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Leading connectivitytechnology
for AI and digital infrastructure
Alphawave IP Group plc
Annual report and financial statements 2023
Alphawave IP Group plc | Annual report and financial statements 2023
Who we are
Our offices
Alphawave Semi is a leading semiconductor company
specialising in high-speed wired connectivity and compute
technologies that enable data to travel faster, more reliably
and using lower power.
We develop leading-edge, high-speed connectivity solutions
that are a critical part of the core infrastructure enabling next
generation services in data centres, artificial intelligence, data
networking, data storage, 5G infrastructure and autonomous
vehicles.
Alphawave Semi operates with over 800 employees globally
and has R&D centres in Canada, India, the US and Israel.
Our technology focus, combined with our entrepreneurial
and inclusive culture, has driven us to the forefront of
connectivity technology.
Ottawa
Toronto HQ
London HQ
Hod
HaSharon
Pune
Bengaluru
Shanghai
San Jose,
Milpitas
Kaohsiung
City
Highlights
Financial
Non-Financial
Contents
Revenue and
revenue growth
US$321.7m+74%
FY 2022: US$185.4m +106%
Bookings
1
US$383.9m
FY 2022: US$228.1m
Adjusted EBITDA
1
and margin
US$62.6m19%
FY 2022: US$46.8m 25%
R&D employees
2
and%of total
741 89%
FY 2022: 621 89%
Operating
(loss)/profit
US$(19.4)m
FY 2022: US$37.6m
Number of employees
2
(closing)
829
FY 2022: 695
Cash generated from
operations
US$25.5m
Restated FY 2022
3
: US$1.0m
Number of
end‑customers
103
FY 2022: 80
Strategic report
1 Highlights
2 Our purpose, strategy & values
6 Executive Chair’s statement
9 Q&A with Tony Pialis, President
 andChiefExecutiveOfficer
12 Investment case
14 A vertically integrated business model
18 The markets where we operate
20 Our strategy
22 Strategy in action
28 Stakeholder engagement and Section 172(1)
33 ESG
60 Non-financialinformationandsustainabilitystatement
62 KPI’s
66 Financial review
72 Viability statement
74 Principal risks and uncertainties
Governance
78 Board of Directors
82 Management team
84 Corporate governance statement
90 Nomination Committee report
94 Audit Committee report
100 Directors’ remuneration report
122 Directors’ report
Financials
126 Statement of Directors’ responsibilities
127 Independent auditor’s report
136 Consolidated statement of comprehensive income
137 Consolidated balance sheet
138 Consolidatedcashflowstatement
139 Consolidated statement of changes in equity
140Notestotheconsolidatedfinancialstatements
186 Alternative performance measures
190 Company balance sheet
191 Company statement of changes in equity
192 NotestotheCompanyfinancialstatement
Additional information
199 Appendix
203 Shareholder information
IBC Glossary
Sustainability
GHG emissions
4,942.8 tCO
2
e
FY 2022: 1,152.1 tCO
2
e
Gender diversity
19%
FY 2022: 20%
Employee turnover
7%
FY 2022: 10%
On‑time delivery
100%
FY 2022: 99%
1. Fordefinitionsofnon-IFRSmeasuresseeKPIssectionandAlternativeperformancemeasuressection.
2. FY 2023 and FY 2022 headcount numbers throughout the report exclude interns.
3. FY2022hasbeenrestatedtoreflectthefinalisationofthepurchasepriceallocationontheacquisitionofOpenFive(seenotes12and30).
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 1
Technology
leadership
Expansion Innovation
Our purpose, strategy and values
Our connectivity semiconductor technology is at the core
of the rollout of AI technology and the ongoing upgrade of
digitalinfrastructure,enablingdatatotravelfaster,more
reliably,andatlowerpower.
Purpose
Pioneering connectivity technology
to enable a new era of accelerated
computing, unlocking its potential
tocreate economic and social value.
Ambition
To become the leading
semiconductor company in
wired connectivity and compute
technologies for AI and digital
infrastructure markets.
Strategy
Our strategy is built on three pillars:
Further details on our strategy on page 20
Sustainability
Sustainability underpins our core values, drives our business
strategyand influences the way we engage with our stakeholders.
Further details on pages 33
Sustainable
digital
infrastructure
Responsible
business
Work
smarter
Responsible
value chain
Financial review on page 66
Non-financialinformationstatementonpage60
Further details on our end-markets on page 18
2 Alphawave IP Group plc | Annual report and financial statements 2023
Culture and values
Our culture and values underpin the way we
workandhow we engage with our stakeholders.
Our culture is based on collaboration, innovation,
openness and an awareness of our impact on society
and on the environment.
As an organisation, we remain focused on delivering
exceptional results for our customers through a
relentless focus on innovation, collaboration and agility
while maintaining the highest levels of integrity and
inclusivity. In support of this we continue to strengthen
our workforce with people that will maintain and evolve
our culture, enabling us to deliver ongoing success.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 3
Our purpose, strategy and values continued
We are delivering exceptional results for our customers through
a relentless focus on innovation, collaboration and agility while
maintaining the highest levels of integrity and inclusivity.
Our values
1. Innovation
2. Agility
3. Integrity
4. Results-
orientated
5. Inclusivity
6. Collaboration
7. Customer-
focused
4 Alphawave IP Group plc | Annual report and financial statements 2023
1.
Innovation
2.
Agility
3.
Integrity
4.
Results-
orientated
5.
Inclusivity
6.
Collaboration
7.
Customer-
focused
Innovation fuels our growth as a leader in our industry, driving
technological advancements that differentiate us from our
competitors. It is a driving force behind everything we do.
We dare to be dynamic in the face of rapidly evolving technological
demands. Our nimble execution allows us to consistently deliver
game-changingsolutions,andhasfirmlyestablishedusastheleader
inourfield.
Our reputation is built on an unwavering commitment to honesty,
transparency and accountability. It has earned us the respect of
the industry, and has made us a trusted partner, employer and
globalcitizen.
Results are the lifeblood of our company. We are driven by the
relentless pursuit of delivering exceptional experiences to our
customers and exceeding expectations at every opportunity.
Inclusion fuels our success as a company. It taps into the power
of diverse perspectives and backgrounds. Our commitment to an
inclusive culture drives our innovation.
Collaboration propels us forward as a company and a community.
Byharnessingthepowerofatrulycollectivedevelopmenteffort
amongst our team and our customers, we are able to accelerate and
enhance our technological advancements.
Ourcustomer-centricapproachignitesoursuccess.Wepassionately
strive to understand our customers’ ever-changing needs so we can
deliver exceptional products and establish the highest levels of trust
via our unparalleled customer service.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 5
Dear shareholder,
2023 was our third year as a public listed company, a year
during which we consolidated the acquisitions we made in
2022, while continuing to invest in future revenue growth for
2024 and beyond.
Thishasbeenayearofsignificantprogress,wherethe
integrated businesses began to work with a single long-term
ambition, to be the leader in wired connectivity solutions for
next generation AI and digital infrastructure, and to create
valueforourstakeholdersinpursuitofourgoal.TheAI
boom is not only an important driver for AI as an end-market,
but is a force-multiplier with the associated infrastructure
investments needed to support AI. All of these markets and
end applications need our connectivity technology in the form
of IP, custom silicon and connectivity products.
FollowingthesuccessofourfirstCapitalMarketsDayinearly
2023,wewillbehostingoursecondeventon4June2024.
During the event we will share with analysts and investors
our long-term ambition for the business as well as all the
achievements and the progress we have made so far.
Whilst we remain mindful of the challenging global macro and
geopolitical environment, we are laying the foundations ahead
of the scaling phase and continue to deliver growth in all three
areas of our business: IP licensing, custom silicon, and our
exciting new range of connectivity products that will start
generating revenue in 2024.
Executive Chair’s statement
Ayearofsignificantprogress.
JohnLoftonHolt
Executive Chair
6 Alphawave IP Group plc | Annual report and financial statements 2023
Governance and oversight
During the year we continued to evolve our governance
capabilities,particularlyonfinancialoversight,aswe
welcomed David Reeder to our Board as a Non-Executive
Director.Davidhasservedinseniorfinanceandoperational
roles in global technologies companies, bringing vast
commercial and operational experience in semiconductors
aswellasadditionalgovernancearoundfinanceoperations.
David is a member of the Audit Committee and the
Nomination Committee.
We also welcomed Rahul Mathur as our new CFO in
October2023.Rahul’sextensiveexperienceinseniorfinance
positions,consistentlydeliveringstrongfinancialresultsand
shareholder value within listed semiconductor companies,
has already been invaluable as we continue to build the
foundations for the next phase of business growth. I have the
pleasure of working with Rahul on a daily basis and I feel more
confidentthaneverinourfinanceteam.
Stakeholder relationships
As a company we seek to establish strong and responsible
relationships with customers, partners and the communities
in which we operate. Our values extend to the way we engage
with all our stakeholders.
We contribute to society by promoting diversity, fostering
the next wave of innovation and innovators, promoting
responsible business practices and playing our role in
tackling climate change. We do this both through our own
activities and in collaboration with our customers and other
stakeholders, for shared success.
We are a fabless business, i.e. we do not own any
manufacturing facilities, we partner with multiple stakeholders
in the supply chain, playing our role in promoting responsible
business practices (see Supply Chain section on page 49).
Asthebusinessgrowsandmatureswewillcontinueto
enhance our policies and practices in this area.
InJuly2023,wejoinedtheUnitedNationsGlobalCompact
(UNGC), supporting the Ten Principles of the UNGC on human
rights, labour rights, environment and anti-corruption. In this
report,youwillfindhowsomeofouractivitiesadvancethe
broader development goals of the United Nations, particularly
the Sustainable Development Goals.
Financial performance
In 2023 we consolidated the three acquisitions we made in
2022 under the Alphawave Semi umbrella. We also made
significantorganicinvestmentsinfuturerevenuegrowth
through hiring and business infrastructure investment.
Bookings for the full year were US$383.9m, 68% above the
prior year (FY 2022: US$228.1m). Alongside the strong growth
in bookings, we delivered another year of robust revenue
growth,up74%year-on-year,asignificantachievementfor
thebusinessalbeitbelowourguidancefortheyear.Adjusted
EBITDAwasUS$62.6m,34%abovetheprioryear(FY2022:
US$46.8m) although below our guidance for the year of
approximatelyUS$87m.AdjustedEBITDAmarginof19%was
below 2022 (FY 2022: 25%). EBITDA in 2023 was US$9.8m
compared to US$49.3m in 2022. In 2023, the business
incurred a net loss of US$51.0m compared to a net loss of
US$1.1m in 2022. The cash position at the end of 2023 was
US$101.3m.Thiswaslowerthantheprioryear,reflectingthe
ongoing investment in future revenue growth, including the
developmentofournewopto-electronicproducts.
People, culture and values
Our employees have embodied our customer focus, with
their commitment and passion at the core of our success.
On behalf of the Board, I would like to express our sincere
gratitude for their hard work during the year.
Our culture and values inform the way we conduct our
business, ensuring we are mindful of the impact we have
on society and the environment, helping us to build strong
relationships with all our stakeholders. Throughout this report
are examples of how we live these values, achieving results
and maintaining a strong customer focus with an unwavering
commitment to collaboration, honesty, transparency and
accountability.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 7
Executive Chair’s statement continued
Sustainability
During the year we made further progress on our sustainability
strategybyundertakingourfirstmaterialityassessment.
TheESGSteeringCommitteemetthreetimesduringthe
year and the outcome of the materiality assessment was
presented at the last meeting of the year. The assessment
will inform our ESG strategy and will help us prioritise our key
sustainability areas. In 2024 we will review and consider the
implementation of its detailed recommendations (see ESG
sectiononpage33).
Update on our China go-to-market strategy
FollowingthesimplificationofourChinastrategyin
2022, during 2023 the Group made three small additional
investments in WiseWave for a total of US$14.7m. We are
seeking to exit our equity investment in WiseWave in 2024 but
we will time this exit based on market conditions to maximise
return to shareholders.
With these changes to the Group’s go-to-market strategy
in China, we will continue to execute against the market
opportunitiesinChinainasimplifiedwaythatadaptstothe
evolving geopolitical and macroeconomic environment.
Outlook 2024 and beyond
In2024wewillputinplacethefinalpiecesofthe
consolidation phase and start preparations for the beginning
of the scaling phase of our business in 2025. For the FY 2024
we expect revenue to be between US$345m to US$365m
andadjustedEBITDAmarginofapproximately20%.Our2025
targets have been revised to approximately US$450m of
revenue(previouslyUS$500m)andadjustedEBITDAmargin
between 20% and 25% (previously 30%).
We are executing on our strategy and we remain excited about
the growth potential of our business. We are creating a leading
semiconductor business in high-speed connectivity and
compute technologies. But most importantly, we are building
onourstrengthstogeneratesignificantvalueforshareholders
and other stakeholders over the long term.
JohnLoftonHolt
Executive Chair
23 April 2024
8 Alphawave IP Group plc | Annual report and financial statements 2023
CEO Q&A
Investing to become the next
leader in connectivity for AI.
Tony Pialis
President & Chief Executive Officer
Q
What would you highlight about the
business performance in 2023?
During 2023 we signed a record US$383.9m of bookings
(FY 2022: US$228.1m), up 68% over the prior year. Of the
US$274.0m of licence and NRE bookings signed in 2023,
over 80% were in advanced nodes, 7nm and below. Given the
complexityofthismarket,oursuccessreflectsthestrength
of our technology leadership and the business potential of the
acquisitions we made in 2022. Our backlog at the end of 2023
was 7% below the prior year. In 2023 we reduced our backlog
byapproximatelyUS$87mofnetadjustmentsofwhichnearly
half came from the backlog acquired through OpenFive.
Ourbacklogisnowenrichedbymorebusinessinadvanced
nodesfromwhichwecanextracthigherprofitabilityoverthe
long-term.
We continued to integrate the business operations of the
2022 acquisitions and delivered strong revenue growth but
ourfinancialresultswerebelowourguidancefortheyear.
This was mainly as a result of our accelerated transition away
from our legacy custom silicon business and differences in
the timing of the revenue recognition of long-term contracts in
advanced nodes. In 2023, revenue grew 74% via our historical
IP and our newly formed Custom Silicon business. In parallel,
we continued to invest in R&D, maintaining our technology
leadership.Asaresult,adjustedEBITDAwasup34%from
theprioryeartoUS$62.6mandadjustedEBITDAmarginwas
below 2022 at 19% (FY 2022: 25%). In 2023 the business
generatedalossbeforetaxofUS$39.5m(FY2022:profit
before tax US$17.2m).
During the year our cash and cash equivalents balance
decreased to US$101.3m (FY 2022: US$186.2m), as we
continued to invest in the development of new products
and the necessary equipment to support future growth.
Wecontinuetoreviewourcapitalallocationaswellas
available sources of capital to support our long-term
growthstrategy.
With an enhanced product portfolio of connectivity technology
for AI, as well as with our partnership with ARM to implement
their latest Neoverse cores for advanced AI and data centre
compute products, we can further monetise our investments
in the form of custom silicon and other connectivity products.
This is allowing us to access a larger addressable market
focused on AI, gain greater scale and enhance our competitive
position. The combined custom silicon design wins in 2023
will support our mid and long-term revenue targets as we
start to generate revenue from the production phase. These
wins have a potential lifetime revenue from silicon production
ofapproximatelyUS$500m,whichisnotyetreflectedinour
bookingsorbacklog.Thefirstsiliconproductionordersare
expected in 2025, which is when they will start contributing
torevenue.
The success of the business would not be possible without
the commitment and support of all our employees and
Iwouldliketoexpressmysinceregratitudefortheirhard
workduring2023.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 9
CEO Q&A continued
Q
How does Alphawave Semi compete
againstmuchlargerplayersintheindustry?
High-speed connectivity IP and advanced ARM compute
are the DNA of the business. Our Company has been
recognised by the world’s largest foundries as the premier
leaderinhigh-speedconnectivity.Butwedon’tjustdevelop
greatconnectivity,wealsodoitintheworld’smostadvanced
nodes. We look into our portfolio of now over 235 silicon IPs
and pull from it the ingredients that we can bring to the table in
order to meet our customers’ needs.
Our competitive positioning is built on our technology
leadership and a full product portfolio of leading connectivity
solutions coupled with our partnership delivering ARM
computetotheworld’smostadvancedartificialintelligence
(AI) processors. This is what differentiates us from some of
our competitors that are more focused on certain products
or segments. We have been part of TSMC IP Alliance
Programme, a key component of the Open Innovation
Platform
®
,forfiveconsecutiveyears.In2023webecame
a founding partner of TSMC 3DFabric™ Alliance working
towards the adoption of chiplet products.
With a unique portfolio of leading-edge connectivity
technology, we are working with our customers to meet
their connectivity needs across their data centres and create
long-term business relationships.
Manyofourcustomershavefirst-handexperienceofour
technology through our IP, which is often the foundation of
our business relationship. Once a customer has that positive
experience of our technology it creates opportunities to work
across other connectivity needs, such as custom silicon or
opto-electronics.
Q
How are data centres changing to enable
the increasing adoption of AI?
In the last decade, AI was run as software on traditional
server grade, general performance CPUs. In order to deliver
the inevitable performance gains, data centres transitioned to
GPU-based architecture. GPUs can perform a higher number
of calculations in parallel and have dedicated hardware for
implementing complex mathematical models like neural
networks and deep learning.
However,aswescaletheamountofcomputefromteraflops
topetaflops,weneedtobuildafasternetworkusingleading
opto-electronic solutions that can deliver the increased
compute capacity with a lower energy footprint.
This has created accelerated momentum, where hyperscalers
are designing and implementing their own AI engines,
commonly using ARM processors, in addition to industry
standardGPUs.Theseenginesareoptimisedfortheirspecific
models, and deliver higher performance using lower power.
Not surprisingly, the custom silicon market is expected to
growatahealthydouble-digitrateoverthenextfewyears
as hyperscalers invest in the development of their own AI
engines.
AIandmachinelearning(ML)putatremendousamountof
bandwidth performance requirements on the network, and
arethereforeamongthemajorgrowthdriversfordatacentre
switchingoverthenextfiveyears.WithbandwidthinAI
growing, the portion of Ethernet and PCI-Express switching
thatisusedtoconnectAI/MLandacceleratedcomputing
willmigratefromanichetodaytoasignificantportionofthe
marketby2027
1
.Ourconnectivitytechnologyplaysacentral
role in building the network connecting the switches, optics
and GPUs.
Q
How do you see business in China evolving
over time?
In2023,LicenceandNREbookingsfromChinaremained
below10%forasecondconsecutiveyear(FY2023:7%;
FY 2022: 10%). This is an important leading indicator of
the transformation of our pipeline and our revenue over the
medium to long term. Based on this, we expect a decline in
revenue from China over the longer term, which will be mainly
offset by revenue from North American customers.
In 2023, revenue from China was US$190.4m or 59% of the
Group revenue (2022: US$105m or 57% of the total). The
increase in revenue from China was mainly driven by the
legacy silicon business from OpenFive.
China is an important market for the semiconductor industry
and the Group will continue to comply with all applicable rules
and regulations to ensure we can create sustainable customer
relationships in all geographies.
1. https://650group.com/press-releases/data-center-ai-networking-surges-over-100-y-y-as-infiniband-and-ethernet-achieve-record-revenues-in-1q23-
according-to-650-group/.
10 Alphawave IP Group plc | Annual report and financial statements 2023
Q
Did the custom silicon business perform
asexpected?Whatdoyouthinkisthe
strengthoftheoffering?
Our broad portfolio of high-speed connectivity IP is what sets
us apart. We can bundle our IP and expertise to win larger and
more complex custom silicon opportunities at leading-edge
process nodes.
We have transformed our custom silicon business from
a low margin business to a highly scalable AI and data
centre business, and our pipeline is built on opportunities
inadvancednodes,5nmandbelow.
Our custom silicon team deploys the necessary IP from our
portfolio, working closely with our customers, taking their
specificationsandtransformingthemintosilicon.In2023,
weachievedkeywinsintonextgeneration800G/1.6T
solutions for data centre, including a 3nm highspeed IP
licensing deal and a 3nm custom ASIC win for AI. These wins
were the result of our leading connectivity IP, our partnership
with ARM and our design capability in advance nodes.
Q
Is the Connectivity Products business on
tracktodeliverfirstrevenuein2024?
The Connectivity Products business is developing the next
generation of PAM4 and coherent technology to drive the
cabling. This will feed the exponential data growth over
the next several generations of product refresh, creating
the optical network that connects all the switches inside
data centres. We are working closely with a leading North
Americanhyperscalerandweexpectfirstrevenuein2024.
Q
What are the main sustainability priorities
for Alphawave Semi?
In2023wejoinedtheUnitedNationsGlobalCompactand
in2024wewillbesubmittingourfirstCommunicationon
Progress describing our company’s effort to implement
theTenPrinciples.Inaddition,weundertookourfirst
sustainability materiality assessment, which is informing
our sustainability strategy and helping us prioritise what
is most critical to the long-term success of the Company.
TheoutcomeoftheassessmentwassharedwiththeBoard.
As a provider of leading connectivity technology, our products
contributetowardsthedeploymentofamoreefficientdigital
infrastructure, enabling the transmission of data faster, more
efficientlyandconsuminglessenergy(seeIPsectiononpage
51). Our commitment to sustainability extends to our ongoing
operations,asweseektomaintainhighstandardsofbusiness
conduct across our value chain.
We have delivered ongoing progress with our sustainability
reporting (see ESG section on page 33) and we will continue
todosooverthecomingyears.
Q
What’s next for Alphawave Semi?
During 2023 we consolidated and fully embedded the
acquisitions we made in 2022.
We also continued to invest in future revenue growth,
expanding our workforce and pushing ahead with the
development of leading connectivity technologies and our
own connectivity products.
Despite an uncertain macro and geopolitical environment,
our customers continue to invest in leading technology.
AIinvestmentsarerampingupquicklyandcouldamount
to US$200bn globally by 2025
1
.Ourpipelinereflectsthe
accelerated momentum in the rollout of next generation AI
infrastructure and provides a solid foundation from which we
seek to create long-term value for our shareholders and other
stakeholders.Ilookforwardtothefuturewithconfidence.
1. https://www.goldmansachs.com/intelligence/pages/ai-investment-forecast-to-approach-200-billion-globally-by-2025.html.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 11
Investment case
A leading-edge connectivity
technology business
benefiting from the
long‑term investment
inAIinfrastructure.
> The amount of data produced,
consumed, shared and processed
is growing exponentially.
> Our technology is at the core of
high‑growth data infrastructure
markets, such as AI‑centric data
centres and next generation data
centres, enabling data to travel
faster, more reliably and at a
lowerpower.
> A growing addressable market
expected to grow at 20% CAGR
over the 2023‑2026 period.
+20%
Growth in addressable market
2023‑2026 CAGR
+68%
2023 year‑on‑year growth
inbookings
1
US$355m
Backlog
1
excluding royalties
We support our customers
with high‑performance
and power‑efficient wired
connectivity technology.
> We are at the forefront of
connectivity silicon technology,
from 7nm to 2nm processes.
> We have a unique scalable and
configurable product architecture
with a growing product portfolio.
> Our talent pool is focused on
solving the hardest problems:
speed, reliability and low power.
> We get an increasing share of
customers’ technology budget
through repeating business and
higher‑value solutions.
103
Number of end‑customers
89%
Engineering pool
(as % oftotalemployees)
24%
R&D expense as % of revenue
We monetise our IP through
a vertically integrated
business model (licence
and silicon), delivering high
revenue growth. Weare
investing in the development
of new long‑term growth
opportunities.
> Our licence model and long
product cycles provide good
visibility to long‑term revenue
streams and future cash flows.
> Actual cash flow generation
reflects our investment in
future revenue growth and
the development of our own
connectivity products.
> Our capital allocation supports
organic investment in future
growth.
+74%
Year‑on‑year revenue growth
US$62.6m
Adjusted EBITDA
1
US$25.5m
Cash generated from operations
1. For definitions of non‑IFRS measures see KPIS on page 62 and Alternatives Performance Measures section.
12 Alphawave IP Group plc | Annual report and financial statements 2023
Consolidating our vision for the business
2023 was the first year of the consolidation period of our ambition
to become the next leader in connectivity technology for AI data
infrastructure markets.
In 2023, we continued to enhance and extend our product
portfolio, and to expand our engineering capability. During the
year we invested US$131.4m¹ in R&D activities including the
development of our own range of opto‑electronic products
for hyperscalers (FY 2022: US$78.0m). Over the period our
headcount increased from 695 to 829 at the end of 2023.
The collaboration with our foundry partners has continued to
play a key role in pushing forward the boundaries of what is
possible with our technology, enabling our customers to roll
out advanced technologies.
Our pipeline of opportunities in custom silicon quickly
upgraded towards advanced silicon designs. This was enabled
by our technology leadership in high‑speed connectivity.
In addition, we expect our first connectivity products to be in
the market in 2024.
1. See note 5 Research and development expenses.
Pre-IPO
IP licence business
Capital deployment
Vertically integrated business – IP licence and silicon
Consolidation Ramp and scale
2017 2021 2022 2023 2024 2026
US$300m multi‑
year agreement
with leading North
American hyperscaler
Connectivity
products
Custom
silicon
IP licensing
and royalties
Illustrative revenue mix
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 13
A vertically integrated business model
We bring our connectivity technology to customers in three ways:
> license our IP and support the customer’s silicon development programme;
> custom silicon design as per customer specifications in which we embed our IP; and
> other connectivity products targeting data centres.
IP licence
We license a customer to use an
IP for a single end product on a
specified manufacturing process.
During the customer product
development phase (approximately
two years) we recognise the IP
licensing fee, any non‑recurring
engineering fees and any support.
Once our customer goes into
production, some of our licences
include royalty payments based
on the volume of chips shipped by
customers. Our IP is embedded in
semiconductors with an average
lifecycle of five to tenyears.
Custom silicon
We develop silicon following
customer specifications. During
the development phase (up to two
years) we recognise
non‑recurring engineering fees.
These are typically larger than
when the customer licenses our
silicon IP.
Once the design is finalised, we
generate revenue from the supply
of silicon when the customer
orders silicon through us. Although
fabless, we manage the full
manufacturing, assembly and
test process on behalf of our
customers.
Connectivity products
We leverage our IP and expertise
in the development of a range of
new opto‑electronics products
targeting connectivity applications
in data centres. Production will be
outsourced to leading foundries
deploying advanced manufacturing
processes. Assembly and testing
will also be undertaken in close
collaboration with our outsourced
semiconductor assembly and
testing (OSAT) partners.
Our first products are expected to
be in the market in 2024.
1 2 3
Where we are in the value chain
Alphawave Semi Third‑party suppliers
Materials sourcing
(Materials partners)
Third-party IP
R&D
1
and IP
2
Design and
verification
Manufacturing
(Foundry
partners)
Assembly
and test
(OSAT
3
partners)
Delivery
and support
Customers
1. Research and development.
2. Intellectual property.
3. Outsourced semiconductor assembly and test.
14 Alphawave IP Group plc | Annual report and financial statements 2023
What we do
Addressing the hardest‑to‑solve connectivity challenges
We are entering a new era of AI, resulting in an exponential growth in the amount of data that is created, processed, stored
and shared. Alphawave Semi develops and markets high‑speed connectivity technology for next generation AI and digital
infrastructure, such as data centres, enabling data to travel faster, reliably and consuming less power.
Foundries
and OSAT
partners
IP Licence
Non-recurring
engineering
services
$
$
$
Customers develop
semiconductors using
our IP. They work
with their foundries
and OSAT partners
to manufacture their
products
We bill the
customer a price
per unit of silicon
when it goes into
production
We bill the customer
NREs for the design of
the bespoke silicon
Price
per unit
IP licence and
engineering
services
Customers
contract us to
develop and
deliver bespoke
solutions
We develop and self-fund
our own products to sell to
multiple customers
$
Royalties
When the
semiconductors
go into production,
customers pay a
royalty per unit of
product (depending
on contract)
We are developing
a range of standard
opto-electronics
products that can
be sold to multiple
customers
Connectivity
products
Custom
silicon
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 15
$
A vertically integrated business model continued
Our customers can choose between licensing our IP, entrusting us with the development
and dispatching of custom silicon, or purchasing a new range of opto‑electronics products¹.
Our business model allows us to further monetise our IP, gain greater scale and enhance our
competitive positioning relative to major industry players.
A scalable business model
Since the inception of the Company we have sought to manage our key sustainability issues and risks. For more information
see ESG section.
Silicon IP Products
Monetise
our IP
Vertically
Integrated
Business
Greater scale
and enhanced
competitive
positioning
Leading portfolio
of connectivity
IP, Chiplet and
optical portfolio
Deep expertise
in 2.5D and 3D
Chiplet ASICs
Higher scale
and relatively
lower operating
margin
Average
contractsize
>$20m
+ revenue from
products sold
Custom silicon Opto-electronicsCore IP Product IP Chiplet IP
><
1. Our new range of opto‑electronic products is expected to generate first revenue in 2024.
Leading portfolio
of differentiated
advanced
connectivity IP:
Core IP, Product
IP and Chiplet IP
Over 235
IP products –
from 7nm
to 2nm
Lower scale and
high operating
margin
Average
opportunity
size<$10m
+royalties
16 Alphawave IP Group plc | Annual report and financial statements 2023
Our business model depends on a range of inputs. Through our business activity we transform these inputs into a set of
outcomes and create value for our stakeholders. The table below shows the main inputs and outputs of our business model,
and how it links to our strategy and main risks.
Inputs Outputs/outcomes KPI/metrics Link to risks Link to strategy
> Highly engaged and
diverse workforce
> See Our People section
on page 38
> D&I KPIs
> Workforce
engagement
> Employee turnover
> Growth
> Technology
leadership
> Key personnel
Technology
leadership
Innovation
Talented
people and
diversity &
inclusion
> Leading wired
connectivity IP and
products
> See Intellectual Property
section on page 51
> % of R&D of total
employees
> TSMC OIP Partner
Award since 2019
> 2023 Samsung Best
Collaboration Award
> Growth
> Technology
leadership
> IP protection/
infringement
Technology
leadership
Innovation
IP and
expertise
> Responsible and
longstanding
relationships
> See Supply Chain section
on page 49 and Business
ethics section on page 54
> On‑time delivery
> Working with
the three leading
foundries in the
industry
> Reliance on
third party
Expansion
Ecosystem of
partners and
foundries
> Longstanding customer
relationships
> Number of
end‑customers
> % of revenue from
existing customers
> Customer
dependence
> Customer
demand
Expansion
Close R&D
collaboration
with
customers
> Increasing long‑term
returns and investment
in high margin revenue
with strong cash flow
generation
> See financial review on
page 66
> Adjusted EBITDA
> Cash from
operating activities
pre‑tax
> Growth
Innovation
Expansion
Financial
capital
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 17
The markets where we operate
Hyperscalers and other cloud service providers are investing in the
infrastructure required to roll out AI technologies and the increased demand
for enterprise‑grade and consumer cloud services.
Alphawave Semi works with customers in growing digital
infrastructure markets. Growth in our end‑markets is driven
by the adoption of AI technologies, the exponential growth
of data and the increasing need for connectivity technology
supporting higher data speeds and bandwidth. Hyperscalers
are ramping up their AI infrastructure in data centres to deploy
next generation AI technologies
1
. Opto‑electronic connectivity
solutions are needed to scale up the required compute
capability and create the network that enables data to flow.
The generative AI market is expected to grow at 42% CAGR
2
over the next ten years, driven by training infrastructure in the
near term and gradually shifting to inference devices for large
language models (LLMs), digital ads, specialised software and
services in the medium to long term.
The rollout of generative AI, the proliferation of connected
devices, mobile phones, social platforms, streaming services,
e‑commerce, cloud services, virtual and augmented reality,
and a long list of data‑intensive applications are causing an
exponential growth in the amount of data created, shared,
processed and stored. The volume of data is expected to
almost double, once again, over the period 2022‑2026
3
.
Tomeet this challenge, the number and complexity of data
centres continues to increase, creating growing opportunity
forour business.
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
5
2
6.5
9
12.5
15.5
18
26
33
41
64.2
79
97
120
147
181
181 ZB
Size of global datasphere
by 2025
4
– data volume
inzettabytes
1. AI Drives Cloud Player Capex Amid Cautious Overall Spend – Counterpoint (counterpointresearch.com), 27 July 2023.
2. https://www.bloomberg.com/company/press/generative‑ai‑to‑become‑a‑1‑3‑trillion‑market‑by‑2032‑research‑finds/.
3. The Data Center Journey, From Central Utility To Center Of The Universe (semiengineering.com).
Source: Statista https://semiengineering.com/thedatacenter‑journey‑from‑central‑utility‑to‑center‑of‑the‑universe/.
4. https://www.statista.com/statistics/871513/worldwide‑data‑created/, 22 August, 2023.
Data rates double every 2‑3 years
Switch data rate
2017
Transceiver data rate
Pluggable
Co-packaged
2020 2022 2025
Source: Company, ‘Silicon Photonics
Market and Technology Report 2020’,
April 2020 Silicon Photonics Market &
Technology 2020 – Yole Développement
(i‑micronews.com)
Tbps
x2
x2
x2
x2
x2
x2
4X100G
PAM4/400G
Coherent
100G PAM4
4X200G
PAM4/800G
Coherent
200G PAM4
Co-packaged
switch ASIC
Ex.: 48 ports
at 100G
5
100G 200G 400G
800G
0 12.8 25.6 51.2
18 Alphawave IP Group plc | Annual report and financial statements 2023
ComputerData networking
Data storageArtificial intelligence
5G wireless infrastructure
Autonomous vehicles
Our core markets
Data centre opportunity:
Today our technology is mostly used in data centres and 5G
networks (wired component) and, based on current estimates,
we expect our addressable market to grow at 20% CAGR over
the period 2023‑2026.
Alphawave Semi has licensed its IP to the leading
semiconductor companies and hyperscalers since its
inception.
The custom silicon business is an important element of
our growth strategy as more and more companies, such as
hyperscalers and leading technology businesses, invest in
the development of bespoke semiconductors to attain further
differentiation, performance improvements and lower costs.
In 2023, over 80% of ourlicence and NRE bookings were in
advanced nodes.
Opto‑electronic products represent a new revenue‑generating
opportunity for us over the mediumterm.
This is a particularly exciting area given the growing need for
optical solutions within data centres to scale up compute
capability and create the network that enables data to
flow. Our solutions meet the increasing demand for higher
speeds and bandwidths at a lower cost and reduced power
consumption. We expect the first revenue from this product
line in 2024.
Opto-electronics
36% CAGR
Custom silicon
16% CAGR
High performance IP
24% CAGR
2023
2026
1.1 7.6
2.1 11.9 3.6
1.4
Addressable markets US$bn
Semico Research Corporation, December 2022, IPNest and LightCounting
10.1
17.6
20% CAGR
The increasing
adoption of
artificial intelligence
technologies
requires higher data
speed, bandwidth
and lower latency
connectivity.
Hyperscalers
are increasingly
developing their own
AI silicon to provide
technological
advantage, optimise
workloads and
power efficiency.
Data rates double
every two years,
putting additional
pressure on
connectivity
components.
The cost and
complexity of chip
design continues
to increase.
Chiplets represent
a new architecture
paradigm enabling
more cost‑effective
solutions.
Changes in data
centres (from silo
to disaggregated
architecture) require
specialised low
latency connectivity
and increased use
of opto‑electronics.
Key industry trends
1 2 3 4 5
Hyperscalers
Data rates
increase
Complexity
ChangesArtificial
intelligence
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 19
Strategy
We are leveraging our technology and expertise to build a leading connectivity
company for AI and digital infrastructure markets.
Market
leadership
Maintain pace of
innovation and market
leadership by attracting
and retaining talent
Expansion
Land and expand: broader
and deeper customer base
> Expand our customer
base in our target
end‑markets
> Deepen our customer
base by winning new
designs with existing
customers
Innovation
Leverage our IP to expand
our product portfolio and
grow our custom silicon
business
Progress in 2023
> Joined Arm Total Design, an ecosystem to
make specialised solutions based on Arm
®
Neoverse™ Compute Subsystems (CSS)
widely available across the infrastructure
> Number of employees in R&D increased
from 621 to 741
> Certified ‘Great Place To Work’ in allour
main locations
Progress in 2023
> Increase in the number of end‑customers
generating revenue from 80 to 103 in
FY2023
> New customers in North America
> Expanded collaboration with Samsung
Progress in 2023
> Silicon tapeouts for next generation
224G, PCI‑Express Gen6, HBM3 and
UCIe interface IP in both 5nm and 4nm
processes
> Silicon tapeout for highly configurable 3nm
112GSerDes IP
> Silicon tapeout on TSMC’s 3nm process
of High Bandwidth Memory 3 (HBM3)
PHY and Universal Chiplet Interconnect
Express™ (UCIe™) PHYIPs
20 Alphawave IP Group plc | Annual report and financial statements 2023
In 2023, we made further strategic progress, investing in an enhanced product portfolio and engineering expertise, covering
the full range of wired connectivity technologies. The table below shows the links between our strategy, our main risks, the
remuneration framework and our key sustainability areas.
KPI/metrics
89%
of employees in R&D
functionas % of total
>235
number of IP products
7%
employee turnover
Risk
> Competition and failure
to maintain our market
leadership
> Reliance on key personnel
and ability to attract talent
> IP protection and
infringement
Remuneration
> Adjusted EBITDA
(annualbonus)
> Adjusted Basic EPS
growth (LTIP)
2024 initiatives
> Ongoing selective hiring
in R&D
> Continued effort to
support talent with
enhanced HR policies
and compensation
framework
> Expand foundry
partnerships with further
design wins at 3nm and
beyond
Sustainability
> People
> Innovation: close
R&D collaborations
inecosystem
KPI/metrics
93%
of licence and NRE bookings
from North American, APAC
and European customers
103
revenue‑generating
end‑customers in 2023
Risk
> Customer dependence
> Customer demand
> Dependence on licensing
revenues
> Reliance on third‑party
manufacturing foundries
> External environment
andevents
Remuneration
> Revenue (annual bonus)
2024 initiatives
> Focus on custom
silicon opportunities
inadvancednodes
> Start of the ramp of
new products for a
leading North American
hyperscaler
> Convert pipeline
of opportunities in
advancednodes to
revenue
Sustainability
> Innovation: close
R&D collaborations in
ecosystem
> Efficient and responsible
value chain
KPI/metrics
US$322m
FY 2023 revenue
3nm
custom silicon tapeouts
Risk
> Competition and failure to
maintain our technology
leadership
> Reliance on key personnel
and ability to attract talent
> IP protection and
infringement
Remuneration
> Revenue (annual bonus)
> Adjusted EBITDA (annual
bonus)
> Adjusted Basic EPS
growth (LTIP)
2024 initiatives
> Continued focus on
advanced IP enabling
the rollout of AI
technologies
> Expand product
road‑mapincluding PAM4
and coherent DSP building
on IP portfolio and IP
subsystems
> Continued focus on
high‑value custom
siliconopportunities
Sustainability
> People
> Innovation: close
R&D collaborations
inecosystem
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 21
Strategy in action
Market leadership
Enabling next generation
chiplet-based custom silicon
for generative AI and data
centre workloads
With our vertically integrated
semiconductor focus, in 2023 we
delivered a comprehensive 3nm
chiplet connectivity platform for
hyperscaler and data‑infrastructure
customers to keep pace with the
surge in data‑intensive applications
such as generative AI.
22 Alphawave IP Group plc | Annual report and financial statements 2023
3nm process technology is vital for creating advanced chips
that can effectively handle the exponential surge in data
generated by AI, with demands for more compute, memory
bandwidth, I/O speeds, and energy efficiency. Alphawave
Semi’s 3nm chiplet‑enabled custom silicon platform is built on
flexible and customisable connectivity IP. Customers benefit
from Alphawave Semi’s application optimised IP subsystems
and experience with the TSMC 3DFabric
TM
ecosystem to
integrate advanced interfaces such as CXL
TM
, UCIe
TM
, HBMx,
and Ethernet onto custom chips and chiplets.
These 3nm tapeouts are a testament to Alphawave Semi’s
dedication to technology leadership in connectivity and our
collaborative efforts in fostering an open chiplet ecosystem.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 23
Strategy in action continued
Expansion
Expanded customer base
At the end of 2023, the total number
of revenue‑generating end‑customers
was 103, representing a 29% increase
overthe prior year (2022: 80).
103
Revenue‑generating
end‑customers
FY 2023
In 2023, we continued to expand our customer base and to
broaden thebusiness relationships with existing customers.
24 Alphawave IP Group plc | Annual report and financial statements 2023
During 2023, we worked with leading technology companies,
including hyperscalers, leading semiconductor device
companies and data centre module makers.
During this time we expanded our collaboration with
Samsung, to include 3nm connectivity IP. Samsung Foundry
platform customers can benefit from Alphawave Semi’s
most advanced high performance connectivity IP and chiplet
technologies, including
112 Gigabits‑per‑second (Gbps) Ethernet and PCI
Express Gen6/CXL 3.0 interfaces to build the complex
systems‑on‑a‑chip (SoCs) needed to keep pace with the
rapidly growing demands of data‑intensive applications, such
as generative AI and the associated infrastructure required by
global datacentres.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 25
Strategy in action continued
Innovation
Fostering innovation through
a robust chiplet ecosystem
Generative AI has fundamentally
transformed data centre compute
and connectivity by creating a surge
in demand for compute, memory
bandwidth, I/O speeds and energy
efficiency.
26 Alphawave IP Group plc | Annual report and financial statements 2023
In 2023 Alphawave Semi continued to enhance its capabilities,
joining Arm® Neoverse
TM
Compute Subsystems (CSS).
Theintegration of Arm Neoverse CSS onto Alphawave
Semi’s most advanced high‑speed connectivity IP and
chiplet‑based custom silicon platform, paves the way for a
new generation of SoCs tailored for hyperscalers and other
data infrastructurecustomers.
Customers gain a significant time‑to‑market advantage by
integrating Arm Neoverse CSS compute with Alphawave
Semi’s Universal Chiplet Express (UCIe
TM
) enabled custom
silicon and pre‑built connectivity chiplets.
STRATEGIC REPORT
Alphawave IP Group plc | Annual report and financial statements 2023 27
ADDITIONAL INFORMATIONFINANCIALSGOVERNANCE
Stakeholder engagement and S172 statement
This section of the strategic report, along with the referenced pages, includes the Company’s
section 172(1) statement. It also outlines how the Directors have interacted with employees,
considered their interests, and managed the Company’s business relationships with customers,
suppliers and other external stakeholders.
We aim to embed sustainable and responsible business practices into the way we act internally and how we engage with
external stakeholders. Our Code of Ethics and Business Conduct sets out how we maintain a high standard of integrity
acrossall engagements.
Examples of how Directors have considered these matters in connection with key decisions are detailed on page32.
Employees
Our success is entirely
dependent on our ability
to attract, retain and
motivate talented staff.
Partners and suppliers
Our partners and suppliers are major
players in our industry, such as TSMC,
Samsung and Intel. Our access to their
technology is vital to our success and
our ability to deliver to our customers.
Community
Our business is grounded
in the communities it
operates in. We work
together with universities
and professional bodies,
as well as local and
national organisations.
Governments
and regulators
Countries and regions seek to guarantee
supply and build domestic supply chains,
as well as restrict outside access to their
domestic technologies.
Investors
We maintain a regular and
open dialogue with our
current and prospective
shareholders.
Customers
Our customers include some
of the largest technology
companies globally,
who trust us to provide
technology that may be
critical to the future of their
businesses.
$
28 Alphawave IP Group plc | Annual report and financial statements 2023
Customers
Our technology enables our
customers to develop and sell, or
use for their internal operations,
the next generation ofconnectivity
solutions.
Relationship with our stakeholders
Employees
Partners
and suppliers
Investors
Community
Governments
and regulators
We benefit from our customers’
feedback both at service level
and opportunities forbusiness
development.
We seek to create an
entrepreneurial and dynamic
culture where the best in our sector
want to work.
We create an inclusive environment
where we reward performance, foster
talent development and care for the
wellbeing of our employees.
We foster strong, collaborative and
responsible working relationships
with our partners and suppliers
over time.
Our CEO and SVPs meet our main
partners and suppliers at least
annually.
There are also regular face-to-face
meetings with our key partners.
We engage with investors to help
them understand our technology,
business model and strategy and
how they can generate long-term
and sustainable value.
Our Board also engages with
shareholders, including at the AGM,
and receives regular updates from our
Head of Investor Relations.
We aim to make a positive
contribution to the communities
in which we operate through
technological advance and
the enhancement of the local
skillspool.
See more about our internship and
STEM programmes on Our People
section.
We maintain good relations with
regulatory agencies in the regions
in which we operate, industry
bodies and trade associations.
We engage with industry and sector
groups to support the development
ofindustry standards.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 29
Stakeholder engagement and S172 Statement continued
Customers Employees
Engagement
> Customer service feedback
> Regular project meetings
> Industry and commercial events
> Discussion of new business opportunities
Frequency
> Regular contact with customers (new and existing)
What do they care about?
> Innovation and investment in R&D
> Product quality (innovation), performance and price
> Project schedules
Sharing value created
> Pushing the boundaries in wired connectivity technology
(manufacturing node, reliability and low power
consumption)
> Meeting project schedules
Engagement
> Annual employee survey
> Employee reviews and monthly employee focus groups
> All-staff calls
> Senior management presentations
> Designated workforce engagement Board Director
Frequency
> Monthly, quarterly and annual basis
What do they care about?
> Company strategy
> Turnover and terms of employment
> Innovative projects and team culture
> Learning and development
> Working environment
> Flexible working practices and spaces
Sharing value created
> US$131.6m expensed in salaries and performance
incentive programmes
> Employee benefits
> Training and development programmes
Partners and suppliers Investors
Engagement
> Regular project meetings
> Annual/quarterly reviews
> Annual audits
Frequency
> Ongoing
What do they care about?
> Innovation
> Company strategy and performance
> Price
> Sustainability topics such as human rights and labour
rights, conflict minerals and quality
Sharing value created
> Creating long-lasting partnerships built upon innovation,
respect for human and labour rights, quality standards,
and health and safety
Engagement
> AGM
> Financial reporting
> Capital Markets Day, investor roadshows and conferences
> Ongoing investor relations engagement
> Investor survey (bi-annual or when considered necessary)
Frequency
> Ongoing
What do they care about?
> Technological trends
> Company strategy and performance
> Cash flow trends and capital allocation
> Competition for talent and diversity
> Governance, particularly financial oversight
> Key sustainability areas such as innovation, remuneration,
diversity and talent management
Sharing value created
> Delivering on our strategy which supports long-term
appreciation of our share price
See Our People section
See Supply Chain section See Our Markets section and ESG section
$
30 Alphawave IP Group plc | Annual report and financial statements 2023
Community Governments and regulators
Engagement
> Community projects and fundraising
> University relations
> Internship programme with the University of Toronto,
University ofOttawa and a number of other universities
in India
> Publication of our annual report
Frequency
> Monthly to annual contact with local communities
What do they care about?
> Sponsorships and volunteering
> Donations and additional support
> Contribution to research and the advancement of
technology
Sharing value created
> Contributed approximately US$37,000 towards community
projects
> Twelve interns as of 31 December 2023.
> Creating stable and high-quality jobs
Engagement
> Government consultations
> Regulatory enquiries
> Industry/sector groups including standard setting groups
Frequency
> Ad hoc
> Ongoing collaboration with standard setting groups
What do they care about?
> Sector-wide issues
> Geopolitical risks
> Compliance and regulation
> Environmental regulation
Sharing value created
> US$9.7m paid in corporate tax
> Active engagement with regulators and other bodies
to understand their requirements and educate them on
industry impact of regulatory changes
See Environmental Responsibility
and Business Ethics section
See Community Engagement section
and Our People section
During the September 2023 Board and Committee meetings, the Remuneration Committee Chair held a roundtable session
focused on women in technology. It was a chance for some of the women in the Toronto office to come together and share
insights and experiences. They were able to share their journey to success, offer advice on navigating the workplace, and
explore ways to support the next generation of women in technology. This was also an opportunity to ask the Remuneration
Committee Chair career questions. The meeting reinforced the importance of fostering a supportive community for women
in technology.
Women in technology
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 31
The Board and our stakeholders
Our commitment to stakeholder engagement lies at the heart
of our strategy formulation and execution. It plays a pivotal
role in achieving sustainable long-term success. The Board
meticulously considers the needs of our diverse stakeholders
and carefully weighs the consequences of every decision
over the long term. By considering our stakeholders in key
business decisions we ensure that we continue to build trust
and maintain their ongoing support. Whilst it is not always
possible to provide possible outcomes for all stakeholders,
theprincipal decisions made by the Board as a whole have
met the expectations of investors and the market.
This year marks significant progress as our integrated
businesses unite under a single long-term ambition: to lead
in connectivity solutions for next generation AI and digital
infrastructure. Our unwavering focus is on creating value for
stakeholders as we pursue our goal.
The Board continues to act responsibly in line with our
purpose, values and strategy, helping the Company create
ongoing economic, social and stakeholder value.
The Directors confirm that they have acted in a way they
consider, in good faith, to be the most likely to promote the
success of the Company for the benefit of its members as
a whole, and in doing so have had regard, amongst other
matters, to the matters set out in section 172 (1) of the
Companies Act 2006. In doing so, however, they must have
regard to the interests of all of our stakeholders, to ensure the
long-term sustainability of the Company.
An introduction to our stakeholders can be found in the
preceding pages of the strategic report. Further information
on how Directors have had regard to their section 172 duty
can be found throughout the strategic and governance
reports.
Section 172 – stakeholders
andBoarddecision‑making
Our customers
The Board continues to receive reports on the pipeline
and existing customers as part of the CEO report at Board
meetings. This has helped the Board to understand the
evolving industry trends and who our customers are.
TheSenior Vice Presidents present to the Board on a regular
basis on the role that the major business groups play in the
future strategy of the Group. In particular, the Board was
briefed on the impact of technology for AI, and how this can
further strengthen the business.
Section 172 statement
Our suppliers
Suppliers have a key role in allowing us to deliver our strategy
of a full product portfolio of leading connectivity solutions.
We collaborate with multiple suppliers in the value chain.
TheBoard delegates manufacturing‑related activities,
including the management of our foundry, to the Senior Vice
President of Silicon Operations with oversight from the CEO.
The Board, through the Audit Committee, is kept up to date on
any risks that may cause major disruption to the supply chain
and the mitigating actions used to reduce this risk.
Our shareholders
The Board receives regular data on changes to the share
register and on the level of engagement with shareholders.
The Global Head of IR presents feedback on investor
sentiment at each Board meeting and highlights any trends.
Whilst the Executive Chair and the CEO regularly meet
with investors, it is a shared responsibility for all Directors.
TheChairs of the Remuneration and Audit Committees
engage with investors on specific topics and the AGM
provides the main form of interaction between the Board
andthe shareholders.
Our employees
The Board delegates the overall workforce reward, incentives
and conditions, along with executive pay, to the Remuneration
Committee. The Board, through the Nomination Committee,
considers succession plans for key employees. Both the
Executive Directors and Non-Executive Directors have taken
part in numerous Alphawave University meetings, which is an
opportunity for all Alphawave employees to ask questions and
to hear from the Board.
32 Alphawave IP Group plc | Annual report and financial statements 2023
ESG
Introduction
Our success and long-term
value creation depend on
the close collaboration of
various stakeholders. Working
closely together and acting
responsibly can positively
impact our business while
creating long-term value for
our shareholders, employees,
customers, partners and the
communities where we live
and work.
In 2023 we established the ESG Steering
Committee, undertook our first sustainability
materiality assessment and joined the United
Nations Global Compact.
The Group supports the UN SDGs and through
our existing programmes and technologies
wecontribute to progress against five of
the17goals.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 33
ESG continued
A sustainable business model
Vision
Since the Company’s IPO, we have sought to carefully manage
our key sustainability issues and risks. We aim to embed
sustainable and responsible business practices into the way
we act internally and engage with external stakeholders in
order to create and preserve long-term value for a wide range
of stakeholders.
Applicable external standards
We participate in and are committed to the principles
of the following standards:
> United Nations Global Compact (since July 2023);
> ISO 9001 Quality Management System Standard for our
custom silicon operations; and
> Sustainability Accounting Standards – SASB
Semiconductor Standard version 2023-12.
In addition to the above, we apply the UN Guiding Principles
and international recognised labour rights, and aim to
contribute to the achievement of the UN SDGs.
> UN Guiding Principles.
Management approach
In 2023, we established the ESG Steering Committee, joined
the United Nations Global Compact and undertook our first
sustainability materiality assessment.
The ESG Steering Committee is a multi-disciplinary group
chaired by the Executive Chair, with representatives from
People, Places and Culture (PPC), Governance, Investor
Relations, IT, Risk Management and Supply Chain.
Thepurpose of the ESG Steering Committee isto:
> ensure all relevant sustainability areas are identified,
managed and reported upon, externally and internally;
> co-ordinate overall ESG strategy and identify areas of
improvement across the Group; and
> ensure consistency between consideration of ESG issues
and the Group’s main strategic decisions.
We are managing our resources and relationships to create a sustainable
business model, aiming to preserve and create long-term value for a wide
range of stakeholders.
The ESG Steering Committee met three times during 2023.
During the year, the Steering Committee reviewed and
discussed ESG ratings, and considered actions to improve
a range of activities. The ESG Steering Committee also
supports the identification of ESG risks and opportunities,
reviews all relevant KPIs and proposes changes when
necessary.
In December 2023 the ESG Steering Committee reviewed
the outcome of our first materiality assessment for the first
time. Further reviews will take place during 2024 by each
functional lead and these will inform our future ESG strategy
and prioritise our activities across the Group.
PPC, Operations Manufacturing and IT are responsible for the
management of their respective sustainability issues, and are
subject to the oversight of the ESG Steering Committee and
the management team. Where sustainability management
performance issues are of sufficient importance, responsible
departments will report these directly to the Board on anad
hoc basis.
Main sustainability issues
In 2023, the Company undertook its first sustainability
materiality assessment to support the ESG Steering
Committee in the ongoing development of the Company’s
ESG strategy and management approach. The outcome
of the assessment provided a holistic view of where the
Company should focus its ESG management and reporting
efforts (i.e. identification of its material ESG issues, as
well as insight into key risks, opportunities and impacts). It
provided recommendations on a number of areas which will
bereviewed in detail in 2024.
Managing our resources and relationships
34 Alphawave IP Group plc | Annual report and financial statements 2023
The assessment was carried out by an external third party,
following a structured four-stage approach to identify what
matters most to the Company and its stakeholders:
> baseline research including sector analysis, peer
benchmarking, ESG rating reports, customer
questionnaires, external standards and media reviews;
> internal engagement with subject matter experts;
> external engagement with investors and ESG analysts; and
> verification and finalisation.
Governance, including risk management, was automatically
considered as material.
The results of the materiality assessment are set out in the
matrix published below.
This includes our most material issues, as well as a range
of additional relevant issues that we are also proactively
managing. The matrix replaces the SASB Semiconductor
Risk Matrix considered in 2022. The Group continues to
report on sustainability topics following the Semiconductors
Sustainability Accounting Standard 2023-12. Further details
can be found in the Appendix.
During the assessment, external stakeholders shared
additional comments on three areas:
> product impacts: the low-emissions nature of the business
and the demand for further disclosures on the positive
impact of our products;
> R&D and innovation: as a business at the forefront of
technology, the need for a set of KPIs to monitor progress
in this area; and
> governance: investors are placing further scrutiny on
a number of ESG topics, such as talent attraction,
development and retention or carbon emissions.
Materiality matrix
Outward with Impact on or importance for external stakeholders
1.00
0.00 1.00 2.00 3.00 4.00 5.00
2.00
3.00
4.00
5.00
Inward with Impact on Alphawave Semi

