Leading connectivity technology
for AI and digital infrastructure
Alphawave IP Group plc
Annual report and financial statements 2023

Who we are
Alphawave Semi is a leading semiconductor company
specialising in high-speed wired connectivity and computetechnologies 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 autonomousvehicles.
Alphawave Semi operates with over 800 employees globallyand 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 ofconnectivity technology.

Our offices

London HQToronto HQ
San Jose,
Milpitas

OttawaPune
HodHaSharonShanghai
Bengaluru

Kaohsiung
City

STRATEGIC REPORTGOVERNANCE

FINANCIALS

Highlights

Contents

Financial

Strategic report

Revenue andrevenue growth

Operating(loss)/profit

US$321.7m+74%
FY 2022: US$185.4m+106%

ADDITIONAL INFORMATION

1

Highlights

2

Our purpose, strategy & values

US$(19.4)m6

Executive Chair’s statement

9

Q&A with Tony Pialis, President
and Chief Executive Officer

FY 2022: US$37.6m

12 Investment case
14 A vertically integrated business model

Adjusted EBITDA1
and margin

Cash generated fromoperations

US$62.6m

US$25.5m

FY 2022: US$46.8m

19%

25%

Restated FY 20223: US$1.0m

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

Non-Financial

74 Principal risks and uncertainties

Bookings1

Number of employees2(closing)

US$383.9m

829

78 Board of Directors

FY 2022: US$228.1m

FY 2022: 695

84 Corporate governance statement

Governance
82 Management team
90 Nomination Committee report

R&D employees2
and % of total

Number ofend‑customers

741

89%

103

FY 2022: 621

89%

FY 2022: 80

94 Audit Committee report
100 Directors’ remuneration report
122 Directors’ report

Financials
126 Statement of Directors’ responsibilities
127 Independent auditor’s report

Sustainability

136 Consolidated statement of comprehensive income

GHG emissions

Employee turnover

4,942.8 tCO2e7%

FY 2022: 1,152.1 tCO2e

FY 2022: 10%

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

Gender diversity

On-time delivery

19%

100%

FY 2022: 20%

FY 2022: 99%

192 Notes to the Company financial statement

Additional information
199 Appendix
203 Shareholder information
IBC Glossary

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).
Alphawave IP Group plc | Annual report and financial statements 2023

1

Our purpose, strategy and values
Our connectivity semiconductor technology is at the coreof the rollout of AI technology and the ongoing upgrade ofdigital infrastructure, enabling data to travel faster, morereliably, and at lower power.

PurposePioneering connectivity technology
to enable a new era of accelerated
computing, unlocking its potential
to create economic and social value.
Financial review on page 66
Non-financial information statement on page 60

Ambition
To become the leading
semiconductor company inwired connectivity and computetechnologies for AI and digital
infrastructure markets.
Further details on our end-markets on page 18

Strategy
Our strategy is built on three pillars:
Technology
leadership

Expansion

Innovation

Further details on our strategy on page 20

Sustainability
Sustainability underpins our core values, drives our businessstrategy and influences the way we engage with our stakeholders.
Responsible
businessWorksmarter

Sustainabledigitalinfrastructure

Responsible
value chain

Further details on pages 33

2

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

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ADDITIONAL INFORMATION

Culture and values
Our culture and values underpin the way wework 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 arelentless focus on innovation, collaboration and agility
while maintaining the highest levels of integrity andinclusivity. 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.

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 througha relentless focus on innovation, collaboration and agility while
maintaining the highest levels of integrity and inclusivity.

Our values

1. Innovation

2. Agility

7. Customerfocused

3. Integrity

6. Collaboration

5. Inclusivity

4

4. Resultsorientated

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

1.
Innovation

Innovation fuels our growth as a leader in our industry, driving
technological advancements that differentiate us from ourcompetitors. It is a driving force behind everything we do.

2.
Agility

We dare to be dynamic in the face of rapidly evolving technologicaldemands. Our nimble execution allows us to consistently delivergame‑changing solutions, and has firmly established us as the leader
in our field.

3.
Integrity

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 andglobal citizen.

4.
Resultsorientated

Results are the lifeblood of our company. We are driven by therelentless pursuit of delivering exceptional experiences to ourcustomers and exceeding expectations at every opportunity.

5.
Inclusivity

Inclusion fuels our success as a company. It taps into the powerof diverse perspectives and backgrounds. Our commitment to an
inclusive culture drives our innovation.

6.
Collaboration

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 andenhance our technological advancements.

7.
Customerfocused

Our customer-centric approach ignites our success. We passionately
strive to understand our customers’ ever‑changing needs so we candeliver exceptional products and establish the highest levels of trust
via our unparalleled customer service.

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Executive Chair’s statement

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 for2024 and beyond.
This has been a year of significant progress, where theintegrated businesses began to work with a single long‑term
ambition, to be the leader in wired connectivity solutions fornext 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 andend applications need our connectivity technology in the formof IP, custom silicon and connectivity products.

A year of significant progress.
John Lofton Holt
Executive Chair

6

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 theachievements and the progress we have made so far.
Whilst we remain mindful of the challenging global macro andgeopolitical environment, we are laying the foundations aheadof the scaling phase and continue to deliver growth in all threeareas of our business: IP licensing, custom silicon, and our
exciting new range of connectivity products that will start
generating revenue in 2024.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Financial performance

Governance and oversight

In 2023 we consolidated the three acquisitions we made in
2022 under the Alphawave Semi umbrella. We also madesignificant organic investments in future revenue growththrough hiring and business infrastructure investment.

During the year we continued to evolve our governancecapabilities, particularly on financial oversight, as wewelcomed David Reeder to our Board as a Non‑Executive
Director. David has served in senior finance and operationalroles in global technologies companies, bringing vastcommercial and operational experience in semiconductors
as well as additional governance around finance operations.
David is a member of the Audit Committee and theNomination Committee.

Bookings for the full year were US$383.9m, 68% above theprior year (FY 2022: US$228.1m). Alongside the strong growthin bookings, we delivered another year of robust revenue
growth, up 74% year‑on-year, a significant achievement forthe 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 businessincurred 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 theongoing investment in future revenue growth, including thedevelopment 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 ourbusiness, ensuring we are mindful of the impact we haveon 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 unwaveringcommitment to collaboration, honesty, transparency andaccountability.

We also welcomed Rahul Mathur as our new CFO in
October 2023. Rahul’s extensive experience in senior financepositions, consistently delivering strong financial results andshareholder value within listed semiconductor companies,
has already been invaluable as we continue to build thefoundations for the next phase of business growth. I have thepleasure 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 intackling climate change. We do this both through our own
activities and in collaboration with our customers and otherstakeholders, 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 toenhance 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 humanrights, labour rights, environment and anti‑corruption. In thisreport, you will find how some of our activities advance thebroader development goals of the United Nations, particularly
the Sustainable Development Goals.

Alphawave IP Group plc | Annual report and financial statements 2023

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Executive Chair’s statement

continued

Sustainability

Outlook 2024 and beyond

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 theyear and the outcome of the materiality assessment waspresented 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).

In 2024 we will put in place the final pieces of theconsolidation phase and start preparations for the beginningof 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%).

Update on our China go-to-market strategy
Following the simplification of our China strategy in2022, 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 theevolving geopolitical and macroeconomic environment.

8

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 andcompute 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

Alphawave IP Group plc | Annual report and financial statements 2023

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ADDITIONAL INFORMATIONCEO Q&A

Q What would you highlight about thebusiness 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 thecomplexity of this market, our success reflects the strengthof our technology leadership and the business potential of theacquisitions 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.

Investing to become the next
leader in connectivity for AI.
Tony Pialis
President & Chief Executive Officer

We continued to integrate the business operations of the2022 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 awayfrom our legacy custom silicon business and differences inthe timing of the revenue recognition of long-term contracts inadvanced 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% fromthe prior year to US$62.6m and adjusted EBITDA margin was
below 2022 at 19% (FY 2022: 25%). In 2023 the businessgenerated 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 asavailable 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 investmentsin 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 westart to generate revenue from the production phase. These
wins have a potential lifetime revenue from silicon productionof 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 andI would like to express my sincere gratitude for their hard
work during 2023.

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9

CEO Q&A

continued

Q How does Alphawave Semi compete
against much larger players in the industry?

Q How are data centres changing to enable
the increasing adoption of AI?

High-speed connectivity IP and advanced ARM computeare the DNA of the business. Our Company has beenrecognised by the world’s largest foundries as the premierleader 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 inorder to meet our customers’ needs.

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 toGPU‑based architecture. GPUs can perform a higher numberof calculations in parallel and have dedicated hardware for
implementing complex mathematical models like neuralnetworks and deep learning.

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 ofour 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 becamea 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 meettheir connectivity needs across their data centres and create
long‑term business relationships.
Many of our customers have first-hand experience of ourtechnology 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.

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 specificmodels, 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, andare 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 switchingthat is used to connect AI/ML and accelerated computing
will migrate from a niche today to a significant portion of themarket by 20271. Our connectivity technology plays a central
role in building the network connecting the switches, optics
and GPUs.

How do you see business in China evolving
over time?
Q

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 inrevenue 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 theGroup revenue (2022: US$105m or 57% of the total). The
increase in revenue from China was mainly driven by thelegacy 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-1q23according-to-650-group/.

10

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STRATEGIC REPORTGOVERNANCE

Q Did the custom silicon business perform
as expected? What do you think is thestrength of the offering?

FINANCIALSQ

ADDITIONAL INFORMATION

What’s next for Alphawave Semi?

During 2023 we consolidated and fully embedded theacquisitions we made in 2022.

Our broad portfolio of high-speed connectivity IP is what sets
us apart. We can bundle our IP and expertise to win larger andmore complex custom silicon opportunities at leading‑edge
process nodes.

We also continued to invest in future revenue growth,
expanding our workforce and pushing ahead with thedevelopment of leading connectivity technologies and ourown connectivity products.

We have transformed our custom silicon business froma 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.

Despite an uncertain macro and geopolitical environment,
our customers continue to invest in leading technology.
AI investments are ramping up quickly and could amountto US$200bn globally by 20251. Our pipeline reflects theaccelerated momentum in the rollout of next generation AI
infrastructure and provides a solid foundation from which weseek to create long-term value for our shareholders and otherstakeholders. I look forward to the future with confidence.

Our custom silicon team deploys the necessary IP from ourportfolio, 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 partnershipwith 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 thecabling. This will feed the exponential data growth overthe next several generations of product refresh, creating
the optical network that connects all the switches insidedata centres. We are working closely with a leading North
American hyperscaler and we expect first revenue in 2024.

What are the main sustainability priorities
for Alphawave Semi?
Q

In 2023 we joined the United Nations Global Compact andin 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 firstsustainability 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 page51). Our commitment to sustainability extends to our ongoing
operations, as we seek to maintain high standards of businessconduct 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.

1. https://www.goldmansachs.com/intelligence/pages/ai-investment-forecast-to-approach-200-billion-globally-by-2025.html.

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Investment caseA leading-edge connectivity
technology businessbenefiting from thelong‑term investment
in AI infrastructure.

We support our customers
with high-performanceand power‑efficient wired
connectivity technology.

We monetise our IP througha vertically integrated
business model (licenceand silicon), delivering highrevenue growth. We areinvesting in the developmentof new long‑term growth
opportunities.

> The amount of data produced,
consumed, shared and processedis growing exponentially.
> Our technology is at the core ofhigh-growth data infrastructure
markets, such as AI-centric data
centres and next generation data
centres, enabling data to travel
faster, more reliably and at alower power.
> A growing addressable market
expected to grow at 20% CAGR
over the 2023-2026 period.

> We are at the forefront ofconnectivity silicon technology,
from 7nm to 2nm processes.
> We have a unique scalable andconfigurable product architecturewith a growing product portfolio.
> Our talent pool is focused on
solving the hardest problems:
speed, reliability and low power.
> We get an increasing share ofcustomers’ technology budget
through repeating business andhigher‑value solutions.

> Our licence model and longproduct cycles provide goodvisibility to long-term revenue
streams and future cash flows.
> Actual cash flow generationreflects our investment in
future revenue growth andthe development of our own
connectivity products.
> Our capital allocation supports
organic investment in future
growth.

+20%

103

+74%

Growth in addressable market

Number of end-customers

Year-on-year revenue growth

+68%

89%

US$62.6m

2023 year-on-year growthEngineering pool

Adjusted EBITDA1

in bookings1(as % of total employees)

US$355m

24%

US$25.5m

Backlog1 excluding royalties

R&D expense as % of revenue

Cash generated from operations

2023‑2026 CAGR

1. For definitions of non-IFRS measures see KPIS on page 62 and Alternatives Performance Measures section.

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ADDITIONAL INFORMATION

Consolidating our vision for the business2023 was the first year of the consolidation period of our ambition
to become the next leader in connectivity technology for AI data
infrastructure markets.

IP licence business

Vertically integrated business – IP licence and silicon

Illustrative revenue mix

Connectivity
products

Customsilicon

US$300m multiyear agreementwith leading North
American hyperscaler

IP licensing
and royalties

2017
Pre-IPO

2021

2022

Capital deployment

2023
Consolidation

In 2023, we continued to enhance and extend our productportfolio, and to expand our engineering capability. During theyear we invested US$131.4m¹ in R&D activities including thedevelopment of our own range of opto-electronic products
for hyperscalers (FY 2022: US$78.0m). Over the period ourheadcount increased from 695 to 829 at the end of 2023.

2024

2026
Ramp and scale

The collaboration with our foundry partners has continued toplay a key role in pushing forward the boundaries of what is
possible with our technology, enabling our customers to rollout 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.

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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.

1

2

3

IP licence

Custom silicon

Connectivity products

We license a customer to use an
IP for a single end product on a
specified manufacturing process.
During the customer productdevelopment 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 basedon the volume of chips shipped bycustomers. Our IP is embedded insemiconductors with an average
lifecycle of five to ten years.

We develop silicon following
customer specifications. During
the development phase (up to two
years) we recognise
non-recurring engineering fees.
These are typically larger thanwhen the customer licenses our
silicon IP.

We leverage our IP and expertisein the development of a range of
new opto-electronics products
targeting connectivity applications
in data centres. Production will beoutsourced to leading foundries
deploying advanced manufacturing
processes. Assembly and testing
will also be undertaken in close
collaboration with our outsourced
semiconductor assembly andtesting (OSAT) partners.

Once the design is finalised, we
generate revenue from the supplyof silicon when the customer
orders silicon through us. Although
fabless, we manage the fullmanufacturing, assembly andtest process on behalf of ourcustomers.

Our first products are expected to
be in the market in 2024.

Where we are in the value chain

R&D1 and IP2

Design andverification

Third-party IP

Alphawave Semi

Manufacturing(Foundry
partners)

Assemblyand test(OSAT3
partners)

Deliveryand support

Customers

Materials sourcing(Materials partners)

Third-party suppliers
1. Research and development.
2. Intellectual property.
3. Outsourced semiconductor assembly and test.

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ADDITIONAL INFORMATION

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.

Customsilicon

IP Licence$
Customers develop
semiconductors using
our IP. They workwith their foundries
and OSAT partners
to manufacture theirproducts$

Customers
contract us todevelop anddeliver bespoke
solutions

IP licence andengineering
services$
When thesemiconductors
go into production,customers pay aroyalty per unit ofproduct (depending
on contract)

Non-recurring
engineering
services

We bill the customer
NREs for the design ofthe bespoke silicon

Connectivity
products

Royalties

We develop and self-fund
our own products to sell tomultiple customers

We are developinga range of standard
opto-electronics
products that canbe sold to multiple
customers$Price
per unit

We bill thecustomer a priceper unit of silicon
when it goes into
production

Foundries
and OSAT
partners

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 ourcompetitive 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.

$
Monetise< our IP >Silicon IP

Products

Leading portfolio
of differentiatedadvancedconnectivity IP:
Core IP, ProductIP and Chiplet IP

Over 235
IP products –from 7nm
to 2nmLower scale andhigh operating
marginAverageopportunity
size <$10m+ royalties

Core IP

Product IP

Chiplet IP

VerticallyIntegrated
Business

Greater scaleand enhanced
competitive
positioning

Leading portfolioof connectivity
IP, Chiplet andoptical portfolio

Deep expertisein 2.5D and 3D
Chiplet ASICs

Higher scaleand relatively
lower operating
marginAveragecontract size>$20m
+ revenue fromproducts sold

Custom silicon

Opto-electronics

1. Our new range of opto-electronic products is expected to generate first revenue in 2024.

16

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Our business model depends on a range of inputs. Through our business activity we transform these inputs into a set ofoutcomes 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

Talentedpeople anddiversity &inclusion> Highly engaged anddiverse workforce> See Our People section
on page 38> D&I KPIs
> Workforce
engagement> Employee turnover> Growth> Technology
leadership> Key personnel

Technology
leadership

IP andexpertise> Leading wired
connectivity IP andproducts> 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

Ecosystem ofpartners andfoundries> Responsible andlongstanding
relationships> See Supply Chain section
on page 49 and Businessethics section on page 54> On-time delivery> Working withthe three leading
foundries in theindustry> Reliance onthird party

Expansion

Close R&D
collaborationwithcustomers> Longstanding customer
relationships> Number ofend‑customers> % of revenue fromexisting customers> Customer
dependence> Customer
demandExpansion

Financial
capital> Increasing long-term
returns and investment
in high margin revenue
with strong cash flow
generation> See financial review on
page 66> Adjusted EBITDA> Cash fromoperating activities
pre-tax> Growth

Innovation

Alphawave IP Group plc | Annual report and financial statements 2023

Innovation

Innovation

Expansion

17

The markets where we operate
Hyperscalers and other cloud service providers are investing in theinfrastructure required to roll out AI technologies and the increased demandfor 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 growthof 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 technologies1. Opto-electronic connectivity
solutions are needed to scale up the required computecapability and create the network that enables data to flow.
The generative AI market is expected to grow at 42% CAGR2
over the next ten years, driven by training infrastructure in thenear term and gradually shifting to inference devices for large
language models (LLMs), digital ads, specialised software andservices 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 toalmost double, once again, over the period 2022-20263.
To meet this challenge, the number and complexity of data
centres continues to increase, creating growing opportunity
for our business.

181 ZB

181

Size of global datasphereby 2025 4 – data volume
in zettabytes

147
120
97
79
64.2

2

5

6.5

9

10

11

12

13

12.5 15.5

18

14

16

15

26

17

33

18

41

19

20

21

22

23

24

25

Data rates double every 2-3 years
Switch data rate
0

Tbps

2017
5

2020
x2

2022

12.8

x2

25.6

2025
x2

Ex.: 48 ports
at 100G

Transceiver data rate
Source: Company, ‘Silicon Photonics
Market and Technology Report 2020’,
April 2020 Silicon Photonics Market &Technology 2020 – Yole Développement(i-micronews.com)

100G

51.2

Co-packaged
switch ASIC

x2

200G

x2

400G

x2

800G

Pluggable

4X100G
PAM4/400G
Coherent

4X200G
PAM4/800G
Coherent

Co-packaged

100G PAM4200G PAM4

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.

18

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATIONOur core markets
Data centre opportunity:

Data networking

Computer

5G wireless infrastructure

Artificial intelligence

Data storage

Autonomous vehicles

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 overthe 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 ofour 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 inadvanced 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 computecapability 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 productline in 2024.

Addressable markets US$bn
2023 1.1

7.6

1.4

2.1

11.9

High performance IP
24% CAGR

Custom silicon
16% CAGR

2026

10.1

20% CAGR
3.6

17.6

Opto-electronics
36% CAGR

Semico Research Corporation, December 2022, IPNest and LightCounting

Key industry trends
1

Artificial
intelligence
The increasing
adoption of
artificial intelligence
technologies
requires higher data
speed, bandwidthand lower latency
connectivity.

2

Hyperscalers3

Hyperscalers
are increasingly
developing their own
AI silicon to provide
technologicaladvantage, optimise
workloads andpower efficiency.

Alphawave IP Group plc | Annual report and financial statements 2023

Data rates
increase
Data rates double
every two years,
putting additionalpressure on
connectivity
components.

4

Complexity
The cost andcomplexity of chip
design continues
to increase.
Chiplets represent
a new architecture
paradigm enabling
more cost-effective
solutions.

5

Changes
Changes in data
centres (from silo
to disaggregatedarchitecture) require
specialised low
latency connectivity
and increased useof opto‑electronics.

19

Strategy
We are leveraging our technology and expertise to build a leading connectivity
company for AI and digital infrastructure markets.

Progress in 2023

Marketleadership

Maintain pace ofinnovation and market
leadership by attracting
and retaining talent

Progress in 2023

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 existingcustomers

Innovation> 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

Leverage our IP to expand
our product portfolio andgrow our custom siliconbusiness

20> Joined Arm Total Design, an ecosystem tomake 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> Silicon tapeouts for next generation
224G, PCI-Express Gen6, HBM3 andUCIe interface IP in both 5nm and 4nm
processes> Silicon tapeout for highly configurable 3nm
112G SerDes IP> Silicon tapeout on TSMC’s 3nm processof High Bandwidth Memory 3 (HBM3)
PHY and Universal Chiplet Interconnect
Express™ (UCIe™) PHY IPs

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

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, theremuneration framework and our key sustainability areas.

KPI/metrics

89%

of employees in R&D
function as % of total>235

number of IP products

Risk> Competition and failure
to maintain our market
leadership> Reliance on key personnel
and ability to attract talent> IP protection andinfringement

7%

Remuneration> Adjusted EBITDA(annual bonus)> Adjusted Basic EPS
growth (LTIP)

Sustainability> People> Innovation: close
R&D collaborationsin ecosystem

employee turnover

KPI/metrics

93%

of licence and NRE bookingsfrom North American, APAC
and European customers

103

revenue-generatingend‑customers in 2023

KPI/metrics

US$322m
FY 2023 revenue

3nm

custom silicon tapeouts

Risk> Customer dependence> Customer demand> Dependence on licensing
revenues> Reliance on third‑party
manufacturing foundries> External environment
and events

Risk
> C
 ompetition and failure to
maintain our technology
leadership> Reliance on key personnel
and ability to attract talent> IP protection andinfringement> Ongoing selective hiringin R&D> Continued effort tosupport talent withenhanced HR policies
and compensation
framework> Expand foundry
partnerships with further
design wins at 3nm andbeyondRemuneration

2024 initiatives> Revenue (annual bonus)> Focus on custom
silicon opportunities
in advanced nodes> Start of the ramp of
new products for aleading North American
hyperscaler> Convert pipelineof opportunities inadvanced nodes torevenue

Sustainability> Innovation: close
R&D collaborations inecosystem> Efficient and responsible
value chain

Remuneration

2024 initiatives> Revenue (annual bonus)> Adjusted EBITDA (annual
bonus)> Adjusted Basic EPS
growth (LTIP)> Continued focus onadvanced IP enabling
the rollout of AI
technologies> Expand productroad‑map including PAM4and coherent DSP buildingon IP portfolio and IP
subsystems> Continued focus onhigh‑value custom
silicon opportunities

Sustainability> P eople> Innovation: close
R&D collaborationsin ecosystem

Alphawave IP Group plc | Annual report and financial statements 2023

2024 initiatives

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 wedelivered a comprehensive 3nm
chiplet connectivity platform for
hyperscaler and data-infrastructure
customers to keep pace with thesurge in data-intensive applications
such as generative AI.

22

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

3nm process technology is vital for creating advanced chipsthat 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 3DFabricTM ecosystem tointegrate advanced interfaces such as CXLTM, UCIeTM, 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 ourcollaborative efforts in fostering an open chiplet ecosystem.

Alphawave IP Group plc | Annual report and financial statements 2023

23

Strategy in action

continued

Expansion
Expanded customer baseIn 2023, we continued to expand our customer base and to
broaden the business relationships with existing customers.

At the end of 2023, the total numberof revenue‑generating end-customers
was 103, representing a 29% increaseover the prior year (2022: 80).

103
Revenue-generatingend‑customers
FY 2023

24

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

During 2023, we worked with leading technology companies,
including hyperscalers, leading semiconductor devicecompanies 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 therapidly growing demands of data-intensive applications, suchas generative AI and the associated infrastructure required by
global data centres.

Alphawave IP Group plc | Annual report and financial statements 2023

25

Strategy in action

continued

Innovation
Fostering innovation througha robust chiplet ecosystem

Generative AI has fundamentallytransformed data centre computeand 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

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

In 2023 Alphawave Semi continued to enhance its capabilities,
joining Arm® NeoverseTM Compute Subsystems (CSS).
The integration of Arm Neoverse CSS onto Alphawave
Semi’s most advanced high-speed connectivity IP andchiplet‑based custom silicon platform, paves the way for a
new generation of SoCs tailored for hyperscalers and otherdata infrastructure customers.
Customers gain a significant time-to-market advantage byintegrating Arm Neoverse CSS compute with Alphawave
Semi’s Universal Chiplet Express (UCIeTM) enabled custom
silicon and pre-built connectivity chiplets.

Alphawave IP Group plc | Annual report and financial statements 2023

27

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 withexternal 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.

Customers
Governments
and regulators
Countries and regions seek to guarantee
supply and build domestic supply chains,
as well as restrict outside access to theirdomestic technologies.

Community

Employees

Our business is groundedin the communities it
operates in. We work
together with universities
and professional bodies,
as well as local andnational organisations.

Our success is entirely
dependent on our ability
to attract, retain andmotivate talented staff.

Investors$

28

Our customers include someof the largest technology
companies globally,
who trust us to provide
technology that may be
critical to the future of theirbusinesses.

We maintain a regular andopen dialogue with ourcurrent and prospective
shareholders.

Partners and suppliers
Our partners and suppliers are major
players in our industry, such as TSMC,
Samsung and Intel. Our access to theirtechnology is vital to our success andour ability to deliver to our customers.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Relationship with our stakeholders
Customers

Our technology enables ourcustomers to develop and sell, oruse for their internal operations,the next generation of connectivity
solutions.

We benefit from our customers’
feedback both at service leveland opportunities for businessdevelopment.

Employees

We seek to create anentrepreneurial 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.

Partners
and suppliers

We foster strong, collaborative andresponsible working relationships
with our partners and suppliers
over time.

Our CEO and SVPs meet our main
partners and suppliers at least
annually.

Investors

We engage with investors to help
them understand our technology,
business model and strategy andhow they can generate long‑termand sustainable value.

Our Board also engages withshareholders, including at the AGM,
and receives regular updates from our
Head of Investor Relations.

Community

We aim to make a positive
contribution to the communities
in which we operate throughtechnological advance andthe enhancement of the local
skills pool.

See more about our internship and
STEM programmes on Our People
section.

Governments
and regulators

We maintain good relations withregulatory agencies in the regionsin which we operate, industry
bodies and trade associations.

We engage with industry and sector
groups to support the developmentof industry standards.

Alphawave IP Group plc | Annual report and financial statements 2023

There are also regular face-to-facemeetings with our key partners.

29

Stakeholder engagement and S172 Statement

Customers

continued

Employees
See Our People section

Engagement

Engagement

>
>
>
>

>
>
>
>
>

Customer service feedback
Regular project meetings
Industry and commercial events
Discussion of new business opportunities

Frequency

Annual employee survey
Employee reviews and monthly employee focus groups
All-staff calls
Senior management presentations
Designated workforce engagement Board Director> Regular contact with customers (new and existing)

Frequency

What do they care about?

> Monthly, quarterly and annual basis> Innovation and investment in R&D> Product quality (innovation), performance and price> Project schedules

Sharing value created> P ushing the boundaries in wired connectivity technology(manufacturing node, reliability and low power
consumption)> Meeting project schedules

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$

See Supply Chain section

Investors
See Our Markets section and ESG section

Engagement

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

 GMA
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 price30

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Community

Governments and regulators

See Community Engagement section
and Our People section

See Environmental Responsibility
and Business Ethics section

Engagement

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> Government consultations> Regulatory enquiries> Industry/sector groups including standard setting groups

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 oftechnology

Sharing value created> C ontributed approximately US$37,000 towards community
projects> Twelve interns as of 31 December 2023.
> Creating stable and high-quality jobs

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 onindustry impact of regulatory changes

Women in technology
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 shareinsights and experiences. They were able to share their journey to success, offer advice on navigating the workplace, andexplore 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 womenin technology.

Alphawave IP Group plc | Annual report and financial statements 2023

31

Section 172 statement

The Board and our stakeholders

Our suppliers

Our commitment to stakeholder engagement lies at the heartof 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.

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.

This year marks significant progress as our integrated
businesses unite under a single long-term ambition: to leadin connectivity solutions for next generation AI and digital
infrastructure. Our unwavering focus is on creating value forstakeholders as we pursue our goal.

The Board receives regular data on changes to the shareregister 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 meetwith 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 Boardand the shareholders.

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 thesuccess of the Company for the benefit of its members asa whole, and in doing so have had regard, amongst othermatters, to the matters set out in section 172 (1) of theCompanies Act 2006. In doing so, however, they must haveregard to the interests of all of our stakeholders, to ensure thelong-term sustainability of the Company.
An introduction to our stakeholders can be found in thepreceding 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 governancereports.

Our 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 andto hear from the Board.

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 regularbasis on the role that the major business groups play in the
future strategy of the Group. In particular, the Board wasbriefed on the impact of technology for AI, and how this canfurther strengthen the business.

32

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

ESG

Introduction
Our success and long-termvalue creation depend on
the close collaboration ofvarious stakeholders. Working
closely together and acting
responsibly can positively
impact our business while
creating long-term value forour shareholders, employees,
customers, partners and thecommunities 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 throughour existing programmes and technologies
we contribute to progress against five of
the 17 goals.

Alphawave IP Group plc | Annual report and financial statements 2023

33

ESG

continued

Managing our resources and relationships
We are managing our resources and relationships to create a sustainablebusiness model, aiming to preserve and create long-term value for a wide
range of stakeholders.
A sustainable business model
VisionSince the Company’s IPO, we have sought to carefully manage
our key sustainability issues and risks. We aim to embedsustainable and responsible business practices into the way
we act internally and engage with external stakeholders inorder to create and preserve long‑term value for a wide rangeof stakeholders.

Applicable external standards
We participate in and are committed to the principlesof the following standards:> United Nations Global Compact (since July 2023);> ISO 9001 Quality Management System Standard for ourcustom 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 tocontribute 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 firstsustainability materiality assessment.
The ESG Steering Committee is a multi-disciplinary groupchaired 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:

The ESG Steering Committee met three times during 2023.
During the year, the Steering Committee reviewed anddiscussed ESG ratings, and considered actions to improvea range of activities. The ESG Steering Committee also
supports the identification of ESG risks and opportunities,
reviews all relevant KPIs and proposes changes whennecessary.
In December 2023 the ESG Steering Committee reviewed
the outcome of our first materiality assessment for the firsttime. Further reviews will take place during 2024 by eachfunctional 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 andthe 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 outcomeof the assessment provided a holistic view of where theCompany should focus its ESG management and reporting
efforts (i.e. identification of its material ESG issues, aswell as insight into key risks, opportunities and impacts). It
provided recommendations on a number of areas which will
be reviewed in detail in 2024.

> 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.

34

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

The assessment was carried out by an external third party,
following a structured four-stage approach to identify whatmatters most to the Company and its stakeholders:> baseline research including sector analysis, peerbenchmarking, 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 automaticallyconsidered as material.
The results of the materiality assessment are set out in thematrix published below.

FINANCIALS

ADDITIONAL INFORMATIONThis includes our most material issues, as well as a rangeof additional relevant issues that we are also proactively
managing. The matrix replaces the SASB Semiconductor
Risk Matrix considered in 2022. The Group continues toreport on sustainability topics following the Semiconductors
Sustainability Accounting Standard 2023-12. Further details
can be found in the Appendix.
During the assessment, external stakeholders sharedadditional comments on three areas:> product impacts: the low-emissions nature of the businessand the demand for further disclosures on the positive
impact of our products;> R&D and innovation: as a business at the forefront oftechnology, the need for a set of KPIs to monitor progressin this area; and> governance: investors are placing further scrutiny ona number of ESG topics, such as talent attraction,
development and retention or carbon emissions.

Materiality matrix
5.00

1

Outward with Impact on or importance for external stakeholders

4.00

10
11

8
9

5
6
7

3
4

2

12

14
13

3.00

2.00

15

2. R&D and innovation

9. Employee engagement andwellbeing

3. Compliance, business ethics andtransparency

11. Diversity, equity and inclusion

1. Economic performance and impact

16
17

4. Talent attraction, development
and retention

1.00

5. Product impacts
6. Value chain disruption
7. Cybersecurity
8. Responsible supply chains

0.00
Business

1.00
Environment

2.00
3.00
Inward with Impact on Alphawave Semi
People10. Climate risks and opportunities
12. Meeting customer standards
13. Employment practices
14. Carbon emissions
15. Resource use
16. Waste management
17. Community engagement

4.00

5.00

Value chain

Alphawave IP Group plc | Annual report and financial statements 2023

35

ESG

continued

Managing our resources and relationships

continued

Material sustainability issues

Alphawave Semi joined the UNGC in July 2023.

These are the sustainability issues that are most important toour business and key stakeholders. Although our sustainability
activities cover a wide range of topics, our effort is focusedon these.

The Group supports the UN SDGs and through our existing
programmes and technologies we contribute to progressagainst five of the 17 goals in the following ways:

1. Economic performance and impact

Highly engaged anddiverse workforce

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

Quality education

8. Responsible supply chains

11. Diversity, equity and inclusion

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 andour recent partnership in Canada with Let’s Talk Science.

12. Meeting customer standards

Gender equality

9. Employee engagement and wellbeing
10. Climate risks and opportunities

Business

Environment

PeopleValue chain

Focus areas in 2024
> ESG Steering Committee functional leads to review in detailthe recommendations of the materiality assessment to
inform and identify areas of improvement and next steps.
> Update our ESG Policy taking into account the outcomeof 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.

Alphawave Semi takes equality and equal opportunity for
all employees very seriously. In line with our corporate
values, we conduct business ethically, honestly and infull compliance with applicable laws and regulations.
This applies to every business decision in every area of theCompany 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 theexciting 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 iscommitted to employing and developing those people whohave 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 andlearning and development activities are key to this.

