REG - Frontier Dev PLC - Interim Results
Frontier Developments plc
Interim Results
Game portfolio, player base and profitability continue to grow
Frontier Developments plc (AIM: FDEV, "Frontier", the "Company"), a leading developer and publisher of video games based in Cambridge, UK has published its interim results for the 6 months to 30 November 2020 ('H1 FY21').
Financial Highlights
H1 FY21
(6 months to 30 November 2020)
H1 FY20
(6 months to 30 November 2019)
FY20
(12 months to 31 May 2020)
Revenue
£36.9m
£32.0m
£76.1m
Operating Profit
£6.9m
£4.5m
£16.6m
Operating Margin %
19%
14%
22%
EBITDA*
£15.5m
£10.9m
£31.5m
EPS (basic)
15.0p
9.4p
41.3p
Operating Cash Flow**
£3.1m
£1.9m
£13.6m
Net Cash Balance at period end
£34.9m
£28.9m
£45.8m
*Earnings before interest, tax, depreciation and amortisation
** EBITDA excluding non-cash items less investments in game developments and game technology
· The ongoing performance of all existing titles, combined with initial contributions from new platform launches, delivered H1 on H1 revenue growth of 15%
· Gross profit margin grew to 71% (H1 FY20: 67%) with operating profit margin increasing to 19% (H1 FY20: 14%) through lower average distribution costs, including lower digital store commission rates on some services, and a greater proportion of revenue from own-IP titles versus licenced IP titles
· Net cash balance of £34.9m at 30 November 2020 (31 May 2020: £45.8m) reflecting £10m of share purchases into the Employee Benefit Trust in September 2020, and ongoing investments in internal development projects and Frontier Foundry titles
Operational & Strategic Highlights
· Player numbers for all titles continue to expand strongly, through active player-community management, additional free and chargeable content, price promotions and expansions onto new platforms and channels:
o Planet Zoo, which released in November 2019, has achieved record performance on PC in its first 15 months, surpassing 1.5 million base game units sold. Paid content packs including the Arctic, South America, Australia, and Aquatic packs have proved to be popular, as expected
o Planet Coaster: Console Edition released successfully in November 2020 on all current and next generation PlayStation and Xbox consoles following its success on PC for over 4 years, pushing total sales across all platforms above 3 million base game units
o Jurassic World Evolution expanded onto the Nintendo Switch in November 2020, which has helped to move total sales above the 4 million threshold for base game units sold across all platforms
o Elite Dangerous has also passed 4 million base game units sold having achieved new all-time active player number records several times this financial year, with total base game owners now at 12 million following the Epic Games Store 'Free Week' in November 2020. The PC release of a major new era, Elite Dangerous: Odyssey, is scheduled to land before the end of the current financial year with console releases coming later in calendar 2021
· Frontier Foundry, our own games label for third-party publishing, continues to grow with a number of exciting titles in discussion as well as the titles already signed. Our first partner title, the experimental and unique Struggling, released in August 2020. Frontier Foundry is set to become a material part of the business in the future
· Our amazing people continue to operate positively through the challenges posed by remote working, supporting and growing our portfolio of games. Our team continues to grow, with 175 hires made during 2020, most of whom joined us during the remote working period. We reached 600 people as at 31 December 2020 to enable our future product plans
Current Trading and Outlook
All titles continue to perform well, and revenue growth in the second half of the financial year is expected to build on the strong performance achieved in the first half through three factors:
· The ongoing sales performance of a larger portfolio, with Jurassic World Evolution: Complete Edition on Nintendo Switch and Planet Coaster: Console Edition on PlayStation and Xbox having released in November 2020, as well as chargeable content packs in H2 FY21 for Planet Zoo such as the Aquatic Pack (December 2020)
· Revenue in December, which is typically the biggest month of the year for videogames sales, was stronger than expected, with base game units and paid downloadable content ('PDLC') selling well across all four major franchises
· The anticipated success of Elite Dangerous: Odyssey, a major new era for Elite Dangerous, planned for release on PC before the end of this financial year
Covid-19 related remote working provided collaboration challenges for us during calendar 2020, and these continue into 2021. As announced in our trading statement on 13 January 2021, in early January we reviewed the project timelines for our next major release, Elite Dangerous: Odyssey, to take into account the renewed need to continue with remote working for the near future. We took the decision to update our launch plans for Odyssey, with the PC release still planned for FY21 but the PlayStation and Xbox releases moving out to FY22. We made this decision to ensure that we are able to deliver an enjoyable experience for all of our players, on all platforms.
