Pollard Banknote Limited (PBL) Earnings Call Transcript & Summary

Hello, and welcome to the Annual Meeting of Shareholders of Pollard Banknote Limited. Please note, today's meeting is being recorded. It is now my pleasure to turn today's meeting over to Gordon Pollard, the Chair of the Board.

Good morning, ladies and gentlemen. My name is Gordon Pollard. I am the Chair of the Board of Directors of Pollard Banknote Limited. On behalf of the Board of Directors, I am pleased to welcome each of you to the Annual Meeting of Shareholders. We have the following matters of business to conduct today: the presentation of the financial statements; the election of 6 directors; and the reappointment of KPMG LLP as the corporation's auditors. Immediately following the formal business of this meeting, John Pollard and Doug Pollard, Co-Chief Executive Officers of Pollard Banknote, will provide a report on the operations and respond to any questions that you may have. Questions may be posed to our co-CEOs by accessing the Q&A tab, typing your name and your question into the box at the bottom of your screen and pressing the Send button. As this meeting is being held virtually via live audio webcast, voting on all matters will be conducted by electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on each business item after the presentation of all business items. When you are asked to vote, you will receive a message on the virtual interface, requesting you to register your votes. You will only have a certain amount of time to cast your votes once the polls are open. As a reminder, only registered shareholders or their proxies are entitled to take part in and vote at this meeting. All participants, however, are welcome to pose questions to our co-CEOs at the end of the meeting. On behalf of the Board, I wish to express thanks to those shareholders who have submitted their proxies in advance. To make the best use of our time, certain shareholders have been asked to move and second the proposals, which are called for in the notice of the meeting. And having dealt with those procedural matters, we will now proceed with the formal portion of today's meeting. The meeting will now come to order, and with your approval, I will ask Riva Richard, General Counsel and Corporate Secretary of Pollard Banknote, to act as Secretary of the meeting and Computershare Investor Services Inc., through its representatives, to act as scrutineers of the meeting. The notice calling the annual meeting and the accompanying form of proxy and Management Information Circular were mailed to all shareholders on April 17, 2023. This was confirmed by an affidavit from the corporation's transfer agent. I direct that a copy of the notice and the affidavit be kept with the records of the meeting, and therefore, it will not be necessary to read the notice of the meeting. In accordance with applicable law and as described in the management information circular, the directors determined that to be valid, proxies were to be deposited with the transfer agent not later than 11:00 a.m. Winnipeg time on May 10, 2023. As of that date and time, the transfer agent recorded proxies representing 85.13% of the voting shares. The shares of those present or represented by proxy and who are entitled to vote at this meeting are therefore, in excess of quorum requirements. That being so, I now declare that the meeting is regularly called and properly constituted for the transaction of business. Before we start with the business of this meeting, there are a couple of matters I would like to address. First, our longest serving director, Dr. Jerry Gray, is retiring from our Board after this meeting. Jerry has served almost 2 decades as a director at Pollard Banknote. He was the first director recruited by our father when Pollard Banknote decided to go public, and he has been an extremely valuable adviser to the company and the Pollard family for the past 20 years. Jerry tried to retire once before, but we convinced him to unretire a year ago to fill a vacancy. He has told us this retirement is permanent. So a heartfelt thank you to Jerry Gray from Pollard Banknote and the Pollard family for your many years of sage advice. Secondly, I would like to welcome Carmele Peter to the Board of Directors. Carmele is the President of Exchange Income Corp., which she joined 10 years ago after practicing law for more than 20 years at Aikins MacAulay. She brings a wealth of experience in managing a diverse public company and directing the integration of the companies acquired by EIC. We were very pleased when Carmele agreed to join our Board, and believe Pollard Banknote will really benefit from having her advice and direction. Welcome, Carmele. As the first item of business on the agenda for today's meeting, I will ask the secretary to table the audited financial statements of Pollard Banknote Limited, together with the auditor's report thereon and the report to the shareholders contained in the annual report previously sent to you. Copies of such documents are available on our corporate website and through SEDAR. And accordingly, I don't consider it necessary to read the report to the meeting. We now have a few resolutions to present, beginning with the election of directors. The number of directors to be elected at this meeting and to hold office until the next Annual Meeting of Shareholders has been fixed at 6. I declare the meeting open for nominations.

Mr. Chair, I nominate the following persons for elections as directors of Pollard Banknote Limited: Dave Brown; Lee Meagher; Carmele Peter; Gordon Pollard; John Pollard; Douglas Pollard, and move that they be elected directors to hold office until the next annual election of directors or until their successors are duly elected or appointed.

