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Keywords Studios Material US acquisition for games Company Events 15-Dec SSP Group; FY20 Results development services SEGRO Acquiring control of Parisian Urban Logistics business Sofibus Economic View Aggressive government support for businesses and workers continues FBD Holdings Interim Report on Differential Pricing Practices Review

Economic Events Ireland 15-Dec Trade Balance Oct20 22-Dec PPI Nov20 Wholesale Price Indsx Nov20

United Kingdom 15-Dec ILO Unemployment Rate Oct20 16-Dec CPI Nov20 PPI Nov20 Retail Price Index Nov20 17-Dec BoE Official Rate 18-Dec Retail Sales Nov20 22-Dec GDP Q3 Exports Q3 Imports Q3 Current Account Q3

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Keywords Studios Material US acquisition for games development services Keywords Studios has announced the acquisition of High Voltage software, a full-service AAA game developer based in Illinois and New Orleans for up to $50m. The team comprises over Recommendation: Hold Closing Price: £24.70 100 development staff add c. 10% to KWS group game development services headcount. It

adds scale in areas where KWS can grow and where it is not competing for development Patrick O'Donnell resource with its client pool, in line with normal strategy. The studios were established in the +353-1-641 6013 early 90's and have worked with top tier clients on projects including Fortnite, Saints Row, [email protected] Mortal Kombat, Hunter the Reckoning, The Conduit, and Lego Racers. Post this transaction, KWS has spent c.£40m in up front terms and closer to £90m including earn outs in deals announced this year, underlying a growing confidence in the ability to execute at the upper end. The acquisition multiple on that basis looks like 5.1x on FY21 EBITDA of $9.75m and adds c. 11% to our FY21 Adjusted EBITDA forecasts. The consideration includes $23.7m in cash, $9.75m in shares initially with $16.5m deferred based on FY21 targets.

Overall, this deal underlines an ability to execute on a pipeline following the material Gnet acquisition recently and tells us KWS is focusing on the higher value, earlier stages of game development which will be helpful for group margin longer term. We will be upgrading Adj EBITDA forecasts by 11% on FY21 to account for the transaction. Furthermore, it gives KWS that solid footprint in AAA full game development that they have been looking for to establish its position as the go to player in game services development.

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SEGRO Acquiring control of Parisian Urban Logistics business Sofibus

SEGRO (SGRO:LN) have agreed to purchase the controlling interest (an additional 74.9% on Recommendation: Hold top of the 19.5% it already owns) in a French urban logistics investment company Sofibus Closing Price: £9.09 Patrimoine (SFBS:FP). The deal is valued at €179m. On completion of this transaction, SEGRO will then file a simplified mandatory offer for the remaining share capital of Sofibus Colm Lauder +353-1-641 6042 (this is expected in Q1 2021). The transaction allows a SEGRO to increase its presence in the [email protected] Paris urban warehouse market significantly. This transaction increases the size of SEGRO's portfolio in Paris by approximately one-third. SEGRO will finance the acquisition from cash

and its existing debt facilities. Closing of the transaction is expected by 21st December 2020, at which point SEGRO will own 94.4 per cent of Sofibus.

SEGRO will file a simplified mandatory tender offer for the Sofibus shares not owned by SEGRO (6.6% after this transaction), at the same price of €313.71 per share, and intends to implement a squeeze-out procedure in order to delist the Company from Euronext Paris. Sofibus's main asset is Parc d'Activités des Petits Carreaux, a 149,900 sq m urban warehouse park in Bonneuil-sur-Marne, an established commercial area close to central Paris. The portfolio also includes 17 hectares of adjacent development land and an office building in Central Paris. Within the Income Statement for the financial year ended 31st December 2019, the Company reported passing rent of €12.6m and EBITDA of €9.7m. With an equity value (of the 100%) of €238.5m, this implies a yield of 5.0%, a consider cheaper route to accessing growing Parisian urban logistics market.

This is a logical transaction for SEGRO as it ramps up its exposure to the thriving Parisian urban logistics market. By acquiring through a corporate transaction, SEGRO is getting access to a strong portfolio of assets at a yield that is considerably cheaper than buying directly on the open market.

