Transforming Gambling

Kindred Group plc Annual Report and Accounts 2019

Transforming gambling Managing short term challenges while investing in the next wave of opportunities Transforming gambling Our future goal is simple – to be the number one operator across our markets. To get there, we will manage short term challenges while investing in the next wave of opportunities.

Strategic report 1 Highlights 2 Kindred at a glance 4 Chairman’s statement 5 Chief Executive Officer’s review 7 Revenue model 8 Business model 10 Promoting responsible gambling 12 Investing in new technology 14 Bringing exciting products to new markets 16 Talented people delivering success 18 Key performance indicators 20 Sustainability 28 Sports betting integrity at Kindred Group 29 Risk and risk management 30 Principal risks and uncertainties 32 Financial review Governance 35 Introduction to governance 36 Board of Directors 38 Executive Committee 40 Corporate governance statement 43 Audit Committee report 44 Nomination Committee report 45 General legal environment 48 Shares and share capital 51 Remuneration Committee report 57 Directors’ report Financial statements 59 Independent auditors’ report 66 Consolidated income statement 'SRWSPMHEXIHWXEXIQIRXSJɸGSQTVILIRWMZIMRGSQI 67 Consolidated balance sheet 'SRWSPMHEXIHWXEXIQIRXSJGLERKIWɸMRIUYMX] 69 Consolidated cash flow statement 2SXIWXSXLIGSRWSPMHEXIHJMRERGMEPɸWXEXIQIRXW Other information 96 Annual General Meeting IBC Definitions

This document is the English original. In the event of any discrepancy between the original English document and the Swedish translation, the English original shall prevail. Kindred Group plc Annual Report and Accounts 2019 1 Highlights Strategic report Kindred is one of the largest online gambling operators in the European market with over 27 million customers worldwide. Governance

Gross winnings revenue Betting duties Financial statements Strategic highlights > Successfully went live under (GBP) (GBP) new local licence in Sweden on 1 January 2019. > Launched sportsbook and casino MR2I[ɸ.IVWI]ERH4IRRW]PZERME > Developed a single, globally geo-distributed platform based

on multi-active datacentres. +1% +29% Other information Financial summary > Continued financial pressures and Marketing expenditure EBITDA1 significant investments for the (GBP) (GBP) future have impacted the EBITDA and Earnings per share in 2019.

Operational highlights > For the full year 2019, 59 per cent of Gross winnings revenue came from locally regulated markets. > *SVIZIV]+&4TVSTSWIHMR +9% -37% HMZMHIRH/MRHVIHTEMH+&4 5.7 in tax (betting duties, VAT, employment tax and corporate Profit before tax Earnings per share tax) to the relevant authorities and (GBP) (GBP) WYTTSVXIHWTSVXWXLVSYKL+&4ɸ of direct sponsorship costs.

Responsible business highlights > %[EVHIHXLI-73ɸ certification for information security management in June 2019. > Achieved 17 audit certifications -55% -57% across all licensed activities, as required by the licence terms, with Free cash flow per share1,2 no failures in compliance noted. > Signed a partnership with European (GBP) Football Development Network, a network of professional football clubs leagues and associations, to promote football as a tool for social development. Responsible gambling highlights -68% > Set the ambition that zero percent of our revenue is derived from harmful gambling by 2023. > Grown to a team of 116 people focused on player sustainability.

6IJIVXS2SXISRTEKIWɸERHJSVXLIVIGSRGMPMEXMSRSJXLI+VSYTƅWEPXIVREXMZITIVJSVQERGI QIEWYVIWXSXLIQSWXHMVIGXP]GSQTEVEFPIQIEWYVIWVITSVXIHMREGGSVHERGI[MXL-*67 8LIJVIIGEWLJPS[YWIHMRGEPGYPEXMRKXLMWQIXVMGLEWFIIRVIWXEXIH 7II2SXI&SRTEKIɸJSVQSVIMRJSVQEXMSRSRXLMWVIWXEXIQIRX 2 kindredgroup.com Kindred at a glance The Kindred Group offers sports betting, casino & games, bingo and poker through our distinctive brands.

Kindred Group is one of the world’s leading C D A A scalable business model online gambling operators with business The industry landscape in Kindred’s main across Europe, Australia, and now also the markets has undergone rapid change since USA, offering over 27 million customers 2010, largely as a result of emerging local a great form of entertainment in a safe, regulation in many countries. Superficially, fair and sustainable environment across this looks like a negative development Our products 11 brands. for the industry, since regulation typically A7TSVXWFIXXMRKƁ introduces new taxes, additional costs &'EWMRS +EQIWƁ Kindred employs 1,666 people, is listed and challenges in complying with complex C &MRKSERHSXLIVKEQIWƁ on Nasdaq Stockholm Large Cap and is a local regulations. D4SOIVƁ founding member of the European Gaming and Betting Association (EGBA) and ESSA Over this period however, Kindred’s track (Sports Betting Integrity). record demonstrates that, when managed right, the opportunity presented by local Kindred is audited and certified by regulation is such that the opportunity eCOGRA for compliance with the 2014 EU outweighs the costs. Kindred operates & 6IGSQQIRHEXMSRSR'SRWYQIV4VSXIGXMSR in locally regulated markets through its ERH6IWTSRWMFPI+EQFPMRK )9 licences in Australia, Belgium, Denmark, Estonia, France, Germany (Schleswig- Holstein), Ireland, Italy, Romania, Sweden, XLI9/ERH2I[.IVWI]ERH4IRRW]PZERME in the USA, as well as other markets internationally through its gambling 14% licences in Malta and Gibraltar. EBITDA margin All licensed activity is monitored through local gambling authorities. Kindred pays betting duties in all markets in accordance [MXLETTPMGEFPIPSGEPPE[W-RɸTIVɸGIRX of our Gross winnings revenue is derived 1,666 from locally regulated markets and this employees at year end number is growing.

Estimated market size (GGR) (USDm)

Europe N. America 29,010 6,311

Oceania 2,758

Source: H2 Gambling Capital Nov 2019 Kindred Group plc Annual Report and Accounts 2019 3

A sustainable business model Strategic report Our business model is based on expanding our business by taking market share from 703.5m 3.1m the competition and thereby growing our Gross winnings revenue from mobile yearly active customers number of active customers. We do this +&4Q (Millions) by being data driven and by knowing what drives the customer experience and what improves our business. 800 3.5 703.5 3.1 3.1 700 662.7 3.0 2.9 We want to retain our customers over a Governance 600 long period of time and build sustainable 537.5 2.5 2.3 500 relationships with them. This means that 2.0 SYVEZIVEKIVIZIRYITIVYWIV %649 400 351.5 1.5 is relatively stable over time, while we 1.3 continue to grow the number of active 300 1.0 users. We believe that this is sustainable 200 179.0 0.5 and responsible growth. 100 0 Our business strategy supports our 0 15 16 17 18 19 Financial statements objective of long-term growth through 15 16 17 18 19 a focus on winning and retaining customers, having a digital DNA and operating a sustainable business. Only The shift from offline to online gaming is accelerating by performing strongly in all of these Total European gaming market, including lotteries areas will we be able to create long-term value and continued healthy growth. USDbn Online Offline Offline CAGR 0.2% Offline CAGR 0.6% Online CAGR 10.3% Online CAGR 6.6% 140 30% 31% Other information 28% 29% 120 23% 25% 26% 20% 22% 18% 12% 13% 17% 100 9% 10% 15%

80 78% 77% 71% 69% 81% 90% 88% 87% 85% 83% 82% 80% 75% 74% 72% 70% 60

0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E 2022E 2023E 2024E

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Sustainable growth 5YEVXIVP]EGXMZIGYWXSQIVWERH+VSYT%649

Thousands/GBP Group ARPU (GBP)

1,600 A sustainable business can only exist if there is sustainable consumption based 1,400 upon the channelling of digital consumer 1,200 demand to the regulated framework. 1,000

To enable this channelling, operators 800 must be able to provide their customers 600 with a value adding offering, including premium user experience and financial 400 value. If taxes are too high and consumer 200 experience is not aligned to digital market reality, channelling will be undermined 0 and consumer policy objectives will Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 be unachieved. 2013 2014 2015 2016 2017 2018 2019 4 kindredgroup.com Chairman’s statement Kindred is not just a company; it is also an enterprise, which throughout its journey of more than two decades has radically altered and improved the gambling industry.

Benefitting all our stakeholders

In many of our markets, we are more than Today, Kindred is able to channelise conducted with an understanding that simply the most respected player; several online gambling as part of a much larger upholds and enhances the traits I have of our brands, Unibet being the obvious entertainment industry, in ways that mentioned, in order to protect, preserve example, have also transformed into are advantageous for society; by secure and further develop our accomplishments. the foremost term of reference used to and sustainable betting for all of our describe the whole sector. customers, by responsible gambling Looking back on the road we have travelled, within the gaming community, by I can happily ascertain that we have shaped These tremendous and, in the true meaning generating tax revenues for governments and formed the online gambling industry of the word, revolutionising steps towards and by large and active sponsorships according to our early visions and forecasts. the creation of an online gambling industry, of different sports in many countries. Thus, Kindred should naturally also be of which we have been the forerunner, However, of course, our main focus one of the leading and most successful would not have been possible without and commitment has always been and performers in that arena. I see it as my first our committed owners and dedicated continues to be, to increase our financial and foremost assignment as the founder, investors, who have supported Kindred value for the benefit of our shareholders. as an owner and as the Chairman of the during its endeavours and who continue to Board to do my part in capturing that do so. In this context, it is also self-evident We have achieved a state of affairs where position for Kindred for the benefit of to underline the importance of all our luckily society monitors legal and legitimate all our shareholders and stakeholders. colleagues in Kindred and of our partners, gambling, rather than illicit gambling whose devoted work and vital contributions influencing society or even controlling Anders Ström have been the most important source of parts of it. However, it is of the utmost Founder & Chairman of the Board strength for the Company. importance that the public regulation is Kindred Group plc

. Kindred Group plc Annual Report and Accounts 2019 5 CEO’s review Strategic report For Kindred, a successful business is about future-proofing operations to generate long-term value for

shareholders and society. Governance

A digital marketplace set out new rules with a wide range of challenges in 2019

I expected the Swedish market to Financial statements develop in a more positive direction than it has. Kindred has worked hard for many years to educate regulators and policy formers on the benefits of a modern license system, and why the old system was not fit for purpose in a digital world. High channelisation with a professional and honest relationship between the industry Other information and the regulator is the best way forward. The change is a symbol of the continued transition from .com to .country, bringing improved market access and predictability, reduced competition over time, and significantly higher contribution to society through betting duties and community engagement.

It also reflects the other key driver, the shift from offline gambling to online gambling. A shift that virtually every industry has gone through as they adapt to the digital dynamic of today’s modern world. We know that regulators and policy formers struggle Future-proofing to keep up with these shifts, which is why we have stressed the need for sustainable regulations benefitting our operations all stakeholders.

Looking back at over two decades strong growth. With the year’s results Channelisation the only of impressive growth for the online in hand, it is evident that the growth objective that matters gambling industry, I can conclude that has not been as strong as expected. Re-regulation occurs not to please 2019 is the start of a new beginning. Our Gross winnings revenue reached gambling operators. It occurs to ensure We have seen a new market reality take +&4QMPPMSRSRTEV[MXLXLI a high level of consumer protection. shape and an industry needing to adapt, year before, however our EBITDA We share this objective and we work and so also Kindred needs to adapt. VIEGLIH+&4ɸQMPPMSR[LMGLMW with authorities in markets where we are However, despite short-term challenges, not satisfactory. Increased betting present as we believe that collaboration I see great opportunities for operators duties, challenging market growth and is the way to succeed in creating a robust who manage to set up their business investments into new markets are all and fair market for everyone. To achieve model to cater for all stakeholders contributing to this, and we are adjusting this, channelisation must be the key today and tomorrow. our operations to manage these changes. priority because if channelisation fails, Despite these current headwinds, I want so will all other objectives. This is the New market realities have put to highlight that we increased our active reality in a digital world where the pressure on our operations customers in the fourth quarter to an customer is in charge. As we all know, For Kindred, it has been a year when we almost new all time high for the group, the internet knows no borders. stepped foot into the US market for the a sign that we continue to offer a great first time, and it has also been the year experience for our customers. It is also when the Swedish market opened for a a good platform to build on as we enter modern gambling license model. A year a new big sports year. ago, we entered 2019 full of enthusiasm for what was to come with continued re-regulation and an expectation for 6 kindredgroup.com CEO’s review continued

A challenging year has put potentially huge market one state at a We have left 2019 behind us and look focus on cost control time and ensure we gain a stable market forward to a progressive and exciting 2020 The Swedish market has not been share in each state. Since establishing a with a number of seasonal events across growing as expected due to declining presence in the US in 2019 we have grown our sports and markets including the UEFA channelisation, Norway is desperately a dedicated local team of 35 experts from Euro 2020 and the Olympics in Tokyo. trying to defend its politically sensitive our European operations and local talent, monopoly, the Dutch market is preparing remaining at neutral headcount for the Our great team is firmly committed for re-regulation, and we have entered group, making use of our expertise in to giving customers an unbelievable new markets. With this new reality we data to ensure we give our customers experience and I am convinced they must adapt, and are. We have taken steps what they desire. will deliver above and beyond to achieve to further control our costs, for example the tough targets we have set. It has been we have put processes in place to limit Stepping into the future a tough year for everyone, and I would headcount growth, we have reduced spend Access to real time data is the foundation like to thank the entire Kindred team on travel and telecom by reverting more for sustainable growth. It allows us to learn for pushing ahead. Our culture has meetings to video conferencing, we are about our customers and provide them taken us through tough times before. adjusting our marketing mix to optimise with a better experience than ever before. This time is no different. ROI and we are reviewing both our brand Our technological proficiency, which you portfolio and geographic footprint. can read more about on page 12 and 13, our data expertise and our proprietary A game changer in the US platform enables us to understand what These are all small steps towards better customers want and how they want it. Henrik Tjärnström profitability, however I know that we We have set up an ambition to reach zero CEO need to grow our business to absorb revenue from harmful gambling by 2023, Malta, 6 March 2020 new regulations, which is why in 2019 we which we believe we can achieve through entered into the US market following the the technological revolution taking place VITIEPSJXLI4%74%PIKMWPEXMSRMR right now. By 2023 I am convinced the The US market represents the largest use of artificial intelligence, computing opportunity for future regulated growth capacity, access to data and the [LMGLMW[L][IHIGMHIHMRXSIRXIV introduction of 5G infrastructure across the market. In the second half of 2019 we the world will enable us to see harmful [IRXPMZIMR2I[.IVWI]ERH4IRRW]PZERME gambling, money-laundering, fraud, match- and I am excited about the initial results fixing and other destructive behaviours we are seeing from this investment. being a thing of the past on digital gambling platforms. In our Sustainability Report We are entering the US market through 2019 we give a detailed description of I am convinced selective growth and complete focus our framework and report on progress we will see on what we do best. We will take on this against our commitments. local regulation continue to put pressure on operators, but I am equally convinced Kindred is fit for growth in this new market reality. A big part of our business is delighting customers who enjoy placing a bet on sports, and 2020 is a great sports year. Kindred Group plc Annual Report and Accounts 2019 7 Revenue model Strategic report The model shows how Gross winnings revenue, adjusted for costs, capital investments, movements in working capital and tax payments, flows through 1

to free cash flow that is available to distribute to Governance shareholders as a cash dividend and/or share purchase.

Gross winnings revenue – Costs and other Financial statements generated from across all of adjustments – these Kindred’s brands, products include all of Kindred’s and markets. Across all operating expenses including products, Kindred’s margin betting duties and other [EWETTVS\MQEXIP]ɸTIV taxes paid in our various cent in 2019 (meaning territories, marketing and that the average pay-back administrative expenses as ratio to our customers was well as capital investments

ɸTIVGIRX in new technology. Other information

Free cash flow available Distribution to Kindred’s Costs for dividends1 – this owners – Kindred has a represents the surplus policy to distribute up to fifty cash generated by the per cent of free cash flow to business for the financial its owners as dividends or year after all cash outflows through share purchases. Sports betting Capital required for operations and The Board has reviewed expenditure maintaining capital assets. the available resources of This surplus is available the business and decided both to finance continued to propose a dividend that investment and can also, represents approximately Movements in subject to the proposal of the ɸTIVGIRXSJJVIIGEWLJPS[ working capital Board and approval by the for the year, in line with the Casino & Games shareholders, be distributed dividend policy to distribute to Kindred’s owners. surplus cash. The proposed Tax payments dividend for 2019 amounts to +&4 +&4 per share/SDR.

Poker Free cash flow Dividend available for dividends1 Bingo and Share purchases other games

Retained earnings

Retained earnings, after approval and distribution of the annual dividend, represent the increase in the Group’s reserves that can be used to continue to invest in delivering future growth.

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These pillars are articulated as:

Always the best deal and products Ability to achieve results Licence to operate

The pillars are broken down into ɸJSGYWEVIEWEPPS[MRKYWXSSTIVEXI a scalable, successful and sustainable business. The three strategic pillars are described opposite. Kindred Group plc Annual Report and Accounts 2019 9 Strategic report

Always the Ability Licence Governance best deal and to achieve to operate products results

Since our very foundation, we have put We have managed to achieve great results We operate in an industry that is often our customers at the heart of what we by constantly breaking new ground and criticised or mistrusted. Sometimes it do. The notion of constantly improving finding a better way to offer our customers has been deserved. What we know is that the experience we offer our customers is what they desire. To succeed, we have a responsible and sustainable business apparent in every corner of our business. invested in innovation, technology, culture is a successful business and any operator Financial statements We know that by giving our customers and our people. It has served us well in the who wishes to have a place in tomorrow’s the best deal and products, we ensure they past, and it will serve us well in the future. society must integrate this into their will continue to enjoy gambling with us. business model today. Kindred did this A scientific and data-driven approach several years ago and we continue to Safe & agile platform We do not base our decisions on hunches strive towards setting best practice. Our proprietary platform allows us to or gut feelings. We base our decisions on adapt to customer needs and local facts and insights. We use the data we Responsible gambling regulation and provide a safe and stable have to delight our customers by giving Any customer who does not enjoy environment all year round. We handle our them new choices, a safer environment gambling should stop. It is our duty Other information customers’ money and we do so with the and better offerings. It allows us to open as a gambling operator to help our most advanced technology available to new doors for them. customers who need to take a break ensure complete security and compliance to do so. We take this role seriously, with rules and regulations. True innovation as we only see sustainable value in Through our Kindred Futures team, we happy customers who gamble for fun. Multi-brand approach explore tomorrow’s ideas and test how We operate a truly multi-brand business they can be applied to real-life products. Maintaining integrity where we delight our customers through We constantly seek to innovate and find Our business builds on trust. If our a portfolio consisting of global brands, new ways forward as only then can we customers do not trust us with their local brands and hyper-local brands. develop what is not yet here. money or do not trust the products This gives us the flexibility to tweak we offer, we will not have a business our product offering in each market. Strong values, culture and people for long. We operate with the highest Since the very start, our company has security standards and together with Global scale & local relevance rested on clear values and a strong partners help maintain the integrity As a global operator with a fully-scalable culture. As we grow we must protect across all areas of our industry. platform, we can adapt our offering and this culture and ensure it encompasses presence in markets around the world the entire company. The ability to nurture Contributing to our communities with very limited effort. In other words, our culture has allowed us to attract and, Through our employees in our offices, we can quickly be where we want to be. above all else retain, the best talent in our local operations and our numerous a truly diverse team. partnerships across the world, we contribute to the communities we are Scalable and efficient solutions part of. We depend on these communities We have great ambitions and will continue and they, to a degree, depend on us. to grow. Our ability to scale our business Sustainable growth is about being part model and develop efficient solutions to of our local community. challenges, has allowed us to maintain our growth without compromising in any Running a compliant business area. This allows us to act where other Gambling is an industry that operates companies fail. under a licence. Ensuring we can open our doors to customers tomorrow requires that we comply with local regulations in every market. We take great pride in running a compliant business every day. After all; no licence = no business. 10 kindredgroup.com Promoting responsible gambling

116 Kindred exists to offer players entertainment Kindred people on a platform that is safe and secure. Our responsible for player sustainability success is built on long-term sustainable relationships with our players. Our aim is for DNA customers to have more fun for a longer time; Responsible gambling is that way they remain loyal to us for longer. embedded in our DNA

A new model of sponsorship Focus on people improved our service – communities, places One of our biggest challenges in ERHɄTISTPI Customer Service was that our people Over the past 12 months, were leaving us too quickly to work for Kindred Group has driven other companies. This had a big impact forward an ambitious on the quality level of the service we TVSNIGXXSɸGLERKIXLI[E] could offer our customers, since we organisations like ours then never saw the actual return on the sponsor sport with sponsors investments put into onboarding training having unique links to and knowledge development. communities, places and people. This new model of We therefore had a clear strategy around sponsorship, which benefits making Customer Service a career path both sporting organisations and a better place to work, with focus on ERHɸGSQQYRMXMIWMW building a culture around our core Kindred continuing to grow. values. A lot of changes were made in structure, empowerment, repurposing roles and a Customer Service career path programme was launched. The attrition rate reduced and went from 56 per cent in 2017 to 30 per cent at the end of 2019 and the Customer Satisfaction score has increased since then as a result of our best people staying longer at Kindred. Kindred Group plc Annual Report and Accounts 2019 11 Strategic report Through our tools, we can provide expertise and guidanceance on how to adopt and integrateate different measures that makeke gambling less harmful and more enjoyable, making surere Governance gambling stays a positive andand safe experience for our players.yers.

Taina Grech Responsible Gaming Analyst Financial statements

71% of customers deposit less after having been Other information We help our customers stay in control detected in PS-EDS As a digital company, we create a digital fingerprint of our customers’ behaviour on our platform. This allows us to detect, monitor and follow-up on problematic gambling activities, which is a big part of building a safe gambling environment for our customers. We believe that looking at each 11.5% customer individually rather than as part of a group is the most efficient of customers set up way to prevent problematic gambling at an early stage. a non-mandatory gambling tool Our customers all have different behaviours, incomes, social backgrounds and ages. To ensure consistency and efficiency we deploy tools at a customer Measuring effectiveness account level and not at a product or transaction level. We believe that We look at a number of KPIs and monitoring our customers over time is what makes the difference in ensuring at usage of control tools, both in customers stay in control of their gambling. the total customer group and in the group of customers who are Kindred’s award-winning Player Safety – Early Detection System (PS-EDS) is at detected in our PS-EDS. Our aim is the heart of our responsible gambling approach. This system is an automated, to de-risk as early as possible before real time, scanning system that combines risk indicators based on empirical any financial harm is even present. studies with a humanistic personalised approach. Customers who set a voluntary limit are more loyal in the long run.

Monthly % usage of Self-Exclusions (6+ months) compared to non-mandatory control tools January 2016 – December 2019 All customers go 15% 11.24% XLVSYKLɸEɸWGSVMRKW]WXIQ to detect early signs of 9.01% 10% problem gambling Once a customer is detected, a humanistic approach is used 5% 0.75% 0.65%

0% Jan 2016 Dec 2019

Self exclusion Voluntary control tools

Promoting Responsible Watch our detecting harmful Gambling through onsite gambling video: messaging, emails www.kindredgroup.com/detect and calls Promoting informed adult choice to help customer protection

Different Responsible Gambling training levels We actually see for all employees behavioural change in 80% of detected customers 12 kindredgroup.com Investing in new technology

99.95% We explore tomorrow’s ideas and Uptime on average test how they can be applied into across our sites real life products. We constantly seek to innovate and find new 36 ways forward as only then can Integrated payment methods across our we develop what is not yet here. markets, including Swish, Bancontact , MobilePay and ApplePay 25+ Sports & Gaming Persuasive design provider integrations Persuasive design opens up a huge on our Kindred platform opportunity for brands to deliver more than just a product or service that is usable. It helps provide a first-class experience by putting users in the centre of everything. The future is about going beyond usability and using persuasion to make the experience emotionally engaging for our users. Persuasive design applies psychological principles into users’ experience by making things easy, relevant and trustworthy to help customers in decision-making. It is a valuable addition to our customer and user experience, paving the way for our business to gain competitive advantage and growth.

Compliance and responsibilities Kindred uses sophisticated data analytics tools to monitor customer activity. This customer intelligence gives us a competitive edge and also helps in early detection of player safety risks.

Our platform also provides the capability to generate the wide range of reports needed both for internal control processes and to satisfy our regulatory reporting requirements. Kindred Group plc Annual Report and Accounts 2019 13 Strategic report Player safety & responsible gambling are at the heart of Kindred and we have builtt dedicated teams focusing on providing the right tools foror our players to be in control Governance of their gambling activity.

Prathiba Sadagopan Line lead Platform development Financial statements

43m Transactions processed during peak days Other information Kindred platform Our proprietary technology platform is like a city of micro-services divided into experience-districts, yet connected with each other, all serving their own purpose in delivering the holistic experience of visiting. Kindred works 9,300 closely with our product suppliers to ensure that we provide an engaging Releases during 2019 and relevant experience to our customers, tailored to their local market and specific to each brand.

Kindred also works with multiple payment suppliers to ensure we provide our customers in each market with a full range of payment solutions fitted to the territory.

It’s all about automation Deploying the Kindred Core Infrastructure is a crucial step when establishing our technological platform in a new data centre. Having automated processes for this comes with a lot of benefits. It scales easier and it reduces the human errors in the processes, which in turn reduces potential incidents. This leads to a better stability in the deployed system. But most notably, it is incredibly faster!

The challenge of providing a seamless experience to our customers grows every year, as we add new products, features and channels. During peak days in 2019 we processed over 43 million transactions per day. On top of that we make sure that the ever-changing requirements of regulators in many different markets are satisfied at all times, across all our brands. Watch video: www.kindredgroup.com/futures We naturally place top priority on ensuring our sites are available to customers 24/7/365. This means not only mitigating unwanted interruptions, but also ensuring availability when making changes and implementing new releases.

During 2019, we have made 9,300 releases with no interruption in service to our customers.

The digital world continues to evolve at a rapid pace. At Kindred, we continuously monitor developments in the wider tech universe, so that we can be ready to provide new experiences to our customers as soon as new platforms and technologies come to market. 14 kindredgroup.com Bringing exciting products to new markets

USD From the data we collect we can get 13.6bn a 360° view of our customers: where US online sportsbetting they click, what devices they use, market by 2023 according to Eilers & Krejcik Gaming and more. This allows us to tailor our products to each local area.

Unibet is live in New Jersey ERHɄ4IRRW]PZERME During the year, we launched casino and sportsbook in New Jersey ERHɸ4IRRW]PZERMEERHXLI9RMFIX Sportsbook Lounge in the Mohegan Sun Pocono casino.

A unique and differentiated product offering is only growing in importance. During the year we have expanded the capabilities of our proprietary horseracing product and enabled it in more markets with great success. We have also improved the sportsbetting experience by delivering several unique front-end components. In Casino, the main focus has been on expanding our local and exclusive game offering. We have also taken important steps by rolling out our award-winning poker product in France as well as breaking out the popular game HexaPro as a stand-alone product. Kindred Group plc Annual Report and Accounts 2019 15 Strategic report Working within the Kindred Group,roup, in our very competitive industry,ry, is very intense, demanding and alwaysalways challenging. Yet it is at the sameme time very rewarding to see whathat we are able to achieve workingg all Governance together, with a strong ambitionon and fantastic team spirit, challenging our market and our competitors!

Mathieu Drida General Manager France Financial statements

Using data smarter Other information We collect data from multiple sources in real time. All data is stored and 95% made available to the business to analyse and derive insights. From that Payback of what insight we drive action. We also use measurement to optimise conversion SYVGYWXSQIVWɄFIX across our site and apps and monitor the projected lifetime value of each acquisition channel, so we know where to focus our acquisitions. We break this down into individual campaigns and we use A/B testing GBP (two version testing) to test different content, or journeys in order to improve conversion.

531 We focus on using existing machine learning techniques to deliver immediate Average total payout value whilst also exploring more cutting-edge techniques such as deep learning per customer in 2019 that won’t deliver immediate value, but in the future has the potential to solve complex problems and be transformational.

Today we have 20+ machine algorithms deployed. The idea of machine learning is that we give machines access to data and give them algorithms that let them learn for themselves.

This allows us to make smarter decisions and as we gain new insights this 6IEPXMQIHEXEJSV)YVSɄ has also allowed us to start automating decision-making. For the 2020 European Championship in football, Kindred will give the Some of our algorithms run in real time and support a range of business functions customer the most exciting and such as player safety, money laundering detection, fraud detection, but also in relevant experience when interacting media buying, high value customer detection and lifetime value projection. with our brands and product offerings.

We have built the next generation recommendation engines that Data access supports the customer to easily find the most relevant product offering and to personalise the experience. A customer placing a live bet receives a personalised recommendation on a new bet based on the first one.

We have also taken the next steps in communicating with customers when it is most relevant, with the right content and in the right communication Personalisation Reports channel. For Euro 2020 this could mean communication in near real-time when a match is being played. Again, this is to be as relevant as possible to each customer’s needs and way of interacting with the Kindred brands. Product development Insights 16 kindredgroup.com Talented people delivering success

GBP We use the data we collect to give 0.489m the best experience to our customers. Invested in employee This cannot be done without our people training in 2019 having the knowledge to interpret the 85% data we have. Customer Satisfaction Score

Personalisation and We want to be the most data recommendations We find patterns in data driven gambling company in and use them to drive value. the world. Predicting what a particular customer wants and what they’re interested in. Our real-time data allows us to observe customer behaviours, make the customer experience relevant and personal, identify potential problem users and to have relevant customer communication. Using this data, we are able to provide a fun and safe gambling experience. This has led to increased loyalty and retention among our customer base.

Tomas Hagelin Head of Data Kindred Group plc Annual Report and Accounts 2019 17 Strategic report Without diversity in our worldwideide team, we would not have got to where we are today. Our employeesees work together to deliver the bestt and safest possible gambling experience for our customers Governance every day.

Elen Barber Chief Marketing Officer

Financial statements

A strong, unified culture Other information Our values Delivering a superior customer experience is central to Kindred’s operating One global team, united by five shared model. During 2019, Kindred implemented changes that will enable faster values, all having a part to play across delivery of improvements to the customer experience across all brands each of our unique brands. and markets. Changes implemented will deliver short-term returns and support long-term sustainable growth.