Thank you, Mr. Rose. Are there any further nominations? As there are no further nominations, I will ask Jennifer Westbury to move that nominations be closed.

I move that the nominations be closed.

I second the motion.

Thank you. The next item of business is the reappointment of auditors and the authorization of the directors to fix their remuneration. The Audit Committee of the Board of Directors has approved, subject to shareholder confirmation, the appointment of KPMG LLP as the auditors of the company. I believe Lee Meagher has a motion in this regard.

I move that the accounting firm of KPMG LLP be appointed auditors of Pollard Banknote Limited to hold office until the next Annual Meeting of Shareholders or until their successors are appointed and that the directors be authorized to fix their remuneration.

I second the motion.

Thank you, Ms. Westbury. As indicated, voting today will be conducted by electronic ballot. I will now ask that Computershare please open the balloting to registered holders and appointed proxy holders. All registered holders and appointed -- and proxy holders who have properly logged in with their control numbers or access code are asked to please register their votes by selecting for or against next to the name of each director and for or withhold next to the resolution appointing KPMG LLP as the company's auditors. Once the electronic balloting closes, the voting page will disappear, your votes will automatically -- will be automatically submitted and the scrutineers will compile an interim report. Now while we wait for the results of the votes, I would like to call upon John Pollard and Doug Pollard, Co-Chief Executive Officers of Pollard Banknote, to briefly report on their operations and current activity of the company. Following their presentation, if there are any general questions regarding the presentation or any other questions regarding Pollard Banknote, which you would like to raise, we would be happy to address them for you. John and Doug?

