Shares in London are marginally ahead in morning trading. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Keywords Studios (KWS) has acquired Canadian business Snowed In Studios for up to CAD$4m. Snowed In provides engineering and co-development services to the video games industry, and significant clients include Ubisoft and Bethesda. Management at Keywords said Snowed In will “add strength and scale” to its recently-launched engineering service line. For the year to January 2018, Snowed In saw revenues of CAD$2.4m and cash profits of CAD$0.8m. Buy.
Sirius Minerals (SXX) has signed two new long-term off-take agreements for its polyhalite product, bringing peak contracted sales volume to 5.7 million tonnes per year (Mtpa). The new deals, with Chinese customers Eiliseng and YSA, for 1.2Mtpa and 0.8Mtpa respectively, replace 1Mpta of existing demand from Dian Huang and have been struck at what the company has described as “existing agreements”. Vindication of Sirius’ POLY4 potash was a key milestone in our buy call, which we maintain. Buy.
After a number of uncertainties and delays, Personal Group (PGH) is finally firing on all cylinders. PG Let’s Connect, the group’s salary sacrifice business, had an encouraging start to the year, having previously been affected by delays from major customers. However, Royal Mail is now running the scheme for its employees, while PG has also been appointed to the Crown Commercial Services framework, one of the biggest in the country. The core insurance business is trading well, and further progress has been made in rolling out the Sage employee benefits scheme. Buy
Bango’s (BGO) end user spend was £220m for the half-year to June, against £92m a year earlier. The mobile payments group’s second-half EUS should be “significantly higher” than the first. Revenue growth continues as anticipated, though pricing models have been launched for some recent contracts to incentivise moving EUS from other channels to Bango’s. Operational costs from running Bango’s platform are unchanged from prior years. Total administrative expenses rose slightly to integrate the recently-acquired Audiens business, and drive marketing in Asia and mobile operator launches in Latin America. June’s cash position was £5.8m, against £4.8m in December 2017; Bango says it’s fully-funded to reach group profitability. The shares were down 2 per cent this morning. Recommendation under review.
Yesterday Unilever (ULVR) announced plans to buy back €6bn (£5.4bn) worth of shares. The move is meant to help the consumer goods giant maintain a net debt to cash profits ratio of 2 times and return the after-tax proceeds from the disposal of the spreads business. The company has already completed the first round of buybacks, worth €3bn, and will commence buying the remaining €3bn to target today. Shares are up more than 1 per cent in early trading. Buy.
Shareholders in Royal Mail (RMG) overwhelmingly rejected the remuneration of directors at yesterday’s annual general meeting. Just over 70 per cent voted against the pay deals, with those voting representing around 61 per cent of issued share capital. Retiring former chief executive Moya Greene is set to receive more than £900,000 as termination payout. New boss Rico Back will have a base salary of £640,000, a 17 per cent increase on Ms Greene’s. The vote is not binding, so both will receive their sums, but the company will have to come back with a new pay policy next year. Shares are down 1 per cent in early trading. Sell.
KEY STORIES:
Acacia Mining (ACA) is in a holding pattern, as first half results today testify. Interim chief executive Peter Geleta said the group continues to “manage through the current uncertainty in the operating environment and the on-going disputes with the Government of Tanzania”, though it should be noted that the management of those disputes is not being led by Acacia. Were that not the case, one might expect the shares to be up today; costs are now trending in the right direction, the group has returned to free cash flow, the upper end of the 2018 production forecast range is now in sight, and net cash position edged higher to $63.3m in the period.
OTHER COMPANY NEWS:
The Canadian subsidiary of Anglo American’s (AAL) De Beers group has agreed to acquire Toronto-listed Peregrine Diamonds (TSX:PGD), for C$107m ($81m). Peregrine owns the high-grade Chidliak diamond project, in the sparsely-populated Nunavut region of Canada. The deal, signed yesterday, has been struck at a 50 per cent premium to Peregrine’s share price at close on Wednesday (18 July).
Budget accommodation chain easyHotel (EZH) has acquired a freehold site in central Dublin. The location currently has planning permission for 96 bedrooms, but management reckon there is potential to extend to 130 bedrooms. The site has been acquired for €9.0m (£8.1m)and is expected to have a total investment cost of €18m and will be funded using cash. Shares are down 2 per cent in early trading.
