As Chairman of the Board of Directors of Sondrel, it is my responsibility to ensure the Company has sound corporate governance structures and processes in place to ensure a suitable corporate governance framework and an effective Board. As Chairman of the Company my responsibilities include leading the Board effectively, overseeing the Group’s corporate governance model, communicating with shareholders and ensuring that good information flows freely between the Executive and Non-Executive Directors in a timely manner.

The Company has decided to adopt the Quoted Companies Alliance Corporate Governance Code (QCA Code), which the Board believes to be the most appropriate recognised corporate governance code for the Company on account of its current size, scale and complexity, and I explain in this statement how the ten QCA Code principles have been applied. The Board considers that the Company complies with the QCA Code in all respects.

The Board believes that corporate governance generally, and the QCA Code specifically, provides  a framework which underpins core Sondrel values in which we all believe, including a commitment to open and transparent communications with stakeholders. We believe that good corporate governance improves long-term success, performance and shareholder value.

The Company will update this statement, in relation to the Company’s compliance with the QCA Code, not less than on an annual basis.

Establish a strategy and business model which promote long term value for the shareholders:

The Board has concluded that the highest medium- and long-term value can be delivered to its shareholders by the adoption of a single strategy for the Company. Sondrel is a UK fabless semiconductor business providing turnkey services in the design and delivery of high-end application-specific integrated circuits (ASICs) and system on chips (SoCs) for leading global technology brands introducing next-generation technologies across advanced end markets. Sondrel’s capabilities are provided to customers seeking competitive advantage by including customised ASIC/SoC devices in differentiating their end products.

The Group has a 20-year track record of delivering complex ASIC/SoC designs on a consultancy and/or project basis for a wide range of leading multinational corporate customers.

Historically, Sondrel has provided customers with both its market-leading ASIC/SoC designs and also an engineering consulting service during the new product introduction (NPI) prototyping, testing and production phases. However, in recent years the Group has transitioned its business model such that customers are now also able to contract directly with Sondrel to purchase production ASIC/SoC devices directly from Sondrel as a “one stop shop”.

With original equipment manufacturers (OEMs) and OEM suppliers increasingly focused on semiconductor supply chain resilience and efficiency, customers are able to contract Sondrel as a single counterparty in the design, supply chain management and production of ASIC/SoC devices. Sondrel’s customers are therefore able to differentiate their end products with the Group’s market-leading design capabilities at the forefront of technology whilst also leveraging Sondrel’s expertise and relationships throughout the semiconductor industry. In doing so, Sondrel’s customers are able to remove their own requirements for multiple counterparties in the ASIC/SoC supply chain and for supply chain management.

Sondrel’s designs are delivered by a team of more than 125 engineers across five design centres globally, making Sondrel one of only a handful of companies worldwide with the scale, capability and strength of industry relationships to deliver projects in leading technologies.

The Company intends to deliver shareholder returns initially through capital appreciation and the Directors do not intend to commence the payment of dividends in the immediate future, considering that it is likely to be more prudent to retain cash generated to fund the expansion of the Group. The Directors will reconsider the Company’s dividend policy from time to time. The declaration and payment by the Company of any dividends will depend on the results of the Group's operations, its financial condition, cash requirements, future prospects, profits available for distribution, and other factors deemed to be relevant at the time.

The key challenges faced by the Group, which the Board takes steps to mitigate, are explained in detail in the Company’s AIM admission document, which can be found on the Company’s website.

Seek to understand and meet shareholder needs and expectations

The Company is committed to maintaining good communication and constructive dialogue with its shareholders. The Company has close ongoing relationships with its private shareholders and the Executive Directors will meet regularly with institutional shareholders, including after the announcement of full-year and half-year results and are responsible for ensuring that their expectations are understood by the Board. In addition, all shareholders will be encouraged to attend the Company’s Annual General Meeting each year which provides a further opportunity for dialogue with shareholders.

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

The Board recognises that the long-term success of the Company is reliant upon the efforts of the employees of the Company and its contractors, suppliers, vendors, customers and other stakeholders. The Board has put in place a range of processes and systems to ensure that there is close oversight and contact with its key resources and relationships.

Sondrel seeks to be a socially responsible Group which has a positive impact on the communities in which it operates. By the nature of the business, the Company employs a diverse workforce comprising colleagues of many nationalities. No discrimination is tolerated and the Company endeavours to give all employees the opportunity to develop their capabilities.

Everyone within the Group is a valued member of the team and our aim is to help every individual achieve their full potential. We offer equal opportunities regardless of race, gender, gender identity or assignment, age, disability, religion and sexual orientation.

