Corporate Governance

The Board of The Kellan Group plc is committed to achieving good standards of corporate governance, displaying integrity and operating ethically in its activities. Following the changes to the AIM Rules, the Group has elected to adopt the Quoted Company Alliance (“QCA”) Code.

The QCA Code is constructed around ten broad principles and a set of disclosures, which are detailed below. The Board has taken steps to comply with the Code, and the disclosures below describe in broad terms how the Company addresses the key governance principles defined in the QCA Code. It was not possible for the Company to include the Annual Report & Accounts disclosures required by the 2018 QCA Code in the Company’s Annual Report & Accounts for the financial year ended 31 December 2017 (the “2017 Accounts”), given that the 2018 QCA code was published on 25 April 2018, after the Company had published the 2017 Accounts.

These disclosures were last updated on 27 September 2018.

The QCA code and its application in The Kellan Group plc (“the Group”)

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

The Kellan Group plc is a market leading recruitment business operating across a wide range of functional disciplines and industry sectors. The Group focuses on permanent, contract, temporary and interim positions across the Accounting and Finance, Hospitality and Leisure, Information Technology & Manufacturing sectors. In accordance with its business model, the Group operates in these sectors through its three brands, Berkeley Scott, the RK Group and The Quantica Group.

The Group’s growth strategy is focused primarily on organic growth, by expansion into new regions and industry sectors. The Group will also pursue growth by acquisition, so long as it does not impact the organic growth of the Group, adversely impact the wellbeing of its employees, or conflict with the Group’s core business.

A copy of the 2017 Accounts discussing the Group’s strategy and most recent business performance is located on the Group website http://www.kellangroup.co.uk/investors/.

The key risks and challenges to the business and how they are mitigated is detailed on pages 3 and 4 of the 2017 Accounts. The Company uses its internal control systems to identify risk and implement appropriate measures to monitor, manage and mitigate known risks.

2. Seek to understand and meet shareholder needs and expectations

The Board acknowledges the importance of open communication with shareholders, within the regulatory constraints applicable to a public company. As such, the Company primarily communicates with shareholders through regulatory announcements. The Board recognises the Annual General Meeting as an important way for the Board to meet shareholders. This offers all shareholders and the Board the opportunity to discuss the Group’s performance, plans for the future, growth aspirations and risk appetite. The Directors are available to listen to the views of all shareholders informally immediately following the AGM. Where shareholder voting decisions are not in line with the Board’s recommendations or expectations, the Board will seek to engage with the relevant shareholders to understand and address any issues. In addition, the Chairman and Finance Director seek to talk to the Group’s major shareholders on a regular basis and ensure that their views are shared with the Board.
The Directors have found that these methods of shareholder engagement are sufficient to support the Company’s aims in meeting their needs and expectations.

Shareholders can also contact the Group’s Company Secretary with any questions they may have at any time, using the details on the Group contacts page, located here. The Company may be required to exercise discretion as to which shareholder questions shall be responded to, and the information used to answer questions will be information that is freely available in the public domain.

Further information on the Group’s Shareholder Relations can be found on the Group’s Corporate Governance page, located here.

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

The Company’s key stakeholders include its employees, candidates, clients and suppliers. The Company is able to identify its key stakeholders through the Directors’ and management’s experience and knowledge of the operation of the Group.

The Group has a staff committee that meets once every three months to discuss all issues that employees wish to discuss. All points raised are considered by the Board, and any changes made where it is feasible. Most recently, staff have been asking to do more charitable work. As a result, the Group have engaged more with charities, and has raised almost £5,000 for various charities in 2018 so far. The Group has also implemented a cycle to work scheme which enables staff to purchase a bike and or equipment tax free – the scheme provides staff with savings and contributes towards a healthier lifestyle.

The Group is committed to ensuring that all employees are paid the same pay for the same work, regardless of gender, age, or any other factor that is not directly related to the role they fulfil, and we actively monitor the pay levels to ensure they are fair.

The Group speaks regularly to both clients and suppliers to understand if there are any issues to address which can help both organisations grow. This feedback helps the Group adapt to the changing needs of both clients and suppliers, as far as is feasible.

Further information on the Group’s Corporate Social Responsibilities can be found on our CSR page, located here.

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

Risk management is an important part of the management process throughout the Group. The composition of the Board is structured to give balance and expertise when considering governance, financial and operational recruitment issues. Board meetings incorporate, amongst other agenda items, a review of monthly management accounts, operational and financial KPIs and major issues and risks facing the business.

In order to manage risk, all clients are required to pass a credit check before engaging with the Group. Any exception to this requires approval by the Board, who will consider the request carefully.

New suppliers are also subject to a review of the organisations health and appropriateness to work alongside the Group. Depending on the size of the supplier, this may range from a basic check on the Directors, to a full health assessment of the organisation.

All employees are subject to identity and right to work checks, and where it is considered appropriate, a Disclosure and Baring Service (“DBS”) check. Additional checks are carried out to ensure, as far as is reasonable, the information provided to the Group is accurate.

Further details on the risk profile and procedures in place to mitigate the risks are included in the Financial Review within the 2017 Accounts, which are located here.

The Board has ultimate responsibility for and will continue to monitor the Group’s system of internal controls, to ensure they are appropriate and effective in relation to the Group’s risk management.