1. Economic performance and impact
2. R&D and innovation
3. Compliance, business ethics and
transparency
4. Talent attraction, development
and retention
5. Product impacts
6. Value chain disruption
7. Cybersecurity
8. Responsible supply chains
9. Employee engagement and
wellbeing
10. Climate risks and opportunities
11. Diversity, equity and inclusion
12. Meeting customer standards
13. Employment practices
14. Carbon emissions
15. Resource use
16. Waste management
17. Community engagement
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Business Environment People Value chain
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 35
ESG continued
Focus areas in 2024
> ESG Steering Committee functional leads to review in detail
the recommendations of the materiality assessment to
inform and identify areas of improvement and next steps.
> Update our ESG Policy taking into account the outcome
ofthe materiality assessment.
> Agree carbon emissions baseline based on 2023 data,
identify actionable targets and develop a plan.
> Continue our focus on recruitment, talent management
andretention to support our growth strategy.
Quality education
Alphawave Semi fosters future innovators through our
support for science, technology, engineering and maths
(STEM) subjects, particularly amongst female students.
This includes our community engagement activities,
internship programme, collaboration with universities and
our recent partnership in Canada with Let’s Talk Science.
Gender equality
Alphawave Semi takes equality and equal opportunity for
all employees very seriously. In line with our corporate
values, we conduct business ethically, honestly and in
full compliance with applicable laws and regulations.
Thisapplies to every business decision in every area of the
Company worldwide. Our Equal Opportunities and Dignity
at Work Policy and Code of Ethics and Business Conduct
provide a solid framework to ensure all related activities are
fully compliant.
We are making efforts to raise awareness amongst
women, both inside and outside the Company, of the
exciting careers in engineering.
Decent work and economic growth
As a business built on innovation and leading-edge
technology, we recognise the importance of investing in
the development of our employees. Alphawave Semi is
committed to employing and developing those people who
have the necessary skills, experience and values to excel in
their role. The Company is also making efforts to develop
the talent of the future and our internship programme and
learning and development activities are key tothis.
Highly engaged and
diverse workforce
Material sustainability issues
These are the sustainability issues that are most important to
our business and key stakeholders. Although our sustainability
activities cover a wide range of topics, our effort is focused
onthese.
Alphawave Semi joined the UNGC in July2023.
TheGroup supports the UN SDGs and through our existing
programmes and technologies we contribute to progress
against five of the 17 goals in the followingways:
1. Economic performance and impact
2. R&D and innovation
3. Compliance, business ethics and transparency
4. Talent attraction, development and retention
5. Product impacts
6. Value chain disruption
7. Cybersecurity
8. Responsible supply chains
9. Employee engagement and wellbeing
10. Climate risks and opportunities
11. Diversity, equity and inclusion
12. Meeting customer standards
Business Environment People Value chain
Managing our resources and relationships continued
36 Alphawave IP Group plc | Annual report and financial statements 2023
Decent work and economic growth
We expect all of our major suppliers to comply with
minimum standards relating to impacts on human and
labour rights, health and safety, and the environment.
TheCompany is committed to fair wages, healthy and safe
working conditions, respect for human and labour rights,
and honest relationships with both customers and partners
in the supply chain.
This is in addition to our support of the Ten Principles
of the United Nations Global Compact on human rights,
labour, environment and anti-corruption.
Responsible and
longstanding relationships
Industry, innovation and infrastructure
Innovation is at the core of our business and we seek to
sustain a healthy level of investment in the development of
leading-edge connectivity technology and products. Our
technologies support infrastructure development and value
creation from the adoption of AI. Our R&D approach and
close collaboration with foundry partners, customers and
ODMs, ensure we remain at the forefront of connectivity
technology.
Climate action
Our connectivity technology helps to reduce the power
consumption of data centres, as well as minimise the
number of chips required (see pages 52 and 53).
Although fabless, we seek to reduce our carbon footprint
using renewable energy in those locations where it is
available and offset all travel-related CO
2
emissions.
Leading wired
connectivity IP
and products
Industry, innovation and infrastructure
As part of our strategic objectives, we reinvest cash in the
organic development of new connectivity technologies
and products. We seek to maintain a focused and
sustained investment in the R&D of leading and lower
power connectivity technologies aiming to solve the
hardestproblems.
Increasing long-term returns
and investment in high margin
revenue with strong cash flow
generation
$
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 37
ESG continued
Context
Building upon the effort made in 2022, 2023 was a pivotal
chapter in our journey, marked by the continued integration
of our newly acquired teams. We aim to enhance cohesion,
productivity and innovation across the entire organisation.
Whilst our headcount grew more slowly this year, we
continued to add capability in our teams in support of our
growth strategy. Our closing headcount grew from 695 in
2022 to 829 as of 31 December 2023. In 2023, we opened
new offices in Pune, India and Ottawa, Canada.
Management approach: nurturing excellence
through people-centric values
We firmly believe that our people are the driving force behind
our success. Guided by a robust management approach, we
seek to prioritise the wellbeing, development and engagement
of our employees. This commitment is overseen by the Vice
President of PPC and supported by a dedicated PPC team
based in each of our regions.
The management team interacts daily with employees and
operates a dedicated PPC function at our key sites. Wehave
implemented employee policies and procedures that are
appropriate for the size of the Company and meet the
requirements of applicable local legislation.
Our goal, reflected in our policies, is that our employees can
openly communicate and share any ideas and concerns with
management regarding working conditions and management
practices without fear of discrimination, reprisal, intimidation
or harassment. Our approach is characterised by the following
key pillars:
Our people
Customised human resource policies
Our HR team is dedicated to the application of human
resource policies tailored to reflect local legal requirements,
business priorities and labour market nuances. By seeking
to ensure compliance while adapting to the unique needs of
different locations, we aim to create a work environment that
respects diversity and fosters inclusion.
Code of Ethics and Business Conduct
We adhere to a Code of Ethics and Business Conduct that
establishes fundamental standards governing our behaviour.
This includes a strong commitment to labour and human
rights, seeking to ensure that our employees work in an ethical
and respectful environment.
Talent planning and development
Recognising that our people are our most valuable asset,
we invest in talent planning and development initiatives.
This approach seeks to ensure that our employees and our
business are equipped with the skills and knowledge needed
to thrive in an ever-evolving technological landscape.
Diversity and inclusion
We recognise the benefits that a diverse workforce can
offer. We actively seek to create an environment where
different perspectives are not only welcomed but celebrated.
Our commitment to diversity is fundamental to fostering
innovation and creativity within our workforce (see further
information on page 42).
38 Alphawave IP Group plc | Annual report and financial statements 2023
Employee engagement and communication
To align our workforce with our business objectives,
weimplement robust engagement and communication
strategies. This seeks to ensure that our employees are
well-informed, motivated and connected to the larger vision
ofthe Company.
We undertake annual employee satisfaction surveys and
the CEO has regularly appeared in virtual meetings for all
employees, providing a summary of business performance,
and addressing questions on a wide range of topics
(seefurther information on page 43).
Knowledge sharing and collaboration
We encourage a culture of knowledge sharing and
collaboration, believing that collective intelligence fuels
innovation. Our employees are empowered to share ideas,
collaborate across teams, and contribute to the continuous
improvement of our operations.
Employee wellbeing
We strive to create a supportive environment that prioritises
the physical and mental health of our workforce. By doing so,
we seek to foster a workplace where our employees can thrive
both personally and professionally.
Reward and recognition
We recognise high performance through effective and
targeted compensation, as well as benefits programmes that
enable our employees to share in the value they create.
We seek to create an entrepreneurial and dynamic culture,
where the best in our sector want to work and develop their
careers in advanced technologies. We have built our company
on the foundations of diversity and inclusion, where our
employees can share their ideas and concerns.
Working conditions and employment rights
Our workspaces aim to offer our employees the highest
standard of safety, comfort, technology and accessibility,
withadditional measures to ensure employees can
successfully work remotely as required.
We support internationally recognised human rights, as laid
out in the Universal Declaration of Human Rights, including
labour rights such as freedom of association, and aim to
ensure that our employees benefit from excellent working
conditions, across all geographies.
We have a formal grievance escalation procedure which
is referenced in the Workplace Violence and Harassment
Policy as well as in the Code of Ethics and Business Conduct
(seepolicies athttps://awavesemi.com/company/esg).
Closing headcount
byregion
North America | 43%
EMEA | 9%
APAC | 48%
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 39
ESG continued
Our people continued
Equal opportunities
Our Equal Opportunities and Dignity at Work Policy (see
www.awavesemi.com) stresses the value and importance
of diversity in the workplace and highlights our strict stance
against discrimination, harassment or bullying in the
workplace.
We respect and uphold internationally proclaimed human
rights principles (Universal Declaration of Human Rights)
and in 2022, the first year after our IPO, we put in place an
Anti-Slavery and Human Trafficking Policy, which applies
to both employees and others through whom the Company
conducts business. The Company may perform investigations
and audits to verify that business is being conducted in
compliance with this policy. For more information
see www.awavesemi.com.
Disclosure regarding employment of
disabledpersons
In accordance with our Equal Opportunities and Dignity at
Work Policy, we give full and fair consideration to applications
for employment made by disabled persons, having regard
to their aptitudes and abilities. We remain committed to
any employees who become disabled during their time
with us, ensuring they receive the support and training they
may require. Promotion and development opportunities are
provided for all employees without discrimination. All these
topics are covered in our Equal Opportunities and Dignity at
Work Policy and Alphawave Semi Accessibility Plan (see all
People-related policies at www.awavesemi.com).
Key initiatives
Employee wellbeing
The wellbeing of all our employees is important to the
Company. During 2023, our employees continued to work
following a hybrid model, working remotely and in our offices.
FY 2023 Female Male Total
Board 4 6 10
Total employees 160 669 829
Senior management
1
1 10 11
FY 2022 Female Male Total
Board 4 6 10
Total employees 141 554 695
Senior management
1
1 11 12
1. Senior management diversity reflects the composition of the leadership
team, including the CEO and the Executive Chair.
Number of employees
Total employees
gender diversity
Male | 81%
Female | 19%
Senior
management
gender diversity
Male | 92%
Female | 8%
Board
gender diversity
Male | 60%
Female | 40%
Diversity
Male
2023
Male
2022
Female
2023
Female
2022
40 Alphawave IP Group plc | Annual report and financial statements 2023
We put in place multiple initiatives and activities to make the
most of the time our employees spend at our offices, creating
opportunities for social interaction and promoting a healthy
and supportive environment; for example, health check days,
assistance programmes and access to wellness courses such
as yoga and meditation.
We have in place a Right to Disconnect Policy
(see www.awavesemi.com) which recognises that every
employee has the right to, and should, disconnect from work
outside of their normal working hours unless there is an
emergency or agreement to do so, for example there is an
emergency and/or another legitimate reason (examples of
which are provided in the policy).
Talent identification and recruitment
We believe our employees are our best ambassadors and that
is why the Company has an internal referral programme in
place. Employees who refer successful candidates receive a
reward. In parallel, we have social media campaigns targeting
specific skills and roles.
Employee learning and development
Facilitating learning and sharing across the organisation are
key aspects of employee development. Alphawave University
is an internal programme that aims to give employees the
opportunity to learn different aspects of our Company
and its technology. The programme consists of regular
sessions where a range of technical and non-technical
topics are discussed. Presenters are mostly members of
themanagement team and the Board.
The Company also has an employee education programme
that reimburses employees upon successful completion
of relevant courses. Employees identify their learning and
development needs on a regular basis (both technical and
non-technical) and agree these with their line manager.
In 2023, we added over 20,000 courses to our Global HR
system covering a broad range of competency and technical
training needs.
Number of employees
(closing)
829
FY 2022: 695
Employee
turnover
7%
FY 2022: 10%
Gender
diversity
19%
FY 2022: 20%
Jan Frykhammar was the main speaker in a virtual
meeting with employees, part of the Alphawave
University programme. Jan shared valuable insights
gained as an experienced CFO. Hediscussed
his views on performance management, risk
management and the importance of establishing
a clear link between the present and mid-term
ambitions. Jan also discussed the importance of
culture in organisations and how all employees share
a joint responsibility for success.
Alphawave University –
A session with our Senior Independent
Director Jan Frykhammar
Leadership development
2023 was the second year of our Board mentoring programme.
This programme cultivates leadership excellence within our
organisation. By pairing experienced Board members with
leaders, this programme fosters a unique mentorship dynamic
that transcends traditional hierarchical structures. Through
personalised guidance, seasoned leaders can impart strategic
insights, industry knowledge and leadership skills to mentees,
contributing to their professional growth and development.
The mentorship programme plays a pivotal role in shaping
a robust leadership pipeline by instilling a strong sense of
organisational culture, values and strategic vision. Asmentors
share their experiences and expertise, they support the
next generation of leaders, fostering a collaborative and
forward-thinking leadership ethos that benefits the entire
organisation.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 41
Diversity and inclusion
We believe in fostering an inclusive environment where every
individual, regardless of gender, background or ethnicity,
can thrive. We are committed to supporting community
programmes aimed at encouraging children, especially girls,
to explore and pursue STEM fields. By investing in these
initiatives, we hope to contribute to the development of a
diverse talent pipeline and inspire the next generation of
leaders.
In 2023, for example, we launched two new D&I initiatives.
We started a partnership with Let’s Talk Science in Canada,
to encourage girls to get into engineering and ultimately take
engineering programmes we hire from. Let’s Talk Science is
an award-winning, national, charitable organisation, focused
on education and outreach to support youth development.
They create and deliver a comprehensive suite of unique
learning programmes and services that engage children,
youths and educators in STEM.
In addition, we launched a women’s mentoring programme
within our organisation, recognising the importance of
empowering women to excel in their careers. Theseinitiatives
reflect our dedication to fostering diversity, equity and
inclusion. Our two largest locations, India and Canada,
nowhave dedicated gender diversity initiatives in place.
Ourinternship programme is also part of our D&I initiatives.
The majority of our independent Board members are women
and 19% of our employees are female (FY2022: 20%).
We closely monitor our salary systems, regular reviews
and processes, which have been designed to avoid any
gender-based discrimination.
Alphawave Semi is not legally required to submit Gender Pay
Gap data as it does not have the minimum required number
of employees in the UK. The Company has a Diversity and
Inclusion Policy in place which is available on our website at
www.awavesemi.com.
ESG continued
Our people continued
Internship programme
Alphawave Semi has internship programmes in Canada
and India, the two countries with the highest number of
employees. During 2023 we successfully hired many of our
interns. As of 31 December 2023, there were twelve interns
inthe Company (FY 2022: 47).
In Canada, we welcome interns from the universities of
Toronto and Ottawa, and the programme runs for a period of
12 to 16 months. As of 31 December 2023, there were eleven
in Canada (FY 2022: ten).
The programme seeks to encourage the next generation
of engineers and innovators, giving them insight into the
wide range of engineering careers and illustrating the
valuable contribution they can make to the advancement of
technology.
The main objective of our internship programme is to identify
high potential students in their final semester or year of
their undergraduate or masters degree, with a view to future
employment within the Company. As of 31 December 2023,
there was one intern in India (2022: 37). The programme
engages with universities such as KLE Tech University, the
University of Burdwan and the CVR College of Engineering in
Hyderabad. Students come from different socio-economic
backgrounds.
Tony Pialis, our CEO, was the main speaker in
a virtual meeting with employees, part of the
Alphawave University programme. Tony shared
his background and early experiences as an
entrepreneur in the semiconductor industry as well
as Vice President of Mixed-Signal IP at Intel. He
shared with employees his vision and ambition for
the future of the business and how employees can
be part of the journey. During the event, employees
had the opportunity to ask Tony questions.
Alphawave University
– A session with our CEO, Tony Pialis
42 Alphawave IP Group plc | Annual report and financial statements 2023
Employee engagement and
communicationstrategies
We implement ongoing employee engagement and
communication through town halls, employee forums and
local events with the participation of the senior management
team. We keep employees updated on the strategic progress
of the Company, as well as financial results and key areas of
strategic focus for the business.
In 2023, we undertook our second annual employee
satisfaction survey, which was conducted by ‘Great Place to
Work’. The response rate for the Group was 76% (FY2022:
80%, Canada and US only) and the feedback from our
employees was extremely positive. Amongst some of the
positive messages, our employees feel that they can make a
difference and remain committed to go the extra mile to get
the job done.
The survey also suggested that enhancing work/life balance
and development programmes remain as two of the key areas
of interest for our employees.
The results of the annual survey were presented back to the
Board and employees, and have informed changes to, for
example, the Global Rewards and Recognition Programme,
which will be rolled out in 2024.
The Company is now certified as a Great Place to Work
®
in
allits main locations (FY 2022: Canada and US only).
Focus areas in 2024
> Improve our employee response rate, fostering a workplace
where our team members feel valued, motivated and
empowered.
> Implement a comprehensive Global Rewards and
Recognition Programme.
> Implement community outreach initiatives globally focused
on education and healthcare.
> Implement Company-wide job architecture and
compensation design and strategy.
Reward and recognition
We offer market-competitive pay and employee benefits,
along with opportunities for individual and team recognition,
all within a supportive working environment. We regularly
benchmark our pay and benefits against the employment
markets in which we operate.
Our compensation programmes include short-term
cash-based bonus and long-term share plans that allow us
to differentiate levels of reward, based on critical skills and
performance levels. In early 2023, the Company introduced a
performance appraisal process with clear objectives aligned
with the Company objectives.
The majority of our employees participate in our long-term
incentive programme which helps to promote a shared sense
of ownership. The majority of the hires we made in FY 2023
were given equity incentivisation through our long-term
employee share programme.
Non-financial benefits
Employees have access to a variety of non-financial benefits
that contribute to their overall job satisfaction and wellbeing.
These benefits include, amongst others: flexible work
arrangements, such as telecommuting and flexible hours;
professional development opportunities such as training
programmes and educational assistance; and health and
wellness initiatives, including health insurance and access to
gym memberships, as well as access to financial counselling.
We seek to ensure that our teams have the opportunity
to participate in team-building activities and workshops,
fostering a positive company culture. In addition, employees
have access to different work amenities such as remote
work support and massage chairs. Employee engagement
initiatives, a strong emphasis on company culture and values,
health check days with doctors on site and volunteer and
community involvement programmes, contribute to a holistic
and supportive work environment.
The availability of these benefits varies reflecting geographic
location, regional cultures and regulatory requirements.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 43
ESG continued
Context
As a fabless semiconductor company we have a low carbon
footprint relative to companies in other segments of the value
chain. Alongside the benefit our products bring to the overall
energy consumption in digital infrastructure applications
(such as data centres, 5G base stations and artificial
intelligence) weare working towards minimising and reducing
our carbon footprint over time.
Although fabless, we are making ongoing efforts to minimise
our carbon footprint and rely on our foundry and OSAT
partners, which are mostly based in Asia, for the fabrication,
testing, assembly and distribution of our products.
We intend to use FY 2023 data to baseline our carbon
footprint and identify opportunities to reduce carbon
emissions further.
Management approach
Responsibility for environmental performance sits with the
Board. We govern our environmental responsibility through
the application of our ESG Policy, which was approved in early
2023 and addresses our key priorities.
The Company seeks to minimise and gradually reduce its
carbon footprint through a combination of emission reduction
and energy efficiency initiatives and the use of carbon offsets.
In addition to the environmental reporting in this section
we make further disclosures following the Semiconductors
Sustainability Accounting Standard version 2023-12
(seeSASB table in the Appendix).
Governance
The Board has overall accountability for the management of
climate-related risks and opportunities (pages 46 to 48).
Environmental responsibility
Our Chief Financial Officer is responsible for our risk
management framework, including the assessment and
management of climate-related risks. The ESG Steering
Committee supports and guides the execution of our
climate-related and environmental activities.
Our Global Head of Investor Relations is also responsible
for leading our climate change agenda and managing our
policies and practices across sustainability and ESG matters.
OurGlobal Facilities Manager is responsible for all our
facilities and our IT Director is responsible for our IT resilience
and IT end-of-life policies.
Strategy
The delivery of our technology to customers is, in certain
instances, through virtual and not physical means.
Ourvalue chain has worked effectively through exceptional
circumstances, such as the COVID-19 pandemic, to execute
remotely and from alternative locations. Therefore, we regard
our exposure to direct physical climate-related risks as low.
Further, the impact of any transitional changes upon the
Group and its operations is considered to be low compared
to those businesses that have more direct dependencies.
However, carbon pricing policies and the cost of energy can
have some impact in the running costs of our business.
In preparing the consolidated financial statements, the
Directors have considered the impact of climate change
on the Group and have concluded that there is no material
impact on financial reporting judgements and estimates
(as discussed in note 3 to the financial statements). Thisis
consistent with the assertion that risks associated with
climate change did not affect the business, its strategy and
financial performance in 2023, and are not expected to have
amaterial impact on the longer-term viability of the Group.
Further, the Directors do not consider there to be a material
impact on the carrying value of goodwill, other intangibles or
on property, plant and equipment.
44 Alphawave IP Group plc | Annual report and financial statements 2023
The table below summarises the GHG emissions for the 2023
reporting year, including all our locations in 2023. Israel was
not included in 2022. In 2023 we moved to larger offices in
Pune and Ottawa, resulting in higher Scope 2 emissions. Israel
was not included in the reported 2022 emissions.
Scope 1 includes emissions associated with gas
consumption. Scope 2 includes emissions associated with
electricity consumption. The increase in Scope 1 and Scope
emissions was mainly driven by the increase in our headcount
and the square footage of our offices. Scope 3 includes
those emissions associated with business travel and also
includes electricity consumption attributable to our utilisation
of servers within our third-party data centre provider. In our
2023 Scope 3 emissions we have for the first time, included
those from outsourced logistics, commuting and computing.
This resulted in an increase in excess of 1,600 metric tonnes.
In addition, due to the increase in our headcount and level
of business activity, emissions related to travel increased by
over 800 metric tonnes. These two elements represent over
two thirds of the overall increase in 2023. In 2024 we will be
analysing in further detail our 2023 emissions to establish
a baseline carbon footprint from which we can identify
opportunities for improvement over the short, medium and
long term and assess the need for more specific reduction
goals and targets.
Metrics and targets
For the third consecutive year, the Company appointed Carbon
Footprint Ltd, a carbon and energy management company, to
independently assess its greenhouse gas (GHG) emissions
in accordance with the UK Government’s ‘Environmental
reporting guidelines: including Streamlined Energy and Carbon
Reporting requirements’. The GHG emissions have been
assessed following the ISO 14064-1:2018 standard using the
2021 emission conversion factors published by Department
for Environment, Food and Rural Affairs and the Department
for Business, Energy and Industrial Strategy.
We use Scope 1, Scope 2 and partial Scope 3 emissions
as our metrics. As a fabless business we outsource the
production of semiconductors to leading foundries. In line
with our fabless peers, we currently have no data from the
foundries on the emissions relating to the manufacturing of
our products or our IP embedded in customers’ products
which would be very complex to calculate. In addition, we use
the intensity ratio per employee as defined in the table below.
The assessment follows the location-based approach for
assessing Scope 2 emissions from electricity usage. The
financial control approach has been used.
Streamlined Energy and Carbon Reporting 2022
Baseline
year 2023
In metric tonnes CO
2
e
Total Scope 1 emissions (natural gas) 208.9 378.7
Total Scope 2 emissions (electricity consumption) 341.5 1,111.5
Total Scope 3 emissions (transmissions and distribution, non-controlled electricity, hotel stays,
homeworkers, computing, upstream logistics air and road, well to tank, commuting, flights, hire
car, taxi and grey fleet travel.) 601.7 3,452.6
Total gross (Scope 1, 2 and 3) location-based emissions 1,152.1 4,942.8
Intensity ratios
tCO
2
e (gross Scope 1, 2 and 3) per employee 1.78 5.96
tCO
2
e (gross Scope 1, 2 and 3) per US$m revenue
1
nm 15.3
Underlying energy consumption (kWh)
Total global energy consumed 2,618,460 5,685,827
Total UK energy consumed
2
n/a n/a
UK-based emissions nm nm
UK-based energy consumption nm nm
1. tCO
2
e (gross Scope 1, 2 and 3) per US$m revenue reported as nm in 2023 and 2022. Group FY 2022 revenue includes revenue from the acquisition of
OpenFive from 31 August 2022 (closing date) but FY 2022 emissions baseline includes annualised contribution from the related locations in India and the US.
Considering the annualised contribution of these locations allowed for a more meaningful tCO
2
e (gross Scope 1, 2 and 3) per employee comparison.
2. UK energy consumed in 2023 and 2022 was calculated based on the kWh for home-working and it represented an insignificant portion of the total energy
consumed.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 45
Metrics and targets continued
We are gradually rolling out activities to reduce our GHG
emissions: actively managing e-waste with robust product
lifecycle management programmes for our computer and IT
resources, reducing unnecessary business travel, locating
our offices in energy-efficient buildings and, where possible,
sourcing from renewable energy. In 2023 we made the
decision to relocate our offices in Bangaluru to newly built
premises that are more energy efficient. The relocation will
take place in 2024.
In addition, we are also offsetting our GHG emissions from
travel included in Scope 3.
Our reporting is consistent with the recommendations of the
Task Force on Climate-related Financial Disclosures (TCFD).
We provided the information on our approach to assessing
and disclosing climate-related risks and opportunities
in accordance with Listing Rule 14.3.27R, except for the
following matters: disclosure (‘strategy c’) – we have not
performed a quantitative risk assessment or climate-related
scenario analysis. The Directors believe this is not necessary
for an understanding of the Company’s business at this stage.
In 2024 we will evaluate the additional requirements and
associated costs to assess the resilience of the organisation
under different climate-related scenarios. Following this
evaluation, we will make a decision on whether a quantitative
risk assessment should be prioritised and the timing if
appropriate.
ESG continued
Environmental responsibility continued
See our full compliance statement in the Appendix.
Risk management
Our process for identifying and assessing climate-related risks
and opportunities follows our Group-wide risk assessment
and management process. These risks, together with
mitigations, are discussed by the executive management
team and the Board. Given our fabless business model, the
Group’s exposure to climate-related risks is considered to be
limited and not currently classified as a significant risk. Our
overall risk management process is described on page 74.
The Group has not identified any short-term direct
climate-related risks that are likely to have a material and
direct impact on our operations. We are potentially exposed
to medium and longer-term climate-related risks of a
global/ macro nature that impact society in general, together
with risks which may impact our end-customers and the
broader semiconductor supply chain.
Climate-related risks and opportunities related to the transition to a low-carbon economy
Short, medium and long-term time periods
205020402030
Short term
Medium term
Long term
2021
Years 10 20 30
In 2023, weundertook our first business materiality
assessment (see page 35).
We continue to adapt and comply with regulatory standards,
including evolving product standards.
As a fabless business with low capital intensity we do not have
a significant amount of assets at risk of impairment or early
retirement as a result of changes in environmental legislation.
We are actively managing e-waste, reducing unnecessary
business travel and, when necessary, relocating our offices
intoenergy-efficient buildings.
Policy and legal Resource efficiency
Risks Opportunities
Medium to long term Medium to long term
Key:Low Medium High
46 Alphawave IP Group plc | Annual report and financial statements 2023
Alphawave Semi is at the forefront of wired connectivity
technology.
Our leading-edge technology advances push the boundaries
of wired connectivity capabilities, enabling data to travel
faster, more reliably and using lower power.
Our focus on connectivity and R&D investment seeks to
ensure we remain ahead of our competitors.
Energy from renewables is not available in all our locations,
but where possible, we try to improve the mix of purchased
energy towards renewables.
All our premises are leased. Our offices in Canada (Toronto
and Ottawa) and the US (Milpitas and San Jose) are based
in modern, smart buildings with energy-saving systems and
modern HVAC systems.
In 2023 we selected a new location for our office in
Bangalore; a highly efficient building with climate resilience
procedures in place.
Although our direct carbon footprint is relatively small
compared to other business activities, we seek to reduce our
carbon footprint and undertake appropriate efforts to not
fall short of best practice amongst fabless semiconductor
companies in our sector and our largest customers.
We are planning to use our 2023 carbon emissions baseline
to set a clear level from which we can define specific
environmental goals.
We work with the leading companies in the semiconductor
industry, leading telecommunications business, technology
companies as well as hyperscalers. These companies have
a strong focus on reducing their carbon footprint and are
investing in new technologies.
Our connectivity technology aims to address the
hardest-to-solve problems for customers in digital
infrastructure markets.
Our new range of opto-electronics and increased AI and
data centre custom silicon business represent new revenue
opportunities for our low power technologies, contributing
towards reducing the power consumption of data centres
and AI infrastructure (see pages 52 and 53).
Reputation
Long termLong term
Markets
Risks
Opportunities
Technology Energy source
Medium to long term Medium to long term
As a fabless business, energy costs are not a major direct
cost driver.
Our business has a low risk exposure from scarcity of ‘rare
Earth materials’.
Higher energy costs could potentially impact the direct
costs of our manufacturing partners and result in higher
cost of goods sold. Our foundry partners are the leading
manufacturing companies in the industry and continuously
invest in the adoption of next generation manufacturing
technologies.
The semiconductor industry is well placed to support
the transition to a lower carbon emission economy.
Ourtechnology enables semiconductors with lower power
consumption, contributing to a more energy-efficient digital
infrastructure, such as data centres, 5G base stations and
other data-intensive applications.
Our technology contributes in different ways to reduce the
power consumption of data centres (see pages52 and 53).
Market
Products and services