We are Maintaining high employee engagement and investing in Kindred’s individuals united employee experience also remained a core focus. The 2019 Great Place to Work (GPTW) employee survey scores showed significant increases in engagement across respect, fairness, pride and camaraderie. In the response 88 per cent of employees said that Kindred was a great place We dare to work. Kindred also achieved a significant increase in employees who to challenge “feel good about the way we contribute to society” at 71 per cent – evidence that sustainability efforts are achieving improved impact.

We build on trust

We seek to innovate

We believe in friendship

Kindred is also proud to have been recognised in the following categories by GPTW for its commitment to delivering a great employee experience: Watch our employee video: > Great Place to Work 2019 www.kindredgroup.com/careers > UK’s Best Workplaces in Tech 2019 > Excellence in Wellbeing Award 2019 1,666 59 Employees Nationalities represented 18 kindredgroup.com Key performance indicators The Group assesses the performance of the business on a regular basis, to measure results and help deliver on its strategy and objectives. 912.8 128.1 0.250 Gross winnings revenue EBITDA1 Earnings per share1 (GBP million) (GBP million) (GBP) 2019 912.8 2019 128.1 2019 0.250 2018 907.6 2018 202.8 2018 0.580 2017 751.4 2017 180.3 2017 0.516 2016 544.1 2016 120.7 2016 0.366

Definition Definition Definition Gross winnings revenue (GWR) on Sports 4VSƼXJVSQSTIVEXMSRWFIJSVIHITVIGMEXMSR 4VSƼXEJXIVXE\HMZMHIHF]XLI[IMKLXIH betting is defined as the net gain or loss and amortisation charges. average number of ordinary shares for from bets placed. Within Casino & Games, the year. the Group defines GWR as the net gain Performance from bets placed and Poker GWR reflects Increased betting duties from regulated Performance the net income (“rake”) earned from markets and significant investments, both The negative impact of those items poker games completed. GWR across to enter the US market and ensure we have that affected the EBITDA has flowed all products is reported net of the cost a solid headcount to achieve future growth, down the income statement to earnings. of promotional bonuses. have come at the same time as we are While still profit generating, the Group is facing some headwinds in GWR. The Group concentrating its efforts on continuing to Performance is focused on cost efficiency measures to add shareholder value in future years. Despite regulatory headwinds during ensure we deliver improved performance, the year, GWR growth in comparison to utilise the current cost base in the most the prior year was still achieved, with the effective way, and, as always, continue Group now poised to increase this growth working to achieve a scalable business model in the coming year. in preparation for future industry changes. 0.176 1.017 8 Dividend per share Equity per share Operating margin1 (GBP) (GBP) (%) 2019 0.176 2019 1.017 2019 8 2018 0.496 2018 1.269 2018 17 2017 0.551 2017 1.296 2017 18 2016 0.310 2016 1.058 2016 18

Definition Definition Definition Amount proposed by the Board or paid 8SXEPEWWIXWPIWWXSXEPPMEFMPMXMIWHMZMHIHɸ 4VSƼXJVSQSTIVEXMSRWEWETIVGIRXEKI out for the respective year, divided by by the number of ordinary shares at the of GWR. XLIɸRYQFIVSJSVHMREV]WLEVIWMRMWWYI balance sheet date. Performance Performance Performance With top line growth not reaching The Board has reviewed the projected cash In 2019, the equity per share decreased expected levels, and costs increasing as VIUYMVIQIRXWJSVERHLEWɸTVSTSWIH as a result of the high dividend paid a result of new regulation in Sweden and to increase the 2019 dividend above the to shareholders. other Group investments, as previously +VSYTƅWTSPMG]SJYTXSɸTIVGIRXSJ mentioned, the operating margin has free cash flow available for dividends, reduced substantially during 2019. The XSɸTIVGIRX8LMWMWXSFIETTVSZIHEX Group is focused on the recovery of this the 2020 AGM and is broadly in line with margin by ensuring both marketing and XLITVMSVɸ]IEVHMWXVMFYXMSRTIVGIRXEKI operating expenditure are optimised in the coming year. Kindred Group plc Annual Report and Accounts 2019 19 Strategic report Governance 8 0.219 41.4 Other costs, share of GWR1,3 Free cash flow available for Capital expenditure on intangible assets (%) dividends per share2,3 (GBP) (GBP million) 2019 8 2019 0.219 2019 41.4 2018 8 2018 0.686 2018 23.5 Financial statements 2017 9 2017 0.743 2017 20.4 2016 8 2016 0.423 2016 19.2

Definition Definition Definition Other costs as a percentage of GWR. Net cash generated from operations, Capital expenditure on intangible assets Other costs are defined as operating adjusted for capital investments, lease (see Note 11 on page 82). costs, excluding salaries, depreciation payments, movement in customer

and amortisation. FEPERGIWERHɸGIVXEMRMXIQWEJJIGXMRK Performance Other information GSQTEVEFMPMX] WIIɸ2SXISRTEKI Capital expenditure was notably higher Performance HMZMHIHF]XLIRYQFIVSJɸSVHMREV]WLEVIW in 2019 due to the capitalisation of licence Excluding the impact of IFRS 16 this metric EXɸXLIFEPERGIWLIIXɸHEXI costs of GBP 14.9 million to enter the would have been 9 per cent. The increase 97ɸQEVOIX TVIHSQMRERXP]4IRRW]PZERME from prior year reflects the significant Performance The usual increase in investment regarding investments in people and infrastructure in The significant decrease from the the development of the Group’s platform, 2019. These investments leave the Group prior year is primarily the impact of which enables the Group to deliver the in a strong position and other costs are the reduction in profit from operations best technology to our customers is not expected to grow as significantly in in the year. also a factor. future years. With higher GWR growth also expected, this should ensure we keep the percentage at a consistent level. 1,603,903 88% Active customers in the Percentage of Kindred employees who last quarter of the year say “Kindred is a Great Place to Work” 2019 1,603,903 2019 88 2018 1,568,574 2018 87 2017 1,329,124 2017 82 2016 1,150,027 2016 80

Definition Definition An active customer is a customer The result of this survey represents the degree who has placed at least one bet to which employees believe that the Kindred HYVMRKɸXLIPEWXUYEVXIV Group has a good employee culture.

Performance Performance Despite a fall during 2019, growth of Creating a best-in-class employee experience ɸTIVɸGIRXEGLMIZIHGSQTEVIH[MXL continues to be a strategic focus across the Q4 2018 supported by a focus on Group. Achieving such a high score in 2019 is optimisation of marketing expenditure. indicative of a strong culture in all locations,

enabling high performance and continued 1 2019 figures have been impacted by the adoption business success. of IFRS 16, “Leases” and are therefore not directly comparable to comparative years. See Note 13 on page 85 for more information. Maintaining a strong culture ensures the 2 The free cash flow comparatives used in calculating this Group attracts and retains the best talent. metric have been restated. See Note 1B on page 70 for It also supports the continued successful more information on this restatement. integration of acquired companies. During 6IJIVXS2SXISRTEKIWɸERHJSVXLIVIGSRGMPMEXMSR of the Group’s alternative performance measures to 2019, strengthening the capability of our the most directly comparable measures reported in manager community has been a major focus. accordance with IFRS. 20 kindredgroup.com Sustainability Our ambitious sustainability strategy defines our sustainability priorities and sets our ambitions and commitments towards 2023 within our five priority areas: Responsible gambling, Maintaining integrity, Running a compliant business, Being Kindred and Contributing to our communities.

A successful business ensuring high level of trust. Having achieve results”. These pillars are broken is a sustainable business healthy, long-lasting customer relationships down into 11 focus areas. Kindred’s We believe a successful business is and being a positive contributor to our sustainability strategy is focused on five about future-proofing operations to surroundings offers a clear competitive priority areas where we know we can generate profit and value for a long advantage. By improving our competitive have an impact and create real value. period of time. Sustainable business advantages and acting in a responsible These five priority areas are integrated is about ensuring that profitability way today, Kindred safeguards the ability into our business model. and sustainability exist in harmony. to do good business tomorrow. We have It means continual improvements and set a high bar for our sustainability work, Collaboration between stakeholders responsibility for our operations – and including long-term ambitions and a to drive sustainable entertainment constantly striving for change for the variety of activities over the coming years We know we cannot reach our ambitions better. We see great value in delivering within our five priority areas: Responsible by working alone. We work with a wide sustainable growth and shared value for gambling, Maintaining integrity, Running range of stakeholders to deliver progress our customers, shareholders and the local a compliant business, Being Kindred and on our sustainability strategy, and we communities around us. Our focus on Contributing to our communities. continue to seek partnerships and driving a sustainable business ensures collaborate with experts. The ongoing that we keep our legal and social licence Sustainability is at the heart of Kindred’s dialogue with our stakeholders is vital to operate and maintain our customers’ business operation and is embedded in to our success. Their opinions, requests trust in a highly regulated and competitive our corporate strategy to become the and perspectives guide the choices industry. We are convinced that the lasting number one operator across our markets. we make in our effort to create a more economic success of any company today Our business is based on three pillars: sustainable business and industry. is based on acting responsibly, engaging “Always the best deal and product”, with communities and stakeholders and “Licence to operate”, and “Ability to

In this Annual Report, we have Our business model provided an overview of sustainability in the Kindred Group. Separate to this great customer iver a expe report, the Kindred Group publishes del rien We ce a comprehensive 2019 Sustainability Report, copies of which are available and app Multi-br roach Glo on our corporate website, ba rm l s fo ca at le www.kindredgroup.com. pl & e l il oc ag a st deal a l r & e be nd p e fe th ro le a ys d v a t our custom uc a S lw pu ers ts n We firs c

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In 2017, we completed an extensive Governance materiality assessment to help define The matrix below charts the results of our evaluation of Kindred’s sustainability and determine the business, social and impact, by assessing each factor in terms of both its importance to the various environmental topics that matter the stakeholder groups and the impact of each factor on Kindred’s business model most to us and our key stakeholder and the external environment in which we operate. groups. Below is an overview of the

stakeholder groups that were engaged More relevant Environmental aspects 18 in the materiality assessment and the 1 Green buildings and 4 most material topics identified within energy management 15 17 7 each group. 2 Responsible business 6 5 Financial statements travel 14 3 Waste management 13 In 2019, we continued to engage with our 16 stakeholders to better understand their Social aspects 4 Responsible Gambling Relevance 12 9 10 8 positions, explore how we can collaborate to and player protection improve our operations and get their views 5 Ethical marketing 2 on how we can do more to create long-term 6 Product transparency

1 7 Integrity in sports to 11

value in a sustainable way. Our ongoing dialogue takes place in the shape of surveys, betting stakeholders 8 Employee engagement 3 personal meetings, investor relations,

9 Diversity and equality Other information social platforms, participations in industry 10 Employee training and seminars, through our customer support development department and in online chat forums. 11 Community involvement

management Less relevant Our most material SDGs Governance aspects The UN’s Sustainable Development 12 Responsible sourcing Goals (SDGs) are a collection of 17 global 13 Tax transparency goals that form a blueprint for a better 14 Anti-money laundering and more sustainable future by 2030. 15 Anti-corruption Not material topics Most material topics They call on governments, civil society, 16 Fair competition Less impact More impact businesses and the general public to act to 17 Customer data integrity Assessed impact on Kindred’s business and external environment 18 Cyber security manage the challenges we face related to poverty, inequality, climate, environmental degradation, prosperity, and peace and Three topics were considered as less material. While we still work on them, they are not covered in this report. justice. The goals are interconnected, and within each goal there are a number of targets and topics.

Priority areas

Responsible Maintaining Running a Being Kindred Contributing to Gambling integrity Compliant business our communities

Priority SDGs

Supporting SDGs 22 kindredgroup.com Sustainability continued Kindred’s highlights and achievements in the year.

Responsible Maintaining Running a Gambling integrity compliant business

17 external audits with all open points closed

11.5% 95% of our customers use non- of our employees completed QERHEXSV]ɄGSRXVSPXSSPW training on information security 76.8% 92 of our customers adopt vulnerabilities identified, LIEPXLMIVɄKEQFPMRKFILEZMSYV VIWSPZIHɄERHVIQIHMEXIH after personalised Responsible Gambling messages 20 59% sports betting events gross winnings revenue is derived 200 VITSVXIHɄEWɄWYWTMGMSYW from locally regulated markets researchers, therapists, regulators, operators and other experts attended the Sustainable Gambling Conference 71% of our customers deposit less after detection in PS-EDS

35 million 13 transactions on average per day local jurisdictions – all monitored through local authorities

Read more on page 24 Read more on page 25 Read more on page 25 Kindred Group plc Annual Report and Accounts 2019 23 Strategic report Governance

Being Contributing to External Financial statements Kindred our communities accreditations: Other information

88% GBP MSCI AAA of our employees feel that 226m Kindred is a great place to work total tax contribution 1,666 -11.4% employees reduction in emissions TIVɄIQTPS]II

25,755 Carbon Footprint employee hours dedicated 100% XSɄXVEMRMRK of our reported CO2 emissions were offset +85% increase in employees using their extra paid leave for contributing to the local community

ESG Transparency Partner Nasdaq 59 nationalities represented in our employee group

CDP Read more on page 26 Read more on page 27 24 kindredgroup.com Sustainability continued

Responsible Gambling

Gambling is entertainment. The clear committed to do all that we reasonably majority of people enjoy our offering can to prevent and minimise harm caused 11.5% in sports betting, casino and games by gambling and to help and support those of our customers use in the way it is intended. who develop problematic and compulsive non-mandatory control tools gambling behaviours. We believe that Around 98 per cent of the people who by working together, across gambling gamble do so as a recreational activity. operators, regulators, treatment centres, However, this means that we also have reformed problem gamblers, researchers 76.8% customers who do not use our products and other partners with responsible in the way they are intended to be used. gambling ambitions, and by technological of our customers adopt For those customers, gambling is no advancements we can make a difference EɄLIEPXLMIVKEQFPMRK longer entertainment and can cause and move towards an industry that offers behaviour after responsible harm to their physical, psychological, customers true entertainment. Last year gambling messages emotional and financial health, as well Kindred, as part of our vision to make as to the people around them. We want gambling 100 per cent enjoyable, set an customers to enjoy gambling as a form of ambition to reach zero revenue derived entertainment. We have a responsibility from harmful gambling by 2023. 200 as a gambling operator, and we are researchers, therapists, regulators, operators, and other experts attended the Sustainable Gambling Conference 97% of our employees completed training on responsible gambling Kindred Group plc Annual Report and Accounts 2019 25 Strategic report Governance

Maintaining Running a Integrity compliant business

Kindred is dedicated to delivering a safe As a global Group operating in regulated Financial statements and secure platform where people can markets, we need licences and appropriate enjoy our gambling products. authorisations to operate. 17 external audits with all We want our customers to experience Kindred currently holds international open points closed a rewarding journey through our digital gambling licences in Malta and Gibraltar gambling platform and a crucial part of this and local licences in 13 jurisdictions, is to provide the required levels of system including Australia, Belgium, Denmark, and data security as well as a trustworthy Estonia, France, Germany (Schleswig-

59% Other information gambling product. Maintaining integrity Holstein), Ireland, Italy, Romania, the UK, means ensuring that gambling is conducted the USA (New Jersey and Pennsylvania) Gross winnings revenue fairly and openly, free from betting related and Sweden, which are all monitored is derived from locally corruption. The integrity of betting is through local gambling authorities. regulated markets important because of the significant risks In 2019, 59 per cent of our Gross winnings that any compromise would pose to sport, revenue was derived from locally regulated its practitioners and fans, given its scale markets and the number is growing every and popularity around the world. That is year (2018: 43 per cent). Compliance is 337 why our ambition is to always behave with a prerequisite for our business, and we suspected cases of integrity and fairness in everything we do, are subject to strict rules and provisions money laundering raised to ensure the trust of our customers, the in the countries where we hold licences. by Kindred to authorities regulators and society. With every local licence having its own specific legal, operational and commercial requirements, Kindred has invested heavily in compliance and governance 96% functions over the years. We currently have 110 employees within our business of our employees completed working on this aspect of our operations. training on GDPR We govern our operations according to internationally recognised standards and our policies outline the way we conduct business in a responsible and transparent 92 way. Our ambition is to ensure that in a vulnerabilities identified, highly regulated industry, our operations resolved and remediated always continue to meet the highest professional, compliance and ethical work standards. During 2019, Kindred undertook 17 regulatory audits across 20 all its licensed activities as required by the terms of its licences (2018: 21), sports betting events with no failures in compliance noted. reported as suspicious 11 employees appointed to be certified Privacy Champions 26 kindredgroup.com Sustainability continued

Being Kindred

Our people are our strongest assets and Considering Kindred’s significant growth, we rely on attracting and keeping top both in terms of people, products and 59 talent to deliver on Kindred’s strategy for geographical regions, we must always nationalities ensuring sustainable growth and profits. work actively to support and nourish our culture. We do that by helping employees A key element of this is to offer a feel and perform at their best at work. best-in-class employee experience. We regularly measure our employees’ 93% We invest in building a great place to work level of engagement and satisfaction to through offering access to a great office understand what supports our culture and of our employees feel they environment, training and development of what we should focus more on. Our long- are treated fairly regardless our employees, competitive benefits and term commitment is ambitious, but we of age, race, sexual great events for all employees. Kindred is a have always strived for the best for our orientation, disability, value-led community with a strong culture employees. Our ambition is to be one of position or gender built on dedicated employees with diverse the world’s highest ranked companies backgrounds. Our values play a leading within employee engagement. role in creating the ground-breaking culture necessary for Kindred to be the 980,657 number one operator across all markets. share awards granted to our employees

2019 Employee C age breakdown (%) A <30 years – 31% B 31–40 years – 46% C 41+ years – 23% B

2019 Employee gender breakdown (%) A Female – 35% B Male – 65%

B Kindred Group plc Annual Report and Accounts 2019 27 Strategic report Governance

Contributing to our communities

GBP Our long-term ambition is to equip our Financial statements communities with the knowledge and resources to build a better future.

226m We do so by continuing to stimulate generated to governments economic growth through innovation and MRɄXE\ GSVTSVEXIXE\IW:%8 by providing employment opportunities, betting duties). by paying more taxes through further licensed jurisdictions, and by engaging in

meaningful partnerships with local and Other information global organisations. We are increasing -11.4% our social engagement through additional partnerships and active sponsorships, reduction in emissions as well as working towards securing TIVɄIQTPS]II ɸTIVGIRXSJSYVTYVGLEWIHIRIVK] from renewable resources by 2023. In Malta 32 employees used their company paid charity days to support the Richmond Foundation restore one of their facilities. 100% Read more in our Sustainability Report of our reported CO2 emissions were offset +85% increase in employees using their extra paid leave for contributing to the local community

Kindred Group CO2 emissions Tonnes of COǖe 2018/19 2017/18 2016/171

Scope 1 – Operation of site facilities (tonnes CO2e) 36 38 51

Scope 2 – Grid electricity purchased (tonnes CO2e) 2,521 2,428 2,481

Scope 3 – Indirect emissions including travel (tonnes CO2e) 4,049 4,092 4,688

Total 6,606 6,558 7,220

CO2e ratio (tonnes per employee) 3.97 4.48 5.38

CO2e ratio (tonnes per GWR GBP million) 7.24 7.23 9.61

1 Gibraltar (32Red) provided an updated electricity figure for 2016/17 since last year’s appraisal, and this element was recalculated to account for the adjustment in the total figure. 28 kindredgroup.com Sports betting integrity at Kindred Group

Kindred sees match-fixing as a major threat to society.

Billions of people around the world enjoy signed Memoranda of Understanding with football as a tool for social development. participating in or consuming sport, and gaming regulators to make sure relevant As Community Partner, Kindred Group if the unpredictability of sporting events intelligence is shared with the respective will work with EFDN on the Fair Sports is taken away, this passion is in severe authorities as soon as possible. In 2019, 4 All project, which aims to educate jeopardy. However, when betting-related 183 events were deemed to be suspicious professional football players on sports match-fixing is introduced, it creates and were reported to the authorities. betting integrity in order to prevent an increasing risk to our industry. If match-fixing among the 70+ members the honesty of a sporting event is lost, Together with the European Gaming of the EFDN community. interest in our betting product is also and Betting Association (EGBA) and the lost, and eventually the whole sports Remote Gambling Association (RGA), the Monthly returns and tracking errors entertainment chain may suffer. IBIA is in close cooperation with European The Group manages the risk of the Union (EU) Athletes, an independent Sportsbook by using in-house expert Therefore, it is imperative for operators athletes’ association representing over resources and its B2B provider Kambi to show responsibility towards society 25,000 professional athletes throughout Sports Solutions and maintaining a and our industry and contribute to the Europe. A Code of Conduct and education close working relationship with them. fight against this problem. This can only programme co-financed by the European Kambi employs various risk management be done by working closely together to Commission has been established. Both tools to assess and manage the risks. promote regulated and healthy betting initiatives help professional athletes and For example, to dynamically monitor the activities in order to combat match-fixing. sports people understand and comply relative risk of the Sportsbook, it has risk Unattractive regulations increasingly with the sports’ rules against match-fixing. tools and models normally used in the channel betting activities outside a investment management industry. regulated system and thus increase In September 2019, Kindred Group the difficulty to combat match-fixing attended the annual IBIA Working The chart on page 28 sets out the monthly in an organised and efficient manner. Group, this time hosted by UEFA at their return on the Sportsbook from mid-2003 to headquarters. In October 2019, Kindred date (pre-game and live betting combined). Kindred operates under the “See Group was invited to the third edition of something, say something” approach. the International Forum for Sports The two outside lines represent the Suspicious betting activity will always be Integrity, organised by the IOC. upside and downside tracking error of this reported along three lines: to the relevant return, benchmarked against a long-term local authority, to the relevant sport In November 2019, Kindred Group hosted average return. governing body and to The International the quarterly meeting of the Sports Betting Integrity Association (IBIA). Betting Integrity Forum, bringing together The tracking errors are measured by taking representatives from sports governing the standard deviation on the difference The IBIA, formerly known as ESSA, is the bodies, betting operators, sport and betting in return between the Sportsbook and the integrity body of the regulated betting trade associations, law enforcement and average return at a 95 per cent confidence industry and reports aggregated findings gambling regulation, in order to co-ordinate interval. A 95 per cent confidence interval on suspicious betting events to regulators the battle against match-fixing. indicates that on average, for 19 months and sports governing bodies. The IBIA out of 20, the actual return should be works closely with many of the world’s In December 2019, Kindred Group between the two tracking error lines. leading sport federations, such as the launched a partnership with the European International Olympic Committee (IOC), Football for Development Network (EFDN), The chart below illustrates that over time the FIFA and UEFA. Moreover, the IBIA has with the aim of promoting the power of tracking error band has become narrower, indicating that the monthly margins have become more stable. One of the main Sportsbook monthly returns and tracking errors contributors is the fact that the relative amount of live betting within the Sportsbook 18.0% has increased, and live betting is more 16.0% stable, although it has a lower margin.

14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

-2.0% Jun 03 Dec 03 Jun 04 Dec 04 Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 Dec 19

Monthly Sportsbook margin Tracking error standard deviation Kindred Group plc Annual Report and Accounts 2019 29 Risk and risk management Strategic report

As the industry is facing several uncertainties and Risk management process Kindred Group’s risk management process challenges and as the Kindred Group has grown stipulates that a risk assessment is through the years in size and revenue, the importance conducted annually. During the second half

of the year, the Risk Management function Governance of risk management is critical now more than ever. worked together with the business (1st Uncertainty about future events is a natural feature Line and 3rd Line Organisation) to conduct a risk assessment across the Group and of all business operations, and the Group has capture the relevant risks. implemented a holistic risk management process Several initiatives across the Group have to ensure that risk is managed proactively. been carried out to perform the risk assessment and to identify and assess the relevant risks. The data is captured Risk governance Continuous Assessment Risk function and compiled into the risk report. The risk Financial statements Kindred’s Board of Directors has overall reviews risk to account for changes in report is presented annually to the Audit responsibility for the risk management market circumstances and developments Committee and the Board of Directors. process and risk governance. The Executive within the Group’s operating areas. Management team, with the approval of Each risk is assigned a 1st Line owner, the Board of Directors, is responsible for Frequent Monitoring Risk function to and the owner has the responsibility to identifying, assessing and managing the monitor and liaise closely with 1st Line implement the mitigation strategy and risk within the Group. and 3rd Line Organisation. to monitor the risk with assistance of the Risk Management function.

The risk management oversight of risk The Risk Management and Internal Other information is based on the following five principles: Audit teams perform reviews of the This enables the Group to: effectiveness of the risk mitigation > Map and anticipate identifiable risks Independence Responsible for assessing controls and report the results to the and regularly update assessments and monitoring risks across the Group, Audit Committee regularly. > Prioritise them against Group strategy independently of the operating areas of and risk appetite the Group. The Kindred Group divides the principal > Allocate risk ownership risks into general risks and industry- > Develop and implement policies and Prudential Management Responsibility specific risks. mitigation plans covers all areas and assesses risk from > Communicate and embed key control a Group-wide perspective providing a General objectives to 1st Line Organisation consistent approach across all areas. > Strategic > Provide training and support, and > Operational regularly check the effectiveness Business Activity Risk function should > Financial (see Note 2C pages 75 of the process be consulted to review and assess risk. and 76) > Compliance

Risk is identified using the process described in the diagram below

Risk Management and Audit Committee Kindred Group’s Board Risk Management and 1st Line Organisation Internal Audit teams

Risk Mitigation Plans Approval of annual Internal Review of key risks Revision of Internal Audit Plan Work with 1st Line Organisation Audit Plan and sign-off Update, add and remove audit on Risk Mitigation Plans Update and add audit projects if projects if necessary

Nov/Dec necessary

Risk assessment Review key risks Identify and assess key risks for > Review the Group the Kindred Group risk assessment > Add risks as appropriate > Review risk

Aug/Oct management process > Sign-off on key risks and risk management process

Risk Monitoring Review of Internal Audit Plan Revision of Internal Audit Plan Work with 1st Line Organisation > Review the revised Internal Update, add and remove audit on update of risk Audit Plan projects if necessary

May/Jul > Discuss updates with the Internal Audit function

Jan/Apr > Discuss updates with the Internal Audit function 30 kindredgroup.com Principal risks and uncertainties

The tables below presents some of the risks that could have implications for the Group’s future development. The risks are not arranged by order of importance or potential financial impact on the Group’s profit or financial position.

1. Risk Mitigation Strategic Non-sustainable regulation The Group maintains ongoing dialogue with regulators and Risk If core, or new, markets establish a policymakers in its core markets, providing input on new or non-sustainable regulatory model with updated regulation to help create a sustainable regulatory high taxes and/or significant product environment that is aligned to customer demand and the restrictions, it is hard to maintain a cross-border digital market reality. The Group’s compliance profitable business. with existing regulation is embedded in the wider organisation and tested regularly by external agencies. Third party dependency The risk is mitigated by reducing dependency on single Lack of control over availability of suppliers where commercially viable and working with external suppliers gives rise to risk multiple third-party suppliers. This allows the Group to of either business disruption or sub- mitigate the risks of suppliers failing to operate effectively. optimisation. As the industry evolves there is a risk of supplier concentration; if key suppliers acquire dominant or monopoly positions, that creates a risk of uncontrolled price increases.

2. Risk Mitigation Operational External security intrusion attempts The Group in 2019 became ISO 27001 certificate compliant Risk Either as a result of a cyber-attack or and will continue to improve its policies and procedures internal security weakness, the Group’s with technology advancements. customer data, including sensitive data such as passwords and/or banking The Group is committed to training and educating all details, could leak into the public domain. employees as required. Failure in recruiting or The Group identifies and monitors key staff and works VIXEMRMRKOI]ɄWXEJJ hard to be an attractive employer to encourage key staff Failure to recruit or retain existing to stay. Succession planning is also performed for all key key staff will lead to difficulties in staff and functions. EGLMIZMRKXLIɸ+VSYTƅWSFNIGXMZIW Marketing restrictions While this relies on external factors and the Group is The increase in marketing restrictions committed to being compliant, the Group has also across channels in a number of taken the initiative to focus part of its marketing jurisdictions makes it more difficult towards Responsible Gambling to raise awareness. for the Group to promote its brands and product offerings. Kindred Group plc Annual Report and Accounts 2019 31 Strategic report Governance

3. Risk Mitigation Financial Foreign exchange The Group’s operating cash flows provide a natural hedge Risk The Group operates internationally of operating currency risks, since deposits and pay-outs

and in addition to GBP, is exposed to to customers in different territories are matched in the Financial statements foreign exchange risk arising from same currency. various currency exposures, primarily with respect to the euro, Swedish krona, The Group also monitors key balances such as cash, customer Norwegian krone, Danish krone and balances and borrowings held in foreign currencies with the Australian dollar. Certain events may aim that this will provide a natural hedge against some foreign have an effect on foreign exchange rates. exchange risk. It also continuously forecasts its future cash flows and will aim to draw down in currencies where it believes Foreign exchange risk can arise through that the potential translation gains and losses arising may be the Group’s daily operations, as well as in offset by future operational cash flows in the same currency. respect of significant assets and liabilities Other information including its credit facility when it draws down in currencies other than GBP. Odds/trade The Group has, via its in-house expert resources and its The risk that the Group will lose money Sportsbook supplier Kambi, adopted specific risk management on its business due to unfavourable policies that control the maximum risk exposure for each sport outcomes on the events where the or event on which the Group offers odds. The results of the Group offers odds. most popular teams in the major football leagues comprise the predominant market risk. Through diversification, which is a key element of the Group’s business, the risk is spread across a large number of events and sports.

4. Risk Mitigation Compliance Corporate tax Supervision of tax compliance across the Group is imperative. Risk The Group operates in multiple Engagement with tax advisers, industry peers and associations jurisdictions and is subject to a variety to be informed about new legislation and planning for mitigating of national tax laws and compliance risk deriving from such changes. procedures, together with varying approaches taken by different tax authorities towards transfer pricing for cross-border businesses. Regulatory compliance The Group is fully committed towards compliance and Changes to regulatory, legislative and implementing any changes as required on time. The Group fiscal regimes for betting and gaming in also does mandatory training for all employees as part key markets could have an adverse effect of our training and awareness campaign. on the Group’s results and additional costs may be incurred in order to comply with any new laws or regulations.

