Kindred : Interim report January – June 2017 (unaudited)

Kindred Group plc

Interim report January - June 2017 (unaudited)

Second quarter and first half year highlights

• New all-time high in Gross winnings revenue of GBP 166.6 (126.6) million for the second quarter of 2017, and GBP 319.8 (249.0) million for the first half of 2017.

• Underlying EBITDA for the second quarter of 2017 was GBP 33.4 (22.0) million, and GBP 63.7 (50.5) million for the first half of 2017.

• Gross winnings revenue contribution from 32Red was GBP 4.7 million and underlying EBITDA was GBP 1.2 million.

• Profit before tax for the second quarter of 2017 amounted to GBP 22.9 (15.4) million, and GBP 41.1 (37.9) million for the first half of 2017. For the quarter, this includes M&A costs of GBP 2.6 million related to the acquisition of 32Red.

• Profit after tax for the second quarter of 2017 amounted to GBP 20.4 (13.5) million and GBP 36.7 (33.5) million for the first half of 2017.

• Earnings per share for the second quarter of 2017 were GBP 0.090 (0.059) and GBP 0.161 (0.146) for the first half of 2017.

• Underlying earnings per share for the second quarter of 2017 were GBP 0.103 (0.063) and GBP 0.188 (0.154) for the first half of 2017.

• Number of active customers during the quarter was 1,171,166 (1,132,840). Of these, 39,268 were customers of 32Red.

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

"The marketing investments made in previous quarters have resulted in a new all-time high in Gross winnings revenue that was up 32 per cent compared to last year. In constant currency Gross winnings revenue increased by 22 per cent whilst the organic increase in Gross winnings revenue in constant currency was 18 per cent. Taking into consideration the lack of major tournaments this year, we are confident that we have continued to outpace market growth and have continued to take market share."

"Our reported EBITDA increased by 45 per cent during the second quarter of 2017. Excluding items affecting comparability, underlying EBITDA grew by 52 per cent and 34 per cent in constant currency. The underlying organic EBITDA in constant currency was up 28 per cent."

"In the second quarter of 2017, 38 per cent of the Group's Gross winnings revenue came from locally regulated markets. The acquisition of 32Red will significantly accelerate our development and profitability in the world's largest locally regulated market. Gross winnings revenue from the mobile channel grew by 52 per cent and accounted for 73 per cent of total Gross winnings revenue in the second quarter".

"In the period up to 23 July 2017, average daily Gross winnings revenue in GBP was 20 per cent higher compared to the same period in 2016 (up 9 per cent excluding 32Red). Adjusting for the impact of exchange rate changes, the growth was 15 per cent (up 4 per cent excluding 32Red)," says Henrik Tjärnström, CEO of Kindred Group.

Today, Wednesday 26 July 2017, Kindred Group's CEO Henrik Tjärnström will host a presentation in English at FinancialHearings, Tändstickspalatset, Västra Trädgårdsgatan 15, in Stockholm at 9.00 CEST.

Please go financialhearings.com to sign in. The presentation is also webcast live on www.kindredgroup.com.

For those who would like to participate in the telephone conference in connection with the presentation, the telephone number is UK: [phone] or in the USA: [phone].

The Kindred Group companies hold local gambling licences in UK, France, Belgium, Denmark, Germany (Schleswig-Holstein), Italy, Australia, Ireland, Romania and Estonia. The Kindred Group also holds international gambling licences in Malta and Gibraltar. The Kindred Group pays betting duties in all markets in accordance with applicable local laws.

Q2 AND FIRST HALF YEAR SUMMARY

This table and the contents of this announcement are unaudited.

Q2	Jan - June	Full Year	Rolling
2017	2016	2017	2016	2016	12 months5
GBPm	GBPm	GBPm	GBPm	GBPm	GBPm

GBP

Gross winnings revenue	166.6	126.6	319.8	249.0	544.1	614.9
EBITDA¹	30.5	21.1	59.9	48.7	120.7	131.9
Underlying EBITDA2	33.4	22.0	63.7	50.5	123.7	136.9
Profit before tax	22.9	15.4	41.1	37.9	92.8	96.0
Profit after tax	20.4	13.5	36.7	33.5	83.9	87.1
Net cash3	54.1	28.4	54.1	28.4	38.6
Bank debt	259.5	62.1	259.5	62.1	54.6