Thank you, Mr. Chair. This is Doug Pollard. I'll start off. I would just like to remind listeners that certain matters discussed in today's conference call or answers that may be given to questions asked could constitute forward-looking statements that are subject to risks and uncertainties related to Pollard's future financial or business performance. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that affect results are detailed in Pollard's annual information form and other periodic filings and registration statements. You can access these documents at SEDAR's database found at sedar.com, and a more detailed summary of the issues surrounding forward-looking statements is documented on this second slide in the accompanying investor deck, which will be available on our website. Our agenda today, no surprises, we're going to have some financial highlights. We'll break down a little bit by division, 2022 annual results, and we'll get a look at the 2023 first quarter. Some of the highlights, you can see in the first 2 rows across the top, continuing strong sales growth, reflecting very nice ongoing demand for all of our products across all categories. The third line, adjusted EBITDA is actually down slightly from 2021. Actually, we look at that as not too bad when you consider the inflation shock that we experienced in our core product of retail printed instant tickets, which we'll talk a little bit more about later. That margin pressure, that really got squeezed by the increase in input costs. Thankfully, we are seeing some really good progress being made on repricing some of those contracts as they come up for renewal and rebid, and we expect to see that kicking in as we get further into 2023, that's the benefit of that. And the last line, I guess I'll point out is our net debt is up slightly. A lot of that is working capital. It also reflects some of the other acquisition expenses, but still very low leverage considering the cash flow in the business, and we'll highlight to you those specifics. Jumping ahead. Just a reminder of our strategy to be the partner of choice. We want to see ourselves helping lotteries grow and raise more money for the good causes they support. And we really focus in on these 3 areas, which you'll see, outstanding games, retail excellence and digital innovation. When I look at retail lottery, I start out there. You can see, and this is a chart we've presented before. It shows you 10-year growth trends, both for worldwide sales of instant scratch tickets, and for North America, they're in green. Both of those showing good, strong long-term growth. What you notice is that in 2022, that actually dropped off a little bit, and that somewhat reflects a comparison to a very strong 2021. Remember that during 2021, you had a couple of things happening. You had government stimulus checks in many nations, particularly in the U.S. And you also had ongoing closures of other forms of gaming casinos and such. So really, we encourage you to look at 2022 compared more to 2019 and you can see a nice steady growth trend that's been continuing. We look forward, one of the first data points that we get is from North America. And you can see that in 2023, although it is early, the year-to-date, we're returning to growth in instant ticket sales, which is also encouraging. I'd like to point this out because I think it highlights both an opportunity and a threat for us. You can see it in that pie chart on the left, that nearly 70% of our instant ticket sales in the U.S. are sold through convenience and gas station convenience stores. And that's been a very resilient channel, notwithstanding the changes in that space. But you can see grocery is an area where we're still underrepresented by retail type. And on the right, you can see the penetration where instant ticket sales as a percentage of overall grocery is still fairly low. And so we are -- that's an area that we're really focusing on and the industry is very interested in as well. One of the products that we're really excited about that we've developed is a product called easyVEND. You can kind of see it here, it's meant to be able to bring instant ticket sales in lane in a multilane grocery environment. And that has a couple of real benefits. For the player, it dramatically increases convenience, which we know is a big factor in play. And for retail, we provided an automated solution, which gives them the security to prevent shrinkage risk, and the integration there to make it easy for them to manage and low administratively. So lots of excitement about that. I'd also highlight one of those pillars that we had of our strategy of retail excellence, Schafer Retail Solutions is an area that we've expanded into. I would say it's not enough just to have attractive tickets that we produce, you have to merchandise them effectively, and Schafer Retail Solutions provides that. So you can see some of these great merchandising solutions, digital menu boards on the left, lightered displays. The blue one in the bottom right is what the easyVEND would look like under the counter to the retailer. So we're continuing to do that. I remind you that Schafer is the industry leader in this merchandising space, which is exciting for us. So when we make advances in this space, not only do we grow Pollard Banknote sales, but we help grow the overall lottery industry. Talk about iLottery for a second. If I start out, our 2022 continued to be a very strong year within our NeoPollard joint venture. You can see here that we are very much the market leader. This is in the U.S., we do 68% of all -- iLottery wagers go through the NeoPollard operations in Virginia, Michigan, New Hampshire and North Carolina. We have another operation in Alberta in Canada, but that doesn't show up here. You can see in the graph in this chart just how much we outperform the other markets on a per capita sales basis. North Carolina, I'll highlight, is a bit lower, but that's because it is lotto only, and we are hoping that, that will convert soon to also sell instants. So that's been a good ongoing trend there. You can see when you look at the operations, that growth is continuing. If I look at the combined revenues and the combined income '21 to '22, showing really nice steady growth. You can also see in the column most to the right, you can see Q1 has that growth continuing, both for Michigan iLottery and for the NeoPollard joint venture and showing up in the combined income. A lot of that is driven by very high jackpot through the first quarter. Unfortunately, as we stand today, Powerball is down to $125 million, Mega Millions is $99 million. So there's a little bit of a challenge, but jackpots will be back, and there is nice underlying steady growth there in any case. I'd like to remind you that we have -- our joint venture, while it's been focused on North America, our Pollard Digital Solutions group has acquired our own gaming platform, which we've been putting significant resources into enhancing that significantly in the last couple of years. And we will deploy that platform around the world, including potentially North America, in jurisdictions where the NPI joint venture partners decide to bid separately. We've already been showing that to some customers, and the early feedback has been tremendously positive. We believe that we have the most omnichannel platform available in the market today, both for retail and online sales. In addition, our Power Digital Solutions group have developed our own game studio to produce eInstants, which are an important piece of the iLottery pie. We started to produce about 2 games per month. Some of those are already deployed in Europe, and our next steps will be to begin deploying those throughout North America. So a very exciting chapter for us there. Within that digital transformation and our digital strategy, one of the other areas that we like to focus on is excellence in the user experience, both for desktop users and mobile app users. And the industry leader in this space is mkodo, a company we acquired a couple of years ago. And they supply lotteries such as British Columbia Lottery, Ontario, Western Canada, the Irish lottery, but also casinos and sort of iGaming casinos, I should say, White Hat Gaming, [ Rank ], some of those areas. And they've also developed some interesting software products like GeoLocs, which is a software product to confirm that a player is where they're geographically permitted to be in order to be gaming. So some exciting work in mkodo has been producing some nice results financially as well. There are other products within our digital space, which we could go into, but we'll save it for another day, areas like loyalty that are important to the one-to-one marketing, which we'll be focusing on as we move forward. The other very important part of our business has had a great year is our charitable gaming space. And for that, I'm going to turn it over to John Pollard, our other co-CEO.

