LONDON (ShareCast) - (Sharecast News) - Videogame developer Frontier Developments saw its shares dip on Wednesday after a fall in revenue and increased investment in research and development cut annual profits.
For the year ended 31 May, the company reported revenue of £34.2m, down 9% from the previous year, and operating profit of £2.8m, down 64%, as its operating margins shrank from 21.0% to 8.0%.

The firm attributed the decline in margins to the release of its 'Elite Dangerous' title on the Playstation 4, as well as lower margin physical disk sales of the game on the Playstation 4 and Xbox One consoles.

Research and development expenses of £15.9m, up 25.0%, were mainly due to staff costs and outsourcing relating to the recently released 'Jurassic World Evolution' title.

David Braben, chief executive of Frontier, said: "Jurassic World Evolution has achieved our biggest launch to date, and we are now very well positioned with three successful revenue generating franchises."

The firm had cash and cash equivalents of £24.4m at 31 May, up from £12.6m at the same point the year before.

"We will continue to support and enhance all three of our existing franchises (Elite Dangerous, Planet Coaster and Jurassic World Evolution), and we'll be making a number of exciting announcements about each franchise in due course," said Braben.

Braben added that the firm is now developing the first instalment in a fourth franchise, based on the developer's own un-announced IP, with a targeted release in 2020 while two other franchises are in an early development stage.

Frontier's shares were down 9.06% at 964.00p at 1254 BST.

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