Medium to long term Medium to long term
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 47
Focus areas in 2024
> Develop further training, define process for data collection
and reporting requirements to support the collection and
monitoring of emissions across the Group’s locations.
> Set emissions baseline using 2023 data and develop
emission-reduction strategies for our main locations.
> Evaluate additional requirements and costs involved in
thedevelopment of climate-related scenarios.
Environmental responsibility continued
Related to the physical impact of climate change
Dependency on natural, human and
socialcapital
Climate change would not create any new direct dependencies
on natural, human or social capital.
Our highly skilled engineers and talented employees are
vital to ensure we can deliver innovative products. Electronic
engineers are in high demand and companies outside
the semiconductor industry are establishing engineering
departments to design some of their semiconductor
requirements.
As a fabless semiconductor company, our own operations
are unlikely to face any specific material risks as a result of
the physical impacts of climate change, such as property
damage due to extreme weather events (i.e. changes in
temperature, wind patterns or water-related).
We have not yet assessed current and future climate risks,
acute and chronic, in our most critical locations. In 2024 we
are intending to evaluate additional requirements and costs
involved in such assessment.
All our employees can work remotely and the majority of our
offices are located in modern offices in city centres.
Our manufacturing partners have implemented multiple
initiatives to reduce their carbon footprint, review water
and energy usage, and understand and manage the effects
of climate change on their own operations. We work with
leading companies such as TSMC, Samsung and Intel which
follow the recommendations of the TCFD and have initiatives
in place to manage theserisks.
In the longer term, changes in greenhouse gas emissions
regulations could result in increased costs in our supply
chain due to higher compliance, raw materials or energy
costs to our suppliers.
It could potentially become more difficult or expensive to
insure certain locations.
Risks
Acute risk (event driven)
(
to  )
Chronic risk (long-term
shifts in climate patterns)
(
to  )
Medium to long term
Medium to long term
ESG continued
Key:Low Medium High
48 Alphawave IP Group plc | Annual report and financial statements 2023
Context
Our Silicon Operations team is responsible for managing the
manufacturing process that is outsourced to foundries as well
as semiconductor assembly and test (OSAT) partners.
As a fabless business, our commercial success is reliant on
our ability to manage our supply chain. As such, we are not
only focused on minimising any reputational, commercial or
contractual harm but also to identify and proactively manage
related sustainability impact.
As well as minimising potential disruption risks, this also
includes sustainability aspects such as:
> impact on human and labour rights (aligned to national
legislation);
> health and safety performance of our partners; and
> environmental impact.
Our main foundry and OSAT partners, which are the leading
companies in their sectors and much larger organisations,
have longstanding environmental and labour programmes
inplace.
Management approach
We outsource the production of our semiconductors to the
leading companies in the industry, such as TSMC. These
companies provide high-quality products and have the ability
to meet both our stringent qualification requirements and our
tight deadlines.
Assembly and test functions are also outsourced to leading
companies in the sector, such as ASE.
We still retain advanced packaging expertise in-house,
such as 2.5D and 3D technologies, as this is an area of vital
importance in the development of new architectures, such
as System-in-Package and chiplets.
Our manufacturing operations are ISO 9001:2015 certified
https://awavesemi.com/custom-silicon/
Our Vice President of Silicon Operations is responsible for all
manufacturing-related activities, including the management
of our foundry, assembly and test partners. Board-level
responsibility for supply chain lies with our CEO.
We manage our supply chain by:
> requiring all our fabrication, assembly and test partners to
be ISO 9001 certified;
> the categorisation of partners as critical and non-critical;
> screening all partners against our manufacturing partner
assessment survey and undertaking on-site audits for
a limited number of suppliers, mainly those categorised
ascritical;
> carrying out annual audits (audit-light approach) of our
major partners using the assessment survey checklist
including a focus on training and development of staff,
working conditions and the traceability of materials, as
well as a range of topics directly related to the quality and
control of their activities;
> jointly reviewing the annual audits with our partners,
including any recommended corrective actions. Any major
discrepancies may require a re-survey to verify that the
required corrective actions have been implemented;
> significant non-compliance quality events are addressed by
issuing Corrective Action Requests (CARs). These actions
identify root cause, implement permanent corrective
actions, and are followed by monitoring its effectiveness;
> engaging with those suppliers which have not met
our requirements to resolve and to raise their level of
performance to acceptable levels; and
> carrying out weekly business and performance reviews
with our regular partners, as well as in-person bi-monthly
business reviews and annual meetings with our major
vendors.
In addition, certain customers carry out due diligence on us
and our suppliers to ensure adequate systems are in place
to monitor ongoing performance, ensuring it is in line with
expectations and the products supplied meet all requirements.
Supply chain
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 49
ESG continued
Supply chain continued
Performance
In 2023, we performed 14 audits (FY 2022: 11 audits),
covering the majority of our manufacturing partners as well
as our main foundry partner. The average score of the audits
undertaken in 2023 was 99%. The lowest score achieved was
94.7%. Three of the 14 audits were undertaken onsite and the
remaining through self-assessment.
During the year we raised two CARs and sought to obtain full
resolution. In one of the cases we achieved this with enhanced
part marking, additional training and instructions.
On-time delivery (OTD)
OTD measures supply chain efficiency; whether or not the
Company is meeting its goals in regard to agreed delivery
times. It is also important for maintaining customer
satisfaction. In FY 2023, average OTD was 100% which was
inline with 2022 (from 1 September to 31 December 2022,
theaverage OTD was 99%).
Conflict minerals
We support international efforts to ensure that the mining and
trading of tin, tungsten, tantalum and gold (known as 3TG) in
high-risk locations do not contribute to conflict and/or serious
human rights abuses in the Democratic Republic of the Congo
(DRC) and the Great Lakes region of Africa (or elsewhere).
Wehave a Conflict Minerals Policy in place which is available
on our website: https://awavesemi.com/custom-silicon.
Alphawave Semi extends this obligation to our suppliers,
requiring them to reasonably assure that the tin, tungsten,
tantalum and gold in the products they manufacture are
conflict free. The Company also expects its suppliers to
establish their own due diligence programme to achieve
conflict-free supply chains.
In 2023 we did not identify any instances where tin, tungsten,
tantalum and gold that are integrated into our products have
supported armed groups in the DRC or adjoining countries
(2022: nil). Allour 3TG minerals are from Conflict Minerals
compliant smelters.
Environmental management
It is important that our fabrication partners demonstrate
responsible environmental standards. This is why, in line with
our Environmental Compliance Policy, we only work with
suppliers who are committed to environmental preservation,
and who comply fully with environmental laws, regulations
and industry environmental guidelines. We continue to work
with our manufacturing partners to adopt advanced process
technologies that aim to have an ever-decreasing impact on
the environment.
It is vital that we can identify and safely manage hazardous
materials. This includes the provision of relevant materials
declarations under EU Directive 2011/65/EU (Restriction of
Hazardous Substances or ‘RoHS3’) and the amendment EU
Directive 2015/863. Our products are halide free, containing
very low concentrations of halogens (fluorine, chlorine,
bromine and iodine), well below the internationally suggested
limits.
Our products are also fully compliant with EU Regulation
(EC) 1907/2006 (Registration, Evaluation, Authorisation and
Restriction of Chemicals, or ‘REACH’).
Forward focus 2024
> Continue to deliver high levels of operational performance
and maintain our average OTD.
> Ongoing identification of possible areas of improvement.
50 Alphawave IP Group plc | Annual report and financial statements 2023
Intellectual property
Context
The protection of intellectual property is vital for any business
focused on the creation of innovative and high-value
technological solutions.
Any failure in this regard could have profound consequences
for the value of our inventions, products and our Company.
Furthermore, we have access to and work with our customers’
intellectual property and/or commercial and technological
secrets.
We recognise the high degree of trust that this requires on the
part of our customers, and this reflects the value we seek to
add in these relationships which we work hard to maintain.
Management approach
We are advancing wired connectivity technology for digital
infrastructure. Given the rapid evolution of technology
and increasingly demanding customer requirements, the
sustainability of our business relies on us staying at the
cutting edge. Our engineering teams seek to innovate in
ways that grow the business, help our customers and keep
the Group at the forefront of the connectivity market. As a
result, we invest a significant amount into R&D. In FY 2023 we
expensed US$78.2 m of R&D activities or 24% of revenue (FY
2022: US$69.4m or 37% of revenue).
Our Chief Technology Officer (CTO) works with Alphawave
Semi innovators to define our technology vision and roadmap
and to drive innovation across theGroup.
The CTO chairs the IP Committee, and its members include
representatives from our Engineering, Marketing and Legal
teams. The Committee meets on a monthly basis.
The IP Committee is responsible for:
> advising the CTO on how to best combine trade secrets,
patents and public disclosures to lead in a competitive
environment; and
> reviewing and ensuring the correct implementation of
applicable policies and procedures.
We ensure that all intellectual property is safeguarded through
the application of:
> a dedicated Invention Disclosure Policy, as well as related
procedures. The Invention Disclosure Policy is intended to
ensure all innovation is recognised and properly managed;
> an incentive policy for innovations submitted to the IP
Committee as well as recognition awards;
> a Public Technical Disclosure Policy, covering the regulation
of public technical disclosures to standards bodies,
consortia, customers, vendors, partners and other public
venues;
> related restrictive provisions in our contracts of
employment;
> robust information technology systems to prevent data
leakage; and
> access controls to specific project data for employees and
third parties.
In line with our Company commitment to fostering innovation
and supporting the next generation of innovators, each
innovation disclosure submitted to the IP Committee by
employees is considered for an innovation award. Recipients
of these awards are recognised at an all-hands event with a
commemorative plaque and US$4,000 bonus shared equally
among inventors.
Alphawave Semi innovation award
In 2023 the Group awarded its second innovation award.
The award recognised four innovators for an invention
that improves the robustness of our DSP for high-speed
connectivity in some of the industry’s most demanding
applications. We look forward to recognising many more of
the outstanding innovations across the Company in 2024
andbeyond.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 51
ESG continued
Key issues and initiatives
Positive product impacts
The technology that we develop and market can be optimised
to our customers’ precise design needs, helping to bring
applications to market quicker. Our multi-standard silicon IP
solutions enable data transmission faster, more reliably and at
lower power, offering proven solutions to many of the world’s
most complex connectivity challenges.
Being particularly energy intensive, the data centre industry
accounts for 1-1.5% of global electricity use. The data centres
and data transmission networks that underpin digitalisation
accounted for around 300 Mt CO
2
-eq in 2020, equivalent to
0.9% of energy-related GHG emissions or 0.6% of total GHG
emissions
1
. Connectivity accounts for 20% to 40% of the
power in data centres, and our technology is helping to reduce
it by approximately 25% to 40%.
Reliable and power-efficient data transmission sits at the
core of industry efforts to improve energy efficiency and help
reduce carbon emissions. As published by
the Global Semiconductor Mobile Association in its State
of the Industry on Climate Action 2022 report, AI, ML and
virtualisation are helping to optimise power use in equipment,
centralising network resources (enabling synergies)
and avoiding unnecessary heating or air-conditioning
2
.
Ourtechnology enables the flow of data necessary to
enablethis.
Our technology reduces the number of components needed
in data centres and helps reduce power consumption in a
number of ways:
> the required reach (or distance of data transmission)
enabled by our transceivers eliminates the need for
additional receivers or retransmitters;
> our R&D contributes to reduce the transceiver low power,
which helps to keep the overall data centre power low;
> achieving higher per-lane data rates (for example from
112G to 224G) as well as more advanced technology nodes
(for example from 5nm to 3nm) significantly reduces the
energy-per-bit transmitted. On average the adoption of a
smaller manufacturing node achieves power savings of
between 25% to over 40%
3
compared to the previous node;
> our chiplet architectures allow for new low-power
computing architectures resulting in power savings of
approximately 40% compared to monolithic products
(HBM is less power intensive than DDR; more in-package
integrated compute replaces chip-to-chip communication
with ultra low-power die-to-die communication); and
> our CXL and higher-speed PCIe allows for aggregation
or sharing of memory or storage, reducing the amount
of memory required for data centre compute by
approximately 30%, lowering the environmental footprint
ofmemory manufacturing.
Intellectual property continued
1. IEA (2022), Data Centres and Data Transmission Networks, IEA, Paris https://www.iea.org/reports/data-centres-and-data-transmission-networks, License:
CC BY 4.0.
2. https://www.gsma.com/betterfuture/wp-content/uploads/2022/05/Moble-Net-Zero-State-of-the-Industry-on-Climate-Action-2022.pdf.
3. TSMC focuses on power and efficiency with the new 2nm node | Digital Trends; Samsung’s 3nm chips reduce power consumption by up to 45%
–InceptiveMind.
52 Alphawave IP Group plc | Annual report and financial statements 2023
Minimisation of negative product impacts
The nature of our integrated circuits means that their
actual and potential negative impacts are relatively limited.
Nonetheless, we design our products in a way that helps
to minimise any negative impacts they might have over
their lifecycle. This includes efforts to reduce the size of
our integrated circuits, thus reducing the amount of input
materials required.
Focus areas in 2024
> Ongoing development of technologies that enable AI.
> Increase collaboration across teams to foster
moreinnovation.
Source: Company
1. https://pcisig.com.
2. HOME | Compute Express Link.
3. Home | My Site (uciexpress.org).
Power consumption breakdown in data centre
_
_
Servers (20% connectivity)
Power consumption associated with connectivity
networking and storage
At least
cooling
25%-40% Savings
Our connectivity technology enables power
savings of between 25%-40%. That is
approximately 10% power savings of the
overalldata centre power consumption.
50%
10%
20%15%
10%
35%30%
10%
In 2023, we continued to invest in key connectivity
technologies for AI compute, such as PCIe6 and PCIe7
1
,
CXL
2
and UCIe
3
(Universal Chiplet Interconnect Express).
These investments, in combination with our entry into the
Arm Total Design ecosystem (see page 26), position us to
be one of very few companies able to deliver optimised
custom silicon for AI compute.
Investing in the future of AIcompute
20%-40%
of the data centre power consumption relates
toconnectivity.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 53
ESG continued
Business ethics
Context
We work with leading-edge technologies and seek to establish
long-lasting relationships with our customers, partners and
suppliers.
Our Code of Ethics and Business Conduct guides:
> adherence to technical, ethical and commercial
requirements;
> protection of our intellectual property; and
> strict compliance with the national legislation of our host
societies, including relevant anti-bribery and corruption
laws.
Any breach of our legal obligations or our customers’
and partners’ trust has the potential to compromise our
business, either in terms of the loss of valuable commercial
relationships, loss of our reputation or the application of
official sanctions.
Management approach
Our Code of Ethics and Business Conduct addresses a range
of issues, including:
> respect for the individual;
> creating a culture of open and honest communication;
> ethical and fair competition;
> proprietary information;
> conflicts of interest;
> corporate record keeping;
> protection of the Company’s reputation; and
> selective disclosure.
For further information on our policies see
www.awavesemi.com. Our Code of Ethics and Business
Conduct is also available at www.awavesemi.com.
Our Code of Ethics and Business Conduct is directly informed
by international, industry and customer standards.
Responsibility for reviewing and updating the Code of Ethics
and Business Conduct sits with our Chief Financial Officer.
Below we set out some of the additional issues we actively
manage, in line with our corresponding policies.
Human and labour rights
Given the highly specialised nature of our industry, we believe
our supply chain has relatively low levels of slavery and human
trafficking risk. Our Policy Against Trafficking of Persons
and Slavery reflects our ongoing commitment to a work
environment that is free from human trafficking and slavery,
including forced labour and unlawful child labour. The Company
seeks to remain vigilant through compliance monitoring and
verification, especially in selecting new suppliers.
For further details on our Policy Against Trafficking of Persons
and Slavery see our website at www.awavesemi.com.
Anti-bribery and corruption
Compliance with global anti-bribery and corruption (ABC)
legislation is vital to our approach to business dealings
and forms the basis of our Anti-Bribery Policy. We uphold
all laws relevant to countering bribery and corruption in all
the jurisdictions in which we operate. However, we remain
bound by the laws of the UK, including the Bribery Act 2010,
in respect of our conduct both in the UK and abroad. Training
on this policy forms part of the induction process for all new
employees. Additionally, all employees are asked to formally
accept conformance to the policy on an annualbasis.
Responsibility for this framework sits with our Chief
FinancialOfficer.
For further details see our Anti-Bribery and Corruption Policy at
www.awavesemi.com.
Anti-fraud and dishonesty
Compliance with our Anti-Fraud and Dishonesty Policy
ensures transparency and accountability in how our
administrative processes are carried out and the decisions
we make. This policy includes topics such as fraud, theft and
abuse of position.
The Company seeks to foster honesty and integrity in its
entire workforce. Directors and staff are expected to lead by
example in adhering to policies, procedures and practices.
54 Alphawave IP Group plc | Annual report and financial statements 2023
Equally, customers and external organisations (such as
suppliers and contractors) are expected to act with integrity
andwithout intent to commit fraud against the Company.
The Company provides clear routes by which concerns
may be raised by Directors, employees and associates.
Forfurther details see our Anti-Fraud and Dishonesty
Policyatwww. awavesemi.com.
Whistleblowing
Employees or associates that suspect a potential issue
including bribery, facilitation of tax evasion, fraud or other
criminal activity, can report it to the confidential email address
ombudsman@awavesemi.com or by contacting the Senior
Independent Director. Employees or associated persons who
report such issues in good faith will be supported by the
Company. The Company seeks to ensure that the individual
is not subjected to detrimental treatment as a consequence
of his/her report and any instances of such behaviour will be
treated as a disciplinary offence. Our Whistleblowing Policy is
available to all employees.
In 2023 there was an incident reported through these
whistleblowing channels (2022: no incidents). TheCompany
engaged an independent third party to investigate the
accuracy of the reported incident. The report was determined
to be accurate and as a result the employment contract of one
of our employees was immediately terminated.
In addition, the Company is planning to introduce increased
background checks on contractors and third-party vendors.
Details can be found in the Company’s Anti-Bribery and
Whistleblowing Policy.
Overall responsibility for managing the risk of fraud sits with
the Chief Financial Officer. Day-to-day responsibility has been
delegated to the Senior Director of Group Finance who acts on
behalf of the Chief Financial Officer.
For further details or to receive a copy of the policy please
email info@awavesemi.com
Performance
In 2023, all new employees covered our Code of Ethics and
Business Conduct as part of their induction. In addition, during
the year, all employees were required to read and acknowledge
our key policies.
During the year we updated our Policy Against Trafficking of
Persons and Slavery and reviewed some of our key policies,
such as the Anti-Fraud and Dishonesty Policy and our
Anti-Bribery and Corruption Policy.
Focus areas in 2024
> Annual review of relevant policies.
> New Whistleblowing Policy.
> Review of additional training requirements.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 55
ESG continued
IT and cybersecurity
Key areas of focus in 2023
In 2023, our IT function successfully integrated our IT support
systems, following two major business acquisitions in Q4
2022. This will help ensure seamless service delivery across
our expanded enterprise. A major achievement was the
integration of applications, where we streamlined multiple
platforms into a unified suite, enhancing efficiency while
optimising our licensing framework. This effort not only
rationalised costs but also fostered a more cohesive user
experience.
Our efforts are managed by our IT Director, who oversees
a comprehensive, multidisciplinary programme involving
information security, IT and physical security. The IT Director
reports directly to the Senior Vice President, Engineering and
regularly updates our Board of Directors on our cybersecurity
performance and risk profile.
We have made significant progress on the integration of our
network. We implemented Zero Trust VPN and Magic WAN
products from Cloudflare, significantly enhancing our network
infrastructure. This strategic implementation not only reduced
costs and simplified operations but also enabled the Group
to enforce robust network firewall policies across our global
network, ensuring superior security and connectivity.
Central to our integration strategy was the implementation of
centralised authentication and Single Sign-On (SSO) solutions,
simplifying user access and further reinforcing security. In
2023, we also made considerable progress in safeguarding
our digital assets and improving our IT infrastructure.
These steps towards implementing a unified IT infrastructure
have significantly enhanced our operational resilience and
positioned us to leverage technology for scalable growth.
Overview of cybersecurity landscape –
management approach
Within our corporate security framework, Alphawave Semi
upholds a detailed set of policies for information security
management, aligned with the ISO/IEC 27001 standards.
In addition, our cloud-based Software-as-a-Service (SaaS)
applications are regularly audited to ensure adherence
to various standards covering aspects such as security,
availability, processing integrity, confidentiality and privacy.
We also engage in annual third-party penetration testing of
our business and customer networks, along with continuous
vulnerability scans of servers, applications, endpoints and
network equipment. Any vulnerabilities categorised as critical,
high or medium risks are addressed promptly. Moreover, we
play an active role in global and professional groups focused
on shaping future standards for a more secure, safe and
privacy-conscious digital environment, such as the Institute
ofElectrical and Electronics Engineers.
Group-wide Security policies and IT controls are regularly
reviewed and updated by the Security Council, which is
chaired by our IT Director. Our policies seek to address the
regulatory environment, including data privacy regulations,
and to mitigate the evolving cybersecurity threat.
All our existing policies and procedures are assessed regularly
by our external auditors, as well as third-party consultants.
Wemaintain cyber-liability insurance that covers certain
liabilities in connection with security breaches or related
incidents.
In 2023, Alphawave Semi did not experience any material
information security breaches (2022: zero). Wealso
addressed cybersecurity scenarios in our resiliency planning
and documented them through business continuity plans.
Our Incident Response Programme facilitates an integrated
response to potential cybersecurity events.
56 Alphawave IP Group plc | Annual report and financial statements 2023
Security training and awareness
We are committed to regularly improving our employees’
understanding and awareness of security and privacy
matters. This is in response to the rising number of
significant cyber-attacks, and with the aim of safeguarding
the confidentiality and security of our employees, customers
andother interested parties. This is achieved through:
> implementing regular, quarterly email phishing exercises
that encompass a large portion of our workforce, equipping
them with essential skills for cyber self-defence; and
> mandatory annual training sessions for all employees
on data security and privacy awareness. These sessions
include comprehensive coverage of topics such as
cybersecurity, phishing, data protection and privacy
concerns.
Focus areas in 2024
> Formation of a dedicated Security team.
> Rollout of a new enterprise system.
In 2024, we plan to establish a dedicated team at the
forefront of our cybersecurity initiatives, focusing on
enhancing compliance and IT controls. Their expertise
and specialised focus will enable us to implement
more robust security measures, conduct in-depth
risk assessments and respond more effectively to
potentialthreats.
This is aligned with our broader goal of ensuring the
highest levels of data protection and network security,
thereby maintaining the trust and confidence of our
clients and stakeholders.
We believe that these enhancements in our cybersecurity
framework will significantly contribute to the resilience
and success of our organisation in the digital era.
Our new Security team
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 57
ESG continued
Community engagement
Context
2023 was the second year of our community engagement
programme. As an organisation, it is important to us that we
engage with the communities in which we operate.
Our corporate giving programme provides additional support
by matching employee donations to local charities and
organisations.
Our community engagement activities seek to improve the
welfare of the communities where we work and live.
This programme creates a platform for our employees
to donate their time and support to a range of local and
not-for-profit organisations that are of interest to them.
Management approach
Our Community Involvement Global Council includes local
representatives from all our locations, who meet remotely on
a bi-monthly basis. The purpose of the Global Council is to
ensure that local engagement is aligned with our principles
and values, to co-ordinate Group-wide initiatives and to share
experiences.
Responsibility at Group level sits with our Global Facilities
Manager who is part of the People, Places and Culture
function.
The goal of our community engagement programme is to
support local and not-for-profit organisations that are of
interest to our employees, promote the wellbeing of local
residents and align with our corporate values, such as
Inclusivity, Integrity and Collaborative (more information on
our Culture is on page 4).
Key initiatives
In 2023, the Company donated approximately US$37,000
globally to support local organisations and charities
(FY2022:US$30,000).
Additionally, our internship programmes in India and Canada
work with local universities and organisations to make a
positive contribution to the promotion of science, technology,
engineering and mathematics (STEM) education and careers
in engineering. The objective of this effort is to support the
next wave of innovators and expanding the talent pipeline.
Formore information see the Our People section.
In 2023 we rolled out Keen to Help, an external platform
through which our employees can request and search for
volunteer opportunities that are aligned with our Company
values and community engagement programme goals.
In 2023, we also hosted our second ‘bring your kids to work’
day in Toronto and Ottawa. As in the prior year there were
multiple creative activities with a link to science.
Alphawave Semi is partnering with the Dream School
Foundation (DSF) in India, providing educational support to
unprivileged children. Alphawave Semi and DSF initiated a
new and effective programme named TYDE (Transformation
Youth Development Engagement). Thisprogramme supports
high school and college-going students and helps in their
all-round development.
Forward focus areas in 2024
> Track number of volunteering hours focused on community
engagement activities.
> Assign country-specific community engagement budgets.
> Encourage employee participation through online tools that
facilitate volunteering.
58 Alphawave IP Group plc | Annual report and financial statements 2023
Alphawave Semi has partnered with the DSF in India,
which provides educational support to underprivileged
children. The DSF strives to break the cycle of
socio-economic vulnerability faced by children and their
families, and help them to help themselves through the
power of education. It helps children and parents travel
the path from ‘schools to livelihood’.
Through TYDE we support students from
socio-economically disadvantaged families. It helps
students gain technological knowledge and skills.
Alphawave Semi not only provides financial support
but has been involved in the planning and design of
the infrastructure and the selection of the equipment
required. Our volunteers provide intensive mentoring and
coaching as well as providing other support to students.
Alphawave Semi partnering with the Dream
School Foundation in India
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 59
Non-financial information and sustainability statement
The Group complies with the non-financial reporting requirements in sections 414CA and 414CB
of the Companies Act 2006. In 2023 we joined the UNGC. In this report we have mapped our
business outputs and efforts to the United Nations Sustainable Development Goals (UN SDGs)
and we aim to continue to focus our efforts on those goals. Our approach to SDG mapping is set
out on pages 36 and 37.
Reporting
requirements
Policies and standards
that inform our approach
Outcomes
ofthepolicies
> Environmental Compliance Policy (Supply Chain). Page 50
Environmental
matters
Pages 44 to 48
Appendix
> TCFD framework.
> Companies Act climate-related financial disclosures.
TCFD and
Companies Act
climate-related
financial
disclosures
Our People and culture,
pages 38 to 43
> Code of Ethics and Business Conduct.
> Our culture and values.
> Country-specific HR policies.
Employees
Social matters
Societal benefits including
community engagement
on pages 58 and 59
> ESG Policy.
Human rights
Our People, pages 38 to 43;
Supply Chain,
pages49and50
> Code of Ethics and Business Conduct.
> Equal Opportunities and Dignity at Work Policy.
> Right to Disconnect Policy.
> Workplace Violence, Harassment and Discrimination Policy.
> Accessibility Plan (Canada).
> Policy Against Trafficking of Persons and Slavery.
> Conflict Free Minerals Sourcing Policy (website).
> ISO 9001:2015 (supply chain; website).
60 Alphawave IP Group plc | Annual report and financial statements 2023
Reporting
requirements
Policies and standards
that inform our approach
Outcomes
ofthepolicies
Pages 56, 57 and 74 > Confidential Information and IP Policy.
> IT Disaster Recovery Plan.
> IT Incident Management Policy.
> Risk Management Policy.
We recognise our social responsibility to pay tax in the jurisdictions in which we operate. We act with
full transparency and integrity in all of our tax matters and our tax planning supports our commercial
activities. We are committed to remaining compliant with all applicable tax laws and practices.
Principal risks
and uncertainties
Tax strategy
> N/A. Business Model
pages14to17
Business model
Managing our resources and
relationships, page34
> SASB.
> UNGC.
> UN SDGs.
Non-financial
KPIs
Anti-corruption
and anti-bribery
Business Ethics,
pages 54 and 55
> Code of Ethics and Business Conduct.
> Policy Against Trafficking of Persons and Slavery.
> Anti-Bribery Policy.
> Anti-Fraud and Dishonesty Policy.
> Anti-Money Laundering Policy.
> Whistleblowing Policy.
> Conflict Free Minerals Sourcing Policy (website).
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 61
KPIs
Employee turnover (%)
Link to strategy:
Description:
Number of voluntary leavers in the last twelve months
divided by the average headcount during that period
expressed as a percentage. Monitoring our ability to recruit
and retain experienced engineering and commercial
professionals is vital given the strong competition for skills
in the sector, ageing population and our business growth
ambitions.
Performance:
Turnover in 2023 was 7% compared to 10% in 2022
and 7% in 2021. Due to the acquisitions in 2022, data
for India and Israel was included from 1 September
and 13October 2022, respectively. Our ability to recruit
and retain engineering professionals remained high.
TheCompany has a performance management system to
ensure we reward our best employees through appropriate
mechanisms.
Non-financial
2023 7%
2022 10%
2021 7%
Engineering R&D
1
(%)
Link to strategy:
Description:
Number of employees working in research and
development and related functions as a percentage of total
employees as of the end of the reporting period expressed
as a percentage. This KPI provides a snapshot of our
engineering talent and our capacity for innovation, which
isa key component of our strategy.
Performance:
In 2023, the percentage of employees working in research
and development remained stable at 89% (FY 2022: 89%).
FY 2022 included R&D employees who joined the business
through the acquisitions of Precise-ITC, OpenFive and
BaniasLabs.
2023 89%
2022 89%
2021 87%
Through our KPIs we monitor our sales and financial performance, as well as our pool of talent,
as it is vital for a business built on innovation. These KPIs allow us to track our performance
against our long-term objectives.
1. Headcount numbers throughout the report exclude interns. In FY 2021 there were five interns who were previously reported as R&D headcount.
Technology leadership
Expansion
Innovation
62 Alphawave IP Group plc | Annual report and financial statements 2023
Our key performance indicators seek to ensure performance is aligned with our strategy as well
as the key interests of our stakeholders. Additionally, the Company works with a wide range of
metrics covering different aspects of our business activities.
Bookings
1
(US$m)
Link to strategy:
Description:
Bookings are a non-IFRS measure representing legally
binding and largely non-cancellable commitments by
customers to license our technology. Our bookings
comprise licence fees, non-recurring engineering support
and, in some instances, our estimate of potential future
royalties. A portion of our bookings may not convert to
revenue if those royalties do not materialise or customers
are unable to pay us.
Performance:
In 2023, bookings were up 68% over the prior year
(FY2022: US$228.1m). The combined bookings from
North American, EMEA and APAC customers represented
75% of the Group bookings in 2023 (FY 2022: 61%). China
represented 7% of the licence and NRE bookings in FY
2023 (FY2022: 10%). In 2021 we signed two multi-year
subscription deals adding up to US$147.8m.
2023 US$383.9m
2022 US$228.1m
Backlog excluding royalties (US$m)
Link to strategy:
Description:
Backlog is a non-IFRS measure representing our bookings
less revenues recognised to date. Itrepresents the revenue
that we expect to collect in future years based only on our
existing and legally binding orders. As new bookings are
secured, our backlog will increase and as existing bookings
are recognised as revenue, our backlog will decrease.
Performance:
Backlog, excluding royalties, decreased by 7%. This was
mainly driven by adjustments and bookings cancellations
of approximately US$87m. Nearly half of the adjustments
and bookings cancellations were part of the backlog
acquired through OpenFive of which over US$100m had
not been recognised at the end of 2022.
2023 US$354.9m
2022 US$379.7m
2021 US$168.6m2021 US$244.7m
1. Including estimates of potential future royalties totalling US$15.1m in FY 2022 and US$24.0m in FY 2021. Royalties are estimated based on contractually
committed royalty pre-payments on commencement of customer silicon shipments or, in limited instances, on sensitised volume estimates provided by
customers.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 63
KPIs continued
End-customers
Link to strategy:
Description:
End-customers is a non-IFRS measure representing the
number of unique end-customers that we recognise
revenue from, and are therefore actively engaged with,
during the year. Winning new customers reflects our ability
to execute against our strategy and continue to innovate.
Performance:
Through organic growth and acquisitions we
significantly increased the number of revenue-generating
customers over the last three years. The number of
revenue-generating end-customers increased from 80 in
FY 2022 to 103 in FY2023. During the year we also won
repeat business from many of our customers.
Non-financial continued
2023 103
Financial
2022 80
2021 20
Revenue (US$m)
Link to strategy:
Description:
Our revenue is an IFRS financial measure and
demonstrates our ability to execute against our bookings.
For our licence bookings, our revenue is primarily
recognised on a percentage of completion basis as we
execute against contractual milestones. Ourcontracts are
highly negotiated and invoicing and cash collection may
lead or lag revenue recognition.
Performance:
We delivered 74% revenue growth in FY 2023, driven
largely in China and North America. This was the result of
organic growth as well as the revenue contribution from the
acquisition of OpenFive.
2023 US$321.7m
2022 US$185.4m
2021 US$89.9m
Technology leadership
Expansion
Innovation
64 Alphawave IP Group plc | Annual report and financial statements 2023
Adjusted EBITDA
1
(US$m) and margin
Link to strategy:
Description:
Adjusted EBITDA is a non-IFRS financial measure
defined as the Group’s earnings before interest, taxation,
depreciation and amortisation, adjusted to remove
share-based payment charges and non-recurring operating
expenses such as IPO-related costs (in 2021) and advisory
costs associated with acquisitions. Adjusted EBITDA is
reconciled in note 4 Alternative performance measures
(APMs).
Performance:
Adjusted EBITDA increased by 34% in FY 2023, driven
mainly by the increase in revenue growth and higher
operating expenses related to the higher headcount and
scale-up our operations to support future revenue growth.
Adjusted EBITDA margin was below FY 2022 at 19%.
2023 US$62.6m 19%
2022 US$46.8m 25%
2021 US$51.8m 58%
1. Adjusted EBITDA excludes IPO-related non-recurring costs, foreign exchange adjustments, share-based payments, M&A transaction expenses and one-time
legal fees associated with WiseWave. See Alternative Performance Measures section.
2. FY 2022 has been restated to reflect the finalisation of the purchase price allocation on the acquisition of OpenFive (see notes 12 and 30).
Cash generated from operations
2
(US$m)
Link to strategy:
Description:
Cash generated from operations is a IFRS financial
measure and demonstrates our ability to convert operating
profit into cash. Pre-tax operating cash flow is based on
our pre-tax profit, adding back non-cash items, such as
depreciation, and reflecting changes in our workingcapital.
Performance:
In FY 2023 cash generated from operations was
US$25.5m compared to US$1.0m in FY 2022 (restated).
In 2022 there were one-time payments of approximately
US$6.0m relating to M&A and professional fees and
included US$28.2m of cash outflows related to deferred
compensation payable as part of the acquisitions of
Precise-ITC and Banias.
2023 US$25.5m
2022
2021 US$26.5m
US$1.0m
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 65
Financial review
Investing in future revenue growth
In 2023 we consolidated the teams and technologies we
acquired in 2022 and became a vertically integrated global
semiconductor company. Alphawave Semi is one of the few
companies in the world bringing a full portfolio of connectivity
IP for AI and digital infrastructure.
Building on the strength of our technology portfolio, we
have successfully transformed our custom silicon pipeline
to a higher margin business focused on AI and data centre
solutions in advanced nodes. Our connectivity solutions
meet the increasingly complex bandwidth, latency and power
requirements critical to support the adoption of artificial
intelligence. With our enhanced product portfolio and
silicon expertise, we can access a larger and high-growth
addressable market of approximately US$18bn by 2026,
gaining greater scale and enhancing our competitive position.
During this transition year, we achieved record bookings of
US$383.9m. 71% of these bookings came from IP licencing
and advanced node custom silicon NRE contracts with North
American, European and APAC (non-China) customers.
Theremaining 29% came from the legacy lower margin
business we acquired in 2022. The custom silicon contracts
that we signed in 2023 give us visibility to a potential lifetime
revenue from silicon production of approximately US$500m,
which is not yet reflected in our bookings or backlog.
Firstsilicon production orders from these contracts are
expected in 2025.
Our financial performance was below our guidance for the
year both on revenue and adjusted EBITDA, mainly due to our
accelerated transition away from our legacy custom silicon
business in China and the timing of revenue recognition
on long-term contracts in advanced nodes combined
with our continuing investment in advanced research
and development. Revenue grew 74% year-on-year from
US$185.4m to US$321.7m and we delivered an adjusted
EBITDA margin of 19%, down 6% from 2022.
In 2023 we expensed US$78.2m in the development
of products which will go into production in future years and
will contribute to accelerated revenue growth over the medium
term. The strong investment in our new opto-electronic
products and future revenue growth is reflected in the lower
cash and cash equivalents balance at the end of 2023 of
US$101.3m (compared with US$186.2m at the end of 2022).
2024 will be another year of growth for the Group as we
lay the foundations towards our longer-term strategic and
financial targets. I am confident that with prudent financial
management and the successful execution of our product
roadmaps and customer engagements we are on track to
become the next great global semiconductor company.
In 2023 we delivered another
year of strong revenue
growth, up 74% and continued
to invest in our leading-edge
engineering capabilities.
As a vertically integrated
business we are well
positioned to benefit from
thelong-term investment in
AIand digital infrastructure.
Tony Pialis
Chief Executive Officer
66 Alphawave IP Group plc | Annual report and financial statements 2023
Contracted order book and backlog
2023 bookings totalled US$383.9m, of which
US$274.0m represented IP licensing and NRE orders and
US$109.9m represented royalty and silicon orders. This
compares to US$228.1m of total bookings in 2022. Bookings
grew 68% year-on-year, comprising 109% growth in licensing
and NRE orders and 14% growth in royalty and silicon orders.
The performance in our royalty and silicon orders was driven
by silicon orders in our custom silicon group following the
acquisition of OpenFive.
North America was the largest contributor to bookings in
2023, representing 34% of the total. It was followed by 25%
from China, 21% from APAC and 20% from EMEA excluding
China. Our China bookings in the period were largely driven by
custom silicon orders from customers acquired through the
acquisition of OpenFive.
Backlog represents the value of contracted bookings
over the life of the Group not yet recognised as revenue,
excluding potential royalties. At the end of 2023, our backlog
was US$354.9m, 7% lower than the backlog at the end of
2022 of US$379.7m. Backlog reduced year-on-year due to
adjustments of US$87.3m, of which nearly half came fromthe
backlog acquired with OpenFive.
Revenues
Revenues for 2023 reached US$321.7m, 74% growth
compared to US$185.4m in 2022:
> customers – in 2023, we recognised revenues from 103
end-customers, compared to 80 end-customers in 2022.
This included new tier-one customers licensing our IP as
well as legacy customers acquired in 2022. End-customer
revenue concentration marginally decreased during the
year. Our top five end-customers generated 46% of our
2023 revenues (2022: 47%) or 42% excluding revenues
from the WiseWave subscription deal (2022: 39%); and
> regions – in addition to WiseWave and VeriSilicon, the
contribution in 2023 from China (59%) was driven by legacy
custom silicon business. Absent this, our regional mix
was comparable to 2022. Over the long term, as silicon
product revenues ramp with hyperscalers and other large,
predominantly North American, customers, we expect
the mix of China revenues to gradually decrease to 10%
ofsales or lower.
North American revenues grew 60% from US$51.4m
in 2022 to US$82.2m in 2023, and APAC (excluding China)
revenues grew 97% from US$17.0m in 2022 to
US$33.5m in 2023. We also saw EMEA revenue grow 28%
from US$12.3m in 2022 to US$15.7m in 2023.
We recognised a small amount of royalty revenue in 2023
based on early production volumes from a specific customer.
Given the long design cycles at our customers, we expect
royalties to gradually increase and contribute to earnings in
the medium term. Further, as we seek to monetise our IP
through silicon and achieve greater revenue scale and higher
absolute earnings, we expect the contribution from IP royalties
to be less significant to our Group results.
Income Statement
IFRS Adjusted
US$m 2023 2022 2023 2022
Revenue 321.7 185.4 n/a n/a
Cost of sales (156.4) (60.8) n/a n/a
Gross profit 165.3 124.6 n/a n/a
Gross margin 51% 67% n/a n/a
EBITDA 9.8 49.3 62.6 46.8
EBITDA margin 3% 27% 19% 25%
Operating (loss)/profit (19.4) 37.6 n/a n/a
Operating margin (6%) 20% n/a n/a
(Loss)/profit before tax (39.5) 17.2 n/a n/a
Net (loss)/profit (51.0) (1.1) 11.3 6.7
Basic EPS (US$ cents) (7.23) (0.16) 1.59 0.98
Diluted EPS (US$ cents) (7.23) (0.16) 1.59 0.98
Cash generated from
operations 25.5 1.0 n/a n/a
1. For definitions of non-IFRS measures see KPIs on page 62 and alternative performance measures section on page 186.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 67
Financial review continued
Adjusted EBITDA
Year ended 31 December
US$m
2023
US$m
2022
US$m
Net loss (51.0) (1.1)
Add/(deduct):
Finance income (3.4) (1.7)
Finance expense 8.8 3.6
Loss from joint venture 14.7 18.5
Income tax expense 11.5 18.3
Depreciation and amortisation 29.2 11.7
EBITDA 9.8 49.3
Add/(deduct):
Acquisition-related costs 0.7 12.7
Compensation element of Banias
deferred cash rights
8.4 1.7
Remeasurement of contingent
consideration payable for Precise-ITC
0.0 4.2
Share-based compensation expense 40.7 15.7
Currency translation loss/(gain) 3.0 (36.8)
Adjusted EBITDA 62.6 46.8
Operating expenses and profitability
Gross margin in 2023 was 51%, with cost of sales
primarily reflecting silicon manufacturing costs and custom
silicon development costs, as well as sales and reseller
commissions on IP sales. In 2022, gross margin was 67%,
driven predominantly by our IP business before acquisitions.
Grossmargin in 2023 reflects the diversification of our
business into custom silicon development and silicon
products. Through the acquisition of OpenFive, we inherited
a number of contracts where gross margins are below our
Group targets.
EBITDA
1
in 2023 was US$9.8m (3% margin) compared
to US$49.3m in 2022 (27% margin). On an adjusted basis,
EBITDA in 2023 was US$62.6m (19% margin) compared to
US$46.8m (25% margin) in 2022. The decrease in adjusted
EBITDA margin reflects the early stage of our migration to a
combined IP licensing and silicon business model through our
acquisitions and the scaling of our engineering capabilities.
Adjusted EBITDA was below our guidance for 2023. This was
driven by a combination of low-margin silicon sales from
legacy OpenFive contracts and increased investment in R&D
activities.
Reflecting the continued scaling of the business and our
acquisitions, operating expenses in 2023 were US$184.7m
compared to US$87.0m in 2022.
Research and development (R&D) expenses in 2023
were US$78.2m (24% of revenue) compared to US$69.4m
(37% of revenue) in 2022. In 2023, R&D expenses included
US$12.7m amortisation of acquired intangibles (US$5.5m in
2022). In 2023 we capitalised US$54.5m related to our own
product development activities, compared to $7.2m in 2022,
the increase reflecting the growth in investment in our own
product development.
Sales and marketing (S&M) expenses in 2023 were
US$12.8m (4% of revenue) compared to US$4.6m (3% of
revenue) in 2022.
General and administrative (G&A) expenses in 2023
were US$40.8m (13% of revenue) compared to US$15.5m
(8% of revenue) in 2022. G&A expenses in 2023 included an
expected credit loss of US$7.3m based on our assessment
of our potential credit loss on overdue invoices and accrued
revenues (US$2.2m in 2022). Excluding this, our G&A
expenses for 2023 were US$33.5m, or 10% of revenue
(US$13.3m, or 7% of revenue in 2022).
The year-on-year increase in R&D, S&M and G&A expenses
was primarily due to the increase in headcount from 695
full-time employees at end 2022 to 829 at end 2023, together
with associated software tool costs which scale with our R&D
headcount. In addition, we invested in our support functions
and continue to scale our finance, HR, legal and corporate
marketing teams, reflecting the increased complexity and
geographical spread of the Group to support our transition to
a vertically integrated semiconductor company.
In the medium term, we anticipate modest growth in our
headcount as we address the opportunities ahead.
Other expenses in 2023 totalled a US$52.9m. Share-based
payment costs of US$40.7m in 2023 reflect our increased
headcount, as well as one-time grants awarded to new
members of the senior management team who joined us in
2023 and the payment of the 2023 employee bonus in shares
rather than in cash. Exchange losses in 2023 were US$3.0m.
US$8.4m of other expenses in 2023 related to deferred cash
rights for the former Banias Labs employees.
Other expenses in 2022 totalled a credit of US$2.5m,
comprising M&A and professional costs of US$12.7m
related to the acquisitions and the debt funding, US$15.7m
share-based payment costs, US$1.7m of deferred cash rights
for the former Banias Labs employees and US$36.8m of
exchange gains.
Operating loss was US$19.4m in 2023, compared to
an operating profit of US$37.6m in 2022 and reflected
the decrease in gross margin and increases in operating
expenditures described above.
1. For definitions of non-IFRS measures see KPIs on page 62 and alternative performance measures section on page 186.
68 Alphawave IP Group plc | Annual report and financial statements 2023
Finance income in 2023 was US$3.4m, compared to
US$1.7m in 2022. The increase was largely driven by cash
balances being invested in interest-bearing accounts and
higher interest rates.
Finance expense in 2023 was US$8.8m, higher than the
US$3.6m in 2022 due to interest associated with the five-year
Term Loan obtained in October 2022. US$9.5m of finance
expense was capitalised in 2023 as it related to qualifying
intangible assets.
Share of the post-tax loss of equity-accounted joint
ventures was US$14.7m in 2023, compared to US$18.5m
in2022.
At the end of 2023, the Group owned 42.5% of WiseWave
(compared to 42.5% at the end of 2022), a company
established in China in Q4 2021 to develop and sell silicon
products incorporating silicon IP licensed from the Group.
Weequity account for the investment as a joint venture,
resulting in a US$14.7m loss in 2023 (US$18.5m loss in
2022). The five-year subscription licence agreement is being
capitalised and amortised over the life of the agreement by
WiseWave.
Tax expense in 2023 was US$11.5m, being 29% of loss
before tax of US$39.5m.
In 2023 we incurred a net loss of US$51.0m compared to
US$1.1m loss for the year in 2022.
On an adjusted basis, net profit in 2023 was US$11.9m,
compared to US$6.7m in 2022.
The exchange gain of US$10.2m in other comprehensive
income is predominantly a result of the Company, a
GBP-denominated entity, having net assets translated into
USD, our presentational currency. This is re-translated again
for presentational purposes into USD at the year end.
Balance sheet, liquidity and cash flow
At the end of 2023, we held US$101.3m in cash and cash
equivalents and had borrowings of US$220.4m, comprising
a Revolving Credit Facility of US$125.0m, a Term Loan of
US$93.8m and other long-term borrowings of US$1.6m.
During 2023, our net debt position increased from US$24.0m
to a net debt position of US$119.1m as we continued to invest
in our business.
During 2023 current trade and other receivables increased
from US$47.1m to US$75.6m. This change was primarily due
to timing of advance payments to foundries to reserve fab
capacity and other prepayments.
Contract assets, where revenue recognition conditions are
met under IFRS 15, but we have not billed or collected any
amount, increased from US$57.0m at the end of 2022 to
US$65.2m at the end of 2023. This increase was a function
of our revenue growth and the timing of invoicing milestones
on specific contracts, primarily for our IP sales. WiseWave
accounted for US$42.4m of the contract asset balance at the
end of 2023 (2022: US$16.8m).
At the end of 2023 we held physical inventory of silicon
devices with a value of US$11.6m (2022: US$18.1m).
Thedecrease reflects the fulfilment in 2023 of a large
numberof silicon orders booked in 2022.
Current income tax receivables increased from US$2.9m
in 2022 to US$23.5m in 2023 and other current assets
decreased from US$71.5m in 2022 to US$19.0m in 2023.
The significant decrease in other current assets came from
a reduction in prepayments which were unusually high at the
end of 2022 due to payments made to foundries for silicon
production that occurred in 2023.
We ended 2023 with aggregate goodwill of US$309.2m from
the acquisitions of Precise-ITC, OpenFive and Banias Labs.
Aggregate goodwill has decreased from our provisional
estimate of US$331.9m in 2022, following the finalisation of
the purchase price adjustment for OpenFive and Alphawave
Semi making a Section 338 election which allowed the
OpenFive acquisition to be treated as an asset deal for
US tax purposes. US$10.3m of the decrease in goodwill
relates to the Section 338 election which reduced deferred
tax liabilities by US$15.9m and increased consideration by
US$5.6m. US$12.4m of the decrease in goodwill relates to the
finalisation of the arbitration process to determine the final
consideration due for the OpenFive acquisition.
At the end of 2023 the carrying amount of other intangible
assets was US$203.3m (2022: US$161.4m). This balance
is primarily due to the technology and IP acquired with
OpenFive and Banias Labs and the capitalisation of our
owndevelopment expenditure.
Owned property and equipment increased from US$13.4m
at the end of 2022 to US$20.7m at the end of 2023 due
to increased expenditure on laboratory equipment and
prototyping. Leased property and equipment increased
slightly from US$14.6m at the end of 2022 to US$15.3m
attheend of 2023.
Investments in equity-accounted associates, namely the
value of the investment in WiseWave, remains US$nil, as a
result of equity accounting for losses at WiseWave during
the period. The value of the cumulative losses incurred by
WiseWave exceeds the cumulative value of our investment
into the business. In 2023 we invested US$1.0m in an Israeli
semiconductor company.
During 2023, current trade and other payables decreased from
US$88.7m to US$69.3m. This decrease was predominantly
due to timing differences of payments to vendors.
Contract liabilities, where we have invoiced or received money
for products or services where revenue recognition conditions
are not met, decreased from US$96.9m at the end of 2022
to US$56.0m at the end of 2023. This decrease was due to
the high order intake for custom silicon products at the end
of 2022 where customers were required to make advance
payment ahead of silicon being shipped to them in the first
half of 2023.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 69
Summary balance sheet
US$m 31 December 2023
Restated
1
31 December 2022
Assets
Cash and cash equivalents 101.3 186.2
Other current assets 194.9 196.6
Total current assets 296.2 382.8
Goodwill 309.2 309.2
Other intangible assets 203.3 161.4
Other non-current assets 45.8 47.2
Deferred tax assets 12.1 2.7
Total non-current assets 570.4 520.5
Total assets 866.6 903.3
Liabilities and equity
Total current liabilities 136.6 194.4
Loans and borrowings 214.8 205.2
Other non-current liabilities 46.7 35.5
Total non-current liabilities 261.5 240.7
Total liabilities 398.1 435.1
Total equity 468.5 468.2
Total liabilities and equity 866.6 903.3
1. Restated to reflect the finalisation of the purchase price allocation on the
acquisition of OpenFive (see notes 12 and 30).
Balance sheet, liquidity and cash flow
At the end of 2023, our current and non-current loans and
borrowings were US$220.4m, an increase of US$10.2m from
2022 as a result of drawing down an additional US$15.0m
against the revolving credit facility and repayments of the
termloan principal.
In 2023, we generated cash from operations of US$25.5m
compared with US$1.0m in 2022. In 2022 there were
one-time payments of approximately US$6.0m relating to
M&A and professional fees. Also, our operating cash flow
in 2022 included US$28.2m of cash outflows related to
deferred compensation payable as part of the acquisitions
ofPrecise-ITC and Banias. These are attributable to payments
made as part of the acquisitions that do not represent
consideration, but are classified as compensation payments
in lieu of share-based remuneration or payments conditional
on continued employment with the Group. These payments
are included within working capital. Excluding these, our
operating cash flow before tax in 2022 was US$29.2m.
Working capital in 2022 decreased by US$50.1m, compared
to a decrease of US$41.7m in 2023. The decrease in working
capital in 2023 was primarily due to an increase in trade and
other receivables and a decrease in contract liabilities, offset
by an increase in trade and other payables.
Income tax paid in 2023 was US$9.7m, compared to
US$19.9m in 2022.
In 2023, the Group generated a cash inflow from operating
activities of US$15.8m, compared to a cash outflow of
US$18.9m in 2022, due to increased cash generation from
operations and lower tax payments in 2023.
Capital expenditure during 2023 totalled US$73.6m
(2022: US$15.5m), comprising US$18.6m of property and
equipment (2022: US$4.2m), US$1.8m of intangible assets
(2022: US$4.1m) and US$53.3m of capitalised development
expenditure (2022: US$7.2m). US$6.9m of property and
equipment relates to purchases of lab and test equipment
which grew from US$0.1m in 2022 as we ramp our own
product development capabilities.
Financial review continued
70 Alphawave IP Group plc | Annual report and financial statements 2023
In 2023, we also made further equity investments into
WiseWave totalling US$14.7m, with Wise Road Capital
contributing US$19.9m. As disclosed in our IPO Prospectus,
Alphawave Semi has the ability to invest up to US$170m in
total into WiseWave, although our expectation is that any
future investment will continue to be limited. We are seeking
to exit our equity investment in WiseWave in 2024 but we will
time this exit based on market conditions to maximise return
to shareholders.
During the second quarter of 2023, the Group’s Fixed Charges
Coverage Ratio (FCCR), one of the covenants in its borrowing
arrangements, was below the minimum allowed ratio of
1.25x, principally due to a higher working capital requirement
as a result of a significant reduction in contract liabilities,
a higher proportion of lower margin silicon revenue at the
beginning of the year and increased investment in research
and development activities, as anticipated, as the Group
invests in its own products business. On 22 September 2023,
we established an amendment to the Credit Agreement with
the lenders which suspended the FCCR ratio for the period
from the quarter ended 30 June 2023 to the quarter ending
30June2024, after which it is set at 1.1x until the quarter
ending 30 September 2025 when it reverts to 1.25x. As we
continue to invest in growth and scale, we continue to closely
monitor our cash flow to ensure we maintain full compliance
with our debt covenants.
The Company’s capital allocation policy remains focused on
investment in own product development and prototyping,
critical hires and expertise to support growth opportunities,
and management of our debt position in a changing interest
rate environment. We do not intend to pay dividends or
make significant acquisitions in the short or medium term.
We continue to review our capital allocation framework and
available sources of capital to support our long-term growth
strategy.
Finally, as further detailed on page 140, the Directors have
adopted the going concern basis of accounting.
Summary cash flow
US$m 31 December 2023
Restated
1
31 December 2022
Cash generated from
operations before changes
inworking capital 67.3 51.0
Changes in working capital (41.7) (50.1)
Cash generated from
operations 25.5 1.0
Taxes paid (9.7) (19.9)
Cash flow from operating
activities 15.8 (18.9)
Capital expenditure (73.6) (15.5)
Investment in joint venture (14.7) (9.1)
Purchase of businesses (7.4) (403.6)
Drawdown of loans and
borrowings 15.0 210.0
Interest paid (18.4) (0.7)
Interest received 3.1 1.3
Other cash flows (8.6) (3.4)
Net decrease in cash
andcashequivalents (88.8) (239.9)
Cash and cash equivalents
atthe beginning of the year 186.2 501.0
Currency translation gain/(loss)
on cash and cash equivalents 3.9 (74.9)
Cash and cash equivalents
atthe end of the year 101.3 186.2
1. Restated to reflect the finalisation of the purchase price allocation on the
acquisition of OpenFive (see notes 12 and 30).
Tony Pialis
Chief Executive Officer
23 April 2024
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 71
In assessing the Group’s prospects, the Directors have
considered the recent financial performance, the current
financial position and the Group’s strategy, business model
and principal risks and uncertainties.
The Group’s viability and prospects are primarily assessed
on the basis of the Group’s strategic planning process, which
includes a bi-annual review of quarterly revenues, profitability
and cash flow over three years. The budgeting and planning
process is led by the Chief Executive Officer and the Chief
Financial Officer along with the relevant group function leads.
Financial year 2024 is based upon the Group’s budget.
Financial years 2025 and 2026 are based on extrapolation
of operating expenses and key balance sheet and cash
flow ratios, with revenue estimates based on the same
methodology as our budgeting process. Our revenue
forecasting is based on order intake across different
product lines and contract types with revenue recognition
assumptions based on a range of sensitivities including timing
of IP delivery and key ASIC development milestones.
Our funding position is considered in terms of our liquidity
headroom and compliance with debt covenants.
In considering the viability prospects of the Group, the
Directors have had regard to the following characteristics of
the business:
> Alphawave is a fast-growing semiconductor business
with tier-one customers, a high level of repeat customer
business and a strong order backlog, including multi-year
contractual commitments from customers;
> our customers include many of the largest technology and
semiconductor companies in the world and each contract
for IP or ASIC design services is typically worth several
million US dollars over the life of the contract;
> our own-products business is in its infancy and requires
ongoing investment to secure significant future revenue
growth; and
Viability Statement
As required by the UK Corporate Governance Code, the Directors have
assessed the viability and prospects of the Group over an appropriate
period,significantly longer than twelve months from approval of these
financial statements.
> the business is undergoing a transformation from a pure IP
business to a vertically integrated semiconductor company
and is transitioning its acquired ASIC business to chip
designs in leading-edge manufacturing nodes.
Viability assessment period
The Directors have determined that a period of three years
over which to assess the Group’s longer-term viability is
appropriate and reasonable based on the following:
> it aligns with the Group’s internal strategic planning
process;
> it sufficiently accommodates the Group’s evolving financial
profile and appropriately models the ongoing impact of the
Group’s acquisitions, including the near-term period as the
Group transitions from some of the lower margin legacy
business from the OpenFive acquisition; and
> a period in excess of three years is regarded as less
meaningful in view of the rapid evolution of the Group,
nascency of the Group’s own product offering and the fast
pace of the market environment.
Assessment of viability and
scenariosmodelled
The Directors’ assessment of viability builds upon the analysis
performed to support the going concern assessment and
incorporates additional scenarios, regarded as severe or
extreme but plausible, that may be encountered over the
three-year assessment period. These scenarios are intended
to quantify the potential impact of one or more of the
Group’s principal risks and uncertainties, as set out on pages
74to77, materialising over the three-year assessment period.
Whileeach principal risk and uncertainty has been considered
as part of this assessment, we have only considered those
that represent a severe but plausible scenario.
72 Alphawave IP Group plc | Annual report and financial statements 2023
We have modelled the two stress test scenarios below. Our scenario modelling does not consider a range of additional
measures, including further significant reductions in operating expenses or additional financing, which management could
implement to mitigate against a severe reduction in revenues. Both scenarios assume that no discretionary employee bonuses
would be paid and that our term loan and revolving credit facility are settled in full on their maturity in Q4 2027.
Scenario modelled
1. 25% reduction in revenues and increase in borrowingcosts
We have modelled all revenue streams reducing by 25% from our base case plan over the
assessment period.
We assume that operating expenditures are reduced by 20% and expenditure on lab
equipment and prototyping is reduced by 50% to mitigate the reduction in revenues.
Interest on our debt is assumed to increase by 200 basis points from the start of the
assessment period.
We assume no further investment in WiseWave and no sale of our stake in WiseWave
during the assessment period.
> Managing our growth.
> Competition and
failure to maintain our
technology leadership.
> Customer
dependence.
> Customer demand.
Principal risks
included
In each of these scenarios, the Group is forecast to have sufficient resources to continue to meet its liabilities as they fall due
without recourse to further cost saving actions. In reality, as highlighted above, the Group would have numerous additional
options available to maintain its financial position. When the scenarios are combined, Group revenues would almost halve
from 2024 to 2027. In such a situation, it would be reasonable to assume the Group would take further actions to reduce
costs, commensurate with the reduction in revenues. Under the combined scenario, assuming a mitigating action of reducing
operating expenditure by 35%, the Group is forecast to have sufficient resources to continue to meet its obligations as they fall
due over the viability assessment period.
Confirmation of longer-term viability
Based on the assessments above and in accordance with the UK Corporate Governance Code, the Directors confirm that they
have assessed the prospects and viability of the Group over a three-year period and have a reasonable expectation that the
Group will continue in operation and meet its liabilities as they fall due over thisperiod.
2. Geopolitical environment impacts our strategy in China
We have modelled that the Group generates no revenues from customers in China over the
assessment period.
We assume that operating expenditures are reduced by 15% to mitigate the reduction in
revenues.
We assume no further investment in WiseWave and no sale of our stake in WiseWave
during the assessment period.
> Managing our growth.
> Risks associated with
WiseWave.
> External environment
and events.
> Customer demand.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 73
Principal risks
The Group faces a number of risks and uncertainties
that may have an impact onouroperations and performance.
The risks and uncertainties are regularly assessed by the
Directors and are summarised below. These reflect the risks
in the business as we expand our addressable market, both
organically and through acquisition, into providing silicon in
addition to IP. The principal risks and uncertainties affecting
the Group are summarised on the next page.
Risk management framework
The active management of risk is integral to meeting
our strategic objectives. We operate a risk management
framework which aims to identify, assess and mitigate
potential risks. Our effective management of risk is shaped
and governed by our Board and executive managementteam.
Risk appetite
We assess risk by combining the likelihood of something
happening and the impact that arises if it does happen.
TheBoard regularly reviews and discusses our risk register
and determines the level of risk appetite, this being the
amount of risk the Board is willing to allow the business to
assume in pursuit of its objectives.
Emerging risks
Given the rapid expansion of the business, the Group’s
acquisition strategy and the increasing importance of
semiconductors in a geopolitical context, the senior
management team regularly discusses emerging risks
within the business. The Chief Financial Officer and senior
management team are responsible for identifying new and
emerging risks.
The risks have been reviewed by the Board, which has
completed a robust assessment of the Group’s principal and
emerging risks. The Board has reviewed the effectiveness of
the Group’s risk management and internal control systems.
For further information, please see page 98.
In summary, the principal risks
anduncertainties areasfollows:
> managing our growth;
> competition and failure to maintain our technology
leadership;
> customer dependence;
> customer demand;
> risks associated with WiseWave;
> dependence on licensing revenues;
> reliance on key personnel and ability to attract talent;
> external environment and events;
> IP protection and infringement;
> reliance on third-party manufacturing foundries; and
> reliance on complex IT systems.
Board
Group leadership
Regions, functions and projects
Reporting escalation
Direction of oversight
74 Alphawave IP Group plc | Annual report and financial statements 2023
Managing our growth
Competition and failure to maintain
ourtechnologyleadership
Customer dependence
Customer demand
Change in year
Change in year
Change in year
Change in year
Increase
No change
No change
No change
Risk Mitigation
We have a limited operating history and are growing rapidly with
increased pressure on cash flows. If we do not manage our
growth successfully, fail to execute on our strategy, fail to meet
future debt covenants or maintain sufficient liquidity, or fail
to implement or maintain governance and control measures,
our business may be adversely impacted. We have rapidly
expanded our headcount and the complexity of our business
and operations, both organically and through acquisitions.
We seek to maintain our competitive advantage by being
first to market with new IP as data speeds increase and
manufacturing sizes decrease. If these industry transitions
do not materialise, or are slower than anticipated, our
competitors may be able to introduce competing IP which
may diminish our competitive advantage and selling
prices. Our ability to maintain our technology leadership
is further dependent on our ability to attract R&D and
engineeringtalent.
Our products and technology target AI, data centre and
network infrastructure markets, where there are a limited
number of customers. Further, the cost and complexity of
developing semiconductors targeted by our IP limits the
number of our potential addressable customers. In any
reporting period, a substantial part of our revenues may
beattributable to a small number of customers.
Demand for our technology is dependent on the continued
global growth in generation, storage and consumption of
data across our target markets, as well as the increasing
cost and complexity of designing and manufacturing
semiconductors. We may be impacted by our customers’
demand sensitivity to broader economic and social
conditions. Our potential customers may seek to develop
competitive IP or semiconductors internally or acquire IP or
semiconductors from our competitors.
The executive management team meets formally on a weekly
basis to review current and future resourcing needs and
priorities. During 2023, we continued to expand our senior
leadership team and strengthened our administrative and
operational functions. We have strengthened the management
of commitments, payables and receivables to ensure timing
aligns with Minimum Liquidity Requirement covenant. We also
utilise external advisers to help manage our growth.
We offer competitive employment packages to retain
and incentivise our employees, as well as providing the
opportunity to work in a dynamic and entrepreneurial culture.
Our ability to compete is also driven by our track record as a
trusted partner and the continued addition of new products
and new functionality to our existing portfolio.
Our Sales and Marketing team regularly monitor the
competitive landscape to identify any new or potential
technology developments or products that may directly
orindirectly impact our business.
To date, we have been successful in both expanding our
customer base and winning repeat business from many
of our customers. We strive to maintain best‑in‑class
execution capabilities and technology to retain our
customers and win new customers. As we expand our
product offering by pursuing a vertically integrated model,
we expand our total addressable customer base.
In 2023, revenue concentration from our top three
end‑customers was 33%, which was below theprior year
(FY 2022: 36%).
There are no indications that the global appetite for data
is slowing. As speeds become faster and manufacturing
processes smaller, the ability of our customers to develop
competing technology in‑house diminishes. Increasing
costs and complexity are an opportunity to drive our
custom silicon and standard product offerings, including
chiplets. Hyperscalers and carrier networks continue to
invest in leading technology through the economic cycles.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 75
Principal risks continued
Risks associated with WiseWave
Reliance on key personnel and ability to attract talent
External environment and events
Change in year
Change in year
Change in year
No change
No change
Increase
Risk Mitigation
WiseWave is today an important element of our strategy to
monetise our IP in China and we are a significant minority
shareholder. We therefore may be limited in our ability to
influence strategy, operational, legal, commercial or financial
matters. The Group and WiseWave may also face regulatory
risk in terms of transfer of technology into China. There is a
risk that we are unable to collect receivables due and we are
unable to realise the full value of our investment on exiting
the joint venture.
We rely on the senior management team and our business
could be negatively impacted if we cannot retain and
motivate our key employees. Our ability to grow the
business is also dependent on attracting talent, particularly
in R&D and engineering, and if we are unable to do so our
business may be negatively impacted.
Semiconductors are becoming increasingly important as
countries and regions seek to guarantee supply and build
domestic supply chains, as well as restrict outside access
to their domestic technologies. Our business could be
impacted by the actions of governments, political events
or instability, or changes in public policy in the countries in
which we operate. The current conflict in the Middle East
potentially has wide-ranging impacts, including global
economic instability, increased geopolitical tensions and
disruption to our operations and supply chains.
The legal agreements governing WiseWave give us a degree
of oversight and governance over WiseWave. Our President &
Chief Executive Officer and Executive Chair are currently on the
Board of WiseWave. The senior team of WiseWave comprises
a number of established industry professionals with a proven
track record at large US and global semiconductor companies.
In 2022, we took the strategic decision to sell our shareholding
in WiseWave over the medium term and seek to maintain a
commercial relationship over the long term.
Dependence on licensing revenues
Change in year Decrease
Our financial performance is less dependent on licensing
revenues and we do not anticipate a material contribution
from royalty revenues for some years. If our customers
delay or cancel their development projects, fail to take
their products to production or those products are not
successful, our royalty revenues may be delayed, diminished
or not materialise.
The acquisition of OpenFive has materially reduced our
dependency on IP licensing revenues as we seek to monetise
our IP through custom silicon.
Given the costs, time and resources involved, our customers
are highly incentivised to take their products into production.
We receive minimum royalty guarantees from some of our
customers.
Leveraging our acquisition of Banias Labs, as we drive
revenues from our own products, our relative exposure to IP
licensing will also decrease.
Our senior management team and our employee base are
highly incentivised with equity and also the opportunity to
work within a fast-growing and dynamic environment at the
leading edge of chip technology. In 2023, our headcount
increased from 695 to 829. See Our People section for
further information.
We have a balance of customers in different regions, are
exposed to multiple end-markets and have an increasingly
diversified portfolio of products.
We seek to maintain good relations with regulatory agencies
in the regions where we operate. We seek to structure our
business and our contracts to prevent use of our technology
in areas thought to be sensitive to governments, including
military applications. In 2022, the acquisition of OpenFive
was reviewed and approved by CFIUS (Committee on
Foreign Investment in the United States). Through that
process, we believe we have strengthened our relationship
with US regulators.
76 Alphawave IP Group plc | Annual report and financial statements 2023
The strategic report on pages 1 to 77 was approved by the Board of Directors and signed on its behalf by:
Tony Pialis
President & Chief Executive Officer
23 April 2024
IP protection and infringement
Reliance on complex IT systems
Change in year
Change in year
No change
No change
Risk Mitigation
We protect our technology through trade secrets, contractual
provisions, confidentiality agreements, licences and other
methods. A failure to maintain and enforce our IP could
impair our competitiveness and adversely impact our
business. If other companies assert their IP rights against
us, we may incur significant costs and divert management
and technical resources in defending those claims. If we are
unsuccessful in defending those claims, or we are obliged to
indemnify our customers or partners in any such claims, it
could adversely impact our business.
We rely heavily on IT systems to support our business
operations. The vast majority of our design tools, software
and IT system components are off-the-shelf solutions
and our business would be disrupted if these components
became unavailable. If our IT systems were subject to
disruption, for example through malfunction or security
breaches, we may be prevented from developing our IP and
fulfilling our contracts with our customers.
Our designs can only be manufactured on leading‑edge
processes by a small number of foundry partners. Our IP
embeds tagging layers, which prevent unauthorised use.
We manage our R&D capabilities and seek to structure our
contracts with customers to minimise the risk and impact
of IP infringement claims by third parties.
Reliance on third-party manufacturing foundries
Change in year
We rely on third‑party semiconductor foundries, both
as customers and as manufacturing partners to our
customers. If foundries delay the introduction of new
process nodes or customers choose not to develop silicon
on those process nodes, our ability to license new IP and
our selling prices may be adversely impacted. By pursuing a
vertically integrated model and supplying silicon products,
we are reliant on the foundries’ capacity for a portion of our
revenues and this reliance may increase as royalty revenues
become more material to us.
A significant part of the semiconductor industry is reliant
on a small number of foundry partners with leading-edge
manufacturing capabilities (TSMC, Samsung and Intel).
Beyond diversifying our business and continuing to work with
all leading foundry providers, our ability to mitigate this risk is
limited. As we pursue a vertically integrated business model,
we become more reliant on third-party foundries and if their
ability to supply us with silicon products is constrained, we
will be impacted more quickly and more severely.
In 2023, we continued to make further improvements to
our IT systems, in line with best practice. This included
conducting network penetration testing and strengthening
end‑user access controls (see pages 56 and 57).
As with much of the semiconductor industry, we are reliant on
design automation tools from Cadence, Synopsys and Siemens
and our ability to source alternative suppliers is limited.
Decrease
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 77
The Board believes that the
current Directors bring to the
Company a desirable range of
skills and experience while at
the same time ensuring that
no individual (or small group
of individuals) can dominate
the Board’s decision-making.
Our Directors have extensive
experience across multiple
business disciplines
and industry sectors
relevant to the Company.
Webring together senior
individuals in industries
including semiconductors,
telecommunications and
data networking, and
with operational, financial
and strategic skillsets
andexperience.
John Lofton Holt
Executive Chair
John Lofton Holt has served as strategic
adviser to management since 2019 and was
appointed as the Company’s Executive Chair
in 2021.
John has been a semiconductor
executive since the late 1990s and has
founded, funded, scaled and led multiple
semiconductor businesses, driving billions
of dollars in value for shareholders. Hehas
more than 25 years of experience as an
investor and senior executive, including
considerable experience in chairing boards.
He previously served as Chairman and Chief
Executive Officer of Achronix Semiconductor
Corporation and was also a Managing
Partner of Holt Brothers Capital LLC where
he managed a portfolio of investments
in semiconductors, hardware, robotics,
renewables and real estate. John started his
career in the late 1980s at NASA Goddard
Space Flight Center, where he worked as
a design engineer focusing on optics and
electronics for remote sensing and LIDAR
applications.
John holds a BSE in Electrical Engineering
from Princeton University and an MSE
in Electrical Engineering from Johns
HopkinsUniversity.
External appointments
WiseWave Technology Co. Ltd, Director.
C
Tony Pialis
President & Chief Executive Officer
Tony Pialis co-founded Alphawave Semi in
2017 and has since served as its President &
Chief Executive Officer. Tony has extensive
experience as an entrepreneur in the
semiconductor industry, having co‑founded
three semiconductor IP companies, including
Snowbush Microelectronics Inc, which
was sold in 2007 to Gennum/Semtech
and is currently part of Rambus. He also
founded V Semiconductor Inc. where he
served as President & Chief Executive
Officer, and which was acquired by Intel
Corporation in 2012. Tony served as Vice
President of Analog and Mixed-Signal IP at
Intel Corporation between 2012 and 2017.
During his tenure at Intel, Tony and his team
won the prestigious Intel Achievement
Award for successfully delivering next
generation Ethernet and PCI-Express SerDes
solutions on Intel’s 22nm and 14nm process
technologies.
Tony holds a Bachelor of Science and Master
of Engineering in Electrical Engineering from
the University of Toronto.
External appointments
Pitech Investments Inc., Director; Pitech
Corp., Director; WiseWave Technology Co.
Ltd, Director; The Tony Pialis (2017) Family
Trust, Trustee; Scarborough Health Network,
Board member.
Board of Directors
C
Committee Chair Audit Committee Remuneration Committee Nomination Committee
Committee memberships
78 Alphawave IP Group plc | Annual report and financial statements 2023
Jan Frykhammar
Senior Independent Non-Executive
Director
Jan Frykhammar was appointed to the
Board in April 2021 as Senior Independent
Non‑Executive Director. Jan has years of
experience as a senior executive, chair and
non‑executive director as well as an adviser
to listed and non‑listed companies. Jan was
the Group Executive Vice President and Chief
Financial Officer at Ericsson Group, and
served as interim Chief Executive Officer until
2017. Currently Jan serves as an adviser to
Zinkworks Ltd, Sweepr Technologies Ltd and
ng-voice GmbH.
Jan has previously served as Chair of the
Board at Aspia Group AB, Clavister Holding
AB, Celltick Technologies Ltd, and as chair of
the audit committee of ITAB Shop Concept
AB, Nordic Semiconductor ASA, Ox2 AB
as well as ENEA AB. He has also served as
Non-Executive Director of Roima Intelligence
OY, Quickbit AB, Telavox AB and the Swedish
International Chamber of Commerce.
Jan holds a Bachelor of Science in Business
Administration and Economics from the
University of Uppsala.
External appointments
FCD Sverige AB, Director.
C
Michelle Senecal de Fonseca
Independent Non-Executive
Director
Michelle Senecal de Fonseca joined the
Board in April 2021. Her expertise is in
international telecommunications and
technology sectors. Michelle was the
Global Vice President for Cloud Innovation
Partnerships at Citrix Systems after having
led its European sales. Prior to Citrix, she
was the Global Director of Cloud and Hosting
Services at Vodafone as well as Managing
Director of Telecom, Media and Technology
banking team at the European Bank for
Reconstruction and Development. Michelle
joined the Board of the FDM Group (a FTSE
250 company) in January 2016, is the
co‑founder and board member of Women in
Telecoms and Technology, as well as a global
council member at Thunderbird School of
Global Management in Phoenix, Arizona.
Michelle holds Bachelor of Science degrees
in Business and Political Science from the
University of Kansas and an MBA from the
Thunderbird School of Global Management.
External appointments
FDM Group (Holdings) plc, NED, member
of the Remuneration, Audit and Nomination
Committees; Women in Telecoms and
Technology (WiTT) Limited, Director; Move
Capital LLP Investment, Board Member
and Shareholder; Arizona State University
Foundation UK company, Trustee.
Victoria Hull
Independent Non-Executive
Director
Victoria Hull was appointed to the Board in
April 2021. Victoria has over two decades of
senior management experience including roles
as Executive Director and General Counsel
of Invensys plc, who she joined in 2001, and
Telewest Communications plc, who she
joined in 1995. Prior to Telewest, she was a
solicitor in the corporate finance department
ofCliffordChance.
Victoria has a strong legal and corporate
governance background and has operated
at an Executive Committee or Board level
throughout her career. She joined the board of
Ultra Electronics plc (a FTSE 250 company) as
Senior Independent Director in April 2017 and
is a member of the Audit, Remuneration and
Nomination Committees. Victoria was also
appointed to the board of Network International
PLC (a FTSE 250 company) in April 2019 where
she chairs the Remuneration Committee and
is a member of the Nomination Committee.
Victoria is a NED at IQE plc where she chairs
the Remuneration Committee and is a member
of the Audit and Nomination Committees.
Victoria holds a Bachelor of Laws from the
University of Southampton and qualified as a
solicitor in 1987.
External appointments
Ultra Electronics Holdings plc, NED and SID;
Network International Holdings plc, NED
and Chair of Remuneration Committee; La
Pleiade Limited, Director; IQE plc, Director
and Chair of Remuneration Committee;
Hikma Pharmaceuticals PLC.
C
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 79
Board of Directors continued
Rosalind Singleton
Independent Non-Executive
Director
Rosalind Singleton was appointed to the Board
in April 2021. She is a telecoms executive with
over 30 years of experience across the sector.
Rosalind is a Chair, NED, adviser and investor
in the technology sector having held executive
positions in multiple telecoms businesses
including Spring Fibre LTD, UK Broadband
(Three UK), Cable & Wireless, Vodafone,
various VNOs, and other international
operators from start‑ups to incumbents.
Rosalind is currently Chair of the Telcoms
Supply Chain Diversification Advisory
Council (TSCD) which advises Government
on developing the telecoms ecosystem,
an advisory member of INCA’s Board and
a member of Ofcom’s Spectrum Advisory
Board.She is an Independent Board Observer
at Lumine Group, listed in Toronto.
Rosalind is an active angel investor with
a primary focus on tech businesses with
a female founder and is a member of the
AngelAcademe Advisory Board.
External appointments
Telcoms Supply Chain Diversification
Advisory Council (TSCD), Advisory Council
Chair; Independent Networks Co-Operative
Association (INCA), AdvisoryBoardmember;
Lumine Group Inc, Board Observer.
Appointed to Nomination Committee on
2January2024.
Paul Boudre
Independent Non-Executive
Director
Paul Boudre was appointed to the Board in
April 2021. He retired in July 2022 as the Chief
Executive Officer of Soitec and he is now the
CEO and Co-Founder of Silian Partners SA.
Paul is currently Chair of Unity Semiconductor
SAS and a Director and Chair of the
Technology Committee at Comet Holding
AG, a Swiss firm developing and producing
innovative high‑tech components and
systems based on x-ray and radio frequency.
As a 30-year semiconductor industry veteran,
Paul started his career in 1982 at IBM in
France, where he supported in the production
and development of semiconductors. He
gained extensive international experience
through his previous positions: managing
industrial operations for IBM Semiconductor,
STMicroelectronics, Motorola Semiconductor
and Atmel. From 1997 to 2006, he managed
European operations for KLA-Tencor, a leading
semiconductor equipment manufacturer.
Paul holds a graduate degree in Chemistry
from France’s Ecole Nationale Supérieure de
Chimie de Toulouse.
External appointments
Silian Partners SA, CEO and Board member,
Unity Semiconductor SAS, Chair of the
Board; Comet Holding AG, Director; SCI
Pacabou, Director; SCIFarmers and CO,
Director; TulleHoldings, Director.
Sehat Sutardja
Executive Director
Sehat Sutardja was appointed to the Board
in April 2021. Sehat has extensive experience
in the semiconductor industry, having
co-founded Marvell Technology Group
with his wife, Weili Dai, and having served
as its Chief Executive Officer. Today,Sehat
is the Chief Executive Officer at FLC
TechnologyGroup.
In 2006, Sehat was named Inventor of the
Year by the Silicon Valley Intellectual Property
Law Association. In 2010, hereceived the
Distinguished Alumni Award from the Iowa
State University Alumni Association, and
in 2013, he received the Dr.Morris Chang
Exemplary LeadershipAward.
Sehat holds a PhD in Electronic Engineering
and Computer Science from the University of
California, Berkeley. He is also an IEEE Fellow
of the Institute of Electrical and Electronics
Engineers.
External appointments
FLC Technology Group, Inc., Chairman/CEO;
Danger Devices Inc., Chairman; Zerro Power
Systems Pte Ltd, Chairman/CEO; Wolley
Tech, Inc., Director; DreamBig Semiconductor
Inc., Chairman; Blue Cheetah Analog
Design, Inc, Director; Elastic.Cloud, Director;
AvivaLinks, Director; Ventana Micro, Director;
Apex, Director; Silicon Box, Chairman;
Leap Frog, Director; Expedera, Director;
SSWD LLC, Co-owner; Aviva Technology
Holdings,Director.
C
Committee Chair Audit Committee Remuneration Committee Nomination Committee
Committee memberships
80 Alphawave IP Group plc | Annual report and financial statements 2023
Susan Buttsworth
Independent Non-Executive
Director
Susan Buttsworth was appointed to the
Board in April 2021. At that time she was
Three UK’s Chief Operating Officer and
responsible for driving its overall network
and IT transformation. Susan has worked
for the CK Hutchison Group since 1996 and
has delivered large scale network and IT
deployments across its group. In addition to
her role at Three, Susan previously led CKH
Innovations Opportunities & Development
(CKHIOD), a telecom unit of CK Hutchison
Holdings (CKHH). CKHIOD comprises
cross‑border wholesale and enterprise
opportunities, data monetisation and digital
consumer products and services. She is
currently working for CKHH as a senior
consultant.
Susan holds a bachelor’s degree in
Commerce from the University of New South
Wales, a Master’s degree in Commerce
from Macquarie University, and is a Fellow
Certified Practising Accountant inAustralia.
External appointments
CKH IOD Data Limited, Director; G&S
Buttsworth Holdings Pty Ltd, Director;
Buttswann Nominees Pty Ltd, Director;
Cherrybooks Pty Ltd, Director.
Appointed the Chair of Nomination Committee
on2January 2024.
David Reeder
Independent Non-Executive
Director
David Reeder was appointed to the Board
in September 2023. David has extensive
experience in the semiconductor industry as
well as corporate finance, strategic planning,
supply chain management, engineering,
manufacturing, IT systems, investor relations
and risk management. David has served
in senior finance and operational roles in
global high technology companies including:
GlobalFoundries, Texas Instruments,
Broadcom, Cisco and Lexmark.
Prior to GlobalFoundries, David was on the
Board of Directors and served as a member
of the Audit Committee at Milacron Holdings
Corp until its acquisition by Hillenbrand
Inc in November 2019. Previously, David
was Chief Executive Officer for Tower Hill
Insurance Group from 2017 to 2020. Prior to
that, he was President and CEO for Lexmark
International, Inc. from 2015 to 2017. Earlier
in his career, David was CFO at Electronics
for Imaging from 2014 to 2015 and Cisco’s
Enterprise Networking Division from 2012
to 2014 and held executive positions at
Broadcom and Texas Instruments.
David holds a Bachelor of Science degree in
Chemical Engineering from the University
of Arkansas and a Master of Business
Administration degree from Southern
Methodist University.
Kim Clear
Company Secretary
Kim Clear was appointed as Company
Secretary in August 2022 and reports directly
to the Executive Chair.
Kim has extensive experience as a
senior chartered secretary, with 24 years’
experience within FTSE plcs and asset
management. Kim has overall responsibility
for the regulatory and secretariat activities
across the Group, the effective operating of
the Alphawave Semi Board and advising on
key issues of corporate governance.
Prior to joining Alphawave Semi, Kim spent
five years at TUI AG and started her career in
2000 with Whitbread plc.
Kim holds a Masters degree in Psychology
from Middlesex University and is a Fellow of
the Chartered Governance Institute.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 81
82 Alphawave IP Group plc | Annual report and financial statements 2023
Our management
team nurtures an
engineering-
focused culture
that enables us to
drive innovation
for next generation
technologies
under the direction
of some of the
best engineering
talent inwired
connectivityIP.
John Lofton Holt
Executive Chair
Tony Pialis
President & Chief
Executive Officer
Management team
Babak Samimi
SVP and General
Manager,
Connectivity
Products
Babak Samimi joined the
Company in November
2022 and brings a
wealth of experience
in the semiconductor
industry. Prior to joining
Alphawave, Babak was
the Corporate VP for
Microchip Technology,
Communications
Networking Business,
focused on enterprise,
telecom and cloud
service providers. Before
joining Microchip, he
was with Microsemi
Corporation and PMC
Sierra.
Babak holds a Bachelor
degree in Electrical
Engineering from the
Memorial University of
Newfoundland.
Jonathan Rogers
SVP, Engineering
Jonathan Rogers
co-founded Alphawave
Semi in 2017 and has
since served as its
Senior Vice President
of Engineering, leading
the Group’s research
and development
function. He has over 14
years’ experience as an
engineering executive,
including as Director of
Engineering and Senior
Principal Engineer
at Intel Corporation
between 2012 and
2017, and Director of
Design Engineering
at V Semiconductor
and Gennum. He was
also the Director of IP
Development and IC
Designer at Snowbush
Microelectronics Inc.
Rahul Mathur
Chief Financial
Officer
Rahul joined Alphawave
IP Group plc as Chief
Financial Officer in
October 2023.
Rahul had served as
CFO of Avantus since
2021 and as CFO and
Senior Vice President of
Finance of Rambus from
2016 to 2021. During
his tenure at Rambus,
he was an integral part
of its transformation
as a product company,
consistently delivering
strong financial results
and shareholder value.
Prior to Rambus, Rahul
served as Senior Vice
President of Finance at
Cypress Semiconductor,
managing financial
planning and investors
relations, as well as Vice
President of Finance
at Spansion before the
company was acquired
by Cypress. He has
extensive experience in
M&A, corporate finance,
strategic planning,
investor relations and risk
management.
Rahul holds a Bachelor
of Arts in applied
mathematics from
Dartmouth College
and an MBA from the
Wharton School of
Business at the University
of Pennsylvania.
Maia Jones
VP, People, Places
and Culture
Maia Jones is an
accomplished executive
with extensive experience
in diverse sectors,
including government,
public and technology.
As VP of People,
Places and Culture at
Alphawave, she leads
the Company’s Human
Resources, Facilities and
Administrative functions,
attracting and retaining
top talent and fostering a
positive work culture. With
prior experience at two
leading semiconductor
companies and a medical
device start‑up, Maia has
a proven track record of
success. Her nine years
of experience with the
Ontario government have
uniquely positioned her to
lead Alphawave’s People,
Places and Culture team.
Mohit Gupta
SVP and General
Manager, Custom
Silicon
Mohit Gupta joined in
September 2022 via
the acquisition of the
OpenFive business from
SiFive. He currently serves
as Senior Vice President
and General Manager for
IP and the Custom Silicon
business unit. Mohit
brings more than two
decades of experience
in semiconductor IP and
SoC domain-leading
worldwide engineering,
application engineering,
products and field teams.
Prior to Alphawave, he led
the IP and Custom SoC
business units at SiFive
andRambus.
Mohit holds a Bachelor of
Engineering in Electronics
and Communications
from Thapar University
and Master of Science
in Microelectronics
from BITS, Pilani. He
also holds an executive
MBA in International
Business from the Indian
Institute ofManagement,
Calcutta.
Tony Chan
Carusone
Chief Technology
Officer
Tony Chan Carusone
was appointed Chief
Technology Officer in
January 2022. Tonyhas
been a professor of
Electrical and Computer
Engineering at the
University of Toronto
since 2001. He has
over 100 publications,
including eight
award‑winning best
papers, focused on
integrated circuits for
digital communication.
Tony has served as a
Distinguished Lecturer
for the IEEE Solid-State
Circuits Society and
on the Technical
Programme Committees
of the world’s leading
circuits conferences.
He co‑authored the
classic textbooks ‘Analog
Integrated Circuit Design’
and ‘Microelectronic
Circuits’ and he is a
Fellow of the IEEE.
Tony has also been
a consultant to the
semiconductor industry
for over 20years, working
with both start‑ups and
some of the largest
technology companies
intheworld.
Tony holds a B.A.Sc.
in Engineering Science
and a PhD inElectrical
Engineering from the
University ofToronto.
Saeid Ghafouri
SVP, Worldwide
Sales
Saeid Ghafouri joined
Alphawave Semi in
February 2021 as
Senior Vice President
of Worldwide Sales.
With over 30 years
of experience in the
semiconductor industry,
he has helped several
companies grow from
early stages to large
successful enterprises.
Among them are
Cadence Design
Systems, Synopsys and
Magma Design, where he
ran worldwide sales and
managed to grow their
revenue from US$40m
to over US$200m by
meeting or exceeding
Wall Street’s expectations
for 23 quarters in a row.
Saeidholds a BS in
Electrical Engineering.
Sudhir Mallya
SVP, Corporate
Marketing
Sudhir Mallya is Senior
Vice President of
Corporate Marketing at
Alphawave Semi. He is
based in Silicon Valley
and has over 25 years
of experience at leading
global semiconductor
companies with executive
positions in engineering,
marketing and business
unit management.
Hisexperience spans
custom silicon (ASICs)
and application-specific
(ASSPs) products
across multiple
application domains
including data centres,
networking, storage
and edge‑computing.
Hehas an MSEE from the
University of Cincinnati
and a bachelor’s in
electrical engineering
from the Indian Institute
of Technology, Bombay.
Raj Mahadevan
SVP, Operations
Raj Mahadevan
co-founded Alphawave
Semi in 2017 and has
since served as its
Senior Vice President
of Operations and Chief
Operating Officer. Raj
has more than two
decades of engineering
executive experience
in the semiconductor
IP industry, including
leading roles in design,
architecture, operations
and design methodology
development.
Heco-founded
VSemiconductor Inc.,
wherehe was a Director,
and also Snowbush
Microelectronics Inc.
Raj holds a Bachelor
of Applied Science in
Engineering Science
and a Master of Applied
Science in Engineering
from the University
ofToronto.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 83
Dear shareholder
On behalf of the Board, I am pleased to present the Company’s
corporate governance report for the financial year ended
31December 2023.
As outlined in my Chair’s statement, it has been another busy
year, consolidating the acquisitions we made in 2022, while
continuing to invest in future revenue growth. We welcomed
Rahul Mathur as our new CFO in October 2023, as well as a
new independent Non-Executive Director, David Reeder.
The Board has been highly engaged this year, being flexible
with their time, and I would like to thank my Board colleagues
for their considerable commitment and support during
the year, particularly in the management of delay to the
publication of the FY 2022 financial statements.
Corporate governance
This corporate governance report sets out how the Company
has complied with the UK Corporate Governance Code 2018
(the ‘Code’). The Board believes that good governance is
fundamental to supporting the sound management and
long-term success of the Group. This can only be achieved if
the Board is supported by appropriate governance processes
to ensure that the Group is managed responsibly and with
integrity, fairness, transparency and accountability.
The Board is firmly committed to the highest standards
of corporate governance. Given that the Company has a
standard listing, the Board voluntarily complies and intends
to continue to comply with the requirements of the Code.
The Board will also voluntarily report to its shareholders
on its compliance with the Code in accordance with the
requirements for listed companies under the ListingRules.
The Code recommends that at least half the board of directors
of a UK premium listed company, excluding the chair, should
comprise of non‑executive directors determined by the board
to be independent in character and judgement and free from
relationships or circumstances which may affect, or could
appear to affect, the director’s judgement. The Company
regards all Non‑Executive Directors as independent within
the meaning of the Code and free from any business or other
relationship that could materially interfere with the exercise
oftheir independent judgement.
Board leadership and Company purpose
“ The Board’s commitment
to strong governance
supports the long-term
success of the Group.”
John Lofton Holt
Executive Chair
84 Alphawave IP Group plc | Annual report and financial statements 2023
The Code also recommends that, on appointment, the chair
ofa UK listed company should meet the independence criteria
set out in the UK Corporate Governance Code. However,
Iasthe Company Chair was not independent on Admission.
The Board considered that with the majority of independent
Directors on the Board, my executive role is not expected
to compromise the Board’s overall independence and its
firm commitment to the highest standards of corporate
governance, as noted above.
The Board further believes that the current Directors bring to
the Company a desirable range of skills and experience while
at the same time ensuring that no individual (or small group
of individuals) can dominate the Board’s decision-making.
TheCode recommends that the board of directors of a
UK premium listed company should appoint one of the
independent non‑executive directors to be the senior
independent director to provide a sounding board for the chair
and to serve as an intermediary for the other directors when
necessary. The Company appointed Jan Frykhammar as its
Senior Independent Director. In compliance with the Code, the
Board has established three committees: an Audit Committee,
a Nomination Committee and a Remuneration Committee, and
has also established a separate Market Disclosure Committee.
If the need should arise, the Board mayset upadditional
committees as appropriate.
Compliance with the Code and Listing Rules
This statement, together with the various Board Committee
reports and relevant sections of the strategic report included
in this annual report, describes the Board’s application
of and compliance with the Code published by the FRC
( w w w . f r c . o r g . u k ) .
This corporate governance statement, together with the
rest of the corporate governance report and Committee
reports, provides information on how the Group has applied
the principles and complied with all relevant provisions of
the Code, except as otherwise disclosed, and meets other
applicable requirements, including provisions of the Listing
Rules and the Disclosure Guidance and Transparency Rules
ofthe Financial Conduct Authority.
The requirements under the Disclosure Guidance and
Transparency Rules DTR 7.2 are covered in greater detail
throughout the annual report, for which we provide a reference
as follows:
> Directors’ statement with regard to the appropriateness of
adopting the going concern basis of accounting and any
material uncertainties identified is set out on pages 99;
> the viability statement is set out on page 72;
> information with regard to significant share holdings
ispresented in the Directors’ report on page 124;
> information on Board and Committee composition and
division of responsibilities on pages 87 and 88;
> the Board’s approach to workforce and stakeholder
engagement is in the section 172(1) statement on pages
28to32;
> the Executive Chair’s and the more comprehensive Board’s
performance as part of the Board evaluation are discussed
in the Nomination Committee report on page 90.
> Board diversity is discussed in the section on the
Nomination Committee’s activities on page 90.
> the section describing the work of the Audit Committee is
set out on pages 94 to 99; and
> the Directors’ statement on fair, balanced and
understandable is set out on page 97.
John Lofton Holt
Executive Chair
23 April 2024
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 85
Board leadership and Company purpose continued
Our governance framework
The Board
The Board is responsible for the overall
leadership of the Group and setting the
Group’s values and standards, with the
overall aim of delivering shareholder
value. Principally, we achieve this
through:
> approving the Group’s business
strategy proposed by management,
as well as setting its purpose, values,
standards and culture and ensuring
that these are aligned;
> oversight of effective Group
risk management and internal
control processes including a
robust assessment of the Group’s
emergingand principal risks;
> the approval of any changes relating
to the Group’s capital, corporate and/
or listing structure; and
> oversight of the Group’s ESG strategy.
Board
Pages 78 to 81
Board activities
Page 87
Division of responsibilities
Page 88
Audit Committee Remuneration Committee Nomination Committee
Responsible for the integrity of
the Group’s financial reporting,
including scrutinising accounting
policies, and reporting to the Board
on significant reporting issues and
judgements.
Monitors the effectiveness
of internal control and risk
management systems and the
effectiveness and objectivity of
internal and external auditors.
Approves the internal audit plan and
recommends the appointment of
the external auditor.
Read the Audit Committee report.
Ensures there is a formal and
transparent process for establishing
the Directors’ Remuneration Policy.
Approves individual remuneration
packages of the Executive Chair,
Executive Directors and the wider
workforce.
Approves the overall remuneration
policy for the Group including
reviewing the design and
development of share plans
operated for Executive Directors
and others requiring shareholder
approval, and approves and
assesses performance targets
where applicable.
Reviews workforce remuneration
practices and policies when setting
executive remuneration, as well
as the alignment of incentives and
awards with culture.
Read the Remuneration
Committeereport.
Facilitates the Board in meeting
its responsibilities to plan and
execute timely Chief Executive
Officer succession and works with
the Chief Executive Officer to plan
and execute Executive Director
succession.
Ensures suitable succession plans
are in place for the Board and senior
executives to achieve the Group’s
strategic objectives, ensuring plans
are based on merit and against
objective criteria.
Recommends appointments to the
Board and its principal Committees.
Oversees development of a diverse
pipeline in the executive succession
plan and talent management.
Assists the Board in the
development of a Group-wide
approach to all forms of diversity
and inclusion.
Read the Nomination
Committeereport.
86 Alphawave IP Group plc | Annual report and financial statements 2023
Roles and responsibilities of the Board
The Board is the body responsible for the overall management
and conduct of the Group’s business. The Group’s governance
framework is designed to encourage a clear understanding
and delivery of its strategy. The Board has accountability for
the oversight, governance, direction, long‑term sustainability
and success of the business and affairs of the Group and
is responsible to stakeholders for creating and delivering
sustainable shareholder value.
The Board has delegated certain responsibilities to its
Committees and, in compliance with the Code, has
established an Audit Committee, a Nomination Committee
and a Remuneration Committee. The terms of reference for
each of the Board’s Committees were most recently updated
and approved in March 2024 and are available to view on
the Group’s website: www.awavesemi.com/en/investors/
corporate-governance/.
The Committee Chairs are responsible for reporting to the
Board on the Committees’ activities.
Board activities in FY 2023
During the year, the Board held five scheduled meetings,
together with a separate dedicated strategy day. The Board’s
strategy sessions centred around the financial performance
of the Group, scaling the business and expanding product
offerings, along with a focus on workplace engagement.
The Board makes decisions in order to ensure the long-term
success of the Group whilst taking into consideration the
interests of wider stakeholders as required under section
172(1) of the Companies Act 2006. Board meetings are one
of the mechanisms through which the Board discharges
thisduty.
Further information about Board decisions is included in the
strategic report.
Culture
The Board is deeply committed to fostering and nurturing
the Company’s collaborative and innovative culture, rooted
in values of integrity, inclusivity and agility. Together with
the management, we firmly believe that the ingenuity and
adaptability of our engineering talent are paramount to
the Group’s achievements. Our company boasts a highly
technical and proficient management team that has
cultivated an engineering‑centric environment, emphasising
results orientation and customer focus. This approach
has empowered us to attract and retain some of the finest
engineering minds in the interconnected world. Research
and development/engineering comprise a significant 89% of
our workforce, highlighting our dedication to innovation and
forward-thinking.
Our culture and values serve as the bedrock of our operations,
guiding our interactions internally and externally. The Board
takes on the crucial responsibility of championing and
monitoring our culture as we evolve and expand.
We actively seek input from our employees through
engagement surveys, fostering a collaborative environment
where everyone’s voice is heard and valued. Together, we
remain steadfast in our commitment to driving progress,
fostering inclusivity and delivering exceptional outcomes for
our customers and stakeholders alike.
2023 Annual General Meeting
The Company’s Annual General Meeting (AGM) was held on
22 June 2023. All resolutions put to the meeting were passed
but the Board did note that Resolution 19 to approve the Rule
9 waiver received less than 65% in favour.
Resolution 19 sought to approve the Rule 9 waiver obtained
from the Takeover panel which was originally obtained
upon IPO. Under Rule 9 of the Takeover Code, if someone
acquires control of 30% or more of the voting rights of a
Code‑governed company (or someone already holding more
than 30% (but less than 50%) of the voting rights acquires
additional shares carrying voting rights), Rule 9 requires that
person to make a mandatory offer to all of the Company’s
shareholders. This resolution waives the requirement for the
founders to make a mandatory offer if their shareholding in
the Company increases as a result of any buyback of shares
by the Company.
The Executive Chair and the Global Head of Investor Relations
continue to engage with investors to understand their views
and concerns.
Board site visits
The September 2023 Board programme was held at the
Alphawave Toronto (Canada) headquarters. The two-day
visit incorporated the scheduled Board and Committee
meetings and also provided the Board the opportunity to meet
with staff over breakfast and tour the on-site labs. The visit
enabled the Board to see some of the changes made by the
acquisition expansion investment made in 2022. Additionally,
the November 2023 Board programme was held in London
(England) facilitating in‑person engagement between Board
members and senior management.
Board reserved matters
To safeguard the areas material to the purpose, strategy and
values of Alphawave, the Board retains a schedule of matters
reserved for its decision.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 87
Board composition
The Board is comprised of ten Directors: the Executive
Chair, the Chief Executive Officer, one Executive Director
and seven independent Non‑Executive Directors, one of
whom is the Senior Independent Director. Jan Frykhammar
is the Senior Independent Director and Chair of the Audit
Committee. Victoria Hull is Chair of the Remuneration
Committee. JohnLofton Holt is Chair of the Board and up
to 31December2023 was also Chair of the Nomination
Committee. From 1 January 2024 Susan Buttsworth became
Chair of the Nomination Committee. The Code recommends
that at least half the board of directors of a UK premium listed
company, excluding the chair, should comprise non‑executive
directors determined by the board to be independent in
character and judgement and free from relationships or
circumstances which may affect, or could appear to affect,
the director’s judgement. The Company regards all of the
Non-Executive Directors as ‘independent Non-Executive
Directors’ within the meaning of the Code and free from any
business or other relationship that could materially interfere
with the exercise of their independent judgement. The Board
also considers that it has complied with the requirements
of the Code in relation to the balance of Executive and
independent Non‑Executive Directors on the Board, and
the composition of the Company’s Audit Committee,
Remuneration Committee and Nomination Committee.
The roles of the Executive Chair
and the Chief Executive Officer
The roles of the Executive Chair and the Chief Executive
Officer are separately held, with the division of responsibilities
clearly defined. The Executive Chair leads the Board,
facilitating engagement at meetings by drawing on members’
skills, experience and knowledge, and is responsible for
the Board’s overall effectiveness and oversight of the
management of the Group. The Executive Chair, in his
executive capacity, provides management support on key
strategic, operational and financial activities, and plays a
pivotal role in stakeholder management and investor relations.
The Chief Executive Officer is responsible for all executive
management matters of the Group within the authority
delegated by the Board and for theimplementation of
Boardstrategy.
The role of the Senior Independent Director
The purpose of this role is to provide a sounding board for the
Executive Chair and to act as an intermediary for the other
Directors. In addition, to be available to shareholders if they
have any matters of concern that contact through the normal
channels of the Executive Chair or Chief Executive Officer has
failed to resolve.
Company Secretary
The Company Secretary acts as the Secretary to the Board and
all Company Committees, and attends all Board and Committee
meetings. The Company Secretary supports the Chair and
ensures that the Board and Committee members receive all the
information needed to perform their roles, including receiving
papers in a timely manner. The Company Secretary advises the
Board on legal and corporate governance matters, including
the Code, UK Listing Rules and other statutory and regulatory
requirements. Additionally, the Company Secretary facilitates
the Directors’ induction programmes, assists with their
professional development, and provides advice and support
tothe Directors when required.
Non-Executive Director for Workplace
Engagement
A Non-Executive Director for Workplace Engagement serves
as a crucial link between the Board and the workforce.
Theyensure employee perspectives are represented in the
boardroom, develop and oversee employee engagement
initiatives, and communicate Board decisions to the workforce.
They also collaborate with relevant stakeholders on strategic
workforce issues, ensuring that employee interests are
considered in all strategic decisions. This role is integral to
fostering a positive andinclusive workplace culture, promoting
employee satisfaction and productivity, and driving overall
business success.
Meeting attendance
The names of the Directors who served during FY 2023 are set
out in the table across, together with their attendance at Board
and Committee meetings held. All meetings are able to be held
virtually to allow greater participation but at least one meeting
per year is held in person.
Each Director’s attendance at Board and Committee meetings
is considered as part of the formal annual review of their
performance. Directors are encouraged to attend all Board and
Committee meetings but sometimes due to time differences
or prior business activities a Director may not always be
able to attend. When this happens and a Director is unable
to attend a Board or Committee meeting, they continue to
receive all papers. They can communicate their comments and
observations on the matters to be considered at the meeting
in advance via the Executive Chair, the Company Secretary, the
Senior Independent Director or the relevant Board Committee’s
Chair for raising, as appropriate, during the meeting. The absent
Director is kept up to date after the meeting on any decisions
taken and feedback provided when appropriate.
In addition to the scheduled Board and Committee meetings,
monthly update calls are scheduled to ensure comprehensive
coverage of critical business developments, emerging issues
and opportunities. Contingency arrangements are also in place
to address any Board decisions or approvals needed outside of
these regular meetings.
The Executive Chair holds regular meetings with each of the
Non‑Executive Directors.
Board leadership and Company purpose continued
88 Alphawave IP Group plc | Annual report and financial statements 2023
Details of our business model, strategy and key risks for the business can be found in our strategic report.
The table below shows the number of scheduled Board and Committee meetings attended by each Director during the year
against the total number of possible meetings in respect of each Director.
Name
1,2
Board
3,4
Audit
Committee
Remuneration
Committee
Nomination
Committee
John Lofton Holt 5/5 n/a n/a 3/3
Tony Pialis 5/5 n/a n/a n/a
Sehat Sutardja 1/5 n/a n/a n/a
Jan Frykhammar 5/5 5/5 4/4 3/3
Victoria Hull 5/5 5/5 4/4 n/a
Susan Buttsworth 5/5 n/a n/a 3/3
Michelle Senecal de Fonseca 4/5 4/5 n/a n/a
Paul Boudre 5/5 n/a 4/4 n/a
David Reeder
5
2/2 2/2 n/a 2/2
Rosalind Singleton 5/5 n/a n/a n/a
Daniel Aharoni
6
2/2 n/a n/a n/a
1. The composition of the Board and its Committees is shown as at 31 December 2023 and remains unchanged as at the date of this document.
2. The Market Disclosure Committee has been omitted from the above table as it meets on an adhoc basis, rather than a scheduled basis. It met ten times
during the period under review.
3. The Board held several additional adhoc and sub-committee meetings during the period to deal with urgent matters. All Board members who were able to
attend did so.
4. Michelle Senecal de Fonseca was unable to attend the September Board and Audit Committee meetings due to pre-planned leave and Sehat Sutardja was
unable to attend the March, April, June and September Board meetings due to prior commitments.
5. David Reeder joined the Board in September and has attended all scheduled meetings. At the same time, he was appointed to the Audit and Nomination
Committees.
6. Daniel Aharoni left the Company in May 2023.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 89
Dear shareholder
I am pleased to present our third Nomination Committee
report, covering the year ended 31 December 2023. In the
period following the IPO, the main purpose of the Committee
was to embed the newly formed Board and Committee
members and ensure the Directors had the appropriate level
of strategic understanding of the Company’s business.
During 2023, the Committee continued to ensure orderly
succession plans were in place for key members of the
Executive. The Committee also reviewed the independence,
experience and diversity of the independent Non‑Executive
Directors and recommended their re‑election to the Board.
The Nomination Committee determined that they were all
independent in character and judgement and that there were
no relationships or circumstances which are likely to affect
their judgement.
Purpose and role
The Committee is an important component of the
Company’s governance framework and the Group’s strategy.
TheNomination Committee is responsible for ensuring that
the Company has the executive and non‑executive Board
leadership it requires, both now and for the future. It reviews,
and challenges gaps in, succession plans for all key senior
roles to ensure the organisation’s long‑term stability. It also
seeks to ensure that talented individuals are provided with
opportunities to develop.
The Committee’s work extends beyond the composition
of the main Board and the Committee was involved in the
selection and appointment process for the Group’s new Chief
Financial Officer, Rahul Mathur. Rahul joined in October2023,
and his biography is set out in the management team
section. TheCommittee looks forward to working with
himduring2024.
Committee composition
The Nomination Committee is comprised of myself as
Chair and its other members are Jan Frykhammar, Susan
Buttsworth and David Reeder, all independent Non-Executive
Directors. It was agreed at the November Committee
meetings that Susan would become Chair of the Committee,
Rosalind Singleton would be appointed as a member and
John Lofton Holt would step back from the Committee.
Thebiographies of each member of the Committee are set
out on the Board of Directors pages.
The UK Corporate Governance Code 2018 (the ‘Code’)
recommends that a majority of the members of a nomination
committee should comprise independent non‑executive
directors. The Board considers that the Company complies
with the recommendations of the Code in this respect.
Meetings and attendance
Two scheduled meetings were held in 2023, with one ad hoc
meeting. The Nomination Committee Chair reported to the
Board on the key matters discussed.
Composition, succession and evaluation
NOMINATION COMMITTEE REPORT
“ The Committee actively
contributes to the Board’s
efforts in ensuring the
long-term success of the
business by considering
the future needs of the
Board, in terms of both
skills and diversity.”
John Lofton Holt
Chair of the Nomination Committee
90 Alphawave IP Group plc | Annual report and financial statements 2023
Committee evaluation
The Committee’s performance and effectiveness were
reviewed as part of the wider Board evaluation. The review
stated that the Committee was performing well but it
was suggested that the Chair position should be held by
a Non‑Executive Director and this has been actioned.
Allmembers allocated sufficient time to the Committee
withquality discussion and debate.
Focus and key activities in 2023
The Nomination Committee assists the Board in discharging
its responsibilities and is responsible for ensuring the ongoing
composition and make-up of the Board and any Committees
of the Board remain effective and suited to the Group’s
strategy and values. In practice this means it is responsible
for periodically reviewing the Board’s structure and identifying
potential candidates to be appointed as Directors or
Committee members as the need may arise. The Committee
reviewed the current structure, size and composition of the
Board and found it to be suitable.
The Committee reviewed the training needs of the Directors
and ensured there was suitable time on the Board agenda for
Company‑appropriate training.
The Committee was mindful of Board diversity and the
benefits it can bring.
Director independence and time commitment
The Nomination Committee considers that the independent
Non‑Executive Directors continue to demonstrate effective
performance, enthusiasm and commitment to the role and
have sufficient time to meet their responsibilities.
The Nomination Committee is satisfied that the Board has
the appropriate range of skills, experience, independence and
knowledge of the Group to enable it to discharge its duties and
responsibilities effectively.
Focus areas for 2024
As part of the Nomination Committee’s remit, it will look at the
following key tasks:
> full annual evaluation of effectiveness of the Board and its
Committees;
> a review of the Board composition, skills matrix
and succession planning, for the Board and senior
management team and;
> setting diversity objectives and strategies for the Group,
and monitoring the impact of diversity initiatives.
Succession planning
Continuous evaluation will be carried out as the Company
matures, to ensure that the composition of the Board
continues to be appropriate for the needs of the Group and its
long‑term success.
People are at the heart of our business and the Committee
will continue to prioritise the development of the Company’s
Talent, Succession and Development offering and look to
implement any further improvements that can be made. The
Committee will also seek to drive forward further progress
towards our diversity goals.
Internal Board evaluation
The second annual evaluation of the operation and
effectiveness of the Board, its Committees and individual
Directors took place in December 2023. The internal
evaluation was facilitated by Link Company Matters Limited,
using a tailored questionnaire structured to provide Directors
with an opportunity to express their opinions on the efficiency
of the Board and its Committees, the focus and functionality
of meetings and answering specific questions. The Board
completed evaluation questionnaires split into five sections
with an additional separate section each covering Directors’
self‑appraisal, and fellow Directors’ appraisal. The responses
were collated and analysed by Link Company Matters Limited.
Board evaluation summary
The results of the Board evaluation were encouraging,
indicating progress across several critical areas. Noteworthy
achievements include:
Strategic alignment:
> The forward meeting plan and individual agendas
effectively mirror the Board’s strategic priorities.
> The Executive Chair demonstrated strong leadership,
guiding the Board through changing circumstances.
Effective governance:
> The relationship between Non‑Executive Directors and the
Chief Executive Officer remains robust.
> Oversight of strategic implementation has been diligent.
> The Board actively contributes to strategy development.
> The Company Secretary and training programmes provide
essential support.
Board composition:
> The evaluation affirmed a well-balanced Board
composition.
> Discussions centred on attributes crucial for future
appointments and succession planning.
While the findings were positive, there’s always room for
improvement. As part of a balanced process, we’ll focus on
refining our practices. Looking ahead, the Chair’s priorities for
the coming year will align with the evaluation outcomes.
The Board intends to comply with the Code guidance that
an externally facilitated evaluation should take place at least
every three years.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 91
Composition, succession and evaluation continued
NOMINATION COMMITTEE REPORT
Our approach to election and re-election
The Board has opted to comply with provision 18 of the
Code where all Directors stand for re-election at each Annual
General Meeting. Accordingly, all Directors will stand for
re-appointment at the Company’s 2024 AGM.
The Board considers that all the current Directors continue to
be effective, are committed to their roles, and have sufficient
time available to perform their duties. The Board therefore
recommends the election of all Directors.
Induction of new Directors and Board training
The Directors receive training and development throughout
their tenure. The Board and its Committees receive
regular updates on relevant legal, regulatory and financial
developments, changes in best practice and environmental,
social and governance matters from subject experts, including
the Company’s external lawyers and Company Secretary.
During the 2023 financial year, in collaboration with Link
Company Matters Limited, and following the appointment
of a new Director, the Company Secretary facilitated access
to updated Director training. This training comprehensively
covered the requirements outlined in the Companies Act 2006.
Annual refresher training is made available to the Board of
Directors. The Board holds an annual off‑site strategy meeting.
In 2023, dedicated Directors’ training sessions included
sessions on:
> duties and responsibilities of Directors of UK listed
companies, including AGM duties; and
> refresher on MAR and continuing obligations.
The training needs of the Directors are periodically discussed
at Board meetings. A corporate governance update is a
standing item at all Board meetings. Additional training is
available on request, so that Directors can update their skills
and knowledge as applicable.
The Board plans training on a forward-looking basis, and
upon collecting feedback from Non-Executive Directors on
topics of interest. Board members receive formal papers a
week ahead of each Board or Committee meeting, which
enables them to make informed decisions on the issues
under consideration. In addition to formal Board meetings,
the Executive Chair maintains regular contact throughout the
year with the Chief Executive Officer, Chief Financial Officer
and Group management team to discuss specific issues.
The Company Secretary acts as an adviser to the Board on
matters concerning governance and ensures compliance with
Board procedures. All Directors had access to the Company
Secretary’s advice throughout 2023. Directors may also take
independent professional advice at the Company’s expense
if required. In the event that any Director has concerns about
the running of the Group, or a proposed action, that cannot be
resolved within the Board forum, these may be reflected in the
Board minutes. The Company Secretary circulates minutes
of each Board and Committee meeting following the meeting
for comment and approval to ensure an accurate record is
captured.
Diversity
At Alphawave Semi, ensuring diverse representation and the
bold ideas it creates is something we take seriously from the
top down.
Diversity is one of the strongest assets of our organisation.
The Group is committed to promoting the recognition and
appreciation of our diverse and rich culture and believes that
it is critical to its success to promote freedom of thought and
opinion in a respectful environment. The decisions we make
are rooted by respectfully considering each other’s thoughts
and opinions and by working towards a greater common goal.
The Group recognises the importance of having a diverse
Board, including in terms of gender and ethnicity. We believe
that having Board members who collectively possess
a broad range of social, educational and professional
backgrounds, together with different skills, experiences and
cognitive strengths will contribute towards a high‑performing
business. Management believes that our engineering‑focused
workforce, management teams and diverse and experienced
Board of Directors differentiate it from the competition and are
critical to the Group’s success in its marketplace.
The Company has met the following FCA diversity targets
(asrequired by Listing Rule 9.8.6(9):
> at least 40% of the Board being women (2023: 40%); and
> at least one member of the Board being from an ethnic
minority background (2023: one).
Although in the year we have not met the target of having
at least one senior Board position being held by a woman,
we are pleased to report that the Chairs of our Nomination
Committee and Remuneration Committee are women.
Board gender diversity
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board
(CEO, SID
and Chair)
Number
in executive
management
Percentage
in executive
management
Men 6 60% 3 8 89%
Women 4 40% 0 1 11%
Not specified/
prefer not tosay — — — — —
92 Alphawave IP Group plc | Annual report and financial statements 2023
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board
(CEO, SID
and Chair)
Number
in executive
management
Percentage
in executive
management
White British
or other White
(including
minority‑white
groups) 9 90% 3 5 45.5%
Mixed/Multiple
Ethnic Groups — — — — —
Asian/Asian
British — — — 4 36.5%
Black/African/
Caribbean/ Black
British — — — — —
Other ethnic
group, including
Arab 1 10% — 1 9%
Not specified/
prefer not tosay — — — 1 9%
For the purposes of the FCA disclosures, ‘executive
management’ is defined as the most senior executive body
below the Board and the Company Secretary, as set out under
Listing Rule 9.8.6R(10). However, the Company Secretary is
not a member of the Management team, therefore as set
out earlier in this report, the Management team currently
comprises one female and ten male colleagues.
Approach to data collection
At Alphawave Semi, the gender and ethnicity data relating to
the Board is based on the information held by the Company
Secretary and individual confirmations collected on an annual
basis as part of our Director year-end confirmation.
Board experience
Financial M&A Strategy
Semi-
conductors Telecoms
Data
networking
John Lofton Holt
• • • • •
Tony Pialis
• • • •
Sehat Sutardja
• • • •
Jan Frykhammar
• • • • • •
Michelle Senecal
de Fonseca
• • • • •
Rosalind
Singleton
• • • •
Paul Boudre
• • •
Susan
Buttsworth
• • • • •
David Reeder
• • •
Victoria Hull
• • • •
Board geographic diversity
John Lofton Holt
Tony Pialis
Sehat Sutardja
Jan Frykhammar
Michelle Senecal de Fonseca
Rosalind Singleton
Paul Boudre
Susan Buttsworth
David Reeder
Victoria Hull
When considering Board appointments and internal
promotions at a senior level, the Group will continue to take
account of relevant voluntary guidelines in fulfilling their role
regarding diversity, while seeking to ensure that each post is
offered strictly on merit against objective criteria to the best
available candidate.
The Nomination Committee will continue to consider
the structure, size and composition of the Board and its
Committees when contemplating new appointments and
succession planning for the year ahead. A range of diversity
factors will be taken into account in determining optimal
composition, together with the need to balance their
composition and refresh this progressively over time.
Succession planning, Board independence
and tenure of service
New Directors will typically be appointed by the Board
and then put forward for election by shareholders at the
subsequent AGM.
All Non-Executive Directors are appointed for initial terms
of two three‑year terms and may be terminated by either
party upon one month’s written notice or by shareholder vote
at the AGM. The Non-Executive Directors do not have any
entitlement to compensation (or payment in lieu of notice)
if they are not re‑elected by shareholders following any
retirement.
Full details of the remuneration of the Non-Executive Directors
can be found in the Directors’ remuneration report.
John Lofton Holt
Chair of the Nomination Committee
23 April 2024
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 93
Dear shareholder
On behalf of the Board, I am pleased to present my third
report as Chair of the Audit Committee. The report provides
a summary of the Audit Committee’s role and activities
for the year ended 31 December 2023, and is intended to
provide an understanding of the work the Committee has
done and to provide an insight into how the Committee has
discharged its responsibilities. I trust you will find this report
to be informative and that you take assurance from the work
wehave undertaken.
During the later part of the financial year, we welcomed
David Reeder as an independent Non-Executive Director
and member of the Committee and Rahul Mathur as the
new CFO of the Company. David was the Group Finance
Director at Globalfoundries and is now the CFO at Chewy,
Inc and is considered by the Board to have recent, relevant
financial experience. Rahul was the CFO at Rambus, Inc.,
and has decades of experience in senior finance roles in the
semiconductor industry.
Much of the work of the Committee in the first half of the
financial year was targeted and focused upon the audit of
the financial statements of FY 2022. Although the audit
procedures were substantially complete by the required
publication date, the Company’s external auditor had
requested more time to complete their internal oversight and
assurance processes before issuing its formal audit opinion.
The principal reason for this was due to the additional
procedures required in connection with the first-time audit
and consolidation of an enlarged Company following
three transformational acquisitions over the financial year
2022. These transactions included both whole business
acquisitions, carve-outs, debt financing and a 351% increase
in headcount.
The audited results for financial year 2022 were published
on 19 May 2023, which fell outside of the deadline required
by the Financial Conduct Authority’s Disclosure and
Transparency Rules for the publication of audited financial
statements. Asaresult, the listing of the Company’s shares
was suspended from trading from 7.30am on 2 May 2023 until
the22 May 2023.
Over the course of the year, the Committee and I have
concentrated on ensuring consistency and continued
accuracy of financial reporting, compliance with our debt
covenants, trading updates and monitoring the performance
of the external auditors.
On 5 December 2023, I received a letter from the FRC
following their review of the 2022 annual report and accounts.
The FRC asked us to clarify the basis on which we did not
eliminate the full amount of unrealised gains on sales made
to WiseWave. We provided a satisfactory explanation and the
FRC closed this enquiry.
Audit, risk and internal control
AUDIT COMMITTEE REPORT
“ In 2023 the Group made
significant infrastructure
investments to improve
financial controls and set
the platform for future
growth.”
Jan Frykhammar
Chair of the Audit Committee
94 Alphawave IP Group plc | Annual report and financial statements 2023
The FRC also asked us to explain how we had concluded
that the offsetting criteria in IAS 32 ‘Financial Instruments:
Presentation’ had been met in relation to our disclosure of
financial assets by foreign currency that indicated that a credit
balance was included in within cash and cash equivalents
in the balance sheet. We explained the events that led to the
credit balance and confirmed that there were no other material
credit balances within cash and cash equivalents. Given the
particular circumstances surrounding the issue, the FRC did
not consider it proportionate to pursue the matter further.
The FRC’s role is to consider compliance with reporting
requirements, not to verify the information provided.
Theirreview was based solely on our annual report and
accounts and does not benefit from detailed knowledge
of ourbusiness nor an understanding of the underlying
transaction entered into.
Whilst this Audit Committee report contains some of the
matters addressed during the year, it should be read in
conjunction with the external auditor’s report and the financial
statements of the Group and Company in general.
The Audit Committee reviewed significant accounting and
other related matters with appropriate challenge and debate.
The Audit Committee has reviewed the content in the annual
report and believes that this explains our strategic objectives
and is fair, balanced and understandable.
Purpose and role
The role of the Audit Committee is to assist with the Board’s
oversight responsibilities in relation to the Group’s financial
and narrative reporting, the effectiveness of the internal
control and risk management framework, internal audit
(where appropriate) and the independence and effectiveness
of the external auditor. The following sections of this report
describe the key activities of the Audit Committee in each of
these areas. The Board reviewed and approved the terms of
reference of the Audit Committee. For more information on
the Committee’s terms of reference visit: https://awavesemi.
com/investors/corporate-governance/.
Committee composition
The Audit Committee is comprised entirely of independent
Non-Executive Directors. The Audit Committee is chaired
by myself and its other members are Victoria Hull, Michelle
Senecal de Fonseca and David Reeder. The UK Corporate
Governance Code 2018 (the ‘Code’) recommends that the
Audit Committee should comprise at least three Independent
Non‑Executive Directors and that at least one member has
recent and relevant financial experience. The Board considers
that the Audit Committee as a whole complies with the
requirements of the Code in these respects.
Meetings and attendance
The Committee has a structured forward-looking planner
which reflects the financial cycle of the Company. This planner
drives the business to be considered at each meeting and is
regularly reviewed in conjunction with the Company Secretary
and management to ensure that it adequately reflects any areas
identified for additional focus.
Five scheduled meetings were held in 2023, with six ad hoc
meetings. The Executive Chair, Chief Executive Officer, Chief
Financial Officer and KPMG as external auditor regularly attend
the meetings.
Before each meeting, the Committee Chair meets with the CFO
and the external auditor to ensure there is a shared understanding
of the key issues to be discussed. Committee meetings are held
in advance of Board meetings to facilitate an effective and timely
reporting process. The Committee Chair provides a report to the
Board following each meeting.
The Committee meets privately without management present, as
necessary, and also privately with the CFO after each scheduled
meeting. Private meetings are also held at least once a year with
the external auditor to allow any issues of concern to be raised.
Committee evaluation
This year, we conducted an internally facilitated evaluation
of Board effectiveness. As part of this assessment, our
performance as a Committee was thoroughly examined. I am
delighted to report that the evaluation affirmed our effective
operation, and the Board draws assurance from the quality of
our work.
The quality and length of risk reporting emerged as an area
requiring greater attention. We anticipate that our new Chief
Financial Officer will address this matter in 2024.
The Committee members possess a diverse and substantial
background in recent and relevant financial and commercial
experience across various industries. Furthermore, each
member brings competence that is directly applicable to our
sector. For additional insights, you can explore their biographies.
Focus and key areas in 2023
One area of focus for the Committee was the need for a
continued improvement of the finance systems. TheCompany
had established systems following the IPO but these have
needed to be reviewed in light of the acquisitions and
changing nature of the business. Along with the CFO, a
thorough review of the needs of the business was conducted
and this resulted in the selection of an Enterprise Resource
Planning (ERP) solution.
The Committee also had deep‑dive sessions on talent,
capabilities and organisational structure in finance, and
assessed the review of the insurance placements and
coverage. As a result, the D&O insurance has been moved
from a captive and third party combination to a third party
cover. In addition, the Committee continues to monitor the
need for a permanent internal audit function.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 95
Audit, risk and internal control continued
AUDIT COMMITTEE REPORT
The Audit Committee, together with management, identified significant areas of financial statement risk and judgement as
described below.
Focus areas for 2024
Cybersecurity will be a notable focus for the Committee
during this coming year.
The Audit Committee will monitor progress of the
implementation of the ERP solution during the course of
the year. We will also assist management with the review
of post‑admission compliance, including the Delegation of
Authority matrix and other internal control improvements.
Financial reporting
The primary role of the Audit Committee in relation to financial
reporting is to review and monitor the integrity of the financial
statements, including annual and half‑year reports, results
announcements, and any other formal announcements
relating to the Group’s financial performance.
In considering the Group’s half-year report for the six months
ended 30 June 2023, the Committee conducted a page turn of
the report at its meeting in September 2023 and subsequently
recommended the report to the Board for approval.
The Audit Committee approved the planned scope of the
audit of the Company’s and Group’s 2023 annual financial
statements in November 2023, including materiality, the audit
cycle and the proposed timetable.
This Audit Committee report will show how the Company’s
financial reporting process is monitored and reviewed.
In the preparation of the Company’s and Group’s 2023
annual financial statements, the Audit Committee has
assessed the accounting principles and policies adopted,
and whether management had made appropriate estimates
and judgements. The Audit Committee also reviewed and
challenged the alternative performance measures used by the
Group. This review included evaluating our accounting policies
as they relate to the alternative performance measures,
the selection and overall presentation of the alternative
performance measures and the clarity and consistency
ofthereconciliations to IFRS measures.
In doing so, the Audit Committee discussed management
reports and enquired into judgements made. The Audit
Committee reviewed the reports prepared by the external
auditor on the 2023 annual report.
Jan Frykhammar
Chair of the Audit Committee
23 April 2024
Description of
significantarea
Revenue recognition
Revenue recognition for the Group’s
revenue streams is complex. This
is an area of focus due to the
nature of the licensing transactions
requiring management to exercise
significant judgement as well as
the revenue recognition treatment
of new revenue streams acquired
with the acquisitions of Precise-ITC,
OpenFive and Banias.
Work undertaken by the
Audit Committee and outcomes
The Committee reviewed the assumptions and disclosures around revenue
recognition made by management including critical judgements required
following the Group’s acquisitions of Precise-ITC, OpenFive and Banias and the
expansion of the Group’s business model to include silicon products.
The Committee was satisfied with the explanations provided and conclusions
reached in relation to revenue recognition and the Group’s compliance with
IFRS 15.
Capitalisation of R&D expenses
The Group has capitalised a
significant amount of expense
related to investments in products
expected to have revenue in the
future, and therefore accounting for
R&D capitalisation is a key area of
focus due to the level of judgement
involved.
For the R&D capitalised development expenditure, the Committee considered
the key judgements made in determining project costs eligible for capitalisation
under the Group’s R&D capital expenditure policy. This includes judgements
made in future cost estimates and future revenue expectations. The Committee
noted that the projects had been extensively reviewed, including key forecast
assumptions, bythe management team.
Key forecast assumptions included estimated future internal and external
expenditure, including external capital expenditure, progress to date, and
expected cash flow from future sales.
The Committee subsequently approved the amount of R&D capitalised for 2023.
96 Alphawave IP Group plc | Annual report and financial statements 2023
Fair, balanced and understandable
At the request of the Board, the Audit Committee has reviewed
the content of the 2023 annual report and considered
whether, taken as a whole, in its opinion it is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group’s position, performance,
business model and strategy. The Committee was provided
with an early draft of the annual report and provided
feedback on areas where further clarity or information was
required in order to provide a complete picture of the Group’s
performance. The final draft was then presented to the
Audit Committee for review before being recommended for
approval by the Board. When forming its opinion, the Audit
Committee reflected on discussions held during the period
and reports received from the external auditor, and the
following measures were adopted to ensure that this annual
report meets that requirement:
> factual content was verified by management;
> members of senior management undertook a
comprehensive review of the document to consider
messaging and balance;
> the Audit Committee reviewed a full draft of the document,
together with a summary of management’s approach to
the preparation of the narrative sections and the annual
financial statements;
> the Audit Committee considered whether there was
consistency between the key messages in this annual
report and the Group’s position, performance and strategy,
and between the narrative sections and the Group’s annual
financial statements;
> it also considered whether all key events reported to
the Board and its Committees during the year, both
positive and negative, were adequately reflected, together
with reporting by the external auditor of any material
inconsistencies;
> the Audit Committee reviewed and challenged the use
of alternative performance measures by the Group as
described in the financial review;
> a comprehensive review of the entire annual report was
carried out by the Directors; and
> feedback from the Audit Committee and other Directors
on areas that would benefit from further clarity was
incorporated into this annual report ahead of final approval.
Description of
significantarea
Going concern
The Group’s going concern
assessment assumes that there
will be no further investment in
WiseWave and that WiseWave will
be adequately funded by external
financing sources to continue
to discharge its liabilities with
theGroup.
Work undertaken by the
Audit Committee and outcomes
The Committee challenged management on the assumptions used in the going
concern assessment and particularly whether the Group would be required to
provide additional funding to WiseWave during the going concern period.
The Committee was satisfied that while there is the ability for the Group to
invest further in WiseWave, there is no obligation or intention to do so and
hence the Committee agreed with the conclusions reached in the going
concern assessment.
WiseWave contract asset
recoverability
Having fulfilled the IP licence
performance obligations in the
five-year subscription licence
agreement with WiseWave at the end
of 2023, the Group has recognised all
remaining IP licence revenue in the
agreement and has also recognised
a contract asset of US$42.4m, which
is due to be settled by WiseWave
over the remainder of the term of
the agreement. Judgement has
been used in determining the likely
recoverability of this contract asset
and the level of any credit loss
provision required.
Management have high visibility of the operations and prospects of WiseWave
through the directorships Alphawave holds on WiseWave’s board. Management
have explained to the Committee WiseWave’s historic payment pattern,
itsnear-term funding plans (including the prospects of securing funding from
external parties other than Alphawave) and the actions available to Alphawave
in the event of non-payment by WiseWave. The Committee is satisfied with
management’s assessment that no additional expected loss provision is
required for the WiseWave contract asset and that it is appropriate to deem it
recoverable.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 97
Audit, risk and internal control continued
AUDIT COMMITTEE REPORT
Fair, balanced and understandable continued
Following the Committee’s review, the Directors confirm
that, in their opinion, the 2023 annual report, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
Risk management and internal control
The Audit Committee’s responsibilities include a review of the
risk management systems and internal controls to ensure that
they remain effective and that any identified weaknesses are
properly dealt with. The Audit Committee:
> reviews annually the effectiveness of the Group’s internal
control framework; and
> reviews reports from the external auditor on any issues
identified in the course of their work, including any
internal control reports received on control weaknesses,
and ensures that there are appropriate responses, from
management.
The Audit Committee’s responsibilities include a review of
the risk management systems and internal controls to ensure
that they remain effective and that any identified weaknesses
are properly dealt with. The Group has internal controls
and risk management systems in place in relation to its
financial reporting processes and preparation of consolidated
accounts. Theinternal control systems include the elements
described below.
Element
Control environment
Approach and basis for assurance
The Group is committed to the highest standards of business conduct and seeks to
maintain these standards across all of its operations. The Group has adopted a Code of
Business Conduct which provides practical guidance for all staff. There are also supporting
Group policies and employee procedures in place for the reporting and resolution of
suspected fraudulent activities. The Group has an appropriate organisational structure for
planning, executing, controlling and monitoring business operations in order to achieve
Group objectives. Linesofresponsibility and delegations of authority are documented.
Risk assessment
Whilst risk management is a matter for the Board as a whole, the day-to-day management
of the Group’s key risks resides with the senior management team and is documented in
a risk register. The Executive Risk Committee is responsible for reviewing the risk register.
Areview and update of the risk register is undertaken by the Audit Committee on an annual
basis. The management of identified risks is delegated to the senior management team,
and regular updates are given to executive management at monthly meetings.
Control activities
The Group and its operating units are continuing to improve the control procedures
designed to ensure complete and accurate accounting for financial transactions.
Measures taken during 2023 include expanding the finance team capabilities, further
management reviews, formalising controls, strengthening spreadsheet controls and a
new ERP system scheduled for 2024.
Monitoring and
corrective action
The Audit Committee meets at least four times a year and, within its remit, reviews progress
with improvements and the effectiveness of the Group’s system of internal controls.
In addition to these internal assurances, the Audit Committee took into account the findings
from the external auditor’s evaluation of the internal control environment performed
during the audit and feedback from the work of a specialist internal controls consultant,
as well as its own observations throughout the period under review. The Audit Committee
acknowledged the findings of the external auditor in relation to the Group’s risk management
and internal control systems and where areas for improvement were identified, there were
processes in place to ensure that the necessary actions would be taken by management and
that these outcomes would be monitored.
The Board considered the Audit Committee’s findings in relation to the effectiveness of the
Group’s systems of risk management and internal control, and was satisfied that throughout
the year under review and up to the Last Practicable Date, the Group’s risk management and
internal control environment continued to be effective.
98 Alphawave IP Group plc | Annual report and financial statements 2023
Going concern and viability statement
The Audit Committee reviewed management’s schedules
supporting the going concern assessment and viability
statements. These included the Group’s medium-term plan
and cash flow forecasts for the period to end H1 2024.
The Audit Committee discussed with management the
appropriateness of the three‑year period and discussed the
correlation with the Group’s principal risks and uncertainties
as disclosed on pages 74 to 77. This three‑year period aligns
with the Group’s internal forecasting framework, reflects the
Group’s high growth and evolving financial profile and aligns
with the Group’s external financial guidance.
The feasibility of mitigating actions and the potential speed
of implementation to achieve any flexibility required were
discussed. Scenarios covering events that could adversely
impact the Group were considered.
The Audit Committee evaluated the conclusions over going
concern and viability and the disclosures in the financial
statements and satisfied itself that the financial statements
appropriately reflect the conclusions.
For additional detail, please refer to the external auditor’s
report and strategic report contained in this annual report.
External auditor
During 2023, the Audit Committee approved the audit
plan and fee for the period ending 31 December 2023 and
reviewed KPMG’s findings in respect of the audit of the
financial statements for the period ended 31 December2022.
The Audit Committee regularly met separately with
representatives from KPMG without management present
and with management without representatives of KPMG
present, to ensure that there were no issues in the relationship
between management and the external auditor which it
should address.
The Committee has reviewed, and is satisfied with, the
independence of KPMG LLP as the external auditor.
Non-audit services provided
by the external auditor
The external auditor is primarily engaged to carry out
statutory audit work. There may be other services where the
external auditor is considered to be the most suitable supplier
by reference to their skills and experience. It is the Group’s
practice that it will seek quotes from several firms, which may
include KPMG, before engagements for non-audit projects are
awarded.
Contracts are awarded based on individual merits. The Audit
Committee oversaw the application of a formal policy on the
procurement of non‑audit services. This policy is in place for
the provision of non‑audit services by the external auditor,
toensure that the provision of such services does not impair
the external auditor’s independence or objectivity and will
be assessed going forward in line with the FRC’s Ethical and
Auditing Standards.
The review of the half‑year report, an assurance‑related
non-audit service, was approved as part of the Audit
Committee approval of the external audit plan. All permitted
non-audit services require approval in advance by either the
Audit Committee Chair, the Audit Committee or the Board,
subject to the cap of 70% of the fees paid for the audit in the
last three consecutive financial years.
Approved and signed on behalf of the Audit Committee.
Jan Frykhammar
Chair of the Audit Committee
23 April 2024
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 99
Dear shareholder
As Chair of the Remuneration Committee, I am pleased to
present our third report on Directors’ remuneration.
This report is divided into three sections:
> this introductory letter, which describes the main decisions
made in respect of and during the year, as well as detail on
the context in which these decisions were made;
> the Remuneration Policy (the ‘policy’), which sets out the
approach the Remuneration Committee takes on Directors’
pay, as approved by shareholders at the AGM in 2022; and
> the annual report on remuneration, which describes the
details of what has been paid to Directors in respect of
2023 and an outline of how we propose to implement the
policy in 2024.
This year the Committee’s focus has been on implementing
the Policy in line with the Group’s long-term business strategy,
whilst maintaining our commitment to high standards of
corporate governance.
Purpose and role
The Remuneration Committee is a formal committee of the
Board and its remit is set out in terms of reference, which can
be found on the Company’s website https://awavesemi.com/
investors/corporate-governance/.
The Committee’s performance against these terms of
reference is reviewed on an annual basis and the Committee
is satisfied that it has acted in accordance with its terms of
reference during the year.
The primary purposes of the Committee, as set out in its
terms of reference, are:
> to make recommendations to the Board on the Group’s
framework of executive remuneration;
> to determine individual remuneration packages within that
framework for the Executive Directors and certain senior
executives; and
> to oversee the operation of the Group’s share schemes.
The Committee is authorised to seek information from any
Director and employee of the Group and to obtain external
advice.
The Committee is solely responsible for the appointment of
external remuneration advisers and for the approval of their
fees and other terms.
No Director or other attendee takes part in any discussion
regarding his or her personal remuneration.
Remuneration
DIRECTORS’ REMUNERATION REPORT
“ The strategic importance
of our employees
is reflected in the
remuneration structure
across the Group.”
Victoria Hull
Chair of the Remuneration Committee
100 Alphawave IP Group plc | Annual report and financial statements 2023
Committee composition
The Remuneration Committee is comprised entirely of
independent Non‑Executive Directors. I am the Chair and
its other members are Jan Frykhammar and Paul Boudre.
Thebiographies of each member of the Committee are set
out on the Board of Directors pages.
Meetings and attendance
Four scheduled meetings were held in 2023, with three ad hoc
meetings. The Committee asked the Executive Directors and
the VP of HR to attend meetings and assist its discussions.
This excluded matters connected to their own remuneration,
service agreements or terms and conditions of employment.
The Committee takes care to recognise and manage conflicts
of interest when receiving views from Executive Directors
or senior management. The Committee reserves the right
to conduct in full or start its meetings without executive
management present when it wishes to do so. The Committee
and the Chair also engage regularly with the remuneration
consultants and Head of Governance.
Committee evaluation
The Committee’s performance and effectiveness were
reviewed as part of the wider Board evaluation. The review
stated that the Committee was well chaired and that all
members allocated sufficient time to the Committee with
quality discussion anddebate.
Focus and key activities in 2023
The following matters were considered and discussed
in2023:
Dilution
The Committee is keenly aware of the dilutive effect of
share‑based compensation and monitors this closely,
balancing with a need for the Company to pay competitively
inorder to attract and retain talented individuals.
CFO change
As announced in May 2023, Daniel Aharoni stepped down
asCFO and as a member of the Board.
Details of Daniel’s remuneration arrangements relating to
his time on the Board were set out in the section 430(2B)
statement and can also be found on the following pages.
Rahul Mathur joined as CFO in October 2023. Rahul has a
wealth of experience in senior finance and leadership roles.
Weare confident that his highly relevant skills and experience
will help us to take advantage of the significant opportunities
before us and will be invaluable as we continue to build our
business.
Rahul is not a Board Director and his remuneration package
is not subject to the Directors’ remuneration report. However,
the Committee, along with the Nomination Committee, were
involved in reviewing and approving the remuneration package.
Remuneration in context
The Committee’s approach to governing executive pay at
Alphawave Semi is to ensure a clear and rigorous focus
on aligning pay with performance, but equally to give due
consideration to all our key stakeholders.
With that in mind, this report contains the key drivers of our
decisions in relation to the Executive Directors’ remuneration
outcomes for the financial year.
This year we have operated under the current Remuneration
Policy, which was approved by shareholders at the AGM in
June2022.
It is relevant context to note that, as founders of the Company,
the Executive Directors retain significant shareholdings in the
Company, which amount to over 100 times their respective
salaries. As a result of these shareholdings, the Executive
Directors are highly aligned with Group financial performance
and the interests of our investors.
Corporate performance
Strategic priorities
> We diversified our business in terms of end-customers,
end-markets, product portfolio and expertise,
and geographies. We continued to increase our
revenue‑generating end‑customer base from 80 to 103.
> We increased our engineering and operational capabilities,
scaling headcount from 695 to 829 by 31December 2023.
> We expanded our product offering to address lower
process nodes.
Financial performance
> Bookings for the year were up by 68% to US$383.9m
(FY2022: US$228.1m).
> We grew our revenues for the year by 74% to US$321.7m
(FY2022: US$185.4m).
> We delivered an increase of 34% in adjusted EBITDA to
US$62.6m (FY 2022: US$46.8m) representing an adjusted
EBITDA margin of 19%.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 101
Remuneration continued
DIRECTORS’ REMUNERATION REPORT
Remuneration in context continued
Stakeholder experience
Our shareholders
> We are committed to take wider stakeholder experience
into account when making decisions on executive pay
and we have noted the performance of the shares and the
factors contributing to that performance.
> Promoting share ownership is a key principle of Alphawave
Semi’s approach to remuneration across the Group.
We want all employees to be aligned with shareholders
so they can share in the success of the Group and be
invested in its growth story. The Executive Chair and Chief
Executive Officer, as founders of the business, embody this
philosophy, having retained significant stock ownership
in the Company on IPO, to ensure they are aligned to
the experience of new (and indeed, old) investors in the
Company.
Our employees
> The 2023 average annual salary increase for the wider
workforce was 10% and all employees are eligible for an
annual bonus. No cash bonus was paid out in 2023.
> The philosophy behind our compensation programme
is to support the Group’s mission and values. Aligned
with an effective communication plan, it is designed to
support, reinforce and align our values, business strategy,
operational and financial needs with a goal of growth and
profitability. In alignment with our culture, we communicate
openly about the goals of the business. Alphawave Semi
works hard to administer the compensation programme in
a manner that is consistent and free of discrimination and
is equitable to all employees regardless of race, ancestry,
place of origin, ethnic origin, citizenship, creed, gender,
sexual orientation, age, marital status, family status or
disability.
> As a Canada-originated business competing in the
semiconductor industry, many of our employees are
situated in Canada or the United States. It is critical to our
success to ensure this talent is remunerated competitively.
As such, we consider a global high-tech talent market when
benchmarking pay for the organisation.
> Alongside our Workforce Engagement NED, the Committee
is committed to ensuring it has good oversight over pay
practices and policies of the wider workforce and ensuring
that any decisions made about executive remuneration are
considered in the context of the wider workforce.
2023 remuneration
Taking the context set out above into account, the Committee
made the following decisions in respect of remuneration
in2023:
Base salary
No increases were made to the salaries of Executive Directors.
CFO transition
As announced on 4 May 2023, Daniel Aharoni stepped down
as CFO and an Executive Director of the Company following
the publication of the audited results of the Company for FY
2022. Christian Bowsher, Senior Director of Finance, served
as interim CFO until Rahul Mathur was appointed as CFO with
effect from 30 October 2023.
The Committee applied the Directors’ Remuneration Policy
and the terms of his employment contract in determining
Daniel Aharoni’s remuneration arrangements. He will receive
monthly payments of base salary for his twelve‑month notice
period, subject to mitigation and pay in lieu of accrued but
untaken holiday. He was not eligible for a bonus or long-term
incentive award for the 2023 financial year. Any outstanding
deferred bonuses will continue to be payable in accordance
with their terms. His outstanding long‑term incentive award
lapsed in full. His unvested restricted shares acquired prior
to IPO will continue to vest each month until December
2024 in accordance with their terms. He remains subject
to post-employment shareholding requirements. Further
details are included in the annual report on remuneration
onpage110.
Christian Bowsher and Rahul Mathur are not directly subject
to the Remuneration Policy as they are not Executive Directors
of the Company.
Given the above, the fact that the Executive Chair and Chief
Executive Officer waived participation in annual bonus
and LTIP for 2023, and that Sehat Sutardja is not entitled
to participate in any bonus or variable compensation
arrangement, no Executive Directors participated in incentive
arrangements for the year. There are therefore no details of
incentive outcomes for the year to be disclosed.
2024 Remuneration Policy
andimplementation
The Remuneration Policy was approved by a shareholder vote
of 99.97% at the AGM in 2022 and is designed to ensure a
strong link between remuneration, strategic priorities and the
delivery of objectives.
The Policy includes provision for Executive Directors
to participate in a Short-Term Incentive Plan (STIP) and
Long-Term Incentive Plan (LTIP). However, in the first two
years of the Policy the Executive Directors chose to waive
participation in these arrangements given the very early
stage of the Company’s development. In keeping with this
philosophy, the Executive Directors also chose to forgo pay
rises and salaries were consciously positioned at the low end
of comparable FTSE 250 salaries. Except for 2024, where
the Chief Executive Officer will have an increase of 51% to his
May2024 salary.
102 Alphawave IP Group plc | Annual report and financial statements 2023
In the two and a half years since the IPO in May 2021 the
business has made significant progress towards consolidating
the strategy to be a leading provider of connectivity
technology for digital infrastructure markets, including the
acquisitions of Precise-ITC, OpenFive and Banias Labs which
represent steps towards a vertically integrated business
model. These acquisitions have added greater geographic
and operational complexity to the Company’s operations.
But the results are tangible. This is reflected in a 10x increase
in revenue from the year before the Company’s IPO, while
continuing profitable operations – and an 11x increase in
company headcount. The Group’s goal is to achieve US$450m
in revenue by 2025 and US$1bn of revenue by 2027. Our FY
2023 financial performance reflects good progress towards
those goals, with 74% year-on-year revenue growth alongside
a year-on-year increase in adjusted EBITDA of 34%.
Given this swift evolution, the Company is now at a very
different stage and the Board strongly believes that it is
appropriate to recast the Executive Director packages and
offer market competitive remuneration to the CEO and
Executive Chairman and better align the executive team
remuneration generally. With this context. and in view of the
exceptional and dynamic leadership of the CEO and Executive
Chairman. the Board wishes to offer market rate salary, bonus
and equity incentives.
The Remuneration Committee offered the Executive
Chairman the opportunity to participate in the 2024 incentive
arrangements but at the present time John Lofton Holt will
continue to waive such participation.
No changes are proposed to the arrangements for Sehat
Sutardja.
The table below summarises Tony Pialis’ arrangements in
2023 and those proposed for 2024:
Director 2023 Proposed 2024
Base salary £450,000 £680,000
STIP N/A – waived
Maximum opportunity
of 150% of salary
LTIP N/A – waived
LTIP award of face
value 300% of salary
with stretching
performance conditions
The Committee notes that, although Alphawave Semi is a
UK listed company, in practical terms the talent market with
which we compete for senior executive talent is made up of
companies within the semiconductor sector, primarily based
in North America. The levels of remuneration offered by these
companies (especially in terms of long‑term incentive awards)
are significantly above typical levels in the UK and those in our
proposals for 2024.
Notably, such companies commonly award restricted stock
units with no performance criteria and vesting at least
annually. However, the Committee believes that at this
juncture it is appropriate to operate within the limits of the
existing shareholder-approved Policy rather than look to
amend this.
Base salary
At the time of the IPO the salary level was deliberately
positioned at the lower end of salaries for CEOs in the FTSE
250. The Committee’s intention is that the CEO new salary
level will represent a one-time ‘right-sizing’ adjustment to a
market competitive level and that future increases will be
modest and generally no greater than increases for our wider
workforce while the Company remains at the current scale.
Annual Bonus
The payout of STIP will be subject to the achievement
of stretching performance targets based on Revenue,
EBITDA and Operating Cash Flow. The Committee decided
to introduce an Operating Cash Flow element this year in
response to feedback received from shareholders during the
consultation exercise and our ongoing focus on optimising
operational efficiency and enhancing liquidity alongside
sustainable growth. One‑third of any bonus will be deferred
into shares for a period of two years. Further details are set
out on page 116.
LTIP
The vesting of LTIP awards will be linked to the achievement
of stretching performance targets, closely aligned with the
creation of value for shareholders. Consistent with previous
years, these will be based on Relative Total Shareholder
Return (compared to two groups: the FTSE 250 and the FTSE
All-World Technology Index) and Earnings Per Share growth
over a three‑year period.
Full details on the Policy and further information on the
proposed implementation of the Policy can be found on the
following pages.
I hope you find that this report clearly explains the
remuneration approach we have taken and how we will
implement the Policy in 2024. I look forward to your support
at the 2024 AGM in respect of the resolution relating to
thisreport.
Victoria Hull
Chair of the Remuneration Committee
23 April 2024
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 103
Remuneration continued
DIRECTORS’ REMUNERATION REPORT
Salary
Pension and
other benefits
LTIP
Total
remuneration
One-third of any
bonus will be
deferred into
sharesfor a period
oftwoyears
Bonus –
cash
Fixed
Long term
Variable
Elements of the Directors’ remuneration
Strategy
in action
Measuring outcomes
How remuneration links to our strategy
2024 Annual bonus
> Revenue.
> EBITDA.
> Cash flow from
operations before
changes in working
capital.
2024-25 LTIP
> TSR.
> EPS.
Market leadership
Maintain pace of
innovation and market
leadership by attracting
andretaining talent
Innovation
Leverage our IP to expand
our product portfolio and
grow our custom silicon
business
Expansion
Land and expand:
broader and deeper
customer base
104 Alphawave IP Group plc | Annual report and financial statements 2023
Remuneration at a glance
Component
Fixed pay
Base salary level
Benefits
Our governance
Our link between remuneration and strategy
Alphawave Semi’s strategic priorities as detailed on page 20
are designed to maintain our leading technology position,
enabling it to expand its position at its existing customers
and win new customers, generating profitable growth whilst
retaining and motivating employees.
The Remuneration Policy (the ‘policy’), which was approved by
a vote of 99.97% at the AGM in 2022, is designed to ensure a
strong link between remuneration, the strategic priorities and
delivery of objectives.
Incentive scheme targets are carefully considered by the
Committee to ensure they reward performance and are
correctly calibrated. Targets used in the incentive schemes
are then monitored and progress measured by reference to
many of the reported KPIs. With the continuing development
of the Group’s approach to sustainability, we are committed
to understanding the most material ESG factors to Alphawave
Semi as a business with a view to embedding these into the
executive remuneration framework, to align with the Group’s
strategy, in future years.
For further details on how our Policy links to strategy,
seethePolicy table on pages 107 to 110.
> John Lofton Holt, Executive Chair: £450,000.
> Tony Pialis, President & Chief Executive
Officer: £450,000.
> Sehat Sutardja, Executive Director: £85,000
(part-time working arrangement).
> Daniel Aharoni, Chief Financial Officer:
£365,000 (until he stepped down in
May2023).
> John Lofton Holt, Executive Chair:
£450,000.
> Tony Pialis, President & Chief
Executive Officer: £680,000.
> Sehat Sutardja, Executive Director:
£85,000 (part-time working
arrangement).
Component Component
> Private medical cover for the President &
Chief Executive Officer, and Chief Financial
Officer (until May 2023). The Executive
Chair declined medical coverage.
> No change from 2023.
Pension
> Only the Chief Financial Officer
participated (until May 2023), with a 10%
of salary contribution level, aligned with
wider workforce.
> No Executive Directors will
participate in 2024.
Variable pay
Annual bonus
> Executive Chair and President & Chief
Executive Officer were eligible but waived
participation, therefore no Executive
Directors participated in bonus in respect
of 2023.
> Tony Pialis will participate
in 2024 with a maximum
opportunity level of 150% of
basesalary.
> No changes for other Executive
Directors.
Long-term incentives
> Executive Chair and President & Chief
Executive Officer eligible but waived
participation, therefore no Executive
Directors participated in LTIP in respect
of2023.
> Tony Pialis will participate in
2024 with an award level of 300%
of base salary.
> No changes for other Executive
Directors.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 105
Remuneration continued
DIRECTORS’ REMUNERATION REPORT
Our governance continued
UK Corporate Governance Code 2018 (the ‘Code’) – Provision 40 alignment
The table below explains how the Remuneration Committee addressed the factors set out in Provision 40 of the Code when
determining the Remuneration Policy. As founders of the Company, the Executive Directors retain significant shareholdings in
the Company. As a result of these shareholdings, the Executive Directors are highly aligned with Group financial performance
and the interests of our investors.
Clarity
Remuneration arrangements
should be transparent and promote
effective engagement with
shareholders and the workforce.
The Remuneration Committee has aimed to incorporate simplicity and transparency
into the design and delivery of our Remuneration Policy. Theremuneration structure
is simple to understand for both participants andshareholders and is aligned to the
strategic priorities of the business.
We aim for disclosure of the Policy and how it is implemented to be in a clear and
succinct format.
Simplicity
Remuneration structures should
avoid complexity and their rationale
and operation should be easy to
understand.
Our remuneration arrangements for Executive Directors are purposefully simple,
comprising of fixed pay (salary, benefits, pension/pension salary supplement),
a short‑term incentive plan (annual bonus scheme) and a long‑term incentive
plan(LTIP).
Risk
Remuneration arrangements should
ensure reputational and other
risks from excessive rewards, and
behavioural risks that can arise
from target‑based incentive plans,
are identified and mitigated.
The Policy includes a number of points to mitigate potential risk:
> defined limits on the maximum opportunity levels under incentive plans;
> provisions to allow malus and clawback to be applied, where appropriate;
> performance targets calibrated at appropriately stretching but sustainable levels; and
> bonus deferral, LTIP holding periods, in‑employment and post‑employment
shareholding requirements ensuring alignment of interests between Executive
Directors and shareholders and encouraging sustainable performance. For
founder Executive Directors, actual shareholding levels are far in excess of these
requirements, providing a strong alignment between individual and investor interests.
Predictability
The range of possible values of
rewards to individual Directors
and any other limits or discretions
should be identified and explained
at the time of approving the policy.
We aim for our disclosure to be clear to allow shareholders to understand the range
of potential values which may be earned under the remuneration arrangements.
Proportionality
The link between individual awards,
the delivery of strategy and the
long-term performance of the Group
should be clear. Outcomes should
not reward poor performance.
A significant part of an Executive’s reward is linked to performance with a clear line
of sight between business performance and the delivery of shareholder value. For
founder Executive Directors, the significant shareholding levels provide a strong
alignment between individual and investor interests.
106 Alphawave IP Group plc | Annual report and financial statements 2023
Remuneration Policy
This section sets out the Company’s first Directors’
Remuneration Policy which has been prepared in accordance
with the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations. The Policy was subject
to a binding shareholder vote at the 2022 AGM and became
effective from the date of the AGM.
The Company is committed to maintaining high standards
of corporate governance and to making consistent annual
improvements in its corporate governance practices in order
to reflect evolving legal requirements, critical ESG themes,
investor expectations and wider stakeholder considerations.
Therefore, the principles of the Code were taken into account
when developing this first Policy post-Admission to the
LSE. The Committee will also seek to develop and maintain
an open and constructive dialogue with current and future
investors on the approach it takes to Director remuneration.
In the event that any material changes to the Policy or its
implementation are proposed, the Committee will engage
inaconsultation with shareholders as appropriate.
Alignment to culture
Incentive schemes should drive
behaviours consistent with Group
purpose, values and strategy.
The incentive arrangements and the performance measures used are strongly
aligned to those that the Board considers when determining the success of the
implementation of the Group’s purpose, values and strategy. In determining that
success, the Board has regard to the impact of the Group’s purpose, values and
strategy on the financial performance of the business, including the revenues and
profitability, and how that performance is reflected in the Company’s share price
over the medium and long term. The Board is able to review targets, measures and
weightings for both the short‑term and long‑term incentive plans on an annual basis to
ensure that they continue to be aligned with the Group’s purpose, values and strategy.
Purpose and
linktostrategy
Fixed remuneration
Base salary
To attract and retain
executives of the right
calibre to successfully
develop and execute on an
intensive and ambitious
emerging markets
business strategy aimed
at driving shareholder
returns over time.
Base salaries will typically
be reviewed annually, with
any increases normally
effective from 1 January.
Base salary levels take
account of:
> the individual’s role,
performance and
experience;
> business performance,
individual track record
and the external
environment;
> salary increases for
senior management
and other employees;
and
> salary levels for
comparable roles
at relevant global
businesses.
No recovery or
withholding applies.
Whilst there is no prescribed
maximum, salary increases will
generally be in line with those of
the wider workforce.
Increases may be made above
this level where the Committee
considers it appropriate,
including (but not limited to) a
significant increase in the scale,
scope, market comparability
or responsibilities of the role,
bearing in mind potential growth
and increased complexity of the
business.
Where an individual has been
appointed on a salary lower than
market levels, increases above the
wider workforce may be made to
recognise experience gained and
performance in the role.
Such increases will be explained
in the relevant year’s annual report
on remuneration.
Operation Performance
measures
Maximum
opportunity
None.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 107
Remuneration continued
DIRECTORS’ REMUNERATION REPORT
Remuneration Policy table for Executive Directors continued
Purpose and
linktostrategy
Fixed
remuneration
Benefits
To provide
market-competitive
benefits.
Benefits typically include
participation in car
schemes, private health
insurance, disability
insurance, travel insurance
and life insurance. Where
appropriate, other benefits
may be offered, including,
but not limited to,
allowances for relocation.
Executive Directors will
be eligible to participate
in all‑employee share
schemes which may be
established in the future,
on the same terms as
other employees and
subject to the limits
defined in the plan rules.
No recovery or
withholding applies.
Benefits provided
may vary by role
and individual
circumstance
and are reviewed
periodically.
There is
no overall
maximum.
Operation Performance measuresMaximum
opportunity
None.
Pension (or cash
allowance)
To provide market
competitive
retirement benefits
in line with the global
workforce.
Executive Directors may
participate in a defined
contribution scheme.
Individuals may receive
a cash allowance in lieu
of some or all of their
pension contribution.
No recovery or withholding
applies.
Pension
contribution or
cash payment
is equal to the
maximum
employer
contribution
available to
employees under
the defined
contribution
scheme
(currently 10%
of salary) in line
with the wider
workforce.
None.
108 Alphawave IP Group plc | Annual report and financial statements 2023
Purpose and
linktostrategy
Performance-
related variable
remuneration
Short-Term
Incentive Plan
(STIP)
To provide alignment
between the
successful delivery
of annual strategic
business priorities
andreward.
The bonus is earned based
on the achievement of
one‑year performance
targets and is delivered in
cash or a combination of
cash and deferred shares.
At least one-third of gross
bonus will be deferred
into shares, typically for
a period of two years.
Dividend equivalents may
be accrued on deferred
shares.
Malus and clawback
provisions may be
applied in exceptional
circumstances as detailed
in the notes to this table.
The overall
policy maximum
for Executive
Directors is 180%
of base salary.
The bonus
pays out from
threshold at
25% to target at
50% and 100%
at maximum
performance.
Operation Performance measuresMaximum
opportunity
Performance measures, weightings
and targets are reviewed annually
and set at the beginning of the
year to ensure they are stretching
and they continue to support the
achievement of the Group’s key
strategic priorities. The bonus
will be based on a combination of
financial, operational, strategic and
individual measures. At least 60% of
the bonus will be based on financial
measures, which may include (but
are not limited to) revenue and
adjusted EBITDA. TheCommittee
has the discretion to adjust the
bonus outcomes to ensure they are
reflective of underlying business
performance and any other relevant
factors. The Committee will consult
with major shareholders where
appropriate before the use of
discretion to increase the outcome.
Long-Term
Incentive Plan
(LTIP)
To incentivise and
reward participants
over the long term
for sustained
performance and
delivery of the
business strategy
and shareholder
value.
Provides
longer‑term
alignment with
the shareholder
experience.
LTIP awards will typically
be made annually and
consist of rights to shares
(or a cash equivalent)
subject to performance
conditions. Awards will
normally vest no less
than three years after
the respective award
grant date, based on
satisfaction of the defined
performance metrics.
Vested shares are subject
to a holding period of two
years (shares may be
sold at vesting to satisfy
any tax‑related liabilities).
Dividend equivalents may
be accrued on shares.
Malus and clawback
provisions may be
applied in exceptional
circumstances as detailed
in the notes to this table.
The overall
policy maximum
for Executive
Directors is 300%
of base salary.
For threshold
performance,
payment starts
at 25%.
The targets, measures and weightings
will be determined annually by the
Committee prior to the grant of the
award.
This is likely to include a market
measure (such as relative TSR) and
an internal financial measure.
The Committee will set the measures
and weightings each year, and has
discretion to adjust the number of
shares vesting from the formulaic
application of the performance
conditions based on a review of
underlying performance of the Group.
The Committee will consult with
major shareholders where appropriate
before the use of any material
discretion to increase the formulaic
outcome.
For 2024, the Committee has selected
relative TSR and EPS growth as the
appropriate measures, as they align
with long‑term shareholder interests.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 109
Remuneration continued
DIRECTORS’ REMUNERATION REPORT
Notes to the Policy table
Operation of incentive plans
The incentive plans will be operated within the Policy at all
times and in accordance with the relevant plan rules and the
Listing Rules. There are a number of areas over which the
Committee retains flexibility, as detailed below:
> who participates in each plan;
> the timing and size of an award and/or payment (subject to
any maximums indicated in the table above);
> the performance measures, weightings and targets that will
apply each year and any intra-period adjustments thereof;
> treatment of leavers; and
> amendments of plan rules in accordance with their terms.
Where appropriate, any use of discretion by the Committee
will be disclosed in the relevant annual report on remuneration
and may be subject to consultation with the Company’s
shareholders.
Malus and clawback provisions
Consistent with best practice, malus and clawback
provisions will be operated at the discretion of the Committee
in respect of both the annual bonus and LTIP where it
considers that there are exceptional circumstances. Such
exceptional circumstances include those relating to material
misstatement of accounts, errors in calculating the LTIP
award, corporate failure and a participant’s conduct resulting
in material reputational damage.
Clawback may be applied from the point of payment for the
bonus for a period of up to three years and, for the LTIP, from
vesting until the fifth anniversary of the award (or two years
from vesting, for a three‑year award).
Remuneration Policy table for Executive Directors continued
Purpose and
linktostrategy
Performance-
related variable
remuneration
Shareholding
policy
To provide
alignment between
the interests of
Executive Directors
and shareholders
over the longer term.
Shareholding guidelines
will be 200% of base
salary for all Executive
Directors, to be built
up over a five-year
period from their date
of appointment to the
Board. For the purposes
of the Policy, shares
which are beneficially
owned will count, as will
unvested shares which
are not subject to any
performance conditions
(on a net of tax basis).
Post-cessation
shareholding policy
All Executive Directors will
be required to maintain
the in‑employment
guideline or their actual
shareholding at the point
of leaving for lesser of the
two years post‑cessation.
Not applicable.
Operation Performance measuresMaximum
opportunity
Not applicable.
110 Alphawave IP Group plc | Annual report and financial statements 2023
Illustrative scenario analysis (2024)
Discretion
The Committee recognises the importance of ensuring that
pay reflects performance aligned with the Group’s strategy,
ambitions and risk appetite.
Consequently, and in line with the Code, the Committee
expects to review formulaic outcomes to ensure alignment
with Alphawave Semi’s long-term goals and shareholder and
stakeholder experience, and may apply appropriate judgement
and adjustments, upwards or downwards. In addition, the
Committee may amend formulae, performance metrics and
targets to reflect changes in Group strategy, acquisitions
or disposals or other exceptional circumstances. Such
exercise of judgement or discretion shall be disclosed in the
remuneration report.
Existing arrangements
Payments may be made to satisfy commitments made
prior to the approval of this Policy. This may include, for
example, but without limitation, payments made to satisfy
legacy arrangements agreed prior to an employee (and not
in contemplation of) being promoted to the Board. All such
outstanding obligations may be honoured, and payment will
be permitted under thisPolicy.
Minor amendments
The Committee may make minor amendments to the
Policy (for example for tax, regulatory, exchange control
or administrative purposes) without obtaining shareholder
approval.
Illustrations of application of the Policy
The graphs below provide estimates of the potential reward
opportunity for the current Executive Directors and the split
between the three different elements of remuneration under
three different performance scenarios: ‘Minimum’, ‘Target’ and
‘Maximum’. In line with the reporting regulations, a scenario
assuming 50% share price growth over the three-year LTIP
performance period is also shown below. The assumptions
used for these charts are set out in the table below.
The bar charts are part shaded for the Executive Chair to
show the theoretical entitlement under the Policy, for which he
has opted to waive participation. Sehat Sutardja is not entitled
to participate in any incentive arrangements.
The Remuneration Committee offered the Executive Chairman the opportunity to should participate in the 2024 incentive
arrangements but at the present time John Lofton Holt will continue to waive such participation
£1.0m
Minimum
On-target
Maximum
Maximum with 50%
share price growth
Minimum
£2.6m
Maximum
On-target
£3.7m
£85k
Maximum with 50%
share price growth
Minimum
Tony PialisJohn Lofton Holt
Sehat Sutardja
£85k
On-target
£4.9m
£85k
Maximum with 50%
share price growth
£463k
£2.1m
£85k
Maximum
£1.7m
Fixed remuneration
Annual bonus
Long-term incentives
£0
£500,000
£1,000,000
£1,500,000
£2,000,000
£2,500,000
£3,000,000
£4,500,000
100% 45%
33%
22%
22%
33%
45%
18%
53%
30%
£680k
100% 40%
30%
30%
18%
27%
55%
14%
24%
62%
100% 100% 100% 100%
£4,000,000
£4,500,000
£5,000,000
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 111
Fixed remuneration (salary and benefits) only
No payout under the STIP or LTIP vesting
Remuneration continued
DIRECTORS’ REMUNERATION REPORT
Notes to the Policy table continued
Minimum
The charts above are based on notional bonus opportunity
of 150% of salary, LTIP award level of 300%, and assume a
one‑third bonus deferral.
Other than the ‘Maximum scenario with 50% share price
growth’, no share price growth has been included in the
charts above and it is assumed that no dividends or dividend
equivalents are paid.
Recruitment remuneration
In agreeing a remuneration package for a new Executive
Director, the structure and quantum of variable pay elements
would reflect those set out in the Policy table above. Salary
would reflect the skills and experience of the individual, and
may be set at a level to allow future progression to reflect
performance in the role. On recruitment, relocation benefits
may be paid as appropriate.
This overall approach would also apply to internal
appointments, with the provision that any commitments
entered into before promotion, which are inconsistent with this
Policy, can continue to be honoured under the Policy. Similarly,
if an Executive Director is appointed following the Group’s
acquisition of or merger with another company, legacy terms
and conditions would be honoured.
An Executive Director may initially be hired on a contract
requiring 24 months’ notice which then reduces pro rata
over the first year of the contract to requiring twelve
months’notice.
The Committee may award compensation for the forfeiture
of awards from a previous employer in such form as the
Committee considers appropriate taking account of all
relevant factors including the expected value of the award,
performance achieved or likely to be achieved, the proportion
of the performance period remaining and the form of the
award.
There is no specific limit on the value of such awards, but
the Committee’s intention is that the value awarded would be
similar to the value forfeited.
Maximum variable pay will be in line with the maximum set
out in the Policy table (excluding buy‑outs). The Committee
retains discretion in exceptional circumstances to make
appropriate remuneration decisions outside the standard
Remuneration Policy to meet the individual circumstances
when:
i) an interim appointment is made to a fill an Executive
Director role on a short‑term basis; and
ii) exceptional circumstances require that the Executive Chair
or a Non-Executive Director takes on an executive function
on a short‑term basis.
For Non-Executive Directors, the Board would consider the
appropriate fees for a new appointment taking into account
the existing level of fees paid to the Non‑Executive Directors,
the experience and ability of the new Non‑Executive Director
and the time commitment and responsibility of the role.
Fixed remuneration
50% of maximum payout under the STIP
25% of maximum vesting under the LTIP
Target
Fixed remuneration
100% of maximum payout under the STIP
100% of maximum vesting under the LTIP
Maximum
Fixed remuneration
100% of maximum payout under the STIP
100% of maximum vesting under the LTIP
50% assumed share price growth over three-year LTIP performance period
Maximum +
50% share
price growth
112 Alphawave IP Group plc | Annual report and financial statements 2023
Directors’ service contracts and letters of
appointment
Executive Directors’ contracts have rolling terms and are
terminable on no more than twelve months’ notice, with the
exception of Sehat Sutardja, whose contractual notice period
is one month. The key elements of the service contract for
Executive Directors relate to remuneration, payments on
loss of office and restrictions during active employment
(andfor twelve months thereafter). These restrictions include
non‑competition and non‑solicitation of customers and
employees.
Non‑Executive Directors do not have service contracts but
each has a letter of appointment. In accordance with the
Company’s Articles, following their appointment, all Directors
must retire at each AGM and may present themselves for
re‑election. The Board may terminate their appointment at
any time, on one month’s notice. None of the Non‑Executive
Directors has a notice period or any provision in their letters of
appointment giving them a right to compensation upon early
termination of appointment.
Executive Directors’ service contracts and Non‑Executive
Directors’ letters of appointment are available to inspect at the
Company’s registered office.
Treatment of corporate events
The plan rules contain provisions relating to change of control.
In general, outstanding awards would normally vest and
become exercisable on a change of control, to the extent that
the Committee determines that any applicable performance
conditions have been satisfied at that time or are likely to
be satisfied. Unless the Committee decides otherwise (or
the award is a bonus deferral award), the number of shares
vesting will also be reduced, reflecting the time period to the
date of the event. Alternatively, awards may be exchanged for
equivalent awards over shares in the acquiring company. Any
holding period will come to an end on the date of the change
of control.
The Committee can decide that similar treatment will apply
on a demerger, delisting, distribution (other than an ordinary
dividend) or other transaction which could affect the value of
an award. The Committee can adjust the number or type of
shares subject to an award and/or any exercise price to take
account of any rights issue, demerger, special dividend or
other variation of capital or similar corporate event.
Payments for departing Executive Directors
Notice period and compensation for loss of
office in service contracts
The Company can make payments in lieu of notice which is
limited (except in the case of Tony Pialis) to base salary and
contractual benefits. Any such payments can be made on
a monthly basis with payments reduced by the amount of
earnings from any alternative employment.
The employment agreement of Tony Pialis is governed by
Canadian Law and any payment in lieu of notice would only
include anything other than cash and benefits if required to do
so by Canadianlaw.
Annual bonus
Upon termination, the annual bonus is only payable if the
participant is considered to be a good leaver as determined by
the Committee (which would include ill health, injury, disability,
retirement, the employing company ceasing to be a member
of the Group and redundancy, or in other circumstances if the
Committee so decides).
In these circumstances, the payment will be pro‑rated for
the period of service during the financial year and will reflect
the extent to which Group performance has been achieved
(subject to Committee discretion).
Bonus deferral awards that have not yet vested will not lapse
on the leave date but will continue in effect until they vest
or lapse according to the terms of the plan. However, if a
participant leaves because of misconduct or otherwise in
circumstances in which their employment could have been
terminated without notice, the award will lapse.
LTIP
An LTIP award which has not vested will automatically lapse
on the date the participant leaves employment, except if they
leave in circumstances detailed in the plan rules, such as ill
health, injury, disability, retirement, the employing company
ceasing to be a member of the Group and redundancy or in
other circumstances, if the Committee so decides, the award
will continue in effect (or may vest on or after leaving). Vesting
of the award will be subject to the extent that performance
conditions have been or are likely to be satisfied (as determined
by the Committee), and any additional conditions as the
Committee may impose. Unless the Committee decides
otherwise, the number of shares that vest will be reduced
to reflect the proportion of the period up to the vesting date
which has elapsed by the date the participant left employment.
The normal vesting date will apply, unless the Committee
exercises its discretion to allow an award to vest on the date the
participant leaves employment or any later date it chooses. If a
participant dies, any outstanding awards will vest on the date of
death in full.
Pension and benefits
Generally pension and benefit provisions will continue to apply
until the termination date. Where appropriate, other benefits
may be receivable, such as (but not limited to) payments
in lieu of accrued holiday, legal fees or tax advice costs in
relation to the termination, settlement of any potential legal
claims and repatriation.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 113
Remuneration continued
DIRECTORS’ REMUNERATION REPORT
Payments for departing Executive
Directorscontinued
Pay and conditions throughout the Group
The pay and conditions of employees are considered by the
Committee in setting policy for the Executive Directors and
senior management.
The Committee is kept regularly informed on the pay and
benefits provided to employees and base salary increase
data from the annual salary review for the wider employee
population general staff is considered when reviewing
Executive Directors’ salaries and those of senior management.
The Committee did not consult with employees when setting
thePolicy.
Annual report on remuneration
This section of the Directors’ remuneration report provides
details of:
> how Directors were paid for the year ended
31December2023; and
> how we propose to implement our Policy for 2024.
This section of the report will be subject to an advisory vote
atthe 2024 AGM.
Remuneration paid to Executive Directors
inrespect of 2023
Single figure of remuneration for the 2023
financial year (audited)
The tables on the following page set out the total
remuneration to Executive Directors for the years ended
31December 2023 and 31 December 2022.
Remuneration Policy table for Non-Executive Directors
Purpose and
linktostrategy
Fees
The Company
offers competitive
fee arrangements
to attract and
retain high calibre
and experienced
individuals to serve
on the Board.
Non‑Executive Directors receive an annual
base fee. They may receive further fees
for additional responsibilities such as
being the Senior Independent Director or
chairing a Board Committee and also for
membership of a Board Committee. Fees
are subject to review taking into account
time commitment, responsibilities and
market practice. Non-Executive Directors
are entitled to be reimbursed for reasonable
expenses incurred during the performance
of their duties, including any tax due on
thesebenefits.
Total fees paid
will be within the
limit stated in
the Articles of
Association.
Operation Performance
measures
Maximum
opportunity
None.
Benefits. Non‑Executive Directors do not participate
in incentive schemes or receive a pension
provision. The Company reimburses travel
expenditure and provides travel insurance
when on Company business and provides
professional advice in respect of Company
business. Generally there are no other
benefits but the Company may offer other
benefits reflecting the requirements of the
role, or changing market.
Not applicable. Not applicable.
114 Alphawave IP Group plc | Annual report and financial statements 2023
31 December 2023
Director
Salary and
fees Benefits
1
Pension/cash
in lieu of
pension
2
Bonus LTIP award
Total
remuneration
Total fixed
remuneration
Total variable
remuneration
John Lofton Holt £450,000 — — — — £450,000 £450,000 —
Tony Pialis £450,000 £3,148
3
— — — £453,148 £453,148 —
Daniel Aharoni
4
£139,328 £3,068 £14,150 — £156,546 £156,546 —
Sehat Sutardja £85,000 — — — — £85,000 £85,000 —
1. Benefits represent the taxable value of benefits paid and comprise private family health insurance.
2. Pension contribution: Only Daniel Aharoni participated in the Company pension scheme and the employer contribution made for him was 10% of salary,
aligned to the contribution level for the wider workforce.
3. The increase in benefit costs is directly correlated to the changes in benefits made for all employees in this region.
4. Daniel Aharoni stepped down as CFO and an Executive Director of the Company on 19 May 2023.
31 December 2022
Director
Salary and
fees Benefits
1
Pension/cash
in lieu of
pension
2
Bonus
3
LTIP award
Total
remuneration
Total fixed
remuneration
Total variable
remuneration
John Lofton Holt £450,000 £12,689 — — — £462,689 £462,689 —
Tony Pialis £450,000 £2,600 — — — £452,600 £452,600 —
Daniel Aharoni £365,000 £4,129 £36,500 £246,375 — £652,004 £405,629 £246,375
Sehat Sutardja £85,000 — — — — £85,000 £85,000 —
1. Benefits represent the taxable value of benefits paid and comprise private family health insurance. John Lofton Holt self insures and the Company
reimburseshim.
2. Pension contribution: Only Daniel Aharoni participated in the Company pension scheme and the employer contribution made for him was 10% of salary,
aligned to the contribution level for the wider workforce.
3. In respect of the annual bonus for the Chief Financial Officer, the amount is based on 75% of his annual base salary of £365,000 (subject to performance
targets met), as this reflects work undertaken in his capacity as an Executive Director and employee of the Company, post-Admission. As per the
Remuneration Policy, one-third of the bonus payment will be deferred into shares for a period of two years.
Director changes during the year
As referenced in the Remuneration Committee Chair’s letter,
it was announced on 4 May 2023 that Daniel Aharoni would
step down as CFO and an Executive Director of the Company
following the publication of the audited results of the
Company for FY 2022 and he did so on 19 May 2023.
In accordance with the Directors’ Remuneration Policy, Daniel
received monthly payments that are not included in the single
figure noted on the previous page. These monthly payments
of base salary are for his twelve‑month notice period, and one
off payments for pay in lieu of accrued but untaken holiday.
He was not eligible for a bonus or long‑term incentive award
for the 2023 financial year. The details of the payments can be
seen in table above.
Outstanding deferred bonuses in respect of 2021 and
2022 will continue to be payable on the normal schedule
in accordance with their terms. His outstanding long‑term
incentive award lapsed in full.
His unvested restricted shares acquired prior to IPO have
and will continue to vest each month until December 2024 in
accordance with their terms.
Daniel will be subject to post-employment shareholding
requirements as set out in the Director’s Remuneration Policy.
Christian Bowsher, who served as interim CFO until
30October 2023, and Rahul Mathur, who was appointed
as CFO from that date, are not Executive Directors of the
Company and are therefore not directly subject to the
Remuneration Policy. Given this, the fact that the Executive
Chair and Chief Executive Officer waived participation
in the annual bonus and LTIP for 2023, and that Sehat
Sutardja is not entitled to participate in any bonus or
variable compensation arrangement, no Executive Directors
participated in incentive arrangements for the year. There are
therefore no details of incentive outcomes for the year to be
disclosed.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 115
Remuneration continued
DIRECTORS’ REMUNERATION REPORT
Deferred shares plan
Conditional share awards were granted under the Bonus Deferral Award plan to Daniel Aharoni for the deferred element of his
FY 2021 and FY 2022 annual bonuses.
Director Date of grant
Face value of
deferred award on
grant date (US$)
Price per share
(US$)
Number of shares
subject to the
deferred award
Daniel Aharoni 8 June 2022 115,858 2.24 51,741
Daniel Aharoni 19 May 2023 103,559.63 1.261 82,125
The long-term incentive award granted to Daniel Aharoni on 8 June 2022 over 424,275 shares lapsed in full on the termination
date and no compensation was paid in respect of such lapsing.
Non-Executive Directors’ single figure of remuneration (audited)
The remuneration of the Non‑Executive Directors for 2023 is set out below.
Non‑Executive Directors
Fees
2023
Benefits
2023
Total
2023
Jan Frykhammar £119,417 — £119,417
Michelle Senecal de Fonseca £87, 8 33 — £87,833
Rosalind Singleton £65,000 — £65,000
Victoria Hull £90,000 — £90,000
Susan Buttsworth £75,000 — £75,000
Paul Boudre £75,000 — £75,000
David Reeder
1
£28,333 — £28,333
Total £540,583 — £540,583
1. David Reeder was appointed to the Board in September 2023.
No changes to fees are being proposed for 2024, except where additional appointments have been undertaken.
Details of Directors Service Contracts and letters of Appointment
Detail of the service, employment contracts and letters of appointment in place as at 31 December 2023 for Directors are
asfollows:
Name
Date of
appointment
date of current
service contract
or letter of
appointment unexpired term at 31 December 2023
John Lofton Holt 11 January 2021 22 April 2021
Executive Directors are subject to a 12-month
notice period, with the exception of Sehat
Sutardja, whose contractual notice period is
one month.
Tony Pialis 16 April 2021 22 April 2021
Sehat Sutardja 16 April 2021 22 April 2021
Jan Frykhammar 16 April 2021 22 April 2021
Victoria Hull 16 April 2021 22 April 2021
Letters of appointment for the Non‑Executive
Directors do not contain fixed-term periods;
however, they are appointed in the expectation
that they will serve two three‑year terms
subject to satisfactory performance
and re-election at AGMs.
See page 113 for details.
Susan Buttsworth 16 April 2021 22 April 2021
Michelle Senecal de Fonseca 16 April 2021 22 April 2021
Paul Boudre 16 April 2021 22 April 2021
David Reeder 1 September 2023 31 August 2023
Rosalind Singleton 16 April 2021 22 April 2021
116 Alphawave IP Group plc | Annual report and financial statements 2023
% Change in pay 2022-2023
Salary
Change in
2022 (%)
Benefits
Change in
2022 (%)
Bonuses
Change in
2022 (%)
Salary
Change in
2023 (%)
Benefits
Change in
2023 (%)
Bonuses
Change in
2023 (%)
Directors
John Lofton Holt
1
61% 100% 0% 0% (100)% 0%
Tony Pialis
1
60% 127% 0% 0% 21% 0%
Daniel Aharoni
2
57% 61% (10)% 5.6% (26)% (100)%
Sehat Sutardja 59% 0% 0% 0% 0% 0%
Non-Executive Directors
1
Jan Frykhammar 16% 0% 0% 0% 0% 0%
Michelle Senecal de Fonseca 88% 0% 0% 0% 0% 0%
Rosalind Singleton 61% 0% 0% 0% 0% 0%
Victoria Hull 61% 0% 0% 0% 0% 0%
Susan Buttsworth 41% 0% 0% 0% 0% 0%
Paul Boudre 61% 0% 0% 0% 0% 0%
David Reeder
3
N/A N/A N/A N/A N/A N/A
Employees
4
4% 40% 59% 10% 613% (100)%
1. The increase in benefits for Tony Pialis is directly correlated to the changes in benefits made for all employees in this region. Daniel Aharoni only received
benefits part of the year, whilst John Lofton Holt received no benefits.
2. Daniel Aharoni stepped down as CFO and an Executive Director of the Company on 19 May 2023.
3. David Reeder was appointed to the Board in September 2023.
4. The increase in employee salaries and bonuses has been calculated by taking the figures per employee in 2022, and comparing with the figures in 2023 (for
those still in employment).
Payments to past Directors (audited)
There were no payments made to past Directors.
Payments for loss of office (audited)
The payments for loss of office for Daniel Aharoni are described.
Director
Salary
Benefits
accrued
holiday not taken Bonus Pension
Total
Payment
Daniel Aharoni £225,723 — £20,355 — £246,078
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 117
Remuneration continued
DIRECTORS’ REMUNERATION REPORT
% Change in pay 2022-2023 continued
Directors’ interests in the shares of the Company (audited)
A summary of interests in shares and scheme interests of the Directors who served during the year and their connected
persons is given below, as at 31 December 2023.
Executive Directors
Total number
of interests
in shares
(31 December
2023)
Vested without
performance
conditions
Unvested with
performance
conditions
Unvested
without
performance
conditions
Shares held
as % of
salary
2
Total number
of interests
in shares
(31 March 2024)
John Lofton Holt
1
26,624,585 — — — 7,205% 26,624,585
Tony Pialis 95,333,160 — — — 25,798% 95,333,160
Daniel Aharoni 2,600,000 933,333 — 989,422 712% 2,450,000
Sehat Sutardja 96,275,358 — — — 137,926% 96,275,358
Total 220,833,103 933,333 — 989,422 220,683,103
1. As disclosed in the IPO Prospectus, John Lofton Holt has an option to acquire up to 51,531,420 shares from other major shareholders.
2. Shares held as % of salary based upon Alphawave IP one-month volume-weighted average share price of £1.22 as at 31 December 2023.
Unvested without performance conditions contain unvested IPO shares, plus two bonus grants (see page 116). Daniel Aharoni
was awarded share options in November 2020, which were exercised and exchanged for 2.8 million restricted shares prior to
the IPO, vesting in 36 equal instalments on a monthly basis from December 2021. Other Executive Director shareholdings are
beneficially owned. The Directors held no options granted by the Company during the year.
Non‑Executive Directors
Total number
of interests
in shares
(31 December
2023)
Total number
of interests
in shares
(31 March 2024)
Jan Frykhammar 48,780 48,780
Michelle Senecal de Fonseca 3,619 44,316
Rosalind Singleton 52,420 52,420
Victoria Hull 102,821 102,821
Susan Buttsworth 48,780 48,780
Paul Boudre 48,780 48,780
David Reeder — —
Total 305,200 345,897
Alignment to shareholder interests
Current levels of ownership by the Executive Directors, and the date by which the goal should be achieved, are shown on the
next page.
Based on a one‑month volume‑weighted average share price of £1.22 as at 31 December 2023, John Lofton Holt, Tony
Pialis and Sehat Sutardja far exceed their shareholding requirement (% of salary). By virtue of being founders and significant
shareholders in the Company, they are inherently aligned to the experience of other shareholders.
118 Alphawave IP Group plc | Annual report and financial statements 2023
Director
Requirement
as a %
of salary
Current
% of salary
held
Number of
shares owned
% of issued
share capital
1
Date of
requirement
to be achieved
John Lofton Holt 200% 7,205% 26,624,585 3.72% n/a
Tony Pialis 200% 25,798% 95,333,160 13.32% n/a
Sehat Sutardja 200% 137,926% 96,275,358 13.46% n/a
1. Note: % of issued share capital based on issued shares as at 31 December 2023.
TSR performance chart (2024)
Jul 2023 Nov 2023Sep 2023
Alphawave
0
40
20
100
80
60
140
120
Dec 2023
May 2022 May 2023Nov 2022 Jan 2023 Mar 2023Jul 2022 Sep 2022
FTSE 250
FTSE All World Technology Index
Share Value
Single figure of remuneration for the CEO 2021 2022 2023
President & Chief Executive Officer – Tony Pialis £332,758 £452,600 £453,148
Annual bonus payout (% of maximum) n/a n/a n/a
LTIP payout (% of maximum) n/a n/a n/a
The graph above shows the value, as at 31 December 2023, of £100 invested at the IPO date (13 May 2021) in Alphawave IP
compared with the value of £100 invested in the comparative indices. We have compared against the FTSE 250 and FTSE
All-World Technology indices as these are reflective of our UK listing and our sector, respectively, and are also the comparisons
used for the TSR conditions under the LTIP.
Relative importance of spend on pay
The table below shows the total expenditure on employee remuneration compared to distributions to shareholders in 2023 and
the prior year.
2022 2023
Employee remuneration US$50.6m US$90.8m
Distributions to shareholders n/a
1
n/a
1
1. Our policy is to reinvest any profits back into the business and we do not intend to pay dividends for the foreseeable future.
CEO pay ratio
Although we do not currently have a large enough employee population to meet the threshold under the UK regulations for CEO pay
ratio figures to be robust, the Remuneration Committee is satisfied that relativities between employees and Executive Directors are
appropriate. We have a highly skilled and competitively rewarded employee population and the President & Chief Executive Officer
does not currently participate in incentive arrangements. As a fast-growing business, we are recruiting rapidly and expect to report
CEO pay ratio figures in the annual report once the population is sufficient for this to be done on a robust basis.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 119
Remuneration continued
DIRECTORS’ REMUNERATION REPORT
Engagement with colleagues
Michelle Senecal de Fonseca continues to act as the Group’s
Workforce Engagement NED. Her responsibilities include
understanding the concerns of the workforce, representing
those views and concerns in Board meetings, and ensuring
the Board takes appropriate steps to evaluate the impact of
proposals and developments on the workforce and considers
what steps should be taken to mitigate any adverse impact.
Michelle has driven a number of workforce engagement
activities as outlined in this annual report.
Application of Policy in 2024
Base salary and benefits
The table below shows the 2023 salary levels for each
Executive Director and 2024 proposed. As described in the
Chair’s introduction letter, the Committee intends that the
CEO new salary level will represent a one-time ‘right-sizing’
adjustment to a market competitive level and that future
increases will be modest and generally no greater than
increases for our wider workforce while the Company
remainsat the current scale.
Director
2023
Salary level
2024
Salary level
Proposed
change
for 2024 (%)
John Lofton Holt £450,000 £450,000 0%
Tony Pialis £450,000 £680,000 51%
Sehat Sutardja
1
£85,000 £85,000 0%
1. Sehat Sutardja’s base salary is reflective of a part-time working arrangement.
Benefit provision will be unchanged in 2024.
Annual bonus and long-term incentives
As described in the Chair’s letter, the Committee believes that, given the development of the business since the IPO, that it is
now appropriate to recast the Executive Director packages and offer market competitive remuneration including participation
in annual bonus and equity incentives. The CEO will therefore participate in the annual bonus scheme in 2024, with a maximum
opportunity level of 150% of base salary.
The Committee also offered the Executive Chairman the opportunity to participate in the 2024 incentive arrangements but at
the present time John Lofton Holt will continue to waive such participation. Sehat Sutardja is not eligible to participate.
The payout of STIP will be subject to the achievement of stretching performance targets, as follows:
Measure Weighting
Revenue 60%
Adjusted EBITDA 20%
Operating Cash Flow 20%
Revenue and Adjusted EBITDA have been selected as the performance measures as they are two strategically critical financial
measures for the Group. Operating Cash Flow was included as a metric for 2024, both in response to feedback received from
shareholders during the consultation exercise and our ongoing focus on optimising operational efficiency and enhancing
liquidity alongside sustainable growth. Weighting distribution is based on the business’ continued focus on generating revenue,
while equally balancing profitability and operating cash flow.
The Committee considers that the targets are commercially sensitive on a forward-looking basis but commits to disclosing the
full details of these, as well as performance against them on a retrospective basis in next year’s remuneration report.
One‑third of any bonus will be deferred into shares for a period of two years.
Measure Weighting Threshold Maximum
Relative TSR vs constituents of the FTSE 250 35% Median Upper Quartile
Relative TSR vs constituents of the FTSE All-World Technology Index 35% Median Upper Quartile
Adjusted EPS growth 30% 10% CAGR 40% CAGR
120 Alphawave IP Group plc | Annual report and financial statements 2023
These performance metrics have been selected as they
align with the Group’s focus on ambitious growth and
profitability. The targets were set at a level the Committee
believes to be appropriately stretching, taking into account
both internal performance expectations and external analyst
forecasts. Thetargets also reflect the transformation of the
business from a single >90% gross margin revenue stream,
to a business with three revenue streams, each having very
different scales and margin profiles, which is typical of a
multinational vertically integrated semiconductor company.
The Committee has chosen to use TSR as an important
measure of value created for our shareholders and measure
against the constituents of the FTSE 250, reflecting our UK
listing, and against those of the All-World Technology Index,
reflecting our sector. Stretching EPS targets will reflect our
focus on ambitious growth and profitability. CAGR targets
approximate analyst growth targets for 2024 and reflect
the transition from a standalone IP business to a vertically
integrated semiconductor business.
The Committee intends to make an LTIP award to the CEO
in 2024 of face value of 300% of salary. John Lofton Holt will
continue to waive participation in the LTIP and Sehat Sutardja
is not eligible to participate. The performance measures,
weightings and targets for 2024 are outlined previously.
External advisers
Willis Towers Watson (WTW) were appointed advisers
to the Company prior to IPO, to advise the Company on
remuneration matters in the context of UK listed company
best practice corporate governance expectations and
regulatory requirements. WTW now provide independent
advice to the Committee on all aspects of executive
remuneration and attend Remuneration Committee meetings.
The Committee reviews the advice, challenges conclusions
and assesses responses from its advisers to ensure
objectivity and independence.
WTW is a founder member of the Remuneration Consultants
Group and, as such, voluntarily operates under the
Remuneration Consultants Group Code of Conduct in
relation to executive remuneration consulting in the UK.
This is based upon principles of transparency, integrity,
objectivity, competence, due care and confidentiality by
executive remuneration consultants. WTW has confirmed
that it adheres to that Code of Conduct for all remuneration
services provided to Alphawave Semi and therefore the
Committee is satisfied that it is independent and objective.
The Remuneration Consultants Group Code of Conduct
is available at www.remunerationconsultantsgroup.com.
Thefees payable to WTW for services to the Committee
during the year were £43,381.
Shareholder voting
The table below sets out the actual voting in respect of the resolution regarding the Remuneration Report at the 2023 and 2022
annual general meeting.
Resolution For Against Total Withheld
To approve the Directors’ remuneration report 2023
592,461,946
(99.72%)
1,650,592
(0.28%)
594,112,538 28,471
To approve the Directors’ remuneration report 2022
635,783,146
(99.98%)
115,061
(0.02%)
635,898,207 100,058
Victoria Hull
Chair of the Remuneration Committee
23 April 2024
This Directors’ remuneration report has been prepared in accordance with the requirements of Schedule 8 to the Large and
Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended). The report also meets the
relevant requirements of the Listing Rules of the Financial Conduct Authority, and describes how the Board has complied with
the principles and provisions of the UK Corporate Governance Code relating to remuneration matters. Remuneration tables are
subject to audit in accordance with the relevant statutory requirements.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 121
Directors’ report
The Directors present their report, together with the
auditedfinancial statements, for the period ended
31December 2023.
The Directors’ report, together with the strategic report, represent the management report for the purposes of compliance with
the Disclosure Guidance and Transparency Rules 4.1.8R.
In accordance with section 414C(11) of the Companies Act 2006 and the Companies (Miscellaneous Reporting) Regulations
2018, the Board has included certain disclosures in the strategic report set out below:
Disclosure Page
Future business developments Market opportunities, pages 18 and 19
Risk management Principal risks and uncertainties, pages 74 to 77
Going concern and viability statement Viability statement, page 72
Disabled employees ESG, Our People section, pages 38 to 43
Business relationship with suppliers, customers and
other stakeholder engagement
Stakeholder engagement, page 28
Climate-related financial disclosures, greenhouse
gas consumption, energy consumption and energy
efficiency action
ESG, pages 44 to 48 and appendix
Climate‑related disclosures
Workforce engagement ESG, Our People section, page 43
Compliance with the UK Corporate
Governance Code 2018
Alphawave IP Group plc was admitted to the standard
listing segment of the FCA’s Official List and to trading on
the London Stock Exchange’s main market on 18May 2021
(‘Admission’). Save as set out in the corporate governance
statement, the Board voluntarily complies with the
requirements of the UK Corporate Governance Code (the
‘Code’). Prior to 18 May 2021, the Group was not required to
comply with the principles and provisions of the Code. Since
Admission, the Group has complied with all provisions of the
Code, except as noted below.
The annual evaluation of the operation and effectiveness
of the Board, its Committees and individual Directors was
undertaken in 2023. TheBoard intends to comply with the
Code guidance that an externally facilitated evaluation should
take place at least every three years.
Whilst the Group did not have an internal audit function during
the period under review, the Company has complied with the
requirement in Provision 25 for the Audit Committee to consider
annually whether there is a need for one. During the period under
review, the Group did not have an internal audit function as it had
been agreed that the Group’s size and activities were such that
internal assurance was achievable through other means.
The Audit Committee continue to evaluate the need for an
internal audit function and recommended to the Board to keep
this area under review. In addition, the annual evaluation of
the Group’s risk management and internal control systems (in
accordance with Provision 29 of the Code) took place in 2023.
During 2023, the Audit Committee undertook the a review of
the effectiveness of the external audit process (in accordance
with Provision 25 of the Code). The process began soon
after the publication of FY 2022 results in May 2023 and this
continues.
The Executive Chair of the Company, John Lofton Holt, was
not independent on Admission. Together with the other
founders, John has guided the Group’s growth through its
early stages and the Board considers that his continued
leadership will ensure that the Group is best placed to
continue its current growth trajectory.
Further information on the Company’s application of the
principles and provisions of the Code can be found in the
corporate governance report.
Corporate governance statement
The information that fulfils the requirements of the corporate
governance statement for the purposes of the FCA’s
Disclosure Guidance and Transparency Rules can be found in
the corporate governance report and in this Directors’ report.
122 Alphawave IP Group plc | Annual report and financial statements 2023
Disclosure of information to auditors
The Directors confirm that, so far as they are each aware,
there is no relevant audit information of which the Company’s
auditors are unaware. Each Director has taken all the
steps that they ought to have taken as a Director to make
themselves aware of any relevant audit information and
to establish that the Company’s auditors are aware of that
information.
Insurance and indemnities
The Group has maintained Directors’ and Officers’
liability insurance cover throughout the reporting period.
TheDirectors are able to obtain legal or other relevant advice
at the expense of the Company in their capacity as Directors.
The Company has also provided a qualifying third-party
indemnity to each Director as permitted by section 234 of
the Companies Act 2006 and by the Articles, which remain
inforce at the date of this report.
The Directors’ and Officers’ liability insurance cover also
extends to the directors of Group subsidiaries.
Political and charitable donations
The Group did not make any political or charitable donations
or incur political expenditure during the reporting period.
Subsidiaries and branches
The Company acts as a holding company for the Group of
subsidiaries. The Group’s subsidiaries are set out on page 198
of the financial statements.
Share capital
Details of the Company’s share capital, together with details of
the movements in the share capital during the year, are shown
on pages 178 and 197 of the accounts. The Company has one
class of ordinary shares which carry no right to fixed income.
Eachshare carries the right to one vote at a general meeting
of the Company. Restrictions on share transfers are set out
in the Company’s Articles of Association. The Company is
not aware of any agreements between shareholders that
restrict the transfer of shares or voting rights attached to the
shares. As approved by the IPO Committee of the Board on
12 May2021 and the High Court of Justice Business and
Property Court of England and Wales on 16 November 2021,
the nominal value of the Company’s ordinary shares reduced
from £1.00 to £0.01 on 17 November 2021.
Exchangeable shareholders
As set out in the Company’s Prospectus, a portion of the
interests of The Tony Pialis (2017) Family Trust, TheRajeevan
Mahadevan (2017) Family Trust, 2641239 Ontario Inc.
and certain other pre‑IPO shareholders in the Company
immediately prior to Admission (‘exchangeable shareholders’)
are held through ordinary shares that were issued to
Project AuroraIP Limited (JerseyCo) on 14 May2021.
Theseordinary shares (referred to as underlying shares) are
legally and beneficially owned by JerseyCo, except that (i)the
exchangeable shareholders will have a right to direct the
voting rights attaching to such shares, and (ii) JerseyCo will
irrevocably waive its rights to distributions declared on such
shares for as long as it holds them. Each of the exchangeable
shareholders have also been issued with exchangeable shares
on a one‑for‑one basis for each ordinary share that will be held
by JerseyCo. The exchangeable shares can be redeemed at
any time for a cash price that can be satisfied by the transfer
to such exchangeable shareholder of an underlying share.
Each exchangeable share also carries a right to receive, upon
redemption, a cash payment that is equal to all dividends
and distributions declared on an ordinary share from time to
time. The total number of underlying shares that are issued
to JerseyCo as of 31 December 2023 was 264,896,259
representing 37.02% of the Company’s issued ordinary share
capital.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 123
Directors’ report continued
Substantial shareholdings
As at 31 December 2023 and at 31 March 2024, the following persons were directly or indirectly interested (within the meaning
of the Companies Act 2006) in 3% or more of the Company’s issued share capital or voting rights. Further, as at the date
of this report, the following contains information received, in accordance with Rule 5 of the FCA’s Disclosure Guidance and
Transparency Rules, from holders of notifiable interest in the Company’s issued share capital.
The information provided below is correct at the date of notification.
As at 31 December 2023 As at 31 March 2024
Holder
Number of
shares
Voting
rights (%)
Number of
shares
Voting
rights (%)
The Tony Pialis (2017) Family Trust
1
95,333,160 13.32% 95,333,160 13.07%
The Rajeevan Mahadevan (2017) Family Trust
2
95,333,160 13.32% 95,333,160 13.07%
2641239 Ontario Inc.
3
95,333,140 13.32% 95,333,140 13.07%
Sutardja Family LLC
4
96,275,358 13.46% 96,275,358 13.20%
Fidelity International 49,698,765 6.95% 49,658,400 6.81%
Artisan Partners 28,704,807 4.01% 28,154,550 3.86%
July Twelve Capital Limited
5
26,624,584 3.72% 26,624,584 3.65%
1. This includes interests held by Pitech Investments Inc., a discretionary beneficiary of The Tony Pialis (2017) Family Trust and a person closely associated with
Tony Pialis (within the meaning of the Market Abuse Regulation). Tony Pialis is the trustee of The Tony Pialis (2017) Family Trust and he is also a discretionary
beneficiary.
2. This includes interests held by Jeevan Capital Inc., a discretionary beneficiary of The Rajeevan Mahadevan (2017) Family Trust and a person closely
associated with Rajeevan Mahadevan (within the meaning of the Market Abuse Regulation). Rajeevan Mahadevan is the trustee of The Rajeevan Mahadevan
(2017) Family Trust and (through a wholly owned company) he is also a discretionary beneficiary.
3. The shares of 2641239 Ontario Inc. are wholly owned by The Jonathan Rogers (2018) Family Trust. Jonathan Rogers is the trustee of The Jonathan Rogers
(2018) Family Trust.
4. Sehat Sutardja holds 10% of the shares in Sutardja Family LLC. The remaining shares are held by his family members.
5. July Twelve Capital Limited is a person closely associated with John Lofton Holt (within the meaning of the Market Abuse Regulation). In addition to the
interests listed in this table, July Twelve Capital Limited also has an option to purchase up to 51,531,420 Exchangeable Shares in aggregate from The Tony
Pialis (2017) Family Trust, 2641239 Ontario Inc. and The Rajeevan Mahadevan (2017) Family Trust.
Information provided to the Company pursuant to Rule 5 of the FCA’s Disclosure Guidance and Transparency Rules is published
on a Regulatory Information Service.
Dividend policy
In the near term, the Group currently intends to retain any
future earnings to finance the operation and expansion of
its business, and to drive continued growth. The Group will
review its dividend policy on an ongoing basis, with respect
to the cash position of the Group, the growth of the Group’s
businesses, and the macroeconomic environment, but does
not expect to declare or pay any dividends for the foreseeable
future.
Articles of Association and powers of
theDirectors
The Company’s Articles of Association (the ‘Articles’) contain
the rules relating to the powers of the Company’s Directors
and their appointment and replacement mechanisms.
TheArticles may only be amended by special resolution at a
general meeting of the shareholders. Subject to the Group’s
Articles and relevant regulatory measures, including the
Companies Act 2006, the day-to-day business of the Group
is managed by the Board who may exercise all the powers of
theCompany.
Authority to purchase own shares
At a general meeting held on 22 June 2023 shareholders
passed a special resolution in accordance with the
Companies Act 2006 to authorise the Company to purchase
in the market a maximum of 70,228,236 ordinary shares,
representing 10% of the Company’s issued ordinary share
capital (excluding treasury shares) as at the Last Practicable
Date prior to the publication of the 2023 Notice of AGM.
No shares have been purchased under this authority.
Theauthority will expire at the forthcoming Annual General
Meeting. The Directors are seeking renewal of the authority,
inaccordance with relevant institutional guidelines.
Significant agreements and change of control
The Group has a number of contractual arrangements which
it considers essential to the business of the Group. A change
of control of the Company may cause some agreements to
which the Group is a party to alter or terminate.
The Company has a Long‑Term Incentive Plan in place,
whichcontains provisions relating to a change of control.
124 Alphawave IP Group plc | Annual report and financial statements 2023
Compensation for loss of office
There are no agreements between the Company and its
Directors or employees providing for compensation for loss
of office or employment that occurs because of a takeover
bid, except that provisions of the Company’s share plans may
allow options and awards granted to Directors and employees
to vest on a takeover.
Additional disclosures
The following information can be found elsewhere in this
document, as indicated in the table below, and is incorporated
into this report by reference.
Disclosure Page
Directors’ interests Directors’ remuneration report, pages 100 to 121
Directors of the Company Board of Directors, pages 78 to 81
Dividends Financial review, pages 71, 119 and 124
Financial instruments Financial statements, pages 170 to 172
Important events since the financial year end Events after the balance sheet date, page 185
Statement of Directors’ responsibilities Directors’ responsibilities, page 126
Appointment of auditor
On the recommendation of the Audit Committee, resolutions
will be proposed at the 2024 AGM to re-appoint KPMG LLP as
auditor of the Company and to authorise the Audit Committee
to set the auditor’s remuneration.
Annual General Meeting
The Company’s AGM will be held on 25 June 2024. Details of
the resolutions to be proposed at the AGM are set out in the
Notice of Meeting, which is provided to all shareholders.
The Directors’ report, which has been prepared in accordance
with the requirements of the Companies Act 2006, has been
approved by the Board and signed on its behalf by:
Tony Pialis
Chief Executive Officer
23 April 2024
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 125
Statement of Directors’ responsibilities
IN RESPECT OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS
The Directors are responsible for preparing the annual
report and the Group and Company financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and
parent Company financial statements for each financial year.
Under that law they are required to prepare the Group financial
statements in accordance with UK-adopted international
accounting standards and applicable law and have elected
to prepare the parent Company financial statements in
accordance with UK accounting standards and applicable law,
including FRS 101 Reduced Disclosure Framework.
Under company law, the 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 Group’s profit or loss for that period.
In preparing each of the Group and Company financial
statements, the Directors are required to:
> select suitable accounting policies and then apply them
consistently;
> make judgements and estimates that are reasonable,
relevant and reliable;
> for the Group financial statements, state whether they have
been prepared in accordance with UK-adopted international
accounting standards;
> for the parent Company financial statements, state whether
applicable UK accounting standards have been followed,
subject to any material departures disclosed and explained
in the parent Company financial statements;
> assess the Group and Company’s ability to continue as a
going concern, disclosing, as applicable, matters related
togoing concern; and
> use the going concern basis of accounting unless they
either intend to liquidate the Group or the Company or to
cease operations, or have no realistic alternative but to
doso.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s transactions and disclose with reasonable
accuracy at any time the financial position of the Group and
enable them to ensure that its financial statements comply
with the Companies Act 2006. They are responsible for such
internal control as they determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and have general
responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Group and to prevent and
detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a strategic report, Directors’ report,
Directors’ remuneration report and corporate governance
statement that complies with that law and those regulations.
In accordance with Disclosure Guidance and Transparency
Rule (DTR) 4.1.16R, the financial statements will form
part of the annual financial report prepared under DTR
4.1.17R and 4.1.18R. The auditor’s report on these financial
statements provides no assurance over whether the annual
financial report has been prepared in accordance with those
requirements.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Group’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Responsibility statement of the Directors in
respect of the annual financial report
We confirm that to the best of our knowledge:
> the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the
consolidation taken as a whole;
> the management report includes a fair review of the
development and performance of the business and the
position of the issuer and the undertakings included in the
consolidation taken as a whole, together with a description
of the principal risks and uncertainties that they face; and
> we consider the annual report and accounts, taken as a
whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the
Group’s position and performance, business model and
strategy.
Tony Pialis
Chief Executive Officer
23 April 2024
Alphawave IP Group plc
6th Floor
65 Gresham Street
London
EC2V 7NQ
United Kingdom
126 Alphawave IP Group plc | Annual report and financial statements 2023
1. Our opinion is unmodified
We have audited the financial statements of Alphawave
IP Group plc (“the Company”) for the year ended 31
December 2023 which comprise the Consolidated
statement of comprehensive income, Consolidated
statement of financial position, Company statement of
financial position, Consolidated statement of cash flows,
Consolidated statement of changes in equity and
Company statement of changes in equity, and the
related notes, including the accounting policies in note
2.
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 December 2023 and of
the Group’s loss for the year then ended;
— the Group financial statements have been properly
prepared in accordance with UK-adopted
international accounting standards;
— the parent Company financial statements have been
properly prepared in accordance with UK accounting
standards, including FRS 101 Reduced Disclosure
Framework; and
— the financial statements 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 are described
below. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our
opinion. Our audit opinion is consistent with our report
to the audit committee.
We were first appointed as auditor by the directors on 16
April 2021. The period of total uninterrupted engagement
is for the three financial years ended 31 December 2023.
We have fulfilled our ethical responsibilities under, and
we remain independent of the Group in accordance with,
UK ethical requirements including the FRC Ethical
Standard as applied to listed public interest entities. No
non-audit services prohibited by that standard were
provided.
Independent
auditor’s report
to the members of Alphawave IP Group plc
Overview
Materiality:
group financial
statements as a whole
$3.3m (2022: $
1.8m)
1.0% (2022: 1.0%) of Revenue
Coverage
99.9% (2022: 97.0
%) of revenue
Key
audit matters vs 2022
Recurring risks
Revenue recognition
◄►
New: Development costs
capitalisation
Recoverability of
parent company’s
investments in
subsidiaries
◄►
Event driven
New:
Going concern
2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements
and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including 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. We summarise below the key audit matters, in decreasing order of audit significance, in arriving at our audit opinion
above, together with our key audit procedures to address those matters and, as required for public interest entities, our results from those
procedures. These matters were addressed, and our results are based on procedures undertaken, in the context of, and solely for the
purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that
opinion, and we do not provide a separate opinion on these matters.
[We continue to perform procedures over [identify key audit matter]. However, following [explain why risk is less significant this year], we
have not assessed this as one of the most significant risks in our current year audit and, therefore, it is not separately identified in our
report this year.]
The risk
Our response
Revenue recognition
($167.6 million; 2022: $137.6 million)
(IP and NRE, IP and NRE
– Reseller, IP
and NRE
–JV)
Refer to page 143 & 150 (accounting
policy) and page 152 (financial
disclosures)
Accounting application
:
The Group enters into contracts with
customers that include various
combinations of products. Each contract is
bespoke with varying options and terms and
the application of accounting standards to
these terms is complex and involves
judgement.
There is a risk that the individual
performance obligations are not correctly
identified. Revenue includes subjective
measurements requiring management to
exercise significant judgement with respect
to estimated total hours to complete the
contract. The effect of these matters is that,
as part of our risk assessment, we
determined that revenue recognition has a
high degree of estimation uncertainty, with
a potential range of reasonable outcomes
greater than our materiality for the financial
statements as a whole.
The financial statements (note 4) disclose
the sensitivity estimated by the Group.
We
performed the detailed tests below rather
than
seeking
to rely on any of the Group’s
controls
because
our knowledge of the design of
these
controls
indicated that we would not be able
to
obtain
the required evidence to support reliance
on
controls
.
Our
procedures included:
—
Test of details: We assessed whether the
Group’s revenue recognition policy is in line
with the requirements of the accounting
standards, which includes consideration of
alternative accounting treatment;
—
We assessed the Group’s determination of
distinct performance obligations contained
within their contracts by selecting a sample of
the contracts and considering the terms
together with the requirements of the
accounting standards including whether any
alternative treatment existed;
— We agreed samples of invoices raised in the year
in respect of revenue and to cash receipts for
those paid;
—
We considered the appropriateness of the
allocation of contract revenue to the identified
performance obligations by comparing the
approach taken to the requirements of the
accounting standards;
—
Independent recalculation : We recalculated
the stage of completion based on the costs
incurred as at year end and the Group’s
estimate of future costs to complete contracts,
which included assessment of the historical
accuracy of the Group’s estimates, to assess the
appropriate amount of revenue to recognise
and compare this to the amounts recorded by
the Group;
—
Assessing transparency: We considered the
adequacy of the Group’s disclosures in respect
of revenue recognition and the judgements and
estimates made in determining the revenue
recognised.
Our results
—
We found the revenue recognition to be
acceptable (2022: acceptable).
2. Key audit matters: our assessment of risks of material misstatement (cont.)
[We continue to perform procedures over [identify key audit matter]. However, following [explain why risk is less significant this year], we
have not assessed this as one of the most significant risks in our current year audit and, therefore, it is not separately identified in our
report this year.]
The risk
Our response
Going Concern
see note 1 to the group financial
statements
Disclosure quality
The financial statements explain how the
Board has formed a judgement that it is
appropriate to adopt the going concern
basis of preparation for the Group and
parent Company.
That judgement is based on an evaluation
of the inherent risks to the Group’s and
Company’s business model and how those
risks might affect the Group’s and
Company’s financial resources or ability to
continue operations over a period of at
least a year from the date of approval of
the financial statements.
The risks most likely to affect the Group’s
and Company’s available financial resources
adversely and metrics relevant to debt
covenants over this period were:
•
Maintenance of sales growth in the
face of rapidly changing technology
in the industry in which the group
operates;
•
Future increases in interest rates.
There are also less predictable but realistic
second order impacts, such as the impact of
global political developments.
The risk for our audit was whether or not
those risks were such that they amounted
to a material uncertainty that may have
cast significant doubt about the ability of
the Company and the Group to continue as
a going concern. Had they been such, then
that fact would have been required to have
been disclosed.
We considered whether these risks could plausibly
affect the liquidity or covenant compliance in the
going concern period by assessing the directors’
sensitivities over the level of available financial
resources and covenant thresholds indicated by the
Group’s financial forecasts taking account of severe,
but plausible, adverse effects that could arise from
these risks individually and collectively.
Our procedures also included:
—
Funding assessment: We assessed the forecast
cash position, available committed facilities and
the directors’ assessment of the Group’s ability
to comply with its covenants for a period of at
least 12 months from the date of approval of
the financial statements (‘forecast period)’, to
understand the financial resources available to
the Group during the forecast period;
—
Historical comparisons:
We assessed the ability
of the Group to forecast accurately by
comparing the most recent financial year’s
performance against budget and challenged the
assumptions over the going concern period
based on historical performance. We also
compared the actual performance in recent
years versus base case and downside case to
challenge the quantum of risks applied in the
forecasts;
—
Key dependency assessment: We evaluated
how the cash flow model captures events and
conditions that may cast significant doubt on
the ability to continue as a going concern and
evaluated whether key assumptions of group
revenue forecast and a potential increase in
interest rates were within a reasonable range;
—
Sensitivity analysis: We assessed the downside
sensitivity to check whether this represented a
severe but plausible scenario based on our
knowledge of the business, the sector and the
most recent results of the Group;
—
Evaluating directors’ intent: We evaluated the
achievability of the actions the directors
consider they would take to improve the
position should the risks materialise, taking into
account the extent to which the directors can
control the timing and outcome of these;
—
Assessing transparency: We considered
whether the going concern disclosure in note 1
to the financial statements gives a full and
accurate description of the directors’
assessment of going concern, including the
identified risks and, dependencies, and related
sensitivities.
Our results
—
We found the going concern disclosure in note
1 to be acceptable.
2. Key audit matters: our assessment of risks of material misstatement (cont.)
The risk
Our response
Development costs capitalisation
($54.5
million; 2022: $7.2 million)
Refer to page 146 & 150 (accounting
policy) and page 162 (financial
disclosures).
This capitalised development expenditure
consists primarily of staff costs where staff
have worked on projects that are eligible for
capitalisation under the Group’s research
and development accounting policy.
There is a risk that additions to internally
generated intangible assets are recorded
inappropriately when:
•
the expenditure is not eligible for
capitalisation,
•
the assets are not accurately recorded,
•
the entity does not have the rights to
the assets, or
•
the assets do not exist.
We performed the tests below rather than seeking
to rely on any of the Group’s controls because the
nature of the balance is such that we would expect
to obtain audit evidence primarily through the
detailed procedures described.
Our audit procedures included:
—
Inquiries: we performed specific inquiries with
management regarding project costs and
obtained management’s assessment of the
criteria of capitalisation of all project costs;
—
Tests of detail: We assessed whether the costs
of internally generated intangibles are eligible
for recognition as an intangible asset;
—
We evaluated management’s allocation of
internal costs to the asset and determined
whether the methodology of allocation was
appropriate;
—
Assessing transparency: we considered the
adequacy of the Group’s disclosures in respect
of research and development cost capitalisation
and the judgements involved in determining the
amount of cost to capitalise.
Our results
—
We found the capitalisation of development
costs to be acceptable.
2. Key audit matters: our assessment of risks of material misstatement (cont.)
The risk
Our response
Recoverability of parent company’s
investments in subsidiaries
($346.2 million; 2022: $280.4 million)
Refer to page 193 (accounting policy)
and page 196 (financial disclosures)
Low risk, high value
The carrying amount of the Parent
Company’s investments in subsidiaries
represents 44.8% (2022: 39.3%) of the
Company’s total assets. The recoverability is
not at high risk of significant misstatement
or subject to significant judgement.
However, due to their materiality in the
context of the Parent Company financial
statements, this is considered to be the area
that had the greatest effect on our audit of
the Parent
Company.
We
performed the detailed tests below rather
than
seeking
to rely on any of the Group’s
controls
because
our knowledge of the design of
these
controls
indicated that we would not be able
to
obtain
the required evidence to support reliance
on
controls
.
Our
procedures included:
—
Test of details: We compared the carrying
amount of the investments in subsidiaries, with
the relevant subsidiaries’ draft balance sheet, to
identify whether their net assets, being an
approximation of the minimum recoverable
amount of the related investments were in
excess of their carrying amount.
Our results
—
We found the assessment of recoverability of
the Parent Company’s investments in
subsidiaries to be acceptable (2022:
acceptable).
We continue to perform procedures over the control environment. However, there were no acquisitions during the year and we did not
encounter the same degree of challenge in respect of the control environment, as such we have not assessed this as one of the most
significant risks in our current year audit and, therefore, it is not separately identified in our report this year. We have not assessed any risk in
current year over Valuation of acquired identifiable intangibles as there were no acquisitions during the year.
97
100
0
Group profit before tax
Group total assets
100%
(2022 97%)
80
6
78
12
90%
(2022 86%)
99
94
2
96%
(2022 99%)
Key:
Full scope for group audit purposes 2023
Specified risk-focused audit procedures 2023
Full scope for group audit purposes 2022
Specified risk-focused audit procedures 2022
Residual components
Group revenue
3. Our application of materiality and an overview of
the scope of our audit
Materiality for the Group financial statements as a
whole was set at $3,300,000 (2022: $1,800,000),
determined with reference to a benchmark of Group
revenue, of which it represents 1.0% (2022: 1.0%).
Materiality for the parent Company financial
statements as a whole was set at $2,650,000 (2022:
$1,440,000), determined with reference to a
benchmark of Company total assets, of which it
represents 0.3% (2022: 0.2%).
In line with our audit methodology, our procedures
on individual account balances and disclosures were
performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the
risk that individually immaterial misstatements in
individual account balances add up to a material
amount across the financial statements as a whole.
Performance materiality was set at 64.9% (2022:
65%) of materiality for the financial statements as a
whole, which equates to $2,140,000 (2022:
$1,170,000) for the Group and $1,720,000 (2022: $
936,000) for the parent Company. We applied this
percentage in our determination of performance
materiality based on the level of identified
misstatements, control deficiencies and changes in
the control environment during the prior period.
We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding $165,000 (2022: $75,000), in addition to
other identified misstatements that warranted
reporting on qualitative grounds.
Of the Group’s 14 (2022: 14) reporting components,
we subjected 6 (2022: 6) to full scope audits for
group purposes and 1 (2022: 1) to specified risk-
focused audit procedures. The latter was not
individually financially significant enough to require a
full scope audit for group purposes, but did present
specific individual risks that needed to be addressed.
The components within the scope of our work
accounted for the percentages illustrated opposite.
The remaining 0% (2022: 3%) of total Group revenue,
10% (2022: 14%) of Group profit before tax and 4%
(2022: 1%) of total Group assets is represented by 7
(2022: 7) reporting components, none of which
individually represented more than 5% (2022: 4%) of
any of total Group revenue, Group profit before tax
or total Group assets. For these components, we
performed analysis at an aggregated group level to
re-examine our assessment that there were no
significant risks of material misstatement within
these.
Group revenue
$321.7m (2022: $185.4m)
Group materiality
$3.3m (2022: $1.8m)
Total Group Revenue
Group materiality
$3.3m
Whole financial
statements
materiality (2022: $
1.8m)
$2.1m
Whole financial
statements performance
materiality (2022: $ 1.2m)
$2.7m
Range of materiality at seven
components ($0.7m
-$2.7m)
(2022: $0.7m to $1.4m)
$165,000
Misstatements
reported to the
audit committee (2022: $75,000)
4. Going concern
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the Group
or the Company or to cease their operations, and as they have
concluded that the Group and the Company’s financial position
means that this is realistic. They have also concluded that there
are no material uncertainties that could have cast significant
doubt over their ability to continue as a going concern for at least
a year from the date of approval of the financial statements (“the
going concern period”). An explanation of how we evaluated
management’s assessment of going concern is set out in the
related key audit matter in section 2 of this report.
Our conclusions based on this work:
—
we consider that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements is
appropriate; and
—
we have not identified, and concur with the directors’
assessment that there is not, a material uncertainty related to
events or conditions that, individually or collectively, may
cast significant doubt on the Group’s or Company's ability to
continue as a going concern for the going concern period.
However, as we cannot predict all future events or conditions
and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time
they were made, the above conclusions are not a guarantee that
the Group or the Company will continue in operation.
5. Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due
to fraud
To identify risks of material misstatement due to fraud (“fraud
risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity
to commit fraud. Our risk assessment procedures included:
— Enquiring of directors, the audit committee, and inspection
of policy documentation as to the Group’s high-level policies
and procedures to prevent and detect fraud, including the
Group’s channel for “whistleblowing”, as well as whether
they have knowledge of any actual, suspected or alleged
fraud;
— Reading Board and audit committee minutes;
— Considering remuneration incentive schemes; and
performance targets for management, directors and sales
staff.
— Using analytical procedures to identify any unusual or
unexpected relationships.
We communicated identified fraud risks throughout the audit
team and remained alert to any indications of fraud throughout
the audit. This included communication from the Group audit
team to full scope component audit teams of relevant fraud risks
identified at the Group level and request to full scope
component audit teams to report to the Group audit team any
instances of fraud that could give rise to a material misstatement
at the Group level.
As required by auditing standards, and taking into account
possible pressures to meet profit targets, we perform procedures
to address the risk of management override of controls and the
risk of fraudulent revenue recognition, in particular:
— the risk that Group and component management may be in a
position to make inappropriate accounting entries;
— the risk of bias in accounting estimates underpinning revenue
recognition; and
— the risk that revenue is overstated through recording
revenues in the wrong period.
Further detail in respect of revenue recognition is set out in the
key audit matter disclosures in section 2 of this report.
We also identified a fraud risk related to inappropriate
capitalisation of development costs in response to potential
incentives to capitalise these costs.
We also performed procedures including:
— Identifying journal entries and other adjustments to test for
all full scope components based on risk criteria and
comparing the identified entries to supporting
documentation;
— Evaluated the business purpose of significant unusual
transactions; and
— Assessing whether the judgements made in making
accounting estimates are indicative of a potential bias.
3. Our application of materiality and an overview of
the scope of our audit (cont.)
The Group team instructed component auditors as to the
significant areas to be covered, including the relevant risks
detailed above and the information to be reported back. The
Group team approved the component materialities, which
ranged from $2,650,000 to $660,000 (2022: $1,440,000 to
$720,000), having regard to the mix of size and risk profile of
the Group across the components. The work on two of the
seven components (2022: two of the seven components) was
performed by component auditors and the rest, including the
audit of the parent Company, was performed by the Group
team.
The scope of the audit work performed was fully substantive as
we did not rely upon the Group’s internal control over financial
reporting.
The Group team visited two (2022: two) component locations
in Canada and the United States of America to assess the audit
risk and develop strategy.
Video and telephone conference meetings were also held with
the two component auditors in China and inspection of
component audit teams’ key work papers took place in person
to evaluate the quality of execution of audits of the
components. At these visits and meetings, the findings
reported to the Group team were discussed in more detail, and
any further work required by the Group team was then
performed by the component auditor.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
5. Fraud and breaches of laws and regulations – ability to detect
(cont.)
Identifying and responding to risks of material misstatement
related to compliance with laws and regulations
We identified areas of laws and regulations that could reasonably
be expected to have a material effect on the financial statements
from our general commercial and sector experience, and through
discussion with the directors and other management (as required
by auditing standards), and discussed with the directors and
other management the policies and procedures regarding
compliance with laws and regulations.
As the Group is regulated, our assessment of risks involved
gaining an understanding of the control environment including
the entity’s procedures for complying with regulatory
requirements.
We communicated identified laws and regulations throughout
our team and remained alert to any indications of
noncompliance throughout the audit. This included
communication from the Group audit team to full-scope
component audit teams of relevant laws and regulations
identified at the Group level, and a request for full scope
component auditors to report to the Group audit team any
instances of non-compliance with laws and regulations that could
give rise to a material misstatement at the Group level.
The potential effect of these laws and regulations on the financial
statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation (including related companies legislation), distributable
profits legislation, and taxation legislation and we assessed the
extent of compliance with these laws and regulations as part of
our procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and
regulations where the consequences of non-compliance could
have a material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or
litigation. We identified the following areas as those most likely
to have such an effect: health and safety, data protection laws,
anti-bribery, employment law, export law, and certain aspects of
company legislation recognising the financial and regulated
nature of the Group’s activities and its legal form. Auditing
standards limit the required audit procedures to identify
noncompliance with these laws and regulations to enquiry of the
directors and other management and inspection of regulatory
and legal correspondence, if any. Therefore if a breach of
operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of
law or regulation
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. For example, the further removed non-
compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely
the inherently limited procedures required by auditing standards
would identify it.
6. We have nothing to report on the other information in the
Annual Report
The directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does not
cover the other information and, accordingly, we do not express
an audit opinion or, except as explicitly stated below, any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in doing
so, consider whether, based on our financial statements audit
work, the information therein is materially misstated or
inconsistent with the financial statements or our audit
knowledge. Based solely on that work we have not identified
material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
— we have not identified material misstatements in the
strategic report and the directors’ report;
— in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
— in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Corporate governance disclosures
Based solely on our work on the other information described
above:
— with respect to the Corporate Governance Statement
disclosures about internal control and risk management
systems in relation to financial reporting processes and about
share capital structures:
– we have not identified material misstatements therein;
and
– the information therein is consistent with the financial
statements; and
— in our opinion, the Corporate Governance Statement has
been prepared in accordance with the relevant rules of the
Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority.
We are also required to report to you if a corporate governance
statement has not been prepared by the company. We have
nothing to report in these respects.
7. We have nothing to report on the other matters on which we
are required to report by exception
Under the Companies Act 2006, we are required 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
— the parent Company financial statements and the part of the
Directors’ Remuneration Report to be audited 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.
We have nothing to report in these respects.
8. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 126,
the Directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; assessing
the Group 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
they 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
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 our
opinion in an auditor’s report. Reasonable assurance is a high
level of assurance, but does not 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 aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of the financial
statements.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial statements in
an annual financial report prepared under Disclosure Guidance
and Transparency Rule 4.1.17R and 4.1.18R. This auditor’s report
provides no assurance over whether the annual financial report
has been prepared in accordance with those requirements.
9. The purpose of our audit work and to whom we owe our
responsibilities
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.
Andrew Campbell-Orde (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
23 April 2024

