Gfinity Investor Relations:
Corporate Governance

Chairman’s Statement

“The Directors recognise the fundamental importance of good corporate governance in providing an efficient, effective and dynamic management framework to ensure that the Company is managed in the right way for the benefit of all shareholders over the medium to longterm. In view of this, the board of Gfinity plc has chosen to apply the QCA Corporate Governance Code (the ‘QCA Code’) published by Quoted Companies Alliance. The QCA Code is a pragmatic and practical tool, which adopts a principles-based approach to corporate governance, which the directors of Gfinity believe is correct for Gfinity in its current stage of growth. This section of the report provides further details on how Gfinity complies with these principles of good corporate governance.”

Neville Upton, Founder and Chairman, August 2020

Compliance with QCA Code

Deliver Growth

NO. 1.

QCA Principle

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

Application as per QCA Code
The board must be able to express a shared view of the company’s purpose, business model and strategy. It should go beyond the simple description of products and corporate structures and set out how the company intends to deliver shareholder value in the medium to long-term. It should demonstrate that the delivery of long-term growth is underpinned by a clear set of values aimed at protecting the company from unnecessary risk and securing its long-term future.

Gfinity Approach and Disclosures

Gfinity is a world-leading solutions provider within the fast-growing esports sector. A sector which is expected to grow in size to $1.65bn by 2021 (source: Newzoo 2018: Global Esports Market Report.).

The Directors of Gfinity expect the Company to deliver long term value for shareholders by developing a position as one of the market leaders within this sector, enabling it to derive significant revenues over the medium to long term, through:

  • Establishing the Company as a leading provider of end to end esports solutions for major partners, including game publishers, sports rights holders, media companies and other corporations looking to communicate with an engaged and growing audience.
  • Delivery of Gfinity owned and operated programmes including the Gfinity Elite Series
  • Building of an esports community, playing, watching and reading esports content via gfinityesports.com

A full description of this strategy is provided within the Strategic Report and Directors’ Report on pages 6 to 21 of Gfinity’s June 2019 Annual Report and Accounts.

The key risks to the delivery of this strategy are outlined in the Directors’ Report on pages 7 to 9 of Gfinity’s June 2017 Annual Report and Accounts.

Gfinity’s approach to Corporate Governance, providing a framework to manage risk, is outlined in the Corporate Governance Report on pages 22 and 31 of Gfinity’s June 2019 Annual Report and Accounts.

NO. 2.

QCA Principle

Seek to understand and meet shareholder needs and expectations

Application as per QCA Code

 

Directors must develop a good understanding of the needs and expectations of all elements of the company’s shareholder base.

The board must manage shareholders’ expectations and should seek to understand the motivations behind shareholder voting decisions.

Gfinity Approach and Disclosures

The Directors of Gfinity recognise the importance of consistent two-way communications with all groups in the shareholder base. As a result, the Company employs a Head of Investor Relations, who is responsible for day to day communications on behalf of the Board.

The Executive Chairman and Global Chief Operating Officer talk regularly with the Group’s major shareholders, thereby ensuring that their views are communicated fully to the Board.

The Company, together with our Nomad, Allenby Capital, has also entered into a relationship Agreement, with its largest shareholder, Charles Street International Holdings Ltd (“Charles Street”) defining the terms of the relationship and specifically confirming that the Board will always act in the interests of the overall shareholder base and that Charles Street will not seek to influence it otherwise.

The Board recognises the Annual General Meeting (“AGM”) as an important opportunity to meet private shareholders. The Directors are available to listen to the views of shareholders informally immediately following the AGM.

If any votes at a general meeting do not proceed in line with the company’s expectations the Board will engage with those shareholders to understand and address any issues. The Company Secretary is the main point of contact for such matters.

NO. 3.

QCA Principle

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

Application as per QCA Code

Long-term success relies upon good relations with a range of different stakeholder groups both internal (workforce) and external (suppliers, customers, regulators and others). The board needs to identify the company’s stakeholders and understand their needs, interests and expectations.

Where matters that relate to the company’s impact on society, the communities within which it operates or the environment have the potential to affect the company’s ability to deliver shareholder value over the medium to long-term, then those matters must be integrated into the company’s strategy and business model.

Feedback is an essential part of all control mechanisms. Systems need to be in place to solicit, consider and act on feedback from all stakeholder groups.

Gfinity Approach and Disclosures

Engaging with our stakeholders strengthens our relationships and helps us make better business decisions. The Board receives feedback on all stakeholder engagement activities undertaken across the Company, in order to constantly develop its understanding and help Gfinity to deliver on its strategic objectives. Such activities have included:

  • Employee feedback surveys designed to understand what aspects of the Company’s culture staff most value and which they would like to change, which have resulted in creation of employee development plan, together with changes to the office working environment and standard employee terms and conditions.
  • Customer feedback sought at the completion of all major initiatives, which has enables the Company to consistently improve is partner solutions business.
  • Research undertaken to fully understand the ongoing wants and needs of the esports community, which is being used to shape the next phase of Gfinity’s tournament platform development.

