REG - Frontier Developmnts - FY25 Financial Results
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RNS Number : 6466Y Frontier Developments PLC 10 September 2025
10 September 2025
Frontier Developments plc
FY25 FINANCIAL RESULTS - CREATING MOMENTUM
Frontier Developments plc (AIM: FDEV, 'Frontier', the 'Company', or the
'Group'), a leading developer and publisher of video games based in Cambridge,
UK, publishes its full-year results for the 12 months ended 31 May 2025
('FY25'). This announcement contains inside information.
FINANCIAL SUMMARY
FY25 FY24
(12 months to 31 May 2025) (12 months to 31 May 2024)
Revenue £90.6m £89.3m
Adjusted Operating Profit* £13.2m £4.6m
EBITDA** £36.1m £26.8m
Adjusted EBITDA*** £9.4m £0.9m
Operating Profit/(Loss) £12.7m (£28.4m)
Cash balance at year end £42.5m £29.5m
* Adjusted Operating Profit measures Frontier's financial performance after
eliminating non-cash development cost accounting adjustments (cost
capitalisation, amortisation charges and impairment charges), non-cash share
charges, non-operating items (including restructuring costs), and after
recording the full benefits of tax and R&D expenditure credits against the
expenditure they relate to.
** Earnings before interest, tax, depreciation, amortisation, impairment and
restructuring costs.
*** Adjusted EBITDA is earnings before interest, tax, depreciation,
amortisation and impairment charges related to game developments and game
technology, less investments in game developments and game technology, and
excluding restructuring costs, share-based payment charges and other non-cash
items.
FY25: OUR REFOCUSED CMS STRATEGY DELIVERED
· Total Group revenue increased to £90.6 million (FY24: £89.3 million):
o Revenue from Frontier's genre-leading CMS games grew 25% year on year,
driven by the release of Planet Coaster 2 in November 2024.
o Frontier's three CMS game franchises - Planet Coaster, Planet Zoo and
Jurassic World Evolution - together delivered 77% of total Group revenue in
FY25 (FY24: 62%).
o Back-catalogue revenue from established leading titles, comprised of
multiple CMS games and the ever-evolving Elite Dangerous space simulation,
grew 4% year on year.
· A significant uplift in financial performance through strong trading, a
lower operating cost base and the sale of publishing rights:
o Adjusted Operating Profit* grew to £13.2 million (FY24: £4.6 million).
o Adjusted EBITDA*** grew to £9.4 million (FY24: £0.9 million).
o Operating profit of £12.7 million in FY25, marking a significant recovery
from a loss of £28.4 million in FY24 due to non-cash impairment charges for
underperforming games.
· Financial position further strengthened:
o Cash grew by £13.0 million to £42.5 million at 31 May 2025 (31 May 2024:
£29.5 million), reflecting trading performance, tax credits and the sale of
publishing rights.
o A share buyback programme of up to £10.0 million was initiated in July
2025 to enhance shareholder value, with £4.4 million invested as at 31 August
2025.
FY26 AND BEYOND: AN EXCITING PIPELINE OF CMS GAMES
· Three future CMS games are now in development, including a recently
started project for release in FY28:
o For FY26, Jurassic World Evolution 3, the third exciting instalment in the
Jurassic World Evolution game franchise, is scheduled for release on 21
October 2025.
o For FY27, a second CMS game, which is yet to be announced, is in full
development and is on track.
o For FY28, a third CMS game, which is also yet to be announced, will
further evolve Frontier's expertise in the CMS genre.
· A positive outlook: having achieved growth in revenue, profit and cash
in FY25, the Board is confident in Frontier's ability to deliver further
annual growth in FY26 through nurturing and expanding our genre-leading game
franchises.
Jonny Watts, Frontier's CEO, said:
"FY25 was a year of delivery, resilience and renewed momentum for Frontier. We
executed the first phase of our long-term strategy, strengthened our financial
foundations, and reaffirmed our leadership in Creative Management Simulation.
With a clear roadmap, a passionate team, and a robust pipeline of titles, we
are focused on building sustainable growth through high-quality,
player-centric experiences."
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
Jonny Watts, CEO
Alex Bevis,
CFO
Peel Hunt - Nomad and Joint Corporate Broker +44 (0)20 7418
8900
Neil Patel / Ben Cryer / Kate Bannatyne
Panmure Liberum - Joint Corporate Broker +44 (0)20 3100
2000
Max Jones / Shalin Bhamra
Teneo
+44 (0)20 7353 4200
Matt Low / Arthur Rogers
About Frontier Developments plc
Frontier is a leading independent developer and publisher of video games
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.
Frontier's LEI number: 213800B9LGPWUAZ9GX18.
www.frontier.co.uk (http://www.frontier.co.uk)
CHAIRMAN'S STATEMENT
Following our strategic reset in FY24, the last 15 months have been a period
of meaningful progress for Frontier. We delivered on all our key milestones
and significantly strengthened our financial performance. Our exceptional
portfolio of CMS franchises puts us in an excellent position to deliver
long-term success.
The major release of FY25 was Planet Coaster 2, the first of three CMS games
outlined in the FY24 Annual Report as the foundation of Frontier's development
roadmap through FY27. The second title in that roadmap, Jurassic World
Evolution 3, was announced on 6 June 2025 and is scheduled for release on 21
October 2025 (FY26). The third CMS game remains unannounced, with a planned
launch in FY27. In light of the continued strength and scalability of the CMS
portfolio, Frontier has now committed to developing an additional CMS title
for release in FY28.