Thank you, Doug. So charitable gaming did have another really strong year in 2022 coming out of the -- following the strong year in 2021 we had coming out of the COVID shutdowns in 2020. So it just made a tremendous recovery. The reminder that our charitable gaming group is comprised of American Games, International Gamco that primarily produce the printed products for us, pull-tabs and bingo paper; and Diamond Game and our tuck-in acquisition of Compliant Gaming, which are our electronic pull-tab or eGaming system suppliers. And so if we flip to the next chart and we look at just the sales trends, we see really strong growth coming in from that division. From pre-COVID 2019, we were up almost 30%. And we were actually constrained here by our sort of inability to -- during 2022, to ramp up production of our paper-printed products even higher just due to the difficulty as many manufacturers faced in 2022 of expanding our staffing, primarily down in our Omaha, in Council Bluffs base there. So we could have grown even faster than what's on this chart. We have the demand for it, but it was a difficult environment to expand our staff. We are having more success in that regard. It's Interesting just in the last few months. So we do expect continued growth in 2023 as we're able to ramp up because there's still unmet demand currently for our printed products in the charitable gaming space. So 2023 is looking like it should be a strong year and continue that growth trend. Just an interesting chart that we show to underline there. Minnesota is one of the largest charitable gaming markets in the United States and our largest charitable gaming market. And it's interesting because it has both a strong presence of the eGaming product as well as the paper-printed pull tabs. And so this chart really just shows, of course, on the light blue line in the bottom, the tremendous growth over the last years from the electronic product, which was starting from nearly nothing in Minnesota just a few years ago, of course. But the interesting part about this is showing on the orange-colored line, I guess it is, that paper pull tabs are still growing alongside of it. So those 2 products can coexist, much like we would talk about on the instant ticket side where the iLottery products are not sort of stealing customers away from printed, traditional scratch-off, instant tickets. So just the Minnesota data confirms the health of both of those parts of the charitable gaming market. I'll flip now to talk in a little more detail about the 2022 annual results. We have a highlights page here that just has a little bit more than that first highlights page that Doug talked about earlier. So I don't have to go into too much more detail on it. I mean the big stories in 2022 were strong sales growth and strong demand for all of our products. So again, you can see that combined sales number jumping up really nicely from $537 million to $499 million. And it could have been higher if we weren't really constrained on hiring in our charitable gaming side and in the early part of 2022 in the instant ticket side as well. Of course, the third line on this slide is really the disappointing part of 2022, which is you can see that decline in gross margin of $9 million, notwithstanding the strong sales growth. And that is sort of the tale of 2 cities within there. Within the charitable side and the iLottery side, strong growth in gross margins, but more than overcome by the dramatic increase in our input costs on instant tickets, which really significantly reduced our gross margin here and wiped out the gains in the charitable and iLottery side. So disappointment there. We'll talk a bit more about that coming up. But the other line you have to talk about here is the NeoPollard joint venture profit line. Just to remind people, our Michigan sales are up in the top line in sales but the JV goes through a separate line in our financials. In the combined lineup talk, we showed them all in sales, but the JV continues to produce tremendously strong results, our net income there growing from $12 million to $23 million. That other income line, by the way, of -- or other income expense line, negative $4 million this year, $5 million last year is primarily the earn-out payments to the compliant vendors. Again, the compliant results continue to be so strong. Those folks earn some earn-out payments in '21 and '22, which are fundamentally over by the early part of 2023. So the EBITDA line, as Doug talked about earlier, is down by $4 million, $84 million and down to only $80 million this year. Again, strong growth in all areas of the business more than wiped out by the input cost problems on instant tickets. And so let's just look a little more detail. I think -- next slide just shows the long history of our sales growth. I won't get into that too much more, but obviously, that's still the good -- great news story that our sales are growing and the markets we're in are all continuing to grow. So there's no change in that overall story there. And then the next slide is the history of our EBITDA where we'll dig a little bit to why that EBITDA was down, breaking an awfully nice trend we had of growing EBITDA for quite a long time there. So on the next slide, we see the -- a little more detail of what happened in sales. You can see an awful lot of green on this page because there's an awful lot of good news on the sales side for our business where essentially all areas we're growing except for that one red spot, which was the problem area in our business was scratch-off tickets or instant tickets. We actually had essentially no growth, a slight decline on our average selling price, $4 million. Of course, in percentage terms, that's only just over 1% of our sales in that area because it's a big part of our sales. So it's -- it's not a big change, but it still shows up. I'll remind people now that the big part of the story of our business going forward, is, as Doug alluded to, is our ongoing efforts that started over a year ago to reprice our instant ticket contracts in terms of their selling prices to our customers to recover those input costs. We've had great success already in the last 12 months at repricing those contracts as they come up for renewal. The market is bearing