36

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Leading wired
connectivity IP
and products

Responsible andlongstanding relationships

Industry, innovation and infrastructure

Decent work and economic growthInnovation is at the core of our business and we seek tosustain a healthy level of investment in the development ofleading-edge connectivity technology and products. Our
technologies support infrastructure development and value
creation from the adoption of AI. Our R&D approach andclose collaboration with foundry partners, customers andODMs, 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 thenumber of chips required (see pages 52 and 53).

We expect all of our major suppliers to comply withminimum standards relating to impacts on human andlabour 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 Principlesof the United Nations Global Compact on human rights,
labour, environment and anti-corruption.

Although fabless, we seek to reduce our carbon footprint
using renewable energy in those locations where it isavailable and offset all travel-related CO2 emissions.

Increasing long-term returns
and investment in high margin
revenue with strong cash flow
generation$

Industry, innovation and infrastructure
As part of our strategic objectives, we reinvest cash in theorganic development of new connectivity technologies
and products. We seek to maintain a focused andsustained investment in the R&D of leading and lower
power connectivity technologies aiming to solve thehardest problems.

Alphawave IP Group plc | Annual report and financial statements 2023

37

ESG

continued

Our people
Context

Customised human resource policies

Building upon the effort made in 2022, 2023 was a pivotal
chapter in our journey, marked by the continued integrationof 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.

Our HR team is dedicated to the application of humanresource policies tailored to reflect local legal requirements,
business priorities and labour market nuances. By seeking
to ensure compliance while adapting to the unique needs ofdifferent locations, we aim to create a work environment that
respects diversity and fosters inclusion.

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, weseek to prioritise the wellbeing, development and engagementof 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 andoperates a dedicated PPC function at our key sites. We have
implemented employee policies and procedures that areappropriate for the size of the Company and meet therequirements of applicable local legislation.
Our goal, reflected in our policies, is that our employees can
openly communicate and share any ideas and concerns withmanagement regarding working conditions and management
practices without fear of discrimination, reprisal, intimidationor harassment. Our approach is characterised by the following
key pillars:

38

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 humanrights, seeking to ensure that our employees work in an ethicaland 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 ourbusiness 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 canoffer. 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).

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Employee engagement and communication

Reward and recognition

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 visionof the Company.

We recognise high performance through effective andtargeted compensation, as well as benefits programmes thatenable our employees to share in the value they create.

We undertake annual employee satisfaction surveys andthe 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 andcollaboration, 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.

We seek to create an entrepreneurial and dynamic culture,
where the best in our sector want to work and develop theircareers 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 laidout in the Universal Declaration of Human Rights, including
labour rights such as freedom of association, and aim toensure that our employees benefit from excellent working
conditions, across all geographies.
We have a formal grievance escalation procedure whichis 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 headcountby region
North America | 43%
EMEA | 9%
APAC | 48%

Alphawave IP Group plc | Annual report and financial statements 2023

39

ESG

continued

Our people

continued

Diversity

Total employees
gender diversity
Male | 81%
Female | 19%

Number of employees

Seniormanagement
gender diversity
Male | 92%
Female | 8%

FY 2023

Female

Male

Total

Board

4

6

10

160

669

829

1

10

11

FY 2022

Female

Male

Total

Board

4

6

10

141

554

695

1

11

12

Total employees
Senior management1
			Total employees
Senior management1
Board
gender diversity
Male | 60%
Female | 40%

Male
2023
Female
2023

Male
2022
Female2022

Equal opportunities
Our Equal Opportunities and Dignity at Work Policy (seewww.awavesemi.com) stresses the value and importanceof diversity in the workplace and highlights our strict stanceagainst discrimination, harassment or bullying in theworkplace.
We respect and uphold internationally proclaimed humanrights 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 incompliance with this policy. For more information
see www.awavesemi.com.

1. Senior management diversity reflects the composition of the leadershipteam, including the CEO and the Executive Chair.

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 toany employees who become disabled during their timewith us, ensuring they receive the support and training they
may require. Promotion and development opportunities areprovided 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 theCompany. During 2023, our employees continued to work
following a hybrid model, working remotely and in our offices.

40

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Number of employees(closing)

Employeeturnover

Genderdiversity

829

7%

19%

FY 2022: 695

FY 2022: 10%

FY 2022: 20%

We put in place multiple initiatives and activities to make themost of the time our employees spend at our offices, creating
opportunities for social interaction and promoting a healthyand supportive environment; for example, health check days,
assistance programmes and access to wellness courses suchas 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 workoutside 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 ofwhich are provided in the policy).

Talent identification and recruitment
We believe our employees are our best ambassadors and thatis why the Company has an internal referral programme inplace. Employees who refer successful candidates receive areward. 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 theopportunity to learn different aspects of our Company
and its technology. The programme consists of regularsessions where a range of technical and non-technical
topics are discussed. Presenters are mostly members ofthe management team and the Board.
The Company also has an employee education programmethat reimburses employees upon successful completionof relevant courses. Employees identify their learning anddevelopment needs on a regular basis (both technical andnon-technical) and agree these with their line manager.

Alphawave University –A session with our Senior Independent
Director Jan Frykhammar
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 establishinga clear link between the present and mid-term
ambitions. Jan also discussed the importance of
culture in organisations and how all employees sharea joint responsibility for success.

Leadership development
2023 was the second year of our Board mentoring programme.
This programme cultivates leadership excellence within ourorganisation. By pairing experienced Board members withleaders, this programme fosters a unique mentorship dynamicthat transcends traditional hierarchical structures. Throughpersonalised 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 oforganisational culture, values and strategic vision. As mentors
share their experiences and expertise, they support thenext generation of leaders, fostering a collaborative andforward‑thinking leadership ethos that benefits the entire
organisation.

In 2023, we added over 20,000 courses to our Global HR
system covering a broad range of competency and technicaltraining needs.

Alphawave IP Group plc | Annual report and financial statements 2023

41

ESG

continued

Our people

continued

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 adiverse talent pipeline and inspire the next generation ofleaders.
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 takeengineering programmes we hire from. Let’s Talk Science isan award-winning, national, charitable organisation, focusedon education and outreach to support youth development.
They create and deliver a comprehensive suite of uniquelearning programmes and services that engage children,
youths and educators in STEM.
In addition, we launched a women’s mentoring programmewithin our organisation, recognising the importance ofempowering women to excel in their careers. These initiatives
reflect our dedication to fostering diversity, equity andinclusion. 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 womenand 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 numberof employees in the UK. The Company has a Diversity andInclusion Policy in place which is available on our website atwww.awavesemi.com.

42

Alphawave University– A session with our CEO, Tony Pialis
Tony Pialis, our CEO, was the main speaker ina virtual meeting with employees, part of theAlphawave University programme. Tony shared
his background and early experiences as anentrepreneur 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 canbe part of the journey. During the event, employees
had the opportunity to ask Tony questions.

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 ourinterns. As of 31 December 2023, there were twelve interns
in the Company (FY 2022: 47).
In Canada, we welcome interns from the universities ofToronto and Ottawa, and the programme runs for a period of
12 to 16 months. As of 31 December 2023, there were elevenin Canada (FY 2022: ten).
The programme seeks to encourage the next generationof engineers and innovators, giving them insight into thewide range of engineering careers and illustrating thevaluable contribution they can make to the advancement oftechnology.
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, theUniversity of Burdwan and the CVR College of Engineering inHyderabad. Students come from different socio-economic
backgrounds.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

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 andperformance levels. In early 2023, the Company introduced aperformance appraisal process with clear objectives alignedwith the Company objectives.
The majority of our employees participate in our long-term
incentive programme which helps to promote a shared senseof 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 andwellness 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 andcommunity involvement programmes, contribute to a holistic
and supportive work environment.
The availability of these benefits varies reflecting geographic
location, regional cultures and regulatory requirements.

Alphawave IP Group plc | Annual report and financial statements 2023

FINANCIALS

ADDITIONAL INFORMATION

Employee engagement andcommunication strategies
We implement ongoing employee engagement andcommunication through town halls, employee forums andlocal events with the participation of the senior management
team. We keep employees updated on the strategic progressof the Company, as well as financial results and key areas ofstrategic focus for the business.
In 2023, we undertook our second annual employee
satisfaction survey, which was conducted by ‘Great Place toWork’. The response rate for the Group was 76% (FY 2022:
80%, Canada and US only) and the feedback from ouremployees was extremely positive. Amongst some of thepositive messages, our employees feel that they can make adifference and remain committed to go the extra mile to get
the job done.
The survey also suggested that enhancing work/life balanceand development programmes remain as two of the key areasof interest for our employees.
The results of the annual survey were presented back to theBoard and employees, and have informed changes to, forexample, the Global Rewards and Recognition Programme,
which will be rolled out in 2024.
The Company is now certified as a Great Place to Work® inall 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 andempowered.
> Implement a comprehensive Global Rewards andRecognition Programme.
> Implement community outreach initiatives globally focusedon education and healthcare.
> Implement Company-wide job architecture andcompensation design and strategy.

43

ESG

continued

Environmental responsibility
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 theBoard. We govern our environmental responsibility throughthe application of our ESG Policy, which was approved in early2023 and addresses our key priorities.
The Company seeks to minimise and gradually reduce its
carbon footprint through a combination of emission reductionand 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 ofclimate-related risks and opportunities (pages 46 to 48).

Our Chief Financial Officer is responsible for our risk
management framework, including the assessment andmanagement of climate-related risks. The ESG Steering
Committee supports and guides the execution of ourclimate‑related and environmental activities.
Our Global Head of Investor Relations is also responsible
for leading our climate change agenda and managing ourpolicies and practices across sustainability and ESG matters.
Our Global Facilities Manager is responsible for all ourfacilities and our IT Director is responsible for our IT resilienceand 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 theGroup and its operations is considered to be low comparedto those businesses that have more direct dependencies.
However, carbon pricing policies and the cost of energy canhave some impact in the running costs of our business.
In preparing the consolidated financial statements, theDirectors have considered the impact of climate changeon 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 isconsistent with the assertion that risks associated withclimate change did not affect the business, its strategy andfinancial performance in 2023, and are not expected to havea 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 oron property, plant and equipment.

44

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

Metrics and targets
For the third consecutive year, the Company appointed Carbon
Footprint Ltd, a carbon and energy management company, toindependently assess its greenhouse gas (GHG) emissionsin accordance with the UK Government’s ‘Environmental
reporting guidelines: including Streamlined Energy and Carbon
Reporting requirements’. The GHG emissions have beenassessed following the ISO 14064-1:2018 standard using the2021 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 theproduction of semiconductors to leading foundries. In linewith our fabless peers, we currently have no data from thefoundries on the emissions relating to the manufacturing ofour 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 forassessing Scope 2 emissions from electricity usage. The
financial control approach has been used.

FINANCIALS

ADDITIONAL INFORMATION

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 withelectricity consumption. The increase in Scope 1 and Scopeemissions was mainly driven by the increase in our headcountand the square footage of our offices. Scope 3 includes
those emissions associated with business travel and also
includes electricity consumption attributable to our utilisationof servers within our third‑party data centre provider. In our2023 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 levelof business activity, emissions related to travel increased byover 800 metric tonnes. These two elements represent over
two thirds of the overall increase in 2023. In 2024 we will beanalysing in further detail our 2023 emissions to establish
a baseline carbon footprint from which we can identify
opportunities for improvement over the short, medium andlong term and assess the need for more specific reduction
goals and targets.

2022

Baselineyear 2023

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, hirecar, 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

1.78

5.96

nm

15.3

2,618,460

5,685,827

n/a

n/a

UK-based emissions

nm

nm

UK-based energy consumption

nm

nm

Streamlined Energy and Carbon Reporting

In metric tonnes CO2e

Intensity ratios
tCO2e (gross Scope 1, 2 and 3) per employee
tCO2e (gross Scope 1, 2 and 3) per US$m revenue

1

Underlying energy consumption (kWh)Total global energy consumed
Total UK energy consumed

2

1. tCO2e (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 tCO2e (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.

Alphawave IP Group plc | Annual report and financial statements 2023

45

ESG

continued

Environmental responsibility

continued

Metrics and targets continued

See our full compliance statement in the Appendix.

We are gradually rolling out activities to reduce our GHG
emissions: actively managing e-waste with robust productlifecycle 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 thedecision to relocate our offices in Bangaluru to newly built
premises that are more energy efficient. The relocation willtake place in 2024.

Risk management

In addition, we are also offsetting our GHG emissions fromtravel 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 thefollowing 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 andassociated costs to assess the resilience of the organisation
under different climate-related scenarios. Following thisevaluation, we will make a decision on whether a quantitativerisk assessment should be prioritised and the timing if
appropriate.

Our process for identifying and assessing climate-related risks
and opportunities follows our Group-wide risk assessmentand management process. These risks, together with
mitigations, are discussed by the executive management
team and the Board. Given our fabless business model, theGroup’s exposure to climate‑related risks is considered to belimited 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 anddirect 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 thebroader semiconductor supply chain.

Short, medium and long-term time periods
2021

2030

2040

2050

Short term
Medium termLong term

Years

10

20

30

Climate-related risks and opportunities related to the transition to a low-carbon economy
Risks

Opportunities
Medium to long term

Policy and legal

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.

Resource efficiency

Medium to long term

We are actively managing e-waste, reducing unnecessary
business travel and, when necessary, relocating our offices
into energy-efficient buildings.

As a fabless business with low capital intensity we do not havea significant amount of assets at risk of impairment or early
retirement as a result of changes in environmental legislation.

Key: Low

46

MediumHigh

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

Risks
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 toensure we remain ahead of our competitors.

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.

Reputation

ADDITIONAL INFORMATION

Opportunities
Medium to long term

Alphawave Semi is at the forefront of wired connectivity
technology.

Market

FINANCIALSLong term

Energy source

Medium to long term

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 basedin modern, smart buildings with energy-saving systems andmodern HVAC systems.
In 2023 we selected a new location for our office in
Bangalore; a highly efficient building with climate resilience
procedures in place.

Products and services

Medium to long term

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 andother data-intensive applications.
Our technology contributes in different ways to reduce thepower consumption of data centres (see pages 52 and 53).

Markets

Long term

Although our direct carbon footprint is relatively small
compared to other business activities, we seek to reduce ourcarbon footprint and undertake appropriate efforts to not
fall short of best practice amongst fabless semiconductor
companies in our sector and our largest customers.

We work with the leading companies in the semiconductor
industry, leading telecommunications business, technology
companies as well as hyperscalers. These companies havea strong focus on reducing their carbon footprint and areinvesting in new technologies.

We are planning to use our 2023 carbon emissions baseline
to set a clear level from which we can define specificenvironmental goals.

Our connectivity technology aims to address thehardest‑to‑solve problems for customers in digital
infrastructure markets.
Our new range of opto-electronics and increased AI anddata 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).

Alphawave IP Group plc | Annual report and financial statements 2023

47

ESG

continued

Environmental responsibility

continued

Related to the physical impact of climate change
Risks
Acute risk (event driven)(to)

Medium to long term

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 intemperature, 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 weare intending to evaluate additional requirements and costs
involved in such assessment.
Chronic risk (long-term
shifts in climate patterns)(to)

All our employees can work remotely and the majority of ouroffices are located in modern offices in city centres.
Our manufacturing partners have implemented multiple
initiatives to reduce their carbon footprint, review waterand energy usage, and understand and manage the effects
of climate change on their own operations. We work withleading companies such as TSMC, Samsung and Intel which
follow the recommendations of the TCFD and have initiatives
in place to manage these risks.

Medium to long term

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 toinsure certain locations.

Dependency on natural, human andsocial capital

Focus areas in 2024

Climate change would not create any new direct dependencies
on natural, human or social capital.
Our highly skilled engineers and talented employees arevital to ensure we can deliver innovative products. Electronicengineers are in high demand and companies outside
the semiconductor industry are establishing engineering
departments to design some of their semiconductor
requirements.

Key: Low

48

Medium> Develop further training, define process for data collection
and reporting requirements to support the collection andmonitoring 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.

High

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Supply chain

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 orcontractual 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 theleading 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 ourtight 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, suchas System‑in‑Package and chiplets.

Our Vice President of Silicon Operations is responsible for all
manufacturing-related activities, including the managementof 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 fora limited number of suppliers, mainly those categorised
as critical;> carrying out annual audits (audit-light approach) of ourmajor partners using the assessment survey checklist
including a focus on training and development of staff,
working conditions and the traceability of materials, aswell as a range of topics directly related to the quality andcontrol 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 therequired corrective actions have been implemented;> significant non-compliance quality events are addressed byissuing 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.

Our manufacturing operations are ISO 9001:2015 certified
https://awavesemi.com/custom-silicon/

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 withexpectations and the products supplied meet all requirements.

Alphawave IP Group plc | Annual report and financial statements 2023

49

ESG

continued

Supply chain

continued

Performance

Environmental management

In 2023, we performed 14 audits (FY 2022: 11 audits),
covering the majority of our manufacturing partners as wellas 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 theremaining through self-assessment.

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 workwith our manufacturing partners to adopt advanced process
technologies that aim to have an ever-decreasing impact on
the environment.

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 theCompany 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 andtrading 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.

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 ofHazardous 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 andRestriction of Chemicals, or ‘REACH’).

Forward focus 2024
> Continue to deliver high levels of operational performanceand maintain our average OTD.
> Ongoing identification of possible areas of improvement.

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 areconflict free. The Company also expects its suppliers toestablish 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 havesupported armed groups in the DRC or adjoining countries(2022: nil). All our 3TG minerals are from Conflict Minerals
compliant smelters.

50

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATIONIntellectual property
Context
The protection of intellectual property is vital for any businessfocused 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 technologicalsecrets.
We recognise the high degree of trust that this requires on thepart 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, thesustainability of our business relies on us staying at the
cutting edge. Our engineering teams seek to innovate inways that grow the business, help our customers and keep
the Group at the forefront of the connectivity market. As aresult, we invest a significant amount into R&D. In FY 2023 we
expensed US$78.2‌m 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 Legalteams. 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 competitiveenvironment; and> reviewing and ensuring the correct implementation of
applicable policies and procedures.

Alphawave IP Group plc | Annual report and financial statements 2023

We ensure that all intellectual property is safeguarded throughthe application of:> a dedicated Invention Disclosure Policy, as well as related
procedures. The Invention Disclosure Policy is intended toensure 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 regulationof public technical disclosures to standards bodies,consortia, customers, vendors, partners and other publicvenues;> related restrictive provisions in our contracts of
employment;> robust information technology systems to prevent dataleakage; and> access controls to specific project data for employees andthird parties.
In line with our Company commitment to fostering innovationand supporting the next generation of innovators, eachinnovation disclosure submitted to the IP Committee by
employees is considered for an innovation award. Recipientsof these awards are recognised at an all-hands event with acommemorative 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.

51

ESG

continued

Intellectual property

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 atlower 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 digitalisationaccounted for around 300 Mt CO2‑eq in 2020, equivalent to0.9% of energy‑related GHG emissions or 0.6% of total GHG
emissions1. Connectivity accounts for 20% to 40% of thepower in data centres, and our technology is helping to reduce
it by approximately 25% to 40%.
Reliable and power-efficient data transmission sits at thecore of industry efforts to improve energy efficiency and help
reduce carbon emissions. As published by
the Global Semiconductor Mobile Association in its Stateof the Industry on Climate Action 2022 report, AI, ML andvirtualisation are helping to optimise power use in equipment,
centralising network resources (enabling synergies)
and avoiding unnecessary heating or air-conditioning2.
Our technology enables the flow of data necessary toenable this.

Our technology reduces the number of components neededin 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 theenergy-per-bit transmitted. On average the adoption of asmaller 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 ofapproximately 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 aggregationor sharing of memory or storage, reducing the amountof memory required for data centre compute byapproximately 30%, lowering the environmental footprintof memory manufacturing.

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

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STRATEGIC REPORTGOVERNANCE

Minimisation of negative product impacts
The nature of our integrated circuits means that theiractual 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 overtheir lifecycle. This includes efforts to reduce the size of
our integrated circuits, thus reducing the amount of input
materials required.

Focus areas in 2024

FINANCIALS

ADDITIONAL INFORMATION

Investing in the future of AI compute
In 2023, we continued to invest in key connectivity
technologies for AI compute, such as PCIe6 and PCIe71,
CXL2 and UCIe3 (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 optimisedcustom silicon for AI compute.

> Ongoing development of technologies that enable AI.
> Increase collaboration across teams to foster
more innovation.

Power consumption breakdown in data centre
50%

15%

_ 20%

30%

Servers (20% connectivity)

networking and storage

cooling

10%

10%

_ 35%

Power consumption associated with connectivity
10%

At least

20%-40%25%-40% Savingsof the data centre power consumption relates
to connectivity.

Our connectivity technology enables powersavings of between 25%-40%. That is
approximately 10% power savings of theoverall data centre power consumption.

Source: Company
1. https://pcisig.com.
2. HOME | Compute Express Link.
3. Home | My Site (uciexpress.org).

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 andsuppliers.
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 hostsocieties, including relevant anti‑bribery and corruption
laws.
Any breach of our legal obligations or our customers’
and partners’ trust has the potential to compromise ourbusiness, 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; andselective disclosure.

For further information on our policies see
www.awavesemi.com. Our Code of Ethics and BusinessConduct 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.

54

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 humantrafficking 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 andverification, 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 remainbound 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 atwww.awavesemi.com.

Anti-fraud and dishonesty
Compliance with our Anti-Fraud and Dishonesty Policy
ensures transparency and accountability in how ouradministrative processes are carried out and the decisions
we make. This policy includes topics such as fraud, theft andabuse of position.
The Company seeks to foster honesty and integrity in its
entire workforce. Directors and staff are expected to lead byexample in adhering to policies, procedures and practices.

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STRATEGIC REPORTGOVERNANCE

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 othercriminal activity, can report it to the confidential email address
ombudsman@awavesemi.com or by contacting the Senior
Independent Director. Employees or associated persons whoreport such issues in good faith will be supported by theCompany. The Company seeks to ensure that the individual
is not subjected to detrimental treatment as a consequenceof his/her report and any instances of such behaviour will betreated as a disciplinary offence. Our Whistleblowing Policy isavailable to all employees.
In 2023 there was an incident reported through thesewhistleblowing channels (2022: no incidents). The Company
engaged an independent third party to investigate theaccuracy of the reported incident. The report was determined
to be accurate and as a result the employment contract of oneof our employees was immediately terminated.

Alphawave IP Group plc | Annual report and financial statements 2023

FINANCIALS

ADDITIONAL INFORMATION

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 andWhistleblowing Policy.
Overall responsibility for managing the risk of fraud sits with
the Chief Financial Officer. Day-to-day responsibility has beendelegated to the Senior Director of Group Finance who acts onbehalf of the Chief Financial Officer.
For further details or to receive a copy of the policy pleaseemail info@awavesemi.com

Performance
In 2023, all new employees covered our Code of Ethics andBusiness 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.

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 acrossour expanded enterprise. A major achievement was theintegration 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 andregularly 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 Groupto enforce robust network firewall policies across our global
network, ensuring superior security and connectivity.
Central to our integration strategy was the implementation ofcentralised 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.

We also engage in annual third-party penetration testing ofour business and customer networks, along with continuous
vulnerability scans of servers, applications, endpoints andnetwork equipment. Any vulnerabilities categorised as critical,
high or medium risks are addressed promptly. Moreover, weplay an active role in global and professional groups focusedon shaping future standards for a more secure, safe andprivacy‑conscious digital environment, such as the Instituteof Electrical and Electronics Engineers.
Group-wide Security policies and IT controls are regularly
reviewed and updated by the Security Council, which ischaired by our IT Director. Our policies seek to address theregulatory 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 planningand documented them through business continuity plans.
Our Incident Response Programme facilitates an integrated
response to potential cybersecurity events.

These steps towards implementing a unified IT infrastructure
have significantly enhanced our operational resilience andpositioned 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.

56

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STRATEGIC REPORTGOVERNANCE

Security training and awarenessWe are committed to regularly improving our employees’
understanding and awareness of security and privacy
matters. This is in response to the rising number ofsignificant 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 exercisesthat encompass a large portion of our workforce, equippingthem 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

FINANCIALS

ADDITIONAL INFORMATIONOur new Security teamIn 2024, we plan to establish a dedicated team at theforefront of our cybersecurity initiatives, focusing on
enhancing compliance and IT controls. Their expertiseand specialised focus will enable us to implement
more robust security measures, conduct in-depth
risk assessments and respond more effectively topotential threats.
This is aligned with our broader goal of ensuring thehighest levels of data protection and network security,
thereby maintaining the trust and confidence of ourclients and stakeholders.
We believe that these enhancements in our cybersecurity
framework will significantly contribute to the resilienceand success of our organisation in the digital era.

> Formation of a dedicated Security team.
> Rollout of a new enterprise system.

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Community engagement
Context

Key initiatives

2023 was the second year of our community engagement
programme. As an organisation, it is important to us that weengage with the communities in which we operate.

In 2023, the Company donated approximately US$37,000
globally to support local organisations and charities(FY 2022: US$30,000).

Our corporate giving programme provides additional support
by matching employee donations to local charities andorganisations.

Additionally, our internship programmes in India and Canada
work with local universities and organisations to make apositive contribution to the promotion of science, technology,
engineering and mathematics (STEM) education and careers
in engineering. The objective of this effort is to support thenext wave of innovators and expanding the talent pipeline.
For more information see the Our People section.

Our community engagement activities seek to improve thewelfare 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 andnot‑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 toensure that local engagement is aligned with our principles
and values, to co-ordinate Group-wide initiatives and to shareexperiences.
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 tosupport local and not-for-profit organisations that are ofinterest 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).

58

In 2023 we rolled out Keen to Help, an external platform
through which our employees can request and search forvolunteer 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 tounprivileged 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 thatfacilitate volunteering.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Alphawave Semi partnering with the Dream
School Foundation in India
Alphawave Semi has partnered with the DSF in India,
which provides educational support to underprivilegedchildren. The DSF strives to break the cycle ofsocio‑economic vulnerability faced by children and theirfamilies, and help them to help themselves through thepower of education. It helps children and parents travel
the path from ‘schools to livelihood’.
Through TYDE we support students fromsocio‑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 ofthe infrastructure and the selection of the equipment
required. Our volunteers provide intensive mentoring andcoaching as well as providing other support to students.

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 414CBof the Companies Act 2006. In 2023 we joined the UNGC. In this report we have mapped ourbusiness 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.
Reportingrequirements
Environmental
matters
TCFD andCompanies Act
climate‑related
financialdisclosures
Employees

Human rights

Social matters

60

Policies and standards
that inform our approach

Outcomesof the policies> Environmental Compliance Policy (Supply Chain).

Page 50> TCFD framework.
> Companies Act climate-related financial disclosures.

Pages 44 to 48> Code of Ethics and Business Conduct.
> Our culture and values.
> Country-specific HR policies.

Our People and culture,pages 38 to 43

>
>
>
>
>
>
>
>

Our People, pages 38 to 43;

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).

> ESG Policy.

Appendix

Supply Chain,pages 49 and 50

Societal benefits including
community engagementon pages 58 and 59

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORT

Reportingrequirements
Anti-corruption
and anti‑bribery

Business model

Principal risks
and uncertainties

Non-financial
KPIs

Tax strategy

GOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Policies and standards
that inform our approach

Outcomesof the policies

>
>
>
>
>
>
>

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).

> N/A.

Business Modelpages 14 to 17

>
>
>
>

Pages 56, 57 and 74

Confidential Information and IP Policy.
IT Disaster Recovery Plan.
IT Incident Management Policy.
Risk Management Policy.

> SASB.
> UNGC.
> UN SDGs.

Managing our resources andrelationships, page 34

We recognise our social responsibility to pay tax in the jurisdictions in which we operate. We act withfull 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.

Alphawave IP Group plc | Annual report and financial statements 2023

61

KPIs

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 performanceagainst our long-term objectives.

Non-financial
Employee turnover (%)
2023

Engineering R&D1 (%)
7%

2022
2021

10%
7%

2023

89%

2022

89%

2021

87%

Link to strategy:

Link to strategy:

Description:

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 recruitand retain experienced engineering and commercial
professionals is vital given the strong competition for skillsin the sector, ageing population and our business growthambitions.

Number of employees working in research anddevelopment 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 ourengineering talent and our capacity for innovation, which
is a key component of our strategy.

Performance:

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 Septemberand 13 October 2022, respectively. Our ability to recruitand retain engineering professionals remained high.
The Company has a performance management system toensure we reward our best employees through appropriate
mechanisms.

In 2023, the percentage of employees working in researchand development remained stable at 89% (FY 2022: 89%).
FY 2022 included R&D employees who joined the businessthrough the acquisitions of Precise‑ITC, OpenFive andBanias Labs.

Technology leadership
Expansion
Innovation

1. Headcount numbers throughout the report exclude interns. In FY 2021 there were five interns who were previously reported as R&D headcount.

62

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Our key performance indicators seek to ensure performance is aligned with our strategy as wellas the key interests of our stakeholders. Additionally, the Company works with a wide range of
metrics covering different aspects of our business activities.

Bookings1 (US$m)

Backlog excluding royalties (US$m)

2023
2022
2021

US$383.9m
US$228.1m
US$244.7m

2023

US$354.9m

2022
2021

US$379.7m
US$168.6m

Link to strategy:

Link to strategy:

Description:

Description:

Bookings are a non-IFRS measure representing legallybinding and largely non-cancellable commitments bycustomers to license our technology. Our bookingscomprise licence fees, non-recurring engineering support
and, in some instances, our estimate of potential futureroyalties. A portion of our bookings may not convert torevenue if those royalties do not materialise or customers
are unable to pay us.

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:

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.

Backlog, excluding royalties, decreased by 7%. This was
mainly driven by adjustments and bookings cancellationsof 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.

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 contractuallycommitted royalty pre‑payments on commencement of customer silicon shipments or, in limited instances, on sensitised volume estimates provided bycustomers.

Alphawave IP Group plc | Annual report and financial statements 2023

63

KPIs

continued

Non-financial continued

Financial

End-customers

Revenue (US$m)

2023

103

2022
2021

80
20

2023

US$321.7m

2022
2021

US$185.4m
US$89.9m

Link to strategy:

Link to strategy:

Description:

Description:

End-customers is a non-IFRS measure representing thenumber of unique end-customers that we recogniserevenue 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.

Our revenue is an IFRS financial measure anddemonstrates 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 arehighly negotiated and invoicing and cash collection may
lead or lag revenue recognition.

Performance:

Performance:

Through organic growth and acquisitions wesignificantly increased the number of revenue-generating
customers over the last three years. The number ofrevenue‑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.

We delivered 74% revenue growth in FY 2023, driven
largely in China and North America. This was the result oforganic growth as well as the revenue contribution from theacquisition of OpenFive.

Technology leadership
Expansion
Innovation

64

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Adjusted EBITDA1 (US$m) and margin

Cash generated from operations2 (US$m)

2023

2023

2022
2021

US$62.6m 19%
US$46.8m 25%
US$51.8m 58%

2022

US$25.5m
US$1.0m

2021

US$26.5m

Link to strategy:

Link to strategy:

Description:

Description:

Adjusted EBITDA is a non-IFRS financial measuredefined 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 isreconciled in note 4 Alternative performance measures(APMs).

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:

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 andscale-up our operations to support future revenue growth.
Adjusted EBITDA margin was below FY 2022 at 19%.

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 andincluded US$28.2m of cash outflows related to deferredcompensation payable as part of the acquisitions ofPrecise-ITC and Banias.

1. Adjusted EBITDA excludes IPO-related non-recurring costs, foreign exchange adjustments, share-based payments, M&A transaction expenses and one‑timelegal 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).

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 weacquired 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 andsilicon 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.

In 2023 we delivered anotheryear of strong revenue
growth, up 74% and continued
to invest in our leading-edge
Our financial performance was below our guidance for theyear both on revenue and adjusted EBITDA, mainly due to ourengineering capabilities.
accelerated transition away from our legacy custom siliconbusiness in China and the timing of revenue recognition
on long-term contracts in advanced nodes combined
As a vertically integrated
with our continuing investment in advanced researchand development. Revenue grew 74% year-on-year frombusiness we are well
US$185.4m to US$321.7m and we delivered an adjusted
EBITDA margin of 19%, down 6% from 2022.
positioned to benefit fromIn 2023 we expensed US$78.2m in the development
the long-term investment inof products which will go into production in future years andwill contribute to accelerated revenue growth over the medium
AI and digital infrastructure.
term. The strong investment in our new opto-electronic
Tony Pialis
Chief Executive Officer

66

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 welay the foundations towards our longer-term strategic andfinancial targets. I am confident that with prudent financial
management and the successful execution of our productroadmaps and customer engagements we are on track to
become the next great global semiconductor company.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

Contracted order book and backlog
2023 bookings totalled US$383.9m, of which
US$274.0m represented IP licensing and NRE orders andUS$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 theacquisition 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 bycustom silicon orders from customers acquired through theacquisition of OpenFive.

FINANCIALS

ADDITIONAL INFORMATIONNorth 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

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

Revenues

EBITDA

9.8

49.3

62.6

46.8

Revenues for 2023 reached US$321.7m, 74% growthcompared to US$185.4m in 2022:

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 fromoperations

25.5

1.0

n/a

n/a

Backlog represents the value of contracted bookingsover 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 of2022 of US$379.7m. Backlog reduced year-on-year due toadjustments of US$87.3m, of which nearly half came from thebacklog acquired with OpenFive.

> 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 theyear. Our top five end-customers generated 46% of our2023 revenues (2022: 47%) or 42% excluding revenues
from the WiseWave subscription deal (2022: 39%); and> regions – in addition to WiseWave and VeriSilicon, thecontribution 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.

US$m

1. For definitions of non-IFRS measures see KPIs on page 62 and alternative performance measures section on page 186.

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)

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

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

Add/(deduct):Add/(deduct):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 ourbusiness into custom silicon development and silicon
products. Through the acquisition of OpenFive, we inherited
a number of contracts where gross margins are below ourGroup targets.
EBITDA1 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 ouracquisitions 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 fromlegacy OpenFive contracts and increased investment in R&D
activities.

Reflecting the continued scaling of the business and ouracquisitions, 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 in2022). 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% ofrevenue) 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 assessmentof 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 andgeographical spread of the Group to support our transition toa vertically integrated semiconductor company.
In the medium term, we anticipate modest growth in ourheadcount 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 newmembers of the senior management team who joined us in
2023 and the payment of the 2023 employee bonus in sharesrather 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 toan 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

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

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 andhigher interest rates.

