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A Record Year. an Exciting Future

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A Record Year. an Exciting Future FRONTIER DEVELOPMENTS PLC DEVELOPMENTS FRONTIER A RECORD YEAR. AN EXCITING FUTURE. EXCITING AN YEAR. RECORD A ANNUAL REPORT AND ACCOUNTS 2019 ACCOUNTS AND REPORT ANNUAL A RECORD YEAR. AN EXCITING FUTURE. FRONTIER DEVELOPMENTS PLC ANNUAL REPORT AND ACCOUNTS 2019 HIGHLIGHTS A RECORD YEAR. AN EXCITING FUTURE. Frontier is a world-class videogame developer and publisher, with a proven track record of launching multiple successful franchises with a strong post-launch nurturing strategy which delivers multi-year revenues. Each new release provides strong launch sales, while a combination of regular free and chargeable updates, together with active community support, ensures longevity of sales performance. Frontier is currently the UK’s largest independent studio and continues to grow. In the 12 months to 31 May 2019 Frontier recruited more than 120 people, growing headcount to over 460 staff in its Cambridge headquarters. In financial year 2019 Frontier grew revenue simulation, featuring authentic living animals, Frontier continues to grow its franchise portfolio by more than 160% and operating profit by rich management and limitless creativity, and is and its headcount in order to deliver long-term nearly 600% representing record financial coming exclusively on PC on 5 November 2019. revenue and earnings growth, and support the performance. This was delivered through ambition to be the most respected and highest In addition to Frontier’s core model of developing the success of Jurassic World Evolution quality entertainment company in the world. and publishing its own games, the Company is (June 2018) and the ongoing performance of partnering with other high-quality developers Frontier’s first two self-published titles, Elite to bring more games to market through the Dangerous (2014) and Planet Coaster (2016). Company’s Frontier Publishing initiative. In Frontier’s next major release is Planet Zoo, June 2019 Frontier announced the first of these the Company’s fourth title launch since the deals with Haemimont Games, an experienced transition to a self-publishing business model and respected developer of quality strategy in 2013-2014. Planet Zoo is the ultimate zoo and management titles. Operational and strategic highlights • Frontier achieved its biggest launch to date with • Planet Coaster, launched in November 2016, • Planet Zoo will be Frontier’s fourth major game Jurassic World Evolution. Released in June 2018 continues to lead its genre. 11 separate release since the transition to self-publishing. alongside the launch of the Jurassic World: Fallen chargeable themed expansion packs are now Coming exclusively on PC on 5 November 2019, Kingdom film, the game achieved 1 million unit available, enabling existing players to access Planet Zoo will be the ultimate zoo simulation, sales in five weeks and 2 million in seven months. substantial new features and content, and featuring authentic living animals, rich attracting new players into the Planet Coaster management and limitless creativity. • Frontier’s strategy of supporting and nurturing world of creativity and sharing. Planet Coaster its titles through active community engagement, • On 6 March 2019 Frontier announced securing base game unit sales passed 2 million units free updates, and chargeable content (paid a major global IP licence for a future game in January 2019. downloadable content or ‘PDLC’) continues to release in 2021. deliver, with Jurassic World Evolution, Planet • Elite Dangerous, launched in December 2014, • On 11 June 2019 Frontier announced its Coaster and Elite Dangerous all continuing to continues to deliver exciting game experiences first partnership under the Frontier Publishing entertain existing players and attract new ones. to active players whilst welcoming new ones. initiative, with experienced developer Haemimont In December 2018 Frontier delivered the fourth • Jurassic World Evolution has been supported Games. The partnership will see Frontier and chapter of the Beyond season of free updates, since launch through a number of free updates Haemimont work together on a new project which added a number of gameplay features and by a growing range of chargeable content, for release in two to three years’ time. and further narrative to the Elite Dangerous with five separate PDLC packs now available universe. In January 2019 Elite Dangerous as at 4 September 2019. crossed the 3 million base game unit threshold. STRATEGIC REPORT Contents STRATEGIC REPORT IFC Highlights 02 Our history 04 Our franchise portfolio 06 Chairman’s statement 07 Chief Executive’s statement 10 Our business model and strategy 12 Our franchises 