Welcome to the Kindred Group PLC telephone conference, 1st of October, 2021. For the first part of this call, all participants will be in listen-only mode. Afterwards, there will be a question and answer session. Today, I am pleased to present Patrick Kortman, Head of Investor Relations. Good morning, everybody. I would like to welcome you all to today's conference call, which we're hosting as a result of Kindred's last night's decision to temporarily cease services to Dutch citizens. My name is Patrick Kortman, Head of Corporate Development and Investor Relations. I will be moderating today's call. With me on the line here, I have Kindred Group's CEO, Henrik Tjärnström, and Kindred Group's CFO, Johan Wilsby. We'll start the call with a brief update by Henrik. After that, we'll open up for Q&A. Before I hand over to Henrik, I would like to remind you that we are currently in silent period ahead of the Q3 reporting and will not be able to comment on anything else beyond last night's announcement. With that, I hand over to Henrik here. Thank you, Patrick. Good morning, everyone. Yesterday, Kindred took the decision to cease our services to Dutch citizens, as Patrick mentioned, as of yesterday on a temporary basis. Kindred's ambition is and have always been to be a sustainable operator in the Dutch market, contributing to Dutch society once the license is awarded. Yesterday's decision was taken due to the recent policy changes in the Netherlands on which we are now seeking further clarification. It's our understanding that there is no request from the Dutch officials that international operators post the 1st of October must block Dutch citizens from accessing their services. We have been asking for a license for the past 10 years and are now ready for the opening of the Dutch licensing process under the Remote Gambling Act and successfully completed all the required audits that we are required to do as a part of the licensing process. Having completed those preparations, we will now, in accordance with the regulatory timeframe that we must comply to and observe, apply for a Dutch license during the fourth quarter of 2021. Kindred is and has always been compliant with the prioritization criteria outlined by the Dutch Gambling Authority, and we are not actively targeting Dutch customers. We will already now comply as much as possible with all the Dutch license requirements and are fully dedicated to consumer protection, preventing addiction, and combating fraud and crime. However, we are not allowed to connect to the national self-exclusion scheme, CRUKS, even though we want to do. We see the opening of the online gambling market as a very positive step for all involved, we are looking forward to receiving our Dutch license during 2022 and thereby be able to enter the Dutch market, as well as positively contributing to the Dutch society. We have successfully increased our profitability over the last couple of years from locally regulated markets in line with our long-term strategy. As long as services towards Dutch customers are temporarily ceased, this decision is expected to have a negative impact on group EBITDA of approximately GBP 12 million per month against Kindred's own forecast before any potential mitigation actions are taken, as put in the release yesterday. That concludes the intro from my side. Very good. Thank you. Operator, do we have any questions on the line? We currently have 2 questions. If you would like to ask a question, please press zero one on your telephone keypad. There will now be a brief pause while questions are being registered. The first question comes from the line of Erik Moberg from ABG. Please go ahead. Your line is open. Yes, morning. Thanks for taking the question. Obviously, you gave sort of an indication on what sort of losses to expect on an EBITDA level here on a monthly basis. I'm just thinking, how should one perceive the market dynamics? My take is that you will obtain a license, best guess, Q2, maybe second half of Q2. After that, how do you perceive that the market dynamics will change? Obviously a couple of operators now will go live and start to market themselves. Just if you could elaborate how you perceive this dynamic to change over the coming six to nine months, it would be really helpful. Thanks. Yeah. That's, of course, a valid question, and again, it's so far away in the future, so it's hard to tell, and it's impossible to tell really what exactly will happen. Of course, the logical sort of outcome is that the operators who can be in the market and can do marketing will have a benefit. We also know that we have a strong brand and a loyal following in a sense, and we have seen in other markets if we look at, like France, where we had that experience in 2010, that even though we came back later on into the market, we had a strong comeback. That's what we also hope and expect to have in the Dutch market. We will, of course, have to first see what these clarifications mean and what the implications are on that, in a sense, before we can think about the longer term. Yeah. Understood. I know you have a strong brand there, but just thinking here, just from Q2 and onwards, I think it's also too far-fetched for everyone to pencil in 100% recovery right off the bat. What do you yourself see in terms of recovery