REG - Frontier Developmnts - Acquisition of Complex Games Inc

Frontier DevelopmentsAnnouncement

02/11/2022 07:00

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RNS Number : 9875E  Frontier Developments PLC  02 November 2022

Frontier Developments plc

Acquisition of Complex Games Inc

Frontier Developments plc (AIM: FDEV, 'Frontier' or the 'Company'), a leading
developer and publisher of videogames based in Cambridge, UK, announces the
acquisition of experienced game development studio Complex Games Inc
('Complex'), (the 'Acquisition').

The Acquisition follows the successful collaboration between Complex and
Frontier Foundry ('Foundry'), Frontier's games label for third-party
publishing, on the development and publication of turn-based strategy game
Warhammer 40,000: Chaos Gate - Daemonhunters, which released in May 2022 to a
very positive reception and is Foundry's most successful game to date.

Founded in 2001 by Noah Decter-Jackson and Adrian Cheater, Complex has over 21
years of experience in a wide variety of game genres and platforms. The studio
is based in Winnipeg, in the Canadian province of Manitoba, and employs 20
talented people, primarily developers.

Rationale for the Acquisition

The Acquisition supports Frontier's strategic objectives:

·    It creates a core development footprint for Frontier in Manitoba,
Canada, a region with an extensive and growing talent pool for videogame
development. Frontier intends to grow the development team in Winnipeg to
support future growth;

·    In the near term, the closer collaboration achieved by the
Acquisition will enable Complex and Frontier to even more effectively nurture
Warhammer 40,000: Chaos Gate - Daemonhunters;

·    In the medium to long term, the growing development team in Winnipeg
will add to Frontier's game portfolio through the application of Frontier's
develop, launch and nurture strategy, which will support Frontier's continued
delivery of sustainable and profitable growth

Having worked closely during the development and launch of Warhammer 40,000:
Chaos Gate - Daemonhunters, the Acquisition is de-risked through a deep mutual
understanding and alignment of the culture, ability, and ambition of the two
companies.

Financial Consideration

Frontier has acquired 100% of the shares in Complex for an upfront cash
consideration of CAD$13 million (GBP£8.3 million). Conditional deferred cash
consideration of up to CAD$5.16 million (GBP£3.3 million) will be payable
subject to Complex meeting certain operational milestones during the period to
31 December 2023. In addition, the four employee shareholders - the two
founders and the two studio principals - will participate in a 5 year
profit-share cash earn-out scheme, which aligns with Frontier's strategy to
develop, launch and nurture new games developed by the Winnipeg studio.

The total maximum upfront and deferred consideration of up to CAD$18.16
million (GBP£11.6 million) will be funded from Frontier's existing cash
resources. Frontier's cash balances as at 31 August 2022 were £53.1 million.

The additional profit-share earn-out of up to CAD$11.76 million (GBP£7.5
million) payable over 5 years to the four employee shareholders will be funded
from future cash profits generated from games developed by the Winnipeg
studio.

The Acquisition is expected to deliver modest accretive financial benefits in
FY23 and FY24 through a greater level of profitability for Frontier from the
ongoing performance of Warhammer 40,000: Chaos Gate - Daemonhunters.

 

Jonny Watts, Frontier's CEO commented:

"When we launched our third-party publishing strategy in 2019 we were excited
by the potential to align our Frontier Foundry development partners more
formally with Frontier through acquisition. Our experience with Complex Games
on Warhammer 40,000: Chaos Gate - Daemonhunters has been terrific, and I am
delighted to welcome Noah and the team to Frontier, with a view to growing and
evolving our development team in Manitoba, Canada. This is Frontier's first
acquisition and we will continue to explore opportunities to grow Frontier's
resources to further develop and nurture our portfolio."

Noah Decter-Jackson, Complex Games CEO commented:

"Working with Frontier on Warhammer 40,000: Chaos Gate - Daemonhunters has
been a great experience and I am excited about our growth plans for our
Winnipeg studio. I am really proud of Complex Games' achievements and I'd like
to thank everyone who has been involved with that success over many years. I
look forward to developing even more great games in the future as part of
Frontier."

 

There will be a call for analysts and institutional investors at 09:30 this
morning. To register please contact frontier@tulchangroup.com

The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.

 

Enquiries:

Frontier Developments   +44 (0)1223 394 300

Jonny Watts, CEO

Alex Bevis, CFO

 

Liberum - Nomad and Joint Broker   +44 (0)20 3100 2000

Neil Patel / Cameron Duncan / Kate Bannatyne

 

Jefferies - Joint Broker   +44 (0)20 7029 8000

Max Jones / William Brown

 

Tulchan Communications   +44 (0)20 7353 4200

Matt Low / Mark Burgess / Alex Dart

 

 

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.

www.frontier.co.uk (http://www.frontier.co.uk/)

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