Application (as set out by QCA)

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.

What we do and why

Our strategy is to be the leading legal and professional services business outside London and we aim to achieve this through:

• organic growth which in particular includes:
  • attracting new talent (be that individuals or teams) wishing to be part of a progressive legal services business;
  • roll-out of new offices into target regional locations;
  • outsourcing from national and international firms;
  • increasing productivity through better use of IT; and
  • enhanced cross-selling through the addition of new service lines within the existing business; and
  • acquisitive growth by continuing to acquire legal teams or firms offering geographic expansion into attractive new regional markets for Knights, and to further expand offerings in existing regional locations.

The key challenge to the successful development of this strategy are the resources of the management team to identify suitable acquisition and recruitment targets, negotiate terms with such targets and integrate those acquisition or recruitment targets into the Group’s business. Having identified this risk the Group will continue to recruit additional resource into the key areas of its management team to ensure that it can capitalise on all attractive recruitment and acquisition opportunities that may be available.

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.

Application (as set out by QCA)

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.

What we do and why

The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Chief Executive Officer and Chief Financial Officer meet with its institutional shareholders and analysts on a regular basis and offer meetings to institutional shareholders and PCFM’s on a bi-annual basis to coincide with the announcement of the Group’s results. As well as presenting an explanation of these results, these meetings give the shareholders an opportunity to inform the Directors of investors needs and expectations.

In addition shareholders of Knights also have access to current information on the Group through its principal website www.knightsplc.com.

The primary point of contact for institutional shareholders and PCFM’s should be the Chief Executive Officer, the Chief Financial Officer or the Chairman. In addition the Board offers an alternative access for shareholders via its Senior Independent Director who is available to discuss any concerns shareholders may have, or where it would otherwise be inappropriate to liaise with the outlined individuals. There is regular dialogue through the medium of the Company’s nominated adviser and broker, Numis Securities, and the Company seeks to understand shareholder expectations and reactions through its retained adviser as well as the Directors being available for informal discussions should a shareholder wish.

Any investor queries can be submitted to investors@knightsplc.com.

The Annual General Meeting (AGM) is normally attended by all directors and is an important opportunity to report to shareholders on current and proposed operations and developments and ensures that the Directors are available to listen to the views of shareholders informally immediately following the AGM. At the time of this report Covid-19 continues to impact on our daily lives including with the social distancing measures that the government has put in place. As a Board we are supportive of the government’s efforts to contain the virus and we are committed to following all guidance provided and instructions issued by the government and Public Health England to help reduce the spread of Covid-19. 

Under the Corporate Insolvency and Governance Act 2020 which came into force on 27 June 2020 the government has introduced further measures which apply to annual general meetings held prior to 30 September 2020 in order to reduce gatherings and to ensure public safety and in light of this we are encouraging shareholders not to attend the 2020 AGM in person but instead, to exercise their right to vote at the meeting by appointing a proxy. We have encouraged shareholders to continue to submit queries by email and will make answers available on the website following the conclusion of the Annual General Meeting.

Application (as set out by QCA)

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.

What we do and why

The Board is aware that the long term success of the Group is reliant upon its employees, suppliers and regulators.

Internal stakeholders

The Board appreciates the increasing importance of corporate social responsibility and is focused on maintaining an attractive environment for its employees to work in by investing in its offices and maintaining policies and systems to ensure that its employees maintain a good work life balance. The Board is proud of its recent employee net promoter score of +36 and believe it reflects a supportive environment that empowers colleagues to be themselves and use their judgement to do what’s right for clients, the business and the wider community. Above all, Knights aims to create a positive environment that empowers colleagues to be themselves, supports them to take responsibility and provides them with a fulfilling role and development opportunities. The Group has a culture of productivity and encourages a high level of flexible working. Last year it saw 24% of colleagues work part-time, enabling them to choose a work and personal life balance.

The Group’s senior management teams maintain regular communications with colleagues and encourage them to share feedback. Senior management have hosted regular calls through the COVID-19 situation to keep them abreast of developments and opportunities throughout the pandemic, with the Chief Executive Officer holding several ‘all employee’ meetings with over 80% participation and over 200 questions answered. The Group ordinarily holds an annual meeting for all staff to participate in providing an overview of prior activities and the strategic direction of the business.

Employees also participate in the Group’s Share Option Scheme giving them a stake in the Group’s long term success.

External stakeholders

he Group also aims to ensure that the regional markets that it operates in benefit directly from the wealth, expertise and jobs created by the Group, by ensuring that its regional centres maintain a centre of excellence for expertise so that its employees have a higher remuneration level that might only otherwise be achieved in city centres.

The Group is focused on enabling colleagues to support their local communities through its flagship programme 4OurCommunity. This gives colleagues 4 hours of work time per month to spend helping local causes. The Group believes the programme has a huge impact on the wellbeing of staff and enables them to use their individual skills to best effect. The Group’s aspiration is to deliver 50,000 plus hours to its local communities through the 4OurCommunity programme.

