Kindred Group Plc has updated investors on a period of intense activity, in which its business has undertaken a
Publishing its H1 2023 interim results, the group said it continues to focus on “gaining operational efficiencies to increase profitability”.
Headline growth saw Kindred register Q2 group revenues of £307m, up 29% on Q2 2022 comparatives of £238m. Total revenues for the first half of 2023 stood at £613m, up 26% on H1 2022’s results of £485m.
Further improvements saw Q2 B2C gross winnings increase by 28% to £298m (Q2 2022: £234m) – reflecting the group’s strong return to the Dutch market, since 3 July 2022 following its temporary suspension since 1 October 2021.
Investors were notified: “Excluding the Netherlands, Gross winnings revenue for the second quarter of 2023 increased by 1%(in line in constant currency) from the same period in the prior year.”
Overall, H1 gross winnings from B2C activities stood at £595m, up 25% on 2022 comparatives of £475m, as Kindred maintained headline growth while overcoming stringent regulatory adjustments in the markets of Belgium and
Of significance, the Stockholm-listed firm underlined that gross win revenues from locally regulated (taxed) markets reached an all-time high in Q2 2023 – which now generate 82% of corporate revenues.
Interim CEO, Nils Anden, commented: “The ability to maintain the positive business momentum in a time of change is a testament to the strong talent, leadership and commitment across the organisation as well as the proven business model put in place over the years.
“Continued focus on a strong customer offering has resulted in revenue increasing 29% to £307m compared to the same period last year. As revenue increases, we see the true scalability of our business model.
Dutch returns gain on Nordic declines
Providing a regional breakdown, Kindred Western Europe markets’ (WE) Q2 performance registered a 51% uplift in gross winning to £181m – as noted largely due to resumed activity in the Netherlands.
Excluding Dutch results, GWR slightly declined by 2% to £116m, reflecting a regulatory downturn in Belgium (-28%). Elsewhere, Western European results were propped up by improved UK (+8%) gross win results, in which Kindred cited that it had adjusted well to the market’s new compliance demands.
In its home market of the Nordics, Q2 2023 saw a 4% decrease in GWR to £71.5m (Q22022: £74m), primarily due to a 7% decline in casino GWR, while sports betting GWR managed to increase by 6%.
Period trading reflected restrictions imposed on Norwegian customers and additional safer gambling measures in Sweden put pressure on revenues. However, Denmark saw a notable 19% increase in GWR driven by growth in both sports betting and casino activities.
In North America, GWR increased by 17% to £8.4m, reflecting improved results in the states of New Jersey and Pennsylvania.
As it stands, Kindred’s geographic makeup sees Western Europe markets represent the majority of GWR at 60%, followed by the Nordics at 24%, CES at 11%, and other regions at 5%
Efficiencies to Come First
H1 trading saw Kindred implement the first phase of its strategic business review to enhance bottom-line earnings and profitability.
Administrative expenses for year trading stood at £163m, in which costs were attributed to ‘selective headcount growth’ needed to build the company’s proprietary sportsbook platform.
Further comparatives saw group YTD cost-of-sales increase to £268m, reflecting an outlay of £162m in betting duties in licensed markets.
Q2 marketing costs totalled £52m, slightly higher (+£2m) than the same period last year, as Kindred placed a strategic focus towards its re-entry into the Netherlands.
Citing improved operating efficiencies, the group reported a 120% increase in Q2 underlying EBITDA results to €56m (Q22022: €26m) – as Q2 trading benefitted from 7% increase in EBITDA margin to 18%.
YTD underlying EBITDA for 2023 stands at £105m, as Kindred remains on track to outperform full-year 2022 EBITDA results of £129m – but remains behind interim 2021 EBITDA outcome of £212m.
H1 trading saw Kindred account for net losses of £6.7m in items affecting profitability related to market closure and contract terminations in the markets of Austria and Germany.
Gross profit rose to £173.8m, a 31% increase compared to Q2 2022, driven by “increased revenues and efficient cost of sales management”. The growth in profits continued into the first half of the year with a gross profit of £344.8m, up 30% from H1 2022.
Closing H1 trading, Kindred governance maintained its underlying EBITDA guidance for the full year 2023 of at least £200m.
Interim CEO Anden concluded: “It has been an extraordinary quarter in many ways. Our business is showing strong performance in most markets and across product segments.
“With 82% of our revenue derived from locally regulated markets, it remains as important as ever to influence a stable, level, and sustainable operating environment.
“Our business is showing strong performance in most markets and across product segments. At the same time, a strategic review has been initiated by the board and changes have taken place within the executive management team. “
