Corporate governance

This page was last updated on 09/08/2023

The Board acknowledges the role that the ten QCA Code principles has in providing structure to the Group’s corporate governance framework. This section explains how we have adopted the QCA Code, including those provisions where we do not currently comply.

PrincipleDescriptionOur approach
1Establish a strategy and business model which promotes long-term value for shareholdersAs explained fully within the strategic report of the Annual Report, our strategy is focussed around four core areas:

– Telecommunications infrastructure: defending our current position and target new customers by developing the E-band roadmap to W-band
with premium performance high power transceivers, active diplexer and SiP options based on inhouse MMIC design;
– Defence: increasing defence project coverage with major customers requiring RF hybrid solutions; Aerospace: leveraging our current
relationships to secure a bigger role in next generation radar design; and
– Space: position Filtronic in Space (HAPS/LEO) market by virtue of our UK manufacturing capability and Q-band PA design;

Notwithstanding the challenges posed by the macroeconomic backdrop including inflationary pressures, electronic component shortage and extended lead-times during the year, the delivery of the strategy continues and remains, front and centre, as the focus of the Board’s attention. Our objective through the execution of the strategy is to deliver shareholder value and medium long term growth. As a Board, we will ensure that we continue to challenge ourselves and regularly consider whether we are effective in delivering this objective.

Our business model and execution of the strategy is underpinned by the governance framework outlined in this section.
2Seek to understand and meet shareholder needs and expectationsGreat value is taken from maintaining open relationships with our shareholders and the primary point of contact in the Company for this function is the Chief Executive Officer (“CEO”), supported by the Chief Financial Officer (“CFO”) and the Chairman.

The CEO and CFO undertake an extensive programme of individual meetings with shareholders at least twice a year. Additionally, the Chairman is available to speak with shareholders at their request. The Senior Independent Director is also available as an alternative communication channel for shareholders who may wish to raise any concerns.

Presentations are also made to analysts to present the Group’s results. This assists with the promotion of knowledge of the Group in the investment marketplace and also helps the directors to understand the needs and expectations of shareholders. The Group’s website has a dedicated investor section to assist all shareholders.

Investors are welcome to send any questions or queries to
3Take into account wider stakeholder and social responsibilities and their implication for longterm successThe Group takes its corporate social responsibility very seriously and is focussed on maintaining and strengthening effective working relationships across a wide range of stakeholders including shareholders, employees, customers and suppliers.

Our stakeholder engagement recognises the materiality and impact of our stakeholders on the achievement of the Company’s strategy. The Section 172 (1) Statement and Stakeholder engagement sections within the Governance report provide more information on this.

The success of the Group’s strategy is part built upon the maintenance of internal and external relationships and good communication with stakeholders.
4Embedded objective risk management considering both opportunities and targets
throughout the organisation
The Group faces challenges in the execution of its business strategy. The Board acknowledges that it has overall responsibility for the Group’s system of internal controls, which is designed to manage and mitigate rather than eliminate risk, and to review and monitor its effectiveness. The Audit and Risk Committee have been delegated responsibility to oversee risk management, and undertakes regular reviews of the Group’s risk register with a view to:

(i) ensuring the risk register is complete, appropriate and up to date;

(ii) ensuring adequate processes are in place to detect new or emerging risks;

(iii) reviewing risk exposures and any changes to the status of risks in the risk register;

(iv) reviewing risk management assessment and processes;

(v) reviewing risk mitigation measures and the appropriateness of responses to risks;

(vi) reporting its findings to the Board.

Risk management, together with a robust set of systems and internal controls are well established within the business. The Risk Management Committee, made up of the Senior Leadership Team in the business, meet on a regular basis to maintain and review the risk register.