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.

Finance expense in 2023 was US$8.8m, higher than the

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 froma reduction in prepayments which were unusually high at theend of 2022 due to payments made to foundries for silicon
production that occurred in 2023.

US$3.6m in 2022 due to interest associated with the five-year
Term Loan obtained in October 2022. US$9.5m of financeexpense 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 in2022). 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, comprisinga 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 functionof 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 theend of 2023 (2022: US$16.8m).

Alphawave IP Group plc | Annual report and financial statements 2023

We ended 2023 with aggregate goodwill of US$309.2m fromthe 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 thefinalisation 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 balanceis primarily due to the technology and IP acquired with
OpenFive and Banias Labs and the capitalisation of ourown 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 andprototyping. Leased property and equipment increasedslightly from US$14.6m at the end of 2022 to US$15.3m
at the end of 2023.
Investments in equity-accounted associates, namely thevalue of the investment in WiseWave, remains US$nil, as aresult 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 tothe high order intake for custom silicon products at the endof 2022 where customers were required to make advancepayment ahead of silicon being shipped to them in the firsthalf of 2023.

69

Financial review

continued

Summary balance sheet

Balance sheet, liquidity and cash flow
31 December 2023

Restated1
31 December 2022

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

US$m

AssetsDeferred tax assets

12.1

2.7

Total non-current assets

570.4

520.5

Total assets

866.6

903.3

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

Liabilities and equity

1. Restated to reflect the finalisation of the purchase price allocation on theacquisition of OpenFive (see notes 12 and 30).

At the end of 2023, our current and non-current loans andborrowings were US$220.4m, an increase of US$10.2m from2022 as a result of drawing down an additional US$15.0m
against the revolving credit facility and repayments of theterm 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 flowin 2022 included US$28.2m of cash outflows related todeferred compensation payable as part of the acquisitionsof 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 conditionalon continued employment with the Group. These payments
are included within working capital. Excluding these, ouroperating 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 andother 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 fromoperations and lower tax payments in 2023.
Capital expenditure during 2023 totalled US$73.6m(2022: US$15.5m), comprising US$18.6m of property andequipment (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 andequipment relates to purchases of lab and test equipment
which grew from US$0.1m in 2022 as we ramp our own
product development capabilities.

70

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

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 willtime this exit based on market conditions to maximise returnto shareholders.

Finally, as further detailed on page 140, the Directors haveadopted the going concern basis of accounting.

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 researchand development activities, as anticipated, as the Groupinvests in its own products business. On 22 September 2023,
we established an amendment to the Credit Agreement withthe 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 wecontinue to invest in growth and scale, we continue to closely
monitor our cash flow to ensure we maintain full compliancewith our debt covenants.

Cash generated fromoperations before changes
in working capital

67.3

51.0

Changes in working capital(41.7)(50.1)Cash generated fromoperations

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 andborrowings

15.0

210.0

Interest paid

(18.4)(0.7)

The Company’s capital allocation policy remains focused oninvestment 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 ormake significant acquisitions in the short or medium term.
We continue to review our capital allocation framework andavailable sources of capital to support our long-term growthstrategy.

Summary cash flow
US$m

Restated1
31 December 2023 31 December 2022

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

3.9

(74.9)

101.3

186.2

Currency translation gain/(loss)
on cash and cash equivalents
Cash and cash equivalents
at the end of the year

1. Restated to reflect the finalisation of the purchase price allocation on theacquisition of OpenFive (see notes 12 and 30).

Tony Pialis
Chief Executive Officer
23 April 2024

Alphawave IP Group plc | Annual report and financial statements 2023

71

Viability Statement
As required by the UK Corporate Governance Code, the Directors haveassessed the viability and prospects of the Group over an appropriate
period, significantly longer than twelve months from approval of thesefinancial statements.

In assessing the Group’s prospects, the Directors haveconsidered the recent financial performance, the current
financial position and the Group’s strategy, business modeland principal risks and uncertainties.

> 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.

The Group’s viability and prospects are primarily assessedon 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.

Viability assessment period

Financial year 2024 is based upon the Group’s budget.
Financial years 2025 and 2026 are based on extrapolationof 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 timingof 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, theDirectors have had regard to the following characteristics ofthe business:> Alphawave is a fast-growing semiconductor businesswith 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 andsemiconductor 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; and72

The Directors have determined that a period of three years
over which to assess the Group’s longer-term viability isappropriate 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 theGroup’s acquisitions, including the near-term period as theGroup transitions from some of the lower margin legacy
business from the OpenFive acquisition; and> a period in excess of three years is regarded as lessmeaningful 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 andscenarios modelled
The Directors’ assessment of viability builds upon the analysis
performed to support the going concern assessment andincorporates additional scenarios, regarded as severe or
extreme but plausible, that may be encountered over thethree-year assessment period. These scenarios are intended
to quantify the potential impact of one or more of theGroup’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 consideredas part of this assessment, we have only considered thosethat represent a severe but plausible scenario.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

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

Principal risks
included

1. 25% reduction in revenues and increase in borrowing costs> Managing our growth.
> Competition andfailure to maintain our
technology leadership.
> Customer
dependence.
> Customer demand.

We have modelled all revenue streams reducing by 25% from our base case plan over theassessment 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 theassessment period.
We assume no further investment in WiseWave and no sale of our stake in WiseWave
during the assessment period.

2. Geopolitical environment impacts our strategy in China
We have modelled that the Group generates no revenues from customers in China over theassessment period.
We assume that operating expenditures are reduced by 15% to mitigate the reduction inrevenues.
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.

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 halvefrom 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 falldue 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 theGroup will continue in operation and meet its liabilities as they fall due over this period.

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 have been reviewed by the Board, which hascompleted a robust assessment of the Group’s principal andemerging risks. The Board has reviewed the effectiveness of
the Group’s risk management and internal control systems.
For further information, please see page 98.

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, bothorganically 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 registerand determines the level of risk appetite, this being theamount of risk the Board is willing to allow the business toassume in pursuit of its objectives.

Emerging risks

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.

Given the rapid expansion of the business, the Group’s
acquisition strategy and the increasing importance ofsemiconductors 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 andemerging risks.

Board

Reporting escalation

Group leadership

Direction of oversight

Regions, functions and projects

74

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

Risk

FINANCIALS

ADDITIONAL INFORMATION

Mitigation
Increase

Managing our growth

Change in year

We have a limited operating history and are growing rapidly withincreased pressure on cash flows. If we do not manage ourgrowth successfully, fail to execute on our strategy, fail to meet
future debt covenants or maintain sufficient liquidity, or failto implement or maintain governance and control measures,
our business may be adversely impacted. We have rapidly
expanded our headcount and the complexity of our businessand operations, both organically and through acquisitions.

The executive management team meets formally on a weekly
basis to review current and future resourcing needs andpriorities. During 2023, we continued to expand our seniorleadership team and strengthened our administrative andoperational functions. We have strengthened the managementof commitments, payables and receivables to ensure timingaligns with Minimum Liquidity Requirement covenant. We alsoutilise external advisers to help manage our growth.

Competition and failure to maintainour technology leadership

Change in year

No change

We seek to maintain our competitive advantage by being
first to market with new IP as data speeds increase andmanufacturing sizes decrease. If these industry transitions
do not materialise, or are slower than anticipated, ourcompetitors may be able to introduce competing IP which
may diminish our competitive advantage and selling
prices. Our ability to maintain our technology leadershipis further dependent on our ability to attract R&D andengineering talent.

We offer competitive employment packages to retain
and incentivise our employees, as well as providing theopportunity to work in a dynamic and entrepreneurial culture.
Our ability to compete is also driven by our track record as atrusted partner and the continued addition of new products
and new functionality to our existing portfolio.

Customer dependence

Change in year

Our products and technology target AI, data centre andnetwork infrastructure markets, where there are a limited
number of customers. Further, the cost and complexity ofdeveloping semiconductors targeted by our IP limits thenumber of our potential addressable customers. In any
reporting period, a substantial part of our revenues may
be attributable to a small number of customers.

To date, we have been successful in both expanding ourcustomer base and winning repeat business from manyof our customers. We strive to maintain best‑in‑classexecution capabilities and technology to retain ourcustomers and win new customers. As we expand our
product offering by pursuing a vertically integrated model,
we expand our total addressable customer base.

Our Sales and Marketing team regularly monitor thecompetitive landscape to identify any new or potential
technology developments or products that may directly
or indirectly impact our business.

No change

In 2023, revenue concentration from our top three
end‑customers was 33%, which was below the prior year
(FY 2022: 36%).
Customer demand

Change in year

Demand for our technology is dependent on the continued
global growth in generation, storage and consumption ofdata 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.

There are no indications that the global appetite for datais 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 ourcustom silicon and standard product offerings, including
chiplets. Hyperscalers and carrier networks continue toinvest in leading technology through the economic cycles.

Alphawave IP Group plc | Annual report and financial statements 2023

No change75Principal risks

continued

Risk

Mitigation

Risks associated with WiseWave

Change in year

No change

WiseWave is today an important element of our strategy tomonetise 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 arisk that we are unable to collect receivables due and we areunable to realise the full value of our investment on exiting
the joint venture.

The legal agreements governing WiseWave give us a degreeof 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 proventrack record at large US and global semiconductor companies.
In 2022, we took the strategic decision to sell our shareholdingin WiseWave over the medium term and seek to maintain acommercial relationship over the long term.

Dependence on licensing revenues

Change in year

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 taketheir products to production or those products are notsuccessful, our royalty revenues may be delayed, diminishedor not materialise.

The acquisition of OpenFive has materially reduced ourdependency on IP licensing revenues as we seek to monetise
our IP through custom silicon.

Decrease

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 ourcustomers.
Leveraging our acquisition of Banias Labs, as we drive
revenues from our own products, our relative exposure to IP
licensing will also decrease.

Reliance on key personnel and ability to attract talent

Change in year

We rely on the senior management team and our businesscould be negatively impacted if we cannot retain andmotivate our key employees. Our ability to grow thebusiness is also dependent on attracting talent, particularly
in R&D and engineering, and if we are unable to do so ourbusiness may be negatively impacted.

Our senior management team and our employee base arehighly incentivised with equity and also the opportunity towork within a fast‑growing and dynamic environment at theleading edge of chip technology. In 2023, our headcountincreased from 695 to 829. See Our People section forfurther information.

External environment and events

Change in year

Semiconductors are becoming increasingly important as
countries and regions seek to guarantee supply and build
domestic supply chains, as well as restrict outside accessto their domestic technologies. Our business could be
impacted by the actions of governments, political eventsor instability, or changes in public policy in the countries inwhich we operate. The current conflict in the Middle East
potentially has wide-ranging impacts, including global
economic instability, increased geopolitical tensions anddisruption to our operations and supply chains.

We have a balance of customers in different regions, areexposed to multiple end-markets and have an increasingly
diversified portfolio of products.

76

No change

Increase

We seek to maintain good relations with regulatory agencies
in the regions where we operate. We seek to structure ourbusiness 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 thatprocess, we believe we have strengthened our relationshipwith US regulators.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

Risk

FINANCIALS

ADDITIONAL INFORMATION

Mitigation
No change

IP protection and infringement

Change in year

We protect our technology through trade secrets, contractual
provisions, confidentiality agreements, licences and othermethods. A failure to maintain and enforce our IP could
impair our competitiveness and adversely impact ourbusiness. 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 areunsuccessful in defending those claims, or we are obliged toindemnify our customers or partners in any such claims, it
could adversely impact our business.

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 ourcontracts 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, bothas customers and as manufacturing partners to ourcustomers. If foundries delay the introduction of newprocess nodes or customers choose not to develop siliconon 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 ourrevenues 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 withall leading foundry providers, our ability to mitigate this risk islimited. As we pursue a vertically integrated business model,
we become more reliant on third-party foundries and if theirability to supply us with silicon products is constrained, we
will be impacted more quickly and more severely.

Reliance on complex IT systems

Change in year

We rely heavily on IT systems to support our business
operations. The vast majority of our design tools, softwareand 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 todisruption, for example through malfunction or security
breaches, we may be prevented from developing our IP and
fulfilling our contracts with our customers.

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).

No change

Decrease

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.

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

Alphawave IP Group plc | Annual report and financial statements 2023

77

Board of Directors

The Board believes that thecurrent Directors bring to theCompany a desirable range ofskills and experience while atthe same time ensuring thatno individual (or small groupof 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 seniorindividuals in industries
including semiconductors,
telecommunications anddata networking, andwith operational, financial
and strategic skillsets
and experience.

John Lofton Holt

Tony Pialis
President & Chief Executive Officer

John Lofton Holt has served as strategic
adviser to management since 2019 and was
appointed as the Company’s Executive Chair
in 2021.

Tony Pialis co-founded Alphawave Semi in2017 and has since served as its President &Chief Executive Officer. Tony has extensive
experience as an entrepreneur in thesemiconductor 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 heserved 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 atIntel Corporation between 2012 and 2017.
During his tenure at Intel, Tony and his teamwon the prestigious Intel Achievement
Award for successfully delivering next
generation Ethernet and PCI-Express SerDes
solutions on Intel’s 22nm and 14nm process
technologies.

Executive ChairJohn has been a semiconductor
executive since the late 1990s and has
founded, funded, scaled and led multiple
semiconductor businesses, driving billionsof dollars in value for shareholders. He has
more than 25 years of experience as aninvestor 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 asa design engineer focusing on optics andelectronics for remote sensing and LIDAR
applications.
John holds a BSE in Electrical Engineeringfrom Princeton University and an MSE
in Electrical Engineering from Johns
Hopkins University.

External appointments
WiseWave Technology Co. Ltd, Director.

Tony holds a Bachelor of Science and Masterof Engineering in Electrical Engineering fromthe 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.

C

Committee memberships
C

78

Committee Chair

Audit Committee

Remuneration Committee

Nomination Committee

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATIONJan Frykhammar
Senior Independent Non-Executive
DirectorMichelle Senecal de Fonseca
Independent Non-Executive
Director

Victoria Hull
Independent Non-Executive
Director

Jan Frykhammar was appointed to theBoard in April 2021 as Senior Independent
Non‑Executive Director. Jan has years ofexperience as a senior executive, chair andnon-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, andserved as interim Chief Executive Officer until
2017. Currently Jan serves as an adviser toZinkworks Ltd, Sweepr Technologies Ltd andng-voice GmbH.

Michelle Senecal de Fonseca joined theBoard in April 2021. Her expertise is ininternational telecommunications andtechnology 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 theco‑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.

Victoria Hull was appointed to the Board in
April 2021. Victoria has over two decades ofsenior management experience including roles
as Executive Director and General Counselof Invensys plc, who she joined in 2001, andTelewest Communications plc, who shejoined in 1995. Prior to Telewest, she was asolicitor in the corporate finance departmentof Clifford Chance.

Jan has previously served as Chair of theBoard 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 holds Bachelor of Science degrees
in Business and Political Science from the
University of Kansas and an MBA from theThunderbird School of Global Management.

External appointments
FDM Group (Holdings) plc, NED, memberof the Remuneration, Audit and Nomination
Committees; Women in Telecoms andTechnology (WiTT) Limited, Director; Move
Capital LLP Investment, Board Member
and Shareholder; Arizona State University
Foundation UK company, Trustee.

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 andis 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 andis a member of the Nomination Committee.
Victoria is a NED at IQE plc where she chairs
the Remuneration Committee and is a memberof the Audit and Nomination Committees.
Victoria holds a Bachelor of Laws from the
University of Southampton and qualified as asolicitor 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

Alphawave IP Group plc | Annual report and financial statements 2023

79

Board of Directors

continued

Rosalind Singleton
Independent Non-Executive
Director

Paul Boudre
Independent Non-Executive
Director

Rosalind Singleton was appointed to the Board
in April 2021. She is a telecoms executive withover 30 years of experience across the sector.

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 theTechnology Committee at Comet Holding
AG, a Swiss firm developing and producing
innovative high-tech components andsystems based on x-ray and radio frequency.

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 anda 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 witha primary focus on tech businesses witha female founder and is a member of theAngel 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.

Sehat Sutardja
Executive Director
Sehat Sutardja was appointed to the Board
in April 2021. Sehat has extensive experiencein the semiconductor industry, havingco‑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.

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 experiencethrough his previous positions: managing
industrial operations for IBM Semiconductor,
STMicroelectronics, Motorola Semiconductorand Atmel. From 1997 to 2006, he managed
European operations for KLA‑Tencor, a leading
semiconductor equipment manufacturer.
Paul holds a graduate degree in Chemistryfrom France’s Ecole Nationale Supérieure deChimie de Toulouse.

External appointments
Silian Partners SA, CEO and Board member,
Unity Semiconductor SAS, Chair of theBoard; Comet Holding AG, Director; SCI
Pacabou, Director; SCI Farmers and CO,
Director; Tulle Holdings, Director.

In 2006, Sehat was named Inventor of theYear by the Silicon Valley Intellectual Property
Law Association. In 2010, he received theDistinguished Alumni Award from the Iowa
State University Alumni Association, andin 2013, he received the Dr. Morris Chang
Exemplary Leadership Award.
Sehat holds a PhD in Electronic Engineeringand Computer Science from the University ofCalifornia, Berkeley. He is also an IEEE Fellowof 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.

Committee memberships
C

80

Committee Chair

Audit Committee

Remuneration Committee

Nomination Committee

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

Susan Buttsworth
Independent Non-Executive
Director

David Reeder
Independent Non-Executive
Director

Susan Buttsworth was appointed to theBoard in April 2021. At that time she wasThree UK’s Chief Operating Officer andresponsible for driving its overall network
and IT transformation. Susan has worked
for the CK Hutchison Group since 1996 andhas 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 digitalconsumer products and services. She iscurrently working for CKHH as a seniorconsultant.

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 servedin senior finance and operational roles in
global high technology companies including:GlobalFoundries, Texas Instruments,
Broadcom, Cisco and Lexmark.

Susan holds a bachelor’s degree in
Commerce from the University of New South
Wales, a Master’s degree in Commercefrom 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.

Prior to GlobalFoundries, David was on the
Board of Directors and served as a memberof the Audit Committee at Milacron Holdings
Corp until its acquisition by HillenbrandInc in November 2019. Previously, David
was Chief Executive Officer for Tower Hill
Insurance Group from 2017 to 2020. Prior tothat, 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.

ADDITIONAL INFORMATION

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 asenior 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 in2000 with Whitbread plc.
Kim holds a Masters degree in Psychology
from Middlesex University and is a Fellow of
the Chartered Governance Institute.

David holds a Bachelor of Science degree in
Chemical Engineering from the Universityof Arkansas and a Master of Business
Administration degree from Southern
Methodist University.

Alphawave IP Group plc | Annual report and financial statements 2023

81

Management team

Our management
team nurtures anengineering‑focused culturethat enables us todrive innovation
for next generation
technologies
under the directionof some of thebest engineering
talent in wired
connectivity IP.
John Lofton Holt
Executive Chair
Tony Pialis
President & Chief
Executive Officer

Babak Samimi
SVP and General
Manager,Connectivity
Products
Babak Samimi joined theCompany in November
2022 and brings awealth of experiencein the semiconductor
industry. Prior to joining
Alphawave, Babak was
the Corporate VP for
Microchip Technology,
Communications
Networking Business,
focused on enterprise,
telecom and cloudservice providers. Before
joining Microchip, he
was with Microsemi
Corporation and PMC
Sierra.
Babak holds a Bachelor
degree in ElectricalEngineering from theMemorial University of
Newfoundland.

Jonathan Rogers
SVP, Engineering
Jonathan Rogers
co‑founded Alphawave
Semi in 2017 and hassince served as its
Senior Vice Presidentof Engineering, leading
the Group’s researchand development
function. He has over 14
years’ experience as anengineering executive,
including as Director ofEngineering and SeniorPrincipal Engineer
at Intel Corporation
between 2012 and2017, and Director of
Design Engineering
at V Semiconductor
and Gennum. He wasalso the Director of IP
Development and ICDesigner at Snowbush
Microelectronics Inc.

Rahul Mathur
Chief Financial
Officer

Maia Jones
VP, People, Places
and Culture

Rahul joined Alphawave
IP Group plc as Chief
Financial Officer in
October 2023.

Maia Jones is anaccomplished executive
with extensive experiencein diverse sectors,
including government,
public and technology.

Rahul had served as
CFO of Avantus since2021 and as CFO and
Senior Vice President of
Finance of Rambus from2016 to 2021. During
his tenure at Rambus,
he was an integral partof its transformation
as a product company,
consistently deliveringstrong 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 Financeat Spansion before thecompany was acquired
by Cypress. He has
extensive experience in
M&A, corporate finance,
strategic planning,
investor relations and risk
management.

As VP of People,
Places and Culture at
Alphawave, she leads
the Company’s Human
Resources, Facilities andAdministrative functions,attracting and retaining
top talent and fostering a
positive work culture. Withprior experience at two
leading semiconductor
companies and a medical
device start‑up, Maia has
a proven track record ofsuccess. Her nine yearsof experience with theOntario government haveuniquely positioned her tolead Alphawave’s People,
Places and Culture team.

Rahul holds a Bachelorof Arts in appliedmathematics from
Dartmouth College
and an MBA from theWharton School ofBusiness at the Universityof Pennsylvania.

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

Mohit Gupta
SVP and General
Manager, Custom
SiliconTony Chan
Carusone
Chief Technology
Officer

Saeid Ghafouri
SVP, Worldwide
Sales

Sudhir Mallya
SVP, Corporate
Marketing

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 Siliconbusiness unit. Mohit
brings more than two
decades of experiencein semiconductor IP and
SoC domain-leadingworldwide engineering,
application engineering,products and field teams.
Prior to Alphawave, he led
the IP and Custom SoC
business units at SiFive
and Rambus.

Tony Chan Carusone
was appointed Chief
Technology Officer inJanuary 2022. Tony has
been a professor of
Electrical and Computer
Engineering at the
University of Toronto
since 2001. He hasover 100 publications,
including eight
award‑winning best
papers, focused on
integrated circuits for
digital communication.
Tony has served as aDistinguished Lecturer
for the IEEE Solid‑State
Circuits Society andon the Technical
Programme Committeesof the world’s leading
circuits conferences.
He co-authored theclassic textbooks ‘Analog
Integrated Circuit Design’and ‘Microelectronic
Circuits’ and he is a
Fellow of the IEEE.
Tony has also beena consultant to thesemiconductor industry
for over 20 years, working
with both start-ups andsome of the largest
technology companies
in the world.

Saeid Ghafouri joined
Alphawave Semi in
February 2021 as
Senior Vice Presidentof Worldwide Sales.
With over 30 yearsof experience in thesemiconductor industry,he has helped several
companies grow fromearly stages to large
successful enterprises.
Among them are
Cadence Design
Systems, Synopsys andMagma Design, where he
ran worldwide sales andmanaged to grow theirrevenue from US$40m
to over US$200m by
meeting or exceeding
Wall Street’s expectationsfor 23 quarters in a row.
Saeid holds a BS in
Electrical Engineering.

Sudhir Mallya is SeniorVice President ofCorporate Marketing at
Alphawave Semi. He is
based in Silicon Valley
and has over 25 yearsof experience at leading
global semiconductor
companies with executive
positions in engineering,marketing and business
unit management.
His experience spanscustom silicon (ASICs)
and application-specific(ASSPs) products
across multiple
application domains
including data centres,
networking, storageand edge‑computing.
He has an MSEE from the
University of Cincinnati
and a bachelor’s inelectrical engineeringfrom the Indian Instituteof Technology, Bombay.

Mohit holds a Bachelor ofEngineering in Electronics
and Communications
from Thapar University
and Master of Sciencein Microelectronics
from BITS, Pilani. He
also holds an executive
MBA in International
Business from the Indian
Institute of Management,
Calcutta.

ADDITIONAL INFORMATION

Raj Mahadevan
SVP, Operations
Raj Mahadevanco‑founded Alphawave
Semi in 2017 and hassince served as its
Senior Vice Presidentof Operations and Chief
Operating Officer. Raj
has more than two
decades of engineering
executive experiencein 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 inEngineering Scienceand a Master of Applied
Science in Engineeringfrom the Universityof Toronto.

Tony holds a B.A.Sc.
in Engineering Scienceand a PhD in ElectricalEngineering from the
University of Toronto.

Alphawave IP Group plc | Annual report and financial statements 2023

83

Board leadership and Company purpose

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“The Board’s commitment
to strong governancesupports the long-term
success of the Group.”John Lofton Holt
Executive Chair

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 isfundamental to supporting the sound management andlong-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 withintegrity, fairness, transparency and accountability.
The Board is firmly committed to the highest standardsof corporate governance. Given that the Company has astandard 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 therequirements for listed companies under the Listing Rules.
The Code recommends that at least half the board of directorsof 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 otherrelationship that could materially interfere with the exerciseof their independent judgement.

84

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATIONThe Code also recommends that, on appointment, the chairof 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 requirements under the Disclosure Guidance andTransparency Rules DTR 7.2 are covered in greater detailthroughout the annual report, for which we provide a reference
as follows:

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 whileat the same time ensuring that no individual (or small groupof 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 seniorindependent director to provide a sounding board for the chair
and to serve as an intermediary for the other directors whennecessary. The Company appointed Jan Frykhammar as its
Senior Independent Director. In compliance with the Code, theBoard has established three committees: an Audit Committee,
a Nomination Committee and a Remuneration Committee, andhas also established a separate Market Disclosure Committee.
If the need should arise, the Board may set up additional
committees as appropriate.

> Directors’ statement with regard to the appropriateness ofadopting 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 anddivision 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 isset out on pages 94 to 99; and> the Directors’ statement on fair, balanced andunderstandable is set out on page 97.

Compliance with the Code and Listing Rules

John Lofton HoltThis statement, together with the various Board Committee
reports and relevant sections of the strategic report includedin this annual report, describes the Board’s applicationof and compliance with the Code published by the FRC(www.‌frc.‌org.‌uk).

Executive Chair
23 April 2024

This corporate governance statement, together with therest 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 otherapplicable requirements, including provisions of the Listing
Rules and the Disclosure Guidance and Transparency Rulesof the Financial Conduct Authority.

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85

Board leadership and Company purpose

Our governance framework
The Board

continued> approving the Group’s businessstrategy proposed by management,
as well as setting its purpose, values,
standards and culture and ensuringthat these are aligned;> oversight of effective Grouprisk management and internal
control processes including arobust 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

Board activities

Division of responsibilities

Pages 78 to 81

Page 87

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 Boardon significant reporting issues andjudgements.

Ensures there is a formal andtransparent process for establishing
the Directors’ Remuneration Policy.

Facilitates the Board in meeting
its responsibilities to plan andexecute timely Chief Executive
Officer succession and works with
the Chief Executive Officer to planand execute Executive Director
succession.

The Board is responsible for the overall
leadership of the Group and setting theGroup’s values and standards, with theoverall aim of delivering shareholder
value. Principally, we achieve thisthrough:

Monitors the effectivenessof internal control and risk
management systems and theeffectiveness and objectivity ofinternal and external auditors.
Approves the internal audit plan andrecommends the appointment of
the external auditor.
Read the Audit Committee report.

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 anddevelopment of share plans
operated for Executive Directors
and others requiring shareholder
approval, and approves andassesses performance targets
where applicable.
Reviews workforce remuneration
practices and policies when setting
executive remuneration, as wellas the alignment of incentives andawards with culture.
Read the Remuneration
Committee report.

86

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 theBoard and its principal Committees.
Oversees development of a diverse
pipeline in the executive succession
plan and talent management.
Assists the Board in thedevelopment of a Group-wide
approach to all forms of diversity
and inclusion.
Read the Nomination
Committee report.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

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 governanceframework is designed to encourage a clear understanding
and delivery of its strategy. The Board has accountability forthe oversight, governance, direction, long-term sustainability
and success of the business and affairs of the Group andis 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, hasestablished an Audit Committee, a Nomination Committee
and a Remuneration Committee. The terms of reference foreach 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 theBoard 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 performanceof the Group, scaling the business and expanding productofferings, 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 theinterests of wider stakeholders as required under section
172(1) of the Companies Act 2006. Board meetings are oneof the mechanisms through which the Board discharges
this duty.
Further information about Board decisions is included in thestrategic report.

CultureThe Board is deeply committed to fostering and nurturing
the Company’s collaborative and innovative culture, rooted
in values of integrity, inclusivity and agility. Together withthe management, we firmly believe that the ingenuity andadaptability 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 approachhas empowered us to attract and retain some of the finest
engineering minds in the interconnected world. Researchand development/engineering comprise a significant 89% of
our workforce, highlighting our dedication to innovation andforward-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 andmonitoring our culture as we evolve and expand.

Alphawave IP Group plc | Annual report and financial statements 2023

FINANCIALS

ADDITIONAL INFORMATION

We actively seek input from our employees throughengagement 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 forour 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 morethan 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 thefounders to make a mandatory offer if their shareholding in
the Company increases as a result of any buyback of sharesby 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 theAlphawave Toronto (Canada) headquarters. The two-day
visit incorporated the scheduled Board and Committee
meetings and also provided the Board the opportunity to meetwith staff over breakfast and tour the on-site labs. The visit
enabled the Board to see some of the changes made by theacquisition 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 andvalues of Alphawave, the Board retains a schedule of mattersreserved for its decision.

87

Board leadership and Company purpose

continued

Board composition

Company Secretary

The Board is comprised of ten Directors: the Executive
Chair, the Chief Executive Officer, one Executive Director
and seven independent Non-Executive Directors, one ofwhom 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 listedcompany, excluding the chair, should comprise non-executive
directors determined by the board to be independent incharacter and judgement and free from relationships orcircumstances which may affect, or could appear to affect,
the director’s judgement. The Company regards all of theNon‑Executive Directors as ‘independent Non-Executive
Directors’ within the meaning of the Code and free from any
business or other relationship that could materially interferewith the exercise of their independent judgement. The Board
also considers that it has complied with the requirementsof the Code in relation to the balance of Executive andindependent Non-Executive Directors on the Board, andthe composition of the Company’s Audit Committee,
Remuneration Committee and Nomination Committee.

The Company Secretary acts as the Secretary to the Board andall Company Committees, and attends all Board and Committee
meetings. The Company Secretary supports the Chair andensures that the Board and Committee members receive all theinformation needed to perform their roles, including receiving
papers in a timely manner. The Company Secretary advises theBoard 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 theirprofessional development, and provides advice and support
to the Directors when required.

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 apivotal 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 ofBoard 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.

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 theboardroom, 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 tofostering a positive and inclusive workplace culture, promoting
employee satisfaction and productivity, and driving overallbusiness 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 theirperformance. Directors are encouraged to attend all Board andCommittee meetings but sometimes due to time differences
or prior business activities a Director may not always beable to attend. When this happens and a Director is unable
to attend a Board or Committee meeting, they continue toreceive all papers. They can communicate their comments andobservations on the matters to be considered at the meetingin advance via the Executive Chair, the Company Secretary, theSenior 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 ofthese regular meetings.
The Executive Chair holds regular meetings with each of the
Non-Executive Directors.

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

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.
Name1,2

Board3,4

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 Reeder5

2/2

2/2

n/a

2/2

Rosalind Singleton

5/5

n/a

n/a

n/a

Daniel Aharoni6

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 toattend 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.

Alphawave IP Group plc | Annual report and financial statements 2023

89

Composition, succession and evaluation
NOMINATION COMMITTEE REPORT

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 levelof 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 wereno relationships or circumstances which are likely to affecttheir judgement.

Purpose and role

“The Committee actively
contributes to the Board’s
efforts in ensuring thelong-term success of thebusiness by considering
the future needs of theBoard, in terms of bothskills and diversity.”
John Lofton Holt
Chair of the Nomination Committee

The Committee is an important component of theCompany’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 alsoseeks to ensure that talented individuals are provided with
opportunities to develop.
The Committee’s work extends beyond the compositionof the main Board and the Committee was involved in theselection 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 teamsection. The Committee looks forward to working withhim 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 andJohn Lofton Holt would step back from the Committee.
The biographies of each member of the Committee are setout on the Board of Directors pages.
The UK Corporate Governance Code 2018 (the ‘Code’)
recommends that a majority of the members of a nominationcommittee 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 theBoard on the key matters discussed.

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STRATEGIC REPORTGOVERNANCE

Committee evaluation
The Committee’s performance and effectiveness werereviewed 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 bya Non‑Executive Director and this has been actioned.
All members allocated sufficient time to the Committeewith 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 Committeesof 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 theBoard 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 thebenefits 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 andhave sufficient time to meet their responsibilities.
The Nomination Committee is satisfied that the Board has
the appropriate range of skills, experience, independence andknowledge of the Group to enable it to discharge its duties andresponsibilities effectively.

Focus areas for 2024
As part of the Nomination Committee’s remit, it will look at thefollowing 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.

Alphawave IP Group plc | Annual report and financial statements 2023

FINANCIALS

ADDITIONAL INFORMATION

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 andeffectiveness 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 efficiencyof the Board and its Committees, the focus and functionalityof 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 theChief 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 futureappointments and succession planning.
While the findings were positive, there’s always room for
improvement. As part of a balanced process, we’ll focus onrefining our practices. Looking ahead, the Chair’s priorities forthe coming year will align with the evaluation outcomes.
The Board intends to comply with the Code guidance thatan externally facilitated evaluation should take place at least
every three years.

91Composition, succession and evaluation

continued

NOMINATION COMMITTEE REPORTOur approach to election and re-election

Diversity

The Board has opted to comply with provision 18 of theCode 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.

At Alphawave Semi, ensuring diverse representation and thebold ideas it creates is something we take seriously from the
top down.

The Board considers that all the current Directors continue tobe 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 appointmentof 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 listedcompanies, 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 astanding item at all Board meetings. Additional training isavailable on request, so that Directors can update their skills
and knowledge as applicable.
The Board plans training on a forward-looking basis, andupon collecting feedback from Non-Executive Directors on
topics of interest. Board members receive formal papers aweek ahead of each Board or Committee meeting, whichenables them to make informed decisions on the issues
under consideration. In addition to formal Board meetings,
the Executive Chair maintains regular contact throughout theyear 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 takeindependent 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 minutesof each Board and Committee meeting following the meetingfor comment and approval to ensure an accurate record iscaptured.