The Group recognises that the expertise amongst its employee group would greatly assist the running of charitable organisations within the communities within which it operates, and as such encourages its employees to take up trustee positions for local charities to provide this support and expertise to them. A number of the Group’s lawyers currently undertake these roles.

The Group encourages regular feedback from its clients and tracks its net promoter score to indicate the willingness of clients to recommend the Group’s services. Based on client responses in the week commencing 3 February 2020, the Group’s net promoter score was +60 from a scale of -100 to +100 which is considered above average amongst its peer group. The Group requests feedback from clients every quarter so that it has live information at the end of each engagement of the level of client satisfaction. The Group also endeavours to ensure that clients are met with regularly to canvas their opinion on the service levels received and provide any feedback as to how these relationships and/or services can be improved. The Group has a strong track record of retaining deep client relationships with some of these relationships being in excess of 25 years across a number of service lines provided within the Group’s business.

The Group’s business places a strong reliance on technology and works closely with its practice management system provider to enhance the practice management platform for the benefit of the Group which in turn benefits our supplier’s technology. The Group is held in high regard by its practice management provider as the Group’s success and endorsement of the platform provided has directly increased our practice manager’s system supplier’s customer base.

The Group also has a regular dialogue with its relationship manager within its regulator, the Solicitors Regulatory Authority (SRA) given its acquisitive nature.

In comparison with other sectors, the Group is fortunate that its environmental impact is relatively low, but climate change is a global challenge and every business has to play its part in minimising the footprint of its operations and the Group seeks to do this:

• in its offices having made significant investments into digital working practices, enabling the Group to reduce the use of paper across its operations and recently enabled a rapid response to ‘work from home’ measures imposed during the COVID-19 lockdown. These investments range from the extensive roll-out of software that enable the creation, review and sharing of information digitally across the organisation to increasing the use of electronic signatures. The Group has specific targets around the use of paper, and alongside cutting paper consumption, has several other waste management policies in place which are designed to reduce its carbon footprint.
  
  
• Outside of its offices environmental the Group’s greatest impact is from travel by employees going to, from and between offices, and to and from clients. The Group therefore aims to encourage and sustain flexible working amongst its employee base, reducing the amount of times people need to travel to, from and between offices to conduct their roles. This involves investment in digital working practises, including the roll-out of platforms such as Microsoft Teams and Zoom, and training for senior managers across the organisation in how to manage remote working. The recent impact of COVID-19 has seen many more internal and client business meetings conducted by video conference, a trend that will only grow.

Looking to the future, the Group is determined to continue to be proactive in changing what is a traditional sector, believing that greater flexibility can support stronger client delivery, improved working conditions and staff welfare, and reducing its environmental impact.

Application (as set out by QCA)

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).

What we do and why

The Board considers risk to the business at each Board meeting and via it’s standing committees; The Audit Committee, Remuneration Committee and Disclosure Committee.

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

In addition the Group operates in a regulated environment and is required by the SRA) to record non-material breaches and self-report any material breaches of the SRA Handbook, which include the Solicitors Account Rules, the indemnity insurance rules, authorisation rules and code of conduct (which requires compliance with all statutory obligations).

Key risks currently identified by the business and the steps taken to mitigate those risks are explained in more detail on pages 50 to 53 of the annual report which is available on www.knightsplc.com.

Application (as set out by QCA)

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.

What we do and why

The Board of Directors is comprised of Balbinder Johal, the Non-executive Chairman, three executive officers being David Beech, the Chief Executive Officer and Kate Lewis, the Chief Financial Officer, Richard King the Chief Operations Officer and two independent Non-executive Directors being Steve Dolton and Jane Pateman.

Whilst the Chairman has a considerable length of service and has previous interest in the Group, it has been determined that in terms of interest, perspective and judgement he remains independent and is supported by the two additional independent Non-executive Directors.

To enable the Board to discharge its duties all Directors receive regular, appropriate and timely information regarding the Group’s operational and financial performance and any matter concerning the overall strategy of the Group in advance of meetings. All Directors have direct access to the advice and services of the Chief Financial Officer and the Company Secretary and are able to take independent professional advice in order to allow them to discharge their duties, if necessary, at the Group’s expense.

The Board has established three Committees: an Audit Committee, Remuneration Committee and a Disclosure Committee, each having their own written terms of reference. Both the Audit Committee and Remuneration Committee are comprised of the two independent Non-Executives with Jane Pateman chairing the Remuneration Committee and Steve Dolton chairing the Audit Committee.

The Audit Committee has the primary responsibility of monitoring the quality of internal controls to ensure that the financial performance of the Group is properly measured and reported on.

The Remuneration Committee reviews the performance of the executive directors and makes recommendations to the Board on matters relating to their remuneration and terms of service. The Remuneration Committee will also make recommendations to the Board on proposals for the granting of share options and other equity incentives pursuant to any employee share option scheme or equity incentive plans in operation from time to time.

