Corporate Governance and Compliance with QCA code
The Directors acknowledge the importance of high standards of corporate governance and have chosen to comply with the principles set out in the Corporate Governance Code for Small and Mid-Size Quoted Companies, as issued by the QCA (the QCA Code). A summary of how the Company currently complies with the QCA Code is set out below and annual updates on the Company’s compliance will also be provided in the manner recommended by the QCA Code.
As Chairman, my role is to lead the Board of Directors and to be responsible for ensuring that the Company adheres to and applies the standards of corporate governance.
The Board meets regularly to review, formulate and approve the Group’s strategy, performance and corporate actions. The Company has established an Audit Committee, Nomination Committee and a Remuneration Committee with formally delegated duties and responsibilities and with written terms of reference. Each of these committees meets regularly as set out below. From time to time, separate committees may be set up by the Board to consider specific issues when the need arises.
Compliance with the QCA Code
Principle 1 – Establish a strategy and business model which promote long-term value for shareholders
The Company develops and publishes games across multiple platforms and through its games label, which focuses on the premium high-quality independent gaming market, it partners with independent developers across the world, from lone developers to large creative studios, to provide a full partnership offering which spans development, publishing and lifecycle management. The Company has a stringent greenlight process which works to identify the best creative ideas and global talent.
The Company seeks to maximize long-term revenues through building gaming franchises with longevity, and has a significant back catalogue that contributes a large majority of its revenues.
Examples of the principal risks that the Company faces are set out in the AIM Admission Document available on the “RNS News” section of the website. The Board monitors the risks facing the Company on a regular basis and takes appropriate action to ensure that it is able to manage and limit any adverse effects.
Further information regarding the strategy and business model will be provided in each Annual Report and Accounts and Interim Reports.
Principle 2 – Seek to understand and meet shareholder needs and expectations
The Board is committed to an open and ongoing engagement with its shareholders, which has been the case since its AIM admission in May 2018 and it also reviews and discusses the make-up of the Company’s shareholder base at Board meetings. The main methods of communication with shareholders will be the Annual Report & Accounts, the interim and full-year results announcements, the Annual General Meeting and the Company’s website.
In addition, the Chief Executive Officer and the Chief Financial Officer meet regularly with institutional investors and analysts to ensure that its objectives and any business developments are clearly communicated and they are available to respond to any enquiries following Company announcements, together with other Company advisers. The Non-Executive Directors are also available to discuss any matters that shareholders wish to raise and discuss. The Company does not have a dedicated investor relations department given its size but has engaged an external investor relations adviser to act as another point of contact for shareholders, details of which are on the Company’s website.
The Company has not yet had an Annual General Meeting since its AIM admission but at its first such meeting and going forwards, it envisages proactively engaging with any shareholders that do not vote in favour of any resolutions to understand their motivation for doing so.
Principle 3 – Take into account wider stakeholder and social responsibilities and their implications for long term success
The Board recognises that its long-term success will necessitate the maintenance of effective working relationships across a wide range of stakeholders as well as its shareholders; being primarily its employees, customers and the gaming platforms and developers that it partners with as part of the business strategy. The Executive Directors in particular maintain an ongoing and collaborative dialogue with such stakeholders and take all feedback into consideration as part of the decision- making process and day-to-day running of the business.
The Company takes corporate social responsibility very seriously and whilst given the nature of the business the risks of it having a negative impact on society and the environment are limited, the Board has implemented policies to remind employees of their obligations in this regard and adherence is carefully monitored.
Principle 4 – Embed effective risk management, considering both opportunities and threats, throughout the organisation
Examples of the material risks relating to the business and the industry in which the Company operates are set out in the AIM Admission Document, available on the “RNS News” section of the website. A review of these risks will be carried out at least on an annual basis and included in the Annual Report and Accounts going forwards.
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and has also established an Audit Committee, further details of which are set out below.
Principle 5 – Maintain the board as a well-functioning, balanced team led by the chair
The Board currently comprises four Directors: the Non-Executive Chairman, one Non-Executive Director and two Executive Directors. Both of the Non-Executive Directors, Chris Bell and Penny Judd, are considered by the Board to be independent. The Board meets regularly and there are processes in place to ensure that each Director is at all times provided with such information as is necessary for him or her to discharge their duties.
The Board is also supported by the Committees, details of which are set out below.
Whilst the Board believes its current composition is suitable for a company of its size and nature, as set out in the AIM Admission Document, the Board is actively looking to appoint an additional Non-Executive Director by May 2019.