|  | Year ended 31 December |
|  | 2023 | 2022
Continuing operations | Note | US$’000 | US$’000
Revenue | 4 | 3 2 1, 7 2 4 | 1 8 5,406
Cost of sales |  | (15 6 , 3 7 2) | (6 0, 777)
Gross profit |  | 16 5 , 3 5 2 | 12 4 , 6 2 9
Research and development expenses | 5 | (7 8 , 216) | (6 9 ,3 58)
Sales and marketing expenses |  | (12 , 8 10) | (4 , 6 4 7)
General and administration expenses |  | (4 0 , 8 2 1) | (15,465)
of which expected credit loss | 24 | (7, 3 3 7) | (2 ,18 4)
Other operating (expense)/income | 6 | (52 ,8 57) | 2,4 68
Operating (loss)/profit |  | (19 , 3 5 2) | 3 7, 6 2 7
Finance income | 9 | 3,4 48 | 1, 6 8 4
Finance expense | 9 | (8, 8 3 6) | (3 , 5 8 8)
Loss from joint venture | 16 | (14 , 7 3 0) | (18 , 4 8 1)
(Loss)/profit before tax |  | (39, 47 0) | 1 7, 2 4 2
Income tax expense | 10 | (11, 5 3 2) | (18 , 32 8)
Net (loss) |  | (5 1, 0 0 2) | (1 ,086)
Other comprehensive income/(expense) |  |  |
Items that may be reclassified subsequently to profit or loss: |  |  |
Currency exchange gain/(loss) on translation of foreign operations |  | 1 0 ,16 1 | (74 ,9 8 9)
|  | 1 0 ,16 1 | (74 ,9 8 9)
Items that will not be reclassified to profit or loss: |  |  |
Currency exchange remeasurements of defined benefit obligation | 25 | (1, 2 0 7) | —
Related income tax credit |  | 409 | —
|  | (7 9 8) | —
Other comprehensive income/(expense) |  | 9, 3 6 3 | (74 ,9 8 9)
Total comprehensive loss |  | (41, 6 3 9) | (7 6,0 7 5)
Loss per share (US$ cents) | 11 |  |
Basic |  | (7. 2 3) | (0 .16)
Diluted |  | (7. 2 3) | (0 .16)