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

The Board currently includes three Executive directors and one Non-Executive director. The board believe this structure is appropriate for the size of the business. The Board is supported by Audit and Remuneration Committees. The Nomination Committee has not been set up as the Board does not believe its current size or structure requires a separate Nomination Committee.

The Board considers, after careful review, that Michael Jackson, Non-Executive Director, brings independent judgement to bear notwithstanding his length of service.
Further details of the composition of the Board are available on the Group’s website http://www.kellangroup.co.uk/investors/directors-biographies/.

All Directors receive regular and timely information regarding the Group’s operational and financial performance. Relevant information is circulated to the Directors in advance of Board and committee 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, at the Company’s expense.

The Board is aware of the other commitments and interests of its Directors, and at present, each Board member commits sufficient time to fulfil their duties and obligations to the Board and the Group.

All Directors are subject to election by Shareholders at the first Annual General Meeting after their appointment, and are subject to re-election at least every three years.

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

The board consists of four members who have varied and relevant skills which assist them in carrying out their roles. Their current details, together with a summary of their current and past experience can be found on page 5 of the 2017 Annual Report and Accounts, and on the Group’s website: http://www.kellangroup.co.uk/investors/directors-biographies/.

The current Directors have a wide range of industry, financial and capital markets skills and as such, the Board believes that the collective capabilities of the Directors enable the Company to deliver its strategy for the benefit of the shareholders over the medium to longterm.
Directors maintain their skillsets by attending seminars; retaining relevant professional membership; reading/evaluating bulletins from their brokers, auditors, etc. In addition, the Company Secretary ensures legislative changes are communicated to the board, and potential impacts on the business are highlighted.

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

The Board meets at least nine times a year to discuss the performance of the organisation and its effectiveness. The effectiveness of the Board, and its committees, are measured against the annual budget and the mid-term goals of the Group, in order to ensure that the long-term goals can be met. This may result in a requirement for the Directors to attend seminars or to seek external independent advice.

The Company does not have a formal evaluation process in place in relation to individual directors, as it is not considered appropriate for the size and nature of the Board. The reelection of the individual directors at the Annual General Meeting (“AGM”) is considered to be the appraisal of the individual Directors. The Boards opinion on re-election of each individual Director is included within the notes to the AGM.

The Board meetings also include reviews of the wider management teams in the Group, as well as their development, with a view towards succession planning and promotions of individuals to executive levels if appropriate.

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

A large part of the Group’s activities is centred upon what needs to be an open and respectful dialogue with the key stakeholders, and so in order to grow the business it is vital that all employees act in a way that reflects the values of the business.
The Company’s ethical values and the Board’s commitment to achieving good standards of corporate culture are detailed within the Group’s internal policies. These include Corporate Social Responsibility; Bribery Act; Slavery and Human Trafficking; and Diversity.

The Remuneration Committee meets twice a year to discuss all aspects of corporate culture ensuring it is considered during the recruitment process from application to engagement. The committee reviews current practices and takes on board suggested changes which have been communicated from all levels of staff through inductions, performance reviews and exit interviews.

Where relevant staff behaviours do not align with the corporate culture, they are discussed at board meetings and appropriate remedies implemented. Staff from all brands are encouraged to work together as one, and top-performers across the business are taken out for a quarterly corporate lunch.

Corporate Social Media is managed centrally to ensure a consistent message is relayed in the public domain.

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

The Board is comprised of three executive directors and one non-executive director. Details of their responsibilities are available here. Matters reserved for the board include overall Group strategy; determining policies and values; fundraising decisions; approval of major expenditure; approval of the annual and interim results; annual budgets; dividend policy; and Board structure.

Historically, the Board has met at least 9 times each year in accordance with its scheduled meeting calendar. This may be supplemented by additional meetings as and when required. Any specific actions arising from such meetings are agreed by the Board or relevant committee and then followed up by the Company’s management.

The roles and responsibilities of the directors is available via http://www.kellangroup.co.uk/investors/directors-biographies/. The Chairman is responsible for leading the Board, facilitating the effective contribution of all members and ensuring that it operates effectively in the interests of the shareholders. He is also responsible for the leadership of the business, evolution and implementation of the strategy. The executive directors are responsible for proposing the strategic focus to the Board, implementing it once it has been approved and overseeing the management of the Company through the executive team. The Finance Director is responsible for engagement with shareholders and the key stakeholder groups.

The Group has two committees which are Audit and Remuneration Committee. Details of these committees and their terms of reference are available here.

The Board is committed to achieving good standards of corporate governance and will continue to monitor its governance structures with the QCA Code in mind.

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

The Group is committed to open dialogue with both institutional and retail shareholders. The directors liaise with Kellan’s major shareholders and relay their views at the board meetings.

The Group communicates progress throughout the year through regulatory announcements. On the Group’s website shareholders can also find historic announcements, and the Group’s interim reports and annual reports for the last 10 years. Annual Reports and Annual General Meeting Circulars are posted directly to all registered shareholders or nominees and the voting results of the 2017 Annual General Meeting have been published on the Group’s website here. The Group intends to continue to publish voting results of its general meetings on the website and where more than 20% of independent votes have been cast against a resolution at any general meeting, the Group will explain the actions to be taken to understand the reason for that vote and any decisions or actions taken as a result