Malta-headquartered Kindred Group has announced a pre-tax profit of £59.5 million (€69.7 million) for 2023, a 53 per cent decrease from the £126.8 million (€148.5 million) registered at the end of the previous year. This was largely due to its decision to exit the North American market.
The results were published in the major online gambling operator’s Annual and Sustainability Report for the financial year ended 31st December 2023. The company provided the figures in the report in Great British Pounds (GBP).
The drop in profitability came despite an increase in revenue generated in 2023, with this amounting to £1.2 billion (€1.4 billion), an improvement of 13.3 per cent over 2022 (£1.1 billion or €1.3 billion).
Cost of sales was also on the rise, going up by 9.4 per cent to £530.7 million, largely due to increases in betting duties.
Total administrative expenses also increased by 12.2 per cent to £318.2 million from the previous year’s £283.6 million. In terms of these expenses, while marketing costs and other operating expenses remained relatively stable, salaries sharply increased to £164.1 million from the previous year’s £140.8 million.
In 2023, Kindred Group’s Board of Directors initiated a strategic review of the group, including a potential sale of the business. This led to changes in management, including the appointment of Nils Andén as interim CEO, a decision that was made permanent last month. The group had also decided to exit its North American market, a move that will be fully completed by the end of 2024’s second quarter.
One of the major reasons behind the decrease in pre-tax profit is the substantial rise in costs tied to market closure and contract termination related to the exit, with this amounting to £33.8 million, significantly higher than the £2.5 million recorded in 2022. Kindred Group explained that certain contract negotiations are still ongoing and thus costs included are expectations of the final costs and could be subject to change.
Additionally, Kindred Group had £20.8 million in impairment losses on assets in 2023, with this also being tied to the decision to close its North American operations. These charges are made up of impairment of intangible assets, impairment of property, plant and equipment, and impairment of right-of-use assets.
Finance costs totalled £11.3 million, almost double 2022’s £5.9 million, while finance income grew from £1.4 million to £2.6 million in 2023.
Total assets for 2023 contracted slightly to £1.2 billion, while cash and cash equivalents for the year amounted to £240.3 million.
The strategic review also prompted a public cash offer in January 2024 for Kindred Group from French national operator La Française des Jeux, an offer that the group’s Board of Directors unanimously recommended shareholders accept. The process is expected to be completed in 2024’s final quarter.
As a result of this pending sale, any dividends issued prior to the settlement of the offer would lead to the offer price being reduced accordingly. Due to this, Kindred Group’s Board of Directors did not propose a dividend for the end of financial year 2023.
Commenting on the performance, Mr Andén remarked that Kindred Group achieved “success in locally regulated markets” during 2023.
“In what has been a very significant year for Kindred, I would like to begin by thanking my colleagues across the group for their unwavering support and dedication throughout the year. Kindred is on a positive trajectory, and I am very excited about the path ahead,” he affirmed.
Mr Andén described Kindred Group as an “extremely successful growth story over the years,” stating that it has been able to come together as a team and be committed to “transforming gambling by being a trusted source of entertainment that contributes positively to society.”
Despite the changes tied to the strategic review, he said that the underlying business “continued to perform well in key markets and remedial action was taken to address underperformance in other markets.”
He also highlighted that the decision taken in 2023 to exit the North American market in 2024 came after the path to profitability in the continent proved to be “unreasonably long and significantly more investment was required in order to build sufficient scale.” “Our decision to exit North America in November 2023 was painful, but correct,” Mr Andén clarified.
Looking ahead, he remained confident that Kindred Group will have a fruitful summer, particularly given that a number of major sporting events will be held.