Financially, FY25 was a strong year. We delivered revenue growth, improved
margins, and achieved substantial increases in both profit and cash
generation. These results reflect the resilience of our portfolio, the
inherent operating leverage within our business model, and operational
improvements implemented across the organisation.
A key recent operational development was the formation of an Executive Board,
in June 2025, to enhance the delivery of Frontier's strategic plans. This new
team has brought together the Company's long-standing development expertise
with broader player insights and market perspectives, while placing greater
emphasis on the development of our people and teams.
Looking ahead, we are well positioned for the future. With a clear roadmap, a
talented and passionate team, and a strong pipeline of titles, Frontier is
focused on delivering high-quality, player-centric experiences that drive
sustainable growth.
On behalf of the Board, I would like to thank our employees, partners and
shareholders for their continued support. FY25 was a year of learning,
delivery and renewed momentum, and we are building on this foundation in FY26.
CHIEF EXECUTIVE OFFICER'S STATEMENT
We began FY25 with a clear plan to further strengthen our foundations and
complete the first phase of our strategic long-term vision. I am pleased to
report that, thanks to the hard work of our teams, we delivered.
Creative Management Simulation: Evolving Our Core Strength
Our CMS titles remain at the heart of Frontier's creative and commercial
strategy, with our three CMS game franchises together delivering 77% of total
revenue in FY25.
In November 2024, our Planet Coaster franchise saw the release of the
much-anticipated sequel, Planet Coaster 2, which is the first of three
next-generation CMS games confirmed in the refocused roadmap we set out in
FY24. Sales of Planet Coaster 2 have exceeded 600,000 units since launch, but
initial player community sentiment was less positive than we had hoped for.
We've responded with a clear strategy of regular content updates, gameplay
enhancements, and ongoing community engagement. We are committed to
supporting the game over the long term and fully realising its substantial
potential, including through exciting new content. On 9 September 2025 we
announced the Sorcery PDLC pack for release on 16 September 2025.
Meanwhile, our Planet Zoo franchise continues to be a standout performer in
our portfolio. In March 2024, we brought the game to consoles for the first
time, opening it up to a broader audience and extending its life-cycle. The
console release has been well-received and reinforces the long-term value of
the title. Now in its sixth year on PC, Planet Zoo remains a benchmark for
depth and creativity in the genre, supported by a highly engaged and active
community.
In June 2025, we announced exciting news for our third and biggest game
franchise, Jurassic World Evolution, with the confirmation of Jurassic World
Evolution 3, scheduled for release on 21 October 2025. This title builds on
the strong foundations of its predecessor, Jurassic World Evolution 2, which
continues to perform well and engage players globally. With new features,
including juvenile dinosaurs, enhanced and expanded creative tools and an epic
global campaign, Jurassic World Evolution 3 represents another significant
step forward for the franchise.
Our CMS-focused plan is to build a robust and sustainable pipeline of games
that reflects our confidence in the genre and our ability to deliver
high-quality, player-centric experiences. We are in full development of
another CMS game for release in FY27, and we have now commenced development
for another CMS game in FY28.
Supporting Our Broader Portfolio
We believe that Elite Dangerous is the industry category leader among
massive-scale multi-player space simulation games, and a proof point for our
ability to embrace new engagement and monetisation initiatives, including
premium early-access content and colonisation. In FY25, we delivered several
quality-of-life updates, new content and community-driven improvements,
reinforcing our commitment to long-term support. The game's enduring
popularity is a testament to the strength of the universe we've built and the
passion of its players.
Meanwhile, our development team at Complex Games in Canada continues to
develop an exciting game which will build on their experience from previous
similar titles.
Building for the Future
FY25 was a year of transformation following our strategic reset in FY24. The
reshaping of our teams, and the cost reductions that we undertook in the
preceding period, have enabled our organisation to become a more resilient,
sustainable and scalable business, providing a stronger foundation that is
better equipped to serve players and navigate the evolving games industry. The
impact of our lower cost base, when combined with our trading performance,
delivered a strong set of financial results in FY25, with revenue growing and
significant increases in profit and cash generation.
In June 2025, we established our new Executive Board, which has already
brought greater clarity and accountability to our leadership structure. We've
sharpened our focus on delivery, improved cross-functional collaboration, and
embedded a more agile approach to development, enhanced with strengthened
player insight. These changes are already having a tangible impact on our
performance and culture.
Looking ahead, our priorities are clear: deliver outstanding games, support
them effectively post-launch, and continue to invest in our people and
capabilities. With a strong pipeline, a clear strategy and a passionate team,
I believe we are well placed to build on the momentum of FY25 and deliver
sustainable growth in the years to come.
Thank you to our players for your feedback and support, to our partners for
your collaboration, to our shareholders for your patience, and to the entire
Frontier team for your creativity, resilience and commitment.
CHIEF FINANCIAL OFFICER'S STATEMENT
Frontier's sharpened focus on CMS games, combined with a sustainable cost
base, delivered a significant uplift in profitability and cash generation in
FY25. Revenue also increased year on year, placing the Group in a strong and
confident position to pursue further sustainable growth in FY26, through the
continued development and expansion of its genre-leading franchises.