12 Elite Dangerous 14 Planet Coaster 16 Jurassic World Evolution 18 Planet Zoo 20 Principal risks and uncertainties 22 Financial review 24 Our people 18 CORPORATE GOVERNANCE 26 Board of Directors 28 Report of the Directors 30 Corporate governance report 34 Remuneration report FINANCIAL STATEMENTS 36 Independent Auditor’s report 41 Consolidated income statement 12 14 16 41 Consolidated statement of comprehensive income 42 Consolidated statement of financial position 43 Consolidated statement of changes in equity 44 Consolidated statement of cashflows 44 Reconciliation of operating profit to cash generated from operations 25 >8 million >£200 200+ 45 Notes to the financial statements years in base game units of countries with 63 Company statement the industry self-published million a playerbase of self-published of financial position games sold** revenue** 64 Company statement of cashflows 65 Company statement of changes Financial highlights in equity • The launch of Jurassic World Evolution, • Operating profit margin increased to 22% ADDITIONAL INFORMATION combined with the ongoing performance (FY18: 8%, FY17: 21%). 66 Notice of annual general meeting of all three titles, Jurassic World Evolution, 68 Advisors and company information • Operating cashflow* generated an inflow of Planet Coaster and Elite Dangerous, propelled IBC Five year summary £15.4 million (FY18: an outflow of £2.8 million), the Company to a record financial performance reflecting the strong trading performance. for the year ended 31 May 2019. • Cash balances increased by £11.2 million during • Revenue increased by over 160% to £89.7 million the year to £35.3 million (FY18: £24.1 million). in FY19 (FY18: £34.2 million), which was 2.4 times the previous record of £37.4 million in FY17. • Operating profit, as reported under IFRS, grew to £19.4 million, nearly 600% higher than the prior year (FY18: £2.8 million) and 2.5 times the previous record of £7.8 million in FY17. * Operating profit excluding non-cash items, less investments in franchises READ THIS REPORT ONLINE and other game related intangible assets. AR.FRONTIER.CO.UK ** As at 31 July 2019. FRONTIER DEVELOPMENTS PLC ANNUAL REPORT AND ACCOUNTS 2019 01 OUR HISTORY CELEBRATING OUR FIRST 25 YEARS In January we celebrated our 25th 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 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. DAVID BRABEN FOUNDER AND CEO AR.FRONTIER.CO.UK 1984 1994–2013 2013 The original Elite Very successful ‘work-for-hire’ Successful launched developer working with Crowdfunding led to multiple publishers July 2013 IPO 1994 2012 2014 Company founded Crowdfunding for Elite Elite Dangerous by David Braben Dangerous from over launched December 2014 25,000 backers 02 FRONTIER DEVELOPMENTS PLC ANNUAL REPORT AND ACCOUNTS 2019 STRATEGIC REPORT 2016 2019 Planet Coaster Planet Zoo launched is planned to launch November 2016 November 2019 2018 Jurassic World Evolution launched June 2018. We moved into the new Frontier Developments HQ at Cambridge Science Park. FRONTIER DEVELOPMENTS PLC ANNUAL REPORT AND ACCOUNTS 2019 03 OUR FRANCHISE PORTFOLIO GROWING OUR PORTFOLIO Released titles Elite Dangerous Planet Coaster Jurassic World Evolution Elite Dangerous – available for Windows PC, Planet Coaster – available for Windows PC Jurassic World Evolution – available for Windows Microsoft Xbox One and Sony PlayStation 4 – – builds on Frontier’s genre-defining expertise PC, Microsoft Xbox One and Sony PlayStation 4 is the definitive massively multiplayer space with coaster park games such as RollerCoaster – evolves players’ relationships with the Jurassic epic, bringing gaming’s original open world Tycoon 3 and Thrillville. It further raises the World film franchise, placing them in control of adventure to the modern generation with a bar for this popular genre, allowing players to operations on the legendary island of Isla Nublar connected galaxy, evolving narrative and the create the theme park of their dreams as they and the surrounding islands of the Muertes entirety of the Milky Way recreated at its full surprise, delight and thrill incredulous crowds, Archipelago. Players create and manage their galactic proportions. and share their success with the world via the own Jurassic World as they bioengineer new Steam Workshop community. 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’. 10 ELITEDANGEROUS.COM 12 PLANETCOASTER.COM 14 JURASSICWORLDEVOLUTION.COM Financial summary Revenue (£m) Operating profit (£m) Operating margin (%) EBITDA* (£m) £89.7m £19.4m 22% £29.0m 19 89.7 19 19.4 19 22 19 29.0 18 34.2 18 2.8 18 8 18 9.4 17 37.4 17 7.8 17 21 17 12.7 16 21.4 16 1.2 16 6 16 4.9 15 22.8 15 1.6 15 7 15 6.1 * Earnings before interest, tax, depreciation and amortisation.
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