5. Risk Mitigation Industry- Negative public perception The Group continues its commitment towards open dialogue specific Constant negative media attention with regulators and its focus towards player safety and towards the industry drives responsible gambling. More information can be found Risk adverse policy decisions with stricter in the Group’s Sustainability report. rules and/or increased enforcement. 32 kindredgroup.com Financial review

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Sports betting gross margin

Before free bets After free bets Long-term average 12%

10%

0% Q1 Q2 Q3 Q4 YR Q1 Q2 Q3 Q4 YR Q1 Q2 Q3 Q4 YR Q1 Q2 Q3 Q4 YR Q1 Q2 Q3 Q4 YR Q1 Q2 Q3 Q4 YR Q1 Q2 Q3 Q4 YR Q1 Q2 Q3 Q4 YR Q1 Q2 Q3 Q4 YR Q1 Q2 Q3 Q4 YR

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Total margin all products 2019 2019 2019 2019 2019 2018 2017 2016 Q4 Q3 Q2 Q1 FY FY FY FY 8SXEPQEVKMREPPɸTVSHYGXW FIJSVIɸJVIIFIXW

-RGPYHIW7TSVXWFIXXMRKERH'EWMRS +EQIWFYXI\GPYHIW4SOIVVEOIWERH3XLIVVIZIRYIW 34 kindredgroup.com Financial review continued

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The Group has three decision-making bodies Remuneration Committee 8LI6IQYRIVEXMSR'SQQMXXIIGSRWMHIVWERH in a hierarchical relationship to one another: IZEPYEXIWVIQYRIVEXMSREVVERKIQIRXWJSV the Shareholders’ meeting, the Board of Directors WIRMSVQEREKIVWERHSXLIVOI]IQTPS]IIW and the Chief Executive Officer. ERHQEOIWVIGSQQIRHEXMSRWXSXLI&SEVH Governance 8LI6IQYRIVEXMSR'SQQMXXIIVITSVX GERFIJSYRHSRTEKIWXS Shareholders’ meeting and 6IKEVHPIWWSJLS[XLI]EVIETTSMRXIH %RRYEPɄ+IRIVEP1IIXMRK QIQFIVWSJXLI2SQMREXMSR'SQQMXXII Audit Committee 8LI7LEVILSPHIVWƅQIIXMRKMWXLI+VSYTƅW EVIXSTVSQSXIXLIMRXIVIWXWSJEPP 8LI%YHMX'SQQMXXIIEHZMWIWERH LMKLIWXHIGMWMSRQEOMRKFSH]ERHEJSVYQ WLEVILSPHIVW1IQFIVWEVIRSXXS QEOIWVIGSQQIRHEXMSRWXSXLI&SEVH JSVWLEVILSPHIVWXSI\IVGMWIMRJPYIRGI VIZIEPXLIGSRXIRXERHHIXEMPWSJ SRQEXXIVWMRGPYHMRKJMRERGMEPVITSVXMRK 8LI7LEVILSPHIVWƅQIIXMRKGERHIGMHISR RSQMREXMSRWHMWGYWWMSRW MRXIVREPGSRXVSPWVMWOQEREKIQIRXERH ER]+VSYTMWWYI[LMGLHSIWRSXI\TVIWWP] XLIETTSMRXQIRXSJWXEXYXSV]EYHMXSVW Financial statements JEPP[MXLMRXLII\GPYWMZIGSQTIXIRGISJ 6IKYPEVERHW]WXIQEXMGIZEPYEXMSR 8LIVSPIɸSJXLI'SQQMXXIIMWWIXSYXMR ERSXLIVGSVTSVEXIFSH]-RSXLIV[SVHW JSVQWXLIFEWMWJSVEWWIWWQIRXSJXLI MXW[VMXXIR8IVQWSJ6IJIVIRGI XLI7LEVILSPHIVWƅQIIXMRKLEWEWSZIVIMKR TIVJSVQERGISJXLI&SEVHERHXLI'LMIJ VSPIɸSZIVXLI&SEVHSJ(MVIGXSVWERHXLI )\IGYXMZI3JJMGIVERHJSVXLIGSRXMRYSYW 8LI%YHMX'SQQMXXIIVITSVXGERFI 'LMIJ)\IGYXMZI3JJMGIV HIZIPSTQIRXSJXLIMV[SVO JSYRHSRTEKI

%GGSVHMRKXSXLI7[IHMWL'SVTSVEXI 8LI2SQMREXMSR'SQQMXXIIVITSVXGER 'LMIJ)\IGYXMZI3JJMGIVERH +SZIVRERGI'SHIXLIGSRXVSPFSH]MW FIɸJSYRHSRTEKI8LI2SQMREXMSR )\IGYXMZIɄ'SQQMXXII XLIɸWXEXYXSV]EYHMXSV[LMGLMWETTSMRXIH 'SQQMXXIIƅW1SXMZEXIH3TMRMSRW 8LI'LMIJ)\IGYXMZI3JJMGIVMWVIWTSRWMFPIJSV Other information F]ɸXLI7LEVILSPHIVWƅQIIXMRK GERFIɸJSYRHSRXLI+VSYTƅW[IFWMXI XLI+VSYTƅWHE]XSHE]QEREKIQIRXXSKIXLIV [[[OMRHVIHKVSYTGSQ [MXLXLI)\IGYXMZI'SQQMXXII8LI)\IGYXMZI )EGLWLEVILSPHIVLEWXLIVMKLXXS 'SQQMXXIIGSRWMWXWSJXLI')3ERHIMKLX TEVXMGMTEXIMRXLI7LEVILSPHIVWƅQIIXMRK &SEVHSJ(MVIGXSVW WIRMSVSJJMGIVWSJ[LSQX[SEVI[SQIR ERHXSZSXIEGGSVHMRKXSXLIRYQFIVSJ /MRHVIH+VSYTTPGMWMRGSVTSVEXIHERH WLEVIWS[RIH7LEVILSPHIVW[LSEVIRSX VIKMWXIVIHMR1EPXEFYXPMWXIHSR2EWHEU Statutory auditor EFPIXSEXXIRHMRTIVWSRGERI\IVGMWIXLIMV 7XSGOLSPQERHXLIVIJSVILEWHIGMHIH 8LI+VSYTƅWWXEXYXSV]EYHMXSVMWETTSMRXIH VMKLXWF]TVS\] XSETTP]XLITVMRGMTPIWSJXLI7[IHMWL F]XLI7LEVILSPHIVWƅQIIXMRKXSI\EQMRIXLI 'SVTSVEXI+SZIVRERGI'SHI8LMWWXEXIW +VSYTƅWERRYEPEGGSYRXWERHEGGSYRXMRK *SVQSVIMRJSVQEXMSREFSYXXLI%+1 XLEXEQENSVMX]SJXLIQIQFIVWSJXLI TVEGXMGIW8LIWXEXYXSV]EYHMXSVTVIWIRXW WIITEKI &SEVHEVIXSFIMRHITIRHIRXSJXLI+VSYT XLIMVERRYEPEYHMXVITSVXXSɸXLI%YHMX MXWQEREKIQIRXERHXLI+VSYTƅWQENSV 'SQQMXXIIERHXLI&SEVHEW[IPPEWXS Nomination Committee WLEVILSPHIVW8LI/MRHVIH+VSYTƅW&SEVH XLIS[RIVWEXXLI%RRYEP+IRIVEP1IIXMRK 8LITVMRGMTEPXEWOWSJXLI2SQMREXMSR SJ(MVIGXSVWMWGSQTSWIHIRXMVIP]SJ 'SQQMXXIIEVIXSTVSTSWIHIGMWMSRWXS 2SRI\IGYXMZI(MVIGXSVWSJ[LSQXLI XLI7LEVILSPHIVWƅQIIXMRKSRIPIGXMSR QENSVMX]EVIMRHITIRHIRX8LI&SEVH ERHVIQYRIVEXMSRMWWYIWSJXLI&SEVH MWVIWTSRWMFPIJSVXLI+VSYTƅWSZIVEPP SJ(MVIGXSVWERHTVSGIHYVEPMWWYIWJSV WXVEXIK]ERHHMVIGXMSR XLIETTSMRXQIRXSJXLIJSPPS[MRK]IEVƅW 2SQMREXMSR'SQQMXXII

Corporate Governance model

Shareholders Nomination by the AGM Committee

Remuneration Committee Board of External Auditor Directors Audit Committee

CEO and Executive Internal Committee Audit 36 kindredgroup.com Board of Directors An experienced team, committed to high standards of corporate governance.

8LI/MRHVIH+VSYT&SEVH SJ(MVIGXSVWGSQTVMWIW ERI\TIVMIRGIHXIEQ GSQQMXXIHXSLMKLWXERHEVHW SJGSVTSVEXIKSZIVRERGI MRMXWQEREKIQIRXSJXLI +VSYTERHMXWEGGSYRXEFMPMX] XSWLEVILSPHIVW

8LIQIRXMSRIH7[IHMWL (ITSWMXEV]6IGIMTX 7(6 LSPHMRKWMRGPYHITIVWSREP LSPHMRKWJEQMP]LSPHMRKWERH LSPHMRKWXLVSYKLGSQTERMIW MR[LMGL(MVIGXSVWLEZI ERMRXIVIWXERHEVIEWEX *IFVYEV]

%PPQIQFIVWI\GITX%RHIVW 7XVʯQEVIMRHITIRHIRXSJ Anders Ström Hélène Barnekow Peter Boggs XLI+VSYTMXWQEREKIQIRX 'LEMVQERSJXLI&SEVH Board member Board member, ERHQENSVWLEVILSPHIVWSJ QIQFIVSJXLI XLI+VSYT 7[IHMWLGMXMÎR&SVR 7[IHMWLGMXMÎR&SVR Remuneration Committee *SYRHIVSJ/MRHVIH+VSYTMR &SEVHQIQFIVWMRGI ERH&SEVHQIQFIVWMRGI -RHITIRHIRX 97GMXMÎR&SVR MRGSVTSVEXMSR1EXLIQEXMGW &SEVHQIQFIVWMRGI 7XEXMWXMGWERH)GSRSQMGW Current assignments -RHITIRHIRX&%MR%QIVMGER WXYHMIWEX/EVPWXEH9RMZIVWMX] &SEVH1IQFIVSJ+27XSVI 7XYHMIWJVSQ;EWLMRKXSR 2SVH%7ERH')3SJ 'SPPIKI1EV]PERH97% Current assignments 1MGVSWSJX7[IHIR%& &SEVHQIQFIVSJ:IVEPHE%& WMRGI Current assignments GSJSYRHIVSJ/EQFM7TSVXW &SEVHQIQFIVSJ 7SPYXMSRWMRERH&SEVH Previous assignments 9PTMER7]WXIQW0XHERH QIQFIVSJ/EQFM ')3SJ8IPME7[IHIRJVSQ 'ERXVE]FVMHKI8VYWX ERH''3SJ8IPME Previous assignments 'SQTER]JVSQ Previous assignments ,IEHSJ&YWMRIWW(IZIPSTQIRX 7:4+PSFEP*MIPH 4EVXRIV 4VIWMHIRXERH')3SJ+VI] EX9RMFIX+VSYTJVSQ 1EVOIXMRKSJ)1'JVSQ (MVIGX;SVPH[MHIJVSQ ERH')3SJ9RMFIX+VSYT :EVMSYWTSWMXMSRW (MVIGXSVSJ3KMPZ] JVSQ [MXL7SR])VMGWWSR1SFMPI 1EXLIV(MVIGX4PGJVSQ 'SQQYRMGEXMSRWJVSQ 1EREKMRK(MVIGXSVSJ Holdings &VS[R(MVIGX-RGJVSQ /MRHVIH+VSYTTPG ERH4VIWMHIRXERH')3 7(6W XLVSYKLGSQTER] Holdings SJ2(17-RGJVSQ /MRHVIH+VSYTTPG7(6W Holdings /MRHVIH+VSYTTPG7(6W Kindred Group plc Annual Report and Accounts 2019 37 Strategic report Governance Financial statements Other information Gunnel Duveblad Erik Forsberg 7XIJER0YRHFSVK 'EVP1EKRYW1ɫRWWSR Board member, Board member, Board member, Board member, 'LEMV[SQERSJXLI QIQFIVSJXLI 'LEMVQERSJXLI QIQFIVSJXLI Audit Committee Audit Committee Remuneration Committee Remuneration Committee

7[IHMWLGMXMÎR&SVR 7[IHMWLGMXMÎR&SVR 7[IHMWLGMXMÎR&SVR 7[IHMWLGMXMÎR&SVR &SEVHQIQFIVWMRGI &SEVHQIQFIVWMRGI &SEVHQIQFIVWMRGI &SEVHQIQFIVWMRGI -RHITIRHIRX -RHITIRHIRX -RHITIRHIRX -RHITIRHIRX

Current assignments Current assignments Current assignments Current assignments 'LEMVQERSJXLI&SEVHJSV,M5 -RHITIRHIRXEHZMWIVERH &SEVHQIQFIVSJ+ 4VIWMHIRXERH')3SJ%GERHS -RXIVREXMSREP%&8IEQ3PMZME (MVIGXSVSJ7XMPPJVSRX+VSYT )RXIVXEMRQIRX%& 4YFP %&WMRGI +VSYT%&+PSFEP7GERRMRK%7 TYFP 7EJMVEF%&ERH03<'SRXEMRIV ERH6YXIVHEQ&SEVHQIQFIV 8IGLRSPSK]%&'LEMVQERSJ Previous assignments SJ7[IGS%&ERH(YWXMR%& Previous assignments XLI&SEVHEX)ROPEVI)OSRSQM %RYQFIVSJKPSFEPVSPIW '*3SJ-RXVYQ TYFP JVSQ 7ZIVMKI%&ERH2SXI [MXLMR)VMGWWSR%&ERH&SEVH Previous assignments '*3SJ'MWMSR TYFP (IWMKR7XYHMS QIQFIVEX%WMEOEWXMIXS 4VIWMHIRXSJ)(7 2SVXL JVSQERH&YWMRIWW +VSYTTPG )YVSTI JVSQ %VIE'*3ERH+VSYT8VIEWYVIV Holdings ERHZEVMSYWVSPIWEX-&1 EX)*)HYGEXMSR+VSYTJVSQ /MRHVIH+VSYTTPG7(6W Holdings JVSQ /MRHVIH+VSYTTPG7(6W

Holdings Holdings /MRHVIH+VSYTTPG7(6W /MRHVIH+VSYTTPG7(6W

38 kindredgroup.com Executive Committee Kindred Group’s Executive Committee consists of the CEO and eight senior officers; six male and two female.

1 4 7

2 5 8

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Kindred Group plc’s issued share capital as at 8LI&SEVHLEWVIZMI[IHXLITVSNIGXIHGEWL VIUYMVIQIRXWJSVERHMWTVSTSWMRKXS 31 December 2019 comprised 230,126,200 ordinary MRGVIEWIXLIHMZMHIRHJSVXLMW]IEVEFSZI shares each with a par value of GBP 0.000625. ɸTIVGIRXSJJVIIGEWLJPS[EZEMPEFPIJSV HMZMHIRHW8LMWMWMRPMRI[MXLXLIHMZMHIRH All ordinary shares carry equal voting rights and TSPMG]XSHMWXVMFYXIWYVTPYWGEWL rights to share in the assets and profits of the Group. 2SHMZMHIRH[MPPFITEMHSRXLIWLEVIW 7(6WLIPHF]XLI'SQTER]JSPPS[MRKXLI WLEVITYVGLEWITVSKVEQQI RMP 0MWXMRKSJ7[IHMWL(ITSWMXEV]6IGIMTXW [LIVIQEREKIQIRXERHXLI&SEVH GSRWMHIVXLEXXLI+VSYTLEWKIRIVEXIH /MRHVIH+VSYTTPG XLI'SQTER] MWPMWXIH Share purchase programme SR2EWHEU7XSGOLSPQXLVSYKL7[IHMWL WYVTPYWGEWLXLEXMXHSIWRSXVIUYMVIIMXLIV %XXLI%+1WJVSQXSXLI (ITSWMXEV]6IGIMTXW 7(6W MWWYIHF] XSJYRHMXWRSVQEPSTIVEXMSRWEGUYMWMXMSRW WLEVILSPHIVWETTVSZIHEWLEVITYVGLEWI 7OERHMREZMWOE)RWOMPHE&EROIR%& SVSXLIVGSVTSVEXIHIZIPSTQIRXTVSNIGXW TVSKVEQQIEYXLSVMWMRKXLI&SEVHXS TYFP 3RI7(6VITVIWIRXWSRISVHMREV] ;LIRGSRWMHIVMRKFSXLVIKYPEVERHSRI EGUYMVI+&4SVHMREV]WLEVIW WLEVI3Rɸ.YRIXLI7(6W[IVI SJJHMWXVMFYXMSRWXLI&SEVH[MPPXEOIMRXS 7(6WMRXLI'SQTER]8LIQE\MQYQ PMWXIHSRXLI3PMWXSJXLI7XSGOLSPQ EGGSYRXXLISZIVEPPGEWLVIUYMVIQIRXXS RYQFIVSJWLEVIW7(6WXLEXGERFI 7XSGO)\GLERKI 7XSGOLSPQWFʯ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ividend policy FITEMHXSLSPHIVWSJSVHMREV]WLEVIWERH HYVMRKWLEVIW7(6W 8LIHMZMHIRHTSPMG]MWXSTE]EHMZMHIRH 7(6W-JETTVSZIHEXXLI%RRYEP+IRIVEP [IVIEGUYMVIHHYVMRKERH ERHSVI\IGYXIWLEVITYVGLEWIWSJYT 1IIXMRK %+1 XLIHMZMHIRH[MPPFI WLEVIW7(6W[IVIEGUYMVIHHYVMRK XSɸTIVGIRXSJXLI+VSYTƅWJVIIGEWL TEMHSR1E]ERH2SZIQFIV -R SJXLI JPS[EZEMPEFPIJSVHMZMHIRHW HIJMRIHEW -RXLIXSXEPHMZMHIRHSJ+&4 WLEVIW7(6WLIPHF]XLI+VSYT[IVI GEWLJPS[JVSQSTIVEXMSRWEHNYWXIHJSV [EWTEMHMRX[SIUYEPMRWXEPQIRXW YWIHɸMRGSRRIGXMSR[MXLXLI+VSYTƅWWLEVI QSZIQIRXWMR[SVOMRKGETMXEPGETMXEP 8LIJMVWXSJ7)/ +&4 [EW TPERW8LIRYQFIVSJMWWYIHWLEVIWEX MRZIWXQIRXWXE\TE]QIRXWERHGIVXEMR TEMHSYXJVSQ)YVSGPIEVSR1E] (IGIQFIV[EWSJ MXIQWEJJIGXMRKGSQTEVEFMPMX] 8LIWIGSRHMRWXEPQIRXSJ7)/ +&4 [LMGLɸEVILIPHF]XLI'SQTER] [EWTEMHSYXSR2SZIQFIV VITVIWIRXMRKTIVGIRXSJXLIXSXEP -REHHMXMSRXSXLIHMZMHIRHHIWGVMFIH 8LITVSTSWIHHMZMHIRHEQSYRXW RYQFIVSJWLEVIW EFSZI[LMGL[SYPHRSVQEPP]FIMRXLI XSEXSXEPTVSTSWIHHMWXVMFYXMSRSJ+&4 JSVQSJERRYEPGEWLHMZMHIRHWXLI&SEVH +&4 QMPPMSR[LMGLMW GEREPWSHIGMHIXSHMWXVMFYXISRISJJ TIVGIRXSJXLI+VSYTƅWJVII HMZMHIRHWSVI\IGYXIWLEVITYVGLEWIW GEWLJPS[EZEMPEFPIJSVHMZMHIRHWJSV

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Kindred Group SEK thousands 240 200,000 Kindred Group share price OMX St PI Volume Financial statements Kindred Group Total Return OMX St GI

180 150,000 Other information 120 100,000

60 50,000

0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Share capital development 8LIHIZIPSTQIRXSJXLI'SQTER]ƅWWLEVIGETMXEPWMRGIXLI+VSYTƅWVISVKERMWEXMSRGEVVMIHSYXSR2SZIQFIVMWWLS[RMRXLI JSPPS[MRKXEFPI%XER)+1SR(IGIQFIVWLEVILSPHIVWETTVSZIHXSWYFHMZMHIXLIWLEVIWIJJIGXMZISR(IGIQFIVMREWLEVI WTPMXXSWLEVIW[MXLERSQMREPZEPYISJ+&4%WEX(IGIQFIVXLIXSXEPRYQFIVSJSVHMREV]WLEVIW [EW

Change in Total Increase number number Par value in share Share Issue ordinary ordinary per share capital capital Transaction Year price shares shares GBP GBP GBP -WWYIHMR+VSYTVISVKERMWEXMSR — )\IVGMWISJWLEVISTXMSRW )\IVGMWISJWLEVISTXMSRW )\IVGMWISJWLEVISTXMSRW )\IVGMWISJWLEVISTXMSRW )\IVGMWISJWLEVISTXMSRW )\IVGMWISJWLEVISTXMSRW )\IVGMWISJWLEVISTXMSRW )\IVGMWISJWLEVISTXMSRW )\IVGMWISJWLEVISTXMSRW )\IVGMWISJWLEVISTXMSRW )\IVGMWISJWLEVISTXMSRW )\IVGMWISJWLEVISTXMSRW 7LEVIWTPMX — — )\IVGMWISJWLEVISTXMSRW 50 kindredgroup.com Shares and share capital continued

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7XIJER0YRHFSVK 'LEMVSJXLI6IQYRIVEXMSR'SQQMXXII 52 kindredgroup.com Remuneration Committee report continued

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&SEVHSJ(MVIGXSVWGSQTIRWEXMSR Audit Remuneration US Committee Committee Committee 2019 total 2018 total &SEVHJIIW JIIW JIIW JIIW Other1 JIIW JIIW Directors GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 %RHIVW7XVʯQ'LEMVQER Ɓ Ɓ Ɓ Ɓ 260.0 /VMWXSJIV%V[MR Ɓ Ɓ Ɓ 32.3 ,ʣPʢRI&EVRIOS[ Ɓ Ɓ Ɓ 79.0 7STLME&IRH^ ƁƁƁƁƁ– 4IXIV&SKKW Ɓ 83.6 2MKIP'SSTIV ƁƁƁƁƁ– +YRRIP(YZIFPEH Ɓ Ɓ 91.6 )VMO*SVWFIVK ƁƁƁ49.7 Ɓ 'EVP1EKRYW1ʟRWWSR Ɓ Ɓ Ɓ 43.4 Ɓ 4IXIV*VMMW ƁƁƁƁ21.1 7XIJER0YRHFSVK Ɓ Ɓ Ɓ 77.0 Total 602.0 74.0 39.5 20.2 2.0 737.7 717.6

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Ordinary Ordinary shares/ shares/ SDRs at SDRs at 31 December 31 December Directors 2019 2018 %RHIVW7XVʯQ'LEMVQER 5,831,200 ,ʣPʢRI&EVRIOS[ 4,500 4IXIV&SKKW 138,990 +YRRIP(YZIFPEH 8,000 )VMO*SVWFIVK 5,000 Ɓ 7XIJER0YRHFSVK 537,600 'EVP1EKRYW1ʟRWWSR 10,000 Ɓ Total 6,535,290

Ordinary Ordinary shares/ shares/ SDRs at SDRs at 31 December 31 December )\IGYXMZI'SQQMXXII 2019 2018 ,IRVMO8NʞVRWXVʯQ')3 1,677,866 %PFMRHI&IEYVIKEVH 7,041 )PIRE&EVFIV 360 Ɓ &VMXX&SIWOSZ 24,163 6LSHVM(EVGL 22,665 +EZMR,E][EVH 17,288 *VIHVMO/NIPP 1,948 Ɓ 1EVGYW7QIHQER 11,875 %RRI.EET7RMNHIVW 7,490 Ɓ Total 1,770,696

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7XIJER0YRHFSVK 'LEMVSJXLI6IQYRIVEXMSR'SQQMXXII Kindred Group plc Annual Report and Accounts 2019 57 Directors’ report Strategic report

The Directors present their annual report on the 3R.YRI/MRHVIH+VSYT[IRXPMZI affairs of the Group, together with the audited MR2I[.IVWI][MXLXLI9RMFIXFVERH consolidated financial statements and auditors’ 3R.YRIXLI+EQFPMRK

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Future developments 7XEXIQIRXSJ(MVIGXSVWŭVIWTSRWMFMPMXMIW Independent auditors %WXLI97QEVOIXVITVIWIRXWXLIPEVKIWX JSVXLIJMRERGMEPWXEXIQIRXW 8LIEYHMXSVW4['1EPXEERH4['9/ STTSVXYRMX]JSVJYXYVIVIKYPEXIHKVS[XL 8LI(MVIGXSVWEVIVIUYMVIHF]XLI1EPXE LEZIMRHMGEXIHXLIMV[MPPMRKRIWWXS XLI+VSYTIRXIVIHXLMWQEVOIXHYVMRK 'SQTERMIW%GX 'ET XSTVITEVI GSRXMRYIMRSJJMGIERHETVSTSWEPXS *YXYVII\TERWMSRMRXLI97MWSR JMRERGMEPWXEXIQIRXW[LMGLKMZIEXVYIERH VIETTSMRXXLIQLEWFIIRWIRXXSXLI XLILSVM^SR[MXLRI\XWXITWFIMRKXLI JEMVZMI[SJXLIWXEXISJEJJEMVWSJXLI+VSYT 2SQMREXMSR'SQQMXXII I\TERWMSRMRXS-RHMEREERH-S[E EWEXXLIIRHSJIEGLVITSVXMRKTIVMSHERH SJXLITVSJMXSVPSWWJSVXLEXTIVMSH 3RFILEPJSJXLI&SEVH Directors and their interests 8LIJSPPS[MRK(MVIGXSVWIPIGXIHEXXLI%+1 -RTVITEVMRKXLIJMRERGMEPWXEXIQIRXW 1EPXE1EVGL SR1E]WIVZIHHYVMRKXLI]IEVERH XLI(MVIGXSVWEVIVIWTSRWMFPIJSV WYFWIUYIRXP]YRPIWWSXLIV[MWIWXEXIH > IRWYVMRKXLEXXLIJMRERGMEPWXEXIQIRXW Anders Ström LEZIFIIRHVE[RYTMREGGSVHERGI Chairman and Director Anders Ström 'LEMVQER [MXL-RXIVREXMSREP*MRERGMEP6ITSVXMRK 7XERHEVHWEWEHSTXIHF]XLI)9 Gunnel Duveblad Hélène Barnekow 2SRI\IGYXMZI > WIPIGXMRKERHETTP]MRKETTVSTVMEXI Director Peter Boggs 2SRI\IGYXMZI EGGSYRXMRKTSPMGMIW Gunnel Duveblad 2SRI\IGYXMZI > QEOMRKEGGSYRXMRKIWXMQEXIWXLEXEVI Erik Forsberg 2SRI\IGYXMZI VIEWSREFPIMRXLIGMVGYQWXERGIW ERH 7XIJER0YRHFSVK 2SRI\IGYXMZI > IRWYVMRKXLEXXLIJMRERGMEPWXEXIQIRXW EVITVITEVIHSRXLIKSMRKGSRGIVRFEWMW 'EVP1EKRYW1ɫRWWSR 2SRI\IGYXMZI YRPIWWMXMWMRETTVSTVMEXIXSTVIWYQIXLEX XLI+VSYT[MPPGSRXMRYIMRFYWMRIWWEWE 8LIMRXIVIWXWSJXLI(MVIGXSVWEVIWLS[RSR KSMRKGSRGIVR TEKIWERH 8LI(MVIGXSVWEVIEPWSVIWTSRWMFPIJSV Research and development HIWMKRMRKMQTPIQIRXMRKERHQEMRXEMRMRK 8LI+VSYTGETMXEPMWIWWMKRMJMGERXGSWXW MRXIVREPGSRXVSPWEWXLI]HIXIVQMRIMX MRVIPEXMSRXSXLIHIZIPSTQIRXSJMXW RIGIWWEV]XSIREFPIXLITVITEVEXMSRSJ GSVI-8TPEXJSVQEQSRKQER]SXLIV JMRERGMEPWXEXIQIRXWXLEXEVIJVIIJVSQ TVSNIGXW(YVMRKXLI]IEVXLI+VSYT QEXIVMEPQMWWXEXIQIRX[LIXLIVHYIXS GETMXEPMWIH+&4 +&4 JVEYHSVIVVSVERHXLEXGSQTP][MXLXLI QMPPMSRSJHIZIPSTQIRXI\TIRHMXYVI 1EPXE'SQTERMIW%GX 'ET 8LI]EVI ERHI\TIRWIHVIWIEVGLGSWXWSJ EPWSVIWTSRWMFPIJSVWEJIKYEVHMRKXLI +&4ɸ ɸ+&4ɸ QMPPMSR EWWIXWSJXLI+VSYTERHLIRGIJSVXEOMRK XSXLIMRGSQIWXEXIQIRX VIEWSREFPIWXITWJSVXLITVIZIRXMSRERH HIXIGXMSRSJJVEYHERHSXLIVMVVIKYPEVMXMIW Employees 8LI+VSYTMWGSQQMXXIHXSIUYEPMX]SJ 8LIGSRWSPMHEXIHJMRERGMEPWXEXIQIRXW STTSVXYRMX]MREPPEWTIGXWSJIQTPS]QIRX SJ/MRHVIH+VSYTTPGJSVXLI]IEVIRHIH VIKEVHPIWWSJXLIKIRHIVQEVMXEPWXEXYW (IGIQFIVEVIMRGPYHIHMRXLMW KIRHIVVIEWWMKRQIRXWXEXYWHMWEFMPMX] %RRYEP6ITSVXERH%GGSYRXW[LMGLMW VEGIREXMSREPSVMKMRIXLRMGSVMKMRGSPSYV TYFPMWLIHMRLEVHGST]TVMRXIHJSVQERH REXMSREPMX]WI\YEPSVMIRXEXMSRVIPMKMSR MWQEHIEZEMPEFPISRXLI+VSYTƅW[IFWMXI FIPMIJSVEKISJERIQTPS]II 8LI(MVIGXSVWEVIVIWTSRWMFPIJSVXLI QEMRXIRERGIERHMRXIKVMX]SJXLI%RRYEP 8LI+VSYTEPWSGSQTPMIW[MXLEPP 6ITSVXSRXLI[IFWMXIMRZMI[SJXLIMV ETTPMGEFPIREXMSREPERHMRXIVREXMSREP VIWTSRWMFMPMX]JSVXLIGSRXVSPWSZIVERH PE[W[MXLMRLYQERERHPEFSYVVMKLXW XLIWIGYVMX]SJXLI[IFWMXI%GGIWWXS MRXLIPSGEXMSRWMR[LMGLMXSTIVEXIW MRJSVQEXMSRTYFPMWLIHSRXLI+VSYTƅW 8LIWIMRGPYHIFYXEVIRSXPMQMXIHXS [IFWMXIMWEZEMPEFPIMRSXLIVGSYRXVMIWERH QMRMQYQEKIQMRMQYQWEPEV]YRMSR NYVMWHMGXMSRW[LIVIPIKMWPEXMSRKSZIVRMRK VMKLXWERHJSVGIHPEFSYVEW[IPPEWXLI XLITVITEVEXMSRERHHMWWIQMREXMSRSJ 9RMXIH2EXMSRW9RMZIVWEP(IGPEVEXMSR JMRERGMEPWXEXIQIRXWQE]HMJJIVJVSQ SJ,YQER6MKLXWXLI-RXIVREXMSREP VIUYMVIQIRXWSVTVEGXMGIMR1EPXE 0EFSYV3VKERM^EXMSRƅW(IGPEVEXMSRSR *YRHEQIRXEP4VMRGMTPIWERH6MKLXWEX (MWGPSWYVISJMRJSVQEXMSR ;SVOXLI6MS(IGPEVEXMSRSR)RZMVSRQIRX to the auditors ERH(IZIPSTQIRXERHXLI9RMXIH2EXMSRW 7SJEVEWXLI(MVIGXSVWEVIE[EVIXLIVI 'SRZIRXMSR%KEMRWX'SVVYTXMSRERHXLI MWRSVIPIZERXEYHMXMRJSVQEXMSR XLEXMW 9RMZIVWEP(IGPEVEXMSRSJ,YQER6MKLXW MRJSVQEXMSRRIIHIHF]XLI+VSYTƅWEYHMXSVW MRGSRRIGXMSR[MXLTVITEVMRKXLIMVVITSVX 8LI+VSYTVIGSKRMWIWXLIMQTSVXERGISJ SJɸ[LMGLXLI+VSYTƅWEYHMXSVWEVIYRE[EVI IRWYVMRKXLEXIQTPS]IIWEVIOITXMRJSVQIH ERHXLI(MVIGXSVWLEZIXEOIREPPXLIWXITW SJXLI+VSYTƅWTIVJSVQERGIEGXMZMXMIWERH XLEXXLI]WLSYPHXEOIEW(MVIGXSVWMR JYXYVITPERW SVHIVXSQEOIXLIQWIPZIWE[EVISJER] VIPIZERXEYHMXMRJSVQEXMSRERHXSIWXEFPMWL %VIZMI[SJXLI+VSYTƅWIRZMVSRQIRXEPERH XLEXXLI+VSYTƅWEYHMXSVWEVIE[EVISJ GSQQYRMX]EGXMZMXMIWMWMRGPYHIHMRXLI XLEXMRJSVQEXMSR 7YWXEMREFMPMX]WIGXMSRSRTEKIWXS Strategic report Governance Financial statements Other information 59 Auditors’ responsibilities section our of report. We the Consolidated balance sheet as at 31 December 2019; the Consolidated income statement and consolidated statement comprehensive of income the for year then ended; the Consolidated statement changes of in equity for the year ended; then the Consolidated cash flow statement the for year then ended; and the Notes to the consolidatedthe to Notes financial statements, which include a summary the significant of accounting policies.