REVENUE
Frontier's portfolio of CMS games performed strongly in FY25, driving total
revenue to £90.6 million, up from £89.3 million in FY24. The three CMS
franchises, Jurassic World Evolution, Planet Zoo, and Planet Coaster, together
accounted for 77% of total revenue, compared to 62% in the previous year. The
Planet Coaster franchise delivered a near 200% year-on-year revenue increase,
driven by the launch of Planet Coaster 2 in November 2024. Planet Zoo revenue
grew by 2%, supported by the release of Planet Zoo: Console Edition in March
2024 and continued content updates for both console and PC players. Revenue
from the Jurassic World Evolution franchise remained strong at 96% of FY24
levels, as the franchise prepares for its next major release, Jurassic World
Evolution 3, scheduled for 21 October 2025.
Outside the CMS portfolio, Elite Dangerous, Frontier's long-standing space
exploration title, delivered excellent revenue growth of 76% year on year,
supported by new content and increased player engagement.
GROSS PROFIT
Gross profit increased to £63.3 million in FY25, up from £61.3 million in
FY24. This growth was driven by both higher revenue and an improved gross
margin of 70%, compared to 69% in the prior year. The margin improvement
reflects a greater share of revenue from own-IP games, which do not incur IP
royalty costs.
OPERATING COSTS
Total operating expenditure under IFRS, which includes research and
development, sales and marketing and administrative expenses and restructuring
costs, declined by 42% to £54.6 million from £94.6 million in FY24.
Approximately three-quarters of this reduction related to non-cash development
cost accounting under IAS 38. The most significant factor was a £28.2 million
reduction in amortisation and impairment charges for intangible assets related
to game developments and technology. These charges fell to £19.7 million in
FY25, compared to £47.9 million in the prior period, with costs in FY24
including a £16.9 million impairment charge for an underperforming title.
Capitalised development costs under IAS 38 increased to £28.3 million in
FY25, representing 72% of cash expenditure, compared to £26.5 million, or 58%
of cash expenditure, in FY24. The increase in the percentage of cash
expenditure capitalised reflects the strategic refocus on CMS games and the
corresponding reallocation of employees to capitalisable projects.
From FY26, Frontier has adopted Adjusted Operating Profit as its primary
financial performance measure, replacing Adjusted EBITDA. The Group believes
this change provides a more accurate reflection of underlying financial
performance and cash generation, including the benefits from tax and R&D
expenditure credits. Adjusted operating expenditure in FY25, as recorded under
the new Adjusted Operating Profit performance measure, declined 13% year on
year to £54.0 million (FY24: £62.0 million), following cost-saving measures
implemented in FY24, including headcount reductions and the closure of the
Frontier Foundry publishing label. Adjusted operating expenditure, as measured
under Adjusted EBITDA, fell by 11% to £57.8 million, down from £65.3 million
in FY24.
OTHER OPERATING INCOME
Gains from the sale of game publishing rights generated £3.9 million of other
operating income in FY25 (FY24: £4.9 million).
On 1 April 2025, Frontier sold the publishing rights for Stranded: Alien Dawn
to Paradox Interactive AB for a one-time payment of £3.6 million, following
their acquisition of Haemimont Games AD. The game, developed in collaboration
with Haemimont and published under the Frontier Foundry label in October 2022,
had an intangible asset value of £0.1 million at the time of sale. The net
gain of £3.5 million has been recorded as other operating income in the FY25
consolidated income statement.
The remaining £0.4 million of other operating income in FY25 arose from an
upward remeasurement of the value from the FY24 sale of the publishing rights
for RollerCoaster Tycoon 3 (RCT3), due to a stronger-than-expected sales
performance of RCT3 during FY25, which led to an acceleration in the expected
receipt of contingent consideration payments.
FINANCIAL PERFORMANCE
Adjusted Operating Profit, Frontier's updated measure of cash profitability,
rose to £13.2 million in FY25, up from £4.6 million in FY24. This £8.6
million improvement was driven by strong trading performance, a leaner cost
base, and income from the sale of publishing rights. Adjusted EBITDA also
improved significantly, reaching £9.4 million in FY25 compared to £0.9
million in FY24.
Under IFRS, the Group reported an operating profit of £12.7 million in FY25,
a substantial turnaround from the £28.4 million operating loss recorded in
FY24. This improvement reflects both the reduction in amortisation and
impairment charges and the strengthening of underlying financial performance.
CORPORATION TAX, TAX CREDITS AND R&D EXPENDITURE CREDITS
Frontier continues to benefit from several tax incentive and R&D
expenditure credit schemes that provide tax credits and enhanced tax
deductions from our investment in game developments. The benefits from those
schemes, together with tax adjustments for prior periods, generated a
corporation tax credit in the Group's FY25 income statement of £4.0 million
(FY24: £7.0 million). The year-on-year reduction resulted mainly from two
factors: a reduction in the value of tax credits and enhanced deductions
following cost reductions made during FY24; and an improvement in annual
financial performance which transitioned the Company to generate a taxable
profit in FY25, compared with a tax loss for FY24.
