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Edited Transcript of KIND SDB.ST earnings conference call or presentation 24-Jul-19 7:00am GMT

Q2 2019 Kindred Group PLC Earnings Call

Stockholm Jul 30, 2019 (Thomson StreetEvents) -- Edited Transcript of Kindred Group PLC earnings conference call or presentation Wednesday, July 24, 2019 at 7:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Henrik Tjärnström

Kindred Group plc - CEO

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Conference Call Participants

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* Christian Hellman

Nordea Markets, Research Division - Director of Small and Mid Cap

* Erik Moberg

ABG Sundal Collier Holding ASA, Research Division - Research Analyst

* Lars-Ola Hellstrom

Pareto Securities, Research Division - Analyst

* Martin Arnell

DNB Markets, Research Division - Analyst

* Mathias Lundberg

SEB, Research Division - Research Analyst

* Mikael Laséen

Carnegie Investment Bank AB, Research Division - Head of Software & Services and Financial Analyst

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Presentation

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Christian Hellman, Nordea Markets, Research Division - Director of Small and Mid Cap [1]

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All right. Good morning, everybody, and welcome to Kindred Group's Q2 Presentation for 2019. My name is Christian Hellman, and I'm an analyst with Nordea Markets here in Stockholm. I'll be moderating the Q&A session after Henrik's presentation.

And with those words, I'll leave the word over to you, Henrik.

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Henrik Tjärnström, Kindred Group plc - CEO [2]

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Thank you very much, Christian. Thank you very much. My name is Henrik Tjärnström, I'm CEO of Kindred Group. Warm welcome everyone on the videoconference and also those on site here in sunny Stockholm, it looks like season low activity, which is also reflected on our activity this time of the year and especially in an odd year like this year is.

So if we take ourselves back to Q2 last year and when we look at the numbers then, of course, we had the World Cup of 2018 in Russia, the men's World Cup, that was a really big event and the biggest single event ever for us as Kindred Group. And what more was that the Q2 period of the World Cup was the highest contributing period of the World Cup, which makes the comparables even tougher.

And also now when we're into an odd year, the end of Q2 and the start of Q3 is normally the lowest activity period in a 2-year period that we experienced or every 2 years. So that in combination when we have Sweden also going through reregulation and only into the second quarter of that which is, as we always said, will mean tough comparables from an activity and also especially a contribution point of view.

If we take all of those together, that is sort of leading up to very tough comparables year-on-year that we were looking at. But of course more on that later.

I am, however, very confident that when we look over time, things will normalize and we will start to sort of see an improved contribution from Sweden and also that the other markets, the contribution that they are providing will balance out that as well that we are very confident on the long-term forecast for the business. And now especially with the peak season coming up now at the end of Q3 and into Q4 for the rest of the year.

When we -- I can't see anything on this one but that's fine. So and when we look at the presentation, if we start with the highlights. On the outline of today's presentation, we have first the highlights then the financial results and then followed by business overview and then rounding off with a summary.

So if we look at the first brand portfolio that we operate as a group, there is no major changes compared to the previous quarter. The one change you will see is the Unibet logo. So we have reworked our classic logo for our flagship brand Unibet that is now seen at the bottom of this slide, and it -- to better cater for today's mobile-first environment and high eligibility in small digital spaces.

We have had a combination of logos for a while to use in kind of sponsorship modes and then in the traditional sort of marketing modes, and now we combine those into the new logo, which we're very happy with and of course also coinciding with the launch also in the U.S. where we're going live with the new logo.

So when we look at the financial numbers and some of the key report highlights, of course we have everything in the quarter report, but if we look at some of the numbers here and considering that we rub them against the World Cup period of last year and especially the highest contribution period of the World Cup and then also the reregulation of Sweden, we're very happy to show that in reported numbers gross winnings revenue were up 3% to GBP 226 million and the same number in constant currency was up 4%. And again, we're very happy with that considering the tough comparables we were facing.

The growth from the mobile channel continued to grow strongly and was a major contributor also in this quarter and it was up 11% now to GBP 173.5 million. But as I mentioned, the impact of the Swedish reregulation at least short-term but also the other investments that we're doing across the business both in increasing in marketing, we have -- we were investing more in this second quarter than we were actually in the World Cup quarter of last year. And also more than in any other second quarter for us as a business, so we in an odd year, I should say. So that is the very strong investment for the long-term prospects of the business. And of course, all those items. Also, when we're growing faster in a reregulated markets rather than the dot com market, has a pressure on EBITDA and the combined effect against the year, where EBITDA was down 27% year-on-year to GBP 30.4 million.

And also, the same trend in development continues down to earnings per share for the short term, it was down 51% now. And active customers came in 5% down year-on-year, more on that later, but that's a normal decrease compared to a very high activity period as we had in the World Cup of last year.

But if we look in a little bit more detail into the financial results and try to unpick the sort of the differences between the years. If we try to summarize first the second quarter of 2019 and put it into words, this is the long story very, very short. Locally licensed revenues up 41% year-on-year but tough EBITDA comparatives due to the 2018 World Cup but also the Swedish reregulation. Those are the main themes. So in big picture, the growth from locally regulated markets for subsidiary or -- were far above the growth in our dot com markets, which is, of course, very good for the long term. And even if we exclude Sweden from the 41%, the underlying growth, if we call it, on reregulated market was 19% year-on-year. So again, way above the 4% that we reported in constant currency.

And that is, of course, good for the longer term. But when we look at -- also just to remind ourselves about the World Cup period of last year and this is the Slide that we showed you in time for the Q2 presentation a year ago, and here you can see the breakdown of the tournament as such and then also especially about the gross winnings' contribution between the June and July period. And as you can see here highlighted at the bottom of the slide, the June period contributed with GBP 27 million in gross winnings revenue. Of course, if the World Cup wouldn't have been there, some of that revenue would have come anyway but GBP 27 million is very strong, and also highlights what I mentioned before that the June period was stronger than the July period of last year as well. So making the comparatives even tougher. And that's also an indication for what to expect in Q3 of course when that's coming up.

When we look at then the gross winnings revenue sort of year-on-year for the first half year, we see that we have a steady trend continues and now we're at GBP 450.6 million in gross winnings revenue. And the same number then for the full years, you can see here, where the growth has been very positive over the years and we're expecting that to continue as well. And as we've always said, the transformation will start from top line when we're going from dot com to dot country and then later on it follows further down in the P&L, and of course with the ambition to have fully regulated profits in the end of the day.

