Sportech is committed to a high standard of corporate governance and complies with the Quoted Companies Alliance Code (the “QCA Code”). It is the policy of the Board to manage the affairs of the Company in accordance with the principles of the QCA Code so far as the Board is able and believes it is practicable.
Board Composition
Richard McGuire Executive Chairman (Not Independent)
Clive Whiley Non-executive Director (Considered to be Independent)
Paul Humphreys Non-executive Director (Considered to be Independent)
In accordance with the AIM Rules for Companies, Sportech departs from the QCA Code in the following way:
Given the small size of the company, the Board do not consider it necessary to have more than two or more independent non-executive directors.
The Board believe having one experienced independent non-executive director at this stage still enables a well-functioning, balanced team.
Role of the Board
The Board is collectively responsible for the long-term success of the Group. It provides entrepreneurial leadership, sets Group strategy, upholds the Group’s culture and values, reviews management performance and ensures that the Group’s obligations to shareholders are understood and met.
How the Board Operates
The Executive Directors are responsible for business operations and for ensuring that the necessary financial and human resources are in place to carry out the Group’s strategic aims. The Non-executive Directors’ role is to provide an independent view of the Group’s business and to constructively challenge management and help develop proposals on strategy. The Board as a whole reviews all strategic issues and key strategic decisions on a regular basis. Control over the performance of the Group is maintained through evaluation of financial information; the monitoring of performance against key budgetary targets; and by monitoring the return on strategic investments.
The Chairman takes responsibility for ensuring that the Directors receive accurate, timely and clear information. Directors are aware of their right to have any concerns recorded in the Board minutes.
Board Meetings
The Board meets regularly, remotely or in person. Certain matters are considered at all Board meetings, including a business update, a financial update, a legal update, a technology update, business development opportunities and operational issues. Papers for each scheduled board meeting are usually provided within the week before the meeting and Directors unable to attend Board meetings have an opportunity to raise and discuss any issue with the Chairman or any Executive Director. The Company Secretary provides minutes of each meeting.
Matters Reserved for the Board
Matters reserved for the decision of the Board include:
- Strategy and management: overall management and oversight of operations, approval of long-term objectives, commercial strategy, annual budgets, major changes in nature and scope of the business of the Group, entry into significant new business areas and the approval of any actions which would require shareholder approval;
- Structure and capital: approval of major changes to the Group’s capital structure, corporate structure, management structure, control structure and changes to the Company’s listing or status as a PLC;
- Financial reporting and controls: approval of preliminary announcements of interim and annual results, annual report and accounts, dividend policy, declaration of dividends, and significant changes to accounting policies and changes in accounting reference date for any material member of the Group;
- Approval to enter into significant contracts;
- All communications with shareholders; and
- Board memberships, appointments and the remuneration of Directors and senior management.
The responsibilities outlined above are agreed by the Board. The Company maintains Directors and Officers insurance cover.
Division of Responsibilities
There is a clear division of responsibilities between the Chairman and CEO. The Chairman leads the Board and is responsible for its effectiveness and governance. He sets the Board agenda and ensures that sufficient time is allocated to important matters, in particular strategic issues. The CEO is responsible for the day-to-day management of operations and the recommendation of strategy to the Board. The CEO is then responsible for implementing that strategy supported by the wider management team.
The Non-executive Directors have responsibility for determining the remuneration of Executive Directors and have the primary role in appointing and, where necessary, removing Executive Directors, and in succession planning.
Conflicts of Interest
The Board has a procedure in place to deal with situations where a Director has a conflict of interest, as required by the Companies Act 2006. As part of this process, the members of the Board prepare a list of other positions held and all other conflict situations that may need authorising either in relation to the Director concerned or his or her connected persons. The Board considers each Director’s situation and decides whether to approve any conflict situations, taking into consideration what is in the best interests of the Company and whether the Director’s ability to act in accordance with his or her wider duties is affected. Each Director is required to notify the Company Secretary of any potential or actual conflict situations requiring authorisation by the Board. Such authorisations are reviewed annually.
Director Concerns
Where Directors have concerns about the operation of the Board or the management of the Company that cannot be resolved, their concerns are recorded in the Board minutes. These are escalated as appropriate to the Chairman so that they can be addressed respectfully and fairly. It is ensured that the issues raised are understood fully to facilitate meaningful dialogue so that relevant action, if needed, is taken. On resignation, a Non-executive Director provides a written statement to the Chairman, for circulation to the Board, if they have any such concerns.
