Corporate Governance

Corporate Governance Statement

As an AIM-quoted company, Veltyco Group Plc (“Veltyco” or the “Company”) and its subsidiaries (together, the “Group”) is required to apply a recognised corporate governance code, demonstrating how the Group complies with such corporate governance code and where it departs from it.

The Directors of the Company (“Directors” or “Board”) have adopted the QCA Corporate Governance Code (the “QCA Code”). The Board recognises the principles of the QCA Code, which focus on the creation of medium to long-term value for shareholders, without stifling the entrepreneurial spirit in which small to medium sized companies, such as Veltyco, have been created. 

The Company will provide annual updates on its compliance with the QCA Code in its Annual Report.

Application of the QCA Code

In the spirit of the QCA Code it is the Board’s job to ensure that the Group is managed for the long-term benefit of all shareholders and other stakeholders with effective and efficient decision-making. Corporate governance is an important part of that job, reducing risk and adding value to the Group. The Board will continue to monitor the governance framework of the Group as it grows.

Veltyco is an online marketing and operating company that seeks to grow shareholder value through organic growth and acquisitions. Veltyco’s aim is to build a portfolio of gaming brands through a combination of strong organic growth as well as strategic acquisitions that complement the current business. 

The Board aims to achieve these objectives through the adoption of best working practices and by leveraging its industry knowledge and expertise. We believe that the senior management team as well as the Board, together with their industry leading partners and networks, have the necessary capabilities to achieve organic and external growth in the future, as demonstrated, for example, by the acquisition in 2017 of the 51% interest in online sportsbook and casino operations Bet90.

In accordance with the AIM Rules, Veltyco applies (and in some cases departs from) the QCA Code in the following way:

Principle 1Establish a strategy and business model which promote long-term value for shareholders

Veltyco is an online company and its strategy is to create value for its customers and own brand by using state of the art technology and practices to ensure full customer satisfaction both on a B to B as well as on B to C level.

Principle 2Seek to understand and meet shareholder needs and expectations.

Veltyco intends to engage in active dialogue with shareholders through regular communication including investor events, participation in conferences, the Company’s Annual General Meeting, any General Meetings that are held throughout the year and one on-one discussions. Our Corporate Brokers, Whitman Howard, are also taking a leading role in discussions with equity investors throughout the year, as well as offering investor roadshows with the Group’s management.

Principle 3Take into account wider stakeholder and social responsibilities and their implications for long-term success

The Board recognises the importance of its wider stakeholders – employees, contractors, suppliers, customers, regulators and advisors – to its long-term success. The Board has established expectations that these key resources and relationships are valued and monitored. In particular, the Company’s business model of outsourcing some its key activities requires reliable dialogue with contractors to ensure the successful pursuit of its long-term strategic objectives. Furthermore, the Board intends to actively seek to engage regularly with our corporate advisers to ensure proactive communication regarding the Company’s activities. In doing so, the Company is able to take any feedback into account and adjust its actions accordingly to ensure it stays focused on long-term performance.

The Board recognises that the Company operates within a competitive and fast changing industry and strives to remain alert to developments in a wider industry/society context.

Principle 4Embed effective risk management, considering both opportunities and threats, throughout the organisation

Veltyco operates within a complex business environment and an industry that is fundamentally driven by regulatory processes. The Board has set out its understanding of the principal risks and uncertainties in its Annual Report and regularly reviews its strategies for minimising any adverse impact to the Company or its investors.

The Directors acknowledge their responsibility for the Group’s system of internal control, which is designed to ensure adherence to the Group’s policies whilst safeguarding the assets of the Group, in addition to ensuring the completeness and accuracy of the accounting records. Responsibility for implementing a system of internal financial control is delegated to the CFO. 

The essential elements of the Group’s internal financial control procedures involve:

· Strategic businessplanning

The Board regularly reviews and discusses the Group’s performance and strategic objectives.

· Performancereview

The Directors monitor the Group’s performance through the preparation and consideration of monthly management accounts and daily through KPIs and regular reviews of its expenditure and projections.  In addition, detailed financial projections for each financial year are prepared and are subject to formal and regular review against actual trading by the Board.

Principle 5Maintain the Board as a well-functioning, balanced team led by the Chairman

The Board comprises five Directors of which three are Executives and two are Non-executives, including the Chairman, reflecting a blend of different experience and backgrounds. The Board considers Paul J Duffen and Mark Rosman to be independent Non-executive Directors in terms of the QCA guidelines.

The Board meets throughout the year and all major decisions are taken by the Board as a whole. The Group’s day-to-day operations are managed by the Executive Directors. All Directors have access to the Company information and any Director needing independent professional advice in the furtherance of his/her duties may obtain this advice at the expense of the Group.