So if we look more by region and the composition and the growth per region for us, you can see here the 3 main regions we operate, Nordics, Western Europe and CES. And the trend of Swedish reregulation is clearly impacting on the Nordics' numbers -- on the Nordic numbers, but it's also a fact that the World Cup having an impact here as well with the reduced activity year-on-year. So as reported, Nordics was down 9% in constant currency, that decline was 7%. But the strong developments in Western Europe continues, and despite the lack of the World Cup, it was up 10% as reported, and as the euro didn't move against the pound very much, the same number for organic and constant currency.

And the CES was up more and that's also natural that we expect that the -- those markets are relatively more immature and would be growing faster and here we can see that that's reported up 20% and in constant currency as everything is organic year-on-year, it was up 30%.

Now my monitor went black again here but we'll try to manage without. So if we look then on the gross winnings revenue for mobile, the contribution continued and it was up 11% year-on-year, which is strong. We can see a slight decline from Q4 but you can also see that the Q4 period in the last couple of years has been the strongest as expected when it's the peak season really for the sports, which is the largest contributor to the mobile. But still, very strong that in Q2 now remained on the same level as in Q1, and as a total, we had 77% of revenues coming from the mobile channel.

If we look then further down in the P&L to EBITDA that we talked about already, one can see that also the 2018 period was very strong and not only in the first 2 quarters but also looking at the full year, which is kind of to be expected as well in the year when we didn't have any major reregulations happening, and also we had the World Cup, of course again, to assist activity.

So that was a very strong year, which makes the sort of '19 more challenging even so, but still that we're on GBP 61 million now after 2 quarters comparing it to the years prior to '18, it compares well. And the big improvement is that as we will show later the reregulated percentage has come up a lot now in '19 compared to those previous years.

But again, if we look further into the future for 2020, we're expecting that also to be a year without any major reregulation and as such a year where margins can start to normalize to -- from the current levels.

If we look at the contribution or the EBITDA margin and comparing it to the betting duties percentage for us as a business, the trailing 12 month is further reducing now into Q2 as we're losing one kind of a quarter without -- with Sweden on dot com and adding one quarter with Sweden on local license. So it's completely as expected that the EBITDA margin is reducing still now in Q2 and we will, of course, come back to this in Q3, but the logical trend is that it will put them out and then start to come back up again both as we grow scale both in the Swedish market but also, as I mentioned, when we get larger contribution from other already reregulated markets as we indeed are seeing already now in Q2 that those markets are assisting.

Looking at the blue line, the betting duties is also as expected, it's coming up as a consequence of the Swedish reregulation, but also that we are growing fast in other already reregulated markets. And as I showed, large faster growth in those markets than in the dot com markets, as we already mentioned.

When we look at the numbers in isolation quarter by quarter, the trend is of course similar but here we've also added the green line, where we can see the development of our reregulated percentage of revenues and that is clearly coming up from, if you look way back to 2010 when it was pretty much 0, it's gradually come up, and now we've sort of big increase now in Q1 and Q2. And of course, part of this is also that the bonus cost in Sweden and that was very high in Q1 has, as we mentioned already then, starting to normalize or we're lower now in Q2 than in Q1, and as a consequence, that also helps the gross winnings percentage to pick up as bonuses are deducted before gross winnings revenue.

So very strong that we're now on 59% on the business from locally regulated market, and of course, now when we're going live more and more in the U.S. as well, which will add directly to this, we're expecting this trend to continue not only from our already reregulated markets in Europe but also with the other markets outside.

Another thing that we're working very actively with is the cost control and the other cost analysis. Of course, as we're investing in the business for the longer term, short term when we look at kind of relatively lower activity quarters that has an impact on the percentage from -- of other costs as a share of gross winnings revenue but the long-term trend is very stable, and here you can see that the -- for the second quarter on the historical comparable basis, it can be on 10% and for the first half year, it was 9%. So that rates well with the long-term and also as we see over time, we're expecting this trend rather come down as we grow top line faster and faster.

So very good cost control, and also if we look on the FX element and how much that is impacting the P&L. We see, as we've mentioned before, relatively small movements across our basket of currencies and only negative 1% in this quarter. It will compare the pound against those currency. So basically, if we would have had unchanged rates, the revenues would have been GBP 1.8 million higher equivalent. We can also see here sort of FX on operating items of minus 2.4 taking the total sort of reducing impact on profit before tax to GBP 3.3 million for the quarter.

Another thing that we've highlighted already in Q4 and Q1 and giving you more as a benefit for those looking closely into the numbers is the IFRS 16 Leases, the new standard that is replacing IF 17 (sic) [IFRS 17] and it's -- the operating leases are impacted, and as you can see on the right-hand side here, the effects on the bottom line and on the cash flow is minimal but albeit it's a change within the P&L between OpEx and depreciation and amortization in the big picture. So those are the changes to the P&L and cash flow from that.

Taking those and the other aspects into consideration, also as you saw on the FX slide, where we have the FX loss on the dividend payment but also the finance cost and the negative GBP 0.3 million from profit before tax from the IFRS 16 that has a sort of an impact further down in the P&L, also went down to EPS. And that's the numbers for the first half year and the comparables for the rest of the year as well.

So if we look on the business overview and if we start with the sports betting margin, those are clearly fluctuating over time. This is the long-term trend, and if we look at the turnover, it was down 1% in gross -- sort of in turnover but still gross winnings revenue increased year-on-year despite the World Cup of last year as the margin came in slightly higher than the margin of Q2 last year.

The margin for Q2 this year came in on 10.2% before free bets and 8.7% after free bets. And as you can see here, the long-term trend is sort of looking to be pushed upwards in the later sort of quarters and now the long-term trend from 11% to 19% is something around 7.3% after free bets.

If we look at the product and geographical split for us as a group, you can see here that sports and the split is fairly unchanged from Q1 to Q2. Sports now came in on 48% of the total and Casino & Games came in on 47% and the rest is shared then between Poker and Bingo.

So even if the other products like Poker is growing faster than the casino and sports betting, it remains on 3% for the quarter. So that's -- and Bingo is a part of that remaining 2%.

By geography, also here, we can see that what we talked about in connection with the Q1 report on the bonus spend in Sweden or the uptake of bonuses in Q1, that was higher than expected when that effect as we -- is tailing off, we see now in Q2 that the contribution or the gross winnings revenue contribution from the Nordics is as expected, picking up, and now came in on 30% for the quarter and then the Western European segment shrank down to 60%. And then CES, as we showed earlier, was growing faster than those regions, it's also then remained on 8%.