here? Percentage-wise, how much of Netherlands do you think will recover when you go live with the license? Because my suspicion at least is there won't be 100% of your previous standing in Netherlands, so to speak. I think it's way too early to speculate on those things, and we will have to come back to that at a later time. It's not possible today to do that. Yeah. I understand, it's a really complex situation here. Just looking ahead here, what's fair to assume in terms of the EBITDA losses from Netherlands? My view at least is that I don't really see you guys breaking even until, say, H2 2023 in Netherlands. I assume that you will have to ramp up marketing once you obtain a license. What's your view on this, and when do you think you could break even on EBITDA? I assume if you want to actually achieve growth there, you will obviously have to spend a lot in marketing. I respect, we feel that it's too early to speculate on those things right now. We'll have to come back to that later on. I think it's worth highlighting, though, that the general expectation in the market if you look from H2 Gambling Capital, and as we have communicated before, we believe that the market is under-stimulated and has potential for growth for the first few years, probably higher than other markets to catch up to the overall percentage of gambling taking place online on average in Europe. That is just one thing we want to refer to in a sense. As I said, we are in a silent period now. We have our Q3 coming up later on in October here. Yeah. another opportunity. Understood, obviously. Just again, on the market dynamics here, I think we all can agree that the actual TAM will grow, but you will obviously also have a completely new set of new actors that are coming into the market. Even if the market grows, what is it that says that your share will be maintained? Or what is it there? Do you expect to lose market share, or do you expect to maintain your current market share eventually? Depends on what time horizon you look at. Again, if you look at the French market where we came back after a while and we still had a good development there, and it's one of our largest markets today. It's a question about what time horizon one is looking at. But- I just want to reiterate that it's too early to speculate on that right now, I feel. I understood, but in terms of growth here from Netherlands, is it fair to assume, obviously in Sweden when that market regulated, it was a completely different dynamic, obviously, but it took a hit. You have a little bit of a different sort of dynamic. With new competitors coming into play that will start marketing themselves, should we assume, let's say, did you see a 50% sort of recovery once you get the license and obviously they start ramping up marketing then you sort of see a ramp-up? Just trying to get some color on that, because I think it's really important for everyone to understand here, because my view is at least that not all 100% of revenue will come back immediately. What's the most prudent way here to think about the H2 outlook and more important, H2 is H2, but more important, what's more prudent to think about, say, 2023? We'll do our best to come back as soon as possible. Again, I just reiterate that it's too early to speculate now on events that far into the future, and we will need to come back to that at a later stage. If you compare to France, how much of your initial revenue base did you recover during the first six months and then gradually, how did that dynamic work? I don't have those details in front of me now. We came back in 2012 after having been closed down for 18 months in France. Still the database had good value. We had good reactivation percentage on the database there. That was after 18 months. We expect the time to be shorter here for sure. That is something to sort of. What type of- Again, we- Oh, sorry. Continue. My fault. No worries. But- No, we don't want to speculate on these things right now. It's too early to tell. We've sought clarification on the current changes in policy. We need to start there and see what that brings. Then we will look at the longer term after that. What type of market shares did you grab initially in the France market once you started over again? Is that a good proxy to use in the Netherlands as well? Erik, it's too early to speculate on that now. We will have to get back to that at a later stage. Okay, understood. I think that's all from me for now. Thank you very much. Thank you. Thank you. The next question comes from the line of Martin Arnell from DNB Markets. Please go ahead. Your line is open. Good morning, everyone. Good morning. Good morning. Yeah. Let's try to raise the energy here a bit. Henrik and the team, could you just elaborate sort of what you mean, with the dialogue with the Kansspelautoriteit and what you hope to achieve there in the near term? Yeah, we've taken the decision, as we mentioned, Martin, to temporarily cease our services towards the citizens. It's been taken due to the recent policy changes, and that's clearly created a lot of uncertainty in the market overall, and that's what we want to seek clarification on with the Dutch minister and the authority. That's what we need to do now to see how the lay of the land is really before we take a more of a