Corporate Governance

CORPORATE GOVERNANCE STATEMENT

This statement was last updated on 2nd July 2019

As an AIM company, from 28th September 2018, the Company is required to maintain on its website details of a recognised corporate governance code, how the Company complies with this code, and an explanation of any departure from the code.

The information will need to be reviewed annually and the website should include the date on which the information was last reviewed. The Directors intend to undertake this review at the same time as the Annual Report and Consolidated Financial Statements are prepared, and, as with past practice, the Annual Report and Statements will also include a Corporate Governance Report.

The Directors recognise the importance of sound corporate governance, and have, for the period from 1st January 2017, sought to comply with the Quoted Companies Alliance’s Corporate Governance Code (the “QCA Code”). The QCA Code was revised and reissued in May 2018 and the Company will seek to comply the revised QCA Code.

Donald Stewart, in his capacity as Non-Executive Chairman, has assumed responsibility for leading the Board effectively and ensuring that the Company has appropriate corporate governance standards in place and that these standards are observed and applied within the Company as a whole.

The corporate governance arrangements that the Board has adopted are intended to ensure that the Company delivers medium and long-term value to its shareholders. The Board maintains a regular dialogue with its major institutional investors and other professional investors, providing them with such information on the Group’s progress as is permitted by the AIM rules, MAR and the requirements of the relevant legislation.

It should be noted that all the Directors are shareholders and/or option holders in the Company and the both Mr Draper and Mr Petruzzelli are founders and significant shareholders. The Directors therefore view their own medium and long-term interests to be integrally linked to the medium and long-term value of the Company and, as such, the interests of the Directors are directly aligned with those of the shareholders.

The Board currently consists of 3 Independent Non-Executives, Donald Stewart, Mike Hayes and Derek Wise, and 3 Executive Directors, James Draper, Francesco Petruzzelli and John McIntosh.

Key Corporate Governance related matters which have occurred during the last year are:

  • the suspension of the Company’s shares from trading on 18th July 2017;
  • the Company’s becoming a Rule 15 Cash Shell and obliged to make an acquisition or acquisitions which constituted a reverse takeover under AIM Rule 14 on 30th August 2017;
  • the Company’s proposal for a company voluntary arrangement under Part I of the Insolvency Act 1986 and the Insolvency (England and Wales) Rules 2016 on 5th October 2017 (the ‘‘CVA’’). The CVA was approved by unsecured creditors on 23rd October 2017 and by shareholders on 24th October 2017;
  • the resignations of Anna Gudmundson, Richard Goodlad, Heidi Steiger and Mark Ollila from the Board and the simultaneous appointments of John Taylor and Lindsay Mair to the Board on 15th November 2017;
  • the readmission of the Company’s shares to trading on 15th November 2017;
  • the suspension of the Company’s shares from trading on AIM on 1st March 2018;
  • the completion of the Company’s reverse takeover of Bidstack Limited under AIM Rule 14 and the appointment of James Draper, Francesco Petruzzelli and John McIntosh to the Board on 20th September 2018;
  • the appointment of Mike Hayes to the Board on 10th April 2019;
  • the resignations of Lindsay Mair and John Taylor from the Board, and the appointment of Derek Wise to the Board on 2nd July 2019.

Further information on some of these matters is contained in the Admission Document published by the Company on 31st August 2018 which is available here.

The QCA Code sets out 10 principles that should be applied. These are listed below with a short explanation of how the Company applies each of the principles.

Principle 1 – Business Model and Strategy

Bidstack is a provider of native in-game advertising that is dynamic, targeted and automated, serving the global video games industry across multiple platforms. Its proprietary technology is capable of inserting adverts into natural advertising space within video games.

Bidstack has two sets of customers. On the demand side are advertising agencies, buyers for specific brands and operators of programmatic advertising platforms. On the supply side are games publishers, owners and developers.

The Board has concluded that the highest medium and long-term value can be delivered to its shareholders by increasing the number of game publishers with which it has exclusive agreements to include advertising in their games, and thus the amount of advertising inventory it has available to sell to advertisers, either directly or via programmatic advertising platforms.

Its potential market is substantial.

For further information on the market, the future strategy of the Group and the risks the Board consider to be the most significant for potential investors, Shareholders are referred to the Admission Document published by the Company on 31st August 2018 which is available here.