> What audited have we Kindred Group plc’s financial statements, set out on pages66 95 to theof Annual Report and Accounts (“Annual Report”), comprise: > > > Basis for opinion PwC Malta and PwC UK conducted the audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under ISAs are furtherdescribed in the for the audit of the financial statements > believe that the audit evidence obtained have we is sufficient and appropriate provide to a basis for our opinions. PricewaterhouseCoopers are independent the of Group in accordance with the International Ethics Standards Board for Accountants’ Code Ethics of Professional for Accountants (IESBA Code) together with the ethical requirements the Accountancy of issued Directive Holders) Warrant for Ethics of (Code Profession in terms the of Accountancy that are Profession Act 281) (Cap. relevant our to audit the of financial statements in Malta. have We fulfilled our other ethical responsibilities in accordance with these theCodes. best our of knowledge To and belief, we declare that non-audit services that provided we have the Group to are in and Malta in regulations and accordance applicable law the with that not we have provided non-audit services that are prohibited under Article the of Accountancy 18A Profession Act 281). (Cap. PricewaterhouseCoopers LLP are independent the of Group in accordance with the IESBA Code together with applicable EU Regulations relating the provision to non-audit of services in Article Regulation of fulfilled have (EU) We 5(1) No our 537/2014. other ethical responsibilities in accordance with the IESBA Code. the best our of knowledgeTo and belief, we declare that non-audit services thatprovided we have the Group to are in accordance with the applicable and law regulations in Malta and that we have not provided non-audit services that are prohibited under Article Regulation of (EU)5(1) No 537/2014. Other than those disclosed the financial 4 to in Note statements, providedwe have no non-audit services the Group to in the period from 1 January 31 December to 2019 2019. Independence

the financial statements have been prepared in in prepared been have statements financial the accordance with the requirements the of Maltese Companies Act 386). (Cap. the consolidated financial statements “financial (the statements”) Kindred of Group plc and its subsidiaries (the “Group”) give a true and fair view the the of of state Group’s financial position as at 31 December and the of Group’s 2019 ended then year the for flows cash and performance financial accordance Financialin Reporting with International Standards (“IFRSs”) as adopted by the European Union.

Our opinion is consistent with our additional report the to Audit Committee. > In addition, in the opinion PwC of Malta: > Report on the audit of the consolidated financial statements Opinion In our opinion: shareholders of Kindred Group plc Kindred of shareholders Group PricewaterhouseCoopers LLP to the PricewaterhouseCoopers is the appointed statutory auditor of Kindred Group plc, a company incorporated in Malta, under the LLP PricewaterhouseCoopers 386). (Cap. Act Companies Maltese has been appointedan as additional auditor by the directors Kindredof Group plc. PricewaterhouseCoopers and “Group the separately LLP(each PricewaterhouseCoopers the of statements financial the audited team”) engagement Group for the year ended 31 December 2019. For the purpose this report, of “our” the terms “we”, and “us” denote PricewaterhouseCoopers (“PwC Malta”) in relation to regulatory and and responsibilities legal, professional Maltese reporting obligations the shareholders to Kindred of Group plc and PricewaterhouseCoopers LLP (“PwC UK”) in relation to reporting obligations the shareholders to Kindred of Group plc as agreed with the directors Kindred of Group plc. For the purposes theof “Our audit approach” section this report, of "our" "we", and PwC“us” refer to Malta and PwC UK, except forthe purposes of the table on pages 63 62 to that sets out the audit key matters and how our audit addressed audit the key matters, where the terms "we"and "our" PwC refer to Malta and/or PwC UK and/or our component teams. of PricewaterhouseCoopers and PricewaterhouseCoopers of Independent auditors’ report Kindred Group plc Annual Report and Accounts 2019 60 kindredgroup.com Independent auditors’ report of PricewaterhouseCoopers and PricewaterhouseCoopers LLP to the shareholders of Kindred Group plc continued

Our audit approach Overview

> Overall group materiality: GBP 5.8 million, which represents 5% of the average profit before tax for the preceding three years.

Materiality > PwC Malta and PwC UK are the group auditors with responsibility for the oversight of planning, execution and completion of the audit, and are supported by a number of other component network audit teams who perform procedures in accordance with the instructions provided by the group auditors. Group > Our work performed has provided coverage over 95% of Gross winnings revenue and 91% scoping of Profit before tax.

> Impairment assessments for goodwill in relation to the Betchoice and 32Red cash generating units (‘CGUs’); Key audit > Consideration of liabilities arising from non-compliance with laws and regulations; and matters > Recognition and disclosure of tax charges and provisions.

The scope of our audit whether the consolidated financial statements are free from As part of designing our audit, we determined materiality and material misstatement. Misstatements may arise due to fraud or assessed the risks of material misstatement in the financial error. They are considered material if individually or in aggregate, statements. In particular, we considered where the directors they could reasonably be expected to influence the economic made subjective judgements; for example, in respect of significant decisions of users taken on the basis of the financial statements. accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all Based on our professional judgement, we determined certain of our audits, we also addressed the risk of management override quantitative thresholds for materiality, including the overall group of internal controls, including among other matters, consideration materiality for the financial statements as a whole as set out in of whether there was evidence of bias that represented a risk of the table below. These, together with qualitative considerations, material misstatement due to fraud. helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the Materiality effect of misstatements, both individually and in aggregate on The scope of our audit was influenced by our application of the financial statements as a whole: materiality. An audit is designed to obtain reasonable assurance

Overall group materiality GBP 5.8 million for 2019 (GBP 7.5 million for 2018).

How we determined it 5% of the average profit before tax for the preceding three years (2018: 5% of profit before tax before excluding certain items affecting comparability).

Rationale for the materiality benchmark applied Due to the volatility of the results in the year, predominantly as a result of the new Swedish regulations and the impact of entering the US market, we consider the use of an average of profit before tax over the preceding three years to be the most appropriate basis for determining materiality. We have changed the benchmark to a three-year average given the volatility of results experienced in 2019 and determined statutory profit before tax to be most appropriate given the insignificant impact of those items affecting comparability previously excluded. We continue to use profit before tax as the benchmark because, in our view, it is the benchmark against which the performance of the Group is most commonly measured by users, and is a generally accepted benchmark, however as described above, given the volatility of results, we have used an average of the preceding three years. We chose 5% which is within the range of acceptable quantitative materiality thresholds in auditing standards. Strategic report Governance Financial statements Other information 61 ation with them throughout Key audit matters auditKey matters are those matters that, in the auditors’ professional judgement, were most of significance in the audit the of financial comments any and matters, These period. current the of statements onwe make the results our of addressed procedures thereon, were in the context our of audit the financial of statements as a whole, and separate a provide not do opinion thereon, we our and forming in opinion on these matters. This is not a complete list all risks of identified our audit. by We issuedWe formal written instructions all component to auditors setting out the audit work be performed to by each them of communic regular maintained and the audit cycle. These interactions included attending certain component clearance meetings, as well as reviewing and reported. matters any assessing The engagement Group team also reviewed selected audit working papers for certainin-scope component teams. In addition, senior members the Group of engagement team visited component teams in France These and Gibraltar. visits included meetings withlocal management and with the component auditors. How we tailored the group audit scope tailoredWe the scope our of audit in order perform to sufficient work enable to provide us to an opinion on the financial statements as a whole, taking account into the structure the Group, of the accounting processes and controls, and the industry in which the Group operates. In establishing the overall approach the Group to audit, we determined the type work of that needed be performed to at under operating auditors component or us, by components instruction. our The components included within our scope audit of were determined based on the individual component’s contribution the groupto financial key statement line items (in particular revenue and profit or loss before tax), and considerations relating aggregation to risk within the group. we auditors, component by performed was work Where determined the level involvement of we needed have in the to audit work at those components be able to conclude to whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the consolidated financial statements as a whole. We agreedWe with the Audit Committee would report that we them to misstatements identified during audit GBP our above 290,000 GBP 370,000)(2018: well as as misstatements below that amount that, in our warranted view, reporting for qualitative reasons. Kindred Group plc Annual Report and Accounts 2019 62 kindredgroup.com Independent auditors’ report of PricewaterhouseCoopers and PricewaterhouseCoopers LLP to the shareholders of Kindred Group plc continued

Key audit matter How our audit addressed the key audit matter Impairment assessments for goodwill in relation We assessed the appropriateness of management’s determination of the CGUs to the Betchoice and 32Red cash generating and concluded these to be appropriate. units (‘CGUs’) We obtained the annual impairment assessments performed by management Refer to page 43 (Audit Committee Report), Note 2A and compared the carrying value of each CGU (as defined in Note 11) with the 7YQQEV]SJWMKRMJMGERXEGGSYRXMRKTSPMGMIW 2SXIɸ recoverable amount. (Intangible assets). In respect of each impairment assessment over goodwill, a key component This key audit matter specifically relates to the risk of our work was to consider the budgets and cash flow forecasts prepared of impairment of the goodwill associated with the by management, as outlined below. This was supplemented by specific acquisitions of Betchoice (now trading as Unibet procedures on the key assumptions used. in Australia) and 32Red. We agreed the cash flow forecasts in the impairment models to the latest IAS 36 ‘Impairment of Assets’ requires that Goodwill Board approved budgets. We evaluated the assumptions in the forecasts and and other indefinite lived intangible assets are subject considered the evidence available to determine whether the forecasts were to an impairment review at least annually, or more reasonable and supportable. This included analysis of the CGUs’ historical frequently when there is evidence of a trigger event. performance including actual results for 2019. It also included comparison of IAS 36 also requires a number of specific disclosures the trends in EBITDA margin with other parts of the Kindred Group where we in respect of the impairment assessment. deemed such a comparison to be appropriate. We also assessed the reasonableness of growth rates and costs in light of the market environment. The Group has goodwill of GBP 275.3 million including amounts relating to the acquisitions We performed sensitivity analyses on the level of cash flows, the risk adjusted of Betchoice (GBP 4.2 million) and 32Red discount rates, growth rates and margin used in the impairment assessments. +&4ɸɸQMPPMSR ;LIRTIVJSVQMRKXLIERRYEP As part of our work, we assessed the accuracy of management’s historic impairment review of goodwill as at 31 December forecasting ability when considering the assumptions used within the value 2019, management determined that the goodwill in use models. in respect of 32Red was fully recoverable and that an impairment of GBP 2.0m was required Betchoice in respect of Betchoice. In relation to Betchoice, management has recognised an impairment loss of GBP 2.0m to reduce the carrying value of the CGU to its recoverable amount In performing our audit, we have focused on this of GBP 4.2m, based on management’s value in use model. Following the area as the preparation of these assessments impairment charge, the carrying value is equal to recoverable amount, and as involves a significant degree of estimation, in such any shortfall against budget or adverse movement on a key assumption particular with respect to the cash flow forecasts. not compensated by other factors, would give rise to further impairment in We have formed our own independent view of future periods as disclosed in Note 11. the recoverable amount of Betchoice and 32Red, When considering the carrying value of Betchoice following the impairment charge based on our assessment of the assumptions booked by management, we concluded that any further impairment which may used in management’s cash flow forecasts and exist in respect of Betchoice’s Goodwill balance would not be material. the fair values of the businesses. Separately, we considered the recoverability of the carrying value of the other assets in the Betchoice CGU, which include intangible assets and PPE, and concluded these values to be supportable. 32Red Using our valuations experts, we considered the risk adjusted discount rate used in the goodwill impairment assessment by comparing it with the cost of capital of the Group and discount rates of competitors. We determined that the application of alternative discount rates, which we considered to be in the reasonable range, did not give rise to an impairment. When comparing the carrying value of this CGU with the value in use, we did not identify material impairment however, if the forecast growth rate in EBITDA margin is not achieved or becomes unrealistic in future years, an impairment charge may arise as disclosed in Note 11. We assessed the appropriateness of the disclosures as required by IAS36 in respect of the goodwill on Betchoice and 32Red in light of the impairment charges that may arise in the event of a reasonably possible change in assumptions and considered these to be reasonable. Refer to Note 11 (Intangible assets). Strategic report Governance Financial statements Other information 63 gulations, responsible gambling and and gambling responsible gulations, the information given in the Directors’ report for the are financial the which statements for financial year prepared is consistent with the financial statements; and the Directors’ report has been prepared in accordance with the Maltese Companies 386). Act (Cap.

> Additional reporting on other information by PwC Malta With respect the to Directors’ report, we also considered whether the Directors’ report includes the required disclosures by Article the of Maltese 177 Companies Act 386). (Cap. Based on the work performed, we have in our opinion: In addition, in the light knowledge of and understanding the of Group and its environment obtained in the course the of audit, we are required to report if we have identified material misstatements in the Directors’ report. nothing have report We to in this regard. > anti-money laundering obligations covering player registration controls, customer deposits and withdrawals. read,We where relevant, external legal and regulatory advice sought by the Group. also inquired We management of and obtained confirmation letters from the Group’s external legal advisers about any known instances material of breaches in regulatory or licence compliance that needed be disclosed to or required accruals or provisions be recorded. to Whilst acknowledging that there are instances where this becomesa judgemental area, we found that the Group had an appropriate monitoring basis of and accounting these for matters in the statements financial the in disclosures resultant the and statements financial were appropriate. discussedWe with management and their tax experts how the Group manages and controls each individual company across the various territories and jurisdictions in determined. are obligations tax local the how assessed and operates it which also obtainedWe and read relevant tax correspondence with the respective tax authorities, together with external any tax advice obtained by the Group assist themto in supporting their tax position. With input from our tax experts across the various jurisdictions key in which the Group operates, including UK and Malta, we assessed the judgements key with respect the tax to positions taken. obtained We evidence support to the provisions and consider these reflect to management’s best estimate. foundWe the overall position adopted in the financial statements and the related disclosures in respect corporation of tax, indirect taxes and betting duties beto appropriate. We assessedWe how management monitors legal and regulatory developments and their assessment the of potential impact on the business. This includes compliance with digital licencing re Kindred Group plc Annual Report and Accounts 2019 Reporting on other information by PwC Malta and PwC UK The Directors are responsible for the other information. The other information comprises the Strategic report section on pages 34, 1 to the Governance section on pages 58 35 to (including the Directors’ report on pages 57 58), to as well as Other Information relating to the Annual General Meeting and Definitions (but does not include report thereon). auditors’ our and statements financial the Our opinion on the financial statements does not cover the other report. Directors’ the including information, In connection with our audit the of financial statements, our responsibility read the is to other information identified above and, in doing so, consider whether the other information is our or statements financial the with inconsistent materially knowledge obtained in the audit, or otherwise appears be to materially misstated If we identify an apparent material inconsistencyor material misstatement, we are required perform to procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement the of other information. based If, on the work performed, we have we conclude that there is a material misstatement this other of information, we are required report to that fact. nothing have report We to based on these responsibilities. Refer to pageRefer to 43 (Audit Committee Report) and 2B Note (Critical accounting estimates assumptions). and The Group operates across borders and is subject regulationsto in respect corporation of tax, indirect tax and betting duties in a number jurisdictions. of focussedWe on this matter as the taxation environment is complex and can change quickly and could result in material exposure liabilities. to Recognition and disclosure tax of charges ERHɸTVSZMWMSRW Consideration of liabilities arising from non- from arising liabilities of Consideration regulationscompliance and with laws pageRefer to 43 (Audit Committee Report), pages 2B Note and Environment) Legal (General 47 45 to (Critical accounting estimates and assumptions). The international legal and licencing framework territory digital gaming is for specific, someand in territories this remains uncertain. Regulations are makes environment evolving this and developing with area complex increasingly an compliance gambling responsible specific regulations, territory and anti-money laundering obligations. Given the potential litigation for and licence withdrawal, the risk non-compliance of with digital gaming and laws licence regulations could give rise to material fines, penalties, legal claims or market exclusion. There is also a reputational and financial risk together with or changes future any should risk concern going a interpretation the mean of law that the business may not be able continue to operate to in certain territories. Key audit matter audit Key matter audit key the addressed audit our How Other information Other 64 kindredgroup.com Independent auditors’ report of PricewaterhouseCoopers and PricewaterhouseCoopers LLP to the shareholders of Kindred Group plc continued

Responsibilities for the financial statements and the audit > Evaluate the appropriateness of accounting policies used Responsibilities of the directors and those charged and the reasonableness of accounting estimates and related with governance for the financial statements disclosures made by the directors. The directors are responsible for the preparation of the financial > Conclude on the appropriateness of the directors’ use of the statements that give a true and fair view in accordance with going concern basis of accounting and, based on the audit IFRSs as adopted by the EU and the requirements of the Maltese evidence obtained, whether a material uncertainty exists Companies Act (Cap. 386), and for such internal control as the related to events or conditions that may cast significant doubt directors determine is necessary to enable the preparation of on the Group’s ability to continue as a going concern. If we financial statements that are free from material misstatement, conclude that a material uncertainty exists, we are required to whether due to fraud or error. draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, In preparing the financial statements, the directors are to modify our opinion. Our conclusions are based on the audit responsible for assessing the Group’s ability to continue as a evidence obtained up to the date of our auditors’ report. However, going concern, disclosing as applicable matters related to going future events or conditions may cause the Group to cease to concern and using the going concern basis of accounting unless continue as a going concern. For example, the terms of the the directors either intend to liquidate the Group or to cease United Kingdom’s withdrawal from the European Union are not operations, or have no realistic alternative but to do so. clear, and it is difficult to evaluate all of the potential implications on the Group’s trade, customers, suppliers and the wider economy. Those charged with governance are responsible for overseeing the Group’s financial reporting process. > Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether Auditor’s responsibilities for the audit of the financial statements the financial statements represent the underlying transactions Our objectives are to obtain reasonable assurance about and events in a manner that achieves fair presentation. whether the financial statements as a whole are free from > Obtain sufficient appropriate audit evidence regarding the material misstatement, whether due to fraud or error, and to financial information of the entities or business activities issue an auditors’ report that includes our opinion. Reasonable within the Group to express an opinion on the financial assurance is a high level of assurance, but is not a guarantee that statements. We are responsible for the direction, supervision an audit conducted in accordance with ISAs will always detect a and performance of the group audit. We remain solely material misstatement when it exists. Misstatements can arise responsible for our audit opinion. from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence We communicate with those charged with governance regarding, the economic decisions of users taken on the basis of these among other matters, the planned scope and timing of the audit financial statements. and significant audit findings, including any significant deficiencies As part of an audit in accordance with ISAs, we exercise in internal control that we identify during our audit. professional judgement and maintain professional scepticism throughout the audit. We also: We also provide those charged with governances with a statement that we have complied with relevant ethical requirements regarding > Identify and assess the risks of material misstatement of the independence, and to communicate with them all relationships financial statements, whether due to fraud or error, design and and other matters that may reasonably be thought to bear on our perform audit procedures responsive to those risks, and obtain independence, and where applicable, related safeguards. audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material From the matters communicated with those charged with misstatement resulting from fraud is higher than for one governance, we determine those matters that were of most resulting from error, as fraud may involve collusion, forgery, significance in the audit of the financial statements of the current intentional omissions, misrepresentations, or the override of period and are therefore the key audit matters. We describe these internal control. matters in our auditors’ report unless law or regulation precludes > Obtain an understanding of internal control relevant to the public disclosure about the matter or when, in extremely rare audit in order to design audit procedures that are appropriate circumstances, we determine that a matter should not be in the circumstances, but not for the purpose of expressing communicated in our report because the adverse consequences an opinion on the effectiveness of the Group’s internal control. of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Strategic report Governance Financial statements Other information 65 Appointment PwC Malta were first appointed as auditors the of Group on ɸ3GXSFIVF]XLIHMVIGXSVWSJXLI+VSYT4['1EPXEƅW shareholder by annually renewed been has appointment resolution representing period a total uninterrupted of years. 15 of appointment engagement PwC UK were first appointed as additional auditors the of Group on 5 October 2005 by the directors the of Group. PwC UK’s appointment has been renewed annually by the directors the of Group representing period a total uninterruptedof engagement years. 15 appointment of Flynn Simon For and on behalf of PricewaterhouseCoopers 78 Mill Street Qormi QRM3101 Malta 2020 March 6 LLP PricewaterhouseCoopers Chartered Accountants 1 Embankment Place London WC2N 6RH Kingdom United 2020 March 6 PwC UK’s in resulting audit the partner on engagement The Jenkins. Julian report is auditors’ independent

adequate accounting records not have been kept, or that returns adequate for our audit not have been received from us. by visited not branches the financial statements are not in agreement with the returns. and records accounting we have notwe have received all the informationand explanations we require for our audit. certain disclosures directors’ of remuneration specified by law are not made in the financial statements, giving the required particulars in our report.

Other matters on which we are required to report by exception PwC Malta has responsibilities under the Maltese Companies Act 386)(Cap. report to in our you if, to opinion: > Report on other legal and regulatory requirements Kindred Group plc Annual Report and Accounts 2019 > > Other matters PwC Malta’s report, including the opinions, has been prepared for and only for the Group’s shareholders as a body in accordance with Section the of Maltese Companies 179 Act 386) (Cap. and for no other purpose. PwC UK’s report, including the opinion, has been prepared for and only for the Group’s shareholders as a body in accordance with our engagement letter dated ɸ*IFVYEV]ERHJSVRSSXLIVTYVTSWI2IMXLIV4[' Malta nor PwC UK, in giving these opinions, accept or assume responsibility for any other purpose any other or to person to whom this report is shown or whose into hands it may come our prior where consent agreed expressly writing. by in save reportWe separately on the parent company financial statements Kindredof Group plc for the year ended 31 December 2019. > nothing have reportWe to you in respect to these of responsibilities. 66 kindredgroup.com Consolidated income statement

Year ended Year ended 31 December 31 December (GBP m) Note 2019 2018

Gross winnings revenue 3 912.8 907.6

Betting duties 3 -204.3 -158.7 Marketing revenue share 3 -48.8 -50.0 Other cost of sales 3 -151.1 -146.7 Cost of sales -404.2 -355.4 Gross profit 508.6 552.2

Marketing costs 4 -210.9 -189.0 Employee costs 4 -96.1 -83.4 Other operating expenses 4 -73.6 -74.9 Depreciation of property, plant and equipment 4 -14.9 -13.0 Depreciation of right-of-use assets 4 -10.1 – Amortisation of intangible assets (excluding on assets arising on acquisition) 4 -24.3 -17.8 Total administrative expenses 4 -219.0 -189.1 Underlying profit before items affecting comparability 78.7 174.1

Management incentive costs relating to acquisitions 4 -0.2 -0.9 Personnel restructuring costs 4 -1.7 – Impairment losses recognised in the year 11 -2.0 – Accelerated amortisation of acquired intangible assets 4 – -4.7 Amortisation of intangible assets that arose on acquisition 4 -5.9 -11.3 Foreign currency gains/(losses) on operating items 4 2.0 -1.2 Profit from operations 3 70.9 156.0

Finance costs 6 -7.0 -4.6 Finance income 70.40.4 Foreign currency gains/(losses) on borrowings 2.9 -2.0 Share of loss from associate 14 -0.1 -0.3 Profit before tax 67.1 149.5

Income tax expense 8 -10.5 -17.9 Profit for the year 56.6 131.6

Earnings per share, GBP 10 0.250 0.580 Diluted earnings per share, GBP 10 0.248 0.576

More detailed definitions can be found on the inside back cover. The notes on pages 70 to 95 are an integral part of these JMRERGMEPɸWXEXIQIRXW

Consolidated statement of comprehensive income

Year ended Year ended 31 December 31 December (GBP m) 2019 2018

Profit for the year 56.6 131.6

Other comprehensive income Currency translation adjustments taken to equity -8.6 -2.0 Total comprehensive income for the year 48.0 129.6

All the above amounts relate to continuing operations and are wholly attributable to owners of the parent. The translation adjustment relates primarily to foreign currency retranslation of goodwill and acquired intangibles and the net investment in the subsidiaries, to the closing exchange rate for each year. Strategic report Governance Financial statements Other information 67 pean pean 2018 As at As (Restated) 31 December 2.2 3.2 53.8 66.5 41.5 43.0 2019 As at As 187.3 236.7 284.6 153.6 277.2561.8 310.2 463.8 226.1795.8 256.2 755.8 234.0 292.0 795.8 755.8 569.7 499.6 31 December 1913171815 – 11.7 138.4 67.4 45.0 5.9 131.0 – 62.3 5.4 222222 0.1 81.5 -42.9 0.1 81.5 1913 -42.9 20 225.4 53.3 5.9 149.3 – 4.3 1628 46.8 137.8 38.9 174.3 111114 275.313 159.720 1.823 282.7 151.8 64.1 23.5 1.9 6.5 – 15.8 6.8 Note (2018: 1.118).

1 1

Current liabilities Borrowings Lease liabilities and other payables Trade balances Customer income Deferred liabilities Tax Total assets Total Equity and liabilities reserves and Capital capital Share premium Share reserve translation Currency reserve Reorganisation earningsRetained equityTotal attributable to the owners Non-current liabilities Borrowings Lease liabilities Deferred tax liabilities liabilities Total equity liabilities and Total 22 8.0 16.6 Taxation recoverable equivalents cash and Cash The on notes pages 95 are an integral 70 to part these of financial statements. The financial statements on pages 66 95 were authorised to for issue by the BoardDirectors of on 6 March 2020 and were signed SRɸMXWɸFILEPJF] Other assets intangible Investment in associate equipment and plant Property, Right-of-use assets assets tax Deferred bond Convertible assets non-current Other assets Current and other receivablesTrade 12 36.6 37.4 Assets assets Non-current Goodwill Central Bank as at 31 December was 1.175 2019 Ström Anders Director and Chairman Director Duveblad Gunnel The official closing middle exchange of rate applicable between the presentation currency and the (GBP) euro issued by the Euro 1 See Note on page 1B 70 for more information on the restatement of the 2018 comparative figures.

