Games developer moves away from debt in ‘significant’ year which ended in IPO
A Sheffield-based games developer which made its debut on the stock exchange in December has reported a rise in revenue and moved away from its previous £52m debt during ‘significant’ year of change.
Sumo Digital this morning reported its annual results to December 31 2017, which included the details of the IPO it undertook on December 21 which valued the business at £145m when it entered the AIM.
It revenues for the year stood at £30.6m, up from £24.1m in the previous year. Its cash position for 2017 was reported as £12.4m – a turnaround from its debt position of £52.2m in 2016. Pre-tax losses for the year were £28m, up from £21m in 2016.
Speaking to TheBusinessDesk.com this morning, the firm said that underlying trading figures showed a true picture given the IPO which completed at the end of the reporting period. Its adjusted EBITDA for 2017 stood at £8.4m, up from £6m in 2016.
Its adjusted revenue excluding pass-through stood at £28.6m in 2017, up 40% from £20.5m in 2016 while adjusted pre-tax profit was reported as £7.5m, a 42% rise from £5.3m in 2016.
Carl Cavers
Carl Cavers, CEO, said: “The year culminated in the IPO and a lot of effort was put into that from everybody.
“We spent 2017 re-structuring the leadership team as we wanted to get the firm in the right shape to push and get ready for the IPO and move away from debt.”
Cavers added: “The year under review was a significant one. Having completed a secondary management buyout, backed by Perwyn LLP in September 2016, the business entered 2017 energised and with a clear plan to deliver strong organic and acquisitive growth.
“Not only were both these objectives met but the year culminated with the successful admission of shares in Sumo Group plc to AIM on 21 December 2017.”
The business will mark its 15th anniversary this June and has grown consistently, becoming one of Europe’s largest independent videogames developers.
In June 2017 the firm acquired Atomhawk, a multi award-winning visual design company, servicing the games, film and visual effects industries. This acquisition expanded its integrated video game service.
It recently moved the Atomhawk Canada operations into a larger site in Vancouver.
Cavers said the IPO has meant that the firm could move away from debt and look to grow further in the future, in a market that he described as “extremely exciting.”
Speaking to TheBusinessDesk.com this morning, he said that the games market was growing at that Sumo Digital were looking to capitalise on that trend. He said: “People want premium experiences and you can’t get that from mobile devices. The core demographic has changed, which means the average age of a gamer is now 35; people do not stop playing as they get older and therefore the market continues to grow.
“It’s about having the right content development to succeed and grow. Often there is a team of over 100 people working on a video game development at Sumo. We need to create quality products.”
Cavers said: “Having been through three changes of ownership in the last three years, we are looking forward to the stability that this platform brings and the opportunity to focus wholly on the development of the business.
“Sumo Group is a people business offering premium videogame development services to its clients. Following the IPO, we have a strong balance sheet and a structure with which we can incentivise our people, as we continue to drive growth in the business.
Cavers added that the firm’s biggest challenge was recruiting and retaining the right talent. He said the firm was investing heavily in this and working closely with universities.
“”We are in a very exciting market. South Yorkshire has a huge heritage in video game development and we will look to strengthen our position in Sheffield and in our other locations,” he added.
The firm entered 2017 with 382 people operating from three locations in two countries. The year concluded with Sumo Group plc employing 489 people operating at five locations in three countries.
Post year end, the Group extended its operations further when it took over the Newcastle studio of CCP Games, bringing a further 34 people to the business and an additional studio location.