92

Diversity is one of the strongest assets of our organisation.
The Group is committed to promoting the recognition andappreciation of our diverse and rich culture and believes that
it is critical to its success to promote freedom of thought andopinion in a respectful environment. The decisions we makeare 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 believethat having Board members who collectively possessa broad range of social, educational and professional
backgrounds, together with different skills, experiences andcognitive 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
Numberof senior
positions on
NumberNumber Percentage
the Boardof Board Percentage(CEO, SID in executive in executive
members of the Board
and Chair) management management

Men

6

60%

3

8

89%

Women

4

40%

0

1

11%

Not specified/prefer not to say

—

—

—

—

—

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

Numberof senior
positions on
NumberNumber Percentage
the Boardof Board Percentage(CEO, SID in executive in executive
members of the Board
and Chair) management management

White British
or other White(including
minority-whitegroups)

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%

Board geographic diversity
John Lofton Holt
Tony Pialis

Jan Frykhammar
Michelle Senecal de Fonseca
Rosalind Singleton
Paul Boudre
Susan Buttsworth
David Reeder

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•

SemiData
M&A Strategy conductors Telecoms networking

Jan Frykhammar

•

•
•
•
•

Michelle Senecalde Fonseca••

Rosalind
Singleton
Paul Boudre

Tony Pialis
Sehat Sutardja

Susan
Buttsworth•

David Reeder••

Victoria Hull

ADDITIONAL INFORMATION

Sehat Sutardja

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.

John Lofton Holt

FINANCIALS

•
•
•
•

•
•
•
•

Victoria Hull
When considering Board appointments and internal
promotions at a senior level, the Group will continue to takeaccount of relevant voluntary guidelines in fulfilling their role
regarding diversity, while seeking to ensure that each post isoffered 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 andsuccession planning for the year ahead. A range of diversity
factors will be taken into account in determining optimalcomposition, together with the need to balance theircomposition and refresh this progressively over time.

Succession planning, Board independence
and tenure of service
New Directors will typically be appointed by the Boardand then put forward for election by shareholders at thesubsequent AGM.
All Non-Executive Directors are appointed for initial termsof two three-year terms and may be terminated by either
party upon one month’s written notice or by shareholder voteat 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.

•

•
•
•
•

•

•

•

•

•

•

• John Lofton Holt

•

•

•

•

•

•
•

•

Full details of the remuneration of the Non-Executive Directors
can be found in the Directors’ remuneration report.

Chair of the Nomination Committee••

23 April 2024••

Alphawave IP Group plc | Annual report and financial statements 2023

93

Audit, risk and internal control
AUDIT COMMITTEE REPORT

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 toprovide an understanding of the work the Committee hasdone and to provide an insight into how the Committee hasdischarged 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 FinanceDirector 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 thesemiconductor industry.

“In 2023 the Group madesignificant infrastructure
investments to improvefinancial controls and set
the platform for future
growth.”Jan Frykhammar
Chair of the Audit Committee

Much of the work of the Committee in the first half of thefinancial 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 andassurance 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 businessacquisitions, carve-outs, debt financing and a 351% increasein headcount.
The audited results for financial year 2022 were publishedon 19 May 2023, which fell outside of the deadline requiredby the Financial Conduct Authority’s Disclosure andTransparency 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 haveconcentrated on ensuring consistency and continued
accuracy of financial reporting, compliance with our debt
covenants, trading updates and monitoring the performanceof 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 madeto WiseWave. We provided a satisfactory explanation and the
FRC closed this enquiry.

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STRATEGIC REPORTGOVERNANCE

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 offinancial assets by foreign currency that indicated that a credit
balance was included in within cash and cash equivalentsin the balance sheet. We explained the events that led to thecredit balance and confirmed that there were no other material
credit balances within cash and cash equivalents. Given theparticular 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 andaccounts and does not benefit from detailed knowledgeof our business nor an understanding of the underlying
transaction entered into.
Whilst this Audit Committee report contains some of thematters 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 andother 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 effectivenessof the external auditor. The following sections of this report
describe the key activities of the Audit Committee in each ofthese areas. The Board reviewed and approved the terms ofreference of the Audit Committee. For more information on
the Committee’s terms of reference visit: https://awavesemi.
com/investors/corporate-governance/.

FINANCIALS

ADDITIONAL INFORMATION

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 isregularly reviewed in conjunction with the Company Secretaryand 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 understandingof the key issues to be discussed. Committee meetings are heldin advance of Board meetings to facilitate an effective and timely
reporting process. The Committee Chair provides a report to theBoard 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 withthe external auditor to allow any issues of concern to be raised.

Committee evaluation
This year, we conducted an internally facilitated evaluationof Board effectiveness. As part of this assessment, ourperformance 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, eachmember brings competence that is directly applicable to our
sector. For additional insights, you can explore their biographies.

Committee composition

Focus and key areas in 2023

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 therequirements of the Code in these respects.

One area of focus for the Committee was the need for acontinued improvement of the finance systems. The Company
had established systems following the IPO but these haveneeded to be reviewed in light of the acquisitions andchanging nature of the business. Along with the CFO, athorough review of the needs of the business was conducted
and this resulted in the selection of an Enterprise Resource
Planning (ERP) solution.

Alphawave IP Group plc | Annual report and financial statements 2023

The Committee also had deep‑dive sessions on talent,
capabilities and organisational structure in finance, andassessed the review of the insurance placements andcoverage. 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 theneed for a permanent internal audit function.

95

Audit, risk and internal control

continued

AUDIT COMMITTEE REPORT

Focus areas for 2024
Cybersecurity will be a notable focus for the Committee
during this coming year.
The Audit Committee will monitor progress of theimplementation 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 theaudit 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 estimatesand judgements. The Audit Committee also reviewed andchallenged the alternative performance measures used by theGroup. 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 consistencyof 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

The Audit Committee, together with management, identified significant areas of financial statement risk and judgement as
described below.

Description ofsignificant area

Work undertaken by the
Audit Committee and outcomes

Revenue recognition

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.

Revenue recognition for the Group’s
revenue streams is complex. Thisis an area of focus due to thenature of the licensing transactions
requiring management to exercise
significant judgement as well as
the revenue recognition treatmentof new revenue streams acquiredwith the acquisitions of Precise-ITC,
OpenFive and Banias.

Capitalisation of R&D expenses
The Group has capitalised asignificant 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.

The Committee was satisfied with the explanations provided and conclusions
reached in relation to revenue recognition and the Group’s compliance withIFRS 15.

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, andexpected cash flow from future sales.
The Committee subsequently approved the amount of R&D capitalised for 2023.

96

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Description ofsignificant area

Work undertaken by the
Audit Committee and outcomes

Going concern

The Committee challenged management on the assumptions used in the going
concern assessment and particularly whether the Group would be required toprovide additional funding to WiseWave during the going concern period.

The Group’s going concern
assessment assumes that there
will be no further investment in
WiseWave and that WiseWave will
be adequately funded by externalfinancing sources to continue
to discharge its liabilities with
the Group.

WiseWave contract asset
recoverability
Having fulfilled the IP licence
performance obligations in thefive‑year subscription licenceagreement with WiseWave at the endof 2023, the Group has recognised all
remaining IP licence revenue in theagreement and has also recogniseda contract asset of US$42.4m, whichis 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.

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 andhence the Committee agreed with the conclusions reached in the going
concern assessment.

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 fromexternal parties other than Alphawave) and the actions available to Alphawave
in the event of non-payment by WiseWave. The Committee is satisfied withmanagement’s assessment that no additional expected loss provision isrequired for the WiseWave contract asset and that it is appropriate to deem it
recoverable.

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 andunderstandable and provides the information necessary forshareholders 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 forapproval 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 thefollowing measures were adopted to ensure that this annual
report meets that requirement:> factual content was verified by management;> members of senior management undertook acomprehensive review of the document to consider
messaging and balance;

Alphawave IP Group plc | Annual report and financial statements 2023

> the Audit Committee reviewed a full draft of the document,
together with a summary of management’s approach tothe preparation of the narrative sections and the annual
financial statements;> the Audit Committee considered whether there wasconsistency 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 materialinconsistencies;> the Audit Committee reviewed and challenged the useof 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 wasincorporated into this annual report ahead of final approval.

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 awhole, is fair, balanced and understandable and provides theinformation 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 therisk management systems and internal controls to ensure thatthey remain effective and that any identified weaknesses areproperly 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, frommanagement.
The Audit Committee’s responsibilities include a review of
the risk management systems and internal controls to ensurethat 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

Approach and basis for assurance

Control environment

The Group is committed to the highest standards of business conduct and seeks tomaintain these standards across all of its operations. The Group has adopted a Code ofBusiness Conduct which provides practical guidance for all staff. There are also supporting
Group policies and employee procedures in place for the reporting and resolution ofsuspected fraudulent activities. The Group has an appropriate organisational structure forplanning, executing, controlling and monitoring business operations in order to achieveGroup 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 managementof the Group’s key risks resides with the senior management team and is documented ina 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 andcorrective action

The Audit Committee meets at least four times a year and, within its remit, reviews progresswith 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 andthat these outcomes would be monitored.
The Board considered the Audit Committee’s findings in relation to the effectiveness of theGroup’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 andinternal control environment continued to be effective.

98

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STRATEGIC REPORTGOVERNANCE

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 planand cash flow forecasts for the period to end H1 2024.
The Audit Committee discussed with management theappropriateness of the three-year period and discussed thecorrelation 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 theGroup’s high growth and evolving financial profile and aligns
with the Group’s external financial guidance.
The feasibility of mitigating actions and the potential speedof implementation to achieve any flexibility required werediscussed. 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’sreport 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 andreviewed KPMG’s findings in respect of the audit of thefinancial statements for the period ended 31 December 2022.
The Audit Committee regularly met separately withrepresentatives from KPMG without management present
and with management without representatives of KPMG
present, to ensure that there were no issues in the relationshipbetween management and the external auditor which it
should address.

FINANCIALS

ADDITIONAL INFORMATION

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 theexternal auditor is considered to be the most suitable supplierby 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 areawarded.
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 forthe 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-relatednon‑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 thelast three consecutive financial years.
Approved and signed on behalf of the Audit Committee.

Jan Frykhammar
Chair of the Audit Committee
23 April 2024

The Committee has reviewed, and is satisfied with, theindependence of KPMG LLP as the external auditor.

Alphawave IP Group plc | Annual report and financial statements 2023

99

Remuneration
DIRECTORS’ REMUNERATION REPORT

Dear shareholder
As Chair of the Remuneration Committee, I am pleased topresent 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 theapproach the Remuneration Committee takes on Directors’
pay, as approved by shareholders at the AGM in 2022; and> the annual report on remuneration, which describes thedetails of what has been paid to Directors in respect of2023 and an outline of how we propose to implement thepolicy 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 ofcorporate governance.

“The strategic importanceof our employees
is reflected in the
remuneration structure
across the Group.”
Victoria Hull
Chair of the Remuneration Committee

Purpose and role
The Remuneration Committee is a formal committee of theBoard and its remit is set out in terms of reference, which canbe found on the Company’s website https://awavesemi.com/
investors/corporate-governance/.
The Committee’s performance against these terms ofreference is reviewed on an annual basis and the Committee
is satisfied that it has acted in accordance with its terms ofreference 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 thatframework 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 theirfees and other terms.
No Director or other attendee takes part in any discussion
regarding his or her personal remuneration.

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Committee composition

Remuneration in context

The Remuneration Committee is comprised entirely of
independent Non-Executive Directors. I am the Chair andits other members are Jan Frykhammar and Paul Boudre.
The biographies of each member of the Committee are setout on the Board of Directors pages.

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.

Meetings and attendance
Four scheduled meetings were held in 2023, with three ad hoc
meetings. The Committee asked the Executive Directors andthe 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 conflictsof interest when receiving views from Executive Directors
or senior management. The Committee reserves the rightto 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 werereviewed 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 withquality 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 ofshare‑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 changeWith that in mind, this report contains the key drivers of ourdecisions 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 performanceand 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 ourrevenue‑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%.

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 awealth 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 ourbusiness.
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, wereinvolved in reviewing and approving the remuneration package.

Alphawave IP Group plc | Annual report and financial statements 2023

101

Remuneration

continued

DIRECTORS’ REMUNERATION REPORT

Remuneration in context continued
Stakeholder experience

Base salary

Our shareholders

CFO transition> 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 thefactors 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 beinvested in its growth story. The Executive Chair and Chief
Executive Officer, as founders of the business, embody thisphilosophy, having retained significant stock ownershipin the Company on IPO, to ensure they are aligned tothe 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 anannual bonus. No cash bonus was paid out in 2023.
> The philosophy behind our compensation programmeis to support the Group’s mission and values. Alignedwith an effective communication plan, it is designed tosupport, reinforce and align our values, business strategy,
operational and financial needs with a goal of growth andprofitability. In alignment with our culture, we communicate
openly about the goals of the business. Alphawave Semi
works hard to administer the compensation programme ina manner that is consistent and free of discrimination andis equitable to all employees regardless of race, ancestry,
place of origin, ethnic origin, citizenship, creed, gender,
sexual orientation, age, marital status, family status ordisability.
> As a Canada-originated business competing in thesemiconductor 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 whenbenchmarking 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 ensuringthat 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 remunerationin 2023:102

No increases were made to the salaries of Executive Directors.

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 witheffect 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 accordancewith 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 Directorsof 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 entitledto 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 voteof 99.97% at the AGM in 2022 and is designed to ensure astrong link between remuneration, strategic priorities and thedelivery of objectives.
The Policy includes provision for Executive Directors
to participate in a Short-Term Incentive Plan (STIP) andLong‑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 earlystage of the Company’s development. In keeping with thisphilosophy, the Executive Directors also chose to forgo pay
rises and salaries were consciously positioned at the low endof comparable FTSE 250 salaries. Except for 2024, where
the Chief Executive Officer will have an increase of 51% to his
May 2024 salary.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

In the two and a half years since the IPO in May 2021 thebusiness has made significant progress towards consolidating
the strategy to be a leading provider of connectivity
technology for digital infrastructure markets, including theacquisitions of Precise-ITC, OpenFive and Banias Labs which
represent steps towards a vertically integrated businessmodel. 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 incompany 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 alongsidea 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 isappropriate to recast the Executive Director packages andoffer market competitive remuneration to the CEO and
Executive Chairman and better align the executive teamremuneration 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 willcontinue 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

Base salary
STIP

LTIP

2023

Proposed 2024

£450,000£680,000

N/A – waived

Maximum opportunityof 150% of salary

N/A – waived

LTIP award of facevalue 300% of salarywith stretching
performance conditions

The Committee notes that, although Alphawave Semi is a
UK listed company, in practical terms the talent market withwhich we compete for senior executive talent is made up ofcompanies within the semiconductor sector, primarily basedin North America. The levels of remuneration offered by thesecompanies (especially in terms of long-term incentive awards)
are significantly above typical levels in the UK and those in our
proposals for 2024.

Alphawave IP Group plc | Annual report and financial statements 2023

FINANCIALS

ADDITIONAL INFORMATION

Notably, such companies commonly award restricted stock
units with no performance criteria and vesting at least
annually. However, the Committee believes that at thisjuncture it is appropriate to operate within the limits of theexisting shareholder-approved Policy rather than look toamend 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 salarylevel will represent a one-time ‘right-sizing’ adjustment to amarket competitive level and that future increases will bemodest 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 achievementof 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 theconsultation exercise and our ongoing focus on optimising
operational efficiency and enhancing liquidity alongsidesustainable growth. One-third of any bonus will be deferred
into shares for a period of two years. Further details are setout on page 116.

LTIP
The vesting of LTIP awards will be linked to the achievementof stretching performance targets, closely aligned with thecreation 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 growthover a three-year period.
Full details on the Policy and further information on the
proposed implementation of the Policy can be found on thefollowing 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 tothis report.

Victoria Hull
Chair of the Remuneration Committee
23 April 2024

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Remuneration

continued

DIRECTORS’ REMUNERATION REPORT

Elements of the Directors’ remuneration
Long term

SalaryFixed

Pension andother benefits

One-third of any
bonus will bedeferred intoshares for a periodof two years

Bonus –
cash

LTIP

Total
remuneration

Variable

How remuneration links to our strategy
Measuring outcomesMarket leadership
Maintain pace ofinnovation and market
leadership by attracting
and retaining talent

Strategyin action

Expansion
Land and expand:broader and deeper
customer base2024 Annual bonus> Revenue.
> EBITDA.
> Cash flow fromoperations beforechanges in working
capital.

2024-25 LTIP
> TSR.
> EPS.

Innovation
Leverage our IP to expand
our product portfolio andgrow our custom siliconbusiness

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Remuneration at a glance
Component

Component

Component

Base salary level> 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).

Benefits> 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 withwider workforce.

> No Executive Directors will
participate in 2024.

Fixed pay

Variable pay
Annual bonus

Long-term incentives> Executive Chair and President & Chief
Executive Officer were eligible but waived
participation, therefore no Executive
Directors participated in bonus in respectof 2023.

> Tony Pialis will participate
in 2024 with a maximum
opportunity level of 150% ofbase salary.
> No changes for other Executive
Directors.

> Executive Chair and President & Chief
Executive Officer eligible but waived
participation, therefore no Executive
Directors participated in LTIP in respectof 2023.

> Tony Pialis will participate in
2024 with an award level of 300%of base salary.
> No changes for other Executive
Directors.

Our governanceOur 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 bya vote of 99.97% at the AGM in 2022, is designed to ensure astrong link between remuneration, the strategic priorities anddelivery of objectives.

Alphawave IP Group plc | Annual report and financial statements 2023

Incentive scheme targets are carefully considered by theCommittee to ensure they reward performance and arecorrectly calibrated. Targets used in the incentive schemes
are then monitored and progress measured by reference tomany of the reported KPIs. With the continuing developmentof 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.

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Remuneration

continued

DIRECTORS’ REMUNERATION REPORTOur 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 performanceand the interests of our investors.

Clarity
Remuneration arrangements
should be transparent and promote
effective engagement withshareholders 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 thestrategic priorities of the business.
We aim for disclosure of the Policy and how it is implemented to be in a clear andsuccinct format.

Simplicity
Remuneration structures should
avoid complexity and their rationale
and operation should be easy tounderstand.

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 otherrisks from excessive rewards, andbehavioural 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; andbonus 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 theserequirements, providing a strong alignment between individual and investor interests.

Predictability
The range of possible values ofrewards to individual Directors
and any other limits or discretions
should be identified and explainedat the time of approving the policy.

We aim for our disclosure to be clear to allow shareholders to understand the rangeof potential values which may be earned under the remuneration arrangements.

Proportionality
The link between individual awards,
the delivery of strategy and thelong‑term performance of the Groupshould be clear. Outcomes should
not reward poor performance.

106

A significant part of an Executive’s reward is linked to performance with a clear lineof sight between business performance and the delivery of shareholder value. For
founder Executive Directors, the significant shareholding levels provide a strongalignment between individual and investor interests.

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Alignment to culture
Incentive schemes should drive
behaviours consistent with Grouppurpose, values and strategy.

The incentive arrangements and the performance measures used are stronglyaligned to those that the Board considers when determining the success of theimplementation of the Group’s purpose, values and strategy. In determining thatsuccess, the Board has regard to the impact of the Group’s purpose, values andstrategy on the financial performance of the business, including the revenues andprofitability, and how that performance is reflected in the Company’s share priceover the medium and long term. The Board is able to review targets, measures andweightings for both the short-term and long-term incentive plans on an annual basis toensure that they continue to be aligned with the Group’s purpose, values and strategy.

Remuneration Policy
This section sets out the Company’s first Directors’
Remuneration Policy which has been prepared in accordancewith 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 standardsof corporate governance and to making consistent annual
improvements in its corporate governance practices in orderto reflect evolving legal requirements, critical ESG themes,
investor expectations and wider stakeholder considerations.

Purpose andlink to strategy

Therefore, the principles of the Code were taken into accountwhen developing this first Policy post-Admission to theLSE. The Committee will also seek to develop and maintainan 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.

Operation

Maximum
opportunity

Performancemeasures

Base salaries will typicallybe reviewed annually, withany increases normallyeffective from 1 January.

Whilst there is no prescribedmaximum, salary increases will
generally be in line with those of
the wider workforce.

None.

Base salary levels takeaccount of:

Increases may be made above
this level where the Committee
considers it appropriate,including (but not limited to) asignificant increase in the scale,scope, market comparabilityor responsibilities of the role,
bearing in mind potential growthand increased complexity of thebusiness.

Fixed remuneration
Base salary
To attract and retain
executives of the rightcalibre to successfully
develop and execute on an
intensive and ambitious
emerging markets
business strategy aimed
at driving shareholder
returns over time.

> the individual’s role,
performance andexperience;> business performance,
individual track record
and the external
environment;> salary increases forsenior management
and other employees;
and> salary levels forcomparable roles
at relevant global
businesses.
No recovery or
withholding applies.

Alphawave IP Group plc | Annual report and financial statements 2023

Where an individual has been
appointed on a salary lower thanmarket levels, increases above thewider workforce may be made torecognise experience gained andperformance in the role.
Such increases will be explainedin the relevant year’s annual reporton remuneration.

107Remuneration

continued

DIRECTORS’ REMUNERATION REPORT

Remuneration Policy table for Executive Directors continued
Purpose andlink to strategy
Fixed
remuneration
Benefits
To provide
market‑competitive
benefits.

Operation

Maximum
opportunity

Performance measures

Benefits typically include
participation in car
schemes, private healthinsurance, disability
insurance, travel insurance
and life insurance. Where
appropriate, other benefits
may be offered, including,but not limited to,allowances for relocation.

Benefits provided
may vary by roleand individual
circumstanceand are reviewed
periodically.

None.

There isno overallmaximum.

Executive Directors will
be eligible to participate
in all‑employee shareschemes which may beestablished in the future,on the same terms asother employees andsubject to the limits
defined in the plan rules.
No recovery or
withholding applies.

Pension (or cash
allowance)
To provide market
competitive
retirement benefits
in line with the global
workforce.

108

Executive Directors may
participate in a defined
contribution scheme.
Individuals may receivea cash allowance in lieu
of some or all of theirpension contribution.
No recovery or withholding
applies.

Pensioncontribution or
cash payment
is equal to the
maximum
employercontribution
available toemployees under
the defined
contribution
scheme(currently 10%
of salary) in linewith the wider
workforce.

None.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORT

Purpose andlink to strategy

GOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Operation

Maximum
opportunity

Performance measures

The bonus is earned basedon the achievement of
one‑year performancetargets and is delivered in
cash or a combination of
cash and deferred shares.

The overall
policy maximum
for Executive
Directors is 180%of base salary.

Performance measures, weightings
and targets are reviewed annuallyand set at the beginning of theyear to ensure they are stretching
and they continue to support theachievement of the Group’s key
strategic priorities. The bonus
will be based on a combination offinancial, operational, strategic andindividual measures. At least 60% of
the bonus will be based on financial
measures, which may include (butare not limited to) revenue andadjusted EBITDA. The Committee
has the discretion to adjust thebonus outcomes to ensure they arereflective of underlying businessperformance and any other relevant
factors. The Committee will consult
with major shareholders whereappropriate before the use of
discretion to increase the outcome.

Performancerelated variable
remuneration
Short‑Term
Incentive Plan
(STIP)
To provide alignment
between the
successful deliveryof annual strategic
business priorities
and reward.

At least one-third of grossbonus will be deferred
into shares, typically fora period of two years.
Dividend equivalents may
be accrued on deferredshares.

The bonus
pays out fromthreshold at
25% to target at
50% and 100%at maximum
performance.

Malus and clawback
provisions may be
applied in exceptional
circumstances as detailed
in the notes to this table.

Long-Term
Incentive Plan
(LTIP)
To incentivise andreward participants
over the long term
for sustained
performance anddelivery of thebusiness strategy
and shareholder
value.
Provideslonger-termalignment withthe shareholder
experience.

LTIP awards will typicallybe made annually andconsist of rights to shares(or a cash equivalent)
subject to performance
conditions. Awards will
normally vest no lessthan 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 besold 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.

Alphawave IP Group plc | Annual report and financial statements 2023

The overall
policy maximum
for Executive
Directors is 300%of base salary.
For thresholdperformance,
payment starts
at 25%.

The targets, measures and weightings
will be determined annually by theCommittee prior to the grant of theaward.
This is likely to include a market
measure (such as relative TSR) andan internal financial measure.
The Committee will set the measures
and weightings each year, and has
discretion to adjust the number ofshares vesting from the formulaic
application of the performance
conditions based on a review ofunderlying performance of the Group.
The Committee will consult withmajor 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 theappropriate measures, as they alignwith long-term shareholder interests.

109

Remuneration

continued

DIRECTORS’ REMUNERATION REPORT

Remuneration Policy table for Executive Directors continued
Purpose andlink to strategy

Operation

Maximum
opportunity

Performance measures

Not applicable.

Not applicable.

Performancerelated variable
remuneration
Shareholding
policyTo providealignment between
the interests of
Executive Directors
and shareholders
over the longer term.

Shareholding guidelines
will be 200% of basesalary for all Executive
Directors, to be built
up over a five-year
period from their dateof appointment to theBoard. For the purposesof the Policy, shares
which are beneficiallyowned 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 maintainthe in‑employment
guideline or their actual
shareholding at the pointof leaving for lesser of thetwo years post‑cessation.

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 theListing Rules. There are a number of areas over which theCommittee retains flexibility, as detailed below:> who participates in each plan;> the timing and size of an award and/or payment (subject toany 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.

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 thebonus for a period of up to three years and, for the LTIP, fromvesting until the fifth anniversary of the award (or two years
from vesting, for a three-year award).

Where appropriate, any use of discretion by the Committee
will be disclosed in the relevant annual report on remunerationand may be subject to consultation with the Company’s
shareholders.

110

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Discretion

Minor amendments

The Committee recognises the importance of ensuring thatpay reflects performance aligned with the Group’s strategy,
ambitions and risk appetite.

The Committee may make minor amendments to the
Policy (for example for tax, regulatory, exchange control
or administrative purposes) without obtaining shareholder
approval.

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 andstakeholder experience, and may apply appropriate judgement
and adjustments, upwards or downwards. In addition, theCommittee may amend formulae, performance metrics andtargets 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

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 toshow the theoretical entitlement under the Policy, for which hehas opted to waive participation. Sehat Sutardja is not entitledto participate in any incentive arrangements.

Payments may be made to satisfy commitments madeprior to the approval of this Policy. This may include, forexample, but without limitation, payments made to satisfy
legacy arrangements agreed prior to an employee (and notin contemplation of) being promoted to the Board. All suchoutstanding obligations may be honoured, and payment will
be permitted under this Policy.

Illustrative scenario analysis (2024)£5,000,000£4.9m

Long-term incentives£4,500,000

Annual bonus
Fixed remuneration£4,500,000£3.7m£4,000,000

62%£3,000,000
£2.6m

53%

22%

18%

£680k
100%

40%

John Lofton Holt

24%

18%

14%

£85k
100%

£85k
100%

£85k
100%

£85k
100%
Maximum with 50%
share price growth

45%

30%

On-target

100%

33%

27%
30%

Minimum

33%

Maximum with 50%
share price growth

£0

£463k

On-target£500,000

Minimum£1,000,000

30%

Maximum

£1.0m
22%

£1.7m

Maximum

45%

On-target£1,500,000

Minimum£2.1m

Maximum with 50%
share price growth£2,000,000

55%

Maximum£2,500,000

Tony Pialis

Sehat Sutardja

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

Alphawave IP Group plc | Annual report and financial statements 2023

111

Remuneration

continued

DIRECTORS’ REMUNERATION REPORT

Notes to the Policy table continued
Minimum

TargetFixed remuneration (salary and benefits) only
No payout under the STIP or LTIP vesting

Fixed remuneration
50% of maximum payout under the STIP
25% of maximum vesting under the LTIP

Maximum

Fixed remuneration
100% of maximum payout under the STIP
100% of maximum vesting under the LTIP

Maximum +50% share
price growth

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

The charts above are based on notional bonus opportunityof 150% of salary, LTIP award level of 300%, and assume aone‑third bonus deferral.
Other than the ‘Maximum scenario with 50% share pricegrowth’, no share price growth has been included in thecharts 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. Salarywould reflect the skills and experience of the individual, andmay 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 thisPolicy, 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.

112

The Committee may award compensation for the forfeitureof awards from a previous employer in such form as theCommittee considers appropriate taking account of all
relevant factors including the expected value of the award,
performance achieved or likely to be achieved, the proportionof the performance period remaining and the form of theaward.
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 makeappropriate 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; andii) exceptional circumstances require that the Executive Chairor a Non-Executive Director takes on an executive function
on a short-term basis.
For Non-Executive Directors, the Board would consider theappropriate fees for a new appointment taking into accountthe 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.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

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 onloss of office and restrictions during active employment(and for twelve months thereafter). These restrictions include
non-competition and non-solicitation of customers andemployees.
Non-Executive Directors do not have service contracts but
each has a letter of appointment. In accordance with theCompany’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 earlytermination of appointment.
Executive Directors’ service contracts and Non-Executive
Directors’ letters of appointment are available to inspect at theCompany’s registered office.

Treatment of corporate events
The plan rules contain provisions relating to change of control.
In general, outstanding awards would normally vest andbecome 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 (orthe award is a bonus deferral award), the number of shares
vesting will also be reduced, reflecting the time period to thedate of the event. Alternatively, awards may be exchanged forequivalent awards over shares in the acquiring company. Any
holding period will come to an end on the date of the changeof 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 ofan award. The Committee can adjust the number or type ofshares subject to an award and/or any exercise price to takeaccount of any rights issue, demerger, special dividend orother variation of capital or similar corporate event.

Payments for departing Executive Directors
Notice period and compensation for loss ofoffice in service contracts
The Company can make payments in lieu of notice which islimited (except in the case of Tony Pialis) to base salary andcontractual benefits. Any such payments can be made ona monthly basis with payments reduced by the amount of
earnings from any alternative employment.

Alphawave IP Group plc | Annual report and financial statements 2023

FINANCIALS

ADDITIONAL INFORMATIONThe 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 theparticipant 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 memberof the Group and redundancy, or in other circumstances if theCommittee so decides).
In these circumstances, the payment will be pro-rated forthe 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 vestor lapse according to the terms of the plan. However, if aparticipant leaves because of misconduct or otherwise incircumstances 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 theyleave in circumstances detailed in the plan rules, such as illhealth, injury, disability, retirement, the employing company
ceasing to be a member of the Group and redundancy or inother circumstances, if the Committee so decides, the award
will continue in effect (or may vest on or after leaving). Vestingof the award will be subject to the extent that performance
conditions have been or are likely to be satisfied (as determinedby the Committee), and any additional conditions as theCommittee 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 theparticipant leaves employment or any later date it chooses. If aparticipant dies, any outstanding awards will vest on the date ofdeath 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 inrelation to the termination, settlement of any potential legal
claims and repatriation.

113

Remuneration

continued

DIRECTORS’ REMUNERATION REPORT

Payments for departing Executive
Directors continued
Pay and conditions throughout the GroupThe pay and conditions of employees are considered by theCommittee in setting policy for the Executive Directors andsenior management.

The Committee is kept regularly informed on the pay andbenefits 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.

Remuneration Policy table for Non‑Executive Directors
Purpose andlink to strategy

OperationFees
The Company
offers competitive
fee arrangements
to attract andretain high calibre
and experienced
individuals to serveon 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 orchairing a Board Committee and also formembership of a Board Committee. Fees
are subject to review taking into accounttime commitment, responsibilities andmarket practice. Non‑Executive Directors
are entitled to be reimbursed for reasonable
expenses incurred during the performanceof their duties, including any tax due onthese benefits.

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 otherbenefits but the Company may offer otherbenefits reflecting the requirements of therole, or changing market.

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 voteat the 2024 AGM.

114

Maximum
opportunity

PerformancemeasuresTotal fees paid
will be within thelimit stated in
the Articles of
Association.

None.

Not applicable.

Not applicable.

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.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

31 December 2023

Benefits1

Pension/cashin lieu ofpension2

Bonus

LTIP award

Total
remuneration

Total fixed
remuneration

Total variable
remuneration£450,000

—

—

—

—

£450,000£450,000—Tony Pialis£450,000£3,1483———£453,148£453,148—

Daniel Aharoni4£139,328£3,068£14,150—£156,546£156,546—

Sehat Sutardja£85,000———£85,000£85,000—

Director

Salary andfeesJohn Lofton Holt—

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

Benefits1

Pension/cashin lieu ofpension2

Bonus3

LTIP award

Total
remuneration

Total fixed
remuneration

Total variable
remuneration£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—

Director

Salary andfeesJohn Lofton Holt

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 performancetargets met), as this reflects work undertaken in his capacity as an Executive Director and employee of the Company, post-Admission. As per theRemuneration 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 theCompany 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 paymentsof 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 beseen in table above.
Outstanding deferred bonuses in respect of 2021 and2022 will continue to be payable on the normal schedulein accordance with their terms. His outstanding long-term
incentive award lapsed in full.

Alphawave IP Group plc | Annual report and financial statements 2023

His unvested restricted shares acquired prior to IPO have
and will continue to vest each month until December 2024 inaccordance 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 theCompany and are therefore not directly subject to theRemuneration Policy. Given this, the fact that the Executive
Chair and Chief Executive Officer waived participationin the annual bonus and LTIP for 2023, and that Sehat
Sutardja is not entitled to participate in any bonus orvariable compensation arrangement, no Executive Directors
participated in incentive arrangements for the year. There are
therefore no details of incentive outcomes for the year to bedisclosed.

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.
Face value ofdeferred award on
Date of grant
grant date (US$)

Director

Price per share(US$)

Number of sharessubject to thedeferred award

Daniel Aharoni

8 June 2022

115,858

2.24

51,741

Daniel Aharoni

19 May 2023

103,559.63

1.261

82,125The 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.
Fees
2023

Benefits
2023

Total
2023

Jan Frykhammar£119,417—£119,417

Michelle Senecal de Fonseca£87,833—£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 Reeder1£28,333—£28,333

Total£540,583—£540,583

Non-Executive Directors

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:

Date ofappointment

date of current
service contract
or letter of
appointment

11 January 2021

22 April 2021

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

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

16 April 2021

22 April 2021

Name

John Lofton Holt

Rosalind Singleton

116

unexpired term at 31 December 2023

Executive Directors are subject to a 12‑monthnotice period, with the exception of Sehat
Sutardja, whose contractual notice period is
one month.

