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A MULTI-FRANCHISE                                                                                                                 WE CONTINUE                                                                       Operational highlights
                                                                                                                                                                                                                    • Frontier’s strategy of sustaining and nurturing its franchises

                                                                                                                                  TO SCALE UP
                                                                                                                                                                                                                      continues to deliver, as both Elite Dangerous and Planet Coaster
                                                                                                                                                                                                                      continue to thrive.
                                                                                                                                                                                                                    • Elite Dangerous, which launched in December 2014, delivered
                                                                                                                                                                                                                      its fourth year of sustained substantial revenue generation in FY18.
                                                                                                                                                                                                                      In June 2017 the franchise’s addressable audience was further
                                                                                                                                                                                                                      expanded with its release on the Sony PlayStation 4 platform,
                                                                                                                                                                                                                      and we launched the Beyond season of free updates to continue
                                                                                                                                                                                                                      to appeal to new and existing players by providing additional
                                                                                                                                                                                                                      gameplay features and further narrative.

Frontier Developments plc (‘Frontier’), listed on the AIM stock                                                                   Financial KPIs                                                                    • Planet Coaster, which launched in November 2016, continues
                                                                                                                                                                                                                      its genre-leading popularity. During the year we started to
market (AIM: FDEV), is a world-class video game developer                                                                         Total revenue (£m)                          Operating profit (£m)                   release chargeable themed expansion packs, each of which
and publisher with multiple revenue generating franchises.                                                                                                                                                            adds substantial features and content for players and generates
                                                                                                                                  £34.2m                                      £2.8m                                   additional sales for the franchise beyond the initial game purchase.
Founded in 1994 by David Braben, co-author of the seminal Elite game and based
in Cambridge, Frontier uses its proprietary ‘COBRA’ game development technology                                                   34.2
                                                                                                                                  18                                                  18   2.8                     • Towards the end of FY18 we completed the development of
to create innovative games, currently focusing on video game consoles and                                                         37.4
                                                                                                                                  17                                                  17                      7.8     our third franchise, Jurassic World Evolution, as planned
personal computers.                                                                                                               21.4
                                                                                                                                  16                                                  16   1.2                        and, in June 2018 (after the end of FY18), achieved a third
                                                                                                                                  15                                                  15    1.6                       successful franchise launch with its release alongside
Having successfully completed a transition to a self-publishing model with its first two franchises,                              9.5
                                                                                                                                  14                                          (1.7)   14                              the launch of the Jurassic World: Fallen Kingdom film.
Frontier is scaling up to expand its franchise portfolio in order to deliver long-term revenue
and earnings growth.                                                                                                                                                                                                • £17.7 million was raised in July 2017 through a strategic
                                                                                                                                                                                                                      investment from Tencent, a leading internet and interactive
In the financial year ended 31 May 2018, the ongoing success of Frontier’s first two franchises,                                                                                                                      entertainment company based in China, to improve and
Elite Dangerous (launched December 2014) and Planet Coaster (launched November 2016)                                              Operating margin (%)                        EBITDA* (£m)                            accelerate Frontier’s growth into the key Chinese market
supported the investment in Jurassic World Evolution, which launched successfully in June                                                                                                                             and help drive scale-up of the business.
2018 (after the end of the financial year) and will deliver the next step up in financial                                         8%                                          £9.4m
performance for the Company.                                                                                                                                                                                        • In October 2017 the first Frontier Expo was held, a Frontier‑specific
                                                                                                                                                  18     8                    	
                                                                                                                                                                              1 8   9.4                               event which brought together Frontier’s developers, player
We have a proven track record of sustaining and nurturing existing franchises to deliver multi-year                                               17           21              12.7
                                                                                                                                                                                                                      community members and media to spotlight major franchise
revenues, with each new franchise release providing a step-up in overall Company financial                                                        16   6                       4.9
                                                                                                                                                                                                                      announcements, maximising awareness and further
performance, and we have proven our ability to successfully launch franchises for a third                                                         15    7                      6.1
                                                                                                                                                                                                                      building Frontier’s profile.
time with Jurassic World Evolution. Our ambition is to create a multi-franchise success                                           (18)            14                     14     0.3
story, and we remain excited about the prospects for our industry and for our Company.                                                                                                                              Financial highlights
                                                                                                                                                                                                                    • Total revenue of £34.2 million in FY18 reflected sustained sales
                                                                                                                                                                                                                      performances for both Elite Dangerous and Planet Coaster
                                                                                                                                  EPS (basic) (p)                             Operating cash flow** (£m)              following the step-up in sales in the prior period from the
                                                                                                                                  9.6p                                        £(2.8)m                                 launch of Planet Coaster in November 2016 (FY17 revenue
                                                                                                                                                                                                                      grew 75% over FY16).
                                                                                                                                          18                                     (2.8)            18
                                                                                                                                                                                                                    • As anticipated, a combination of slightly lower annual sales
                                                                                                                                          17                 22.7                                 17   3.4
                                                                                                                                                                                                                      resulting from no new franchise launch in FY18 and our planned
                                                                                                                                          16   4.2                               (2.7)            16
STRATEGIC REPORT                       FINANCIAL STATEMENTS                                                                                                                                                           increased investment in development and marketing saw
                                                                                                                                          15    4.9                                               15   2.6           operating profit reduce to £2.8 million (FY17: £7.8 million)
01 Highlights                          29 Independent Auditor’s report
                                                                                                                                  (5.8)   14                                  (3.4)               14
                                                                                                                                                                                                                      and EBITDA reduce to £9.4 million (FY17: £12.7 million).
02 Frontier at a glance                34 Consolidated income statement
03 Chairman’s statement                34 Consolidated statement of comprehensive income
                                                                                                                                                                                                                    • Operating cash flow (operating profit excluding non-cash items,
04 Chief Executive’s statement         35 Consolidated statement of financial position                                                                                                                                less investments in franchises and other intangible assets)
06 Our business model and strategy     36 Consolidated statement of changes in equity                                                                                                                                 was an outflow of £2.8 million (FY17: inflow of £3.4 million),
08 Our franchises                      37 Consolidated statement of cashflows                                                     Net cash balance (£m)
                                                                                                                                                                                                                      reflecting the investment in Jurassic World Evolution.
    08 Elite Dangerous
    10 Planet Coaster
                                       38 Notes to the financial statements
                                       58 Company statement of financial position
                                                                                                                                  £24.1m                                                                            • Cash balances increased by £11.5 million during the year
    12 Jurassic World Evolution        59 Company statement of cashflows                                                          24.1
                                                                                                                                                                                                                      to £24.1 million (FY17: £12.6 million) following the £17.7 million
14 Financial review                    60 Company statement of changes in equity                                                  12.6
                                                                                                                                                                                                                      strategic investment by Tencent in July 2017.
16 Principal risks and uncertainties                                                                                              8.6

CORPORATE GOVERNANCE                   ADDITIONAL INFORMATION                                          Read this report online:
18 Board of Directors                  61 Notice of Annual General Meeting

20 Report of the Directors             IBC Five-year summary                                            AR.FRONTIER.CO.UK
22 Corporate governance report         IBC Advisors and Company information
27 Remuneration report                                                                                                            *	Earnings before interest, tax, depreciation and amortisation
                                                                                                                                  **	Operating profit excluding non-cash items, less investments in franchises
                                                                                                                                      and other intangible assets

                                                                                                                                                                                                                                           FRONTIER DEVELOPMENTS PLC
                                                                                                                                                                                                                                      ANNUAL REPORT AND ACCOUNTS 2018              01

FRONTIER AT A GLANCE                                                                                                                                CHAIRMAN’S STATEMENT
                                                                                                                                                    DAVID GAMMON, NON-EXECUTIVE CHAIRMAN

WE HAVE PROVEN OUR ABILITY                                                                                                                          DELIVERING FOR
TO LAUNCH SUCCESSFUL FRANCHISES                                                                                                                     OUR STAKEHOLDERS

                                                                                                                                                    We are well positioned
                                                                                                                                                    for the future.