Principle 2 – Understanding Shareholders’ Needs and Expectations

The Directors are themselves shareholders and/or option holders and therefore have aligned their own interests with the interests of shareholders as a whole. The Company has a close relationship with its institutional and other larger shareholders.

Communication with shareholders is co-ordinated between the Chairman, the Chief Executive Officer and independent non-executive directors. The Company’s financial PR advisers are also engaged to assist the Board with shareholder communications.

The Company is in regular dialogue with, and holds regular meetings with, institutional and other larger shareholders and brokers representing private shareholders providing them with such information on the Company’s progress as is permitted within the AIM rules, MAR and requirements of relevant legislation.

The Company regularly updates its website and releases news flow and operational updates. Communications are also provided through the Company’s Annual and Interim Reports.

Shareholders are encouraged to attend the Annual General Meeting, which the Board believes is a good opportunity to communicate directly with shareholders.

The Company discloses contact details on its website and on all announcements released via RNS, should shareholders wish to communicate with the Board.

Principle 3 – Consider Wider Stakeholder and Social Responsibilities

The Board believes that its stakeholders (other than shareholders) are its employees, the publishers of games in which it places advertisements, the players of such games, the operators of programmatic advertising exchanges and brands and other customers requiring advertising.

The Board recognises that the long-term success of the Company is reliant upon the efforts of the employees of the Group and its consultants, advisers and these stakeholders.

The Board and senior management of the Company make every effort to communicate effectively with all stakeholders, to ensure that the Company complies with contractual terms and that employees, in particular, are afforded a safe and enjoyable working environment, and are remunerated and incentivised appropriately.

In order to understand the needs, interests and expectations of its stakeholders, the Group:

  • provides a safe and enjoyable working environment for employees and seeks to ensure they are remunerated and incentivised appropriately;
  • works directly with games publishers and developers as they link the Group’s software to their own to understand their unique requirements;
  • intends to sponsor and organise e-sports tournaments to get direct feedback from the players and viewers of relevant video games;
  • works closely with the operators of programmatic advertising exchanges to ensure that the relevant platforms are properly integrated and technical and commercial expectations are met;
  • engages with brands and other customers requiring advertising to ensure a mutual understanding of requirements.

Principle 4 – Risk Management

The Board has overall responsibility for the determination of the Company’s risk management objectives and policies and recognises the need for an effective and well-defined risk management process. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company’s competitiveness and flexibility. The Board is responsible for the monitoring of financial performance against budget and forecast and the formulation of the Group’s risk appetite including the identification, assessment and monitoring of the Company’s principal risks.

For further information on the risks the Board consider to be the most significant for potential investors, Shareholders are referred to the Admission Document published by the Company on 31st August 2018 which is available here.

The Board has delegated certain authorities to committees, each with formal terms of reference. As part of its terms of reference, the Audit Committee is obliged, inter alia, to keep under review the Company’s internal financial controls systems that identify, assess, manage and monitor financial risks, and other internal control and risk management systems, review the adequacy and security of the Company’s arrangements for its employees and contractors to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters and ensure that these arrangements allow proportionate and independent investigation of such matters and appropriate follow up action, review the Company’s procedures for detecting fraud and review the company’s systems and controls for the prevention of bribery.

Principle 5 – A Well-functioning Board of Directors

The Board is responsible for the management of the business of the Group, setting the strategic direction of the Group and establishing the policies of the Group. It is the Board’s responsibility to oversee the financial position of the Group and monitor the business and affairs of the Group on behalf of Shareholders, to whom the Directors are accountable. The primary duty of the Board is to act in the best interests of the Group at all times. The Board also addresses issues relating to internal control and the Group’s approach to risk management.

The Board consists of three Executive Directors, comprising the Chief Executive Officer, Chief Financial Officer and Chief Technology Officer, and three Non-Executive Directors.

Donald Stewart chairs the Board. The Executive Directors have industry and technical knowledge and expertise (James Draper and Fran Petruzzelli) and financial expertise (John McIntosh). The Non-Executive Directors have legal, public market, technical, leadership, people management, start-up, investment and software development experience (Donald Stewart, Mike Hayes and Derek Wise).