(GBP m) Consolidated balance sheet Consolidated Kindred Group plc Annual Report and Accounts 2019 68 kindredgroup.com Consolidated statement of changes in equity

Currency Share Share translation Reorganisation Retained (GBP m) Note capital premium reserve reserve earnings Total

Balance as at 1 January 2018 0.1 81.5 18.6 -42.9 240.9 298.2

Comprehensive income Profit for the year – – – – 131.6 131.6 Other comprehensive income Translation adjustment – – -2.0 – – -2.0 Total comprehensive income – – -2.0 – 131.6 129.6

Transactions with owners Share awards – value of employee services21––––0.70.7 Equity settled employee benefit plan 21 – – – – 1.9 1.9 Treasury share purchase 22 – – – – -14.6 -14.6 Disposal of treasury shares22––––1.81.8 Dividend paid 9 – – – – -125.6 -125.6 Total transactions with owners – – – – -135.8 -135.8 At 31 December 2018 0.1 81.5 16.6 -42.9 236.7 292.0

Adjustment on adoption of IFRS 16 13 - - - - 2.1 2.1 Restated balance at 1 January 2019 0.1 81.5 16.6 -42.9 238.8 294.1

Comprehensive income Profit for the year – – – – 56.6 56.6 Other comprehensive income Translation adjustment – – -8.6 – – -8.6 Total comprehensive income – – -8.6 – 56.6 48.0

Transactions with owners Share awards – value of employee services21––––0.40.4 Equity settled employee benefit plan 21 – – – – 2.0 2.0 Disposal of treasury shares22––––2.02.0 Dividend paid 9 – – – – -112.5 -112.5 Total transactions with owners – – – – -108.1 -108.1 At 31 December 2019 0.1 81.5 8.0 -42.9 187.3 234.0

The notes on pages 70 to 95 are an integral part of these financial statements. Strategic report Governance Financial statements Other information ) 1 69 2018 (Restated Year ended 31 December –-1.8 0.3 0.2 -6.9 -8.3 -6.6 -3.7 -8.5 0.8 70.9 156.0 2019 -26.9 -15.0 -83.9 -143.7 -64.4 -54.8 137.8 174.3 147.2 221.4 174.3 165.6 Year ended 31 December 9 -112.5 -125.6 21 2.4 2.2 28 221919 130.0 – -92.8 112.0 -14.6 -115.5 Note 1 1 1

Share-based payments Equity settled benefit employee planreceivables other and trade in Increase 21 2.0 2.2 Foreign currency on dividend (losses)/gains 6 -0.4 0.3 Loss on disposal intangible of assets 4 – 0.3 Increase in trade and other payables, including customer balances customer including payables, other and trade in Increase 21.9 21.4 Depreciation of property, plant and equipment and plant property, of Depreciation assets right-of-use of Depreciation assets intangible of Amortisation Impairment recognised year losses the in Loss on disposal property, of plant and equipment 12 14.9 4 13 11 11 13.0 0.1 10.1 2.0 30.2 0.5 – 33.8 – Cash flows from operating activities operating from flows Cash Net income taxes paid taxes income Net activities operating from generated cash Net 120.3 206.4 Investing activities Investing Interest received Cash and cash equivalents at the beginning of the year Treasury share purchase borrowings Proceeds from Repayment borrowings of Net cash used in financing activities Net (decrease)/increase in cash and cash equivalents -28.0 7.9 Financing activitiesFinancing Repayment lease of liabilities paid Dividend 13 -8.6 – Interest paid Interest Interest paid on lease liabilitiesPurchases other of non-current assets equipment and plant property, of Purchases Proceeds from sale property, of plant and equipment assets intangible of costs acquisition and Development activities investing in used cash Net 11 12 -41.4 13 -15.6 0.1 -23.5 -1.2 -26.0 – – Effect foreign of exchange changes rate Cash and cash equivalents at the end of the year The on notes pages 95 are an integral 70 to part these of financial statements. 1 See Note on page 1B 70 for more information on the restatement of the 2018 comparative figures. Operating activities operations from Profit Adjustments for:

(GBP m) Consolidated cash flowConsolidated statement Kindred Group plc Annual Report and Accounts 2019 70 kindredgroup.com Notes to the consolidated financial statements

1A: Basis of preparation (b) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2019 These consolidated financial statements have been prepared and not early adopted MRɸEGGSVHERGI[MXL-RXIVREXMSREP*MRERGMEP6ITSVXMRK7XERHEVHW The following amendments have been issued but are not yet EWɸEHSTXIHF]XLI)YVSTIER9RMSR -*67W)9 ETTPMGEFPI effective, and have not been early adopted by the Group. They interpretations issued by the IFRS Interpretations Committee are not expected to have a material impact in the current or (IFRS IC) and the Maltese Companies Act (Cap 386). future reporting periods and on foreseeable future transactions: > Amendments to IFRS 3 – definition of a business; and The consolidated financial statements have been prepared under the historical cost convention, subject to modification where > Amendments to IAS 1 and IAS 8 on the definition of "material". appropriate by the revaluation of financial assets and liabilities EXɸJEMVZEPYIXLVSYKLTVSJMXSVPSWW8LIMRHMZMHYEPTEVIRXJMRERGMEP There are no other IFRS or IFRS IC interpretations that are not statements have been prepared separately and are not included in yet effective that would be expected to have a material impact this Annual Report and Accounts. on the Group’s consolidated financial statements. The Group is in a net current liability position as at 31 December 1B: Restatement 2019. The Group generates strong cash flows and it is expected that sufficient funds will be available for its ongoing operations as At 31 December 2019, GBP 10.3 million of amounts held in trust in well as the repayment of its borrowings, whilst also having access respect of customers have been reclassified from trade and other to an unused revolving credit facility of GBP 54.6 million. The receivables to restricted cash within cash and cash equivalents to Group has complied with all of the facility covenant requirements better reflect the nature of these funds. This change means that during the year and forecasts show that continued compliance the comparatives at 31 December 2018 and 1 January 2018 have with these covenants is expected. The Directors have reviewed been restated accordingly. This change ensures that the net debt the financial position of the Group, together with its forecast cash calculation correctly includes these funds in order to match their flows and financing facilities available and have a reasonable corresponding customer balances, which have always been expectation that the Group has adequate resources to continue in included within net debt. This also impacts the consolidated cash operational existence for a minimum of 12 months following the flow statement, resulting in restatement of both the movement in signing of these financial statements. For this reason they trade and other receivables and cash and cash equivalents for the continue to adopt the going concern basis in preparing the year ended 31 December 2018. financial statements. The restatement has impacted each of the affected financial The preparation of financial statements in conformity with statement line items for prior years, as follows: IFRSs EU requires the use of certain critical accounting estimates. It also requires management to exercise its judgement Consolidated balance sheet (extract) MRXLITVSGIWWSJɸETTP]MRKXLI+VSYTƅWEGGSYRXMRKTSPMGMIW8LI As at 31 EVIEWMRZSPZMRKEɸLMKLIVHIKVIISJNYHKIQIRXSVGSQTPI\MX]SV As at 31 December areas where assumptions and estimates are significant to the December Increase/ 2018 consolidated financial statements, are disclosed in Note 2B. (GBP m) 2018 (decrease) (Restated) Trade and other receivables 52.9 -14.0 38.9 (a) New and amended standards and interpretations effective from 1 January 2019 and adopted by the Group Cash and cash equivalents 160.3 14.0 174.3 The Group has applied the following standard for the first time for Total assets 755.8 – 755.8 the financial year commencing 1 January 2019: > IFRS 16, “Leases”. As a result of the adoption of IFRS 16 As at 1 the Group had to change its accounting policies. The Group As at 31 January elected to adopt the new rules under the modified retrospective December Increase/ 2018 approach by recognising the cumulative effect of initially (GBP m) 2017 (decrease) (Restated) ETTP]MRKXLIRI[WXERHEVHSRɸ.ERYEV]ERHRSXVIWXEXMRK Trade and other receivables 38.5 -6.5 32.0 the prior year comparatives. This is disclosed in Note 13. Cash and cash equivalents 159.1 6.5 165.6 Total assets 726.0 – 726.0 The following amendments have also been applied for the first time for the financial year commencing 1 January 2019: Consolidated cash flow statement (extract) > Amendments to IAS 19, “Employee benefits” on plan amendment, curtailment or settlement; Year ended Year ended 31 December > Annual improvements to IFRS Standards 2015-2017 Cycle; 31 December Increase/ 2018 > IFRIC 23, “Uncertainty over income tax treatments”; and (GBP m) 2018 (decrease) (Restated) > Amendments to IAS 28 “Investments in associates and Increase in trade and other joint ventures”, on long-term interests in associates and receivables -15.8 7.5 -8.3 joint ventures. Net increase in cash and cash equivalents 0.4 7.5 7.9 We have considered the impact of the above and do not deem there to be any material impact or required changes to our accounting policies or any of the disclosures within the 2A: Summary of significant consolidated financial statements. accounting policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. The policies have been consistently applied to all years presented, unless otherwise stated. Strategic report Governance Financial statements Other information 71 W EVI W

I I

ansferred to the Group’s currency currency Group’s the to ansferred Segment reporting 3TIVEXMRKWIKQIRXWEVIVITSVXIHMREQERRIVGSRWMWXIRX[MXLɸ the internal reporting provided the chief to operating decision- QEOIV8LIGLMIJSTIVEXMRKHIGMWMSRQEOIVW[LSEVIɸVIWTSRWMFPI the Companyof are denominated. Items included in the financial statements each of the of +VSYTƅWɸIRXMXMIWEVIQIEWYVIHYWMRKXLIGYVVIRG]SJXLI primary economic environment in which the entity operates, currency. functional the being in currenciesTransactions other than the presentation currency SJɸXLI'SQTER]EVIMRMXMEPP]VIGSVHIHEXXLIVEXIWSJI\GLERKI prevailing on transactions. the of dates Monetary assets and at retranslated such in currencies denominated are liabilities XLIɸVEXIWTVIZEMPMRKSRXLIFEPERGIWLIIXHEXI+EMRWERHPSWWI income included consolidated the in are exchange on arising WXEXIQIRXJSVXLIɸ]IEV+EMRWERHPSWWIWEVMWMRKSRSTIVEXMSRW comparability. affecting items within recognised Gains and losses related financing, to including unrealised KEMRWɸERHPSWWIWEVMWMRKSRXLIVIXVERWPEXMSRSJFSVVS[MRKWEV recognised within finance costs or finance income where the financing has not been matched the currency to a specific of specific a in required been has financing Where acquisition. currency complete to an acquisition, the Group considers the borrowing be a hedging to instrument and any gains and losses tr are retranslation the on arising translation reserve. The Group does not enter forward into contracts nor options XSɸLIHKIMXWI\TSWYVIXSJSVIMKRI\GLERKIVMWOW On consolidation, the assets and liabilities the Group’s of overseas operations are translated at exchange prevailing rates on the balance sheet Income date. and expense items are translated at the exchange the on transaction. of the rate date Exchange differences subsidiaryarising on of the translation reserves are classified as equity and transferred the Group’s to currency translation reserve. non-trading long-term to relating differences Translation Group’s included within the also inter-company balances are currency translation reserve. acquisition on arising adjustments value fair and Goodwill SJɸEɸJSVIMKRIRXMX]EVIXVIEXIHEWEWWIXWERHPMEFMPMXMIWSJXL JSVIMKRɸIRXMX]ERHXVERWPEXIHEXXLIGPSWMRKVEXI)\GLERKI Group’s the within recognised are arising differences GYVVIRG]ɸXVERWPEXMSRVIWIVZI for allocating resources and assessing the performance of performance of the assessing and resources allocating for Chief the as identified been have segments, operating the Executive Officer and the Executive Committee who, subject authorisationto by the Board, strategicmake decisions. Leases As explained the Group has 1, changed in Note its accounting policy leases for where theGroup is the lessee. The new policy and the impact the of change is disclosed 13. in Note Until 31 December the 2018, Group’s leases were all classified as operating leases (leases in which a significant portion the of risks and ownership rewards of are retained by the lessor). Accounted underfor Leases, IAS rentals 17 payable under operating leases were charged the income to statement on a straight-line basis over the term the of relevant lease any incentive of (net received lessor). the from currenciesForeign The Group operates in Malta and in a number international of financial consolidated the of currency presentation The territories. WXEXIQIRXWMW+&4WMRGIXLEXMWXLIGYVVIRG]MRɸ[LMGLɸXLIWLEVI GI P SJɸER MHMEV] bonuses financial within the period. income, Deferred but where reliably be measured can which revenue representing transactions not have closed at the balance sheet date, is recognised at fair value with gains or losses recognised in the statement. income Within Casino & Games, the Group defines Gross winnings revenue as the net gain from bets placed after the cost of financial the bonuses period. in promotional The Group considers Gross winnings revenues on Sports betting and Casino & Games be derivative to financial instruments. Poker Gross winnings revenue reflects the net income (“rake”) earned from poker games completed after the cost of promotional bonuses within the financial period. Other Gross winnings revenues include those from Bingo and other products. Bingo Gross winnings revenues are recognised EWɸXLIRIXKEMRJVSQFIXWTPEGIHEJXIVXLIGSWXSJTVSQSXMSREP financial period. the bonuses represent in Other revenues product gaming services provided within the financial period. investee enterprise obtain so as to benefits from its activities. Where necessary, adjustments are made the financial to statements subsidiaries of bring to the accounting policies YWIHɸMRɸPMRI[MXLXLSWIYWIHF]SXLIVQIQFIVWSJXLI+VSYT %PPɸMRXIVGSQTER]XVERWEGXMSRWERHFEPERGIWFIX[IIR+VSYT companies are eliminated on consolidation. Subsidiaries consolidated, are using the purchase method SJɸEGGSYRXMRKJVSQXLIHEXISR[LMGLGSRXVSPMWXVERWJIVVIH XSɸXLIɸ+VSYTERHGIEWIXSFIGSRWSPMHEXIHJVSQXLIHEXISR [LMGLɸGSRXVSPMWXVERWJIVVIHSYXSJXLI+VSYT3REGUYMWMXMSR XLIɸEWWIXWERHPMEFMPMXMIWERHGSRXMRKIRXPMEFMPMXMIWSJEWYFW EVIɸQIEWYVIHEXXLIMVJEMVZEPYIWEXXLIHEXISJEGUYMWMXMSR %R]ɸGSRXMRKIRXGSRWMHIVEXMSRXSFIXVERWJIVVIHF]XLI+VSYT MWɸVIGSKRMWIHEXJEMVZEPYIEXXLIEGUYMWMXMSRHEXI7YFWIUYIRX with IFRS 3 through the income statement. Acquisition-related incurred. as expensed are costs All associate entities are accounted by applying for the equity is associates surrounding policy The Group’s method. accounting outlined on page 73 and they are discussed further on page 87. comparability affecting Items items those as comparability affecting items defines Group The which, by theiror nature size in relation both the to Group and individual segments, should be separately disclosed in order XSɸKMZIEJYPPYRHIVWXERHMRKSJXLI+VSYTƅWYRHIVP]MRKJMRERGME performance, and aid comparability theof Group’s results periods. between Items affecting comparability include management incentive costs relating acquisitions, to personnel restructuring costs, impairment losses, amortisation acquired of intangible assets items. operating on losses and gains currency foreign and recognition Revenue The Group provides online gaming services across the following: Sports betting, Casino & Games, Poker and other products. Gross winnings revenue on Sports betting is defined as the RIXɸKEMRSVPSWWJVSQFIXWTPEGIHEJXIVXLIGSWXSJTVSQSXMSREP Basis of consolidation of Basis The consolidated financial statements incorporate the financial statements Kindred of Group plc “the Company” and entities controlled by the Company “its subsidiaries” made up to ɸ(IGIQFIVIEGL]IEV'SRXVSPMWEGLMIZIH[LIVIXLI'SQTER] LEWXLIEFMPMX]XSKSZIVRXLIJMRERGMEPERHSTIVEXMRKTSPMGMIW Kindred Group plc Annual Report and Accounts 2019 changes the fair value the to contingent of consideration that MWɸHIIQIHXSFIEREWWIXSVPMEFMPMX]MWVIGSKRMWIHMREGGSVHER 72 kindredgroup.com Notes to the consolidated financial statements continued

2A: Summary of significant Goodwill is carried at cost, less accumulated impairment losses. accounting policies continued Any contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are Retirement benefit costs and pensions subsequently remeasured to fair value with changes in fair value The Group does not operate any defined benefit pension recognised in the consolidated income statement. schemes for employees or Board Directors. Certain Group companies make contributions to defined contribution pension Other intangible assets WGLIQIWJSVɸIQTPS]IIWSREQERHEXSV]SVGSRXVEGXYEPFEWMW Other intangible assets are stated at cost less accumulated The Group has no further payment obligations once the amortisation and any recognised impairment losses. GSRXVMFYXMSRWLEZIɸFIIRTEMH8LI+VSYTHSIWRSXTVSZMHI any other post-retirement benefits. An internally-generated development intangible asset is recognised at cost only if all of the following criteria are met: Taxation The tax expense represents the sum of the tax currently payable, (i) An asset is created that can be identified; and movements in the deferred tax provision. (ii) There is an intention to complete and use the asset; (iii) There is the ability and internal resource to complete and The tax currently payable is based on taxable profit for the year. use the asset; Taxable profit differs from profit before tax as reported in the consolidated income statement because it excludes items of (iv) There is the technical feasibility to complete and use the asset; income or expense that are taxable or deductible in other years (v) It is probable that the asset created will generate and it further excludes items that are never taxable or deductible. JYXYVIɸIGSRSQMGFIRIJMXW ERH (vi) 8LIHIZIPSTQIRXGSWXSJXLIEWWIXGERFIQIEWYVIHɸVIPMEFP] The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance Internally-generated intangible assets are amortised on sheet date. a straight-line basis over three to five years. Where no internally-generated intangible asset can be recognised, Deferred tax is the tax expected to be payable or recoverable on development expenditure is recognised as an expense in differences between the carrying amount of assets and liabilities XLITIVMSHMR[LMGLMXɸMWɸMRGYVVIH in the financial statements and the corresponding tax basis used in the computation of taxable profit, and is accounted for using Expenditure on research activities is recognised at cost as the balance sheet liability method. Deferred tax liabilities are an expense in the period in which it is incurred. generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is expected Intangible assets identified as a result of a business combination that taxable profits will be available against which deductible are dealt with at fair value in line with IAS 38, and are brought onto temporary differences can be utilised. Such assets and liabilities the consolidated balance sheet at the date of acquisition. Where are not recognised if the temporary difference arises from the XLI]EVMWIEWEVIWYPXSJXLIEGUYMWMXMSRSJEJSVIMKRIRXMX]ɸXLI]EVI initial recognition (other than in a business combination) of other treated as assets of the acquired entity and are translated at the assets and liabilities in a transaction that affects neither the tax closing rate. profit nor the accounting profit. Acquired intangibles include brands, customer databases, Deferred tax liabilities are recognised for taxable temporary development costs and trade names. The Maria, 32Red, Roxy differences arising on investments in subsidiaries and associates Palace and some of the iGame collection of brands together and interests in joint ventures, except where the Group is able with the Bingo.com and iGame domains are considered to XSɸGSRXVSPXLIVIZIVWEPSJXLIXIQTSVEV]HMJJIVIRGIERHMXMW have indefinite economic lives as there is no foreseeable limit probable that the temporary difference will not reverse in the to the period over which these assets are expected to generate foreseeable future. net cash inflows and are therefore not subject to amortisation. Instead they are subject to annual impairment tests, allocated The carrying amount of deferred tax assets is reviewed at each to cash-generating units alongside goodwill. All other acquired balance sheet date and reduced to the extent that it is no longer intangible assets are being amortised on a straight-line basis expected that sufficient taxable profits will be available to allow over three to five years, as the Directors believe this to be their all or part of the asset to be recovered. useful economic life.

Deferred tax is calculated at the tax rates that are expected Computer software XSɸETTP]MRXLITIVMSH[LIRXLIPMEFMPMX]MWWIXXPIHSVXLIEWWIX Acquired computer software is capitalised on the basis of realised. Deferred tax is charged or credited to the income XLIɸGSWXWMRGYVVIHXSEGUYMVIERHFVMRKMRXSYWIXLIWSJX[EVI statement, except when it relates to items charged or credited These costs are amortised on a straight-line basis over their directly to equity, in which case the deferred tax is also dealt estimated useful life of three years. Computer software is with in equity. Deferred tax may be offset where appropriate. GEVVMIHEXGSWXPIWWEGGYQYPEXIHEQSVXMWEXMSRERHɸER] recognised impairment losses. Costs associated with Goodwill maintaining computer software are expensed as incurred. Goodwill arising on an acquisition of a subsidiary undertaking MWɸHIIQIHXSFIXLII\GIWWSJXLI Gaming licences > consideration transferred; Gaming licences are capitalised on the basis of the costs incurred > amount of any non-controlling interest in the acquired to acquire them. These costs are amortised on a straight-line IRXMX] ɸERH basis over the respective lifetimes of the licences in question. Gaming licences are carried at cost less accumulated > acquisition-date fair value of any previous equity interest EQSVXMWEXMSRERHɸER]VIGSKRMWIHMQTEMVQIRXPSWWIW MRɸXLIɸEGUYMVIHIRXMX]SZIVXLIJEMVZEPYISJXLIRIXMHIRXMJMEFPI assets acquired. Strategic report Governance Financial statements Other information 73

P RGMEP the asset is held within a business model whose objective collectis to the contractual cash flows, and the contractual terms give cash rise to flows that are solely interest. and principal of payments

Share capital Ordinary shares are classified as equity. Incremental costs directly attributable the issue new to of shares are shown in equity as a deduction, net tax, of from the proceeds. Where any Group company purchases the Company’s equity share capital, the consideration paid, including directly any attributable incremental costs income of (net is deducted taxes) from equity attributable the Company’s to equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, anyconsideration received, net any directly of attributable incrementaltransaction costs and the related MRGSQIXE\IJJIGXWMWMRGPYHIHMRIUYMX]EXXVMFYXEFPIXSɸXLI holders. equity Company’s assets Financial The Group classifies its financial assets in the following categories: at fair value through profit or loss and at amortised cost. The classification depends on the purpose which for the financial assets were acquired. The Group determines the classification its of financial assetsinitial at recognition. (b) Financial(b) assets amortised at cost The Group classifies its financial assets at amortised cost only met: are criteria following the of both if (a) Financial assets(a) at fair value through profit or loss Financial assets at fair value through profit or loss include options on convertible loan instruments. These assets are treated as derivatives and are therefore remeasured fair value with to any gains or losses recognised in the consolidated income statement. Financial assets carried at fair value through profit or loss are transaction costs value are and recognisedinitially fair at statement. income the in expensed > Financial assets at amortised receivables, at Financial assets other comprise cost GEWLERHGEWLIUYMZEPIRXWERHPSERɸMRWXVYQIRXWSJGSRZIVXMFPI loans in the balance sheet. Those with maturities greater than ɸQSRXLWEJXIVXLIFEPERGIWLIIXHEXIEVIGPEWWMJMIHEWRSR current assets. Financial assets at amortised cost areinitially recognised at fair value plus transaction costs. Financial assets are derecognised when the rights receive to cash flows from the investments expired have or been have transferred and the Group has transferred substantially all risks and rewards of ownership. %XIEGLFEPERGIWLIIXHEXIXLI+VSYTEWWIWWIW[LIXLIVXLIVIɸ MWSFNIGXMZIIZMHIRGIXLEXEJMRERGMEPEWWIXSVEKVSYTSJɸJMRE > assets is impaired. andTrade other receivables Other receivables are recognised initially at fair value and effective the using cost amortised at measured subsequently interest method, less any expected credit losses that are will Group the that evidence objective is there when required RSXɸFIEFPIXSGSPPIGXEPPEQSYRXWHYIEGGSVHMRKXSXLISVMKMRE theterm receivables. of Significant financial difficulties of probabilitythe debtor, that the debtor will enter bankruptcy or payments in delinquency or default and reorganisation, financial than 30(more are considered overdue) days indicators that the receivable is impaired. The amount the of expected loss allowance is the difference between the assets’ carrying value and the present value estimated of future cash flows, discounted the original at effective rate. interest PI XS EXIH

MW 8LMWQIERWXLEXɸXLI+VSYTƅW Office equipment, fixtures and fittings, years 3-10 Computer hardware, 3 years

> reversal the of impairment at the end each of reporting period. companies Associated the which over companies all are companies Associated +VSYTɸLEWWMKRMJMGERXMRJPYIRGIFYXRSXGSRXVSPKIRIVEPP] and cent per between 20 of shareholding a accompanying ɸTIVGIRXSJXLIZSXMRKVMKLXW Investments in associated companies been have reported EGGSVHMRKXSXLIIUYMX]QIXLSH VIGSKRMWIXLI+VSYTƅWWLEVISJɸXLITVSJMXSVPSWWSJXLIEWWSGM GSQTER]EJXIVXLIHEXISJɸEGUYMWMXMSR When the Group’s share losses of in an associate equals or exceeds its interest in the associate, the Group does not VIGSKRMWIJYVXLIVPSWWIWYRPIWWMXɸLEWMRGYVVIHSFPMKEXMSRW Impairment of non-financial assets non-financial of Impairment Goodwill and intangible assets that an have indefinite useful PMJIɸEVIRSXWYFNIGXXSEQSVXMWEXMSRERHEVIXIWXIHERRYEPP] JSVɸMQTEMVQIRXSVQSVIJVIUYIRXP]MJIZIRXWSVGLERKIWMR circumstances indicate that they might be impaired. Other EWWIXWɸEVIXIWXIHJSVMQTEMVQIRX[LIRIZIVIZIRXWSVGLERKIW MRɸGMVGYQWXERGIWMRHMGEXIXLEXXLIGEVV]MRKEQSYRXQE]RSXFI recoverable. An impairment loss is recognised for the amount F]ɸ[LMGLXLIEWWIXƅWGEVV]MRKEQSYRXI\GIIHWMXWVIGSZIVEFPI amount. The recoverable amount the is higher an asset’s of fair and value disposal use. in value costs less of grouped at impairment, are assessing assets purposes of the For the lowest levels which for there are separately identifiable cash other assets Non-financial units. cash-generating i.e. inflows: XLERKSSH[MPPXLEXWYJJIVERMQTEMVQIRXEVIVIZMI[IHJSVɸTSWWMF share income of after taxes in an associated company is reported as part the of Group’s income. Investments in such a company EVIVITSVXIHMRMXMEPP]EXɸGSWXERHXLIRMRGVIEWIHSVHIGVIEWIH Kindred Group plc Annual Report and Accounts 2019 or madepayments on behalf the of associated company. Gains or losses on transactions with associated companies, if been have any, recognised the extent to unrelated of investors’ associate. the in interests Accounting policies associate of companies been have changed where necessary ensure to consistency with the policies adopted by the Group. equipment and Property, plant Property, plant and equipment is stated at cost less accumulated depreciation and any recognised impairment losses. Cost includes the original purchase price the asset of and the costs attributable bring to the asset working to condition for MXWɸMRXIRHIHYWI Depreciation is charged write off so as to the cost, less the estimated residual value, the of assets over their estimated useful PMZIWYWMRKXLIWXVEMKLXPMRIQIXLSHSRXLIJSPPS[MRKɸFEWIW written its recoverable down to amount. > The gain or loss arising on the disposal an asset of determined is EWXLIHMJJIVIRGIFIX[IIRXLIWEPIWTVSGIIHWERHɸXLIGEVV]MRK amount the of asset and is recognised within administrative expenses in the consolidated income statement. The residual values assets of and their useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. If any MQTEMVQIRXMWMHIRXMJMIHMRXLIGEVV]MRKZEPYISJEREWWIXMXɸ 74 kindredgroup.com Notes to the consolidated financial statements continued

2A: Summary of significant Provisions Provisions are recognised when the Group has a present accounting policies continued legal or constructive obligation as a result of past events, Financial liabilities it is probable that an outflow of resources will be required to Financial liabilities are classified as financial liabilities at fair settle the obligation, and the amount can be reliably estimated. ZEPYIɸXLVSYKLTVSJMXSVPSWWSVEWJMRERGMEPPMEFMPMXMIWQIEWYVIH Share-based employee remuneration EXɸEQSVXMWIHGSWXEWETTVSTVMEXI8LI+VSYTHIXIVQMRIWXLI The Group operates several equity-settled share-based classification of its financial liabilities at initial recognition. compensation plans, under which Group companies The measurement of financial liabilities depends on their VIGIMZIɸWIVZMGIWJVSQIQTPS]IIWEWGSRWMHIVEXMSRJSVIUYMX] classification: (i) financial liabilities at fair value through profit instruments (performance shares) in Kindred Group plc. SVɸPSWWEVIGEVVMIHSRXLIFEPERGIWLIIXEXJEMVZEPYI[MXLKEMRW The fair value of the employee services received in exchange or losses recognised in the income statement; and (ii) financial for the grant of performance shares is recognised as an liabilities measured at amortised cost are initially recognised at I\TIRWI8LIXSXEPEQSYRXXSFII\TIRWIHMWɸHIXIVQMRIHF] fair value less transaction costs and subsequently measured at reference to the fair value of the performance shares granted, amortised cost using the effective interest method. Amortised including market performance conditions and the impact of any cost is calculated by taking into account any issue costs, and non-vesting conditions, and excluding the impact of any service any discount or premium on settlement. Gains and losses or vesting conditions. Non-market performance and service arising on the repurchase, settlement or cancellation of GSRHMXMSRWEVIMRGPYHIHMRɸEWWYQTXMSRWEFSYXXLIRYQFIVSJ liabilities are recognised respectively in interest and other share-based payments that are expected to vest. The total VIZIRYIWERHɸJMRERGIGSWXW amount expensed is recognised over the vesting period of the share-based payments, which is between three and four years. The Group derecognises a financial liability from its balance sheet when the obligation specified in the contract or arrangement is The grant by the Company of performance share awards to the discharged, cancelled or expires. IQTPS]IIWSJɸWYFWMHMEV]YRHIVXEOMRKWMRXLI+VSYTMWXVIEXIHEWE capital contribution. The fair value of employee services received, Trade and other payables and customer balances measured by reference to the grant date fair value, is recognised Trade and other payables and customer balances are recognised over the vesting period as an increase to investment in subsidiary initially at fair value less transaction costs and subsequently YRHIVXEOMRKW[MXLEGSVVIWTSRHMRKGVIHMXXSIUYMX]ɸMRɸXLI QIEWYVIHEXɸEQSVXMWIHGSWXYWMRKXLIIJJIGXMZIMRXIVIWXQIXLSH Company’s financial statements.

