CORPORATE GOVERNANCE

The Board is responsible for formulating, reviewing and approving the Company’s strategies, budgets and corporate actions.

Chairman’s Corporate Governance Statement

The Board accepts the importance of strong corporate governance. In this section we explain our approach to governance and how the board and its committees operate in relation to corporate governance.

The corporate governance framework which the Company operates is based upon practices which the Board believes are appropriate and proportional to the size and complexity of the Company and its business. The Board has chosen to adhere to the Quoted Companies Alliance (QCA) Corporate Governance Code for small and mid-size quoted companies (revised in April 2018 to satisfy the new requirements of AIM Rule 26).

The QCA code is constructed around 10 broad principles and a set of disclosures. The QCA has stated what it considers to be appropriate arrangements and asks companies to provide an explanation on how they are meeting the principles. The QCA code is prepared on a comply or explain basis. The Board has considered these principles and how the Company meets them given the size of the Company. The results of our review are set our below.

These disclosures are set out on the basis of the current Company and the Board highlights where it has departed from the Code presently. The Company is currently suspended from trading pursuant to an announcement dated 26 July 2018. It is therefore likely the Company will be subject to change, following its proposed readmission to trading on AIM. These disclosures will therefore be updated as appropriate.

The following paragraphs set out the Company’s compliance with the 10 principles of the QCA code and the information below was last updated on 28 September 2018.

  1. Establish a strategy and business model which promotes long term value for shareholders

The Company’s strategy is to invest in fast growing private companies with the objective of achieving an increase in capital value. Our business model is to attract businesses through our network of contacts and to offer a pro-active and supportive approach to the management of investee companies which fosters confidence and trust. The Board maintains close dialogue with a number of other funds and specialist funding businesses and brokers to help identify suitable investment opportunities.

Investing in early stage companies presents many challenges. The Board considers that the key challenge in executing the Company’s plan is identifying early stage opportunities where it is likely that the investee will progress rapidly and the investment will therefore rise in value.

Given the size of the Company and the historic limited cash resources we believe the strategy and business model we have adopted is consistent with our goal of promoting long term value for shareholders.

  1. Seek to understand and meet shareholder needs and expectations

The Company is committed to communicating openly with its shareholders to ensure that its strategy, business model and performance are clearly understood. The principal forms of communication are the Annual Report and Accounts, full and half-year announcements, trading updates, other regulatory announcements and its website. The Annual General Meeting allows all shareholders an opportunity to meet with the board and ask questions regarding the business.

External PR advisors have not been appointed and there is no broker or analyst coverage at this stage. The Company’s website has a facility for questions to be addressed to the Company and it is the Board’s commitment that all reasonable questions are answered promptly.

The principal point of contact is Tony Fabrizi and his contact details are on all announcements made by the Company, and also the website.

  1. Takes into account wider stakeholder and social responsibilities and their implication for long-term success

The Company’s business is focused on making and appraising investments as a minority shareholder. As such, stakeholder and social responsibilities, in terms of impact on society, the communities within which the company operates and the environment, apply less than that of an operating company. Therefore, the Company appraises its social responsibilities as part of its investment appraisal process. The key resource on which the Company relies is the collective experience of the Directors.

In terms of its shareholders, the Company aims to provide transparent and balanced information to encourage support and confidence in the Board’s approach.

  1. Embed effective risk management, considering both opportunities and threats, throughout the organisation

The Company considers risk management to fall into two broad categories, being the investment activity of the Company and the operations of the Company.

(a) The investment risk is considered as part of the appraisal processes and by way of due diligence and ongoing monitoring.

(b) The Company uses internal appraisal and the annual audit to ensure financial risks are evaluated in detail. Board meetings are also used for the directors to raise any issues relating to business risk arising from the Company’s business model and operations.

Dealings in the Company’s shares are monitored and any dealings must first be approved by the CEO and Chairman.

  1. Maintain the board as a well-functioning, balanced team led by the chair

The Company departs from the Code as it currently only has two directors.

The Board consists of two directors the Chief Executive Officer and the non-executive Chairman. The Board has two committees, audit and remuneration. Given the small size of the Board it has been decided that there is currently no need for a nominations committee.

The Board holds at least 6 Board meetings per year and at least two committee meetings. Board meetings cover regular business, investments, finance and operations. The CEO prepares the board agenda and circulates relevant documents. The chairman is responsible for ensuring that relevant and accurate information is supplied for all board and committee meetings.

The Board notes that, pending the outcome of the proposed transaction announced on 26 July 2018, the board composition will be kept under review. The Board is mindful of the guidance of the Code.

  1. Ensure that between them the directors have the necessary up to date experience, skills and capabilities

All board members have significant experience in the financial services industry and in investments. The Board believes they have the requisite mix of skills and experience to successfully execute the business strategy in order to meet the Company’s objectives.