Elite Dangerous                                   Planet Coaster                                    Jurassic World Evolution
Available for Windows PC, Microsoft Xbox          Available for Windows PC – builds on Frontier’s   Available for Windows PC, Microsoft Xbox
One and Sony PlayStation 4 – is the definitive    genre-defining expertise with coaster park        One and Sony PlayStation 4 – evolves
massively multiplayer space epic, bringing        games such as RollerCoaster Tycoon 3 and          players’ relationships with the Jurassic
gaming’s original open world adventure to         Thrillville. It further raises the bar for this   World film franchise, placing them in control   I am pleased to report on another healthy     Our long-term ambition to become a global             At the AGM in October 2018 our Chief Operating
the modern generation with a connected            popular genre, allowing players to let their      of operations on the legendary island of Isla   year for Frontier. Our first two franchises   leader in entertainment remains on plan.              Officer, David Walsh, will transition to a
galaxy, evolving narrative and the entirety       imaginations run wild as they surprise, delight   Nublar and the surrounding islands of the       continued to perform well, and our            We are scaling up to continue our multi-franchise     Non-Executive Director role in order to
of the Milky Way recreated at its full            and thrill incredible crowds, and share their     Muertes Archipelago. Players will create        team did a terrific job on the development    success story through the development and             focus his attention on a start-up opportunity
galactic proportions.                             success with the world via the Steam              and manage their own Jurassic World as          and successful launch of Jurassic             growth of our internal capabilities together          outside of the games industry. I would like
                                                  Workshop community.                               they bioengineer new dinosaur breeds,           World Evolution in June 2018. Our chosen      with an expanding use of external resources.          to thank David for his 17 years of excellent
                                                                                                    and construct attractions, containment and      business model of multi-franchise             Our proven ability to both launch and sustain         service to Frontier, and I am delighted that
Read more from page 8
                                                                                                    research facilities. Every choice leads to a    self-publishing is delivering well for        franchises within a self-publishing model,            he will continue to contribute in a Non-Executive
                                                  Read more from page 10
                                                                                                    different path and spectacular challenges       our Company and all of its stakeholders,      as well as our long history of delivery and           role. David’s responsibilities are being allocated
                                                                                                    arise when ‘life finds a way’.                  including our community of players,           capability, positions us very well to continue        between James Dixon, Director of Operations,
                                                                                                                                                    our employees and our investors.              our organisational development. It is pleasing        Stewart Stanbury, Director of Marketing and
                                                                                                                                                                                                  to see both Elite Dangerous and Planet Coaster        Alex Bevis, CFO. James Dixon has been with
                                                                                                    Read more from page 12
                                                                                                                                                                                                  selling strongly in their fourth and second           the Company for over 20 years and has
                                                                                                                                                                                                  financial years respectively. This validates          a wealth of experience of both the game
                                                                                                                                                                                                  our model of establishing franchises with             development and operational aspects of the
                                                                                                                                                                                                  enduring appeal rather than for the short             company. Stewart Stanbury joined Frontier
                                                                                                                                                                                                  term. Franchises four, five and six are all           in September 2017 from Google, where he
                                                                                                                                                                                                  at different stages of development, from              specialised in digital marketing, brand and
Revenue history (£m)                                                                                                                                                                              full scale production to conceptual design            strategy for top games industry clients including
                                                                                                                                                                                                  stage. In addition we have exciting plans             Activision, EA, Ubisoft and Wargaming as
FY18 1.5                                                                                                                    32.7                                                                  for our three existing franchises.                    Games Industry Manager for the Media &
                                                                                                                                                                                                                                                        Entertainment Sector.
                                                                                                                                                                                                  We benefit from a highly experienced
FY17        1.0                                                                                                                        36.4                                                       team at Board level. In September 2017                We have already achieved a lot since we
                                                                                                                                                                                                  our Board was further strengthened                    started our transition to a self-publishing
FY16 0.3                                                                       21.1                                                                                                               through the appointment of James Mitchell             multi-franchise model, but there is much
                                                                                                                                                                                                  as a Non-Executive Director. We invited James,        more to come. We are well positioned for
FY15              3.8                                                               19.0
                                                                                                                                                                                                  who is Chief Strategy Officer at Tencent,             the future as a result of the dedication,
FY14                                9.0     0.5                                                                                                                                                   to join the Board in order to gain his                engagement, skill and professionalism of
                                                                                                                                                                                                  insights into the Chinese market and the              our amazing team, and I would like to take
                                                                                                                                                                                                  wider global entertainment industry,                  this opportunity, on behalf of the Board, to
                                          Revenue from work-for-hire                  Revenue from self-publishing                                                                                following the £17.7 million strategic investment      thank them for their tremendous efforts.
                                                                                                                                                                                                  made by Tencent in July 2017. James has
                                                                                                                                                                                                  already proven to be an invaluable member
                                                                                                                                                                                                                                                        DAVID GAMMON
                                                                                                                                                                                                  of the Board and we are delighted with
                                                                                                                                                                                                                                                        NON-EXECUTIVE CHAIRMAN
                                                                                                                                                                                                  his appointment.
                                                                                                                                                                                                                                                        5 September 2018

                                                                                                                                                                                                                                                           FRONTIER DEVELOPMENTS PLC
                                                                                                                                                                                                                                                      ANNUAL REPORT AND ACCOUNTS 2018              03