The Board is satisfied that it has a suitable balance between independence on the one hand, and knowledge of the Group on the other, to enable it to discharge its duties and responsibilities effectively, and that all Directors have adequate time to fill their roles.

Details of the current Directors, their roles and background can be found <here>

The role of the Chairman is to provide leadership of the Board and ensure its effectiveness on all aspects of its remit to maintain control of the Group. In addition, the Chairman is responsible for the implementation and practice of sound corporate governance. The Chairman is considered independent and seeks to have adequate separation from the day-to-day running of the Group.

Principle 6Ensure that between them the directors have the necessary up to-date experience, skills and capabilities

The Board has weekly board calls and meets at least six times per annum. It has established an Audit Committee and a Remuneration Committee, the particulars of which appear hereafter. The Board has agreed that appointments to the Board are made by the Board as a whole and so has not created a Nomination Committee. The Chairman and the Non-Executive Directors are considered to be part time but are expected to provide as much time to the Company as is required. The Board considers that this is appropriate given the Company’s current stage of operations. It shall continue to monitor the need to match resources to its operational performance and costs and the matter will be kept under review going forward.

Principle 7Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement

Veltyco’s Board is small and extremely focussed on implementing the Group’s strategy. However, given the size and nature of the Group, the Board does not consider it appropriate to have a formal performance evaluation procedure in place, as described and recommended in Principle 7 of the QCA Code. The Board will closely monitor the situation as it grows.

Principle 8Promote a corporate culture that is based on ethical values and behaviours

The Board recognises its role in establishing and monitoring not only the strategic direction and risk appetite but also the tone and culture of the organisation. As such, the Board places great importance on the effective use of its limited human resources. It is a key belief of the Group that our human resources are essential to define its competitive advantage in relation to its peers.

Principle 9Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

Corporate Governance Committees

The Board has established two committees comprising the Non-executive Directors.

The composition of the committees is as follows:

Audit committee

Paul J Duffen (Chairman)

Mark Rosman

Remuneration committee

Mark Rosman  (Chairman)

Paul J Duffen

The Audit Committee

The Audit Committee meets twice during the year to review the published financial information, the effectiveness of external audit and internal financial controls including the specific matters set out below.

The terms of reference of the Audit Committee are to assist all the Directors in discharging their individual and collective legal responsibilities and during the meetings to ensure that:

· The Group’s financial and accounting systems provide accurate and up-to-date information on its current financial position, including all significant issues and going concern;

· The integrity of the Group’s financial statements and any formal announcements relating to the Group’s financial performance and reviewing significant financial reporting judgments contained therein are monitored;

· The Group’s published financial statements represent a true and fair reflection of this position; and taken as a whole are balanced and understandable, providing the information necessary for shareholders to assess the Group’s performance, business model and strategy;

· The external audit is conducted in an independent, objective thorough, efficient and effective manner, through discussions with management and the external auditor; and

· A recommendation is made to the Board for it to put to shareholders at a general meeting, in relation to the reappointment, appointment and removal of the external auditor and to approve the remuneration and terms of engagement of the external auditor.

The Audit Committee does not consider there is a need for an internal audit function given the size and nature of the Group.

Significant issues considered by the Audit Committee during the year have been the Principal Risks and Uncertainties (which are set out in the latest annual report) and their effect on the financial statements. The Audit Committee tracked the Principal Risks and Uncertainties through the year and kept in contact with the Group’s Management, External Service Providers and Advisors and received regular updates. The Audit Committee is satisfied that there has been appropriate focus and challenge on the high-risk areas.

Smith & Williamson, our external auditors, have been in office since 2013.

The external auditors are invited to attend the Audit Committee meeting to present their findings and this provides them with a direct line of communication to the Non-executive Directors.

The Remuneration Committee

The terms of reference of the Remuneration Committee are to:

· recommend to the Board a framework for rewarding senior management, including Executive Directors, bearing in mind the need to attract and retain individuals of the highest calibre and with the appropriate experience to make a significant contribution to the Group; and

· ensure that the elements of the remuneration package are competitive and help in underpinning the performance-driven culture of the Group.

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

The Board is committed to maintaining good communication with its shareholders and in promoting effective dialogue regarding the Group’s strategic objectives and performance. Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback via meetings with the Company. The Annual General Meeting and any other General Meetings that are held throughout the year are for shareholders to attend and question the Directors on the Company’s performance. Regular progress reports are also made via RNS announcements and the point of contacts are Paul J. Duffen, Chairman and Marcel Noordeloos, CFO.

Last Updated Date: 11 February 2019