The payment of tax and R&D expenditure credits relating to each financial
year are typically received in the following financial year, which results in
significant current assets in the statement of financial position. At 31 May
2025, the combined balance of current tax assets and R&D expenditure
credits receivable was £6.4 million (31 May 2024: £7.2 million), reflecting
the expected cash inflows in FY26 from tax and R&D expenditure credits
related to expenditure incurred in FY25. The majority of the total
receivable balance of £6.4 million related to tax credits from the UK's Video
Games Tax Relief (VGTR) scheme, with the remaining amounts receivable from the
Research and Development Expenditure Credit (RDEC) scheme in the UK, as well
as other UK and Canadian tax incentive schemes.
We are working through the transition from VGTR to the Video Games Expenditure
Credit (VGEC) scheme, which will become mandatory for all games from 1 April
2027. We don't expect the new VGEC scheme to materially impact the value of
our claims, but there are likely to be some changes to how tax credits are
accounted for within our income statement, since different accounting rules
are applied to the tax credits receivable from VGEC compared with VGTR. We'll
provide an update on the impact in our FY26 financial statements.
PROFIT AFTER TAX AND EARNINGS PER SHARE
Profit after tax for FY25 was £16.4 million (FY24: loss after tax of
£21.5 million) and the basic earnings per share was 42.4p (FY24: loss per
share of 55.6p).
CASH POSITION AND CASHFLOW
Frontier remains well capitalised and has no debt, with £42.5 million of cash
at 31 May 2025 (31 May 2024: £29.5 million) and £39.4 million at 31 August
2025. The significant increase in cash during FY25 reflected a strong trading
performance, lower operating costs, the receipt of tax credits relating to
FY24, and the sale of the publishing rights for Stranded: Alien Dawn.
SHARE BUYBACK PROGRAMME
On 8 July 2025, Frontier launched an on-market share buyback programme for up
to a maximum aggregate consideration of £10 million to reduce the Company's
share capital. As at 31 August 2025 1,187,544 shares have been purchased for
an aggregate consideration of £4.4 million, representing an average price per
share of 372p.
The share buyback is returning surplus capital to shareholders, improving
return on equity and increasing earnings per share, while maintaining the
financial headroom to invest in the Group's strategy to confidently deliver
sustainable growth.
PLC BOARD AND EXECUTIVE BOARD
In June 2025, Frontier created an Executive Board to enhance the delivery of
Frontier's strategic plans, reporting to the PLC Board of Directors. Three new
senior roles were created to establish the Executive Board, with each
reporting directly to Jonny Watts, Chief Executive Officer. In June 2025,
Yvonne Dawes was promoted to Chief People Officer and Piers Jackson to Chief
Development Officer. In August 2025, Jo Cooke joined Frontier as Chief
Marketing Officer. Effective 1 September 2025, following the successful
establishment of the Executive Board and the resulting redistribution of
responsibilities, the Nominations Committee of the PLC Board approved a change
for Alex Bevis, Chief Financial Officer, to reduce his average working pattern
to three days per week, whilst remaining flexible to the needs of the
business.
The members of the PLC Board and Executive Board are as follows:
PLC Board of Directors: Jonny Watts, David Braben and Alex Bevis (Executive
Directors); Ilse Howling, Leslie-Ann Reed, David Walsh and James Mitchell
(Non-Executive Directors).
Executive Board: Jonny Watts (CEO), Alex Bevis (Finance), James Dixon
(Operations), Piers Jackson (Development), Jo Cooke (Publishing), Yvonne Dawes
(People), Jessica Bourne (Legal).
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MAY 2025
Notes 12 months to 12 months to
31 May 2025 31 May 2024*
£'000
£'000
Revenue 90,600 89,270
Cost of sales (27,257) (27,954)
Gross profit 63,343 61,316
Research and development expenses (31,971) (67,881)
Sales and marketing expenses (7,710) (11,635)
Administrative expenses (14,921) (13,659)
Other operating income 3,910 4,851
Operating profit/(loss) before restructuring 12,651 (27,008)
Restructuring costs - (1,405)
Operating profit/(loss) 12,651 (28,413)
Finance income 800 832
Finance costs (1,032) (844)
Profit/(loss) before tax 12,419 (28,425)
Income tax credit 3 3,968 6,953
Profit/(loss) for the year attributable to shareholders 16,387 (21,472)
12 months to 12 months to
31 May 2025 31 May 2024
pence pence
Earnings/(loss) per share
Basic earnings/(loss) per share 4 42.4 (55.6)
Diluted earnings/(loss) per share 4 40.7 (55.6)
All the activities of the Group are classified as continuing.