And the other segment where we have Australia and the U.S. came in on 2% for the quarter. And mentioning the U.S., it's very exciting times ahead. On New Jersey, we went live on the 3rd of June, which was long-awaited albeit that it was more of a soft launch as we only have, for now, the casino product and some of them live, and now with 2 days ago, we submitted the sports betting product for lab testing and normally that process takes around 4 weeks before we can go live and that will be in time then for the American football season picking up now in Q3.

So that's also marking the point where we start to make a real push on marketing in the U.S. and where we can really expect to see any meaningful numbers really coming out of New Jersey especially in the U.S. than as a start.

So that's -- very much looking forward to that. Also as you can see here on the bottom with Pennsylvania, the conditional license for casino and the sports book were awarded to us on the 10th of July, and that's clearly very, very good for us and we expect now working very actively to be able to launch our lounge in the land-based casino sometime hopefully early Q4, and then also to be able to go live with both sports and casino during the fourth quarter. So basically at the end of the year, we have expectations to be live or fully live in both New Jersey and Pennsylvania in the U.S. And then of course the team is also working very actively on the ground to look at potential partnerships for more states to come but of course more when we have something more concrete to talk about in that respect.

Other things that the teams have been working very actively with is, of course, securing important media and marketing assets. And in the Swedish markets where kind of sponsorships are becoming a really scarce asset, we're very happy to inform that we highlight again, I would say, that we have secured the sponsorship for the coming 2 years of Hockeyallsvenskan, and we are the main sponsor now from the 1st of July. And the commitment is a SEK 25 million over 2 years of which SEK 3 million will go to RGM projects against match-fixing as well, which is fundamental part of the sustainability aspects of both what we do but also for sports in general. And, of course, it's also part of our long-term strategy to also give back to sports and society to create a very good echo system for both the sports and us as an operator.

So very much looking forward to this as a compliment to the Swedish Elite Football sponsorship that we've already talked about several times that kicks off from 1st January next year. And these kind of the partnerships, we really believe, will be a key differentiator between us and our main competitors in the Swedish markets.

Other very positive news for us, first and foremost, internally but also to highlight that we are a great place to work at, is that our Kindred U.K. office was recognized as a top -- one of top 30 workplaces in the great place to work, best workplaces large category survey conducted now in 2019. And that's clearly very, very important for us to be able to attract and retain the top talent that we need, and as I said, this and other aspects of what we are doing in investing in our staff and in our facilities has enabled us to really reduce attrition over time but also attract more top talent, which will be key for us to build the business for the longer term, and as a consequence, we also see that the staff numbers were up year-on-year, which is really good for us for the longer term as we need to get more talent in to cater for the increased needs that we have.

If we look at the active customers, also especially from a sustainability point of view, we're very happy to look at the long-term trend, where we've seen that from Q2 2011 to Q2 2019, the growth in -- compounded annual growth rate in number of active customers have been up 22% year-on-year, and at the same time, the ARPU seen as a line here at the bottom has been up just 1.9% or about 2%. So basically that the overall business is growing something around 24% year-on-year over that period of time. And that's clearly very positive, but the main point here is that we strongly believe that growing number of active customers rather than ARPU is the sustainable way of really growing the business and we're very happy that we're continuing on that path.

What we've also done further within sustainability in addition to publishing the sustainability report and all the other work that we're doing regarding RGM, we are the only operator with the AAA rating from Morgan Stanley Capital International on ESG, is that we also shifted our commercials a lot over the last year where we have started in Belgium and followed by Sweden and now we're taking that theme into other key markets for us as a group. And now we will show you 2 really good films from first Danish the market and what we're doing here to get with our Unibet ambassador Brian Laudrup in the Danish market. And here comes the movie.

(presentation)

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Henrik Tjärnström, Kindred Group plc - CEO [3]

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Again, here you can see the new logo and how it fits in, in TV commercial as well. So really positive uptick from the customers on that commercial. And then what we're further doing together with our Unibet ambassador Morten Langli in Norway is a similar one and it's also been equally appreciated also by the customers.

(presentation)

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Henrik Tjärnström, Kindred Group plc - CEO [4]

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Really here also emphasizing the themes. Sorry for the lack of subtitles on the last one. But emphasizing the important thing that the customer should only gamble with money they can afford to lose and it should be -- you should play for fun rather than anything else. So those are really, really important things that we're working on and that is sort of enabling us to also position ourself as the -- or keep the position as the sort of sustainable operator in our sector, and as mentioned already, we're the only one with the AAA rating.

Another thing that we have done and we're very happy with is the achievement of the ISO 27001 certification that we achieved, and it's the further quality stamp on what we do and how we operate as a group and it will of course also help us to facilitate the process of applying for licenses, et cetera, in new territories as well like we're doing on an ongoing basis, and especially now we're digging deeper and deeper into the U.S. market and similar. So again, it's a really important step to facilitate for us going forward.

Another thing that we have done now for 3 consecutive years and this will be the fourth year is the Sustainable Gambling Conference, and this year we're asking you to save the date on the 8th of October, and this year it will take place in Copenhagen, so please put the date in your calendars and make sure that you make yourself to Copenhagen on the 8th of October.

So if we summarize the second quarter, as I mentioned, reported gross winnings revenue up 3%, 4% in constant currency and the sports betting margin of 8.7%, but also as we mentioned, the EBITDA for the reasons we have already given down 27% year-on-year, where we're expecting now the peak season to pick up and that the contribution from EBITDA should be picking up equally over time for the reasons we talked about.

Gross winnings revenue from the mobile, up 11%, active customers, down 5% but still very good and also now that bodes well for the peak season picking up from now into the Q3 and Q4. And then, one of the main highlights, I would say, is the gross winnings revenue from locally regulated markers that now came in on 59%. So that is very, very positive for the long-term and it's an ambition that we strived for many, many years.

That concludes the presentation, and I invite Christian back up for the Q&A.

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Questions and Answers

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Christian Hellman, Nordea Markets, Research Division - Director of Small and Mid Cap [1]

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Thank you very much, Henrik. Yes, I will start off with a couple of questions before leaving word over to the room and the telephone conference. The first one. Let's start with revenues. You grew revenues by 3%, and you had strong growth in locally regulated markets, which leads me into my question about, yes, to be regulated markets, i.e., Holland, Norway and (inaudible) as well. Can you discuss a bit about the business conditions in those markets during the quarter, and also what you see going forward?