Letters of appointment for the Non‑Executive
Directors do not contain fixed‑term periods;
however, they are appointed in the expectationthat they will serve two three-year terms
subject to satisfactory performanceand re‑election at AGMs.
See page 113 for details.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION% Change in pay 2022-2023
SalaryChange in
2022 (%)

Benefits
Change in
2022 (%)

Bonuses
Change in
2022 (%)

SalaryChange in2023 (%)

Benefits
Change in2023 (%)

Bonuses
Change in2023 (%)

John Lofton Holt1

61%

100%

0%

0%

(100)%

0%Tony Pialis1

60%

127%

0%

0%

21%

0%

Daniel Aharoni2

57%

61%

(10)%

5.6%

(26)%

(100)%

Sehat Sutardja

59%

0%

0%

0%

0%

0%

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%

N/A

N/A

N/A

N/A

N/A

N/A

4%

40%

59%

10%

613%

(100)%

Directors

Non-Executive Directors1

David Reeder

3

Employees4

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 (forthose 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

Daniel Aharoni

Salary£225,723

Alphawave IP Group plc | Annual report and financial statements 2023

accruedBenefits holiday not taken—£20,355

Bonus—

Pension

Total
Payment£246,078

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 numberof interests
in shares(31 December
2023)

Vested without
performance
conditions

Unvested withperformance
conditions

Unvested
without
performance
conditions

Shares held
as % ofsalary 2

Total numberof interests
in shares(31 March 2024)

John Lofton Holt1

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—

989,422712%

2,450,000

Sehat Sutardja

96,275,358

—

—

—

137,926%

96,275,358

220,833,103

933,333—

989,422

Total

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.
Total numberof interests
in shares(31 December
2023)

Total numberof interests
in shares(31 March 2024)

Jan Frykhammar

48,78048,780Michelle Senecal de Fonseca

3,619

44,316

Rosalind Singleton

52,42052,420Victoria Hull

102,821102,821

Susan Buttsworth

48,78048,780Paul Boudre

48,78048,780David Reeder——

305,200

345,897

Non-Executive Directors

Total

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 thenext 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

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Requirement
as a %
of salary

Current% of salary
held

Number ofshares owned% of issued
share capital1

Date ofrequirement
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

Director

1. Note: % of issued share capital based on issued shares as at 31 December 2023.

TSR performance chart (2024)
140

Alphawave

FTSE 250

May 2023

Jul 2023

FTSE All World Technology Index

120

Share Value

100
80
60
40
20
0
May 2022

Jul 2022

Sep 2022

Nov 2022

Jan 2023

Single figure of remuneration for the CEO

Mar 2023

Sep 2023

Nov 2023

Dec 2023

2021

2022

2023

£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

President & Chief Executive Officer – Tony Pialis

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 andthe prior year.
2022

Employee remuneration
Distributions to shareholders

2023

US$50.6m

US$90.8m

n/a

n/a1

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 areappropriate. 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.

Alphawave IP Group plc | Annual report and financial statements 2023

119

Remuneration

continued

DIRECTORS’ REMUNERATION REPORTEngagement 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 ofproposals 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 thanincreases for our wider workforce while the Company
remains at the current scale.

Director

2023
Salary level

2024
Salary level

Proposedchangefor 2024 (%)

John Lofton Holt

£450,000£450,000

0%

Tony Pialis£450,000£680,000

51%

Sehat Sutardja1£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 participationin 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:
MeasureWeighting

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 fromshareholders 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 thefull 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.
MeasureWeightingThresholdMaximum

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%

120

10% CAGR

40% CAGR

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

These performance metrics have been selected as theyalign with the Group’s focus on ambitious growth andprofitability. The targets were set at a level the Committee
believes to be appropriately stretching, taking into accountboth internal performance expectations and external analyst
forecasts. The targets also reflect the transformation of thebusiness 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 amultinational vertically integrated semiconductor company.
The Committee has chosen to use TSR as an importantmeasure of value created for our shareholders and measureagainst 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 verticallyintegrated 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 willcontinue 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.

FINANCIALS

ADDITIONAL INFORMATION

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 andregulatory 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 theRemuneration Consultants Group Code of Conduct inrelation 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 confirmedthat it adheres to that Code of Conduct for all remuneration
services provided to Alphawave Semi and therefore theCommittee 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

AgainstTotal

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 andMedium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended). The report also meets therelevant requirements of the Listing Rules of the Financial Conduct Authority, and describes how the Board has complied withthe 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.

Alphawave IP Group plc | Annual report and financial statements 2023

121

Directors’ report
The Directors present their report, together with theaudited 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 andother stakeholder engagement

Stakeholder engagement, page 28

Climate-related financial disclosures, greenhousegas consumption, energy consumption and energy
efficiency action

ESG, pages 44 to 48 and appendix

Workforce engagement

ESG, Our People section, page 43

Compliance with the UK Corporate
Governance Code 2018

The Audit Committee continue to evaluate the need for aninternal 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 (inaccordance with Provision 29 of the Code) took place in 2023.

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 governancestatement, the Board voluntarily complies with therequirements of the UK Corporate Governance Code (the‘Code’). Prior to 18 May 2021, the Group was not required tocomply with the principles and provisions of the Code. Since
Admission, the Group has complied with all provisions of theCode, except as noted below.
The annual evaluation of the operation and effectivenessof the Board, its Committees and individual Directors wasundertaken in 2023. The Board intends to comply with theCode guidance that an externally facilitated evaluation shouldtake 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 therequirement in Provision 25 for the Audit Committee to consider
annually whether there is a need for one. During the period underreview, the Group did not have an internal audit function as it had
been agreed that the Group’s size and activities were such thatinternal assurance was achievable through other means.

122

Climate-related disclosures

During 2023, the Audit Committee undertook the a review ofthe effectiveness of the external audit process (in accordancewith Provision 25 of the Code). The process began soonafter the publication of FY 2022 results in May 2023 and thiscontinues.
The Executive Chair of the Company, John Lofton Holt, was
not independent on Admission. Together with the otherfounders, 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 tocontinue its current growth trajectory.
Further information on the Company’s application of theprinciples and provisions of the Code can be found in thecorporate 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.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Disclosure of information to auditors

Share capital

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 thesteps that they ought to have taken as a Director to makethemselves aware of any relevant audit information andto establish that the Company’s auditors are aware of that
information.

Details of the Company’s share capital, together with details of
the movements in the share capital during the year, are shownon 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 meetingof 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 theshares. As approved by the IPO Committee of the Board on
12 May 2021 and the High Court of Justice Business andProperty 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.

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 198of the financial statements.

Alphawave IP Group plc | Annual report and financial statements 2023

Exchangeable shareholders
As set out in the Company’s Prospectus, a portion of theinterests 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) arelegally and beneficially owned by JerseyCo, except that (i) the
exchangeable shareholders will have a right to direct thevoting rights attaching to such shares, and (ii) JerseyCo will
irrevocably waive its rights to distributions declared on suchshares for as long as it holds them. Each of the exchangeable
shareholders have also been issued with exchangeable shareson a one-for-one basis for each ordinary share that will be heldby 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 totime. 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 sharecapital.

123

Directors’ reportcontinued

Substantial shareholdings
As at 31 December 2023 and at 31 March 2024, the following persons were directly or indirectly interested (within the meaningof the Companies Act 2006) in 3% or more of the Company’s issued share capital or voting rights. Further, as at the dateof this report, the following contains information received, in accordance with Rule 5 of the FCA’s Disclosure Guidance andTransparency 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

Number ofsharesVotingrights (%)

Number ofsharesVotingrights (%)

The Tony Pialis (2017) Family Trust1

95,333,160

13.32%

95,333,160

13.07%The Rajeevan Mahadevan (2017) Family Trust2

95,333,160

13.32%

95,333,160

13.07%

2641239 Ontario Inc.

95,333,140

13.32%

95,333,14013.07%

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%

28,704,807

4.01%

28,154,550

3.86%

26,624,584

3.72%

26,624,584

3.65%

Holder3

Artisan Partners
July Twelve Capital Limited

5

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 theinterests 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

Authority to purchase own shares

In the near term, the Group currently intends to retain any
future earnings to finance the operation and expansion ofits 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’sbusinesses, and the macroeconomic environment, but does
not expect to declare or pay any dividends for the foreseeable
future.

At a general meeting held on 22 June 2023 shareholders
passed a special resolution in accordance with theCompanies Act 2006 to authorise the Company to purchasein the market a maximum of 70,228,236 ordinary shares,
representing 10% of the Company’s issued ordinary sharecapital (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.

Articles of Association and powers of
the Directors
The Company’s Articles of Association (the ‘Articles’) containthe 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 theCompanies Act 2006, the day-to-day business of the Groupis managed by the Board who may exercise all the powers of
the Company.

124

Significant agreements and change of control
The Group has a number of contractual arrangements whichit considers essential to the business of the Group. A changeof control of the Company may cause some agreements towhich 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.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Compensation for loss of office

Additional disclosures

There are no agreements between the Company and its
Directors or employees providing for compensation for lossof office or employment that occurs because of a takeoverbid, except that provisions of the Company’s share plans may
allow options and awards granted to Directors and employees
to vest on a takeover.

The following information can be found elsewhere in thisdocument, 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 accordancewith 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

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 inaccordance with applicable law and regulations.
Company law requires the Directors to prepare Group andparent 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 inaccordance with UK accounting standards and applicable law,
including FRS 101 Reduced Disclosure Framework.
Under company law, the Directors must not approve thefinancial statements unless they are satisfied that they givea true and fair view of the state of affairs of the Group andCompany 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 themconsistently;> make judgements and estimates that are reasonable,
relevant and reliable;> for the Group financial statements, state whether they havebeen 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 explainedin the parent Company financial statements;> assess the Group and Company’s ability to continue as agoing concern, disclosing, as applicable, matters related
to going concern; and> use the going concern basis of accounting unless theyeither intend to liquidate the Group or the Company or tocease operations, or have no realistic alternative but todo so.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s transactions and disclose with reasonableaccuracy at any time the financial position of the Group andenable them to ensure that its financial statements comply
with the Companies Act 2006. They are responsible for suchinternal control as they determine is necessary to enable thepreparation 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 tothem to safeguard the assets of the Group and to prevent anddetect fraud and other irregularities.

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 thoserequirements.
The Directors are responsible for the maintenance andintegrity 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 theapplicable set of accounting standards, give a true and fairview of the assets, liabilities, financial position and profit orloss of the Company and the undertakings included in the
consolidation taken as a whole;> the management report includes a fair review of thedevelopment and performance of the business and theposition of the issuer and the undertakings included in the
consolidation taken as a whole, together with a descriptionof the principal risks and uncertainties that they face; and> we consider the annual report and accounts, taken as awhole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess theGroup’s position and performance, business model andstrategy.

Tony Pialis
Chief Executive Officer
23 April 2024

Alphawave IP Group plc
6th Floor
65 Gresham Street
LondonEC2V 7NQ
United Kingdom

Under applicable law and regulations, the Directors are also
responsible for preparing a strategic report, Directors’ report,
Directors’ remuneration report and corporate governancestatement that complies with that law and those regulations.

126

Alphawave IP Group plc | Annual report and financial statements 2023

Independent
auditor’s reportto the members of Alphawave IP Group plc
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 offinancial position, Consolidated statement of cash flows,
Consolidated statement of changes in equity andCompany statement of changes in equity, and therelated notes, including the accounting policies in note2.
In our opinion:— the financial statements give a true and fair view ofthe 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; andWe 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, andwe remain independent of the Group in accordance with,UK ethical requirements including the FRC EthicalStandard as applied to listed public interest entities. No
non-audit services prohibited by that standard were
provided.

Overview
Materiality:
group financial
statements as a whole
Coverage

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 haveobtained is a sufficient and appropriate basis for our
opinion. Our audit opinion is consistent with our reportto the audit committee.

1.0% (2022: 1.0%) of Revenue
99.9% (2022: 97.0%) of revenue

Key audit matters
Recurring risks

vs 2022
Revenue recognition◄►

New: Development costs
capitalisation— the financial statements have been prepared inaccordance with the requirements of the Companies
Act 2006.
Basis for opinion$3.3m (2022: $1.8m)

Recoverability ofparent 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 thosewhich had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of theengagement 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.
The risk

Our response

Revenue recognition

Accounting application:($167.6 million; 2022: $137.6 million)

The Group enters into contracts withcustomers that include various
combinations of products. Each contract isbespoke with varying options and terms andthe application of accounting standards tothese terms is complex and involves
judgement.

We performed the detailed tests below rather thanseeking to rely on any of the Group’s controls
because our knowledge of the design of thesecontrols indicated that we would not be able toobtain the required evidence to support reliance on
controls.

(IP and NRE, IP and NRE – Reseller, IP
and NRE –JV)
Refer to page 143 & 150 (accounting
policy) and page 152 (financial
disclosures)

There is a risk that the individual
performance obligations are not correctly
identified. Revenue includes subjective
measurements requiring management toexercise significant judgement with respect
to estimated total hours to complete thecontract. The effect of these matters is that,as part of our risk assessment, we
determined that revenue recognition has ahigh degree of estimation uncertainty, witha 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.

Our procedures included:— Test of details: We assessed whether theGroup’s revenue recognition policy is in linewith the requirements of the accounting
standards, which includes consideration ofalternative accounting treatment;— We assessed the Group’s determination of
distinct performance obligations contained
within their contracts by selecting a sample ofthe contracts and considering the terms
together with the requirements of theaccounting 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 theallocation of contract revenue to the identified
performance obligations by comparing theapproach taken to the requirements of theaccounting 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 historicalaccuracy of the Group’s estimates, to assess theappropriate amount of revenue to recogniseand compare this to the amounts recorded by
the Group;[We continue to perform procedures over [identify key audit matter]. However, following[explain why
risk is less significant
this year],— Assessing
transparency:
We considered
the wehave not assessed this as one of the most significant risks in our current year audit and, therefore,
not Group’s
separately
identifiedininrespectouradequacyitofis thedisclosures
report this year.]of revenue recognition and the judgements andestimates 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.)
The risk

Our response

Going Concern

Disclosure quality

see note 1 to the group financial
statements

The financial statements explain how the
Board has formed a judgement that it isappropriate to adopt the going concern
basis of preparation for the Group andparent Company.

We considered whether these risks could plausibly
affect the liquidity or covenant compliance in thegoing concern period by assessing the directors’
sensitivities over the level of available financial
resources and covenant thresholds indicated by theGroup’s financial forecasts taking account of severe,
but plausible, adverse effects that could arise fromthese risks individually and collectively.

That judgement is based on an evaluationof the inherent risks to the Group’s andCompany’s business model and how thoserisks might affect the Group’s andCompany’s financial resources or ability tocontinue operations over a period of atleast a year from the date of approval of
the financial statements.
The risks most likely to affect the Group’sand Company’s available financial resources
adversely and metrics relevant to debt
covenants over this period were:•

Maintenance of sales growth in theface 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.

Our procedures also included:— Funding assessment: We assessed the forecast
cash position, available committed facilities andthe directors’ assessment of the Group’s ability
to comply with its covenants for a period of atleast 12 months from the date of approval of
the financial statements (‘forecast period)’, tounderstand the financial resources available to
the Group during the forecast period;— Historical comparisons: We assessed the abilityof the Group to forecast accurately bycomparing the most recent financial year’s
performance against budget and challenged theassumptions over the going concern period
based on historical performance. We also
compared the actual performance in recent
years versus base case and downside case tochallenge the quantum of risks applied in theforecasts;— Key dependency assessment: We evaluated
how the cash flow model captures events andconditions that may cast significant doubt on
the ability to continue as a going concern andevaluated whether key assumptions of grouprevenue forecast and a potential increase ininterest rates were within a reasonable range;

The risk for our audit was whether or not
those risks were such that they amounted
to a material uncertainty that may havecast significant doubt about the ability of
the Company and the Group to continue asa going concern. Had they been such, then
— Sensitivity
analysis:
We significant
assessed the[We continue to perform procedures overkeyhaveaudit
matter].
However,following[explain why
risk is lessthisdownsideyear], wethat [identify
fact would
been
required
to havesensitivityit tocheckwhetheridentified
this represented
have not assessed this as one of the mostsignificant
is notseparately
in our a
been
disclosed.risks in our current year audit and, therefore,
severe but plausible scenario based on ourreport this year.]knowledge of the business, the sector and themost recent results of the Group;— Evaluating directors’ intent: We evaluated theachievability of the actions the directors
consider they would take to improve theposition should the risks materialise, taking into
account the extent to which the directors cancontrol 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 andaccurate description of the directors’
assessment of going concern, including theidentified risks and, dependencies, and relatedsensitivities.
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.)

Development costs capitalisation($54.5 million; 2022: $7.2 million)
Refer to page 146 & 150 (accounting
policy) and page 162 (financial
disclosures).

The risk

Our response

This capitalised development expenditureconsists primarily of staff costs where staff
have worked on projects that are eligible forcapitalisation under the Group’s researchand development accounting policy.

We performed the tests below rather than seeking
to rely on any of the Group’s controls because thenature of the balance is such that we would expect
to obtain audit evidence primarily through thedetailed procedures described.

There is a risk that additions to internallygenerated intangible assets are recorded
inappropriately when:

Our audit procedures included:•

the expenditure is not eligible forcapitalisation,•

the assets are not accurately recorded,•

the entity does not have the rights tothe assets, or•the assets do not exist.

— Inquiries: we performed specific inquiries withmanagement regarding project costs andobtained management’s assessment of thecriteria 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 ofinternal costs to the asset and determined
whether the methodology of allocation wasappropriate;— Assessing transparency: we considered theadequacy of the Group’s disclosures in respectof research and development cost capitalisationand the judgements involved in determining theamount 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.)

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)

The risk

Our response

Low risk, high value

We performed the detailed tests below rather thanseeking to rely on any of the Group’s controls
because our knowledge of the design of thesecontrols indicated that we would not be able toobtain the required evidence to support reliance on
controls.

The carrying amount of the Parent
Company’s investments in subsidiaries
represents 44.8% (2022: 39.3%) of theCompany’s total assets. The recoverability is
not at high risk of significant misstatement
or subject to significant judgement.
However, due to their materiality in thecontext of the Parent Company financial
statements, this is considered to be the areathat had the greatest effect on our audit of
the Parent Company.

Our procedures included:— Test of details: We compared the carrying
amount of the investments in subsidiaries, withthe relevant subsidiaries’ draft balance sheet, toidentify whether their net assets, being anapproximation of the minimum recoverable
amount of the related investments were inexcess 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 notencounter the same degree of challenge in respect of the control environment, as such we have not assessed this as one of the mostsignificant risks in our current year audit and, therefore, it is not separately identified in our report this year. We have not assessed any risk incurrent year over Valuation of acquired identifiable intangibles as there were no acquisitions during the year.

Group revenue

3. Our application of materiality and an overview ofthe scope of our audit$321.7m (2022: $185.4m)

Group materiality$3.3m (2022: $1.8m)

Materiality for the Group financial statements as awhole was set at $3,300,000 (2022: $1,800,000),
determined with reference to a benchmark of Grouprevenue, of which it represents 1.0% (2022: 1.0%).

$3.3m

Materiality for the parent Company financial
statements as a whole was set at $2,650,000 (2022:$1,440,000), determined with reference to abenchmark of Company total assets, of which it
represents 0.3% (2022: 0.2%).

$2.1m

In line with our audit methodology, our procedures
on individual account balances and disclosures were
performed to a lower threshold, performancemateriality, so as to reduce to an acceptable level therisk that individually immaterial misstatements inindividual account balances add up to a material
amount across the financial statements as a whole.

Range of materiality at sevencomponents ($0.7m-$2.7m)(2022: $0.7m to $1.4m)

Whole financial
statements materiality (2022: $1.8m)
Whole financial
statements performancemateriality (2022: $ 1.2m)$2.7m

Total Group Revenue
Group materiality$165,000

Performance materiality was set at 64.9% (2022:
65%) of materiality for the financial statements as awhole, 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 thispercentage in our determination of performancemateriality based on the level of identified
misstatements, control deficiencies and changes in
the control environment during the prior period.

Misstatements reported to theaudit committee (2022: $75,000)

Group revenue

Group profit before tax

0

We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding $165,000 (2022: $75,000), in addition toother identified misstatements that warranted
reporting on qualitative grounds.

12

100%

6

(2022 97%)

Of the Group’s 14 (2022: 14) reporting components,
we subjected 6 (2022: 6) to full scope audits forgroup purposes and 1 (2022: 1) to specified riskfocused audit procedures. The latter was notindividually financially significant enough to require afull 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.

97
100

Group total assets

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 tore-examine our assessment that there were no
significant risks of material misstatement withinthese.

2

96%(2022 99%)
99
94

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

90%(2022 86%)

80

78

3. Our application of materiality and an overview ofthe scope of our audit (cont.)
The Group team instructed component auditors as to thesignificant areas to be covered, including the relevant risks
detailed above and the information to be reported back. The
Group team approved the component materialities, whichranged 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 theseven components (2022: two of the seven components) was
performed by component auditors and the rest, including theaudit of the parent Company, was performed by the Groupteam.
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 withthe two component auditors in China and inspection ofcomponent audit teams’ key work papers took place in person
to evaluate the quality of execution of audits of thecomponents. At these visits and meetings, the findings
reported to the Group team were discussed in more detail, andany further work required by the Group team was thenperformed by the component auditor.
4. Going concern
The Directors have prepared the financial statements on thegoing concern basis as they do not intend to liquidate the Groupor the Company or to cease their operations, and as they haveconcluded that the Group and the Company’s financial positionmeans 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 leasta year from the date of approval of the financial statements (“thegoing concern period”). An explanation of how we evaluatedmanagement’s assessment of going concern is set out in therelated 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 basisof accounting in the preparation of the financial statements isappropriate; and— we have not identified, and concur with the directors’

assessment that there is not, a material uncertainty related toevents or conditions that, individually or collectively, may
cast significant doubt on the Group’s or Company's ability tocontinue 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 areinconsistent with judgements that were reasonable at the timethey 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 (“fraudrisks”) 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 inspectionof policy documentation as to the Group’s high-level policies
and procedures to prevent and detect fraud, including theGroup’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; andperformance 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 accountpossible pressures to meet profit targets, we perform procedures
to address the risk of management override of controls and therisk of fraudulent revenue recognition, in particular:— the risk that Group and component management may be in aposition 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 andcomparing the identified entries to supporting
documentation;— Evaluated the business purpose of significant unusualtransactions; and— Assessing whether the judgements made in making
accounting estimates are indicative of a potential bias.

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 statementsfrom our general commercial and sector experience, and throughdiscussion with the directors and other management (as requiredby auditing standards), and discussed with the directors andother 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 ofnoncompliance 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), distributableprofits legislation, and taxation legislation and we assessed theextent of compliance with these laws and regulations as part ofour procedures on the related financial statement items.
Secondly, the Group is subject to many other laws andregulations 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 orlitigation. 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 ofcompany 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 thedirectors and other management and inspection of regulatory
and legal correspondence, if any. Therefore if a breach ofoperational regulations is not disclosed to us or evident fromrelevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches oflaw or regulation
Owing to the inherent limitations of an audit, there is anunavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we haveproperly planned and performed our audit in accordance withauditing standards. For example, the further removed noncompliance with laws and regulations is from the events andtransactions reflected in the financial statements, the less likely
the inherently limited procedures required by auditing standards
would identify it.

In addition, as with any audit, there remained a higher risk ofnon-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override ofinternal controls. Our audit procedures are designed to detectmaterial misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect noncompliance with all laws and regulations.

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 notcover the other information and, accordingly, we do not express
an audit opinion or, except as explicitly stated below, any form ofassurance conclusion thereon.
Our responsibility is to read the other information and, in doingso, consider whether, based on our financial statements audit
work, the information therein is materially misstated orinconsistent 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 thestrategic report and the directors’ report;— in our opinion the information given in those reports for thefinancial year is consistent with the financial statements; and— certain disclosures of directors’ remuneration specified bylaw 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 fairview; such internal control as they determine is necessary toenable the preparation of financial statements that are free frommaterial 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 unlessthey either intend to liquidate the Group or the parent Company
or to cease operations, or have no realistic alternative but to doso.

— in our opinion those reports have been prepared inaccordance with the Companies Act 2006.

Auditor’s responsibilities

Directors’ remuneration report

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 highlevel of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect amaterial misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually orin aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of the financial
statements.

In our opinion the part of the Directors’ Remuneration Report tobe audited has been properly prepared in accordance with theCompanies Act 2006.
Corporate governance disclosures
Based solely on our work on the other information describedabove:— with respect to the Corporate Governance Statement
disclosures about internal control and risk management
systems in relation to financial reporting processes and aboutshare 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 theDisclosure Guidance and Transparency Rules of the Financial
Conduct Authority.
We are also required to report to you if a corporate governancestatement has not been prepared by the company. We havenothing to report in these respects.
7. We have nothing to report on the other matters on which weare required to report by exception
Under the Companies Act 2006, we are required to report to you
if, in our opinion:

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 inan annual financial report prepared under Disclosure Guidance
and Transparency Rule 4.1.17R and 4.1.18R. This auditor’s reportprovides no assurance over whether the annual financial reporthas 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 mightstate 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 orassume responsibility to anyone other than the Company and theCompany’s members, as a body, for our audit work, for thisreport, or for the opinions we have formed.

— adequate accounting records have not been kept by theparent Company, or returns adequate for our audit have notbeen 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 inagreement with the accounting records and returns; orAndrew Campbell-Orde (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square

LondonE14 5GL
23 April 2024

Consolidated statement of comprehensive income

Year ended 31 December
Continuing operations

Note

Revenue
Cost of sales
Gross profit
Research and development expenses
Sales and marketing expenses
General and administration expenses
of which expected credit loss
Other operating (expense)/income
Operating (loss)/profit
Finance income
Finance expense
Loss from joint venture(Loss)/profit before tax
Income tax expense
Net (loss)
Other comprehensive income/(expense)
Items that may be reclassified subsequently to profit or loss:
Currency exchange gain/(loss) on translation of foreign operations

4

5

24
6
9
9
16
10

Items that will not be reclassified to profit or loss:
Currency exchange remeasurements of defined benefit obligation
Related income tax credit

25

Other comprehensive income/(expense)
Total comprehensive loss
Loss per share (US$ cents)
Basic
Diluted2023
US$’000

20221
US$’000

321,724(156,372)
165,352(78,216)(12,810)(40,821)(7,337)(52,857)(19,352)3,448(8,836)(14,730)(39,470)(11,532)(51,002)

185,406(60,777)
124,629(69,358)(4,647)(15,465)(2,184)
2,468
37,627
1,684(3,588)(18,481)
17,242(18,328)(1,086)

10,161
10,161(74,989)(74,989)(1,207)
409
(798)
9,363
(41,639)———(74,989)(76,075)(7.23)(7.23)(0.16)(0.16)

11

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).

The notes on pages 140 to 185 form part of these financial statements.
136

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Consolidated balance sheet

As at 31 December

Note

AssetsCash and cash equivalents
Trade and other receivables
Contract assets
Inventories
Income tax receivables
Other current assets
Total current assets
Goodwill
Other intangible assets
Property and equipment – owned
Property and equipment – leased
Other investments
Trade and other receivables
Deferred tax assets
Total non-current assets
Total assets
Liabilities and equity
Trade and other payables
Contract liabilities
Income taxes payable
Lease liabilities
Loans and borrowings
Total current liabilities
Trade and other payables
Lease liabilities
Loans and borrowings
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Ordinary shares
Share premium accountMerger reserve
Share-based payment reserve
Currency translation reserve
Retained earnings
Total equity
Total liabilities and equity

17
18
4
19
20
12
13
14
15
18
10

21
4
15
22
21
15
22
10

26
26
26
26
26

2023
US$’000

Restated1
2022
US$’000

101,291
78,08965,173
11,622
23,467
19,017
298,659
309,199
203,314
20,654
15,262
1,019
6,392
12,086567,926
866,585

186,23147,14356,98718,061
2,922
71,475
382,819
309,199
161,406
13,421
14,553—
19,272
2,680
520,531
903,350

69,28556,026
1,051
3,953
5,625
135,940
1,775
12,727214,750
32,945
262,197
398,137
10,011
1,638(793,216)
41,875(86,546)
1,294,686
468,448866,585

88,66596,933
—
3,756
5,000
194,354
10,555
11,177205,201
13,790240,723
435,0779,751
775(793,216)
18,189(96,707)
1,329,481
468,273
903,350

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

The notes on pages 140 to 185 form part of these financial statements.
Alphawave IP Group plc | Annual report and financial statements 2023

137

Consolidated cash flow statement

Year ended 31 December
2023
US$’000

Restated1
2022
US$’000(51,002)(1,086)

13,294
11,212
4,612
40,691
15,466
8,352—(3,448)
8,836
14,7304,533
67,276

6,159
2,472
3,036
15,695(10,444)
1,702—(1,684)
3,588
18,481
13,13051,049(Increase) in trade and other receivables(22,592)(120,921)

Decrease/(increase) in inventories(Increase) in contract assets
Increase in trade and other payables(Decrease)/increase in contract liabilities
Cash generated from operations
Income taxes paid
Cash inflow/(outflow) from operating activities
Cash flows from investing activities
Purchase of intangible assets
Purchase of property and equipment
Capitalised development expenditure
Investment in joint venture
Purchase of businesses, net of acquired cash
Interest received
Cash outflow from investing activities
Cash flows from financing activities
Issue of ordinary sharesInterest paid
Lease payments
Drawdown of loans and borrowings
Repayment of loans and borrowings
Cash (outflow)/inflow from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Currency translation gain/(loss) on cash and cash equivalents
Cash and cash equivalents at the end of the year

6,439
(8,186)23,503(40,907)
25,533(9,699)15,834(3,390)(22,554)
51,973
44,834991(19,906)(18,915)(1,825)(18,568)(53,254)(14,730)(7,369)3,118(92,628)(4,131)(4,209)(7,202)(9,060)(403,588)
1,270(426,920)

1,123(18,390)(4,740)15,000(5,000)(12,007)(88,801)
186,231
3,861
101,291898(650)(3,038)210,000(1,250)205,960(239,875)
500,964(74,858)
186,231

Note

Cash flows from operating activities
Net (loss)
Non-cash items within operating profit:– Amortisation of intangible assets– Depreciation of property and equipment – owned– Depreciation of property and equipment – leased– Share-based compensation expense– Currency translation loss/(gain) on intercompany balances
Deferred cash rights
Other income
Finance income
Finance expense
Loss from joint venture
Income tax expense
Cash generated from operations before changes in working capital
Changes in working capital:

13
14
15
27

9
9
16

13
14
16

26
15

17

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

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Consolidated statement of changes in equity

Ordinary
share
capital
US$’000

Share
premium
account
US$’000

Mergerreserve
US$’000

Share-based
payment
reserve
US$’000

9,399
—
—
—

—
—
—
—

(793,216)
—
—
—

4,777
—
—
—

26

352

775

—

(246)

—

—

881

27

—

—

—

(2,037)

—

2,037

—

27

—
352
9,751
—
—

—
775
775
—
—

—
—
(793,216)——

15,695
13,412
18,189
—
—

—
—
—
2,037
(96,707) 1,329,481—(51,002)
10,161(798)

15,695
16,576468,273(51,002)
9,363

—

—

—

—

10,161(51,800)(41,639)

26

260

863

—

—

—

—

1,123

27

—

—

—

(17,005)—

17,005

—

27

—
260
10,011——863—
1,638 (793,216)

40,691
23,686
41,875———17,005(86,546) 1,294,686

40,691
41,814
468,448Note

As at 1 January 2022
Net loss
Other comprehensive expense
Total comprehensive loss
Settlement of share awards:– Issue of ordinary shares– Transfer of cumulativecompensation expense on
settled awards
Share-based compensation expense
for the year
Other changes in equity
As at 31 December 2022
Net loss for the year
Other comprehensive expense
Total comprehensive loss for theyear
Settlement of share awards:– Issue of ordinary shares– Transfer of cumulativecompensation expense on
settled awards
Share-based compensation expense
for the year
Other changes in equity
As at 31 December 2023

Currencytranslation
reserve
US$’000

Retainedearnings
US$’000

Total
US$’000(21,718) 1,328,530—(1,086)(74,989)—(74,989)(1,086)

527,772(1,086)(74,989)(76,075)

The notes on pages 140 to 185 form part of these financial statements.
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 andWales 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 marketingof high-speed connectivity solutions for application in data
centres, data networking, data storage, artificial intelligence,
5G wireless infrastructure and autonomous vehicles.

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 reductionof 50% in laboratory and prototyping operating and capital
expenditure.
Under both the base and downside scenario, there are nofurther investments forecast to be made to WiseWave.
Under the base case and the downside scenario, the analysis
demonstrates the Group can continue to maintain sufficientliquidity headroom with no default on debt covenants.

Statement of complianceFollowing consideration of the Group’s liquidity position andprospects for the year ahead, the Directors have a reasonable
The consolidated financial statements set out on pages 136
expectation that the Group has adequate resources for a
to 185 have been prepared in accordance with International
period of at least twelve months from the date of approval
Financial Reporting Standards (IFRS) as adopted for use in theof the consolidated financial statements and have therefore
United Kingdom and those parts of the Companies Act 2006
assessed that the going concern basis of accounting isthat are applicable to companies reporting under IFRS. The
appropriate in preparing the consolidated financial statements.
consolidated financial statements also comply with IFRS as
issued by the International Accounting Standards Board (IASB).

Segment information

Basis of preparation
The consolidated financial statements have been preparedon a going concern basis and in accordance with thehistorical 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 ispresented in note 23.

