Section 172(1) Companies Act 2006 - 2019 Statement

The following statement reflects how the Company, and in particular, the board of directors, have engaged with key stakeholders and explains, with relevant examples, how the board has reached key decisions and how those decisions may have impacted the Company’s stakeholders.

The Board of Directors consideration of the requirements of Section 172(1)

The Company has held quarterly board meetings with the presence of three Executive board members (Chairman, Managing Director & Finance Director), three non-Executive Shareholder (Airbus) representative board members, one independent non-Executive board member and the Company Secretary.  At the start of each Board meeting, the Chairman has reminded the Board members of the need to consider the matters contained within Section 172(1) and these matters are noted within the Board papers for regular reference.

The comprehensive board agenda contained updates relating to project delivery, workload, engineering / technology developments, employee statistics, corporate security, health & safety, IT, risk, compliance, business development & finance.  The key stakeholder groups discussed and considered at board level were employees, customers, institutional bodies and the shareholder.

Matters relating to stakeholder engagement and decisions that may impact stakeholders were discussed & reviewed throughout the board meetings, with the Company Secretary noting the full discussion & final decision within the board minutes.  There is currently no documented assessment of each and every decision against the six matters set out in section 172(1) in order to maintain the timing of the board agenda and the natural flow of the meeting.  A review to incorporate this documented assessment in future board meetings is underway.

At the end of each board meeting, the Chairman requested all board members to reflect upon the discussion and decisions taken during the board meeting in specific reference to Section S172(1) and the matters contained therein.  Each board member had the opportunity to confirm or disagree with the view that all discussions and decisions taken did consider the impact on the Company’s various stakeholders and considered the long-term success of the Company.  The Company Secretary noted this specific conclusion within the board minutes and any requirement to revisit a decision was noted accordingly.

 

Employees

The non-Executive directors within the board of directors did not generally directly engage with the employees as this engagement is managed by the Executive directors and management team.

The board of directors reached the decision to restructure the Company in January 2019 as a result of a lack of new orders secured in 2018 and a resulting insufficient workload and unaffordable cost base.  The board of directors reached the conclusion that the restructuring was the only viable option in order to ensure the long-term survivability of the Company and protection of the majority of the employees.  The board of directors were aware of the consequences of those affected employees and therefore maximised the voluntary redundancy scheme which resulted in 2/3 of the affected circa 70 employees leaving the Company with an enhanced financial package.  The board also agreed on the need to support those affected with application for open Airbus group recruitment positions.

The board of directors considered employees in the strategic update which took place during the 2nd half of the year and which helped shape the product & customer base by which the Company strives to acquire new orders.  This strategic decision making helps provide the employees with not only adequate workload but with a nature of work that is interesting & engaging.  An example is the board of director’s decision to pursue the Lunar Pathfinder mission with European Space Agency as not only will the mission provide the employees with substantial workload, it will also provide the employees with a very technically challenging objective of deploying a data relay communications satellite in orbit around the moon.  If the mission is successful, it shall be very rewarding and motivating for all of the employees within the Company and promote a sense of purpose and achievement.

 

Customers

The board of directors engaged with customers in various forums.  The Chairman & Managing Director both regularly engaged with key customers directly in relation to specific sales campaigns and often the Managing Director engaged with customers to discuss existing project topics such as a face to face meeting held with the customer OHB regarding the Galileo programme.  Certain non-executive members of the board interacted with customers on behalf of the Company in order to strengthen the position of the Company’s key sales campaigns.  Such engagements were made at industry events and customer meetings.

The board of directors made the key decision to approve the pursuit of the UK Ministry of Defence (MoD) Artemis programme enabling the Company to sign a Memorandum of Understanding in July 2019 to aim to provide the customer with a rapid, low cost, small satellite constellation for UK military use.  The board of directors also approved the aforementioned Company restructuring to enable the Company to continue as a going concern, meeting both existing customer contractual obligations and new customer price expectations.