long-term decision. We have decided out of prudency to cease our activities right now and then seek that further clarification on these recent changes, and then we will take a decision on the future. We are expecting, as I said, to submit our licenses now during the fourth quarter, and then with the licensing period that is expected, we should be able to go live during the second quarter. That's our working hypothesis. How long have you been working on this license application? The license application we worked on for a long time already. As I mentioned, we passed all the required audits that was as a part of this process. We are also working on getting our systems to be fully compliant and be ready to go live ASAP. Of course, we have the cooling off period to consider as well. We are ready with quite a few of the aspects and are hoping to be, or planning to be ready with most of them come 1st of November. That's a part of the process that we've been going through for the last year and a half when we've been preparing ourselves for this situation. Okay, thanks. You mentioned the mitigating actions potential here in the release last night. Could you highlight some examples of what kind of potential actions that could involve? Of course, we operate with a broad portfolio of markets, and we have a very well-balanced product portfolio as well. Of course, we see times of more challenge, then we have a good opportunity to use our different aspects to make sure that the impact is reduced as much as possible. Of course, we also need to consider the long-term effects as well on those kind of measures, and it's about finding the right balance there between short-term impact and long-term effects on those sort of cost-saving measures should we want to do them. As we say, we believe that this is a temporary basis, and we look forward to go live on the Dutch license eventually, and we want to be as strong as possible at that time as an overall group. I think the French situation is interesting to think about here as well, and you discussed it a little bit. If you would summarize what you learned when you relaunched, how would you explain that? Yeah, in the French market when we bought the Solfive business in December 2011, and that was after having been closed down for close to 18 months then. We rebranded that platform to Unibet, and in early 2012 we migrated our legacy database onto that new platform. As I said, we had a good success rate on that one, which was even more complex than what we expect to see here and also for a longer period of time. We have hope and belief that our database will be very valuable in the Dutch market eventually. We're of course also aware of the timeframe that we're talking about and that, again, we have to get back to that. I think, as you say, the French situation is proven that we have been through this before and the whole process. We have come out of that in a good way. We believe that this will be the case here as well. Okay, thanks. Just a final one on the competitive landscape. What is your competitive edge in the future Dutch re-regulated market? We have worked very hard in Dutch society in the way we have been able to regarding contributing with expertise around the online gambling and having a close dialogue with the authorities and the regulator as well, and providing our expertise to the market, and also with regards to match fixing and other sort of sports integrity questions as well. We want to play an important part in the Netherlands like we do in the other locally regulated markets where we have a license, and we believe that we have a lot of value to bring in that sense. Of course, also very good customer experience in the end of the day in our platform and products that we offer to the customers in our locally regulated markets. Okay, thanks. That's all from me. Thank you. Thanks, Martin. Thank you. The next question comes from the line of Steve Hoare from Gaming Intelligence. Please go ahead. Your line is open. Thanks. Hi, Henrik. Hi, all. Hi. I just have a query kind of about the process here. If we're looking back, the regulator said in mid-2019 that it would refuse applications from any operator deemed to have targeted the Dutch market in the two years prior to the start of the licensing process. They fined you in August 2019 for doing just that. I'm a bit confused as to what the confusion is here. It seems that they deemed that you did target Dutch customers and therefore you can't get a license now. I don't understand what the confusion is. No, that's not the case. We've not been actively targeting the Dutch market, and the fine that we paid was a voluntary payment we did in the market. Again, in the letter that the minister sent on the 20th of September, it states clearly that there should not be a connection between sort of having Dutch customers, passively accepting customers and the licensing process. That's been part of the development in the regulatory situation here that is fine for operators who have not been actively targeting the Dutch market to actually get a license eventually and be able to operate in the Dutch market. This is it. You're saying it's the difference between actively seeking and not actively seeking. They would say actively seeking is if you've got a website with a.nl, or you use