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Frontier Developments builds on Planet Zoo success

The group's latest launch went well, but only contributed 26 days to the first-half performance
Frontier Developments builds on Planet Zoo success

Video games companies such as Frontier Developments (FDEV) are only as good as their latest release. 

IC TIP: Buy at 1,302p

Planet Zoo, Frontier’s latest title, only came out in early November and while the game was a hit, topping the rankings on gaming platform Steam, that timing meant these results benefitted from just 26 days of contribution from the title. In contrast, last year’s half-year figures included almost a full six-month contribution from Jurassic World Evolution, which was launched alongside the hit movie in June 2018.

What's more, compared with the six months immediately prior to the financial half-year, improvements in trading performance become clearer still. Sales were up 28 per cent to £32m, while operating profits more than doubled to £4.5m, on a 14 per cent margin – up from 9 per cent previously. 

The group has continued to employ its strategy of building additional content for its existing titles, releasing expansion packs for Planet Coaster and Jurassic World Evolution in the period, with a “major new release” for Elite Dangerous expected after the financial year-end.

House broker Liberum is forecasting adjusted pre-tax profits of £11.6m for the full year and EPS of 27p, rising to £21.2m and 48.2p in 2021. 

FRONTIER DEVELOPMENTS (FDEV)  
ORD PRICE:1,302pMARKET VALUE:£ 506m
TOUCH:1,302-1,308p12-MONTH HIGH:1,452pLOW: 790p
DIVIDEND YIELD:NILPE RATIO:89
NET ASSET VALUE:201p*NET CASH:£28.9m
Half-year to 30 NovTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201864.717.340.20nil
201932.04.39.40nil
% change-51-75-77-
Ex-div:na   
Payment:na   
*Includes intangible assets of £41.4m, or 106p a share