Kindred ups operating costs to accommodate for licensed realities

Publishing its unaudited 2019 interim report (January-June), Stockholm-listed Kindred Group Plc has detailed confidence in its long-term prospects, as the company continues to adjust to new regulated market demands across its operating territories.

Despite competing against a tough comparative period featuring World Cup 2018 trading, Kindred continued its positive revenue momentum by recording year-to-date group gross winnings of £450 million – up 5% on YTD 2018’s £426 million.

Updating investors, Kindred governance underlined the group’s commitment to ‘focused growth within locally licensed markets’, which has resulted in the company adjusting to ‘margin pressures from higher betting duties’.

Maintaining confidence in its long-term corporate strategy, Kindred has supported its position undertaking a period of high marketing activity which has contributed to H1 2019 operating costs of £212 million (2018: £182m).

“During the first quarter of 2019, the new licensing regulation in Sweden has resulted in significant short-term margin pressure driven by higher betting duties but also higher marketing as we are investing for the longer term,” detailed Henrik Tjärnström, Chief Executive of Kindred Group.

Regulated market adjustments and higher operating costs resulted in Kindred posting an H1 2019 period EBITDA of £61 million, down 31% on YTD 2018’s £89 million.

Closing H1 2019 trading, Kindred governance declared group profits of £27.5 million, down 50% on YTD 2018’s £55 million.

“Total marketing for the Group, as a percentage of Gross winnings revenue, came in at 29 per cent and was at its highest level since 2013 when compared to other second quarters in non-major football tournament years,” added Tjärnström.

“We also continue to invest heavily in technology and other operating expenditure in order to drive our future growth. Whilst this may reduce profitability in the short term, we are confident that, as we have previously proven, this will drive future growth in Gross winnings revenue and profits, particularly in locally licensed markets.

“Other significant items affecting the quarter were the planned investments in the USA, both in marketing and operating expenses, that contributed GBP 1.6 million of negative EBITDA in the quarter.”

Kindred Group Plc – Unaudited H1 2019 Overview