significant increases that should recover fully those input cost increases, but it will take 3 to 4 years at least to turn all those contracts over, but we'll start seeing the benefit of that in 2023. We've probably repriced a good chunk of our contracts already but we haven't seen those actual prices kicking in yet, but we'll see it in 2023. So that little red spot on this chart will hopefully turn to green in 2023. Drilling in a little bit more to the EBITDA side of the business. What you can see here, of course, is the strong green bar from iLottery revenue contributing so strongly to our EBITDA growth. And then the next bar over that negative $7 million from lower gross margins, we don't break out separately instant tickets from the charitable. So really, there's 2 stories within that negative $7 million EBITDA effect there. There's a significant positive number from charitable gaming that's much more than offset by a very significant lower number from instant tickets. Maybe going forward, we'll have to give out a little breakout disclosure over there, but for now, we still don't show those separate numbers. But that really is all about instant tickets being significantly negative and within their positive numbers within charitable gaming. Our SG&A was up a little bit just reflecting the continuing growth of the business. And we did have some [ cues ] of the COVID subsidy numbers back in 2021 that were not repeated in 2022, which was -- contributed a little bit to the negative there as well. So that's sort of the 2022 story on EBITDA. Again, going forward into 2023, we hopefully will see the impact of the repricing of our selling prices contributing to better performance in some tickets. Just quickly looking at the first quarter of 2023 that we just released yesterday. On the highlights page, you can see, again, the strong sales growth continues. That is definitely the happy part of our business still. And so really nice strong sales growth again in Q1 of this year over last year. But exactly the same story fundamentally in Q1 here as was the story in 2022. On the third line, you see the gross margin reduction of more than $4 million, again, essentially entirely related to that dramatic rise of input costs, where all of our paper, ink packaging, freight, those costs were all up in the range of 30-odd percent in 2022 over the prior years. And so that was continuing in Q1 of 2023. I will say on the good news side of those input costs is we have seen no further announcements of increases in input costs for, I'd say, over 6 months now. That doesn't mean some previously announced increases weren't still kicking in, in the latter part of 2022, but those were announced prior to that. It's been more than 6 months now since any announced further increases. So we are seeing that huge flood of increases that started in late 2021 and the first half of 2022 has stopped and maybe even seeing little bits of a glimmer of hope that some of those things may come down a little bit. Some of our freight costs for international shipping have come down a little bit and maybe seeing a little glimmer that there could be some softening in paper and ink prices. So we'll hold out some hope for that in 2023. Just lastly on this page. Of course, you see the nice jump again in the NeoPollard joint venture income as we had some really great results in Q1 for the iLottery part of our business. So unfortunately, adjusted EBITDA was down just fractionally in Q1 of this year over Q1 of last year. Again, the story is really all those input costs on scratch tickets or instant tickets. Although we did also, as we talked about in our more detailed disclosures that we released yesterday, we had a little bit of a weaker mix as well in our sales mix in instant tickets in Q1 that hopefully will be just timing and -- sorry, it is just timing, to be clear on that, and we'll see improvement on that in the future quarters of 2023. So just one more slide really with much detail, which is the detailed changes in EBITDA in Q1. So again, that negative $3.6 million number in red is the combination of instant tickets and charitable gaming. Again, just like I commented in 2022 -- sorry, that is a positive number for charitable gaming, which is offset by a more -- a bigger negative number for instant tickets, netting out to that $3.6 million decline in gross margins there. We did have a little bit higher SG&A again in the quarter, just reflecting the continuing growth in our business. And then, of course, you see the large $4.7 million positive number from iLottery with another really strong quarter. So again, the sort of takeaway for looking forward here is that we should start to gradually now see a reversal of that negative gross margin trend from scratch tickets that hurt us so badly in 2022 and first quarter of 2023 as we will see in future quarters now some benefit of the higher selling prices that we've negotiated kicking in, combined with no further increases in input costs. So there should be good news to be reporting in future quarters on the instant ticket side. Lastly, I won't spend too much time on this, Doug alluded to earlier. With the strong cash flow from our business, notwithstanding that our EBITDA was not as strong as we'd like it in 2022, we still generated positive cash for the business, which paid for the earnout costs and the jump in working capital that was really just caused by the fact that all our input costs went up so much that to carry the same amount of inventory just cost us a lot more in dollar terms. So we anticipate continuing strong cash flow in 2023. We don't have any big outflows anticipated for things like unusual capital expenditures or earn-out payments. So we should have good cash flow in 2023. So looking forward to better results coming up in future quarters, and we thank our shareholders for their -- their patience and understanding with the results of the last few quarters that were not as good as we would like because of the very unusual inflation circumstances. And looking forward to continuing growth in our business and improving results going forward. Doug, I think that is probably all we really need to say unless you have any other comments that you want to make about the year and the first quarter.

