Henrik Tjärnström CEO - Kindred Group · 8 0 100 200 300 400 500 600 700 800 900 1,000 1,100...

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Henrik TjärnströmCEOQ2 2017

26 July 2017

© Kindred Group plc 2017

• Financial results Q2• Business overview• Summary Q2 2017

OutlineOutline

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Financial results

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© Kindred Group plc 2017

“

Q2 2017

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Strong organic growth in both Gross winnings revenue and EBITDA for the second quarter”

Q2 2017 Key Report Highlights

© Kindred Group plc 2017

Underlying EBITDA

GBP 33.4m(+52%)

Gross winnings revenue

GBP 166.6m(+32%)

Sports betting

turnover

GBP 1.2bn(+28%)

Earnings per share

GBP 0.090(+53%)

Active customers

1,171,166(+3%)

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4

249.0

156.6153.6

Gross winnings revenue

© Kindred Group plc 2017 7

76.5 76.1122.4 153.2

77.1 80.5

126.6

166.680.4 86.1

142.3

78.0111.4

152.8

2012 2013 2014 2015 2016 2017

Q1

Q2

Q3

Q4

GBPm

226.7268.0

312.0354.1

544.1

319.8

Gross winnings revenue from mobile

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GBPm

0

20

40

60

80

100

120

140

Q12013

Q2 Q3 Q4 Q12014

Q2 Q3 Q4 Q12015

Q2 Q3 Q4 Q12016

Q2 Q3 Q4 Q12017

Q2

+52%

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Q2 2017 P&L FX impact v Q2 2016

© Kindred Group plc 2017 9

SEK 11.26111.797 4.5%NOK 10.88811.847 8.1%EUR 1.1631.272 8.6%DKK 8.6479.460 8.6%

Q2 2017Q2 2016Avg rate Movement

GBPmGWR increase 12.1CoS / Opex increase -7.6FX loss on operating items -0.4EBITDA FX impact Q2 2017 4.1FX loss on loan repayment -0.0FX loss on other items below EBITDA -0.1Profit before tax impact 4.0

AUD 1.7051.927 11.5%

Weighted average movement in FX rates: 7.3%

Geographic balance– Key Report Highlights Q2 2017

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Nordics

Western Europe

+26% +17%

+41% +31%

GWR as reported in GBP

GWR in constant currency

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Other Costs analysisExcl. Non-recurring items

© Kindred Group plc 2017

Share of GWR (as reported) 8%12% 8% 9.8%9%

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GBPm2013

FY2014

FY2015

FY2016

FY2017

Q2

Reported Other Costs 52.3 47.9 43.1 69.4 24.1

Depreciation & Amortisation -18.9 -16.8 -13.0 -23.8 -7.4

FX loss/gain on Opex -0.6 -1.8 -0.7 -0.6 -0.4

Other Costs post D&A and FX 32.8 29.3 29.4 45.0 16.3

59.9

48.7

33.435.3

EBITDA – Excl 2014 Kambi one-off item

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21.3 14.427.6 29.4

14.0 19.0

21.130.521.7 17.4

33.118.4 26.2

38.9

2012 2013 2014 2015 2016 2017

GBPm

Q1

Q2

Q3

Q452.5

63.4

75.5 77.0

120.7

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0.146

0.103

0.0440.087 0.072

0.059

0.059 0.0900.057

0.0910.084

0.129

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

2012 2013 2014 2015 2016 2017

Q3

Q4

EPS development – Excl 2014 one-off items

Q1

Q2

GBP

0.244

0.366

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0.161

Business overview

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0100200300400500600700800900

1,0001,1001,2001,300

Q12011

Q2 Q3 Q4 Q12012

Q2 Q3 Q4 Q12013

Q2 Q3 Q4 Q12014

Q2 Q3 Q4 Q12015

Q2 Q3 Q4 Q12016

Q2 Q3 Q4 Q12017

Q2

Active customers

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Thousands

2011 2012 2013 2014 2015 2016 2017

Sports betting gross marginCombined

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0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%Before free bets After free bets

2011 2012 2013 2014 2015 2016 2017

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Product & geographic balance Gross winnings revenue over time

© Kindred Group plc 2017 17

By product, % By geography, %

Pre-game betting

Poker

Casino &Games

Other

Live bettingNordics

WesternEurope

CES

Other

20 23 24 21 22 24 22 23 21

23 23 22 23 23 23 23 20 23

3 2 2 3 2 22 2 2

50 49 48 50 51 48 49 51 51

4 3 4 3 2 3 4 4 3

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

45 47 43 44 42 45 44 45 41

8 89 10 9 9 8 7

7

43 42 45 44 47 44 46 46 50

4 3 3 2 2 2 2 2 2

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q22015 20152016 20162017 2017

UK online market

RevenuesGBP 4.5bn

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CasinoGBP 2.6bn

SportsbettingGBP 1.6bn

Active customers 22.87m

* Source: UK Gambling Commission (2016 numbers)* Source: UK Gambling Commission (2016 numbers)

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© Kindred Group plc 2017

32Red strategy and positioning

Focus onre-regulated

markets

Sport and racing marketing and sponsorship

UsingMicrogaming

platform

ROI drivenmarketingcampaigns

UK beingthe key market

Primarily casino product

Sportsbookoffered by Kambi

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Expected sources of synergies

Pre-migration

• Plc and Board costs

• Overlap in functions

• Office costs

Post-migration

• Revenue synergies

• Betting duties and regulatory audits

• Product and marketing contracts

• IT costs

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• All condition precedents have now been fulfilled, incl the UKGC approval

• 32Red delisted from AIM on 7 July 2017

• Kindred received 100% of 32Red shares

Current/next steps:

• Integration of 32Red into Kindred Group

• Migration to the group platform‒ Target date for migration: Q2 2018

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Update of the process and next steps

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• Kindred is fully consolidating 32Red from 6 June 2017

• 32Red contributed GBP 4.7m in GWR and GBP 1.2m in underlying EBITDA since completion

• Acquired intangible assets (brand, customers database and technology) and goodwill are recognised in Kindred consolidated balance sheet

• Impact of amortisation of acquired intangible assets: approx. GBP 6m per year over the coming 3 yrs

• Total estimated transaction related costs: GBP 4.6m.GBP 0.6m have already been recognised in Q1 & GBP 2.6m in Q2. The rest will be reported in finance costs Q3 2017-Q4 2019.

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Accounting impact

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• Biggest team in the Championship with great history

• Will support the partnership with unique content and enhanced odds

• Key sponsorship in the UK market

Part of a stronger sponsorship investment that includes

© Kindred Group plc 2017

Unibet Principle Partner for Aston Villa

32Red Glasgow Rangers

32Red Leeds United

Unibet Essex, Surrey & Warwickshire Cricket

Unibet Masters of Darts

Unibet Champions League of Darts

Unibet European Championship

Unibet World Grand Prix

Betting partner of Investec Derby

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© Kindred Group plc 2017 24

Summary Q2 2017• ATH GWR in SB & Casino&Games

• GWR +32%

• GWR +22% in constant currency

• EBITDA +45%

• Underlying EBITDA +52%

• Underlying EBITDA +34% in constant currency

• Acquisition of 32 Red finalised

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Q&AQ&A

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