An operating segment is a component of an entity thatengages in business activities from which it may earn revenues
and incur expenses for which discrete financial information isavailable 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 thechannels 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
The Group’s material accounting policies are set out in note 2.
locations. Our CODM, the Chief Executive Officer, therefore
does not utilise disaggregated information for resource
Going concern
allocation decisions. Accordingly, management considers thatAt the time of approving the financial statements, the Directors the Group’s business constitutes only one operating segment
are required to form a judgement as to whether the Groupand therefore no disaggregated information is presented in theand the Company have adequate resources to continue inconsolidated financial statements.
operational existence for the foreseeable future. In forming
their judgement, the Directors consider the Group’s current
Presentation currency
financial position, the Group’s medium-term plan and its
The Directors consider that the Company’s functional currency
budget for the next financial year, and the principal risks andis pound sterling, but present the consolidated financial
uncertainties that it faces.
statements in US dollars (‘US$’) because substantially all of
As at 31 December 2023, the Group had cash and cash
the Group’s revenues and a significant part of its expenses areequivalents of US$101.3m and had bank borrowings totalling
denominated in US$. US$ is the presentation currency used by
US$220.4m, comprised of a Term Loan of US$95.4m andmost companies in the semiconductor industry and its use by
US$125.0m drawn against a US$125.0m Revolving Credit
the Group therefore assists investors in making comparisons
Facility. Both the Term Loan and the Revolving Credit Facility
with its peers.
are scheduled to mature in the fourth quarter of 2027.
All US$ amounts are rounded to the nearest thousand, unlessstated otherwise.

140

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Use of estimates

As a consequence of having adopted the amendments to
IAS 1, since the breach of the covenant was unresolved as at
The preparation of the financial statements requires
30 June 2023, the amounts outstanding under the Term Loan
management to make estimates and assumptions thatand the Revolving Credit Facility were classified wholly as current
affect the reported amounts of assets and liabilities at theliabilities in the consolidated balance sheet as at that date.
date of the financial statements and the reported amounts of
On 22 September 2023, we agreed an amendment of the Credit
revenues and expenses during the reporting period. Changes
Agreement with the lenders that temporarily suspended the Fixedin estimates and assumptions are accounted for prospectively.
Charges Covenant Ratio but introduced a Minimum Liquidity
Actual outcomes may differ from estimates and assumptions
Requirement. Since the Group was not in breach of the amended
and affect the Group’s results in future periods. Key sources
financial covenants as at 31 December 2023, the appropriateof estimation uncertainty affecting the consolidated financial
portion of the amounts owed under the Term Loan facility and thestatements are discussed in note 3.
Revolving Credit Facility are classified as non-current liabilities in
the consolidated balance sheet as at that date.
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 amore 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 subsidiarywith 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 thatthe 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 theGroup until 1 January 2024, we adopted them early with effectfrom 1 January 2023.
As disclosed in note 22, the Group has outstanding borrowings
under a Term Loan facility and a Revolving Credit Facility thatare 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.

Alphawave IP Group plc | Annual report and financial statements 2023

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 theimplementation 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 theirendorsement 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 ofan 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. Althoughadoption 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.

141

Notes to the consolidated financial statements

continued

FOR THE YEAR ENDED 31 DECEMBER 2023

1 Background continued
Accounting standards adopted during
the year continued
Deferred Tax related to Assets and Liabilities arisingfrom a Single Transaction (Amendments to IAS 12)

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 theentity. 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
The Group previously accounted for deferred tax on leases
considers all relevant facts and circumstances in assessing
on a net basis. Since adopting the amendments, where
whether or not its voting rights are sufficient to give it power toappropriate, the Group has recognised a separate deferred
direct the activities that significantly affect its returns from thetax asset in relation to its lease liabilities and a deferred tax
entity, including: the size of the Company’s holding of voting
liability in relation to its right-of-use assets. However, there was rights relative to the size and dispersion of the holdings of
no impact on the consolidated financial statements because
other vote holders; potential voting rights held by the Company,
the deferred tax assets and liabilities recognised qualified forother vote holders or other parties; and rights arising from
offset under IAS 12.
other contractual arrangements.
Amendments to IAS 12 that have the effect that the exemption
from the requirement to recognise deferred tax assets andliabilities on initial recognition of a transaction does not apply
to transactions in which equal amounts of deductible andtaxable temporary differences arise on initial recognition,for example where a lessee recognises an asset and a liabilityon the commencement of a lease.

Accounting standards issued but not adopted
as at 31 December 2023

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

Supplier Finance Arrangements (Amendments to IAS 7 obtains control over the subsidiary and ceases at such time as
and IFRS 7)
control over the subsidiary is lost. Transactions and balances
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 supplierfinance arrangements (also known as ‘reverse factoring’).
The amendments became effective for the Group on
1 January 2024.

between members of the Group, and any unrealised profits orlosses on such transactions, are eliminated on consolidation.

The Group does not currently provide supplier financearrangements.

Joint ventures

Changes in the Company’s ownership interest in a subsidiarythat do not result in a loss of control are accounted forwithin equity.

A joint venture is a joint arrangement where the parties thathave joint control of the arrangement have rights to the net
assets of the arrangement, rather than rights to its assets andobligations for its liabilities. Joint control is the contractually
Amendments to IFRS 16 Leases that clarify how a seller-lessee
agreed sharing of control of an arrangement which exists only
measures sale and leaseback transactions. The amendments
when decisions about the activities that significantly affect the
became effective for the Group on 1 January 2024.
returns of the arrangement require the unanimous consent ofManagement will refer to the new guidance in the event thatthe parties sharing control.
the Group enters into any sale and leaseback transactions in
Joint ventures are accounted for using the equity method.
the future.
On initial recognition the investment in a joint venture isrecognised at cost and the carrying amount of the investment
Lack of Exchangeability (Amendments to IAS 21)
is increased or decreased to recognise the Group’s share ofAmendments to IAS 21 The Effects of Changes in Foreign
the comprehensive income or loss of the joint venture after
Exchange Rates to provide guidance to identify when acurrency is exchangeable and how to determine the exchange the date of acquisition. If the Group’s share of losses of a joint
rate to be used for accounting purposes when it is not. Subject venture equals or exceeds its interest in the joint venture, theGroup does not recognise its share of further losses. After theto their endorsement for use in the UK, the amendments will
Group’s interest in a joint venture is reduced to nil, additional
become effective for the Group on 1 January 2025.
losses are provided for, and a liability recognised, only to theManagement does not expect that adoption of the newextent that it has incurred legal or constructive obligations or
guidance will have a material impact on the consolidated
made payments on behalf of the joint venture.
financial statements.

Lease Liability in a Sale and Leaseback (Amendments
to IFRS 16)

142

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

If the initial accounting for a business combination is
The Group’s investment agreement in its joint venture,
WiseWave Technology Co., LTD, stipulates that Alphawave can incomplete by the end of the reporting period in which theinvest up to US$170,000,000 in WiseWave. Any requirement for combination occurs, provisional amounts are reported forthe items for which the accounting is incomplete. During aa capital contribution is a shareholder reserved matter whichmeasurement period of up to one year after the acquisition
requires the explicit approval of Alphawave as joint investor.
As such, the Group does not have a constructive obligation to date, adjustments may be made to the provisional amounts
fund the joint venture and therefore additional losses recorded as if the accounting for the business combination had been
after the Group’s interest in the joint venture have reduced to nil completed at the acquisition date. Thereafter, the initialaccounting for a business combination may not be adjusted
are not provided for and no liability is recognised.
Unrealised profits and losses arising on transactions involving except to correct an error.
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 fromthe licensing of IP or the sale of products to a joint ventureis eliminated to the extent that the resulting asset has notbeen 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 shareof the comprehensive income or loss of the joint venture andonly 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 inwhich the Company obtains control over a business.

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 thanthe entity’s functional currency. Sales, purchases and othertransactions denominated in foreign currencies are recordedin the entity’s functional currency at the exchange rateruling at the date of the transaction. Monetary assets andliabilities 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 arerecognised 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 aretranslated into US dollars at the average exchange rate for thereporting period and their assets and liabilities are translated
Goodwill acquired in a business combination is recognised as into US dollars at the exchange rate ruling at the end of the
an intangible asset and represents the excess of the aggregate reporting period. Currency translation differences arising on
consolidation are recognised in other comprehensive incomeof the consideration transferred, including contingent
and taken to the currency translation reserve. In the event thatconsideration, and the amount of any non-controllinga foreign operation is sold, the related cumulative currencyinterests in the acquired business over the net total of theidentifiable assets and liabilities of the acquired business at the translation difference recognised in other comprehensive
acquisition date. Any shortfall, negative goodwill, is recognised income is reclassified from equity to profit or loss and isincluded in calculating the gain or loss on disposal of theimmediately as a gain in profit or loss.
foreign operation.
Consideration transferred represents the sum of the fair values
at the acquisition date of the assets given, liabilities incurred
Revenue recognition
or assumed and equity instruments issued by the Group in
General principles
exchange for control over the acquired business.
Revenue is recognised in accordance with IFRS 15 Revenue
Acquisition-related costs are charged to profit or loss in thefrom Contracts with Customers, upon transfer of control of
period in which they are incurred.
promised products or services to customers in an amount that
Identifiable assets and liabilities of the acquired business arereflects the consideration the Group expects to be entitled to inmeasured at their fair value at the acquisition date, except
exchange for those products or services.
for certain items that are measured in accordance with
Revenue represents the consideration to which the Groupthe relevant Group accounting policy, such as replacement
expects to be entitled in exchange for transferring goods orequity‑settled share-based compensation awards and deferred services to a customer, excluding sales taxes and, where
tax assets and liabilities.
applicable, including estimates of rebates, product returns andBusiness combinations are accounted for using theacquisition method.

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 atfair 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.

Alphawave IP Group plc | Annual report and financial statements 2023

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 amountof cumulative revenue recognised will not occur when theuncertainty associated with the variable consideration issubsequently resolved.

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 primarilyof software files that customers use to create, integrate andoperate functional building blocks within a semiconductor
device. Such contracts typically include the provision of
support to customers during the integration of the IP productinto their chip design (‘integration support’) and when ensuringthat 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 theperiod 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 andwhere computer-aided design tools can enable the IP towork with different manufacturing processes.

We recognise revenue on hard IP products by reference tothe stage of completion of the project, measured based on
the engineering hours spent on work performed to date as apercentage 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 arehighly 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 whensuccessive deliveries of customised IP are made.

SupportSupport services are considered a separate performanceobligation from delivery of the IP products because customers
Contracts to license the Group’s IP products specify the
could benefit from the services on their own or with otherconsideration to be paid by the customer, based on the specific resources that are readily available to them.
IP products licensed and the amount of any non‑recurring
Our obligation to provide support services is a stand-readyengineering (NRE) required. Invoicing is typically aligned withobligation over a specified period, the timing of which isthe achievement of project milestones. Support services are
uncertain and there is typically no maximum number ofgenerally separately priced within the contract and are invoiced hours stated in the contract. Revenue from support services
on an annual basis.
is therefore recognised on a straight-line basis over the

Where a contract involves more than one performance
contractual period of support provision.
obligation, we allocate the transaction price to the performance
Custom siliconobligations based on their relative stand-alone selling prices.
The Group enters into contracts with customers to develop
Hard IPcustom silicon products that can include various combinationsof IP provided by the Group, IP provided by third parties, other
Due to the complexity of the IP products being delivered andthe need for customers to integrate the IP products with other third-party costs required to prototype the device and the
IP building blocks in their chip designs, the Group’s IP products Group’s internal engineering costs and, if those products go
into production, to supply them to those customers. Custom
are typically delivered in multiple stages, referred to as IP
silicon development contracts vary according to the proportion
views, all of which require some level of customisation and/or configuration. Although delivery of the licensed IP products of the engineering work that the Group is required to undertake.
is split over multiple deliveries of IP views, these deliveries are For example, the customer may provide a specification only,with the Group designing, implementing and manufacturing
not distinct because each IP view is highly dependent on or
the resulting chip, utilising third-party manufacturers.
interrelated with one or more of the other IP views.
Alternatively, a customer may provide their own design, andFurther, we do not consider any NRE work required to configure
only utilise the Group’s supply chain infrastructure to manage
the IP products to be distinct because customers are unable
the manufacturing of the chip. All custom silicon contracts
to benefit from the IP views on their own or together with otherspecify that the Group owns the unique mask set of the chip
resources readily available to them, due to the bespoke naturedesign and, therefore, if the resulting chip goes into production,of the configuration that the Group performs on the hard IP
it can only be supplied to the customer by us. Equally, however,products. We therefore consider that the delivery of the IP
the customer controls the chip design because the Group
views and the configuration of the IP products represents acannot use it for any purpose other than to manufacture chips
single performance obligation.
for the customer.

144

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STRATEGIC REPORTGOVERNANCE

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 arecapable of being distinct, they are not distinct in the context
of the contract. Each deliverable is highly dependent on orinterrelated 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 designor prototype.
We therefore consider custom silicon development to be asingle 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 volumecommitments and therefore the supply of chips is not only
capable of being distinct, but is also distinct in the context ofthe contractual arrangements.

FINANCIALS

ADDITIONAL INFORMATIONThe 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 meetthe requirements of the end-customers.
We recognised revenue under the agreement by reference tothe 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 asadditional 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
Custom silicon contracts specify the consideration receivable selling price of each of the IP products. Based on engineering
for the custom design work, including any third‑party
schedules, we therefore estimated the total number of IP
components, as well as pricing for any subsequent silicon
products that we expect to provide into the library over theorders. Pricing of the design work will depend on factors
duration of the agreement in order to calculate the estimatedincluding chip complexity, manufacturing process technology unit price of the IP products. Given that the number ofand IP costs. Invoicing for development work is typically
products to be put into the library in the future is uncertain,aligned with the achievement of project milestones. Contracts the estimated unit price of the IP products constitutes variable
are typically cancellable by the customer for convenience
consideration. We therefore exercise judgement in applying
during the design phase. In the event of cancellation, theconstraints to the unit price of the IP products in order tocustomer will be liable to make payment corresponding to aminimise the risk of significant reversals of revenue in future
future contract milestone or a specified fixed percentage of the periods. Revenue on this agreement is recognised at a point
contract value.
in time when an IP product is added to the library, as this iswhen we consider control of the IP product is transferred to
We recognise revenue on custom silicon development
projects by reference to the stage of completion of the project, WiseWave.
measured based on the costs incurred for work performed toContract modifications
date as a percentage of the estimated total development costs.
A contract modification is a change in the scope or price
Supply of silicon products(or both) of a contract that is approved by the parties to thecontract.
The Group enters into contracts with customers for the
supply of silicon devices that are developed by the Group to
Modifications to our IP products and custom silicon
the customer’s specification. Silicon products are physicaldevelopment contracts with customers do not normally involve
goods held as inventory with revenue recognised at a point
the addition of goods or services that are distinct from thosein time when the customer obtains control of the products.
already being provided under the contract. Such modifications
Accordingly, where products are sold on ‘ex-works’ incoterms, are therefore accounted for as an adjustment to the existing
revenue is recognised when the products are released forcontract rather than as a separate contract. Accordingly, thecollection by the customer. Otherwise, revenue is recognised
effect that the modification has on the transaction price and/
when the products are delivered to the customer. Whereor on the measure of progress to completion of the contract
products are supplied on a consignment basis, delivery takes
is recognised as a cumulative catch-up adjustment to revenue
place and revenue is recognised when the products are taken
when the modification is approved.
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 theagreement, we charged VeriSilicon exclusivity fees for eachcalendar year that we invoiced to them and collected on aquarterly basis.
Alphawave IP Group plc | Annual report and financial statements 2023

Contract balances

Contract assets represent the amount of revenue recognisedon IP and product development contracts that has not yet been
billed to the customer.
Contract liabilities represent amounts billed to customers inexcess of revenue recognised on IP and product development
contracts.
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

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.

Incremental costs of obtaining a contract with an expected
duration of more than one year are recognised as an asset that
Other intangible assets are carried at cost less accumulated
is amortised over the period of the contract in proportion to theamortisation and impairment losses, if any. Cost comprises
recognition of the revenue receivable on the contract.
the purchase price of the asset and any costs directly
As permitted by IFRS 15, the costs of obtaining contracts with attributable to preparing the asset for its intended use, or, in thean expected duration of one year or less are expensed as they case of an asset acquired in a business combination, is its fairare incurred.
value at the acquisition date.

Onerous contracts

Other intangible assets are amortised on a straight-line basis
so as to charge their cost to profit or loss over their estimateduseful lives as follows:

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 theDeveloped IP		
contract exceed the remaining benefits to be received under it.
Developed technology– 4 to 5 years

Research and development (R&D)

Customer relationships– 12 years

All research expenditure is expensed as it is incurred.

Note developed technology includes all capitalised
development. Estimated useful lives are regularly reviewed
and the effect of any change in estimate is accounted forprospectively by adjustment to the amortisation expense.
Other intangible assets are regularly reviewed to eliminate
obsolete items.

Development expenditure is also expensed as it is incurred
until such time as it can be demonstrated that the productis both technically feasible and commercially viable and thatmanagement intends to complete the development of the
product and sell it to customers. Development expenditure
incurred after that time and before the developed product isavailable to be put into full production is capitalised.

– 4 to 8 years

Property and equipment – owned

Property and equipment is carried at cost less accumulated
depreciation and impairment losses, if any. Cost comprises the
R&D expenditure credits principally comprise amounts claimed purchase price of the asset and any costs directly attributable
to bringing the asset to the location and condition necessary tofrom the Canadian federal and provincial government under
the Scientific Research and Experimental Development (SRED) enable its intended use, or, in the case of an asset acquired in abusiness combination, is its fair value at the acquisition date.
incentive programme. Claims are made annually basedon assumptions and estimates made by management in
Repair and maintenance costs are charged to profit or loss indetermining the eligible R&D expenditure incurred during thethe period in which they are incurred.
year. Claims made are subject to review and approval by the
Items of property and equipment are depreciated on a
Canadian tax authorities and may be subject to adjustment instraight‑line basis so as to charge their cost, less estimatedsubsequent years.
residual value, to profit or loss over their expected useful lives
R&D expenses are stated after deducting R&D expenditure
as follows:
credits claimed for the year and any adjustments to amounts
Computer equipment– 2 years
claimed in previous years. We recognise a corresponding
Furnitureandfixtures– 5 years
receivable for R&D expenditure credits claimed. R&D expenditurecredits receivable are settled by deduction from the amount of
Leasehold improvements – 2½ years
income tax payable to the Canadian tax authorities. Any excess
Laboratory equipment– 2 yearsof the R&D expenditure credits receivable over income tax
payable is paid to the Group by the tax authorities.
Depreciation methods, useful lives and residual values
are reviewed at each balance sheet date and the effect
Goodwillof any change in estimate is accounted for prospectively
Goodwill acquired in a business combination is carried at cost, by adjustment to the depreciation expense. Property andequipment is regularly reviewed to eliminate obsolete items.
less impairment losses, if any.

R&D expenditure credits

Internally generated goodwill is not recognised as an asset.

146

Any gain or loss arising on disposal of property and equipment
is recognised in profit or loss.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Property and equipment – leased

Cloud-computing arrangements

Where the Group is lessee in a lease arrangement,
it recognises a right-of-use asset and an associated leaseliability, except where the leased asset is of low value or thelease is short term (a lease term of twelve months or less).

Software-as-a-Service (SaaS) arrangements convey to theGroup 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 leaseor the purchase of an intangible asset). Accordingly, the costof a SaaS arrangement is recognised as an expense on asystematic basis over the term of the arrangement.

On the commencement date of a lease, the lease liability ismeasured at the present value of the future lease payments
discounted using the interest rate implicit in the lease, if thatrate 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 (initiallymeasured using the index or rate at the commencement date)and, where applicable, amounts expected to be paid undera residual value guarantee, a purchase option or by way oftermination penalties.

Costs that we incur to configure or customise the provider’ssoftware in a SaaS arrangement are recognised as an expense
as incurred or, if not distinct from the right to access thesoftware, 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
Variable lease payments that do not depend on an index orrate are not reflected in the lease liability and are recognised in get ready for its intended use. Borrowing costs are considered
profit or loss in the period in which the event that triggers those to be directly attributable to a qualifying asset if the related
borrowings would have been avoided if the expenditure on thepayments occurs.
asset had not been made.
After the commencement date, the carrying amount of thelease liability is increased to reflect the accrual of interest,
Impairment of tangible and intangible assets
reduced to reflect lease payments made and remeasured toreflect reassessments of the future lease payments or certain Goodwill, other intangible assets and property and equipment
lease modifications. Interest on the lease liability is recognised are tested for impairment whenever events or circumstancesindicate that their carrying amounts may not be recoverable.
in profit or loss (within interest expense).
Additionally, goodwill and intangible assets still under
On the commencement date of a lease, the right-of-use asset development are subject to an annual impairment test.
is measured at cost which comprises the initial amount of
the lease liability, adjusted for any lease payments made at or An asset is impaired to the extent that its carrying amountexceeds its recoverable amount. An asset’s recoverable
before the commencement date, plus any initial direct costs
amount is the higher of its value-in-use and its fair value
incurred and an estimate of any dismantling or restoration
less costs of disposal. An asset’s value-in-use represents
costs (typically leasehold dilapidations).
the present fair value of the future cash flows expected to
The right-of-use asset is subsequently depreciated using the
be derived from the asset in its current use and condition.
straight-line method from the commencement date to the
Fair value less costs of disposal is the amount expected to
end of the lease term, unless the lease transfers ownership of be obtainable from the sale of the asset in an arm’s length
the underlying asset to the Group by the end of the lease term transaction between knowledgeable, willing parties, less theor the cost of the right-of-use asset reflects that the Group
costs of disposal.
will exercise a purchase option. In that case, the right-of-use
Where it is not possible to estimate the recoverable amountasset will be depreciated over the useful life of the underlyingof an individual asset, the recoverable amount is determinedasset, which is determined on the same basis as those offor the cash-generating unit (CGU) to which the asset belongs.
property and equipment. In addition, the right-of-use asset isperiodically reduced by impairment losses, if any, and adjusted An asset’s CGU is the smallest identifiable group of assets that
includes the asset and generates cash inflows that are largely
for certain remeasurements of the lease liability.
independent of the cash inflows from other assets or groups ofWhere a contract contains a lease and non-lease components assets. Goodwill does not generate cash flows independently(for example, property maintenance services) and theof other assets and is, therefore, tested for impairment at thecontractual payments cannot be readily allocated to the lease level of the CGU or group of CGUs that are expected to benefit
component, the Group accounts for the entire contract asfrom the synergies of the related business combination.
a lease.
Value-in-use is based on pre-tax estimates of pre-tax cash
Lease payments relating to low-value assets or to short-term
flows in the periods covered by budgets and/or plans thatleases are recognised as an expense (in arriving at operating
have been approved by the Board. Such cash flow estimates
profit) on a straight-line basis over the lease term.
are discounted at a pre-tax discount rate that reflects thecurrent market assessments of the time value of money andspecific risks.

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 havebeen 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 andfinished goods.

Impairment of financial assets
The Group recognises an allowance for credit losses inrespect of trade receivables and contract assets measured as
the amount of the lifetime expected credit losses estimatedusing a provision matrix based on the Group’s historical credit
loss experience, adjusted for factors that are specific to thecustomers, and general current and forecasted economic
conditions.
We recognise an allowance for credit losses in respect of otherfinancial assets that is measured as the amount of expectedcredit losses over the next twelve months. If, however, the riskof default has increased significantly since initial recognition,
we measure the allowance as the amount of lifetime expectedcredit losses.
If a financial asset has no realistic prospect of recovery, itis written off, firstly against any allowance made and thendirectly 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 otherexternal factors indicate that the counterparty is unlikely to pay
its creditors in full. Any subsequent recoveries are credited to
profit or loss.

Inventories are stated at the lower of cost and net realisablevalue. Cost is determined using the weighted-average cost
method and includes expenditure incurred in acquiring theinventories and in bringing them to their present location andcondition. In the case of work in progress and finished goods,
cost includes an appropriate share of overheads based on
Trade and other payables
normal operating capacity. Net realisable value represents theTrade payables represent the value of goods and services
estimated selling price, less estimated costs of completion andpurchased from suppliers for which payment has notmarketing, selling and distribution costs.
been made. Trade and other payables are measured at fairvalue on initial recognition and subsequently measured at
Financial instruments
amortised cost.

Cash and cash equivalents

Contingent consideration liabilities

Cash and cash equivalents comprise cash at bank and on handand bank deposits with an original maturity of 90 days or less. Contingent consideration that is classified as a liability is
Cash and cash equivalents are measured at fair value on initial measured at fair value through profit or loss. Contingent
recognition, less an allowance for expected credit losses, and consideration that is classified as equity is not remeasured
subsequently measured at amortised cost using the effective and its subsequent settlement is accounted for within equity.
interest method.
Loans and borrowings

Contract assets

Bank and other loans are measured at fair value on initialrecognition, less any directly attributable transaction costs,
Contract assets represent the amount of revenue recognisedon IP and product development contracts that has not yet been and are subsequently measured at amortised cost using theeffective interest method.
invoiced to the customer, less an allowance for expectedcredit losses.
If a loan or borrowing is subject to covenants and the Groupis in breach of one or more of the covenants at the end ofTrade and other receivables
the reporting period, the carrying amount of the liability is
Trade receivables represent the amount of revenue fromclassified wholly as a current liability, irrespective of any
customers that has been invoiced, but for which payment
element that would otherwise be payable more than one year
has not been received. Trade and other receivables areafter the end of the reporting period.
measured at fair value on initial recognition, less an allowance
Facility arrangement costs are amortised as a finance expensefor expected credit losses, and subsequently measured atover the term of the facility.
amortised cost.

Equity investments
Equity investments are measured at fair value through profit
or loss unless we make an irrevocable election on initialrecognition to measure them at fair value through othercomprehensive income. Gains and losses recognised in othercomprehensive income are not reclassified to profit or loss inthe event that the investment is sold.

148

Offsetting financial instruments
Financial assets and financial liabilities are offset and the
net amount presented in the balance sheet where there isa 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.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

Contract liabilities

FINANCIALS

ADDITIONAL INFORMATION

Income taxes

Contract liabilities represent amounts invoiced to customers in Tax on the profit or loss for the year comprises current andexcess of revenue recognised on IP and product development deferred tax. Tax is recognised in the profit and loss accountcontracts.
except to the extent it relates to items recognised directly inequity or other comprehensive income, in which case it is
Share-based payments
recognised directly in equity or other comprehensive income.
As described in note 27, the Company operates share-based
Current tax is the amount of tax payable or recoverable inpayment plans under which it grants options and RSUs overrespect of the taxable profit or loss for the period. Taxable profit
its ordinary shares to certain of its employees and those ofdiffers from accounting profit because it excludes income
its subsidiaries. Awards granted under the existing plans areor expenses that are recognised in the period for accountingclassified as equity-settled awards.
purposes but are either not taxable or not deductible for tax
purposes or are taxable or deductible in earlier or subsequent
We recognise a compensation expense that is based on the
periods. Current tax is calculated using tax rates and laws thatfair value of the awards measured at the grant date using an
have been enacted or substantively enacted at the balance
appropriate valuation model. Fair value is not subsequently
remeasured unless relevant conditions attaching to the awards sheet date.
are modified.
Deferred tax is tax expected to be payable or recoverable on
temporary differences between the carrying amount of an
Fair value reflects any market performance conditions
asset or liability in the financial statements and its tax baseand all non-vesting conditions. Adjustments are made toused in the computation of taxable profit. Deferred tax liabilities
the compensation expense to reflect actual and expected
are generally recognised for all taxable temporary differences.
forfeitures due to failure to satisfy service conditions orDeferred tax assets are generally recognised for all deductible
non-market performance conditions.
temporary differences to the extent that it is probable that
We recognise the resulting compensation expense on ataxable profits will be available in the future against which theysystematic basis over the vesting period and a corresponding can be utilised.
credit is recognised in the share-based payments reserve
Deferred tax assets and liabilities are not recognised in respect
within equity.
of temporary differences arising from the initial recognition
In the event of the cancellation of an option or an award by the of goodwill or from the initial recognition of other assets or
Company or by the participating employee, the compensation liabilities in a transaction that is not a business combination and,expense that would have been recognised over the remainder at the time of the transaction, affects neither accounting profitof the vesting period is recognised immediately in profit
nor taxable profit and does not give rise to equal amounts ofor loss.
taxable and deductible temporary differences.

Post-employment benefits
Defined contribution plans
Contributions to defined contribution pension plans arecharged 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 witha similar duration as the benefit obligation.
We recognise the current service cost and interest on thebenefit 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 determinedat 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.

Alphawave IP Group plc | Annual report and financial statements 2023

Deferred tax liabilities are recognised for taxable temporary
differences associated with investments in subsidiaries,
except where management is able to control the reversal of thetemporary difference and it is probable that it will not reversein the foreseeable future. Deferred tax assets and liabilities aremeasured 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 thebalance 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 treatmentby the relevant tax authorities. Uncertain tax treatments arereviewed regularly and current and deferred tax amounts areadjusted 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.
149

Notes to the consolidated financial statements

continued

FOR THE YEAR ENDED 31 DECEMBER 2023

2 Material accounting policies continued
Income taxes continued

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 ormore of the other goods or services in the contract and the nature
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 of the obligation is to deliver a combined output in the form ofdifferent period outside profit or loss, in which case the related a completed design or prototype. In management’s judgement,
therefore, a custom silicon development contract constitutes a
tax is also recognised outside profit or loss, either in othersingle performance obligation.
comprehensive income or directly in equity.
Payments by customers incorporated in certain tax
jurisdictions may be subject to withholding tax. Where thecountry in which the sales invoice is raised has a tax treaty
in place with the relevant tax jurisdiction, the tax withheld istreated 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 mostsignificant effect on the consolidated financial statements.

Revenue recognition – Identification of performanceobligations
IP licensing
Hard IP products are typically delivered in multiple stages,
referred to as IP views. Management considers that thesedeliveries 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 theirown or with other resources that are readily available to them.

Custom silicon
Custom silicon developments are typically complex andhighly customised with detailed engineering schedules anddeliverables.

150

Custom silicon contracts do not contain purchase volumecommitments 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 isconsidered a separate performance obligation which arises onreceipt of a silicon purchase order from the customer.

Cash-generating units
A cash-generating unit (CGU) is the smallest identifiablegroup of assets that generates cash inflows that are largely
independent of the cash inflows from other assets or groupsof 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 acrossthe channels through which we provide our products andservices to customers, i.e. IP licensing, custom silicon andown products. Given this interdependence of the Group’s
operations, management considers that the Group consistsof 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 ofassets. Consequently, the Group consists of a single operating
segment and goodwill is tested for impairment at Group levelbased 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 ofthe product can be demonstrated. Management is therefore
required to make judgements about the technical feasibility ofthe 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 andthe 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.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Accounting for WiseWave
Classification as a joint venture

Essentially, there is an accounting policy choice either torecognise the excess as deferred income or not to recognise
the excess at all. Management has used judgement in deciding
The Group owns a 42.5% equity interest in WiseWave Technology not to recognise the excess on the basis that it is consistent
Co Ltd (‘WiseWave’), a company established in China to develop
with management’s intention to exit the joint venture in theand sell silicon products incorporating silicon IP licensed frommedium term. If unrealised gains on sales to WiseWave had
Alphawave.
been eliminated in full, the Group’s loss before tax for the year
ended 31 December 2023 would have been US$12.5m larger
Management was required to exercise judgement to determine(2022: profit before tax would have been US$2.3m lower) andwhether WiseWave is an associate (an entity over which thethere would be cumulative deferred income of US$14.1m at theGroup has significant influence, but not control) or a joint
end of 2023 (2022: US$2.3m). In prior periods, the elimination
arrangement (an arrangement in which the Group has jointof downstream sales was reflected within the Loss from joint
control with one or more other parties). Joint control is theventure category. However, an alternative approach could havecontractually agreed sharing of control of an arrangement,
been to recognise this as a reduction in revenue. Consequently,
which exists only when decisions about activities thatan amount of US$12.5m could have been allocated to either
significantly affect the returns of the arrangement require theunanimous consent of the parties sharing control. Management revenue or loss from joint venture.
determined that Alphawave has joint control and that WiseWave
Recoverability of contract asset with WiseWave
is therefore a joint arrangement.
At the end of 2023, the Group had completed its performance
Further judgement was required to assess whether Alphawave
obligations under the subscription licence agreement withhas rights to the joint arrangement’s net assets (in which
WiseWave relating to the provision of IP products to the librarycase it should be classified as a joint venture), or rights to andof IP. A significant proportion of the consideration due under the
obligations for specific assets, liabilities, expenses and revenues subscription licence agreement will be invoiced and collected(in which case it should be classified as a joint operation). Having over the remainder of the term of the contract and, as a result,considered relevant factors including the structure, legal form and a contract asset of US$42.4m has been recognised against thecontractual agreement governing the arrangement, management contract.
determined that WiseWave should be classified as a joint venture.
Management have considered the recoverability of this contract
Share of losses in excess of interest in WiseWave
asset in the context of WiseWave’s historic pattern of settlementsof accounts receivable with the Group, the anticipated short‑andIf the Group’s share of losses of a joint venture equals or
medium-term funding requirements of WiseWave and theirexceeds its interest in the joint venture, the Group discontinues
prospects of securing such additional funding and actions
recognising its share of further losses. If the Group’s interest inavailable to Alphawave in the event of non-payment by WiseWave
a joint venture is reduced to nil, additional losses are providedof the future billing milestones. Taking the above factors into
for, and a liability recognised, only to the extent that the Grouphas incurred legal or constructive obligations or made payments account, management have judged that the contract asset withon behalf of the joint venture. The Group’s share of WiseWave’s WiseWave is recoverable and therefore no provision in excess oflosses amount to US$34.0m. The remaining amount recognised that determined by reference to the Group’s expected credit loss
policy has been made against the contract asset. Had we judged
as share of loss is the elimination of unrealised profit on sales
that the contract asset was not recoverable, contract assets
to WiseWave which is cumulatively US$12.1m. As a result, thewould have been up to US$42.4m lower and the Group’s loss
Group’s interest in WiseWave has been reduced to nil (2022:
US$nil) and no provision has been recognised on the basis that before tax would have been up to US$42.4m lower as at and forthe year ended 31 December 2023.
the Group does not have a constructive obligation.

