Annual Report
and Accounts 2024
Filtronic plc – Stock code: FTC
filtronic.com
Filtronic plc Annual Report and Accounts 2024
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Our purpose
To be the trusted provider of
innovative RF solutions.
Our mission
Creating value for our
customers through
technology leadership.
Our vision
Enabling the future of RF,
Microwave and mmWave
communication.
Integrity
Act with integrity; being
honest, always keeping our
promises.
Respect
Be respectful to all; it is the
foundation of our culture.
Excellence
Strive for excellence; it is
what our customers and
colleagues expect and what
we endeavour to deliver.
Our strategy
Our values
01
www.filtronic.com Stock Code: FTC
04
06
What’s inside:
Contents
Strategic report
Financial highlights
3
Operational highlights
3
Chairman’s statement
4
Chief Executive’s review
7
Market review
10
Strategy
15
Financial review
18
Key performance indicators
22
Risk management
23
Our people
27
Stakeholder engagement
31
Sustainability report
35
Governance report
Board of Directors
42
Governance report
44
Nominations Committee report
48
Audit and Risk Committee report
50
Directors’ remuneration report
54
Directors’ report
64
Financials
Independent auditors’ report to
the members of Filtronic plc
66
Consolidated income statement
70
Consolidated statement
of comprehensive income
71
Consolidated statement of financial position
72
Consolidated statement of changes in equity
73
Consolidated cash flow statement
74
Notes to the consolidated financial statements
75
Company statement of financial position
104
Company statement of changes in equity
105
Company cash flow statement
106
Notes to the Company financial statements
107
Company information
113
Glossary
114
Chairman’s
statement
“The low earth orbit (“LEO”) space
communications market, whilst an
emerging market, continues to produce
sizeable opportunities from a range of
prospective clients.“
Chief Executive’s
review
“Our mission is to create value for our
clients through technology leadership.
We develop the building blocks of core
IP and then utilise this technology to
create highly customised solutions for
our core markets.”
Strategy
“The strategic markets we are serving
of LEO space and aerospace and
defence remain the focus of our
investments where we can add
significant value, and where we can
realise long term sustainable margins
and deliver shareholder value.“
13
Financial review
“The business delivered a break-
through set of results with significant
improvement in revenue, profit
and cash reflecting the successful
execution of our strategy.”
17
02
Filtronic plc Annual Report and Accounts 2024
History of Innovation
1989
Filtronic components receive a
Queens award for technology. Wireless
infrastructure business established.
1992
Filtronic Comtek
established to focus
on 2G – global
systems for (GSM).
1994
Filtronic Comtek
plc listed on the UK
stock exchange.
1999
Acquisition of
Fujitsu Silicon plant
in Newton Aycliffe
to produce GaAs
(Gallium arsenide)
wafers.
2015
Company listing
moves to the AIM
stock market.
2003
Company
reorganises into three
divisions: Wireless
Infrastructure,
Handset Products
and Integrated
Products.
2002
Triton chipset,
transmit and
receive multi-
function MMICs
developed for
mobile backhaul.
2011
Development
of mmWave
capabilities,
including Theseus,
Orpheus and
Morpheus II.
2013
Headquarters
relocate to
NETPark science
park in Sedgefield,
County Durham.
2020
Launched
Morpheus II,
market leading
transceiver product
and Tower Top
Amplifier range.
2023
ESA funded project
2021
Awarded
Queens Award
for Enterprise:
International Trade.
2023
DTEP Funding
2017
Launch of contract
manufacturing
services, principally
for aerospace and
defence.
Hercules II
The Hercules II
combines Filtronic’s
Morpheus II
transceiver and
either a Cerus 4 or
8 SSPA module,
Taurus
In terms of
performance,
our high power
amplifier redefines
E-band power for
commercial and
military applications.
Cerus 32
Cerus, the 71-76GHz
and 81-86GHz boost
power amplifiers
from Filtronic,
deliver market-
leading transmit
power, enabling
extended link
distances for high-
capacity E-band
point-to-point,
HAPS and Satellite
applications.
1977
Company founded
by Professor David
Rhodes at Leeds
University.
2022
Launched Hades
E-band Active
Diplexer and
extended range of
Cerus high-power
amplifiers.
2023
Leonardo - Supplier
Innovation Award
2023
Launched Morpheus
X2, Taurus and
Hades X2
2024
Strategic
partnership with
Space X
1979
First employees
recruited.
New Products
1970
1990
2010
2000
2020
2020
2010
1980
1990
2023
Awarded Kings
Award for Enterprise:
Innovation
New brands we are working with this year
2024
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Revenue
£25.4m (56%)
Adjusted EBITDA*
£4.9m (285%)
Operating profit
£3.6m (1,423%)
Cash at bank
£7.2m (176%)
Net cash (net of all lease obligations
except right of use property lease)
£5.2m (229%)
Strategic report
Operational Highlights
* Adjusted EBITDA is earnings before interest,
taxation, depreciation, amortisation and
share-based payments.
03
Financial highlights
Operational highlights
Signed a 5-year Strategic Partnership with
SpaceX, a market leader in low earth orbit
(“LEO”) space communications, for the
supply of Cerus solid state power amplifier
(“SSPA”) products at multiple frequency
bands. Given the customer’s preference
for vertical integration, this is a significant
testament to our ability to design and deliver
best in class technology.
Contract award of £3.2m from the European
Space Agency to develop a series of
mmWave products with strategic importance
for next generation LEO constellations
including payload applications.
Contract wins from strategic target clients,
BAE Maritime Services and QinetiQ,
for £4.5m and £2.0m respectively for
radar systems.
Launched and secured production orders
for E-band derivative products from
telecommunication infrastructure OEMs
and several specialist private telecom
network providers.
Secured a fourth programme from DSTL to
design and develop a tuneable filter solution
for future defence radar applications.
Won the King’s award for Enterprise in
Innovation recognising our outstanding
product development.
Flexed the operation to meet growing market
demand for our products demonstrating
our ability to respond and scale the business
rapidly and efficiently.
04
Filtronic plc Annual Report and Accounts 2024
Dear fellow shareholder
I am pleased to report that the year ended 31 May 2024
has been one of significant progress. We have successfully
capitalised on the momentum built in prior years in
bringing to market our core technology projects and
enhanced market focus. This culminated in the business
securing a strategic partnership with SpaceX in addition
to numerous contract wins with key target clients including
BAE, QinetiQ and the European Space Agency, and our
opportunity pipeline continues to grow across our core
markets.
These achievements have given us an excellent platform
to deliver long-term sustainable growth and is a major
step forward in the execution, and de-risking, of our
wider strategy. To that end, we will not lose sight of the
need to focus developing business opportunities in our
core and adjacent markets. Expanding and diversifying
our customer base remains key to growth and resilience
planning.
Strong trading and workforce commitment in H2 enabled
us to deliver good growth in revenue and profit with
material improvements seen over the prior year. We have
kept the market and investors up to date with this dynamic
situation by upgrading market expectations via a series of
trading updates during the course of FY2024.
These pleasing efforts and results have enabled us
to deliver adjusted earnings before interest, taxation,
depreciation, amortisation and share-based payments
(“adjusted EBITDA”) of £4.9m (2023: £1.3m), and
significantly strengthened the balance sheet and cash
position. This underpins our ability to invest in growing the
operational capability to match the improved orderbook
and extend the innovation and technology road map to
support our collective revenue growth ambitions.
The Markets
This year we experienced our highest levels of customer
engagement, which reflects the growing demand for
our core capabilities and innovative products across the
markets we serve.
The low-earth-orbit (“LEO”) space communications
market, whilst an emerging market, continues to produce
sizeable opportunities from a range of prospective clients.
The success we have had in the LEO market offers not
only the potential for transformational growth, but also
for us to accelerate the technology we believe this sector
will need. Initially, this is through our innovative Cerus32
E-band product that is being actively deployed into
ground stations of the Starlink constellation which is
the first and only operational commercial E-band link
in the world today. Whilst the market is currently led by
a small number of household names, there are many
well capitalised companies looking to participate in this
market with the aim of providing low-cost internet to
remote locations and direct to cell phone capability which
will bolster the market opportunity for us to exploit.
The aerospace and defence industry outlook remains
strong. There is increasing global need for high
bandwidth, fast and secure data telemetry and
infrastructure and we continue to explore opportunities on
land, sea and air. As well as security and defence market
opportunities, the private network and high-speed trading
opportunities are a meaningful part of our current and
future portfolio.
The telecommunications infrastructure market has
become a less dominant part of our growth plan as the
rollout of 5G stalls in some markets, but it remains an
important market given the leading players tend to be
first adopters of new technology. This ‘first to market’
drive helps accelerate our own technology roadmap and
positions us well in adjacent markets where the product
offering is highly desirable with strong revenue and
earnings potential.
Of critical interest and relevance to new and existing
customers is our ability to design, develop, test and
manufacture a turn-key solution to a high-quality
standard, at volume.
Scaling up our business is a key focus for the year ahead
as we keep pace with the increased rate of trading.
Financially, the Group’s cash position provides the means
to make meaningful prudent investments in the business
to facilitate further growth. We are currently exploring the
possibility of moving to a larger facility which will offer
more manufacturing space customised to our precise
needs with room to expand our respective teams. We
are also mindful that well run businesses are efficient
and protecting profit leakage is equally important.
Recruiting additional resource into our engineering team
will be critical in the year ahead, to not only service the
development needs of our current programmes, with
their new technology requirements, but the new business
opportunities we are pursuing.
Chairman’s statement
05
Strategic report
www.filtronic.com Stock Code: FTC
Financial performance summary
Group sales increased in the year by 56% to £25.4m
(FY2023: £16.3m).
The increase in sales and a stronger sales mix, with a
lower concentration of revenue from telecommunications
infrastructure, led to an operating profit of £3.6m (2023:
£0.2m) and adjusted EBITDA of £4.9m (2023: £1.3m).
The Group closed the year with £7.2m of cash at bank
(2023: £2.6m) in addition to the availability of undrawn
working capital debt facilities in the UK (£3.0m with
Barclays) and the USA ($4.0m with Wells Fargo).
The Group’s net cash position, including all debt except
right of use property leases, was £5.2m at the end of the
financial year (2023: £1.6m). Net cash including right of
use property leases was £4.2m (2023: £0.3m).
Dividend
As with previous years, and after continued dialogue
with investors the Board supports the view that the long-
term interests of shareholders are better served by cash
being retained in the business to fund future business
development. Consequently, no dividend is proposed for
the year (2023: £nil).
Environmental, Social and Governance
(“ESG”)
We are committed to building a sustainable business for
the future, delivering consistent financial returns and long-
term value for all our stakeholders. Having formalised our
ESG strategy last year we have made appropriate and
meaningful progress on sustainability, building on the
three pillars of:
• Sustainable commercial enterprise;
• Sustainable culture and organisation; and
• Sustainable environmental impact.
Full details of the ESG strategy and objectives can be
found on the Filtronic website at https://filtronic.com/
investors/esg-strategy/ and more detail can be found in
the Sustainability section of the Annual Report.
www.filtronic.com Stock Code: FTC
Pictured: Cerus 32
What we specialise in:
Customised
RF Sub-systems
300MHz to 300GHz
design, manufacture
& test
Mission critical
communications
Hybrid
manufacturing
services
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What we specialise in:
06
Filtronic plc Annual Report and Accounts 2024
Board Composition
Following Richard Gibbs’s decision to step down from his
role as Chief Executive Officer, the Nomination Committee
undertook a rigorous selection process to find a suitable
candidate to drive the business through its next phase of
growth. We were delighted to welcome Nathaniel (“Nat”)
Edington to the Board on 13 May 2024 as the Group’s new
Chief Executive Officer. Nat brings a wealth of experience
and knowledge in the electronics industry and a pedigree
of executing growth plans. I would like to take this
opportunity, on behalf of all of us, to thank Richard for his
hard work, leadership and dedication over the duration
of his tenure. Through his vision and drive, Filtronic has
established a solid platform with a much-improved
market position.
Outlook
The demand drivers for our business, as I have outlined
above, remain strong and the markets we serve are
robust. We have increasing confidence in our ability
to deliver further growth in the year ahead, but we
recognise the need to work fast and not be complacent.
We will be matching our resources with the enlarged
business that we are now operating, investing in key areas
including exceptional and experienced engineering and
manufacturing talent, developing opportunities with
those in the early stages of their career and leveraging
strong commercial relationship builders to deliver greater
customer focus and support. We have also identified the
essential capital equipment needed to position ourselves
to exploit the existing and new market opportunities.
I would like to finish by thanking, on behalf of the Board,
everyone who has contributed to the Group’s success this
year including our talented and driven employees as well
as our discerning and demanding customers, suppliers,
partners and shareholders.
Jonathan Neale
Chairman
29 July 2024
Chairman’s statement continued
07
Strategic report
www.filtronic.com Stock Code: FTC
I am delighted to present my first Chief Executive’s review
covering the full year results for FY2024. Since joining
the business, I have been hugely impressed with the
energy and commitment of the organisation, the deep
understanding of RF technology and the strength of
customer relationships with the industry leaders in our
chosen markets of LEO space, aerospace and defence
and telecommunications infrastructure.
The Company has delivered an excellent set of results
for the FY2024 trading period, and we end the year with
revenue growing by 56% to £25.4m (FY2023: £16.3m),
ahead of market expectations. Reported adjusted
EBITDA also exceeded market expectations at £4.9m
(FY2023: £1.3m), based on the strength of second half
earnings and is a testament to the controlled scaling of the
operating cost base throughout the trading period. We
also close the year with a growing, healthy cash balance
of £7.2m (2023: £2.6m).
We have invested in the long-term future of the business
by building our IP portfolio and strengthening our
business development and engineering teams. With a
strengthened balance sheet and a record orderbook we
are planning for future growth, which includes looking at
new facilities to expand our manufacturing footprint in
Sedgefield and the continued development of our world
class RF engineering capability. I am excited to be leading
the business through the next exciting phase of growth.
We are shaping the future of microwave and millimetre
wave communications, and a growing number of
companies are engaging our services for the design and
manufacture of next generation communication products.
The ability to undertake rapid cutting-edge RF design and
scale the manufacturing of mmWave products enables
customers to drive performance improvement and
accelerate time to market for demanding applications.
Our global reputation, ability to push the boundaries of
what is possible in RF design and the service offering of
a turnkey solution to design and manufacture remain
the key competitive advantages that Filtronic provides to
customers in our strategic markets.
RF design is a complex engineering discipline requiring
a highly specialised set of design skills and deep
understanding of analogue design principles. Critical to
our success is the recruitment and retention of world class
RF engineers. Filtronic has over 45 years’ experience in
the RF market and unrivalled history of innovation and IP
development. The ability to offer exciting careers working
at the leading edge of RF technology with the world’s
leading communication and aerospace companies has
proved essential in our ability to attract the talent we need.
We have successfully coupled our engineering
expertise with investment in state-of-the-art production
equipment that enables the rapid transition from product
development to full scale manufacturing at volume. The
addition of dedicated engineering lines to create new
processes without disrupting mainstream operations, has
greatly improved delivery of engineering programmes
and allowed us to move at the speed our customers
demand. The move to a new purpose-built manufacturing
facility would significantly improve the efficiency of our
manufacturing operations and enhance our ability to
meet future scale-up opportunities.
In the last twelve months Filtronic has released several new
high-power products for use in the telecommunications
and LEO space market based on specific customer
requirements. We end the year with a healthy number of
new product developments in the engineering pipeline,
and a well-defined technology roadmap aligned with
both customer and future market requirements.
Chief Executive’s review
Pictured: Hercules II
08
Filtronic plc Annual Report and Accounts 2024
During my first few months in post, I have seen first-
hand the strength of relationships with Filtronic’s
strategic customers, who are amongst the leaders in
their respective markets. The engagement with SpaceX,
with whom we signed a five-year Strategic Partnership
in April 2024, demonstrates the value we bring to all of
our clients. Leveraging our engineering capabilities, and
the responsiveness and speed of execution to develop
product and ramp manufacturing output quickly, we were
able to take the Cerus 32 SSPA product from concept to
volume production in less than six months, in this rapidly
evolving market.
Customers and Markets
Our mission at Filtronic is to enable the future of RF,
microwave and mmWave communications, and our focus
markets are those that operate at the leading edge and
offer growth potential for our products. The strategic
markets we are serving of LEO space and aerospace and
defence remain the focus of our investments where we can
add significant value, and where we can realise long term
sustainable margins and deliver shareholder value.
The LEO space market is growing rapidly as the costs
associated with the launch and deployment of satellite
technology continues to dramatically reduce. Well-
funded, private corporations like SpaceX, together
with established global aerospace contractors and
ambitious regional start-up companies, are racing to
build constellations of satellites that will accelerate the
delivery of internet and ‘direct to cell’ services across
the globe. Gateway communications between the LEO
satellite and the ground enable convergence with the
established terrestrial telecommunication networks, that
in turn provide the world with high speed, low latency
and ubiquitous connectivity. Filtronic’s leadership as a
supplier of compact, highly integrated, and extremely
reliable telecommunication backhaul solutions position
us well to respond to the aggressive timelines demanded
by the leading players in the LEO space market. The
ability to design and build SSPAs, at multiple frequency
bands, enabled Filtronic to win initial production orders
with SpaceX for the deployment of the first LEO space
E-band backhaul communication links in early 2023.
Over the past year we have successfully built on this
relationship to establish a Strategic Partnership to secure
supply of E-band SSPAs and work in partnership to
develop the technology roadmap associated with the
Starlink constellation over the next five years. In July we
announced our first follow-on order since announcing our
partnership; a new contract worth $9.0m (£7.1m).
The accelerating convergence of ground-based
telecommunications with LEO space enabled connectivity,
will continue to drive demand for efficient use of high-
performance terrestrial telecom solutions. Increasing
demand for high power transceiver modules and custom
power amplifier solutions for private telecommunication
networks, demonstrates significant adjacent market
opportunities for Filtronic.
The aerospace and defence market has been a consistent
long term revenue contributor to Filtronic over the years,
and our technology is well adapted for use in electronic
warfare (“EW”) applications associated with Active
Electronically Scanned Array (“AESA”) radar. We have
retained a position in the aerospace radar market with
the supply of hybrid transmit/receive modules and highly
customised filter designs. Whilst supply to this market
has seen a hiatus, we remain well positioned for strategic
airborne radar programmes that will follow in the next
few years once procurement decisions have been made
by several governments. In FY2024, after a long selling
cycle, we were successful in winning contracts in both
land-based radar and maritime radar applications
from QinetiQ and BAE respectively. In addition to radar
applications, we have continued to make inroads into the
UK defence market for the supply of next generation RF
communication products. Following an initial engagement
with Defence Science Technology Laboratories (“DSTL”)
for the delivery of our first battlefield communications
product in FY2022, we were successful in winning an
additional two DSTL programmes in FY2023 and a
fourth programme in FY2024. Battlefield communication
solutions are evolving quickly, with commercial space
and telecommunication technology augmenting the
legacy defence communication solutions. Our DSTL
engagements will align us closer with UK MoD strategic
requirements and ultimately provide consistent and long-
term revenue streams for highly customised products.
Outlook
We operate in a world with an ever-increasing demand
for broadband connectivity, and with it the search for
opportunities to open additional RF spectrum. Filtronic is
the leader in the field of millimetre wave solutions, and we
benefit from the fact that the expertise we offer is in short
supply.
Filtronic’s strategic markets represent industry verticals
that have a robust outlook and align well with the needs of
the post-pandemic world. Public safety, mobile
telecommunications, sovereign defence capability and
the rapid development of LEO space networks, are
well funded sectors that resonate with governments,
investors, and the public at large. Alongside the growth
opportunities for the business generated from the SpaceX
partnership, our pipeline with other customers and in other
focus markets is also healthy and increasing, providing
good growth opportunities across our markets and
customer base.
Chief Executive’s review continued
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Business plans for FY2025 and beyond reflect our
confidence. We have a dynamic and proactive culture
that is highly motivated to drive the Company forward
and deliver excellence in all aspects of our business. With
momentum behind us we will focus our efforts in the
following areas in FY2025:
• Continue to develop the close partnership with SpaceX
for the supply and development of ground station
applications and continue to try and penetrate into the
payload.
• Ensure timely execution of new chip and module
developments in alternative frequency bands, to
maintain our technology leadership, and underpin our
products for several years to come.
• Invest in our sales organisation to accelerate the
opportunities in focus markets.
• Position the business to move up the value chain and
provide a higher level of integration for UK Defence
programmes.
• Strengthen our Senior Leadership Team with key
experience to manage growth and scale up the
business.
• Move to a new world class manufacturing facility in
Sedgefield to further scale manufacturing volumes and
support turn-key customer development programmes.
• Develop new manufacturing capabilities to strengthen
Filtronic’s position as a trusted sovereign supplier of
advanced RF packaging for aerospace and defence
and high reliability applications.
There is an increasing demand for our high-performance
products and unique RF design capabilities, and we
are building the IP portfolio, resources, and expertise
necessary to scale the business in response to a growing
pipeline of opportunity.
Embarking on a new financial year, I am extremely excited
by the potential that exists at Filtronic and believe we are
well placed to continue to build sustainable shareholder
value.
.
Nat Edington
Chief Executive Officer
29 July 2024
Our core markets
Core 4
Telecommunications
& Infrastructure
Space
Defence
Aerospace
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Filtronic plc Annual Report and Accounts 2024
Market review
In the space sector, our high-power, low-latency wireless
technologies connect Earth to the stratosphere and
beyond. We help our customers build high-performance
networks that extend to the far reaches of space, ensuring
robust and reliable communication channels.
Our contributions to aerospace and defence are pivotal.
In aerospace, our advanced RF technologies support
critical communications and navigation systems. For
defence, our technologies are integral to next-generation
radar systems, enhancing threat detection and situational
awareness. We help shape the future of defence by
solving tomorrow’s challenges today.
In telecommunications, our products ensure reliable and
high-speed connections, essential for modern digital
communications. We enable the transmission of big data
over long distances, supporting the ever-growing demand
for faster and more efficient networks.
Filtronic’s advanced microwave technology also plays
a crucial role in the development of next-generation
supercomputers, unlocking the potential to explore and
understand the universe.
At Filtronic, our innovative engineers bring future
technologies to life, shaping a connected world.
Innovating Tomorrow, Today!
At Filtronic, we push the boundaries of future technologies using high-frequency RF, impacting, space,
aerospace, defence and telecommunication sectors. Our expertise enables seamless data transmission with
increased bandwidth, reduced latency, and improved connectivity.
SPACE
Off-the-shelf RF components for Low Earth Orbit
and High-Altitude Pseudo Satellites
• Experts in mmWave (Ka, Ku, Q, V, E, & W)
• Low weight, high power, improved integration
• SSPAs and transceivers for ground-based terminals
Although more renowned for terrestrial performance
and reliability, we are now pushing boundaries in non-
terrestrial applications. From our UK facilities, we
develop RF components and subsystems, specialising in
mmWave for Low Earth Orbit (“LEO”) and High Altitude
Pseudo Satellites (“HAPS”). We have become a trusted
supplier into the new space industry, our technologies are
deployed in ground stations and payloads.
Excelling in high-performance amplifiers and transceiver
modules for mission-critical environments. Our customers
including SpaceX depend on us for best-in-class RF solutions
that meet their rigorous requirements, with proven scalability.
We deliver highly integrated Size, Weight, and Power
(“SWaP”) improvements, accelerating market entry, reducing
development costs, and enhancing competitive edge.
Our achievements include pioneering the first 40Gbps
stratosphere-to-ground link and contributing to the first
commercial E-band earth station antenna, revolutionising 5G
performance and latency in the Satcom market.
Our RF technology is working hard in space,
connecting earth to the stratosphere and beyond
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AEROSPACE
RF subs-systems for:
• AESA radar
• Electronic warfare
• Unmanned systems
• Ultra-wide band digital systems
Unmatched excellence across the RF spectrum
Filtronic designs and manufactures complex transmit
and receive modules (“TRMs”), filters and other active
and passive RF components and sub-systems for
aerospace applications. We also provide contract hybrid
manufacturing services for our customers, producing and
testing their precision components at scale to individual
specifications in our state-of-the-art facilities.
From our award-winning base in the UK, we have a track record
of delivering innovative early TRL projects as well as COTS
products at high volume. We are an agile SME, who works
collaboratively with our customers, acting as their
high-frequency RF partner to deliver high-performance,
high-reliability RF components and sub-systems.
Our track record means we have developed and built complete
trust, we communicate openly, ensure compliance, and deliver
exemplary products with class leading Size, Weight and Power,
minus cost that provide reliable, best-in-class performance.
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Filtronic plc Annual Report and Accounts 2024
DEFENCE
RF subs-systems for:
• Land
• Maritime
• Electronic warfare
• Radar
Using the invisible electromagnetic spectrum to sense,
protect, and communicate, is critical for the defence
of our country. At Filtronic we use the power of RF to
facilitate modern defence communications.
We design, develop and manufacture RF, microwave or mmWave
components, working collaboratively with clients to build trust,
communicate openly, ensure compliance, and deliver exemplary
products that provide reliable, best-in-class performance.
We have a proven performance record and a continuous
improvement culture, currently providing a range of market-
leading contract manufacturing services to some of the globe’s
largest defence primes. We are considered an integral supply
chain partner, recently winning an award for outstanding
supply chain contribution.
Our technologies enable clearer sensing, communication and defence
Market review continued
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TELECOMMUNICATIONS
INFRASTRUCTURE
Xhaul for telecommunications infrastructure
• Transceivers
• Amplifiers
• Filters
• Multiplexers
At Filtronic, we design and manufacture high-
performance mmWave transceivers tailored for 4G
and 5G wireless Xhaul applications, covering fronthaul,
midhaul, and backhaul requirements.
Our innovative transceiver solutions seamlessly integrate between
the baseband modem module and the antenna, facilitating a
plug-and-play architecture that eliminates the need for clients to
develop in-house mmWave expertise. This streamlined approach
significantly reduces time to market, lowers overall development
costs, and minimises the cost of quality.
Our microwave and mmWave solutions enable ultra-high
capacity, low latency wireless transport of data from cell sites
to the core of mobile networks.In telecommunications, power
and linearity are crucial, and our transceivers and amplifiers
deliver high speed and high bandwidth with high yields at
volume. Filtronic is a trusted partner for two of the big three
OEMs globally, delivering them a competitive advantage in
power and reliability. Our highly linear solutions are essential for
densification and disaggregation in 5G networks. Our product
portfolio includes ultra-high capacity mmWave transceivers and
diplexers, which have been deployed and field-proven in some of
the world’s most demanding point-to-point radio links.
Filtronic is the go-to partner for cutting-edge technologies
that drive the evolution of wireless network access and Xhaul
applications, ensuring superior performance and reliability in the
rapidly advancing landscape of 5G connectivity.
Our technologies enable the transmission and receipt of big data over long distances
14
Filtronic plc Annual Report and Accounts 2024
Filtronic’s products are integral to advanced radio
networks, ensuring reliable and consistent communication
for dispatchers and first responders. We design and
manufacture high-performance solutions, offering crucial
support when seconds count.
Our precision products include tower top amplifiers, filters,
crossband/in-band combiners, power amplifiers, and
multiplexers. Collaborating with leading OEMs, we serve as
trusted RF partners. Our innovations enhance miniaturisation,
reduce component footprint and weight, and increase power and
amplification for improved connectivity.
We have a strong reputation in the US Project 25 (“P25”) public
safety market with our high-performance ceramic filter/
combiners and RF conditioning products.
With full US-based assembly, Filtronic has been instrumental in
reshoring products and processes for our customers, reinforcing
our commitment to quality and reliability.
CRITICAL
COMMUNICATIONS
Proven performance in high-performance,
high-reliability RF
• Tower top amplifiers
• Diplexers and multiplexers
• Filters
• Combiners
High-performance and high-reliability RF for LMR, LTE and Converged Networks
Market review continued
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Background
Filtronic is a global leader in advanced RF
communications products, with a history spanning over 45
years, and various successful incarnations. The business
has created a large pool of talent in the North East of
England and Yorkshire, with many companies involved in
aerospace and defence and RF technology having their
roots in Filtronic.
Today, Filtronic is a high growth, highly dynamic
business that is leveraging IP and know-how in RF design
developed over many years and leading the market in
high-frequency communications up to 300GHz. The
key focus areas for the business are in the emerging
high growth market of LEO space communications, and
opportunities in aerospace and defence from a growing
global threat to national security.