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Henrik Tjärnström, Kindred Group plc - CEO [2]

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Yes, it's not the purpose in itself but those markets should not grow but we'd rather see in the trend that we had now actually when the reregulated markets are growing faster than dot com and that's part of our long-term plan that, that will happen and of course, we are focusing investments more into already regulated markets. And that's also where we have the stability to do complete media mix across those markets rather than in dot com markets, where it can be more difficult to also do media exposure, et cetera. But it's also a case that in the -- in those yet to be regulated or yet to be locally regulated markets, those are, of course, regulated by the license we have in Malta. So they are fully regulated from that point of view.

But the -- it's also effect of the World Cup that in those markets that are still to be regulated and there is also a World Cup effect coming in from those one with the slightly reduced activity as expected now in an odd year without the World Cup. And then that is also impacting on the sort of gross winnings revenue. There has also been, in some of those markets, a little bit more challenging from operational point of view in the Netherlands when we remove the iDEAL at the very early part of the year that of course have had some impact on that before the customers to get used to alternative payment solutions, but that is as expected and it's managing out now well.

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Christian Hellman, Nordea Markets, Research Division - Director of Small and Mid Cap [3]

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And Norway?

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Henrik Tjärnström, Kindred Group plc - CEO [4]

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Norway as well with the payment blocking or the increased enforcement by the government, which we are arguing if it's sort of a breach of integrity but there has also been impacting to some extent on numbers in that respect, as you mentioned.

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Christian Hellman, Nordea Markets, Research Division - Director of Small and Mid Cap [5]

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Right. And were you havening removed the iDEAL now, the payment solution in the Netherlands? You consider yourself to be fully compliant with the regulator -- the regulator's guidelines in the Netherlands?

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Henrik Tjärnström, Kindred Group plc - CEO [6]

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Yes, in our opinion, we have always been compliant when it comes to the priority criteria as we work together with the government and the regulator since 2011, 2012 when these criterias were put in place in the first place. And the last sort of change there was the requested removal of iDEAL, which we did immediately, and as a consequence, we think that we have been fully compliant with the regulator's ambitions throughout that period.

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Christian Hellman, Nordea Markets, Research Division - Director of Small and Mid Cap [7]

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All right. And on the cost side, marketing costs were up year-over-year despite you having the men's World Cup in Q2 last year, and you also highlighted in the report that marketing costs were a bit higher than normal. Could you elaborate a bit more on that? And then also if this is new normalized level or what you see going forward and the -- yes, just a bit more color on the marketing.

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Henrik Tjärnström, Kindred Group plc - CEO [8]

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Yes. No, I appreciate that. What we had said in previous quarters now is that we have been guiding towards a couple of percentage points below 30 and we've also mentioned in some other reports that sort of back end of 2017. If we looked at way back, we were -- the feeling was that we were kind of almost underinvesting a little bit considering the long-term sort of importance of marketing investments. And now, we've been sort of catching up on that, and in the end of the day, we see -- we know that there is a very strong correlation between sort of the investments in marketing and market share in the end of the day, and considering the increased pressures we're getting from increased betting duties, we need to grow fast to be able to absorb those things and keep that very good trend when have a pretty much unchanged EBITDA margin despite the betting duties picking up as a percentage. So we're very confident that as we proved previously that the investments that we're doing now will pay dividends in the coming quarters, and that's sort of what we need to do. We're not managing the business on a quarter-to-quarter basis, we're looking at it on the long term and this is our firm belief that where we need to be to be a one of the absolute leaders for the long term.

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Christian Hellman, Nordea Markets, Research Division - Director of Small and Mid Cap [9]

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And on the U.S., you're live now in New Jersey and you mentioned in reports as well that it burdened the result by GBP 1.6 million and you went live on the 3rd of June. Should we interpret that as those costs were sort of on a single month basis? Or how should we see sort of the cost revenue situation going forward in, yes, the U.S., New Jersey, Pennsylvania?

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Henrik Tjärnström, Kindred Group plc - CEO [10]

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Now it's combination of both OpEx and marketing, and as I mentioned, we've now done a soft launch to a very large extent in the U.S., where we're just pushing more digital assets to sort of start to get our brand out there, and it's only now when we'll get -- push that as we're going live with the Unibet, which is more sport related, that's when we're really going to start to push on marketing as well. So this is more about sort of initial phases on digital and some of the production costs, it's not that we have done around the -- be able to go live fully now in -- and this is out hopefully in 4 weeks' time. So -- and then we will come back to it. But what we said before is that we're expecting for '19, and now into sort of 2020 depending on next year, of course, and what we want to put in the budget but it's -- the overall investment in the U.S. is over relatively small scale in the overall group scheme of things, but of course it's also a good opportunity for us for the longer term. So we want to find the optimum balance, where we sort of invest in line with the brand rather than anything else. So it will pick up over time.

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Christian Hellman, Nordea Markets, Research Division - Director of Small and Mid Cap [11]

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Yes. And best guess at the moment, when do you think you'll be breakeven in the U.S.?

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Henrik Tjärnström, Kindred Group plc - CEO [12]

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It all depends on the kind of future states to go live and stuff like that as well. So it's impossible to predict now what it will be like but we -- as we said before, we see it is a huge opportunity for us as a group and we really want to be there and take that one, but of course that opportunity won't come without investments as well. And of course, investments kind of unfortunately always comes before return. So it means that we're not expecting, as we said before, any contribution -- sort of a profit contribution from the U.S. for the foreseeable future but rather that we're building very important assets for the shareholders over time.

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Christian Hellman, Nordea Markets, Research Division - Director of Small and Mid Cap [13]

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And just final question before I open up for further questions. The trading update. You can elaborate a bit on that, you were down 8% organically.

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Henrik Tjärnström, Kindred Group plc - CEO [14]

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Organically, no. In constant currency, yes. 7% as reported, yes.

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Christian Hellman, Nordea Markets, Research Division - Director of Small and Mid Cap [15]

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Is that a World Cup effect only or...

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Henrik Tjärnström, Kindred Group plc - CEO [16]

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Yes. I would say, to the very largest extent. We're comparing to the full quarter of last year, so of course, World Cup trying to dilute that effect to some extent but it's still very much there. And as I said, now in Q3 and in odd year and the start of first 22 days, it's pretty much the low point of activity we have in any 2-year cycle for the business. So it's only down 7% in that respect, I think it's very positive and it bodes very well for the pick up now. And the logical trend that we see every sort of odd year is that now is sort of -- it starts to ramp up sort of gradually over July but then into August, and especially then end of August and into September when the sports season kicks off for the Unibet brand, but also as it's a correlation between also sports activity and casino revenues as well as we have a lot of combined players. So definitely that the World Cup effect is not only on sport, it's also a spill over our own casino now in Q2 and Q3.