                                                                                                                                                 STRATEGY                                          Frontier is scaling up to build a broad portfolio     Overall we will continue to focus on
                                                                                                                                                 We believe that publishing our own franchises     of franchises, each different to the last, and        opportunities which leverage our existing
                                                                                                                                                 is the best way to maximise the benefit of        each with the capability to offer sustained           expertise, intellectual property, publishing
                                                                                                                                                 our core skills, our assets and our COBRA         revenue streams as already seen with Elite            presence, relationships and financial
                                                                                                                                                 technology platform. The Company’s focus          Dangerous and Planet Coaster. Releases of             position. As stated in the Group’s previous
                                                                                                                                                 is on developing top-quality self-published       new franchises can be expected to drive               Annual Reports and other communications,
                                                                                                                                                 PC and console titles for digital distribution.   steps up in the Group’s financial performance.        in addition to the current core model of using
                                                                      I would like to thank everyone                                             Generally the audiences on these platforms        Because of the small number of franchises             internal resources supplemented by outsourced
                                                                                                                                                 value the types of high-quality games that        and relatively infrequent major releases              services, the Group will continue to explore
                                                                      at Frontier and all our players                                            Frontier is able to deliver.                      Frontier is currently able to make, revenue           other opportunities to accelerate its scale-up.
                                                                                                                                                                                                   is sensitive to the specific schedule of such
                                                                      around the world.                                                          We will also continue to follow our repeatable
                                                                                                                                                 model, to create further franchises in popular
                                                                                                                                                                                                   releases and may therefore exhibit ‘stepped’
                                                                                                                                                                                                                                                         External partnerships are an important element
                                                                                                                                                                                                                                                         within our plans and such opportunities
                                                                                                                                                                                                   behaviour across financial years, as those
                                                                                                                                                 game genres where we can use our key                                                                    are likely to include third party publishing
                                                                                                                                                                                                   new franchises are released. In the future,
                                                                                                                                                 expertise and knowledge and/or IP to deliver                                                            (controlling the promotion and distribution
                                                                                                                                                                                                   as we successfully scale the number and
                                                                                                                                                 highly differentiated, best-in-class player                                                             of other developers’ games), commissioning
                                                                                                                                                                                                   frequency of franchise releases, annual
                                                                                                                                                 experiences, and further build our revenue                                                              (outsourcing the majority of development
                                                                                                                                                                                                   revenue growth should accelerate and our
                                                                                                                                                 pipeline over the long term.                                                                            of Frontier games to other developers), and
                                                                                                                                                                                                   dependency on each major release
                                                                                                                                                                                                                                                         enhancing the Group’s franchise portfolio
                                                                                                                                                 Our strategic objective is to create long-term    should decrease.
                                                                                                                                                                                                                                                         or capabilities via acquisitions.
                                                                                                                                                 sustainable growth through success by
                                                                                                                                                                                                   We aim to accelerate our output to achieve
                                                                                                                                                 publishing a growing number of franchises.                                                              I look forward to working with Frontier’s
In January 2019 Frontier will celebrate      THE GAMES MARKET                                  quality. ‘Discoverability’ (the ability to find                                                     one major launch every 12 months or so,
                                                                                                                                                 Our strategic focus is on two key areas:                                                                fantastic team and our partners to build on
its 25th anniversary since I founded         We operate in an exciting and growing industry    a title) is also better on PC and console, with                                                     but this will not require us to increase our
                                                                                                                                                                                                                                                         our early self-publishing success and establish
the company in January 1994. Both            that continues to see rapid change. The games     excellent support from reviewers, ‘youtubers’     • developing our business to achieve              workforce linearly because supporting existing
                                                                                                                                                                                                                                                         a new long-term, self-published track record
the industry and our Company have            market is already the premier form of             and social media.                                   repeatable success; and                         franchises typically requires less resource
                                                                                                                                                                                                                                                         of quality, innovation and delivery as we
undergone significant change throughout      entertainment worldwide, worth over                                                                                                                   than creating new ones.
                                                                                               The whole market is moving rapidly towards        • creating and managing franchises.                                                                     scale-up to continue our multi-franchise
that time, and I am personally very          $100 billion per year within the wider
                                                                                               digital download as the primary delivery model.                                                                                                           success story.
proud of all of our achievements. I am       $300 billion entertainment industry. That
                                                                                               Mobile and PC are now almost 100% digital,
particularly pleased with the success        is larger than each of the film, TV or music
                                                                                               and the console audience is quickly adopting
of our transition to self-publishing over    industries. The games sector is growing fast
                                                                                               digital downloads too, as market focus moves
the last five years. The rise of digital     too, increasing at around 10% last year,
                                                                                               to the new generation of hardware and older
distribution was the catalyst for our        whilst some other entertainment sectors,
                                                                                               business models are replaced.
change, and our extensive experience         such as TV, have experienced declines. The
                                                                                                                                                 Current trading and outlook
in the games industry gave us the            lines between entertainment sectors               There are already some very large and
confidence to make the switch. I believe     continue to blur, as audiences crave greater      well-established companies in the games
our decision has been proved correct         levels of interactivity within their              market, with a number of companies                The launch of Jurassic World Evolution,           coincide with the film release of Jurassic            David Braben, Chief Executive, said:
by the ongoing performance of our first      entertainment experiences; more than just         supporting $1 billion+ valuations. Two of         in June 2018 has led a record trading             World: Fallen Kingdom confirms our ability
two franchises, Elite Dangerous and          shouting at their TVs! These are exciting         the largest publishers and developers, EA                                                                                                                 “Jurassic World Evolution has achieved our
                                                                                                                                                 performance during the period from the            to ship a new game on a hard deadline
Planet Coaster, and the successful           times and Frontier is well placed to both         and Activision Blizzard, both based in the                                                                                                                 biggest launch to date, and we are now very
                                                                                                                                                 year end (31 May 2018). Digital sales of          simultaneously across three high-end
launch of Jurassic World Evolution.          drive and support future changes in the           US, have a combined value of around $100                                                                                                                   well positioned with three successful revenue
                                                                                                                                                 Jurassic World Evolution have been                gaming platforms (PC, PlayStation 4 and
I would like to thank everyone at            wider entertainment industry, including the       billion. However, our industry has always                                                                                                                  generating franchises. We will continue to
                                                                                                                                                 substantial across all three platforms, (PC,      Xbox One).
Frontier for their continued contribution    potential addition of whole new forms             thrived on disruption, in terms of individual                                                                                                              support and enhance all three of our existing
                                                                                                                                                 PlayStation 4 and Xbox One) and physical
and hard work and thank our players          of entertainment.                                 games, game genres, charging models,                                                                Our first two franchises, Elite Dangerous              franchises (Elite Dangerous, Planet Coaster
                                                                                                                                                 disc sales on PlayStation 4 and Xbox One
around the world who continue to make                                                          technology and routes to market, and it has                                                         and Planet Coaster, both supported by our              and Jurassic World Evolution), and we’ll be
                                             The games market is typically seen as three                                                         have also been significant. On 19 July 2018
all this possible.                                                                             been interesting to observe the impact of                                                           strategy of ongoing development, continue              making a number of exciting announcements
                                             different sectors: PC, console and mobile/                                                          Frontier announced that cumulative sales
                                                                                               some of those disrupting factors in the last                                                        to perform well, delivering a sustained                about each franchise in due course. Franchise
                                             tablet. The characteristics of each sector                                                          on all formats had passed 1 million units,
                                                                                               12 months. Our chosen model – supporting                                                            revenue contribution during the period                 four, which is based on our own un-announced
                                             are quite different. Our development focus                                                          just 5 weeks after the digital launch on
                                                                                               our games and their communities with                                                                from 31 May 2018.                                      IP, is now in full development and targeted
                                             is currently on PC and console titles, as the                                                       12 June 2018.
                                                                                               regular updates, essentially ‘games as                                                                                                                     for release in FY20, and two more
                                             audiences on these platforms highly value                                                                                                             Although it is still early in terms of both
                                                                                               a service’ – is working very well, producing      We are pleased with the positive early sales                                                             new franchises are in earlier stages
                                             games exhibiting Frontier’s key development                                                                                                           Frontier’s financial year and the life-cycle
                                                                                               three out of three successful franchises so       and player feedback for Jurassic World                                                                   of development.”
                                             strengths such as compelling gameplay and                                                                                                             of Jurassic World Evolution, the Board
                                                                                               far, but we will continue to monitor and          Evolution. This initial success further
                                             high production quality. In contrast the mobile                                                                                                       is comfortable with the current range of
                                                                                               consider different options as the industry        demonstrates our ability to add new franchises
                                             sector is overcrowded, with a very low barrier                                                                                                        analyst revenue projections of £75 million
                                                                                               continues to evolve.                              to our portfolio and emphasises our capability
                                             to entry, so success is both much less                                                                                                                to £88 million for FY19 (the year ending
                                                                                                                                                 to both develop and publish top tier IP,
                                             predictable and much less influenced by                                                                                                               31 May 2019), a substantial increase over
                                                                                                                                                 reinforcing our appeal as a partner to IP
                                                                                                                                                                                                   the £34 million achieved in FY18.
                                                                                                                                                 holders. The timing of our launch to

                                                                                                                                                                                                                                                            FRONTIER DEVELOPMENTS PLC
                                                                                                                                                                                                                                                       ANNUAL REPORT AND ACCOUNTS 2018            05


OUR MULTI-FRANCHISE                                                                                                                                         Developing our business to achieve repeatable success