GBP GBP GBP GBP GBP GBP

EBITDA¹ per share	0.134	0.092	0.263	0.212	0.527	0.578
Underlying EBITDA2 per share	0.147	0.096	0.280	0.220	0.540	0.600
Earnings per share	0.090	0.059	0.161	0.146	0.366	0.382
Underlying earnings per share4	0.103	0.063	0.188	0.154	0.379	0.413
Net cash3 per share	0.235	0.123	0.235	0.123	0.168

Q2	Jan - June	Full Year	Rolling
2017	2016	2017	2016	2016	12 months5
SEKm	SEKm	SEKm	SEKm	SEKm	SEKm

SEK

Gross winnings revenue	1,876.1	1,493.5	3,568.0	2,976.8	6,300.7	6,891.9
EBITDA¹	343.5	248.9	668.3	582.2	1,397.7	1,483.8
Underlying EBITDA2	376.1	259.5	710.7	603.7	1,432.4	1,539.4
Profit before tax	257.9	181.7	458.6	453.1	1,074.6	1,080.1
Profit after tax	229.7	159.3	409.5	400.5	971.6	980.5
Net cash3	593.1	323.8	593.1	323.8	430.7
Bank debt	2,844.9	708.1	2,844.9	708.1	609.2

SEK SEK SEK SEK SEK SEK

EBITDA¹ per share	1.509	1.084	2.936	2.535	6.101	6.502
Underlying EBITDA2 per share	1.652	1.130	3.123	2.629	6.253	6.746
Earnings per share	1.009	0.693	1.799	1.744	4.241	4.296
Underlying earnings per share4	1.157	0.740	2.093	1.838	4.392	4.648
Net cash3 per share	2.577	1.407	2.577	1.407	1.871

No. No. No. No. No. No.

Active customers	1,171,166	1,132,840
Registered customers (million)	20.2	15.3	20.2	15.3 16.5

Currency rate Q2 17 average: 1 GBP = 11.261 SEK, Q2 16 average: 1 GBP = 11.797 SEK, FY 16 average: 1 GBP = 11.580 SEK, 2017

YTD average: 1GBP = 11.157 SEK, 2016 YTD average: 1GBP = 11.955 SEK, 30 June 2017: 1 GBP = 10.963 SEK, 30 June 2016: 1 GBP = 11.403 SEK

The Kindred Group reports in GBP and the SEK figures presented above at period end rates are for information only and do not necessarily comply with IFRS.

1 EBITDA = Profit from operations before depreciation & amortisation.

2 Underlying EBITDA = EBITDA less M&A costs, management incentive costs relating to acquisitions.

3 Net cash = Total cash at period end less customer balances.

4 Underlying earnings per share = Profit after tax less M&A costs & management incentive costs & finance costs relating to acquisitions, divided by the weighted average number of outstanding shares for the period.

5 Rolling 12 months consists of 12 months ended 30 June 2017.

Significant events during the second quarter of 2017

On 6 June 2017, Kindred Group completed the acquisition of 32Red which from 7 July 2017 is delisted from the AIM Market of the London Stock Exchange.

Significant events after the period end

On 4 July 2017, Kindred Group's brand Unibet signed as Aston Villa's new principle partner. On 10 July 2017, Kindred Group repaid GBP 2.8 million of the Revolving Credit Facility.

Acquisition of 32Red

On 23 February 2017, the boards of Kindred Group and 32Red reached an agreement on the terms of a recommended cash offer pursuant to which Kindred Group would acquire the entire issued and to be issued share capital of 32Red. On 6 June 2017, the UK Gambling Commission approved the acquisition and, with effect from that date, Kindred Group acquired full control of 32Red and consolidated it in its financial statements. The offer valued 32Red at GBP 175.6 million and Kindred Group has received 100 per cent of 32Red's outstanding shares. From 7 July 2017, 32Red was delisted from the AIM Market of the London Stock Exchange. Kindred has provisionally fair valued the net assets acquired from 32red Group plc at GBP 78.1 million and, accordingly, a goodwill of GBP 97.5 million has been provisionally recognised on the Kindred Group's balance sheet.

Total estimated transaction related costs are GBP 4.6 million of which GBP 0.6 million have already been recognised in the first quarter of 2017 and GBP 2.6 million has been recognised in the second quarter of 2017. The remaining cost will be recognised within finance costs from the third quarter of 2017 until the fourth quarter of 2019. Amortisation of acquired intangible assets is estimated at GBP 6 million per year over the coming three years from the second quarter of 2017. The cash consideration payable under the offer is funded by a new credit facility agreement of up to GBP 178 million, specifically for the purposes of this transaction.