Board Diversity
The Board does not have a formal Board diversity policy but plans to continue to review the need for such a policy annually, taking into account the size of the Board and skills required.
Induction of New Directors
On joining the Board, new Directors undergo an induction programme which is tailored to the existing knowledge and experience of the Director concerned, including site visits; meetings with key employees; and presentations from management on topics such as strategy, finance and risk. The Chairman is responsible for this process.
Time Commitments, Skills and Expertise
The Board is satisfied that each Director continues to show the necessary commitment and allocates sufficient time to discharge their duties and continues to be an effective member of the Board in respect to their skills, expertise and business acumen.
Development
The Company Secretary ensures that all Directors are kept abreast of changes in relevant legislation and regulations, with the assistance of the Group’s advisers where appropriate. Executive Directors are subject to the Group’s performance development review process through which their performance against objectives is reviewed and their personal and professional development needs considered.
External Appointments
In the appropriate circumstances, the Board may authorise Executive Directors to take non-executive positions in other companies and organisations provided the time commitment does not conflict with the Director’s duties to the Company. The appointment to such positions is subject to Board approval.
Board Performance Evaluation
The last annual Board Evaluation process was supported by the Company Secretary, and concluded in April 2021. The performance of Non-executive Directors and the functioning of the Committees was also appraised as part of this evaluation process. The process involves all Directors completing an anonymous online questionnaire set by the Company Secretary and returned direct to them, who summarises the results and feeds back to the Board. The aim of the process is to ensure the roles are being carried out properly (and as expected), procedures are adhered to and to have an open discussion on the overall functioning of the Board. The evaluation covered all key board duties. The results were analysed and following the discussions, a number of proposed recommendations were made, including; a clear succession plan is to be developed; the additional NED appointment should chair the Remuneration Committee; and a plan for stakeholder engagement is to be developed. The Board agreed to take the recommendations forward for implementation. A further evaluation will take place later in 2022 due to the Board changes in early 2022.
Shareholders and Other Stakeholders
There is regular dialogue with shareholders through a planned programme of investor relations which includes formal presentations of the Group’s results by members of the Board. Meetings also take place with institutional investors and analysts as required and there is regular communication with shareholders through the Annual and Interim Reports and Sportech’s corporate website. The Non-executive Directors have taken steps to develop an understanding of major shareholders’ views of the Company (in particular, in relation to any areas where the Non-executive Director has responsibility through their role as Chair or a member of a committee).
All stakeholders can and are welcome to question the Board at the AGM both formally and informally. Management meet with and have regular dialogue with stakeholders including gaming regulators, suppliers and significant customers. Management have an “open door” policy to any other stakeholders wishing to communicate with the Group.
The Board ensures that workplace policies and practices are consistent with the Company’s values and support its long-term sustainable success. Group HR undertake regular reviews of policies and report to the Board accordingly. The Company has a confidential whistleblowing process which all employees have access to. In addition, Board members and senior management encourage open conversations on all matters of concern.
Whistleblowing
The Group has a whistleblowing policy in place which sets out the formal process by which an employee of the Group may, in confidence, raise concerns about possible improprieties in financial reporting or other matters. The whistleblowing facility is provided by an independent external company. During the year ended 31 December 2021, there were no incidents for consideration.
Investors
The Board endeavours to ensure the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Company’s position, performance, business model and strategy, and welcomes feedback from shareholders on its content.
Board Committees
The Board has delegated specific responsibilities to the Nomination, Audit and Remuneration Committees. Each Committee has written terms of reference setting out its duties, authority and reporting responsibilities. The terms of reference of each Committee are kept under review to ensure they remain appropriate. Each Committee comprises the Non-executive Directors of the Company. The Company Secretary is the secretary of the Committees.
Audit Committee
The Audit Committee consists of Paul Humpheys (Chair), Clive Whiley and Richard McGuire. Executive Directors attend by invitation.
The Board is satisfied that Paul Humpheys as Chairman of the Committee, has recent and relevant financial experience. The Chairman of the Committee reports formally to the Board, as appropriate, on issues discussed by the Audit Committee and presents the Committee’s recommendations.
