Kindred SDR : Group plc - Interim report January – March 2017 (unaudited)

Kindred Group plc

Interim report January - March 2017 (unaudited)

First quarter highlights

• New all-time high in Gross winnings revenue of GBP 153.2 (122.4) million for the first quarter of 2017, an increase of 25 per cent.

• Underlying EBITDA for the first quarter of 2017 was GBP 30.3 (28.5) million.

• Profit before tax for the first quarter of 2017 amounted to GBP 18.2 (22.5) million. This includes M&A costs of GBP 0.6 million related to the proposed acquisition of 32Red and non-cash items of GBP 3.9 million as shown in the income statement.

• Profit after tax for the first quarter of 2017 amounted to GBP 16.3 (20.0) million.

• Earnings per share for the first quarter of 2017 were GBP 0.072 (0.087).

• Number of active customers during the quarter was 1,232,915 (1,007,365).

"Despite strong comparatives, new all-time high in active customers and Gross winnings revenue."

"Despite a low sports betting margin over the first quarter of 2017 (6.0 per cent after free bets), Gross winnings revenue grew by 25 per cent to GBP 153.2 million (+ 12 per cent in constant currencies). Active customers reached an all-time high this quarter at over 1.2 million customers, proving our ability to acquire and retain customers.

Sports betting turnover increased by 32 per cent and reached an all-time high at GBP 1.1 billion, which equated to a growth of around 19 per cent in constant currencies."

"In line with the fundamentals of our growth strategy, we have continued to invest heavily in marketing for both new customer acquisition and reactivation of existing customers. While this may reduce profits in the short term, we are confident that, as we have previously proven, this will drive sustained growth in Gross winnings revenue and profits. For the quarter, marketing was 29 per cent of Gross winnings revenue; however, for the full year we still expect it to average a few percentage points below 30 per cent."

"Our cash offer for the UK operator 32Red will, from the second quarter of 2017, instantaneously increase both revenue and profit from the very significant UK market. This acquisition will supplement our current strong organic growth and will significantly increase the Group's overall growth in the future, especially during the first twelve months. The acquisition will also bring new expertise into the Group and offer both immediate and future opportunities for both revenue and cost synergies."

"In the first quarter of 2017, 34 per cent of the Group's Gross winnings revenue came from locally regulated markets. Gross winnings revenue from the mobile channel grew by 53 per cent and accounted for 73 per cent of total Gross winnings revenue in the first quarter."

"In the period up to 23 April 2017, average daily Gross winnings revenue in GBP was 24 per cent higher compared to the same period in 2016. Adjusting for the impact of exchange rate changes, the growth was 17 per cent," says Henrik Tjärnström, CEO of Kindred Group.

Today, Wednesday 26 April 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.

Q1 SUMMARY

This table and the contents of this announcement are unaudited.

Q1	Full Year	Rolling
2017 GBPm	2016 GBPm	2016 GBPm	12 months4 GBPm

GBP

Gross winnings revenue	153.2	122.4	544.1	574.9
EBITDA¹	29.4	27.6	120.7	122.5
Underlying EBITDA2	30.3	28.5	123.7	125.5
Profit before tax	18.2	22.5	92.8	88.5
Profit after tax	16.3	20.0	83.9	80.2
Net cash3	42.7	34.9	38.6
Bank debt	42.0	26.3	54.6

GBP GBP GBP GBP

EBITDA¹ per share	0.129	0.120 0.527 0.536
Earnings per share	0.072	0.087 0.366 0.351
Net cash3 per share	0.186	0.152 0.168

Q1	Full Year	Rolling
2017 SEKm	2016 SEKm	2016 SEKm	12 months4 SEKm

SEK

Gross winnings revenue	1,693.5	1,483.1	6,300.7	6,511.0
EBITDA¹	325.0	334.4	1,397.7	1,388.3
Underlying EBITDA2	334.9	345.3	1,432.4	1,422.0
Profit before tax	201.2	272.6	1,074.6	1,003.2
Profit after tax	180.2	242.3	971.6	909.4
Net cash3	475.8	406.8	430.7
Bank debt	468.0	306.5	609.2

SEK SEK SEK SEK

EBITDA¹ per share	1.428	1.456 6.101 6.073
Earnings per share	0.792	1.055 4.241 3.977
Net cash3 per share	2.067	1.768 1.871

No. No. No. No.