* Finance income and finance costs were previously presented on a net basis
but have now been presented separately.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2025
12 months to 12 months to
31 May 2025 31 May 2024
£'000
£'000
Profit/(loss) for the year 16,387 (21,472)
Other comprehensive income
Items that will be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations (534) (277)
Total comprehensive income/(loss) for the year attributable to the equity 15,853 (21,749)
holders of the parent
The accompanying accounting policies and notes form part of this financial
information.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MAY 2025
(REGISTERED COMPANY NO: 02892559)
Notes 31 May 2025 31 May 2024
£'000
£'000
Non-current assets
Goodwill 6,539 6,954
Other intangible assets 5 41,971 35,702
Property, plant and equipment 3,810 4,739
Right-of-use assets 17,548 19,661
Trade and other receivables 1,105 -
Total non-current assets 70,973 67,056
Current assets
Trade and other receivables 12,290 13,590
Current tax assets 4,928 7,216
Cash and cash equivalents 42,502 29,523
Total current assets 59,720 50,329
Total assets 130,693 117,385
Current liabilities
Trade and other payables (10,418) (11,096)
Lease liabilities (1,823) (1,748)
Deferred revenue (1,486) (4,351)
Deferred income from R&D expenditure credits (955) -
Current tax liabilities (276) -
Total current liabilities (14,958) (17,195)
Net current assets 44,762 33,134
Non-current liabilities
Provisions (100) (85)
Lease liabilities (17,644) (19,535)
Other payables (635) (3,101)
Deferred revenue - (256)
Deferred income from R&D expenditure credits (1,204) -
Deferred tax liabilities (990) (390)
Total non-current liabilities (20,573) (23,367)
Total liabilities (35,531) (40,562)
Net assets 95,162 76,823
Equity
Share capital 197 197
Share premium account 36,547 36,547
Equity reserve (12,955) (13,283)
Foreign exchange reserve (1,407) (873)
Retained earnings 72,780 54,235
Total equity 95,162 76,823
The accompanying accounting policies and notes form part of this financial
information.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2025
Share capital £'000 Share premium account £'000 Equity reserve £'000 Foreign exchange reserve £'000 Retained earnings £'000 Total equity £'000
At 31 May 2023 197 36,547 (14,553) (596) 74,373 95,968
Loss for the year - - - - (21,472) (21,472)
Other comprehensive income:
Exchange differences on translation of foreign operations - - - (277) - (277)
Total comprehensive loss for the year - - - (277) (21,472) (21,749)
Share-based payment charges - - 2,778 - - 2,778
Share-based payment transfer relating to option exercises and lapses - - (1,508) - 1,508 -
Deferred tax movements posted directly to reserves - - - - (174) (174)
Transactions with owners - - 1,270 - 1,334 2,604
At 31 May 2024 197 36,547 (13,283) (873) 54,235 76,823
Profit for the year - - - - 16,387 16,387
Other comprehensive income: - - - - - -
Exchange differences on translation of foreign operations - - - (534) - (534)
Total comprehensive income for the year - - - (534) 16,387 15,853
Share-based payment charges - - 2,368 - - 2,368
Share-based payment transfer relating to option exercises and lapses - - (2,158) - 2,158 -
Employee Benefit Trust cash inflows from option exercises - - 118 - - 118
Transactions with owners - - 328 - 2,158 2,486
At 31 May 2025 197 36,547 (12,955) (1,407) 72,780 95,162
The accompanying accounting policies and notes form part of this financial
information.
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 31 MAY 2025
12 months to 12 months to
31 May 2025 31 May 2024
£'000
£'000
Profit/(loss) before taxation 12,419 (28,425)
Adjustments for:
Depreciation and amortisation 23,435 36,892
Impairment of other intangible assets - 16,930
Movement in unrealised exchange gains on forward contracts - (37)
Share-based payment expenses 2,368 2,778
Interest received (800) (832)
Payment of interest element of lease liabilities 1,032 844
Other operating income (3,910) (4,851)
Working capital changes:
Change in trade and other receivables 1,466 3,661
Change in trade and other payables 635 (4,557)
Change in deferred revenue (3,121) -
Change in deferred income from R&D expenditure credits 2,159 -
Change in provisions 15 14
Cash generated from operations 35,698 22,417
Taxes received 5,808 9,208
Net cashflows from operating activities 41,506 31,625
Investing activities
Purchase of property, plant and equipment (341) (960)
Expenditure on other intangible assets (30,370) (29,419)
Payments for contingent consideration on business acquisitions - (1,516)
Sale of publishing rights 4,005 3,195
Interest received 800 832
Net cashflows used in investing activities (25,906) (27,868)
Financing activities
Employee Benefit Trust cash inflows from option exercises 118 -
Payment of principal element of lease liabilities (1,726) (1,665)
Payment of interest element of lease liabilities (1,032) (844)
Net cashflows used in financing activities (2,640) (2,509)
Net change in cash and cash equivalents from continuing operations 12,960 1,248
Cash and cash equivalents at beginning of year 29,523 28,311
Exchange differences on cash and cash equivalents 19 (36)
Cash and cash equivalents at end of year 42,502 29,523
The accompanying accounting policies and notes form part of this financial
information.
NOTES TO THE FINANCIAL INFORMATION
1. CORPORATE
INFORMATION
Frontier Developments plc (the 'Group' or the 'Company') 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 and headquartered in the UK, with
subsidiaries based in Canada and the US.
2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE
The financial information contained in this preliminary announcement of
audited results does not constitute the Group's statutory accounts for the
years ended 31 May 2025 and 31 May 2024. The accounts for the year ended 31
May 2024 have been delivered to the Registrar of Companies. The statutory
accounts for the year ended 31 May 2025 have been reported on by the Company's
auditors. The report on these accounts was unqualified, did not draw attention
to any matters by way of emphasis and did not contain any statement under
section 498(2) or (3) of the Companies Act 2006 or equivalent preceding
legislation.