The primary function of the Disclosure Committee is to assist the Company in making timely and accurate disclosure of any information required to be disclosed in order to meet legal and regulatory obligations.

The Board has elected not to constitute a dedicated Nomination Committee given the size of the Group and make-up of the Board and leadership team of the Group, instead retaining such decision-making with the Board as a whole. It may be appropriate to establish a Nomination Committee in the future as the Group grows in size and as this is a technical breach of the QCA Code the Board will keep this under review.

All of the executive directors work full time for the Company. Directors are expected to attend all meetings of the board and the Committees on which they sit, and to devote sufficient time to the Company’s affairs to enable them to fulfil their duties. In the event that directors are unable to attend a meeting, their comments on papers to be considered at the meeting will be discussed in advance with the Chairman so that their contribution can be included in the wider board discussion.

Details of the directors’ attendance at board and committee meetings during each financial year is included within the annual report which can be located at www.knightsplc.com.

The Board are aware of their duty to promote the Group’s success and the requirements to disclose conflicts of interest as and when they arise for consideration and approval by the non-conflicted members of the board. All Directors are reminded annually of their obligations to notify any changes in their statements of interest and to declare any benefits received from third parties in their capacity as a Director of the Company.

Application (as set out by QCA)

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.

What we do and why

The Board has a broad range of skills and a brief biography of each Director is included on pages 56 and 57 of the Annual Report. The Board also has access to external advisors where necessary and direct access to the advice and services of the Chief Financial Officer and Company Secretary. All Directors are encouraged to use their independent judgment and to challenge all matters affecting the Company’s performance whether strategic or operational.

The Company Secretary supports the Chairman in addressing the training and development needs of Directors. The Board participate in all regulatory training programmes of the Group and the Non-Executive Directors are invited to participate in training that may be relevant.

Non-executive directors meet regularly with management at board and committee meetings in order to better understand their operational activities.

Application (as set out by QCA)

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.

What we do and why

Being a regulated law firm the Group is focused on progressing a strong ethical corporate culture. The Board implements a policy of equal opportunities in the recruitment and engagement of employees during the course of their employment and recognises the importance of honest and open feedback at all times to facilitate the growth of individuals and teams within the business.

The Board also recognises the importance of providing opportunities to all staff through training and development which are open to all regardless of age, race, religion, gender, sexual orientation or disability. Employees are also encouraged to take responsibility for the development of their careers where it is made clear that promotion and development are based on merit and commitment rather than tenure.

The Group prides itself on its culture, and maintaining that culture through consistent engagement with its staff which is integral to the Group’s success. The Group achieves this consistent messaging in a number of ways including: regular meetings with team leaders to understand the issues that the staff are facing, all staff calls, particularly during COVID-19 to ensure all staff are fully informed about key developments, and a clear and collaborative management structure which encourages engagement at all levels.

Application (as set out by QCA)

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.

What we do and why

The Board meet regularly to review, formulate and approve the Group’s strategy, budgets, corporate actions and oversee the Group’s progress towards its goals. In addition the Board hold regular ad hoc discussions to consider particular issues relating to the Group’s business.

Whilst the day to day operation of the business of the Group has been delegated to the Executive Directors the Board is responsible for the long term success of the Group and a set of reserved matters for approval by the board has been established and are regularly reviewed in order to ensure that they remain appropriate given the growth of the Group. The Non-Executive Directors also provide independent oversight and constructive challenge to the Executive Directors.

The Chairman is responsible for the successful operation of the Board and for ensuring appropriate strategic direction and focus.

The Chief Executive Officer is responsible for proposing the strategic focus of the Group and ensuring its implementation and successful delivery by overseeing the leadership team of the Group.

The Board is supported by the Audit, Remuneration and Disclosure Committee, with each Committee having their own terms of reference and access to such resources, external advice and information as required in order to allow them to discharge their respective duties.

Application (as set out by QCA)

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).

What we do and why

The Company is committed to maintaining good communication and having constructive dialogue with its shareholders. All shareholders are ordinarily encouraged to attend the Company’s Annual General Meeting save for the exceptional circumstances in the current financial year where shareholders are instead urged to email our Company Secretary at shareholderenquiries@knightsplc.com with any questions on the business of the Annual General Meeting or the Report and Accounts in advance of the meeting, and vote by proxy. In addition regular institutional shareholder and PCFM meetings with the Chief Executive Officer and Chief Financial Officer are held to discuss Company performance, particularly following publication of the Group’s interim and full year results.

A range of corporate information (including copies of presentations and announcements, and an overview of activities of the Group) is available on the Group’s website. The Group lists contact details on its website should shareholders wish to communicate with the board, or with its nominated adviser and broker, Numis Securities.

The Board recognises the AGM as an important opportunity to meet private shareholders. The Directors are available to listen to the views of shareholders and analysts and institutional shareholders will have the opportunity to discuss issues and provide feedback at meetings.