Kindred counts cost of US withdrawal as FDJ demands Norway exit ahead of takeover

Kindred Group Plc will continue to prioritise enhancing operating efficiencies and cost controls, with shareholders set to vote on the future of the Stockholm online gambling group.

The focus on cost controls is required as Kindred published its Q4 and full-year 2023 results this morning, revealing period corporate losses of £19m (Q42022: £52m). Full-year accounts see profits ‘before tax’ decline to £59.5m from £126m on FY2022 results.

Year trading sees Kindred post its second consecutive year of profit declines since FY2021 results of £295m Total revenue increased by 2% in Q4 2023 to £313m from £305m in Q4 2022, and by 13% for the full year to £1.211bn from £1.068bn in 2022.

Closing 2023 trading, Kindred maintained performance above market expectations in the Netherlands, UK, and Romania. However, Q4 earnings were dragged by regulatory impacts in the markets of Norway and Belgium, as Kindred’s EBITDA slumped to GBP £20m (Q42022: GBP £67m).

Period trading saw the number of active customers recorded on Kindred brands decrease by 8% to 1,686,662 (Q42022: 1,827,881). The decline was linked to comparatives against 2022’s Winter World Cup in Qatar.

Despite setbacks, Kindred achieved its financial target of generating £200m in underlying FY2023 EBITDA, maintaining growth in core western European markets undergoing regulatory changes.

Group CEO, Nils Andén, detailed: “Looking back at an eventful and busy year, I can conclude that Kindred is establishing a stronger and more robust foothold in core markets across Europe.”

“Our performance demonstrates that Kindred is able to grow profitably within highly regulated markets.”

Andén noted that Kindred will continue to execute its “dedicated growth plan for markets in Europe and Australia”, as its operations are refocused following the “controlled exit from North America and the reduction in headcount being actions taken to improve profitability”.

Kindred’s balance sheet detailed a significant increase in FY2023 betting duties totaling £318m (FY2022: £272m). The tax increase impacts Kindred performance in “absolute terms and as a percentage of gross win revenues (GWR),” due to a higher revenue proportion concentrated in locally regulated markets, notably after re-entering the Dutch market in July 2022.

Cost controls saw the Stockholm operator reduce its FY2023 marketing expenditure by £37m (FY2022: £42m), as Kindred lowered Q4 cost of sales to £136m.

Closing FY2023 accounts, Kindred booked £26m in additional items impacting corporate profitability related to the closure of its North American business and its termination of contracts – as ongoing negotiations will possibly affect final costs.

As declared on 22 January, the board of Kindred recommended the SEK 130 per share offer put forward by La Française des Jeux (FDJ) – a €2.6bn cash offer to acquire Kindred outright.

Investors were further informed: “FDJ does not intend to materially alter the operations of Kindred following the implementation of the offer, other than the exit from the Norwegian market and those other non-regulated markets with no ongoing path to regulation. This is in line with Kindred’s ambition to be a locally regulated operator.”

Due to the public cash offer from FDJ, no dividend is proposed for the financial year 2023, as any dividends before the offer settlement would reduce the offer price.