Ongoing project statuses were discussed during each board meeting and in those cases requiring board support or intervention, the board of directors agreed on actions to be taken by one or more board members.  The Alsat-1B project close out was proving to be difficult for the customer and therefore the board of directors agreed in July 2019 that the Chairman would be required to directly visit the customer in Algeria in September 2019 in order to better understand the needs of the customer.

 

Shareholder

The Executive Directors engaged with the shareholder throughout the year via the quarterly board meeting whereby the shareholder’s appointed non-Executive Directors attended and represented Airbus Group.  The Executive Directors also engaged with various shareholder representatives throughout the year in areas such as finance, compliance, legal and commercial.  Airbus group has enforced policies, processes & controls which require mandatory implementation within all controlled subsidiaries.  Therefore, the Company is engaging on a very regular basis with the shareholder within many departments of the Company.  Local Company and Airbus group level approval are now required in many Company processes.

The financial results of the Company are reviewed at each board meeting and it is generally such key information which contributes to driving the board to make the strategic decisions of the Company.  The financial stability of the Company and the financial return to the shareholder have been pertinent topics of consideration throughout the year.  One key decision reached by the board was that, following the Company restructure, the Executive Management team were tasked to review the strategy of the Company and report back to the board in September 2019 with proposed amendments which would complement Airbus Defence & Space in related markets and would also work towards the Company securing financial stability – both being key requirements of the shareholder. Since this date the Executive Management Team have been implementing the new strategy to pursue low cost innovative technology demonstration missions to develop first to market positioning in order to deliver value to the Airbus Group by enabling long term business opportunities.

 

The Executive Management’s consideration of the requirements of Section 172(1)

At a Company operational level, a quarterly Environmental Quality Management System (EQMS) review was held with the presence of the executive management team.  The performance of the Company against targeted key performance indicators across a wide area of subjects was assessed in both a financial & non-financial manner.  The Company held monthly project reviews and weekly executive team meetings whereby key Company operational decisions were made and noted.  Throughout these various operational level reviews, the key stakeholders discussed and considered were employees, customers, suppliers, institutional bodies / external parties, the local community and the shareholder.

 

Employees

The executive management team engaged with the employees in a number of different ways including the business connection forum which was a regular meeting held between employee representatives and management to address employee topics and concerns.  The executive management team also engaged via quarterly staff updates, bi-weekly face to face staff meetings and regular email or intranet communication updates.  The employees were also requested to take part in a Company survey with the aim of understanding their satisfaction levels across a number of factors within the Company.  The results have been communicated and actions are being taken to address areas of employee concern.

 

Customers

The Company engaged with existing customers at project level and each project had an appointed project manager who interacted with each customer project manager throughout the year.  The customer’s progress, schedule and overall satisfaction were closely monitored with resolution actions determined during monthly project reviews.  The executive management team attended the monthly project reviews and endorsed the agreed actions in order to satisfy customers’ needs during the period.  Resources were prioritised or reallocated as determined during the project review.

 

Suppliers

Project teams within the Company maintained a very close relationship with key subcontractors and with regards to the Galileo project, the Company had dedicated subcontract managers who acted as the focal point for any supplier related issues.  Progress meetings were held regularly between the subcontractor and project team and support was given to subcontractors when any issues arose.

One of the key suppliers of the Galileo payload subsystems encountered technical issues throughout the year during their development phase and the Company has supported the subcontractor by putting in place a post-delivery integration (retro-fit) process to protect the customer schedule and to help protect the subcontractor from further costs and liquidated damages.

 

Local Community

The Company regularly supported the local community and engaged with various charities throughout the year.  Various charitable events were organised and hosted by the Company’s Charity Committee in aid of the Shooting Star Chase Children’s Hospice Charity and Macmillan Cancer Support.  In October 2019, the Company organised an Earth Observation open day, open to family & friends with the aim of inspiring the next generation of small satellite engineers.

The Company appreciates the value it can offer to the local community with the niche activities it undertakes and therefore has decided to maintain an everlasting commitment to continue to host events and support the local community of Guildford.

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