In a recent announcement on April 26, Kindred Group revealed that it is conducting a comprehensive review of its operations, focusing on maximizing value for its shareholders.
The company has enlisted the services of financial advisors, PJT Partners, Morgan Stanley & Co International plc, and Canaccord Genuity, to assist in this review process.
Kindred Group, however, did not specify a timeline for the completion of the review, and they also cautioned that the outcome remains uncertain.
The company has stated that it will only make further announcements when its board reaches final decisions.
This strategic review comes on the heels of Kindred Group’s release of its financial results for the first quarter of the 2023 fiscal year.
The company reported growth in both revenue and net profit, attributing this positive performance to its cost optimization initiatives, which have been actively pursued since the beginning of the year.
CEO Henrik Tjärnström emphasized the importance of cost control, noting that no expense was considered “sacred” during the cost-cutting efforts.
These initiatives have begun to yield results in the first quarter of 2023.
Tjärnström highlighted that 2023 is an investment year, as Kindred Group continues to recruit key talent to strengthen its proprietary sportsbook platform, a crucial driver of value creation.
This recruitment drive, along with annual salary reviews, contributed to an increase in salary costs for the quarter.
Regarding financial performance for Q1, Kindred Group reported a revenue of £306.4 million, representing a 24.2% year-on-year increase.
B2C gross winning revenue (GWR) accounted for £297.3 million of this total, with the re-entry into the Dutch market playing a significant role.
The breakdown of B2B GWR showed that casino and games contributed 55%, sports betting 40%, poker 3%, and other games 2%.
Geographically, 58% of GWR came from Western Europe, 26% from the Nordics, 11% from Central and Eastern Europe, and 5% from other markets.
Additionally, B2B revenue from the acquired Relax Gaming business in October 2021 saw significant growth, reaching £9.1 million, an increase of 111.6% compared to the previous year.
While Kindred Group reported strong revenue growth, cost of sales rose by 18.7% to £134.4 million, and administrative expenses increased by 26.2% to £82.9 million.
Nevertheless, the company managed to achieve an operating profit of £32.2 million, representing a 288.0% year-on-year increase.
After accounting for financial costs and taxes, the pre-tax profit for the quarter reached £30.4 million, a 300.0% year-on-year increase.
Earnings before interest, tax, depreciation, and amortization (EBITDA) for Q1 were also strong, rising by 115.0% to £47.3 million.
CEO Henrik Tjärnström expressed optimism about the company’s performance, citing positive signs across their business.
He also acknowledged the temporary challenges posed by local licensing transitions within the industry but emphasized the benefits of having a stable business model in locally regulated markets.
However, it’s worth noting that Kindred Group faced a £7.1 million fine from the Great Britain Gambling Commission in Q1 due to social responsibility and anti-money laundering failures at two of its brands, 32Red and Platinum Gaming.
Both brands received official warnings from the Commission, and Kindred Group acknowledged the historical nature of these failures and their non-alignment with the Commission’s expectations regarding affordability.
In conclusion, Kindred Group’s strategic review aims to deliver value for shareholders while the company continues to make positive strides in its financial performance, driven by cost optimization initiatives and strong growth in various segments of its business.