Deferred income At the end of each reporting period, the Group revises the Deferred income, representing revenue which can be measured estimates of the number of share-based payments that are reliably but where transactions have not closed at the balance expected to vest. It recognises the impact of the revision to sheet date, is classified as a financial liability at fair value original estimates, if any, in the income statement, with a through profit and loss. It is initially recognised at fair value, corresponding adjustment to equity. and subsequently remeasured to fair value with gains or losses recognised in the consolidated income statement. ;LIRWLEVIFEWIHTE]QIRXWZIWXXLI'SQTER]QE]ɸMWWYI new shares. Proceeds received net of any directly attributable Borrowings and finance costs transaction costs are credited to share capital (nominal value) Borrowings are initially recognised at fair value net of transaction and share premium. costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction In respect of cash settled share-based payments, the Group costs) and the redemption value is recognised in the income measures goods or services acquired and the liability incurred statement over the period of the borrowings using the effective at the fair value of the liability. Until the liability is settled, the interest method. Borrowings are classified as current liabilities Group remeasures the fair value of the liability at the end of YRPIWWXLI+VSYTLEWERYRGSRHMXMSREPVMKLXXSɸHIJIVWIXXPIQIRX each reporting period and at the date of settlement, with any SJɸXLIPMEFMPMX]JSVEXPIEWXQSRXLWEJXIVXLIFEPERGIWLIIXHEXI GLERKIWMRɸZEPYIVIGSKRMWIHMRXLIGSRWSPMHEXIHMRGSQI statement for the period. Interest paid in the consolidated cash flow statement is presented within investing activities as opposed to financing activities, as Cash and cash equivalents, and finance income XLITVMRGMTEPYWISJXLIFSVVS[MRKWXS[LMGLXLI]ɸVIPEXIEVIXS Cash and cash equivalents includes cash in hand, deposits JYRHI\TERWMSRSJXLIFYWMRIWWWYGLEWZMEɸEGUYMWMXMSR LIPHɸEXGEPP[MXLFEROWTE]QIRXWSPYXMSRTVSZMHIVWERHSXLIV short-term highly liquid investments with original maturities Lease liabilities SJɸXLVIIQSRXLWSVJI[IV-RGPYHIHMRGEWLERHGEWLIUYMZEPIRXW Lease liabilities are initially recognised at the present value of are funds not available for use by the Group which are funds the remaining lease payments (see Note 13 on page 85) and required to be held for regulatory purposes. WYFWIUYIRXP]QIEWYVIHEXɸEQSVXMWIHGSWXYWMRKXLIIJJIGXMZI interest method. Cash and cash equivalents in the prior year have been restated. Refer to Note 1B on page 70 for more information on this Offsetting restatement. Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable Finance income is recognised on bank balances using the right to set off the recognised amounts and there is an intention effective interest method as and when it accrues. to settle on a net basis, or realise the asset and settle the liability Dividend distribution simultaneously. Dividends are recognised as a liability in the period in which the dividends are approved by the Company’s shareholders. Interim dividends are recognised when paid. Strategic report Governance Financial statements Other information

against

on page 89), 89), page on

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SRTEKIɸ

there is a currency translation exposure that related financial to liability. Based on the exchange between rate these currencies and GBP December at 31 a 2 per cent fall in 2019, the value of GBP against both EUR and SEK would give an exchange rise to MRɸ2SXI PSWWSJɸETTVS\MQEXIP]+&4QMPPMSR9RXMPWYGLXMQIEWXLI SJ)96ɸTIV+&4 8LIVEXISJI\GLERKISJXLI7[IHMWL by weakened krona 88. page on As elements the of Group’s borrowings at the end the of financial 19 Note EUR in SEK and denominated (see are year loan becomes repayable such translation gains and losses are unrealised. These gains and losses are recognised within the income statement and are non-cash a gain items. In 2019, SJ+&4ɸ PSWWSJ QMPPMSRLEWFIIRVIGSKRMWIH ;LIVIɸXLIFSVVS[MRKWLEZIFIIRQEXGLIHXSXLIGYVVIRG] SJERɸEGUYMWMXMSRER]WYGLXVERWPEXMSRKEMRWERHPSWWIWɸEVI reflected in the Group’s currency translation reserve. +&4F]ɸTIVɸGIRX JVSQEVEXISJ)96TIV+&4XSEVEXI Additional foreign exchange disclosures are contained 18 in Note GBP to a rate of SEKGBP of a rate per to 12.279 GBP). These movements in principal thesome Group’s trading currencies of contributed XSɸXLISZIVEPPJSVIMKRI\GLERKI ERHRIXMRZIWXQIRXWɸMRJSVIMKRSTIVEXMSRW The Group’s operating cash flows provide a natural hedge JSVɸSTIVEXMRKGYVVIRG]VMWOWWMRGIHITSWMXWERHTE]SYXW XSɸGYWXSQIVWMRHMJJIVIRXXIVVMXSVMIWEVIQEXGLIHMRXLI WEQIɸGYVVIRG] The Group has certain investments in foreign operations, [LSWIɸRIXEWWIXWEVII\TSWIHXSJSVIMKRGYVVIRG]XVERWPEXMSR risk. In addition, the Group reports in GBP sterling, which is XLIɸGYVVIRG]MR[LMGLMXWS[RWLEVIGETMXEPMWHIRSQMREXIH although it is incorporated andtrading in Malta. The spread the of Group’s operations, including material revenue and currencies, different many in denominated expenses and XEOMRKMRXSEGGSYRXXLIJEGXXLEXGYWXSQIVWGERɸXVEHI[MXL Market risk Market Market risk is the risk that the Groupwill lose money on its business due unfavourable to outcomes on the events where XLIɸ+VSYTSJJIVWSHHW8LI+VSYTLEWEHSTXIHWTIGMJMGVMWO management policies that control the maximum risk levelfor IEGLɸWTSVXSVIZIRX[LIVIXLI+VSYTSJJIVWSHHW8LIVIWYPXW theof mostpopular teams in major football leagues comprise the predominant market risk. Through diversification, which is elementa key the of Group’s business, the risk is spread across a large number events of and sports. In respect betting of on other products,the Group does not usually incur any significant financial risk, except for the risk of fraudulent transactions considered within credit risk overleaf. Foreign currency exchange risk The Group operates internationally and in addition GBP to WXIVPMRKɸMWI\TSWIHXSJSVIMKRI\GLERKIVMWOEVMWMRKJVSQ ZEVMSYWɸGYVVIRG]I\TSWYVIWTVMQEVMP][MXLVIWTIGXXSXLI euro, Swedish krona, Norwegian kroner, Danish krone and Australian Foreign dollar. exchange risk arises from future GSQQIVGMEPXVERWEGXMSRWɸVIGSKRMWIHEWWIXWERHPMEFMPMXMIW the Group in currencies other than the currency their of territory SJVIWMHIRGIQEOIWMXMQTVEGXMGEPXSMWSPEXIXLIɸMQTEGXSJ operations. from results the on movements currency single exchange of the rate theDuring of euro 2019, XSVW XS 11).

going assessment of individual individual assessmentgoing of Income taxes Income The Group is subject income to taxes in numerous jurisdictions. Significant judgement is required in determining theworldwide during transactions some are There taxes. income for provision the ordinary course business of which for the ultimate tax determination is based on management’s judgement, being country of regulations. and specific interpretation the tax laws environment Legal operations its which in markets of number a in operates Group The QE]FIWYFNIGXXSPMXMKEXMSRVMWOWEWLMKLPMKLXIHSRɸTEKIW In such circumstances, the potential outcome can often be unknown. The Group therefore routinely makes estimates the of financial management’s using impact experience current and knowledge the of situation. Capitalisation of development costs The capitalises Group internally generated development costs, being salary costs for those working on the development and enhancement its of platform, in line with the relevant accounting policy on page 72. In assessing the criteria recognising for these on its in assets, and intangible projects ensure to they still meet these criteria, management judgement. of degree certain a exercises 2C: Financial2C: risk management Financial risk factors The Group’s activities expose a variety it to financial of risks: market risk (including foreign currency exchange risk and interest risk overall liquidity risk. and The Group’s risk credit risk), rate the of unpredictability the on focuses programme management Group’s markets and seeks minimise to potential adverse effects management risk Financial performance. financial Group’s the on is managed by the finance reporting team through the Chief *MRERGMEP3JJMGIVXSXLI&SEVHSJɸ(MVIGXSVW8LI&SEVHSJ(MVIG supervises strategic decisions, including the management the of +VSYTƅWGETMXEPɸWXVYGXYVI*SVQSVIMRJSVQEXMSRSRXLI+VSYT W principal risks, please pages refer to 30 and 31. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations future of events that are believed be reasonable to under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, definition, by seldom equal the related actual results. The estimates and assumptions that a significant have risk causing of a material adjustment the carrying to amounts SJɸEWWIXWERHPMEFMPMXMIW[MXLMRXLIRI\XJMRERGMEP]IEVEVI HMWGYWWIHɸFIPS[ Impairment of goodwill and other intangible assets The Group tests annually whether goodwill and other intangible assetssuffered have any impairment, in accordance with the accounting policy stated on page 73. The recoverable amount on based determined been has units cash-generating of value-in-use calculations which require the estimates use of such as EBITDA margin, the risk adjusted discount and rate the long-term growth Note (see rate 2B: Critical accounting estimates and assumptions Kindred Group plc Annual Report and Accounts 2019 76 kindredgroup.com Notes to the consolidated financial statements continued

2C: Financial risk management Of the Group’s total financial liabilities of GBP 499.2 ɸ+&4ɸ QMPPMSR+&4 +&4 QMPPMSR continued mature in less than one year and GBP 278.7 (2018: GBP 149.3) At the year end, the Group has access to a multicurrency million mature in more than one year. The Group always revolving loan facility of GBP 160 million with several Nordic maintains cash balances in excess of customer balances. banks and at such time that the Group draws down further The table below analyses the Group’s financial liabilities based on the facility, a currency translation exposure related to that on the remaining period at the balance sheet date. The amounts financial liability may arise. Any potential future translation disclosed in the table are the contractual undiscounted cash gains and losses arising on the credit facilities would be offset flows. See also Notes 15 and 17 for further information on the to the extent that the Group generates positive future cash Group’s financial liabilities. flows in the corresponding currency.

Interest rate risk As at December 2019 As at December 2018 The Group’s interest rate risk is managed through the Less Between Between Less Between Between negotiation of fixed rates above EURIBOR (or the relevant than 1–2 2–5 than 1–2 2–5 (GBP m) 1 year years years 1 year years years equivalent inter-banking lending rate) on the individual XVERGLIWSJXLIFEROɸFSVVS[MRKW Deferred income 5.9 – – 5.4 – – The substantial majority of the Group’s liquid resources Trade and are held in short-term accounts in order to provide the other necessary liquidity to fund the Group’s operations, so payables1 135.5 – – 128.4 – – there is no significant exposure to interest rate risk in Customer respect of the Group’s interest-bearing assets and liabilities. balances 67.4 – – 62.3 – – Lease Credit risk liabilities 11.7 12.0 28.3 – – – The Group manages credit risk on a Group-wide basis. 8LI+VSYTɸHSIWRSXSJJIVGVIHMXXSER]GYWXSQIVWXLIVIJSVI Borrowings – – 225.4 45.0 103.0 46.3 the only exposure to credit risk in respect of its sports betting Total 220.5 12.0 253.7 241.1 103.0 46.3 FYWMRIWWEVMWIWMRXLIPMQMXIHXVEHMRKEGXMZMXMIWXLEXMXɸSGGEWMSREPP] conducts with other parties in order to lay off its exposure. In )\GPYHMRKRSRJMRERGMEPɸPMEFMPMXMIWFIMRKSXLIVXE\EXMSRERHWSGMEPWIGYVMX] respect of betting on other products, the Group works with a WQEPPRYQFIVSJTEVXRIVWERHEXER]XMQIQE]LEZIɸEWQEPP 2D: Capital risk management degree of credit exposure. The Group’s objective in managing capital is to ensure it has The principal credit risk that the Group faces in its gaming operations sufficient liquidity to manage its business and growth objectives GSQIWJVSQXLIVMWOSJJVEYHYPIRXXVERWEGXMSRWERHɸXLIVIWYPXMRK while maximizing return to shareholders through the optimisation GLEVKIFEGOWJVSQFEROWERHSXLIVTE]QIRXɸTVSZMHIVW8LI+VSYT of the use of debt and equity. Liquidity is necessary to meet the has a fraud department (within the player sustainability team) that Group’s existing general capital needs, fund the Group’s growth MWɸMRHITIRHIRXSJMXWJMRERGIJYRGXMSRXLEXMRZIWXMKEXIWIEGLGEWI and expansion plans, and undertake certain capital markets that is reported and also monitors the overall level of such activities, including the repayment of debt and investing activities. transactions in connection with changes in the business of the Group, whether in terms of new markets, new products or new The Group has historically met its liquidity needs through cash flow payment providers. generated from operations and externally financing activities were sought notably to finance business development activities, such The Group also manages credit risk by using a large number as acquisitions. The Board makes all the relevant decisions to SJɸFEROMRKERHTE]QIRXWSPYXMSRTVSZMHIVW7II2SXI*SR investment opportunities and whether to take on further external TEKIɸ financing. The Group’s current objective is to meet all of its current liquidity and existing general capital requirements from the cash Liquidity risk flow generated from operationsand to optimise its capital structure Prudent liquidity risk management involves maintaining and cost of capital. The Group intends to deleverage by focusing on sufficient cash and availability of funding for the business. improving profitability and repaying its debt. %WEXɸ(IGIQFIVXLIGYVVIRXPMEFMPMXMIWSJXLI+VSYT exceeded the current assets by GBP 51.1 (2018: GBP 54.0) million. The Group also monitored adherence to debt covenants that The Group ensures adequate liquidity through the management of related to the facilities detailed on page 89 in accordance with the rolling cash flow forecasts, the approval of investment decisions by conditions of those instruments, and has been fully compliant XLIɸ&SEVHERHXLIRIKSXMEXMSRSJETTVSTVMEXIJMRERGMRKJEGMPMXMIW with such conditions. These forecasts show that the Group is in a positive cash flow TSWMXMSR%WEXɸ(IGIQFIVXLIYRYWIHVIZSPZMRKPSER JEGMPMX]EZEMPEFPIXSFIɸHVE[RSR[EW+&4 +&4 QMPPMSR WII2SXIɸSRTEKI 8LIɸ+VSYTEPWSQSRMXSVIH adherence to debt covenants that related to the facilities detailed on page 89 in accordance with the conditions of those instruments, ERHLEWFIIRJYPP]GSQTPMERX[MXLɸWYGLGSRHMXMSRW Strategic report Governance Financial statements Other information ) 1 77 2018 As atAs (Restated Ʉ(IGIQFIV 2019 As atAs Ʉ(IGIQFIV comparative figures. comparative Not ratedNot equivalents cash and cash Total 137.8 174.3 68.8 80.0 BBBBBB- 10.5 1.5 14.5 2.3 BBB+ 0.5 – A- 2.1 – 1 See Note on page 1B 70 for more information on the restatement of the 2018 The Group continually monitors its credit risk with banking partners and did not incur any losses as a result during 2019 SJɸFEROJEMPYVIW2SXVEXIHƉTVMQEVMP]GSRWMWXWSJTE]QIRX maintaining by managed is risk credit where providers solution a spread the of Group’s funds across a number industry- of established providers. The maximum exposure credit to risk cashfor and cash equivalents, and trade and other receivables, MWVITVIWIRXIHF]ɸXLIMVGEVV]MRKEQSYRX (GBP m) AA-20.5 A+ A0.8– 33.2 33.1 44.3 The assessment loss of allowances for financial assets are based on assumptions about risk defaultof and expected loss rates. The Group uses judgement in making these assumptions, based onpast the history Group’s and existing conditions, market as well as forward-looking estimates at the end each of reporting or period. techniques estimation No significant changes to reporting period. the during made were assumptions Since the Group does not significant have trade receivables, its principal credit risk is in relation cash to and cash equivalents. The Group uses a largenumber banks of and payment solution providers both in order provide to maximum access markets to andconvenience for customers and ensure also to that credit risk in banking relationships is spread. The credit ratings the of +VSYTƅWTVMRGMTEPFEROMRKTEVXRIVWEXɸ(IGIQFIVERH based2018, on publicly reported Fitch ratings, are as follows: Current and non-current receivables measured at amortised cost; amortised at measured non-current and receivables Current Embedded option on the convertible bond measured at fair value through profit and loss; and External credit far ratings as available); (as Cash and cash equivalents, consisting primarily amounts of held with banks and payment providers measured amortised at cost. Actual or expected significant adverse changes in business, financial or economic conditions that are expected cause to a significant change the counterparty’s to ability meet to its and obligations; Significant changes in the behaviour of the counterparty, the Significant of behaviour the changes in such as the status payments. of

> The Group has three types financial of assets that are subject to model: loss credit expected the 2F: Impairment and credit quality of financial assets The carrying value less expected loss allowances trade of and SXLIVɸVIGIMZEFPIWERHXVEHIERHSXLIVTE]EFPIWEVIEWWYQIHXS approximate their fair values. The fair value financial of liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest that rate MWɸEZEMPEFPIXSXLI+VSYTJSVWMQMPEVJMRERGMEPMRWXVYQIRXW For further information on fair value estimates, see 15 Note SRɸTEKI 2E: Fairvalue estimation Kindred Group plc Annual Report and Accounts 2019 > > > recognition initial on default of probability the considers Group The an asset,of which of the all of above were considered low have to considers then Group The recognition. initial upon risk credit whether there has been a significant increase in credit risk on an reporting each throughout ongoing basis period. assess whether thereTo is a significant increase in credit risk, the Group compares the risk a default of occurring on the asset as at the reporting with date the risk default initial of of as at the date supportive and reasonable available considers It recognition. forwarding-looking including: information, > Regardless the of analysis above, an increase in credit risk is presumed if a debtor is more than 30 days past due in making payment. contractual a reasonable no is there when off written are assets Financial expectation recovery, of such as a debtor failing engage to in a repayment plan with the company. The Group assesses a loan or receivable for write off when a debtor make fails to contractual payments days past more due. than Where 120 company the off, written been have receivables or loans continues engage to in enforcement activity attempt to to recover the receivable due. Where recoveries are made, these are recognised in profit or loss. > 78 kindredgroup.com Notes to the consolidated financial statements continued

3: Operating segments Management has determined the operating segments based on the reports reviewed by the CEO and Executive Committee and provided to the Board, which are used to make strategic decisions.

Management considers the business primarily from a geographic perspective, emphasising the primary role of territory management in driving the business forward. Products and brands are also an important part of the Group’s operational matrix. However, the product teams are considered as suppliers of products and services to the territory managers. This reflects the fact that products may be sourced both internally and externally from independent suppliers. Brands are also managed from a geographic perspective by the territory managers.

8LIVITSVXEFPISTIVEXMRKWIKQIRXWHIVMZIXLIMVVIZIRYIWJVSQɸSRPMRI7TSVXWFIXXMRK'EWMRS +EQIW4SOIVERH3XLIVɸFIXXMRK operations (including Bingo and other games).

The primary measure used by the CEO and the Executive Committee to assess the performance of operating segments is gross profit, [LMGLMWHIJMRIHEW+VSWW[MRRMRKWVIZIRYI RIXɸSJFSRYWIW PIWWGSWXSJWEPIW8LMWQIEWYVIQIRXFEWMWɸI\GPYHIWGIRXVEPSZIVLIEHW MRGYVVIHMRWYTTSVXSJXLIMRXIKVEXIHSTIVEXMRKQSHIPETTPMIHF]XLI+VSYTMRSVHIVXSɸHIVMZIQE\MQYQSTIVEXMSREPIJJMGMIRG]

8LI+VSYTHSIWRSXEPPSGEXIWYGLGIRXVEPSTIVEXMRKERHEHQMRMWXVEXMZII\TIRWIWF]WIKQIRXWMRGIER]EPPSGEXMSR[SYPHɸFIEVFMXVEV]8LI QIEWYVIEPWSI\GPYHIWXLIIJJIGXWSJɸIUYMX]WIXXPIHWLEVIFEWIHTE]QIRXWHITVIGMEXMSRERHEQSVXMWEXMSRERHJMRERGIGSWXWERHMRGSQI

The Group operates an integrated business model and does not allocate either assets or liabilities of the operating segments in its internal reporting.

The segment information provided to the CEO and the Executive Committee for the reportable segments during the year ended ɸ(IGIQFIVMWEWJSPPS[W

Central, Eastern and 31 December 2019 Western Southern (GBP m) Nordics Europe Europe Other Total Gross winnings revenue 258.6 555.5 79.0 19.7 912.8 Betting duties -23.6 -165.9 -10.1 -4.7 -204.3 Marketing revenue share -13.8 -27.3 -5.5 -2.2 -48.8 Other cost of sales -53.9 -77.8 -15.4 -4.0 -151.1 Gross profit 167.3 284.5 48.0 8.8 508.6

Marketing costs -210.9 Administrative expenses -219.0 Items affecting comparability -7.8 Profit from operations 70.9

The segment information provided to the CEO and the Executive Committee for the reportable segments during the year ended ɸ(IGIQFIVMWEWJSPPS[W

Central, Eastern and 31 December 2018 Western Southern (GBP m) Nordics Europe Europe Other Total Gross winnings revenue 306.5 516.3 68.2 16.6 907.6 Betting duties -9.2 -138.7 -7.4 -3.4 -158.7 Marketing revenue share -17.4 -25.6 -5.5 -1.5 -50.0 Other cost of sales -60.7 -68.9 -15.0 -2.1 -146.7 Gross profit 219.2 283.1 40.3 9.6 552.2

Marketing costs -189.0 Administrative expenses -189.1 Items affecting comparability -18.1 Profit from operations 156.0 Strategic report Governance Financial statements Other information 79 ul

oup oup 2018 2018 LF] Year ended ended Year ended Year JYPP 31 December 31 December –0.3 2.20.8 9.3 0.8 1.72.05.9 – – 11.3 7.8 18.1 70.5 64.0 15.081.1 12.9 10.1 70.5 – 21.326.7 17.9 22.3 48.8 50.0 96.1 83.4 2019 2019 435.5429.3 435.6 431.8 204.3151.1210.9 158.7 146.7 189.0 219.0 189.1 912.8 907.6 Year ended ended Year ended Year 31 December 31 December res have also been reclassified. XLI+VSYTƅWXSXEPEQSVXMWEXMSRGLEVKIWLS[RMR2SXISRTEKI +VSYTHIJMRIWMXIQWEJJIGXMRKGSQTEVEFMPMX]EWXLSWIMXIQW[LMG EPWIKQIRXWWLSYPHFIWITEVEXIP]HMWGPSWIHMRSVHIVXSɸKMZIE 1 1 1 Management incentive million costs in connection GBP GBP of 0.9) 0.2 (2018: with previous Group acquisitions. efficiencies. Personnel restructuring GBP nil) (2018: million as a result costs the of GBP Group of 1.7 implementing measures improve to cost and this adjustment has no impact on free cash flow available for dividends. For more on information page 82. see 11 Note GBP 2.0 million, being the impairment Betchoice of goodwill, following the Group’s assessment the of recoverable amount the of Betchoice cash generating unit (CGU) as being lower than its previous carrying value. This is a non-cash charge taken by the Gr IGSRSQMGPMJISJɸXLIEWWIX8LMWGLEVKIMWMRGPYHIHEWTEVXSJ Amortisation acquired of intangible assets, which is the charge on “IFRS 3 Business combinations” acquired assets over the usef

Total administrative expenses Items affecting comparability acquisitions to relating costs incentive Management costs restructuring Personnel 0.2 0.9 Other employee costs employee Other costs Employee equipment and plant property, of Depreciation Depreciation of right-of-use assets Amortisation intangible of assets on (excluding assets arising on acquisition)Loss on disposal property, of plant and equipment Loss on disposal intangible of assets rentals lease Operating Fees statutory payable to auditors Other Impairment recognised year losses the in assets intangible acquired of amortisation Accelerated assets intangible acquired of Amortisation items operating on 24.3 (gains)/losses currency Foreign itemsTotal affecting comparability 17.8 14.9 0.1 13.0 0.5 – -2.0 4.7 1.2 Casino & Games Poker Other Marketing revenue share sales of cost Other costs Marketing Administrative expenses development) and (Research costs Employee Betting duties Betting 4: Expenses by nature Sports betting Sports > 1 Research and development costs has been updated in 2019 to reflect the most appropriate classification, 2018 comparative figu %WI\TPEMRIH[MXLMRXLIEGGSYRXMRKTSPMG]RSXISRTEKIXLIɸ (GBP m) (GBP m) XLIMVWM^ISVREXYVIMRVIPEXMSRXSFSXLXLI+VSYTERHMRHMZMHY Product revenues Product Gross winnings revenue by principal product groups: Kindred Group plc Annual Report and Accounts 2019 understanding the of Group’s underlying financial performance, and aid comparability the of Group’s results between years. items affectingIn 2019, year-on-year comparison included: > > > 80 kindredgroup.com Notes to the consolidated financial statements continued

4: Expenses by nature continued 6: Finance costs In addition to items seen in the current year; in 2018, items Year ended Year ended affecting year-on-year comparison included: 31 December 31 December > A non-cash amortisation charge of GBP 4.7 million as a (GBP m) 2019 2018 result of the rationalisation of its brands and the migration of Interest and fees payable on acquired brands to the Group’s platform. For more information FEROɸFSVVS[MRKW 5.4 4.6 see Note 11 on page 82. Interest on lease liabilities 1.2 – Foreign exchange loss on dividend 0.4 – Fees payable to the statutory auditors, the PricewaterhouseCoopers 7.0 4.6 network, can be broken down as follows: Foreign currency gains or losses on operating items are included Year ended Year ended within items affecting comparability. 31 December 31 December (GBP m) 2019 2018 Annual statutory audit 0.7 0.7 7: Finance income Non-audit services 0.1 0.1 Year ended Year ended 0.8 0.8 31 December 31 December (GBP m) 2019 2018 The annual statutory audit fee includes fees for the local statutory Interest receivable on convertible audits of some of the Group’s subsidiaries. bond and bank deposits 0.4 0.4 0.4 0.4 Non-audit services includes the interim review, permissible tax compliance, sustainability reporting and other services. 8: Income tax expense 5: Employee costs Year ended Year ended 31 December 31 December Employee costs can be broken down as follows: (GBP m) Note 2019 2018 Current tax: Year ended Year ended 31 December 31 December Income tax expense 16.3 22.1 (GBP m) 2019 2018 Deferred tax: Wages and salaries 76.5 66.4 Deferred tax credit 20 -5.8 -4.2 Share award charge – value of Total tax expense 10.5 17.9 employee services (see Note 21) 2.0 2.2 Equity settled employee benefit plan Income tax in Malta is calculated at a basic rate of 35 (2018: 35) (see Note 21) 2.6 2.2 per cent of the estimated assessable profit for the year. Taxation Social security costs 10.2 8.9 for other jurisdictions is calculated at the rates prevailing in the Pension costs 4.8 3.7 respective jurisdictions. 96.1 83.4 The tax expense for the year can be reconciled to the profit per the income statement as follows: The remuneration of the Directors and Executive Committee MWɸHMWGPSWIHSRTEKI Year ended Year ended 31 December 31 December Average employee numbers are provided as below: (GBP m) 2019 2018 Profit before tax 67.1 149.5 Year ended Year ended Average number of employees 31 December 31 December Taxation at the basic income tax rate for the year 2019 2018 of 35% (2018: 35%) 23.5 52.3 Finance, legal, administration Effects of: ERHɸQEREKIQIRX 447 387 Tax recoverable1 -40.3 -45.6 Marketing (including trading) 570 478 Overseas tax rates 1.6 -8.2 Customer services 225 244 Items of income/expenditure not Research and development 382 302 taxable/deductible 4.8 9.4 2 1,624 1,411 Other 20.9 10.0 Tax expense 10.5 17.9

1 The tax recoverable of GBP 40.3 (2018: GBP 45.6) million represents the Malta tax refundable in accordance with applicable fiscal legislation on intra-Group dividends distributed during the year and the Malta tax that shall be recoverable upon distribution of unremitted earnings. 2 Included in other for the financial year ended 31 December 2019 is an amount of +&4ɸQMPPMSRVITVIWIRXMRKEREHNYWXQIRXXSXLIHIJIVVIHXE\VIGSKRMXMSRYTSR consolidation of tax losses that are eligible for offset against future profits. Strategic report Governance Financial statements Other information 81 2018 131.6 131.6 0.580 0.576 1,304,455 Year ended ended Year 227,043,853 228,348,308 31 December 56.6 56.6 2019 0.248 0.250 1,714,651 Year ended ended Year 31 December 226,669,514 228,384,165 Earnings the for purposes diluted of share per earnings of number average Weighted outstanding shares the for purposes SJHMPYXIHIEVRMRKWTIVɸWLEVI (MPYXIHIEVRMRKWɸTIVWLEVI The nominal value per share is GBP 0.000625 GBP(2018: 0.000625). 10: Earnings per share The calculation the of basic and diluted earnings per share is based on the following data: (GBP m) Earnings basic purposes the of Earnings for share per earnings shares of Number of number average Weighted the for shares outstanding TYVTSWIWɸSJFEWMGIEVRMRKWTIVWLEVI Effect dilutive of potential ordinary awards share – shares Earnings per share GBP )EVRMRKWTIVɸWLEVI I S XLI 0.1 2018 2018 125.6 Year ended ended Year Year ended ended Year 31 December 31 December – 2019 2019 112.5 Year ended ended Year Year ended ended Year 31 December 31 December Kindred Group plc Annual Report and Accounts 2019 cash flow available In line dividends for with the previous 2019. for ]IEVERHEPMKRIH[MXLXLI+VSYT WHMZMHIRHTSPMG]SRTEKI TVSTSWIHHMZMHIRHMWEFSZITIVGIRXSJXLI+VSYT WJVIIGEWL flow available dividends, for reflecting the solid capital structure of the Group. million shareholders’ of funds. In order facilitate to more efficient cash management, the dividend is proposed be paid to in two IUYEPMRWXEPQIRXW-JETTVSZIHEXXLI%+1ɸSR1E]XLI JMVWXMRWXEPQIRX[MPPFITEMHSR1E]XSɸWLEVILSPHIVW[L EVISRXLI)YVSGPIEV7[IHIRVIKMWXIVSRɸ1E]8LI second instalment November be will paid on 19 2020 to shareholders who are on the Euroclear Sweden register on 2020. November 16 8LITVSTSWIHHMZMHIRHEQSYRXWXSTIVGIRXSJXLI+VSYT WJVI (GBP m) Dividend paid GBP 0.496 per share GBP 0.551(2018: per share) The Board Directors of is proposing a final dividend in respect SJɸXLIJMRERGMEP]IEVIRHIH(IGIQFIVSJ+&4 TIVɸSVHMREV]WLEVI7(6[LMGL[MPPEFWSVFERIWXMQEXIH+&4 9: Dividend 9: Share-based payments recognised tax income Total HMVIGXP]ɄMRɄIUYMX] – 0.2 (GBP m) Current tax credit in relation to: Share-based paymentsDeferred tax charge in relation to: – -0.1 The income tax expensed directly equity to during the year is EWɸJSPPS[W 82 kindredgroup.com Notes to the consolidated financial statements continued

11: Intangible assets Other intangible assets Development Computer Customer Gaming Brands and (GBP m) Note Goodwill costs software databases licences other Total Cost At 1 January 2018 283.4 103.5 15.6 44.4 – 125.1 288.6 Additions – 20.9 3.0 – – – 23.9 Fair value adjustments5.1–––––– Reclassifications – 3.2 -3.2 – – – – Disposals – -6.3 -2.5 – – – -8.8 Currency translation adjustment -1.7 -0.3 -0.1 – – -0.3 -0.7 At 31 December 2018 286.8 121.0 12.8 44.4 – 124.8 303.0 Additions – 25.0 1.5 – 14.9 – 41.4 Reclassifications – – – – 1.0 -1.0 – Disposals – -52.1 -1.0 – – – -53.1 Currency translation adjustment -5.6 -0.4 -0.5 -0.7 -0.5 -2.7 -4.8 At 31 December 2019 281.2 93.5 12.8 43.7 15.4 121.1 286.5 Accumulated amortisation At 1 January 2018 4.3 79.4 10.4 27.5 – 8.5 125.8 Charge for the year – 16.9 2.8 9.3 – 4.8 33.8 Reclassifications – 1.3 -1.3 – – – – Disposals – -6.3 -2.2 – – – -8.5 Currency translation adjustment -0.2 -0.1 0.3 – – -0.1 0.1 At 31 December 2018 4.1 91.2 10.0 36.8 – 13.2 151.2 Charge for the year – 22.4 1.8 5.2 0.3 0.5 30.2 Impairment losses recognised in the year 2.0–––––– Reclassifications – – – – 0.3 -0.3 – Disposals – -52.1 -1.0 – – – -53.1 Currency translation adjustment -0.2 – -0.4 -0.8 – -0.3 -1.5 At 31 December 2019 5.9 61.5 10.4 41.2 0.6 13.1 126.8

Net book value At 31 December 2019 275.3 32.0 2.4 2.5 14.8 108.0 159.7 At 31 December 2018 282.7 29.8 2.8 7.6 – 111.6 151.8

Goodwill balances relating to acquisitions and other intangible assets were subject to foreign currency adjustments as shown MRɸXLIɸEFSZIXEFPIERHI\TPEMRIH[MXLMRXLI+VSYTƅWEGGSYRXMRKTSPMGMIWSYXPMRIHMR2SXI%SRTEKI

Goodwill, some brands and domains arising on business combinations, together with any material separately acquired brands or domains, are not subject to amortisation but are reviewed annually, or more frequently if events require, for impairment, as described on the next page. The amortisation periods for all other classes of intangible assets are outlined in Note 2A on page 72.