MODEL                                                                                                                                                       INVEST
                                                                                                                                                            We invest our development resources in
                                                                                                                                                                                                             Our development focus is on PC and console.
                                                                                                                                                                                                                                                                   We continue to assess the distribution
                                                                                                                                                            games with strong franchise potential. In        Audiences on these platforms tend to value            channels and platforms we use to achieve
                                                                                                                                                            order to maximise the return on our core         games that exhibit Frontier’s key                     an optimal addressable audience for each
                                                                                                                                                            skills and assets we target game genres          development strengths.                                game, and the monetisation strategy for
                                                                                                                                                            where we have established expertise                                                                    each franchise. We participate in price
                                                                                                                                                                                                             We use online channels to create and
                                                                                                                                                            and/or intellectual property.                                                                          promotions on each of the distribution
                                                                                                                                                                                                             engage with a player community during
                                                                                                                                                                                                                                                                   platforms we use for each of our games as
                                                                                                                                                            We continue to invest in our organisation        game development, which provides a
                                                                                                                                                                                                                                                                   appropriate to its life-cycle stage, allowing
What we do                                                                                                                                                  to create a model of repeatable success.         valuable source of both feedback and
                                                                                                                                                                                                                                                                   us to reach the widest possible audience
                                                                                                                                                            To accelerate our progress and increase          advocacy for each franchise before
                                                                                                                                                                                                                                                                   over time.
                                                                                                                                                            the frequency of launches we are scaling         first release.
                                                                                                                                                            up our organisation, not just in terms of                                                              We also monitor the geographical performance
                                                                                                                                                                                                             Our development process uses our proprietary
                                                                                                                                                            staff numbers, but also in terms of leadership                                                         of our franchises, understanding and
        Employees                            R&D                    In-house technology                 Audience                      Partnerships                                                           COBRA development tools and technology to
                                                                                                                                                            skills, training, organisational structure,                                                            monitoring under and over performance
                                                                                                                                                                                                             facilitate innovative features and the creation
                                                                                                                                                            process and external partnerships.                                                                     versus expectations in each territory, and
                                                                                                                                                                                                             of top-quality self-published games with
                                                                                                                                                                                                                                                                   will continue to look for opportunities to
                                                                                                                                                            We also invest in the necessary facilities to    strong differentiation for the PC and console
                                                                                                                                                                                                                                                                   tailor our local price to a level more appropriate
                                                                                                                                                            support our world-class team. In April 2018      audiences. Our control of this technology also
                                                                                                                                                                                                                                                                   to each local economy. In particular we note
                                                                                                                                                            we moved all of our staff into a brand new       removes the risk related to ongoing access
                                                                                                                                                                                                                                                                   the rapidly growing Chinese market for
                                                                                                                                                            office space on the Cambridge Science Park.      to third party licensed technology alternatives,
                                                                                                                                                                                                                                                                   premium PC games, and we expect our strong
                                                                                                                                                            It is our belief that having all our people in   the risk relating to the ability to fix uncovered
                                                                                                                                                                                                                                                                   relationship with Tencent to help us to take
                           CREATE                                 BUILDING PLAYER                                     NURTURE                               Cambridge working together in a single           problems in that technology and the risk
                                                                                                                                                                                                                                                                   advantage of its unparalleled expertise and
              Frontier uses experience gained from                                                         Frontier avoids ‘pay-to-win’ features,           building helps to maximise our operational       related to the lack of control over the delivery
            a track record in the games industry over              NUMBERS AND                         instead continuing to expand each franchise                                                                                                                 distribution capabilities in its home market
                                                                                                                                                            effectiveness and efficiency.                    dates and new feature roadmap of such
             three decades to create franchises that                ENGAGEMENT                         offering through an ongoing program of free
                                                                                                                                                                                                             solutions. It also facilitates rapid response
                                                                                                                                                                                                                                                                   for our franchises.
                build on our world-class expertise.                                                        and paid-for expansions and add-ons.
                                                                                                                                                                                                             to market opportunities, for example as
                         High quality                                                                         Boost player experience
                                                                                                                                                                                                             happened with support for Virtual Reality
                  Innovative experiences                                                                       Increasing awareness                                                                          and Augmented Reality.

                                         CREATING AND NURTURING TO ACHIEVE REPEATABLE SUCCESS

Creating and managing franchises                                                                                                                            Future franchises

OVERVIEW                                                                                                                                                    We are building a broad portfolio of             Subject to Frontier’s disclosure obligations as       that we can develop and publish world-leading
In order to maximise the return on our core             We will continue to grow the capacity            We will endeavour to enhance and expand            franchises, each different to the last and       an AIM company, it is the Board’s intention to        IP alongside a major film launch; we will
skills and assets we target game genres on              and capability of our organisation in both       our franchises and grow their audiences            each with the capabilities to expand over        make announcements about future franchises            review the value of licensing proven third
PC and Console platforms where we believe               commercial and development areas in              using appropriate additional products,             time. All future franchises will be selected     at the optimum time for the success of that           party IP versus developing our own IP for
we can both i) deliver high-quality, differentiated     order to further the successful evolution        platforms, media, marketing, distribution          using the same approach described above          particular franchise. This may be some time           each potential future franchise on a
offerings using established expertise and               of our franchises.                               channels and charging models through               that was used for Elite Dangerous, Planet        after the start of a particular project, and not      case-by-case basis.
intellectual property, and ii) have a strong                                                             investing in the necessary people, organisation,   Coaster and Jurassic World Evolution. We are     necessarily at the time of the signature of an
                                                        As part of this process, we will explore                                                                                                                                                                   Franchise four, which is based on our own
chance of successful market entry, based on                                                              resources and infrastructure.                      scaling up for the future so we can release      agreement with a development or IP partner.
                                                        potential partnerships and licensing                                                                                                                                                                       un-announced IP, is now in full development
past experience or knowledge of that sector.                                                                                                                games more frequently, and we already have
                                                        opportunities. We will also continue to                                                                                                              Our future franchise portfolio is likely to           and targeted for release in FY20, and two
                                                                                                                                                            future franchises in different phases
We use this repeatable model to invest our              review potential acquisition targets that                                                                                                            contain a mixture of owned IP (like Elite             more new franchises are in earlier stages
                                                                                                                                                            of development.
resources with the intention of creating                could augment our capacity or add new                                                                                                                Dangerous and Planet Coaster) and licensed            of development.
world-class games with strong franchise                 capabilities as well as IP that may help                                                                                                             IP (like Jurassic World Evolution). We are
potential and plan for strong post-launch               us achieve our goals.                                                                                                                                pleased with the initial sales and feedback
franchise support to further help realise                                                                                                                                                                    for Jurassic World Evolution, which illustrates
this potential.


                                                                                                    FUTURE FRANCHISES
                                                                    JURASSIC WORLD EVOLUTION (2018+)
                                     PLANET COASTER (2016+)
     ELITE DANGEROUS (2014+)

                                                                                                                                                                                                                                                                      FRONTIER DEVELOPMENTS PLC
                                                                                                                                                                                                                                                                 ANNUAL REPORT AND ACCOUNTS 2018              07


                                                                                                                        Ongoing development
                                                                                                                        THE HORIZONS SEASON OF EXPANSIONS

                                                                                                                        Each expansion offers new headline gameplay features
                                                                                                                        plus a large number of quality of life enhancements and
                                                                                                                        other tweaks, fixes and improvements, and there is an