We are a larger organisation than we were this time
last year in terms of market capitalisation, having had
several contract successes to leading players in their
respective markets. As a larger business it is important
that we maintain the strengths that have been critical
to our success. These include rapid development, agile
decision making and a track record in quick production
ramps to bring products to market. To complement this,
we are taking considered action to scale the business,
with more employees, appropriate additions to plant and
machinery, increased capability and a planned move of
Strategy
Why our customers choose Filtronic
Speed to market
Lower cost
of ownership
Customisation
Higher
performance
Agility
SWaP-C
Engineer to
engineer
collaboration
Core 4 markets
Aerospace and defence
Telecommunications
infrastructure
Filtronic’s high-performance mmWave
solutions, deployed globally, leverage our
expertise in module integration for plug-and-
play functionality. With unparalleled design,
manufacturing, and testing capabilities, we continuously
enhance performance while reducing size, weight, and
costs. We have a proven track record of designing and
manufacturing sub-systems and devices with superior
characteristics, including high power, exceptional lineari-
ty, low noise, and high reliability.
Space
In the new space sector, including Low
Earth Orbit and High Altitude Pseudo
Satellites, our high-performance RF
technology is enabling Satcom to meet the
growing demand for fast, reliable, and scalable
communication solutions. Our expertise in mmWave
technology helps our customers be first to market,
facilitating market capture, technological leadership,
regulatory influence, and economic benefits, all of which
are critical in this rapidly evolving ecosystem.
Aerospace
Building on our established customer relationships, we
specialise in mission-critical, customised components and
sub-systems that address unique challenges, ranging
from low TRL to high-volume production.
Our focus is on creating lighter, smaller, and more
powerful products to meet industry demands.
Defence
With a proven track record underscoring our commit-
ment to excellence, we deliver advanced solutions that
push the boundaries of innovation for the UK defence
industry. Our dedication to innovation drives us to create
products that are not only lighter and smaller but also
more powerful, aligning seamlessly with the evolv-
ing needs of the industry.
16
Filtronic plc Annual Report and Accounts 2024
factory to larger premises in the North East of England.
This investment in our internal capabilities will ensure
we manage more customers, and projects with perfect
execution. As we build the organisation, priority will be
on building the engineering, programme management
and commercial teams. As we execute on these key areas,
we will ensure robust financial governance, as well as
ensuring we remain nimble, flexible and fast moving.
The addition of a new CEO, in Nat Edington, with a track
record in execution of growth strategies for technology
businesses, brings a renewed energy to the business.
This energy will be harnessed to augment the culture of
the Group whilst providing an opportunity to review the
strategy with a fresh perspective and new ideas.
Creating value
Our purpose and mission define our strategy and provide
the framework in which our strategic focus lies.
Our vision is clear, to be known for enabling the future of
RF, microwave and mmWave communication. This is a
bold statement but one in which we firmly believe given the
strength of our capabilities and successes in pushing the
boundaries of technology. We have developed technology
that have been world firsts and achieved world leading
status with data speeds.
Our mission is to create value for our clients through
technology leadership. We develop the building blocks
of core IP and then utilise this technology to create
highly customised solutions for our core markets. Our IP
starts with the chipsets we use in our systems which are
developed in-house and designed to perform better than
what is available from commercial off the shelf (“COTS”)
products. This gives our technology a competitive
advantage over our competitors. We then use these chips
in our core product offering where we are seen as leaders
in the technology with substantial know-how having
been operating at very technically challenging frequency
bands for over 15 years. There are design houses that
have capability and there are manufacturers that can
process the technology, but Filtronic can offer end-to-
end capability with turnkey solutions where we design,
engineer and manufacture solutions.
The strategy remains focussed on organic growth
to capitalise on opportunities in expanding markets
including LEO space, aerospace and defence and
telecommunications infrastructure. These are markets
where there is significant government and industrial
investment in the technology that the Group provides.
In the satellite communications market, we are a trusted
partner and supplier to the space industry, as evidenced
by our long-term agreement with the market leader,
SpaceX. Our mmWave technology for LEO applications
in both ground stations and payload is helping accelerate
our customers’ entry into this market. We continue to
penetrate and work with other leaders in this market and
have already been successful in multiple projects with
the European Space Agency (“ESA”), opening up future
commercial opportunities.
Within aerospace and defence, we provide RF, microwave
and mmWave solutions that are critical for sensing,
protecting and communicating in areas such as Electronic
Warfare and AESA radar. Here, military satellite
communications is also a fast growing opportunity, and
we are already applying our market leading components
and subsystems in this area. We have long established
specialised hybrid manufacturing capabilities, and this
remains a growth area for us.
These are our two key strategic markets that we deliver
growth by:
• Developing long-term customer partnerships;
• Encouraging innovation and advancement of
technology;
• Identifying and pursuing growth opportunities in new
and existing markets; and
• Developing high-quality leadership teams and a
high-performance culture in our organisation.
We continue to support our legacy markets of
telecommunications infrastructure and critical
communications, and we expect these to be good
contributors to our business for years to come, but the
other strategic markets are now driving our growth.
Telecommunications infrastructure will always be
an important market for us as it drives much of the
technology roadmap. Whilst it is very price sensitive,
technology tends to be adopted first by this market, which
enables adjacent market opportunities for us.
We have a well-defined, focused technology roadmap
and strategy that will ensure we remain a key player in
microwave and mmWave communications products
for years to come. In order to execute these technology
developments at pace, we also utilise the research and
academic community along with our industrial partners,
as an extension of our internal expertise. We have
demonstrated the ability to have technologies available
for key customers ahead of their requirements, and also
influenced their product plans, which is testament to our
deep expertise in the RF arena.
We will continue to operate as a technology and
manufacturing company, in markets that align with
our mission and purpose, and invest to capitalise on the
significant levels of market demand that we are seeing in
our opportunity pipeline.
Strategy continued
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Frequency table
Objective and strategy continued
1MHz
1GHz
2GHz
4GHz
8GHz
12GHz
18GHz
27GHz
40GHz
75GHz
110GHz
170GHz
300GHz
Test & Measurement 18GHz - 175GHz
Critical Comms
700, 800 & 900MHz
Quantum Computing 1MHz - 86GHz
Telecommunications Infrastructure 800MHz - 175GHz
Private Networks 1MHz - 86GHz
Aerospace & Defence 1MHz - 90GHz
Space 1GHz - 86GHz
Track to Train
40GHz - 86GHz
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Filtronic plc Annual Report and Accounts 2024
The business delivered a break-through set of
results with significant improvement in revenue,
profit and cash reflecting the successful execution
of our strategy. The strong performance provides
the platform to invest in the long-term growth of
the Group with momentum building from customer
demand and pipeline opportunities.
FY2024 saw major progress for the Group, with the
signing of a Strategic Partnership with SpaceX offering
potential for significant growth. Revenue growth in the
year of 56% and adjusted EBITDA growth of 285% to
£4.9m (2023: £1.3m) saw the Group upgrade market
expectations a number of times in the year as trading was
very strong in H2. Revenue growth initiatives continue to
be the major benefactor of investment as we capitalise
on market opportunities and deliver on key strategic
objectives, particularly to broaden the customer base and
increase revenue in the markets we serve. Whilst there
have been economic headwinds in the wider economy, we
have benefitted from operating in core markets such as
space and aerospace and defence, that are seeing huge
investment and are high on the priority of government
spending plans.
Revenue
Group revenue increased to £25.4m (2023: £16.3m)
with the emerging market of LEO space driving much
of the growth, mainly due to SpaceX rapidly deploying
and expanding their Starlink constellation. As more
subscribers are added to the network, bandwidth and
low-latency become critical to the end-user experience
and therefore more E-band SSPAs are needed to keep
pace with the network rollout and new user additions.
Whilst we announced significant order wins in the year to
strategically important customers such as the European
Space Agency, BAE Maritime and QinetiQ, revenue
in FY2024 has not benefitted from any meaningful
recognition of these contracts, which are expected to
positively impact FY2025 and beyond.
Our LEO space customer Space X, contributed 48% of
revenue in FY2024. We are mindful of the short-term
consequence on customer concentration and dependency
arising from this. The three largest customers represent
84% of turnover (2023: 73%). However, we are confident
that this will rebalance over time as the sector develops
and we continue to win business in other markets.
As expected, the 5G telecommunications infrastructure
market has seen a slowdown in demand coupled with
the original equipment manufacturers (“OEM”) holding
excess inventory. This led to sales to this sector decreasing
year-on-year by 12% but whilst the cyclical nature of the
market meant we were down in the period, we still see this
market as an important one for the Group, particularly
as we continue to push the boundaries of innovation
and technology with our customers, who are often early
adopters of new technologies.
Sales of Xhaul products to other markets were up 77%
on the prior year mainly due to three new customers that
we won orders from covering a range of end markets
including high-frequency trading platforms and private
networks. These products are a blend of E-band
derivative technology products that have been customised
from our core offering and use of our highly automated
process capability.
Aerospace and defence revenue was lower than the prior
year by 49% due to a hiatus in supply of components to
airborne radar systems from an established programme.
This is a timing issue with demand expected to return
as new aircraft orders are received. Despite this, the
underlying fundamentals in this market remain strong and
it is fully expected that significant growth will be delivered
over FY2024 in the coming year based on order intake
and opportunity pipeline. This is a key market to our
growth plans, and we are investing to further penetrate
within the defence primes and the Ministry of Defence
(“MoD”). Our technology is highly relevant and the skills we
offer are in short supply within our key target customers
who are all expressing a need to engage with SMEs
who can offer sovereign capability. This is supported
by the MoD which has placed increasing importance
on maximising small and medium sized enterprises
(“SME”) integration into defence procurement, not only to
invigorate the sector and shorten the supply chain, but to
ensure the defence industry has access to the innovation
and technologies that SMEs develop.
The legacy products supplied into the critical
communications market saw demand return to
normalised levels after upstream component issues within
the system-level product last year. This resulted in an
increase of revenue to this market of 53%. This increase
was seen throughout the product portfolio we offer to the
P25 network in the USA including the TTA product.
Financial review
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Operating costs and headcount
Operating costs increased by 25% in the year to £12.5m
(2023: £10.0m) as investment increased to realise the
growing opportunity pipeline. The key area of spend was
in our engineering organisation where we increased the
headcount, particularly in Q4, and worked with partners
to undertake product developments on a variable cost
basis. In addition to this, the annual bonus target was met,
having not been achieved in the prior year, whilst we also
increased manufacturing overhead to facilitate the rapid
ramp of production in H2.
As mentioned above, the annual bonus performance
target was met in the year as the directors and key
management were rewarded for achieving a stretch
revenue target. This bonus will be paid in August 2024
payroll, after publication of the audited accounts, but has
been accrued in the FY2024 financial statements. We
also implemented a one-off bonus in FY2024 for all of our
employees who were not already part of a variable bonus
scheme, based on the achievement of the same stretch
target given the effort needed to enable the production
ramp.
The Group’s largest overhead is salary-related costs,
representing 67% of the operational cost base, which
increased by 22% lifting overheads by £1.5m, accounting
for much of the overall operating cost uplift. The mix of
our manufacturing employees shifted from lower cost
production operatives to higher cost specialist engineers in
process engineering who are critical for implementing new
products and processes.
Engineering resource is key for our growth, and it was
pleasing to see that we not only increased the number of
engineers, but also the quality and quantity of candidates
we are attracting with valuable expertise and experience,
which has helped to significantly upskill the team from
the prior year. This has enabled us to service a larger
opportunity pipeline, increase the number of product
developments for customers and expand our technology
roadmap, to position us well to execute our strategic plans.
Given some of the changing dynamics described above,
the headcount increased to 133 (2023: 130) at 31 May
2024 with a mix change from manufacturing to research
and development. An analysis of the Group’s headcount is
presented below:
Employee Number
2024
2023
Manufacturing
73
78
Research and development
39
33
Sales and marketing
7
6
Administration
14
13
Total headcount
133
130
We are planning to add further business development
resource in FY2025, to augment our direct access
to market, whilst we also plan to bring in additional
engineering resource to deliver scheduled programmes
and accelerate new product delivery. Investment in
the engineering team is critical to sustainable financial
growth and we plan to maintain this spend at around
13% of revenue. Given the speed of revenue growth and
relative difficulty in recruiting RF engineers quickly, this
number was around 11% this year (2023: 13%) despite
an increase in engineering costs of £0.8m. Continuing
to focus on this metric will ensure we have the resource
in place to capitalise on growth opportunities and keep
ahead of our competitors with the latest technology.
Where product development is customer specific, we
seek to receive a Non-Recurring Engineering (“NRE”)
charge to maintain a healthy flow of cash during the
development phase of the engineering projects and
ensure commitment from our customer. When developing
our own technology roadmap and IP, we invested from
our cash reserves. This was the case when we developed
technology for the LEO space market, and we’ll develop
further technology from our own reserves at a range of
other frequencies in both ground station applications
and the payload. Consequently, we capitalised £0.7m of
development costs in the year. Further commentary on
these capitalised development costs can be seen in the
Research and Development section of this review.
Other costs increased in line with scaling a business
including recruitment fees, equipment hire and insurance
costs whilst electricity costs reflected a new fixed term
contract having concluded the contract that was locked in
prior to inflationary pressures in the energy industry.
The Group continues to be active in securing grant
funding to further support growth initiatives and
investment. We benefitted from a further £0.15m of
grant income in the year from the Defence Technology
Exploitation Programme (“DTEP”) and local support from
Business Durham for the purchase of some key machinery.
Looking forward, we are engaged in a number of open
calls in both regional funding programmes and national
technology grants that we hope to be awarded in the next
year.
Adjusted EBITDA
The Group utilises an alternative performance measure
(“APM”) to track performance of the business. This
APM is adjusted EBITDA as it measures the quality of
earnings without the impact of non-cash expenses such as
depreciation, amortisation and share-based payments.
Share-based payments have been added to the APM this
year, having been calculated as part of IFRS2 fair value
accounting, to reflect the grant of options in FY2024 to
Executive Directors and key management. More details of
this can be found in note 30.
Adjusted EBITDA for the year was £4.9m (2023: £1.3m)
representing a 285% increase whilst operating profit was
£3.6m (2023: £0.2m) representing a 1,423% uplift. This
was the result of stronger gross profit from higher revenue,
whilst the sales mix was also stronger due to a reduction to
the concentration of low margin 5G telecommunications
equipment which is a highly price sensitive market.
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Filtronic plc Annual Report and Accounts 2024
The table below shows the reconciliation of operating
profit delivered at £3.6m (2023: £0.2m) to adjusted
EBITDA of £4.9m (2023: £1.3m):
Reconciliation of operating
2024
2023
profit to Adjusted EBITDA
£000
£000
Operating profit
3,610
237
Depreciation
945
780
Amortisation
287
253
Share-based payments
47
-
Adjusted EBITDA
4,889
1,270
Taxation
A tax charge of £0.2m (2023: tax credit of £0.4m) was
recognised in the year, as deferred tax assets were
amended to recognise a shorter period of asset usage.
The Group also benefits from R&D tax credits, due to
the advancement of science and technology in the new
products we develop, which lowers the amount of taxable
profit on qualifying R&D activities. We also make use of
the Annual Investment Allowance (“AIA”) which offers
tax relief on capital expenditure purchases, and utilise
first year allowances on capital purchases above the AIA
threshold.
With substantial deferred tax assets, including those
not recognised on the balance sheet, the Group will
continue to benefit from not having a tax liability for the
foreseeable future.
Research and development costs (“R&D”)
Total R&D costs in the year before capitalisation
and amortisation of development costs were £2.8m
(2023: £2.0m). The Group incurred engineering costs
on a mixture of customer funded developments and
progression of the technology roadmap.
The Group remains committed to investing in R&D for
future growth and consequently measures R&D spend
as a KPI. Key areas of spend in the year included product
development for LEO space applications in both the
ground station and the payload, private networks and
aerospace and defence. The year ahead will see us
continue to invest in the development of our own strategic
technology roadmap and proprietary IP, enabling us to
build long-term shareholder value in the years ahead.
Recruitment of RF engineers has been an industry-wide
issue for some time, but we are pleased with recent
successes in attracting new talent to the business at each
of our three UK engineering development sites. We will
augment this by building an organisation fit for the future,
increasing the intake of graduate recruits and augmenting
our apprenticeship programme.
The Group capitalises its development costs in line with
IAS 38 as set out in note 1 to the financial statements.
A reconciliation of R&D costs before capitalisation and
amortisation can be seen in the table below:
2024
2023
Reconciliation of R&D costs
£000
£000
R&D costs in income statement
2,408
1,776
Capitalisation of development costs
677
48
Amortisation of development costs
(245)
(222)
R&D cash spent
2,840
2,035
When capitalising development costs, an impairment
review is undertaken of each development programme to
test the carrying value does not require impairment in line
with IAS 36.
Capital expenditure and right of use assets
Capital expenditure in the year remained in line with
the prior year, with investments focussed on automated
test capability which enables the R&D team to engineer
at higher frequency bands, critical for execution of the
strategic plans. The total amount of capital purchased
was £1.5m (2023: £1.5m).
Warranty provision
In line with industry practice, the Group provides
warranties to customers over the quality and performance
of the products it sells. Reflecting a full risk analysis
of current commercial contracts at 31 May 2024, the
warranty provision was £0.4m (2023: £0.3m).
Funding and cash flow
The Group recorded an increase in cash and cash
equivalents to £7.2m (2023: £2.6m) at the year-end. Cash
generated from operating activities in the year was £6.3m
(2023: £1.0m) as adjusted EBITDA performance drove
cash generation and customers prepaid an element of
the contract value for product development of bespoke
solutions.
Net cash, when including all debt except property leases
at the end of the period, was £5.2m (2023: £1.6m), whilst
overall net cash including property leases was £4.2m
(2023: £0.3m).
We also have additional cash headroom available
through a £3.0m invoice discounting facility with Barclays
Bank plc in the UK. We had a $4.0m invoice factoring
facility with Wells Fargo Bank in the USA but terminated
this agreement on 12 July 2024. Both facilities were
undrawn at 31 May 2024 (2023: undrawn).
Financial review continued
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Going concern
In assessing going concern, the Board have considered:
• The principal risks faced by the Group which are
discussed within the ‘Risk management’ section of the
Annual Report;
• The financial position of the Group including forecasts
and financial plans;
• The healthy cash position at 31 May 2024 of £7.2m
(2023: £2.6m) and the additional headroom available
through the undrawn invoice discounting facilities and
overdraft (2023: undrawn); and
• Economic headwinds with the potential for customers
to reassess their priorities, with opportunities
postponed or curtailed.
Following the above considerations, the directors are
satisfied that the Group has adequate financial resources
to continue in operational existence for a period of at least
12 months from the date of this report. Accordingly, the
going concern basis has been adopted in the preparation
of the Annual Report for the year ended 31 May 2024.
Michael Tyerman
Chief Financial Officer
29 July 2024
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Filtronic plc Annual Report and Accounts 2024
Key performance indicators
The Group’s management team uses various Key Performance Indicators (“KPIs”) to monitor the
financial and non-financial performance of the business. Below are the measures and metrics
which the Board believes best indicate the financial performance of the Group’s continuing
operations.
The total amount the Group earns
from the sale of products and
services.
Revenue (£m)
£25.4m
2024
2022
15.9
2021
2023
The Board recognises adjusted
EBITDA as a key metric of the
underlying health of the business.
Adjusted EBITDA (£m)
£4.9m
0.7
The Board recognises that the
Group needs to invest in new
products, capabilities and
technologies to participate in a
technology-driven market and
measures the investment made in
research and development.
R&D costs (£m)
£2.8m
2024
2022
2021
1.2
1.7
1.7
2.0
2023
The Board recognises that the
Group needs to invest in new
products, capabilities and
technologies to participate in a
technology-driven market and
measures the investment made in
research and development.
R&D costs as percentage
of revenue (%)
11%
2024
2022
2021
2023
The Board recognises that cash
flow from operating activities
indicates whether the Group is
able to generate sufficient positive
cash flow to maintain and grow
its operations, or it may require
external funding for financing.
Cash generated from
operating activities (£m)
£6.3m
2024
2022
2021
2023
2024
2022
2021
2023
2.8
15.6
17.1
16.3
25.4
1.3
1.8
2.8
4.9
2.5
2.3
1.0
6.3
11
10
13
11
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Approach to managing risk
The Board is ultimately responsible for the overall risk
management system and internal controls applied
throughout the Group to ensure a structured and
appropriate approach to risk is taken in line with
strategic priorities and risk appetite. The Audit and
Risk Committee has oversight of risk management
and reports to the Board with its findings. The directors
recognise that risk is inherent in any business so actively
manages rather than eliminates risk to achieve business
objectives which includes review of the effectiveness of
these controls.
Risk management within the Group is managed by the
Risk Management Committee made up predominantly
of the Senior Leadership Team including the Executive
Directors.
The team is responsible for:
• Identifying the risk and the negative and positive
risk circumstances;
• Assessing and evaluating the likelihood and impact
of those risks;
• Reporting the risk; and
• Managing the key risks in accordance with
established processes under the Group’s
operational policies and controls.
This process includes a regular review of the Group’s
risk register considering existing and emerging risks,
risk scores and mitigation action plans prepared by
risk owners to manage and reduce the risk. Reporting
within the Group is structured so that key issues can be
escalated rapidly through the management team to
the Board where appropriate.
Risk management
Board of Directors
Audit and Risk
Committee
(Independent
review and
challenge)
Outsourced
internal audit
(Independent,
objective review
function)
Functional
risk registers
Risk Management
Committee
(Review and input)
1
2
3
4
5
Impact
Probability
1
2
3
4
5
HIGH
LOW
LOW
HIGH
Recruitment & retention
Supply chain
Market requirements
Reliance on key customers
Manufacturing
Technology
Key:
Market requirements
Technology
Recruitment
Reliance of key customers
Cyber risk
The Board recognises strong risk management is key to our success and achievement of our
strategic objectives. A rigorous assessment of the principal risks facing the Group is regularly
undertaken with quick and effective responses taken when needed. These principal risks carry
financial, operational and compliance impacts including those that threaten the business model,
strategy, future performance, solvency and liquidity. They are identified based on the likelihood of
occurrence and the severity of impact on the Group that could result in damage to our reputation or
business performance.
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Filtronic plc Annual Report and Accounts 2024
Risk
Risk description
Mitigation actions
Change
in year
Our ability to remain competitive in terms of technology
and product design is underpinned by retaining key
employees, talent acquisition and effective design
methodologies.
We work closely with our customers and suppliers to gain
a thorough knowledge of the technology being developed
in the marketplace. We are also members of key forums
such as The European Telecommunications Standards
Institute (ETSI). By staying close to the market, we position
ourselves to react quickly to any technology changes that
develop.
When undertaking new product developments, we
follow a process which facilitates a thorough review
of the engineering development at various milestones
throughout the project. This methodology is designed
to ensure the product has no design defects, meets the
required specification and is on time to exploit the market
opportunity. We have a project management team to
ensure compliance with our engineering development
process and have plans to further strengthen this function
in FY2025.
In order to protect our intellectual property, we maintain
and apply for patents when appropriate and actively
encourage innovation in our engineering team through a
reward process.
The markets we supply into are
time-sensitive and opportunities
may be lost if we fail to achieve
customer specification or meet
the timescales required to match
market demand. This may also
impact on future revenue.
For products in the production
cycle, technology insertion is often
required as a means of achieving
cost reductions to improve
product margins.
Our product competitiveness is
heavily influenced by technology
choices at product concept stage
and throughout the execution
of design to product launch. If
the technology we develop is
inappropriate this could result in
missed opportunities.
Failure
to deliver
projects on
time or to
specification
Our principal risks and uncertainties
In a market of rapid technology changes, it is imperative
the Group chooses opportunities that will yield a good
rate of return and have an extended product life. All new
opportunities are appraised to ensure there is a good
match between our capacity, capabilities and likely
adoption in a growing market with a good rate of return.
The appraisal process includes regular communication
with our customers including key members of our
engineering teams to ensure we are developing innovative
products that deliver the technical solutions needed by the
market. This process also assists in the formulation of the
technology roadmap to ensure it is aligned to the needs of
our customers which augments the work we undertake to
develop our own market intelligence.
With the rapid evolution of
product technology and other
corporate decisions, the size of
our addressable market may
be affected. Failure to forecast
market movements correctly thus
missing opportunities or wrongly
predicting product longevity
could impact on long-term
revenue and profit.
Failure to
identify
market
requirements
Managing new emerging risks
We monitor new and emerging risks closely. In the year,
we have not added recruitment to our risk register as we
are trying to scale the business to manage a growing
opportunity pipeline and the number of projects we are
managing. We have downgraded the risks relating to
semiconductor shortages as the global component crisis
is now behind us and cost inflation which is now under
control. Therefore, we have removed these risks from
principal risks and uncertainties.
Risks also present opportunities as well as potential
downside; the challenge to scale our business with
talented people not only represents a risk, but also an
opportunity is it builds our internal capacity and
bandwidth to manage more projects to achieve our
growth plans.
We have mitigating plans to cover each of the risks we
are managing and met regularly as a Risk Management
Committee to discuss these material risks.
In the year ahead, our priorities are focussed on
broadening the customer base and winning new clients
in our strategic markets. We will also be working to
ensure we build capacity in our engineering teams to
minimise the risk that project timelines are not met, given
the volume of programmes we are actively managing
to support customers and develop our own technology
roadmap.
Risk management continued
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Risk
Risk description
Mitigation actions
Change
in year
Our largest customers are very successful in their
respective markets, and each has a long-established
relationship with Filtronic. We continue to win further
contracts with our existing customers, including the
strategic partnership with SpaceX, and have good
outlook visibility as well as being actively engaged with
them on new opportunities.
The Group has strong account management
strategies and mitigates this risk by working closely
with customers, at all levels, to ensure that we are
designed into their new products at an early stage,
enabling us to develop products that meet their
specifications and requirements.
We provide customers with a well-resourced
programme and a high level of service with a focus
on product quality and delivery which enables high
customer retention rates.
To broaden the customer base, we won several
contracts with new customers in the year, including
BAE, QinetiQ and the European Space Agency, across
several different markets that may lead to significant
business in the future. In the short-term the risk has
increased due to significant order intake from SpaceX
driving revenue growth.
Having strengthened the business development
function in FY2024, we are looking to strengthen
further in FY2025 in both the direct and indirect
channels, giving confidence this risk can be reduced.
Our revenue is currently weighted
towards our largest customers.
The loss of any of these
customers, material reduction in
orders from any such customer or
the timing of customer projects
may have a material adverse
effect upon Filtronic’s financial
condition.
Reliance
on key
customers
The Group has a highly competitive remuneration
package that is reflective of market conditions for key
roles and is under review as conditions change. For an
insight into the benefits package the Group offers please
see the ‘Our people’ section of this report. The Group also
operates a long-term incentive plan for key employees
and a SAYE scheme for all UK employees.
We continue to invest in our engineering teams to ensure
we have engineers with the right skills to execute our
strategy. We also provide regular communications to all
employees through communication meetings in each
of our business locations along with a newsletter to
employees giving updates about business performance.
By giving our employees an understanding of our
strategic direction and objectives, we believe it
enables them to make meaningful contributions to the
achievement of our goals.
The Group is reliant on the key
skills and knowledge of its people
in a range of areas especially in
the engineering function. Failure
to recruit, develop and retain an
appropriate number of suitably
qualified people in critical areas
could affect our ability to design
new products and meet our
customers’ needs. Due to the
highly technical nature of our
activities, these skills are not
always readily available which
could have an adverse effect on
the Group.
Recruitment
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Filtronic plc Annual Report and Accounts 2024
Risk
Risk description
Mitigation actions
Change
in year
Risk key
Increased risk
No change
Decreased risk
As a supplier to the defence industry the Group has strong
cyber security credentials including IASME Governance
Gold, Cyber Essentials Plus and DART accreditation.
We have also worked with a third party to undertake
penetration tests of our system to ensure the integrity of
all our defensive systems. In the year ahead we intend to
upgrade our cyber accreditation to ISO 27001.
Regular reviews are undertaken of the network security
arrangements and training is provided regularly to users
on cyber threats and other data loss/integrity risks.
The Group also limits access to data and access is only
provided to those users with a genuine business need.
Data shared externally is conducted under contractual
arrangements.
There is a risk to the Group if
there is unauthorised access
to, or integrity issues with, our
data systems. This could cause
significant reputational damage
as well as service disruptions
and potential impact on orders,
revenue and profit.
Cyber
security
and data
integrity
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Exceptional people allow us to create exceptional
products and solutions for our customers, and the markets
we serve. We are proud to have employees who are just
that. Our engineering and operations teams are very
highly regarded by both domestic and international
customers and other stakeholders alike.
Our workforce is exceptionally stable; we have an average
length of service of over 8 years and an employee turnover
rate of under 2%.
Employee Communication and Engagement
On a regular basis, management engages with our
employees through a range of formal and informal
channels, including briefings and memos from the
Executive Directors, team meetings, 1-2-1’s, and online
publications via various social media outlets.
We consider an open and honest culture critical to success
and continuous improvement and have an open door
policy throughout the business to encourage informal
conversations and accessibility.