A comprehensive business planning process is also completed on an annual basis including the long-range plan which are reviewed and approved by the Board. This ensures the resources in the Group are correctly aligned with the business strategy. In addition, the Group conducts regularly re-forecasts to ensure resources are aligned to the ongoing needs of the business. During the year, the Group’s results are compared against the business plan which is reported monthly and discussed at each meeting of the Board.
5Maintain the board as a well functioning, balanced team led by the ChairmanThe Board is currently comprised of:
– Non-Executive Chairman;
– two Executive Directors; and
– two Non-Executive Directors

The Non-Executive Directors are regarded by the Board as being independent Non-Executive Directors.

The role of Company Secretary is currently undertaken by the CFO. In compliance with the Code, the Board is mindful of the need to develop plans to separate the roles of CFO and Company Secretary at an appropriate time.

Board members are also able to take independent professional advice at the Company’s expense in the discharge of their duties.

There is a formal schedule of matters reserved for the Board. To enhance the Board’s communication with management and achieve greater operational transparency, senior management from the sales and marketing, operational and engineering organisations are periodically invited to the board meeting to present their key projects and deliverables.

Board meetings
The Board meets each month against a defined reporting timetable and at times in between the scheduled meetings when required. Board meetings are held at the Group’s operational sites to enable local management teams to present operational and strategic programme progress
to the Board. The Board believes this arrangement gives greater transparency and enhanced relationships between the management and the Board. During the year, board meetings have been held in person at the Sedgefield, Yeadon and Manchester sites.

Directors’ attendance FY2023
The Board normally schedules at least 10 meetings during the year. Last year the Board met formally 10 times.
Meetings attended
– Jonathan Neale 10/10
– Richard Gibbs 10/10
– Michael Tyerman 10/10
– Pete Magowan 10/10
– John Behrendt 10/10
6Ensure that between them directors
have the necessary up-to-date experience, skills and
At present, the Board is satisfied that its overall size and composition reflects an appropriate balance of sector, financial and public markets skills and experience. The composition of the Board is reviewed at least annually by the Nominations Committee, with a view to ensuring it comprises the skills necessary for executing the Company’s strategy.

Details of each director’s skills and experience can be found in the directors’ biographies section. The members of the Board bring a range of complementary skills and experience from across markets in which the Group operates.

Each member of the Board takes responsibility for maintaining their skill set, which includes formal training and seminars. The directors have also received briefings and training in respect of AIM rules compliance and Market Abuse Regulations.

When necessary, external advice is sought, on legal, HR, financial and governance matters. The primary sources are the Company’s Nomad and the Company’s lawyers.
7Evaluate board performance based on clear and relevant objectives, seeking continuous improvementsThe Board carries out an evaluation of its own performance at the end of each financial year, reviewing its performance in that year.

The Chairman and the Company Secretary prepare an evaluation questionnaire reflecting the considerations of the corporate governance code as well as significant events over the year.

The performance of the Board, its Committees, and individual directors is assessed. Board members are asked to provide feedback for assessment by the Chairman in the first instance and to the Senior Independent Non- Executive Director, in respect of the Chairman. The combined feedback is discussed by the Board and actions agreed with progress updates during the year.

As part of the Director’s induction process the Company Secretary arranges an induction session with each new director covering such matters as:
– Group and organisation structure,
– Filtronic’s values and group policies,
– an introduction to the AIM Rules for Companies,
– the QCA Code,
– Market Abuse Regulation (“MAR”) and the terms of reference for the Board’s committees.

Where specific training needs are identified, including as a result of the Board evaluation process and individual director appraisals, the Company will organise the relevant training. The Company Secretary supports the Chairman in addressing the training and development needs of directors.
8Promote a corporate culture that is
based on ethical values and behaviours
At Filtronic, we believe in collaboration, we work with our technology leadership clients to solve their complex RF, microwave and mmWave challenges.

Our purpose and reason for being is to be the trusted provider of innovative RF solutions. Innovation matters to us, we want to push the boundaries of what is possible with RF communication.

Filtronic are long-term partners in aerospace and defence, telecommunications infrastructure and critical communications and have formed partnerships in the emerging market of space. These effective partnerships have grown from having a strong value-based culture, where all our employees are encouraged and supported to:

– Act with integrity; being honest, always keeping our promises.
– Be respectful to all; it is the foundation of our culture.
– Strive for excellence; it is what our clients and colleagues expect and what we endeavour to deliver.

