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Kindred unveils bold financial targets for 2025

| By Richard Mulligan
The Kindred Group has unveiled a target of £1.6bn in annual revenue by 2025 and an updated financial strategy, amid its leading shareholder’s push for the business to be sold.
FDJ Kindred

The Nasdaq Stockholm-listed group, whose brands include Unibet and 32Red, has revealed new financial targets and priorities ahead of its Capital Markets Day in London later today (Wednesday). These include the new revenue target as well as an ambition to achieve underlying EBITDA margin of 21-22% through continued cost optimisation and scalability, and a distribution policy of 75-100% of free cash flow (after M&A) by 2025.

Kindred said the expected revenue increase – 27.1% higher than its total revenue figure for 2021 of £1.26bn – would be achieved via growth in existing markets.

It has unveiled the targets after revealing a 32.2% decline in revenue during H1 2022, criticism from its largest single shareholder, Corvex Management, and reports that representatives have contacted a number of operators and private equity groups in an attempt to sell the business.

“Kindred operates a balanced portfolio of markets in different stages of maturity, providing opportunities to benefit from both the expected underlying market growth and further market share gains,” the group said in a statement. “The Netherlands is expected to be an important contributor during the coming years along with improved product differentiation and unique content supply.”

Priorities for the business include gaining further market share in its existing core markets in Europe and Australia, which are expected to grow by 7% annually between 2021 and 2026.

It will also look to develop a strong position in the Netherlands, a market which it recently re-entered after a nine-month absence due to licensing requirements that devastated its performance in the early part of 2022. Kindred said trusted brand recognition and local experience would assist its growth in the Netherlands.

Other priorities include leveraging strategic investments such as supplier Relax Gaming, which it recently acquired, and the development of its own sportsbook platform.

It will also look to grow its presence in North America.

“I am delighted to share a more detailed view of our strategic direction and priorities we have set out at Kindred,” said Henrik Tjärnström, chief executive of Kindred Group, in a statement.

“We have been a driving force in the transformation of the industry and understood early on the requirements to succeed in a locally regulated and complex environment. We now have critical building blocks in place, and I am fully confident in the direction we are taking.

“It is also very encouraging to see the progress being made in the development of our Kindred sportsbook platform, with key milestones already achieved, towards a selected market launch around year-end 2023.

“The entry into the Netherlands has also exceeded our expectations and we are well under way to reach our ambition of a 15% market share by the end of the year.”

After a poor H1 2022, Kindred today said its performance so far during Q3 “shows a solid gross winnings revenue development driven by high activity across markets”.

While average daily gross winnings revenue for the period from 1 July to 11 September was 12% lower than Q3 2021, it was up 6% when excluding the Netherlands. Kindred said daily gross winnings revenue for the Netherlands has increased gradually throughout the period, and it estimates the revenue for the third quarter of 2022 to be in the range of £270m-280m.

In August, activist investor Corvex Management – which has pushed the board of Kindred to pursue a sale – became the largest shareholder of the operator. It also asked to be involved in the nomination of its next board of directors.

At the time, Corvex founder Keith Meister said: “We look forward to working on the newly comprised nomination committee with representatives of Kindred’s other largest shareholders and Kindred chairman Evert Carlsson. In our view, the committee should seek to nominate directors with a mandate to maximise long-term, risk-adjusted value for all Kindred shareholders.”

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