 

The Company monitors research on the impact of video gaming on society and takes this into account in the development of its products and in its decisions over which games to support.

NO. 4.

QCA Principle

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

Application as per QCA Code

The board needs to ensure that the company’s risk management framework identifies and addresses all relevant risks in order to execute and deliver strategy; companies need to consider their extended business, including the company’s supply chain, from key suppliers to end-customer.

Setting strategy includes determining the extent of exposure to the identified risks that the company is able to bear and willing to take (risk tolerance and risk appetite).

Gfinity Approach and Disclosures

Gfinity’s approach to risk management and internal control is outlined in the Corporate Governance section of its June 2017 Annual Report and Accounts, which can be found on pages 13 and 14.

The Board recognises that maintaining sound controls and a risk management framework is critical to ensuring that the Group maintains the focus and resources required to deliver on its stated strategy.

Overall responsibility for risk management and internal framework, lies with the Gfinity Board. As such the Board is updated on key risk areas at each Board meeting, of which there are at least six per annum.

Gfinity also has an Audit Committee, which includes representation from each the Company’s Non-Executive Directors. The Committee is responsible for monitoring the Company’s financial risk and controls framework and is provided with detailed financial and process documentation ahead of each meeting, produced by Chief Financial and Global Chief Operation Officers.

Overall the Directors believe the Company’s approach to risk to be comprehensive, while still consistent with the Company’s aim of establishing a market leading position in a new and rapidly growing sector.

MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK

NO. 5.

QCA Principle

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

Application as per QCA Code
The board members have a collective responsibility and legal obligation to promote the interests of the company, and are collectively responsible for defining corporate governance arrangements. Ultimate responsibility for the quality of, and approach to, corporate governance lies with the chair of the board.

The board (and any committees) should be provided with high quality information in a timely manner to facilitate proper assessment of the matters requiring a decision or insight.

The board should have an appropriate balance between executive and non-executive directors and should have at least two independent non-executive directors. Independence is a board judgement.

The board should be supported by committees (e.g. audit, remuneration, nomination) that have the necessary skills and knowledge to discharge their duties and responsibilities effectively.

Directors must commit the time necessary to fulfil their roles.

Gfinity Approach and Disclosures

The Board is led by Non-Executive Chairman, Neville Upton. It also comprises of two Executive Directors and two Non-Executive Directors. Each of the current Non-Executive Directors is considered to be independent, having no day to day involvement in the executive operations of the company. All Non-Executive directors are required to commit a minimum of 2 days per month to their roles, outside of attendance at Board meetings.

All Directors receive regular and timely information of the Group’s operational and financial performance. Relevant information is circulated to the Directors in advance of meetings. All Directors have direct access to the advice and services of the Company Secretary and are able to take independent professional advice in the furtherance of the duties, if necessary.

The Board is supported by the Audit Committee, Remuneration Committee and Nomination Committee, the terms of reference for which are available at gfinityplc.com.

Board meetings are held at least six times per annum.

Audit Committee and Remuneration Committees meet at least twice per annum, with the Nominations Committee meeting at least once per annum, with additional meetings scheduled over and above these as required. 

NO. 6.

QCA Principle

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

Application as per QCA Code

The board must have an appropriate balance of sector, financial and public markets skills and experience, as well as an appropriate balance of personal qualities and capabilities. The board should understand and challenge its own diversity, including gender balance, as part of its composition.

The board should not be dominated by one person or a group of people. Strong personal bonds can be important but can also divide a board.

As companies evolve, the mix of skills and experience required on the board will change, and board composition will need to evolve to reflect this change.

Gfinity Approach and Disclosures

Gfinity aims to maintain a Board, with significant experience across a broad range of sectors and functional specialisms, with an appropriate degree of public company experience.

The biographies of each Board member can be viewed at gfinityplc.com/investors/board/.

NO. 7.

QCA Principle

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

Application as per QCA Code

The board should regularly review the effectiveness of its performance as a unit, as well as that of its committees and the individual directors.

The board performance review may be carried out internally or, ideally, externally facilitated from time to time. The review should identify development or mentoring needs of individual directors or the wider senior management team.

It is healthy for membership of the board to be periodically refreshed. Succession planning is a vital task for boards. No member of the board should become indispensable.

Gfinity Approach and Disclosures

The Board carries out an evaluation of its performance annually, taking
into account the Financial Reporting Council’s Guidance on Board
Effectiveness. As part of this process, the Board will assess its
success against a number of criteria including:

  • Does the strategy that it has set continue to deliver long term shareholder value in a rapidly evolving sector;
  • How clearly is that strategy communicated to the Executive team and are the decisions being taken by management aligned to the overall strategy;
  • Does the Company have the appropriate resources, both financial and otherwise to deliver on the Strategy;
  • Is the Board displaying the right behaviours to promote the desired culture across the Company;
  • Does the composition of the Board remain appropriate for the next phase of the Company’s growth.
 

