Annual report and accounts 2018 Kambi Group plc Corporate governance Annual report and accounts 2018 Kambi Group plc Corporate governance Corporate governance Kambi recognises the importance and value of good corporate governance. 36 37 Annual report and accounts 2018 Kambi Group plc Corporate governance 250 Share230 performance 210 190 170 150 The closing price on the first The highest closing price during the year trading day of the year, was SEK253.50, on 31 October. The 130 lowest closing price during 2018 was 2 January 2018, was SEK95.50. SEK92.00 on 3 January. The average 110 daily volume traded during 2018 was The closing price on the last 133,552 shares and the average closing trading90 day of the year, 28 share price was SEK156.71. Kambi Group December 2018, was SEK190.00 plc is listed on First North at Nasdaq Stockholm with the ticker code ‘KAMBI’ with 70a market capitalisation of and ISIN code: MT0000780107. For €559 million.Jan Feb Mar AprinformationMay on analystsJun coveringJul the Aug Sep Oct Nov Dec Kambi stock, please see the company website www.kambi.com. Shares traded 2018 Total volume (thousands) 1,600 1,400 1,200 1,000 800 600 400 200 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: NASDAQ 38 Annual report and accounts 2018 Kambi Group plc Corporate governance Share price development 2018 Closing price (SEK) 250 230 210 190 170 150 130 110 90 70 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: NASDAQ Shareholders on 31 December 2018 Shareholder Number of shares % of total Veralda Investment Ltd 7,336,900 24.31% Swedbank Robur Fonder 2,502,414 8.29% 1,600Bodenholm Master 2,139,360 7.09% Keel Capital 1,806,074 5.98% 1,400 Second Swedish National Pension Fund 1,406,333 4.66% 1,200 Total 5 largest shareholders 15,191,081 50.33% 1,000Total other shareholders 14,989,116 49.67% 800Total 30,180,197 100.00% 600 400 200 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 39 Annual report and accounts 2018 Kambi Group plc Corporate governance Risk factors Set out here are some of Regulatory and political Sport-specific the business and industry- environment intellectual property related risk factors, we have The Group’s core business is strictly In certain jurisdictions, regulators have identified as having potential regulated by law in the markets begun to impose charges on licence consequences for Kambi’s where Kambi and our clients operate. holders for the right to offer odds, access future development. This is Accordingly, political decisions, court data and use trademarks on certain not an exhaustive list, and the rulings or changes in laws in the countries sports. Any future changes in these where Kambi or our operators have charges could impact Kambi’s financial below factors are not arranged licences or commercial interests could position. in order of importance, or have a material adverse effect on our potential economic impact. business and operations. Regulatory Dependency on key operators changes can also have a positive impact, such as enabling us to access a market A majority of Kambi’s revenue is currently that becomes regulated or re-regulated. generated from a few large operators. The loss of business with any, or some Risks related to IT of these, could have a material adverse effect on our business. Kambi’s business depends on our IT systems. System failures and other Underlying performance events that affect operations could have a material adverse effect on our business of operators and results. We mitigate this risk by Kambi’s financial performance depends using continuous monitoring to detect on the underlying performance of any problems as early as possible. All our operators. This is a result of our critical servers are duplicated, so that if business model, in which we receive a one server fails, another will immediately percentage-based commission on the take over. We carry out detailed analysis operators’ net gaming revenue. A decline following any downtime to ensure that in our operators’ financial performance the underlying reason for the outage is could have a material effect on our own understood and rectified. financial position. Operator trading margins can vary significantly from one Match fixing period to the next, depending on the outcome of sporting events. Match fixing is defined as ‘the manipulation of an event where the participants seek to fix the outcome Competition and price pressure for financial gain’. Kambi has internal Kambi’s growth depends on our ability systems and alerts in place to highlight to develop and sell competitive products any indications of match fixing and and services. As the market matures, so reduce the financial impact of this increased competition and price risk. We also collaborate with industry pressures may materialise. Our ambition watchdogs and regulators. If match fixing is to continue striving to offer the best were to lead to changes in regulatory B2B Sportsbook in the market and to environments, this could have an impact build further on our customer portfolio, on the results of operators and therefore with successful and loyal operators. our own financial performance. 