1
1. There has been a change to the grouping of operating expenses in 2022, specifically relating to the compensation element of Banias deferred cash rights.
Thisis shown within other operating expenses/(income) in 2023 so we have changed 2022 operating expenses /(income) to be presented on the same basis
(see notes 6 and 30).
Consolidated statement of comprehensive income
The notes on pages 140 to 185 form part of these financial statements.
136 Alphawave IP Group plc | Annual report and financial statements 2023

|  | As at 31 December |
|  |  | Restated
|  | 2023 | 2022
| Note | US$’000 | US$’000
Assets |  |  |
Cash and cash equivalents | 17 | 10 1, 2 9 1 | 18 6 , 2 3 1
Trade and other receivables | 18 | 78 ,0 89 | 47,143
Contract assets | 4 | 6 5 ,17 3 | 5 6 ,9 87
Inventories | 19 | 11, 6 2 2 | 18 , 0 61
Income tax receivables |  | 2 3 , 4 67 | 2 ,9 2 2
Other current assets | 20 | 19, 0 17 | 7 1, 4 75
Total current assets |  | 298,659 | 382,81 9
Goodwill | 12 | 3 0 9,19 9 | 3 0 9 ,19 9
Other intangible assets | 13 | 203,31 4 | 16 1 ,406
Property and equipment – owned | 14 | 20,6 54 | 13 , 4 2 1
Property and equipment – leased | 15 | 15 , 2 6 2 | 14 , 5 5 3
Other investments |  | 1, 0 19 | —
Trade and other receivables | 18 | 6, 392 | 19 , 2 7 2
Deferred tax assets | 10 | 12 , 0 8 6 | 2,680
Total non-current assets |  | 5 67, 9 2 6 | 52 0, 5 31
Total assets |  | 866,585 | 90 3, 350
Liabilities and equity |  |  |
Trade and other payables | 21 | 6 9, 2 8 5 | 88,6 65
Contract liabilities | 4 | 5 6,0 26 | 96,933
Income taxes payable |  | 1 ,05 1 | —
Lease liabilities | 15 | 3,9 5 3 | 3 ,75 6
Loans and borrowings | 22 | 5,625 | 5,000
Total current liabilities |  | 13 5 ,9 4 0 | 19 4 , 35 4
Trade and other payables | 21 | 1,7 75 | 1 0,555
Lease liabilities | 15 | 12 , 7 2 7 | 11 ,1 7 7
Loans and borrowings | 22 | 2 14 , 7 5 0 | 205,201
Deferred tax liabilities | 10 | 3 2 ,94 5 | 13 , 7 9 0
Total non-current liabilities |  | 262, 1 97 | 2 40,723
Total liabilities |  | 398, 137 | 4 35 , 07 7
Ordinary shares | 26 | 1 0 , 0 11 | 9,751
Share premium account | 26 | 1,6 3 8 | 7 75
Merger reserve | 26 | (7 9 3 , 2 16) | (7 9 3 , 2 16)
Share-based payment reserve | 26 | 41, 8 7 5 | 18 ,18 9
Currency translation reserve | 26 | (8 6 , 5 4 6) | (96 , 70 7)
Retained earnings |  | 1, 2 9 4 , 6 8 6 | 1, 3 2 9, 4 81
Total equity |  | 468,448 | 4 6 8 , 273
Total liabilities and equity |  | 866,585 | 90 3, 350