The training and development of the Group’s workforce is essential to maintaining its position within the market, meeting the requirements of customers and to retaining personnel. Designed and overseen by the Group’s Learning and Development team, the Group has a bespoke performance assessment matrix which shapes employee growth, identifies high performers for accelerated development pathways and identifies medium-term skills requirements to inform Group recruitment efforts.

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

The Board recognises the need for an effective and well-defined risk management process and, whilst it oversees and regularly reviews risk management and internal control mechanisms, the primary responsibility for this is delegated to the Audit and Risk Committee. The status of key risks will be shared regularly with the Board, and the Board will thoroughly review the Company’s risk register on an annual basis.

The review process will involve the identification of risks (encompassing industry- and Company-related risks, including emerging risks): assessment of those risks to determine the relative likelihood of them impacting the business and the potential severity of the impact; and determination of what needs to be done to manage them effectively. Risk management is integral to the ability of the Group to deliver on its strategic objectives.

The system of internal control is structured around an assessment of the various risks to the business and is designed to address those risks that the Board considers to be material. It acts to safeguard assets against unauthorised use or disposition and to maintain proper accounting records which produce reliable financial and management information. The Board has established appropriate reporting and control mechanisms to ensure the effectiveness of its control systems. These will continue to evolve as the Group develops and matures.

Internal financial controls include strategic planning, approval of annual budgets, regular monitoring of performance against budget (including full investigation of significant variances), control of capital expenditure and ensuring proper accounting records are maintained. The Directors have reviewed the effectiveness of the procedures presently in place and consider that they are appropriate to the nature and scale of the operations of the Company. The Directors will continue to reassess internal financial controls as the Company expands further.

The Board also engages independent professional advice on risk assessment matters where appropriate. It is the Board’s policy to ensure that the management structure and the quality and integrity of the personnel are compatible with the requirements of the Group.

Maintain the Board as a well-functioning, balanced team led by the Chair

The Board comprises Graham Curren (CEO), Joe Lopez (CFO), plus the Non-Executive Chairman, Nigel Vaughan, and three Non-Executive Directors: Adrian Carey, Sherry Madera and Gordon Orr. Each of the Non-Executive Directors of the Company are considered by the Board to be independent.

Biographical details of the Directors are set in the Board page. The letters of appointment of all Directors are available for inspection at the Company’s registered office during normal business hours and are summarised in the Company’s AIM admission document available via the Company’s website. All the Non-Executive Directors are expected to dedicate at least 2 days per calendar month to the Company.

The Chairman will lead Board meetings in an open and constructive manner, with every Director participating fully. Senior management will frequently be invited to meetings in order to provide the Board with a thorough overview of the Group.

The Board will meet a minimum of six times in the year, and more frequently during the first year post-admission. A calendar of meetings and principal matters to be discussed will be agreed at the beginning of each financial year. The Directors will meet formally and informally and will have the flexibility to hold Board meetings by videoconference when required. Board and Committee document authors will be made aware of paper deadlines through the calendar of meetings assembled at the beginning of each year. Board papers will be collated by the relevant personnel (Chair, Company Secretary, CFO, Committee Chair), compiled into a Board/Committee Pack, and circulated at least one week before meetings, allowing time for full consideration and necessary clarifications before the meetings. The Board has identified a secure portal through which papers will be circulated in a secure and efficient manner.

The Board is supported by an Audit and Risk Committee and a Remuneration and Nomination Committee. Terms of reference for each are published on the Group’s website. The Board confirms that its Committees have the necessary skills and knowledge to discharge their duties effectively and details of the numbers of Board and Committee meetings held during the year will be detailed in the Company’s Annual Reports.

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

The Board considers its overall size and current composition to be suitable and have an appropriate balance of sector,financial and public markets skills and experience as well as an appropriate balance of personal qualities and capabilities. Details of the Directors’ experience and areas of expertise are outlined on the Board page.

The Company has employed the services of ONE Advisory Limited to act as Company Secretary, responsible for ensuring that Board procedures are followed, as well as helping the Chairman maintain excellent standards of corporate governance.

In order to continue to develop their skills and keep up to date with market developments and corporate governance matters, the Board shall review annually the appropriateness and opportunity for continuing professional development, whether formal or informal. All directors are also able to take independent professional advice in the furtherance of their duties, if necessary, at the Company’s expense.

Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement

The Board’s effectiveness and the individual performance of Directors are considered regularly by the Board on an informal basis. Internal evaluation of the Board, the Committee and individual Directors will be to be undertaken on an annual basis in the form of peer appraisal and discussion to determine the effectiveness and performance in various areas, as well as the Directors’ continued independence.

