A January trading update from Frontier Developments (FDEV) already revealed significant revenue growth for the half-year period ended 30 November 2018, buoyed by the successful launch of the group's Jurassic World Evolution game last June. Jurassic marked Frontier’s biggest release to date, achieving 1m base game unit sales in just five weeks, and 2m over seven months. But it wasn’t the only driver of growth.
Older games such as Elite Dangerous, which launched in December 2014, and Planet Coaster, which launched in November 2016, still contributed to the top line – in keeping with the group's strategy to "nurture and grow" the existing portfolio alongside launching new products.
As such, half-year pre-tax profits soared, despite a contraction in the gross margin from 69 per cent to 61 per cent. This stemmed from royalties payable to Universal Games and Digital Platforms on sales of Jurassic, and lower-margin physical disc sales of the game.
A fourth – but for now top-secret – game release is planned for later in 2019. But in the meantime, a healthy net cash balance of £39.5m offers the company a degree of flexibility to build scale, whether via acquisitions, commissioning new games or publishing work from other companies.
Broker Jefferies expects pre-tax profits of £17.7m and EPS of 42.3p for FY2019 (from £2.9m and 9.6p in FY2018).
| FRONTIER DEVELOPMENTS (FDEV) | ||||
| ORD PRICE: | 966p | MARKET VALUE: | £374m | |
| TOUCH: | 956-970p | 12-MONTH HIGH: | 1880p | LOW: 730p |
| DIVIDEND YIELD: | nil | PE RATIO: | 23 | |
| NET ASSET VALUE: | 177p* | NET CASH: | £39.5m | |
| Half-year to 30 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 19.0 | 3.0 | 8.0 | nil |
| 2018 | 64.7 | 17.3 | 40.2 | nil |
| % change | +240 | +482 | +403 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £30.9m or 80p a share | ||||