1
1. Restated to reflect the finalisation of the purchase price allocation on the acquisition of OpenFive (see notes 12 and 30).
The financial statements on pages 136 to 139 were approved and authorised for issue by the Board of Directors on
23 April 2023 and were signed on its behalf by:
Tony Pialis
Director
Consolidated balance sheet
The notes on pages 140 to 185 form part of these financial statements.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 137
Consolidated cash flow statement

|  |  | Year ended 31 December
|  |  | Restated
|  | 2023 | 2022
| Note | US$’000 | US$’000
Cash flows from operating activities |  |  |
Net (loss) |  | (5 1, 0 0 2) | (1 ,086)
Non-cash items within operating profit: |  |  |
– Amortisation of intangible assets | 13 | 13 , 2 9 4 | 6 ,15 9
– Depreciation of property and equipment – owned | 14 | 11 , 2 1 2 | 2 , 472
– Depreciation of property and equipment – leased | 15 | 4 , 612 | 3,036
– Share-based compensation expense | 27 | 4 0, 691 | 15 , 6 95
– Currency translation loss/(gain) on intercompany balances |  | 15 , 4 6 6 | (1 0 ,444)
Deferred cash rights |  | 8, 352 | 1, 7 0 2
Other income |  | — | —
Finance income | 9 | (3 , 4 4 8) | (1, 6 8 4)
Finance expense | 9 | 8 ,836 | 3,58 8
Loss from joint venture | 16 | 14 , 7 3 0 | 18 , 4 8 1
Income tax expense |  | 4,533 | 13 ,13 0
Cash generated from operations before changes in working capital |  | 67, 2 76 | 5 1, 0 4 9
Changes in working capital: |  |  |
(Increase) in trade and other receivables |  | (2 2 , 5 9 2) | (12 0 , 9 2 1)
Decrease/(increase) in inventories |  | 6,4 39 | (3 , 3 9 0)
(Increase) in contract assets |  | (8 ,1 8 6) | (22 ,5 5 4)
Increase in trade and other payables |  | 23,503 | 5 1,9 7 3
(Decrease)/increase in contract liabilities |  | (4 0 ,9 0 7) | 4 4,83 4
Cash generated from operations |  | 25,533 | 9 91
Income taxes paid |  | (9, 6 9 9) | (19 ,9 0 6)
Cash inflow/(outflow) from operating activities |  | 15 , 8 3 4 | (18 ,9 15)
Cash flows from investing activities |  |  |
Purchase of intangible assets | 13 | (1, 8 2 5) | (4 ,1 3 1)
Purchase of property and equipment | 14 | (18 , 5 6 8) | (4 , 2 0 9)
Capitalised development expenditure |  | (53 , 2 54) | ( 7, 2 0 2)
Investment in joint venture | 16 | (14 , 7 3 0) | (9, 0 6 0)
Purchase of businesses, net of acquired cash |  | (7, 3 6 9) | (4 0 3 , 5 8 8)
Interest received |  | 3 ,11 8 | 1, 2 7 0
Cash outflow from investing activities |  | (9 2 ,6 2 8) | (4 2 6 ,9 2 0)
Cash flows from financing activities |  |  |
Issue of ordinary shares | 26 | 1,12 3 | 898
Interest paid |  | (18 , 3 9 0) | (6 5 0)
Lease payments | 15 | (4 , 74 0) | (3 , 0 3 8)
Drawdown of loans and borrowings |  | 1 5,000 | 21 0,000
Repayment of loans and borrowings |  | (5,000) | (1, 2 5 0)
Cash (outflow)/inflow from financing activities |  | (12 , 0 0 7) | 20 5, 9 60
Net decrease in cash and cash equivalents |  | (8 8 , 8 0 1) | (23 9, 8 75)
Cash and cash equivalents at the beginning of the year |  | 18 6 , 2 3 1 | 5 0 0 ,9 6 4
Currency translation gain/(loss) on cash and cash equivalents |  | 3,86 1 | (7 4,8 58)
Cash and cash equivalents at the end of the year | 17 | 10 1, 2 9 1 | 18 6 , 2 3 1

1
1. Restated to reflect the finalisation of the purchase price allocation on the acquisition of OpenFive (see notes 12 and 30).
A reconciliation of changes in liabilities arising from financing activities is presented in note 22.
The notes on pages 140 to 185 form part of these financial statements.
138 Alphawave IP Group plc | Annual report and financial statements 2023
Consolidated statement of changes in equity

|  |  | Ordinary | Share |  | Share-based | Currency |  |
|  |  | share | premium | Merger | payment | translation | Retained |
|  |  | capital | account | reserve | reserve | reserve | earnings | Total
|  | Note | US$’000 | US$’000 | US$’000 | US$’000 | US$’000 | US$’000 | US$’000
As at 1 January 2022 |  |  | 9, 3 9 9 | — | (7 9 3 , 2 16) | 4, 777 | (2 1, 7 18) | 1, 3 28 , 5 3 0 | 527,772
Net loss |  |  | — | — | — | — | — | (1 ,086) | (1 ,086)
Other comprehensive expense |  |  | — | — | — | — | (74 , 9 8 9) | — | (74 , 9 8 9)
Total comprehensive loss |  |  | — | — | — | — | (74 ,9 8 9) | (1 ,086) | (7 6,07 5)
Settlement of share awards: |  |  |  |  |  |  |  |  |
– | Issue of ordinary shares | 26 | 352 | 7 75 | — | (24 6) | — | — | 881
– | Transfer of cumulative |  |  |  |  |  |  |  |
| compensation expense on |  |  |  |  |  |  |  |
| settledawards | 27 | — | — | — | (2,037) | — | 2,03 7 | —
Share-based compensation expense |  |  |  |  |  |  |  |
for the year | 27 | — | — | — | 15 , 6 9 5 | — | — | 15 , 6 95
Other changes in equity |  | 352 | 7 75 | — | 13 , 4 12 | — | 2,03 7 | 16 , 5 7 6
As at 31 December 2022 |  | 9,751 | 7 75 | (7 9 3 , 2 16) | 18 ,18 9 | (96 ,70 7) | 1, 3 2 9 , 4 8 1 | 4 68 , 273
Net loss for the year |  | — | — | — | — | — | (51, 0 0 2) | (51, 0 0 2)
Other comprehensive expense |  | — | — | — | — | 1 0 ,16 1 | (7 9 8) | 9, 3 6 3
Total comprehensive loss for the year |  |  | — | — | — | — | 1 0 ,16 1 | (51, 8 0 0) | (41 , 6 3 9)
Settlement of share awards: |  |  |  |  |  |  |  |
– | Issue of ordinary shares | 26 | 260 | 863 | — | — | — | — | 1 ,1 2 3
– | Transfer of cumulative |  |  |  |  |  |  |  |
| compensation expense on |  |  |  |  |  |  |  |
| settledawards | 27 | — | — | — | (1 7 ,005) | — | 17 ,005 | —
Share-based compensation expense |  |  |  |  |  |  |  |  |
for the year |  | 27 | — | — | — | 4 0 ,6 91 | — | — | 4 0, 691
Other changes in equity |  |  | 260 | 86 3 | — | 23,686 | — | 1 7 ,005 | 41, 8 14
As at 31 December 2023 |  |  | 10 , 011 | 1, 6 3 8 | (7 9 3 , 216) | 41, 8 75 | (8 6 , 5 4 6) | 1, 2 9 4 , 6 8 6 | 468,448

The notes on pages 140 to 185 form part of these financial statements.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 139
Notes to the consolidated financial statements
FOR THE YEAR ENDED 31 DECEMBER 2023
1 Background
Reporting entity
Alphawave IP Group plc (the ‘Company’) is a public limited
company that is incorporated and domiciled in England and
Wales and whose shares are listed on the main market of
the London Stock Exchange. The address of the Company’s
registered office is 6th Floor, 65 Gresham Street, London,
EC2V 7NQ, United Kingdom.
The principal activities of the Company and its subsidiaries
(together, the ‘Group’) are the development and marketing
of high-speed connectivity solutions for application in data
centres, data networking, data storage, artificial intelligence,
5G wireless infrastructure and autonomous vehicles.
Statement of compliance
The consolidated financial statements set out on pages 136
to 185 have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted for use in the
United Kingdom and those parts of the Companies Act 2006
that are applicable to companies reporting under IFRS. The
consolidated financial statements also comply with IFRS as
issued by the International Accounting Standards Board (IASB).
Basis of preparation
The consolidated financial statements have been prepared
on a going concern basis and in accordance with the
historical cost convention, except that certain investments
and contingent consideration are measured at fair value.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. Information
about assets and liabilities that are measured at fair value is
presented in note 23.
The Group’s material accounting policies are set out in note 2.
Going concern
At the time of approving the financial statements, the Directors
are required to form a judgement as to whether the Group
and the Company have adequate resources to continue in
operational existence for the foreseeable future. In forming
their judgement, the Directors consider the Group’s current
financial position, the Group’s medium-term plan and its
budget for the next financial year, and the principal risks and
uncertainties that it faces.
As at 31 December 2023, the Group had cash and cash
equivalents of US$101.3m and had bank borrowings totalling
US$220.4m, comprised of a Term Loan of US$95.4m and
US$125.0m drawn against a US$125.0m Revolving Credit
Facility. Both the Term Loan and the Revolving Credit Facility
are scheduled to mature in the fourth quarter of 2027.
The Directors based their going concern assessment on
the base case scenario and a severe but plausible downside
scenario over the going concern period as follows:
> Group revenue forecasts are materially reduced by 25%
and the interest rate on the Group’s debt is 200 basis
points higher than forecast, with a controllable mitigating
reduction of 10% of operating expenditure and a reduction
of 50% in laboratory and prototyping operating and capital
expenditure.
Under both the base and downside scenario, there are no
further investments forecast to be made to WiseWave.
Under the base case and the downside scenario, the analysis
demonstrates the Group can continue to maintain sufficient
liquidity headroom with no default on debt covenants.
Following consideration of the Group’s liquidity position and
prospects for the year ahead, the Directors have a reasonable
expectation that the Group has adequate resources for a
period of at least twelve months from the date of approval
of the consolidated financial statements and have therefore
assessed that the going concern basis of accounting is
appropriate in preparing the consolidated financial statements.
Segment information
An operating segment is a component of an entity that
engages in business activities from which it may earn revenues
and incur expenses for which discrete financial information is
available and whose operating results are regularly reviewed
by the Chief Operating Decision Maker (CODM) to assess
performance and make resource allocation decisions.
Our business model is such that our IP is leveraged across the
channels through which we provide our products and services
to customers, i.e. IP licensing, custom silicon or own products.
Moreover, the Group’s products and services are of similar
nature and are provided to similar types of customers in similar
locations. Our CODM, the Chief Executive Officer, therefore
does not utilise disaggregated information for resource
allocation decisions. Accordingly, management considers that
the Group’s business constitutes only one operating segment
and therefore no disaggregated information is presented in the
consolidated financial statements.
Presentation currency
The Directors consider that the Company’s functional currency
is pound sterling, but present the consolidated financial
statements in US dollars (‘US$’) because substantially all of
the Group’s revenues and a significant part of its expenses are
denominated in US$. US$ is the presentation currency used by
most companies in the semiconductor industry and its use by
the Group therefore assists investors in making comparisons
with its peers.
All US$ amounts are rounded to the nearest thousand, unless
stated otherwise.
140 Alphawave IP Group plc | Annual report and financial statements 2023
Use of estimates
The preparation of the financial statements requires
management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Changes
in estimates and assumptions are accounted for prospectively.
Actual outcomes may differ from estimates and assumptions
and affect the Group’s results in future periods. Key sources
of estimation uncertainty affecting the consolidated financial
statements are discussed in note 3.
Approval of the consolidated financial
statements
The consolidated financial statements for the year ended
31 December 2023 were authorised for issue by the Board of
Directors on 23 April 2024.
Company financial statements
Separate financial statements for the Company are set out on
pages 190 and 191.
Accounting standards adopted during the year
IFRS 17 Insurance Contracts
IFRS 17 requires liabilities in relation to insurance contracts
to be measured at current fulfilment value and provides a
more uniform measurement and presentation approach for
all insurance contracts compared with the standard that it
replaced, IFRS 4 Insurance Contracts.
While the Group established a captive insurance subsidiary
with the intention of providing Directors’ and Officers’ liability
insurance, it has not transacted any business. Accordingly,
the adoption of IFRS 17 had no impact on the consolidated
financial statements.
Classification of Liabilities as Current or Non‑Current
and Non‑current Liabilities with Covenants
(Amendments to IAS 1)
Amendments to IAS 1 Presentation of Financial Statements
were issued by the IASB in 2020 and 2022 to clarify that
the classification of liabilities with an uncertain settlement
date as current or non-current is based on rights that are in
existence at the end of the reporting period and to introduce
new disclosure requirements for non-current liabilities that are
subject to covenants.
While adoption of the amendments was not mandatory for the
Group until 1 January 2024, we adopted them early with effect
from 1 January 2023.
As disclosed in note 22, the Group has outstanding borrowings
under a Term Loan facility and a Revolving Credit Facility that
are subject to financial covenants. For the period ended on
30 June 2023, the Fixed Charges Coverage Ratio was below
the minimum permitted level of 1.25x.
As a consequence of having adopted the amendments to
IAS 1, since the breach of the covenant was unresolved as at
30 June 2023, the amounts outstanding under the Term Loan
and the Revolving Credit Facility were classified wholly as current
liabilities in the consolidated balance sheet as at that date.
On 22 September 2023, we agreed an amendment of the Credit
Agreement with the lenders that temporarily suspended the Fixed
Charges Covenant Ratio but introduced a Minimum Liquidity
Requirement. Since the Group was not in breach of the amended
financial covenants as at 31 December 2023, the appropriate
portion of the amounts owed under the Term Loan facility and the
Revolving Credit Facility are classified as non-current liabilities in
the consolidated balance sheet as at that date.
International Tax Reform – Pillar Two Model Rules
(Amendments to IAS 12)
In October 2021, the OECD published its Global Anti-Base
Erosion Model Rules (Pillar Two) that seek to ensure that large
multinational enterprises pay a minimum effective corporate
tax rate of 15% on the income arising in each jurisdiction where
they operate.
In view of the uncertainties that exist during the
implementation phase, in May 2023, the IASB issued
amendments to IAS 12 Income Taxes that introduce a
temporary exception under which an entity does not recognise
any deferred tax assets or liabilities related to Pillar Two top-up
taxes together with new disclosure requirements concerning
an entity’s estimated exposure to them. The amendments
became effective for the Group immediately following their
endorsement for use in the UK in July 2023.
Since the Group does not currently operate in any jurisdiction
where it expects to have a liability for Pillar Two top-up taxes,
adoption of the amendments has had no impact on the
consolidated financial statements.
Definition of Accounting Estimates
(Amendments to IAS 8)
Amendments to IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors that introduce a definition of
an accounting estimate to be applied where items are subject
to measurement uncertainty and clarify that a change in an
accounting estimate that results from new information or new
developments is not the correction of an error.
Adoption of the amendments did not have a material impact
on the consolidated financial statements.
Disclosure of Accounting Policies (Amendments to
IAS 1 and IFRS Practice Statement 2)
Amendments to IAS 1 to require the disclosure of ‘material’,
rather than ‘significant’, accounting policies. Although
adoption of the amendments did not result in any change in
the Group’s accounting policies themselves, they have caused
management to revise the accounting policy information
disclosed in the consolidated financial statements.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 141
1 Background continued
Accounting standards adopted during
theyearcontinued
Deferred Tax related to Assets and Liabilities arising
from a Single Transaction (Amendments to IAS 12)
Amendments to IAS 12 that have the effect that the exemption
from the requirement to recognise deferred tax assets and
liabilities on initial recognition of a transaction does not apply
to transactions in which equal amounts of deductible and
taxable temporary differences arise on initial recognition,
for example where a lessee recognises an asset and a liability
on the commencement of a lease.
The Group previously accounted for deferred tax on leases
on a net basis. Since adopting the amendments, where
appropriate, the Group has recognised a separate deferred
tax asset in relation to its lease liabilities and a deferred tax
liability in relation to its right-of-use assets. However, there was
no impact on the consolidated financial statements because
the deferred tax assets and liabilities recognised qualified for
offset under IAS 12.
Accounting standards issued but not adopted
as at 31 December 2023
Supplier Finance Arrangements (Amendments to IAS 7
and IFRS 7)
Amendments to IAS 7 Statement of Cash Flows and
IFRS 7 Financial Instruments: Disclosures that add new
disclosure requirements to the nature and extent of supplier
finance arrangements (also known as ‘reverse factoring’).
The amendments became effective for the Group on
1 January 2024.
The Group does not currently provide supplier finance
arrangements.
Lease Liability in a Sale and Leaseback (Amendments
to IFRS 16)
Amendments to IFRS 16 Leases that clarify how a seller-lessee
measures sale and leaseback transactions. The amendments
became effective for the Group on 1 January 2024.
Management will refer to the new guidance in the event that
the Group enters into any sale and leaseback transactions in
the future.
Lack of Exchangeability (Amendments to IAS 21)
Amendments to IAS 21 The Effects of Changes in Foreign
Exchange Rates to provide guidance to identify when a
currency is exchangeable and how to determine the exchange
rate to be used for accounting purposes when it is not. Subject
to their endorsement for use in the UK, the amendments will
become effective for the Group on 1 January 2025.
Management does not expect that adoption of the new
guidance will have a material impact on the consolidated
financial statements.
2 Material accounting policies
Basis of consolidation
The consolidated financial statements incorporate the results,
cash flows and assets and liabilities of the Company and its
subsidiaries.
A subsidiary is an entity that is controlled, either directly
or indirectly, by the Company. Control exists when the
Company is exposed, or has rights, to variable returns from its
involvement with the entity and has the ability to affect those
returns through its power to direct the relevant activities of the
entity. Generally, such power exists where the Company holds
a majority of the voting rights of an entity. When the Company
holds less than a majority of the voting rights of an entity, it
considers all relevant facts and circumstances in assessing
whether or not its voting rights are sufficient to give it power to
direct the activities that significantly affect its returns from the
entity, including: the size of the Company’s holding of voting
rights relative to the size and dispersion of the holdings of
other vote holders; potential voting rights held by the Company,
other vote holders or other parties; and rights arising from
other contractual arrangements.
Details of the Company’s subsidiaries as at 31 December 2023
are set out on page 198.
Consolidation of a subsidiary commences when the Company
obtains control over the subsidiary and ceases at such time as
control over the subsidiary is lost. Transactions and balances
between members of the Group, and any unrealised profits or
losses on such transactions, are eliminated on consolidation.
Changes in the Company’s ownership interest in a subsidiary
that do not result in a loss of control are accounted for
within equity.
Joint ventures
A joint venture is a joint arrangement where the parties that
have joint control of the arrangement have rights to the net
assets of the arrangement, rather than rights to its assets and
obligations for its liabilities. Joint control is the contractually
agreed sharing of control of an arrangement which exists only
when decisions about the activities that significantly affect the
returns of the arrangement require the unanimous consent of
the parties sharing control.
Joint ventures are accounted for using the equity method.
On initial recognition the investment in a joint venture is
recognised at cost and the carrying amount of the investment
is increased or decreased to recognise the Group’s share of
the comprehensive income or loss of the joint venture after
the date of acquisition. If the Group’s share of losses of a joint
venture equals or exceeds its interest in the joint venture, the
Group does not recognise its share of further losses. After the
Group’s interest in a joint venture is reduced to nil, additional
losses are provided for, and a liability recognised, only to the
extent that it has incurred legal or constructive obligations or
made payments on behalf of the joint venture.
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
142 Alphawave IP Group plc | Annual report and financial statements 2023
The Group’s investment agreement in its joint venture,
WiseWave Technology Co., LTD, stipulates that Alphawave can
invest up to US$170,000,000 in WiseWave. Any requirement for
a capital contribution is a shareholder reserved matter which
requires the explicit approval of Alphawave as joint investor.
As such, the Group does not have a constructive obligation to
fund the joint venture and therefore additional losses recorded
after the Group’s interest in the joint venture have reduced to nil
are not provided for and no liability is recognised.
Unrealised profits and losses arising on transactions involving
assets between the Group and a joint venture are recognised
only to the extent of unrelated investors’ interests in the joint
venture. Accordingly, the Group’s share of its profit from
the licensing of IP or the sale of products to a joint venture
is eliminated to the extent that the resulting asset has not
been utilised by the joint venture or sold on to a third party.
Such elimination is made in arriving at the Group’s share of
the profit or loss from the joint venture and correspondingly
against its interest in the joint venture. However, such
elimination is made after the Group has recognised its share
of the comprehensive income or loss of the joint venture and
only to the extent that its interest in the joint venture is reduced
to nil.
Business combinations
A business combination is a transaction or other event in
which the Company obtains control over a business.
Business combinations are accounted for using the
acquisition method.
Goodwill acquired in a business combination is recognised as
an intangible asset and represents the excess of the aggregate
of the consideration transferred, including contingent
consideration, and the amount of any non-controlling
interests in the acquired business over the net total of the
identifiable assets and liabilities of the acquired business at the
acquisition date. Any shortfall, negative goodwill, is recognised
immediately as a gain in profit or loss.
Consideration transferred represents the sum of the fair values
at the acquisition date of the assets given, liabilities incurred
or assumed and equity instruments issued by the Group in
exchange for control over the acquired business.
Acquisition-related costs are charged to profit or loss in the
period in which they are incurred.
Identifiable assets and liabilities of the acquired business are
measured at their fair value at the acquisition date, except
for certain items that are measured in accordance with
the relevant Group accounting policy, such as replacement
equity-settled share-based compensation awards and deferred
tax assets and liabilities.
Non-controlling interests that entitle their holders to a
proportionate share of the net assets of the acquired
business in the event of a liquidation are measured either at
fair value or at the non-controlling interest’s proportionate
share of the identifiable assets and liabilities of the business.
Other non-controlling interests are measured at fair value.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, provisional amounts are reported for
the items for which the accounting is incomplete. During a
measurement period of up to one year after the acquisition
date, adjustments may be made to the provisional amounts
as if the accounting for the business combination had been
completed at the acquisition date. Thereafter, the initial
accounting for a business combination may not be adjusted
except to correct an error .
Foreign currency translation
Each entity within the Group has a functional currency, which
is normally the currency in which the entity primarily generates
and expends cash.
At entity level, a foreign currency is a currency other than
the entity’s functional currency. Sales, purchases and other
transactions denominated in foreign currencies are recorded
in the entity’s functional currency at the exchange rate
ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are translated at
the exchange rate ruling at the end of the reporting period.
Currency translation differences arising at entity level are
recognised in profit or loss. Non-monetary assets and liabilities
denominated in foreign currencies are not retranslated
subsequent to initial recognition.
On consolidation, the results of foreign operations are
translated into US dollars at the average exchange rate for the
reporting period and their assets and liabilities are translated
into US dollars at the exchange rate ruling at the end of the
reporting period. Currency translation differences arising on
consolidation are recognised in other comprehensive income
and taken to the currency translation reserve. In the event that
a foreign operation is sold, the related cumulative currency
translation difference recognised in other comprehensive
income is reclassified from equity to profit or loss and is
included in calculating the gain or loss on disposal of the
foreign operation.
Revenue recognition
General principles
Revenue is recognised in accordance with IFRS 15 Revenue
from Contracts with Customers, upon transfer of control of
promised products or services to customers in an amount that
reflects the consideration the Group expects to be entitled to in
exchange for those products or services.
Revenue represents the consideration to which the Group
expects to be entitled in exchange for transferring goods or
services to a customer, excluding sales taxes and, where
applicable, including estimates of rebates, product returns and
other forms of variable consideration. Variable consideration
is included in revenue only to the extent that we consider that
it is highly probable that a significant reversal in the amount
of cumulative revenue recognised will not occur when the
uncertainty associated with the variable consideration is
subsequently resolved .
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Alphawave IP Group plc | Annual report and financial statements 2023 143
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
2 Material accounting policies continued
Revenue recognition continued
IP licensing
The Group enters into contracts with customers to license
intellectual property (IP) products, which consist primarily
of software files that customers use to create, integrate and
operate functional building blocks within a semiconductor
device. Such contracts typically include the provision of
support to customers during the integration of the IP product
into their chip design (‘integration support’) and when ensuring
that the IP product is functional within the resulting chip
(‘bring up support’).
The Group typically licenses its IP products under standard
pay-per-use licence agreements and are delivered over the
period its customers are developing their semiconductor
devices, which can span several years.
The Group licenses two different types of IP product:
> hard IP, which has to be specifically tailored for different
manufacturing process technologies, as it contains
analogue circuitry whose characteristics may change
depending on the manufacturing process; and
> soft IP, which typically contains only digital circuitry and
where computer-aided design tools can enable the IP to
work with different manufacturing processes.
Contracts to license the Group’s IP products specify the
consideration to be paid by the customer, based on the specific
IP products licensed and the amount of any non-recurring
engineering (NRE) required. Invoicing is typically aligned with
the achievement of project milestones. Support services are
generally separately priced within the contract and are invoiced
on an annual basis.
Where a contract involves more than one performance
obligation, we allocate the transaction price to the performance
obligations based on their relative stand-alone selling prices.
Hard IP
Due to the complexity of the IP products being delivered and
the need for customers to integrate the IP products with other
IP building blocks in their chip designs, the Group’s IP products
are typically delivered in multiple stages, referred to as IP
views, all of which require some level of customisation and/
or configuration. Although delivery of the licensed IP products
is split over multiple deliveries of IP views, these deliveries are
not distinct because each IP view is highly dependent on or
interrelated with one or more of the other IP views.
Further, we do not consider any NRE work required to configure
the IP products to be distinct because customers are unable
to benefit from the IP views on their own or together with other
resources readily available to them, due to the bespoke nature
of the configuration that the Group performs on the hard IP
products. We therefore consider that the delivery of the IP
views and the configuration of the IP products represents a
single performance obligation.
We recognise revenue on hard IP products by reference to
the stage of completion of the project, measured based on
the engineering hours spent on work performed to date as a
percentage of the estimated total project hours.
Soft IP
While the initial delivery of IP may not be to a customer’s
exact specification, customers are able to use the IP without
significant modification and therefore benefit from it on its own
or together with resources readily available to them.
We therefore consider the initial delivery of IP to be a separate
performance obligation.
We consider any customisation work and subsequent IP
deliveries to be a single separate performance obligation
because they are distinct from the initial IP delivery but are
highly dependent or interrelated with each other.
We recognise revenue on the initial IP when the IP is delivered
to the customer.
We recognise revenue on customisation and subsequent IP
deliveries by reference to the stage of completion of the project
and achievement of specific contractual milestones when
successive deliveries of customised IP are made.
Support
Support services are considered a separate performance
obligation from delivery of the IP products because customers
could benefit from the services on their own or with other
resources that are readily available to them.
Our obligation to provide support services is a stand-ready
obligation over a specified period, the timing of which is
uncertain and there is typically no maximum number of
hours stated in the contract. Revenue from support services
is therefore recognised on a straight-line basis over the
contractual period of support provision.
Custom silicon
The Group enters into contracts with customers to develop
custom silicon products that can include various combinations
of IP provided by the Group, IP provided by third parties, other
third-party costs required to prototype the device and the
Group’s internal engineering costs and, if those products go
into production, to supply them to those customers. Custom
silicon development contracts vary according to the proportion
of the engineering work that the Group is required to undertake.
For example, the customer may provide a specification only,
with the Group designing, implementing and manufacturing
the resulting chip, utilising third-party manufacturers.
Alternatively, a customer may provide their own design, and
only utilise the Group’s supply chain infrastructure to manage
the manufacturing of the chip. All custom silicon contracts
specify that the Group owns the unique mask set of the chip
design and, therefore, if the resulting chip goes into production,
it can only be supplied to the customer by us. Equally, however,
the customer controls the chip design because the Group
cannot use it for any purpose other than to manufacture chips
for the customer.
144 Alphawave IP Group plc | Annual report and financial statements 2023
Custom silicon development projects are typically complex
and highly customised with detailed engineering schedules
and deliverables. A custom silicon project may include internal
engineering services, our IP, IP support services, third-party
IP, tooling costs and prototypes. While these elements are
capable of being distinct, they are not distinct in the context
of the contract. Each deliverable is highly dependent on or
interrelated with one or more of the other goods or services
in the contract and the nature of the obligation is to deliver
a combined output in the form of a completed design
or prototype.
We therefore consider custom silicon development to be a
single performance obligation.
We consider that the supply of chips following release to
production is a separate performance obligation which arises
on receipt of a silicon purchase order from the customer.
Custom silicon contracts do not contain purchase volume
commitments and therefore the supply of chips is not only
capable of being distinct, but is also distinct in the context of
the contractual arrangements.
Custom silicon contracts specify the consideration receivable
for the custom design work, including any third-party
components, as well as pricing for any subsequent silicon
orders. Pricing of the design work will depend on factors
including chip complexity, manufacturing process technology
and IP costs. Invoicing for development work is typically
aligned with the achievement of project milestones. Contracts
are typically cancellable by the customer for convenience
during the design phase. In the event of cancellation, the
customer will be liable to make payment corresponding to a
future contract milestone or a specified fixed percentage of the
contract value.
We recognise revenue on custom silicon development
projects by reference to the stage of completion of the project,
measured based on the costs incurred for work performed to
date as a percentage of the estimated total development costs.
Supply of silicon products
The Group enters into contracts with customers for the
supply of silicon devices that are developed by the Group to
the customer’s specification. Silicon products are physical
goods held as inventory with revenue recognised at a point
in time when the customer obtains control of the products.
Accordingly, where products are sold on ‘ex-works’ incoterms,
revenue is recognised when the products are released for
collection by the customer. Otherwise, revenue is recognised
when the products are delivered to the customer. Where
products are supplied on a consignment basis, delivery takes
place and revenue is recognised when the products are taken
out of the consignment by the customer.
Reseller fees
VeriSilicon licensed the Group’s IP products to third-party
customers under an exclusive IP subscription reseller
agreement that ended in December 2023. Under the
agreement, we charged VeriSilicon exclusivity fees for each
calendar year that we invoiced to them and collected on a
quarterly basis.
The exclusivity fees represented minimum annual payments
by VeriSilicon against which it could offset purchases of our
IP products for license to third parties at any time during
the relevant calendar year. We carried out the necessary
customisation and/or configuration of our IP products to meet
the requirements of the end-customers.
We recognised revenue under the agreement by reference to
the stage of completion of the related customisation and/or
configuration project, measured based on the engineering hours
spent on work performed as a percentage of the estimated total
project hours. Any unutilised exclusivity payments could not be
carried forward by VeriSilicon to future calendar years.
We therefore recognised any unutilised exclusivity payments as
additional revenue at the end of the relevant calendar year.
Licence agreement with joint venture
We have a subscription licence agreement that provides
WiseWave with right of use over a library of our IP products
for a fixed fee spread over a period of five years ending in
2026. As we do not usually provide individual licences without
NRE to customers it is difficult to determine the standalone
selling price of each of the IP products. Based on engineering
schedules, we therefore estimated the total number of IP
products that we expect to provide into the library over the
duration of the agreement in order to calculate the estimated
unit price of the IP products. Given that the number of
products to be put into the library in the future is uncertain,
the estimated unit price of the IP products constitutes variable
consideration. We therefore exercise judgement in applying
constraints to the unit price of the IP products in order to
minimise the risk of significant reversals of revenue in future
periods. Revenue on this agreement is recognised at a point
in time when an IP product is added to the library, as this is
when we consider control of the IP product is transferred to
WiseWave.
Contract modifications
A contract modification is a change in the scope or price
(or both) of a contract that is approved by the parties to the
contract.
Modifications to our IP products and custom silicon
development contracts with customers do not normally involve
the addition of goods or services that are distinct from those
already being provided under the contract. Such modifications
are therefore accounted for as an adjustment to the existing
contract rather than as a separate contract. Accordingly, the
effect that the modification has on the transaction price and/
or on the measure of progress to completion of the contract
is recognised as a cumulative catch-up adjustment to revenue
when the modification is approved.
Contract balances
Contract assets represent the amount of revenue recognised
on IP and product development contracts that has not yet been
billed to the customer.
Contract liabilities represent amounts billed to customers in
excess of revenue recognised on IP and product development
contracts.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 145
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
2 Material accounting policies continued
Revenue recognition continued
Costs of obtaining contracts
Incremental costs of obtaining a contract with an expected
duration of more than one year are recognised as an asset that
is amortised over the period of the contract in proportion to the
recognition of the revenue receivable on the contract.
As permitted by IFRS 15, the costs of obtaining contracts with
an expected duration of one year or less are expensed as they
are incurred.
Onerous contracts
If a contract with a customer is considered to be onerous,
a provision is recognised to the extent that the remaining
unavoidable costs of meeting the obligations under the
contract exceed the remaining benefits to be received under it.
Research and development (R&D)
All research expenditure is expensed as it is incurred.
Development expenditure is also expensed as it is incurred
until such time as it can be demonstrated that the product
is both technically feasible and commercially viable and that
management intends to complete the development of the
product and sell it to customers. Development expenditure
incurred after that time and before the developed product is
available to be put into full production is capitalised.
R&D expenditure credits
R&D expenditure credits principally comprise amounts claimed
from the Canadian federal and provincial government under
the Scientific Research and Experimental Development (SRED)
incentive programme. Claims are made annually based
on assumptions and estimates made by management in
determining the eligible R&D expenditure incurred during the
year. Claims made are subject to review and approval by the
Canadian tax authorities and may be subject to adjustment in
subsequent years.
R&D expenses are stated after deducting R&D expenditure
credits claimed for the year and any adjustments to amounts
claimed in previous years. We recognise a corresponding
receivable for R&D expenditure credits claimed. R&D expenditure
credits receivable are settled by deduction from the amount of
income tax payable to the Canadian tax authorities. Any excess
of the R&D expenditure credits receivable over income tax
payable is paid to the Group by the tax authorities.
Goodwill
Goodwill acquired in a business combination is carried at cost,
less impairment losses, if any.
Internally generated goodwill is not recognised as an asset.
Other intangible assets
Other intangible assets comprise identifiable intangibles
acquired in business combinations (principally
customer-related assets and developed technology),
licences and capitalised product development costs.
Other intangible assets are carried at cost less accumulated
amortisation and impairment losses, if any. Cost comprises
the purchase price of the asset and any costs directly
attributable to preparing the asset for its intended use, or, in the
case of an asset acquired in a business combination, is its fair
value at the acquisition date.
Other intangible assets are amortised on a straight-line basis
so as to charge their cost to profit or loss over their estimated
useful lives as follows:
Developed IP – 4 to 5 years
Developed technology – 4 to 8 years
Customer relationships – 12 years
Note developed technology includes all capitalised
development. Estimated useful lives are regularly reviewed
and the effect of any change in estimate is accounted for
prospectively by adjustment to the amortisation expense.
Other intangible assets are regularly reviewed to eliminate
obsolete items.
Property and equipment – owned
Property and equipment is carried at cost less accumulated
depreciation and impairment losses, if any. Cost comprises the
purchase price of the asset and any costs directly attributable
to bringing the asset to the location and condition necessary to
enable its intended use, or, in the case of an asset acquired in a
business combination, is its fair value at the acquisition date.
Repair and maintenance costs are charged to profit or loss in
the period in which they are incurred.
Items of property and equipment are depreciated on a
straight-line basis so as to charge their cost, less estimated
residual value, to profit or loss over their expected useful lives
as follows:
Computer equipment – 2 years
Furniture and fixtures – 5 years
Leasehold improvements – 2½ years
Laboratory equipment – 2 years
Depreciation methods, useful lives and residual values
are reviewed at each balance sheet date and the effect
of any change in estimate is accounted for prospectively
by adjustment to the depreciation expense. Property and
equipment is regularly reviewed to eliminate obsolete items.
Any gain or loss arising on disposal of property and equipment
is recognised in profit or loss.
146 Alphawave IP Group plc | Annual report and financial statements 2023
Property and equipment – leased
Where the Group is lessee in a lease arrangement,
it recognises a right-of-use asset and an associated lease
liability, except where the leased asset is of low value or the
lease is short term (a lease term of twelve months or less).
On the commencement date of a lease, the lease liability is
measured at the present value of the future lease payments
discounted using the interest rate implicit in the lease, if that
rate can be readily determined, or using the lessee entity’s
incremental borrowing rate. Future lease payments comprise
fixed lease payments, less any lease incentives receivable,
variable payments that depend on an index or rate (initially
measured using the index or rate at the commencement date)
and, where applicable, amounts expected to be paid under
a residual value guarantee, a purchase option or by way of
termination penalties.
Variable lease payments that do not depend on an index or
rate are not reflected in the lease liability and are recognised in
profit or loss in the period in which the event that triggers those
payments occurs.
After the commencement date, the carrying amount of the
lease liability is increased to reflect the accrual of interest,
reduced to reflect lease payments made and remeasured to
reflect reassessments of the future lease payments or certain
lease modifications. Interest on the lease liability is recognised
in profit or loss (within interest expense).
On the commencement date of a lease, the right-of-use asset
is measured at cost which comprises the initial amount of
the lease liability, adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs
incurred and an estimate of any dismantling or restoration
costs (typically leasehold dilapidations).
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the
end of the lease term, unless the lease transfers ownership of
the underlying asset to the Group by the end of the lease term
or the cost of the right-of-use asset reflects that the Group
will exercise a purchase option. In that case, the right-of-use
asset will be depreciated over the useful life of the underlying
asset, which is determined on the same basis as those of
property and equipment. In addition, the right-of-use asset is
periodically reduced by impairment losses, if any, and adjusted
for certain remeasurements of the lease liability.
Where a contract contains a lease and non-lease components
(for example, property maintenance services) and the
contractual payments cannot be readily allocated to the lease
component, the Group accounts for the entire contract as
a lease.
Lease payments relating to low-value assets or to short-term
leases are recognised as an expense (in arriving at operating
profit) on a straight-line basis over the lease term.
Cloud‑computing arrangements
Software-as-a-Service (SaaS) arrangements convey to the
Group the right to access the supplier’s application software
rather than control over the software. SaaS arrangements
are accounted for as service contracts (rather than as a lease
or the purchase of an intangible asset). Accordingly, the cost
of a SaaS arrangement is recognised as an expense on a
systematic basis over the term of the arrangement.
Costs that we incur to configure or customise the provider’s
software in a SaaS arrangement are recognised as an expense
as incurred or, if not distinct from the right to access the
software, over the term of the arrangement.
Capitalisation of borrowing costs
Borrowing costs are capitalised if they are directly attributable
to the acquisition, construction or production of a qualifying
asset, being an asset that takes a substantial period of time to
get ready for its intended use. Borrowing costs are considered
to be directly attributable to a qualifying asset if the related
borrowings would have been avoided if the expenditure on the
asset had not been made.
Impairment of tangible and intangible assets
Goodwill, other intangible assets and property and equipment
are tested for impairment whenever events or circumstances
indicate that their carrying amounts may not be recoverable.
Additionally, goodwill and intangible assets still under
development are subject to an annual impairment test.
An asset is impaired to the extent that its carrying amount
exceeds its recoverable amount. An asset’s recoverable
amount is the higher of its value-in-use and its fair value
less costs of disposal. An asset’s value-in-use represents
the present fair value of the future cash flows expected to
be derived from the asset in its current use and condition.
Fair value less costs of disposal is the amount expected to
be obtainable from the sale of the asset in an arm’s length
transaction between knowledgeable, willing parties, less the
costs of disposal.
Where it is not possible to estimate the recoverable amount
of an individual asset, the recoverable amount is determined
for the cash-generating unit (CGU) to which the asset belongs.
An asset’s CGU is the smallest identifiable group of assets that
includes the asset and generates cash inflows that are largely
independent of the cash inflows from other assets or groups of
assets. Goodwill does not generate cash flows independently
of other assets and is, therefore, tested for impairment at the
level of the CGU or group of CGUs that are expected to benefit
from the synergies of the related business combination.
Value-in-use is based on pre-tax estimates of pre-tax cash
flows in the periods covered by budgets and/or plans that
have been approved by the Board. Such cash flow estimates
are discounted at a pre-tax discount rate that reflects the
current market assessments of the time value of money and
specific risks.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 147
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
2 Material accounting policies continued
Impairment of tangible and intangible
assetscontinued
Impairment losses are recognised in profit or loss.
Impairment losses recognised in previous periods for assets
other than goodwill are reversed if there has been a change
in the estimates used to determine the asset’s recoverable
amount, but only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised
in previous periods. Impairment losses in respect of goodwill
are not reversed.
Inventories
Inventories comprise raw materials, work in progress and
finished goods.
Inventories are stated at the lower of cost and net realisable
value. Cost is determined using the weighted-average cost
method and includes expenditure incurred in acquiring the
inventories and in bringing them to their present location and
condition. In the case of work in progress and finished goods,
cost includes an appropriate share of overheads based on
normal operating capacity. Net realisable value represents the
estimated selling price, less estimated costs of completion and
marketing, selling and distribution costs.
Financial instruments
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand
and bank deposits with an original maturity of 90 days or less.
Cash and cash equivalents are measured at fair value on initial
recognition, less an allowance for expected credit losses, and
subsequently measured at amortised cost using the effective
interest method.
Contract assets
Contract assets represent the amount of revenue recognised
on IP and product development contracts that has not yet been
invoiced to the customer, less an allowance for expected
credit losses.
Trade and other receivables
Trade receivables represent the amount of revenue from
customers that has been invoiced, but for which payment
has not been received. Trade and other receivables are
measured at fair value on initial recognition, less an allowance
for expected credit losses, and subsequently measured at
amortised cost.
Equity investments
Equity investments are measured at fair value through profit
or loss unless we make an irrevocable election on initial
recognition to measure them at fair value through other
comprehensive income. Gains and losses recognised in other
comprehensive income are not reclassified to profit or loss in
the event that the investment is sold.
Impairment of financial assets
The Group recognises an allowance for credit losses in
respect of trade receivables and contract assets measured as
the amount of the lifetime expected credit losses estimated
using a provision matrix based on the Group’s historical credit
loss experience, adjusted for factors that are specific to the
customers, and general current and forecasted economic
conditions.
We recognise an allowance for credit losses in respect of other
financial assets that is measured as the amount of expected
credit losses over the next twelve months. If, however, the risk
of default has increased significantly since initial recognition,
we measure the allowance as the amount of lifetime expected
credit losses.
If a financial asset has no realistic prospect of recovery, it
is written off, firstly against any allowance made and then
directly to profit or loss. We consider that a financial asset
is not recoverable if the balance owing is 365 days past due
and information obtained from the counterparty and other
external factors indicate that the counterparty is unlikely to pay
its creditors in full. Any subsequent recoveries are credited to
profit or loss.
Trade and other payables
Trade payables represent the value of goods and services
purchased from suppliers for which payment has not
been made. Trade and other payables are measured at fair
value on initial recognition and subsequently measured at
amortised cost.
Contingent consideration liabilities
Contingent consideration that is classified as a liability is
measured at fair value through profit or loss. Contingent
consideration that is classified as equity is not remeasured
and its subsequent settlement is accounted for within equity.
Loans and borrowings
Bank and other loans are measured at fair value on initial
recognition, less any directly attributable transaction costs,
and are subsequently measured at amortised cost using the
effective interest method.
If a loan or borrowing is subject to covenants and the Group
is in breach of one or more of the covenants at the end of
the reporting period, the carrying amount of the liability is
classified wholly as a current liability, irrespective of any
element that would otherwise be payable more than one year
after the end of the reporting period.
Facility arrangement costs are amortised as a finance expense
over the term of the facility.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the
net amount presented in the balance sheet where there is
a currently enforceable legal right to offset the recognised
amounts and management intends either to settle on
a net basis or to realise the asset and settle the liability
simultaneously.
148 Alphawave IP Group plc | Annual report and financial statements 2023
Contract liabilities
Contract liabilities represent amounts invoiced to customers in
excess of revenue recognised on IP and product development
contracts.
Share‑based payments
As described in note 27, the Company operates share-based
payment plans under which it grants options and RSUs over
its ordinary shares to certain of its employees and those of
its subsidiaries. Awards granted under the existing plans are
classified as equity-settled awards.
We recognise a compensation expense that is based on the
fair value of the awards measured at the grant date using an
appropriate valuation model. Fair value is not subsequently
remeasured unless relevant conditions attaching to the awards
are modified.
Fair value reflects any market performance conditions
and all non-vesting conditions. Adjustments are made to
the compensation expense to reflect actual and expected
forfeitures due to failure to satisfy service conditions or
non-market performance conditions.
We recognise the resulting compensation expense on a
systematic basis over the vesting period and a corresponding
credit is recognised in the share-based payments reserve
within equity.
In the event of the cancellation of an option or an award by the
Company or by the participating employee, the compensation
expense that would have been recognised over the remainder
of the vesting period is recognised immediately in profit
or loss.
Post‑employment benefits
Defined contribution plans
Contributions to defined contribution pension plans are
charged to profit or loss in the period to which they relate.
Defined benefit plans
As described in note 25, the Group operates certain unfunded
post-employment benefit plans in India.
We measure the benefit obligation on an actuarial basis using
the projected unit credit method and this is discounted using a
discount rate derived from high-quality corporate bonds with
a similar duration as the benefit obligation.
We recognise the current service cost and interest on the
benefit obligation in profit or loss. The current service cost
represents the increase in the present value of the benefit
obligation resulting from employee service in the period.
Interest on the benefit obligation is determined by applying
the discount rate to the benefit obligation, both as determined
at the beginning of each year, but taking into account benefit
payments during the period.
We recognise the effect of remeasurements of the benefit
obligation in other comprehensive income. Remeasurements
comprise actuarial gains and losses arising due to changes in
actuarial assumptions and experience adjustments.
Income taxes
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the profit and loss account
except to the extent it relates to items recognised directly in
equity or other comprehensive income, in which case it is
recognised directly in equity or other comprehensive income.
Current tax is the amount of tax payable or recoverable in
respect of the taxable profit or loss for the period. Taxable profit
differs from accounting profit because it excludes income
or expenses that are recognised in the period for accounting
purposes but are either not taxable or not deductible for tax
purposes or are taxable or deductible in earlier or subsequent
periods. Current tax is calculated using tax rates and laws that
have been enacted or substantively enacted at the balance
sheet date.
Deferred tax is tax expected to be payable or recoverable on
temporary differences between the carrying amount of an
asset or liability in the financial statements and its tax base
used in the computation of taxable profit. Deferred tax liabilities
are generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that
taxable profits will be available in the future against which they
can be utilised.
Deferred tax assets and liabilities are not recognised in respect
of temporary differences arising from the initial recognition
of goodwill or from the initial recognition of other assets or
liabilities in a transaction that is not a business combination and,
at the time of the transaction, affects neither accounting profit
nor taxable profit and does not give rise to equal amounts of
taxable and deductible temporary differences.
Deferred tax liabilities are recognised for taxable temporary
differences associated with investments in subsidiaries,
except where management is able to control the reversal of the
temporary difference and it is probable that it will not reverse
in the foreseeable future. Deferred tax assets and liabilities are
measured using the tax rates that are expected to apply when
the asset is realised or the liability is settled, based on tax rates
and laws that have been enacted or substantively enacted at the
balance sheet date.
Where there is uncertainty concerning the tax treatment of an
item or group of items, the amount of current and deferred tax
recognised is based on management’s expectation of the likely
outcome of the examination of the uncertain tax treatment
by the relevant tax authorities. Uncertain tax treatments are
reviewed regularly and current and deferred tax amounts are
adjusted to reflect changes in facts and circumstances, such as
the expiry of limitation periods for assessing tax, administrative
guidance given by the tax authorities and court decisions.
Current tax assets and liabilities are offset when there is a legally
enforceable right to set off the amounts and management
intends to settle on a net basis. Deferred tax assets and liabilities
are offset when there is a legally enforceable right to offset
current tax assets and liabilities and the deferred tax assets
and liabilities relate to income taxes levied by the same taxation
authority on the same taxable entity.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 149
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
2 Material accounting policies continued
Income taxes continued
Current tax and deferred tax is recognised in profit or loss
unless it relates to an item that is recognised in the same or a
different period outside profit or loss, in which case the related
tax is also recognised outside profit or loss, either in other
comprehensive income or directly in equity.
Payments by customers incorporated in certain tax
jurisdictions may be subject to withholding tax. Where the
country in which the sales invoice is raised has a tax treaty
in place with the relevant tax jurisdiction, the tax withheld is
treated as prepaid income tax and offset against current tax
payable.
3 Critical judgements and key sources of
estimation uncertainty
Critical judgements in applying the Group’s
accounting policies
Critical judgements are the judgements, apart from those
involving estimates, that management has made in applying
the Group’s accounting policies that have had the most
significant effect on the consolidated financial statements.
Revenue recognition – Identification of performance
obligations
IP licensing
Hard IP products are typically delivered in multiple stages,
referred to as IP views. Management considers that these
deliveries are not distinct because each IP view is highly
dependent on or interrelated with one or more of the other
IP views.
Furthermore, management does not consider any NRE
work required to configure the IP products to be distinct
because customers would be unable to benefit from the IP
views without configuration by Alphawave. In management’s
judgement, the delivery of IP views and the NRE work required
to configure them represents a single performance obligation.
While the initial delivery of soft IP may not be to a customer’s
exact specification, they can use the IP without significant
modification. In management’s judgement, the initial delivery
of soft IP is a separate performance obligation but any
customisation work and subsequent IP deliveries are a single
separate performance obligation because they are highly
dependent or interrelated with each other.
In management’s judgement, support services are a separate
performance obligation from the delivery of IP products
because customers could benefit from the services on their
own or with other resources that are readily available to them.
Custom silicon
Custom silicon developments are typically complex and
highly customised with detailed engineering schedules and
deliverables.
While the various elements of the contracts are capable of being
distinct, they are not distinct in the context of the contract because
each delivery is highly dependent on or interrelated with one or
more of the other goods or services in the contract and the nature
of the obligation is to deliver a combined output in the form of
a completed design or prototype. In management’s judgement,
therefore, a custom silicon development contract constitutes a
single performance obligation.
Custom silicon contracts do not contain purchase volume
commitments and therefore the supply of custom silicon products
is not only capable of being distinct, but is distinct in the context
of the contractual arrangements. In management’s judgement,
therefore, the supply of silicon following release to production is
considered a separate performance obligation which arises on
receipt of a silicon purchase order from the customer.
Cash‑generating units
A cash-generating unit (CGU) is the smallest identifiable
group of assets that generates cash inflows that are largely
independent of the cash inflows from other assets or groups
of assets. Identification of CGUs is important for determining
the Group’s operating segments and the level at which goodwill
should be tested for impairment.
Our business model is such that our IP is leveraged across
the channels through which we provide our products and
services to customers, i.e. IP licensing, custom silicon and
own products. Given this interdependence of the Group’s
operations, management considers that the Group consists
of a single CGU because there is no asset or group of assets
within the business that generates cash inflows that are largely
independent of the cash inflows from other assets or groups of
assets. Consequently, the Group consists of a single operating
segment and goodwill is tested for impairment at Group level
based on the fair value less costs of disposal or value-in-use of
the Group as a whole.
Capitalisation of product development costs
Product development costs are capitalised from the time
when the technical feasibility and commercial viability of
the product can be demonstrated. Management is therefore
required to make judgements about the technical feasibility of
the product based on engineering studies and the commercial
viability of the product based on expectations concerning
the marketability of the product, the product’s useful life and
the extent of future demand from customers. During 2023,
the Group capitalised development costs totalling US$54.5m
(2022: US$7.2m).
Capitalisation of borrowing costs
Borrowing costs are capitalised if they are directly attributable
to the acquisition, construction or production of a qualifying
asset, such as capitalised development costs. To the extent
that the Group borrows funds generally and uses them for the
purpose of obtaining a qualifying asset, the Group determines
the amount of borrowing costs eligible for capitalisation by
applying a capitalisation rate to the expenditures on that asset.
Accordingly, the Group has capitalised eligible borrowing costs
to capitalised development costs.
150 Alphawave IP Group plc | Annual report and financial statements 2023
Accounting for WiseWave
Classification as a joint venture
The Group owns a 42.5% equity interest in WiseWave Technology
Co Ltd (‘WiseWave’), a company established in China to develop
and sell silicon products incorporating silicon IP licensed from
Alphawave.
Management was required to exercise judgement to determine
whether WiseWave is an associate (an entity over which the
Group has significant influence, but not control) or a joint
arrangement (an arrangement in which the Group has joint
control with one or more other parties). Joint control is the
contractually agreed sharing of control of an arrangement,
which exists only when decisions about activities that
significantly affect the returns of the arrangement require the
unanimous consent of the parties sharing control. Management
determined that Alphawave has joint control and that WiseWave
is therefore a joint arrangement.
Further judgement was required to assess whether Alphawave
has rights to the joint arrangement’s net assets (in which
case it should be classified as a joint venture), or rights to and
obligations for specific assets, liabilities, expenses and revenues
(in which case it should be classified as a joint operation). Having
considered relevant factors including the structure, legal form and
contractual agreement governing the arrangement, management
determined that WiseWave should be classified as a joint venture.
Share of losses in excess of interest in WiseWave
If the Group’s share of losses of a joint venture equals or
exceeds its interest in the joint venture, the Group discontinues
recognising its share of further losses. If the Group’s interest in
a joint venture is reduced to nil, additional losses are provided
for, and a liability recognised, only to the extent that the Group
has incurred legal or constructive obligations or made payments
on behalf of the joint venture. The Group’s share of WiseWave’s
losses amount to US$34.0m. The remaining amount recognised
as share of loss is the elimination of unrealised profit on sales
to WiseWave which is cumulatively US$12.1m. As a result, the
Group’s interest in WiseWave has been reduced to nil (2022:
US$nil) and no provision has been recognised on the basis that
the Group does not have a constructive obligation.
Unrealised profit on sales to WiseWave
IAS 28 Investments in Associates and Joint Ventures requires
that unrealised profits and losses arising on transactions between
the Group and a joint venture are recognised only to the extent of
unrelated investors’ interests in the joint venture. Accordingly, the
Group’s share of its profit on ‘downstream’ sales to WiseWave is
eliminated to the extent that the related IP has not been utilised
by WiseWave. IAS 28 is, however, unclear on how this elimination
should be recognised in profit or loss. Management has used
judgement in determining the Group’s accounting policy of
making the elimination against the Group’s share of WiseWave’s
profit or loss rather than revenue arriving at the Group’s operating
profit or loss and correspondingly against its interest in the joint
venture. IAS 28 is also unclear about the elimination of unrealised
gains on downstream sales in excess of the Group’s interest in a
joint venture.
Essentially, there is an accounting policy choice either to
recognise the excess as deferred income or not to recognise
the excess at all. Management has used judgement in deciding
not to recognise the excess on the basis that it is consistent
with management’s intention to exit the joint venture in the
medium term. If unrealised gains on sales to WiseWave had
been eliminated in full, the Group’s loss before tax for the year
ended 31 December 2023 would have been US$12.5m larger
(2022: profit before tax would have been US$2.3m lower) and
there would be cumulative deferred income of US$14.1m at the
end of 2023 (2022: US$2.3m). In prior periods, the elimination
of downstream sales was reflected within the Loss from joint
venture category. However, an alternative approach could have
been to recognise this as a reduction in revenue. Consequently,
an amount of US$12.5m could have been allocated to either
revenue or loss from joint venture.
Recoverability of contract asset with WiseWave
At the end of 2023, the Group had completed its performance
obligations under the subscription licence agreement with
WiseWave relating to the provision of IP products to the library
of IP. A significant proportion of the consideration due under the
subscription licence agreement will be invoiced and collected
over the remainder of the term of the contract and, as a result,
a contract asset of US$42.4m has been recognised against the
contract.
Management have considered the recoverability of this contract
asset in the context of WiseWave’s historic pattern of settlements
of accounts receivable with the Group, the anticipated short-and
medium-term funding requirements of WiseWave and their
prospects of securing such additional funding and actions
available to Alphawave in the event of non-payment by WiseWave
of the future billing milestones. Taking the above factors into
account, management have judged that the contract asset with
WiseWave is recoverable and therefore no provision in excess of
that determined by reference to the Group’s expected credit loss
policy has been made against the contract asset. Had we judged
that the contract asset was not recoverable, contract assets
would have been up to US$42.4m lower and the Group’s loss
before tax would have been up to US$42.4m lower as at and for
the year ended 31 December 2023.
Uncertain tax treatments
Uncertainty may exist concerning the tax treatment of a specific
item or group of items because of, for example, uncertainty
as to the meaning of tax law or to the applicability of tax law
to a particular transaction or circumstance, the determination
of appropriate arm’s length pricing in accordance with OECD
transfer pricing principles or because the amount of current
and deferred tax depends on the results of an ongoing or future
examination of previously filed tax returns by the tax authorities.
Where such an uncertainty exists, management is required
to exercise judgement in forming its expectation of the likely
outcome of the examination of the uncertain tax treatment by
the relevant tax authorities. Due to the complexity of tax laws and
their interpretation, the amount ultimately agreed with the tax
authorities may differ materially from the amount of current and
deferred tax recognised in the consolidated financial statements.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 151
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
3 Critical judgements and key sources of
estimation uncertainty continued
Key sources of estimation uncertainty
Key sources of estimation uncertainty are those that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year.
Revenue recognition – Percentage of completion
We recognise revenue from contracts for the provision of hard
IP, customisation services and custom silicon development
projects over time by reference to the stage of completion of
the respective performance obligations. For hard IP and related
customisation, we measure the stage of completion based
on engineering hours spent on work performed to date as a
percentage of the estimated total project hours. For custom
silicon development projects, we measure the stage of
completion based on actual cost incurred to date as a percentage
of the estimated total project cost, where cost includes both
external costs, such as bought-in IP and manufacturing mask
sets and internal costs. Management is required to make
estimates of the attributable cost per engineering hour for internal
costs in custom silicon development projects and the number
of hours required to complete the project in both IP delivery and
customisation engagements and custom silicon development
projects. These estimates vary depending on factors including
the contract type, customer specifications, the maturity of the
IP being licensed, the complexity of the silicon being developed,
whether the IP has already been proven for integration in silicon
products and whether the contract deliverables are in their early
or later stages.
During 2023, we recognised revenue totalling US$171.8m by
reference to the stage of completion of projects. At the end of
2023, the carrying amount of related contract assets and contract
liabilities was US$69.0m (2022: US$58.5m) and US$55.2m (2022:
US$96.9m) respectively. If the estimated number of hours, or the
estimated external costs required to complete these projects was
to change significantly, there could be a material adjustment to
the cumulative revenue recognised and the carrying amount of
contract balances during the next financial year.
Revenue recognition – Licensing agreement with
joint venture
We have a subscription licence agreement that provides
WiseWave with right of use over a library of our IP products for a
fixed fee spread over a period of five years ending in 2026.
As explained in note 2, management estimates the total number
of IP products that it expects will be provided into the library in
order to calculate the estimated unit price of the IP products.
Moreover, since the estimated unit price of the IP products
constitutes variable consideration, management is required to
exercise judgement in applying constraints to the unit price in
order to minimise the risk of significant reversals of revenue in
future periods. Revenue on this agreement is recognised at a
point in time when an IP product is added to the library, as this is
when control of the IP product is transferred to WiseWave.
During 2023, the Group recognised revenue of US$49.6m
(2022: US$31.1m) from the subscription licence agreement,
following delivery of all remaining IP products under the
agreement to the library during the year. At the end of 2023,
the cumulative amount of revenue recognised from the
agreement amounted to US$108.4m. All IP products have now
been delivered to the library and management have judged
that there will be no further IP products provided. Based on this
judgement, we no longer consider there to be any estimation
uncertainty associated with the subscription licence agreement.
The remaining revenue of US$0.6m to be recognised under
this agreement relates to the provision of support services and
associated revenue is recognised over time on a straight-line
basis as it represents a stand-ready obligation.
Recoverability of trade receivables and contract assets
We recognise an allowance for credit losses in respect of trade
receivables and contract assets measured as the amount of
the lifetime expected credit losses estimated using a provision
matrix based on the Group’s historical credit loss experience,
adjusted for factors that are specific to the customers, and
general current and forecasted economic conditions.
As at 31 December 2023, the Group’s allowance for expected
credit losses was US$3.0m on trade receivables and contract
assets totalling US$5.1m. If the amount of actual credit losses
differs significantly from the lifetime expected credit losses,
there could be a material impact on the Group’s results within
the next financial year.
Climate change
In preparing the consolidated financial statements, the
Directors have considered the impact of climate change on
the Group and have concluded there is no material impact
on financial reporting judgements and estimates. This is
consistent with the assertion that risks associated with climate
change did not affect the business, its strategy and its financial
performance in 2023, and are not expected to have a material
impact on the longer-term viability of the Group.
4 Revenue
Disaggregation of revenue
The Group has disaggregated revenue into various categories
in the following tables which is intended to depict how the
nature, amount, timing and uncertainty of revenue and cash
flows are affected by economic factors.