Active customers	1,232,915	1,007,365
Registered customers (million)	16.9	14.1 16.5

Currency rate Q1 17 average: 1 GBP = 11.054 SEK, Q1 16 average: 1 GBP = 12.117 SEK, FY 16 average: 1 GBP = 11.580 SEK, 31 December 2016:

1 GBP = 11.157 SEK, 31 March 2017: 1 GBP = 11.142 SEK, 31 March 2016: 1 GBP = 11.655 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 = Profit from operations before depreciation, amortisation and items affecting comparability (excluding amortisation of acquired intangible assets and foreign currency differences on operating items).

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

4 Rolling 12 months consists of 12 months ended 31 March 2017.

Significant events during the first quarter of 2017

On 16 January 2017, the Kindred Group became the first operator to successfully complete an external audit against the official 2014 EU Recommendation on Consumer Protection and Responsible Gambling (2014/478/EU). The independent audit was conducted by eCOGRA, a leading audit body accredited in several countries.

On 18 January 2017, the Kindred Group launched a new online casino brand directed towards high rollers in the Norwegian and Swedish market: storspiller.com and storspelare.com.

On 26 January 2017, the Group decided to suspend its application for a license in the Czech Republic and, as a result, also suspended its operations.

On 6 February 2017, the Group was awarded "Bingo Operator of the Year" at the IGA awards.

On 8 February 2017, the Group was awarded "Socially Responsible Operator of the Year" at the GIA awards.

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 will acquire the entire issued and to be issued share capital of 32Red. This offer values 32Red at GBP 175.6m. The acquisition will be funded by new credit facilities of GBP 178 million.

On 31 March 2017, the Swedish Inquiry on Gambling presented its proposal to re-regulate Sweden's online gambling market.

Significant events after the period end

No significant events after the period end.

Acquisition of 32Red

The boards of Kindred Group and 32Red have reached an agreement on the terms of a recommended cash offer pursuant to which Kindred Group will acquire the entire issued and to be issued share capital of 32Red. The Offer values 32Red at GBP 175.6m. 32Red is listed on the AIM market of the London Stock Exchange. The cash consideration payable under the offer will be funded by a new credit facility agreement of up to GBP 178 million, specifically for the purposes of this transaction. Completion of the transaction is subject to certain conditions including customary regulatory approvals by the relevant gambling authorities.

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.

Swedish Inquiry on Gambling

The Inquiry proposes a Swedish gambling licensing system with a betting duty of 18 per cent on Gross Gaming Revenue and operators getting the opportunity to obtain licenses to provide all products. The Inquiry sets a target of (at least) 90 per cent of Swedish customers choosing to play with online gambling companies within the Swedish licensing system (a process known as channelisation). High channelisation makes the system trustworthy and enables the Swedish regulatory authorities to ensure games offered in Sweden take place in a safe and secure environment.

The Inquiry also proposes comprehensive responsible gaming measures such as compulsory registration of players, a national self-exclusion register, mandatory spending budget and Player Behavioural Tracking.

Capital Market Day, 31 May 2017

On 31 May 2017 at 8.00 - 12.00 CEST, Kindred Group is organising a Capital Markets Day at Tändstickspalatset in Stockholm for investors, analysts and financial media. Kindred Group's CEO Henrik Tjärnström together with key managers will present current industry trends and how these impact the Group's operational activities.

No new financial information will be disclosed. The presentations will be in English. For attendance, please send an email to [e-mail] to register.

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 42,039 live betting events in the first quarter of 2017 and streamed 9,801 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 of our markets. The Group's offering was expanded during the quarter with the addition of new game suppliers for both local and global use. In addition, the Group went live with one new casino brand in Norway and one in Sweden targeting players with a profound interest in Casino.

Poker

The Kindred Group's poker product is the fastest growing licensed poker network in the industry. During the quarter the focus has been on continuous development of the recently released version 2 of the poker platform including emphasis on mobile channels. The Unibet Open in London in February kicked off the 10th annual season and the entire event was successfully streamed online and yielded an all-time high in views and engagement. Next stop will be in Copenhagen on 25-28 May 2017.

Bingo

The Kindred Group's bingo product offers several different game types, 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 Stan James online went live on the bingo platform, the highest ever bingo jackpot was paid out and Unibet won "Online Bingo Operator of the Year" at the International Gaming Awards.

Customers

The total number of registered customers has continued to increase and amounted to 16.9 (14.1) million at 31 March 2017, whilst at 31 December 2016, over 16.5 million customers were registered.

For the first quarter of 2017 the number of active customers amounted to 1,232,915 (1,007,365), compared with 1,150,027 for the fourth quarter of 2016. An active customer is defined as one placing a bet in the last three months.