Duties
The Committee is scheduled to meet at least three times a year. The Committee’s main responsibilities include reviewing the Annual Report and Accounts and the Interim Report. This includes considering significant financial reporting issues and judgements as contained within. The Committee reviews, and challenges where necessary, the consistency and changes to accounting policies, methods used to account for significant and unusual transactions, whether the Company has followed appropriate accounting standards and the clarity of disclosure in the Company’s financial statements. Further to this, the Committee has delegated authority from the Board to review the effectiveness of internal controls, the Company’s whistleblowing procedures and the need for an internal audit function, as well as the scope, extent and effectiveness of such systems and procedures.
The main focus areas and items of business considered by the Audit Committee are:
- Review of the key areas of judgement and estimation which have been used by management in preparing the financial statements, in conjunction with input from the external auditors;
- consideration of the external audit report and the external auditor’s management letter which includes observations on the Group’s financial control environment;
- review of the risk management and internal control systems, and of the Company’s risk register;
- review of the need for an internal audit function;
- review of taxation matters of the Group;
- review any whistleblowing reports;
- review of the implications of forthcoming updates or changes to accounting standards; and
- review the Consolidated Financial Statements and the Annual Report and assess whether, taken as a whole, the Report and Accounts are fair, balanced and understandable and provide the information necessary for stakeholders to assess the Company’s position and performance, business model and strategy.
In relation to the integrity of the financial statements for the year ended 31 December 2021, the Committee also reviewed and considered the following specific areas:
- risk of misstatement on revenue recognition;
- disposal accounting and discontinued operations; and
- the assumptions underlying impairment testing of the Company’s investment in subsidiaries.
Risk Management and Internal Controls
The Group has a framework of risk management and internal control systems, policies and procedures. The Audit Committee is responsible for reviewing the risk management and internal control framework and ensuring that it operates effectively. The Committee has reviewed the framework and is satisfied that risk management is appropriate for the size of business.
Role of the External Auditor
The Audit Committee monitors the Company’s relationship with the external auditor, BDO LLP, to ensure that external auditor independence and objectivity are maintained. As part of its review the Committee monitors the provision of non-audit services by the external auditor. The breakdown of fees between audit and non-audit services is provided in Note 7 of the Group’s Consolidated Financial Statements. The non-audit fees related to Reporting Accountants work on the Company’s admission to AIM.
The Committee also assesses the external auditor’s performance. Having reviewed the external auditor’s independence and performance, the Audit Committee recommends that BDO LLP be re-appointed as the Company’s external auditor at the next AGM.
Audit Process
The external auditor prepares an audit plan that sets out the scope of the audit, key areas of audit focus, audit materiality and the timetable for audit work. This plan is reviewed and agreed in advance by the Audit Committee. Following the completion of its work, the external auditor presents its findings to the Audit Committee for discussion.
Internal Audit
The Group does not have an internal audit function. The Audit Committee has considered the use of an internal audit function during the year but considers that due to the size and nature of the Group there was no such requirement. The Finance function continues to undertake certain work of an internal audit nature and reports its findings to the Audit Committee. The Committee will keep the need for an internal audit function under review. The Group’s external Auditor considers and assesses the suitability of the overall control environment of the Group, including documenting and commenting to the Board on the design and implementation of general IT controls and other controls in place related to significant risks of material misstatement.
Audit Committee Terms of Reference (pdf)
Remuneration Committee
The Remuneration Committee consists of Clive Whiley (Chair), Paul Humphreys and Richard McGuire. The purpose of the Committee is to ensure that the remuneration of Executive Directors and Senior Executives, together with their terms and conditions of employment is sufficient to recruit and retain individuals of the calibre required to ensure a profitable growth of the business.
Remuneration Committee Terms of Reference (pdf)
Nomination Committee
The Nomination Committee consists of Clive Whiley (Chair), Paul Humphreys and Richard McGuire. Executive Directors attend by invitation.
Duties
In carrying out its duties, the Nomination Committee is primarily responsible for:
- Identifying and nominating candidates to fill Board vacancies;
- evaluating the structure and composition of the Board with regard to the balance of skills, diversity, knowledge and experience and making recommendations accordingly;
- drafting the job descriptions of all Board members;
- reviewing the time requirements of Non-executive Directors;
- giving full consideration to succession planning; and
- reviewing the leadership of the Group.
The Committee is scheduled to meet once a year, but it will meet more frequently if required. The Committee reports to the Board on how it has discharged its responsibilities.
Nomination Committee Terms of Reference (pdf)
Management ensures that the Committees are provided with all the necessary resources to enable them to undertake their duties in an effective and efficient manner. The Company Secretary or her delegate acts as secretary to the Committees.
