Sumo seeks deals as lockdown boosts video games

Sheffield-based video gaming firm Sumo Group plc said on Tuesday it will continue to look for acquisitions as it announced final results for the year ended December 31, 2019, which it said were “slightly ahead of market expectations.”

Sumo Group said revenue increased 26.6% to £49 million and it reported a statutory profit before tax of £7.4 million compared to a 2018 loss of £900,000.

Total headcount at Sumo Group increased 29% to 766.

“We have a strong pipeline of acquisition opportunities, ranging in activity, size and location, and are actively pursuing a number of these opportunities,” said Sumo.

“We remain keen to acquire owner-managed businesses, where the vendors remain with the business post acquisition and where we can use our listed shares to provide attractive ongoing incentive arrangements.”

Sumo Group CEO Carl Cavers said: “The group entered 2020 in great shape and global demand for our services remains strong.

“The video games market is forecast to grow at 9% CAGR over the next three years and early indications show this increasing as COVID-19 ‘lockdown’ measures affect our leisure activities.

“Whilst March was challenging for the group operationally, as we transitioned to remote working, our people have risen to the challenge and are adapting well to their new working routines.

“The business continued to press ahead throughout this disruption and our earnings visibility on contracted or near contracted development fees for FY20 has increased further in the last few weeks to approximately 73%. 

“It is still too early to estimate accurately the financial impact of the pandemic on the group.

“However, our low-risk business model, strong balance sheet and robust liquidity position, with £24.0m cash (net cash £14.0m) at 20 April 2020, provide firm foundations on which to withstand the challenges.

“I am pleased to report that we are not using any furloughing arrangements, nor do we expect or intend to do so.  

“Whilst there will inevitably be some impact from the pandemic on the group’s performance in FY20, the directors remain confident in the group’s strategy and its ability to continue delivering strong returns for stakeholders in the longer term.”