kindred opening growth negated by exceptional chargesby Joker 24.04.2020 0 comments
Kindred Group has this morning published its Q1 2020 trading update stating that its business model has shown its ‘resilience against COVID-19’s exceptional circumstances’.
The Stockholm-listed operator recorded a strong opening to 2020 trading, with group revenues ‘returning to double digit growth’ with the group reporting a 11% increase to £250m (Q12019: £224m).
During Q1, Kindred detailed that all core markets were tracking above ‘positive expectations’, attributed to a strong take-up of its sportsbook products (trading with higher operating margins) up until COVID-19’s mid-March sports postponements.
Kindred maintained an improved EBITDA of £32.5m (Q12019: £30m) despite reporting a number of ‘items affecting comparability’, with the group choosing to absorb specific charges related to ‘disputed regulatory sanctions’ (£8m) and accelerated amortisation costs attached to acquired assets (£10m).
Despite reporting improved top-line results, accounting for significant exceptional charges Kindred declared Q1 2020 operating profits of £7.3m (Q12019: £15m).
“As part of the previously communicated plans to review the Group’s cost base, we have recognised a charge of GBP 1.9 million in the first quarter of 2020 in connection with restructuring costs,” said Henrik Tjärnström, Kindred Group CEO.
He added: “We have additionally decided to rationalise the Group’s brand portfolio and have announced the pending closure of several smaller brands. This, together with a wider review of acquired intangibles, has triggered a noncash charge of GBP 10.8 million in the first quarter.”
Closing Q1 trading, Kindred’s attention has fully shifted to mitigating COVID-19 disruptions across its group operations. This March, Kindred governance sanctioned a number of cost controls and capital liquidity protections to safeguar the firm during lockdown.
Tjärnström continued: “We have seen positive growth in other products and we have acted quickly to adapt our marketing and other investments and to maintain an even tighter control over all operating costs. If we see any further deterioration in the business, we will not hesitate to make further adjustments.
“As a pure digital company, we are well prepared and ready to take the opportunities that will come when markets start to normalise. I am very confident that Kindred’s well-diversified and financially sound business model will enable us to emerge stronger over the coming quarters.”