                                                                                                                        accompanying update to the base game.
                                                                                                                        DECEMBER 2015
Elite Dangerous is now in its fifth financial       Each Beyond update is free for all players,                         Planetary Landings was launched in December 2015
year since release in December 2014.                regardless of whether they have the Horizons                        and expanded gameplay to planetary surfaces for the
Since launch we have continued to release           season pass. Beyond focuses on enhancements                         first time.
expansions to the original Elite Dangerous          to the overall player experience, bringing                          2.1
game, simultaneously on PC, Xbox One and            foundational changes to the core systems of                         MAY – JUNE 2016
PlayStation 4 as those platforms have               Elite Dangerous and delivering new in-game                          The Engineers was launched on PC in May 2016 and Xbox
been added.                                         content for Commanders to experience as                             One in June 2016 and added loot and crafting mechanics
                                                    they explore the massively multiplayer galaxy.                      to the game to allow players to upgrade the performance
Simultaneous releases on all supported
platforms are planned to continue going             The Elite Dangerous franchise continues                             of their ship and weapons.
forward, including Sony’s PlayStation 4             to perform strongly and we continue to                              2.2
following the franchise’s debut on the              focus on enhancements within the strategy                           OCTOBER 2016
platform in June 2017 which significantly           of further improving perceived quality and                          The Guardians was launched in October 2016 and
expanded its addressable audience.                  sentiment, adding significant long-term                             expanded the gameplay possibilities of each ship
                                                    new features and supporting the unique                              by adding ship-launched fighters.
These updates add to the quality of the game,
                                                    evolving player-driven story, which all
renew the interest of existing players and                                                                              2.3
                                                    players experience together. We expect
also generate additional coverage, resulting                                                                            APRIL 2017
                                                    to further expand the player base over
in new sales. The attach rate of Elite Dangerous:                                                                       The Commanders was launched in April 2017 and
                                                    the next financial year, adding new content
Horizons to the base game continues to grow                                                                             offered the ability for multiple players to crew a ship
                                                    and increasing the audience.
steadily, helped by the regular updates.                                                                                and represented player characters in game with
                                                    We continue to invest significant effort into                       sophisticated customisation options.
Having the base game and Horizons expansions
                                                    Elite Dangerous which we expect to yield some
in the market covers mid-price entry to the                                                                             2.4
                                                    exciting future developments – more to come!
franchise with an upgrade path, and we bundle                                                                           SEPTEMBER 2017
the two together and add some digital items          ELITEDANGEROUS.COM                                                 The Return was released in September 2017 and supported
to create a Deluxe edition for a premium                                                                                the ongoing story arc related to Thargoids, the franchise’s
price point entry. We believe each product                                                                              first alien species, and their interactions with humans
in the franchise offers great value.                                                                                    in the Elite Dangerous galaxy.
The third Elite Dangerous season, Beyond,                                                                               The release of 2.4 The Return completed the Horizons
was announced in October 2017 at Frontier                                                                               season of expansions.
Expo 17. Chapter 1 launched in February 2018,
Chapter 2 launched in June 2018 and                                                                                     BEYOND UPDATES
Chapter 3 launched in August 2018.                                                                                      Each Beyond update is free for all players. Beyond
                                                                                                                        focuses on enhancements to the overall player experience,
                                                                                                                        bringing foundational changes to the core systems of
                                                                                                                        Elite Dangerous and delivering new in-game content
                                                                                                                        for Commanders to experience as they explore the
                                                                                                                        massively multiplayer galaxy.
                                                                                                                        BEYOND CHAPTER 1
                                                                                                                        FEBRUARY 2018
                                                                                                                        BEYOND CHAPTER 2
                                                                                                                        JUNE 2018
                                                                                                                        BEYOND CHAPTER 3
                                                                                                                        AUGUST 2018

                                                                                                                                      FRONTIER DEVELOPMENTS PLC
                                                                                                                                 ANNUAL REPORT AND ACCOUNTS 2018            09


                                                                                                                                                                          Ongoing development
                                                                                                                                                                          WINTER UPDATE

                                                                                                                                                                          DECEMBER 2016
                                                                                                                                                                          SPRING UPDATE
                                                                                                                                                                          APRIL 2017

PARK SIMULATION                                                                                                                                                           SUMMER UPDATE
                                                                                                                                                                          JUNE 2017

Planet Coaster was successfully launched           In November 2017 the Planet Coaster              In December 2017 we released                                          FIRST PDLC PACKS
in November 2016 after a short Beta period,        Anniversary Update was released, in              the Planet Coaster Adventure Pack                                     JULY 2017
achieving the global #1 position on the            celebration of one year since the game’s         with new rides, new scenery and                                       Involving iconic Universal IP – Back to the Future,
Steam distribution channel and continuing          launch. It was the fourth major free update      a new entertainer for players to                                      The Munsters, and Knight Rider.
to sell strongly through the subsequent            and provided new rides, features and gameplay.   discover on an all-new creative journey.                              SPOOKY PACK
holiday period. In accordance with our                                                                                                                                    SEPTEMBER 2017
                                                   This update strategy is intended to further      In March 2018 the Planet Coaster Studios
strategy, we began to release free updates,                                                                                                                               The first paid-for expansion pack - introducing new rides,
                                                   improve perceived quality and sentiment          Pack was launched, bringing the blockbuster
each of which adds headline features but                                                                                                                                  a new entertainer, an all-new theme and bold new
                                                   by adding significant long-term new features.    experience to life with spectacular stunts,
also expands and improves different creative                                                                                                                              creative options. The pack enables players to mix and
                                                   Such updates add to the quality of the game,     earth-shaking explosions, hotels and rides
and management aspects of the game.                                                                                                                                       match hundreds of new scenery pieces, two new rides
                                                   renew the interest of existing players and       that put park guests at the heart of the action.
The Winter Update was released in December         also generate additional coverage, resulting                                                                           and new building components with Planet Coaster’s
                                                                                                    In July 2018 the Planet Coaster Vintage                               other unique themed building components.
2016 with something for all players. In addition   in new sales.
                                                                                                    Pack was launched, offering nostalgic
to new rides being added, there were further                                                                                                                              ANNIVERSARY UPDATE
                                                   In July 2017 we released our first three paid    classic coasters and rides plus authentic
improvements to streamline management                                                                                                                                     NOVEMBER 2017
                                                   downloadable content (PDLC) packs – all          period scenery that is filled to the brim
operations within parks, new scenarios, new                                                                                                                               Added the Scenario Editor, giving players tools to
                                                   three involving Universal IP – Back to the       with Victorian touches and timeless charm.
shops, new transport rides and a new snowy                                                                                                                                create their own custom scenarios and share them
                                                   Future, The Munsters, and Knight Rider.
winter theme.                                                                                       We will continue to support Planet Coaster                            on the Steam Workshop with friends.
                                                   As with Elite Dangerous, this uses a model
                                                                                                    going forwards; it has a long future ahead
The Spring Update was released in April 2017       that provides an accompanying free feature                                                                             ADVENTURE PACK
                                                                                                    of it!
and added security guard staff members             update to the base game for all players.                                                                               DECEMBER 2017
and go-kart track rides for players to use in                                                                                                                             Discover more on your jungle-themed adventure with
                                                   In September 2017 we launched the Planet          PLANETCOASTER.COM
their parks, along with more rides, coasters,                                                                                                                             thrilling rides, exciting scenery to create your own
                                                   Coaster Spooky Pack – the first paid-for
scenarios and further management                                                                                                                                          pyramids & temples, and lure your guests into ancient
                                                   expansion pack – introducing new rides, a new
improvements, as well as doubling the                                                                                                                                     traps and have them encounter some truly scary creatures!
                                                   entertainer, an all-new theme and bold new
maximum size of blueprints that can be shared
                                                   creative options. The pack enables players                                                                             STUDIOS PACK
via the Steam workshop to 4,000 pieces.
                                                   to mix and match hundreds of new scenery                                                                               MARCH 2018
The Summer Update was released in                  pieces, two new rides and new building                                                                                 Bring glitzy Hollywood glamour to your park, build the
June 2017 and added customisable firework          components with Planet Coaster’s other                                                                                 ultimate backlot tour and bring the blockbuster experience
displays and video billboards for players          unique themed building components.                                                                                     to life with spectacular stunts, dramatic effects and
to place in their parks, as well as more                                                                                                                                  rides that put park guests in the heart of the action.
rides, coasters, scenarios and further
management improvements, plus a                                                                                                                                           VINTAGE PACK
new Stars and Stripes scenery set.                                                                                                                                        JULY 2018
                                                                                                                                                                          Build nostalgic buildings and fairground-style areas
                                                                                                                                                                          using new vintage looking scenery. Have your guests
                                                                                                                                                                          try out the classic rides and traditional attractions
                                                                                                                                                                          reminiscent of old school town fairs.