Liam O’Donoghue, who is an accountant and an experienced Company Secretary, is the Company Secretary.

The Board holds board meetings monthly and whenever issues arise which require the urgent attention of the Board. The Executive Directors are full time employees, and the Non-Executive Directors are expected to devote at least two days per month to the affairs of the Company and such additional time as may be necessary to fulfil their roles.

The Board has also established an Audit Committee and a Remuneration Committee. The Company considers that, at this stage of its development, and given the current size of its Board, it is not necessary to establish a formal Nominations Committee and nominations to the Board will be dealt with by the whole Board. This position will be reviewed on a regular basis by the Directors.

All three Non-Executive Directors (Donald Stewart, Mike Hayes and Derek Wise) are considered to be independent. The three Non-Executive Directors sit on the Audit and Compliance Committee, which is chaired by Mike Hayes and on the Remuneration Committee, which is chaired by Mike Hayes.

The Company will report annually on the number of Board and Committee meetings that have been held and the attendance record of individual Directors.

Principle 6 – Appropriate Skills and Experience of the Directors

The Company believes that the current balance of skills within the Board as a whole reflects a broad and appropriate range of commercial, technical and professional skills relevant to the sector in which the Company operates and its status as an AIM listed company.

Biographical details of each of the Directors and officers are set out below:

Donald Stewart – Non-Executive Chairman (aged 55)
Appointed to the Board on 1st December 2015, Donald is a solicitor and has practised corporate law, particularly focused on smaller quoted companies, for almost 30 years. Between April 2013 and July 2015 he was on the board of AIM quoted Progility Plc and, before that, had been a corporate partner in the London office of a global law firm. He is a former director (and past chairman) of the Quoted Companies Alliance, the UK not-for-profit organisation dedicated to promoting the cause of smaller quoted companies. Donald brings extensive experience of quoted companies, legal and regulatory issues, corporate governance and of the role of chairman. As a practising solicitor, Donald is required to keep his skills up to date through continuing professional development.

James Draper – Chief Executive Officer (aged 37).
James is the co-founder and Chief Executive Officer of Bidstack. He initiated Bidstack’s move into the gaming space in 2017 and led the negotiations to secure the three year contract with SEGA’s Football Manager title. He has been responsible for the day to day management of Bidstack, as well as overseeing its strategic direction. Prior to Bidstack, James spent several years working within marketing and advertising with a range of clients in the sports and b2b space. James brings core management, marketing and strategic vision and an intimate knowledge of all aspects of the Bidstack business to the Board.

Francesco Petruzzelli – Chief Technology Officer (aged 29)
Fran is the co-founder and Chief Technology Officer of Bidstack. He created Bidstack’s core artificial intelligence engine, heads its development studio and oversees its team of developers and programmers. Prior to Bidstack, Francesco founded Whaleslide, a privacy conscious search engine allowing users to control all aspects of their online lives from one webpage. Fran brings to the Board software technical and developmental expertise and a comprehensive understanding of the Bidstack product.

John McIntosh CA – Finance Director (aged 49)
After qualifying with Deloitte in 1994, John worked with Sony, advertising agencies and the BBC before concentrating on online, multi-media businesses. He was CFO and COO of DCD Media plc for five years until July 2011 and CFO of Progility Plc from November 2012 to April 2015, growing the business from a £12 million to £60 million turnover. Since leaving Progility John has worked as a consultant CFO for a number of entities in UK, Europe and Hong Kong, and since October 2016 as CFO for CRS GT ltd, which is licensed to trade as McLaren GT. John brings significant experience of CFO and COO roles in AIM quoted companies. As a member of the Institute of Chartered Accountants John is required to keep his skills up to date through the ICAS Professional Development Process.

Mike Hayes – Non-Executive Director (aged 58)
Mike has a wealth of experience in the video games industry having spent eight years at SEGA, latterly as CEO of SEGA Europe and America. During his tenure, SEGA became established as a top 10 worldwide publisher of video games.
Prior to SEGA, Mike spent five years as Sales and Marketing Director on the Board of Codemasters, the award­-winning British developer and publisher of high quality racing games. For over five years, Mike was Sales and Marketing Director at Nintendo, responsible for hardware and software.
Mike is currently an Investment Director at AIM listed Mercia Technologies PLC, where he is Head of Digital and Digital Entertainment.