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Christian Hellman, Nordea Markets, Research Division - Director of Small and Mid Cap [17]

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Thank you. Any questions from the room. Yes?

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Martin Arnell, DNB Markets, Research Division - Analyst [18]

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Martin Arnell with DNB Markets. Can I just follow up on that question on the start to Q3? Because if I look at it, I understand it's a World Cup effect, but it looks like there is something more. It's still very early days but could you just give some flavor on if there is any market that has performed weak in the start?

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Henrik Tjärnström, Kindred Group plc - CEO [19]

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Yes. If anything as we touched on earlier in the presentation is about Sweden and the -- now in -- with 2 quarters into the reregulated system. It's surprising me as we touched on already at the time with the Q1 report and now the trend has continued into Q2 that of course there is a World Cup effect with reduced activity but it's also -- seems like the overall market is down, anything up to sort of around 20% year-on-year. And that's unusual if we look at any other reregulated market where the expectation has been that in the first year or even couple of years after reregulation introduced that it's more increased growth phase in the market. And now if we see it -- and that was what we saw in Denmark, for example, back in the days, and now in Sweden, if the market is actually coming down rather than growing, I'm not saying that it is the case but it could be some warning signs that channelization is negatively impacted, which is kind of dangerous for the system for the long term and it remains to be looked at, I would say, but -- especially in the light of when it talks about further regulation of the sector rather than anything else I think that's something for the regulator as well to keep a very close eye on what channelization really is because no one really knows how large the total market is. So that's something.

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Martin Arnell, DNB Markets, Research Division - Analyst [20]

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So it does not relate to Netherlands and the fact that you've removed iDEAL? Is that something to do with the start of Q3?

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Henrik Tjärnström, Kindred Group plc - CEO [21]

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No, I will say, there's more around the World Cup and the effects around that. And as said, the removal, the impact of that is sort of fading out now as well as we get further and further -- customers getting more familiar with alternative solutions. So we're not expecting any sort of long-term negative from that.

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Martin Arnell, DNB Markets, Research Division - Analyst [22]

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Okay. And on Sweden, can you comment on your monthly trend there since the start of the regulation? It looks like you've been growing on a monthly basis since January.

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Henrik Tjärnström, Kindred Group plc - CEO [23]

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Yes. You would have seen the numbers coming out of the tax authorities on the month by month. We were reporting sort of the taxing on the gross, so -- and that meant that our numbers were kind of looking like they were coming down and now they've been coming back up again. So we are confident on the long-term outlook and what we're doing there but it's -- as I mentioned, it's more about the surprise that the overall market seems to be shrinking rather than growing fast in Sweden. Of course, some of our -- the incumbents got improved product offering from the start as well, which is logically impacting but now, as I mentioned, with the sponsorships deals that we have secured, we are confident that we have a good position and a good mix for the longer term that we should be able to also benefit from when smaller operators will struggle in the market like we're seeing already now and that should be to the benefit of the larger operators like ourselves.

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Martin Arnell, DNB Markets, Research Division - Analyst [24]

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And on marketing, did you say that you still expect a few percentage points below 30% of sales for the full year?

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Henrik Tjärnström, Kindred Group plc - CEO [25]

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Yes, now for the first 2 quarters, or first half year, we come in somewhere between 29% and 29.5%. So that's in line with that, but it's also as expected. Normally the trend for us is that in sort of Q1, Q2 and Q3, we tend to be slightly over that yearly guidance, and then Q4 normally comes in below to take us to that kind of guideline. So we're still believing around a couple of percentage points below 30% for the full year.

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Martin Arnell, DNB Markets, Research Division - Analyst [26]

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Okay. And on active player base, I know it's not the perfect correlation but it still looks a bit strange that you're up in marketing but you're down quite materially on actives and you're expecting payoff from this marketing that you're doing, but can you help me understand?

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Henrik Tjärnström, Kindred Group plc - CEO [27]

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Yes. That is the kind of the normal trend. And we always know that the marketing investments that we do will payoff for kind of 6 to 9 to 12 months' time. So now we're sort of positioning and pushing more for kind of building the brand awareness, what we have done. And then we will go into more, call it, action when we come closer when the leagues really pick up and start. So it's more about that and it's the seasonality effects rather than, so if we say, that we've taken in customers but the active ones have sort of become a little bit more dormant but that we fully expect then what we've seen in previous years that it will pick up now in back end of Q3.

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Mikael Laséen, Carnegie Investment Bank AB, Research Division - Head of Software & Services and Financial Analyst [28]

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Okay. Mikael Laséen, Carnegie. Few questions. Starting with the cost side. Can you explain why administrative cost increased quarter-on-quarter?

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Henrik Tjärnström, Kindred Group plc - CEO [29]

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Yes, because we are increasing number of headcount, to start with, and that drives a lot of the costs as well. So that I think it's the lion's share of that one. We -- I don't know if there was anything more specific you were looking.

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Mikael Laséen, Carnegie Investment Bank AB, Research Division - Head of Software & Services and Financial Analyst [30]

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No. no, it was a significant increase, GBP 5 million.

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Henrik Tjärnström, Kindred Group plc - CEO [31]

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Sorry?

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Mikael Laséen, Carnegie Investment Bank AB, Research Division - Head of Software & Services and Financial Analyst [32]

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It was an increase of GBP 5 million sequentially.

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Henrik Tjärnström, Kindred Group plc - CEO [33]

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Quarter on quarter?

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Mikael Laséen, Carnegie Investment Bank AB, Research Division - Head of Software & Services and Financial Analyst [34]

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Yes.

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Henrik Tjärnström, Kindred Group plc - CEO [35]

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Which number are you looking at then? Perhaps you can take that with Hellman later, GBP 5 million.

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Mikael Laséen, Carnegie Investment Bank AB, Research Division - Head of Software & Services and Financial Analyst [36]

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Yes, for Q1.

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Henrik Tjärnström, Kindred Group plc - CEO [37]

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On what?

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Mikael Laséen, Carnegie Investment Bank AB, Research Division - Head of Software & Services and Financial Analyst [38]

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Administrative expenses was quite high.

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Henrik Tjärnström, Kindred Group plc - CEO [39]

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But is it relating to the IFRS 16 you're looking at or? What (inaudible)

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Mikael Laséen, Carnegie Investment Bank AB, Research Division - Head of Software & Services and Financial Analyst [40]

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No, just the P&L.