This transaction is consistent with Kindred's multi-brand strategy and will further enhance Kindred's position in the fast growing online casino market in the UK valued at GBP 2.6 billion by UK Gambling Commission for the full year 2016.

Market

The Kindred Group is one of Europe's leading providers of moneytainment, operating in 20 different languages in more than 100 countries. The Group offers pre-game and live Sports betting, Racing, Poker, Casino & Games and Bingo through several subsidiaries and brands. While the Group's core markets are in Europe and Australia, it addresses global markets excluding only territories that it has consistently blocked for legal reasons such as the USA, Turkey and similar markets. The Kindred Group is a founding member of the European Gaming and Betting Association, the Remote Gambling Association in the UK and is audited and certified by eCOGRA in relation to the pan-European CEN standard on consumer protection and responsible gaming.

Current products Sports betting

The Kindred Group's pre-game sports betting and live betting service offers a comprehensive range of odds on a variety of international and local sports events, to a worldwide customer base (excluding restricted markets as described above) 24 hours a day, 7 days a week. Bets are placed via the Group's websites and mobile apps.

The Group offered 45,861 live betting events in the second quarter of 2017 and streamed 11,841 events on desktop and mobile devices.

The majority of the Kindred Group's business is largely determined by the seasons for key sports such as the major football leagues in Europe, major golf and tennis tournaments, ice hockey leagues in the Nordic countries and North America and sports and racing in Australia. The seasonality of these events results in fluctuations in the Group's quarterly performance, especially in terms of the amounts staked. However, quarterly results can also vary widely, due to the volatility of Gross winnings margins in sports betting. Please also refer to page 5 for more information about the margin.

Casino & Games

The Kindred Group's casino product features a large variety of games from suppliers covering all markets and brands. The focus during the quarter has been to further strengthen the product position by integrating new suppliers, refining the current offering and building new features on the Kindred platform.

Poker

The Kindred Group's poker product is the fastest growing licensed poker network in the industry. The Unibet Open live poker series took place in Copenhagen in May and had over 1,000 entries, building up a total prize pool of over EUR 500,000. In June, Kindred won the "Innovation in Poker" award at the prestigious industry event EGR Operator Marketing and Innovation Awards.

Bingo

The Kindred Group's bingo product offers several different game types, including big jackpots and exciting mini games. Since the launch of the Group's bespoke bingo product in summer 2015, the bingo network has continued to grow thanks to great software and innovative campaigns. During the quarter the mini games offering was expanded and the feature "player missions" was added and well received.

Customers

The total number of registered customers has continued to increase and amounted to 20.2 (15.3) million at 30 June 2017, whilst at 31 March 2017, over 16.9 million customers were registered.

For the second quarter of 2017 the number of active customers amounted to 1,171,166 (1,132,840), compared with 1,232,915 for the first quarter of 2017. Of these, 39,268 are customers of 32Red. An active customer is defined as one placing a bet in the last three months.

1300

1200

1100

1000

900

Thousands

800

700

600

500

400

300

200

100

0

Active Customers

Q1 2011

Q2 Q3 Q4 Q1

2012

Q2 Q3 Q4 Q1

2013

Q2 Q3 Q4 Q1

2014

Q2 Q3 Q4 Q1

2015

Q2 Q3 Q4 Q1

2016

Q2 Q3 Q4 Q1 Q2

2017

Financial review

The financial information within this report has been presented in accordance with International Financial Reporting Standards as adopted by the European Union. The accounting policies remain unchanged from the last published Annual Report and Accounts for the year ended 31 December 2016.

Throughout the report where a comparative number is stated in brackets, this relates to the comparative of the period specified.

Gross winnings revenue

Gross winnings revenue on sports betting represents the net receipt of bets and payouts for the financial period, as reduced for Free Bets granted. Free Bets are bonuses granted or earned in connection with customer acquisition.

Gross winnings revenue for sports betting amounted to GBP 73.2 (56.2) million for the second quarter of 2017. For the first half of 2017, Gross winnings revenue for sports betting amounted to GBP 139.6 (110.3) million.

In the second quarter of 2017, live betting accounted for 61.6 (61.4) per cent of turnover on sports betting and 52.3 (51.1) per cent of Gross winnings revenue on sports betting.