Odyssey is coming together well and, based on the continued strong performance of our existing titles and the anticipated success of Odyssey launching on PC before the end of this financial year, the Board's expectations for FY21 remain in-line with the previously guided revenue range of £90 million to £95 million (FY20: £76.1 million).
For FY22 we anticipate significant growth from the continued strong performance of our existing portfolio alongside contributions from an exciting line‐up of new games, including two multi‐platform releases incorporating major global IP licenses and a number of Frontier Foundry titles.
David Braben, Chief Executive, said:
"Covid has caused a great deal of hardship for many people, but we have been fortunate to benefit from a higher level of demand and engagement for our immersive games during the various lockdowns around the world. I am delighted with the growth achieved in our player communities and in our team during 2020. It's pleasing to see strong engagement across all of our titles during these challenging times for so many people and I am proud of our great team for the adaptability they have shown during remote working.
Our next major event is Elite Dangerous: Odyssey, which is coming together really well, and represents one part of our exciting line-up for 2021 and beyond. We're in great shape for the 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 / William Booth / Tom Blundell / David Allchurch
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.
Financial Review
TRADING
Total revenue in H1 FY21 was £36.9 million, 15% ahead of the comparative period despite that period including the launch revenue of Planet Zoo (H1 FY20: £32.0 million). This was driven by the continued performance of all four titles - Elite Dangerous, Planet Coaster, Jurassic World Evolution and Planet Zoo - including new platform releases for Planet Coaster and Jurassic World Evolution.
Frontier's strategy of launching and then supporting games to achieve multi-year earnings continues to deliver, with all four titles materially contributing to revenue in the period through both base game sales and PDLC (paid-downloadable content) sales.
Player engagement on Elite Dangerous, which originally launched in December 2014, achieved record levels during the period, with base game sales and PDLC sales both performing well. Total sales to date of Elite Dangerous have now crossed 4 million paid base game units. On top of this, the player base for Elite Dangerous was further increased from November 2020 through its release on the Epic Games Store. The launch on this important new channel for Frontier included an initial 'Free Week' which allowed Epic customers to download the Elite Dangerous base game for free, boosting the total number of owners of the Elite Dangerous base game across all platforms to 12 million. This substantial increase in base game owners comes in advance of the release of Elite Dangerous: Odyssey, a major new chargeable era for Elite Dangerous, which is due to land on PC in FY21 with releases planned for consoles later in calendar 2021.
Planet Coaster continues to perform well, now into its fifth year on PC since launching in November 2016. Following its success on PC, the talented team at Frontier brought the creative and stimulating world of Planet Coaster to PlayStation and Xbox players during the period. Planet Coaster: Console Edition arrived in November 2020 for the Xbox Series X|S, Xbox One, PlayStation 4 and PlayStation 5, making it Frontier's first next generation console title. Sales from launch in November 2020 have been encouraging, supported by a strong catalogue of PDLC. Four PDLC packs have so far been released from a total portfolio of 11 packs currently available for Planet Coaster on PC. The console releases have helped to push sales of Planet Coaster across all platforms above 3 million base game units.
Jurassic World Evolution also benefitted from a major new platform launch in the period, with Jurassic World Evolution: Complete Edition coming to Nintendo Switch in November 2020. This edition includes the base game and all eight existing PDLC products already available on PC, PlayStation and Xbox. Initial sales on Nintendo Switch, together with continued stronger than expected performance of Jurassic World Evolution on PC, PlayStation and Xbox, have driven total base game units sold to date across all platforms above the 4 million unit threshold.
