangerous drove a step-up in all financial measures. Our third franchise, based on the Jurassic World movie franchise, is on track for launch in summer 2018.
After successfully proving our ability to launch franchises, our ambition is to continue our evolution to create a self-publishing multi-franchise success story. Ongoing investment in our people, organisation and facilities, supported by the proceeds from the £17.7 million strategic investment by Tencent completed in July 2017, will enable the business to continue scaling up.
Highlights & KPIs
Operational & Strategic Highlights
- The Company’s transition to a fully self-publishing business model was completed in November 2016 with the successful launch of Frontier’s second franchise, Planet Coaster. In July 2017 Planet Coaster’s first paid additional downloadable content was launched.
- Elite Dangerous, which launched in December 2014, continues to perform well. In June 2017 the franchise’s addressable audience was further expanded with release on the Sony PlayStation 4 platform.
- Frontier’s next major game franchise, based on the Jurassic World movie franchise, was revealed in August 2017. Jurassic World Evolution is planned for launch in summer 2018 alongside the movie launch of Jurassic World: Fallen Kingdom.
- £17.7 million was raised in July 2017 through a strategic investment from Tencent, a leading Internet and interactive entertainment company based in China. This will improve and accelerate Frontier’s growth into the key Chinese market and help drive scale-up of the business.
- Total revenue grew 75% to £37.4 million (FY16: £21.4 million) as the launch of the Planet Coaster franchise in November 2016 drove a step-up in annual sales.
- Self-publishing revenue of £36.4 million (FY16: £21.1 million) accounted for 97% of total revenue with the balance being related to our legacy work-for-hire business.
- Operating profit grew by 550% to £7.8 million (FY16: £1.2 million) representing an operating margin of 21% (FY16: 6%) and EBITDA increased to £12.7 million (FY16: £4.9 million).
- Operating cash flow (operating profit excluding non-cash items, less investments in franchises and other intangible assets) was an inflow of £3.4 million (FY16: outflow of £2.7 million).
- Cash balances increased £4.0 million during the year to £12.6 million (FY16: £8.6 million). Following the £17.7 million strategic investment by Tencent the Company’s cash balance was £27.5 million on 31 August 2017.
Revenue (£m)£37.4m +75%
Operating Profit (£m)£7.8m +550%
Operating Margin (%)21% +15%
EBITDA (£m)*£12.7m +159%
EPS (basic) (p)22.7p +440%
Operating Cash Flow (£m)£3.4m +610%
Net Cash Balance (£m)£12.6m +47%
* Earnings before interest, tax, depreciation and amortisation
I am delighted with our results and excited about our future.
I am pleased to report on a very satisfying year in Frontier’s continued development. We completed the transition of our business to our chosen multi-franchise self-publishing model with the successful launch of our second franchise, Planet Coaster, and we are excited about the potential for our third franchise, Jurassic World Evolution. Meanwhile, Elite Dangerous continues to grow its addressable audience and is performing well.
Our long-term ambition is to become a global leader in entertainment and we are scaling up to continue our multi-franchise success story. Our recent strong self-publishing performance, as well as our long history of delivery and capability, positions us very well to achieve this. We have established a scale-up plan to achieve our next step which includes investments in people, organisation, geographical distribution and facilities.
Chairman's Statement (56.18 KB) (56.18 KB)
I would like to thank our amazing team who have achieved so much since our decision to transition our business four years ago.
In 2013 we set out our plan to transition the business from work-for-hire to multi-franchise self-publication. The rise of digital distribution was the catalyst for our change, and our extensive experience in the games industry gave us the confidence to make the switch.
Four years later I am delighted with our achievements; we have overcome a number of challenges to transform our business model with two successful franchises, Planet Coaster and Elite Dangerous already in the market, and more to come. Our next major development, Jurassic World Evolution, is progressing well, and is scheduled for launch in summer 2018. I would like to thank our amazing team who have achieved so much since our decision to transition our business four years ago.
Founder & CEO
Significant step up in financial performance
The Company achieved a significant step-up in financial performance in the year ended 31 May 2017, as the transition from a work-for-hire business model to multi-franchise self-publishing was completed through the launch of Planet Coaster in November 2016.
The addition of this second franchise helped boost annual revenue by over 75% to £37.4 million and operating profit grew by 550% to £7.8 million. Cash flow was also strong, with an increase of £4.0 million in the year to £12.6 million. Cash balances were further boosted by the £17.7 million strategic investment in July 2017; cash balances at 31 August 2017 stood at £27.5 million.
CFO & Company Secretary
Our Strategic Priorities
Developing our business to achieve repeatable success
We invest our development resources in games with strong franchise potential. In order to maximise the return on our core skills and assets we target game genres where we have established expertise and intellectual property.
We continue to invest in our organisation to create a model of repeatable success. To accelerate our progress and increase the frequency of launches we are scaling up our organisation, not just in terms of staff numbers, but also in terms of leadership skills, training, organisational structure and process.Strategic Priorities (3.29 MB)