40 Annual report and accounts 2018 Kambi Group plc Corporate governance Foreign currency risk to the added cost of gaming-related taxes, which we share with operators. In Two forms of foreign exchange risks exist: managing our taxation affairs, including transaction risks and translation risks. estimating the amounts of taxation due, When our operators handle transactions we rely on the exercise of judgment in a currency other than the Euro, concerning our understanding of and currency movements can have an impact compliance with those laws, assisted by on our revenues. Transaction risks occur professional advice. in conjunction with purchases and sales of products and services that are made in Risk related to convertible bond currencies other than the local currency of the company involved. Translation risks In 2014, Kambi Group plc issued a €7.5 occurs when the income statements and million convertible bond to a wholly owned balance sheets of foreign subsidiaries subsidiary of Kindred Group plc. This are converted into Euros. Changes in the agreement was extended in July 2018, until valuation of Euros, in relation to other December 2023. According to the terms currencies, can therefore have positive of the convertible bond, the Company is and negative effects on the Group’s profit obliged to ensure that certain events listed and financial position. To some degree, we in the agreement do not take place, unless manage currency risk by holding funds on with the prior consent of the lender. In case short-term deposit, in the currencies of of a conversion, Kindred Group plc would our principal cash outflows. obtain a controlling influence over Kambi, consequently having the power to control Tax risks the outcome of most matters to be decided by vote at a shareholders’ meeting. Kambi conducts its business in accordance with its interpretation and understanding of the applicable tax laws and treaties, case law, and the requirements of relevant tax authorities in the countries where we operate. Changes to regulatory, legislative and fiscal regimes in key markets could have an adverse effect on our results due 41 Annual report and accounts 2018 Kambi Group plc Corporate governance Board Senior of directors executives Lars Stugemo, Chairman Cecilia Wachtmeister Kristian Nylén, Born: 1961 Born: 1966 Chief Executive Officer Education: MSc. in Electronics Education: MSc. in Industrial Born: 1970 Engineering from KTH Engineering and Management from the Nationality: Swedish Institute of Technology in Linköping, Nationality: Swedish Employed: 2010 Sweden Elected: 2014 Education: BSc. in Business Administration, Nationality: Swedish Lars is CEO, President and co-founder of Mathematics and Statistics from the HiQ International, an IT and management Elected: 2017 University of Karlstad consultancy firm founded in 1995 and Cecilia was previously Vice Kristian joined Unibet in 2000 and within listed on NASDAQ OMX Stockholm. Lars President, Group Head of Sourcing three years had assumed responsibility has been a member of IVA (Kungliga and Procurement at Ericsson AB. for Unibet’s entire Sportsbook operation vetenskapsakademien) and VI since 2013. She joined Ericsson in 1991 and has and joined the Group’s management team. Holdings in Kambi Group plc: 28,180 shares since then held various international Kristian co-founded Kambi in 2010 and as positions in the company, with CEO leads on all commercial aspects of experience of long sales cycles in B2B. the business. Anders Ström Holdings in Kambi Group plc: Holdings in Kambi Group plc: 465,000 Born: 1970 6,080 shares and 46,000 options shares and 322,500 options Education: Studies in Mathematics, Statistics and Economics at Karlstad Marlene Forsell University David Kenyon, Born: 1976 Nationality: Swedish Chief Financial Officer Education: MSc. in Business Elected: 2014 Born: 1975 Administration and Economics from Nationality: British Anders is founder of the sports-information Stockholm School of Economics company Trav-och Sporttjänsten in 1993. Employed: 2010 Nationality: Swedish He was founder of Kindred Group plc in Education: MA in Modern Languages Elected: 2018 1997, where he held various positions from Oxford University including Chief Executive Officer and Marlene recently served as Chief Having qualified at KPMG, David joined Chairman of the Board. Anders was co- Financial Officer of Swedish Match, Unibet in 2002 as Group Financial founder of Kambi Sports Solutions in 2010, a global fast-moving consumer goods Controller, working on Unibet’s NASDAQ Chairman of the Advisory Board of Kambi company within tobacco. Prior to OMX Stockholm listing. He then spent two until May 2014 and then a Board member becoming CFO, Marlene held various years at the Capital Pub Company as CFO, since Kambi’s listing in 2014.