The statutory accounts for the year ended 31 May 2025 are expected to be
posted to shareholders in due course and will be delivered to the Registrar of
Companies after they have been laid before the shareholders in a general
meeting on 29 October 2025. Copies will be available from the registered
office of the Company, 26 Science Park, Milton Road, Cambridge CB4 0FP and
will be accessible on the Frontier Developments website,
https://www.frontier.co.uk. The registered number of Frontier Developments plc
is 02892559.
The basis of preparation and going concern policies applied in the preparation
of these financial statements are set out below. These policies have been
consistently applied to all the periods presented, unless otherwise stated.
Basis of preparation
The consolidated financial statements of the Group have been prepared in
accordance with UK-adopted International Accounting Standards (IASs) and the
requirements of the Companies Act 2006 applicable to companies reporting under
UK-adopted IASs. The financial information has been prepared on the basis of
all applicable IFRSs, including all IASs, Standing Interpretations Committee
(SIC) interpretations and International Financial Reporting Interpretations
Committee (IFRIC) interpretations that are applicable to the financial period.
The consolidated financial information has been prepared on a going concern
basis under the historical cost convention, except for financial instruments
held at fair value. The consolidated financial information is presented in
Sterling and has been rounded to the nearest thousand (£'000) except when
otherwise indicated.
Going concern basis
The Group and Company'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 and
Company have adequate resources to continue in operational existence for the
period to 30 September 2026. The Group and Company therefore continue to adopt
the going concern basis in preparing their financial statements.
The Group's day-to-day working capital requirements are expected to be met
through the cash and cash equivalent resources (including treasury deposits)
at the balance sheet date of 31 May 2025 of £42.5 million along with expected
cash inflows from current business activities. Cash and cash equivalent
resources (including treasury deposits) at 31 August 2025 were £39.4 million.
The Annual Budget approved by the Board of Directors, which has been used to
assess going concern, reflects assessments of current and future market
conditions and the impact this may have on cash resources.
The Group has also performed stress testing on the Annual Budget in respect of
potential downside scenarios to identify the break point of current cash
resources and to identify when current liquidity resources may fall short of
requirements.
The scenarios both consider a reduction in predicted revenues; however, the
reduction would need to be severe in order to prevent the Group from
continuing as a going concern and is considered to be highly unlikely to
occur. The Group has also identified mitigating actions that could be
reasonably taken, if required, to offset the reduction of cash inflows, to
enable it to continue its operations for the period to 30 September 2026.
The sensitivities included in the stress testing include a significant
reduction of revenue for the Group from both the existing portfolio and future
game launches, including factoring in delays to major game launches.
As expected, the scenarios resulted in an accelerated use of current cash
resources; however, in all scenarios tested the current cash resources were
sufficient to support the Group's activities. This is due to a variety of
factors:
· the Group currently has significant cash reserves to maintain the
current level of operations;
· the development and publishing of titles has progressed as expected;
and
· should a more extreme downside scenario occur, the Group could take
further mitigating actions by reducing its operating costs.
Having considered all the above, including the current strong cash position,
no current impact on debtor recoverability and the continued strong trading
performance for the Group, the Directors are satisfied that there are
sufficient resources to continue operations for the period to 30 September
2026. The financial statements for the year ended 31 May 2025 are therefore
prepared under the going concern basis.
3. TAXATION ON ORDINARY ACTIVITIES
The major components of the income tax credit are:
Consolidated income statement 12 months to 31 May 2025 12 months to
£'000
31 May 2024
£'000
Current tax:
Credit in respect of current year (4,512) (5,868)
Adjustments in respect of prior years (78) (894)
Total current tax (4,590) (6,762)
Deferred tax:
Charge/(credit) in respect of current year 617 (185)
Adjustments in respect of prior years 5 (6)
Total deferred tax 622 (191)
Total taxation credit reported in the consolidated income statement (3,968) (6,953)
Consolidated equity 12 months to 31 May 2025 12 months to
£'000
31 May 2024
£'000
Deferred tax related to items recognised in equity during the year:
Net change in share option exercises - 174
Reconciliation of total tax credit at statutory tax rates:
12 months to 31 May 2025 12 months to
£'000
31 May 2024
£'000
Profit/(loss) on ordinary activities before taxation 12,419 (28,425)
Tax on profit/(loss) on ordinary activities at standard statutory tax rate of 3,105 (7,106)
25% (FY24: 25%)
Factors affecting tax expense for the year:
Expenses not deductible for tax purposes 238 63
Adjustments in respect of prior years (73) (900)
Video Games Tax Relief enhanced deductions on which credits claimed (5,869) (7,290)
Benefit of Patent Box (1,016) -
Deferred tax not recognised (410) 8,259
Effect of higher tax rates in Canada 57 21
Total taxation credit reported in the consolidated income statement (3,968) (6,953)
The corporation tax rate has remained at 25% since 1 April 2023; therefore, at
31 May 2025, tax on profit on ordinary activities was being measured at the
rate of 25%. Deferred taxes have been measured using the tax rate at the date
that the deferred tax asset or liability unwinds of 25% (31 May 2024: 25%).
In FY25 the Group generated taxable profits of £12.4 million (FY24: loss of
£28.4 million) and an implied tax charge at 25% of £3.1 million (FY24: a tax
credit of £7.1 million); however, the Group has recorded a total corporation
tax credit of £4.0 million (31 May 2024: £7.0 million).