No, I think we can turn it back to the Chair.

Okay. Thank you very much, Doug and John, for that excellent presentation. The meeting is now open for questions. As a reminder, questions may be posed to our co-CEOs by accessing the Q&A tab, typing your name and your question into the box at the bottom of your screen and pressing the Send button. And we'll wait for a moment or so to see if we have any questions showing up. We're still waiting. We're not going to wait for much longer, but we'll give it another minute or so.

I guess that means that Doug and I did all right in our [ sort of ] number there that we're not getting any questions about that.

Well, okay, given the extraordinarily thorough presentation by John Pollard and Doug Pollard, there are no questions. So I will now return to the formal business of the meeting. I am advised by the scrutineers that the ballots and proxy -- oh, hang on. Oh, this is exciting. We may have a question coming in.

There's a question posed about iGaming and about Pollard's possible strategy going forward. And I guess what I would -- the way I would choose to address that is we draw a distinction between iLottery and iGaming. And iGaming is really dominated by casinos. If you look at the iGaming market worldwide, there's a few markets in Europe, particularly the U.K., a little after that, Italy and then a few smaller markets that are giant. And the U.S. is kind of a nascent market where you've seen New Jersey and Michigan and a couple of others, but still not as much growth there. But that is being dominated by the likes of BetMGM and DraftKings and FanDuel. Sorry, I might add, this is a question from Russell McLellan, please. Thank you for the question, Russell. And so that's a space that's a little trickier for us. But iLottery is really in our sweet spot where we work directly with the lotteries. And you can see in markets like Michigan, it does bring us into competition with them. And so we have to be excellent at it, and our lotteries have to be excellent at it. So our strategy is to make sure that we've got outstanding technology that is every bit as good as everything the iGaming providers have. And that's part of what, through Pollard Digital Solutions, we're developing. We have to add people who understand how to attract and retain players. That's a key part of this and how we can help our lotteries withstand that competition. And that's going to be our emphasis. You can see in markets like Michigan, where we are active in supporting Michigan Lottery, we've been able to hold on, and Michigan has done pretty well, notwithstanding the dramatically increased competition coming from the iGaming space, from the iCasinos there. And so we feel quite confident that, that's a segment there. And I might add, it also plays to our strengths. I like to say the number one strategic asset the lotteries have is their reputation, their brand integrity and the trust factor that goes with that. And that fits very well with Pollard Banknote. We are a highly trusted brand that lotteries are very happy to work with. And yes, so that's a -- that is a -- that's a space that we feel quite confident in, and we'll continue to support our iLottery customers. So thank you for that, Russell. I hope that addresses your question.

Doug, the only other thing I'd say as I sort of jump in on this is on the iLottery side that's exciting, I think, to us this year is that the -- our acquisition of Next Gen Lotteries has given us a terrific platform to really be successful now outside of North America. Of course, we have, with NeoGames, a fantastically successful joint venture that's dominating the North American market for iLottery, as we talked about in our presentation. But that joint venture was focused on North America only. But with the work we've done in acquiring Next Gen Lottery and then all the terrific efforts we've put in the last years or so to invest in that platform to make it, hopefully, the best iLottery platform in the world, we'll be really ready now in 2023 to go after European markets where there is a strong iLottery business that we weren't really able to before. And as you know, we're already in discussions with a number of European lotteries that are really interested in our product. So I think we've got a great opportunity to see some really good iLottery sales coming from the European market for our company over the next year or two as well. Those are long sales cycles to get through. So you won't see anything in Q2, but really good opportunities coming there for us.

Yes. Thank you, John. All right. As there are no further questions, I'll go back to the formal business. The scrutineers have advised me that the ballots and proxies deposited for the meeting have been voted in favor of the resolutions. I hereby confirm that each of the 6 nominees have been elected as directors of the company to serve until the next Annual Meeting of Shareholders or until their successors are duly elected or appointed. The appointment of KPMG LLP as the auditors of the company has been approved, and the Board of Directors of the company has been authorized to fix their remuneration. I direct that the results of the poll be included with the minutes of this meeting and the results of the voting be filed on SEDAR. That concludes the formal business of the meeting. As there is no further business to come before the meeting, I will ask Jennifer Westbury for a motion to terminate.

I move that the meeting terminates.

Thank you.

I second the motion.

Thank you, Mr. Rose. I now declare the meeting terminated, and thank you all very much for your attendance.

This concludes the meeting. You may now disconnect.