Through our HR system we have also enabled surveys
covering key aspects of employment such as onboarding
and equality, diversity and inclusion. Voluntary leavers are
interviewed to provide an additional means of expressing
their views enabling us to analyse data to address any
retention issues or implement suggested improvements.
Equality, Diversity and Inclusion (“EDI”)
EDI is embedded in our culture; procedurally and
behaviourally from recruitment, employee development,
succession planning through to pay audits. We want to
reflect the local communities in which we operate and the
diversity in our workforce is largely representative of this.
Filtronic has equal opportunity policies which form part
of the Group’s core values and which are expected of
employees, suppliers and other stakeholders. Our policies
and practices emphasise the importance of treating
people in a non-discriminatory and inclusive manner
across the full employment life cycle.
Our workforce gender split is, female 35%: male: 65%.
The majority of technical and managerial positions are
held by men. We continue to work towards addressing
this and increasing the number of technical, managerial
and leadership positions held by women. This is a
challenging target as the engineering sector is still very
much male dominated particularly in the UK, but we
have had success this year recruiting female engineers
internationally.
We are confident that our university and apprentice
scheme partnerships will assist us in placing more women
into technical roles.
Employee Remuneration
Our compensation strategy aims to attract and retain
talent whilst promoting and rewarding sustainable
performance and contributions at all levels of the
organisation. The Board and the Remuneration
Committee continually look to ensure that our
remuneration provisions support our strategy and
business objectives.
The market competitiveness of salaries across the
company is assessed at local or national market level,
dependent upon role, and is reviewed annually. A full
salary benchmarking exercise was undertaken this
year for all roles, with significant increases made to
manufacturing salaries, to ensure that we recruit and
retain the highest quality candidates in this area.
In addition to competitive salaries, we also offer a suite of
benefits including, but not limited to, employer matched
pension contributions plus 2%, to a maximum of 8%, long-
term incapacity benefit, 4 x base pay sum life assurance,
childcare vouchers, cycle to work scheme, electric vehicle
scheme and paid time off for charity work.
We love to encourage innovation within our business, the
Technology Leadership Recognition policy aims to do
this by recognising and rewarding innovative thinking
and professional personal development. A number of
awards were made in the year, under this scheme, for new
patent applications and grants as well white papers and
technical presentations. To complement this, we have also
introduced a ‘Bright Ideas’ scheme managed through our
T-card system, to broaden the reward scope for new ideas
and continuous improvement suggestions. Vouchers are
presented quarterly to employees with the best ideas.
We also like to reward loyalty and offer an additional
days’ holiday every five years to a maximum of 15 years.
After this, we gift a long service award to our employees
recognising their commitment to the Company, and
celebrate their commitment with an awards ceremony at
our annual summer event.
Our people
We are extremely proud of our people and their contribution in supporting organisational performance
and strategy.
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Filtronic plc Annual Report and Accounts 2024
Employee Share Plans
We have share option plans designed to align employees’
interests with the Group’s performance and the interest
of our shareholders. For information on the share-based
compensation plans please see note 29.
UK-based employees of Filtronic are eligible to participate
in the Save As You Earn (“SAYE”) Scheme. Options are
granted at the closing middle market price on the day
before issue and vest after completion of a three-year
savings period.
Wellbeing
We are committed to supporting our employees, and
offer a fully funded Employee Assistance Programme,
WeCare, which includes additional mental health and
financial advice for employees, as well as their families.
Employees have 24/7 access to an online GP, mental
health counselling as well as legal, financial, and
nutritional advice.
We have integrated medical and wellbeing checks into
our performance management processes, to ensure that
a proactive approach is taken from and line management
perspective. We have offered tailored support packages
fr individuals where needed and on a broader level offer;
• hybrid working;
• flexible working hours; and
• choice of operational site to work from to aide work-
life balance, family support (parent and carer) and
pre-retirement scale down and general wellbeing.
We undertake periodic health checks for all shift workers,
as well as having a dedicated occupational health service
provider, for specialist advice and referrals.
Looking to the Future - FY2025 Priorities
Our people will continue to be a real focus for the business
in FY2025; both new and existing talent. Our recruitment
plans are ambitious and necessary to deliver medium-
and long-term growth plans, and resourcing will be given
the utmost priority. We are building the HR organisation
to support all people related activities, particularly talent
management and employee experience.
The key focus areas are:
• Employer branding;
• Development of a flexible benefits suite and
platform;
• Succession planning; and
• Developing strategic partnerships with UTC Durham
and the North East Space Skills and Technology
Centre (“NESST”), a £50m investment into
Northumbria University from the UK Space Agency
and Lockheed Martin that we are supporting to
build the talent pipeline in the UK space economy.
Current headcount metrics
Length
FY2024 FY2023
of service
%
%
0-5
58
59
5-10
16
13
10-20
11
12
20+
13
11
>25
2
5
Function
FY2024 FY2023
%
%
Manufacturing
53
52
R&D
35
34
Sales & marketing
5
5
Administration
7
9
Nationality
FY2024 FY2023
%
%
American
8
9
British
78
80
Other
14
12
Gender
FY2024 FY2023
%
%
Male
65
63
Female
35
37
Our people continued
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Act with integrity; being
honest and fair, always
keeping our promises.
Do the right thing, not the easy
thing, speak up if it’s not right.
Deliver on your promises.
Be truthful, always being
honest and open.
Be fair and ethical in your work
and decision making.
Take responsibility for your
own actions, learn from
mistakes when they happen.
Integrity
Be respectful to all; it is the
foundation of culture.
Be inclusive, always respecting
and valuing others.
Act how you want to
be treated; being kind,
considerate and respectful of
others and their opinions.
Be supportive and positive in
all your working relationships.
Value the importance
of equality, diversity
and inclusivity.
Be open-minded and upfront
with people.
Respect
Strive for excellence; it is what
our clients and colleagues
expect and what we
endeavour to deliver.
Perform to the highest
professional standards.
Be innovative and pragmatic
with problem solving.
Take pride in our work, paying
attention to detail.
Be agile and flexible
in your approach.
Be curious and challenge
constructively to improve how
we work.
Excellence
Behaviours
Values
Our values
dustry?
nges, for
ctrical
nd
ology
ing
ming
F
alls I
xtremely
cal,
ic.
ong
e
was
ompared
Katie
Management Accountant
Linda
Lead Operator
What’s the best thing about your job?
The best thing about my job is working with a great team.
Every day is different and can be lots of fun, and I really
enjoy being part of projects from beginning to end, our
products make a difference, which is a good feeling.
What have you learnt since working for our
company?
Since joining the company, I’ve learnt the importance
of being flexible and open to new ideas, technologies,
and ways to improve what we do. I feel better equipped
to lead teams and appreciate even more the value of
working with a good team.
What is a milestone or project at work that you’re
proud of?
I have recently appraised and implemented the salary sacrifice
Electric Vehicle Scheme which is very exciting for Filtronic! This
allows employees the benefit of leasing an electric car out of
their gross salary before tax and national insurance with no
up-front cost, whilst also saving the planet! This will also help
the business in striving to achieve sustainability.
What does a ‘day in the life’ look for you?
As a Management Accountant, my tasks vary based on what
the business needs each day. At month-end, I focus on putting
together the monthly management accounts, comparing
actual results with forecasts, and analysing the P&L and
Balance Sheet to present to key stakeholders.
What I enjoy most is working with the sales and production
teams to review and fine-tune forecasts. It’s satisfying to ensure
they’re reliable, set targets, and figure out ways to tackle any
issues. Running the weekly sales forecast meetings leading
up to the year-end was particularly rewarding because our
teamwork helped us hit our target—a great win for the whole
Filtronic team.
30
Filtronic plc Annual Report and Accounts 2024
Our people continued
Sam
RF Engineer
Daniel
Engineering Apprentice
What do you love most about your job?
One of the aspects I love most about my job is the daily opportunity to
learn and grow, benefiting from the knowledge and expertise of my
colleagues. Being surrounded by experienced professionals exposes me
to innovative solutions to design problems and challenges. This dynamic
environment allows me to apply the theoretical knowledge from my day
release at Sunderland University to practical situations, enhancing my
understanding and communication skills. I also value the collaborative
atmosphere within the team, where my contributions are appreciated
and my growth is encouraged. The blend of hands-on experience and
continuous learning makes my apprenticeship incredibly fulfilling.
What was it about the Filtronic Apprentice scheme that
attracted you?
Similar to any apprenticeship, Filtronic lured me in by the opportunity
to work in such a unique sector of electrical engineering as not many
people can say they contribute towards products used for satellite
communications - something that everybody interacts with in some form.
Further to this, the opportunity to work in a really good engineering team
with vast knowledge, experience and feels
like a family. Plus, working towards a degree,
whilst working a full-time job is a real opportunity!
What tools do you use day to day?
No two days are the same in my job, day-to-day I get to use the latest CAD software and RF/microwave measurement
hardware that we have here in the labs. I use CAD to model and analyse the predicted performance of the high-frequency
modules we design at Filtronic. Additionally, I get to use all our top-of-the-range lab equipment, such as signal generators,
spectrum analysers, and oscilloscopes, to measure and test prototypes of our products. I really enjoy this thorough testing
process and getting to see something through from beginning to end. It is really satisfying to see our prototypes meet our high
standards before they proceed to operations.
What have you learnt since working for our company?
Similar to any apprenticeship, Filtronic lured me in by the opportunity to work in such a unique sector of electrical engineering
as not many people can say they contribute towards products used for satellite communications - something that everybody
interacts with in some form. Further to this, the opportunity to work in a really good engineering team with vast knowledge,
experience and feels like a family. Plus, working towards a degree, whilst working a full-time job is a real opportunity!
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Stakeholder engagement
Board considerations and decisions
Given the updates from the SLT, some of the topics
considered throughout the year are presented below
demonstrating how the Board discharged their duties:
Strategy
• Considered The Strategic Partnership and approved
the issue of warrants to SpaceX up to a value of 10%
of the Company’s share capital.
• Considered company performance against its
strategy.
• Considered the technology roadmap and required
investment to undertake the developments.
• Update on new customer acquisition, strategic
milestones and consideration of shareholder value.
• Consideration and approval of the FY2024 interim
report.
• Consideration and approval of the FY2025 business
plan and long-range forecast.
.Employees and culture
• Consideration and approval of an employee
engagement survey to get the views of our employees
on a range of key issues.
• Requested and considered a diversity and inclusion
report of the Group with the decision to have regular
updates given at board level in future.
• Considered succession planning at senior levels of the
business.
Governance
• Agreed the appointment of Nat Edington as Chief
Executive Officer.
• Approval of the updated Group Policies including a
new Anti-Competition and Anti-Trust policy.
• Approval of the increase in headroom allocated
for the share incentive plans to align incentives with
the interests of shareholders and execution of the
strategy.
• Received regular updates from the Audit and Risk
Committee relating to risk management issues.
• Update from shareholders in relation to strategy and
remuneration matters.
The Group’s engagement with key stakeholder groups
and the impact our business operations have on the local
community and the environment are considered within
the implementation of the Company’s Strategy and the
Sustainability report.
The Board carefully considers stakeholder interests when making decisions on strategically important
matters as the directors discharge their duties in alignment with Section 172.
Section 172 (1) Statement
UK Companies Act 2006
In compliance with the
Companies Act 2006, the Board
are required to act in accordance
with a set of general duties. The
Board consider that they have
individually and collectively
acted in a way they consider, in
good faith, would be most likely
to promote the success of the
Company.
To achieve long term success,
the Board recognises the
importance of building and
maintaining relationships
with key stakeholders as
well as considering the likely
consequences of its decisions in
the long-term.
Regular updates from
the executive Senior
Leadership Team (“SLT”)
Throughout the year, the
SLT updated the Board with
information on important areas of
business focus, in particular those
relating to our key stakeholders.
The SLT is made up of the Chief
Executive Officer, Chief Financial
Officer, Chief Commercial
Officer, Chief Operating Officer,
Chief Technology Officer,
Director of Engineering, Chief
Scientist and the Head of HR.
They each submit a report each
month providing comprehensive
operational updates and progress
against strategic milestones.
They are periodically invited
to board meetings to present
this information and update
the Board on key points. This
ensures the Board have a good
understanding of the priorities
of each stakeholder group to aid
decision making at board level.
Direct engagement of
Board members
The Executive Directors are in
daily contact with employees from
across the business to understand
key topics involving employees,
customers and suppliers which
are regularly shared with the
Board. Regular reporting of
customer engagement keeps the
Board up to date on customer
trends and feedback. A number
of board members had meetings
with shareholders during the
year to discuss strategy, business
performance and executive
incentives.
32
Filtronic plc Annual Report and Accounts 2024
Stakeholder
How we engage
Key outcomes
Customers
The Board receives feedback from its customer facing
teams. Each key account has a dedicated account
management who acts as “the voice of the customer”.
The Chief Commercial Officer briefs the Board each
month as to how we are performing with each of our
customers.
The Executive Directors, along with senior members of
the sales and engineering teams will attend meetings
with strategic-level influencers within our customer’s
organisation.
We continually seek opportunities to collaborate at
a product and technology strategy level with our key
clients, but all collaborations are under Non-Disclosure
Agreement (“NDA”) and require director-level approval.
Customer feedback is regularly sought and collected
by the business through a wide range of channels. This
information is processed and analysed as part of our
business improvement initiatives.
We regularly participate in a wide range of trade
shows, conferences and symposia. They play an
important role in our business development planning.
The Executive Directors communicate with employees
through communication sessions and town hall
meetings to update them on the performance of the
business and progress on key initiatives. Employees are
encouraged to ask questions in a Q&A session at the
end of the meetings.
The Group relies upon highly specialised skill sets
that are in increasingly short supply. We are therefore
continually developing our talent management
strategy.
Increased levels of engagement with customers at
a strategic level. A greater understanding of both
customer and market trend requirements better
informs the development and refinement of our own
strategy and technology roadmap to ensure we
support our customers to the best of our ability and
invest in the right capability to meet their needs.
Board-level engagement with our customers helps
convey our commitment to understand and meet their
business needs. Having customers onsite enables
them to see our capability and production facilities
demonstrating our credibility as a leading technology
company.
Disclosure of our product development and
technology roadmaps to customers increases
the opportunity to align our mutual interests and
demonstrate we are the ‘go-to company’ when it
comes to leading technology; the NDA protects our
intellectual property interests.
Listening to the customer enables us to be more
effective in pre-empting and meeting their evolving
requirements. We undertook a Voice of the Customer
(“VoC”) exercise during the year where the Marketing
Manager spoke to 35 existing and former customers
to gain an understanding of their customer
experience, the positives of working with Filtronic and
areas where we could improve. The information was
anonymised, collated and analysed to find trends
to identify consistent feedback. This exercise proved
invaluable enabling the Board to use the information
to shape the strategic plans and develop the areas of
the business where we are able to improve customer
satisfaction.
Attendance at trade exhibitions and conferences has
materially increased over the last year as we have
added more events to our roster to actively promote
the business. This has facilitated key engagement,
not only with prospective customers, but also having
useful discussions with our existing clients.
Broad ranging and meaningful communication leads
to greater transparency throughout the business and
facilitates a more engaged, motivated and effective
team. This is done through a range of communication
channels including newsletters, emails to all employees
and discussion groups with management flow down
to employees and informal factory floor-walks.
The Group is an attractive employer, providing
a rewarding long-term personal development
opportunity environment, recognising and rewarding
those that have demonstrated strong performance.
We have also funded a number of training initiatives
to develop our employees and enhance the skills in the
business including the Filtronic Leadership Academy
to upskill all staff who have managerial responsibility.
The Board recognises its responsibility to take into consideration the needs and concerns of Filtronic’s key stakeholders
as part of its decision-making process. The table demonstrates how the Group engages with its stakeholders and the
outcomes of this during the year:
Employees
Stakeholder engagement continued
33
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Stakeholder
How we engage
Key outcomes
Employees
(continued)
The Executive Directors are required to be actively
visible across our sites to take the pulse of the business
and offer an open-door policy to employees who
would like to ask a question or offer a view.
Participation in the Company Sharesave scheme.
The Chief Executive Officer and Chief Financial Officer
hold analyst and investor meetings throughout the
year both on request and specifically following the
release of the annual and half year results. Feedback
from these meetings is shared with the Board. Major
shareholders are regularly engaged to hear their views
on a range of issues such as strategy, remuneration
and corporate governance.
The Annual General Meeting is our primary method
of engagement with private investors along with the
Annual Report. We encourage investors to attend
and ask questions they may have. At the end of the
meeting, the Board engage in an open and informal
forum with attendees.
The Group’s Annual Report and Accounts is available
to shareholders in both hard copy form and online.
All announcements and presentations are available
on the Company’s website whilst we also engage on
social media platforms such as LinkedIn. There is also
a regular newsletters which is sent to those individuals
that signup on the company website.
The Company’s broker, Cavendish Capital Markets
(“Cavendish”), provides briefings to the Board on
shareholder opinions and independent feedback from
investor meetings. Their views are sought on all market
related matters or announcements.
Meetings are held with key suppliers at both their
facilities and ours. This ensures a more intimate
knowledge of each other’s capabilities and objectives
and leads to closer alignment of values.
Our Supplier Code of Conduct is flowed down to
our supply chain to ensure compliance with social
responsibility and good governance policies.
A better informed and consulted workforce is more
likely to be both better motivated and more effective.
The Group also operates a T-card system where
employees can offer ideas for business improvements
which are shared with the Executive Directors with the
aim of offering feedback to those that have taking the
time to share their views and a quarterly prize for the
best idea. The Board have also approved an annual
employee engagement survey to gain insight into
employees’ thoughts and attitudes towards their work
and overall environment.
Share scheme participation aligns the interests
of employees with shareholders giving staff the
opportunity to hold a stake in the company. The
Company has a SAYE scheme in place which is open to
all employees.
A wide range of communication channels are used
to engage with investors during the year. Feedback
from investors has informed the Board’s discussions
and decisions on the Company’s strategy. All material
information that is worthy of investor announcement
is made available simultaneously to both shareholders
and potential shareholders. Meetings with
shareholders and potential investors were held during
the year with meetings offered both in person and
virtually.
We value the opportunity to meet with our shareholders
and engage in an exchange of views and ideas and,
post AGM, we review the feedback we have received.
We were delighted to welcome shareholders to the
2023 AGM which was physically held in Sedgefield with
private investors encouraged to attend.
We respect that not everyone is online and continue to
provide shareholders with a choice to receive a hard
copy of the report.
Regular and frequent interaction between the
Company and our broker ensures we receive regular
guidance and remain aligned on our engagement
with the investment community. A report collated
by Cavendish, after the business results investor
roadshow, giving shareholders feedback from each
meeting is shared with the Board.
The Group’s supplier base is a key part of the
Company’s ecosystem and effective relationships with
our suppliers are essential to the delivery of Group
performance. We engage with our suppliers through
our engineering and operations team and we work
closely with key suppliers to ensure we take advantage
of innovative technical and commercial solutions
in the supply chain in order to secure a competitive
advantage. We have enjoyed meetings at a number
of suppliers’ sites in the year, both nationally and
internationally.
We minimise our exposure to supplier related risks
by requiring them to adhere to our Supplier Code
of Conduct and group policies. They are required
to confirm they are not in conflict with these policies
before or during engagement.
Investors
Suppliers
34
Filtronic plc Annual Report and Accounts 2024
Stakeholder
How we engage
Key outcomes
Suppliers
(continued)
Supply contracts of material significance to the Group
are subject to internal controls with a summary of the
key terms being provided to the Executive Directors for
approval.
The Group aims to play fair with is suppliers and pay in
line with the contractual payment terms.
Supplier gating processes ensure management is
kept abreast of supplier risks, opportunities and
governance matters and able to act promptly when
required. The Board receives regular updates, from
the Chief Operations Officer, regarding key supplier
performance metrics and any issues under review.
By playing fair with our suppliers we gain their respect,
support and commitment to meeting our own business
objectives.
Suppliers
Standards of business conduct
The Board is committed to a culture of integrity and
openness. The Board is confident that through our people,
our values, our policies and processes we are fostering the
right culture to make a positive impact on the business,
our employees, our customers, suppliers, the environment
and the communities in which we operate. The Board
is committed to identifying other means to drive further
positive impact through our products, processes and
foremost our people, all of which will contribute to the
success of the business.
The Group’s engagement with key stakeholder groups
and the impact our business operations have on the local
community and the environment are considered within the
implementation of the Company’s Objective and strategy
and the Sustainability report.
Stakeholder engagement continued
35
Strategic report
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Sustainability report
At Filtronic we have developed an ESG and sustainability strategy that works in unison with our corporate
goal to create value for our customers through technology leadership. The aim of the strategy is simple. We
will focus on deliverable ESG goals aligned with our corporate strategic targets.
ENVIRONMENTAL
1. Minimise the environmental
impacts of our own activities
and reduce our energy usage
per £ of revenue generated
(reducing carbon intensity
whilst supporting growth)
2. Improve our use of sustainable
resources by operational site
3. Reduce paper and
packaging waste
4. Focus on our work to meet
Scope 1 and 2 Greenhouse
Gas (“GHG”) Emissions
of Net Zero
SOCIAL
1. Equality, diversity and inclusion
(“EDI”) in the workplace and
encourage greater gender
power balance
2. Provide a great place to
work for our employees
enabling them to learn and
develop, creating professional
opportunities
3. Engage with our employees,
keep them informed and pay
fair salaries
4. Support STEM initiatives
in the local community and
provide quality employment
for young people through
apprenticeships and
graduate recruitment
GOVERNANCE
1. Provide a robust cyber security
framework protecting the data
we hold
2. Comply with export control
requirements
3. Maintain strong and enforced
policies and procedures and
promote a strong code of
conduct and ethical behaviour
in our business
Key Objectives
We are committed to enhancing our impact on the world
with a robust and clear ESG strategy. Within each area
we’ve highlighted clear objectives which aim to focus
our efforts and ensure that we are able to maximise
our impact by focusing on the key areas where we can
engage and influence our stakeholders. Our objectives
are thought through, aligned to our corporate strategy
and aligned to the UN Global Goals, so we can best
position our skills and experience to work towards
building prosperity for all. We have a clear roadmap
ahead of us and we look forward to delivering on our
commitments to these goals.
36
Filtronic plc Annual Report and Accounts 2024
Improving our sustainability performance plays a key role
in the way we both run our businesses today and plan for
the future, as we manage our ESG-related risks. We also
recognise that our ESG credentials are an increasingly
important factor in our ability to attract and retain first-
class people. Engaged, motivated, empowered and
appropriately skilled employees are integral to our success.
Whilst our approach to sustainability continues to mature,
we are committed to implementing transparent policies
and procedures, and to fostering an inclusive culture
across the Group where everyone does the right thing
and takes responsibility for their actions. Increasingly this
focus will develop from working as a trusted partner to our
many customers and ensuring that our internal standards
are fit for purpose, to working with our supply chain to
ensure that they too work to the same standards. In doing
so we will build a sustainable company of which all our
stakeholders can be proud, now and in the future.
Our approach to sustainability
The long-term success of Filtronic can only be enhanced
by a positive interaction with all of our stakeholders and
therefore a positive and engaged approach to corporate
responsibility and sustainability is important to us. Our
approach is focused around the environment, people,
ethics and business conduct and governance.
ESG Responsibility
Sustainability forms part of our everyday thinking, from
how we run our business from day to day, to long-term
strategic planning. ESG is now a regular, scheduled
board agenda item and a
standing agenda item for every
meeting of the Group’s Senior
Leadership Team.
2024 has seen us make further
progress as we proactively
manage our sustainability
agenda. Focus areas included
diversity and inclusion,
reducing climate change,
employee wellbeing and
community engagement. As
a business we are committed
to building a sustainable
company of which all our
stakeholders can be proud,
both now and in the future.
Operating our business in a way that cares for the environment and people has never been more important
than it is today. The world is facing significant environmental and social challenges with climate change,
environmental destruction, energy availability and increased costs of living.
A sustainable business plan
that delivers growth for shareholders and has purpose
A sustainable organisation plan
that is future focussed on how we deliver
A sustainable climate and waste plan
that is for all and has a positive impact in a broad sense
An ethical and values-based approach to conduct,
that demands integrity and ethical behaviour
governance, regulation and the rule of law
filtronic.com
Environmental, Social and
Governance (ESG) Strategy
Filtronic’s vision and commitment on ESG
Sustainability report continued
37
Strategic report
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Environmental Objectives
The Group is committed to protecting the environment
through prevention of pollution and minimising our impact
on natural resources. As well as operating in compliance
with all relevant statutory and regulatory obligations, the
Group strives to implement environmental best practices
throughout our activities and continually improve our
environmental management system to enhance our
environmental performance. As we have now formally
documented our ESG strategy, we have collected baseline
data of our current performance to enable us to track and
monitor progress improvements.
The Group supports, trains and encourages its
employees to act responsibly in all 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. We
also work with our customers and suppliers to achieve
a high standard of environmental stewardship. Filtronic
looks forward to receiving and implementing the UK
government’s flow down to industry of its net-zero carbon
target which will involve measuring carbon emissions and
implementing policies for carbon reduction or offsetting
the carbon that is released.
What we do already
FY2025 initiatives
Reduce our
energy usage
• Metering and monitoring in place at a room
level
• LED lighting replacement scheme in place
• Motion sensors on all our lighting
• Invested in newer more-efficient machinery
• NetPark and Manchester supplied with
100% sustainable energy
• Cycle-to-work scheme in place
• Electric vehicle scheme
• Electric vehicle charging points
• Adopted a hybrid working policy
• Removed foam from our shipping
packaging; replaced with cardboard
• Implemented docuSign to reduce our need
to print documents to sign
• Implemented digital systems with workflow
for HR processes, expense management
and timesheets
• Implement LED lighting
• Energy saving equipment purchases
• Continue to educate our employees in high-
energy consumption areas
• Sustainable energy generation in our
buildings
• Convert our Leeds site to 100% sustainable
energy in line with our Sedgefield and
Manchester sites
• Seek opportunities to create renewable
power
• Promote the electric vehicle scheme we have
implemented to our employees
• Continue to switch to recycled materials
removing single use resources where
possible
• Identification of key waste driving activities
by site
• Remove single use plastics from our
operations
• Continue to move business processes to
digital systems
Sustainable
resources
Reduce
paper and
packaging
waste
38
Filtronic plc Annual Report and Accounts 2024
Sustainability report continued
Environmental updates
The progress to our environmental strategy includes
minimising CO2e from:
• Ongoing switch to LED lighting in our buildings for more
efficient use whilst lights have had passive infra-red
sensors added to automatically switch off when not in
use.
• Electricity use with the purchase of new energy efficient
machinery by switching electrical equipment off when
there is no business benefit to leaving it on.
• When appropriate, we have moved our shipments
from air freight to sea freight where lead-times / other
operational constraints allow or purchasing closer to the
business location where possible.
• Converted our electricity supply in Leeds to 100%
sustainable energy usage aligning it to the rest of the
UK sites which are now all powered by sustainable
energy.
• Single use plastics are now removed from our business.
• Several administrative processes have switched from
paper to digital to reduce our usage of paper and
other resources generating waste. This includes invoice
processing, accountancy records and document signing
procedures with a fully automated digital signature
process.
Scope 1 & Scope 2 emissions
We are pleased to present, for the first time, our figures
for the reporting of our Scope 1 and Scope 2 emissions,
equating to a 35% reduction from our base year in
FY2023.
As a company quoted on AIM, there is no obligation to
report on Scope 1 and Scope 2 CO2 emissions but to
maintain a good level of transparency we are voluntarily
disclosing information. We recognise our duty as a good
corporate citizen, to help in the fight against climate
change, and take this obligation seriously. We also
understand our investors eagerness to understand how we
are performing in our commitment to protect the planet by
preventing pollution and minimising our impact on natural
resources. The table below presents our Scope 1 and
Scope 2 emissions.
Emissions for the Group
We are at an early reporting phase in that we have not
defined our scope or targets when comparing to ‘The
Greenhouse Gas Protocol: A Corporate Accounting and
Reporting Standard’ and therefore these figures are
an early attempt to quantify our GHG emissions. We
recognise our obligation to help with the climate crisis,
along with the interests of our key stakeholders, and
therefore we recognise the importance of giving visibility in
our environmental reporting.
We intend to improve the accuracy of the numbers over
time and will engage with a third-party consultant to take
the relevant advice on how to refine and augment the
approach we have taken. The numbers in the table are
taken from our metered gas usage, reported car journeys
and metered electricity usage.
headcount is presented below:
Item
FY2024
FY2023
Scope 1 Direct
(Heating by gas and car journeys)
86.87
85.44
Scope 2 Electricity
(supply is 100% carbon free)
0
0
Total CO2e (tonnes)
86.87
85.44
Annual turnover (£M)
25.4
16.3
Total CO2e/£M revenue
3.42
5.24
39
Strategic report
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Social objectives
Our core values of integrity, honesty and respect,
combined with a strong culture and an agreed set of
behaviours are critical to our future development. The
‘Our People’ section of this Annual Report and Accounts
sets out how we engage with our employees, providing
opportunities and an environment to flourish with
everyone given an equal opportunity. It also covers key
social points such as employee rewards, behaviours,
culture and conduct.