Customer databases recognised as a result of previous acquisitions are amortised over three years.

Impairment review Goodwill and other intangible assets with indefinite lives Goodwill and other intangible assets with indefinite lives are allocated by management to cash-generating units for the purpose of impairment testing.

Other intangible assets that have indefinite useful lives include significant brands acquired through business combinations and key trading domains either acquired through business combinations or separately purchased.

The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill and other intangible assets with indefinite lives arose. The units to which goodwill and other intangible assets with indefinite lives are monitored are reviewed for appropriateness each year and are outlined on the following page: Strategic report Governance Financial statements Other information 83 ent, ent, ith ith unt. rate rate nt ive ive sed by the lead lead 19. using future. future. RW assets there are GBP 108.0 108.0 GBP s included in industry reports. TIGMJMGVMWOWVIPEXMRKXSXLIVIPIZERXWIKQIRXWERHXLI Group operations Solfive Betchoice 32Red IRGIERHMRHYWXV]ERHMRPMRI[MXLXLI+VSYT WWXVEXIK]ERHTPE EVOIXHIZIPSTQIRX TVIXE\[IMKLXIHEZIVEKIGSWXSJGETMXEP ;%'' EHNYWXIHJSVW platform in 2019. Itplatform is therefore considered in 2019. be a separate to cash-generating unit at 2019. December 31 The 32Red and Roxy Palace brands are part the of 32Red acquisition and have therefore been allocated the 32Red to cash-generating unit. substantially as a result separate regulatory of basis in 2019 requirements. It is 2019. December 31 at unit cash-generating separate a be to considered therefore substantially as a result separate regulatory of basis in 2019 requirements. It is 2019. December 31 at unit cash-generating separate a be to considered therefore Description 2007, Guildhall Media2007, Invest in 2008, and Bet24 iGame in 2012 and Stan James Online the activities in 2015, and customers the of acquired businesses been have integrated the into existing businesses the of Kindred Group and the combined businesses are now managed on unified a basis. Management considers the be one cash-generatingcombined to business original unit, purchased the as businesses are no longer separately identifiable. The Maria brand, Bingo.com domain, certain iGame brands and iGame domains are an integrated part the of wider business and therefore have been allocated the to unit. cash-generating operations Group same At 31 DecemberAt 31 2019 December At 31 2018 9.02.0 9.0 2.0 9.0 2.0 9.0 2.0 10.0 2.0 10.0 2.0 13.0 10.0 2.0 2.0 Other intangible intangible Other assets (GBP m) Group 8.3–17.5 15.4–16.5 0–12.0 2.4–17.1 21.9–23.8 12.7–13.8 0.0–18.7 2.9–20.5 operations Solfive Betchoice 32Red Goodwill (GBP m) 164.9 45.3 Following the acquisitions the of MrBookmaker Group in 2005, the Maria Group in 3 2 1 countries in which they operate. they which in countries Kindred Group plc Annual Report and Accounts 2019 KVS[XLVEXIWERHEWWYQTXMSRWGSRWMWXIRX[MXLXLI+VSYTƅWI\TIVM As December at 31 goodwill the total GBP of 2019, 275.3 million and other the total intangible assets with indefinite lives of Totalmillion were tested for impairment on a value-in-use basis. The value-in-use calculation was based on the 2020 budget approved 275.3Board and extrapolated pre-tax projections over four years. These projections wereallocated the above to cash-generating units The assumptions key used by management in the value-in-use calculations support to the overall impairment assessment as 108.0 approved by the Board were as follows: 32Red 100.8 62.7 The acquisition 32Red of on has 9 June continued 2017 operate to on a separate Risk adjusted discount adjusted Risk VEXI TIVɸGIRX Betchoice 4.2 – The acquisition Betchoice of on 29 February has continued 2012 operate to on a Long-term growth VEXI TIVɸGIRX Solfive 5.4 – The acquisition Solfive of December has on continued 12 operate 2011 to on a 3 Weighted average growth rate used to extrapolate cash flows beyond the budget period. The rates are consistent with forecast EBITDA margin margin EBITDA cent) (per to the recoverableto amount the of 32Red cash-generating unit equalling its carrying amount. An increased risk adjusted discount in the first five years (corresponding a decrease to in the EBITDA margin 23 of per cent on average the for same period) would per centat 13 would lead the recoverable to amount the of 32Red cash-generating unit equalling its carrying amount. In performing its assessment the of carrying value goodwill of and other intangibles with indefinite lives, the Board believes two cash-generating units where reasonably possible changes the underlying to assumptions exist that would give rise impairm to units. generating cash two these over performed been have analyses sensitivity result, a As 32Red. and Betchoice being In relation 32Red, to the recoverable amount exceeds the carrying value by GBP million. 103.6 A decrease in EBITDA 38 of per ce with definite lives and was amortised month over period the 18 31 December to GBP 2018. 4.2 million amortisation of was recogni within acceleratedin 2018 amortisation intangible of assets in the consolidated income statement, with no further effect in 20 Based on the Group’s impairment review no indication impairment of has been identified on the separate cash-generating units, w 8LIVEXILEWFIIRVIEWWIWWIHERHGEPGYPEXIHYWMRKXLI'+9 W &EWIHSRTEWXTIVJSVQERGIERHQEREKIQIRX WI\TIGXEXMSRWSJQ the exception Betchoice of where the carrying amount its of goodwill has been reduced by GBP 2.0 million its recoverable to amo This reduction represents the impairment loss and has been recognised in the consolidated income statement. The events and circumstances that led the recognition to the of impairment include the challenging regulatory environment a highly of competit market with high point consumption of taxes that are expected continue to impact to the profitability Betchoice of in the near management took the decision discontinueIn 2017, to the Stan James brand and the related customers were some migrated to of the Group’s main brands in February As 2018. a result, brand the total value GBP of 6.2 million was reclassified intangible to CGU Group operations 84 kindredgroup.com Notes to the consolidated financial statements continued

11: Intangible assets continued With respect to Betchoice, following the impairment posted this year, the recoverable amount equals the carrying value. The impairment assessment is highly sensitive to changes in the key assumptions used in the value in use calculation which could result in the potential impairment of the remaining carrying value if the forecast is not achieved in future years.

The Board believes there are no other cash-generating units where reasonably possible changes to the underlying assumptions exist that would give rise to impairment. 12: Property, plant and equipment Office equipment, Computer fixtures and (GBP m) Note hardware fittings Total Cost At 1 January 2018 25.8 16.5 42.3 Additions 9.5 16.5 26.0 Disposals -2.6 -1.9 -4.5 Currency translation adjustment -0.2 0.2 – At 31 December 2018 32.5 31.3 63.8 Additions 9.3 6.3 15.6 Disposals -2.0 -1.7 -3.7 Reclassifications -0.4 0.4 – Currency translation adjustment -1.4 -1.0 -2.4 At 31 December 2019 38.0 35.3 73.3 Accumulated depreciation At 1 January 2018 14.8 2.8 17.6 Charge for the year 4 7.8 5.2 13.0 Disposals -2.4 -1.6 -4.0 Currency translation adjustment -0.2 – -0.2 At 31 December 2018 20.0 6.4 26.4 Charge for the year 4 8.1 6.8 14.9 Disposals -1.9 -1.6 -3.5 Reclassifications ––– Currency translation adjustment -0.9 -0.2 -1.1 At 31 December 2019 25.3 11.4 36.7

Net book value At 31 December 2019 12.7 23.9 36.6 At 31 December 2018 12.5 24.9 37.4 Strategic report Governance Financial statements Other information 85

d nts early early se se -0.4 83.8 75.0 75.0 10.7 64.3 2019 ing ing e ay not cy in in cy y at the he he e nt. Rental perating perating present value value present LIHEXISJMRMXMEPETTPMGEXMSR Right-of-use assets – increase by GBP 75.6 million million 0.6 GBP by decrease – Prepayments Lease liabilities – increase by GBP 75.0 million that an entity is not required reassess to whether a contract is, or contains, a lease initial at the of date application; the accounting operating for leases with remaining lease months term less as at 1 January of than 12 as short-term 2019 leases being expensed directly through the consolidated income statement; the exclusion initial of direct costs the for measurement the of right-of-use assets initial of at the application; date and the hindsight use of in determiningthe lease term where the contract contains options extend to orterminate the lease.

payments recognised as at 31 December 2018). The change in accounting policy affected the following items in the balance sheetJanuary as at 1 2019: Less: short-term leases recognised on a straight line basis as an expense Lease liabilities recognised as at 1 January 2019 are: which Of Current lease liabilities Non-current lease liabilities Right-of-use assets were measuredthe at amount equal the lease to liability adjustments (after for prepayments and accrued lea 2ANote on page 71 for details. From 1 January leases are recognised 2019, as a right-of-use asset and a corresponding liabilit at whichdate the leased asset is available use for by the Group. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net certain reasonably under be made extension to payments or receivable. Lease incentives lease any payments, less fixed lease of termination options are also included in the measurement the of liability. The net impact on retained earnings as at 1 January was an increase million. 2019 GBP of This 2.1 is disclosed on the face t of > > > Operating lease commitments disclosed as at 31 December 2018 Operating lease commitments in the scope of IFRS 16(MWGSYRXIHYWMRKXLI+VSYT WMRGVIQIRXEPFSVVS[MRKVEXIEWEXX consolidated statement changes of in equity on page 68. 16 IFRS under leases for Accounting b) The Group’s leases predominantly its relate offices to in Malta and other territories but small also relate to items equipme of be used as security for borrowing purposes. Until 31 December the 2018, Group’s leases were all classified 83.4 as operating leases, see and 25 Note the related accounting poli contracts are typically made for fixed periods but extension may have options. Lease terms are negotiated on an individual basis and contain a wide range different of terms and conditions. The lease agreeme do not impose any covenants other than the security interests in the leased assets that are held by the Leased lessor. assets m (GBP m) > This explains note the impact the of adoption IFRS “Leases”, of on the 16, Group’s financial statements, and subsequent account 13: Leases Kindred Group plc Annual Report and Accounts 2019 during the year ended 31 December 2019. Adoptiona) of IFRS 16 Kindred Group plc has adopted IFRS “Leases”, from 16, its mandatory 1 January of date The Group 2019. has applied the simplifie transition approach and has not restated comparative amounts for the year prior first to adoption. The reclassifications and th adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 January 2019. On adoption IFRS the of Group 16, recognised lease liabilitiesin relation leases to which had previously been classified "o as leases" under IAS 17. Theseleases" liabilities under were measured IAS at the present 17. value the remaining of lease payments, discounted using th Group’s weighted average incremental borrowing 2.36% of rate as at 1 January 2019. In applying the for first IFRS 16 time, the Group has used the following practical expedients permitted by the standard: > > The table belowreconciles operating lease commitments disclosed as at 31 December the lease to liability 2018 recognised as at ɸ.ERYEV] > 86 kindredgroup.com Notes to the consolidated financial statements continued

13: Leases continued The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. To determine the incremental borrowing rate, the Group uses recent third-party financing received and adjusts for items specific to each lease, such as the term, country and currency.

Lease payments are allocated between principal and finance cost. The finance cost is charged to the consolidated income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following: > the amount of the initial measurement of lease liability; > any lease payments made at or before the commencement date less any lease incentives received; and > restoration costs.

6MKLXSJYWIEWWIXWEVIKIRIVEPP]HITVIGMEXIHSZIVXLIWLSVXIVSJXLIEWWIX WYWIJYPPMJIERHXLIPIEWIXIVQSREWXVEMKLXPMRIFEWMW

Payments associated with short-term leases of premises and equipment are recognised on a straight-line basis as an expense in the consolidated income statement. Short-term leases are leases with a lease term of 12 months or less.

Extension and termination options are included in a number of leases. The extension and termination options held are exercisable only by the Group and not by the respective lessor. c) Amounts recognised in the consolidated balance sheet, consolidated income statement and consolidated cash flow statement The table below shows the right-of-use assets and corresponding lease liabilities recognised as at 1 January 2019 and as at ɸ(IGIQFIV%PPVIGSKRMWIHVMKLXSJYWIEWWIXWVIPEXIXSXLI+VSYTƅWTVIQMWIW As at As at 31 December 1 January (GBP m) 2019 2019 Right-of-use assets – premises 64.1 75.6

Lease liabilities: 65.0 75.0 Of which are: Current lease liabilities 11.7 10.7 Non-current lease liabilities 53.3 64.3

Additions to the right-of-use assets during the 2019 financial year were GBP 0.9 million. Aside from the impact of depreciation, the only other factor impacting the right-of-use assets is foreign exchange movements.

The consolidated income statement shows the following amounts relating to leases: Year ended Year ended 31 December 31 December (GBP m) 2019 2018 Depreciation of right-of-use assets – premises 10.1 –

Interest expense (included in finance costs) 1.2 –

Expense relating to short-term leases (included in other operating expenses) 2.0 –

Income from sub-leasing right-of-use assets (included in other operating expenses) 0.2 –

The total cash outflow for leases in 2019 was GBP 9.8 million. Strategic report Governance Financial statements Other information 87 % V

2.1 -0.2 fair

MRIWW RɸFIPS[ voting power SJXLI Proportion of Proportion ownership and ownership ept for liabilities PSWWGSRWMWXSJ 1.8 1.9 1.9 Italy 100% -0.1 USA 100% 2019 2018 Spain 100% MaltaMaltaMaltaMalta 100% Malta 100% Malta 100% Malta 100% Malta 100% Malta 100% Malta 100% Malta 100% Malta 100% Malta 100% Malta 100% 100% 100% 100% FranceFrance 100% 100% SwedenSweden 100% 100% BelgiumBelgium 100% 100% GibraltarGibraltarGibraltar 100% 100% 100% Alderney 100% AustraliaAustraliaAustralia 100% 100% 100% Denmark 100% Great BritainGreat BritainGreat BritainGreat 100% 100% 100% Place incorporation of QMPPMSR WII2SXISRTEKI %Xɸ(IGIQFIVSXLI HEXIɸSJɸ+&4 +&4 QMPPMSR GSRWMHIVIHXSFIJYPP]TIVJSVQMRK(YIXSɸXLIREXYVISJMXWFYW KXSMXWTIVGIRXMRXIVIWXMR6IPE\,SPHMRK0MQMXIHMWɸWLS[ *MRERGMEPEWWIXWEXJEMVZEPYIXLVSYKLTVSJMXSVPSWWGSRWMWX QMPPMSR*MRERGMEPPMEFMPMXMIWEXɸJEMVZEPYIXLVSYKLTVSJMXSV Kindred Group plc Annual Report and Accounts 2019 Carrying value December at 31 Share loss of from associate IQFIHHIHSTXMSRSRXLIɸGSRZIVXMFPIFSRHSJɸ+&4 +&4 ZEPYIXLVSYKLTVSJMXSVPSWWSJ+&4ɸ ɸ+&4 QMPPMSR 15: Financial instruments The carrying value the Group’s of financialassets and financial liabilities approximated their fair values at the year end. The Group’s financial assets consist loans of and other non-current and current assets at amortised cost, except for assets at (GBP m) Carrying value at 1 January Name of subsidiary of Name Limited Alderney Unibet Details the of Group’s principal subsidiaries at 31 December are as follows: 2019 Betchoice Corporation Pty Ltd Pty Ltd Development South Kindred Pty Ltd Australia Unibet NV Belgium Kindred BVBA Matic Star Kindred Denmark ApS SAS France Kindred SAS Solfive Limited Red 32 Kindred (Gibraltar) Limited Limited Gaming Platinum Limited Firstclear Limited (London) Kindred Limited Services Kindred SRL Italy Kindred iGame Holding plc Limited IP Kindred Lexbyte Digital Limited Limited Holdings Maria Limited Media Moneytainment Ltd. Spooniker Limited France Betting SPS Trannel International Limited LimitedUnibet (Belgium) Limited (Denmark) Unibet Limited (Germany) Unibet Limited (Holding) Unibet Limited (Italia) Unibet Unibet Services Limited S.L. Tech, Spain Kindred AB People Kindred AB Entertainment PR Unibet Inc. Interactive 8LIQSZIQIRXWMRXLI+VSYTƅWMRXIVIWXMRMXWEWWSGMEXIVIPEXMR 14: Subsidiaries14: and companies associated the Group does not carry any expected credit losses for receivables. The Group does not hold any collateral as security for its receivables. See 2F Note for more information on theimpairment financial of assets. The Group’s financial liabilities consist borrowings, of lease liabilities and other current liabilitiesat amortised cost, exc EXJEMVZEPYIXLVSYKLTVSJMXSVPSWWSJ+&4 +&4 HIJIVVIHMRGSQIɸVIPEXMRKXSYRWIXXPIHFIXWEXɸXLIFEPERGIWLIIX VIGIMZEFPIWSJ+&4 VIWXEXIHɸ+&4ɸ QMPPMSR[IVI 88 kindredgroup.com Notes to the consolidated financial statements continued

15: Financial instruments continued Provisions Movements in each class of provision are set out below: IFRS 13 requires management to identify a three-level hierarchy SJɸJMRERGMEPEWWIXWERHPMEFMPMXMIWEXJEMVZEPYI*EMVZEPYIGLERKIW Jackpot Property Operational in deferred income are minimal, including those attributable to (GBP m) provisions1 provisions2 provisions3 Total credit risk. The Group determines the amount of fair value At 1 January changes attributable to credit risk by determining the changes 2019 3.8 1.5 11.5 16.8 due to inputs based on unobservable market data (defined as level three by IFRS 13), such as historical Sports betting margins, Provided 17.9 – – 17.9 and deducting those changes from the total change in fair value. Utilised -18.2 -1.0 -2.6 -21.8 The Group believes this approach appropriate as changes in Released – – -0.9 -0.9 other factors are not deemed significant. Although the final value Foreign exchange will be determined by future betting outcomes, there are no movements -0.1 – -0.1 -0.2 reasonably possible changes to assumptions or inputs that would At 31 December lead to material changes in the fair value determined. This is also 2019 3.4 0.5 7.9 11.8 XLIGEWIJSVXLI+VSYT WJMRERGMEPEWWIXW[LMGLEVIMQQEXIVMEP 1 The Group offers progressive jackpot games. Each time a progressive jackpot game is played, a portion of the amount wagered by the player is contributed to the jackpot for 16: Trade and other receivables that specific game or group of games. The Group maintains a provision covering 70 per cent of the total jackpot balances. The cash outflows will occur when the jackpots are won. Exact timing is unknown, due to their nature, but these are expected to occur over As at As at the next 12 months. Ʉ(IGIQFIV Ʉ(IGIQFIV 2 This comprises amounts provided for by the Group for the reinstatement of properties 2019 2018 to their original condition when a lease was taken out, if this is required by the terms of (GBP m) (Restated1) the lease. Management estimates the provision based on third party expert information of expected costs, but this could differ from the final outflow required. In the prior year Due within one year: this also included amounts required for exiting a lease before the end of the agreed Other receivables1 19.4 17.1 term. The remaining cash outflows are expected to occur in 8 years time when certain leases are not renewed. Prepayments 27.4 21.8 3 Operational provisions are provisions directly related to the regulated nature of the 46.8 38.9 +VSYT WEGXMZMXMIWERHVIPEXIXSPMXMKEXMSRWERXMQSRI]PEYRHIVMRKVIKYPEXMSRKEQMRK taxes or items of a similar nature. Management estimates these provision based on historic trends, any other current information known, as well as the best estimate of the 1 See Note 1B on page 70 for more information on the restatement of the 2018 most likely outcome. By nature of these estimations, final outflows may differ to the comparative figures. current provision. The cash outflows are expected to occur over the next 12 months.

Other receivables do not include material items that are impaired Of the total provisions at 31 December 2019, GBP 11.3 nor past due on the reporting date. No interest is charged on (2018: GBP 16.0) million is current and GBP 0.5 (2018: GBP 0.8) the receivable balance. The Group does not have collateral over million is non-current. these balances. Due to the short-term nature of other receivables, their carrying amount is considered to be the same as their fair value. No estimated credit loss has been booked in respect of 18: Customer balances these receivables. Customer balances of GBP 67.4 (2018: GBP 62.3) million are repayable on demand, subject to the terms and conditions as 17: Trade and other payables described on the Group’s websites. The following table shows the split by currency of customer balances: As at As at As at As at Ʉ(IGIQFIV Ʉ(IGIQFIV Ʉ(IGIQFIV Ʉ(IGIQFIV (GBP m) 2019 2018 2019 2018 Due within one year: EUR 50% 54% Trade payables 27.8 24.5 SEK 9% 9% Other taxation and social security 2.9 2.6 NOK 11% 7% Other payables 0.9 2.7 DKK 4% 5% Accruals 95.0 84.5 USD 3% 2% Provisions 11.8 16.7 GBP 14% 13% 138.4 131.0 AUD 4% 4% Other 5% 6% Trade payables are unsecured and are usually paid within 30 days 100% 100% of recognition. The carrying amounts of trade and other payables are considered to be the same as their fair values due to their short-term nature. Certain third-party suppliers used by the Group in its non-Sports betting operations use either EUR or USD as their standard currency and therefore the above analysis does not represent XLIɸWTVIEHSJGYWXSQIVFEPERGIWF]XIVVMXSV]8LI+VSYTƅW STIVEXMRKGEWLJPS[WTVSZMHIEREXYVEPLIHKISJɸSTIVEXMRK GYVVIRG]VMWOWWMRGIHITSWMXWERHTE]SYXWXSɸGYWXSQIVWMR HMJJIVIRXXIVVMXSVMIWEVIQEXGLIHMRXLIWEQIɸGYVVIRG] Strategic report Governance Financial statements Other information 89 – -2.4 -1.4

11.4 2018 2018 As atAs As at As -65.2 -30.0 BOR BOR KIRIVEP m. m. ity). rrying ty interests, interests, ty customary customary Ʉ(IGIQFIV Ʉ(IGIQFIV n accordance –– 103.0 45.0 GMPMXMIWEKVIIQIRX 62.038.3 128.0 41.6 2019 2019 As atAs As at As 125.1 24.7 225.4 194.3 225.4 194.3 -225.4 -87.6 Borrowings Borrowings Ʉ(IGIQFIV Ʉ(IGIQFIV than one year Total due after more – year Borrowings Borrowings due within one within due ) 1 – -47.8 47.8 – – -97.9 97.9 7.9 115.5 -112.0 (Restated equivalents Cash and cash and Cash MRKYRHIVXLII\MWXMRKJEGMPMXMIWEKVIIQIRXERHJSVXLI+VSYT W JYPPF]ɸ.YP]FIMRKXLVII]IEVWJVSQXLIHEXISJXLIJE Foreign exchange movements exchange Foreign 2019 December 31 at borrowings Net 137.8 -8.5 – 6.1 Transfers Net borrowings at 31 December 2018 December 31 at borrowings Net flowsCash 174.3 -45.0 -149.3 -20.0 -28.0 92.8 -130.0 Foreign exchange movements exchange Foreign 0.8 – -2.2 Transfers Cash flows Cash corporate purposes. The borrowings are unsecured. As 31 December at the balance the 2019 of facilities utilised was GBP 225.4 8LIJEGMPMXMIWLEZIFIIRYWIHXSVIJMRERGIXLIEQSYRXWSYXWXERH GBP EUR SEK borrowings Total On Kindred 23 July 2019, Group plc entered a new into syndicated multicurrency facilities agreement with several Nordic banks, comprising million a GBP bullet 120 term loan (“the Loan”) Term and a GBP million 160 revolving loan facility (“Revolving Facil amount, as the discounting impact of is not material. Repayments 8LI8IVQ0SERERHXLI6IZSPZMRK*EGMPMX]EVIFSXLVITE]EFPIMR (which, for the avoidance doubt, of includes LIBOR EURIBOR for Loans in GBP, for Loans in EUR and STIBOR for loans in SEK) if the applicable(and IBOR is below zero, IBOR be will deemed plus the be Applicable zero) to Margin 2.00 of per cent per annu (2018: GBP 194.3) million GBP GBP out 194.3) of (2018: a total GBP 280.0 of 224.2) (2018: million. The fair value the of borrowings equals the ca Interest Interest shall accrue on each advance under the facilities agreement at the per rate annum which is the sum the of applicable I Covenants The facilities agreement is also subject financial to undertakings, principally in relation leverage to ratio and other certain covenants which will regulate Kindred and its subsidiaries’ ability among to, other things, incur additional debt, grant securi give guarantees and enter any mergers. into At 31 December the Kindred 2019, Group was in compliance with these undertakings. The Group anticipates continued full compliance and that if the facility is further utilised in the future, it will be repaid i with contracted terms at any such time. Reconciliation of movements in net borrowings (GBP m) Non-current Bank borrowings – due years in 1-2 Bank borrowings – due after more than 2 years 2 than more after due – borrowings Bank Current Bankborrowings – duewithin 1 year borrowings Total The carrying amounts the of Group borrowings are denominated in the following currencies: 225.4 46.3 1 See Note on page 1B 70 for more information on the restatement of the 2018 comparative figures. (GBP m) 2018 January 1 at borrowings Net 165.6 -62.6 -133.0 (GBP m) 19: Borrowings 19: Kindred Group plc Annual Report and Accounts 2019 90 kindredgroup.com Notes to the consolidated financial statements continued

20: Deferred tax The following are the deferred tax liabilities and assets (prior to offset) recognised by the Group and movements thereon during the current and prior reporting year:

Property, plant Unremitted and Intangible (GBP m) Note earnings equipment Tax losses assets Other Total At 1 January 2018 Deferred tax liabilities – -0.1 – -3.8 -1.8 -5.7 Deferred tax assets 5.5 0.5 4.4 0.1 2.9 13.4 'VIHMXXSMRGSQIJSVɸXLI]IEV 8 2.4 0.3 0.7 0.7 0.1 4.2 'LEVKIHMVIGXP]XSɸIUYMX] 8––––-0.2-0.2 Transfer to currency translation reserve – – -0.2 – – -0.2 At 31 December 2018 Deferred tax liabilities – -0.1 – -3.0 -1.2 -4.3 Deferred tax assets 7.9 0.8 4.9 – 2.2 15.8 Credit to income for the year -0.2 0.9 4.9 0.2 – 5.8 'LEVKIHMVIGXP]XSɸIUYMX] ––––0.10.1 Transfer to currency translation reserve -0.4 -0.1 -0.2 0.1 1.0 0.4 At 31 December 2019 Deferred tax liabilities ––– -3.6 -2.3 -5.9 Deferred tax assets 7.3 1.5 9.6 0.9 4.2 23.5

Certain deferred tax assets and liabilities may have been offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation EYXLSVMX]SRIMXLIVXLIWEQIXE\EFPIIRXMX]SVHMJJIVIRXXE\EFPIIRXMXMIW[LIVIXLIVIMWERMRXIRXMSRXSWIXXPIXLIFEPERGIWSRɸERIXFEWMW

8LIJSPPS[MRKMWXLIEREP]WMWSJXLIHIJIVVIHXE\FEPERGIW EJXIVɸSJJWIX JSVJMRERGMEPVITSVXMRKTYVTSWIW

As at As at Ʉ(IGIQFIV Ʉ(IGIQFIV (GBP m) 2019 2018 Deferred tax liabilities -5.9 -4.3 Deferred tax assets 23.5 15.8 Net assets 17.6 11.5

The deferred tax balances include deferred tax assets of GBP 8.3 (2018: GBP 8.5) million that are expected to be recovered within ɸQSRXLW

At 31 December 2019, the Group had unutilised trading tax losses of GBP 135.6 (2018: GBP 56.4) million and other unutilised tax losses of GBP 0.9 (2018: GBP 0.9) million available for offset against future profits. The amount of unutilised trading tax losses as EXɸ(IGIQFIVJSV[LMGLEHIJIVVIHXE\EWWIXLEWɸFIIRVIGSKRMWIHMW+&4 +&4 QMPPMSR2SHIJIVVIHXE\EWWIX has been recognised in respect of the remaining unutilised trading tax losses and in respect of the other remaining unutilised tax PSWWIWHYIXSMRWYJJMGMIRXIZMHIRGISJXLIMVVIZIVWEPMRJYXYVIɸTIVMSHW

The trading tax losses for which no deferred tax asset has been recognised arose principally from unutilised trading tax losses of Kindred France SA and the Australian sub-group which comprises Unibet Australia Pty Ltd, Betchoice Corporation Pty Ltd and Kindred South Development Pty Ltd, for which there is insufficient evidence of reversal. In total these losses represent GBP 43.5 (2018: GBP 40.0) million of the total unutilised trading tax losses disclosed above. There is no specific expiry date of the total remaining unutilised tax losses for which no deferred tax asset has been recognised.