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Henrik Tjärnström, Kindred Group plc - CEO [41]

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We can take that with Hellman. Please look at that Hellman. Don't really remember those in my preparations.

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Mikael Laséen, Carnegie Investment Bank AB, Research Division - Head of Software & Services and Financial Analyst [42]

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Okay. And why did betting duties decline? You had higher taxes, I guess, in the U.K. They raised the tax in April, you had also higher share of regulated markets.

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Henrik Tjärnström, Kindred Group plc - CEO [43]

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The -- you're looking at sequentially or?

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Mikael Laséen, Carnegie Investment Bank AB, Research Division - Head of Software & Services and Financial Analyst [44]

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Yes. You also had that in the slide.

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Henrik Tjärnström, Kindred Group plc - CEO [45]

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On the betting duties. Don't have it sequentially here but 48 from -- the -- that one I can't sort of take top of my mind either. If it's a sequentially...

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Mikael Laséen, Carnegie Investment Bank AB, Research Division - Head of Software & Services and Financial Analyst [46]

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Slide 13.

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Henrik Tjärnström, Kindred Group plc - CEO [47]

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Sorry?

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Mikael Laséen, Carnegie Investment Bank AB, Research Division - Head of Software & Services and Financial Analyst [48]

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Slide 13.

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Henrik Tjärnström, Kindred Group plc - CEO [49]

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Yes. Yes. But the -- Slide 13. Yes. Yes, those ones. The -- they are not -- betting duties are sort of sideways on -- so that one is down, yes, yes. But it's the peak season, as I mentioned also, with the Swedish reregulation, but the Q1 is kind of higher also when it comes the top line. So that's largely the decrease on the betting duties.

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Mikael Laséen, Carnegie Investment Bank AB, Research Division - Head of Software & Services and Financial Analyst [50]

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Okay. And my final one is, well, the stock is down 20% now today and it seems like this was more in line with your sort of own internal expectations that it's an odd year and you didn't have World Cup this year, of course, and you have reregulations freedom. But in general terms of in total, what should we expect going forward? And are you pleased with this result?

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Henrik Tjärnström, Kindred Group plc - CEO [51]

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Of course, you won't be pleased when the numbers are down as much as they are and we had higher expectations internally but the -- that's what the numbers came out at, and I think that's the -- looking at the comparables year-on-year, when I said, World Cup and also now with Sweden reregulation, I think there is, in our opinion, the expectation was that the reregulation in Sweden is not the one-quarter event, it will take a few quarters or even years like we saw in Denmark before we're back to the same level of profitability. So I think that's something we'd take on board that we could have been perhaps even clearer in communicating that previously. And then we are continuing to invest in the business, as I mentioned, we're building the business for the long term rather than for the next quarter or so. So -- but of course we're not happy when we're down as much, and also coming in under expectations. And of course, we take that on board and focus a lot on the rest of the year. And that's what we are doing now, and as I said, for the rest of the year when it comes to Q3 and Q4, we expect the impact of the Swedish reregulation to tail off over time, and also as I said, the portfolio that we have across markets will help us as well to absorb that better and better over time, as I mentioned, especially into 2020, we have expectations that, that will be a relatively calm year from a reregulation point of view and that margins will gradually pick back up to where they used to be. So of course, we're not happy but I think we -- and we also taken on board that we could have been perhaps even clearer on the comps and the expectations from Sweden, but these are the numbers that we are, and I think it's also -- looking back at 2018, as I mentioned, it was a very, very strong year with big markets on dot com that was doing well and that's just the reality where we are today.

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Christian Hellman, Nordea Markets, Research Division - Director of Small and Mid Cap [52]

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I think we have a question further down the room.

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Lars-Ola Hellstrom, Pareto Securities, Research Division - Analyst [53]

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Lars-Ola Hellstrom from Pareto Securities. We can start with Sweden. You're saying that EBITDA is down GBP 9.2 million year-on-year. If we're looking on the tax figures from the tax authority, we get to, what is it, GBP 5 million, GBP 6 million. So the remaining part of the lower EBITDA, is that lower revenue? Or is it increased marketing? Can you give us some flavor there?

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Henrik Tjärnström, Kindred Group plc - CEO [54]

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It's a combination of those 2, but it's lower revenues, as I mentioned, that the market is now rather shrinking and also that's impacting us but it's is also the betting duties. So that's a combination.

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Lars-Ola Hellstrom, Pareto Securities, Research Division - Analyst [55]

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And the trend in Sweden we saw in Q1 with lower player values, et cetera. Is the same trends remaining in Q2? There has not been any recover at all?

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Henrik Tjärnström, Kindred Group plc - CEO [56]

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Yes, that's the consensus we draw from looking at our numbers is that the segment of players has been impacted, say, the most but as that segment is contributing to a larger part of the revenues and the income that has that impact that it's -- so we haven't seen much recovery. And to be honest, also when it's a low-activity quarter, that's sort of perhaps not so strange either from that point of view. But overall we're a bit surprised that the reduction, it's been as it is.

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Lars-Ola Hellstrom, Pareto Securities, Research Division - Analyst [57]

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And in Sweden, maybe you can give us some flavor here, because but I think Kindred payed too much tax in Q1 and now it's the right amount. So on the back of the lower bonus cost that you guided for in Q2, how much revenue has Sweden been growing sequentially just so we can get some flavor on that. Is it GBP 2 million, GBP 3 million, GBP 4 million?

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Henrik Tjärnström, Kindred Group plc - CEO [58]

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Yes, we haven't given that number in the report, and as a consequence, I can't talk about that number specifically, so...

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Lars-Ola Hellstrom, Pareto Securities, Research Division - Analyst [59]

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But has it been growth in Sweden sequentially from Q1 to Q2?

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Henrik Tjärnström, Kindred Group plc - CEO [60]

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Again, we haven't given that number, but again the Q1 is the highest activity quarter. And also, we had the intake of customers when we had this big uptake in bonuses in Q1. So yes, it has been growing but it's also that bonuses has come down. So now if we look over the first half year, bonuses are still higher than they were for the first half year of last year. But still sort of lower in Q2 than they were in Q2 last year. So we're following that trend that we talked about in connection with Q1, where we saw the -- where we expect the bonuses for the full year to come in lower for '19 than for the full year of '18.