Filtronic recognises that it not only makes a difference
to its own employees but also the wider community.
This latter point is particularly pertinent to our ESG
strategy as we can provide quality education, training
and employment within the local community as well as
supporting local charities and foundations to help build a
sustainable society.
What we do already
FY2025 initiatives
Actively
promote
equality,
diversity and
inclusion
(“EDI”) in the
workplace
• Regular analysis of workforce demographics
• EDI training
• Non-discriminatory working practices and
policies
• Value the individual
• Female-to-male ratio in our engineering
function is above the national average
• Career development and guidance for
everyone
• Provide training and development
programmes for all colleagues
• Filtronic Leadership Academy
• Regulatory and mandatory training
• Expert speakers
• Technology Leadership Awards for patents,
conference papers and peer reviewed
publications
• Detailed training needs analysis from
appraisal process
• Assign an Executive sponsor to all graduate
recruits
• Encourage networking and industry event
attendance
• Comprehensive induction process, for all new
starters
• Graduate programme
• Apprenticeships with sponsored degrees
• Further develop a clear EDI strategy
• Promote Filtronic as a female-friendly
workplace
• Promote females in STEM disciplines
• Promote diversity
• EDI surveys
• Positive actions to increase the ratio of female
managers and engineers
• Expand the apprenticeship programme
• Create a knowledge sharing environment
• Continue to upskill our employees
• Utilise supported stretch assignments
to facilitate personal development and
progression
Learning and
development
culture
40
Filtronic plc Annual Report and Accounts 2024
What we do already
FY2025 initiatives
Support STEM
initiatives
in the local
community
and provide
quality
employment
for young
people
• Fair pay and reward structure with regular
benchmarking
• Excellent benefits package including access
to wellbeing support
• Flexible working available
• Celebrate long-term service with awards
• New values embedded in the business
• Town hall meetings and team meetings
• T-card system for continuous improvement
and worker participation
• Employee engagement surveys
• 1 day paid leave given to all employees
undertaking charitable work
• Graduate recruitment
• Apprenticeship programme
• Increase frequency of communication
• Assess current benefits suite, for ongoing
competitiveness and flexibility for individual
choices
• Undertake another employee engagement
survey
• Provide opportunities for local young people
• Build relationships with local learning
institutions
• Implement a structured graduate career
framework
• Support local organisations like the North-
East STEM Foundation
Engage
with our
employees
and pay fair
salaries
Social objectives (continued)
Sustainability report continued
This year we supported the North East STEM Foundation
and UTC Durham by sponsoring events and taking part
in STEM days involving local schools and colleges. We
now have STEM Ambassadors employed in the business
who are qualified to attend STEM days, representing
Filtronic, to inspire the next generation of engineers in our
community. We want to encourage more of our talented
team to become STEM Ambassadors and will be rolling
out an incentive programme across the business to
encourage additional participation and representation.
We also saw the first intake of apprentices on our new
apprenticeship programme which provides quality
employment for young people in the local community.
We are training our apprentices through a mix of ‘on the
job’ training and full sponsorship to degree level at local
universities. These are fantastic opportunities for talented
local young people to have access to a high-quality jobs
complemented with higher education, and they in turn
enrich our culture through diversification, new perspective
and pure enthusiasm! We make use of the apprenticeship
levy to help fund this initiative. Investing in this community
helps us to build a broader and more diverse pool of talent.
We also continued our established graduate programme
with another successful intake this year.
We made progress in our talent acquisition strategy and
have seen an increase in nationalities diversity, rising from
12% to 14%. We have ensured that all of our employment
practices and policies are female friendly and will continue
with any positive actions possible which may further
improve our success in increasing female representation
throughout the business.
Recognising the extraordinary efforts of the entire Filtronic
team to deliver revenue growth of 56%, we implemented
a one-off bonus for all of our staff who each earned the
equivalent of £1,000 pro rata based on service in the
year. Ensuring our employees are paid competitively
in recognition of their enormous value to us, is of great
importance to our retention strategy. In the year, we gave
a general pay award above inflation to all employees to
recognise the importance of them to our growth ambitions
and an inflation-busting award to our manufacturing
operatives. This is in recognition of the skills they possess
and to pay them a salary that keeps their salary at a
competitive level in respect to the rest of the manufacturing
community in the north-east of England.
41
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What we do already
FY2025 initiatives
Cyber
security
• Cyber Essentials Plus
• Defence Assurance Risk Tool (“DART”)
• IASME Governance Gold
• Robust internal control framework
• Trained personnel
• Regular communication with an export
control expert
• Strong Boards and Committees providing
strategic oversight and governance support
• Adherence to QCA Corporate Governance
Code
• Strong suite of Group policies and internal
controls annually reviewed
• Clearly defined and strong company vision
and culture
• Maintenance of appropriate accreditations
and internal audits
• Robust internal branding and document
control
• Annual Report published each year reporting
strategic, governance and financial progress
• Implement ISO27001
• Undertake another penetration test
programme
• Undertake a series of desktop exercises with
the National Cyber Security Centre
• Training courses for those with export control
responsibility
• Review our controls and continually improve
• Review and approve our policies and
procedures annually
• Develop the ESG strategy further
• Ensure employees are suitably trained on
policies and conduct which are enforced
throughout the organisation
Export
Control
Strong and
enforced
policies and
procedures
Governance objectives
Filtronic have always believed that sound governance is
fundamental to the long-term success of the Company
and we follow the QCA Corporate Governance Code
which gives a firm foundation for our governance
structure. Having been listed on the London Stock
Exchange since 1994, the business has a robust approach
to governance, but we can always strive for improvement.
The Board and our management team will drive the ESG
agenda. We recognise that good governance will be key
to ensuring the changes are embedded throughout the
business.
Compliance is critical to our operation, particularly as
we supply into sensitive markets such as aerospace and
defence , and therefore strong governance is at the heart
of how we conduct business.
This year we received the news that the IASME
Governance Gold certification is awarded to the top
3% of applicants for the IASME accreditation. This is
something we are very proud of and demonstrates the
quality of our cyber security credentials and robust
governance framework that we operate. We feel this is a
great segway into the ISO27001 accreditation that we are
looking to commence implementing in FY2025. To test our
cyber defences, we undertook a series of cyber security
exercises including a regular phishing exercise to ensure
our employees are well-educated on the latest phishing
attacks being conducted in addition to a series of desktop
exercises with the National Cyber Security Centre.
We also added a new policy in the year to our Group
Policies to set our governance standard relating to Anti-
Competition and Anti-Trust following a question from a
customer relating to our policy. We have also undertaken
some early action following the update to the QCA
Corporate Governance Code in 2023 which includes
publishing our remuneration policy for the first time in this
Annual Report and implementing annual re-election of
directors at the AGM in October 2024.
We will continue to augment our governance standards in
FY2025 and ensure we operate the business with an ethos
of ‘doing the right thing’ for all of our stakeholders and the
communities in which we conduct business.
The FY2024 Strategic report has been reviewed and
approved by the Board of Directors on 29 July 2024 and
signed on its behalf by
Michael Tyerman
Chief Financial Officer
29 July 2024
Filtronic plc Annual Report and Accounts 2024
42
Nat Edington
Chief Executive Officer
Appointed to the Board
13 May 2024
Nat brings extensive experience in
the high-tech and semiconductor
industries. Before joining Filtronic,
Nat was CEO of Dukosi Ltd.,
where he successfully built a
fabless semiconductor company
in Scotland, transforming it from
an early-stage venture into a
global technology leader. As CEO
of Cambridge CMOS Sensors,
he also steered the company
through significant growth phases
and exited the business to AMS.
He has held strategic leadership
positions at AMS AG and Wolfson
Microelectronics and steered
them through periods of rapid
expansion. Nat also holds a non-
executive position at AIM-listed
Concurrent Technologies plc.
Michael Tyerman
Chief Financial Officer
Appointed to the Board
1 April 2016
Michael joined Filtronic in 2007
as Financial Controller of the
Broadband business and was
promoted to the position of Group
Financial Controller in 2009.
He served this position until his
appointment to the Board. Prior
to joining Filtronic, Michael held
various positions within Procter
and Gamble, Huntsman and
Komatsu which included time
working in the Benelux and Nordic
regions. Michael is a Chartered
Management Accountant.
Jonathan Neale
Non-Executive Chairman
Appointed to the Board
15 November 2021
Committees: A
N
R
Jonathan is Chair and Non-
Executive Director of Filtronic. He
also serves as a Non-Executive
Director for the engineering
services business Contechs
Holdings Ltd and is a Trustee
of the incorporated charity The
Foundation for Science and
Technology. Prior to joining
Filtronic, he spent seven years in
defence electronics and electronic
warfare, 10 years in commercial
and defence aerospace with
BAE systems and 20 years with
McLaren Group Ltd in executive
positions across Formula
1, Automotive and Applied
Technology.
Board of Directors
Chairman of Committee
Committee Key:
Remuneration
R
Audit
A
Nominations
N
Executive Directors
Non-Executive Chairman
Governance report
43
www.filtronic.com Stock Code: FTC
Peter (Pete) Magowan
Senior Independent
Non-Executive Director
Appointed to the Board
19 November 2018
Committees: A
R
N
Pete was previously an early
employee and main board
member of ARM Holdings, an
Executive at Fidelity International
Ltd and General Partner at Alta
Berkeley Venture Partners. Pete’s
early operational career was in
sales and marketing at leading
technology companies. He
received a BSc degree in Electrical
and Electronic Engineering from
UMIST and has a Diploma in
Marketing. He is also a Non-
Executive Director of Solid State
Group plc.
John Behrendt
Independent
Non-Executive Director
Appointed to the Board
1 January 2021
Committees: A
N
R
John was Head of Principal
Investments with Eight Roads,
part of the Fidelity network of
companies, from 2015 until 2020.
John has also held a number of
leadership and operational roles,
including CEO of Optegra, CEO/
CFO of Frontier Silicon Limited,
CFO for Teraview Limited, and
CFO for Alphamosaic Limited.
John is a qualified accountant
with the Chartered Institute
of Management Accountants
(CIMA).
Non-Executive Directors
Filtronic plc Annual Report and Accounts 2024
44
Dear Shareholder
I am pleased to present the Filtronic plc Governance report
for the year ended 31 May 2024.
The Board recognises the value of good corporate
governance as the basis for promoting the long-term
growth and sustainability of the business. Governance
arrangements are reviewed on an ongoing basis to
ensure they are fit for purpose and the Board continues to
consider that the Quoted Companies Alliance Corporate
Governance Code 2018 and the updated QCA Corporate
Governance Code 2023 (the “Code”) provides the most
appropriate framework for governance for the Company’s
size and complexity. We intend to implement all of the
recommendations in the updated version of the Code.
Throughout the year, we complied with all principles of the
Code except for the separation of the Company Secretary
role which is currently undertaken by the Chief Financial
Officer.
The Governance report includes the Corporate
governance statement, the Audit and Risk Committee
report, the Nominations Committee report and the
Directors’ remuneration report and describes how Filtronic
has applied the main principles of the Code during the
year. Further information on compliance can be found on
the Filtronic website at www.filtronic.com/investors.
I am aware that it is my responsibility to ensure that
Filtronic has the governance arrangements in place to
support effective leadership and promote the long-term
success of the Company and that these arrangements are
followed in practice.
Jonathan Neale,
Chairman
29 July 2024
Corporate governance statement
Introduction
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.
Principle 1 – Establish a strategy and business model
which promotes long-term value for shareholders
As explained fully within the strategic report of the Annual
Report, our strategy is focussed around four core areas:
• Space: position Filtronic in the Space market (LEO/
HAPS) by strengthening our position in the market
having already secured a Strategic Partnership with
SpaceX;
• 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
• 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;
The delivery of the strategy remains 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.
Principle 2 - Seek to understand and meet
shareholder needs and expectations
Great 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
investor.relations@filtronic.com.
When the Board considers it appropriate, it consults with
shareholders on key matters that it would like input relating
to strategy, governance and remuneration.
Principle 3 - Take into account wider stakeholder and
social responsibilities and their implication for long-
term success
The 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
Governance report
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45
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maintenance of internal and external relationships and
good communication with stakeholders.
Principle 4 – Embedded 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.
Principle 5 – Maintain the board as a well-
functioning, balanced team led by the Chairman
The Board is currently comprised of:
• the 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 FY2024
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
Nat Edington
1/1
Richard Gibbs
9/9
Michael Tyerman
10/10
Pete Magowan
10/10
John Behrendt
10/10
Principle 6 – Ensure that between them directors
have the necessary up-to-date experience, skills and
capabilities
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. The board undertakes annual
training on a range of subject matters that are proposed
by the directors where they feel it would be beneficial.
When necessary, external advice is sought, on legal, HR,
financial and governance matters. The primary sources
Filtronic plc Annual Report and Accounts 2024
46
are the Company’s Nomad and the Company’s lawyers.
Principle 7 - Evaluate board performance based on
clear and relevant objectives, seeking continuous
improvements
The 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 and its Committees is
assessed. Board members are asked to provide feedback
for assessment by 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.
Principle 8 – Promote 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 space, aerospace and
defence, telecommunications infrastructure and critical
communications. 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.
Principle 8 – Promote 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.
Principle 9 - Maintain 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;
Governance report continued
Governance report
47
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• 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.
Committees
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.
Principle 10 - Communicate how the Group is
governed and is performing by maintaining a
dialogue with shareholders and other relevant
stakeholders
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 openness is 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
employees.
Filtronic plc Annual Report and Accounts 2024
48
Nominations
Committee report
Membership
The members of the Nominations Committee and the
meetings attended in the year are:
Meetings
attended
Jonathan Neale (Chairman)
3/3
Pete Magowan
3/3
John Behrendt
3/3
Roles and responsibilities
The Committee’s role and responsibilities are set out
in full in the terms of reference, which are available
on the Filtronic website and set out the Committee’s
responsibilities as follows:
• Ensure the balance of board members remains
appropriate as the Company implements its strategy
to ensure the business can compete effectively in the
marketplace;
• Identify and nominate candidates to fill board
vacancies as and when they arise;
• Before such appointments are made, evaluate the
overall balance and composition of the Board and in
the light of that evaluation, preparing a description
of the roles and capabilities required for the
appointment; and
• Ensure that each new appointee receives a formal and
customised induction to the Group via the Company
Secretary and other board members as appropriate.
For terms of reference go to www.filtronic.com/investors/
aim-rule-26/
Dear Shareholder
I am pleased to present the Nomination Committee
report for FY2024.
The Nomination Committee supports the Board on
the crucial topic of Executive and Non-Executive
succession planning. Our principal objective as a
Nomination Committee is to make sure the Board and
the wider management team has individuals with the
necessary range of skills and knowledge, and diversity of
experiences to lead the Company and deliver the Group’s
strategy.
The Committee plays a vital role in ensuring the
effectiveness of the Board and its ability to deliver
long-term success for the business, including having the
appropriate balance of skills, experience and knowledge
on the Board to both reflect the changing needs of the
business and anticipate and prepare for the future.
This year the Committee continued its focus on succession
planning with an emphasis on ensuring plans were in
place for an orderly succession following Richard Gibbs
advising us of his intention to retire from the Group.
Following a rigorous search process, having appointed a
highly reputable search firm to assist in a targeted search
and assessment, we were delighted to unanimously
recommend Nat Edington as the new Chief Executive
Officer, joining the Board on 13 May 2024. Richard has
agreed to remain with the business until 30 November
2024 in order to facilitate an orderly transition.
The Committee also took account of the results from
the annual board performance evaluation exercise
conducted in June 2023. The Committee plays a key role
in ensuring the effectiveness of the Board and its ability
to deliver long term success for the Company. As the
Chairman of the Committee, I review the results of this
exercise and share the feedback with the members of
the Board both individually to personalise the feedback
and as a collective. Nothing significant was raised as part
of this evaluation but some improvement actions were
identified which are highlighted below:
• Succession planning which becomes more important
as the business scales in size; and
• Continuing to keep under review the combined role
of the CFO and Company Secretary with a plan to
decouple the role at the appropriate time.
• A greater emphasis on the role of diversity and
inclusion and the important role it plays in high
performance organisations;
Governance report
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In the year ahead, the Committee will continue to work
on succession plans for the Board and key management
and to oversee any actions coming out of the board
effectiveness questionnaires that took place in June 2024
to ensure they are effectively implemented.
Jonathan Neale
Chairman, Nominations Committee
29 July 2024
New appointments and induction of directors
When identifying suitable candidates for board and
senior executive appointments, the Committee uses the
services of external advisers to facilitate the recruitment
search and considers candidates on merit and against
objective criteria. The Committee recognises the value of
a diverse board and will consider all candidates with the
necessary capabilities in accordance with the Company’s
policies including considerations of equality and diversity.
When a new director joins the Board a full and formal
induction process is undertaken including a briefing
session on AIM rules with our Nomad. The Company
Secretary is tasked with providing the new director with:
• information about the Group including board and
committee minutes along with board papers from at
least the last six months;
• the Group’s policies, procedures and governance
information;
• analysis of the Company’s key shareholders and
share capital;
• guidance for directors on their legal and regulatory
responsibilities in an AIM-quoted company;
• guidance on corporate governance and board
effectiveness; and
• relevant information about the markets we operate.
As part of the induction process, the new director also:
• Attends a business briefing with the CEO and CFO;
• Has meetings with the other members of the Senior
Leadership Team; and
• Attends meetings with any other employees they
would like to see.
Diversity and inclusion
The Committee recognises the importance of a diverse
Board and is mindful of the issue of board diversity in
its succession plans. Company policy ensures that the
selection of directors and, in a wider context, employees
throughout the Group, as well as opportunities to progress
and develop will be based upon a range of factors
including skills, experience, qualifications, background
and values. There will be no discrimination or less
favourable treatment of employees or job applicants in
respect of age, race, religion, gender, sexual orientation,
pregnancy, disability or marital status.
Board evaluation
The Nominations Committee undertakes an annual
evaluation of the Board’s performance and effectiveness.
The results of the evaluation exercise are shared with
board members and any recommendations are discussed
and implemented if deemed to be an improvement.
Area of review
Activities undertaken
Board
appointments
• Led the search for a new Chief Executive Officer to replace Richard Gibbs.
• Recommended the appointment of Nat Edington as Chief Executive Officer.
• Reviewed the dual role of the Chief Financial Officer and Company Secretary in line with the
guidelines of the QCA code.
• Undertook a succession planning review of the Board and Senior Leadership Team.
• Conducted a rigorous board performance evaluation exercise and fed the results back as a
group and individually.
• Assessed the size and composition of the Board.
• Reviewed and approved the Committee’s terms of reference.
• Reviewed compliance with the QCA code and the output from the revised QCA code 2023.
Activities of the Nominations Committee during the year
The Nominations Committee discharged its responsibilities during the year by:
Governance
Board performance
evaluation
Filtronic plc Annual Report and Accounts 2024
50
Audit and Risk
Committee report
Membership
The members of the Audit and Risk Committee and the
meetings attended in the year are:
Meetings
attended
John Behrendt (Chairman)
5/5
Jonathan Neale
5/5
Pete Magowan
5/5
Roles and responsibilities of the Audit and
Risk Committee
The Audit and Risk Committee operates within a
framework of approved terms of reference which
are reviewed annually along with its effectiveness;
recommendations made to the Board of any changes
required from the review. The terms of reference are
available on the Filtronic website, and include the
following roles and responsibilities:
• Monitor and make recommendations to the Board
in relation to the Company’s published financial
statements and other formal announcements relating
to the Company’s financial performance;
• Advise the Board on whether the Committee believes
the Annual Report and Accounts, taken as a whole,
are fair, balanced and understandable and provide
the information necessary for shareholders to assess
the Company’s performance, business model and
strategy;
• Monitor and make recommendations to the Board in
relation to the Company’s internal financial controls
and financial risk management systems;
• Consider the need for an internal audit function,
determine the scope of outsourced internal audit
activities, appoint a provider, agree fees and review the
results of these activities;
• Make recommendations to the Board in relation to
the appointment, re-appointment and removal of the
external auditor and approve the remuneration and
terms of engagement of the external auditor;
• Review and monitor the external auditor’s
independence and objectivity and the effectiveness
of the audit process, taking into consideration the
relevant UK professional and regulatory requirements;
• Monitor the extent to which the external auditor is
engaged to supply non-audit services; and
• Ensure that the Company has arrangements in place
for the investigation and follow-up of any concerns
raised confidentially by staff in relation to the propriety
of financial reporting or other matters.
• Review the company’s risk management systems and
processes to ensure their adequacy and regularly
review the risk register to ensure it is complete and up
to date with appropriate risk mitigation measures in
place where required.
For terms of reference go to www.filtronic.com/investors/
aim-rule-26/
Dear Shareholder
I am pleased to present the report of the Audit and Risk
Committee.
The Audit and Risk Committee continues to fulfil a vital
role in the Group’s governance framework, providing
independent challenge and oversight of the accounting,
financial reporting and internal control processes,
risk management, the internal audit activity and the
relationship with the external auditor. This report outlines
how the Committee has discharged its responsibilities
during the year, including the onboarding of a new
auditor. It aims to provide shareholders with a clear
understanding of the work we have done as a committee
to provide challenge and assurance on the integrity of
the FY2024 Annual Report and Accounts and the Group’s
regulatory reporting requirements as well as the key
issues it has considered.
Meetings are generally held immediately prior to a board
meeting to facilitate immediate and efficient reporting to
the Board, with additional meetings where necessary. The
Executive Directors may attend the meeting by invitation
whilst the external auditors attend when requested, as do
outsourced internal audit providers when used.
The Company outsources its internal audit activity to third
parties as it is not deemed appropriate given the size
of the Company to have its own internal audit function.
However, the Audit and Risk Committee considers
annually whether there is a need for an in-house internal
audit function to be established and, were it to conclude
that this would be more appropriate than the current
arrangements, would recommend this to the Board.
This year, the Committee focussed on completing the
tender process that was undertaken in the year resulting
in the appointment of Crowe U.K LLP (“Crowe”) as
external auditor. The Group has worked with Crowe on
the transition activities and has now completed the first
year of the Group and Company audit. The Committee
also had updates on cyber security controls which is a
risk area that the Committee wants to keep a focus on
although the results are very positive with a strong set of
robust controls in place.
The normal pattern of meetings follows the public
reporting and audit cycle, with meetings to consider the
external audit plan; the half year announcement and the
full year Annual Report and Accounts, the latter with the
external auditors’ observations and opinions. There are at
least two additional meetings in the year to review the key
risks within the Group, how they are managed and review
the adequacy of the arrangements to mitigate those risks.
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There is also a meeting to consider the internal audit that
has taken place in the year.
As Chair of the Committee, I maintain regular dialogue
with the Chief Financial Officer and have direct access to
Crowe, the Company’s external auditor. The Committee
meets separately at least once a year with the external
auditor without others being present to facilitate open
discussion and the opportunity to discuss any concerns.
Next year, in addition to the normal cycle of matters
that the Committee schedules for consideration, we are
planning to:
• Undertake an internal audit of the financial internal
control system;
• Engage a cyber security specialist to once again test
the resilience of our cyber security systems; and
• Continue to monitor emerging risks in the Group.
As Chair of the Audit and Risk Committee I make
myself available at the Company’s AGM to answer any
shareholders questions relevant to the Committee.
ystems.
John Behrendt
Chairman, Audit and Risk Committee
29 July 2024
Area of review
Activities undertaken
Financial
reporting
• Review the Annual Report and Accounts, Interim Report and interim management statements
prior to Board approval.
• Consideration of whether the Annual Report and Accounts is fair, balanced and
understandable.
• Review the external auditor’s detailed report to the Committee on the annual financial
statements.
• Review of accounting policies and significant accounting judgements and estimates.
• Review of changes in corporate governance and accounting standards and their impact.
• Review of the going concern basis for preparation of the financial statements including
consideration of the Group’s latest business plan and three-year outlook, cash flow forecast and
corresponding sensitivities on downside scenarios.
• Led the tender process for a new external auditor.
• Recommended the appointment of Crowe.
• Reviewed the external auditor’s plan for the audit of the Group’s financial statements, including
the identification of key risks.
• Review and approval of the external auditor’s terms of engagement, remuneration,
independence and rep letter.
• Review of the external auditors’ compliance with ethical and professional guidance on Senior
Statutory Auditor rotation.
• Assessment of the effectiveness of the audit process.
• Committee-only meeting with the Senior Statutory Auditor.
• Review of the Group’s risk management register.
• Specific focus on risks relating to recruitment, delivery of engineering projects, cyber security as
well as the risk relating to the strategic objective of broadening the customer base.
• Review of the Group’s internal control system and assessment of the effectiveness of those
controls in minimising the impact of key risks.
• Review of the need for an internal audit function and determine what aspects of the Group’s
operations should be subject to outsourced internal audit scrutiny.
• Ensured cyber security was regularly reviewed.
• Reviewed the results of the internal audit undertaken.
• Review of the Committee’s terms of reference.
External auditors
Risk management
and internal
controls
Governance
Activities of the Audit and Risk Committee during the year
During the year, the Audit and Risk Committee discharged its responsibilities by:
Filtronic plc Annual Report and Accounts 2024
52
Fair, balanced and understandable
The Company’s management and the auditor confirmed
to the Audit and Risk Committee that they were not
aware of any material misstatements. Having reviewed
the reports received from management and the auditor,
the Committee is satisfied that the key areas of risk and
judgement have been appropriately addressed in the
financial statements and that the significant assumptions
used in determining the value of assets and liabilities have
been properly appraised and are sufficiently robust.
After careful consideration of the advice of the Audit
and Risk Committee, the Board has concluded that the
2024 Annual Report and Accounts is fair, balanced and
understandable and provides the necessary information
for the Company’s shareholders to assess the Group’s risks,
performance, business model and strategy.
Risk management and internal controls
Risk and risk management is delegated to the Audit and
Risk Committee although the overall responsibility for the
Group’s system of risk management and internal controls
remains with the Board.
The Group has well established risk management and
internal control processes that have been developed
since Filtronic was formed in 1977. The Audit and
Risk Committee confirms that the effectiveness of the
system of internal control, covering all material controls
including financial, operational, commercial and
compliance controls and risk management systems,
have been reviewed during the year. Further details of
risk management can be found in the Risk management
section of this Annual Report on page 23.
Auditor independence
Both the Audit and Risk Committee and Crowe have
procedures in place to avoid the auditors’ objectivity and
independence being compromised.
The Committee performs its own assessment of auditor
independence satisfying itself on an annual basis that
suitable policies and procedures are in place to safeguard
the auditors’ independence and objectivity. This includes
having regard to length of service, provision of non-audit
services and the existence of any conflicts of interest.
On the latter point, the Company has a policy of not
employing anybody from the audit firm within five years
of their departure. The auditor also has open access to
the Chair of the Audit and Risk Committee and open lines
of discussion with the Committee to ensure there is no
influence by management.
Rotation of lead audit partner
As part of their review of auditor independence, Crowe
has confirmed that it is independent of the Company
and has complied with applicable auditing standards.
Crowe is in its first year as auditor and therefore the
Audit and Risk Committee report continued
Significant issue
Key accounting matters
The following key areas of risk and judgement have been identified and considered by the Audit and Risk Committee in
relation to the business activities and financial statements of the Group and Parent Company:
Significant issue
Committee action taken
Carrying value
of goodwill and
other intangible
assets
The Committee considered the judgements made in relation to the valuation methodology
adopted by management and the model inputs used. These are set out in note 14 to the financial
statements.
The Committee agreed with the judgements made by management and concluded that no
impairment of goodwill should be made in the financial statements of the Group.
Filtronic operates in an industry where developments in product technology and the highly
customer specific nature of some inventory may result in inventory becoming slow-moving or
obsolete. This in turn may mean that inventory cannot be sold or sales prices for such inventory are
discounted to less than the relevant inventory’s book value.
The Committee considered a paper from management analysing this inventory by product and
looked at projected future usage relative to current inventory on hand. It reviewed the provision for
excess and obsolete inventory and noted that the level of provision and the methodology applied
was appropriate and consistent.
Inventory
valuation
Capitalisation
and impairment
of intangible
development costs
The Committee considered the capitalisation of development costs and the impairment
assessment prepared by management. It critically assessed the inputs, such as a consideration
of the reasonableness of discount rates applied and of reviewing forecasts into individual
development product projections.
