Kindred Group Presents New Financial Targets and Provides Detailed Strategy Update

VALLETTA, Malta, September 14, 2022 /PRNewswire/ — On today’s Capital Markets Day at London, UKKindred Group CEO Henrik Tjarnstrom and financial director John Wilbyjoined by members of the management team and senior executives, will provide a detailed update on Kindred’s strategic direction, operations and financial performance.

As part of the Capital Markets Day, Kindred Group will present new financial objectives for 2025 consisting of:

  • Turnover above £1.6 billion

  • 21-22% underlying EBITDA margin

  • Distribution policy of ~75 to 100% of free cash flow (after M&A)

Kindred Group plc (Kindred) will hold a Capital Markets Day (CMD) at London, UKToday at 12:00 BST. During the event, the CEO Henrik Tjarnstrom and members of the leadership team will present Kindred’s long-term strategic direction and priorities for the coming years.

Priorities include:

  • Gain more market share by being a trusted source of entertainment in Kindred’s existing core markets by Europe and Australiawhich are expected to grow at a CAGR of 7% between 2021 and 2026.

  • Develop a strong position in the Netherlandsa market that is generally expected to grow significantly in the coming years according to H2 Gambling Capital, thanks to the efficient completion of a rigorous licensing process, trusted brand recognition and local experience.

  • Leverage strategic investments such as the acquisition of Relax Gaming and the development of the Kindred Sportsbook (“KSP”) platform, where increased flexibility, scalability and access to unique product content will differentiate Kindred from the competition .

  • Building on the strong market base established in North America as this region matures and the focus on customer experience increases.

“I am delighted to share a more detailed view of our strategic direction and the priorities we have set at Kindred. We have been a driving force in transforming the industry and understood early on the requirements to succeed in a complex environment. and regulated locally. We now have the essential building blocks in place and I am fully confident in the direction we are headed,” says Henrik Tjärnström, CEO of Kindred Group.

“It is also very encouraging to see the progress made in the development of our Kindred Sportsbook platform, with key milestones already achieved, towards a select market launch towards the end of 2023,” says Henrik Tjärnström, and continues. “The entry into the Netherlands also exceeded our expectations and we are on track to achieve our ambition of a 15% market share by the end of the year. »

2025 financial objectives

Kindred will present detailed information on how the Group is accelerating the execution of its strategy, including the new financial objectives that the Board of Directors has decided.

The expected revenue increase builds on Kindred’s focused strategy and the use of significant growth opportunities in existing markets. Kindred operates a balanced portfolio of markets at different stages of maturity, providing opportunities to benefit from both expected underlying market growth and further market share gains. Netherlands should be a big contributor over the next few years, along with better product differentiation and unique content offering.

Kindred’s focus on increased product control and scalability is fundamental to generating profits in locally regulated markets. Expected revenue growth, combined with continued cost optimization and scalability, should support Kindred’s objective of achieving an underlying EBITDA margin of 21-22% in 2025. The investment in KSP will drive scalability and is expected to generate a positive contribution to cash flow in 2025. Total costs for Kindred’s sports betting business are expected to decrease by approx. 30% after full implementation, which is expected beyond 2025.

The Board of Directors has decided to review the previous dividend policy. Kindred’s new dividend policy is to generate a stable ordinary dividend in absolute terms denominated in sterling, paid in two equal tranches in the second and fourth quarters. In addition, Kindred will supplement dividends with share buybacks.

The total payment of dividends and redemptions will be based on an assessment taking into account Kindred’s financial condition, capital structure and future investment needs, including acquisition opportunities. The total dividend and redemption payout ratio is expected over time to equal approximately 75-100% of free cash flow. Free cash flow is defined as operating cash flow excluding movements in customer balances, less cash flow from investing activities (including acquisitions) and lease debt payments.

In addition to financial targets for 2025, Kindred Group will also present guidance on the share of gross earnings revenue from locally regulated markets and capital expenditure.

Kindred’s strategic objective is to generate sustainable and profitable growth in locally regulated markets. During the first half of 2022, the revenue share of locally regulated gross earnings reached 78% and over the next few years this share is expected to gradually increase and reach around 90% in 2025.

As a percentage of revenue, Kindred’s capital investments have been around 4% in recent years. Kindred will continue to invest in developing and improving the proprietary, bespoke technology platform to improve, among other things, customer experience and data analytics and respond to changes in local licensing requirements. Kindred will also continue to invest in the development of KSP and despite these ongoing development projects, capital investments are expected to remain relatively stable as a percentage of revenue.

Trading update and indicative guidance for the third quarter of 2022

As part of the CMD, Kindred provides further clarity on performance for the period July 1 to September 11 and indicative one-time guidance for the third quarter of 2022. The trade update shows solid revenue development from gross earnings, driven by high market activity. .

The average daily gross earnings income for the Group, up to and including September 11, 2022, was £2.9m12% (12% in constant currency) lower than the daily average for the whole of the third quarter of 2021. Excluding the Netherlandsthe daily average of the Group’s gross earnings, up to and including September 11, 2022has been £2.6 million6% (7% in constant currency) above the daily average for the whole of the third quarter of 2021.

Following a rigorous licensing and regulatory review process, Kindred launched in the Netherlands on July 4 and, during the period from going live to September 11 inclusive, the average daily gross earnings for the Netherlands has been £317,000gradually increasing throughout the period.

Based on activity levels and sports betting margin for the remainder of the quarter, Kindred estimates third quarter 2022 revenue to be in the range of £270 at 280 million.

Underlying EBITDA for the third quarter of 2022 is estimated within the range £37 to 42 million (Q3-2021: £84.8m).

Presentation and video recording of the Capital Markets Day

Presentation material will be available at www.kindredgroup.com/investors/capital-markets-day-2022/ towards 1:00 p.m. CEST on September 14, 2022and the video recording of the day will be available on www.kindredgroup.com later the same day.

This disclosure contains information that Kindred Group is required to make public pursuant to the EU Market Abuse Regulation (EU No. 596/2014). The information has been submitted for publication, through the contact person, the 14-09-2022 07:30 CET.

For more information:
patrick courtmanDirector – Corporate Development and Investor Relations, +46 723 877 438
Linda LythInvestor Relations Manager, +46 767 681 337
[email protected]

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