The Non-Executive Directors were selected with the objective of increasing the breadth of skills and experience of the Board, and bringing independent judgment to the Board. The Company believes that the make-up of the Board as a whole represents a suitable balance of independence and detailed knowledge of the business so as to ensure that it is able to fulfill its role and responsibilities as effectively as possible.
All Directors are subject to re-election by shareholders at the Annual General Meeting and any Directors appointed during a financial year must be formally elected at the Annual General Meeting following their appointment.
Principle 6 – Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
Biographies of the Directors are set out in the “About Us” section of the website.
The Directors believe that the Board has the appropriate balance of diverse skills and experience in order to deliver on its core objectives, though the Board is actively looking to appoint an additional Non-Executive Director by May 2019.
Principle 7 – Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
As the Company has only recently been admitted to AIM it does not yet have a formal process for evaluating its performance against objectives or the performance of the Board, of its committees and of the individual Directors, including the Chairman, in respect of these objectives.
Nevertheless the board has on its agenda for the near future to establish a formal system of evaluation to ensure that the members of the board are committed, independent (where relevant) and provide relevant and effective contribution. In the interim, the Chair is responsible for ensuring an effective board.
Principle 8 – Promote a corporate culture that is based on ethical values and behaviours
The Board places significant importance on the promotion of ethical values and good behaviour within the Company and takes ultimate responsibility for ensuring that these are promoted and maintained throughout the organisation and that they guide the Company’s business objectives and strategy.
The central role that sound ethical values and behavior plays within the Company is enshrined in the Employee Handbook, which promotes this culture through all aspects of the business, from initial recruitment and hiring to career advancement. The Employee Handbook also sets out the Company’s requirements and policies on such matters as whistleblowing, communication and general conduct of employees.
Principle 9 – Maintain governance structures and processes that are fit for purpose and support good decision-making by the board
The Chairman leads the Board and is responsible for its governance structures, performance and effectiveness. The Chairman is also responsible for ensuring that the links between the Board and the shareholders, are strong and efficient. Meanwhile, the Chief Executive Officer and the Chief Financial Officer are responsible for the day-to-day management of the business and for implementing the strategic goals agreed by the Board.
The Board is responsible for the good management of the Company and its principal aim is to enhance the Company’s long-term value for the benefit of shareholders. The Board has adopted a Board Charter and Terms of Reference which set out those matters that are reserved for the Board and which include corporate governance, strategy and management, financial reporting and internal controls.
The Board has also established an Audit Committee, a Remuneration Committee and a Nomination Committee, the responsibilities of which are set out below. From time to time, separate committees may be set up by the Board in order to consider and address specific issues, when and if the need arises.
It is envisaged that the governance framework described above will be reviewed on an annual basis to ensure that it remains effective and appropriate for the business going forwards.
Principle 10 – Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The Group places a strong emphasis on the standards of good corporate governance and maintaining an effective engagement with its shareholders and key stakeholders, which it considers to be integral to longer term growth and success.
The principal methods of communication with shareholders are the Annual Report & Accounts, the interim and full-year results announcements, the Annual General Meeting and the website (in particular the sections “RNS News” and “AIM Rule 26”). The website is updated regularly with information regarding the Group’s activities and performance, and users can register to be alerted of new announcements, reports and events, including Annual General Meetings.
The Company’s reports and presentations and notices of Annual General Meetings will be made available on the website when available, as will the results of voting at shareholder meetings.
The Board Committees
The Audit Committee will have the primary responsibility of monitoring the quality of internal controls to ensure that the financial performance of the Group is properly measured and reported on. It will receive and review reports from the Group’s management and external auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Group. The Audit Committee will meet not less than two times in each financial year and will have unrestricted access to the Group’s external auditors. The Audit Committee comprises Chris Bell and Penny Judd and is chaired by Penny Judd.
The Remuneration Committee will review the performance of the Executive Directors and make recommendations to the Board on matters relating to their remuneration and terms of service. The Remuneration Committee will meet as and when necessary, but at least once each year. In exercising this role, the Directors shall have regard to the recommendations put forward in the QCA Code and, where appropriate, the Remuneration Committee Guide for Small and Mid-Size Quoted Companies published by the QCA and associated guidance. The Remuneration Committee comprises Chris Bell, Penny Judd and Jennifer Lawrence and is chaired by Jennifer Lawrence.
The Nomination Committee will lead the process for board appointments and make recommendations to the Board. The Nomination Committee shall evaluate the balance of skills, experience, independence and knowledge on the board and, in the light of this evaluation, prepare a description of the role and capabilities required for a particular appointment. The Nomination Committee will meet as and when necessary, but at least once a year. The Nomination Committee comprises Debbie Bestwick, Chris Bell and Penny Judd and is chaired by Chris Bell.