The Group’s accounting policy for intangible assets is included within the accounting policies
in note 1 and the components of intangible assets are set out in note 14. The products under
development, and capitalised, are mainly mmWave technology focussing on space opportunities
which are expected to give rise to future economic benefit. Intangible asset impairment
calculations and sensitivities are undertaken at least annually by management.
Governance report
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Senior Statutory Auditor is operating in accordance with
professional guidelines of serving no longer than five years
to maintain independence.
External auditor
The Committee considers that Crowe has carried out its
duties as the auditor in a diligent and professional manner.
In assessing the auditor’s effectiveness, the Committee:
• Challenged the work done by the auditor to test
management’s assumptions and estimates in the key
risk areas;
• Reviewed reports received from the auditor on these
and other matters;
• Received and considered feedback from
management; and
• Held private meetings with the auditor that provided
the opportunity for open dialogue and feedback
between the Committee and the auditor without
management being present.
Having completed its review, the Audit and Risk
Committee is satisfied that Crowe remained effective and
independent in carrying out its responsibilities up to the
date of signing this report.
Appointment of the auditor
Crowe were appointed as external auditor to the Group
in the year, with Michael Jayson being appointed the lead
audit partner for FY2024.
Whistleblowing
The Group has in place a Whistleblowing policy, which
sets out the formal process by which an employee, or other
stakeholder, may, in confidence, raise concerns about
possible malpractice in financial reporting, conduct or
other matters to an identifiable whistleblowing officer.
There were no incidents or concerns raised for
consideration during the year.
Anti-bribery
The Group has in place an Anti-Bribery policy, which
sets its zero-tolerance position. The policy provides the
principles for employees and other stakeholders that acts
as guidance on how to recognise and deal with issues that
may be considered as giving rise to bribery.
During the period there were no incidents reported that
required consideration.
Filtronic plc Annual Report and Accounts 2024
54
Directors’
remuneration report
Membership
The members of the Remuneration Committee and the
number of meetings attended are:
Meetings
attended
Pete Magowan (Chairman)
3/3
Jonathan Neale
3/3
John Behrendt
3/3
The Remuneration Committee compromises the Non-
Executive Directors, including the Chairman.
Role of the Remuneration Committee
The Remuneration Committee’s role is to define and
make recommendations to the Board on the Group’s
remuneration policy and the employment terms of
Executive Directors and senior management along
with the effective implementation of that policy. The
Committee is also responsible for the review and
approval of pay increases, performance related pay
arrangements and share incentive plans along with the
associated performance targets. The Committee’s full
terms of reference are reviewed regularly and approved
by the Board.
For terms of reference go to www.filtronic.com/investors/
aim-rule-26/
Dear Shareholder
On behalf of the Board, I am pleased to present the
Filtronic Directors’ remuneration report for the year
ended 31 May 2024. The report explains the work of the
Remuneration Committee during the year and sets out the
payments and awards made to directors.
The recently updated QCA Code recommends that it is
a good principle of corporate governance to establish
a remuneration policy which aligns with the Company’s
purpose, strategy and culture. The Company is
committed to being transparent and demonstrating good
governance so the remuneration policy is presented within
this Annual Report and will put to an advisory vote at the
AGM.
The Remuneration Committee is committed to structuring
the remuneration packages of Executive Directors and
senior management that are competitive and enable the
Group to attract, retain and motivate talented people that
can develop and execute the Group’s strategy. To promote
the long-term success of the Company, the Executive
Directors incentive benefits are performance based and
earned only subject to the satisfaction of performance
conditions. These performance conditions are aligned
with the interests of the shareholders.
The Committee remains sympathetic to the increased
cost of living our employees are under but recognises the
pay decisions we take needs to reflect the current and
future needs of the business. In determining pay awards,
consideration was given to financial sustainability,
enabling the business to produce the returns it needs
for further investment whilst ensuring Filtronic remains
an attractive proposition to retain and attract the talent
needed to deliver our business strategy. Therefore, we
undertook an external benchmarking exercise, using
third-party experts to compare remuneration packages
we offer against similar businesses in terms of size and
nature. This resulted in standard salary increases being
awarded to the Executive Directors and key management
of 5%.
The ’Our People’ section of this Annual Report and
Accounts offers some greater insight into some of the
additional benefits our employees enjoy as well as some
of the access they get to third-party services for support
with their health and wellbeing.
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The Committee reviewed the outcomes for the FY2024
annual incentive plan with the targets being met, and
exceeded, in the year resulting in a full payment of the
bonus scheme.
The Committee also considered the performance-
related bonus plan to be implemented in FY2025, to
ensure it aligned with the interests of shareholders. As the
Company executes on its growth plans it was concluded
that the revenue-based metric for the incentive scheme
remains the best metric to assess performance against
the scheme. The incentive for FY2025 will be awarded for
achieving stretching targets against the FY2025 strategic
business plan. The Committee is confident this will drive
the right behaviours in the organisation to deliver long-
term shareholder value and ultimately increased revenue
will lead to improved levels of profit.
To support the long-range strategic plans and further
align the interests of the Executive Directors and key
management with shareholders, the Committee consulted
with our major shareholders in the year in relation to
the Employee Share Option Plan (“ESOP”) scheme and
performance conditions. The scheme was restructured,
with the new performance conditions, during the year
to increase the headroom available to grant options
to participants, including both the CEO and CFO, that
incentive the right behaviours and align the outcomes with
those of the shareholders.
The main activities of the Committee in FY2024 are set
out in the table. I hope you find this report gives a clear
account of the Committee’s approach and remuneration
outcomes for the year. We are committed to maintaining
an open dialogue with shareholders with regards to
remuneration and would welcome any comments or
concerns, relating to this report, that shareholders may
have.
Pete Magowan
Chairman, Remuneration Committee
29 July 2024
Activities of the Remuneration Committee during the year
During the year, the Remuneration Committee discharged its responsibilities by:
Area of review
Activities undertaken
Executive
Directors’
and senior
management
remuneration
Share incentive
plans
Governance
• Set the remuneration for the Executive Directors and senior management as part of the annual
pay review.
• Reviewed and appraised the remuneration of the new CEO.
• Assessed and approved the FY2024 bonus outcomes.
• Reviewed and approved the FY2025 performance-related bonus plan and assessed the
performance criteria remaining as a revenue based metric.
• Determined the performance targets for the 2025 annual bonus in line with Filtronic’s strategic
plans.
• Consulted with shareholders on increasing headroom availability in the employee share plans.
• Approved the grant of share options under the ESOP scheme for the Executive Directors and
key management and set stretching performance conditions based on share price growth and
adjusted EBITDA.
• Increased employee share scheme headroom availability to 12.5% from 10%.
• Considered and approved the Directors remuneration report.
• Reviewed and approved the remuneration policy.
• Reviewed and approved the Committee’s terms of reference.
• Reviewed compliance with the QCA code and the updates to the QCA code 2023.
Filtronic plc Annual Report and Accounts 2024
56
Directors’ remuneration policy
The objective of the Directors’ remuneration policy is to
attract, retain and incentivise a high calibre of Executive
Director, Senior Management and Non-Executive
Directors who can direct the business and deliver the
Group’s core objective of growth in shareholder value, by
building a business that is capable of delivering long-term,
sustainable growth.
The Board has overall responsibility for the remuneration
policy but delegates the operation of it to the
Remuneration Committee (“the Committee”) which
is also responsible for ensuring our reward structure
remains both competitive in our market and aligned with
the interests of shareholders. It has spent a significant
amount of time assessing the policy to ensure it aligns
the interests of the Executive Directors and Senior
Management with the Group’s business strategy, growth
ambition, culture and creation of long-term shareholder
value. It is structured in compliance with Principle 9 of the
QCA Code and ensures that appropriate incentives are in
place to motivate and encourage enhanced performance,
with rewards for contribution to the success of the Group
being given in a fair and responsible manner. It supports
and reinforces the desired corporate culture and aims to
promote the right behaviours and decision making within
the organisation.
Executive Directors and Senior Management
Pay structures for the Executive Directors and Senior
Management have been implemented to be attractive to
attract and retain whilst being aligned with shareholders’
interests. To achieve this objective, remuneration
packages are awarded with elements of fixed and
variable pay with share incentives structured to help
Executive Directors and Senior Management build and
hold a meaningful shareholding in the company.
The table below summarises the key components
of remuneration for Executive Directors and senior
management:
Base Salary
To reflect the individual’s
skills and experience,
providing a competitive
base reward to recruit
and retain people of the
calibre needed to develop
and deliver the Company’s
strategy.
Base salaries are normally
reviewed on an annual
basis with any changes
effective from 1 June.
Benefits
While there is no maximum
salary, any increase will
typically be in line with
those awarded to the wider
employee population.
The Remuneration
Committee retains
discretion to make
exceptional salary increases
in circumstances that it
considers appropriate, for
example:
i) where the individual
has been promoted or
gains a clear increase in
responsibility.
ii) aligning pay with a
market competitive rate.
iii) There is a material
change in the size
or complexity of the
business.
Base salary levels
and corresponding
increases are based on
individual experience,
skills and business
performance along with
competitiveness against
similar companies.
Element
Objective and
Link to Strategy
Operation
Opportunity
Performance
Measures
To provide market
competitive benefits as
part of a competitive total
remuneration package.
Benefits include, but are
not limited to, private
healthcare, car allowance,
life assurance and income
support. Although the
latter two are contingent
on being a member of
the Filtronic stakeholder
pension scheme.
The Remuneration
Committee retains
discretion to approve
additional benefits taking
into account the role and
individual circumstances.
None.
Directors’ remuneration report continued
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Element
Objective and
link to Strategy
Operation
Opportunity
Performance
Measures
Annual
Performance
Related
Bonus
To provide an incentive to
deliver short-term stretching
financial performance and
growth targets.
Targets (financial and
non-financial) are set
and reviewed by the
Committee annually.
Actual bonus payable
is determined by the
Committee after the
financial year-end, based
on performance against
these targets
All employee bonuses
are subject to malus and
clawback provisions.
The bonus target is 75% of
base salary in the case of
the CEO and 50% of the
base salary in the case of
the CFO.
Under the financial element
of the annual bonus,
threshold performance
must be exceeded
before any annual bonus
becomes payable. The
percentage payout then
increases according to
the level of achievement
against targets. Bonuses
start accruing from a
minimum threshold at 20%
to the maximum amount
payable of 150% of bonus
target for exceptional
outperformance.
The performance
measures, weighting and
targets are set annually
by the Committee with
reference to external
expectations and internal
financial forecasts.
Employee
Share
Option Plan
(“ESOP”)
To drive and incentivise
long-term value creation,
support retention and
promote share ownership by
the Executive Directors.
The exercise price of the
share option is generally
set at the market price
on the date of the grant
other than in exceptional
circumstances.
Vesting of the option
is conditional on
achievement of pre-
defined performance
conditions, which the
Committee considers to be
appropriately stretching,
and are measured over
multiple financial periods.
The Committee retains
discretion to adjust the
choice of performance
measures to ensure they
continue to be linked to
the delivery of the Group’s
strategy.
The Committee has
full discretion as to the
participants of the scheme
and the number of options
granted to each participant.
Awards vest based on
the achievement of
performance measures.
The performance criteria
are financial and include
measures such as share
price growth and adjusted
EBITDA.
The Committee has
discretion to adjust
outcomes to ensure that
payments accurately
reflect underlying business
performance over the
period.
Pension
contribution
To provide a market
competitive retirement
benefit on the same basis
as that available to other
employees.
The Executive Directors
are eligible to participate
in the Group’s defined
contribution scheme.
The Company has
discretion to authorise
cash payments in lieu of
pension contribution.
The Group operates an
employer matched plus
2% pension scheme for its
UK employees, including
the Executive Directors, up
to a maximum of 8% of
base salary if the employee
contributes 6%.
None.
Filtronic plc Annual Report and Accounts 2024
58
Notes to the policy table
Performance measures and targets
It is the Board’s intention to reward success. Therefore, the
aim of the variable pay structure is to reward Executive
Directors and Senior Management over and above base
salary for the achievement of business objectives.
Performance targets are set to be stretching but
achievable, with regard to the particular strategic
priorities in a given year. The Committee retains the ability
to adjust performance measures or targets if events
occur (such as a change in Group strategy, a material
acquisition or a change in prevailing market conditions)
which cause the Committee to determine that measures
are no longer appropriate and that an amendment is
required so that they achieve their original purpose.
Annual bonus
The bonus criteria are selected annually to reflect the
Group’s main KPIs for the year and are designed to
encourage continuous performance improvement for the
Group.
Group financial performance targets relating to the bonus
plan are set with reference to the Group’s annual budget,
which is reviewed and signed off by the Board prior to the
start of each financial year.
Share schemes
The Committee has determined that the performance
metrics for the recently announced ESOP scheme are
share price growth and adjusted EBITDA performance
over three financial periods to align business performance
with the interests of the shareholders. Minimum and upper
targets are set for achievement where vesting will only
materialise if the lower target is met after the three years
otherwise the share option will lapse. On achieving the
minimum threshold, the ESOP vests at 50% of the total
options granted and continues to vest on a straight-line
basis until the upper target is achieved, at which point the
maximum ESOP potential will vest.
Limit on sale of share option
To promote share ownership of Executive Directors and
Senior Management there is a restriction on the number
of shares that can be sold in any six-month period to a
maximum of 1% the total share capital of the Company.
Remuneration policy for other employees
The approach to annual salary reviews is consistent
across the Group, with consideration given to individual
performance, skills, experience, responsibility, group
performance, market conditions and salaries paid by
similar companies. Pension participation is open to all
employees and those enrolled receive life insurance and
income protection (long term incapacity benefit). UK
employees are also invited to join the SAYE plan on the
same terms as the Executive Directors.
Depending upon role and seniority, some employees may
also benefit from private healthcare and inclusion in the
Filtronic Annual Bonus Scheme. The level of participation
in all bonus and ESOP schemes is determined by the
Board via the Remuneration Committee in consideration
of role, responsibility and individual performance
contribution.
Consideration of AIM market practice
The Board aims to keep reward packages and policy
in line with AIM market norms and will take soundings
from time to time with external advisors to take account
of changing governance requirements and tax policy in
respect of scheme rules.
Consideration of shareholders’ views
The Committee considers feedback received from all
shareholders and seeks engagement to consult with
major shareholders on key remuneration issues. The
Directors’ remuneration report continued
Element
Objective and
link to Strategy
Operation
Opportunity
Performance
Measures
Participation
in other all
employee
share-
based plans
including
Save As
You Earn
(“SAYE”)
To encourage all employees
to make a long-term
investment in share
ownership of the Company
in a tax-efficient way.
The Executive Directors
can participate in the
Company’s SAYE scheme
on the same terms as
other UK employees.
Options are periodically
granted at a discount
(currently up to 20%)
to the market value of
the share at the date of
invitation.
Awards may be adjusted
to reflect a change in the
capital structure of the
company.
Up to the maximum
monthly saving amount as
permitted by HMRC.
N/A
Governance report
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Committee engages proactively with shareholders and
ensures that they are consulted in advance where there
are any material changes to the remuneration policy or
elements of it. During FY2024, a consultation exercise was
undertaken with major shareholders to seek feedback on
the proposed changes to increase the number of options
that could be granted to the Executive Directors and
Senior Management.
Recruitment remuneration policy
The Committee recognises the importance of attracting
the best talent available to the Company to deliver
company strategy and long-term shareholder value.
The Company will, therefore, on recruitment or
internal promotion, to Executive Director or Senior
Management apply the remuneration policy in full. This
includes making use of any, or all of the components of
remuneration set out in the table above. The Committee
retains discretionary authority to set first year annual
bonus performance targets for new recruits different
to those for the other participants, in order to reflect a
commencement period after business plans have been
set and to also offer at commencement the immediate
participation in the ESOP scheme.
In determining appropriate remuneration for a new
Executive Director or Senior Manager, the Committee will
take into consideration all relevant factors including the
quantum, nature of remuneration and jurisdiction from
which the candidate was recruited to ensure that the pay
arrangements are in the best interests of the Group and its
shareholders.
The Committee may include additional elements of pay
which it considers appropriate in circumstances which
may include:
• Interim appointments;
• Non-Executive Directors taking on an executive
function on a short-term basis; and
• Where the timing of the recruitment means that it
would be inappropriate to provide a bonus or ESOP
opportunity for the year, in which case the quantum in
respect of the opportunity for the year of recruitment
may be transferred to the subsequent year in order that
reward is provided on a fair and appropriate basis.
However, the Committee’s discretion is not unlimited.
As noted above, salary, pension and benefits will be
provided in line with the existing policy. The Committee
may alter the performance measures and vesting periods
of incentive remuneration and the deferral arrangements
for the bonus or holding period for the ESOP to reflect the
circumstances of the recruitment. The rationale for any
exercise of this discretion will be explained in the following
year’s remuneration report.
In addition to the above elements of remuneration, the
Committee may consider it appropriate to grant an
award under a different structure in order to facilitate the
recruitment of an individual, to replace remuneration,
benefits and/or incentive arrangements forfeited on
leaving a previous employer.
External appointments
It is the Board’s policy to allow each Executive Director
to take up one non-executive position on the board of
another company, subject to the prior approval of the
Filtronic Board. Any fee earned in relation to outside
appointments is retained by the Executive Director. No
such positions were taken by Richard Gibbs nor Michael
Tyerman and so no such fees were paid during the current
financial year. Nat Edington currently has two Non-
Executive roles that he held prior to joining the Company
but this will reduce to one in line with this remuneration
policy by the end of the H1 FY2025.
Filtronic plc Annual Report and Accounts 2024
60
Directors’ service agreements
The Executive Directors are employed under contracts of
employment with the Group.
The Non-Executive Directors, including the Chairman, are
retained under Letters of Appointment.
Executive Directors’ contracts and Non-executive
Directors’ Letters of Appointment are available to view at
the Company’s Registered Office. Details of the service
contracts currently in place for directors are as follows:
Name
Executive service agreement appointment date
Key current terms
Notice
period
Nat Edington
Appointed to the Board on 13 May 2024
Base salary £260,000
6 months
Chief Executive
Annual bonus
Officer
Health insurance
Long-term incentives
Pension allowance
Michael Tyerman
Appointed to the Board on 1 April 2016
Base salary £158,657
6 months
Chief Financial
Annual bonus
Officer
Health insurance
Long-term incentives
Pension
Name
Role
Non-Executive terms of appointment date
Fee
Notice
period
Jonathan Neale Chairman and Nominations Appointed to the Board on 15 November 2021
£73,500
6 months
Committee Chairman
Pete Magowan
Remuneration Committee
Appointed to the Board on 19 November 2018
£47,250
3 months
Chairman
John Behrendt
Audit and Risk Committee
Appointed to the Board on 1 January 2021
£47,250
3 months
Chairman
Directors’ remuneration report continued
Fees
To attract and retain high
calibre individuals who have
the experience to conduct
both the statutory duties of
a director, as well as advise
on company strategy and
oversee its implementation.
Fee reviews are conducted
annually at the same
time as the Executive
Directors on 1 June
of each financial year
and consider economic
conditions, market levels
and the time commitment
and contribution of each
individual as well as the
affordability for the
Company.
Fees are payable entirely
in cash.
Neither the Chairman
nor the Non-Executive
Directors are permitted
to participate in the
Company’s performance-
based incentive plans.
Increases to fee levels will
typically be in line with
market levels of inflation.
In exceptional
circumstances (eg. material
misalignment with the
market or a change in the
complexity, responsibility or
time commitment required
to fulfil the role of Non-
Executive Director) the
Board retains the discretion
to make appropriate
adjustments to fee levels to
ensure they remain market
competitive and fair to the
Director.
Non-Executive Directors
receive an additional
fee for Chairing a board
committee.
N/A
Element
Objective and
link to strategy
Operation
Opportunity
Performance
measures
Non-Executive Directors
The policy table below summarises the key components
of remuneration for the Chairman and Non-Executive
Directors:
Governance report
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Exit payments
When determining any loss of office payment for a
departing Executive Director or Senior Manager the
Committee will ensure that a consistent approach is
adopted so that there is no reward for poor performance
and the liabilities of the Group are minimised where
appropriate.
The underlying principle to be applied is that payment to
an individual shall be limited to their contractual
obligations and to honour any pre-established
commitments with the exception that, for “good leavers”
the committee will retain discretionary authority over the
grant of pro-rata annual bonus, SAYE and ESOP awards.
No severance payment shall be made to any employee
who is dismissed for serious breach of contract, serious
misconduct or any acts or omissions that bring the
company into disrepute.
Reason for leaving
Timing of vesting
Treatment of awards
“Good leaver” including
redundancy, retirement
etc
“Bad leaver” including
resignation, dismissal,
etc
Change of control
Usually paid at the same time as continuing
employees.
Pro rata payments may also be made early on
compassionate grounds to a “good leaver”.
No annual bonus payable.
Paid immediately on the effective date of change
of control.
Eligible for an award to the extent that
performance targets are satisfied, and the award
is pro-rated for the proportion of the financial year
served.
Not applicable.
Eligible for an award to the extent that
performance targets are satisfied up to the
change of control and the award is pro-rated for
the proportion of the financial year served to the
effective date of change of control.
Annual bonus
Reason for leaving
Timing of vesting
Treatment of awards
“Good leaver” including
redundancy, retirement
etc – awards which
are still subject to
performance conditions
“Bad leaver” including
resignation, dismissal,
etc
Change of control
Continue until the normal vesting date or vest
immediately, at the discretion of the Committee.
In the event of the death of a participant, the award
would vest immediately.
Outstanding awards are forfeited.
Vest immediately on the effective date of change
of control.
Outstanding awards vest to the extent the
performance conditions are or are reasonably
considered to be likely to be satisfied and the
awards are pro-rated to reflect the length of
the performance period served unless the
remuneration committee decides otherwise. In
the event of the death of a participant during the
performance period, the award would vest in full.
Not applicable.
Outstanding awards vest subject to the satisfaction
of performance conditions as at the effective date
of change of control, and the award is pro-rated for
the proportion of the performance period served
to the effective date of change of control unless the
remuneration committee decides otherwise.
ESOP scheme
Filtronic plc Annual Report and Accounts 2024
62
Remuneration Report
Total single figure of remuneration for directors - audited
The directors’ total remuneration in respect of the year under review is shown below and compared to the previous year.
£000
FY2024 FY2023
FY2024 FY2023
FY2024 FY2023
FY2024 FY2023
FY2024 FY2023
Executive Directors
Nat Edington1
15
-
-
-
1
-
-
-
16
-
Richard Gibbs2
206
204
107
-
11
11
479
24
803
239
Michael Tyerman
144
137
72
-
1
-
218
11
435
148
Non-Executive Directors
Jonathan Neale
67
60
-
-
-
-
-
-
67
60
Pete Magowan
44
40
-
-
-
-
-
-
44
40
John Behrendt
44
40
-
-
-
-
-
-
44
40
Total
520
481
179
-
13
11
697
35
1,409
527
1Nat Edington was appointed to the Board on 3 May 2024.
2Richard Gibbs resigned from the Board on 13 May 2024. He will remain with the Company until 30 November 2024 in
an advisory capacity.
Notes to the single figure table of remuneration for directors - audited
Taxable benefits
The Executive Directors are provided with private health insurance and life assurance whilst Nat Edington also receives
an allowance in lieu of pension.
Incentive outcomes - FY2024
The Executive Directors were rewarded for delivering revenue targets aligned with the FY2024 Business Plan.
Long-term incentives
The Executive Directors have long-term incentives as part of the Company’s share option plan. More details relating to
this can be found on page 63 in the ‘Management share option plan - audited’ section of the Directors’ remuneration
report.
Annual performance-related bonus plan - FY2025
An annual performance-related bonus plan has been introduced for the year ending 31 May 2025 which will reward the
Executive Directors and key management cash bonuses for delivering stretching revenue targets aligned to the FY2025
business plan and achievement of personal objectives that support the growth and development of the business.
Nat Edington can earn up to a maximum of 100% of his base salary whilst Michael Tyerman can earn up to 75% of his
base salary. Pay-out is determined by the Remuneration Committee which has discretion to vary the bonus based on
performance.
Salary or fee
Bonus
Benefits
Long-term
incentive
Total remuneration
excluding pension
contributions
Directors’ remuneration report continued
Governance report
63
www.filtronic.com Stock Code: FTC
Total single figure of pension benefits for directors - audited
The Executive Directors’ total pension benefits in respect of the year under review are shown below and are compared to
the previous year.
Pension contributions
£000
FY2024 FY2023
Michael Tyerman
12
11
Richard Gibbs
10
-
Total
22
11
Contributions were made to the Company’s defined contribution scheme.
Richard Gibbs opted to join the Company’s pension scheme in November 2023 having previously elected not to.
Nat Edington chose not to join the Company’s pension scheme and opted to be paid an allowance in lieu of pension as an
alternative.
Directors’ and relevant senior management holdings of Filtronic shares - audited
Directors are not required but are expected to have holdings in the ordinary share capital of the Company.
The interests of the directors, who were serving as at 31 May 2024, in the Company’s ordinary shares, which excludes
interests under the share option schemes, are set out below:
FY2024
FY2023
Shares
%
Shares
%
Nat Edington
-
-
-
-
Michael Tyerman
581,601
0.3%
339,478
0.2%
Jonathan Neale
265,151
0.1%
199,870
0.1%
Pete Magowan
750,000
0.3%
750,000
0.3%
John Behrendt
200,000
0.1%
200,000
0.1%
1,796,752
0.8%
1, 489,348
0.7%
The above shareholdings include holdings of directors’ connected parties.
Management share options scheme - audited
The Executive Directors who were serving at 31 May 2024 held the following options over the ordinary shares of the
Company:
Plan
Exercise period
Option price
FY2024
FY2023
Nat Edington
ESOP
24/05/2027—24/05/2034
17.25p
4,333,333
-
Michael Tyerman
ESOP
01/03/2019—28/02/2026
5.37p
-
300,000
Michael Tyerman
ESOP
24/06/2024—23/06/2031
11.12p
479,988
479,988
Michael Tyerman
ESOP
30/11/2026—30/11/2033
17.25p
1,370,012
-
Michael Tyerman
SAYE
06/05/2024—05/11/2024
6.67p
58,290
58,290
6,241,623
838,278
The ESOPs granted in June 2021 to Michael Tyerman and key management were granted for the delivery of stretch
targets of revenue with the options vesting at various incremental increases of agreed targets. 23% of these options
vested based on the performance condition being met. The Remuneration Committee have agreed to extend the scheme
for another 12 months, with 50% of the remaining options rolled forward, to vest after publication of the audited FY2025
financial statements. The other 50% of remaining options will lapse.
Michael Tyerman opted to take part in the Company’s SAYE scheme which was offered to all employees in May 2021.
The closing middle market price on 31 May 2024 was 59p, and on 31 May 2023 it was 13p. The range of middle market
share prices during the year ended 31 May 2024 was 60p-13p.
There was one change in directors’ interests between 31 May 2024 and 29 July 2024 as Michael Tyerman exercised
58,290 options granted in the SAYE scheme taking his holding to 639,891. The Company’s register of directors’ interests,
which is open to inspection at the Registered Office, contains full details of directors’ shareholdings.
Filtronic plc Annual Report and Accounts 2024
64
Directors’ report
Top Investors
Rank
Investor
31 May 2024
%
1
Canaccord Genuity Group Inc.
30,725,000
14.15%
2
Mark and Diana Dixon
30,000,000
13.82%
3
David and Monique Newlands
28,196,068
12.98%
4
Schroders PLC
11,016,354
5.07%
5
Harwood Capital LLP
10,940,338
5.03%
The directors present their report together with the
audited consolidated financial statements for the year
ended 31 May 2024.
Going concern
The Group’s business, and the factors likely to affect its
future development, performance and position are set out
in the Strategic report.
The revenue, trading results and cash flows are explained
in the Financial review on page 18.
After a review of forecasts including projections of
profitability and cash flows for the year to 31 May 2025
and a further two years, the directors believe that the
Group has adequate resources to continue to operate
for the foreseeable future and that it is therefore
appropriate to continue to adopt the going concern basis
of accounting in the preparation of the consolidated and
Company financial statements. The basis of preparation,
in note 1, provides more detail on this.
Directors and their interests
The directors of the Company during the year, and up to
the date of signing this report, were as follows:
Executive Directors
Nat Edington (appointed 13 May 2024)
Richard Gibbs (resigned 13 May 2024)
Michael Tyerman
Non-Executive Directors
Jonathan Neale
Pete Magowan
John Behrendt
Details of directors’ remuneration and interests in
the share capital of the Company are set out in the
remuneration report on page 54.
Nat Edington will stand for election at the Annual
General Meeting (“AGM”), being the first one since he was
appointed.
The Board has decided to adopt best practice, as
recommended by the QCA Code 2023, so all the directors
will stand for re-election annually starting at the 2024
AGM.
Directors’ indemnity
The Company has in place directors’ and officers’
liability insurance on behalf of its directors and officers in
accordance with the provisions of the Companies Act.