                                                                                                                                                                                        FRONTIER DEVELOPMENTS PLC
                                                                                                                                                                                   ANNUAL REPORT AND ACCOUNTS 2018              11


                                                                                                                          Ongoing development
                                                                                                                          DINOSAUR UPDATE

                                                                                                                          JUNE 2018
                                                                                                                          This update introduced three new dig sites, a
                                                                                                                          cast of new dinosaurs which you can bring to

                                                                                                                          your island, and new InGen database entries.
                                                                                                                          SEPTEMBER 2018 UPDATE
                                                                                                                          On 29 August 2018 we announced a free update for
Jurassic World Evolution, launched on 12           Archipelago. Players create and manage                                 Jurassic World Evolution for release on 13 September
June 2018. It was our first self-published         their own Jurassic World as they bioengineer                           2018. The update will include enhancements to gameplay
title (although not our first game) to debut       new dinosaur breeds and construct attractions,                         including an all new Challenge Mode, more Sandbox
on PC, PlayStation and Xbox simultaneously,        containment and research facilities. Every                             options and new contract types. It will also include visual
and the first to benefit from such a major         choice leads to a different path and                                   enhancements such as sizing adjustments for certain
marketing event as the simultaneous                spectacular challenges arise when ‘life                                dinosaurs, lighting options and new viewing cameras.
launch of the latest film in the franchise,        finds a way.’                                                          Two more languages will also be added in the update:
Jurassic World: Fallen Kingdom at the start                                                                               Korean and Italian.
                                                   Jurassic World Evolution was announced
of the biggest games industry show of the
                                                   in August 2017, with pre-order announced
year – the E3 show in Los Angeles.
                                                   on 28 March 2018 for a digital launch on
The opportunity was identified using the           12 June 2018 on all three platforms. In addition,
same approach described above for Elite            physical discs went on sale for Xbox One
Dangerous and Planet Coaster. Jurassic             and PlayStation 4 on 3 July 2018 for those
World Evolution leverages our management           who still prefer physical media.
and builder game expertise, plus our unrivalled
                                                   Initial player reaction and engagement with
expertise in implementing believable in-game
                                                   Jurassic World Evolution has been very positive.
animals from games such as Dog’s Life,
                                                   On 19 July 2018 Frontier announced that
Kinectimals and Zoo Tycoon. In this case we
                                                   cumulative sales on all formats had passed
determined that being able to use the Jurassic
                                                   1 million units, just 5 weeks after the digital
World IP would significantly benefit awareness
with the most recent movie in the franchise
                                                   launch on 12 June 2018.                                                Jurassic World
released in June 2018, around the 25th
anniversary of the original movie. In fact,
                                                   Jurassic World Evolution’s first PDLC pack
                                                   was available at launch and as a bundle during
                                                                                                                          Evolution’s first PDLC
our digital launch on 12 June coincided with
the US film premiere in Los Angeles.
                                                   pre-order, and we plan to add further free
                                                   updates and paid-for content in the future,
                                                                                                                          pack was available at
Jurassic World Evolution evolves players’
                                                   as we have for our other franchises.
                                                                                                                          launch and as a bundle
relationship with the Jurassic World film
franchise, placing them in control of operations    JURASSICWORLDEVOLUTION.COM
                                                                                                                          during pre-order, and we
on the legendary island of Isla Nublar and
the surrounding islands of the Muertes                                                                                    plan to add further free
                                                                                                                          updates and paid‑for
                                                                                                                          content in the future,
                                                                                                                          as we have for our
                                                                                                                          other franchises.

                                                                                                                                        FRONTIER DEVELOPMENTS PLC
                                                                                                                                   ANNUAL REPORT AND ACCOUNTS 2018            13


A SOLID SET                                                                                                                                                    BALANCE SHEET AND CASHFLOW
                                                                                                                                                               The Company continued to run a robust
                                                                                                                                                               balance sheet during the financial year, and
                                                                                                                                                                                                                   Financial KPIs
                                                                                                                                                                                                                   Total revenue (£m)                          Operating profit (£m)

OF RESULTS                                                                                                                                                     this was further boosted by the strategic
                                                                                                                                                               investment from Tencent completed in
                                                                                                                                                               July 2017.
                                                                                                                                                                                                                                                                       18   2.8
                                                                                                                                                               Tangible assets increased to £5.0 million           37.4
                                                                                                                                                                                                                   17                                                  17                      7.8
                                                                                                                                                               (FY17: £0.7 million) as a result of the fit-out     21.4
                                                                                                                                                                                                                   16                                                  16   1.2
                                                                                                                                                               of the new leased office facility, which the        22.8
                                                                                                                                                                                                                   15                                                  15    1.6
                                                                                                                                                               Company occupied in April 2018.                     9.5
                                                                                                                                                                                                                   14                                          (1.7)   14

                                                                                                                                                               Intangible assets increased by £7.3 million
                                                                                                                                                               to £29.2 million at 31 May 2018 (FY17:
                                                                          Elite Dangerous and Planet                                                           £21.9 million) as investments in franchise
                                                                                                                                                               assets, particularly Jurassic World Evolution,      Operating margin (%)                        EBITDA* (£m)

                                                                          Coaster continue to deliver.                                                         and other intangibles exceeded
                                                                                                                                                               amortisation charges.
                                                                                                                                                                                                                   8%                                          £9.4m
                                                                                                                                                                                                                                   18     8                    	
                                                                                                                                                                                                                                                               1    9.4
                                                                                                                                                               Trade and other receivables was £6.7 million
                                                                                                                                                                                                                                   17            21            12.7
                                                                                                                                                               at the end of the period (FY17: £2.9 million)
                                                                                                                                                               with the increase largely due to pre-order
                                                                                                                                                                                                                                   16   6                      4.9

                                                                                                                                                               sales for Jurassic World Evolution. Total
                                                                                                                                                                                                                                   15    7                     6.1

