Owing to the nature of the video games market, and the creative and developmental services that it provides, Sumo (SUMO) says it will “always serve a relatively small number of clients at any given time”. Even so, its client-base has become less concentrated – helped by recent wins, including Apple (US:AAPL) at the end of 2018.
Indeed, Sumo is now working on two 'own-concept' games for Apple’s new games-subscription platform ‘Apple Arcade’ – including Little Orpheus which stemmed from games developer The Chinese Room, acquired by Sumo last August.
Overall, the group delivered a solid full-year performance. Strong top-line growth fed through to a decent rise in the gross margin to 47.6 per cent from 46.4 per cent, or from 45.4 per cent excluding royalty income – an improvement that Sumo attributes to escalating demand for premium development and creative services, and to an efficient cost structure.
A net cash outflow of £6.4m was as expected – reflecting the likes of IPO-related fees and the timing of video-games-tax-relief receipts, along with receipts tied to one contract for which cash is receivable after the game is released.
House broker Zeus Capital expects adjusted pre-tax profits of £12.3m and EPS of 6.7p in 2019, up from £9m and 4.9p in 2018.
| SUMO (SUMO) | ||||
| ORD PRICE: | 137p | MARKET VALUE: | £206m | |
| TOUCH: | 136-139p | 12-MONTH HIGH: | 187p | LOW: 96p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 29p* | NET CASH: | £3.7m | |
| Year to 31 Dec^ | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 16.1 | 0.03 | na | na |
| 2015 | 21.6 | 2.39 | na | na |
| 2016 | 24.1 | -2.11 | -0.9 | na |
| 2017 (restated)** | 28.6 | -28.0 | -389 | nil |
| 2018 | 38.7 | -0.48 | -0.2 | nil |
| % change | +35 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
*Includes intangible assets of £22.4m, or 15p a share **2017 numbers have been restated, in keeping with 2018 numbers, to exclude pass-through revenues and costs on which Sumo does not make a margin; 2016 figures are unaudited and shown on a pro-forma basis and EPS on a post-IPO capital structure. ^IPO in Dec 2017; 2014 and 2015 figures taken from Aim admission document | ||||