The Board monitors and promotes its corporate culture assisted by the SLT, which includes the Head of HR. This team plays a vital role in disseminating the Company’s shared values with its employees. The SLT holds monthly meetings, and its members are frequently invited to attend sections of the board meeting which helps the Board assess the Group’s culture on an ongoing basis.
9Maintain governance structures and
processes that are fit for purpose and support good decision making by the Board
The Board, led by the Chairman, is committed to a high standard of corporate governance across the Group, recognising its importance in protecting shareholders interests and long term success of the Group.

Remit of the Board
Whilst many day-to-day operational matters are managed by the Executive Directors and SLT, other matters, including those listed below, are reserved for the board:
– Strategy and oversight of the management of the Group;
– Review of business performance and delivery of results;
– Approval of the Company and consolidated financial statements;
– Approval of major corporate transactions and commitments;
– Succession planning (appointment/removal of directors, PDMRs and the Company Secretary);
– Approval of all terms of reference for the committees of the Board;
– Review of the Group’s overall corporate governance arrangements including systems of internal controls and risk management; and
– Approval of the distribution of authority.

The Board is supported by three committees:
– Audit and Risk Committee;
– Remuneration Committee; and
– Nominations Committee.

Detailed written terms of reference for each committee are maintained and are available to view on the company website.

In addition to formal meetings, the Nominations Committee and Remuneration Committee also meet informally during the year to review and discuss board composition and compensation.
10Communicate how the Group is
governed and is performing by maintaining a dialogue with shareholders and other relevant
The Company is committed to open communication with all of its stakeholders. Communication with shareholders is driven primarily through:
– the regulatory news service (“RNS”),
– the Filtronic website;
– the Annual General Meeting; and meetings after the Group’s interim and full year preliminary accounts.

All shareholders receive a copy of the Annual Report and Accounts either as hard copy or electronically depending on shareholder preference. Copies of
historic annual reports and notices of general meetings for the last five years are available on the Filtronic website, as are the half-year results.

Engaging with our employees helps to ensure the values and culture the Board wants to promote are embraced throughout the Group. The Company
encourages open two-way communication to promote innovative and collaborative working. Communication with employees takes place ordinarily through town hall meetings at each of the Company’s sites, the HR system, team meetings, health and safety meetings and training sessions.

The longevity of our business can only be secured through maintaining and expanding our customer base. Communication with customers is a priority and is mediated through dedicated commercial managers and directors, overseen by the Chief Commercial Officer. Customers are solicited for feedback on products and business operations performance, market landscape and demand trends.

Regular contact and an open-door policy are key to maintaining good and stable relations with our supply chain. The procurement department, aided by clear website sections, ensures that Filtronic’ s key policies and values, or their equivalent, are adopted by the supply chain with all suppliers issued with the Filtronic Supplier Code of Conduct which includes, but is not limited to, its policies on issues such as bribery, modern slavery and conflict minerals. Engagement with suppliers is overseen by the Chief Operations Officer.

The group policies were reviewed by the Board during the year and, as a priority for the business, were communicated, via management cascade, to all

Constitution of the Board and of Board Committees

The Board considers that its constitution brings both independence and an appropriate balance of experience in judging matters of strategy, performance, resources, investor relations, internal control and corporate governance. The Board will comprise of at least three Directors as follows: the non-executive chairman, one executive and one non-executive director, and will continue to reflect a blend of different experience and backgrounds. The Board will continue to consider two directors to be independent.

Each of the directors is proposed for re-election at the Annual General Meeting at least every three years. Non-executive directors who have served longer than nine years on the Board are subject to annual re-election. A formal performance review of the Board, its committees and the directors is undertaken annually. This has been implemented in the year by way of a written questionnaire completed by all Board members.

Board committees

‍The Board has a Nominations Committee, a Remuneration Committee and an Audit and Risk Committee. The Remuneration and Audit and Risk Committees comprise all of the independent Non-Executive Directors. Each of these committees operates under terms of reference which have been established by the Board.

