Date: 08.02.2023

by Mateusz Mazur

Kindred releases 2022 financial results and announces measures aiming to improve its profitability

Kindred Group released its annual financial report and announced that after weaker-than-expected results in the fourth quarter it decided to take measures to improve its profitability.

£1,068.7 million total revenues

Total revenue of the group in Q4, from both B2B and B2C operations, was £305.5 million. Revenue from gross win (B2C) increased by 23 percent to £295.1 million. Growth was also recorded in EBITDA, which increased by 42% to £39.1 million.

Kindred reported also that profit before tax was £51.9 million in Q4, positively impacted by the reassessment of the fair value of Relax Gaming’s contingent consideration of £40.8 million. Profit after tax amounted to GBP 50 million, while profit per stock reached GBP 0.23.

The number of active customers of Kindred increased by 25 percent to 1,827,881 (1,461,009) which, excluding the Netherlands, represents an increase of 12 percent.

In the entire 2022, total revenues from B2B and B2C activities recorded a decline and amounted to £1,068.7 million. In 2021, it was £1 259.6 million. Revenues from gross win (B2C) also declined 17 percent to £1,042.9 million (1,255,2 in 2021). EBITDA reached £129.2 million, representing a 61 percent decline in comparison to the previous year, when it amounted to £332.1 million.

The group’s pre-tax profit in 2022 was 126.8 GBP million, which also represents a significant decrease in comparison to 2021, when Kindred reported a pre-tax profit of 338.4 GBP million. Profit after tax was GBP 120.1 million, and earnings per stock were GBP 0.54. The group recorded significant decreases in this area.

The Board of Directors proposed a dividend payment of £0.345 per stock/SDR, equivalent to a total dividend of approximately £75 million.

CEO Henrik Tjärnström comments the fourth quarter of 2022

“Despite growth in our core markets and continued encouraging performance in the Netherlands, following re-entry to the market in July 2022, the fourth quarter fell significantly short of our ambitious expectations.”

“Several core markets continued to perform well during the quarter, with solid activity in France, Sweden, the UK and the Netherlands contributing to total revenue of GBP 305.5 million, an increase of 25 per cent compared to the same period last year. The Netherlands continued to exceed our expectations with daily average Gross winnings revenue of GBP 0.6 million, and we remain firmly on track to being the number one operator in 2023.”

“While most core markets have performed well, Belgium has been impacted by regulatory changes with increased requirements on customer duty of care and responsible gambling limitations affecting revenue negatively. In Norway changes made to our offering also had a negative impact. In both markets this follows the pattern seen previously as a result of regulatory changes and we are working hard to mitigate the impact, with the expectation that revenues will stabilise in the coming quarters and return to growth over time.”

“The non-satisfactory performance during the fourth quarter, attributed to these one-off items as well as the headwinds in Belgium and Norway, have led to actions being taken to further improve profitability. These include reducing losses in North America, re-prioritising investment projects and further optimising the Group’s operating expenses to improve scalability, and we expect these actions to materially lower our growth in operating expenses.”

“With 81 per cent of our Gross winnings revenue coming from locally regulated markets in the fourth quarter, contributing to a fact-based dialogue and being a trusted speaking partner to regulators and policy formers is a top priority for us. The Sustainable Gambling Conference held in Amsterdam on 19 October 2022, and our “journey towards zero”, with 3.3 per cent of revenue from high-risk customers in the fourth quarter (3.8 per cent in the third quarter) are important activities for us to provide a transparent and honest debate.”

“2022 has been a difficult year in many ways, not only for Kindred. However, while the geopolitical uncertainty and cost-of-living challenges remain, the actions now taken and a large customer database from the fourth quarter will strengthen our path towards our 2025 financial targets.”