Corporate Governance

THE QUOTED COMPANY ALLIANCE (QCA) CODE

The Directors recognise the importance of good corporate governance and have chosen to apply the Quoted Companies Alliance Corporate Governance Code (the ‘QCA Code’). The QCA Code was developed by the QCA in consultation with a number of significant institutional small company investors, as an alternative corporate governance code applicable to AIM companies. The underlying principle of the QCA Code is that “the purpose of good corporate governance is to ensure that the company is managed in an efficient, effective and entrepreneurial manner for the benefit of all shareholders over the longer term”. To see how the Company addresses the key governance principles defined in the QCA Code please refer to the below table. Further information on compliance with the QCA Code will be provided in our next annual report.

Michael Dickerson, Executive Chairman

This disclosure was last reviewed and updated on 21 September 2018

THE PRINCIPLES OF THE QUOTED COMPANY ALLIANCE (QCA) CODE

DELIVER GROWTH
QCA Code Principle Application (as set out by QCA) What we do and why
1.   Establish a strategy and business model which promote long-term value for shareholders 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.

The Mi-Pay strategy is explained fully within our Strategic Report section on pages 7 to 14 of our Annual Report and Financial Statements for the year ended 31 December 2017.

Our strategy is focused around six key areas, which enables the Company to drive growth within the existing customer base:

  • Migrating our clients’ existing retail customers to existing digital channels;
  • Increasing our product and services delivered to existing clients to become their single digital payment services partner;
  • Targeting new clients in the mobile pre-pay, digital content and energy markets;
  • Continue to work with our Asia Pacific partners to drive growth in that region;
  • Broaden our existing digital payment channels and payment solutions; and
  • Deliver direct fraud management as a service as a new product offering.

The principle risks and uncertainties, with mitigations can be found on page 16 of our Annual Report and Financial Statements for the year ended 31 December 2017.

2.   Seek to understand and meet shareholder needs and expectations

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.

Mi-Pay encourages two-way communication with its investors and responds quickly to all queries received. Our nominated advisor, brokers and financial PR partners support this process. The Chairman and Chief Executive Officer talk regularly with the Group’s major shareholders and ensure that their views are communicated fully to the Board. Our major shareholder has a position on our Board and the Chairman and Chief Executive office will present directly to any shareholder at both full year and interim results and additional opportunity at the annual AGM.

The Board recognises the 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.

Where voting decisions are not in line with the company’s expectations the Board will engage with those shareholders to understand and address any issues. In addition, the Company has a specific email address (through its PR advisers) through which shareholders can contact the Company.

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

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.

Mi-Pay is committed to sustainability progress in all aspects of our business – for the environment of customers, suppliers and the communities we operate in. This is evidenced and underpinned by our vision and values:

  1. Clients – Grow profitable sales, manage their risks and simplify their business processes
  2. Quality – Operational excellence and manage areas of risk for clients
  3. Environment – Minimise our physical footprint
  4. Innovation – Continued product development and integration with the best of breed digital payment solutions and research and investment in our managed payment fraud proprietary technology
  5. Team Work – Engage our people

Mi-Pay conducts 360 degree annual appraisal for its employees. A collective agreement is in place such that all employees within our core operations and development centre in Romania have a nominated employee representative. This provides a focus for regular review and enables employees to share feedback with management.

All customers have clear account managers and our 24×7 service desk is fully accessible for issues that arise. In addition, the we carry out quarterly reviews with each customer to allow feedback to be shared with the Company.

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

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).

The principle risks and uncertainties, with mitigations can be found on page 16 of our Annual Report and Financial Statements for the year ended 31 December 2017.

The Board considers risk to the business at every Board meeting (at least 6 meetings are held each year). Underpinning this is Mi-Pay’s annual PCI DSS level one accreditation. An external audit, which formally reviews Mi-Pay’s security and risk management of customer payment data, occurs annually which crucially involves a requirement to demonstrate monthly and quarterly risk management processes are delivered. The Company uses this methodology for risk matrix management and identifies and manages its key assets and risks with a security manager and DPO who have clearly defined and segregated roles.