the Dutch language, or you offer payment predominantly to Dutch consumers or advertising, and you're saying you've done none of these things, but you do happen to have quite a big Dutch business. No, we have been in all compliance with the prioritization criteria, like no.nl website, no Dutch language, no local marketing, no Dutch payment solutions. Those are processes that since 2012, when there was written into a coalition agreement after the election in 2012 that the market would open, then these prioritization criteria were introduced, and we have been complying with them throughout. As a consequence, we are not actively targeting Dutch customers. That's the situation. Okay. You haven't actively targeted them at all. Did you apply for a license this time around then? It seems there's no reason why you shouldn't have done then. We have not applied yet due to the cooling off period. Sorry, Henrik, can you just explain this cooling off period then for me? I don't quite get it. The cooling off period is, there was a change in the criteria or the local payment solutions were added back-end of 2018. That is a discussion that's been ongoing, and that's why we ended up paying that voluntary fine back in 2019. That puts us into the cooling off period, but we're coming out of that now in November, we're expecting, and that should allow us to be able to submit the license and then eventually get that license and go live. All those things that we were talking about, no Dutch language, et cetera. It was about a local payment solution that you had in 2018, which means that you couldn't apply. That we were part of the cooling off period, and now. Yeah. Okay. are coming out of that in Q4 2021. It was just from your statement, it felt that the feeling was that you were hard done by and that you didn't entirely agree with the regulations. It sounds like you accept them and it's just a case of, well, this is the impact and now we will apply. Yeah. Yeah. Okay. Good. All right, thanks. Thanks. Thank you. Thank you. The next question comes from the line of Peter Gusev from Capital Group. Please go ahead. Your line is open. Hi, Henrik. Can you hear me? Hello. Yes, very clearly. Never boring. I'll ask you some very easy questions. The first one, in terms of now ceasing to operations, do you actually physically have to close the account so you can keep the accounts open? Do you need to return cash or people can choose to keep cash there? Can you elaborate on that? Just the technicality of it. We've stopped as of yesterday evening to give the customers an opportunity to place bets. Right now their accounts are available, and they can withdraw their money should they wish to do that. That's the current situation. In reality, because many people have several accounts with many operators, if they choose to keep an account open with you, okay, they don't deal with you, but once you get a license, you actually don't even need to open an account. It's already there. You may have to temporarily close it and reopen straight away. Effectively, the way it stands right now, you're not losing anyone, potentially, unless they choose to cease, close the account, and take everything elsewhere. Yes. Yeah. Okay. That is the situation. Fair enough. The second very easy question, can you remind me, on your share buyback policy, whether you can actually activate one anytime and your sort of dividend policy? Yeah. You can take that, Patrick. This decision and policies, Peter, around Dutch citizens to our services will not impact the buyback program that we have ongoing, and that will be ongoing until 17th of December. It will not impact the dividend for November. Yeah, sure. If you want to buy back more, can you actually decide and do it, or do you have authorization to buy back more shares right now or not? We can't buy back more now because we are in a silent period, right? Okay. No. After you report your quarter, in theory, you can buy back more, because I think you had up to 10% authorization, right? In theory, yes. In theory, yes. In theory. Okay. Just only on technicality. The very last question from me, I've heard that there may be a chance that you actually might get, well, not you specifically, that the new batch of licenses might be awarded a lot quicker than Q2. Is it at all possible? As I say, we are awaiting this clarification with the Dutch authorities right now and see what that brings. Of course, as I said, we will be ready to go live as soon as possible. We are preparing ourselves to be able to do that. If that's possible, we, of course, would welcome that. We would welcome that opportunity as well to contribute to the Dutch society in a very positive way and also with contributing to higher channelization into the system as well. Yeah. We would very much welcome that. Okay. Well, I'm done with questions. All the best of luck to you, and thank you. Thanks, Peter. Thank you. The next question comes from Jake Evans from EGR. Please go ahead. Your line is open. Hi there. Good morning, Henrik. Good morning. Yeah, I just had one question. We listened a statement yesterday morning that said it was Kindred's understanding that there was no request for international operators to block Dutch citizens from accessing their services from the 1st of October. Last night, you obviously