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News & Tips: Keywords Studios, Focusrite, Kier & more

Equities look set to end the week on a downbeat note
December 21, 2018

Shares in London are in the red again with the Santa rally clearly not happening this year. Click here for The Trader Nicole Elliott's latest thoughts on the markets. 

IC TIP UPDATES:

Two important bits of news for Keywords Studios (KWS) today. The first is the acquisition of Canadian video game marketing group Sunny Side Up, for CAD5.9m and shares; the second is a trading update – which suggests full-year revenues and adjusted pre-tax profits will rise 65 and 61 per cent, respectively. That’s “in the range of analyst forecasts”, and a boost to shareholder sentiment – which appears to have collapsed recently. Under review.

Audio and music products specialist Focusrite (TUNE) has bucked the trend among retail stocks with a positive trading update this morning. At today’s annual general meeting, executive chairman Phil Dudderidge is expected to tell investors that since full-year results on 20 November, trading has been upgraded from “broadly similar to the prior year” to “ahead of the comparative period”. The shares have responded in kind, and are now up 6 per cent. Under review.

KEY STORIES:

Investor appetite for the rights issue by Kier (KIE) was conspicuous by its absence, with just 38 per cent taken up by shareholders. But as the issue was fully underwritten by banks and brokers, Kier secured the £250m it was seeking to raise.

Plastics packaging group RPC (RPC) has extended the deadline by which US private equity group Apollo Global can make an offer to 5pm on Friday 18 January. Peel Hunt believes this latest extension of the “put-up or shut-up” arrangement will be the last, given Apollo has access to due diligence materials and discussions are said to be at an advanced stage. The shares are unmoved today.

Anglo American (AAL) has restarted operations at its Minas-Rio iron ore mine, after the full inspection, repair and upgrade of a 529km slurry pipeline connecting the mine to the port. Production was halted in March, after the commodities group identified what it then described as a “minor leak”, but will now ramp up to 1.2 million tonnes of iron ore per month, pending the award of certain licenses. The cost of the shut-down is also set to result in an underlying loss before interest, tax depreciation and amortisation of $320m for 2018.

OTHER COMPANY NEWS:

As if its various transactions weren’t already complicated enough, Savannah Petroleum (SAVP) has today announced the acquisition of a further 55 per cent interest in Midstream Accugas, the sale of a 25 per cent stake in the Seven Energy Uquo Gas business and Accugas to Africa Infrastructure Investment Managers for a combined $70m, a revision of term sheets with lenders to Accugas, the proposed acquisition of the Creek Town to Calabar pipeline, and the addition of a new power station customer for Accugas. And breathe. Though the shares are up 12 per cent this morning, Savannah will not receive funds from AIIM, nor access the cash from Seven Energy, until the deal completes. Panmure Gordon analyst Colin Smith believes this factor “is likely to raise increased questions about the company’s funding position and may partly explain the delay in the Niger appraisal programme”.