Derek Wise – Non-Executive Director (aged 43)
Derek, a highly experienced software technologist, became Chief Technology Officer of Grapeshot in January 2017 responsible for software development, product, support and operations globally. Following Oracle’s acquisition of Grapeshot in August 2018, Derek is now VP of Contextual Intelligence with Oracle Data Cloud, responsible globally for all products related to the contextual understanding of data. Starting his technical career in 2000 with Enron Broadband, in 2001 Derek founded GNi, turning it into one of the fastest growing technology companies in the US. He then held a series of Technical Director and CTO roles with CCP, TRC Family Entertainment, Jagex and Benevolent AI.

Liam O’Donoghue from ONE Advisory Group acts as the Company Secretary, and is responsible for ensuring that Board procedures are followed and that the Company complies with all applicable rules, regulations and obligations governing its operation, as well as helping the Chairman maintain good standards of corporate governance. Liam is an ICSA Chartered Company Secretary.

The Directors have access to the Company’s external advisers e.g. NOMAD, lawyers and auditors as and when required and are able to obtain advice from other external advisers when necessary.

All Directors have access to independent legal advice at the Company’s expense.

The Board will seek to take into account Board imbalances for future nominations, with areas to take into account including gender balance.

Principle 7 – Evaluation of Board Performance

Internal evaluation of the Board, its Committees and individual Directors and officers will be undertaken on an annual basis to ensure the Board is performing effectively as a whole.

Such evaluations will be undertaken with reference to how the Director or officer has performed in fulfilling his / her specific functions, attendance at Board and Committee meetings as appropriate, and overall contribution to the Group as a whole.

The Chairman will also consult periodically with key shareholders to obtain their feedback on the Board’s performance. All Directors seek re-election as appropriate at the Annual General Meeting in accordance with the Company’s Articles and the Companies Act.

The Board is aware that succession planning is a vital task and the management of succession planning represents a key responsibility of the Board. The balance of skills required of the Board as a whole is under constant review as the business develops. As a result the composition of the Board will change over time. The Board is likely to appoint additional directors in the event that outstanding people with relevant skills are able to make the necessary commitment to drive the business forward.

Principle 8 – Corporate Culture

The Company recognises the importance of promoting an ethical corporate culture, interacting responsibly with all stakeholders and the communities and environments in which the Group operates. The Board considers this to be essential if medium and long term value is to be delivered.

The Directors consider that at present the Group has an open culture facilitating comprehensive dialogue and feedback, particularly with regard to providing a safe and enjoyable working environment for employees and seeking to ensure they are remunerated and incentivised appropriately.

The Group also works directly with games publishers and developers to understand their unique requirements, participates in gaming conferences and sponsors e-sport tournaments to get direct feedback from the players and viewers of video games and seeks to be regarded as a good corporate citizen by all its stakeholders within its sphere of operation.

The Directors view their own medium and long-term interests to be integrally linked to the medium and long-term value of the Company, and, as such, the interests of the Directors are directly aligned with those of the shareholders. The Company has adopted policies to deal with corruption and bribery and to comply with the UK Bribery Act.

Principle 9 – Maintenance of Governance Structures and Processes
The Board provides strategic leadership for the Group and operates within the scope of a robust corporate governance framework. Its purpose is to ensure the delivery of long-term shareholder value, which involves setting the culture, values and practices that operate throughout the business, and defining the strategic goals that the Group implements in its business plans. The Board defines a series of matters reserved for its decision and has approved terms of reference for its Audit and Remuneration Committees to which certain responsibilities are delegated. The chair of each committee reports to the Board on the activities of that committee.

The Chairman has overall responsibility for corporate governance and in promoting high standards throughout the Group. He leads and chairs the Board, ensuring that committees are properly structured and operate with appropriate terms of reference, ensures that performance of individual Directors, the Board and its committees are reviewed on a regular basis, leads in the development of strategy and setting objectives, and oversees communication between the Group and its shareholders.

The CEO provides coherent leadership and management of the Group, leads the development of objectives, strategies and performance standards as agreed by the Board, monitors, reviews and manages key risks and strategies with the Board, ensures that the assets of the Group are maintained and safeguarded, leads on investor relations activities to ensure communications and the Group’s standing with shareholders and financial institutions is maintained, and ensures that the Board is aware of the views and opinions of employees on relevant matters.