Directors’ conflicts of interest
There are no declarations to be made under Section 182
of the Companies Act 2006.
Financial results and dividend
The results for the year are set out in the income statement
on page 66. The position at the end of the year is shown in
the statement of financial position sheet on page 72.
The directors are not recommending payment of a
dividend (2023: £nil).
Research and development expenditure
Research and development costs in the year are set out in
the Financial Review on page 18.
Treasury policy
The Group’s treasury policy aims to manage the Group’s
financial risk and to minimise the adverse effects of
fluctuations in the financial markets on the value of
the Group’s financial assets and liabilities, on reported
profitability and on the cash flows of the Group. Note 35
sets out the particular risks to which the Group is exposed,
and how these are managed.
Significant events and future developments
There have been no significant events since the reporting
date. The Group’s future developments are disclosed in the
Strategic Report on pages 3 to 41.
Share capital
The Company’s share capital consists of 0.1p ordinary
shares. The rights and obligations attached to each share
are equal. Each share carries the right to one vote at the
Annual General Meeting of the Company and carries no
right to fixed income. There are no limitations on holding
or transfer of the shares. The Board has no powers to
issue or buy back the Company’s shares, other than those
approved by the shareholders at the Annual General
Meeting held in October 2023.
Substantial shareholdings
Up to 31 May 2024, the Company had been notified,
by shareholders, in accordance with chapter 5 of the
disclosure and transparency rules, of the voting rights
they held as shareholders of the Company. An analysis
of shareholders as at 31 May 2024 (as disclosed by
shareholders via TR1) is set out in the table below. As at
31 May 2024, the Company had issued share capital of
218,033,210 ordinary shares of 0.1p each.
Governance report
65
www.filtronic.com Stock Code: FTC
Corporate governance
The Corporate governance statement can be found on
pages 44 to 47 of this annual report and accounts.
Political and charitable contributions
No contributions were made for political purposes (2023:
£nil).
The Group made charitable donations of £1,250 in the
year (2023: £1,250).
Annual General Meeting
The Annual General Meeting of the Company will be held
on 31 October 2024 at 11am at
Plexus Building,
Thomas Wright Way,
Netpark,
Sedgefield,
County Durham,
TS21 3FD.
Full details of the business to be transacted at the meeting
will be set out in the notice of the Annual General Meeting.
Renewal of authority to purchase the
Company’s shares
Last year, a resolution was passed at the Annual General
Meeting to give the Company the authority to purchase
its own Ordinary shares on the Stock Exchange. This
authority expires eighteen months from the passing of
the resolution. To avoid this authority expiring during the
next year and the need to call an extraordinary general
meeting to renew the authority, a resolution to renew the
authority will be requested at the Annual General Meeting
Under the terms of the resolution to be proposed at
the Annual General Meeting, the maximum number of
shares which may be purchased is 10% of the issued
ordinary share capital of the Company. The minimum
price payable by the Company for its ordinary shares
will be 0.1p and the maximum price will be determined
by reference to current market prices. The authority will
automatically expire after a period of eighteen months
from the passing of the resolution unless renewed.
It is not the Directors’ current intention to exercise the
power to purchase the Company’s ordinary shares, but
they believe that under certain circumstances it would be
in the Company’s best interests to do so.
The Directors consider the resolutions to be proposed at
the meeting are in the best interests of the Company and
its shareholders. Therefore, they unanimously recommend
that all shareholders vote in favour of the resolution at the
Annual General Meeting as they intend to do in respect of
their beneficial holdings.
Statement of directors’ responsibilities in
respect of the financial statements
The directors are responsible for preparing the Annual
Report and Accounts and the financial statements in
accordance with applicable law and regulation.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the
directors have prepared the group and the company
financial statements in accordance with UK-adopted
international accounting standards.
Under company law, directors must not approve the
financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the group
and company and of the profit or loss of the group for that
period. In preparing the financial statements, the directors
are required to:
• select suitable accounting policies and then apply them
consistently;
• state whether applicable UK-adopted international
accounting standards have been followed, subject to
any material departures disclosed and explained in the
financial statements;
• make judgements and accounting estimates that are
reasonable and prudent; and
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
group and company will continue in business.
The directors are responsible for safeguarding the
assets of the group and company and hence for taking
reasonable steps for the prevention and detection of fraud
and other irregularities.
The directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain
the group’s and company’s transactions and disclose with
reasonable accuracy at any time the financial position of
the group and company and enable them to ensure that
the financial statements comply with the Companies Act
2006.
The directors are responsible for the maintenance
and integrity of the company’s website. Legislation in
the United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors’ confirmations
In the case of each director in office at the date the
directors’ report is approved:
• so far as the director is aware, there is no relevant
audit information of which the Group’s and Company’s
auditors are unaware; and
• they have taken all the steps that they ought to have
taken as a director in order to make themselves aware
of any relevant audit information and to establish that
the Group’s and Company’s auditors are aware of that
information
By order of the Board
Michael Tyerman
Chief Financial Officer
29 July 2024
Directors’ report continued
Filtronic plc Annual Report and Accounts 2024
66
Independent auditors’ report
to the members of Filtronic plc
Opinion
We have audited the financial statements of Filtronic plc (the “Company”) and its subsidiaries (the “Group”) for the
year ended 31 May 2024, which comprise:
• the Consolidated income statement and statement of comprehensive income for the year ended 31 May 2024;
• the Consolidated and Company balance sheets as at 31 May 2024;
• the Consolidated and Company statements of changes in equity for the year then ended;
• the Consolidated and Company cash flow statements for the year then ended; and
• the notes to the financial statements, including accounting policies.
The financial reporting framework that has been applied in the preparation of the financial statements is
applicable law and UK-adopted international accounting standards.
In our opinion the financial statements:
• give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 May 2024 and
of the Group’s profit for the period then ended;
• have been properly prepared in accordance with UK-adopted international accounting standards;
• have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
financial statements section of our report. We are independent of the Group and the Company in accordance with
the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group’s and
Company’s ability to continue to adopt the going concern basis of accounting included:
• Assessing management’s base case and severe but plausible downside cash flow forecasts, including challenging
management on the key assumptions underpinning the models, which included sales forecasts, margin performance
and working capital assumptions;
• Considering the mitigating actions included in the severe but plausible downside scenario to consider whether they
reflected actions within management’s control, as well as any costs associated with implementing these mitigating
actions;
• Reviewing historic trading results and ‘looking back’ to compare them with management’s original budget for the
relevant period, to consider management’s historical forecasting accuracy;
• Testing the mathematical accuracy and integrity of management’s model;
• Performing additional sensitivity analysis of management’s severe but plausible case; and
• Considering the disclosures provided in the financial statements with respect to going concern for consistency with the
models that were subject to audit.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group’s and Company’s ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of materiality. An item is considered material if it could
reasonably be expected to change the economic decisions of a user of the financial statements. We used the concept of
materiality to both focus our testing and to evaluate the impact of misstatements identified.
Based on our professional judgement, we determined overall materiality for the Group financial statements as a whole to
be £215,000, based on 0.85% percent of Group turnover. Materiality for the Company financial statements as a whole
was set at £30,000 based on 0.65% of total assets.
We use a different level of materiality (‘performance materiality’) to determine the extent of our testing for the audit of
the financial statements. Performance materiality is set based on the audit materiality as adjusted for the judgements
Governance report
67
www.filtronic.com Stock Code: FTC
made as to the entity risk and our evaluation of the specific risk of each audit area having regard to the internal control
environment. This is set at £150,500 for the group and £21,000 for the parent.
Where considered appropriate performance materiality may be reduced to a lower level, such as, for related party
transactions and directors’ remuneration.
We agreed with the Audit and Risk Committee to report to it all identified errors in excess of £8,750. Errors below that
threshold would also be reported to it if, in our opinion as auditor, disclosure was required on qualitative grounds.
Overview of the scope of our audit
Our group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide
controls, and assessing the risks of material misstatements at the Group level. For the three significant components we
identified, which are Filtronic plc, Filtronic Broadband Limited and Filtronic Wireless Inc., we performed a full scope audit
of the complete financial information to component materiality. For the remaining components, we performed analytical
reviews and other audit procedures on specific accounts within that component that we considered had the potential for
the greatest impact on the significant accounts in the financial statements, either because of the size of these accounts or
their risk profile.
The group audit team conducted the audit of all components of the business and no component auditors were used
during the audit process.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Our audit procedures in relation to these matters were designed in the context of our audit opinion as a whole. They were
not designed to enable us to express an opinion on these matters individually and we express no such opinion.
Key audit matter
Carrying value of goodwill (Group)
Refer to page 77 (Key accounting matters) and note 14 to
the financial statements.
The goodwill balance is £974,000. We focused on this
area due to the material goodwill balance held on the
consolidated balance sheet and the estimates and
judgements required to determine recoverable amount.
How our audit addressed the key audit matter
We considered the carrying value of goodwill and non-
current assets by reference to management’s value in use
model, which was based on discounted cash flows.
We considered the carrying value of goodwill and non-
current assets by reference to management’s value in use
model, which was based on discounted cash flows.
We obtained and understanding of the systems and
controls in relation to Goodwill and carried out a
walkthrough to confirm the design and implementation of
these controls.
We assessed management’s determination of CGUs
against technical guidance and considered whether
the impairment assessment was performed at the
appropriate level, considering management’s own internal
reporting for monitoring of goodwill. We tested the inputs
to the model to Board approved budgets, which included
short and long-term growth rates. We also tested the
integrity of the model and its mathematical accuracy.
We determined that the calculations were most sensitive
to growth assumptions and calculated the degree to
which these assumptions would need to move before
any impairment was required. We assessed the short-
term growth rate assumptions against purchase orders
and contracts, along with available market data for the
telecommunications infrastructure sector.
Filtronic plc Annual Report and Accounts 2024
68
Independent auditors’ report
to the members of Filtronic plc continued
Key audit matter
Carrying value of goodwill (Group) (continued)
Capitalisation and carrying value of development costs
Within the intangible assets held by the group (see note
14 of the consolidated financial statements), there are
material balances relating to internally generated,
capitalised development costs. The process of correctly
identifying and capitalising this development expenditure
in the year requires the critical application of judgement
by management, and as such is considered a key audit
matter.
In carrying out impairment assessments there is a risk that
the key assumptions such as revenue growth, terminal
growth rate, variability of costs and discount rates used in
the impairment review model are not appropriate.
How our audit addressed the key audit matter
We also read the disclosures provided in the financial
statements regarding goodwill impairment testing,
and the associated disclosure of the critical accounting
estimates, and found these to be appropriate.
Based on the procedures we performed we were able to
obtain sufficient audit evidence in respect of the carrying
value of goodwill and non-current assets.
We have reviewed and challenged management’s
assessment of whether additions met the criteria
for capitalisation and whether brought forward
developments continued to meet the criteria for
capitalisation. We corroborated a sample of the amounts
capitalised in the year to supporting documentation
including invoices for external costs and an approximate
evaluation of internal resource/time capitalised. We
reviewed management’s assessment of capitalisation
criteria in order to conclude if this was appropriate
in accordance with IAS38.We have gained an
understanding of the group’s process and controls around
the capitalisation and carrying value of development
costs.
We obtained and reviewed management’s assessment of
indicators of impairment; management’s key estimates
are set out within the disclosure of critical accounting
estimates and judgements on page 81.
We reviewed the appropriateness of the amortisation
periods in the context of the continuing development of
technologies which may give rise to obsolescence, and the
expected recovery of the assets against future sales.
Other information
The directors are responsible for the other information contained within the annual report. The other information
comprises the information included in the annual report, other than the financial statements and our auditor’s report
thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that
fact.We have nothing to report in this regard.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion based on the work undertaken in the course of our audit
• the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the Group and the Company and their environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you
if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
Governance report
69
www.filtronic.com Stock Code: FTC
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of the directors for the financial statements
As explained more fully in the directors’ responsibilities statement set out on page 65, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and Parent Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The
extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory frameworks within which the Group and Company operates.
We also considered and obtained an understanding of the UK legal and regulatory framework which we considered in
this context were the Companies Act 2006 and taxation legislation.
We identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be the
override of controls by management, misstatement of revenue and misstatement of carrying value of intangible assets
including goodwill. Our audit procedures to respond to these risks included enquiries of management about their own
identification and assessment of the risks of irregularities, sample testing on the posting of journals. We also reviewed and
challenged accounting estimates and assumptions used by management for the impairment assessment of goodwill and
intangible assets (ee Key Audit Matters above) and recognition of contract income, in order to verify that the calculations
and models were reasonable and free of biases.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some
material misstatements in the financial statements, even though we have properly planned and performed our audit in
accordance with auditing standards. We are not responsible for preventing non-compliance and cannot be expected to
detect noncompliance with all laws and regulations.
These inherent limitations are particularly significant in the case of misstatement resulting from fraud as this may involve
sophisticated schemes designed to avoid detection, including deliberate failure to record transactions, collusion or the
provision of intentional misrepresentations. A further description of our responsibilities is available on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
Michael Jayson (Senior Statutory Auditor)
for on behalf of Crowe U.K. LLP
Chartered Accountants and Statutory Auditors
Manchester
29 July 2024
Filtronic plc Annual Report and Accounts 2024
70
2024
2023
Note
£000
£000
Revenue
3
25,432
16,268
Adjusted earnings before interest, taxation, depreciation, amortisation
and share-based payments
4,889
1,270
Amortisation of intangible assets
14
(287)
(253)
Depreciation of property, plant and equipment and right of use assets
15, 16
(945)
(780)
Share-based payments
31
(47)
-
Operating profit
4
3,610
237
Finance costs
10
(332)
(231)
Finance income
11
83
58
Profit before taxation
3,361
64
Taxation
12
(220)
400
Profit for the year
3,141
464
Basic earnings per share
13
1.45p
0.22p
Diluted earnings per share
13
1.41p
0.21p
The profit for the year is attributable to the equity shareholders of the Parent Company, Filtronic plc.
The notes on pages 75 to 103 form part of these financial statements.
Consolidated income statement
for the year ended 31 May 2024
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Consolidated statement of comprehensive income
for the year ended 31 May 2024
26
3,141
(52)
3,089
Note
2024
£000
The total comprehensive income for the year is attributable to the equity shareholders of the Parent Company, Filtronic
plc.
All income recognised in the year was generated from continuing operations.
The notes on pages 75 to 103 form part of these financial statements.
464
(1)
463
Profit for the year
Other comprehensive income
Items that are or may be subsequently reclassified to profit and loss:
Currency translation movement arising on consolidation
Total comprehensive income for the year
2023
£000
Filtronic plc Annual Report and Accounts 2024
72
Consolidated statement of financial position
as at 31 May 2024
Note
2023
£000
2024
£000
Non-current assets
Goodwill and other intangible assets
Right of use assets
Property, plant and equipment
Deferred tax
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Provisions
Deferred income
Lease liabilities
Non-current liabilities
Deferred income
Lease liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Translation reserve
Retained earnings
Total equity
1,774
2,889
1,446
1,254
7,363
2,778
5,335
2,610
10,723
18,086
3,673
364
164
617
4,818
29
1,698
1,727
6,545
11,541
10,796
11,077
(470)
(9,862)
11,541
2,271
3,756
1,153
1,047
8,227
3,273
6,550
7,215
17,038
25,265
5,406
493
1,403
895
8,197
132
2,121
2,253
10,450
14,815
10,798
11,213
(522)
(6,674)
14,815
14
15
16
17
18
19
20
21
22
23
22
23
24
25
26
28
The total equity is attributable to the equity shareholders of the Parent Company, Filtronic plc.
Company number 2891064.
The notes on pages 75 to 103 form part of these financial statements. The financial statements on pages 70 to 103 were
approved by the Board of Directors on 29 July 2024 and signed on its behalf by
Michael Tyerman
Chief Financial Officer
29 July 2024
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Consolidated statement of changes in equity
for the year ended 31 May 2024
Balance at 1 June 2022
Profit for the year
Currency translation movement arising on consolidation
Share-based payments
New shares issued
Balance at 31 May 2023
Profit for the year
Currency translation movement arising on consolidation
Share-based payments
New shares issued
Balance at 31 May 2024
Share
capital
£000
10,796
-
-
-
-
10,796
-
-
-
2
10,798
Share
premium
£000
11,060
-
-
-
17
11,077
-
-
-
136
11,213
Translation
reserve
£000
(471)
-
1
-
-
(470)
-
(52)
-
(522)
Retained
earnings
£000
(10,342)
464
-
16
-
(9,862)
3,141
47
-
(6,674)
Total
equity
£000
11,043
464
1
16
17
11,541
3,141
(52)
47
138
14,815
The notes on pages 75 to 103 form part of these financial statements.
Filtronic plc Annual Report and Accounts 2024
74
Consolidated cash flow statement
for the year ended 31 May 2024
2024
£000
464
(400)
(58)
231
237
16
780
253
(157)
(833)
665
82
(109)
16
950
(481)
(51)
(946)
(53)
9
(1,522)
(231)
-
17
(626)
(840)
(1,412)
16
4,006
2,610
3,141
220
(83)
332
3,610
47
945
287
(531)
(1,235)
1,749
129
1,342
(16)
6,327
(677)
(107)
(666)
(120)
83
(1,487)
(332)
750
138
(784)
(228)
4,612
(7)
2,610
7,215
Cash flows from operating activities
Profit for the year
Taxation
Finance income
Finance costs
Operating profit
Share-based payments
Depreciation of property, plant and equipment and right of use assets
Amortisation of intangible assets
Movement in inventories
Movement in trade and other receivables
Movement in trade and other payables
Movements in provisions
Change in deferred income
Tax (paid)/received
Net cash generated from operating activities
Cash flows from investing activities
Capitalisation of development costs
Acquisition of other intangible assets
Acquisition of plant and equipment
Acquisition of right of use assets
Interest received
Net cash used in investing activities
Cash flows from financing activities
Interest paid
Proceeds from financing agreements
Exercise of employee share options
Repayment of principal element of lease liabilities
Net cash used in financing activities
Movement in cash and cash equivalents
Currency exchange movement
Opening cash and cash equivalents
Closing cash and cash equivalents
2023
£000
The notes on pages 75 to 103 form part of these financial statements.
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Material accounting policies
Reporting entity
Filtronic plc is a public company limited by shares registered in England and Wales, domiciled in the United
Kingdom, and listed on AIM on the London Stock Exchange. The principal activity of the Company is design,
development and manufacture of high performance Radio Frequency (“RF”) technology.
Basis of preparation
The Company and consolidated financial statements for the year ended 31 May 2024 have been prepared in
accordance with UK-adopted international accounting standards and with the requirements of the Companies Act
2006 as applicable to companies reporting under those standards.
The financial statements have been prepared under the historical cost convention except for forward foreign
exchange contracts that are accounted for on a fair value basis.
The accounting policies have been applied consistently throughout the Group.
Going concern
In accordance with corporate governance requirements and the statement of directors’ responsibilities, and
as disclosed in the Directors’ Report, the directors have undertaken a review of forecasts and the Group’s cash
requirements to consider whether it is appropriate that the Group continues to adopt the going concern assumption.
At 31 May 2024, the Group had cash at bank of £7.2m and access to undrawn invoice discounting facilities of
£3.0m and $4.0m in the UK and US respectively. Details of these facilities can be found in note 35.
As referred to in the Strategic report, the Board recognises the uncertain economic and political environment that
the world faces and has reviewed the business outlook to reflect this uncertainty. Cash flow forecasts have been
prepared to model various scenarios over a three-year period based on the Group’s financial and trading position,
principal risks and uncertainties and strategic plans.
A downside scenario was modelled, to stress-test the business forecast, where programme curtailment and/or
delays may adversely affect forward-looking demand to levels lower than those initially modelled in the base case
scenario including reduced demand from a major customer.
A severe but plausible scenario was also modelled that took the downside scenario and removed a significant
contract win that the Group expected to convert from the outlook period.
The scenarios modelled including the severe but plausible model, demonstrate the Group has adequate cash for the
next twelve months from the date of the approval of the accounts.
The directors are confident that the Group and company will have sufficient funds to continue to meet their liabilities
as they fall due for at least 12 months from the date of approval of the financial statements and therefore continue
to adopt the going concern basis to prepare the financial statements.
Basis of consolidation and foreign currency translation
The financial statements consolidate the income statements, statement of financial position and cash flow
statements of the Company and all of its subsidiaries.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
over the entity. This includes the power to govern the financial and operating policies. In assessing control, the Group
takes into consideration potential voting rights. Subsidiaries are consolidated from the date on which control is
transferred to the Group, and are not consolidated from the date that control ceases. Intragroup transactions and
balances are eliminated on consolidation.
On consolidation, the financial statements of subsidiaries with a functional currency other than sterling are
translated into sterling as follows:
• The assets and liabilities in their statement of financial position plus any goodwill are translated at the rate of
exchange ruling at the statement of financial position date; and
• The income statements and cash flow statements are translated at the average rate of exchange each month
in the financial year, which approximates the rate of exchange ruling at the date of the transactions. Any
exchange difference is included in the Consolidated statement of comprehensive income.
Currency translation movements arising on the translation of the investments in foreign subsidiaries are recognised
in the translation reserve, which is a separate component of equity.
The functional currency of each Group company is the currency of the primary economic environment in which
the Group company operates. The financial statements are presented in sterling which is the functional and
presentational currency of the Company.
Notes to the consolidated financial statements
for the year ended 31 May 2024
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76
Material accounting policies (continued)
Transactions denominated in foreign currencies are translated into the functional currency of each Group company
at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at the rate of exchange ruling at the statement of financial
position date.
Foreign exchange gains and losses arising on the settlement of such transactions and translation of monetary assets
and liabilities are recognised in the income statement.
Revenue
IFRS 15 establishes principles for determining when and how revenue arising from contracts with customers should
be recognised. Filtronic recognises revenue when it transfers goods or services to a customer with an amount of
consideration expected to be received in exchange for fulfilling the performance obligation with the customer.
The Group reviews all income streams against the requirements of IFRS 15. Management undertakes an assessment
of all contracts and revenue streams across the business using the five-step approach specified by IFRS 15:
1) Identify the contract(s) with the customer;
2) Identify the performance obligations in the contract;
3) Determine the transaction price;
4) Allocate the transaction price to the performance obligations in the contract; and
5) Recognise revenue when (or as) a performance obligation is satisfied.
In determining the appropriate method of recognising revenue, management is required to make judgements
as to whether performance obligations are satisfied over a period of time or at a point in time. For performance
obligations that are satisfied over a period of time, judgements are made as to whether the output method or
the input method is more appropriate to measure progress towards complete satisfaction of the performance
obligation. If performance obligations are not satisfied over time, the Group recognises revenue at a point in time.
Revenue is measured at the fair value of consideration received or receivable for goods and services provided
or performed in the normal course of business net of value added tax or sales tax. The nature of our revenue is
disclosed below:
Revenue relating to finished goods product
Sales of finished goods product to customers are recognised when control of the product has transferred to the
customer and the performance obligation has been satisfied at a point in time. This is usually when title passes,
either on shipment or on receipt of goods depending on the delivery terms of the customer contract. The transaction
price is specified in the customer contract.
Revenue relating to non-recurring engineering (“NRE”)
NRE comprises contracts to provide engineering services, such as the design and development of a product,
funded by the customer. The transaction price of the contract is known from inception of the contract. Each contract
is reviewed to identify the number of distinct performance obligations and the transaction price is assigned
accordingly, usually by the value of work performed on an output method basis; outputs are typically milestones
within the development such as design reviews, reports and prototype products. Based on the performance of the
obligations in the contract being met, revenue is recognised over time. If relevant, an expected loss on a contract is
recognised immediately in the income statement.
Current tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using rates enacted
or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Goodwill
Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets is measured at cost less
accumulated impairment losses. Goodwill, which is allocated to cash-generating units, is tested for impairment
at least annually and when there is an indication of impairment. The goodwill carrying value is written down to its
recoverable amount. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss
on disposal.
1
Notes to the consolidated financial statements continued
for the year ended 31 May 2024
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Material accounting policies (continued)
Internally-generated intangible assets
All research costs are expensed as incurred.
Development costs chargeable to the customer are recognised as an expense in the same period as the associated
customer revenue.
Development costs incurred on projects requiring product qualification tests to satisfy customer specifications
are generally expensed as incurred, reflecting the technical risks associated with meeting the resultant product
qualification test.
Development costs incurred on projects are capitalised where:
1) The technical feasibility can be tested against relevant milestones;
2) The probable revenue stream foreseen over the life of the resulting product can support the development; and
3) Sufficient resources are available to complete the development.
These capitalised costs are amortised on a straight-line basis over the expected life of the associated product. The
estimated useful lives for the current and comparative periods are:
• Capitalised development costs
1 to 6 years
Other intangible assets
Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less
accumulated amortisation and accumulated impairment losses.
Amortisation is calculated over the cost of the asset less its residual value.
Amortisation is recognised in the income statement on a straight-line basis over the estimated useful lives of
intangible assets, other than goodwill, from the date that they are available for use, since this most closely reflects
the expected pattern of consumption of the future economic benefits embodied in the asset.
The estimated useful lives for the current and comparative periods are as follows:
• Software licence
4 to 5 years
Amortisation methods, useful lives and residual values are reviewed at each financial year end and adjusted if
appropriate.
Impairment charges
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are
reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication
exists, then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite
useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less
costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset. In assessing the fair value less cost to sell (“FVLCTS”), an estimated market multiple is determined and
applied to the forecast EBITDA of the cash generating unit (“CGU”).
For the purposes of impairment testing, assets that cannot be tested individually are grouped together into the
smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash
inflows of other assets or groups of assets (the “CGU”). For the purpose of goodwill impairment testing, CGUs to
which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest
level at which goodwill is monitored for internal reporting purposes.
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable
amount. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of
CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce
the carrying amounts of the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect
of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed
at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is
reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss
is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
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Material accounting policies (continued)
Right of use assets and lease liabilities
The Group assesses whether a contract is a lease at inception of the contract. The Group recognises a right of use
asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for
short-term leases and leases of low value assets which includes the Group’s leased office equipment such as
printers. For these leases, the Group recognises the lease payment as an operating expense on a straight-line basis
over the term of the lease.
The lease is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease or the incremental borrowing rate. This is the rate when
it is not possible to determine the interest rate in the lease and represents what we would have to pay for a loan of
a similar item and term of repayment. The lease liability is subsequently increased by the interest cost on the lease
and decreased by payments made. In the event of a change in future lease payments, the lease liability will be
remeasured and the difference recognised in the right of use asset.
The Group remeasures the lease liability and makes a corresponding adjustment to the right of use asset whenever
there has been a lease payment change, the lease contract is modified or any other significant event.
The right of use asset is initially measured at cost , which comprises the initial amount of the lease liability adjusted
for any lease payments made at or before the commencement date, and subsequently at cost less accumulated
depreciation and impairment losses. The right of use asset is depreciated over the shorter of the period of the lease
term and useful life of the underlying asset. Where there is reasonable certainty the Group will purchase the asset at
the end of the lease, the asset is depreciated over the useful life. The depreciation starts at the commencement date
of the lease.
Where property leases contain a break option the value of the lease liability and right of use asset recognised on the
statement of financial position requires judgement to determine the lease term. The Group recognises the full term
of the lease, ignoring the break option, as invariably the option will not be exercised.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and less any accumulated
impairment losses.
Depreciation is provided on a straight-line basis over the estimated useful lives of the assets as follows:
• Fixtures and fittings
2 to 10 years
• Plant and equipment
3 to 10 years
• Computer hardware
2 to 4 years
Property, plant and equipment are tested for impairment when there is an indication of impairment. If impaired, the
carrying values of the assets are written down to their recoverable amounts.
The gain or loss arising on disposal or scrappage of an asset is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in income.
Deferred taxation
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of
assets and liabilities in the Consolidated Statement of Financial Position and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the statement of financial position liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the
initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable profit nor the accounting profit; or if at the time of the
transaction, they do not give rise to equal taxable and deductible temporary differences.
The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
1
Notes to the consolidated financial statements continued
for the year ended 31 May 2024
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Material accounting policies (continued)
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the
asset is realised based on tax laws and rates that have been enacted or substantively enacted at the statement of
financial position date. Deferred tax is charged or credited in the income statement, except when
• it relates to items charged or credited in other comprehensive income, in which case the deferred tax is
also dealt with in other comprehensive income;
• it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with
in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis.
Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price
less estimated costs of completion and sale. Inventory, including work in progress, costs comprise direct materials
only. Cost is stated in the consolidated statement of financial position at standard cost, revalued to actual cost,
based on a first in-first out basis.
Provision is made for obsolete, slow moving or defective materials where appropriate. This is reviewed monthly.