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Lars-Ola Hellstrom, Pareto Securities, Research Division - Analyst [61]

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And if we look on other products in the Nordics, it's virtually flat sequentially. So a lower bonus effect can't be at play here or maybe it is and we have sequentially lower revenue in Norway on back of payment restrictions. Would that be a fair assumption that Norway is tricky?

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Henrik Tjärnström, Kindred Group plc - CEO [62]

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Yes. Yes. That is, as I mentioned, that is the case. And also in the combination with Sweden that we're seeing that, and also the World Cup effect. That's the case.

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Lars-Ola Hellstrom, Pareto Securities, Research Division - Analyst [63]

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And what to expect from Norway going forward?

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Henrik Tjärnström, Kindred Group plc - CEO [64]

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We have lot of efforts being put in to sort of improve the customer experience when it comes to the repayments and what we're doing across the market. So we have high hopes for the long term. And of course, we're also -- they're working mainly with also the ambition that it will be a reregulation coming also in Norway, which will be to the benefit of all stakeholders in society but that of course will take longer time to go. So that's more for the long term but short term, it's about improving the player experience as much as possible to give them a good solution.

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Lars-Ola Hellstrom, Pareto Securities, Research Division - Analyst [65]

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And a final question for me on Western Europe. First of all, we see that active players is down sequentially and also even year-on-year, I think. And you say that regulated revenue grew 41%. I guess, France is growing faster than that and we have some other markets. But if we look on the Western Europe figures in total, they are not up that much. So that must imply that the Netherlands is declining sequentially.

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Henrik Tjärnström, Kindred Group plc - CEO [66]

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We haven't given that number but that's a fair assumption.

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Lars-Ola Hellstrom, Pareto Securities, Research Division - Analyst [67]

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Yes. So the problem for us as analysts is, where are we? Should we expect that the business has stabilized at the Q3 level and do we expect it to grow in Q3, Q4? Or how should we view it?

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Henrik Tjärnström, Kindred Group plc - CEO [68]

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Yes, that's the -- that's our own expectation that of course over time, it will get back to growth and it has been growing over time and we expect that to be reinstated. As I said, in Western Europe, we are going fast in the U.K. and also in France, as you mentioned, and also in Belgium. So those markets are sort of compensating for that and the total is what you see there. Also in Germany, we are growing as well. So that is also helping albeit from very low level. So that is the expectation. So as we said, the numbers for Q2 is it's coming more both from top line and also from bottom line, from locally regulated markets, which of course is what we wanted to be for the long term as well. But of course, we also need to manage the transition between them.

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Christian Hellman, Nordea Markets, Research Division - Director of Small and Mid Cap [69]

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All right. Let's see, there is another question down here in the room.

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Mathias Lundberg, SEB, Research Division - Research Analyst [70]

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Mathias Lundberg by SEB. I have 2 questions. The first one relates to the early question from Laséen. I read a report that you have paid GBP 1.6 million related to fines in the U.K. Could that be part of the increased Q-on-Q in the administrative costs?

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Henrik Tjärnström, Kindred Group plc - CEO [71]

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No, that was already provided for in the P&L. So that's not impacting the quarter as such.

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Mathias Lundberg, SEB, Research Division - Research Analyst [72]

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Okay. And I'm a bit curious about general investments. You also write that you continue to invest in technology. Could you elaborate a bit on what kind of initiatives these are?

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Henrik Tjärnström, Kindred Group plc - CEO [73]

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Yes, of course it's is a broad range of initiatives on our proprietary technology platform that we are doing. And those are more around what we talked about -- and also in connection with our Capital Markets Day a couple of years ago about the kind of Kindred brain and the data abilities as a business but also, of course, to have a setup where -- as local and as fast as possible with our customers. But of course, also in overall kind of experience for the customers across the touch points that we have with the customers. So it's in -- it's really across the whole experience for the customers and also across the different brands that we operate that we have done that. And it's, first and foremost, an increase in staff especially within tech.

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Christian Hellman, Nordea Markets, Research Division - Director of Small and Mid Cap [74]

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Okay. I can, yes, take a final one on admin here as well. So just to be clear here, GBP 55 million in administrative costs. Is that a level from which to grow going forward? It's nothing type of EU cost here?

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Henrik Tjärnström, Kindred Group plc - CEO [75]

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No, this is the sort of level that we have when we -- when we're looking forward and also logically over time, it will rather grow from here. But of course, now we have reworked the organization during the second of last year and into this year and to really sort of improve the delivery on -- towards the customer value. And those costs, of course, coming before we seek and reap the benefits but we now built the organization to sort of scale for foreseeable future, and of course that comes with an initial kind of cost that we've already taken up.

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Christian Hellman, Nordea Markets, Research Division - Director of Small and Mid Cap [76]

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Great. Let's see if there are any questions from the telephone conference.

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Operator [77]

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(Operator Instructions) First question is from Erik Moberg from ABG.

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Erik Moberg, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [78]

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Could you just help us understand a little bit better what you said grew underlying in Q2 if we strip out both World Cup and Soccer and sports book margins? And sort of what growth rates these regions were growing at?

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Henrik Tjärnström, Kindred Group plc - CEO [79]

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I haven't got that number in front of me even if it would be possible to get. So it's -- but you can -- what makes it difficult is, as we highlighted on the slides here it's GBP 27 million came from the World Cup last year, but as I mentioned, some of that would have come anyway. And of course, this year, we had women's World Cup, which was also an activity event. So it's really difficult to do sort of a clean like-for-like comparables just stripping one element out. Of course, you can just eliminate the GBP 27 million, but that will probably not be a fair comparison either.

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Erik Moberg, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [80]

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Okay. Fair enough. And in terms of the remainder of Q3, if we include the impact from soccer World Cup, do you think that you will grow underlying in the same rate? Or better or worse than your trading update? And what are the drivers behind this?

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Henrik Tjärnström, Kindred Group plc - CEO [81]

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Yes, it is -- we don't give forecast but it's also very difficult to do that or impossible because it will, in the end, depend largely about kind of the margins that we are able to generate as well for the remaining part of the quarter, which is over 2/3. So -- but of course for the long term, as we've seen here, when we are growing top line and we have expectations for that of course but we're also expecting, as I mentioned, the contribution to also pick up now when we're getting into the sort of the peak season. And, of course, also depending on the investments we are doing across the business for the second half of the year, which is yet to be done in ourselves.

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Erik Moberg, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [82]

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Got you. And just in terms of Q2 and Q3, once again, if we strip out the World Cup, what countries are behind the drag and revenues? I mean most of it probably already had been the numbers that Sweden is going to be down and also Netherlands to a extent. But how much of it -- how much is Netherlands down year-over-year? Because if we just looked at the number for -- excluding Sweden, regulated markets grew 19%. So it's clearly that it is some of the -- assumed to be regulated markets that are lagging behind. Could you just give us some more flavor on that?

