‘Buoyant’ market sees listed games development firm move into profit

Sheffield-headquartered listed games development firm  Sumo Group has reported pre-tax profits of £1.3m in a half-year which the CEO described as “buoyant.”

Publishing its unaudited half year results for the six months ended 30 June, the firm said revenue increased 7.5%, to £20.8m from £19.8m in the same period last year. Pre-tax profits of £1.3m were reported – a rise from the £2.1m pre-tax loss last year. 

During the period, Sumo Group continued to deliver on its stated strategic objectives: to expand; to win new clients; to develop complementary new revenue streams; and to develop its own IP – both self-funded and co-funded.

It increased headcount by 15% from 592 at 31 December 2018 to 679 at 30 June 2019. It also acquired Red Kite Games in January 2019, adding 27 people to the group.

Its new studio also opened in Leamington Spa to focus on the mobile games market.

Sumo said it had strong cash and working capital performance post period end, with net cash standing at £8.9m on 31 August 2019 (30 June 2019: £4.3m).

Post period end, it also further increased in headcount to 711 at 31 August 2019. Sumo added that it also now has a strong acquisition pipeline and was on track to meet market forecasts for FY19.

Carl Cavers, Chief Executive Officer of Sumo Group, said: “H1 19 has been another successful six months for Sumo Group. We have grown the business and delivered financial results in line with our expectations. Our market remains buoyant and we are seeing many exciting opportunities.

“We love to make great games. This is our primary motivation and we are very pleased with the games in our current development pipeline and with the new client partnerships we are building.

“The Group’s business model is developing in a way which allows us to capitalise on our flourishing own-IP capabilities, whilst maintaining an appropriate risk profile. Sumo Group has exceptional people and I am very grateful to the whole team for the passion and dedication they continue to demonstrate.   

“The foundations of our business comprise both exceptional talent and valuable proprietary systems. These, combined with the tremendous growth opportunities presented by our markets, give me confidence in the financial prospects of the Group for this year and beyond.”

Sumo also announced that Ian Livingstone CBE, a Non-Executive Director of the Group, has been appointed as Non-Executive Chairman with effect from today.

Livingstone, who joined the Board of Sumo Digital in September 2015, is one of the founding fathers of the UK games industry and was made a Commander of the British Empire (CBE) in 2013 for his services to the computer gaming industry.

His most notable roles include Co-founder and Joint Managing Director of Games Workshop, the developer and publisher of Warhammer, Executive Chairman of Eidos, publishers of Lara Croft: Tomb Raider and other blockbuster video games, and Chairman of Playdemic, developers of hit mobile game Golf Clash.

He sits on the Board of several important industry bodies, including UKIE, and public and education Boards including the National Citizens Service and Aspirations Academies Trust. Livingstone is also a games designer and international best-selling children’s author.

Ken Beaty, who joined the Board as Chairman of Sumo Digital in 2014 and has chaired the Group since its successful IPO and Admission to AIM in December 2017, steps down from the Board and leaves the Company with effect from today.

Livingstone, the Group’s new Non-Executive Chairman, said: “I am delighted to assume the role of Chairman at Sumo Group. The business is flourishing and the industry is forecast to continue to grow rapidly over the coming years. With its talent, technology and creativity, exceptional management, long-established client relationships and industry-leading development and delivery capabilities, the Group is ideally positioned to benefit from this global growth. I look forward to supporting the Group as it continues to broaden and strengthen its reach and relationships.

“Ken was instrumental in the growth and development of Sumo Digital, as a privately-owned business, and played a key role in the preparation of the Group for its successful flotation on AIM. Since then, the Board has benefitted considerably from his counsel, practicing excellent governance and providing clear strategic guidance for the business. On behalf of all the directors, I thank Ken for his contribution and commitment to the business over the last five years.”

Beaty, added: “I am tremendously proud of everything that Sumo has achieved during my five years as Chairman and am delighted that Ian has agreed to succeed me in this role. Ian can only be described as an industry guru. His knowledge, relationships and skills are precisely what is needed for the next stage in Sumo Group’s development and his strategic and commercial input will enable the Group to increase its already well-established presence in the ever-expanding global video games market.

“Alongside a highly capable and talented executive team and two experienced Non-Executive Directors, I know that I am leaving the Board, and the business, in capable hands.  Sumo Group has a very bright future and, as a shareholder, I look forward to watching its continued growth and development with great interest.”

As Chairman, Ian Livingstone will cease to be a member of the Audit and Remuneration Committees of the Board and will assume the chairmanship of the Nomination Committee.