The Audit and Risk Committee

The primary function of the Audit and Risk Committee is to assist the board in fulfilling its financial and risk oversight responsibilities.

The committee reviews items such as the half and full year results, and then makes a recommendation to the Board.

The Audit and Risk Committee is comprised of all of the Non-Executive Directors.

The terms of reference can be found here.

The Nominations Committee

The Nominations Committee’s duties are confined to the nomination of appointments, re-appointments and termination of employment or engagement of Directors and the Company Secretary.

The Nominations Committee is comprised of all of the Non-Executive Directors.

The terms of reference can be found here.

The Remuneration Committee

The Remuneration Committee’s responsibilities include ensuring that the remuneration policy of the Company and its implementation are appropriate.

The members of the committee have no personal interest in the matters considered other than as shareholders. No potential conflicts of interest exist in relation to any of the member of the committee and their duties.

The Remuneration Committee ensures that levels of remuneration are sufficient to attract, retain and motivate directors of the quality required to run the Company successfully whilst avoiding paying more than is necessary for this purpose.

The Remuneration Committee is comprised of all of the Non-Executive Directors.

The terms of reference can be found here.

Executive Committee

The Chief Executive Officer has established an Executive Committee.

The committee aims to meet monthly either by teleconference or face to face. The routine matters on the agenda include operational matters (trading, customers, suppliers), site specific issues, risk management, health and safety, human resources and environmental matters.

Corporate and Social Responsibility

Filtronic plc takes its corporate and social responsibilities very seriously and recognises the important contributions to the business made by the wider community of stakeholders, in particular employees, clients, suppliers and the local communities.

(i) Health and safety

‍The Board is committed to ensuring the health and safety of the group’s employees and applies high standards throughout the group in the control and management of its operations. The group analyses its practices and processes using systematic health and safety management techniques and auditing regimes. As part of the group’s continued implementation of an occupational health, safety and management system, the group has put preventative measures in place that aim to continue to reduce major injuries and lost time accidents.

‍(ii) Employee development

‍Employee development has been established as one of the group’s key objectives. The group has an education and training policy in place to implement continuous improvement where beneficial to the group and employee, thus underlying the group’s commitment to ongoing employee development and training.

‍(iii) Employee communications

‍The group believes in keeping employees fully informed on matters which affect them through communication procedures including staff meetings and a culture which encourages openness and interaction between all members of staff. The group operates a UK-wide staff forum for information and consultation (‘ICON forum’). The ICON forum is designed to be a gathering at which employee representatives can review group progress and raise, share and discuss specific issues and concerns that affect employees with senior management.

(iv) The environment

‍Care for the environment is an integral part of the group’s business activities. It is the group’s policy to ensure that its facilities are safe and the group is committed to ensuring that its impact on the environment is minimised. The group supports and trains its personnel to act responsibly in matters relating to the environment. The group takes account of relevant legislation and regulations and analyses its practices, processes and products to reduce their environmental impact, and works with its customers and suppliers to achieve a high standard of product stewardship. The group’s in-house manufacturing sites in Sedgefield has established an environmental management systems and has achieved ISO 14001 certification.

Wherever possible, components and materials are reused or recycled. The reuse, utilisation and recycling of packaging is subject to monitoring. The group continues to work with its customers to implement programmes to design products for disassembly and recycling, and in particular so as to ensure compliance with the European Union directive on waste electrical and electronic equipment and the European Union initiatives in relation to the restriction of certain hazardous substances in electrical and electronic equipment. The group has introduced focused management teams throughout its business to ensure that compliance with these requirements is achieved within the required implementation timescales. The group continues to work with major suppliers, contractors and customers to assist them in improving their environmental, health and safety performance.

Group Values and Policies

The Filtronic group (which includes Filtronic plc, its subsidiaries and their business units) recognises its Corporate Governance Responsibilities and is committed to achieving best practice throughout its business activities. To access them please click here