What a difference a year has made for Frontier Developments (FDEV). The first half of 2016 saw shares sell off after the launch of an expansion to its flagship game, Elite Dangerous: Horizons, was delayed by eight weeks. A year on and what is billed as a "multiplayer space epic" has been a major contributor to the group’s stellar performance in the first half of 2017, while the launch of a new game, Planet Coaster, contributed an estimated £20m to the top line.
As expected, operating expenditures ticked up slightly, but at a slower rate to revenues, meaning sales, marketing and administrative expenses are now just 32 per cent of sales, from 37 per cent in last year's first half. These improved margins and sent operating profit up from £1.2m to £7.8m – comfortably ahead of previous expectations.
Frontier is in the process of expanding its headcount, meaning profits are expected to drop again in the year to May 2018. Broker FinnCap is forecasting adjusted pre-tax profits and EPS of £1.3m and 3.3p (FY2017: £9.8m and 28.3p). But by the 2019 financial year, Frontier will have completed the development of its new game franchise, Jurassic World, which is expected to generate £35m of sales in its first year on the shelves.
| FRONTIER DEVELOPMENTS (FDEV) | ||||
| ORD PRICE: | 1,208p | MARKET VALUE: | £ 413m | |
| TOUCH: | 1200-1215p | 12-MONTH HIGH: | 1,218p | LOW: 170p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 53 | |
| NET ASSET VALUE: | 91.5p* | NET CASH: | £12.6m | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 12.1 | 1.07 | 4.2 | nil |
| 2014 | 9.5 | -1.71 | -5.8 | nil |
| 2015 | 22.8 | 1.62 | 4.9 | nil |
| 2016 | 21.4 | 1.28 | 4.2 | nil |
| 2017 | 37.4 | 7.81 | 22.7 | nil |
| % change | +75 | +513 | +440 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £21.9m, or 64p a share | ||||