Nintendo Switch is a relatively new platform for Frontier, with our first three products having launched for this console during 2020. We're pleased to add this important platform as part of our distribution strategy. The successful "porting" of our complex, non-linear games to new platforms, such as achieved with Jurassic World Evolution to Nintendo Switch and Planet Coaster to PlayStation and Xbox, is a significant technical challenge. The strong engagement and positive feedback from those launches stands testament to the quality and depth of the team we have at Frontier.
Planet Zoo, which launched in November 2019 exclusively on PC, has been record-breaking for Frontier in its first 15 months, selling more base game units on PC and generating more revenue on PC than any of Frontier's previous titles during an equivalent time period on that platform. The player community for Planet Zoo continued to grow during the first half of FY21 and also during the important festive December trading period, which falls into the second half of FY21. Base game unit sales have now surpassed 1.5 million units. Our catalogue of PDLC packs for Planet Zoo continues to evolve with five packs now available - the Australia Pack launched in August 2020 during H1 FY21 and the Aquatic Pack released in December 2020, just into H2 FY21.
Frontier Foundry, our own games label for third party publishing, provided a modest revenue contribution during the period through sales of the classic Roller Coaster Tycoon 3 on PC and Nintendo Switch, and through the experimental and unique Struggling, also on PC and Nintendo Switch. Frontier Foundry is set to become a material contributor to Frontier's overall business in the future, with a number of exciting titles already signed and more in review. Lemnis Gate, the awarding winning FPS game with an intriguing time-based strategic element, will be just one of the great titles coming from Frontier Foundry in FY22.
PROFITABILITY
Gross profit of £26.2 million was recorded in the period (H1 FY20: £21.4 million) with gross margin at 71% (H1 FY20: 67%). The four percentage point increase in gross margin versus the comparative period reflected an increased proportion of revenue from own-IP sales (Planet Zoo, Planet Coaster and Elite Dangerous) versus licenced-IP sales (Jurassic World Evolution) and lower overall distribution costs, including the benefit of sales volume commission tiers on the Steam platform.
Gross research and development expenses in the period increased to £15.8 million, growing from £12.4 million in H1 FY20. The increase 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 £13.1 million in the six months to 30 November 2020 (H1 FY20: £9.8 million). The percentage of gross research and development costs which were capitalised was 83% in the period, up from the 79% recorded for H1 FY20. This was because more internal staff were engaged on the development of chargeable products, and investments in Frontier Foundry partner developments, which tend to be capitalised at 100%, started to become more material. Frontier's normal expectations for capitalisation is 70-90% of gross development spending.
R&D amortisation charges related to previously capitalised development costs grew to £7.0 million (H1 FY20: £4.9 million). A full six months of Planet Zoo base game amortisation was charged in H1 FY21, versus only one month in H1 FY20, since Planet Zoo launched in November 2019. H1 FY21 also included one month of amortisation charges for Planet Coaster: Console Edition and Jurassic World Evolution: Complete Edition for Nintendo Switch, since both of those products released in November 2020, the last month of the period.
Net research and development expenses recorded in the income statement in the period were £9.7 million (H1 FY20: £7.5 million), being gross spend of £15.8 million, less capitalised costs of £13.1 million, plus amortisation charges of £7.0 million.
Sales and marketing expenses in the period were £3.4 million (H1 FY20: £3.9 million). The comparative period included the launch of a major brand new game, Planet Zoo, whereas the current period covered new platform releases (Planet Coaster on PlayStation and Xbox, and Jurassic World Evolution on Nintendo Switch) and smaller game launches (Struggling).
Administrative expenses in H1 FY21 were £6.1 million (H1 FY20: £5.4 million). Since the Company's annual bonus scheme is based on operating profit, a higher level of bonus was accrued in H1 FY21 (operating profit of £6.9 million) compared to H1 FY20 (operating profit of £4.5 million).
The growth in operating profit to £6.9 million in the period versus £4.5 million in H1 FY20 was achieved through a higher level of revenue and a higher gross margin percentage, which outweighed the increase in R&D investment. Operating profit margin in H1 FY21 was 19% versus 14% in H1 FY20.
