Show of strength from award-winning video games developer Sumo

Sumo Group, the award-winning video games developer which is to be taken over by Chinese tech giant, Tencent Holdings, said all four of its divisions are trading well.

Sumo said that the global video games market remains strong
Sumo said that the global video games market remains strong

The Sheffield-based firm said its pipeline of new business development opportunities remains in excess of £500m and continues to grow. Sumo said it is pleased with the performance of video game, Hood, in the relatively short period since its launch in May.

The firm said that the global video games market remains strong and the group is performing in line with expectations. The firm said all four divisions of Sumo - Sumo Digital, Pipeworks, Atomhawk and Secret Mode - are trading well. Pipeworks has opened its second studio, Timbre Games, in Vancouver.

The group’s total head count at the end of June was 1,203 up from 1,043 at the end of December and up from 1,155 at the end of May. Of this total (which includes 13 developers who joined Sumo following the acquisition of PixelAnt Games in January) 989 are direct employees.

At the end of June, Sumo had net cash of £4.4m. Sumo spent £5.5m on March 31 funding the purchase of 1.54m Sumo shares through the Employee Benefit Trust following the exercise of options under the LTIP.

Sumo said its acquisition pipeline remains strong and it is evaluating new acquisition opportunities in line with its strategic priorities and growth strategy.

The Sumo board said it is very pleased with the progress that the group is making.

Trading in the half year is in line with expectations and the firm said it is well positioned to continue to take advantage of the strong growth in the global video games market. The Sumo board said it views the group’s prospects for the current year and beyond with confidence.

On July 19, the boards of Tencent Bidco and Sumo announced that they had agreed the terms of a recommended all-cash acquisition at 513p per share. The deal is subject to shareholder approval.

Katie Cousins, an analyst at Shore Capital, said: “The board has stated the acquisition is in the best interests of the shareholders and given the valuation we agree the deal should be accepted.

“For those shareholders who wish to retain exposure in the video games sector, we would suggest building exposure in Team17 or tinyBuild.”