Trade and other receivables
Trade and other receivables are amounts due from customers for goods and services performed in the ordinary
course of business. They are initially recorded at the transaction price and thereafter measured at amortised cost
using the effective interest method, less an allowance for expected credit losses.
Cash and cash equivalents
For the purpose of the cash flow statement and statement of financial position, cash and cash equivalents comprise
cash at bank and short-term bank deposits with an original maturity of three months or less.
Warranty provision
A provision is recognised in the statement of financial position when there is a present legal or constructive
obligation as a result of a past event, and it is probable that an outflow of resources will be required to settle the
obligation and the amount can be reliably estimated. A warranty provision is recognised when products are sold
based on historical warranty data. The level of warranty provision required is reviewed on a product-by-product
basis and adjusted accordingly in light of actual experience.
Dilapidations and onerous leases
A provision for dilapidations and onerous leases is recognised in the statement of financial position on a lease-by-
lease basis and is based on the Group’s best estimates of the required cost to settle the relevant obligations.
Grants
Capital-based grants, when present, are included within deferred income in the statement of financial position and
credited to the profit and loss account over the estimated useful economic lives of the assets to which they relate.
Grants that compensate the Group for expenses incurred are recognised in the profit or loss account as other
operating income on a systematic basis in the same periods in which the expenses are recognised.
Financial liabilities
Financial liabilities comprise interest bearing borrowings and are initially recognised at fair value and subsequently
measured at amortised cost with any net gains or losses, including any interest expense, recognised in profit or loss.
Share capital
Ordinary shares issued are classified as share capital in equity.
Dividends
Interim dividends are recognised in equity in the financial year they are paid. Final dividends are recognised in
equity in the financial year they are approved by shareholders.
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Material accounting policies (continued)
Share-based payments
The Group operates equity settled share option schemes, under which share options are granted to certain
employees. The fair value of the share options at the date of grant was calculated using an option pricing model,
taking into account the terms and conditions applicable to the option grant.
The total amount to be expensed is determined by reference to the fair value of the options granted:
• including any market performance conditions (e.g. the entity’s share price); and
• excluding the impact of any non-market performance vesting conditions (e.g. profitability, sales growth
targets).
The fair value of the number of share options expected to vest was expensed in the income statement on a straight-
line basis over the expected vesting period. At each reporting period, these vesting expectations were revised as
appropriate. A credit is made to equity equal to the share-based payment charge in the financial year.
Defined contribution pension schemes
Defined contribution pension schemes are operated for employees. Contributions are recognised as an expense in
the income statement as incurred.
Forward currency contracts
Forward currency contracts are held at fair value. The gain or loss on re-measurement to fair value is recognised
immediately in the consolidated income statement.
Accounting developments and new standards
At the date of authorisation of these financial statements, new and revised standards issued but not yet effective
are set out below. It is anticipated the adoption of these standards and interpretations in future periods will have no
material impact on the financial statements of the Group. These have not been adopted in the Group’s accounting
policies.
• Amendments to IAS 1 ‘Classification of Liabilities as Current or Non-Current’;
• Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosure: Supplier Finance
Arrangements.
• Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability
• Amendments to IAS 1 ‘Non-Current Liabilities with Covenants’ and;
• Amendments to IFRS 16 ‘Lease liability in a sale and lease back’.
• Introduction of IFRS 18 ‘Presentation and disclosure in financial statements’.
The Group is assessing the impact of these new standards and the Group’s financial reporting will be presented in
accordance with these standards from the relevant accounting period.
1
Notes to the consolidated financial statements continued
for the year ended 31 May 2024
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Accounting estimates and judgements
The preparation of the financial statements requires the use of accounting estimates and judgements, that affect
the application of accounting policies, which are described in note 1, and reported amounts of assets and liabilities,
income and expenses. The directors are required to make accounting estimates and judgements which are
continually evaluated. They are based on historical experience and other factors, including expectations and best
estimates of the future, that are believed to be reasonable under the circumstances. Actual results may differ from
the expected results.
Key sources of estimation uncertainty
The key estimates concerning the future, that have a significant effect on the financial statements are considered
below:
Investments in subsidiaries - impairment
Investments in subsidiaries are tested for impairment by reference to their recoverable amount relative to their
carrying value. In accordance with IAS 36, recoverable amount is determined as the higher of value in use (“VIU”),
determined based on the expected cash generated by the CGU to which the investment relates and fair value less
costs to sell (“FVLCTS”). Both models are subject to uncertainties surrounding the EBITDA and cash flow forecasts
being used.
The sensitivity analysis in respect of the recoverable amount of investments in subsidiaries is presented in note 4 of
the Company accounts.
Goodwill and other intangibles - impairment
Goodwill and other intangibles are tested for impairment by reference to the expected cash generated by the cash
generating unit (“CGU”) or group of CGUs. This is deemed to be the best approximation of value, but is subject to
the same uncertainties as the cash flow forecast being used. The forecasts comprise forecasts of revenue, material
costs and overhead costs based on current and anticipated market conditions that have been considered and
approved by the Board. Whilst the Group is able to manage most of its costs, significant elements of the revenue
forecasts are inherently linked to global demand where uncertainty about both the timing and level of growth
remains which is a key sensitivity.
Capitalised development costs - impairment
Intangible assets include development cost assets which have been reviewed for impairment as at the reporting
date.
The recoverable amount of each technology development project has been determined based on value in use
calculations, using cash flow projections in line with the expected useful economic life of each asset. The value in use
calculations are based on management approved risk-adjusted cash flow forecasts for each project and have been
discounted using a pre-tax discount rate of 16%.
The key assumptions used in the cash flow projections relate to revenue and gross profit margin for each technology
and are based on assumptions about expected customer demand which is inherently linked to the global demand
for the technology under development where the timing and level of demand is subject to uncertainty. The Group
has carried out a sensitivity analysis on the impairment tests of each of these projects, using various reasonably
possible scenarios and concluded there to be no impairment risk.
Deferred tax asset
The recognition of deferred tax assets relating to tax losses carried forward depends on forecasts of the future
taxable profits of the Company and its subsidiaries. The Group has assessed the recoverability of its deferred
tax assets by reference to Board approved budgets and cash flow forecasts. These forecasts require the use of
estimates and judgements about the future performance of the Company and its subsidiaries using the current
order book, forecasts and market knowledge.
Deferred tax assets have been recognised within Filtronic Broadband Limited in the UK and Filtronic Wireless Inc.
in the USA so a change to forecast customer demand in either of these subsidiaries would impact on the amount of
deferred tax asset recognised. A 10% forecast reduction in the profitability of these subsidiaries would see deferred
tax asset recognition reduce by an additional £314,000.
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82
2
Accounting estimates and judgements (continued)
Warranty provision
The Group makes estimates in calculating the warranty provision for existing commitments arising from past events.
In estimating the provision, the Group makes judgements as to the quantum and likelihood of the liability arising.
Certain provisions require more judgement than others. In particular, the warranty provision has to take account
of future outcomes arising from past deliveries of products and services. In estimating these provisions, the Group
makes use of management experience, precedents and any specific contract and customer information.
Critical judgements in applying the Group’s accounting policies
The critical accounting judgements in applying the Group’s accounting policies are considered below and are the
judgements that have the most significant effect on the amounts recognised in the financial statements.
Development costs
Development costs are capitalised in accordance with the accounting policy in note 1 if it meets the criteria as per
IAS 38. Initial capitalisation of costs is based on management’s judgement whether the criteria of IAS 38 is satisfied,
when the technological and economical feasibility is confirmed, usually when a product development project has
reached a defined milestone and there is commercial interest in the product. As part of this judgement process,
management establish future demand relating to the product, evaluate the development plans to complete the
product and establish where the development is positioned on the Group’s technology roadmap. The directors
apply judgement in the review of costs capitalised to determine whether any impairment should be recognised. The
directors also apply judgement in its review of impairment of its development costs and assesses this on a regular
basis to ensure that any costs still capitalised continue to be commercially viable.
Notes to the consolidated financial statements continued
for the year ended 31 May 2024
Financials
83
www.filtronic.com Stock Code: FTC
3
2,239
2,154
17,121
3,918
25,432
Revenue by destination
United Kingdom
Europe
Americas
Rest of the world
2024
£000
6,925
438
7,363
7,972
255
8,227
Split of non-current assets by location
United Kingdom
Americas
Non-current assets relate to property, plant and equipment, right of use assets, goodwill and other intangible assets
and deferred tax.
2023
£000
2023
£000
2024
£000
4,762
2,600
5,711
3,195
16,268
Segmental analysis
Operating segments
IFRS 8 requires consideration of the identity of the chief operating decision maker (‘CODM’) within the Group. In line
with the Group’s internal reporting framework and management structure, the key strategic and operating decisions
are made by the Board, who reviews internal monthly management reports, annual business plans and forecast
information as part of this. Accordingly, the Board is deemed to be the CODM.
The CODM has identified one operating segment within the Group as defined under IFRS 8. In turn, this is the
only reportable segment of the Group as the entities in the Group have similar products and services, production
processes and economic characteristics. Therefore, there is no allocation of operating expenses, profit measures or
assets and liabilities to specific commercial markets.
Accordingly, the CODM assesses the performance of the operating segment on financial information which is
measured and presented in a manner consistent with those in the financial statements by reference to Group results
against budget.
The Group profit measures are operating profit and adjusted EBITDA, both disclosed on the face of the
consolidated income statement. No differences exist between the basis of preparation of the performance
measures used by management and the figures in the Group financial statements.
The Group has three customers representing individually over 10% of revenue each and in aggregate 84% of
revenue. This is split as follows:
• Customer A - 48% (2023: 12%)
• Customer B - 19% (2023: 34%)
• Customer C - 17% (2023: 17%)
Geographical information
In presenting information on the basis of geographical segments, segment revenue is based on the geographical
location of customers and the nature of revenue recognised. Segment assets are based on the geographical
location of the assets.
Filtronic plc Annual Report and Accounts 2024
84
Operating profit
4
2024
£000
2023
£000
5,992
5,884
623
336
-
-
16
6,859
253
780
1,033
(187)
2,334
10,039
237
Revenue
Cost of goods sold including materials and product warranty
Wages and salaries
Social security costs
Pension costs
Bonus
Temporary employees
Share options expense
Staff costs
Amortisation
Depreciation
Depreciation and amortisation
Other operating income
Other expenses
Total operating costs
Operating profit
9,357
6,092
650
372
810
208
47
8,179
287
945
1,232
(326)
3,380
12,465
3,610
Development costs of £677,000 were capitalised in the year (2023: £481,000).
Other operating income relates to grants received for plant and machinery and R&D innovation whilst R&D tax
credits claimed under the RDEC scheme are also recognised in operating profit.
Revenue from goods and services
Revenue from non-recurring engineering (“NRE”) projects
24,135
1,297
25,432
15,362
906
16,268
Notes to the consolidated financial statements continued
for the year ended 31 May 2024
Financials
85
www.filtronic.com Stock Code: FTC
945
2,408
245
42
95
Auditors’ remuneration
The Company’s auditor is Crowe U.K. LLP. The auditors’ remuneration was as follows:
6
Operating items
5
2023
£000
2024
£000
780
1,776
222
31
(107)
Operating profit is stated after charging/(crediting):
Depreciation
Research and development costs in the income statement excluding amortisation
Amortisation of development costs
Amortisation of other intangible assets
Foreign exchange loss/(gain)
2023
£000
2024
£000
45
85
130
45
30
75
Company auditor:
Audit of the Group and Company financial statements
Company auditor and their associates:
Audit of subsidiaries’ financial statements pursuant to legislation
Employees
The average number of employees comprised:
7
2023
Number
2024
Number
74
31
7
13
125
69
33
6
13
121
Manufacturing
Research and development
Sales
Administration
Filtronic plc Annual Report and Accounts 2024
86
The Directors’ remuneration is paid through the Company.
The schedule 5 disclosure requirements are included in the Directors’ remuneration report in the table entitled ‘Total
single figure of remuneration for directors - audited’ and the table entitled ‘Total single figure of pension benefits for
directors - audited’. The elements that are audited are identified as such in that report.
Related party transactions
Identity of related parties
The Company has a related party relationship with its subsidiaries and with its directors.
Transactions with subsidiaries
The main transactions between the Company and its subsidiaries are management administration recharges to
its subsidiaries of £1,069,000 (2023: £1,018,000) and a royalty charge of 1% of filters product sales to Filtronic
Wireless Limited of £46,000 (2023: £30,000). These intercompany transactions are eliminated on consolidation.
The Company also acts as a central service to distribute money around the Group to ensure subsidiaries are
adequately funded to meet obligations and to invest funds from subsidiaries where surplus cash exists. The total
figures for these transactions along with the management and royalty charge can be seen in notes • and • through
the movement in the Company’s intercompany receivables and payables.
The amount outstanding from subsidiary undertakings to the Company at 31 May 2024 totalled £4.5m (2023:
£4.9m). Amounts owed to subsidiary undertakings by the Company at 31 May 2024 totalled £2.8m (2023: £2.8m).
Transactions with key management personnel
Key management personnel are considered to be the Executive Directors of the Company. The remuneration given
to these individuals is disclosed in the Directors’ remuneration report.
9
Compensation of directors
Details of the remuneration, pension entitlements and share options of the individual directors are set out in the
Directors’ remuneration report on pages 54 to 63. The compensation of the directors was:
8
2023
£000
2024
£000
481
-
11
35
527
11
538
505
179
12
697
1,409
12
1,421
Salary or fees
Bonus
Benefits
Long term incentives
Total remuneration excluding pension contributions
Pension contributions
Finance costs
10
2023
£000
2024
£000
139
92
231
236
96
332
Interest expense for lease arrangements
Minimum service costs and interest charges on invoice discounting facilities
Notes to the consolidated financial statements continued
for the year ended 31 May 2024
Financials
87
www.filtronic.com Stock Code: FTC
Taxation
12
2023
£000
18
(32)
(14)
(386)
(386)
(400)
Recognised in the income statement
Current tax charge/(credit)
Overseas taxation in the financial year
Adjustment in respect of prior year — R&D tax credit
Total current tax charge/(credit)
Deferred tax charge/(credit)
Origination and reversal of temporary differences
Total deferred tax charge/(credit)
Income tax charge/(credit)
The reconciliation of the effective tax rate is as follows:
2023
£000
64
Profit before taxation
Finance income
11
2023
£000
2024
£000
49
9
58
1
82
83
Revaluation of foreign currency denominated intercompany balance
Interest receipt on treasury deposits
13
46
30
(89)
(32)
18
(386)
(400)
27
-
27
193
193
200
2024
£000
3,361
840
209
237
(589)
-
27
(504)
220
Profit before taxation multiplied by the average standard rate of corporation tax
in the UK (25%) (2023:20%)
Disallowable items
Deferred tax asset not recognised
Enhanced R&D tax credit
Adjustment in respect of prior year R&D tax credit
Foreign tax not at UK rate
Recognition of deferred tax asset
Taxation
The main rate of UK corporation tax is 25% for companies with profits above £250,000. The US federal corporate
tax rate is 21%.
The deferred tax assets recognised in the year have been calculated at the rates expected to be in existence in the
period of reversal.
2024
£000
Filtronic plc Annual Report and Accounts 2024
88
Earnings per share
13
Profit for the year
Basic weighted average number of shares
Dilution effect of share options
Diluted weighted average number of shares
Basic earnings per share
Diluted earnings per share
2023
£000
2024
£000
464
‘000
215,121
1,358
216,479
0.22p
0.21p
3,141
‘000
216,340
6,555
222,895
1.45p
1.41p
Notes to the consolidated financial statements continued
for the year ended 31 May 2024
Financials
89
www.filtronic.com Stock Code: FTC
Goodwill and other intangibles relate to the acquisition of Isotek (Holdings) Limited. Goodwill is allocated to
the CGUs that were expected to benefit from the synergies of the combination and which represents the lowest
level within the Group at which the goodwill is monitored for internal management purposes. The Group tests
goodwill annually for impairment or more frequently if there are indications that goodwill may be impaired.
The carrying value of intangible assets and goodwill has been assessed for impairment by reference to its value
in use. Value in use was determined by discounting the future cash flows generated from the continuing use of the
CGUs. The calculation of the value in use was based on the following key assumptions:
• Budgets incorporating pre-tax cash flows have been prepared to 31 May 2025 based on past experience, actual
operating results, known future cash flows and estimates of future cash flows;
• Cash flows for a further four years have been prepared based on the Company’s long range plan together with
cost inflation and additional overhead assumptions. A perpetuity factor has been applied based on the year to
31 May 2029. A long-term growth factor of nil was applied to the perpetuity cash flows; and
• The Group’s pre-tax discount rate of 16% (2023:14%) was applied in determining the recoverable amount of the
unit, being the estimated weighted average cost of capital for the CGUs.
Based on the testing above the directors do not consider any of the remaining goodwill or intangible assets to be
impaired, even allowing for a reasonable degree of sensitivity to the underlying assumptions, including the discount
rate.
Goodwill and other intangible assets
Total
£000
Goodwill
£000
Software
costs
£000
Development
costs
£000
Other intangibles
(core technology)
£000
Cost
At 1 June 2022
Additions
At 31 May 2023
Additions
At 31 May 2024
Amortisation
At 1 June 2022
Provided in the year
At 31 May 2023
Provided in the year
At 31 May 2024
Carrying amount at 31 May 2023
Carrying amount at 31 May 2024
974
-
974
-
974
-
-
-
-
-
974
974
10,884
-
10,884
-
10,884
10,884
-
10,884
-
10,884
-
-
380
51
431
107
538
262
31
293
42
335
138
203
1,015
481
1,496
677
2,173
612
222
834
245
1,079
662
1,094
13,253
532
13,785
784
14,569
11,758
253
12,011
287
12,298
1,774
2,271
14
Filtronic plc Annual Report and Accounts 2024
90
The Group’s lease commitments are made up of property leases and plant and equipment. Plant and equipment
classified as a right of use asset is financed under asset finance agreements which usually require the Group to
make a deposit against the machinery of 10%-20%.
The Group leases office premises at its sites in Sedgefield, Yeadon and Manchester in the UK, Salisbury, Maryland
in the USA and a virtual office space in Suzhou, China. Leases remaining are up to five years.
In addition to the depreciation charges shown in the table above, the consolidated income statement includes the
following amounts relating to leases:
Interest expense (included in finance cost)
Expense relating to viable lease payments not included in lease
liabilities (included in operating costs)
236
2
139
2
2024
£000
2023
£000
Right of use assets
15
Cost
1 June 2022
Additions
Disposals
Exchange differences
At 31 May 2023
Additions
Reclassification from property, plant and equipment
Exchange differences
At 31 May 2024
Depreciation
At 1 June 2022
Provided in the year
Disposals
Exchange differences
At 31 May 2023
Provided in the year
Exchange differences
At 31 May 2024
Carrying amount at 31 May 2023
Carrying amount at 31 May 2024
1,938
579
-
1
2,518
860
740
(1)
4,117
518
290
-
-
808
452
(1)
1,259
1,710
2,858
3,664
1,178
(595)
8
4,255
860
740
(9)
5,846
1,371
578
(595)
12
1,366
728
(4)
2,090
2,889
3,756
Plant and
equipment
£000
Total
£000
1,726
599
(595)
7
1,737
-
-
(8)
1,729
853
288
(595)
12
558
276
(3)
831
1,179
898
Property
leases
£000
Notes to the consolidated financial statements continued
for the year ended 31 May 2024
Financials
91
www.filtronic.com Stock Code: FTC
Property, plant and equipment
16
Cost
At 1 June 2022
Additions
Disposals
Exchange differences
At 1 June 2023
Additions
Disposals
Reclassification to right of use assets
Exchange differences
At 31 May 2024
Depreciation
At 1 June 2022
Depreciation
Disposals
Exchange differences
At 31 May 2023
Depreciation
Disposals
Exchange differences
At 31 May 2024
Carrying amount at 31 May 2023
Carrying amount at 31 May 2024
3,892
946
(261)
7
4,584
666
(59)
(740)
(9)
4,442
3,191
202
(261)
6
3,138
217
(59)
(7)
3,289
1,446
1,153
Total
£000
178
3
(17)
-
164
51
-
-
-
215
132
6
(17)
-
121
2
-
-
123
43
92
Computer
hardware
£000
3,418
810
(91)
7
4,144
610
(59)
(740)
(9)
3,946
2,877
158
(91)
6
2,950
180
(59)
(7)
3,064
1,194
882
Plant and
equipment
£000
296
133
(153)
-
276
5
-
-
-
281
182
38
(153)
-
67
35
-
-
102
209
179
Fixtures
and fittings
£000
Filtronic plc Annual Report and Accounts 2024
92
Deferred tax
17
Deferred tax assets within the UK and the USA have been recognised as the directors consider that future taxable
profits will be available against which they can be used. Future taxable profits are determined based on business
plans for individual subsidiaries in the Group and the reversal of temporary differences.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable
that the related tax benefit will be realised; such deductions are reversed when the probability of future taxable
profits improves.
Deferred tax assets
Opening balance
(Reversal)/origination of tax losses
Utilisation of tax losses
Origination/(reversal) of capital allowances
Exchange differences
868
559
(47)
(128)
2
1,254
1,254
(270)
(437)
500
-
1,047
2024
£000
2023
£000
The deferred tax assets have not been recognised where the directors consider that it is unlikely that future taxable
profits will be available against which they can be used. There is no expiry date for these unrecognised deferred tax
assets which are reassessed at each reporting date. These deferred tax assets are presented below:
Depreciation in advance of capital allowances
Tax losses carried forward
Share options deferment
1,229
15,803
80
17,112
2,473
15,805
80
18,358
2023
£000
2024
£000
Deferred tax assets which have not been recognised:
Depreciation in advance of capital allowances
Tax losses carried forward
790
257
1,047
287
967
1,254
2023
£000
2024
£000
Deferred tax assets which have been recognised:
Notes to the consolidated financial statements continued
for the year ended 31 May 2024
Financials
93
www.filtronic.com Stock Code: FTC
Inventories
18
Raw materials
Work in progress
Finished goods
Inventory provision
Inventories (net of provision)
3,528
628
426
4,582
(1,804)
2,778
4,220
975
283
5,478
(2,205)
3,273
2023
£000
2024
£000
Raw materials, consumables and changes in finished goods and work in progress recognised in cost of sales in the
year amounted to £8,567,000 (2023: £5,539,000 ).
The amount charged to the income statement in the year in respect of write-downs of inventories is £163,000
(2023: £60,000). The amount credited to the income statement in the year in respect of reversals of write-downs of
inventories is £nil (2023: £nil).
Trade and other receivables
19
There are no provisions for bad debt.
Trade receivables
Other receivables and prepayments
4,351
984
5,335
5,367
1,183
6,550
2023
£000
2024
£000
Trade and other payables
20
Trade payables
Other payables and accruals
2,891
782
3,673
2023
£000
2024
£000
3,792
1,614
5,406
Filtronic plc Annual Report and Accounts 2024
94
Provisions
21
The provision for warranty relates to the units sold during the last two financial years. The provision is based on
estimates made from historical warranty data. Factors that could impact the warranty provision include the success
of the Group’s quality initiatives as well as parts and labour costs. The provision is expected to be utilised in the next
two financial years.
Warranty provision
Opening balance
Used during the year
Released unused during the year
Charge for the year
Exchange differences
135
(58)
(60)
300
-
317
317
(7)
(6)
142
-
446
2023
£000
2024
£000
The Group leases physical facilities at its three sites in the UK and one in the USA with each of these leases requiring
the site to be restored to its original condition. The dilapidation provision reflects management’s best estimates and
ability to measure the likely costs that may be incurred restoring the building to its original state. Settlement will be
made on exit from each property. There are currently no plans to leave any of the Group’s properties.
Dilapidation provision
Opening balance
Used during the year
Released unused during the year
147
(29)
(71)
47
47
-
-
47
2023
£000
2024
£000
Warranty provision
Dilapidation provision
317
47
364
446
47
493
2023
£000
2024
£000
Total provision
Notes to the consolidated financial statements continued
for the year ended 31 May 2024
Financials
95
www.filtronic.com Stock Code: FTC
Contract liabilities are invoices raised in advance of NRE work completed for customers that will be recognised as
income once the performance obligation of the contract has been met. The majority of NRE contracts are invoiced
with a proportion of the contract value upfront which is recognised as revenue, over time, across the life of contract
at each milestone based on the percentage of the overall contract value achieved at that performance obligation.
A capital grant of £150,000 was awarded in the year towards the purchase of a new die attach machine to
support new product introductions. Capital grants are amortised over a period of up to eight years in line with the
preparation period of the machinery.
Deferred income
22
Contract liabilities
Capital grant
Total current deferred income
Contract liabilities
Capital grant
Total non-current deferred income
Total deferred income
140
24
164
-
29
29
193
1,369
34
1,403
-
132
132
1,535
2023
£000
2024
£000
Lease liabilities
23
2023
£000
Opening lease liability
New leases entered into during the year
Payments made during the year
Finance costs
Exchange differences
1,820
1,126
(765)
139
(5)
2,315
2024
£000
2,315
1,488
(1,018)
236
(5)
3,016
Lease liability payable in less than a year
Current lease liabilities
Lease liability payable in one to five years
Lease liability payable in more than five years
Non-current lease liabilities
Total lease liabilities
617
617
1,579
119
1,698
2,315
2023
£000
896
896
2,120
-
2,120
3,016
2024
£000
Interest bearing loans and borrowings
Over 5
years
£000
Lease liabilities at 31 May 2024
Lease liabilities at 31 May 2023
-
117
2-5
years
£000
1,390
1,166
1-2
years
£000
1,008
665
Less than
1 year
£000
1,142
777
Contractual
cash flows
£000
3,540
2,725
Carrying
value
£000
3,016
2,315
The following are the cash flows relating to the Group’s financial liabilities other than trade and other payables, for
which there is no material difference between their carrying value and contractual cash flows:
Filtronic plc Annual Report and Accounts 2024
96
Share capital
24
All shares are allotted, called up and fully paid. Holders of the ordinary shares are entitled to receive dividends when
declared, and are entitled to one vote per share at meetings of the Company.
The deferred shares have no rights to vote or receive dividends.
At 1 June 2022
Exercise of share options
At 31 May 2023
Exercise of share options
At 31 May 2024
214,798
323
215,121
2,000
217,121
10,796
-
10,796
2
10,798
Ordinary shares
of 0.1p each
Number ‘000
£000
106,877
-
106,877
-
106,877
Deferred shares
of 10p each
Number ‘000
Translation reserve
26
(471)
1
(470)
(52)
(522)
At 1 June 2022
Currency translation movement arising on consolidation
At 31 May 2023
Currency translation movement arising on consolidation
At 31 May 2024
£000
The translation reserve comprises foreign currency differences arising from the translation of the financial
statements of foreign operations.
Dividends
The directors are not proposing to pay a dividend for the year ended 31 May 2024 (2023: £nil).
27
Share premium
25
11,060
17
11,077
136
11,213
At 1 June 2022
Exercise of share options
At 31 May 2023
Exercise of share options
At 31 May 2024
£000
Notes to the consolidated financial statements continued
for the year ended 31 May 2024
Financials
97
www.filtronic.com Stock Code: FTC
Retained earnings
28
(10,342)
464
16
(9,862)
3,141
47
(6,674)
At 1 June 2022
Profit for the year
Share-based payments
At 31 May 2023
Profit for the year
Share-based payments
At 31 May 2024
£000
Share options
Sharesave plans
Seven sharesave plans have been offered to employees over the years, at the date of this report. The first six of the
schemes offered to employees have now closed. Under these plans employees who join the plan can save up to
£500 per month for three years. The members of the plans are granted a number of share options based on the
amount they would save over the three years. At the end of the three years, the members have a six-month period in
which they can exercise the share options. The scheme has an exercise price calculated by reference to the average
of the middle market closing price of the shares on AIM for the dealing day immediately prior to the plan offer date.
29
The weighted average price of the outstanding options under this scheme at 31 May 2024 was 16p (2023: 9p).
Ordinary shares of 0.1p
2024
2023
-
950,000
-
300,000
-
200,000
-
750,000
2,361,760
2,361,760
181,814
181,814
2,770,012
-
4,333,333
-
9,646,919
4,743,574
01/03/2016
11/04/2016
28/03/2018
24/09/2020
24/06/2021
12/10/2022
30/11/2023
24/05/2024
01/03/2017
11/04/2017
28/03/2019
24/09/2023
24/06/2024
12/10/2032
30/11/2026
24/05/2027
28/02/2026
10/04/2026
27/03/2028
24/09/2030
24/06/2031
12/10/2032
30/11/2033
24/05/2034
5.4p
8.5p
9.0p
8.0p
11.1p
11.4p
17.25p
17.25p
Date granted
Earliest date
exercisable
Latest date
exercisable
Exercise price
Management incentive plans
The options granted in the year have specific performance targets attached to them. The exercise price for an
option was the middle market closing price of Filtronic plc’s ordinary shares as derived from AIM on the dealing day
prior to issue. The exception to this is the options issued in May 2024 which were set at an exercise price in live with
those granted in November 2023.