The aggregate amount of other deductible temporary differences at 31 December 2019 for which deferred tax assets have been recognised is GBP 30.7 (2018: GBP 20.8) million. This includes a deductible temporary difference in respect of unexercised share STXMSRWJSVXLIEQSYRXSJ+&4 ɸ+&4ɸ QMPPMSRSJ[LMGL+&4RMP +&4 QMPPMSRLEWFIIRGVIHMXIHHMVIGXP]XSɸ IUYMX]%HIJIVVIHXE\EWWIXLEWRSXFIIRVIGSKRMWIHJSVSXLIVHIHYGXMFPIXIQTSVEV]HMJJIVIRGIWSJ+&4 ɸ+&4ɸ QMPPMSR Strategic report Governance Financial statements Other information

91 1

2016 split) split) 3 Oct awards 2020 LTIP LTIP 2020 (post-share (post-share 2019 23 May 23

1 2018 1 Jun he future. future. he PSP awards PSP (post-share split) (post-share 3 Jul 2017 so that performance in each financial year will be important. Aggregated performance against the targets and the resulting allocation PSP of are disclosed awards after the full year vesting. of On PSP the October 1 full valuethe of 2016 grants 2019, vested. performance business against actual the of The assessment the target conditions confirmed that targets all over the three financial years been have 2016-2018 achieved at greater XLERɸTIVGIRX8LIXSXEPRYQFIVSJWLEVIE[EVHWZIWXIH was 306,599. Performance targetsEBITDA contributionGross flow cash Free the KindredOn 23 May 2019, Group new PSP granted 717,334 senior management to awards employees and key PSP”). (“2019 These grants will vest after June 2021 and are subject to achieving business performance targets over the three financial years 2019-2021 and continued employment. The targets for these plans were set and approved by the Remuneration achieved Target 'SQQMXXIIERHɸXLI&SEVHSJ(MVIGXSVWMR1E]8LIXSXEP amount expensed is recognised over the vesting period the of TPER[LMGLɸMWXLVII]IEVW The charge total recognised in relation the in Group’s to 2019 PSPs was GBP GBP 2.6 2.2) amount (2018: million; the of 2019 GBP 102% 0.6 million was recognised in PSP. relation the new to 2019 The amount recognised in the consolidated statement changes of 103% in equity 101% in respect this scheme of GBP GBP of 0.7) 0.4 (2018: million comprises the of charge above, offset by the utilisation treasuryof shares for the vesting GBP of during 2.2 2019 ɸ+&4ɸ QMPPMSR Grants made under both the PSP and share-based 2020 LTIP Black-Scholes the using valued are arrangements payment option-pricing model. The fair value grants of and the follows: as are calculation the in used assumptions 2016 30 Sep 30

1 2015 5 Nov PSP awards PSP (pre-share split) (pre-share ––– ––– – 4.15 2.71 3.29 3.61 5.68 8.46 3.28 2015 30 Jun 30 Kindred Group plc Annual Report and Accounts 2019 Fair value per award GBP award per value Fair 34.17 55.07 6.46 7.70 8.17 4.55 6.28 Expected dividends dividends Expected expressed dividend as ]MIPHɸ Risk-free rate %––– ––– – rate Risk-free Expected life (years) life Expected 3.50 3.50 3 3 3 3 4 Award life (years) life Award 3.50 3.50 3 3 3 3 4 Expected volatility %18253229253332 volatility Expected Shares under award under Shares (years) period Vesting 38,464 3.50 2,430 3.50 411,713 423,197 3 368,316 717,334 3 1,481,866 3 3 4 Number of employees of Number 100 14 123 149 178 198 1,125 xriepieGP– ––– – GBP––– price Exercise 1 An award is a legally enforceable conditional right to receive a number of the Company’s ordinary shares during a period in t Average share price prior XSɸKVERX+&4 Grant date Grant The Group operates a number of share-based payment schemes schemes payment share-based of number a operates Group The share awards as set out within 307,614 During this note. 2019, vested from Group within Performance the 2016 Share Plan and the 2020 All Employee Share Plan. The charge total the for year relating employee to share-based payment plans GBP was 4.6 GBP million. 4.4) (2018: 2020 long-term incentive plans (“2020 LTIP”) the KindredIn 2016, Group Board approved a long-term incentive Executive the Management and employees team all for plan (“2020 “2020 and Plan” Share Executive Employee All Management Incentive Scheme”). As a result, 1,481,866 share were awards granted existing to employees on 3 October and, together 2016 with the grants made new employees to since this date, these will vestawards after December 2020. The are subject awards achievingto business performance targets in the 2020 financial year and continued employment. The targets were set and approved by the Remuneration Committee and the Board of Directors in December The amount 2016. total expensed is recognised over the vesting period the of plan, which is four years. The charge total recognised in relation the 2020 in to 2019 LTIP was GBP GBP 2.0 2.2) (2018: million. Performance Share Plan (“PSP”) The introduction the of Group PSP was approved the at 2013 AGM under which future share-based payments senior to The be made. PSP employees will management key and performance measures are non-market based conditions providing participants with a high degree alignment of the to performance. Group’s Grants performance of share rights are subject achieving to business performance targets over three financial years and continued employment. These targets are: EBITDA, Gross contribution winnings (Gross revenue, less cost sales, of less marketing costs), and free cash flow per share. Grants made in each year targets will have measured on an aggregate basis between the full year grant of and the two successive years 21: payments Share-based 92 kindredgroup.com Notes to the consolidated financial statements continued

21: Share-based payments continued The expected volatility is based on the standard deviation of the Group’s share price over a year, prior to the grant date. The risk-free rates of return applied to the grants is the approximate implicit risk-free interest rate for the awards’ term to maturity, based on the three-year maturity rate offered by Riksbanken at the respective dates of each grant.

The reconciliation of awards movement during the year ended 31 December 2019 is shown below:

2019 2018 PSP Number Number Outstanding at 1 January 1,090,809 1,049,041 Vested -306,599 -232,296 Granted 717,334 368,316 Lapsed -145,698 -94,252 Outstanding at 31 December 1,355,846 1,090,809

2019 2018 2020 LTIP Number Number Outstanding at 1 January 1,489,867 1,576,878 Vested -1,015 -32,263 Granted 263,323 288,385 Lapsed -242,583 -343,133 Outstanding at 31 December 1,509,592 1,489,867

The grants under the PSPs and long-term incentive plans are at nil cost, therefore the weighted average exercise price for rights SYXWXERHMRKEXɸXLIFIKMRRMRKERHIRHSJXLI]IEVI\IVGMWIHKVERXIHERHPETWIHHYVMRKXLI]IEVMW+&4RMP

The weighted average remaining contractual life of share awards outstanding at the year-end is estimated to be 1.3 years.

Dilution effects 388,281 share awards lapsed or were cancelled during 2019. If all share-based programmes are fully exercised, the nominal share capital of the Company will increase by a total maximum of GBP 1,790.90 (2018: GBP 1,612.92) by the issue of a total maximum of 2,865,438 ordinary shares (2018: 2,580,676 ordinary shares), corresponding to 1 per cent (2018: 1 per cent) of the capital and votes in the Company.

The principal terms of the PSP schemes are set out below.

Performance Share Plan (“PSP”) Under the PSP, share awards are granted to employees of the Company and any subsidiary companies. These awards vest based on XLIWYGGIWWJYPGSQTPIXMSRSJTIVJSVQERGIXEVKIXWWIXF]ɸXLI&SEVH8LIE[EVHWEVIWLEVIWSVɸ7(6WERHRSXSTXMSRWXLIVIJSVIXLIVI MWRSI\IVGMWITVMGIEWWSGMEXIH[MXLXLIE[EVHW%PPɸSXLIVTVMRGMTEPXIVQWSJXLIWGLIQIMRGPYHMRKVIWTSRWMFMPMX]I\IVGMWITIVMSHW changes of control, scheme and individual limits are set out below:

Responsibility for operation The PSP scheme is operated by the Board of Directors of the Company, through the Remuneration Committee appointed by the Board, which consists mainly of Non-executive Directors of the Company.

Eligibility %RMRHMZMHYEPMWIPMKMFPIXSFIKVERXIHERE[EVHSRP]MJXLI]EVIɸERɸIQTPS]IISJE4EVXMGMTEXMRK'SQTER]

Grant of awards %[EVHWQE]FIKVERXIHEXXLIHMWGVIXMSRSJXLI&SEVHSJ(MVIGXSVWSVXLIɸ6IQYRIVEXMSR'SQQMXXIIXSWIPIGXIHIQTPS]IIWEX a senior level. Awards are not pensionable or transferable.

Individual limits 8LI&SEVHSJ(MVIGXSVW[MPPHIGMHIXLIQE\MQYQRYQFIVSJSVHMREV]WLEVIWSV7(6W[LMGLQE]FIKVERXIHYRHIVXLI474ɸTPER XSɸMRHMZMHYEPTEVXMGMTERXW

Scheme limit At any time, not more than 5 per cent of the issued ordinary share capital of the Company may be issued or be issuable under the PSP WGLIQIERHEPPSXLIVIQTPS]IIWƅWLEVIWGLIQIWSTIVEXIHF]ɸXLI'SQTER]8LMWPMQMXHSIWRSXMRGPYHIE[EVHW[LMGLLEZIPETWIHSV been surrendered. Strategic report Governance Financial statements Other information 93 M 2018 As at atAs 31 December – 83.8 2019 As atAs Ʉ(IGIQFIV was GBP 0.2 (2018: GBPwas GBP 0.2) million. 0.2 (2018: There is no indication of impairment the of convertible bond at the year end. 24: commitments Capital The Group has entered into contracted non-current asset GBP 4.5) (2018: millionexpenditure as at GBP of 1.1 ɸ(IGIQFIVɸ Operating25: lease commitments The Group leases various offices under non-cancellable operating lease agreements. The leases varying have terms, including provision for rent reviews and for early termination. From 1 January the Group has 2019, recognised right-of-use assets for these leases, except for short-term and low-value leases the balances and thus at the end are 2019 nil. See of 2SXIɸJSVJYVXLIVMRJSVQEXMSR futureThe of total aggregate minimum lease payments under follows: as are non-cancellable leases operating (GBP m) year one than later No and one year than Later no later than five years years five than Later – – – 9.6 45.4 28.8 23: Convertible bond In connection with the disposal Kambi of the Group in May 2014, WYFWGVMFIHXSɸE+&4QMPPMSRGSRZIVXMFPIFSRHMWWYIHF]/EQF 3Rɸ1E]XLIGSRZIVXMFPIFSRH[EWEQIRHIHERHVIWXEXIH with a principal million bearing amount EUR of an interest 7.5 rate SJɸTIVGIRX8LIFSRHLEWERɸIQFIHHIHGSRXMRKIRXSTXMSRXS provide change control of protection both the to Group and Kambi. The option can only be exercised on the occurrence limited of XVMKKIVIZIRXW8LIJEMVZEPYISJXLISTXMSREXɸɸ(IGIQFIV b) Shareb) premium There was no movement in share nor premium in the in 2019, year. previous reserve Reorganisation c) This reserve GBP GBP of million -42.9 -42.9) (2018: arises in the consolidated financial statements, as a result the of application SJɸXLITVMRGMTPIWSJTVIHIGIWWSVEGGSYRXMRKXSXLI+VSYT represents reserve 2006. in reorganisation The reorganisation XLIɸHMJJIVIRGIWFIX[IIRXLIWLEVIGETMXEPERHRSRHMWXVMFYXEFPI reserves Kindred of Group plc and the share capital andnon- distributable reserves theof former parent company, Kindred Services Limited (formerly UGP Limited). This reserve does not arise in the separate financial statements the of Parent Company and therefore has no impact on distributable reserves. d) Currency translation reserve This reserve million GBP of GBP is a 8.0 16.6) (2018: non-distributable reserve. 2018 As atAs Ʉ(IGIQFIV 2019 As atAs Ʉ(IGIQFIV In January 2019, 1,015 shares were usedIn January in connection 1,015 2019, with the vesting the of 2020 All Employee Share Plan. In October 306,599 2019, shares were used in connection with the performance vesting the of 2016 share plan.

> As at 31 December amount the total issued of 2019, shares in Kindred Group plc was 230,126,200 with a par value GBP of 0.000625. Of these, 3,226,521 shares are held by the Group as When programmes. shares these purchase previous of result a are purchased or subsequently utilised, the impact is reflected within retained earnings. amount theDuring total purchased of 2019, shares that were used in connection with the vesting Group of share plans was 307,614: (GBP) Authorised: 1,600,000,000) (2018: 1,600,000,000 SVHMREV]WLEVIWSJɸ+&4 each December 31 At Issued and fully paid up: At 1 January and December 31 230,126,200) (2018: 230,126,200 – SVHMREV]WLEVIWɄSJɄ+&4 each 1,000,000 1,000,000 1,000,000 1,000,000 143,829 143,829 a) Sharea) capital 22: Share22: and capital reserves Issue shares of Any ordinary shares issued on the vesting will rank awards of equally with shares the of same class in issue on of the date allotment except in respect rights of arising by reference to EɸTVMSVɸVIGSVHHEXI 2020 LTIP The principal terms the of PSP are applicable the for 2020 LTIP. Awards may generallyAwards vest early on scheme a takeover, reorganisation. corporate other or merger arrangement, of cases, certain in or, allowed be may participants Alternatively, required exchange to their over for awards awards shares in the acquiring company. Change control, of merger or other reorganisations The rules the of PSP scheme allow the Board Directors of to grant on awards the basis that they will vest only the extent to that certain performance conditions been have satisfied. Awards vest in however, certainmay, circumstances. These include, for example, an employee leaving because ill health, of retirement, VIHYRHERG]SVHIEXL3RGIWWEXMSRSJIQTPS]QIRXJSVɸSXLIV reasons, will normally awards lapse. Kindred Group plc Annual Report and Accounts 2019 During the Board 2018, Kindred of Group plc started exercising the purchase mandate, which was approved at the Annual General Meeting on 15 May 2018. On 17 and 18 Maywere purchased cost at a total GBP 2018, of 14,653,399. 1,500,000 SDRs > 94 kindredgroup.com Notes to the consolidated financial statements continued

26: Related party transactions For details of Directors’ and Executive Committee remuneration please refer to the Remuneration Committee Report on page 54. As at the year end, GBP 2,000 (2018: GBP 13,000) was owed to the Directors in respect of these services.

As disclosed in Note 14, Kindred Group plc has a 35 per cent interest in its associate, Relax Holding Limited. Relax Holding Limited and its subsidiaries are therefore considered to be related parties of Kindred Group plc. The Relax Gaming Group provides certain brands within the Kindred Group with B2B online gaming services, being the supply of its Casino, Bingo and Poker products as well as some related development. During the year ended 31 December 2019, the following related party transactions were entered into with the Relax Gaming Group: > Various subsidiaries of Kindred Group plc received services from subsidiaries of Relax Holding Limited. The total amount of services procured amounted to GBP 8,635,038 (2018: GBP 7,239,590). At 31 December 2019, the remaining balance owed to the Group was GBP nil (2018: GBP 89,453). > In February 2018, Kindred Group plc agreed to provide a loan facility to Relax Holding Limited for a maximum value of )96ɸɸQMPPMSR-R%TVMPXLIGSQTER]HVI[HS[R)96QMPPMSRSJXLIJEGMPMX]ERHEJYVXLIV)96QMPPMSR[EW drawn down in February 2019. In line with the loan agreement, interest and fees are accruing on the loan balance, and the facility will expire in April 2020. At 31 December 2019, the remaining balance owed to the Group was GBP 991,898 (2018: GBP 488,362).

3XLIVVIPEXIHTEVX]XVERWEGXMSRWHYVMRKXLI]IEVIRHIHɸ(IGIQFIVXSXEPPIH+&4 +&4 8LMWVIPEXIWXS QEVOIXMRKWIVZMGIWTVSZMHIHF]*SSXFEPP9RMXIH-RXIVREXMSREP0MQMXIHEGSQTER]MRɸ[LMGLX[SSJXLI/MRHVIH+VSYTƅW&SEVHQIQFIVW LEZIERɸMRXIVIWX8LIFEPERGIHYIXS*SSXFEPP9RMXIH-RXIVREXMSREP0MQMXIH[EW+&4 +&4RMP EWEX(IGIQFIV 27: Contingent liabilities Currently the Group has not provided for certain potential claims arising from the promotion of gaming activities in certain NYVMWHMGXMSRW&EWIHSRGYVVIRXPIKEPEHZMGIXLI(MVIGXSVWHSRSXɸERXMGMTEXIXLEXXLISYXGSQISJTVSGIIHMRKWERHTSXIRXMEPGPEMQW MJER][MPPLEZIEɸQEXIVMEPEHZIVWIIJJIGXYTSRXLI+VSYTƅWJMRERGMEPTSWMXMSR*YVXLIVHIXEMPWSRXLIPIKEPIRZMVSRQIRXGERFIJSYRH MRXLI+IRIVEPPIKEPIRZMVSRQIRXWIGXMSRSRTEKIWXSɸ 28: Cash and cash equivalents -RGPYHIH[MXLMRXLIXSXEPGEWLERHGEWLIUYMZEPIRXWFEPERGIEXɸ(IGIQFIVSJ+&4 VIWXEXIH+&4ɸ QMPPMSR MW+&4 VIWXEXIH+&4 QMPPMSRSJJYRHWXLEXEVIRSXEZEMPEFPIJSVɸYWIF]XLI+VSYT8LIWIJYRHWEVIHIWMKREXIHF]XLI +VSYTXSɸGSZIVGIVXEMRGYWXSQIVFEPERGIWEWVIUYMVIHF]PSGEPPE[WERHɸVIKYPEXMSRW7II2SXI&SRTEKIɸJSVQSVIMRJSVQEXMSR on the restatement of the 2018 balances. 29: Reconciliation of alternative performance measures The Group presents the following alternative performance measures because they provide owners and investors with additional information about the performance of the business which the Board of Directors consider to be valuable. Alternative performance measures reported by the Group are defined terms under IFRS and may therefore not be comparable with similarly-titled measures reported by other companies.

The following tables show the reconciliation of the Group’s alternative performance measures to the most directly comparable measures reported in accordance with IFRS. As at As at 31 December 31 December 2018 (GBP m) Note 2019 (Restated1)

Borrowings 19 225.4 194.3

Cash and cash equivalents1 28 -137.8 -174.3 Customer balances 18 67.4 62.3 Less: Unrestricted cash -70.4 -112.0

Net debt 155.0 82.3

1 See Note 1B on page 70 for more information on the restatement of the 2018 comparative figures.

Year ended Year ended 31 December 31 December (GBP m) 2019 2018 Profit from operations 70.9 156 Gross winnings revenue 912.8 907.6 Operating margin 8% 17% Strategic report Governance Financial statements Other information ) 1 d 95 with ties 2018 2018 2018 2018 As at As online online (Restated Year ended Year ended Year ended 31 December 31 December 31 December 31 December 1.7 – -1.2-8.6 – -5.1 – – 14% 22% 73.6 74.9 70.9 156.0 50.4 157.8 2019 2019 2019 2019 2019 2019 As at As 912.8 907.6 234.0 292.0 912.8 907.6 1,017 1,269 0.219 0.686 219.0 189.1 128.1 202.8 Year ended Year ended Year ended 230,126,200 230,126,200 230,126,200 230,126,200 31 December 31 December 31 December 31 December 4 -96.1 -83.4 Note Note Note 150.0 million due to the impact of the restatement of the 1 1 2018 comparative figures which is disclosed in Note on page 1B 70. securing all necessary gaming licenses. In Indiana, Kindred will partner with Caesars’ Horseshoe Hammond Property, and in Iowa 30: Subsequent events 30: FebruaryOn 11 2020, Kindred Group signed a multi-state agreement with Caesars Entertainment. The agreement will provide Kindre Equity Less: Employee costs equipment and plant property, of Depreciation Less: Less: Depreciation right-of-use of assetsLess: Amortisation intangible of assets on (excluding assets arising on acquisition) costs Other revenue winnings Gross Other costs as a share of Gross winnings revenue 4(GBP m) Number shares of at period end share Equity per -24.3 -17.8 with market access in Indiana and Iowa over a ten-year 4 period, and potentially other states, allowing the Group operate to both Sports betting and online gaming under the Unibet brand. The agreement is subject the passing to applicable of and laws the par Harrah’s Council Bluffs. -14.9Since the year end, the million Group its of borrowings. has repaid GBP 27.8 4These post balance sheet events do not require any change in the amounts included financial in the 2019 statements. -13.0 -10.1 8% – 8% Total administrative expenses Add: Management incentive costs relating to acquisitions acquisitions to relating costs incentive Management Add: costs restructuring Personnel Add: Interest paid on lease liabilities equipment and plant property, of Purchases Proceeds from sale property, of plant and equipment assets intangible of costs acquisition and Development Repayment lease of liabilities Adjust for: customer balance movement Free cash flow available for dividends 0.2 11 12 0.9 -41.4 -15.6 0.1 -23.5 -26.0 – Net cash generated from operating activities operating from generated cash Net 120.3 206.4 Profit from operations from Profit Depreciation of property, plant and equipment and plant property, of Depreciation assets right-of-use of Depreciation assets intangible of Amortisation Impairment recognised year losses the in EBITDA revenue winnings Gross margin EBITDA 12 14.9 13 11 11 13.0 10.1 2.0 30.2 – 33.8 – (GBP m) 1 For 2018, the free cash flow available for dividends does not agree with that reportedand used for the 2018 dividend of GBP (GBP m) (GBP m) Kindred Group plc Annual Report and Accounts 2019 Number shares of at period end Free cash flow available for dividends per share 96 kindredgroup.com Annual General Meeting

The Annual General Meeting (AGM) of Kindred Group plc will Financial information FIɸLIPHEX')78SR1E]EX/MRHVIHƅW7XSGOLSPQ Kindred Group plc’s financial information is available in Swedish office located at Regeringsgatan 25 in Stockholm, Sweden. and English. Reports can be obtained from the Kindred Group’s website, www.kindredgroup.com or ordered by email at Right to participate [email protected]. Distribution will be via email. Holders of Swedish Depositary Receipts (SDRs) who wish to attend the AGM must be registered at Euroclear Sweden AB on Annual reports can be ordered through the website, ɸ1E]ERHRSXMJ]7OERHMREZMWOE)RWOMPHE&EROIR%& TYFP www.kindredgroup.com or ordered by email at SJɸXLIMVMRXIRXMSRXSEXXIRHXLI%+1RSPEXIVXLER')78 [email protected]. SRɸ1E]F]JMPPMRKMRXLIIRVSPQIRXJSVQTVSZMHIHEX www.kindredgroup.com/AGM, “Registration form for AGM 2020”. The Kindred Group will publish financial reports for the financial 8LIɸJSVQQYWXFIGSQTPIXIHMRJYPPERHHIPMZIVIHIPIGXVSRMGEPP] year 2020 on the following dates:

Please note that conversions to and from SDRs and ordinary Interim Report January – March, on 24 April 2020 shares will not be permitted between 3 May and 14 May 2020. Interim Report January – June, on 24 July 2020 Dividend Interim Report January – September, on 6 November 2020 The Board of Directors proposes a dividend of GBP 0.176 Full Year Report 2020, on 10 February 2021 ɸ TIVWLEVI7(6[LMGLMWETTVS\MQEXIP]7)/ (2018: 6.16 paid in two equal instalments: SEK 3.07 on 21 May 2019 and SEK 3.09 on 21 November 2019) with the exchange rate 12.496 GBP/SEK at 11 February 2020, to be paid to holders of ordinary shares and SDRs. If approved at the AGM, the dividend is expected to be distributed on 19 May 2020 and 19 November ERHEQSYRXWXSEɸXSXEPTVSTSWIHHMWXVMFYXMSRSJ+&4 QMPPMSR[LMGLMWɸTIVGIRXSJXLI+VSYTƅWJVIIGEWL flow available for dividends for 2019. In line with the previous year, ERHEPMKRIH[MXLXLI+VSYT WHMZMHIRHTSPMG]SRTEKIXLI TVSTSWIHHMZMHIRHMWEFSZITIVGIRXSJXLI+VSYT WJVIIGEWL flow available for dividends, reflecting the solid capital structure of the Group. Definitions

Average number of employees: Average number of employees Net debt: 8SXEPGEWLEXXLIFEPERGIWLIIXHEXIPIWWGYWXSQIVɸ for the year based on headcount at each month end. balances and borrowings. When cash at the balance sheet date exceeds the balance of customer balances and borrowings, Cash flow per share: Net increase/(decrease) in cash and cash this is presented as a positive figure. IUYMZEPIRXWHMZMHIHF]XLIRYQFIVSJSVHMREV]WLEVIWEXXLI balance sheet date. Number of active customers: The total registered customers [LSLEZITPEGIHEɸFIXɸ[MXLXLI/MRHVIH+VSYTHYVMRKXLIPEWX Compound annual growth rate (CAGR): A measure of growth three months. over multiple time periods assuming all revenues are reinvested at the end of each year. Number of registered customers: The total number of GYWXSQIVWSRXLI/MRHVIHɸ+VSYTƅWGYWXSQIVHEXEFEWIW Dividend per share: Dividend proposed or paid divided by the number of ordinary shares at the year end. Number of yearly active customers: The total registered customers who have placed a bet with the Kindred Group Earnings per share: Profit after tax divided by the weighted at any time during the year. EZIVEKIRYQFIVSJSVHMREV]WLEVIWJSVXLIɸ]IEV Operating margin: Profit from operations as a percentage Diluted earnings per share: Profit after tax adjusted for any SJɸ+VSWW[MRRMRKWVIZIRYI effects of dilutive potential ordinary shares divided by the diluted [IMKLXIHEZIVEKIRYQFIVSJSVHMREV]WLEVIWJSVXLIɸ]IEV Profit margin: Profit after tax as a percentage of Gross [MRRMRKWɸVIZIRYI EBITDA: Profit from operations before depreciation and amortisation charges. Return on average equity: Profit from operations as a TIVGIRXEKISJɸEZIVEKIɸIUYMX] EBITDA margin: EBITDA as a percentage of Gross winnings revenue. Turnover: Total amount of stakes placed on sporting events ERHɸKEQIW Equity: assets ratio:7LEVILSPHIVWƅIUYMX]EWETIVGIRXEKI SJXSXEPɸEWWIXW Underlying EBITDA: Profit from operations before depreciation and amortisation charges and items affecting comparability Equity per share: Total assets less total liabilities, divided I\GPYHMRKEQSVXMWEXMSRSJEGUYMVIHMRXERKMFPIEWWIXWERH F]ɸXLIɸRYQFIVSJSVHMREV]WLEVIWEXXLIFEPERGIWLIIXHEXI foreign currency differences on operating items).

Free cash flow available for dividends per share: Cash flow Unrestricted cash: Total cash at the balance sheet date less from operations, adjusted for movements in working capital, customer balances. capital investments, tax payments and certain items affecting comparability divided by the number of ordinary shares at the Weighted average number of shares: Calculated as the weighted balance sheet date. average number of ordinary shares outstanding during the year.

Gross gaming revenue (GGR): GGR is a term used to specify Weighted average number of diluted shares: Calculated as the the basis on which betting duties are calculated. GGR is generally weighted average number of ordinary shares outstanding and calculated by taking Gross winnings revenue, without removing potentially outstanding (i.e. including the effects of exercising all the effect of promotional bonuses. GGR can however vary slightly share awards) during the year. F]QEVOIXHYIXSPSGEPVIKYPEXSV]VIUYMVIQIRXWJSVXLITYVTSWIW of calculating betting duties.

Gross profit: Gross winnings revenue less cost of sales.

Gross winnings revenue (GWR): +;6SRɸ7TSVXWFIXXMRKMW defined as the net gain or loss from bets placed. Within Casino & +EQIWXLI+VSYTHIJMRIW+;6EWXLIRIXɸKEMRJVSQFIXWTPEGIH ERH4SOIV+;6VIJPIGXWXLIRIXɸMRGSQI ƈVEOIƉ IEVRIHJVSQ TSOIVKEQIWGSQTPIXIH+;6ɸEGVSWWEPPTVSHYGXWMWVITSVXIH RIXSJXLIGSWXSJɸTVSQSXMSREPFSRYWIW

This Report is printed on materials which are FSC® certified from well-managed forests.

These materials contain ECF (Elemental Chlorine Free) pulp and are 100% recyclable.

Design and production www.luminous.co.uk Kindred Group plc Level 6, The Centre Tigne Point, Sliema TPO 0001, Malta. Tel: +356 2133 3532 Company No: C39017. Registered in Malta.

Registered office c/o Camilleri Preziosi, Level 2, Valletta Buildings South Street, Valletta VLT 1103, Malta. www.kindredgroup.com