said you would cease to offer your services to Dutch citizens. I'm just wondering whether there was a specific conversation or a dialogue with the regulator that helped you to make that decision, or was it just more about giving yourself enough time to come to the right decision, considering it's obviously a very important one? Yes, indeed. There was no dialogue as such, but it was more us doing our sort of evaluation of the current situation and the uncertainty that was prevailing. Out of caution, we took the decision to temporarily cease our services then last night. That is where we are right now. Okay. Thank you very much. Thank you. The next question comes from Simon Davies from Deutsche Bank. Please go ahead. Your line is open. Yeah. Morning, guys. Three from me, please. All fairly simple. Firstly, you've given us guidance in terms of the EUR 12 million EBITDA hit per month. What is the revenue hit? I.e. what do you think the drop-through ratio is there? Secondly, roughly, what do you think your current market share is in the Dutch market? Finally, the rule of thumb in online gaming has always been that it takes about 18-36 months to revert to pre-regulation profit levels once markets regulate. Do you think that that will apply in the case of the Netherlands, given that you've got a pretty high tax rate here of, well, effectively 31% and a number of constraints in terms of marketing? Any guidance you can give on that would be very helpful. Thank you. Thank you. We do not provide country-by-country breakdown on revenue basis, so we cannot disclose that here and now either. That is the situation. Also, what was your second question, Simon? Sorry. Market share in the Netherlands. Market share. For competitive reasons, we have also refrained from estimating and publishing market share because it is uncertain what the actual size of the market is in most markets. That's also something that we have not disclosed our estimation on market share. Then your other third question was regarding the comeback year on 18-36 months, and that is still a bit of an unknown, of course, depending also how long the period will be. It's fair to say that we will also have a decision to make on how much we actually invest and how quickly we want to get back to the same level of profitability. It's no different in the Netherlands compared to where we were in Sweden when we also were other markets, indeed, like the U.S. and other places where we enter a new market, that it's more in our decision on how quickly we want to show profitability or how much of a long-term opportunity we want to capture. Again, it will depend a bit on that. Okay. Thank you. Thank you. Thank you. The next question comes from Oscar Erixon from Carnegie. Please go ahead. Your line is open. Thank you. Good morning, guys. Morning. Couple of questions from me. Morning. First of all, your own forecast in the Netherlands, the GBP 12 million per month, could you say something about what that is based on? I assume it should be for Q4 this year and Q1 next year. What is it based on? Is it a conservative forecast, declining revenue? Alternatively, if it's easier, could you put the impact in the context of your last 12 months EBITDA, perhaps? Thank you. Hi, Oskar. I'll try to give you some color on this. Obviously, as we earlier have communicated, we have been assuming that we would be in a cooling-off period. All the assumptions around the forecast are based around this phasing. The impact that we called out last night is actually at the gross contribution level. It is excluding everything around centrally allocated costs in the group, et cetera. Also, as we said, before any potential mitigating actions that we might take. I guess that gives you some more color to it, right? Great. That's helpful. A follow-up on the previous questions asked here. You mentioned that player accounts will remain, players will be able to withdraw, but you can obviously reactivate them. Two questions there. First, do players have to re-register on the.nl site once you get the license? Two, what have you learned in other markets on the best ways to reactivate them, perhaps without having bonuses available? Thank you. Thank you, Oscar. Yeah, on that one, as we've already communicated or discussed, it's part of the licensing process as well and the go live to customers need to re-register, and that is what we're expecting to happen here as well then. That's what we do. It's different by market that adopts a local regulation, and in some markets, like in the Swedish market, it was more convenient for the customers, which is, of course, the best solution from a channelization point of view. In the Netherlands, it's expected that customers would need to re-register. That is the situation there. Great. Then a final question. You mentioned France as an example, an interesting example. The question is, if you compare to France, how do you expect competition to look by Q2 2022, given that not only you, but most foreign operators will be out of the market and some notably will be in the market? If you could discuss, it'd be helpful. Thank you. Yeah, this staged opening is creating sort of complexities around that, and it's also a bit difficult to predict, of course, what exactly will happen. As more operators come into the market, I think