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
Revenue by type: |  |
IP and NRE | 100,676 | 76,123
IP and NRE – Reseller | — | 3,270
IP and NRE – JV | 66,891 | 58,207
Silicon and royalties | 154,157 | 47,806
| 321,724 | 185,406

152 Alphawave IP Group plc | Annual report and financial statements 2023
‘IP and NRE’ represents revenues from IP products licensing,
along with related support and NRE services, in addition to
custom silicon NRE (which can include internal engineering
services, our IP and related support, third party IP, tooling costs
and prototypes). ‘IP and NRE – Reseller’ represents revenue
from IP products licensing, related support and NRE services
provided through VeriSilicon, prior to our arrangements with
VeriSilicon being moved under WiseWave in late 2021. ‘IP
and NRE – JV’ represents revenue from our joint venture,
WiseWave, and includes revenues recognised under the
five-year subscription licence and revenues recognised under
the VeriSilicon reseller arrangements which were moved
under WiseWave in late 2021. ‘Silicon and royalties’ represent
revenues recognised once our customers are in production
and in the case of custom silicon are based on shipments
of physical silicon products and, for standalone IP licensing,
royalties payable on usage of our IP within silicon products.
Whilst this part of the note shows revenue by type, due to
materiality, we have separately itemised the revenue from our
reseller and joint venture, both based in China. The revenue
from our joint venture in China, WiseWave, predominantly
relates to a five-year subscription licence agreement where
we have recognised US$49.6m (2022: US$31.1m) based on
our deliveries of IP to WiseWave. The remaining revenue from
WiseWave relates to a separate agreement signed in Q4 2021
to deliver chiplet IP and revenue recognised through WiseWave
acting as master reseller of IP to VeriSilicon.
All revenue from VeriSilicon and related balances are in respect
of transactions signed with VeriSilicon as reseller prior to the
VeriSilicon reseller agreement moving under WiseWave as
master reseller effective from November 2021. All revenue and
associated balances in respect of transactions signed with
VeriSilicon since that date are now recognised through the
WiseWave joint venture line.

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
Revenue by region: |  |
North America | 82,160 | 51,361
China | 190,376 | 104,755
APAC (ex-China) | 33,459 | 16,980
EMEA | 15,729 | 12,310
| 321,724 | 185,406

Revenues from customers which comprise greater than 10% of
the Group’s total revenues are as follows:

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
China based customer | 78,226 | 34,538
China based customer | 66,891 | 58,207

US$117.9m (37% of total revenues) (2022: US$90.7m, 49%)
represent revenues recognised over time. Of the US$117.9m
revenue recognised over time, US$66.0m is subject to
estimation uncertainty. US$8.2m of contract assets and
US$35.3m of contract liabilities are also subject to estimation
uncertainty. These revenues require management judgements
and estimates of project hours or costs that are used in
percentage of completion calculations. These revenues relate
to work done during the design phase of a customer project
and include (with the exception of a limited amount of revenue
relating to our soft IP) IP product licensing fees, together with
related support and NRE, as well as custom silicon NRE fees.
We have applied a sensitivity to revenues subject to estimation
uncertainty in 2023. If our estimates of total hours or
total costs had been 10% higher, these revenues would be
US$59.4m, contract assets would be US$7.4m and contract
liabilities would be US$38.8m. If our estimates of total hours
or total costs had been 10% lower, these revenues would be
US$72.6m, contract assets would be US$9.0m and contract
liabilities would be US$31.8m.
US$203.8m (63% of total revenues) (2022: US$94.7m, 51%)
are recognised at a point in time. These revenues are based
on silicon shipments once our customers are in production.
In the case of custom silicon, this represents revenues from
shipments of physical silicon products, and for standalone
IP licensing, royalties payable on usage of our IP within
silicon products. Revenues from our five-year subscription
licence agreement with WiseWave are also recognised at a
point in time, based on the number of IP uploads during the
period. Revenues from the three-year reseller agreement
with VeriSilicon, which was moved under WiseWave in late
2021, are recognised at a point in time to the extent that they
represent exclusivity fees paid during the period not credited
against IP licences. In addition, a limited amount of revenue
from our soft IP products is recognised at a point in time.
WiseWave – subscription licence agreement
Revenue recognition for the WiseWave subscription licence
agreement is determined with reference to the estimated
total number of IP uploads to be delivered to WiseWave
during the term of the agreement and the number of uploads
made to WiseWave each period. As described in note 3,
the performance obligations relating to the provision of IP
products to the library of IP have been completed as at the end
of 2023 and the only remaining revenue to be recognised under
the subscription licence agreement relates to the provision
of support services. The subscription licence agreement
has a term of five years ending in 2026 and the subscription
licence fees paid by WiseWave are invoiced and collected
regularly throughout the term. As all IP licence revenue has
now been recognised, a contract asset of US$42.4m has been
recognised against the contract (2022: US$16.8m) .
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 153
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
4 Revenue continued
Contract assets and liabilities
Below is a reconciliation of the movement in contract assets during the period:

|  | Year ended 31 December
|  | Restated
| 2023 | 2022
| US$’000 | US$’000
At the beginning of the year | 58,534 | 31,719
Acquisition of subsidiaries | — | 2,714
Revenue accrued in the period | 61,182 | 56,231
Accrued revenue invoiced in the period | (50,681) | (31,983)
Expected credit loss | (3,862) | (1,547)
Currency translation differences | — | (147)
At the end of the year | 65,173 | 56,987

1
1. Restated to allocate the expected credit loss allowance between trade receivables from contracts with customers and contract assets.
Below is a reconciliation of the movement in contract liabilities, excluding the flexible spending account, during the period:

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
At the beginning of the year | 91,733 | 12,661
Acquisition of subsidiaries | — | 41,361
Revenue recognised in the period | (90,346) | (38,959)
Revenue deferred in the period | 48,743 | 76,205
Currency translation differences | (24) | 465
At the end of the year | 50,106 | 91,733

The deferred revenue balance is all expected to be satisfied within twelve months of the balance sheet date.
The flexible spending account, which is included with contract liabilities on the face of the balance sheet, has increased to
US$5.9m as at 31 December 2023 from US$5.2m as at 31 December 2022. This represents a type of deferred income, and
these are contracts with customers who have committed to regular periodic payments to us over the term of the contract.
These payments are not in respect of specific licences or other deliverables, but they can be used as credit against future
deliverables.
The balances related to costs to obtain contracts from customers are as follows:

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
Capitalised contract costs | 1,920 | 874

The costs to obtain contracts from customers include commissions. Amortisation of US$1.9m (2022: US$2.9m) and
impairment of US$nil (2022: US$nil) was charged to the profit or loss in the period.
154 Alphawave IP Group plc | Annual report and financial statements 2023
5 Research and development expenses
Research and development expenses presented in profit or loss were derived as follows:

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
Research and development costs incurred | 131,441 | 78,011
Research and development expenditure credits | (6,999) | (5,198)
Development costs capitalised | (46,226) | (3,455)
Total | 78,216 | 69,358

1
1. The amount of US$46.2m capitalised in 2023 includes US$4.4m that has been capitalised in property and equipment.
6 Other operating (expense)/income
Other operating (expense)/income items were as follows:

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
Acquisition-related costs | (831) | (12,712)
Compensation element of Banias Labs deferred cash rights (note 30) | (8,352) | (1,703)
Remeasurement of contingent consideration payable for Precise-ITC (note 30) | — | (4,260)
Share-based compensation expense (note 27) | (40,691) | (15,695)
Currency translation (loss)/gain | (2,983) | 36,838
Other operating (expense)/income | (52,857) | 2,468

1
1. There has been a change to the grouping of operating expenses in 2022, specifically relating to the compensation element of Banias deferred cash rights.
This is shown within other operating expenses/(income) in 2023 so we have changed 2022 operating expenses /(income) to be presented on the same basis
(see consolidated statement of comprehensive income and note 30).
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 155
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
7 Employee benefit costs
Employee benefit costs incurred (before deducting R&D expenditure credits and including costs that were subsequently
capitalised) were as follows:

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
Wages and salaries | 84,784 | 45,301
Social security costs | 2,033 | 3,959
Defined contribution pension costs | 4,115 | 1,300
Share-based compensation expense | 40,691 | 15,695
Total | 131,623 | 66,255

The average number of employees during the period, analysed by category, was as follows:

| Year ended 31 December |
| 2023 | 2022
| Number | Number
Research and development/engineering | 675 | 321
General and administration | 55 | 29
Sales and marketing | 28 | 11
Total | 758 | 361

The number of employees at the period end, analysed by category, was as follows:

| Year ended 31 December |
| 2023 | 2022
| Number | Number
Research and development/engineering | 741 | 621
General and administration | 58 | 57
Sales and marketing | 30 | 17
Total | 829 | 695

156 Alphawave IP Group plc | Annual report and financial statements 2023

8 Auditor’s remuneration

The Group incurred the following amount to its auditor in respect of the audit of the Group’s financial statements and for other
non-audit services provided to the Group.

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
Audit of the financial statements | 3,472 | 1,713
Audit-related assurance services | 268 | 124
| 3,740 | 1,837

An amount of US$1,078,000 included in the 2023 cost of the ‘audit of the financial statements’ row relates to additional work in
respect of the 2022 audit.
9 Finance income and expense

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
Finance income |  |
Interest income from contracts with customers containing significant financing components | 275 | 235
Interest on bank deposits | 3,173 | 1,449
| 3,448 | 1,684
Finance expense |  |
Bank charges | (65) | —
Lease interest | (1,581) | (391)
Term loan interest | (16,489) | (3,134)
Term loan interest capitalised to the balance sheet | 9,534 |
NPV interest | – | (27)
Interest under IAS 19 | (61) | —
IIA interest | (174) | (36)
| (8,836) | (3,588)
Net finance expense | (5,388) | (1,904)

STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 157
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
10 Income taxes
Income tax recognised in profit or loss
The components of the Group’s income tax expense for the year were as follows:

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
Current tax |  |
UK corporation tax | (2,642) | 5,792
Adjustments to prior periods | 3,167 | (516)
Overseas tax | 126 | 13,330
Total current tax | 651 | 18,606
Deferred tax |  |
Origination and reversal of timing differences | 10,881 | (278)
Total deferred tax | 10,881 | (278)
Income tax expense | 11,532 | 18,328

Factors affecting the income tax expense for the year
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except
to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised
directly in equity or other comprehensive income. For income tax arising on dividends, the related tax is recognised in the
income statement, statement of other comprehensive income, or in equity consistently with the transactions that generated the
distributable profits. The Company has determined that the global minimum top-up tax – which is required to pay under Pillar
Two legislation – is an income tax in the scope of IAS 12. The Company has applied a temporary mandatory relief from deferred
tax accounting for the impacts of the top-up tax and accounts for it as a current tax when it is incurred.
The Group’s income tax expense differed from the amount that would have resulted from applying the standard rate of UK
corporation tax to the Group’s profit before income taxes for the following reasons:

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
(Loss)/profit before tax | (39,470) | 17,242
(Loss)/profit before tax at the UK corporation tax rate of 23.52% (2022: 19%) | (9,283) | 3,275
Effects of: |  |
Share-based compensation | 7,267 | 3,141
Expenses not deductible for tax purposes | 3,171 | 1,964
Under/(over) accrual of prior year provision | 3,167 | (516)
Different tax rates applied in overseas jurisdictions | 667 | 3,469
Share of joint venture’s loss | 3,465 | 3,511
Movement in unrecognised deferred tax assets | 2,146 | 3,281
Other tax items | 932 | 203
Income tax expense | 11,532 | 18,328

Factors affecting the income tax expense in future years
A blended UK corporation tax rate of 23.52% is used for 31 December 2023 due to the change in the UK corporation tax rate to
25% from 1 April 2023, from the previously enacted 19%, announced at the Budget on 3 March 2021, and substantively enacted
on 24 May 2021. The deferred taxation balances have been measured using the rates expected to apply in the reporting periods
when the timing differences reverse.
There have been no legislative changes announced in 2023 in relation to Canadian or US tax rates which will affect the Group.
158 Alphawave IP Group plc | Annual report and financial statements 2023
Deferred tax
The movement on the deferred tax account is as shown below:

|  | Year ended 31 December
|  | Restated
| 2023 | 2022
| US$’000 | US$’000
At the beginning of the year | 11,110 | 422
Purchase of businesses | – | 15,234
Charge/(credit) to profit or loss | 10,881 | (278)
(Credit) to OCI | (409) | —
Transfer of tax credits | – | (4,350)
Currency translation differences | (2) | 82
Other | (721) | —
At the end of the year | 20,859 | 11,110

1
1. Restated to reflect the purchase price allocation on the acquisition of Open Five (see note 30).
The deferred tax account is made up as follows:

|  | Year ended 31 December
|  | Restated
| 2023 | 2022
| US$’000 | US$’000
Accelerated capital allowances | 5,720 | 676
Leases | (334) | (65)
Intangibles | 22,429 | 26,947
Non-capital loss | (7,193) | (13,613)
Transfer of tax credits | – | (4,350)
Other temporary differences | 237 | 1,515
Total | 20,859 | 11,110

1
1. Restated to reflect the purchase price allocation on the acquisition of Open Five (see note 30).
The deferred tax account is in a net liability position, all positive numbers indicate an increase in the deferred tax liability.
As at 31 December 2023, the Group has a deferred tax asset of US$12.1m (2022 restated: US$2.7m) and a deferred tax liability
of US$32.9m (2022 restated: US$13.8m). Where we have recognised a deferred tax asset and a deferred tax liability in the same
taxation jurisdiction, these have been netted off, resulting in a deferred tax asset of US$12.1m (2022 restated: US$2.7m) and a
deferred tax liability of US$32.9m (2022 restated: US$13.8m) in the consolidated statement of financial position.
The Group has unrecognised deductible temporary differences of US$126.7m. This is primarily made up of US Federal losses
(US$30.5m), US State losses (US$45.8m) and Stock based compensation (US$24.2m). The Group has not recognised the
deductible temporary differences due to the lack of historical and future profitability. The Group has recognised deferred tax
assets in entities that have suffered losses in the current year. The evidence relied upon to record the deferred tax assets
relates to reversing taxable temporary differences and the entities which had deferred tax assets are expected to be profitable
in the future.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 159
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
11 Earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing net income/(loss) for the period by the weighted average number of
ordinary shares in issue during the period.
Diluted earnings/(loss) per share is calculated after adjusting the weighted average number of ordinary shares used in the
calculation of basic earnings/(loss) per share to include the weighted average number of ordinary shares that would be issued
on conversion of all dilutive potential ordinary shares. Potential ordinary shares comprise share options and RSUs outstanding
under the Company’s share-based compensation plans.

| Year ended 31 December |
(US$ thousands except number of shares) | 2023 | 2022
Numerator: |  |
Net (loss) for the year | (51,002) | (1,086)
Denominator: |  |
Weighted average number of ordinary shares for basic earnings/(loss) per share | 705,550,299 | 679,849,437
Adjustment for dilutive share options and RSUs | – | —
Weighted average number of ordinary shares for diluted earnings/(loss) per share | 705,550,299 | 679,849,437
Basic earnings/(loss) per share (US$ cents) | (7.23) | (0.16)
Diluted earnings/(loss) per share (US$ cents) | (7.23) | (0.16)

Potential ordinary shares are not treated as dilutive if their conversion to ordinary shares would decrease a loss per share from
continuing operations. Consequently, in both 2023 and 2022, basic loss per share and diluted loss per share were the same.
12 Goodwill

|  | Year ended 31 December
|  | Restated
| 2023 | 2022
| US$’000 | US$’000
Carrying amount |  |
At the beginning of the year | 309,199 | —
Acquisition of subsidiaries | – | 331,886
Finalisation of OpenFive PPA | – | (12,437)
Increase in consideration for S338 election | – | 5,610
Reversal of deferred tax liability | – | (15,860)
At the end of the year | 309,199 | 309,199

1
1. Restated to reflect the purchase price allocation on the acquisition of Open Five (see below and see note 30).
Goodwill is denominated in US dollars and therefore there are
no currency translation differences.
The 2022 goodwill figure has been restated for the finalisation
of the OpenFive purchase price allocation resulting in a
reduction in goodwill of US$12,437,000 and recognition of
a receivable of US$12,437,000. The 2022 goodwill figure
has further been restated for the increase in consideration
from the S338 election where we increased goodwill by
US$5,610,000 and reduced the investment in Alphawave
Semi Inc. (formerly Open-Silicon Inc.) by US$5,610,000 and
the reversal of a deferred tax liability where we reduced
goodwill by US$15,860,000 and reduced the deferred tax
liability by US$15,860,000. More information is available in
note 30. All these adjustments are reflected in the restated
31 December 2022 balance sheet.
Goodwill is tested for impairment annually and whenever there
is an indication that it may be impaired. Goodwill is tested for
impairment at the level of the cash-generating unit (CGU) or
group of CGUs to which it is allocated. Our business model
is such that our IP is leveraged across the channels through
which we provide our products and services to customers,
i.e. IP licensing, custom silicon or own products. Given this
interdependence of the Group’s operations, management
considers that the Group’s business constitutes only one
CGU because there is no asset or group of assets within
the business that generates cash inflows that are largely
independent of the cash inflows generated by other assets
or groups of assets. Consequently, management has not
allocated goodwill below Group level. Goodwill is therefore
tested for impairment at Group level based on the fair value
less costs of disposal or value-in-use of the Group as a whole.
160 Alphawave IP Group plc | Annual report and financial statements 2023
In 2023, the Group’s fair value less costs of disposal was
higher than its carrying amount and therefore we concluded
that no impairment of goodwill was required. Management
considers that the Group comprises a single CGU and
therefore goodwill is tested for impairment at the level of
this single CGU, i.e. at Group level. The Company’s shares
are listed on the London Stock Exchange and its market
capitalisation is therefore the most reliable measure
of fair value (a ‘Level 1’ fair value). To test goodwill for
impairment, we used the Company’s market capitalisation
as at 29 December 2023 (the last trading day of 2023) less
assumed costs of disposal of 3%.
In 2022, we measured the Group’s recoverable amount on
a value-in-use basis. Value-in-use represents the present
value of the projected future cash flows for the next five years
based on the most recent budget and forecasts approved by
management. Cash flow projections for a further five years
are extrapolated based on revenue growth rates trending
down to the perpetuity growth rate, and beyond this ten-year
period cash flow projections have been estimated by applying
a perpetuity growth rate to the forecast cash flows in the
tenth year.
We consider that the key assumptions used in determining
value-in-use are the expected growth in each of the Group’s
revenue streams, the expected gross margins for these
revenue streams, our operating and capital expenditure,
the≈perpetuity growth rate and the discount rate.
Expected future revenue is based on external forecasts
of the future demand in each of our revenue streams
adjusted to reflect specific factors such as our customer
base, estimated market share and available distribution
channels, the possibility of new entrants to the market and
future technological developments. Cash flows during the
five-year budget and forecast period also reflect the cost of
materials and other direct costs, research and development
expenditure and selling, general and administrative expenses.
We estimated future revenue on current prices and market
expectations of future price changes and future costs
based on past experience and current prices and market
expectations of future price changes, including the impact
of inflation across the regions in which we operate.
We applied a perpetuity rate of 2% per annum which we
consider to be a reasonable estimate of the average long-term
growth rate in the markets for our products.
We calculated the value-in-use by applying a nominal discount
rate to the expected post-tax cash flows that was determined
using a capital asset pricing model and reflected current
market interest rates, relevant equity and size risk premiums
and specific risks. The equivalent pre-tax discount rate used
was 13.4%.
A sensitivity analysis was performed on the single Group
CGU, using reasonably possible changes in revenue growth
rates, forecast cash flows and pre-tax discount rates and
management concluded that no reasonably possible change
in any of the key assumptions would result in the carrying
value of the single Group CGU exceeding its recoverable
amount.
We did not recognise any goodwill impairment during 2022
and the Group’s recoverable amount was comfortably
in excess of its carrying amount for the purpose of
impairment tests.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 161
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
13 Other intangible assets

| Developed | Developed | Customer | RISC-V | Other |
| IP | technology | relationships | licences | intangibles | Total
| US$’000 | US$’000 | US$’000 | US$’000 | US$’000 | US$’000
Cost |  |  |  |  |  |
As at 1 January 2022 | 1,167 | — | — | — | — | 1,167
Acquisition of subsidiaries |  |  |  |  |  |
(note 30) | 38,887 | 83,900 | 25,700 | 5,200 | 386 | 154,073
Additions | 4,343 | 4,255 | — | — | 3,747 | 12,345
Currency translation differences | (49) | — | — | — | — | (49)
As at 31 December 2022 | 44,348 | 88,155 | 25,700 | 5,200 | 4,133 | 167,536
Additions | — | 54,539 | — | — | 1,825 | 56,364
Re-classify to property |  |  |  |  |  |
and equipment | (1,162) | — | — | — | — | (1,162)
Re-classification of intangibles | — | 2,947 | — | — | (2,947) | —
Currency translation differences | — | — | — | — | — | —
As at 31 December 2023 | 43,186 | 145,641 | 25,700 | 5,200 | 3,011 | 222,738
Accumulated amortisation |  |  |  |  |  |
As at 1 January 2022 | — | — | — | — | — | —
Amortisation charge for the year | 4,730 | — | 714 | 347 | 368 | 6,159
Currency translation differences | (29) | — | — | — | — | (29)
As at 31 December 2022 | 4,701 | — | 714 | 347 | 368 | 6,130
Amortisation charge for the year | 10,112 | — | 2,142 | 1,040 | — | 13,294
Currency translation differences | — | — | — | — | — | —
As at 31 December 2023 | 14,813 | — | 2,856 | 1,387 | 368 | 19,424
Carrying amount |  |  |  |  |  |
As at 31 December 2022 | 39,647 | 88,155 | 24,986 | 4,853 | 3,765 | 161,406
As at 31 December 2023 | 28,373 | 146,441 | 22,844 | 3,813 | 1,843 | 203,314

Developed technology consists of intangible assets that are still under development and are not yet available for use.
The US$54.5m additions to developed technology is mainly made up of capitalised labour and contractor costs in the amount
of US$41.8m (note 5) and term loan interest of US$9.5m that has been capitalised (note 9).
The acquired intangibles within the developed IP category are amortised over four years.
162 Alphawave IP Group plc | Annual report and financial statements 2023
14 Property and equipment – owned

| Computer | Furniture | Leasehold | Laboratory |
| equipment | and fixtures | improvements | equipment | Total
| US$’000 | US$’000 | US$’000 | US$’000 | US$’000
Cost |  |  |  |  |
As at 1 January 2022 | 2,088 | 62 | 404 | — | 2,554
On acquisition of subsidiaries | 913 | 111 | 264 | 1,279 | 2,567
Additions | 10,128 | 286 | 1,261 | 93 | 11,768
Currency translation differences | (5) | (1) | (6) | — | (12)
As at 31 December 2022 | 13,124 | 458 | 1,923 | 1,372 | 16,877
Acquisition of subsidiaries | — | — | — | — | —
Additions | 8,488 | 824 | 2,349 | 6,907 | 18,568
Re-classify from intangible assets | — | — | — | 1,162 | 1,162
Currency translation differences | — | — | — | — | —
As at 31 December 2023 | 21,612 | 1,282 | 4,272 | 9,441 | 36,607
Accumulated depreciation |  |  |  |  |
As at 1 January 2022 | 766 | 31 | 131 | — | 928
Depreciation charge for the year | 1,886 | 58 | 456 | 72 | 2,472
Currency translation differences | 16 | 9 | 31 | — | 56
As at 31 December 2022 | 2,668 | 98 | 618 | 72 | 3,456
Depreciation charge for the year | 8,921 | 259 | 810 | 1,222 | 11,212
Depreciation charged to the P&L then capitalised | — | — | — | 1,285 | 1,285
Currency translation differences | — | — | — | — | —
As at 31 December 2023 | 11,589 | 357 | 1,428 | 2,579 | 15,953
Carrying amount |  |  |  |  |
As at 31 December 2022 | 10,456 | 360 | 1,305 | 1,300 | 13,421
As at 31 December 2023 | 10,023 | 925 | 2,844 | 6,862 | 20,654

Laboratory equipment includes additions of US$5.6m of test chips used for R&D projects that are not yet being depreciated.
15 Property and equipment – leased
Nature of leasing activities (as lessee)
The Group leases all of its product development and office facilities in the various countries in which it operates.
Property leases that have been entered into by the Group contain varied terms and conditions reflecting its business
requirements and local market practices. Property leases are typically for a fixed term of approximately five years but may
include extension or early termination options to provide the Group with operational flexibility. Property rentals are typically
fixed on inception of the lease but may be subject to review during the lease term to reflect changes in market rental rates.
The Group also leases office and other equipment.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 163
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
15 Property and equipment – leased continued
Right‑of‑use assets
Movements on right-of-use assets recognised in relation to leased property and equipment were as follows:

| Buildings | Equipment | Total
| US$’000 | US$’000 | US$’000
Cost |  |  |
As at 1 January 2022 | 8,460 | 2,579 | 11,039
Acquisition of subsidiaries | 2,786 | — | 2,786
Additions | 4,308 | 3,023 | 7,331
Currency translation differences | (248) | (104) | (352)
As at 31 December 2022 | 15,306 | 5,498 | 20,804
Additions | 5,265 | 608 | 5,873
Disposals | (551) | — | (551)
Currency translation differences | (3) | — | (3)
As at 31 December 2023 | 20,017 | 6,106 | 26,123
Accumulated depreciation |  |  |
As at 1 January 2022 | 1,852 | 1,515 | 3,367
Depreciation charge for the year | 1,706 | 1,330 | 3,036
Currency translation differences | (90) | (62) | (152)
As at 31 December 2022 | 3,468 | 2,783 | 6,251
Depreciation charge for the year | 3,006 | 1,606 | 4,612
Disposals | — | — | —
Currency translation differences | (2) | — | (2)
As at 31 December 2023 | 6,472 | 4,389 | 10,861
Carrying amount |  |  |
As at 31 December 2022 | 11,838 | 2,715 | 14,553
As at 31 December 2023 | 13,545 | 1,717 | 15,262

164 Alphawave IP Group plc | Annual report and financial statements 2023
Lease liabilities
Movements on the lease liabilities recognised in relation to leased property and equipment were as follows:

| US$’000
As at 1 January 2022 | 7,828
Acquisition of subsidiaries | 2,616
Additions | 7,196
Interest expense | 391
Lease payments | (3,038)
Currency translation differences | (60)
As at 31 December 2022 | 14,933
Additions | 5,385
Disposals | —
Interest expense | 1,581
Lease payments | (4,740)
Currency translation differences | (479)
As at 31 December 2023 | 16,680

Lease liabilities were presented in the balance sheet as follows:

| As at 31 December |
| 2023 | 2022
| US$’000 | US$’000
Current | 3,953 | 3,756
Non-current | 12,727 | 11,177
Total lease liabilities | 16,680 | 14,933

Expenses recognised in relation to lease payments that were not included in the measurement of lease liabilities were as follows:

| As at 31 December |
| 2023 | 2022
| US$’000 | US$’000
Expense relating to short-term leases and low-value lease expense | 716 | 1,769
Expense relating to variable lease payments not included in lease liabilities | — | 19
| 716 | 1,788

Cash outflow on lease payments
The total cash outflow on lease payments was as follows:

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
Cash flow from financing activities |  |
Lease payments included in lease liabilities | 4,740 | 3,038
Cash flow from operating activities |  |
Variable lease payments not included in lease liabilities | — | 19
Lease payments on short-term leases and leases of low-value assets | 716 | 1,769
Total cash outflow on lease payments | 5,456 | 4,826

STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 165
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
16 Investment in joint venture
As at 31 December 2023, the Group held a 42.5% ownership interest in WiseWave Technology Co., LTD (‘WiseWave’), a supplier
of semiconductor devices based in China. WiseWave’s registered office is at Room 105, No. 6, Baohua Road, Hengqin New
District, Zhuhai, China.
Movements in the carrying amount of the Group’s investment in WiseWave were as follows:

| US$’000
Carrying amount |
As at 1 January 2022 | 9,421
Additional investment | 9,060
Loss from joint venture | (18,481)
As at 31 December 2022 | —
Additional investment | 14,730
Loss from joint venture | (14,730)
As at 31 December 2023 | –

During 2023 and 2022, the Group and the other shareholders in WiseWave increased their investment by subscribing for new ordinary
shares in proportion to their existing ownership interests.
As at 31 December 2023, the cumulative amount of the Group’s share of WiseWave’s losses amounts to US$34.0m. The remaining
amount recognised as share of loss is the elimination of unrealised profit on sales to WiseWave which is cumulatively US$12.1m. As a
result, the Group’s interest in WiseWave has been reduced to nil and no provision has been recognised for the excess of the Group’s
share of WiseWave’s losses over the carrying amount of the investment on the basis that the Group does not have a constructive
obligation. As at 31 December 2022, the cumulative amount of the Group’s share of WiseWave’s losses was not greater than the
carrying amount of the investment and therefore, in accordance with the Group’s accounting policy, the elimination of gains from
sales to WiseWave was recognised only to the extent of reducing the carrying amount of the investment to nil.
During 2023, the Group recognised revenue of US$49.6m (2022: US$31.1m) on delivery of IP licences under the subscription licence
agreement with WiseWave. In accordance with the Group’s accounting policy, to the extent that WiseWave has not yet utilised
the IP, we have eliminated the Group’s share of its profit on the licences. Such elimination is made against the carrying amount of
the investment in WiseWave, but only insofar as it is reduced to nil. As at 31 December 2023, the cumulative amount of profit so
eliminated was nil (2022: US$2.4m). This is due to the cumulative share of loss in itself already reducing the investment to nil, which
was not the case at 31 December 2022. We still expect that the profit eliminated to date will be recognised during the remainder of
the five-year subscription licence agreement ending in 2026.
The following tables summarise financial information of WiseWave taken from its own financial statements and adjusted in
accordance with the Group’s accounting policies:

| As at 31 December |
| 2023 | 2022
| US$’000 | US$’000
Current assets | 23,766 | 18,536
Property and equipment | 5,043 | 1,908
Intangible assets | 53,774 | 71,331
Other non-current assets | 2,176 | 4,883
Current liabilities | 34,411 | 27,351
Non-current liabilities | 24,588 | 42,317
Included in the above amounts are: |  |
Cash and cash equivalents | 13,700 | 15,729
Current financial liabilities (excluding trade payables) | – | —
Non-current financial liabilities (excluding trade payables) | – | —
Net assets (100%) | 25,759 | 26,990
Group share of net assets (42.5%) | 10,948 | 11,471
Share of losses of joint venture recognised as a liability | – | —
Share of unrealised profits on IP licences to joint venture not recognised | 11,910 | 2,344
Carrying amount of liability in joint venture | – | —

166 Alphawave IP Group plc | Annual report and financial statements 2023

| As at 31 December |
| 2023 | 2022
| US$’000 | US$’000
Revenue | 19,826 | 5,517
Loss from continuing operations | (35,930) | (37,764)
Included in loss from continuing operations are: |  |
Depreciation and amortisation | (2 0,730) | (18,267)
Interest expense | (2,171) | (2,936)
Other comprehensive income | – | —
Total comprehensive expense (100%) | (35,930) | (37,764)
Group share of total comprehensive expense (42.5%) | (15,270) | (16,050)
Reversal/(recognition) of share of unrealised profits on IP licences to joint venture | 540 | (2,431)
Loss from joint venture | (14,730) | (18,481)

17 Cash and cash equivalents

| As at 31 December |
| 2023 | 2022
| US$’000 | US$’000
Cash at bank and in hand | 101,291 | 186,231

18 Trade and other receivables

| As at 31 December |
|  | Restated
| 2023 | 2022
| US$’000 | US$’000
Current |  |
Trade receivables from contracts with customers | 49,214 | 16,455
Less: Allowance for expected credit losses | (5,635) | (637)
Trade receivables – net | 43,579 | 15,818
Restricted cash | 17,843 | 18,295
Other receivables | 16,667 | 13,030
Total current | 78,089 | 47,143
Non-current |  |
Restricted cash | 6,392 | 18,793
Other receivables | – | 479
Total non-current | 6,392 | 19,272
Total trade and other receivables | 84,481 | 66,415

1
1. Restated to reflect the finalisation of the purchase price allocation for the acquisition of OpenFive (notes 12 and 30) and to allocate the expected credit loss
allowance between trade receivables from contracts with customers and contract assets.
Prepayments and capitalised contract costs are shown within note 20.
Restricted cash comprises amounts held by third-party paying agents in respect of deferred consideration and future
compensation amounts payable to employees of Precise ITC and Banias Labs conditional on their remaining in the Group’s
employment during the respective vesting periods, the last of which expires during 2026. Cash held by the paying agent in
relation to amounts that are forfeited by the employees will be returned to the Company.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 167
19 Inventories

| As at 31 December |
| 2023 | 2022
| US$’000 | US$’000
Finished goods | 4,248 | 3,616
Work in progress | 5,737 | 10,413
Raw materials | 1,637 | 4,032
Total inventories | 11,622 | 18,061

During 2023, an expense of US$0.6m (2022: US$0.5m) was recognised in respect of the write-down of inventories to net
realisable value.
20 Other assets

| As at 31 December |
| 2023 | 2022
| US$’000 | US$’000
Current |  |
Prepayments | 17,094 | 70,601
Capitalised contract costs | 1,923 | 874
Total other assets | 19,017 | 71,475

Prepayments include advance payments to foundries to reserve manufacturing capacity of US$5.1m (2022: US$50.9m) that are
largely covered by advance receipts from customers.
21 Trade and other payables

| As at 31 December |
|  | Restated
| 2023 | 2022
| US$’000 | US$’000
Current |  |
Trade payables | 18,098 | 23,573
Accrued expenses | 33,553 | 34,322
Social security and other taxes | 195 | 1,204
Contingent consideration | – | 5,000
Other payables | 17,439 | 24,566
Total current | 69,285 | 88,665
Non-current |  |
Other payables | 1,775 | 10,555
Total non-current | 1,775 | 10,555
Total trade and other payables | 71,060 | 99,220

1
1. Restated to reflect the finalisation of the purchase price allocation for the acquisition of OpenFive (notes 12 and 30).
Other payables include US$10.4m (2022: US$10.5m) deferred consideration and compensation payable to employees of
Banias Labs. US$5.5m (2022: US$5.5m) relates to an NRE project that has been put on hold due to the ongoing war in Ukraine.
US$2.6m (2022: US$2.6m) relates to a prepayment from a customer where a project has been cancelled and this will be
refunded in 2024.
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
168 Alphawave IP Group plc | Annual report and financial statements 2023
22 Loans and borrowings

| As at 31 December |
| 2023 | 2022
| US$’000 | US$’000
Current |  |
Term Loan | 5,625 | 5,000
Non-current |  |
Revolving Credit Facility | 125,000 | 110,000
Term Loan | 88,125 | 93,750
Israel Innovation Authority | 1,625 | 1,451
Total loans and borrowings | 220,375 | 210,201

In October 2022, the Group entered into a Credit Agreement
with a syndicate of banks that provided it with a US
dollar-denominated Delayed Draw Term Loan B (‘Term
Loan’) facility of US$100.0m and a multi-currency Revolving
Credit Facility (RCF) of US$125.0m.
In October 2022, the Group drew the Term Loan facility in
full and US$110.0m from the RCF in connection with the
acquisition of Banias Labs. The Group drew the remaining
US$15.0m of the RCF in May 2023.
Both the Term Loan facility and the RCF mature in
October 2027. We are required to repay a percentage of the
principal amount of the Term Loan outstanding at the end of
each calendar quarter prior to maturity. We repaid the first
instalment of US$1,250,000 in December 2022 and repaid
four quarterly instalments totalling US$5,000,000 during 2023.
Based on the principal amount of the Term Loan outstanding
at the end of 2023, we are scheduled to repay US$5,625,000
during 2024, US$7,500,000 during 2025, US$8,125,000 during
2026 and the remaining US$72,500,000 during 2027. We have
the option to prepay some or all of the outstanding principal
amount of the Term Loan at any time prior to maturity without
premium or penalty.
We may, at any time, on one or more occasions, add to
the principal amount of the Term Loan and/or the RCF by
way of an Incremental Facility Amendment, provided that
the increment is less than US$5.0m and the aggregate
outstanding principal amount of all incremental Term Loan
amounts would not thereby exceed the higher of US$60.0m
and the Consolidated Adjusted EBITDA for the twelve months
preceding the end of the most recent calendar quarter.
Our borrowings under the Credit Agreement and Incremental
Facility Amendment were initially subject to two financial
covenants that are normally tested quarterly: the Net Leverage
Ratio (the ratio of Consolidated Total Debt at the end of each
quarter to Consolidated Adjusted EBITDA for the preceding
twelve months) and the Fixed Charges Coverage Ratio
(the ratio of Consolidated Cash Flow to Consolidated Fixed
Charges for the preceding twelve months) as defined in the
Credit Agreement.
The maximum permitted Net Leverage Ratio was 3.75 times
up to the period ended 30 June 2023, 3.5 times up to the
period ending 31 March 2024 and is 3.0 times thereafter
until maturity of the facilities. The minimum permitted Fixed
Charges Coverage Ratio was initially 1.25 times over the term
of the facilities.
For the test period ended on 30 June 2023, the Fixed
Charges Coverage Ratio was below the minimum permitted
level. On 22 September 2023, we agreed with the lenders
an amendment to the Credit Agreement which suspends
the Fixed Charges Coverage Ratio from the period ended
30 September 2023 to the period ending 30 June 2024,
after which it is set at 1.1 times until the period ending
30 September 2025 when it reverts to 1.25 times. When
the Fixed Charges Coverage Ratio resumes, the test periods
ending on 30 September 2024, 31 December 2024 and
31 March 2025 are shortened to the preceding three, six and
nine-month periods, respectively.
While there were no changes affecting the Net Leverage Ratio
test, the amendment to the Credit Agreement introduced a
Minimum Liquidity Requirement whereby the average daily
closing balance of cash and cash equivalents plus any unused
portion of the Revolving Credit Facility during any month and
the closing balance on the last day of each month must not be
less than US$75.0m for any test period ending on or prior to
31 December 2023 and not less than US$45.0m for any test
period ending thereafter until 30 September 2025.
The Group met both of the applicable financial covenants
for the test periods ended on 30 September 2023 and
31 December 2023.
Both the Term Loan and amounts currently drawn under the
RCF bear interest at floating rates of interest based on the
Secured Overnight Financing Rate (SOFR) for the relevant
tenor and adjusted according to the Group’s Total Net
Leverage ratio.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 169
22 Loans and borrowings continued
Changes in liabilities arising from financing activities were as follows:

| Loans and | Interest | Lease |
| borrowings | payable | liabilities | Total
| US$’000 | US$’000 | US$’000 | US$’000
As at 1 January 2022 | — | — | 7,828 | 7,828
Acquisition of subsidiaries | 1,451 | — | 2,616 | 4,067
Financing cash inflow/(outflow) | 208,750 | (650) | (3,038) | 205,062
Currency translation differences | — | — | (60) | (60)
Other movements | — | 3,134 | 7,587 | 10,721
As at 31 December 2022 | 210,201 | 2,484 | 14,933 | 227,618
Financing cash inflow/(outflow) | 10,000 | (18,390) | (4,740) | (13,130)
Currency translation differences | 174 | — | (40) | 134
Other movements | — | 16,053 | 6,527 | 22,580
As at 31 December 2023 | 220,375 | 147 | 16,680 | 237,202

23 Measurement of financial instruments
Analysis by class and category
We set out below the carrying amount of financial assets and liabilities held by the Group by class and measurement category
and their estimated fair value at the balance sheet date:

| As at 31 December 2023 |
| Carrying amount |
| Amortised | Fair
| cost | value
| US$’000 | US$’000
Financial assets |  |
Cash and cash equivalents | 101,291 | 101,291
Trade and other receivables | 103,498 | 103,498
Contract assets | 65,173 | 65,173
Total financial assets | 269,962 | 269,962
Financial liabilities |  |
Trade and other payables | (71,060) | (71,060)
Lease liabilities | (16,680) | (16,680)
Loans and borrowings | (220,375) | (220,375)
Total financial liabilities | (308,115) | (308,115)

Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
170 Alphawave IP Group plc | Annual report and financial statements 2023

|  |  | Restated as at 31 December 2022 |
|  | Carrying amount |
|  | At fair value |
| Amortised | through |  | Fair
| cost | profit or loss | Total | value
| US$’000 | US$’000 | US$’000 | US$’000
Financial assets |  |  |  |
Cash and cash equivalents | 186,231 | — | 186,231 | 186,231
Trade and other receivables | 137,890 | — | 137, 890 | 137, 8 90
Contract assets | 56,987 | — | 56,987 | 56,987
Total financial assets | 381,108 | — | 381,108 | 381,108
Financial liabilities |  |  |  |
Trade and other payables | (94,220) | (5,000) | (99,220) | (99,220)
Lease liabilities | (14,933) | — | (14,933) | (14,933)
Loans and borrowings | (210,201) | — | (210,201) | (210,201)
Total financial liabilities | (319,354) | (5,000) | (324,354) | (324,354)

1
1. Restated to reflect the finalisation of the purchase price allocation for the acquisition of OpenFive (notes 12 and 30) and to allocate the expected credit loss
allowance between trade receivables from contracts with customers and contract assets.
Financial instruments carried at fair value
During the periods under review, all financial instruments held by the Group were carried at amortised cost except for the
contingent consideration liability recognised in relation to the acquisition of Precise-ITC that was carried at fair value through
profit or loss.
Financial instruments that are carried at fair value are categorised into one of three levels in a fair value hierarchy according to
the nature of the significant inputs to the valuation techniques that are used to determine their fair value as follows:
> Level 1 – Quoted (unadjusted) market price in active markets for identical assets or liabilities;
> Level 2 – Inputs other than Level 1 that are observable either directly (as market prices) or indirectly (derived from market
prices); and
> Level 3 – Unobservable inputs, such as those derived from internal models or using other valuation methods.
Contingent consideration in respect of the acquisition of Precise-ITC was dependent on the aggregate value of Precise’s IP Core
revenue and bookings exceeding US$10,000,000 during 2022. We determined the acquisition date fair value of the liability using
an option pricing model based on a range of possible outcomes for Precise’s IP Core revenue and bookings. Since the inputs
to the fair value calculation were therefore largely unobservable, the fair value of the liability on initial recognition was a Level 3
fair value. Precise’s actual IP Core revenue and bookings during 2022 significantly exceeded our expectations at the acquisition
date. As at 31 December 2022, we therefore increased the liability to the maximum amount payable of US$5,000,000. We paid
this amount to the vendors in May 2023.
Movements in the liability for contingent consideration were as follows:

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
Contingent consideration |  |
At the beginning of the year | (5,000) | —
Acquisition of Precise-ITC | — | (740)
Change in estimate (other operating expenses) | — | (4,260)
Settlements | 5,000 | —
At the end of the year | — | (5,000)

STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 171
23 Measurements of financial instruments
continued
Financial instruments not carried at fair value
We are required to disclose the fair value of those financial
instruments that are not carried at fair value.
Cash and cash equivalents, trade and other receivables,
contract assets and trade and other payables (other than
contingent consideration) are of short maturity and/or bear
interest at floating rates. We therefore consider that their
carrying amounts approximate to their fair value (Level 2).
We have calculated the fair value of lease liabilities by
discounting the future lease payments at the relevant lessee’s
incremental borrowing rate based on observable yield curves
at the balance sheet date (Level 2).
With the exception of the Term Loan, we consider that the
carrying amount of loans and borrowings approximates to
their fair value. In the case of the Term Loan, its carrying
amount is stated net of the unamortised balance of issue
costs and therefore does not represent its fair value. Since the
Term Loan bears interest at a floating rate, we consider that
the principal amount of the loan outstanding approximates to
its fair value (Level 2).
24 Financial risk management
Background
The Board has overall responsibility for the determination
of the Group’s risk management objectives and policies.
Whilst retaining ultimate responsibility for them, it has
delegated the authority for designing and operating processes
that ensure the effective implementation of the objectives
and policies to the Group’s centralised finance function,
from which the Board receives regular updates.
The principal objectives of the Board are to ensure adequate
funding is available to meet the Group’s requirements and
for maintaining an efficient capital structure, together with
managing the Group’s counterparty credit risk, interest rate
risk and foreign currency exposures.
Credit risk
Credit risk is the risk that a customer or a counterparty
financial institution fails to meet its contractual obligations
as they fall due, causing the Group to incur a financial loss.
The Group is exposed to credit risk in relation to receivables
from its customers, contract assets and cash and cash
equivalents held with financial institutions.
Before accepting a new customer, we assess the potential
customer’s credit quality and establish a credit limit. Credit
quality is assessed using data maintained by reputable
credit agencies, by checking references included in credit
applications and, where they are available, by reviewing the
customer’s recent financial statements. Credit limits are
subject to authorisation and are reviewed on a regular basis.
We recognise an allowance for credit losses in respect of
trade receivables and contract assets measured as the
amount of the lifetime expected credit losses. We estimate
the expected credit loss on accounts receivable and contract
assets using a provision matrix based on the Group’s historical
credit loss experience, adjusted for factors that are specific to
the customers, and general current and forecasted economic
conditions. When constructing the provision matrix, we
grouped trade receivables and contract assets based on credit
risk factors against which we applied differing loss rates. If we
are aware of specific factors relevant to risk of default of a
customer, we may apply a loss rate to balances receivable
from that customer that differs from that suggested by the
provision matrix.
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
Information about the allowance for expected credit losses by credit risk group was as follows:

| As at 31 December 2023 |  |  | As at 31 December 2022 |  |
| Weighted- | Gross carrying | Loss | Weighted- | Gross carrying | Loss
| average | amount | allowance | average | amount | allowance
| loss rate | US$’000 | $’000 | loss rate | US$’000 | $’000
Start-up company based in developing country | 12% | 45,311 | 5,620 | 1% | 25,300 | 300
Other start-up companies | 0% | 21,658 | 85 | 6% | 21,500 | 1,194
Established company based |  |  |  |  |  |
in developing country | 25% | 11,261 | 2,772 | 2% | 8,200 | 200
Other established companies | 3% | 40,019 | 1,020 | 2% | 19,989 | 490
|  | 118,249 | 9,497 |  | 74,989 | 2,184

172 Alphawave IP Group plc | Annual report and financial statements 2023
Movements in the allowance for expected credit losses were as follows:

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
At the beginning of the year | 2,184 | —
Net remeasurement of loss allowance | 7,337 | 2,184
Foreign exchange difference | (24) | —
At the end of the year | 9,497 | 2,184

As at 31 December 2023, one customer accounted for 14% (2022: 20%) of the aggregate balance of trade receivables and
contract assets. Management has no reason to believe that the amounts owed by the customer are not fully collectible in
the future.
Cash and cash equivalents are placed, where possible, with financial institutions that have a median credit rating of not less
than Aa3 (Moody’s), AA- (Standard & Poor’s), AA- (Fitch) or equivalent. We regularly monitor the credit quality of financial
institutions with whom we have placed the Group’s funds. Credit risk is further limited by holding cash on deposits with
relatively short maturities.
Market risk
Market risk is the risk that the fair value of, or cash flows associated with, a financial instrument will fluctuate because of
changes in market prices. Market risk comprises three types of risk: interest rate risk (due to changes in market interest rates),
currency risk (due to changes in currency exchange rates) and other price risk.
Interest rate risk
The interest rate profile of the Group’s financial assets and liabilities was as follows:

|  |  | As at 31 December 2023 |
| Interest bearing |  | Non-interest |
| Floating rate | Fixed rate | bearing | Total
| US$’000 | US$’000 | US$’000 | US$’000
Cash and cash equivalents | 65,443 | 1,457 | 34,391 | 101,291
Trade and other receivables and other assets | – | – | 103,498 | 103,498
Contract assets | – | – | 65,173 | 65,173
Total financial assets | 65,443 | 1,457 | 203,062 | 269,962
Trade and other payables | – | – | (71,060) | (71,060)
Lease liabilities | – | – | (16,680) | (16,680)
Loans and borrowings | (220,375) | – | – | (220,375)
Total financial liabilities | (220,375) | – | (87,740) | (308,115)

STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 173
24 Financial risk management continued
Market risk continued

|  |  | Restated as at 31 December 2022 |
| Interest bearing |  | Non-interest |
| Floating rate | Fixed rate | bearing | Total
| US$’000 | US$’000 | US$’000 | US$’000
Cash and cash equivalents | 113,616 | 29,244 | 43,371 | 186,231
Trade and other receivables and other assets | – | – | 137,890 | 137,890
Contract assets | – | – | 56,987 | 56,987
Total financial assets | 113,616 | 29,244 | 238,248 | 381,108
Trade and other payables | – | – | (99,220) | (99,220)
Lease liabilities | – | – | (14,933) | (14,933)
Loans and borrowings | (210,201) | – | – | (210,201)
Total financial liabilities | (210,201) | – | (114,153) | (324,354)

1
1. Restated to reflect the finalisation of the purchase price allocation for the acquisition of OpenFive (notes 12 and 30) and to allocate the expected credit loss
allowance between trade receivables from contracts with customers and contract assets.
The Group’s principal exposure to interest rate risk is in relation to floating rate loans and borrowings and cash deposits.
Currency risk
Currency risk arises on financial instruments that are denominated in a currency other than the functional currency of the
entity that holds them. The Company’s functional currency is pound sterling (GBP) and its principal subsidiaries have different
functional currencies, including Canadian dollar (CAD), US dollar (USD), Israeli shekel (ILS), Indian rupee (INR) and Chinese
renminbi (RMB). Substantially all of the Group’s revenue and a significant proportion of its expenses are denominated in US
dollars. Accordingly, the Group is subject to currency risk, particularly in those entities that have a functional currency other than
the US dollar.
The Group does not use derivative instruments to reduce its exposure to currency risk.
The Group’s exposure to currency risk was as follows:

|  |  |  |  | As at 31 December 2023 |  |  |
| CAD | GBP | ILS | INR | RMB | TWD | USD | Total
| US$’000 | US$’000 | US$’000 | US$’000 | US$’000 | US$’000 | US$’000 | US$’000
Cash and cash |  |  |  |  |  |  |  |
equivalents | 632 | 41,957 | 133 | 473 | 2,756 | 210 | 55,130 | 101,291
Trade and other receivables and other assets | 20,376 | 902 | 596 | 1,055 | 6,211 | 72 | 74,286 | 103,498
Contract assets | — | — | — | — | 66 | — | 65,107 | 65,173
Trade and other payables | (26,829) | (4,969) | (2,266) | (3,954) | (393) | (21) | (32,628) | (71,060)
Lease liabilities | (14,949) | — | (832) | (890) | (9) | — | — | (16,680)
Loans and borrowings | — | — | (1,625) | — | — | — | (218,750) | (220,375)
| (20,770) | 37,890 | (3,994) | (3,316) | 8,631 | 261 | (56,855) | (38,153)

Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
174 Alphawave IP Group plc | Annual report and financial statements 2023

|  |  |  | Restated as at 31 December 2022 |  |  |
| CAD | GBP | ILS | INR | RMB | USD | Total
| US$’000 | US$’000 | US$’000 | US$’000 | US$’000 | US$’000 | US$’000
Cash and cash |  |  |  |  |  |  |
equivalents | (6,648) | 125,218 | 833 | 1,965 | 12,986 | 51,877 | 186,231
Trade and other receivables and other assets | — | — | — | 1,572 | 23 | 136,295 | 137,890
Contract assets | — | — | — | — | — | 56,987 | 56,987
Trade and other payables | (1,663) | (952) | (794) | (2,660) | (10,039) | (83,112) | (99,220)
Lease liabilities | (12,579) | — | (1,049) | (1,305) | — | — | (14,933)
Loans and borrowings | — | — | (1,451) | — | — | (208,750) | (210,201)
| (20,890) | 124,266 | (2,461) | (428) | 2,970 | (46,703) | 56,754

1
1. Restated to reflect the finalisation of the purchase price allocation for the acquisition of OpenFive (notes 12 and 30) and to allocate the expected credit loss
allowance between trade receivables from contracts with customers and contract assets.
When applied to financial instruments denominated in foreign currencies held at the end of the year, the effect on the Group’s
profit or loss before tax of a 5% strengthening or weakening of those currencies against the relevant functional currencies would
have been as follows:

| As at 31 December |
| 2023 | 2022
Foreign currency | US$’000 | US$’000
CAD | 834/(834) | 4,807/(4,807)
GBP | 778/(778) | 583/(583)
ILS | 498/(498) | 18/(18)
INR | 26/(26) | 187/(187)
RMB | 632/(632) | 90/(90)
USD | 899/(899) | 4,599/(4,599)

Other price risk
Other price risk is market risk other than interest rate risk or currency risk. The Group has no significant exposure to other price risk.
Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with its financial liabilities.
In October 2022, the Company entered into a Credit Agreement with a syndicate of banks that provided it with a US
dollar-denominated Delayed Draw Term Loan B (‘Term Loan’) facility of US$100.0m and a multi-currency Revolving Credit Facility
(RCF) of US$125.0m. As at 31 December 2023, the facilities were fully drawn.
The Credit Agreement contains various provisions, covenants and representations that are customary for such facilities. For the
test period ended 30 June 2023, the Fixed Charges Coverage Ratio was below the minimum required level. As described in note
27, we subsequently agreed with the lenders an amendment to the Credit Agreement such that testing of the Fixed Charges
Coverage Ratio would be suspended until 30 June 2024 and thereafter the minimum required level would be reduced and the length
of the testing periods would be reduced until 30 September 2025. While there were no changes to the Net Leverage Ratio, the
amendment to the Credit Agreement introduced a Minimum Liquidity Requirement which effectively set minimum required levels
for cash and cash equivalents. We currently monitor and forecast cash flows on a weekly basis at both Group and entity level. As at
31 December 2023, cash and cash equivalents amounted to US$101.3m (2022: US$186.2m). As explained in note 2, the Directors
are satisfied that the Group has sufficient liquidity to continue as a going concern.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 175
24 Financial risk management continued
Liquidity risk continued
The following table sets out the contractual maturities (representing undiscounted contractual cash flows) of financial liabilities:

|  | As at 31 December 2023 |  |
| Due within | Due between | Due > |
| 1 year | 1 and 5 years | 5 years | Total
| US$’000 | US$’000 | US$’000 | US$’000
Trade and other payables | 69,285 | 1,775 | – | 71,060
Lease liabilities | 3,953 | 7,660 | 5,067 | 16,680
Loans and borrowings | 5,625 | 214,750 | – | 220,375
| 78,863 | 224,185 | 5,067 | 308,115

|  |  | Restated as at 31 December 2022 |
| Due within | Due between | Due > |
| 1 year | 1 and 5 years | 5 years | Total
| US$’000 | US$’000 | US$’000 | US$’000
Trade and other payables | 88,665 | 10,555 | — | 99,220
Lease liabilities | 3,756 | 8,819 | 2,358 | 14,933
Loans and borrowings | 5,000 | 205,201 | — | 210,201
| 97,421 | 224,575 | 2,358 | 324,354

1
1. Restated to reflect the finalisation of the purchase price allocation for the acquisition of OpenFive (notes 12 and 30).
Capital management
The Group’s capital is represented by its total equity less net debt less lease liabilities. By this definition, the Group’s capital as at
31 December 2023 was US$332,144,000 (2022: US$429,370,000) as follows:

| As at 31 December |
| 2023 | 2022
| US$’000 | US$’000
Total equity | 467,908 | 468,273
Loans and borrowings | 220,375 | 210,201
Cash and cash equivalents | (101,291) | (186,231)
Net debt | 119,084 | 23,970
Lease liabilities | 16,680 | 14,933
Total capital | 332,144 | 429,370

We seek to maintain a capital structure that supports the ongoing activities of our business and its strategic objectives in order
to deliver long-term returns to shareholders. We allocate capital to support organic and inorganic growth, investing in research
and development and our IP licensing and product offerings. We fund our growth strategy using a mix of equity and debt after
giving consideration to prevailing market conditions.
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
176 Alphawave IP Group plc | Annual report and financial statements 2023
25 Post-employment benefits
Defined contribution plans
The Group operates defined contribution pension plans in most of the countries in which it operates. During 2023, the Group
recognised an expense of US$4,115,000 (2022: US$1,300,000) for defined contribution plans. As at 31 December 2023,
the Group had not paid contributions due to the plans totalling US$nil (2022: US$3,000). All contributions due for the year
have since been paid to the plans.
Defined benefit plans
Prior to the acquisition of Open Silicon in August 2022, the Group had no defined benefit plans. Open Silicon operates unfunded
gratuity and accrued leave plans in India that provide employees with lump sum benefits on leaving employment that are based
on the individual’s final salary and length of service.
Prior to and immediately following the acquisition, the benefit obligation was not measured on an actuarial basis. During 2023,
we engaged an independent qualified actuary and the benefit obligation as at 31 December 2023 and the amounts recognised
in comprehensive income for the year are based on the actuary’s valuation of the plans that was prepared using the projected
unit credit method. Remeasurement of defined benefit plans represents actuarial gains and losses relating to gratuity and leave
encashment.
Movements in the benefit obligation were as follows:

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
At the beginning of the year | 821 | —
Acquisition of Open Silicon (note 30) | — | 323
Recognised in profit or loss: |  |
Current service cost | 489 | 507
Interest expense | 60 | —
Recognised in other comprehensive income: |  |
Experience adjustments | 472 | —
Change in financial assumptions | 735 | —
Benefits paid by employer | (59) | (9)
Currency translation differences | (42) | —
At the end of the year | 2,476 | 821

As at 31 December 2023, the principal assumptions used in measuring the benefit obligation were as follows:

Staff attrition rate - age less than 30 years | 10.0% p.a.
Staff attrition rate - 31-44 years | 5% p.a.
Staff attrition rate - 45 years and above | 3% p.a.
Mortality rate | IALM 2012-14
Rate of increase in salaries year 1 | 22.0% p.a.
Rate of increase in salaries year 2 | 15% p.a.
Rate of increase in salaries year 3 onwards | 10% p.a.
Discount rate | 7.4% p.a.

Mortality assumptions used in measuring the benefit obligation were based on the Indian Assured Lives Mortality 2012-14
tables (‘100% of IALM 2012-14’) published by the Institute of Actuaries in India.
Sensitivities of the benefit obligation to reasonably possible changes in the principal assumptions are immaterial to the
consolidated financial statements.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 177
26 Share capital and reserves
Share capital and share premium account
Share capital
The Company’s share capital is comprised of ordinary shares with a nominal value of £0.01 per share.
The number of authorised, issued and fully paid ordinary shares was as follows:

| Number | Nominal value
| of shares | US$’000
As at 1 January 2022 | 664,965,934 | 9,399
Shares issued under employee share schemes | 30,102,266 | 352
As at 31 December 2022 | 695,068,200 | 9,751
Shares issued under employee share schemes | 20,446,367 | 260
As at 31 December 2023 | 715,514,567 | 10,011

Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
Shares issued during the year
During 2023, 20,446,367 shares (2022: 29,442,453 shares)
were issued on the exercise or vesting of awards made under
employee share schemes.
Since most of the awards were exercised or vested at £0.01
cost to the employee, the cash proceeds received by the
Company on issue of the shares was equal to their aggregate
nominal value. During 2023, a notional bonus expense of
US$70,000, (2022: not material), calculated at the nominal
value of £0.01 per share, was recognised in the profit or loss
account and credited to share capital.
Rights and restrictions
Ordinary shareholders have no entitlement to a share in the
profits of the Company except for dividends that may be
declared from time to time. All ordinary shares rank equally
with regard to the Company’s residual assets in the event of
a liquidation.
Ordinary shareholders have the right to attend, and vote at,
general meetings of the Company or to appoint a proxy to
attend and vote at such meetings on their behalf. Ordinary
shareholders have one vote for every share held.
Share premium account
The share premium account represents the difference
between the nominal value of shares in issue and the fair
value of the consideration received. For 2023 the amount
allocated to the share premium account is US$863,000 (2022:
US$775,000). The share premium account is not distributable
but may be used for certain purposes specified by United
Kingdom law, including to write off expenses on any issue of
shares and to pay up fully paid bonus shares.
Other reserves
Merger reserve
In May 2021, the Company purchased the entire issued
share capital of Alphawave IP Inc., the Group’s former
parent Company, by way of an exchange of shares in a
Group reorganisation that was accounted for as a merger.
The merger reserve represents the excess of the nominal
value of the Company’s ordinary shares issued over the
nominal value of Alphawave IP Inc’s common shares in
issue at the date of the reorganisation.
Share-based payment reserve
The share-based payment reserve represents the cost
recognised to date in respect of share-based payment awards
that have not been exercised.
Currency translation reserve
The currency translation reserve comprises gains and losses
arising on the translation of the results and financial position
of foreign operations from their functional currencies into
US dollars.
178 Alphawave IP Group plc | Annual report and financial statements 2023
27 Share-based payment
Prior to the Company’s IPO in July 2021, options and restricted stock units (RSUs) were granted to employees and consultants
to the Company and its subsidiaries under the Equity Incentive Plan (EIP). Following the IPO, no further awards were granted
under the EIP and it was replaced by the Long-Term Incentive Plan (LTIP). Awards under the LTIP may take the form of RSUs,
options or restricted ordinary shares.
While the specific terms of awards may vary according to individual grant agreements, options and RSUs granted under the
EIP and the LTIP typically vest over four years with 25% vesting on the first anniversary of the grant date and the remaining
75% vesting in equal monthly instalments thereafter until the fourth anniversary of the grant date conditional on the participant
remaining in the Group’s employment during the vesting period and any performance conditions having been met. Unexercised
options granted under the EIP and the LTIP expire on the fifth and tenth anniversary of the grant date, respectively. On exercise
or vesting, each option and RSU issued under the plans converts into one ordinary share in the Company. Unexercised options
and unvested RSUs carry neither rights to dividends nor voting rights. No amounts are paid or payable by the recipient on
receipt of an RSU, however, there are exercise costs paid or payable by the recipient on receipt of an Option.
All options and RSUs outstanding under the plans are equity-settled awards.
During 2023, 24,810,455 (2022: 23,109,685) RSUs were granted under the LTIP. Since the Company does not expect to pay
dividends during the vesting period, the grant date fair value of the awards was the market price of the Company’s ordinary
shares on the grant date. The weighted-average grant date fair value of the RSUs granted during the year was US$1.38
(2022: US$1.64). During the periods under review, no options were granted under the LTIP.
The number of options and RSUs outstanding and the weighted-average price of the options and RSUs on the grant date were
as follows:

|  | Year ended 31 December 2023 |  | Year ended 31 December 2022
| Number | Weighted-average | Number | Weighted-average
| of awards | exercise price (US$) | of awards | exercise price (US$)
Outstanding at the beginning of the year | 85,692,153 | 0.712 | 95,273,220 | 0.280
Granted | 24,810,455 | 1.387 | 23,109,685 | 1.640
Exercised or vested | (20,446,367) | 0.808 | (30,102,266) | 0.102
Forfeited | (3,792,278) | 1.002 | (2,588,486) | 1.381
Outstanding at the end of the year | 86,263,963 | 0.842 | 85,692,153 | 0.712
Vested at the end of the year | 43,669,961 | 0.339 | 41,720,539 | 0.221

1
1. The weighted average exercise price relates to options only.
The price payable by participants on exercise or vesting of option awards outstanding at the end of the year was in the range
US$0.01 to US$1.04 (2022: US$0.01 to US$1.13).
The weighted-average market price of the Company’s ordinary shares on the dates that options and RSUs vested during 2023
was US$1.45 (2022: US$1.86).
During 2023, the total share-based compensation expense recognised by the Group was US$40,691,000 (2022:
US$15,695,000). The primary reason for this increase is due to the two large acquisitions completing in the final four months
of 2022 and headcount more than doubling, with every employee being granted RSUs. In 2023 there was also a prospective
change in accounting method for the RSU charge, in that the charge is based on monthly graded vesting, not annual
graded vesting.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 179
28 Commitments
Software licence commitments
We have entered into a number of multi-year Software-as-a-Service (SaaS) arrangements that give us access to the supplier’s
application software, principally in relation to EDA software that we use in developing chip designs. We account for such
arrangements as service contracts.
Future minimum payments under these arrangements were as follows:

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
Payable: |  |
Within one year | 32,602 | 26,065
Between one and two years | 11,132 | 26,792
Between two and five years | 1,369 | 158
After more than five years | — | —
Total | 45,103 | 53,015

Capital commitments
The shareholders’ agreement governing the WiseWave joint venture stipulates that the Group shall invest up to US$170,000,000
in WiseWave. As at 31 December 2023 the Group has invested US$46,150,000 (2022: US$31,420,000). The shareholders’
agreement includes several matters that are classified as shareholder reserved matters, including any requirement for a capital
contribution. Such shareholder reserved matters require the prior written approval of Alphawave or at least one of the Directors
nominated by Alphawave to be passed. As any additional capital contribution requires the prior written approval of Alphawave,
the Group’s participation in future financing rounds is discretionary and therefore the Group has no capital commitments in
relation to WiseWave.
WiseWave does not currently anticipate requiring the maximum amount stated in the shareholders’ agreement and is likely to
undertake an external financing round in the medium term. If such external financing round were to occur, the Group’s interest
in WiseWave would be diluted.
29 Related party transactions
Key management personnel
As defined by IAS 24 Related Party Disclosures, the Group’s key management personnel are the Directors of the Company (who
are identified on pages 78 to 81), the SVP, Engineering, the SVP, Operations and the Chief Financial Officer.
Expenses recognised in relation to the compensation of the Group’s key management personnel were as follows:

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
Short-term employee benefits | 5,898 | 5,962
Post-employment benefits | 481 | 59
Termination benefits | 25 | —
Share-based payments | 4,774 | 2,208
| 11,178 | 8,229

Post-employment benefits comprise employer contributions payable to defined contribution pension plans.
Termination benefits comprise contractual payments in lieu of notice payable to the former Chief Financial Officer over the
twelve-month period ending in May 2024.
Statutory information about Directors’ remuneration is presented in the Directors’ remuneration report on pages 100 to 121.
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
180 Alphawave IP Group plc | Annual report and financial statements 2023
Other related party transactions
During the year, Group companies entered into the following transactions with related parties who are not members of
the Group.