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Henrik Tjärnström, Kindred Group plc - CEO [83]

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Yes, for competitive reasons, we have chosen not to give the breakdown per market. And I appreciate that that's kind of making the analysis a bit more difficult but we have made that call to do that, and as a consequence, we haven't put any numbers into the report. We are restricted to also communicate regarding specific markets. But as I said, overall, we're expecting to -- sort of the growth to come back, as especially mentioned, about Netherlands, and as mentioned, regarding when customers are getting more accustomed to the alternative solutions. And then it's more question about the -- sort of the cost impact for us as a business when those solutions come at a higher cost than the ideal solution. But overall we're expecting to, and we're working very hard to sort of get any market that is at least short term, not growing as fast to pick up and grow as fast as possible but in the end of day it also depends on the margin.

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Erik Moberg, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [84]

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Okay. But in terms of Netherlands, because I assume that is one of the reasons -- one of the major reasons why the drag and to a certain extent [no way] too I guess, but did you too do see a more severe decline than anticipated if we exclude for the World Cup? Obviously World Cup had an impact but underlying. And what is the likely scenario for the underlying performance for Netherlands both in -- for both Q3 and Q4? Do you expect it to accelerate from current levels or should we expect it to remain flattish or even deaccelerate?

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Henrik Tjärnström, Kindred Group plc - CEO [85]

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We expect all markets to grow over time and rather accelerate, if they're going sideways for the time. So that's the base case that we're working very actively with to ensure that that's happening for any market, including the Netherlands.

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Erik Moberg, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [86]

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Okay. And obviously Netherlands hasn't sort of been a very profitable market, the drop through is pretty high there. But if we're looking at Q2 numbers here, sort of, are there any other costs then cost to sort of payment processors that could have like affected the margins for Netherlands for this quarter or is that the main thing?

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Henrik Tjärnström, Kindred Group plc - CEO [87]

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That's the main thing, yes.

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Erik Moberg, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [88]

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Okay. And just in terms of Netherlands again. When we anticipate growth in Netherlands, we think on a year-over-year basis. Do you think it's more of a scenario that you should sort of waiting for 2020 or how should we look at that?

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Henrik Tjärnström, Kindred Group plc - CEO [89]

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The -- sorry. The growth, you said, or...

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Erik Moberg, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [90]

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Yes, in Netherland. When can we expect it to come back to -- go back to growth if we look at it in a year-over-year basis?

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Henrik Tjärnström, Kindred Group plc - CEO [91]

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Yes. Again, we haven't given anything on that but we are working very actively and the team is working to make sure that it happens as soon as possible within the current framework of top rate.

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Erik Moberg, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [92]

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Yes. Okay. And for marketing cost, as you mentioned before it was around 29% for the first half year. Should we expect it to help revenues in H2? And in terms of the absolute levels of marketing, should we expect this to be at similar levels for the remainder of the year? Thus resulting in the rates to come down or should we expect the marketing in absolute terms to increase throughout the year?

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Henrik Tjärnström, Kindred Group plc - CEO [93]

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So as I said on the previous question here is we're expecting sort of the -- we came in now 29% for Q2 and around 30% for Q1 and then Q3 is probably around the same level or slightly lower, and then Q4 is normally coming in below the kind of the yearly outcome in a sense. So that's what we're expecting right now.

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Erik Moberg, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [94]

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Okay. So in absolute terms, it will increase in Q3 then I assume?

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Henrik Tjärnström, Kindred Group plc - CEO [95]

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Yes. That's likely.

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Erik Moberg, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [96]

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All right. And looking at the other regions Western Europe, France, U.K. and Belgium, should we expect it to accelerate or deaccelerate versus Q2, if you're looking into the second half of the year? And just from looking at the trading update instead of those regions might have started the quarter a little bit weaker as well?

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Henrik Tjärnström, Kindred Group plc - CEO [97]

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It is the expectation that those markets will now -- when the sports season kick up in Ernest that they will pick up and then we'll -- then we continue to grow on a good level that they were doing or ideally if they can grow even faster. And as, of course, the ambition we have to sort of try to maximize growth within this kind of sustainability framework.

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Erik Moberg, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [98]

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Got you. And just one last question in terms of the U.S., and I apologize if you answered this question earlier already. But in terms of the cost base in the U.S. for Q2 now you had a loss of GBP 1.6 million, approximately from the U.S., will this be the same? Or should we expect it to go up to GBP 2 million or GBP 3 million for the coming quarter? Or what's sort of the base level here in terms of OpEx in the U.S.?

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Henrik Tjärnström, Kindred Group plc - CEO [99]

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Yes. We are -- as I said, we haven't really started pushing in earnest yet and as the brand is realistically or unknown in those states that we're pushing, the returns will be coming later on. So the logical expectation is that the negative contribution will rather be a bit higher now for sort of Q3 and then into Q4 but it, of course, also depends on the outcome of -- which we don't know about right now. So the investments will go up but -- and then it's depending on what kind of, of course, revenues we can generate in that period of time.

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Christian Hellman, Nordea Markets, Research Division - Director of Small and Mid Cap [100]

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All right. I think that -- if there are no further questions from the telephone conference.

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Operator [101]

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No. There are no further questions registered. Sorry, we do just have registered a follow-up from Erik Moberg, just as I was saying that there were no more. So I'll just open up the line again.

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Erik Moberg, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [102]

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Just to clarify, again, in terms of the marketing. Previously you said that marketing will be coming down in the region but how much should we sort of expect it to come up in absolute terms from Q2 to Q3?

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Henrik Tjärnström, Kindred Group plc - CEO [103]

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We are not giving anything on absolute terms as such. It's -- we're talking about sort of guidance on sort of percentage of reinvestment. So you'll have to do with that.

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Operator [104]

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Okay. So now there is no more questions registered. So back to the speakers. Go ahead.

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Christian Hellman, Nordea Markets, Research Division - Director of Small and Mid Cap [105]

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Thank you. That sums up the Q&A session. So I'll leave the word to you, Henrik, for any final remarks.

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Henrik Tjärnström, Kindred Group plc - CEO [106]

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Thank you very much, Christian. And thank you very much for attending here on site, but also the ones calling in on the conference. And looking forward to see you again later on in the year in connection with the Q3 report. Thank you very much.