The following options under this scheme were outstanding at 31 May 2024:
Sharesave Plan—Scheme 7
Outstanding at the beginning of the year
Cancelled during the year
Exercised during the year
Outstanding at the end of the year
Exercisable at the end of the year
6.67p
6.67p
6.67p
6.67p
6.67p
1,717,927
(208,331)
-
1,509,596
1,509,596
Weighted average
exercise price 2024
Number of
options 2024
6.67p
6.67p
6.67p
6.67p
6.67p
1,898,193
(157,598)
(22,668)
1,717,927
-
Weighted average
exercise price 2023
Number of
options 2023
Filtronic plc Annual Report and Accounts 2024
98
Outstanding at the beginning of the year
Granted during the year
Cancelled during the year
Exercised during the year
Outstanding at the end of the year
Exercisable at the end of the year
4,743,574
7,103,345
(200,000)
(2,000,000)
9,646,919
-
5,243,574
181,814
(381,814)
(300,000)
4,743,574
1,450,000
Number of share
options 2023
Number of share
options 2024
Share options (continued)
29
Notes to the consolidated financial statements continued
for the year ended 31 May 2024
Share-based payments
30
The share options expense is the fair value of the share options at the date of grant spread over the expected
vesting period of the share options. The fair value of the share options at the date of grant was measured using the
Black–Scholes model.
The inputs to the Black–Scholes model and the weighted average fair value of the share options granted during the
year were as follows:
*Expected volatility is the estimate of the volatility of the share price over the expected life of the share options.
Share options expense
Share options expense
Number of share options granted
Weighted average share price
Expected volatility*
Expected life
Risk-free interest rate
Weighted average fair value
47
47
7,103,345
26.8p
50%
3.0 years
4.2%
6.7p
16
16
181,814
11.37p
50%
3.0 years
2.5%
4.0p
2023
£000
2024
£000
2023
2024
The fair value assumptions relating to the grant of options in the year of 7,103,345 can be found in note 30.
Financials
99
www.filtronic.com Stock Code: FTC
Share warrants
31
As part of the Strategic Partnership with SpaceX announced on 24 April 2024, the Company issued a total of
21,712,109 warrants to SpaceX across two tranches, to enable SpaceX to subscribe for up to a maximum of 10%
of the Company’s existing share capital at the time of the signed agreement, with such warrants expected to vest on
a variable basis, with full vesting of the warrants once approximately $60m (£48m) of orders have been placed by
SpaceX. The two warrant tranches, which are split equally, are detailed below:
Tranche 1: a maximum of 5% vesting on a variable basis from order flow of the E-band SSPA platform; and
Tranche 2: a maximum of a further 5%, also vesting on a variable basis, for order flow of products developed at
alternative frequency bands which would involve partnering with SpaceX on new product
development.
Summary of warrant terms
1) Filtronic issued SpaceX with equity warrants up to a maximum of 5% of its share capital at the time of the
agreement (10,856,055 warrants) and such warrants will vest based on the receipt of purchase orders against
a staged vesting profile for E-band SSPA modules. All warrants in this tranche will fully vest once SpaceX has
placed a minimum of $37m (£30m) of irrevocable purchase orders with Filtronic.
2) Filtronic issued SpaceX with additional equity warrants up to a maximum of another 5% of its existing share
capital (10,856,054 warrants). Such warrants will vest based on the receipt of purchase orders, against a
staged vesting profile for SSPA modules at other operational frequency bands. The warrants in this tranche will
fully vest on a similar profile to those in point 1.
3) The strike price for the warrant 33 pence, being the closing mid-market price of Filtronic’s ordinary shares of
0.1p each on 23 April 2024, being the last business day before the Strategic Partnership contract was executed.
4) SpaceX must place a minimum order value in each subsequent 12-month period from the Contract Date of
$10m to be delivered within 12 months. SpaceX must also maintain a cadence of order flow, so that the timing
between purchase orders does not surpass a 12 month-period. If order flow is not maintained in accordance
with these two tests, within the 5-year warrant period, then the warrants will expire 6 months from that date.
5) The warrants will expire five (5) years from the date the Strategic Partnership contract was executed. The
warrants will expire earlier if certain minimum order volumes are not met by SpaceX. Vested warrants can be
exercised in whole (or in part, in minimum amounts of 500,000) at any time prior to their expiration, to the extent
the agreed vesting conditions have been satisfied.
21,512,000 of the warrants are being issued utilising (to their full extent in this particular regard) the existing
shareholder authorities granted at the Annual General Meeting of the Company held in October 2023, with the
remaining balance (of 200,109 warrants) to be issued following the grant of similar authorities at this year’s Annual
General Meeting.
Filtronic plc Annual Report and Accounts 2024
100
Notes to the consolidated financial statements continued
for the year ended 31 May 2024
Analysis of net cash
34
Cash and cash equivalents
Lease liabilities - plant and machinery
Net cash when including all debt except property leases
Lease liabilities - property leases
2,610
(1,020)
1,590
(1,295)
295
(7)
(1,488)
(1,495)
4
(1,491)
7,215
(1,990)
5,225
(1,027)
4,198
1 June
2023
£000
31 May
2024
£000
Cash
flow
£000
Other
changes
£000
4,612
518
5,130
264
5,394
Reconciliation of cash flow to movement in net cash
Movement in cash and cash equivalents
Movement in lease liabilities - plant and machinery
Movement in lease liabilities - property lease
Exchange differences
Movement in net cash
Opening net cash
Closing net cash
4,612
(971)
269
(7)
3,903
295
4,198
(1,412)
(157)
(338)
16
(1,891)
2,186
295
2023
£000
2024
£000
Cash at bank earns interest at floating rates based on daily bank deposit rates. There are no restrictions on the
availability of the cash and cash equivalents at 31 May 2024 (2023: £nil).
IFRS 16 requires the recognition of property leases on the statement of financial position which is classified as a
debt item.
Pension costs
32
Defined contribution schemes
372
336
2023
£000
2024
£000
Capital expenditure commitments
Capital expenditure contracted for at the statement of financial position
date but not provided in the financial statements
480
234
2023
£000
2024
£000
33
Financials
101
www.filtronic.com Stock Code: FTC
Financial instruments
Fair value
The carrying amount of all the financial assets and liabilities approximates to their fair value at acquisition as
described below.
Cash and cash equivalents comprise bank balances and bank deposits with a maturity of three months or less.
Trade and other receivables are all receivable in less than one year. Trade receivables are generally receivable within
90 days.
Trade and other payables are all payable in less than one year. Trade payables are generally payable within 90
days.
All financial assets and liabilities are held at amortised cost other than derivative financial instruments which are held
at fair value.
Liquidity risk
The Group has cash at bank of £7.2m.
Cash is held on bank deposit for varying periods from overnight to six months to ensure all liabilities can be met as
they fall due.
The Group has access to a £3.0m sales invoicing facility with Barclays Bank.
The sales invoicing facility with Barclays Bank allows the Company to borrow 70% of the UK entities’ debtors
denominated in US dollars and sterling up to a value of £3.0m.
The Group had a sales invoice factoring facility with Wells Fargo Bank which allowed the Company to borrow 85%
of the US entities’ debtors denominated in US dollars up to a value of $4.0m. The arrangement was terminated
effective from 12 July 2024.
The amount of cash available to the Group and the headroom available on debt facilities results in a low liquidity risk.
Credit risk
The exposure to credit risk is limited to the carrying amount of cash and cash equivalents and trade and other
receivables in the statement of financial position.
The credit risk related to cash and cash equivalents is considered to be low due to the cash being held at banks with
high credit ratings such as Barclays Bank and Wells Fargo Bank.
35
Trade receivables included the following amounts for the Group’s largest customers:
Customer one
Customer two
Customer three
Other customers
1,571
1,105
369
1,305
4,350
2,890
1,005
1,002
470
5,367
2023
£000
2024
£000
Credit risk is primarily related to trade receivables. The Group’s businesses are concentrated on long-term
relationships with a small number of large and long-established OEMs. Payment terms for trade receivables range
from prepayment terms to 90 days net. Overdue receivables are regularly monitored and appropriate action is
taken to collect payment. The Group has historically incurred only low levels of unrecoverable receivables. Therefore
credit risk is considered to be low.
Filtronic plc Annual Report and Accounts 2024
102
Notes to the consolidated financial statements continued
for the year ended 31 May 2024
Financial instruments (continued)
35
The age of trade receivables that have not been provided for was as follows:
No expected credit loss is considered necessary in either FY2024 or FY2023.
Interest rate risk
Cash is generally held on short-term bank deposits which earn interest at variable money market deposit rates. At
31 May 2024, there was £nil held on short-term deposit. The remaining cash in the Group is held in very low interest
rate bank accounts. Sterling interest rates are very low and therefore interest rate risk is considered to be low.
The interest rate sensitivity of the expected annual interest income/(expense) assuming a balance on deposit or
loan of £1,000,000 is as follows:
Not past due
Past due less than three months
4,347
4
4,351
5,206
161
5,367
2023
£000
2024
£000
1.5%
1.0%
0.5%
Expected
annual
interest
expense
£000
Expected
annual
interest
income
£000
15
10
5
(15)
(10)
(5)
Foreign currency risk
The Group’s reporting currency is sterling. The functional currencies of the subsidiaries are sterling, US dollar and
Chinese yuan.
The Group’s results and financial position are affected by fluctuations in foreign currency exchange rates.
The Group has generated a surplus of US dollars during the year due to an increasing number of projects being
supplied in US dollars. Whilst the Group aims to maintain a natural hedge, it is not adequate to offset the exposure
on currency risk. Therefore, the Group has used forward foreign exchange contracts to reduce the currency risk
from surplus US dollars. The nature of the Group’s businesses means there is limited visibility of the currency
required in US dollars. Therefore, when forward contracts are used to reduce currency risk, they are usually only for
short periods of no more than six months. If the US dollar were to weaken significantly, this could materially reduce
the Group’s revenue and operating profit.
There was a forward contract in place at 31 May 2024, the fair value of the foreign currency contract was an asset
of £40,000 (2023 : £34,000) liability.
Cash is mainly held in sterling and US dollars.
Financials
103
www.filtronic.com Stock Code: FTC
The Group’s exposure to foreign currency risk for cash and cash equivalents, trade receivables and trade payables
was as follows:
366
4,983
(820)
4,529
11
-
-
11
3
133
(73)
63
337
-
(321)
16
27
-
-
27
549
3,084
(615)
3,018
The sensitivity of the Group operating profit to the US dollar to sterling exchange rate, assuming all other variables
remain constant, is as follows:
If the US dollar had been 1% stronger/weaker against sterling throughout the year ended 31 May 2024, then the
Group operating profit would have been £184,000 higher/lower. The impact of other currencies is not material.
Cash and cash equivalents
Trade receivables
Trade payables
Net exposure
EUR
£000
RMB
£000
USD
£000
2024
EUR
£000
RMB
£000
USD
£000
2023
Capital management
The capital structure of the Group and Company consists of equity and debt. Equity comprises ordinary share
capital and retained earnings. Debt includes sales invoice financing facilities with large banks, asset finance and
lease liabilities.
The objective when managing capital is to safeguard the Group’s ability to continue as a going concern in order to
maximise future returns for shareholders.
Cash flow is controlled by ongoing justification, monitoring and reporting of capital expenditure and regular
monitoring and reporting of operational costs.
Financial instruments (continued)
35
Filtronic plc Annual Report and Accounts 2024
104
Note
2023
£000
2024
£000
-
55
55
4,563
36
4,599
4,654
3,191
3,191
1,463
10,798
11,213
(20,548)
1,463
4
5
7
8
9
10
11
Non-current assets
Investments in subsidiaries
Intangible assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings
Total equity
The Company made a loss in the year of £1,526,000 (2023: £4,500,000).
Company number 2891064.
The notes on pages 107 to 112 form part of these financial statements. The financial statements on pages • to • were
approved by the Board of Directors on 29 July 2024 and signed on its behalf by
Michael Tyerman
Chief Financial Officer
29 July 2024
Company statement of financial position
as at 31 May 2024
346
76
422
4,947
615
5,562
5,984
3,180
3,180
2,804
10,796
11,077
(19,069)
2,804
Financials
105
www.filtronic.com Stock Code: FTC
Company statement of changes in equity
for the year ended 31 May 2024
Balance at 1 June 2022
Loss for the year
Share-based payments
New shares issued
Balance at 31 May 2023
Loss for the year
Share-based payments
New shares issued
Balance at 31 May 2024
Share
capital
£000
10,796
-
-
-
10,796
-
-
2
10,798
Share
premium
£000
11,060
-
-
17
11,077
-
-
136
11,213
Retained
earnings
£000
(14,585)
(4,500)
16
-
(19,069)
(1,526)
47
-
(20,548)
Total
equity
£000
7,271
(4,500)
16
17
2,804
(1,526)
47
138
1,463
The notes on pages 107 to 112 form part of these financial statements.
Filtronic plc Annual Report and Accounts 2024
106
Company cash flow statement
for the year ended 31 May 2024
2023
£000
2024
£000
(4,500)
(4,500)
19
3,833
16
1,375
(381)
362
(23)
(23)
17
17
356
259
615
(1,526)
(1,526)
22
346
47
383
11
(717)
-
-
138
138
(579)
615
36
Cash flows from operating activities
Loss for the year
Operating loss
Amortisation of intangible assets
Impairment of investments in subsidiaries
Share-based payments
Movement in trade and other receivables
Movement in trade and other payables
Net cash (used in)/generated from operating activities
Cash flows from investing activities
Acquisition of intangible assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from exercise of share options
Net cash generated from financing activities
Movement in cash and cash equivalents
Opening cash and cash equivalents
Closing cash and cash equivalents
The notes on pages 107 to 112 form part of these financial statements.
Financials
107
www.filtronic.com Stock Code: FTC
Material accounting policies
Notes to the Company financial statements
for the year ended 31 May 2024
The Company and consolidated financial statements for the year ended 31 May 2024 have been prepared in
accordance with UK-adopted international accounting standards and with the requirements of the Companies Act
2006 as applicable to companies reporting under those standards.
The financial statements have been prepared on the historical cost basis except for the remeasurement of certain
financial instruments to fair value.
In publishing the Parent Company financial statements here together with the Group financial statements, the
Company has taken advantage of the exemptions in s408 of the Companies Act 2006 not to present its individual
income statement and related notes that form part of these approved financial statements.
The principal accounting policies adopted are the same as those set out in note 1 to the consolidated financial
statements except as noted below.
1
Auditor’s remuneration
The auditor’s remuneration for audit and other services is disclosed in note 6 to the consolidated financial
statements.
2
Employees
The Average monthly number of employees (excluding the Non-Executive Directors) was:
3
2023
Number
2024
Number
10
10
10
10
Administration
All the directors were paid through the company, details of which can be found in the Directors remuneration report.
Filtronic plc Annual Report and Accounts 2024
108
Investments in subsidiaries
4
Notes to the Company financial statements continued
for the year ended 31 May 2024
1 Plexus 1, NETPark, Thomas Wright Way, Sedgefield, County Durham TS21 3FD, United Kingdom
2 700 Marvel Road, Salisbury, Maryland, 21801, USA
3 RM 1501, C1 Grand Millennium Plaza (lower block), 181 Queen’s Road Central, Hong Kong
4 Room 2-2201 DC49, Dongfangzhi Building, No. 199 Xinggang Street, Suzhou Industrial Park
Owned by Filtronic Wireless Limited:
Isotek Hong Kong Holdings
Limited3
Owned by Isotek Hong Kong Holdings Limited:
Isotek Telecommunications
Suzhou Limited4
Hong Kong
China
HK$1 ordinary shares
US$350,000
paid in share capital
100%
100%
Holding Company
Design and manufacture
of filters and related products
for telecommunication systems
Filtronic Broadband Limited1
Filtronic Holdings UK Limited1
Isotek (Holdings) Limited1
Owned by Isotek (Holdings) Limited:
Filtronic Wireless Limited1
Filtronic Wireless Inc.2
Name of subsidiary
Country of
incorporation
Description of
equity held
Proportion
held
Activity
UK
UK
USA
UK
UK
1p ordinary shares
1p ordinary shares
US$1 ordinary shares
£1 ordinary shares
1p ordinary shares
100%
100%
100%
100%
100%
Design and manufacture
of microwave products for
telecommunication systems
Design and manufacture of
filters and related products for
telecommunication systems
Design and manufacture of
filters and related products for
telecommunication systems
Holding Company
Holding Company
The Company’s subsidiaries are related parties.
The subsidiaries at 31 May 2024, which were owned by Filtronic plc, were as follows:
Financials
109
www.filtronic.com Stock Code: FTC
Cost
At 1 June 2022, 31 May 2023 and 31 May 2024
Impairment
At 1 June 2022
Impairment in the year
At 31 May 2023
Impairment in the year
At 31 May 2024
Carrying amount at 31 May 2023
Carrying amount at 31 May 2024
21,110
(16,931)
(3,833)
(20,764)
(346)
(21,110)
346
-
£000
The investments in subsidiaries are assessed annually to determine if there is any indication that any of the
investments might be impaired. The assessment of the carrying amount is derived from the higher of the value in use
and the fair value less costs to sell. Value in use is determined by discounting the future cash flows generated from the
continuing use of the cash generating unit (“CGU”) to which the investment relates whilst the fair value less costs to sell
is the amount that a market participant would pay for the asset or CGU, less the costs of sale.
The carrying amount was calculated using the value in use model which returned a higher carrying value based on
the following key assumptions:
• Budgets incorporating post-tax cash flows have been prepared to 31 May 2025 based on past experience, actual
operating results, known future cash flows and estimates of future cash flows;
• Cash flows for a further four years have been prepared based on the Company’s long-range plan together with
cost inflation and additional overhead assumptions. A perpetuity factor has been applied based on the year to 31
May 2029. A long-term growth factor of 5% was applied to the perpetuity cash flows; and
• The CGU has a pre-tax discount rate of 16% (2023:14%) which was applied in determining the recoverable
amount of the unit, being the estimated weighted average cost of capital for the CGU.
The investments in subsidiaries are assessed annually to determine if there is any indication that any of the
investments might be impaired. At 31 May 2024 it was identified that the investment in the CGU responsible for RF
conditioning products would need to be impaired by £0.3m based on discounting the future cashflows following
a review of budgets. The recoverable amount of £nil was determined based on a value-in-use calculation which
requires the use of key assumptions. A key input of the model is the discount rate used. Therefore a +/- 1% difference
in the discount rate would impact impairment by £249,000 on +1% and £278,000 on -1%.
Investments in subsidiaries (continued)
4
Filtronic plc Annual Report and Accounts 2024
110
5
Intangible assets
Cost
At 1 June 2022
Additions
At 31 May 2023
Additions
At 31 May 2024
Amortisation
At 1 June 2022
Provided in the year
At 31 May 2023
Provided in the year
At 31 May 2024
Carrying amount at 31 May 2023
Carrying amount at 31 May 2024
£000
155
23
178
-
178
83
19
102
21
123
76
55
Notes to the Company financial statements continued
for the year ended 31 May 2024
Deferred tax
Depreciation in advance of capital allowances
Tax losses carried forward
Share options deferment
510
14,450
80
15,040
510
14,043
80
14,633
2023
£000
2024
£000
Deferred tax assets which have not been recognised:
Trade and other receivables
7
There are no provisions for bad debt. The Group receivables in the Company were reviewed in the year for expected
credit losses in accordance with IFRS 9.
Amounts owed to Group undertakings are unsecured, interest-free and payable on demand.
Group receivables
Other receivables and prepayments
4,497
66
4,563
4,896
51
4,947
2023
£000
2024
£000
6
Financials
111
www.filtronic.com Stock Code: FTC
Trade and other payables
8
Trade payables
Group payables
Other payables and accruals
71
2,784
336
3,191
55
2,784
341
3,180
2023
£000
2024
£000
Amounts owed to Group undertakings are unsecured, interest-free and payable on demand.
Share capital
9
All shares are allotted, called up and fully paid. Holders of the ordinary shares are entitled to receive dividends when
declared, and are entitled to one vote per share at meetings of the Company.
The deferred shares have no rights to vote or receive dividends.
At 1 June 2022
Exercise of share options
At 31 May 2023
Exercise of share options
At 31 May 2024
214,798
323
215,121
2,000
217,121
10,796
-
10,796
2
10,798
Ordinary shares
of 0.1p each
Number ‘000
£000
106,877
-
106,877
-
106,877
Deferred shares
of 10p each
Number ‘000
Share premium
10
11,060
17
11,077
136
11,213
At 1 June 2022
Exercise of share options
At 31 May 2023
Exercise of share options
At 31 May 2024
£000
Retained earnings
11
(14,585)
(4,500)
16
(19,069)
(1,526)
47
(20,548)
At 1 June 2022
Loss for the year
Share-based payments
At 31 May 2023
Loss for the year
Share-based payments
At 31 May 2024
£000
Filtronic plc Annual Report and Accounts 2024
112
Pension costs
13
Defined contribution schemes
54
42
2023
£000
2024
£000
Notes to the Company financial statements continued
for the year ended 31 May 2024
Share-based payments
12
All of the Group’s share options and share warrants relate to the equity in the Company. Full details of these can be
found in notes 29,30 and 31 in the consolidated financial statements.
Financial instruments
14
Fair value
The carrying amount of all the financial assets and liabilities approximates to their fair value as described below.
Cash and cash equivalents comprise bank balances and bank deposits with a maturity of three months or less.
Trade and other receivables are all receivable in less than one year.
Trade and other payables are all payable in less than one year. Trade payables are generally payable within 30
days.
All financial assets and liabilities are held at amortised cost.
Liquidity risk
The Company has cash at bank of £36k. Cash is held on bank deposit for varying periods from overnight to six
months to ensure all liabilities can be met as they fall due. The amount of cash available to the Company and the
money available in the Group results in a low liquidity risk.
Credit risk
The exposure to credit risk is limited to the carrying amount of cash and cash equivalents and trade and other
receivables in the statement of financial position. The credit risk related to cash and cash equivalents is considered
to be low due to the cash being held at banks with high credit ratings such as Barclays Bank.
Credit risk is primarily related to Group receivables in the form of intercompany loan arrangements. Therefore,
credit risk is considered to be low.
The Company has no trade receivables.
Interest rate risk
Cash is generally held on short-term bank deposits which earn interest at variable money market deposit rates.
Cash is held in low interest rate bank accounts and therefore interest rate risk is considered to be low.
Foreign currency risk
The Company’s reporting and functional currency is sterling with very limited exposure to foreign currency.
Therefore, the Company has little foreign currency risk.
Capital management
The capital structure of the Company consists of equity and debt. Equity comprises ordinary share capital and
retained earnings. Debt includes lease liabilities.
The objective when managing capital is to safeguard the Company’s ability to continue as a going concern in
order to maximise future returns for shareholders. Cash flow is controlled by ongoing justification, monitoring and
reporting of capital expenditure and regular monitoring and reporting of operational costs.
Financials
113
www.filtronic.com Stock Code: FTC
Directors
Jonathan Neale - Non-Executive Chairman
Nat Edington - Chief Executive Officer
Michael Tyerman - Chief Financial Officer
Pete Magowan - Non-Executive Director
John Behrendt - Non-Executive Director
Company Secretary
Michael Tyerman
Company number
2891064
Registered office
Filtronic plc
Plexus 1,
NETPark,
Thomas Wright Way,
Sedgefield,
County Durham,
TS21 3FD
Tel: 01740 618800
Independent auditors
Crowe U.K. LLP
3rd Floor
The Lexicon
Mount Street
Manchester
M2 5NT
Bankers
Barclays Bank plc
10 Market Street
Bradford
BD1 1NR
Financial public relations
Walbrook PR Limited
4 Lombard Street
London
EC3V 9HD
Tel: 020 7933 8780
Nominated advisor and broker
Cavendish Capital Markets Limited
1 Bartholomew Close
London
EC1A 7BL
Tel: 020 7220 0500
Registrars
Link Group
Enquiries regarding shareholdings, change
of address or similar particulars should be
directed in the first instance to our Registrars,
Link Group whose address is:
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
Tel: +44 (0)371 664 0300
(calls are charged at the standard geographic
rate and will vary by provider. Calls outside the
United Kingdom are charged at the applicable
international rate). Lines are open 9.00am
- 5.30pm Monday to Friday excluding bank
holidays in England and Wales.
Shareholder portal
You can register online to view your holdings
using the Signal Shares shareholder portal,
a service offered by Link Group at www.
signalshares.com. This is an online service
enabling you to quickly and easily access and
maintain your shareholding online – reducing
the need for paperwork and providing 24
hour access for your convenience. Through the
shareholder portal you can:
• Cast your proxy vote online
• View your holding balance and get an
indicative valuation
• View movements on your holding
• Update your address
• Elect to receive shareholder
communications electronically
• Access a wide range of shareholder
information including the ability to
download shareholder forms
Filtronic website
Shareholders are encouraged to visit our
website (www.filtronic.com) which has more
information about the Company.
Company information
Filtronic plc Annual Report and Accounts 2024
114
Glossary
5G:
5th Generation mobile networks
Adjusted EBITDA: EBITDA before exceptional items and share-based payments
AGM
Annual General Meeting
AESA:
Active Electronically Steered Array
AIA:
Annual Investment Allowance
APM:
Alternative Performance Measure
Backhaul:
The portion of a hierarchical telecommunications network that comprises the
intermediate links between the core network and the small subnetworks at
the edge of the network
CEO:
Chief Executive Officer
CFO:
Chief Financial Officer
CGU:
Cash Generating Unit
CODM:
Chief Operating Decision Maker
COTS:
Commercial off the shelf
D-band:
130GHz to 175GHz
DART:
Defence Assurance Risk Tool
DSTL:
Department of Science and Technology Laboratory
DTEP:
The Defence Technology Exploitation Programme
E-band:
71GHz to 86GHz
EBITDA:
Earnings Before Interest, Taxation, Depreciation and Amortisation
EDI:
Equality, Diversity and Inclusion
ESA:
European Space Agency
ESG:
Environmental, Social and Governance
ESOP:
Employee Share Option Plan
ETSI:
European Telecommunication Standards Institute
EW:
Electronic warfare represents the ability to use the electromagnetic
spectrum - signals such as radio, infrared or radar - to sense, protect and
communicate. At the same time, it can be used to deny adversaries the
ability to either disrupt or use these signals
FVLCTS:
Fair value less costs to sell used for financial appraisal
FY:
Financial year
GHG:
Greenhouse Gases
GHz:
Gigahertz: 10^9 Hertz
HAPS:
High Altitude Pseudo-Satellites
IP:
Intellectual Property
Ka-band:
26.5GHz - 40GHz
KPI:
Key Performance Indicator
Ku-band:
12GHz -18GHz
LED:
Light Emitting Diode
LEO:
Low Earth Orbit
LMR:
Land Mobile Radio
LTE:
Long-Term Evolution
MAR:
Market Abuse Regulation
MHz:
Megahertz
MMIC:
Monolithic Microwave Integrated Circuit
mmWave:
Millimetre Wave
MOD:
Ministry of Defence
NDA:
Non disclosure agreement
NRE:
Non-recurring engineering
OEM:
Original Equipment Manufacturer
PA:
Power Amplifier
P25:
Project 25: a suite of standards for digital mobile radio communications
designed for use by public safety organisations
Financials
115
www.filtronic.com Stock Code: FTC
PDMR:
Person discharging managerial responsibility
Q-band:
33GHz to 50GHz
QCA:
Quoted Companies Alliance
RAN:
Radio access network. The part of a mobile network that connects end-user
devices, like smartphones, to the cloud
RF:
Radio Frequency: a rate of oscillation in the range of around 3kHz to 300GHz
RNS:
Regulatory News Service
R&D:
Research and Development
SAYE:
Save As You Earn
SiP:
System in package. This is a number of integrated circuits enclosed in one or
more chip carrier packages that may be stacked package on package
SLT:
Senior Leadership team
SME
Small and medium-sized enterprises
SSPA:
Solid State Power Amplifier
STEM:
Science, Technology, Engineering and Mathematics in an educational context
TTA:
Tower Top Amplifier
UTC:
University Technical College Newton Aycliffe
V-band:
40GHz to 75GHz
VIU:
Value In Use used for Financial appraisal
W-band:
92GHz to 115GHz
Xhaul:
The common flexible transport solution for future 5G networks, integrating the
fronthaul and backhaul networks with wired and wireless technologies in a com-
mon packet based transport network
Registered Office
Plexus 1, NET Park,
Thomas Wright Way, Sedgefield,
County Durham, TS21 3FD
T: +44 (0) 1740 618800
E: investor.relations@filtronic.com