Total corporation tax charges in the income statement for the period totalled £0.6 million (H1 FY20: £0.6 million). In accordance with IAS 34, the tax charge recorded in the period is consistent with a prudent expectation for a full year effective tax rate of 10%, which has been applied to the £6.5 million of pre-tax profits recorded for H1 FY21. The Group expects to provide additional details on its tax status in the FY21 financial statements, including the benefits received from Video Game Tax Relief.
Profit after tax in the period was £5.8 million (H1 FY20: £3.6 million). Basic earnings per share was 15.0 pence (H1 FY20: 9.4 pence).
BALANCE SHEET AND CASH FLOW
The Company continues to benefit from a strong balance sheet, with cash balances of £34.9 million at 30 November 2020 (31 May 2020: £45.8 million; 30 November 2019: £28.9 million). The majority of the £11m reduction in cash during the period relates to £10m of share purchases in September 2020 by the Employee Benefit Trust to satisfy future share option exercises. Another factor in the reduction in cash during the period was the timing of cash receipts and investments in Frontier Foundry developments. The majority of net receipts from revenue in November 2020, the biggest month during the six month period, were remitted by distribution partners during December 2020 and January 2021, as expected.
Receivables grew to £15.0 million at 30 November 2020 (31 May 2020: £12.3 million; 30 November 2019: £13.9 million), reflecting the strong sales performance in November 2020, including the launches of Planet Coaster and Jurassic World Evolution on new console platforms.
Trade and other payables totalled £19.1 million at 30 November 2020 (31 May 2020: £21.9 million; 30 November 2019: £9.4 million). The reduction versus the year-end balance for FY20 was mainly due to the payment of the all-staff annual bonus for that financial year in September 2020.
CONSOLIDATED INCOME STATEMENT
Notes
6 months to
30 November 2020
£'000
6 months to
30 November 2019
£'00012 months to 31 May 2020
£'000Revenue
6
36,907
31,967
76,089
Cost of sales
(10,747)
(10,595)
(24,532)
Gross profit
26,160
21,372
51,557
Research and development expenses
(9,717)
(7,528)
(16,014)
Sales and marketing expenses
(3,432)
(3,945)
(5,747)
Administrative expenses
(6,133)
(5,448)
(13,172)
Operating profit
6,878
4,451
16,624
Net interest (charge)/income
(423)
(195)
(401)
Profit before tax
6,455
4,256
16,223
Income tax
(646)
(639)
(329)
Profit for the period attributable to shareholders
5,809
3,617
15,894
Earnings per share
Basic earnings per share
7
15.0
9.4
41.3
Diluted earnings per share
7
14.4
9.0
39.4
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 2020
30 November 2019
31 May 2020
£'000
£'000
£'000
Profit for the period
5,809
3,617
15,894
Other comprehensive income:
Exchange differences on translation of foreign operations
13
(1)
(6)
Total comprehensive income for the period attributable to the equity holders of the parent
5,822
3,616
15,888
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 NOVEMBER 2020
(REGISTERED COMPANY NO: 02892559)
Notes
30 November 2020
£'00030 November 2019
£'00031 May 2020
£'000Non-current assets
Intangible assets
8
58,940
41,439
52,668
Property, plant and equipment
9
5,854
6,161
5,926
Right-of-use asset
21,920
23,544
22,732
Deferred tax asset
6,175
3,185
6,175
92,889
74,329
87,501
Current assets
Trade and other receivables
14,979
13,909
12,284
Current tax asset
2,377
153
2,377
Cash and cash equivalents
34,892
28,948
45,751
52,248
43,010
60,412
Total assets
145,137
117,339
147,913
Current liabilities
Trade and other payables
(11,940)
(8,415)
(13,669)
Lease liability
(1,337)
(1,337)
(1,337)
Deferred income
(1,972)
(1,033)
(1,439)
Current tax liabilities
(684)
(1,605)
-
(15,933)
(12,390)
(16,445)
Net current assets
36,315
30,620
43,967