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Economic View Aggressive government support for businesses and workers continues

The extraordinary level of financial support provided to Irish businesses and workers as a Dermot O’Leary result of the COVID-19 pandemic is laid bare by the latest set of statistics from the +353-1-641 9167 [email protected] government.

According to the Department of Enterprise Trade and Employment, a total of €1.8bn in funding has been provided to businesses in the form of 26 different schemes that have either been initiated or expanded since the pandemic began in March. Unsurprisingly, the take-up of grants has been greater than that of the lending schemes. The largest of these grants schemes is the “Restart Grant” which offered grants of up to €42,500 to reopen their premises. In total, this scheme has provided close to €600m in grants over its two iterations. The Future Growth Loan Scheme, which provides longer-term cheap loans up to €3m has been relatively successful, approving €509m out of a total envelope of €800m. The €2bn Credit Guarantee Scheme (CGS), which only begun in September, has had relatively poor take-up of just €57m thus far.

The major support for workers impacted by the pandemic has come through the Pandemic Unemployment Payment (PUP). €90m will be paid out to 306K people this week, down from €103m and 348K people last week. The big change this week comes as a result of the reopening of businesses such as hotels, restaurants and hairdressers.

The Irish government has been among the most aggressive in the world in terms of fiscal supports for businesses and workers. With a return to normality now in sight, it is vital that these supports continue to act as a bridge to get the economy safely to that point.

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FBD Holdings Interim Report on Differential Pricing Practices Review

Back in September, the Central Bank concluded the first phase of its Review of Differential Recommendation: Buy Pricing in the Motor & Home Markets and issued a letter to the insurance sector. Closing Price: €7.28 Differential pricing relates to customers with a similar risk profile being charged different premiums. Yesterday, the CB published its Interim Report which includes initial observations Eamonn Hughes +353-1-641 9442 on its market analysis phase and the commencement of its quantitative analysis and [email protected] consumer insight phase, where significant work is ongoing. As per the preliminary analysis in September, the Central Bank observed that the majority of firms do utilise dual pricing both

in the car and home insurance markets. It noted that there are significant differences between what different groups of consumers pay relative to their expected cost and also that, in general, consumers tend to show a clear preference to stay with an existing insurance provider. As it is not a discretionary purchase, it is frequently considered in negative terms and/or with a lack of interest, exacerbated by its complexity. Its research showed there was more inertia in the home insurance market than the motor market.

The interim report noted that given that differential pricing can be associated with both benefits and costs for consumers, completion of this detailed analysis is essential in order to ensure a full market perspective, evidence-based conclusions, and appropriately calibrated regulatory interventions. Phase 2 of the Review is ongoing and the Central Bank is expected to complete its 3-stage review of 11 insurers in 2021, with some suggestions for Q321.

Charging new and existing customers different prices is not unusual in other industries (broadband, mobile phones, front & back book mortgages etc). Whilst the Central Bank is prohibited from playing a role in pricing per se, the practice of using data to target specific existing customers will play a central role in this review. The Central Bank’s interim review follows the final report by the FCA in the UK (in late September) on its market study into the pricing of home and motor insurance in that market. The FCA is proposing that when a customer renews, they pay no more than they would if they were new to their provider, through the same sales channel. Firms will be prevented from increasing the renewal price to consumers over time (known as price walking), so basically for existing customers, their renewal price would be no higher than the equivalent new business price. The FCA notes that insurers target price increases on consumers who are less likely to switch. Presumably, the Irish Central Bank will also consider some of the proposals put in place in the UK as a possible outcome to its ongoing review.

For context, the FCA identified 6m policyholders in the UK that were paying high or This document is intended for the sole use of Goodbody Stockbrokers and its affiliates very high margins in 2018 and would save £1.2bn if they paid the average premium for their risk, out of total UK motor and home insurance premium pool of £18bn, so c.7%. Qualitative findings like improving pricing transparency may ultimately play a central role in any recommendations by the Central Bank here, but until then, market participants are likely to be nervous of any quantitative measures that drive down pricing and returns across the industry.

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