Sunday 22 September 2019

Keywords in new acquisition, as profits expected to be at bottom end of forecasts

Keywords Studios CEO Andrew Day
Keywords Studios CEO Andrew Day
Ellie Donnelly

Ellie Donnelly

Irish video-game company Keywords Studios has acquired Sunny Side Up Creative from its founder Thomas Giroux for a consideration of CAD$5.9m (€3.8m).

A total of CAD4.75m (€3m) is being paid in cash on completion of the deal, and the rest through the issue of 60,179 new ordinary shares in Keywords.

The shares will be issued to Mr Giroux on the first anniversary of the acquisition, and will then be subject to orderly market provisions for a further 12 months.

Based in Quebec, Canada, Sunny Side Up produces marketing assets for game publishers and developers including game trailers, key art assets and motion graphic production. 

Meanwhile, the group expects adjusted profit before tax for 2018 to be around €37m on revenues in the region of €250m (around €258m on a constant currency basis), which would represent increases of 61pc and 65pc on the prior year respectively.

According to Joe Quinn, analyst at Davy Stockbrokers, this is at the bottom end of consensus forecasts, and 8pc below Davy’s forecast of €40.4m.

"We believe that while the stock has corrected 50pc from its high in August, this update will result in further share price weakness given the implied lower organic growth and margins," Mr Quinn said.

"Today’s statement would imply that like-for-like growth has remained flat in the second have of the year," he added.

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