Non-current liabilities
Provisions
(34)
(19)
(27)
Lease liability
(21,530)
(22,867)
(22,198)
Deferred income
(230)
(463)
(234)
Other payables
(7,184)
(939)
(8,237)
Deferred tax liabilities
(4,038)
-
(4,038)
(33,016)
(24,288)
(34,734)
Total liabilities
(48,949)
(36,678)
(51,179)
Net assets
96,188
80,661
96,734
Equity
Share capital
10
196
195
195
Share premium account
35,772
34,589
34,589
Equity reserve
(9,529)
(2,023)
(925)
Foreign exchange reserve
(9)
(17)
(22)
Retained earnings
69,758
47,917
62,897
Total equity
96,188
80,661
96,734
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Capital £'000
Share premium account £'000
Equity reserve £'000
Foreign exchange reserve £'000
Retained earnings £'000
Total equity £'000
At 1 June 2019
194
34,390
(3,073)
(16)
44,011
75,506
Profit for the period
-
-
-
-
3,617
3,617
Other comprehensive income:
Exchange differences on translation of foreign operations
-
-
-
(1)
-
(1)
Total comprehensive income for the period
-
-
-
(1)
3,617
3,616
Issue of share capital net of expenses
1
199
-
-
-
200
Share-based payment charges
-
-
852
-
-
852
Share-based payment transfer relating to option lapses
-
-
(289)
-
289
-
EBT net cash inflows from option exercises
-
-
487
-
-
487
At 30 November 2019
195
34,589
(2,023)
(17)
47,917
80,661
Profit for the period
-
-
-
-
12,277
12,277
Other comprehensive income:
Exchange differences on translation of foreign operations
-
-
-
(5)
-
(5)
Total comprehensive income for the period
-
-
-
(5)
12,277
12,272
Issue of share capital net of expenses
-
-
-
-
-
-
Share-based payment charges
-
-
1,095
-
-
1,095
Share-based payment transfer relating to option lapses
-
-
(221)
-
221
-
EBT net cash inflows from option exercises
-
-
224
-
-
224
Deferred tax movements posted directly to reserves
-
-
-
-
2,482
2,482
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 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
CONSOLIDATED STATEMENT OF CASHFLOWS
6 months to
30 November 2020
£'0006 months to
30 November 2019
£'00012 months to 31 May 2020
£'000
Cash generated from operations
11,597
3,107
32,415
Taxes received
38
-
-
Cashflow from operating activities
11,635
3,107
32,415
Investing activities
Purchase of property, plant and equipment
(488)
(346)
(666)
Expenditure on intangible assets
(13,515)
(10,064)
(21,044)
Interest received
27
195
330
Cashflow from investing activities
(13,976)
(10,215)
(21,380)
Financing activities
Proceeds from issue of share capital
1,184
200
200
Employee Benefit Trust net investment
(8,597)
487
711
Payment of lease liabilities and related interest
(1,034)
-
(1,551)
Interest paid
(88)
-
-
Cashflow from financing activities
(8,535)
687
(640)
Net change in cash and cash equivalents from continuing operations
(10,876)
(6,421)
10,395
Cash and cash equivalents at beginning of period
45,751
35,332
35,332
Exchange differences on cash and cash equivalents
17
37
24
Cash and cash equivalents at end of period
34,892
28,948
45,751
The accompanying notes form part of this financial information.
Reconciliation of operating profit to cash generated from operations
6 months to
30 November 2020
£'0006 months to
30 November 2019
£'00012 months to 31 May 2020
£'000
Operating profit
6,878
4,451
16,624
Depreciation and amortisation
8,616
6,425
14,870
EBITDA
15,494
10,876
31,494
Movement in unrealised exchange (gains)/losses on forward contracts
(298)
(76)
(91)
Share-based payment expenses
1,045
852
1,947
Operating cashflow before movements in working capital
16,241
11,652
33,350
Net changes in working capital:
Change in trade and other receivables
(2,397)
(8,730)
(7,046)
Change in trade and other payables
(2,254)
178
6,097
Change in provisions
7
7
14
Cash generated from operations
11,597
3,107
32,415
NOTES TO THE FINANCIAL INFORMATION
1. CORPORATE INFORMATION
Frontier Developments plc '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.