The Executive Directors are responsible for implementing and delivering the strategy and operational decisions agreed by the Board, making operational and financial decisions required in the day-to-day operation of the Group, providing executive leadership to managers, championing the Group’s core values and promoting talent management.

The Independent Non-Executive Directors contribute independent thinking and judgement through the application of their external experience and knowledge, scrutinise the performance of management, provide constructive challenge to the Executive Directors and ensure that the Group is operating within the governance and risk framework approved by the Board.

The Company Secretary is responsible for providing clear and timely information flow to the Board and its committees and supports the Board on matters of corporate governance and risk.

The Board will review annually the effectiveness of its corporate governance structures and processes. The Board currently considers that the balance between Executive and Non-Executive Directors, including the independent Directors, and the roles of the Audit and Compliance Committee and the Remuneration Committee are appropriate for the Company’s size and stage of development.

Matters which are reserved for the Board include:

  • setting the Company’s strategic direction
  • establishing the policies of the Group
  • overseeing the Group’s financial position
  • monitoring the business on behalf of shareholders
  • approving major investments, disposals, capital projects or contracts
  • approving resolutions to be put to general meetings of shareholders and associated documents or circulars
  • approving changes to the Board

The primary duty of the Board is to act in the best interests of the Group at all times. The Board also addresses issues relating to internal control and the Group’s approach to risk management.

The Board delegates authority to two Committees to assist in meeting its business objectives, and the Committees meet independently of Board meetings.

Audit Committee

The Audit Committee comprises Mike Hayes as Chairman, Donald Stewart and Derek Wise, and meets not less than twice a year. The committee is responsible for making recommendations to the Board on the appointment of auditors and the audit fee and for ensuring that the financial performance of the Group is properly monitored and reported. In addition, the Audit Committee will receive and review reports from management and the auditors relating to the interim report, the annual report and accounts and the internal control systems of the Group. As noted above the Audit Committee is also responsible for reviewing the Company’s internal financial controls systems that identify, assess, manage and monitor financial risks, other internal control and risk management systems and other aspects of risk management.

Remuneration Committee
The Remuneration Committee comprises Mike Hayes as Chairman, Donald Stewart and Derek Wise, and meets not less than twice each year. The committee is responsible for the review and recommendation of the scale and structure of remuneration for senior management, including any bonus arrangements or the award of share options with due regard to the interests of the Shareholders and the performance of the Enlarged Group.

At this stage of its development, and given the current size of its Board, the Board deems it is not necessary to establish a formal Nominations Committee and nominations to the Board will be dealt with by the whole Board. This position will be reviewed on a regular basis by the Board.

The Company has also implemented a code for Directors’ and employees’ dealings in securities which is appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the Market Abuse Regulation which came into effect in 2016.

Principle 10 – Shareholder Communication
The Board is committed to maintaining good communication with its major institutional investors and other professional investors, providing them with such information on the Group’s progress as is permitted by the AIM rules, MAR and the requirements of the relevant legislation.

The Board believes that the Company’s Annual Report and Accounts, and its Interim Report published after the half year, play an important part in presenting all shareholders with an assessment of the Group’s position and prospects.

The Annual General Meeting is the principal opportunity for private shareholders to meet and discuss the Group’s business with the Directors. There is an open question and answer session during which shareholders may ask questions both about the resolutions being proposed and the business in general. The Directors are also available after the meeting for an informal discussion with shareholders.

Results of shareholder meetings and details of votes cast will be publicly announced through RNS and displayed on the Company’s website with suitable explanations of any actions undertaken as a result of any significant votes against resolutions.

All reports and press releases are published on the Group’s website: www.bidstackgroup.com and the Company will continue to keep its website up to date, participate in investor presentations, attend conferences and release news flow and operational updates as appropriate.

Under its Social Media Policy, the Company supervises and monitors the dissemination of information to ensure compliance with the Company’s disclosure obligations under the AIM Rules taking into account the use of social media and other forms of electronic communication used by the Company.

The Company will also include a Corporate Governance Report in its Annual Report and Consolidated Financial Statements.