Unrealised profit on sales to WiseWave

Uncertain tax treatments

Uncertainty may exist concerning the tax treatment of a specific
IAS 28 Investments in Associates and Joint Ventures requiresthat unrealised profits and losses arising on transactions between item or group of items because of, for example, uncertainty
the Group and a joint venture are recognised only to the extent of as to the meaning of tax law or to the applicability of tax law
unrelated investors’ interests in the joint venture. Accordingly, the to a particular transaction or circumstance, the determination
Group’s share of its profit on ‘downstream’ sales to WiseWave is of appropriate arm’s length pricing in accordance with OECD
transfer pricing principles or because the amount of current
eliminated to the extent that the related IP has not been utilised
by WiseWave. IAS 28 is, however, unclear on how this elimination and deferred tax depends on the results of an ongoing or future
examination of previously filed tax returns by the tax authorities.
should be recognised in profit or loss. Management has used
Where such an uncertainty exists, management is required
judgement in determining the Group’s accounting policy ofmaking the elimination against the Group’s share of WiseWave’s to exercise judgement in forming its expectation of the likely
profit or loss rather than revenue arriving at the Group’s operating outcome of the examination of the uncertain tax treatment by
the relevant tax authorities. Due to the complexity of tax laws andprofit or loss and correspondingly against its interest in the joint
venture. IAS 28 is also unclear about the elimination of unrealised their interpretation, the amount ultimately agreed with the tax
gains on downstream sales in excess of the Group’s interest in a authorities may differ materially from the amount of current anddeferred tax recognised in the consolidated financial statements.
joint venture.

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

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 theagreement to the library during the year. At the end of 2023,
the cumulative amount of revenue recognised from the
Key sources of estimation uncertainty are those that have asignificant risk of causing a material adjustment to the carrying agreement amounted to US$108.4m. All IP products have now
amounts of assets and liabilities within the next financial year. been delivered to the library and management have judgedthat there will be no further IP products provided. Based on thisRevenue recognition – Percentage of completion
judgement, we no longer consider there to be any estimation
uncertainty associated with the subscription licence agreement.
We recognise revenue from contracts for the provision of hard
The remaining revenue of US$0.6m to be recognised underIP, customisation services and custom silicon development
this agreement relates to the provision of support services andprojects over time by reference to the stage of completion of
associated revenue is recognised over time on a straight-line
the respective performance obligations. For hard IP and relatedbasis as it represents a stand-ready obligation.
customisation, we measure the stage of completion basedon engineering hours spent on work performed to date as a
Recoverability of trade receivables and contract assets
percentage of the estimated total project hours. For custom
We recognise an allowance for credit losses in respect of trade
silicon development projects, we measure the stage ofcompletion based on actual cost incurred to date as a percentage receivables and contract assets measured as the amount of
the lifetime expected credit losses estimated using a provisionof the estimated total project cost, where cost includes bothmatrix based on the Group’s historical credit loss experience,external costs, such as bought-in IP and manufacturing mask
adjusted for factors that are specific to the customers, andsets and internal costs. Management is required to makeestimates of the attributable cost per engineering hour for internal general current and forecasted economic conditions.
costs in custom silicon development projects and the numberof hours required to complete the project in both IP delivery andcustomisation 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 earlyor later stages.

As at 31 December 2023, the Group’s allowance for expectedcredit 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, theDirectors have considered the impact of climate change on
During 2023, we recognised revenue totalling US$171.8m by
the Group and have concluded there is no material impact
reference to the stage of completion of projects. At the end of
on financial reporting judgements and estimates. This is2023, the carrying amount of related contract assets and contract
consistent with the assertion that risks associated with climate
liabilities was US$69.0m (2022: US$58.5m) and US$55.2m (2022:
change did not affect the business, its strategy and its financial
US$96.9m) respectively. If the estimated number of hours, or the
performance in 2023, and are not expected to have a material
estimated external costs required to complete these projects was
impact on the longer‑term viability of the Group.
to change significantly, there could be a material adjustment tothe cumulative revenue recognised and the carrying amount of
4 Revenue
contract balances during the next financial year.

Revenue recognition – Licensing agreement withjoint venture

Disaggregation of revenue

The Group has disaggregated revenue into various categories
in the following tables which is intended to depict how theWe have a subscription licence agreement that provides
nature, amount, timing and uncertainty of revenue and cash
WiseWave with right of use over a library of our IP products for a flows are affected by economic factors.
fixed fee spread over a period of five years ending in 2026.
As explained in note 2, management estimates the total numberof IP products that it expects will be provided into the library inorder 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 toexercise judgement in applying constraints to the unit price inorder to minimise the risk of significant reversals of revenue in
future periods. Revenue on this agreement is recognised at apoint in time when an IP product is added to the library, as this iswhen control of the IP product is transferred to WiseWave.

152

Year ended 31 December
2023
US$’000

2022
US$’000

100,676

76,123

Revenue by type:
IP and NRE
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

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION‘IP and NRE’ represents revenues from IP products licensing,
US$117.9m (37% of total revenues) (2022: US$90.7m, 49%)
along with related support and NRE services, in addition torepresent revenues recognised over time. Of the US$117.9m
custom silicon NRE (which can include internal engineering
revenue recognised over time, US$66.0m is subject toservices, our IP and related support, third party IP, tooling costs estimation uncertainty. US$8.2m of contract assets andand prototypes). ‘IP and NRE – Reseller’ represents revenue
US$35.3m of contract liabilities are also subject to estimationfrom IP products licensing, related support and NRE services
uncertainty. These revenues require management judgements
provided through VeriSilicon, prior to our arrangements withand estimates of project hours or costs that are used in
VeriSilicon being moved under WiseWave in late 2021. ‘IPpercentage of completion calculations. These revenues relate
and NRE – JV’ represents revenue from our joint venture,
to work done during the design phase of a customer project
WiseWave, and includes revenues recognised under theand include (with the exception of a limited amount of revenue
five-year subscription licence and revenues recognised under relating to our soft IP) IP product licensing fees, together with
the VeriSilicon reseller arrangements which were moved
related support and NRE, as well as custom silicon NRE fees.
under WiseWave in late 2021. ‘Silicon and royalties’ represent
We have applied a sensitivity to revenues subject to estimation
revenues recognised once our customers are in production
uncertainty in 2023. If our estimates of total hours or
and in the case of custom silicon are based on shipments
total costs had been 10% higher, these revenues would beof physical silicon products and, for standalone IP licensing,
US$59.4m, contract assets would be US$7.4m and contract
royalties payable on usage of our IP within silicon products.
liabilities would be US$38.8m. If our estimates of total hours
Whilst this part of the note shows revenue by type, due tomateriality, we have separately itemised the revenue from ourreseller 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.

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$94.7m, 51%)
are recognised at a point in time. These revenues are basedon silicon shipments once our customers are in production.
In the case of custom silicon, this represents revenues fromshipments of physical silicon products, and for standalone
IP licensing, royalties payable on usage of our IP withinsilicon products. Revenues from our five-year subscription
All revenue from VeriSilicon and related balances are in respect licence agreement with WiseWave are also recognised at aof transactions signed with VeriSilicon as reseller prior to thepoint in time, based on the number of IP uploads during the
VeriSilicon reseller agreement moving under WiseWave as
period. Revenues from the three-year reseller agreement
master reseller effective from November 2021. All revenue and with VeriSilicon, which was moved under WiseWave in lateassociated balances in respect of transactions signed with
2021, are recognised at a point in time to the extent that they
VeriSilicon since that date are now recognised through therepresent exclusivity fees paid during the period not credited
WiseWave joint venture line.
against IP licences. In addition, a limited amount of revenue
Year ended 31 December
from our soft IP products is recognised at a point in time.
2023
US$’000

2022
US$’000

WiseWave – subscription licence agreement

Revenue by region:

Revenue recognition for the WiseWave subscription licence
North America
82,16051,361 agreement is determined with reference to the estimatedtotal number of IP uploads to be delivered to WiseWave
China
190,376
104,755 during the term of the agreement and the number of uploads
APAC (ex-China)
33,45916,980 made to WiseWave each period. As described in note 3,
EMEA
15,72912,310 the performance obligations relating to the provision of IP
products to the library of IP have been completed as at the end
321,724
185,406 of 2023 and the only remaining revenue to be recognised under
Revenues from customers which comprise greater than 10% of the subscription licence agreement relates to the provisionof support services. The subscription licence agreement
the Group’s total revenues are as follows:
has a term of five years ending in 2026 and the subscription
Year ended 31 December
licence fees paid by WiseWave are invoiced and collected
2023
2022
regularly throughout the term. As all IP licence revenue has
US$’000
US$’000
now been recognised, a contract asset of US$42.4m has been
China based customer
78,22634,538 recognised against the contract (2022: US$16.8m).
China based customer

66,891

58,207

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:

At the beginning of the year

Year ended 31 December
2023
US$’000

Restated1
2022
US$’000

58,53431,719—2,714

Revenue accrued in the period

Acquisition of subsidiaries

61,182

56,231

Accrued revenue invoiced in the period(50,681)(31,983)

Expected credit loss

(3,862)(1,547)

Currency translation differences
At the end of the year

—

(147)

65,17356,987

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
US$’000

2022
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

48,74376,205(24)

465

50,106

91,733Currency translation differences
At the end of the year

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, andthese 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 futuredeliverables.
The balances related to costs to obtain contracts from customers are as follows:

Capitalised contract costs

Year ended 31 December
2023
US$’000

2022
US$’000

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

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

5 Research and development expenses
Research and development expenses presented in profit or loss were derived as follows:

Research and development costs incurredYear ended 31 December
2023
US$’000

2022
US$’000

131,441

78,011

Research and development expenditure credits(6,999)(5,198)Development costs capitalised1(46,226)(3,455)

Total

78,216

69,358

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:

Acquisition-related costs
Compensation element of Banias Labs deferred cash rights (note 30)
Remeasurement of contingent consideration payable for Precise-ITC (note 30)

Year ended 31 December
2023
US$’000

20221
US$’000(831)(12,712)(8,352)(1,703)—(4,260)Share-based compensation expense (note 27)(40,691)(15,695)

Currency translation (loss)/gain(2,983)36,838Other operating (expense)/income(52,857)

2,468

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).

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
US$’000

2022
US$’000

Wages and salaries

84,78445,301Social 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

66,255The average number of employees during the period, analysed by category, was as follows:Year ended 31 December
2023
Number

2022
NumberResearch 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
Number

2022
NumberResearch 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

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

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 othernon‑audit services provided to the Group.
Year ended 31 December

Audit of the financial statements
Audit-related assurance services

2023
US$’000

2022
US$’000

3,472

1,713

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
US$’000

2022
US$’000

275

235

Finance income
Interest income from contracts with customers containing significant financing components
Interest on bank deposits

3,173

1,449

3,448

1,684

(65)

—

Finance expense
Bank charges
Lease interest(1,581)(391)

Term loan interest(16,489)(3,134)

Term loan interest capitalised to the balance sheet
NPV interest

9,534
–

(27)

Interest under IAS 19

(61)

—

IIA interest

(174)

(36)

(8,836)(3,588)(5,388)(1,904)

Net finance expense

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
US$’000

2022
US$’000

UK corporation tax(2,642)

5,792

Adjustments to prior periods

3,167

(516)

Overseas tax

126

13,330Total current tax

651

18,606

Origination and reversal of timing differences

10,881(278)

Total deferred tax

10,881(278)

Income tax expense

11,532

18,328Current tax

Deferred tax

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 theincome 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
US$’000

2022
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

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)

667

3,469

Share of joint venture’s loss

3,465

3,511

Movement in unrecognised deferred tax assets

2,146

3,281

932

203

11,532

18,328

Effects of:Different tax rates applied in overseas jurisdictions

Other tax items
Income tax expense

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

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Deferred tax
The movement on the deferred tax account is as shown below:

At the beginning of the year
Purchase of businesses
Charge/(credit) to profit or loss
(Credit) to OCIYear ended 31 December
2023
US$’000

Restated1
2022
US$’000

11,110422–

15,234

10,881

(278)

(409)

—

Transfer of tax credits–(4,350)Currency translation differences

(2)

82

(721)

—

20,85911,110Other
At the end of the year
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
2023
US$’000

Restated1
2022
US$’000

Accelerated capital allowances

5,720

676

Leases

(334)

(65)

Intangibles

22,42926,947

Non-capital loss

(7,193)(13,613)

Transfer of tax credits
Other temporary differences
Total

–

(4,350)

237

1,515

20,85911,110

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 liabilityof 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 adeferred 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 profitablein the future.

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 ofordinary shares in issue during the period.
Diluted earnings/(loss) per share is calculated after adjusting the weighted average number of ordinary shares used in thecalculation 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

(51,002)(1,086)

705,550,299

679,849,437

Numerator:
Net (loss) for the year
Denominator:
Weighted average number of ordinary shares for basic earnings/(loss) per share
Adjustment for dilutive share options and RSUs–—

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)

Weighted average number of ordinary shares for diluted earnings/(loss) per share

Potential ordinary shares are not treated as dilutive if their conversion to ordinary shares would decrease a loss per share fromcontinuing 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
2023
US$’000

Restated1
2022
US$’000

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)

309,199

309,199

Carrying amountAt the end of the year
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 areno currency translation differences.
The 2022 goodwill figure has been restated for the finalisationof the OpenFive purchase price allocation resulting in a
reduction in goodwill of US$12,437,000 and recognition ofa receivable of US$12,437,000. The 2022 goodwill figure
has further been restated for the increase in considerationfrom 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 andthe 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 innote 30. All these adjustments are reflected in the restated
31 December 2022 balance sheet.

160

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 throughwhich we provide our products and services to customers,
i.e. IP licensing, custom silicon or own products. Given thisinterdependence 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 notallocated goodwill below Group level. Goodwill is therefore
tested for impairment at Group level based on the fair valueless costs of disposal or value-in-use of the Group as a whole.

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

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 ofthis single CGU, i.e. at Group level. The Company’s sharesare listed on the London Stock Exchange and its market
capitalisation is therefore the most reliable measureof 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) lessassumed 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 bymanagement. 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 thetenth year.

FINANCIALS

ADDITIONAL INFORMATION

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 discountrate to the expected post-tax cash flows that was determinedusing 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 GroupCGU, using reasonably possible changes in revenue growth
rates, forecast cash flows and pre-tax discount rates andmanagement 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.

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 theserevenue streams, our operating and capital expenditure,the≈perpetuity growth rate and the discount rate.
Expected future revenue is based on external forecastsof 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 andfuture technological developments. Cash flows during thefive-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.

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
DevelopedIP
US$’000

Developed
technology
US$’000

Customer
relationships
US$’000

RISC-Vlicences
US$’000

Other
intangibles
US$’000

Total
US$’000

Cost
1,167

—

—

—

—

1,167

Acquisition of subsidiaries(note 30)

As at 1 January 2022

38,887

83,90025,7005,200

386

154,073

Additions

4,343

4,255

—

—

3,747

12,345

(49)

—

—

—

—

(49)

44,34888,15525,700

5,200

4,133

167,536—

54,539

—

—

1,825

56,364(1,162)

—

—

—

—

(1,162)

—

2,947

—

—

(2,947)—

Currency translation differences
As at 31 December 2022
AdditionsRe-classify to property
and equipment
Re-classification of intangibles
Currency translation differences

—

—

—

—

—

—

43,186145,641

25,700

5,200

3,011

222,738

—

—

—

—

—

—

4,730

—

714

347

368

6,159

(29)

—

—

—

—

(29)

As at 31 December 2022

4,701

—

714

347

368

6,130

Amortisation charge forthe year

10,112

—

2,142

1,040

—

13,294As at 31 December 2023
Accumulated amortisation
As at 1 January 2022
Amortisation charge forthe year
Currency translation differences

Currency translation differences

—

—

—

—

—

—

14,813

—

2,856

1,387

368

19,424As at 31 December 2022

39,647

88,15524,986

4,853

3,765

161,406

As at 31 December 2023

28,373

146,441

22,844

3,813

1,843

203,314

As at 31 December 2023
Carrying amount

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 amountof 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

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

14 Property and equipment – owned
Computerequipment
US$’000

Furnitureand fixtures
US$’000

Leaseholdimprovements
US$’000

Laboratory
equipment
US$’000

Total
US$’000

2,088

62

404

—

2,554

913

111

264

1,279

2,567

10,128

286

1,261

93

11,768Cost
As at 1 January 2022
On acquisition of subsidiaries
Additions

(5)

(1)

(6)

—

(12)

As at 31 December 2022

Currency translation differences

13,124

458

1,923

1,372

16,877

Acquisition of subsidiaries

—

—

—

—

—

8,488

824

2,349

6,907

18,568Re-classify from intangible assets

—

—

—

1,162

1,162

Currency translation differences

—

—

—

—

—

21,612

1,282

4,272

9,441

36,607

766

31

131

—

928

Depreciation charge for the year

1,886

58

456

72

2,472

Currency translation differences

16

9

31

—

56

Additions

As at 31 December 2023
Accumulated depreciation
As at 1 January 2022

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 thencapitalised

—

—

—

1,285

1,285

Currency translation differences

—

—

—

—

—

11,589

357

1,428

2,579

15,953As at 31 December 2023
Carrying amountAs at 31 December 2022

10,456

360

1,305

1,300

13,421As 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.

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
US$’000

Equipment
US$’000

Total
US$’000

As at 1 January 2022

8,460

2,579

11,039Acquisition of subsidiaries

2,786

—

2,786

Additions

4,308

3,023

7,331

Cost

(248)

(104)

(352)

As at 31 December 2022

Currency translation differences

15,306

5,498

20,804

Additions

5,265

608

5,873

Disposals

(551)

—

(551)

Currency translation differences
As at 31 December 2023

(3)

—

(3)

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)

6,472

4,389

10,861As at 31 December 2022

11,8382,715

14,553As at 31 December 2023

13,545

1,717

15,262As at 31 December 2023
Carrying amount164

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

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
Lease liabilities were presented in the balance sheet as follows:

Current

16,680As at 31 December
2023
US$’000

2022
US$’000

3,953

3,756

Non-current

12,727

11,177

Total lease liabilities

16,68014,933

Expenses recognised in relation to lease payments that were not included in the measurement of lease liabilities were as follows:
As at 31 December

Expense relating to short-term leases and low-value lease expense
Expense relating to variable lease payments not included in lease liabilities

2023
US$’000

2022
US$’000

716

1,769

—

19

716

1,788

Cash outflow on lease payments
The total cash outflow on lease payments was as follows:Year ended 31 December
2023
US$’000

2022
US$’000

4,740

3,038

—

19

716

1,769

5,456

4,826

Cash flow from financing activities
Lease payments included in lease liabilities
Cash flow from operating activities
Variable lease payments not included in lease liabilities
Lease payments on short-term leases and leases of low-value assets
Total cash outflow on lease payments

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 supplierof 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 amountAs at 1 January 2022

9,421

Additional investment

9,060

Loss from joint venture(18,481)

As at 31 December 2022—

Additional investment

14,730Loss 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 aresult, 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 fromsales 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 licenceagreement 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 soeliminated 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 ofthe five-year subscription licence agreement ending in 2026.
The following tables summarise financial information of WiseWave taken from its own financial statements and adjusted inaccordance with the Group’s accounting policies:

As at 31 December

Current assets
Property and equipment
Intangible assets
Other non-current assets
Current liabilities
Non-current liabilities
Included in the above amounts are:Cash and cash equivalents
Current financial liabilities (excluding trade payables)
Non-current financial liabilities (excluding trade payables)
Net assets (100%)
Group share of net assets (42.5%)
Share of losses of joint venture recognised as a liability
Share of unrealised profits on IP licences to joint venture not recognised
Carrying amount of liability in joint venture
166

2023
US$’000

2022
US$’000

23,766
5,043
53,774
2,176
34,411
24,58818,536
1,908
71,331
4,883
27,351
42,317

13,700––25,75910,948–
11,910–15,729——26,99011,471—
2,344—

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATIONAs at 31 December
2023
US$’000

2022
US$’000

Revenue

19,826

5,517

Loss from continuing operations(35,930)(37,764)(20,730)(18,267)(2,171)(2,936)–—

Included in loss from continuing operations are:Depreciation and amortisation
Interest expense
Other comprehensive income
Total comprehensive expense (100%)(35,930)(37,764)

Group share of total comprehensive expense (42.5%)(15,270)(16,050)

540(2,431)(14,730)(18,481)

Reversal/(recognition) of share of unrealised profits on IP licences to joint venture
Loss from joint venture

17 Cash and cash equivalents
As at 31 December

Cash at bank and in hand2023
US$’000

2022
US$’000

101,291

186,231

18 Trade and other receivables
As at 31 December
2023
US$’000

Restated1
2022
US$’000

Trade receivables from contracts with customers

49,214

16,455

Less: Allowance for expected credit losses(5,635)(637)

Trade receivables – net

43,57915,818

Restricted cash

17,843

18,295

Other receivables

16,667

13,030Total current

78,08947,143Current

Non-current
6,392

18,793

Other receivables

Restricted cash–

479

Total non-current

6,392

19,272

Total trade and other receivables

84,481

66,415

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 futurecompensation 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 inrelation to amounts that are forfeited by the employees will be returned to the Company.

Alphawave IP Group plc | Annual report and financial statements 2023

167

Notes to the consolidated financial statements

continued

FOR THE YEAR ENDED 31 DECEMBER 2023

19 Inventories
As at 31 December
2023
US$’000

2022
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
US$’000

2022
US$’000

Prepayments

17,09470,601

Capitalised contract costs

1,923

874

Total other assets

19,017

71,475Current

Prepayments include advance payments to foundries to reserve manufacturing capacity of US$5.1m (2022: US$50.9m) that arelargely covered by advance receipts from customers.

21 Trade and other payables
As at 31 December
2023
US$’000

Restated1
2022
US$’000

Current
Trade payables

18,09823,573

Accrued expenses

33,55334,322

195

1,204

–

5,000

Social security and other taxes
Contingent consideration
Other payables

17,43924,566

Total current

69,28588,665

1,775

10,555

Non-current
Other payables
Total non-current

1,775

10,555

Total trade and other payables

71,06099,220

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.

168

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

22 Loans and borrowings

FINANCIALS

ADDITIONAL INFORMATIONAs at 31 December
2023
US$’000

2022
US$’000

5,625

5,000

Revolving Credit Facility

125,000

110,000

Term Loan

88,12593,750Israel Innovation Authority

1,625

1,451

Total loans and borrowings

220,375

210,201

Current
Term Loan
Non-current

In October 2022, the Group entered into a Credit Agreementwith 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 infull and US$110.0m from the RCF in connection with theacquisition 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 theprincipal amount of the Term Loan outstanding at the end ofeach 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 outstandingat 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 during2026 and the remaining US$72,500,000 during 2027. We havethe 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 tothe principal amount of the Term Loan and/or the RCF by
way of an Incremental Facility Amendment, provided thatthe increment is less than US$5.0m and the aggregate
outstanding principal amount of all incremental Term Loanamounts 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 eachquarter 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 theCredit Agreement.

Alphawave IP Group plc | Annual report and financial statements 2023

The maximum permitted Net Leverage Ratio was 3.75 times
up to the period ended 30 June 2023, 3.5 times up to theperiod 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 termof 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 andnine-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 andthe closing balance on the last day of each month must not beless 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.

169Notes to the consolidated financial statements

continued

FOR THE YEAR ENDED 31 DECEMBER 2023

22 Loans and borrowings continued
Changes in liabilities arising from financing activities were as follows:

As at 1 January 2022
Acquisition of subsidiaries

Loans andborrowings
US$’000

Interest
payableUS$’000

Lease
liabilities
US$’000

Total
US$’000

—

—

7,828

7,828

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

10,721As 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

—

16,053

6,527

22,580220,375

147

16,680237,202

Other movements
As at 31 December 2023

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 amountAmortised
cost
US$’000

Fair
value
US$’000

Cash and cash equivalents

101,291

101,291

Trade and other receivables

103,498

103,498

Contract assets

65,17365,173

Total financial assets

269,962

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(308,115)(308,115)

Financial assets

Financial liabilities

170

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Restated as at 31 December 20221
Carrying amountAmortised
cost
US$’000

At fair value
through
profit or loss
US$’000

Total
US$’000

Fair
value
US$’000

Cash and cash equivalents

186,231—

186,231

186,231

Trade and other receivables

137,890—

137,890

137,890

Contract assets

56,987—56,98756,987

Total financial assets

381,108—

381,108

381,108

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)

Financial assets

Financial liabilities

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 thecontingent consideration liability recognised in relation to the acquisition of Precise-ITC that was carried at fair value throughprofit 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$5,000,000. We paid
this amount to the vendors in May 2023.
Movements in the liability for contingent consideration were as follows:Year ended 31 December
2023
US$’000

2022
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)

5,000

—

—

(5,000)

Settlements
At the end of the year

Alphawave IP Group plc | Annual report and financial statements 2023

171

Notes to the consolidated financial statements

continued

FOR THE YEAR ENDED 31 DECEMBER 2023

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 thancontingent consideration) are of short maturity and/or bearinterest at floating rates. We therefore consider that theircarrying 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 thecarrying amount of loans and borrowings approximates totheir 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 theTerm Loan bears interest at a floating rate, we consider thatthe 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 determinationof the Group’s risk management objectives and policies.
Whilst retaining ultimate responsibility for them, it hasdelegated 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 andfor maintaining an efficient capital structure, together withmanaging the Group’s counterparty credit risk, interest raterisk 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 receivablesfrom 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 thecustomer’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 oftrade receivables and contract assets measured as theamount 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 historicalcredit loss experience, adjusted for factors that are specific tothe customers, and general current and forecasted economic
conditions. When constructing the provision matrix, wegrouped trade receivables and contract assets based on credit
risk factors against which we applied differing loss rates. If weare aware of specific factors relevant to risk of default of acustomer, we may apply a loss rate to balances receivablefrom that customer that differs from that suggested by theprovision matrix.

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

Weightedaverageloss rate

Gross carrying
amount
US$’000

Loss
allowance$’000

Weightedaverageloss rate

Gross carrying
amount
US$’000

Loss
allowance$’000

Start-up company based indeveloping country

12%

45,3115,620

1%25,300300

Other start-up companies

0%21,65885

6%21,5001,194

Established company based
in developing country

25%

11,261

2,772

2%

8,200

200

Other established companies

3%40,0191,020

2%

19,989490

118,2499,497

74,9892,184

172

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Movements in the allowance for expected credit losses were as follows:Year ended 31 December
2023
US$’000

2022
US$’000

At the beginning of the year

2,184

—

Net remeasurement of loss allowance

7,337

2,184

(24)

—

9,497

2,184

Foreign exchange difference
At the end of the year

As at 31 December 2023, one customer accounted for 14% (2022: 20%) of the aggregate balance of trade receivables andcontract 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 lessthan 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 withrelatively 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 ofchanges 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
Floating rate
US$’000

Fixed rate
US$’000

Non-interest
bearing
US$’000

Total
US$’000

65,443

1,457

34,391

101,291

Trade and other receivables and other assets––

103,498

103,498

Contract assets––

65,17365,17365,443

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)

Cash and cash equivalents

Total financial assets

Alphawave IP Group plc | Annual report and financial statements 2023

173

Notes to the consolidated financial statements

continued

FOR THE YEAR ENDED 31 DECEMBER 2023

24 Financial risk management continued
Market risk continued
Restated as at 31 December 20221
Interest bearing
Floating rate
US$’000

Fixed rate
US$’000

Non-interest
bearing
US$’000

Total
US$’000

113,616

29,24443,371

186,231

Trade and other receivables and other assets––

137,890

137,890

Contract assets––

56,98756,987

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)

Cash and cash equivalents

Total financial assets

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 theentity 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 thanthe 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
US$’000

GBP
US$’000

ILS
US$’000

INR
US$’000

RMB
US$’000

TWD
US$’000

USD
US$’000

Total
US$’000

Cash and cash
equivalents

632

41,957

133

473

2,756

210

55,130101,291

Trade and otherreceivables andother assets

20,376

902

596

1,055

6,211

72

74,286

103,498

Contract assets

—

—

—

—

66

—

65,10765,173

Trade and otherpayables(26,829)(4,969)(2,266)(3,954)

(393)

(21)

(32,628)(71,060)

Lease liabilities(14,949)

—

(832)

(890)

(9)

—

—

(16,680)——(1,625)———(218,750)(220,375)(20,770)

37,890(3,994)(3,316)

8,631

261

(56,855)(38,153)

Loans andborrowings

174

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Restated as at 31 December 20221
CAD
US$’000

GBP
US$’000

ILS
US$’000

INR
US$’000

RMB
US$’000

USD
US$’000

Total
US$’000

Cash and cash
equivalents(6,648)125,218

833

1,965

12,98651,877

186,231

Trade and otherreceivables andother assets

—

—

—

1,572

23

136,295

137,890

Contract assets

—

—

—

—

—

56,98756,987

Trade and otherpayables(1,663)

(952)

(794)

(2,660)(10,039)(83,112)(99,220)

Lease liabilities(12,579)—(1,049)(1,305)——(14,933)——(1,451)——(208,750)(210,201)(20,890)

124,266(2,461)

(428)

2,970

(46,703)56,754Loans andborrowings

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
US$’000

2022
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)

Foreign currency

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 thetest 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 lengthof the testing periods would be reduced until 30 September 2025. While there were no changes to the Net Leverage Ratio, theamendment 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.

Alphawave IP Group plc | Annual report and financial statements 2023

175

Notes to the consolidated financial statements

continued

FOR THE YEAR ENDED 31 DECEMBER 2023

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
1 year
US$’000

Due between
1 and 5 years
US$’000Due >5 years
US$’000

Total
US$’000

Trade and other payables

69,285

1,775–

71,060

Lease liabilities

3,953

7,660

5,067

16,680Loans and borrowings

5,625

214,750–

220,375

78,863

224,185

5,067

308,115

Restated as at 31 December 20221
Due within
1 year
US$’000

Due between
1 and 5 years
US$’000Due >5 years
US$’000

Total
US$’000

Trade and other payables

88,665

10,555—99,220

Lease liabilities

3,756

8,819

2,358

14,933Loans and borrowings

5,000

205,201—

210,201

97,421

224,575

2,358

324,354

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$429,370,000) as follows:
As at 31 December
2023
US$’000

2022
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

16,68014,933

Total capital

332,144429,370

We seek to maintain a capital structure that supports the ongoing activities of our business and its strategic objectives in orderto deliver long-term returns to shareholders. We allocate capital to support organic and inorganic growth, investing in researchand 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.

176

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

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 basedon 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 recognisedin 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 leaveencashment.
Movements in the benefit obligation were as follows:Year ended 31 December
2023
US$’000

2022
US$’000

821

—

—

323

Current service cost

489

507

Interest expense

60—

Experience adjustments

472—

Change in financial assumptions

At the beginning of the year
Acquisition of Open Silicon (note 30)
Recognised in profit or loss:

Recognised in other comprehensive income:735—

Benefits paid by employer

(59)

(9)

Currency translation differences

(42)

—

2,476

821

At the end of the year

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
Rate of increase in salaries year 1

IALM 2012-14
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 theconsolidated financial statements.

Alphawave IP Group plc | Annual report and financial statements 2023

177

Notes to the consolidated financial statements

continued

FOR THE YEAR ENDED 31 DECEMBER 2023

26 Share capital and reserves
Share capital and share premium accountShare 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:
Numberof shares

Nominal value
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

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 theCompany 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 bedeclared from time to time. All ordinary shares rank equallywith regard to the Company’s residual assets in the event ofa liquidation.
Ordinary shareholders have the right to attend, and vote at,
general meetings of the Company or to appoint a proxy toattend and vote at such meetings on their behalf. Ordinary
shareholders have one vote for every share held.

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 aGroup 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 thenominal value of Alphawave IP Inc’s common shares inissue 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 positionof foreign operations from their functional currencies into
US dollars.

Share premium account
The share premium account represents the difference
between the nominal value of shares in issue and the fairvalue of the consideration received. For 2023 the amountallocated 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 ofshares and to pay up fully paid bonus shares.

178

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

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 onreceipt 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$1.64). During the periods under review, no options were granted under the LTIP.
The number of options and RSUs outstanding and the weighted-average price of the options and RSUs on the grant date wereas follows:Year ended 31 December 2023
Number
Weighted-averageof awards exercise price (US$)1

Year ended 31 December 2022
Numberof awards

Weighted-average
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. 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 monthsof 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.

Alphawave IP Group plc | Annual report and financial statements 2023

179

Notes to the consolidated financial statements

continued

FOR THE YEAR ENDED 31 DECEMBER 2023

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 sucharrangements as service contracts.
Future minimum payments under these arrangements were as follows:Year ended 31 December
2023
US$’000

2022
US$’000

Within one year

32,602

26,065

Between one and two years

11,132

26,792

Between two and five years

1,369

158

Payable:After more than five years
Total

—

—

45,10353,015

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 inrelation to WiseWave.
WiseWave does not currently anticipate requiring the maximum amount stated in the shareholders’ agreement and is likely toundertake 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 (whoare 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

Short-term employee benefits
Post-employment benefits

2023
US$’000

2022
US$’000

5,898

5,962

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 thetwelve-month period ending in May 2024.
Statutory information about Directors’ remuneration is presented in the Directors’ remuneration report on pages 100 to 121.

180

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATIONOther 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
US$’000

2022
US$’000

429

3,549

–

3,270

66,87958,207

Transactions
Revenue from companies on which a Director is the chairman of the board1
Revenue from VeriSilicon
Revenue from WiseWave, a joint venture, where there is common directorship
Operating expenses from a company on which a Director is a director
Costs capitalised as intangible assets from a company on which a Director is a director

(133)

—

(1,000)(1,200)66,17563,826

Year ended 31 December
2023
US$’000

2022
US$’000

1,650

350

Balances
Accounts receivable from a company on which a Director is the chairman of the board1
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 board1

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
Contract liabilities from a company on which a Director is the chairman of the board
Prepaid expenses with a company in which a Director is a director

(600)

(600)

50,76630,746

–

686

(67)

—

(67)

686

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 havereceived advice that VeriSilicon is not a related party as defined by IAS 24 or Listing Rule 11. All revenue from VeriSilicon andrelated 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 signedwith VeriSilicon since that date are now recognised through the WiseWave joint venture line. Please note this is only relevant forthe 2022 comparative figures as there are no 2023 VeriSilicon figures. This is due to the VARVA agreement signed at the end of2021 meaning all VeriSilicon revenue and associated balances fall under WiseWave.

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181

Notes to the consolidated financial statements

continued

FOR THE YEAR ENDED 31 DECEMBER 2023

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 teamof talented engineers and additional strategic IP to ourportfolio. We had been working with Precise since 2019 andour 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 portfolioof communications IPs to service the most advanced global
customers in the networking and data centre markets,
including leading semiconductor companies and hyperscalers.