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 its North American subsidiary located in the US, Frontier Developments Inc.
The condensed, consolidated interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 May 2020 were approved by the Board of Directors on 9 September 2020 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.
2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE
Basis of preparation
The consolidated interim financial statements should be read in conjunction with the financial statements for the year ended 31 May 2020.
The financial information of Frontier Developments plc has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' (IAS 34).
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 (£'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
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 2020.
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 2020.
5. SIGNIFICANT EVENTS AND TRANSACTIONS
There were no significant events or transactions in the interim period (1 June 2020 to 30 November 2020) 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 2020 to 2 February 2021).
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
30 November 2020
£'0006 months to
30 November 2019
£'00012 months to
31 May 2020
£'000Publishing revenue
36,818
31,826
75,924
Other revenue
89
141
165
36,907
31,967
76,089
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 2020
30 November 2019
31 May 2020
Profit attributable to shareholders (£'000)
5,809
3,617
15,894
Weighted average number of shares
38,779,241
38,357,558
38,483,762
Basic earnings per share (pence)
15.0
9.4
41.3
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 2020
30 November 2019
31 May 2020
Profit attributable to shareholders (£'000)
5,809
3,617
15,894
Diluted weighted average number of shares
40,469,204
40,280,029
40,316,894
Diluted earnings per share (pence)
14.4
9.0
39.4
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 2020
30 November 2019
31 May 2020
Weighted average number of shares
38,779,241
38,357,558
38,483,762
Dilutive effect of share options
1,689,963
1,922,471
1,833,132
Diluted average number of shares
40,469,204
40,280,029
40,316,894
8. INTANGIBLE ASSETS
Game Technology
Game Developments
Licences and Third-party Software
Total
£'000
£'000
£'000
£'000
Cost
At 31 May 2019
6,762
54,959
3,309
65,030
Additions
904
8,861
299
10,064
At 30 November 2019
7,666
63,820
3,608
75,094
Additions
1,492
8,508
8,309
18,309
At 31 May 2020
9,158
72,328
11,917
93,403
Additions
1,529
11,602
384
13,515
Transfer
-
(347)
347
-
At 30 November 2020
10,687
83,583
12,648
106,918
Amortisation
At 31 May 2019
4,793
22,599
1,188
28,580
Amortisation charges
398
4,533
144
5,075
At 30 November 2019
5,191
27,132
1,332
33,655
Amortisation charges
398
5,875
807
7,080
At 31 May 2020
5,589
33,007
2,139
40,735
Amortisation charges
699
6,350
194
7,243
At 30 November 2020
6,288
39,357
2,333
47,978
Net Book Value
Net book value at 30 November 2020
4,399
44,226
10,315
58,940
Net book value at 31 May 2020
3,569
39,321
9,778
52,668
Net book value at 30 November 2019
2,475
36,688
2,276
41,439
Net book value at 31 May 2019
1,969
32,360
2,121
36,450
9. TANGIBLE ASSETS
Fixtures and Fittings
Computer Equipment
Leasehold Improvements
Total
£'000
£'000
£'000
£'000
Cost
At 31 May 2019
850
2,138
5,348
8,336
Additions
6
330
10
346
At 30 November 2019
856
2,468
5,358
8,682
Additions
7
313
-
320
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
Depreciation
At 31 May 2019
246
1,392
346
1,984
Charge for the period
75
295
167
537
At 30 November 2019
321
1,687
513
2,521
Charge for the period
75
312
168
555
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
Net Book Value
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
Net book value at 30 November 2019
535
781
4,845
6,161
Net book value at 31 May 2019
604
746
5,002
6,352
10. SHARE CAPITAL
Number
Nominal Value £
At 1 June 2019
38,741,068
193,705
Shares issued on option exercises and warrants
170,742
854
At 30 November 2019
38,911,810
194,559
Shares issued on option exercises and warrants
-
-
At 31 May 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
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