Both the Board and senior managers are responsible for reviewing and evaluating risk and the Executive Directors meet at least monthly to review ongoing trading performance, discuss budgets and forecasts and new risks associated with ongoing trading.

MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
QCA Code Principle Application (as set out by QCA) What we do and why
5.   Maintain the board as a well- functioning, balanced team led by the chair

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 fulfill their roles.

The Company is controlled by the Board of Directors. Michael Dickerson, the Executive Chairman, is responsible for the running of the Board and John Beale, the Chief Executive, has executive responsibility for running the Group’s business and implementing Group strategy.

All Directors receive monthly, or on an adhoc nature if relevant, information on the Group’s operational and financial performance. Relevant information is circulated to the Directors in advance of meetings. In addition, minutes of the meetings of the Directors of the Group are fully recorded. All Directors have direct access to the advice and services of our legal advisors and are able to take independent professional advice in the furtherance of the duties, if necessary, at the company’s expense.

The Board comprises two Executive Directors and three Non-Executive Directors.

The Board considers Seamus Keating to be an independent non-executive director and chairs our Audit and Risk committee.

Ed Lascelles represents Albion Ventures on the Board however the Board considers Ed to be independent given his time acting on the Board and he is strategically aligned with other shareholders to enhance long term growth and valuations.

The Board does not consider Allen Atwell to be independent due his previous full time role as Chief Technonology Officer and is current technology consultant role.

The Board has a formal schedule of matters reserved to it and is supported by the Audit, Remuneration and Nomination Committees. The composition of the committees can be found on the Company’s website.

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

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.

The Nomination Committee of the Board oversees the process and makes recommendations to the Board on all new Board appointments. Where new Board appointments are considered the search for candidates is conducted, and appointments are made, on merit, against objective criteria to ensure the Board, has the appropriate skill set and experience, as a whole.

The Company receives up-to-date information and board packs from its external partners and professional advisers in relation to changes in regulation within the sector it operates in.

Biographies of the board members can be found in the latest annual report and here.

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

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.

The Board does not consider it appropriate to complete a formal appraisal of each board director. Every director stands for re-election at the AGM, and during the year, the non-executive directors are responsible for informally reviewing director’s performance and highlighting any issues identified.

As part of the annual budget process, the make-up and effectiveness of the Board and its members is reviewed. Such a review led to the restructure of the Board in March 2018.

The directors receive updates from the Company’s professional advisers and partners on material changes within the industry it operates in. In conjunction with this, the Company Secretary supports the Chairman in addressing the training and development needs of Directors.

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

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.

As a PCI DSS level one compliant business, the Group remains focussed on best practice and ethical behaviours. The focus on the security of our data, the protection of client funds and security of payments remains our core driver and this is driven from the top down. Segregation within the operation and clear reporting lines support this process.

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

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

Our Corporate Governance Report on pages 17 – 21 of our Annual Report and Financial Statements for the year ended 31 December 2017 details the Company’s governance structures and why they are appropriate and suitable for the Company.

BUILD TRUST
QCA Code Principle Application (as set out by QCA) What we do and why
10.   Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders.

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 structure 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).

Mi-Pay encourages two-way communication with its investors and responds quickly to all queries received. Our nominated advisor, brokers and financial PR partners support this process. The Chairman and Chief Executive Officer talk regularly with the Group’s major shareholders and ensure that their views are communicated fully to the Board. Our major shareholder has a position on our Board and the Chairman and Chief Executive Officer will present directly to any shareholder at both full year and interim results and additional opportunity at the annual AGM.

The Company holds analyst briefings, on an ad hoc basis, details of which are announced to the public. At these briefings, stakeholders are able to engage in dialogue with the Company.
The Company retains a broker and PR advisers, contact details of whom are included on announcements. Shareholders and stakeholders are able to contact the Company’s advisers to arrange meetings with management when convenient.

The Board recognises the 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.