The key contributors to the net credit recorded are the enhanced tax
deductions available from the Video Games Tax Relief (VGTR) scheme of £5.9
million (31 May 2024: £7.3 million) and Patent Box relief that reduced the
taxable profits for Jurassic World Evolution 2 and Planet Zoo by a total of
£1.0 million. No benefit in respect of Patent Box relief was claimed in FY24
as the Group did not generate sufficient profits from patented income.
VGTR benefits the Group by claiming an additional (enhanced) deduction from
its taxable profit relating to the video game trades. In FY25, the additional
deduction in respect of VGTR was £5.9 million, being £23.5 million of
qualifying expenditure at a tax rate of 25% (FY24: £7.3 million being £29.2
million of qualifying expenditure at a tax rate of 25%). The £1.4 million
year-on-year decrease in the enhanced deduction was due to the decrease in
development costs in FY25 and therefore a decrease core development
expenditure in respect of video games that are subject to VGTR.
The Group recognised an adjustment in respect of prior period of £74k during
FY25 due to additional expenditure included in the Scientific Research and
Experimental Development (SRED) claim. During FY24 the Group recognised an
adjustment in respect of prior period of £900k due to additional core
expenditure in the F1® Manager Franchise VGTR claim.
During FY25, the Group recognised a net credit of £0.4 million in relation to
movements in unrecognised deferred tax assets. This primarily reflects a £0.2
million tax-effected benefit arising from deductible temporary differences
associated with the employee share scheme, as well as a £0.2 million
temporary difference relating to deferred income recognised in respect of the
Research and Development Expenditure Credit (RDEC). These favourable movements
were offset by a £0.8 million increase in unrecognised tax losses, resulting
in the overall net credit.
The movement in the unrecognised tax losses of £0.8 million is due to a £3.2
million net reduction in recognised tax losses, at a tax rate of 25%. The
reduction in tax losses are in respect of £7.7 million (credit of £1.9
million, at a tax rate of 25%) of prior year losses being utilised during the
year, less £4.5 million of losses that have been derecognised in FY25 (debit
of £1.0 million, at a tax rate of 25%) to bring the deferred tax liability to
£nil.
The losses do not have an expiry date.
4. EARNINGS/(LOSS) PER SHARE
The calculation of the basic earnings/(loss) per share is based on the
profits/(losses) attributable to the shareholders of Frontier Developments plc
divided by the weighted average number of shares in issue during the year.
12 months to 31 May 2025 12 months to 31 May 2024
Profit/(loss) attributable to shareholders (£'000) 16,387 (21,472)
Weighted average number of shares 38,658,275 38,608,645
Basic earnings/(loss) per share (pence) 42.4 (55.6)
The calculation of the diluted earnings/(loss) per share is based on the
profits/(losses) attributable to the shareholders of Frontier Developments plc
divided by the weighted average number of shares in issue during the year as
adjusted for the dilutive effect of share options.
12 months to 31 May 2025 12 months to 31 May 2024
Profit/(loss) attributable to shareholders (£'000) 16,387 (21,472)
Diluted weighted average number of shares 40,265,330 38,608,645
Diluted earnings/(loss) per share (pence) 40.7 (55.6)
The reconciliation of the average number of Ordinary Shares used for basic and
diluted earnings/(loss) per share is as follows:
12 months to 31 May 2025 12 months to 31 May 2024
Weighted average number of shares 38,658,275 38,608,645
Dilutive effect of share options 1,607,055 -
Diluted average number of shares 40,265,330 38,608,645
5. OTHER INTANGIBLE ASSETS
The Group's other intangible assets comprise game technology, game
developments, third-party software and IP licences. Game technology includes
Frontier's COBRA game engine and other technology which supports the
development and publication of games. The game developments category includes
capitalised development costs for base game and PDLC assets. Third-party
software includes subscriptions to development and business software.
Intangible assets for IP licences are recognised at the execution of the
licence, based on the minimum guarantees payable by the Group to the IP owner.
Game technology £'000 Game developments £'000 Third-party software £'000
IP licences Total
£'000 £'000
Cost
At 31 May 2023 23,182 167,185 2,877 11,185 204,429
Additions 4,558 21,963 436 1,839 28,796
Disposals - (490) - - (490)
Exchange rate movement - (150) (1) - (151)
At 31 May 2024 27,740 188,508 3,312 13,024 232,584
Additions 5,024 23,255 276 - 28,555
Disposals - (5,841) - (1,916) (7,757)
Exchange rate movement - (406) (3) - (409)
At 31 May 2025 32,764 205,516 3,585 11,108 252,973
Amortisation and impairment
At 31 May 2023 16,961 122,212 2,130 6,139 147,442
Amortisation charges 3,014 27,951 443 1,702 33,110
Impairment charges - 15,502 - 1,428 16,930
Disposals - (490) - - (490)
Exchange rate movement - (109) (1) - (110)
At 31 May 2024 19,975 165,066 2,572 9,269 196,882
Amortisation charges 3,577 16,100 472 - 20,149
Disposals - (5,769) - - (5,769)
Exchange rate movement - (257) (3) - (260)
At 31 May 2025 23,552 175,140 3,041 9,269 211,002
Net book value
Net book value at 31 May 2025 9,212 30,376 544 1,839 41,971
Net book value at 31 May 2024 7,765 23,442 740 3,755 35,702
Amortisation charges for other intangible assets that relate to game
technology, game developments and third-party software are expensed within
research and development expenses. Amortisation charges for IP licences are
typically charged to cost of sales, which reflects the IP licence royalties
which the minimum guarantees relate to.