                                                                                                                                                               deferred income showed a similar change             (18)            14                     14    0.3
                                                                                                                                                               for the same reason, with an increase to
                                                                                                                                                               £4.3 million (FY17: £1.4 million).
                                                                                                                                                               Trade and other payables totalled £5.9 million
                                                                                                                                                                                                                   EPS (basic) (p)                             Operating cash flow** (£m)
                                                                                                                                                               (FY17: £4.9 million) with the increase reflecting
The ongoing performance of Elite
                                                      This legacy revenue included income from a
                                                      royalty dispute which was settled in the period.
                                                                                                           Sales, marketing and administrative expenses
                                                                                                           grew to £12.8 million (FY17: £11.9 million).
                                                                                                                                                               accrued distribution costs on Jurassic
                                                                                                                                                               World Evolution pre-order sales, partly
                                                                                                                                                                                                                   9.6p                                        £(2.8)m
Dangerous and Planet Coaster delivered                                                                     Increases in marketing and facilities costs         offset by a lower level of profit related                   9.6
                                                                                                                                                                                                                           18                                     (2.8)            18
                                                      Gross profit was £24.1 million in the year                                                                                                                                               22.7                                     3.4
a solid set of financial results for the                                                                   were partially offset by lower foreign exchange     bonus accrual.                                              17                                                      17
                                                      (FY17: £27.4 million) with gross margin at                                                                                                                                4.2                               (2.7)
12 months ending 31 May 2018 (‘FY18’),                                                                     charges and a lower level of profit related
                                                                                                                                                               Cash balances increased £11.5 million during
                                                                                                                                                                                                                           16                                                      16
                                                      70.5% (FY17: 73.2%). The largest element of
following the significant step-up in                                                                       bonus accrual. The increased investment in
                                                                                                                                                               the year to £24.1 million (FY17: £12.6 million),
                                                                                                                                                                                                                           15    4.9                                               15   2.6
                                                      cost of sales is the margin payable to our
financial performance achieved in the                                                                      marketing supported the ongoing success
                                                                                                                                                               as a result of the Tencent strategic investment
                                                                                                                                                                                                                   (5.8)   14                                  (3.4)               14
                                                      digital distribution partners. The reduced
prior period (‘FY17’) which resulted                                                                       of existing franchises as well as the launch
                                                                                                                                                               of £17.7 million. Operating cash flow (operating
                                                      margin in FY18 largely resulted from the
from the launch of Planet Coaster in                                                                       of Jurassic World Evolution in June 2018,
                                                                                                                                                               profit excluding non-cash items, less investments
                                                      launch of Elite Dangerous on PlayStation 4
November 2016. The Group generated                                                                         with some of the E3 event related marketing
                                                                                                                                                               in franchises and other intangible assets)
                                                      and the release of lower margin physical
operating profits of £2.8 million (FY17:                                                                   costs falling in June 2018 (and therefore the
                                                                                                                                                               was an outflow of £2.8 million in the period        Net cash balance (£m)
                                                      disc sales of Elite Dangerous on Xbox One
£7.8 million) despite increased investments                                                                FY19 income statement).
                                                                                                                                                               (FY17: an operating cash inflow of £3.4 million),
                                                      and PlayStation 4.
in development and marketing, particularly
                                                                                                           As anticipated, the lower level of annual           with the change reflecting lower sales and          £24.1m
for Jurassic World Evolution. Cash                    Gross research and development
                                                                                                                                                               higher levels of investment.
                                                                                                           sales, lower gross profit margin and higher                                                             24.1
balances were boosted in the period by                expenses in the period were £15.9 million
                                                                                                           level of operating costs resulted in a reduction                                                        12.6
the £17.7 million strategic investment by             (FY17: £12.7 million). The majority of spend                                                             SHARE ISSUES
                                                                                                           in operating profit in the period to £2.8 million                                                       8.6
Tencent in July 2017; cash balances                   related to internal staff costs, and the increase                                                        Employees exercised options over 1,051,117          16
                                                                                                           (FY17: £7.8 million). EBITDA (earnings before                                                           10.5
at 31 May 2018 were £24.1 million.                    in the year largely reflects headcount increases.                                                        Ordinary Shares during the 12 months to             15
                                                                                                           interest, tax, depreciation and amortisation)                                                           8.6
                                                      However, outsourcing is becoming a more                                                                  the end of May 2018. Of this total, 985,517         14
TRADING                                                                                                    reduced to £9.4 million (FY17: £12.7 million).
                                                      significant cost element and accounts for                                                                were newly issued shares with the remaining
Total annual revenue was £34.2 million in
                                                      some of the increase in total gross spend            A corporation tax credit of £0.7 million was        65,600 resulting from transfers under
the period (FY17: £37.4 million) with both
                                                      in the period. Capitalisation of development         recorded in the year (FY17: a charge of             arrangements with the Employee
Elite Dangerous and Planet Coaster continuing                                                                                                                                                                      *	Earnings before interest, tax, depreciation and amortisation
                                                      costs on franchise assets and other intangibles      £0.1 million). The credit resulted from the         Benefit Trust.
to deliver sustained revenue from both                                                                                                                                                                             **	Operating profit excluding non-cash items, less investments
                                                      accounted for £13.4 million in the period            release of a prior year accrual following
sales of the game and PDLC. The ongoing                                                                                                                        In July 2017 the Company completed a                    in franchises and other intangible assets
                                                      (FY17: £9.6 million), with development costs         completion of the FY17 tax return. The
performance of both titles reflects Frontier’s                                                                                                                 strategic investment with Tencent Holdings
                                                      of Jurassic World Evolution being the largest        Group benefits from Video Games Tax Relief
approach to sustaining and nurturing existing                                                                                                                  Limited. Tencent acquired 3,386,252 newly
                                                      element. Amortisation charges grew to                and has accrued tax losses estimated to be
franchises. It is worth noting that Elite Dangerous                                                                                                            issued Ordinary Shares at 523.2p per share,
                                                      £6.0 million for the period (FY17: £4.5 million)     in excess of £10 million as at 31 May 2018.
achieved its highest annual revenues to date                                                                                                                   generating proceeds of £17,716,870.
                                                      reflecting a full year of amortisation charges for
in FY18 following a successful launch on                                                                   Profit after tax for FY18 was £3.6 million
                                                      Planet Coaster. Net research and development
PlayStation 4 in June 2017.                                                                                (FY17: £7.7 million) and basic earnings per
                                                      expenses recorded in the income statement                                                                ALEX BEVIS
                                                                                                           share was 9.6p (FY17: 22.7p).
Self-publishing revenue accounted for 95%             in the year were therefore £8.5 million                                                                  CFO & COMPANY SECRETARY
of sales (FY17: 97%) with the balance being           (FY17: £7.6 million), being gross spend, less                                                            5 September 2018
related to our legacy work-for-hire business.         capitalised costs, plus amortisation charges.

                                                                                                                                                                                                                                                   FRONTIER DEVELOPMENTS PLC
                                                                                                                                                                                                                                              ANNUAL REPORT AND ACCOUNTS 2018                   15


The Group faces competitive, strategic and financial risks that are
inherent in a rapidly growing emerging market. The executive team
maintains the risk register and escalates the key risks for further
consideration at full Board level on a regular basis.
The key business and financial risks for the Group are set out below:

Description                                                Mitigation                                                                Change   Description                                               Mitigation                                                               Change

Staff availability                                         The Group continues to prioritise direct recruitment and outreach.                 Currency risk                                             The Group has expanded its revenue sources and there has been a
                                                           We have visibility of our future needs via a regularly reviewed plan                                                                         subsequent increase in revenue from non-GBP currencies in the last
If the Group does not have the correct numbers             of record and undertake analysis of potential bottlenecks. We seek                 The majority of Frontier’s resources are located          few years. Whilst the longer-term economic risks of selling globally
of people with the correct skills available,               to minimise days lost to sickness via healthcare benefits and general              in the UK and therefore the Group’s operating             cannot be avoided, forward contracts have been used to gain certainty
the execution of its business plan will                    morale and wellbeing initiatives. The Group is a Tier 2 visa sponsor,              costs are mainly in Pounds Sterling (GBP). Sales          over the rate of conversion of foreign currency income. The Group
be compromised.                                            to facilitate its objective to employ the best possible people from the            are global, in multiple countries and in multiple         will continue to review the most effective way of managing
                                                           worldwide talent pool. In 2017 we expanded our HR team to add                      currencies. The Group therefore has short-term            transaction and translation risks.
Links to strategy   INVEST   DEVELOP   PUBLISH
                                                           dedicated talent acquisition resources. We also balance internal                   transaction and translation risks, in addition to the
                                                           and external resources through outsourcing. Brexit is an obvious                   longer-term economic risk of developing in the UK
                                                           concern in respect of sourcing and retaining talent from the EU,                   and selling worldwide. The largest exposure is
                                                           and we continue to monitor this issue.                                             the US Dollar (USD).
                                                                                                                                              Links to strategy   INVEST   DEVELOP   PUBLISH

Staff retention                                            Whilst there will unavoidably be some level of staff turnover, the
                                                           Group believes that its attractive project portfolio, talented staff
Staff departures could create staff and key skill/         and good quality leadership make Frontier a place where talented                   Growth management                                         In order to mitigate the risk, the Group has invested in suitable
experience shortages and compromise the                    people want to build their careers. We use our business success                                                                              training for key staff and key internal systems. The Group’s Board
execution of the Group’s business plan.                                                                                                       The Group’s future success will depend on its             includes experienced Non-Executive Directors who ensure risks are
                                                           to deliver benefits to our people, and the Group is undertaking a
                                                                                                                                              ability to manage and fund its anticipated expansion      managed regularly and objectively. The Group prudently manages
Links to strategy                                          programme of improving incentives and leadership skills which
                    INVEST   DEVELOP   PUBLISH                                                                                                through the utilisation of internal resources together    its liquidity by monitoring forecast cash inflows and outflows both
                                                           is intended to further enhance its attractiveness as an employer.
                                                                                                                                              with the realisation of external opportunities such       in the short and medium terms, as well as its long-term investment
                                                                                                                                              as outsourcing, commissioning and publishing.             needs and opportunities.
                                                                                                                                              These external opportunities may also include
Cybersecurity                                              We review our security provisions regularly and believe them to be
                                                                                                                                              acquisitions. Such expansion and investment are
                                                           in accordance with industry best practices.
A breach of security could take many forms and                                                                                                expected to place demands on management, support
could significantly impact the business and impair                                                                                            functions and working capital. If the Group is unable
its self-publishing plans.                                                                                                                    to manage and fund its expansion effectively, its
                                                                                                                                              business and financial results could suffer.
Exposure includes that of failure of security at our
partners, including Amazon, Valve, Microsoft and Sony.                                                                                        Links to strategy   INVEST   DEVELOP   PUBLISH