William Henbrey, non-executive chairman

Appointed on 1 July 2014: Chair of Audit and Remuneration Committees.

William Henbrey has more than 30 years’ experience in the gaming industry and is a Chartered Accountant. A partner at BDO London from 1978 until his retirement in 2006, William headed up the firm’s Betting and Gaming Unit within the Leisure and Hospitality Group. He has acted as both business assurance and financial adviser to a wide range of clients in the sector, both private and public in the UK and internationally, on business and strategic planning, flotations, acquisitions and disposals.

William’s clients have included Coral, Pleasurama, Tote and Boylesports. He has also advised a number of online gaming businesses including 888, Aspinalls Online, Betbull, Bowman International, Empire Poker, Fairground Gaming, FireOne and St Minver.

Tony Fabrizi, CEO

Originally appointed a non-executive director in August 2011, and appointed CEO in July 2012.

Tony Fabrizi qualified as a chartered accountant with KPMG in 1986 and joined James Capel (later HSBC Investment Bank) in 1987. He worked in corporate finance and spent eight years undertaking UK transactions, becoming a director in 1993. During his last three years at HSBC he was responsible for the other financial and fund management activities within corporate broking.

Tony joined RP&C, a US Investment Bank, as a partner in 1998 to help develop its UK business.

In 2002 he established Ghaliston Limited as a corporate finance advisory business. Over the next 4 years, Ghaliston acted as financial adviser to 10 companies quoted on AIM and raised capital for a number of private companies. In May 2006, Ghaliston Limited acquired Merchant Securities Limited, a private client stockbroking business and the enlarged company listed on AIM in November 2006. Tony resigned as CEO of that company in June 2008.

  1. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

Given the small size and complexity of the Company and the limited resources, the Board has not appointed external consultants to evaluate the performance of the directors and board overall. The Company is currently suspended from trading pursuant to an announcement dated 26 July 2018. The Board acknowledges that it is non-compliant with its processes to evaluate the performance of the Board but it is committed to implementing procedures and measures to comply with this aspect of the QCA Code prior to the recommencement of trading in its shares on AIM.

  1. Promote a corporate culture that is based on ethical values and behaviours

The Board believes that by acting ethically and promoting strong core values it will gain a reputation for honesty and that this will attract business and help the long-term objectives of the Company. As such the Board adopts an open approach to all investors, investment opportunities and all its advisors and service providers.

The Board further considers the activities of and persons involved with potential investee companies as part of its due diligence processes.

  1. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

As per the statements above, the Board notes the proposed transaction and the departure from the Code in terms of independence on the Board.

The Board operates within the scope of a robust corporate governance framework. In particular the Board has defined a number of matters reserved for the Board while delegating certain matters to the Audit and Remuneration committees.

The Audit committee overviews the preparation of the financial statements, oversees risk management and meets with the Company’s auditors to review independence and controls.

The Remuneration committee sets the compensation of the Directors.

It is the role of the Chairman to manage the Board and advise its conduct.

The CEO is responsible for the day to day management of the Company’s activities.

The matters reserved for the Board are:

  1. Defining the long-term strategy for the Company
  2. Approving all major investments
  3. Approving any changes to the Capital and debt structure of the Company
  4. Approving the full year and half year results and reports
  5. Approving resolutions to be put to the AGM and any general meetings of the Company.
  6. Approving changes to the Advisory team.
  7. Approving changes to the board structure.

The Board has approved the adoption of the QCA Code and will monitor the suitability of this code on annual basis and revise its governance framework as appropriate.

10. Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

The Company sets out on its website (see below) clear descriptions of its Audit and Remuneration committees. In addition, the Board endeavours to use its Annual Report and Accounts to highlight any governance matters which it believes should be brought to the attention of shareholders and other relevant stakeholders.

Shareholders can find all of the Company’s reports, accounts and notices on its website. The Company will maintain its website and relevant disclosure of the votes of its general and annual general meeting going forward as per the guidance set out in the Code.

AUDIT COMMITTEE
The Audit Committee consists of Anthony Fabrizi and William Henbrey (Chair). The Committee meets at least twice a year and more frequently if required. The Committee is responsible for monitoring the quality of internal controls, ensuring the financial performance of the Company is being properly measured and reported on, meeting with the auditors and reviewing reports from the auditors relating to accounting and internal controls.
REMUNERATION COMMITTEE
The Remuneration Committee consists of William Henbrey (Chair) and Anthony Fabrizi. The Committee reviews the performance of the Executive Directors, sets the scale and structure of their remuneration and reviews the basis of their service agreements with due regard to the interests of the shareholders. The Remuneration Committee will also make recommendations concerning the allocation of share options to Directors and employees, if appropriate. No Director is permitted to participate in discussions concerning their own remuneration. The remuneration and terms of appointment of Non-Executive Directors are set by the Board as a whole.