it's fair to assume that marketing spend will also be increasing over time, and of course, then it will be sort of such a development we're expecting also in the Dutch market. As I say, if it is more of a staged opening and operators gradually coming into the market, then of course that is logic that the marketing pressure will be increasing, albeit that we will also adopt moderation, and everyone else should do as well in the market to not spend too much. Of course, we want to use all possible channels as well for marketing. We will have to get back to that at a later stage, no doubt. Okay. Thank you very much. That's it from me. Thank you. Thank you. Just a reminder that if you would like to ask a question during the Q&A, please press zero one on your telephone keypad. There will now be a further pause while questions are being registered. The next question comes from Daniel O'Boyle from iGaming Business. Please go ahead. Your line is open. Hi. I was wondering about the clarification that you said you're seeking. What's the timeline on this? How soon do you expect to be able to receive this clarification about whether you are or are not required to block Dutch players? Yeah. We have submitted the questions to the regulator, and we also believe that the trade association have done as well. We're expecting to get an answer on that, hopefully within the coming days or so. That's what we hope, but we don't know really yet. Okay. Then this clarification, I noticed that recently, just before the market opened, the regulator fined Tipico for accepting Dutch customers, even though it seemed that they weren't specifically targeting the Netherlands. It seems that most other large operators, Entain, Betsson, 888, have their own large legal teams, I'm sure, had opted to block Dutch customers before you did. I was wondering what it is exactly that you had seen that sort of gave you the interpretation that seems to be a little bit different from the market, and how that fits in with the recent Tipico ruling. It's not for us to comment on the Tipico ruling. My understanding is that that was related to a similar sort of old sanction fee that we received in 2019. For previous activities, it's not related to the current changes in the enforcement policy. That was only scheduled to come into effect as of 1st of November. That is our understanding of that. All right. What is it that kind of gives you the, we just say, sort of a different interpretation than a lot of the other major online operators? I don't think that there's been a massive disagreement on the interpretation. It's just that there is so much uncertainty on what is actually meant and what is actually expected. That's why you would seen different interpretations over time. In the end, everyone came to pretty much the same conclusion. All right, great. Thanks very much. Thank you. Thank you. The next question comes from the line of David Altaner from VIXIO GamblingCompliance. Please go ahead. Your line is open. I guess I'm just following up on the previous question. What makes you think there's anything ambiguous about the minister's statements last week? Your competitors all concluded that a passive stance was no longer valid. What exactly is ambiguous about what he said? The minister doesn't explicitly request operators to cease services towards Dutch citizens as long as the prioritization criteria published in 2019 are followed, and that's what we're seeking further clarification on now from the Dutch government and the Kansspelautoriteit, to hope to be able to get clarity on that. Okay, thanks. Thanks. Thank you. The final question comes from Olaf, an individual affiliate. Please go ahead. Your line is open. Hi, Henrik. Thanks for doing this. I just wanted to refer back to a question a bit earlier about re-registering current players in the Unibet databases. When this will come in effect, will you re-tag them to affiliate as well? Because millions of players obviously come via affiliates. That is a more detailed question that we will have to get back to closer to the time. Sorry for not having a clear answer on that here now. I have to assume that there is an open discussion ongoing at Unibet with what's going on with the current players and those who are tagged to affiliates. Obviously, the affiliate brought those players in, so in a new situation, I think they should be rewarded. That is a detailed question that is expected to be a part of the ongoing licensing process before go live, and no doubt that will be a topic that will be discussed with the more operational teams closer to the time. Okay. All right. If the current players with current details can register, and there is no limitation from the gaming authority, I have to assume the situation will be as it was. It is part of the detailed work in the lead up to go live, and that will be more an operational question that the teams will handle, I'm sure. All right. Thank you for your time. Thank you. Thank you. We have no further questions. I will pass back to the speakers. Thank you very much. I would like to thank you all for participating today, and we're looking forward talking to you again on the 27th of October when we release our Q3 report. Thank you all. Thank you very much. Thank you for attending. You may now disconnect your lines.