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
Transactions |  |
Revenue from companies on which a Director is the chairman of the board | 429 | 3,549
Revenue from VeriSilicon | – | 3,270
Revenue from WiseWave, a joint venture, where there is common directorship | 66,879 | 58,207
Operating expenses from a company on which a Director is a director | (133) | —
Costs capitalised as intangible assets from a company on which a Director is a director | (1,000) | (1,200)
| 66,175 | 63,826

1

| Year ended 31 December |
| 2023 | 2022
| US$’000 | US$’000
Balances |  |
Accounts receivable from a company on which a Director is the chairman of the board | 1,650 | 350
Accounts receivable from VeriSilicon | – | 669
Accounts receivable from WiseWave, a joint venture, where there is common directorship | 6,364 | 3,360
Contract asset from companies on which a Director is the chairman of the board 1 | 2,567 | 6,750
Contract asset from WiseWave, a joint venture, where there is common directorship | 40,785 | 20,217
Accrued liabilities with a company on which a Director is a director | (600) | (600)
| 50,766 | 30,746
Contract liabilities from a company on which a Director is the chairman of the board | – | 686
Prepaid expenses with a company in which a Director is a director | (67) | —
| (67) | 686

1
1. Companies on which a Director is the chairman of the board are FLC Technology Group and DreamBig Semiconductor Inc. As John Lofton Holt ceased to
be chairman of the board for Achronix Semiconductor Corporation on 8 July 2021, any transactions with Achronix Semiconductor Corporation have been
excluded for 2023 but they are still included in the 2022 comparatives.
Sales to related parties are made at market prices and in the ordinary course of business. Outstanding balances are unsecured
and settlement occurs in cash. Any estimated credit losses on amounts owed by related parties would not be material and are
therefore not disclosed. This assessment is undertaken at each key reporting period through examining the financial position of
the related party and the market in which the related party operates.
In the interests of transparency, we have opted to disclose VeriSilicon as a related party within this note. However, we have
received advice that VeriSilicon is not a related party as defined by IAS 24 or Listing Rule 11. All revenue from VeriSilicon and
related balances are in respect of transactions signed with VeriSilicon prior to the VeriSilicon reseller agreement moving under
WiseWave as master reseller effective November 2021. All revenue and associated balances in respect of transactions signed
with VeriSilicon since that date are now recognised through the WiseWave joint venture line. Please note this is only relevant for
the 2022 comparative figures as there are no 2023 VeriSilicon figures. This is due to the VARVA agreement signed at the end of
2021 meaning all VeriSilicon revenue and associated balances fall under WiseWave.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 181
30 Business combinations
Acquisition of Precise-ITC, Inc.
Year ended 31 December 2022
On 1 January 2022, we completed the acquisition of 100%
of the equity interests of Precise-ITC, Inc. (‘Precise’), a
developer of Ethernet and Optical Transport Network (OTN)
communications controller IP.
Precise, which is based in Ontario, Canada, brought a team
of talented engineers and additional strategic IP to our
portfolio. We had been working with Precise since 2019 and
our combined IP solutions were already integrated in silicon
products for several of our customers. Now, working as one
team, we have an expanded and vertically integrated portfolio
of communications IPs to service the most advanced global
customers in the networking and data centre markets,
including leading semiconductor companies and hyperscalers.
We acquired Precise for US$8,000,000 on a cash and debt-free
basis. We paid consideration of US$8,470,000 in cash on
completion, including US$470,000 in respect of Precise’s
cash less indebtedness.
Additional consideration of up to US$5,000,000 was payable
contingent on the aggregate value of Precise’s IP Core revenue
and bookings exceeding US$10,000,000 during 2022. Using
an option pricing model, we determined that the fair value
of the contingent consideration at the acquisition date was
US$740,000 and recognised a corresponding liability within
trade and other payables.
Further payments totalling US$11,500,000 may be made
to one of the vendors during the period of up to three
years following completion. Since those further payments
are largely conditional on that individual continuing in the
Group’s employment, they are accounted for as employee
compensation rather than as consideration for the purchase
of the business.
We recognised goodwill of US$3,097,000 on the acquisition
of Precise that was principally attributable to the benefits
expected to be derived from the combination of our
technologies to develop new IP and increase our penetration
of the rapidly growing networking and data centre markets.
From the acquisition date to 31 December 2022, Precise
contributed revenue of US$2,251,000 and net income of
US$2,747,000 to the Group’s results.
Precise’s actual IP Core revenue and bookings during 2022
significantly exceeded our expectations at the acquisition date.
As a result, the full amount of the contingent consideration
of US$5,000,000 became payable to the vendors. As at
31 December 2022, we therefore increased the related
liability to US$5,000,000 and recognised a corresponding
expense of US$4,260,000 in profit or loss (within other
operating expenses).
Year ended 31 December 2023
In May 2023, we paid US$5,000,000 to the vendors in
settlement of the contingent consideration, of which
US$740,000 (its fair value on the acquisition date) was
included in cash flows from investing activities and the balance
of US$4,260,000 was included in cash flows from operating
activities.
Acquisition of OpenFive
Year ended 31 December 2022
On 31 August 2022, we completed the acquisition of 100% of
the equity interests in Open-Silicon, Inc. and related assets and
liabilities that together comprised the OpenFive business unit
of SiFive, Inc. and entered into certain IP licensing agreements
that were integral to the business combination.
OpenFive is a leading provider of high-end SoC IP technologies
globally, with a strong focus on the North American market.
We believe that the acquisition of OpenFive has the following
key benefits: it nearly doubles our connectivity and SoC
IP portfolio and will accelerate our progress in providing
advanced connectivity solutions in 5nm, 4nm, 3nm and
beyond; it will enable us to offer leading-edge data centre
and networking custom silicon solutions and will enhance
our chiplet design capabilities; it significantly expands our
customer base and total addressable market, including a new
hyperscaler customer in North America, providing a broader
platform from which to execute our sales strategy; and it
brought a team of more than 300 people, largely based in India,
that will considerably enhance our delivery capabilities.
We acquired the OpenFive business unit and the related
IP licences for US$210,000,000 on a cash and debt-free
basis. We paid consideration of US$203,636,000 in cash
on completion, after deducting US$6,364,000 in respect of
OpenFive’s estimated cash, indebtedness and working capital.
It was envisaged in the Stock and Asset Purchase Agreement
that Alphawave may make an election under section 338 of
the US Internal Revenue Code of 1986 to treat the purchase
of OpenFive as an asset acquisition for US federal income
tax purposes. If such an election is made, the tax base of the
assets acquired would be ‘stepped-up’ to their fair values on
the acquisition date, enabling the purchaser to claim higher
income tax deductions for those assets. On the other hand,
there is usually an increase in the income tax payable by the
vendor and the Stock and Asset Purchase Agreement required
Alphawave to compensate the vendor for the additional US
income tax expense that it may incur if a section 338 election
were made.
At the time the Directors approved the Group’s 2022 accounts,
we had made a section 338 election but were awaiting the
final calculation of its financial effect and any amount payable
to the vendor. We therefore took no account of the section
338 election in determining the purchase consideration and
OpenFive’s deferred tax assets and liabilities in the purchase
price allocation that were reflected in the Group’s 2022
accounts.
Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
182 Alphawave IP Group plc | Annual report and financial statements 2023
Consequently, the purchase price allocation was provisional in
respect of any adjustments that may arise from the finalisation
of OpenFive’s cash, indebtedness and working capital on
completion and the finalisation of the financial effect of the
section 338 election. On that basis, we recognised provisional
goodwill of US$182,158,000 on the acquisition of OpenFive
that is principally attributable to the assembled workforce,
the benefits expected to be derived from the combination of
our technologies to enhance our offering of advanced custom
silicon solutions and further increases in our penetration of the
rapidly growing networking and data centre markets.
From the acquisition date to 31 December 2022, OpenFive
contributed revenue of US$70,827,000 and a net loss of
US$11,717,000 to the Group’s results. If we had acquired
OpenFive on 1 January 2022, we estimate that the Group’s
revenue for 2022 would have been US$75,847,000 higher but
its net loss for 2022 would have been US$13,554,000 greater.
Year ended 31 December 2023
We finalised the financial effect of the section 338 election
in August 2023. As a result, we retrospectively adjusted the
purchase price allocation as follows:
> to derecognise deferred tax liabilities of US$15,860,000 that
were initially recognised in respect of identifiable intangible
assets that became deductible for US federal income tax
purposes as a result of the Section 338 election; and
> to increase the purchase consideration to reflect the
tax adjustment amount of US$5,610,000 payable to
compensate the vendor for the additional income tax
payable as a consequence of the section 338 election.
We paid the tax adjustment amount to SiFive Inc. in
October 2023.
As a result of these adjustments, the goodwill recognised on
the acquisition was reduced by US$10,250,000. We have not
restated the Group’s income tax expense for 2022 to reflect
the retrospective application of the ‘stepped up’ tax base of the
assets acquired because the effect was immaterial.
A binding arbitration decision was reached in December 2023
regarding OpenFive’s cash, indebtedness and working capital
on completion and the vendor paid the resulting purchase price
adjustment of US$12,437,000 to Alphawave in January 2024.
At the end of August 2023, (i.e. at the end of the measurement
period allowed by IFRS 3), it was unclear what the outcome of
the dispute proceedings would be.
New information was obtained about facts and circumstances
that existed at the acquisition date during the arbitration
process and within the measurement period and therefore
the provisional amounts recognised at the acquisition
date have been adjusted accordingly. With the arbitration
process concluding shortly after the end of the measurement
period, management determined that the best estimate of
the outcome as at the end of the measurement period was
that the consideration would be retrospectively reduced by
US$12,437,000.
In the restated 2022 balance sheet, we have therefore reduced
goodwill by US$12,437,000 and recognised a receivable of
US$12,437,000.
Acquisition of Banias Labs
Year ended 31 December 2022
On 12 October 2022, we completed the acquisition of 100% of
the equity interests of Solanium Labs Ltd (Solanium), a leading
optical Digital Signal Processing (DSP) chip developer that
trades under the name Banias Labs.
Banias Labs is based near Tel Aviv, Israel and brought a team
of about 50 people, the majority of whom are engaged in
research and development. Alongside the acquisition of Banias
Labs, we entered into a non-binding, multi-year purchasing
framework with a leading North American hyperscaler that
proposes a multi-year roadmap for Alphawave to develop
and sell a portfolio of optical products and DSPs, including
coherent DSP technology from Banias Labs, with sales
potentially ramping to over US$300m. We consider that the
acquisition of Banias Labs has the following key benefits: it
brings silicon-proven optical DSP technology, expanding our
product portfolio and strengthening our product roadmap;
it will expand Alphawave’s addressable market and deepen
our commercial partnership with a leading North American
hyperscaler; and it will enable us to target the growing
opportunity to use coherent optical technology within data
centres and in other shorter reach applications.
We purchased all of Banias Labs’ outstanding issued common
and preferred shares and all outstanding unexercised options
over its common shares for US$240,000,000 on a cash
and debt-free basis. We paid US$244,955,000 in cash on
completion including US$4,955,000 in respect of Banias
Labs’ estimated cash, indebtedness and working capital.
We paid US$24,300,000 of the initial consideration into an
escrow fund that is available to settle any valid claims that we
may make in relation to the representations, warranties and
indemnities that were provided to us by the sellers. We funded
the acquisition from existing cash balances and the proceeds
of the US$210.0m Senior Secured Credit Facilities, comprising
a five-year US$110.0m Revolving Credit Facility and a five-year
US$100.0m Term Loan, that we obtained in October 2022.
On completion, all outstanding unvested employee options
over Banias Labs’ common shares were converted into rights
to receive future cash payments, which are generally subject
to the vesting schedule and other terms (including a service
condition) that governed the options that they replaced.
We determined that the fair value of the deferred cash
rights on the acquisition date was US$31,013,000, of which
US$8,804,000 was attributable to employee service rendered
before the acquisition date and is therefore accounted
for as consideration. We are recognising the balance of
US$22,209,000 as an employee compensation expense over
the remaining vesting periods of the deferred cash rights which
extend to August 2026. The amount recognised as an expense,
shown as ‘Compensation element of Banias Labs deferred
cash rights’ in note 6, in 2023 was US$8,352,000 and in 2022
was US$1,702,000.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 183
30 Business combinations continued
Acquisition of Banias Labs continued
Year ended 31 December 2022 continued
At the time the Directors approved the Group’s 2022 accounts, we had completed the purchase price allocation, except for
making any adjustments arising from the finalisation of Banias Labs’ cash, indebtedness and working capital on completion.
On that basis, we recognised provisional goodwill of US$146,585,000 on the acquisition that is principally attributable to
the assembled workforce and the benefits expected to be derived from the future development of new connectivity product
offerings for the rapidly growing networking and data centre markets.
Since its key future products are under development, Banias Labs does not yet generate any revenue. From the acquisition date
to 31 December 2022, Banias Labs contributed a net loss of US$481,000 to the Group’s results. If we had acquired Banias Labs
on 1 January 2022, we estimate that the Group’s net loss for 2022 would have been US$12,388,000 greater.
Year ended 31 December 2023
We have not yet agreed Banias Labs’ cash, indebtedness and working capital on completion with the vendors, but do not expect
there to be any material adjustments. Since the measurement period allowed for finalising the purchase price allocation expired
in October 2023, any future adjustments will be recognised in profit or loss.
Assets acquired and liabilities assumed
We have finalised the allocation of the purchase consideration to the identifiable assets and liabilities of the businesses
acquired at their respective acquisition dates and goodwill as follows:

| Precise-ITC | OpenFive | Banias Labs | Total
| US$’000 | US$’000 | US$’000 | US$’000
Assets acquired |  |  |  |
Cash and cash equivalents | 803 | 14,503 | 9,131 | 24,437
Trade and other receivables | 269 | 38,451 | 1,256 | 39,976
Inventories | — | 14,671 | — | 14,671
Technology/IP | 7,800 | 30,100 | 83,900 | 121,800
Customer relationships | — | 25,700 | — | 25,700
Other intangibles | — | 6,573 | — | 6,573
Intangible assets | 7,800 | 62,373 | 83,900 | 154,073
Property and equipment | 52 | 813 | 1,702 | 2,567
Other assets | — | 1,667 | 1,119 | 2,786
Total assets acquired | 8,924 | 132,478 | 97,108 | 238,510
Liabilities assumed |  |  |  |
Trade and other payables | (70) | (40,924) | (2,073) | (43,067)
Contract liabilities | (1,120) | (40,241) | — | (41,361)
Deferred tax liabilities | (1,621) | — | (13,613) | (15,234)
Other liabilities | — | (1,538) | (5,261) | (6,799)
Total liabilities | (2,811) | (82,703) | (20,947) | (106,461)
Net identifiable assets acquired | 6,113 | 49,775 | 76,161 | 132,049
Goodwill arising on acquisition | 3,097 | 159,471 | 146,585 | 309,153
Consideration | 9,210 | 209,246 | 222,746 | 441,202
Purchase consideration was as follows: |  |  |  |
Cash paid on completion | 8,470 | 203,636 | 222,746 | 434,852
Purchase price adjustment | — | 5,610 | — | 5,610
Contingent consideration | 740 | — | — | 740
Consideration | 9,210 | 209,246 | 222,746 | 441,202

Notes to the consolidated financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
184 Alphawave IP Group plc | Annual report and financial statements 2023
We engaged qualified external experts to support the identification and measurement of the identifiable assets acquired and
liabilities assumed. Identifiable intangible assets comprised developed technology/IP, customer relationships and third-party IP
licences. We determined the fair values of the acquired technology/IP intangible assets using the multi-period excess earnings
method (MEEM), the fair value of the customer relationships using the MEEM and the fair value of the third-party IP licences
using the cost savings approach.
Trade and other receivables are stated at their gross contractual amounts receivable, which are considered to be reflective
of their fair values. At the acquisition dates, management expected all of the contractual cash flows from trade and other
receivables to be collected.
As a consequence of our having made the section 338 election, goodwill recognised on the acquisition of OpenFive is
deductible for tax purposes. Otherwise, none of the goodwill recognised on business combinations completed during 2022
is deductible for tax purposes.
During 2023, we incurred acquisition-related costs of US$831,000 (2022: US$14,415,000) (included in other operating
expenses).
Cash flows in relation to business combinations
During the years ended 31 December 2023 and 2022, the cash outflow on the purchase of businesses included in cash flows
from investing activities was as follows:

| 2023 | 2022
| US$’000 | US$’000
Cash paid on completion | — | 434,852
Purchase price adjustment | 5,610 | —
Contingent consideration | 740 | —
Consideration paid | 6,350 | 434,852
Cash and cash equivalents acquired | — | (24,437)
Cash outflow on purchase of businesses, net of cash acquired | 6,350 | 410,415

Contingent consideration of US$5,000,000 paid in 2023 in relation to the acquisition of Precise-ITC was higher than our
estimate at the acquisition date and the excess of US$4,260,000 is therefore included within cash flows from operating
activities.
31 Events after the reporting period
There are no events after the reporting period to report.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 185
Alternative performance measures
Introduction
Management uses a number of measures to assess the Group’s financial performance. We consider certain of these measures
to be particularly important and identify them as ‘key performance indicators’ (KPIs). We have identified the following financial
measures as KPIs: revenue; bookings; backlog (excluding royalties); adjusted EBITDA; and cash generated from operations.
Certain of these measures are non-IFRS measures because they exclude amounts that are included in, or include amounts that
are excluded from, the most-directly comparable measure calculated and presented in accordance with IFRS or are calculated
using financial measures that are not calculated in accordance with IFRS. We do not regard non-IFRS measures as a substitute for,
or superior to, the equivalent IFRS measures. Non-IFRS measures presented by Alphawave may not be directly comparable with
similarly titled measures presented by other companies.
Bookings and backlog
Management monitors bookings and backlog as indicators of future revenue from contracts with customers.
Bookings
Bookings is a non-IFRS measure and represents legally binding and largely non-cancellable commitments by customers. Bookings
comprise licence fees, non-recurring engineering support, orders for silicon products, financing components and estimated future
royalties (based on contractually committed royalty prepayments or on volume estimates provided by customers).
Bookings are recorded at the point the contract has been signed by both Alphawave and the customer. These are released to
the market each quarter within our quarterly trading update. Infrequently, customers request to cancel bookings. At the time of
cancellation, these are recorded as debookings after taking into account any pertinent cancellation charges.
Bookings during the year were as follows:
Year ended 31 December
2023
US$m
2022
US$m
Preliminary bookings (including royalties) 364.4 247.6
Adjustment 19.5 (19.5)
Bookings
1
383.9 228.1
Royalties — (15.1)
Bookings (excluding royalties) 383.9 213.0
1. 2022 bookings exclude a contract of US$19.5m that was signed by the acquired OpenFive business, but not considered a booking until 2023 when project
viability was established.
Backlog
Backlog is a non-IFRS measure that represents cumulative bookings (excluding royalties) that have not yet been recognised as
revenue and which we expect to be recognised in future periods.
Backlog at the end of the year is calculated based on our backlog as at the beginning of the year, plus new bookings during the
year and backlog acquired in business combinations, less revenue recognised during the year.
Movements on backlog during the year were as follows:
Year ended 31 December
2023
US$m
Restated
1
2022
US$m
Backlog at the beginning of the year 379.7 183.8
Add: Bookings during the year (excluding royalties) 383.9 213.0
Add: Backlog acquired in business combinations — 168.3
Less: Net adjustments/debookings during the year (excluding royalties) (87.3) —
Less: Revenue recognised during the year (excluding royalties) (321.4) (185.4)
Backlog at the end of the year 354.9 379.7
1. 2022 opening backlog figure restated to include a WiseWave booking of US$15.2m previously omitted.
Our closing backlog at the end of 2023 is US$354.9m (2022: US$379.7m) and includes US$87.3m of net adjustments/
debookings. Nearly half of this balance includes debookings related to the acquired backlog from OpenFive.
186 Alphawave IP Group plc | Annual report and financial statements 2023
EBITDA
Earnings before interest, taxation, depreciation and amortisation (EBITDA) is a non-IFRS measure that we consider is useful
to investors and other users of our financial information in evaluating the sensitivity of the Group’s trading performance to
changes in variable operating expenses.
Joint venture profit or loss
We also exclude the costs of our joint venture in WiseWave from EBITDA because we consider that, as a start-up, they hinder
the comparison of the Group’s trading performance from one period to another or with other businesses.
EBITDA may be reconciled to net income/(loss) for the period determined in accordance with IFRS as follows:
Year ended 31 December
2023
US$’000
2022
US$’000
Net loss (51,002) (1,086)
Add/(deduct):
Finance income (3,448) (1,684)
Finance expense 8,836 3,588
Loss from joint venture 14,730 18,481
Income tax expense 11,532 18,328
Depreciation of property and equipment – owned 11,212 2,472
Depreciation of property and equipment – leased 4,612 3,036
Amortisation of intangible assets 13,294 6,159
EBITDA 9,766 49,294
Adjusted measures of profitability
We report adjusted measures of profitability because we believe that they provide both management and investors with useful
additional information about the financial performance of our business. Adjusted measures of profitability are non-IFRS
measures that represent the equivalent IFRS measures adjusted for specific items that we consider hinder comparison of
theGroup’s financial performance from one period to another or with other businesses.
Adjusted measures of profitability exclude items that can have a significant effect on profit or loss. We compensate for this
limitation by monitoring separately the items that are excluded from the equivalent IFRS measures in calculating the adjusted
measures.
We outline below the specific items of income and expenses that are recognised in profit or loss in accordance with IFRS but
are excluded from the Group’s adjusted results.
Business combinations
We exclude those effects of applying the acquisition method of accounting under IFRS that we consider are not indicative of
the Group’s trading performance, including the accounting for transaction costs; the recognition of certain elements of the
purchase price as compensation expense; and the recognition of remeasurements of contingent consideration in profit or loss.
During the periods under review, we excluded from our adjusted results the following items arising from the accounting for
business combinations:
> acquisition-related costs;
> the element of the value of the deferred cash rights granted to employees of Banias Labs to replace the unvested employee
share options at the acquisition date that is accounted for as compensation expense rather than as consideration;
> the remeasurement of the contingent consideration payable for Precise-ITC; and
> the purchase price adjustment receivable from the vendor of Open Silicon that was recognised as other operating income
rather than as an adjustment to the purchase price because it was agreed after the end of the measurement period.
We also exclude from our adjusted measures the amortisation of identifiable intangible assets acquired in business
combinations in order that the performance of our business may be compared more fairly with that of businesses that have
developed on an organic basis.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 187
Alternative performance measures continued
Adjusted measures of profitability continued
Business combinations continued
Integration costs
We exclude the costs of integrating acquired businesses because we consider that they hinder the comparison of the Group’s
trading performance from one period to another or with other businesses.
Share-based payments and related expenses
We exclude the compensation expense recognised in relation to options and RSUs granted under the Company’s share-based
payment plans because the awards are equity-settled and their effect on shareholders’ returns is already reflected in diluted
earnings per share measures. We additionally exclude the expense for payroll taxes payable on the exercise or vesting of the
awards because the expense fluctuates according to the Company’s share price at the exercise or vesting date and the effect
on profit or loss is therefore not necessarily indicative of the Group’s trading performance.
Currency translation differences
We exclude gains and losses that arise at entity level on the translation of foreign currency-denominated net cash and
borrowings into the entity’s functional currency. Such gains and losses can be significant and are not representative of the
Group’s trading performance.
Income tax effect of adjustments
Where relevant, we calculate the income tax effect of adjustments by considering the specific tax treatment of each item and by
applying the relevant statutory tax rate to those items that are taxable or deductible for tax purposes.
Adjusted EBITDA
Adjusted EBITDA may be reconciled to EBITDA as follows:
Year ended 31 December
2023
US$’000
2022
US$’000
EBITDA 9,766 49,294
Add/(deduct):
Acquisition-related costs 831 12,713
Compensation element of Banias Labs deferred cash rights 8,352 1,703
Remeasurement of contingent consideration payable for Precise-ITC — 4,260
Share-based compensation expense 40,691 15,695
Currency translation (loss)/gain 2,983 (36,838)
Adjusted EBITDA 62,623 46,827
188 Alphawave IP Group plc | Annual report and financial statements 2023
Adjusted earnings per share
We monitor basic and diluted earnings per share (EPS) on an IFRS basis and on an adjusted basis. We consider that adjusted
EPS measures are useful to investors in assessing our ability to generate earnings and provide a basis for assessing the value of
the Company’s shares (for example, by way of price earnings multiples).
Adjusted net income/(loss) for calculating adjusted EPS measures may be reconciled to net income/(loss) determined in
accordance with IFRS as follows:
Year ended 31 December
2023
US$’000
2022
US$’000
Net loss (51,002) (1,086)
Add/(deduct):
Acquisition-related costs 831 12,713
Compensation element of Banias Labs deferred cash rights 8,352 1,703
Remeasurement of contingent consideration payable for Precise-ITC — 4,260
Amortisation of acquired intangible assets 12,657 5,519
Share-based compensation expense 40,691 15,695
Currency translation (loss)/gain 2,983 (36,838)
Tax effect of above adjustments (2,623) 4,708
Adjusted net income 11,889 6,674
Adjusted basic and diluted earnings per share were as follows:
Year ended 31 December
2023
US$ cents
2022
US$ cents
Adjusted basic earnings per share 1.69 0.98
Adjusted diluted earnings per share 1.69 0.98
Adjusted basic and diluted earnings per share have been calculated by taking the adjusted net income/(loss) for the year and
dividing it by the weighted average number of common shares that are used in calculating the equivalent measures under IFRS
as presented in note 27 to the consolidated financial statements.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 189
Company balance sheet
As at 31 December
Note
2023
US$’000
2022
US$’000
Assets
Current assets
Cash and cash equivalents 5 16,911 125,729
Amounts owed by Group undertakings 6 21,404 14,769
Income tax receivables 2,417 364
Other receivables 7 11,888 14,194
Total current assets 52,620 155,056
Non-current assets
Investments in subsidiaries 8 346,163 280,373
Other investments 1,019 —
Amounts owed by Group undertakings 6 366,304 260,011
Other receivables 7 6,392 17,091
Total non-current assets 719,878 557,475
Total assets 772,498 712,531
Liabilities and equity
Current liabilities
Trade and other payables 9 8,940 12,400
Amounts owed to Group undertakings — —
Income tax payable — 145
Loans and borrowings 10 5,625 5,000
Total current liabilities 14,565 17,5 4 5
Non-current liabilities
Trade and other payables 9 1,775 4,423
Loans and borrowings 10 213,125 203,750
Total non-current liabilities 214,900 208,173
Total liabilities 229,465 225,718
Share capital 11 10,011 9,751
Share premium account 11 1,638 775
Merger reserve 11 (777,751) (777,751)
Share-based payment reserve 11 41,595 17,909
Currency translation reserve 11 (52,087) (79,706)
Retained earnings 1,319,627 1,315,835
Total equity 543,033 486,813
Total liabilities and equity 772,498 712,531
As permitted by section 408 of the Companies Act 2006, the Company’s income statement is not presented in these financial
statements. The Company’s loss for the financial year was US$13,213,000 (2022: profit of US$18,407,000).
The financial statements on pages 190 and 191 were approved and authorised for issue by the Board of Directors on
23April2023 and were signed on its behalf by:
Tony Pialis
Director
Company registered number: 13073661
The notes on pages 192 to 197 form part of these financial statements.
190 Alphawave IP Group plc | Annual report and financial statements 2023
Company statement of changes in equity
Note
Ordinary
share
capital
US$’000
Share
premium
account
US$’000
Merger
reserve
US$’000
Share-based
payment
reserve
US$’000
Currency
translation
reserve
US$’000
Retained
earnings
US$’000
Total
equity
US$’000
As at 1 January 2022 9,399 — (777,751) 4,497 (23,486) 1,295,391 508,050
Profit for the year — — — — — 18,407 18,407
Other comprehensive expense — — — — (56,220) — (56,220)
Total comprehensive income
for the year — — — — (56,220) 18,407 (37,813)
Settlement of share awards:
– Issue of ordinary shares 11 106 775 — — — — 881
– Effect of proceeds below
nominal value 246 — — (246) — — —
– Transfer of cumulative
compensation expense on
settled awards — — — (2,037) — 2,037 —
Share-based compensation
recognised in the year 12 — — — 15,695 — — 15,695
Other changes in equity 352 775 — 13,412 — 2,037 16,576
As at 31 December 2022 9,751 775 (777,751) 17,909 (79,706) 1,315,835 486,813
Loss for the year — — — — — (13,213) (13,213)
Other comprehensive income — — — — 27,619 — 27,619
Total comprehensive income
for the year — — — — 27,619 (13,213) 14,406
Settlement of share awards:
– Issue of ordinary shares 11 260 863 — — — — 1,123
– Effect of proceeds below
nominal value — — — — — — —
– Transfer of cumulative
compensation expense on
settled awards — — — (17,005) — 17,005 —
Share-based compensation
recognised in the year 12 — — — 40,691 — — 40,691
Other changes in equity 260 863 — 23,686 — 17,005 41,814
As at 31 December 2023 10,011 1,638 (777,751) 41,595 (52,087) 1,319,627 543,033
The notes on pages 192 to 197 form part of these financial statements.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 191
Notes to the Company financial statements
FOR THE YEAR ENDED 31 DECEMBER 2023
1 Background
Reporting entity
Alphawave IP Group plc (the ‘Company’) is a public limited
company that is incorporated and domiciled in England and
Wales and whose shares are listed on the main market of
the London Stock Exchange. The address of the Company’s
registered office is 6th Floor, 65 Gresham Street, London,
EC2V7NQ, United Kingdom.
The Company is the ultimate parent of a group of companies
that develops and markets high-speed connectivity solutions
for application in data centres, data networking, data
storage, artificial intelligence, 5G wireless infrastructure
andautonomous vehicles.
Statement of compliance
The Company’s separate financial statements on pages
190 and 191 have been prepared in accordance with FRS
101 Reduced Disclosure Framework and those parts of
the Companies Act 2006 that are applicable to companies
reporting under FRS 101. Accordingly, the Company’s
separate financial statements comply with the recognition and
measurement requirements of IFRS as adopted for use in the
United Kingdom as at 31December 2023 but they exclude
certain disclosures that would otherwise be required under that
body of accounting standards.
Basis of preparation
The Company’s separate financial statements have been
prepared on a going concern basis and in accordance with the
historical cost convention.
The Company’s material accounting policies are set out in
note2.
Going concern
At the time of approving the financial statements, the Directors
are required to form a judgement as to whether the Company
has adequate resources to continue in operational existence
for the foreseeable future. In forming their judgement, the
Directors consider the Company’s current financial position,
the Group’s medium-term plan and its budget for the next
financial year, and the principal risks and uncertainties that
itfaces.
As at 31 December 2023, the Company had cash and cash
equivalents of US$16.9m and had bank borrowings totalling
US$218.8m, comprised of a Term Loan of US$93.8m and
US$125.0m drawn against a US$125.0m Revolving Credit
Facility. Both the Term Loan and the Revolving Credit Facility
are scheduled to mature in the fourth quarter of 2027.
The Directors based their going concern assessment on
the base case scenario and a severe but plausible downside
scenario over the going concern period as follows:
> Group revenue forecasts are materially reduced by 25%
and the interest rate on the Group’s debt is 200 basis
points higher than forecast, with a controllable mitigating
reduction of 10% of operating expenditure and a reduction
of 50% in laboratory and prototyping operating and capital
expenditure.
Under the base case and the downside scenario, the analysis
demonstrates the Group can continue to maintain sufficient
liquidity headroom with no default on debt covenants.
Following consideration of the Company’s liquidity position and
prospects for the year ahead, the Directors have a reasonable
expectation that the Company has adequate resources for a
period of at least twelve months from the date of approval of
the financial statements and have therefore assessed that the
going concern basis of accounting is appropriate in preparing
the financial statements.
Use of estimates
The preparation of financial statements requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities, as well as disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and
expenses during the reporting period. Actual outcomes could
differ from those estimates and assumptions and affect the
Company’s results in future periods.
Presentation currency
The Directors consider that the Company’s functional
currency is pound sterling, but present the Company’s
financial statements in US dollars for comparability with the
consolidated financial statements. All US dollar amounts are
inthousands (US$’000), except where stated otherwise.
192 Alphawave IP Group plc | Annual report and financial statements 2023
Disclosure exemptions utilised under FRS 101
In preparing the Company’s separate financial statements,
theDirectors utilised the following exemptions from the
disclosure requirements of IFRS adopted for use in the United
Kingdom that are available to them under FRS 101:
> paragraphs 45(b) (number and weighted average exercise
prices of share options) and 46 to 52 (determination of fair
value of options and awards granted and financial effect
of share-based compensation) of IFRS 2 Share-based
Payment;
> the requirements of IFRS 7 Financial Instruments –
Disclosures;
> paragraphs 91 to 99 (disclosure requirements) of IFRS 13
Fair Value Measurement;
> paragraph 38 of IAS 1 Presentation of Financial Statements
with regard to comparative information requirements in
respect of paragraph 79(a)(iv) of IAS 1 (reconciliation of
the number of the Company’s shares outstanding at the
beginning and end of the period);
> paragraphs 10(d) (statement of cash flows), 16 (statement
of compliance with IFRS), 38 (A to D) (comparative
information), 111 (statement of cash flows) and 134 to 136
(disclosures about capital) of IAS 1 Presentation of Financial
Statements;
> IAS 7 Statement of Cash Flows;
> paragraphs 30 and 31 of IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors (discussion of
IFRSs issued but not yet adopted by the Company); and
> paragraphs 17 and 18A (compensation of key management
personnel) and paragraph 19 (disclosure of transactions
with wholly owned subsidiaries) of IAS 24 Related Party
Transactions.
Accounting standards adopted during the year
During the year, the Company adopted the following new and
amended accounting standards, none of which had a material
impact on its results or financial position:
> IFRS 17 Insurance Contracts;
> International Tax Reform – Pillar Two Model Rules
(Amendments to IAS 12);
> Definition of Accounting Estimates (Amendments to IAS 8);
> Disclosure of Accounting Policies (Amendments to IAS 1
and IFRS Practice Statement 2); and
> Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12).
An outline of the changes introduced is provided in note 1 to
the consolidated financial statements.
2 Material accounting policies
Investments in subsidiaries
A subsidiary is an entity that is controlled, either directly
or indirectly, by the Company. Control exists when the
Company is exposed, or has rights, to variable returns from its
involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity
that significantly affect its returns. Generally, such power exists
where theCompany holds a majority of the voting rights of an
entity. Each of the Company’s subsidiaries is wholly owned.
Investments in subsidiaries represents the Company’s directly
owned interests in its subsidiaries, i.e. does not include any
interests that are owned by intermediate holding companies.
Investments in subsidiaries are carried at cost, less impairment
losses, if any.
Foreign currency translation
Translation into the Company’s functional currency
Transactions denominated in foreign currencies are recorded
in pounds sterling at the exchange rate ruling at the date of
the transaction. Monetary assets and liabilities denominated
in foreign currencies are translated into pounds sterling at
the exchange rate ruling at the end of the reporting period.
Allresulting currency translation differences are recognised in
profit or loss. Non-monetary assets and liabilities denominated
in foreign currencies are not retranslated subsequent to initial
recognition.
Translation into the Company’s presentation currency
Income and expenses presented in profit or loss or other
comprehensive income are translated from pounds sterling
into US dollars at the average exchange rate for the reporting
period. Assets and liabilities are translated from pounds
sterling into US dollars at the exchange rate ruling at the end
of the reporting period. All resulting currency translation
differences are recognised in other comprehensive income
and taken to the currency translation reserve.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 193
Notes to the Company financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
2 Material accounting policies continued
Financial instruments
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on
hand and bank deposits with an original maturity of 90 days
or less. Cash and cash equivalents are measured at fair value
on initial recognition, less an allowance for expected credit
losses, and subsequently measured at amortised cost using
the effective interest method.
Amounts owed by Group undertakings
Amounts owed by Group undertakings are initially measured
at fair value, less an allowance for expected credit losses,
and are subsequently measured at amortised cost using the
effective interest method.
Other receivables
Other receivables are measured at fair value on initial
recognition, less an allowance for expected credit losses,
andsubsequently measured at amortised cost.
Impairment of financial assets
We recognise an allowance for credit losses in respect of
financial assets that is measured as the amount of expected
credit losses over the next twelve months. If, however, the risk
of default has increased significantly since initial recognition,
wemeasure the allowance as the amount of lifetime expected
credit losses.
If a financial asset has no realistic prospect of recovery, it
is written off, firstly against any allowance made and then
directly to profit or loss. We consider that a financial asset is
not recoverable if the balance owing is 180 days past due and
information obtained from the counterparty and other external
factors indicate that the counterparty is unlikely to pay its
creditors in full. Any subsequent recoveries are credited to
profit or loss.
Trade and other payables
Trade payables represent the value of goods and services
purchased from suppliers for which payment has not
been made. Trade and other payables are measured at fair
value oninitial recognition and subsequently measured at
amortised cost.
Loans and borrowings
Bank and other loans are measured at fair value on initial
recognition, less any directly attributable transaction costs,
and are subsequently measured at amortised cost using the
effective interest method.
If a loan or borrowing is subject to covenants and the
Company is in breach of one or more of the covenants at the
end of the reporting period, the carrying amount of the liability
is classified wholly as a current liability, irrespective of any
element that would otherwise be payable more than one year
after the end of the reporting period.
Facility arrangement costs are amortised as a finance
expense over the term of the facility.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the
net amount presented in the balance sheet where there is
a currently enforceable legal right to offset the recognised
amounts and management intends either to settle on
a net basis or to realise the asset and settle the liability
simultaneously.
Income taxes
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the profit and loss account
except to the extent that it relates to items recognised directly
in equity or other comprehensive income, in which case it is
recognised directly in equity or other comprehensive income.
The Company has determined that the global minimum top-up
tax – which is required to pay under Pillar Two legislation – is
an income tax in the scope of IAS 12. The Company has applied
a temporary mandatory relief from deferred tax accounting for
the impacts of the top-up tax and accounts for it as a current tax
when it is incurred.
Deferred tax is tax expected to be payable or recoverable on
temporary differences between the carrying amount of an asset
or liability in the financial statements and its tax base used in the
computation of taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences. Deferred tax
assets are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable profits
will be available in the future against which they can be utilised.
Where there is uncertainty concerning the tax treatment of an
item or a group of items, the amount of current and deferred tax
recognised is based on management’s expectation of the likely
outcome of the examination of the uncertain tax treatment by
the relevant tax authorities.
Current tax and deferred tax is recognised in profit or loss unless
it relates to an item that is recognised in the same or a different
period outside profit or loss, in which case the related tax is also
recognised outside profit or loss, either in other comprehensive
income or directly in equity.
194 Alphawave IP Group plc | Annual report and financial statements 2023
Share-based payments
As described in note 27 to the consolidated financial statements, the Company operates share-based compensation plans
under which it grants options and RSUs over its ordinary shares to certain of its own employees and those of its subsidiaries.
Awards granted under the existing plans are classified as equity-settled awards.
For awards granted to its own employees, the Company recognises a compensation expense that is based on the fair value
of the awards measured at the grant date using an appropriate valuation model. For awards granted to the employees of a
subsidiary, the Company recognises the compensation expense recognised by the subsidiary, less any amounts charged to
the subsidiary, as a capital contribution to the subsidiary. In either case, the Company recognises a corresponding credit to the
share-based payments reserve within equity.
In the event of the cancellation of an award by the Company or by the participating employee, the compensation expense that
would have been recognised over the remainder of the vesting period is recognised immediately in profit or loss or as a capital
contribution to the relevant subsidiary.
3 Directors and employees
The average number of people employed by the Company during the year was ten (2022: seven).
Statutory information about Directors’ remuneration is set out in the Directors’ remuneration report on pages 100 to 121.
4 Auditor’s remuneration
Fees payable to the Company’s auditor, KPMG LLP, are set out in note 8 to the consolidated financial statements.
5 Cash and cash equivalents
As at 31 December
2023
US$’000
2022
US$’000
Cash at bank and in hand 16,911 125,729
Short-term deposits – –
Total 16,911 125,729
6 Amounts owed by Group undertakings
Current amounts owed by Group undertakings represent balances arising from normal course trading activities that are
expected to be recovered within a year.
Non-current amounts owed by Group undertakings represent balances arising from normal course trading activities and loans
to non-trading entities in respect of our acquisition of OpenFive and equity investment in WiseWave that are not expected to be
recovered within a year.
7 Other receivables
As at 31 December
2023
US$’000
2022
US$’000
Current
Restricted cash 11,611 13,922
Prepayments 277 272
11,888 14,194
Non-current
Restricted cash 6,392 17,091
6,392 17,091
Restricted cash comprises amounts held by third-party paying agents in respect of deferred consideration and future
compensation amounts payable to employees of Banias Labs conditional on their remaining in the Group’s employment during
the respective vesting periods, the last of which expires during 2026. Cash held by the paying agent in relation to amounts that
are forfeited by the employees will be returned to the Company.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 195
Notes to the Company financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
8 Investments in subsidiaries
Movements in the carrying amount of interests in subsidiaries owned directly by the Company were as follows:
US$’000
As at 1 January 2022 22,391
Additions 240,135
Capital contributions – Share-based payments 15,695
Deferred cash rights 1,702
Foreign exchange 450
As at 31 December 2022 280,373
Capital contributions – Share-based payments 39,757
Deferred cash rights 8,352
Foreign exchange 17,681
As at 31 December 2023 346,163
During 2022, the Company acquired 100% of the share capital of Solanium Labs Ltd (Banias Labs).
Details of the Company’s subsidiaries as at 31 December 2023 are set out on page 198.
9 Trade and other payables
As at 31 December
2023
US$’000
2022
US$’000
Current
Trade payables 1,888 1,302
Other payables 4,823 6,249
Accrued expenses 2,321 4,849
Social security and other taxes (92) —
8,940 12,400
Non-current
Other payables 1,775 4,423
Other payables include US$4.5m (2022: US$10.5m) deferred consideration and compensation payable to employees of Banias Labs.
10 Loans and borrowings
As at 31 December
2023
US$’000
2022
US$’000
Current
Term Loan 5,625 5,000
Non-current
Revolving Credit Facility 125,000 110,000
Term Loan 88,125 93,750
213,125 203,750
196 Alphawave IP Group plc | Annual report and financial statements 2023
In October 2022, the Company entered into a Credit
Agreement with a syndicate of banks that provided it with
aUS dollar-denominated Delayed Draw Term Loan B (‘Term
Loan’) facility of US$100.0m and a multi-currency Revolving
Credit Facility (RCF) of US$125.0m.
In October 2022, the Company drew the Term Loan facility
in full and US$110.0m from the RCF in connection with the
acquisition of Banias Labs. The Company drew the remaining
US$15.0m of the RCF in May 2023.
Details of the facilities, including the repayment schedule
attaching to the Term Loan and the applicable financial
covenants, areset out in note 22 to the consolidated financial
statements.
11 Share capital and reserves
Share capital and share premium account
Details of the Company’s share capital are set out in note 26
tothe consolidated financial statements.
Share capital represents the nominal value of shares in issue.
The share premium account represents the difference
between the nominal value of shares in issue and the fair
value of the consideration received. For 2023 the amount
allocated to the share premium account is US$863,000 (2022:
US$775,000). Theshare premium account is not distributable
but may be used for certain purposes specified by United
Kingdom law, including to write off expenses on any issue
ofshares and to pay up fully paid bonus shares.
Other reserves
Merger reserve
In May 2021, the Company purchased the entire issued
share capital of Alphawave IP Inc., the Group’s former
parentCompany, by way of an exchange of shares in a
Group reorganisation that was accounted for as a merger.
Themerger reserve represents the excess of the nominal
value of the Company’s ordinary shares issued over the
carrying amount of Alphawave IP Inc’s net assets at the
dateof the reorganisation.
Share-based payment reserve
The share-based payment reserve represents the cost
recognised to date in respect of share-based payment awards
that have not been exercised.
Currency translation reserve
The currency translation reserve comprises gains and
losses arising on the translation of the Company’s results
and financial position from its functional currency to its
presentational currency.
Distributable profits
Profits available for distribution by the Company comprise
itsaccumulated realised profits less its accumulated realised
losses, subject to the restriction that a distribution may not
reduce the Company’s net assets below the aggregate of its
called up share capital and its undistributable reserves.
The Directors consider that the Company’s loss as at
31 December 2023 amounted to US$13.2m (2022:
US$18.4mprofit).
12 Share-based compensation
Details of the share-based compensation plans operated by
the Company, together with information about share options
exercised and outstanding, is presented in note 27 to the
consolidated financial statements.
During 2023, the Company recognised an expense of
US$0.9m (2022: US$0.2m) in respect of awards granted to
itsown employees.
13 Events after the reporting period
On 27 February 2024 Alphawave 102022 Limited
wasdissolved.
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 197
Related undertakings
Details of the Company’s related undertakings as at 31 December 2023 are as follows:
Name Registered address Country
Subsidiaries
Alphawave IP Inc. 70 University Ave, 10th Floor, Toronto, Ontario, Canada M5J 2M4 Canada
Alphawave Semi US Corp.
(formerly Alphawave IP Corp.)
1730 N 1st St, Suite 650, San Jose, CA, 95112 United States
(Delaware)
Alphawave IP (BVI) Ltd.
1, 2
Trinity Chambers, PO Box 4301, Road Town, Tortola British Virgin
Islands
Alphawave Call. Inc.
1, 2
70 University Ave, 10th Floor, Toronto, Ontario, Canada M5J 2M4 Canada
Alphawave Exchange Inc. 70 University Ave, 10th Floor, Toronto, Ontario, Canada M5J 2M4 Canada
Alphawave IP Limited
1
21 Avenida da Praia Grande, No 409, Edificio China Law, 21 andar, em, Macau China
Precise-ITC, Inc. 170 University Avenue, 10th Floor, Toronto, Ontario, M5H 3B3 Canada
AWIPInsure Limited
1
1st Floor, Limegrove Centre, Holetown, St. James Barbados
Alphawave Semi International
Corp. (formerly Alphawave
Holdings Corp.)
1
1730 N 1st St, Suite 650, San Jose, CA, 95112 United States
(Delaware)
Alphawave Semi Inc. (formerly
Open-Silicon, Inc.)
490 N McCarthy Blvd #220, Milpitas, CA 95035 United States
(Delaware)
Alphawave Semiconductor Corp
1730 N 1st St, Suite 650, San Jose, CA, 95112 United States
(Delaware)
Alphawave Semi Holding Corp
(formerly Open-Silicon Holding
Corp.)
3rd Floor, Les Cascades, Edith Cavell Street, Port Louis Mauritius
Open-Silicon Development
Corp.
2
490 N McCarthy Blvd #220, Milpitas, CA 95035 United States
(Delaware)
Open-Silicon Engineering, Inc.
2
490 N McCarthy Blvd #220, Milpitas, CA 95035 United States
(Delaware)
Open-Silicon International, Inc.
2
490 N McCarthy Blvd #220, Milpitas, CA 95035 United States
(Delaware)
Open-Silicon Japan
2
c/o Akia Tax Consultants, Shoei Kannai Building, 22, Sumiyoshicho 2-chrome,
Naka-ku, Yokohama, Kanagawa
Japan
Alphawave Semi India Pvt
Ltd (formerly Open-Silicon
Research Private Ltd)
No. 11/1 & 12/1 Maruthi Infotech Centre, 2nd Floor, B-Block, Indiranagar,
Koramangala Intermediate Ring Road, Bangalore – 560 071.
India
Alphawave Semi Nanjing Co
Ltd (formerly Yuanfang Silicon
Technology (Nanjing) Co. Ltd)
Room 101, Building B, No. 300, Zhihui Road, Qilin Science and Technology
Innovation Park, Jiangning District, Nanjing
China
Alphawave Semi Asia Co. Ltd Room 702-703, Building 8, Lane 777, Gaoke East Road, Pudong New Area,
Shanghai
China
Alphawave 102022 Limited
(dissolved)
1,2
65 Gresham Street, 6th Floor, London, England, EC2V 7NQ United
Kingdom
(England &
Wales)
Solanium Labs Ltd
1
24 Hanagar, Hod HaSharon 4527713 Israel
Joint venture
WiseWave Technology Co.,
LTD
1,3
Room 105, No. 6, Baohua Road, Hengqin New District, Zhuhai China
All subsidiaries are wholly owned.
1. Owned directly by Alphawave IP Group plc.
2. Dormant.
3. Joint venture in which the Group has a 42.5% ownership interest and voting rights.
Notes to the Company financial statements continued
FOR THE YEAR ENDED 31 DECEMBER 2023
198 Alphawave IP Group plc | Annual report and financial statements 2023
Appendix
TCFD Compliance Table
Disclosure Response
Governance – Compliant
a. Describe the Board’s oversight of climate-related risks and
opportunities.
Page 46, Governance – page 44
b. Describe management’s role in assessing and managing
climate-related risks and opportunities.
Page 46, Governance – page 44
Strategy – Partially compliant
a. Describe the climate-related risks and opportunities the
organisation has identified over the short, medium and
longterm.
See Risks and Opportunities tables on pages 46-48
b. Describe the impact of climate-related risks and
opportunities on the organisation’s business, strategy and
financial planning.
Dependency on natural, social and human capital – page 48
Strategy – page 44
c. Describe the resilience of the organisation’s strategy, taking
into consideration different climate-related scenarios, including
a 2ºC or lower scenario.
We have not performed a quantitative risk assessment or
climate-related scenario analysis. In 2024 we will evaluate the
additional requirements and associated costs to assess the
resilience of the organisation under different climate-related
scenarios. Following this evaluation we will make a decision on
whether a quantitative risk assessment should be prioritised
and the timing if appropriate.
Risk Management – Compliant
a. Describe the organisation’s processes for identifying and
assessing climate-related risks.
Risk Management – Page 46
b. Describe the organisation’s processes for managing
climate-related risks.
See Risks and Opportunities tables on pages 46-48
c. Describe how processes for identifying, assessing and
managing climate-related risks are integrated into the
organisation’s overall risk management.
Risk Management – Page 46
Metrics and Targets – Compliant
a. Disclose the metrics used by the organisation to assess
climate-related risks and opportunities in line with its strategy
and risk management process.
Metrics and Targets – Page 45
b. Disclose Scope 1, Scope 2, and if appropriate, Scope 3
greenhouse gas (GHG) emissions, and the related risks.
Table – Page 45
c. Describe the targets used by the organisation to manage
climate-related risks and opportunities and performance
against targets.
Metrics and Targets – Pages 45 and 46
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 199
Appendix continued
SASB Table
SASB Topic SASB Code SASB Accounting Metric Disclosure Details Page Number of URL
Greenhouse Gas
Emissions
TC-SC-110a.1
(1) Gross global Scope 1
emissions and (2) amount
of total emissions from
perfluorinated compound
Metric tons (t)
CO-e
Page 45, 2023
Annual report
TC-SC-110a.2 Discussion of long-term
and short-term strategy
or plan to manage Scope
1 emissions, emissions
reduction targets, and an
analysis of performance
against those targets
The Group is putting
in place mitigating
actions to reduce its
environmental impact,
such as avoiding
unnecessary business
travel and purchasing
energy from certified
renewable sources,
where possible.
Pages 44 and 45, 2023
Annual report
Energy
Management in
Manufacturing
TC-SC-130a.1 (1) Total energy
consumed,
(2) percentage grid
electricity,
(3) percentage
renewable
Gigajoules (GJ),
Percentage (%)
We are a fabless
business and outsource
the manufacturing of
semiconductors to the
leading foundries in
the industry. Therefore,
energy management
in manufacturing is not
considered a material
sustainability topic for our
Company.
Energy consumed in our
office buildings is reported
on page 45 of this report.
Water Management TC-SC-140a.1 (1) Total water
withdrawn,
(2) total water
consumed, percentage
of each in regions with
High or Extremely High
Baseline Water Stress
Thousand cubic
metres (m³),
Percentage (%)
We are a fabless
business and outsource
the manufacturing of
semiconductors to the
leading foundries in the
industry. The use of water
is limited to our office
buildings. Therefore,
water management is
not considered a material
sustainability topic for our
Company.
Index only.
200 Alphawave IP Group plc | Annual report and financial statements 2023
SASB Topic SASB Code SASB Accounting Metric Disclosure Details Page Number of URL
Waste Management TC-SC-150a.1 (1) Amount of
hazardous waste from
manufacturing, (2)
percentage recycled
Metric tons (t),
Percentage (%)
We are a fabless
business and outsource
the manufacturing of
semiconductors to the
leading foundries in
the industry. Therefore,
hazardous waste from
manufacturing is not
considered a material
sustainability topic for our
Company.
Index only.
Employee Health and
Safety
TC-SC-320a.1 Description of efforts to
assess, monitor and
reduce exposure of
workforce to human
health hazards
D&A Our H&S rules and
procedures are in strict
compliance with national,
regional and/or local
legislation.
TC-SC-320a.2 Total amount of
monetary losses
as a result of legal
proceedings associated
with employee health
and safety violations
Reporting
currency
In 2023, there were
no legal proceedings
associated with employee
health and safety
violations.
Index only.
Recruiting & Managing
a Global & Skilled
Workforce
TC-SC-330a.1 Percentage of
employees that require a
work visa
Percentage (%) 3.3%
Product Lifecycle
Management
TC-SC-410a.1 Percentage of products
by revenue that contain
IEC 62474 declarable
substance
Percentage (%) The Company provides
material declaration in IPC-
1752 or supplier standard
format upon email request.
Index only.
TC-SC-410a.2 Processor energy
efficiency
at a system level for:
(1) servers,
(2) desktops, and
(3) laptops
Various, by
product
category
We do not disclose
energy efficiency at a
system-level as our IP
and semiconductors
are embedded in our
customers’ products
together with a multitude
of other components of
which we have no control.
Materials Sourcing TC-SC-440a.1 Description of the
management of risks
associated with the use
of critical materials
D&A See page 50 of this report.
Conflict Mineral Policy
available on our website.
Intellectual Property
Protection & Competitive
Behaviour
TC-SC-520a.1 Total amount of
monetary losses
as a result of legal
proceedings associated
with anti-competitive
behaviour regulations
Reporting
currency
In 2023, there were
no legal proceedings
associated with anti-
competitive behaviour
regulations.
Index only.
SASB Table continued
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 201
SASB Topic SASB Code SASB Accounting Metric Disclosure Details Page Number of URL
Recruiting & Managing a
Global & Skilled
Workforce
TC-SI-330a.2. Employee engagement
as a percentage
Percentage (%) 76% response rate to our
second annual employee
survey. The survey was
conducted by Best Places
to Work across the Group.
Companies Act climate-related reporting requirements
1. A description of the company’s governance arrangements in
relation to assessing and managing climate-related risks and
opportunities;
See page 44 – Governance
2. A description of how the company identifies, assesses and
manages climate-related risks and opportunities;
See page 46 – Risk Management
3. A description of how processes for identifying, assessing
and managing climate-related risks are integrated into the
company’s overall risk management process;
See page 46 – Risk Management
4. A description of:
i. the principal climate-related risks and opportunities arising
in connection with the company’s operations; and
ii. the time periods by reference to which those risks and
opportunities are assessed;
See Risks and Opportunities tables on pages 46 – 48
5. A description of the actual and potential impacts of the
principal climate-related risks and opportunities on the
company’s business model and strategy;
See page 44 – Strategy
6. An analysis of the resilience of the company’s business
model and strategy, taking into consideration different
climate-related scenarios;
See pages 44 and 46 – Metrics and targets
7. A description of the targets used by the company to
manage climate-related risks and to realise climate-related
opportunities and of performance against those targets; and
See page 45 – Metrics and targets
8. A description of the key performance indicators used
to assess progress against targets used to manage
climate-related risks and realise climate-related opportunities
and of the calculations on which those key performance
indicators arebased.
See page 45 – Metrics and targets
Appendix continued
SASB Table continued
202 Alphawave IP Group plc | Annual report and financial statements 2023
Registered office
Alphawave IP Group plc
6th Floor
65 Gresham Street
London
EC2V 7NQ
United Kingdom
Registered number: 13073661
Web: www.awavesemi.com
Investor relations: ir@awavesemi.com
Media: press@awavesemi.com
Company Secretary: cm-alphawave@linkgroup.co.uk
Company Secretary
Kim Clear
6th Floor
65 Gresham Street
London
EC2V 7NQ
United Kingdom
Joint corporate brokers
Barclays PLC
1 Churchill Place
London
E14 5RB
United Kingdom
J.P. Morgan Cazenove
25 Bank Street
Canary Wharf
London
E14 5JP
United Kingdom
Independent auditor
KPMG LLP
15 Canada Square
London
E14 5GL
United Kingdom
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
United Kingdom
Shareholder helpline:
+44 (0)371 384 2030
Website: www.shareview.co.uk
Lines are open from 8.30am to 5.30pm Monday to Friday
(excluding public holidays in England and Wales).
Legal counsel
Linklaters LLP
1 Silk Street
London
EC2Y 8HQ
United Kingdom
Public relations
Brunswick Group
16 Lincoln’s Inn Fields
London
WC2A 3ED
United Kingdom
Gravitate PR
838 Grant Avenue
Suite 388
San Francisco
California
94108
United States
Shareholder information
STRATEGIC REPORT GOVERNANCE FINANCIALS ADDITIONAL INFORMATION
Alphawave IP Group plc | Annual report and financial statements 2023 203
Financial calendar 2024-2025
2023 Full-year results 23 April 2024
Q1 2024 Trading Statement 23 April 2024
Annual General Meeting 25 June 2024
Q2 2024 Trading Statement w/c 15 July 2024
2024 Half-year results *w/c 23 September 2024
Q3 2024 Trading Statement *w/c 14 October 2024
Q4 2024 Trading Statement *w/c 20 January 2025
* Provisional dates
Shareholder enquiries
Our registrars will be pleased to deal with any questions regarding your shareholdings (see contact details on previous page).
Alternatively,you can contact the Company Secretary at cm‑alphawave@linkgroup.co.uk.
Investor relations website
The investor relations section of our website, www.awavesemi.com/investors, provides further information for anyone
interested in Alphawave IP Group plc. In addition to the annual report and accounts and share price, Company announcements
including the full-year results announcements and associated presentations are also published there.
Shareholder information continued
204 Alphawave IP Group plc | Annual report and financial statements 2023
Glossary
112G 112 gigabit per second connectivity
transmission speed for transmission of data
ASIC application-specific integrated circuit (or
system on chip (SOC)) that integrates all or
most components of a computer or other
electronic system
CAD Canadian dollars
CEO President & Chief Executive Officer
CFO Chief Financial Officer
chiplet smaller modular pieces of silicon, utilised in a
design technique to break integrated circuits
into smaller pieces that can be individually
designed and integrated together using
die-to-die interfaces
Coherent Coherent Modulation is a technique that
uses modulation of Amplitude and Phase
of light, as well as transmission across two
polarizations to enable transport of more
information across the optical fiber
Company Alphawave IP Group plc
CPU central processing unit
DSP digital signal processing capabilities, enabled
to perform a wide variety of signal processing
operations
Form factor design aspect that defines and prescribes the
size, shape and other physical specifications
of hardware components
Gb gigabyte, which is equivalent to
1,000,000,000 bytes
GBP Pounds sterling
GPU graphics processing unit
Group Alphawave IP Group plc and each of its
consolidated subsidiaries
IEEE Institute of Electrical and Electronics
Engineers, an electronics industry body,
including educational and technical
advancement of electrical and electronic
engineering, telecommunications, computer
engineering and allied disciplines, and
standardisation
IP/silicon IP intellectual property core, IP core, or IP block
is a reusable unit of logic, cell or integrated
circuit layout design
NED Non-Executive Director
node technology nodes, or process technologies,
referring to the specific semiconductor
manufacturing process and its design
rules, generally designated by the process’
minimum feature size (in nanometres)
NRE non-recurring engineering, in reference
to revenue earned in respect of one-time
early-stage customer services including for
research, design, development and testing
PAM4 Pulse Amplitude Modulation with Four Levels,
or PAM-4, is a signal encoding technique that
uses four voltage levels to represent four
combinations of two bits logic (00, 01, 10,
and11)
PCIe PCI-Express, a high-speed serial computer
expansion bus standard
PPC People, Places and Culture
R&D Research and development
RSU Restricted stock unit
SerDes serialiser/deserialiser, a wired connectivity
component to interface between integrated
circuits, which converts parallel streams
of data (used as connectivity within
integrated circuits) to serial streams (used in
longer-distance transmission outside chips)
and vice versa
SoC system on chip (or ASIC) that integrates all
or most components of a computer or other
electronic system
Tapeout refers to the completion of the design
phase of an IC and transfer of the design
into a digital format suitable for creation of
‘masks’ used in the semiconductor wafer
manufacturing process
wafer in the fabrication of integrated circuits, the
thin slice of semiconductor material (such
as a crystalline silicon) in and upon which
microelectronic devices are built
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Alphawave IP Group plc | Annual report and financial statements 2023
Alphawave IP Group plc | Annual report and financial statements 2023