Accumulated cost of £5.84 million and accumulated amortisation of £5.77
million have been disposed of in respect to Stranded: Alien Dawn intangible
assets included within game developments as a result of the sale of the
Stranded: Alien Dawn publishing rights on 1 April 2025.
During FY25, commercial discussions with an IP partner resulted in the
voluntary termination of a contract for a future game before full development
started, which resulted in the disposal of £1.92 million within IP licences.
The recoverable amount of each of the assets at 31 May 2025 is determined from
the value in use. The key assumption in calculating the value in use was the
expected future cashflows. A five-year bottom-up forecast for FY26 to FY30
inclusive has been created as a basis of the expected future cashflows, with a
pre-tax discount rate of 10% (31 May 2024: 10%) being applied to the future
cashflows. The Directors have assessed the sensitivity of the impairment test
to incorporate reasonable possible changes in the key assumptions and noted
that no material impairment exists in any cases. Climate change is not
expected to have a material impact on future cashflows. No impairment charges
were required as a result of the impairment tests at 31 May 2025 (31 May 2024:
£16.9 million).
6. KEY PERFORMANCE INDICATORS - NON-STATUTORY MEASURES
In addition to measures of financial performance derived from IFRS-reported
results - revenue, operating profit, operating profit margin percentage,
earnings per share, and cash balance - we have published and provided
commentary on our financial performance measurements, derived from
non-statutory calculations. We believe these supplementary measures, when read
in conjunction with the measures derived directly from statutory financial
reporting, provide a better understanding of our overall financial
performance.
EBITDA
EBITDA, being earnings before interest, tax, depreciation and amortisation, is
commonly used by investors when assessing the financial performance of
companies. It attempts to arrive at a 'cash profit' figure by adjusting
operating profit for non-cash depreciation and amortisation charges. In our
case, EBITDA does not provide a clear picture of our cash profitability, as it
adds back amortisation charges relating to game developments, but without
deducting the investment costs for those developments, resulting in a profit
measure which does not take into account any of the costs associated with
developing games. Since EBITDA is a commonly used financial performance
measure, it has been included below for the benefit of readers of the accounts
who may value that measure of performance.
12 months to 12 months to 31 May 2024
£'000
31 May 2025
£'000
Operating profit/(loss) 12,651 (28,413)
Restructuring costs - 1,405
Depreciation and amortisation 23,435 36,892
Impairment of other intangible assets - 16,930
EBITDA 36,086 26,814
Adjusted Operating Profit
Our Adjusted Operating Profit measure, in our view, provides a fairer
representation of underlying 'cash profit' than both Operating Profit and
EBITDA (earnings before interest, tax, depreciation and amortisation).
Adjusted Operating Profit measures Frontier's financial performance after
eliminating non-cash development cost accounting adjustments (cost
capitalisation, amortisation charges and impairment charges), non-cash share
charges, non-operating items (including restructuring costs), and after
recording the full benefits of development-related tax and R&D expenditure
credits against the expenditure they relate to. This effectively provides the
cash profit figure that would have been achieved if we expensed all game
development investment as it was incurred, net of those tax and R&D
expenditure credits, rather than capitalising those costs and amortising them
over several years. The new measure also includes the lease costs of our
studios, which are a material operating cost. These were previously excluded
from Adjusted EBITDA due to these costs being recorded as depreciation under
IFRS 16 Leases.
12 months to 12 months to 31 May 2024
£'000
31 May 2025
£'000
Operating profit/(loss) 12,651 (28,413)
Add back non-cash intangible asset amortisation charges for game developments 19,677 30,965
and game technology
Add back non-cash intangible asset impairment charges - 16,930
Deduct capitalised investment costs in game developments and game technology (28,279) (26,520)
Add back non-cash share-based payment expenses 2,368 2,778
Add back restructuring costs - 1,405
Adjustment to record the full benefits of tax and R&D expenditure credits 6,767 6,594
against the expenditure they relate to
Adjustments to tax and R&D expenditure credits of prior years 62 837
Adjusted Operating Profit 13,246 4,576
Adjusted EBITDA
As communicated on 11 June 2025, Frontier has switched its primary alternative
performance measure from Adjusted EBITDA to Adjusted Operating Profit. This
change provides a more accurate representation of Frontier's performance and
more closely reflects cash generation, including the recognition of tax and
R&D expenditure credits. For FY26 onwards, we will cease to report
Adjusted EBITDA and only report Adjusted Operating Profit.
12 months to 12 months to 31 May 2024
£'000
31 May 2025
£'000
Operating profit/(loss) 12,651 (28,413)
Add back non-cash intangible asset amortisation charges for game developments 19,677 30,965
and game technology
Add back non-cash intangible asset impairment charges - 16,930
Deduct capitalised investment costs in game developments and game technology (28,279) (26,520)
Add back non-cash depreciation charges 3,286 3,782
Deduct non-cash movements in unrealised exchange gains on forward contracts (273) (37)
Add back non-cash share-based payment expenses 2,368 2,778
Add back restructuring costs - 1,405
Adjusted EBITDA 9,430 890
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