Year ended 31 December 2023
In May 2023, we paid US$5,000,000 to the vendors insettlement 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 balanceof 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 andliabilities that together comprised the OpenFive business unitof SiFive, Inc. and entered into certain IP licensing agreementsthat 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 acquired Precise for US$8,000,000 on a cash and debt‑free We believe that the acquisition of OpenFive has the following
basis. We paid consideration of US$8,470,000 in cash on
key benefits: it nearly doubles our connectivity and SoC
completion, including US$470,000 in respect of Precise’s
IP portfolio and will accelerate our progress in providing
cash less indebtedness.
advanced connectivity solutions in 5nm, 4nm, 3nm andbeyond; it will enable us to offer leading-edge data centre
Additional consideration of up to US$5,000,000 was payable
contingent on the aggregate value of Precise’s IP Core revenue and networking custom silicon solutions and will enhance
our chiplet design capabilities; it significantly expands ourand bookings exceeding US$10,000,000 during 2022. Usingcustomer base and total addressable market, including a new
an option pricing model, we determined that the fair value
hyperscaler customer in North America, providing a broaderof the contingent consideration at the acquisition date wasplatform from which to execute our sales strategy; and it
US$740,000 and recognised a corresponding liability withinbrought a team of more than 300 people, largely based in India,
trade and other payables.
that will considerably enhance our delivery capabilities.
Further payments totalling US$11,500,000 may be madeWe acquired the OpenFive business unit and the related
to one of the vendors during the period of up to three
IP licences for US$210,000,000 on a cash and debt-freeyears following completion. Since those further payments
basis. We paid consideration of US$203,636,000 in cash
are largely conditional on that individual continuing in theon completion, after deducting US$6,364,000 in respect ofGroup’s employment, they are accounted for as employee
OpenFive’s estimated cash, indebtedness and working capital.
compensation rather than as consideration for the purchaseof the business.

It was envisaged in the Stock and Asset Purchase Agreementthat Alphawave may make an election under section 338 of
the US Internal Revenue Code of 1986 to treat the purchaseof OpenFive as an asset acquisition for US federal income
tax purposes. If such an election is made, the tax base of theassets acquired would be ‘stepped-up’ to their fair values on
the acquisition date, enabling the purchaser to claim higher
From the acquisition date to 31 December 2022, Precise
income tax deductions for those assets. On the other hand,contributed revenue of US$2,251,000 and net income ofthere is usually an increase in the income tax payable by the
US$2,747,000 to the Group’s results.
vendor and the Stock and Asset Purchase Agreement required
Alphawave to compensate the vendor for the additional US
Precise’s actual IP Core revenue and bookings during 2022
significantly exceeded our expectations at the acquisition date. income tax expense that it may incur if a section 338 election
were made.
As a result, the full amount of the contingent considerationof US$5,000,000 became payable to the vendors. As at
At the time the Directors approved the Group’s 2022 accounts,
31 December 2022, we therefore increased the related
we had made a section 338 election but were awaiting theliability to US$5,000,000 and recognised a corresponding
final calculation of its financial effect and any amount payable
expense of US$4,260,000 in profit or loss (within otherto the vendor. We therefore took no account of the section
operating expenses).
338 election in determining the purchase consideration and
We recognised goodwill of US$3,097,000 on the acquisitionof Precise that was principally attributable to the benefits
expected to be derived from the combination of ourtechnologies to develop new IP and increase our penetrationof the rapidly growing networking and data centre markets.

OpenFive’s deferred tax assets and liabilities in the purchaseprice allocation that were reflected in the Group’s 2022
accounts.

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STRATEGIC REPORTGOVERNANCE

Consequently, the purchase price allocation was provisional inrespect of any adjustments that may arise from the finalisationof OpenFive’s cash, indebtedness and working capital oncompletion and the finalisation of the financial effect of thesection 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 therapidly growing networking and data centre markets.

FINANCIALS

ADDITIONAL INFORMATION

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 teamof about 50 people, the majority of whom are engaged inresearch 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
From the acquisition date to 31 December 2022, OpenFive
proposes a multi-year roadmap for Alphawave to develop
contributed revenue of US$70,827,000 and a net loss ofand sell a portfolio of optical products and DSPs, including
US$11,717,000 to the Group’s results. If we had acquired
coherent DSP technology from Banias Labs, with sales
OpenFive on 1 January 2022, we estimate that the Group’s
potentially ramping to over US$300m. We consider that therevenue for 2022 would have been US$75,847,000 higher but
its net loss for 2022 would have been US$13,554,000 greater. acquisition of Banias Labs has the following key benefits: itbrings silicon-proven optical DSP technology, expanding ourYear ended 31 December 2023
product portfolio and strengthening our product roadmap;
We finalised the financial effect of the section 338 election
it will expand Alphawave’s addressable market and deepenin August 2023. As a result, we retrospectively adjusted theour commercial partnership with a leading North Americanpurchase price allocation as follows:
hyperscaler; and it will enable us to target the growing> to derecognise deferred tax liabilities of US$15,860,000 that opportunity to use coherent optical technology within data
were initially recognised in respect of identifiable intangible centres and in other shorter reach applications.
assets that became deductible for US federal income tax
We purchased all of Banias Labs’ outstanding issued common
purposes as a result of the Section 338 election; andand preferred shares and all outstanding unexercised options
over its common shares for US$240,000,000 on a cash
> to increase the purchase consideration to reflect theand debt-free basis. We paid US$244,955,000 in cash on
tax adjustment amount of US$5,610,000 payable tocompletion including US$4,955,000 in respect of Banias
compensate the vendor for the additional income tax
Labs’ estimated cash, indebtedness and working capital.
payable as a consequence of the section 338 election.
We paid US$24,300,000 of the initial consideration into an
We paid the tax adjustment amount to SiFive Inc. inescrow fund that is available to settle any valid claims that we
October 2023.
may make in relation to the representations, warranties andAs a result of these adjustments, the goodwill recognised on
indemnities that were provided to us by the sellers. We funded
the acquisition was reduced by US$10,250,000. We have not
the acquisition from existing cash balances and the proceeds
restated the Group’s income tax expense for 2022 to reflectof the US$210.0m Senior Secured Credit Facilities, comprising
the retrospective application of the ‘stepped up’ tax base of the a five-year US$110.0m Revolving Credit Facility and a five-year
assets acquired because the effect was immaterial.
US$100.0m Term Loan, that we obtained in October 2022.
A binding arbitration decision was reached in December 2023 On completion, all outstanding unvested employee options
regarding OpenFive’s cash, indebtedness and working capitalover Banias Labs’ common shares were converted into rights
on completion and the vendor paid the resulting purchase price to receive future cash payments, which are generally subject
adjustment of US$12,437,000 to Alphawave in January 2024.
to the vesting schedule and other terms (including a service
At the end of August 2023, (i.e. at the end of the measurement condition) that governed the options that they replaced.
period allowed by IFRS 3), it was unclear what the outcome of We determined that the fair value of the deferred cash
the dispute proceedings would be.
rights on the acquisition date was US$31,013,000, of which
New information was obtained about facts and circumstances US$8,804,000 was attributable to employee service rendered
before the acquisition date and is therefore accounted
that existed at the acquisition date during the arbitration
for as consideration. We are recognising the balance ofprocess and within the measurement period and therefore
US$22,209,000 as an employee compensation expense overthe provisional amounts recognised at the acquisition
the remaining vesting periods of the deferred cash rights whichdate have been adjusted accordingly. With the arbitration
process concluding shortly after the end of the measurement extend to August 2026. The amount recognised as an expense,
shown as ‘Compensation element of Banias Labs deferredperiod, management determined that the best estimate of
cash rights’ in note 6, in 2023 was US$8,352,000 and in 2022
the outcome as at the end of the measurement period was
was US$1,702,000.
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.
Alphawave IP Group plc | Annual report and financial statements 2023

183

Notes to the consolidated financial statements

continued

FOR THE YEAR ENDED 31 DECEMBER 2023

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 formaking 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 tothe assembled workforce and the benefits expected to be derived from the future development of new connectivity productofferings 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 dateto 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 expiredin 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
US$’000

OpenFive
US$’000

Banias Labs
US$’000

Total
US$’000

Cash and cash equivalents

803

14,5039,131

24,437

Trade and other receivables

269

38,451

1,256

39,976

Assets acquired

Inventories—

14,671—

14,671

7,800

30,10083,900121,800

Customer relationships—

25,700—25,700

Other intangibles

—

6,573

—

6,573

Intangible assets

Technology/IP

7,800

62,373

83,900154,073

Property and equipment

52

813

1,702

2,567

Other assets

—

1,667

1,119

2,786

8,924

132,478

97,108238,510(70)(40,924)(2,073)(43,067)

Contract liabilities(1,120)(40,241)—(41,361)

Deferred tax liabilities

Total assets acquired
Liabilities assumed
Trade and other payables(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

49,77576,161132,049

Goodwill arising on acquisition

3,097

159,471

146,585

309,153

Consideration

9,210

209,246

222,746441,202

Purchase consideration was as follows:
Cash paid on completion

8,470

203,636

222,746434,852

Purchase price adjustment

—

5,610

—

5,610

Contingent consideration

740

—

—

740

9,210

209,246

222,746441,202

Consideration

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FINANCIALS

ADDITIONAL INFORMATION

We engaged qualified external experts to support the identification and measurement of the identifiable assets acquired andliabilities 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 licencesusing the cost savings approach.
Trade and other receivables are stated at their gross contractual amounts receivable, which are considered to be reflectiveof their fair values. At the acquisition dates, management expected all of the contractual cash flows from trade and otherreceivables to be collected.
As a consequence of our having made the section 338 election, goodwill recognised on the acquisition of OpenFive isdeductible 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
US$’000

2022
US$’000—

434,852

Purchase price adjustment

5,610

—

Contingent consideration

740

—

6,350

434,852—(24,437)

6,350

410,415

Cash paid on completion

Consideration paid
Cash and cash equivalents acquired
Cash outflow on purchase of businesses, net of cash acquired

Contingent consideration of US$5,000,000 paid in 2023 in relation to the acquisition of Precise-ITC was higher than ourestimate 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.

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 thatare excluded from, the most-directly comparable measure calculated and presented in accordance with IFRS or are calculatedusing 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 withsimilarly 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. Bookingscomprise licence fees, non-recurring engineering support, orders for silicon products, financing components and estimated futureroyalties (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 tothe market each quarter within our quarterly trading update. Infrequently, customers request to cancel bookings. At the time ofcancellation, these are recorded as debookings after taking into account any pertinent cancellation charges.
Bookings during the year were as follows:Year ended 31 December

Preliminary bookings (including royalties)

2023
US$m

2022
US$m

364.4

247.6

Adjustment

19.5(19.5)

Bookings1

383.9

228.1

Royalties—(15.1)

383.9

213.0

Bookings (excluding royalties)

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 projectviability was established.

Backlog
Backlog is a non-IFRS measure that represents cumulative bookings (excluding royalties) that have not yet been recognised asrevenue 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 theyear 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

Restated1
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

—

168.3

Add: Backlog acquired in business combinations
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

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATIONEBITDA
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 tochanges 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(51,002)(1,086)

Finance income(3,448)(1,684)

Finance expense

8,836

3,588

Loss from joint venture

14,73018,481

Income tax expense

11,532

18,328Depreciation of property and equipment – owned

11,2122,472

Depreciation of property and equipment – leased

4,612

3,036

Amortisation of intangible assets

13,294

6,159

EBITDA

9,766

49,294

Net loss
Add/(deduct):

Adjusted measures of profitability
We report adjusted measures of profitability because we believe that they provide both management and investors with usefuladditional 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 thislimitation 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 thepurchase 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 forbusiness 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 businesscombinations in order that the performance of our business may be compared more fairly with that of businesses that havedeveloped on an organic basis.

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187

Alternative performance measurescontinued

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 theawards because the expense fluctuates according to the Company’s share price at the exercise or vesting date and the effecton 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 andborrowings into the entity’s functional currency. Such gains and losses can be significant and are not representative of theGroup’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

9,766

49,294831

12,713

8,352

1,703

—

4,260

Share-based compensation expense

40,691

15,695Currency translation (loss)/gain

2,983(36,838)

Adjusted EBITDA

62,623

46,827

EBITDA
Add/(deduct):
Acquisition-related costs
Compensation element of Banias Labs deferred cash rights
Remeasurement of contingent consideration payable for Precise-ITC

188

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

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 inaccordance with IFRS as follows:Year ended 31 December
2023
US$’000

2022
US$’000(51,002)(1,086)831

12,713

8,352

1,703

—

4,260

Amortisation of acquired intangible assets

12,657

5,519

Share-based compensation expense

40,691

15,695Currency translation (loss)/gain

2,983(36,838)

Tax effect of above adjustments(2,623)

4,708

Adjusted net income

11,8896,674

Net loss
Add/(deduct):
Acquisition-related costs
Compensation element of Banias Labs deferred cash rights
Remeasurement of contingent consideration payable for Precise-ITC

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 anddividing 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.

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189

Company balance sheet

As at 31 December
Note

2023
US$’000

2022
US$’000

Cash and cash equivalents

5

16,911

125,729

Amounts owed by Group undertakings

6

21,404

14,7692,417

364

11,88814,194

52,620155,056

346,163

280,373

1,019—

AssetsCurrent assets

Income tax receivables
Other receivables

7

Total current assets
Non-current assets
Investments in subsidiaries

8

Other investments
Amounts owed by Group undertakings

6366,304

260,011

Other receivables

7

6,392

17,091

Total non-current assets

719,878

557,475

Total assets

772,498

712,5318,940

12,400Liabilities and equity
Current liabilities
Trade and other payables

9

Amounts owed to Group undertakings——

Income tax payable—

145

Loans and borrowings

10

Total current liabilities

5,625

5,000

14,565

17,545

1,775

4,423

Non-current liabilities
Trade and other payables

9

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 reserve11

41,595

17,909Currency 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

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Company statement of changes in equity

Ordinary
share
capital
US$’000

Share
premium
account
US$’000

Mergerreserve
US$’000

Share-based
payment
reserve
US$’000

Currencytranslation
reserve
US$’000

Retainedearnings
US$’000

Total
equityUS$’000

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)Note

As at 1 January 2022

Settlement of share awards:
106

775

—

—

—

—

881

– Effect of proceeds below
nominal value– Issue of ordinary shares

246

—

—

(246)

—

—

—

– Transfer of cumulativecompensation expense on
settled awards

—

—

—

(2,037)

—

2,037

—

Share-based compensation
recognised in the year

11

—

—

—

15,695——

15,695

Other changes in equity

12

352

775

—

13,412—

2,037

16,576As 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—27,619Total comprehensive income
for the year

—

—

—

—

27,619(13,213)

14,406

260

863

—

—

—

—

1,123

– Effect of proceeds below
nominal value

—

—

—

—

—

—

—

– Transfer of cumulativecompensation expense on
settled awards

—

—

—

(17,005)—

17,005————40,691——

40,691Other changes in equity

260

863

—

23,686—17,00541,814As at 31 December 2023

10,011

1,638(777,751)

41,595(52,087) 1,319,627

543,033

Settlement of share awards:– Issue of ordinary shares

Share-based compensation
recognised in the year

11

12

The notes on pages 192 to 197 form part of these financial statements.
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 andWales 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 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 reductionof 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 sufficientliquidity headroom with no default on debt covenants.
Following consideration of the Company’s liquidity position andprospects for the year ahead, the Directors have a reasonable
expectation that the Company has adequate resources for aperiod of at least twelve months from the date of approval of
the financial statements and have therefore assessed that thegoing concern basis of accounting is appropriate in preparing
the financial statements.

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
Use of estimates
separate financial statements comply with the recognition and
The preparation of financial statements requires management
measurement requirements of IFRS as adopted for use in theto make estimates and assumptions that affect the reported
United Kingdom as at 31 December 2023 but they exclude
certain disclosures that would otherwise be required under that amounts of assets and liabilities, as well as disclosure ofcontingent assets and liabilities at the date of the financial
body of accounting standards.
statements and the reported amounts of revenues andexpenses during the reporting period. Actual outcomes could
Basis of preparationdiffer from those estimates and assumptions and affect the
The Company’s separate financial statements have been
Company’s results in future periods.
prepared on a going concern basis and in accordance with thehistorical cost convention.
The Company’s material accounting policies are set out innote 2.

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 theGoing concern
consolidated financial statements. All US dollar amounts are
At the time of approving the financial statements, the Directors in thousands (US$’000), except where stated otherwise.
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, theDirectors 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.

192

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STRATEGIC REPORTGOVERNANCE

Disclosure exemptions utilised under FRS 101
In preparing the Company’s separate financial statements,
the Directors utilised the following exemptions from thedisclosure requirements of IFRS adopted for use in the United
Kingdom that are available to them under FRS 101:

FINANCIALS

ADDITIONAL INFORMATION

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 entitythat significantly affect its returns. Generally, such power exists
where the Company holds a majority of the voting rights of anentity. Each of the Company’s subsidiaries is wholly owned.

> paragraphs 45(b) (number and weighted average exercise
prices of share options) and 46 to 52 (determination of fairvalue of options and awards granted and financial effectof share-based compensation) of IFRS 2 Share-based
Payment;> the requirements of IFRS 7 Financial Instruments –Investments in subsidiaries represents the Company’s directly
Disclosures;
owned interests in its subsidiaries, i.e. does not include any> paragraphs 91 to 99 (disclosure requirements) of IFRS 13
interests that are owned by intermediate holding companies.
Fair Value Measurement;
Investments in subsidiaries are carried at cost, less impairment> paragraph 38 of IAS 1 Presentation of Financial Statements losses, if any.
with regard to comparative information requirements in
Foreign currency translation
respect of paragraph 79(a)(iv) of IAS 1 (reconciliation of
the number of the Company’s shares outstanding at theTranslation into the Company’s functional currency
beginning and end of the period);
Transactions denominated in foreign currencies are recorded> paragraphs 10(d) (statement of cash flows), 16 (statementin pounds sterling at the exchange rate ruling at the date ofof compliance with IFRS), 38 (A to D) (comparative
the transaction. Monetary assets and liabilities denominatedinformation), 111 (statement of cash flows) and 134 to 136
in foreign currencies are translated into pounds sterling at(disclosures about capital) of IAS 1 Presentation of Financial the exchange rate ruling at the end of the reporting period.
Statements;
All resulting currency translation differences are recognised in> IAS 7 Statement of Cash Flows;
profit or loss. Non-monetary assets and liabilities denominatedin foreign currencies are not retranslated subsequent to initial> paragraphs 30 and 31 of IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors (discussion of recognition.
IFRSs issued but not yet adopted by the Company); andTranslation into the Company’s presentation currency> paragraphs 17 and 18A (compensation of key management
Income and expenses presented in profit or loss or otherpersonnel) and paragraph 19 (disclosure of transactions
comprehensive income are translated from pounds sterlingwith wholly owned subsidiaries) of IAS 24 Related Party
into US dollars at the average exchange rate for the reporting
Transactions.
period. Assets and liabilities are translated from pounds
Accounting standards adopted during the year sterling into US dollars at the exchange rate ruling at the endof the reporting period. All resulting currency translation
During the year, the Company adopted the following new anddifferences are recognised in other comprehensive income
amended accounting standards, none of which had a material and taken to the currency translation reserve.
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 aSingle Transaction (Amendments to IAS 12).
An outline of the changes introduced is provided in note 1 tothe consolidated financial statements.

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 daysor 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 theeffective interest method.

Other receivables
Other receivables are measured at fair value on initialrecognition, 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 offinancial assets that is measured as the amount of expectedcredit losses over the next twelve months. If, however, the riskof default has increased significantly since initial recognition,
we measure the allowance as the amount of lifetime expectedcredit losses.
If a financial asset has no realistic prospect of recovery, itis written off, firstly against any allowance made and thendirectly to profit or loss. We consider that a financial asset is
not recoverable if the balance owing is 180 days past due andinformation 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 notbeen made. Trade and other payables are measured at fairvalue on initial recognition and subsequently measured atamortised cost.

Loans and borrowings
Bank and other loans are measured at fair value on initialrecognition, less any directly attributable transaction costs,
and are subsequently measured at amortised cost using theeffective interest method.
If a loan or borrowing is subject to covenants and theCompany is in breach of one or more of the covenants at theend 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 financeexpense 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 isa 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 anddeferred tax. Tax is recognised in the profit and loss accountexcept to the extent that it relates to items recognised directlyin equity or other comprehensive income, in which case it isrecognised 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 – isan income tax in the scope of IAS 12. The Company has applieda temporary mandatory relief from deferred tax accounting forthe 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 thecomputation 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

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STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

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 valueof 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 tothe subsidiary, as a capital contribution to the subsidiary. In either case, the Company recognises a corresponding credit to theshare-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 thatwould 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

Cash at bank and in hand
Short-term deposits
Total

2023
US$’000

2022
US$’000

16,911

125,729––

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

11,611

13,922Current
Restricted cash
Prepayments

277

272

11,88814,194

6,392

17,091

6,392

17,091

Non-current
Restricted cash

Restricted cash comprises amounts held by third-party paying agents in respect of deferred consideration and futurecompensation 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 thatare forfeited by the employees will be returned to the Company.

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 exchange450

As at 31 December 2022

280,373

Capital contributions – Share-based payments

39,757

Deferred cash rights

8,352

Foreign exchange

17,681As 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

Trade payables

1,888

1,302

Other payables

4,823

6,249

Accrued expenses

2,321

4,849

(92)

—

8,940

12,400

1,775

4,423

Current

Social security and other taxes

Non-current
Other payables

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

5,625

5,000

Revolving Credit Facility

125,000

110,000

Term Loan

88,12593,750213,125

203,750

Current
Term Loan
Non-current

196

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STRATEGIC REPORTGOVERNANCE

In October 2022, the Company entered into a Credit
Agreement with a syndicate of banks that provided it witha 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 theacquisition 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 fairvalue of the consideration received. For 2023 the amountallocated 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 issueof 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 aGroup 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 thedate of the reorganisation.

Alphawave IP Group plc | Annual report and financial statements 2023

FINANCIALS

ADDITIONAL INFORMATION

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 andlosses 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 theconsolidated financial statements.
During 2023, the Company recognised an expense of
US$0.9m (2022: US$0.2m) in respect of awards granted toits own employees.

13 Events after the reporting period
On 27 February 2024 Alphawave 102022 Limited
was dissolved.

197

Notes to the Company financial statements

continued

FOR THE YEAR ENDED 31 DECEMBER 2023

Related undertakings
Details of the Company’s related undertakings as at 31 December 2023 are as follows:
Name

Registered addressCountry

Alphawave IP Inc.

70 University Ave, 10th Floor, Toronto, Ontario, Canada M5J 2M4

CanadaAlphawave 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

Subsidiaries

Alphawave Call. Inc.1, 2

70 University Ave, 10th Floor, Toronto, Ontario, Canada M5J 2M4

CanadaAlphawave Exchange Inc.

70 University Ave, 10th Floor, Toronto, Ontario, Canada M5J 2M4

CanadaAlphawave IP Limited

21 Avenida da Praia Grande, No 409, Edificio China Law, 21 andar, em, Macau

1

Precise-ITC, Inc.

170 University Avenue, 10th Floor, Toronto, Ontario, M5H 3B3AWIPInsure Limited1

1st Floor, Limegrove Centre, Holetown, St. James

Alphawave Semi International
Corp. (formerly Alphawave
Holdings Corp.)1

1730 N 1st St, Suite 650, San Jose, CA, 95112

China
CanadaBarbados
United States(Delaware)

Alphawave Semi Inc. (formerly 490 N McCarthy Blvd #220, Milpitas, CA 95035
Open-Silicon, Inc.)

United States(Delaware)

Alphawave Semiconductor Corp 1730 N 1st St, Suite 650, San Jose, CA, 95112

United States(Delaware)

Alphawave Semi Holding Corp 3rd Floor, Les Cascades, Edith Cavell Street, Port Louis(formerly Open-Silicon Holding
Corp.)

Mauritius

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 Development
Corp.2Open-Silicon Japan2

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
Room 101, Building B, No. 300, Zhihui Road, Qilin Science and Technology
Ltd (formerly Yuanfang Silicon Innovation Park, Jiangning District, NanjingTechnology (Nanjing) Co. Ltd)

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

Solanium Labs Ltd1

24 Hanagar, Hod HaSharon 4527713

IsraelRoom 105, No. 6, Baohua Road, Hengqin New District, Zhuhai

China

UnitedKingdom(England &Wales)

Joint venture
WiseWave Technology Co.,
LTD1,3All 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.

198

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Appendix

TCFD Compliance Table
Disclosure

Response

Governance – Compliant
a. Describe the Board’s oversight of climate-related risks andopportunities.

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 theorganisation has identified over the short, medium andlong term.

See Risks and Opportunities tables on pages 46-48

b. Describe the impact of climate-related risks andopportunities on the organisation’s business, strategy andfinancial planning.

Dependency on natural, social and human capital – page 48

c. Describe the resilience of the organisation’s strategy, taking
into consideration different climate-related scenarios, including
a 2ºC or lower scenario.

Strategy – page 44
We have not performed a quantitative risk assessment or
climate-related scenario analysis. In 2024 we will evaluate theadditional requirements and associated costs to assess theresilience of the organisation under different climate-related
scenarios. Following this evaluation we will make a decision onwhether a quantitative risk assessment should be prioritised
and the timing if appropriate.

Risk Management – Compliant
a. Describe the organisation’s processes for identifying andassessing climate-related risks.
b. Describe the organisation’s processes for managing
climate‑related risks.
c. Describe how processes for identifying, assessing andmanaging climate-related risks are integrated into theorganisation’s overall risk management.

Risk Management – Page 46
See Risks and Opportunities tables on pages 46-48
Risk Management – Page 46

Metrics and Targets – Compliant
a. Disclose the metrics used by the organisation to assessclimate-related risks and opportunities in line with its strategy
and risk management process.
b. Disclose Scope 1, Scope 2, and if appropriate, Scope 3
greenhouse gas (GHG) emissions, and the related risks.
c. Describe the targets used by the organisation to manage
climate-related risks and opportunities and performanceagainst targets.

Alphawave IP Group plc | Annual report and financial statements 2023

Metrics and Targets – Page 45

Table – Page 45
Metrics and Targets – Pages 45 and 46

199

Appendix

continued

SASB Table
SASB Topic

Greenhouse Gas
Emissions

EnergyManagement in
Manufacturing

SASB CodeSASB Accounting Metric

Disclosure Details

Page Number of URL

TC-SC-110a.1(1) Gross global Scope 1
emissions and (2) amountof total emissions fromperfluorinated compound

Metric tons (t)CO-ePage 45, 2023
Annual report

TC-SC-110a.2

Discussion of long-termand short-term strategy
or plan to manage Scope
1 emissions, emissions
reduction targets, and ananalysis of performanceagainst those targets

The Group is putting
in place mitigating
actions to reduce its
environmental impact,
such as avoiding
unnecessary businesstravel and purchasingenergy from certified
renewable sources,
where possible.

Pages 44 and 45, 2023
Annual report

TC-SC-130a.1(1) Total energy
consumed,(2) percentage gridelectricity,(3) percentage
renewable

Gigajoules (GJ),
Percentage (%)

We are a fablessbusiness and outsource
the manufacturing ofsemiconductors to theleading foundries in
the industry. Therefore,
energy management
in manufacturing is notconsidered 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 withHigh or Extremely HighBaseline Water StressThousand cubic
metres (m³),
Percentage (%)

We are a fablessbusiness and outsource
the manufacturing ofsemiconductors to theleading foundries in theindustry. The use of water
is limited to our officebuildings. 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

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATIONSASB Table continued
SASB Topic

SASB CodeSASB Accounting Metric

Disclosure Details

Page Number of URL

Waste Management

TC-SC-150a.1(1) Amount of
hazardous waste frommanufacturing, (2)percentage recycled

Metric tons (t),Percentage (%)

We are a fablessbusiness and outsource
the manufacturing ofsemiconductors to theleading foundries in
the industry. Therefore,hazardous waste frommanufacturing is notconsidered a material
sustainability topic for our
Company.

Employee Health and
SafetyTC-SC-320a.1

Description of efforts toassess, monitor andreduce exposure ofworkforce to humanhealth hazards

D&A

Our H&S rules andprocedures are in strict
compliance with national,
regional and/or local
legislation.

TC-SC-320a.2

Total amount ofmonetary losses
as a result of legal
proceedings associatedwith employee healthand safety violations

Reportingcurrency

In 2023, there wereno legal proceedings
associated with employee
health and safety
violations.

Index only.

Index only.

Recruiting & Managing
a Global & Skilled
Workforce

TC-SC-330a.1

Percentage of
employees that require awork 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 IPC1752 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

TC-SC-440a.1

Description of the
management of risks
associated with the useof critical materials

Intellectual Property
TC-SC-520a.1
Protection & Competitive
Behaviour

Total amount ofmonetary losses
as a result of legal
proceedings associatedwith anti-competitive
behaviour regulations

Materials Sourcing

Alphawave IP Group plc | Annual report and financial statements 2023

Various, byproduct
category

We do not disclose
energy efficiency at asystem-level as our IP
and semiconductors
are embedded in ourcustomers’ products
together with a multitudeof other components ofwhich we have no control.

D&A See page 50 of this report.
Conflict Mineral Policy
available on our website.
Reportingcurrency

In 2023, there wereno legal proceedings
associated with anticompetitive behaviour
regulations.
Index only.

201

Appendix

continued

SASB Table continued
SASB Topic

SASB CodeSASB Accounting Metric

Disclosure Details

Page Number of URL

Recruiting & Managing a TC-SI-330a.2.
Global & Skilled
Workforce

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 inrelation to assessing and managing climate-related risks andopportunities;

See page 44 – Governance

2. A description of how the company identifies, assesses andmanages 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 thecompany’s overall risk management process;See page 46 – Risk Management

4. A description of:i. the principal climate-related risks and opportunities arisingin connection with the company’s operations; andii. the time periods by reference to which those risks andopportunities are assessed;

See Risks and Opportunities tables on pages 46 – 48

5. A description of the actual and potential impacts of theprincipal climate-related risks and opportunities on thecompany’s business model and strategy;

See page 44 – Strategy

6. A
 n analysis of the resilience of the company’s businessmodel 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 tomanage climate-related risks and to realise climate-related
opportunities and of performance against those targets; andSee 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 performanceindicators are based.

See page 45 – Metrics and targets

202

Alphawave IP Group plc | Annual report and financial statements 2023

STRATEGIC REPORTGOVERNANCE

FINANCIALS

ADDITIONAL INFORMATION

Shareholder information

Registered office
Alphawave IP Group plc

Registrar
Equiniti Limited

6th Floor
65 Gresham Street
LondonEC2V 7NQ
United Kingdom

Aspect House
Spencer Road
LancingWest Sussex
BN99 6DA
United Kingdom

Registered number: 13073661
Web: www.awavesemi.com
Investor relations: ir@awavesemi.com
Media: press@awavesemi.com

Shareholder helpline:+44 (0)371 384 2030
Website: www.shareview.co.uk

Company Secretary: cm-alphawave@linkgroup.co.uk

Lines are open from 8.30am to 5.30pm Monday to Friday(excluding public holidays in England and Wales).

Company Secretary
Kim Clear

Legal counsel
Linklaters LLP

6th Floor
65 Gresham Street
LondonEC2V 7NQ
United Kingdom

Joint corporate brokers
Barclays PLC
1 Churchill Place
LondonE14 5RB
United Kingdom

J.P. Morgan Cazenove
25 Bank Street
Canary Wharf
LondonE14 5JP
United Kingdom

1 Silk Street
LondonEC2Y 8HQ
United Kingdom

Public relations
Brunswick Group
16 Lincoln’s Inn Fields
LondonWC2A 3ED
United Kingdom

Gravitate PR
838 Grant Avenue
Suite 388
San Francisco
California
94108
United States

Independent auditor
KPMG LLP
15 Canada Square
LondonE14 5GL
United Kingdom

Alphawave IP Group plc | Annual report and financial statements 2023

203

Shareholder information

continued

Financial calendar 2024-2025
2023 Full-year results

23 April 2024

Q1 2024 Trading Statement

23 April 2024

Annual General MeetingQ2 2024 Trading Statement2024 Half-year results

25 June 2024
w/c 15 July 2024
*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.

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 (orsystem on chip (SOC)) that integrates all ormost components of a computer or otherelectronic system

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
smaller modular pieces of silicon, utilised in adesign technique to break integrated circuits
into smaller pieces that can be individuallydesigned and integrated together using
PAM4
die‑to‑die interfaces

non-recurring engineering, in reference
to revenue earned in respect of one-time
early-stage customer services including for
research, design, development and testing

CAD

Canadian dollars

CEO

President & Chief Executive Officer

CFO

Chief Financial Officer

chipletCoherent

Coherent Modulation is a technique thatuses modulation of Amplitude and Phaseof light, as well as transmission across twopolarizations to enable transport of more
information across the optical fiber

PCIe

PCI-Express, a high-speed serial computer
expansion bus standard

PPC

People, Places and Culture

R&D

Research and development

CompanyAlphawave IP Group plc

CPUcentral processing unit

DSP

digital signal processing capabilities, enabled
to perform a wide variety of signal processing RSU
operations
SerDesForm factor

design aspect that defines and prescribes thesize, shape and other physical specificationsof hardware components

Gb

gigabyte, which is equivalent to1,000,000,000 bytes

GBP

Pounds sterlingGPUgraphics processing unitGroup

Alphawave IP Group plc and each of its
consolidated subsidiaries

IEEE

Institute of Electrical and Electronics
Engineers, an electronics industry body,
including educational and technicaladvancement of electrical and electronicengineering, telecommunications, computerengineering and allied disciplines, andstandardisation

Pulse Amplitude Modulation with Four Levels,
or PAM-4, is a signal encoding technique thatuses four voltage levels to represent fourcombinations of two bits logic (00, 01, 10,
and 11)

Restricted stock unit
serialiser/deserialiser, a wired connectivity
component to interface between integrated
circuits, which converts parallel streamsof data (used as connectivity within
integrated circuits) to serial streams (used inlonger‑distance transmission outside chips)
and vice versa

SoC

system on chip (or ASIC) that integrates allor most components of a computer or otherelectronic system

Tapeout

refers to the completion of the designphase 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, thethin slice of semiconductor material (suchas a crystalline silicon) in and upon whichmicroelectronic devices are built

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