It was through the above assessment process that the board elected to make a number of personnel changes in November 2018, bringing in three experienced Non-Executive Directors to strengthen the level of oversight, challenge and strategic input.

All Directors undergo a performance evaluation before being proposed for reelection to ensure that their performance is, and continues to be effective, that where appropriate they maintain their independence and that they are demonstrating continued commitment to the role. Appraisals are also carried out on an annual basis with all Executive Directors.

All Director appointments are subject to ratification at the following AGM. Directors are automatically subject to re-election after each three years of service. 

NO. 8.

QCA Principle

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

Application as per QCA Code

The board should embody and promote a corporate culture that is based on sound ethical values and behaviours and use it as an asset and a source of competitive advantage.

The policy set by the board should be visible in the actions and decisions of the chief executive and the rest of the management team. Corporate values should guide the objectives and strategy of the company. The culture should be visible in every aspect of the business, including recruitment, nominations, training and engagement. The performance and reward system should endorse the desired ethical behaviours across all levels of the company.

The corporate culture should be recognisable throughout the disclosures in the annual report, website and any other statements issued by the company.

Gfinity Approach and Disclosures

The Gfinity Board is responsible for setting the Group’s vision and the collaborative behaviour that is required to support this.

These behaviours are communicated to staff through all staff
meetings, one to one meetings with team leaders and through
presentations at the All-Staff meeting.

 

The Chief Finance and Operations Officer, working with the group’s Head of
HR, is responsible for ensuring that the demonstration of these
behaviours forms a key component of the Group’s annual appraisal process
and remuneration structure.

NO. 9.

QCA Principle

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

Application as per QCA Code

The company should maintain governance structures and processes in line with its corporate culture and appropriate to its:

  • size and complexity; and
  • capacity, appetite and tolerance for risk.

 

The governance structures should evolve over time in parallel with its objectives, strategy and business model to reflect the development of the company.

Gfinity Approach and Disclosures

The Board is responsible for setting the overall strategy and vision for the Group and for monitoring and holding the Executive Team to account for delivery against this strategy and vision. As part of this, the Board has overall responsibility for approval of the annual budget, ensuring the availability of resources to deliver against this and maintenance of an appropriate controls framework at all times.

The Board meets at least six times per annum on a recurring bi-monthly basis plus other meetings as required on an ad hoc basis. The Board retains responsibility for setting the strategy for the company, approving the annual budget and approval of all material new expenditure, including investment and acquisition decisions.

The board is supported by Audit, Remuneration and Nomination Committees. The principal terms of reference of which are as outlined below:

Audit Committee:

  • Monitoring of financial performance;
    Review of financial plans and budgets;
  • Ensuring adequacy of capital to deliver on strategy;
  • Approval of full year report and accounts and interim report;
  • Monitoring of controls environment within the Company.

Remuneration Committee:

  • Setting remuneration strategy for the Company;
  • Approval of remuneration of all directors and members of Senior Executive Team.
  • Approval of all options over ordinary shares granted in the Company.

Nominations Committee:

  • Identification of new Directors and proposal of appointments for approval by full Board.

The Board reviews the composition and terms of reference for each of its respective committees on an ongoing basis.

Our Corporate Governance Statement within the Annual Report and Accounts, provides further detail on the company’s governance structures and why they are appropriate and suitable for the company.

Build Trust

NO. 10.

QCA Principle

Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
Application as per QCA Code

A healthy dialogue should exist between the board and all of its stakeholders, including shareholders, to enable all interested parties to come to informed decisions about the company.

In particular, appropriate communication and reporting structures should exist between the board and all constituent parts of its shareholder base. This will assist:

  • the communication of shareholders’ views to the board; and
  • the shareholders’ understanding of the unique circumstances and constraints faced by the company.

 

It should be clear where these communication practices are described (annual report or website).

Gfinity Approach and Disclosures

The Board receives detailed updates at bi-monthly Board meetings in order for it to be able to come to an informed decision on the Company’s present performance and associated strategy.

Gfinity maintains ongoing dialogue with shareholders through a number of channels including:

  • AGMs and where required Extraordinary General Meetings (“EGM”) attended by both Executive and Non-Executive Directors;
  • Meetings between shareholders and members of the Executive Management team;
  • Publication of full year and half year reports and accounts;
  • Announcements of all material news via Regulatory News Service;
  • and
    Maintenance of the website, gfinityplc.com, as a hub for all relevant news.

Full details of all resolutions proposed to General Meetings of the company are shown within the Shareholder Circulars section of the Shareholders Information page.

All Resolutions were approved at the General Meeting to which they were proposed.