The results and recommendations that come out of appraisals for the executive directors shall identify the key corporate. Financial or other targets that are relevant to each Director and their personal targets in terms of career development and training. Progress against previous targets shall also be assessed where relevant.

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

The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of the Group as a whole and that this will impact the performance of the Company. The Board is very aware that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that employees behave. The corporate governance arrangements that the Board has adopted are designed to ensure that the Company delivers long-term value to its shareholders, and that shareholders have the opportunity to express their views and expectations for the Company in a manner that encourages open dialogue with the Board.

Our values and culture are the foundation of our strategy and are adopted by all members of our Group. Morality and ethics are central to our values. They are a clear statement of our commitment to excellence and define the approach we take in our interaction with customers, shareholders and each other.

Our values are incorporated into operating procedures and the Board ensures that ethical behaviours are expected and followed by approving a set of internal policies on matters such as anti-bribery and whistleblowing, and by ensuring that appropriate systems and controls are in place to ensure compliance with those policies. Feedback from all stakeholders, as described in further detail in relation to principle 3, allows the Board to monitor the Company’s corporate culture and its consistency with Company objectives, as well as ethical values and behaviours within the business.

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

The governance structures within the Company have been assessed by the Board and are considered appropriate for the size, complexity and risk profile of the Group. This will be reviewed by the Board to ensure governance arrangements continue to be appropriate as the Company changes over time.

The Chairman, Chief Executive, Chief Financial Officer and Non-Executive Directors have clearly defined roles and responsibilities and the respective responsibilities of the Chairman and Chief Executive Officer arise as a consequence of delegation by the Board. The Board has adopted appropriate delegations of authority and there is a formal schedule of matters which are reserved for the decision of the Board that covers the key areas of the Company’s affairs.

The role of the Chairman is to lead the Board and ensure it is operating effectively in approving and monitoring the strategic direction of the Company, whilst also having ultimate responsibility for corporate governance. The role of the Chief Executive is to propose strategic direction to the Board and to execute the approved strategy by leading the executive team in managing the Company’s business.

The roles of the Non-Executive Directors are to act as a sounding board for the Chairman and a source of reciprocal feedback for other members of the Board and shareholders, where required. The Board is supported by the Company’s Audit and Risk Committee and Remuneration and Nomination Committee, further details of which are set out below.

Audit and Risk Committee

The Audit and Risk Committee will have responsibility for monitoring the integrity of the Company’s financial statements, reviewing significant financial reporting issues, reviewing the effectiveness of the Company’s internal control and risk management systems, monitoring the effectiveness of any internal audit function and overseeing the relationship with the external auditor (including advising on their appointment, agreeing the scope of the audit and reviewing the audit findings).

The Audit and Risk Committee will comprise Adrian Carey and Gordon Orr and will be chaired by Adrian Carey. The Audit and Risk Committee will meet at least three times a year at appropriate times in the reporting and audit cycle and otherwise as required. The Audit and Risk Committee will have unrestricted access to the Company’s external auditor.

Remuneration and Nomination Committee

The Remuneration and Nomination Committee will have responsibility for determining and agreeing with the Board the framework for the remuneration of the Chairman, the Executive Directors and other designated senior executives and, within the terms of the agreed framework, determining the total individual remuneration packages of such persons including, where appropriate, bonuses, incentive payments and share options or other share awards. The remuneration of Non-Executive Directors will be a matter for the Chairman and the Executive Directors. No Director will be involved in any decision as to his or her own remuneration.

In addition, the Remuneration and Nomination Committee will have responsibility for reviewing the structure, size and composition (including the skills, knowledge and experience) of the Board and giving full consideration to succession planning. The Remuneration and Nomination Committee will also have responsibility for recommending new appointments to the Board and to the other Board committees. It will be responsible for identifying suitable candidates for board membership and will monitor the performance and suitability of the current Board on an on-going basis.

The Remuneration and Nomination Committee will comprise Adrian Carey, Sherry Madera and Nigel Vaughan and will be chaired by Sherry Madera. The Remuneration and Nomination Committee will meet at least twice a year and at other times as and when necessary.

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

The Board is committed to maintaining effective communications with all of its shareholders and other stakeholders and the Company intends to have close ongoing relationships with its private and institutional shareholders alike. Communications will be primarily through the Company’s website, the annual report and accounts, regulatory announcements, the Company’s Annual General Meeting and one-to-one meetings with large existing or potential new shareholders.

Investors also will have access to current information on the Company though its website, sondrel.com.

In the future, the Company’s annual reports and notices of general meetings covering will also be available on the Company’s website. The Company will report on the responsibilities and activities of each of the Committees in the annual report.

Page last updated: 21 October 2022