Links to strategy   INVEST   DEVELOP   PUBLISH

                                                                                                                                              Market disruption                                         Investing in its own COBRA technology and self-published games
                                                                                                                                                                                                        allows the Group to continue to innovate, and we seek to make our
Execution risk                                             Frontier has a long history of strong project execution. Nevertheless,
                                                                                                                                              The Group operates in a fast-moving industry              processes and business decisions agile and well informed so we can
                                                           it is vital Frontier continues to push itself and so avoid complacency
The Group has transitioned from a work-for-hire                                                                                               where competitive products, larger competitors,           anticipate and exploit such changes. We believe this risk is mitigated
                                                           to retain its excellent execution record. It must continue to challenge
model to a multi-franchise self-publishing model.                                                                                             new market trends or disruptive technology may            by our track record of execution on new platforms and the flexibility
                                                           its own internal assumptions and those about the industry trends to
Whilst successful project execution is very important                                                                                         emerge which reduce its ability to compete and            demonstrated by the diverse range of video games we have
                                                           remain at the forefront of the industry. The Group remains confident
under both models, inherently both the rewards                                                                                                execute its business plan.                                successfully developed in the past.
                                                           that it can use its experience and expertise to continue to deliver on
and the risks under a self-publishing model are            the product, technology, commercial and operational aspects that                   Links to strategy   INVEST   DEVELOP   PUBLISH
probably greater.                                          support its strategy.
Links to strategy   INVEST   DEVELOP   PUBLISH

                                                                                                                                               This strategic report was approved by the Board and signed on its behalf by

Change in risk
                                                                                                                                               ALEX BEVIS
   No change        Increase      Decrease                                                                                                     CFO & COMPANY SECRETARY
                                                                                                                                               5 September 2018

                                                                                                                                                                                                                                              FRONTIER DEVELOPMENTS PLC
                                                                                                                                                                                                                                         ANNUAL REPORT AND ACCOUNTS 2018          17



DAVID GAMMON                            DAVID BRABEN                             DAVID WALSH                               JONNY WATTS                          CHARLES COTTON                          ALEX BEVIS                             JAMES MITCHELL
David joined the Board                  David was the founding                   David joined the Board                    Jonny joined the Board               Charles joined the Board                Alex joined the Board                  James joined the Board
in February 2012                        shareholder of Frontier                  in September 2001                         in February 2012                     in July 2016                            in April 2017                          in September 2017
                                        in January 1994
David has widespread experience                                                  David has over 25 years’ experience       Jonny has over 30 years’             Charles has a successful worldwide      Alex has over 17 years’ experience     James is Chief Strategy Officer
in developing and building technology   David is the co-author of the seminal    of engineering and commercial             experience in gaming. He joined      track record in high-growth             in high growth technology              and Senior Executive Vice
based businesses. Since 2001, David     Elite title and has over 35 years’       management roles in high-growth           Frontier Developments in 1998        technology companies. He was a          businesses. Alex joined Frontier       President at Tencent. He is
has focused on finding, advising        experience in the games industry.        technology companies. In 2001             from Sensible Software. Over the     Supervisory Board member of             from Xaar plc (FTSE: XAR), a           responsible for various functions,
and investing in UK technology          David is also one of the six founding    David joined Frontier from ARM,           course of his career he has been     Euronext Amsterdam listed Tele          world leader in industrial inkjet      including the strategic planning
companies. David is CEO founder         trustees of the Raspberry Pi             the FTSE/NASDAQ listed                    involved in all aspects of the       Atlas which was sold to TomTom          technology, where he was Chief         and implementation, investor
of Rockspring, an advisory and          Foundation, a charity which aims         microprocessor IP licensing               creation of over 30 published        for €2.8 billion in 2008; Executive     Financial Officer from February        relationships, and mergers,
investment firm, which focuses on       to inspire a new generation of           company where he served for               games such as Sensible Soccer        Chairman of NASDAQ listed               2011. Prior to this, Alex rose to VP   acquisitions and investments
early stage technology companies.       children to get interested in computer   six years, helping to grow the            and Cannon Fodder, along             GlobespanVirata Inc.; and CEO of        Finance of Cambridge fabless           activity. James joined Tencent in
Other current positions include         science through the use of a low         company and, as Director of               with Frontier’s suite of games,      Virata Corp. which he took public       semiconductor company CSR plc          2011. Prior to this James was a
non-executive directorship at           cost credit-card sized computer          Software Systems, setting up              including RollerCoaster Tycoon 3,    on NASDAQ in 1999 and achieved          during a 10 year period during         managing director at Goldman
Accesso Technologies plc,               that plugs into your TV and              a division of the company to              Elite: Dangerous, Planet Coaster     a market capitalisation of $5 billion   which CSR listed on the main           Sachs in New York, leading the
Raspberry Pi Trading Limited and        a keyboard.                              facilitate adoption of the architecture   and Jurassic World Evolution.        in 2000.                                market, and grew significantly         bank’s communications, media
he acts as an advisor to Marshall                                                in key target market segments.                                                                                         both organically and through           and entertainment research
                                        David is also a member of                                                          Jonny’s titles span the full range   Charles is an active member
of Cambridge (Holdings) Limited.                                                                                                                                                                        acquisition. Alex qualified as a       team, which analysed internet,
                                        Cambridge Angels, investing and          David is President of Frontier            from independent development         of the Cambridge technology
In 2017 David was elected as an                                                                                                                                                                         Chartered Accountant with              entertainment and media
                                        supporting early stage companies.        Developments Inc, Frontier’s              to 400-person projects, encompass    community holding a number of
Hon Fellow of the Royal Academy                                                                                                                                                                         Deloitte in Cambridge prior            companies globally. James
                                        David is a Fellow of the Royal           wholly owned US subsidiary.               a diverse range of genres, and       strategic, technical and financial
of Engineering and in 2018 a member                                                                                                                                                                     to joining CSR in 2000.                received a degree from Oxford
                                        Academy of Engineering, was                                                        together have been enjoyed by        roles including as a director
of the Scale Up Institute.                                                       At the AGM in October 2018 our                                                                                                                                University and holds a Chartered
                                        honoured with a Fellowship of                                                      over 40 million people worldwide.    of Cambridge Enterprise
                                                                                 Chief Operating Officer, David                                                                                                                                Financial Analyst Certification.
Previous experience includes            BAFTA in 2015, the recipient of                                                                                         and chairing the Scientific
                                                                                 Walsh, will transition to a               Jonny holds zoology and computer
Non-Executive Director (NED)            three honorary doctorates (from                                                                                         Advisory Panel for Cambridge
                                                                                 Non-Executive Director role in            science degrees and is an active
and advisor at artificial general       Abertay University, The Open                                                                                            Innovation Capital. He also
                                                                                 order to focus his attention on           member of BAFTA, serving as a
intelligence company DeepMind           University and York University),                                                                                        founded and is chairman of
                                                                                 a start-up opportunity outside            judge for nine years. He is
Technologies Limited, advisor to        and was honoured with an OBE                                                                                            Cambridge Phenomenon Ltd. and
                                                                                 of the games industry.                    committed to supporting future
Hawkwood Capital LLP, NED at            in the 2014 Birthday Honours                                                                                            has co-authored two books; The
                                                                                                                           developers, including initiatives
real-time location technology           for services to the UK computer                                                                                         Cambridge Phenomenon 50 Years
                                                                                                                           such as Brains Eden.
specialist Ubisense Trading             and video games industry.                                                                                               of Innovation and Enterprise and
Limited, NED at internet TV                                                                                                                                     The Cambridge Phenomenon:
specialist Amino Technologies plc,      Committee membership                                                                                                    Global Impact.
NED at smart metering and               Nominations
software company BGlobal plc                                                                                                                                    Committee membership
and acting CFO at internet                                                                                                                                      Audit
specialist Envisional Solutions                                                                                                                                 Nominations
Limited. Earlier in his career,                                                                                                                                 Remuneration
David worked as an investment
banker for over 15 years.
Committee membership
Audit (Chair)
Nominations (Chair)
Remuneration (Chair)

                                                                                                                                                                                                                                                                          FRONTIER DEVELOPMENTS PLC
                                                                                                                                                                                                                                                                     ANNUAL REPORT AND ACCOUNTS 2018   19
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