A. Operational and Strategic Highlights
Summary
Total bookings in H1 2024 of
US$225.3m, up 20% year-on-year reflects strong demand for the
Group's industry-leading technology across IP, Custom Silicon,
Silicon Products and Chiplets. With total backlog of US$486.4m, the
Group is poised to deliver a strong H2 2024 and accelerated
financial performance in 2025 and beyond.
Licence and non-recurring
engineering ("NRE") bookings in H1 2024 were US$203.5m, up 77%
year-on-year. North American customers represented approximately
50% of these bookings, followed by APAC (excluding China) 38% and
EMEA customers, 4%. China represented 8%, down from 9% in H1 2023.
Royalties and Silicon orders were US$21.8m, down 70% over H1 2023
(H1 2023: US$72.2m) which was driven by pre-existing custom silicon
designs from the acquisition of OpenFive in H2 2022.
During H1 2024 there were
no Flexible Spending Accounts ("FSA")
drawdowns (H1 2023: US$nil) and China (VeriSilicon) reseller deals
totalled US$nil (H1 2023: US$3.4m). Both FSA and reseller deals are
not new bookings but represent the conversion of prior customer
commitments to design wins. There was no licence revenue recognised
in H1 2024 from the WiseWave subscription licence agreement,
following completion of all our delivery obligations in
2023.
As of 30 June 2024, Alphawave Semi
had more than eight of the top twenty semiconductor device
companies as customers[6], a reflection of
its continued strength in the data infrastructure markets that
require the world's most advanced connectivity
technology.
Revenue in H1 2024 was US$91.0m
down 51% year-on-year (H1 2023: US$187.2m), driven by a change in
revenue mix towards the vertically integrated semiconductor
business, which has longer revenue recognition cycles than the
historical IP licensing business. During H1 2024 the Group
recognised revenue from 73 customers compared to 85 in H1 2023
which included substantial revenues from the legacy custom silicon
business in China. H1 2024 revenue continued to be heavily weighted
to core markets of data networking, cloud compute, and AI. 20% of
revenue in the period was generated from Chinese customers (H1
2023: 66%).
Gross margin in H1 2024 was 45%
compared to 44% in H1 2023. The gross margin expansion anticipated
in 2024 reflects the strategic move away from lower margin silicon
sales to Chinese customers. Through the acquisition of OpenFive,
the Group inherited a number of contracts with gross margins below
our targets and throughout 2023 and 2024 the Group has reduced its
exposure to these contracts.
The year-on-year increase in
R&D, S&M and G&A expenses from US$63.4m to US$70.0m was
primarily due to the increase from 744 employees in H1 2023 to 896
in H1 2024, together with associated software tool costs which
scale with R&D/engineering headcount. In addition, the Group
invested in support functions, HR and ERP systems, and scaled the
finance, HR, legal and corporate marketing teams, reflecting the
increased complexity and the extended geographical footprint of the
Group. In H1 2024 the Group capitalised US$33.8m of R&D
expenses related to the development of future products (H1 2023:
US$24.7m).
Other operating expenses in H1
2024 totalled US$19.6m (H1 2023: US$21.7m), and consisted of the
following:
-
|
share-based compensation expense
of US$10.7m (H1 2023: US$18.5m). The reduction in the share-based
compensation expense was due to the front-loaded weighting of the
four-year charge relating to awards to employees who joined the
business through the acquisitions of OpenFive and Banias Labs in Q4
2022 which led to a larger charge in H1 2023 relative to H1
2024.
|
-
|
acquisition-related costs of
US$6.5m (H1 2023: US$0.3m credit). The increase in
acquisition-related costs was due to the release of an escrow
payment of US$6.2m to one of the vendors of Precise-ITC that became
due in H1 2024. This payment is a compensatory expense for
financial reporting purposes per guidance included in IFRS 3
Business Combinations and was included within Other Operating
Expenses due to it being economically connected to a business
acquisition.
|
-
|
compensation element of Banias
Labs deferred cash rights of US$3.8m (H1 2023: US$4.1m)[7]
|
Over the period the Group
generated an operating loss of US$48.3m, driven by continued
investment in new products in IP, Silicon Products, Connectivity
Products and Chiplets and the margin profile of Silicon
Products. This margin profile is expected to improve
significantly in future periods.
Adjusted EBITDA in H1 2024 was a
loss of US$11.8m (negative 13% margin) compared to US$32.4m (17%
margin) in H1 2023. This decrease is primarily driven by the
2024 revenue profile during a period of investment in future
products.
The Group closed the period with
cash and cash equivalents of US$76.3m compared to US$101.3m and
US$122.8m at the end of December 2023 and June 2023, respectively.
At the end of H1 2024, the Group had a net debt position of
US$141.6m (FY 2023: net debt position of US$119.1m; H1 2023: net
debt position of US$100.0m).
End Market Drivers Remain Strong Despite Macro
Weakness
Alphawave sees increasing demand
in all of its core markets of AI and data centre compute
infrastructure, despite the uncertain and weak macroeconomic
environment globally. The Group is well positioned to take
advantage of the opportunity in AI and associated infrastructure
buildouts that are continuing to accelerate globally. These core
markets continue to provide compelling opportunities for growth. As
organisations across the globe look to take advantage of the
opportunities in the era of AI everywhere, there is tremendous
opportunity for Alphawave. Hyperscalers and cloud service providers
(CSPs) are making the necessary investments to deploy AI at scale.
However, there is no one-size-fits-all approach. A combination of
graphics processing units (GPUs) and custom AI silicon is being
introduced to scale compute and meet the specific requirements of
different language models. This presents a challenge to
connectivity infrastructure which is facing ever increasing
requirements on bandwidth, speed, latency, reliability, and scale.
To scale next generation AI, hyperscalers and CSPs will need to
deploy a mix of customised compute and high-performance
connectivity technologies into newly-upgraded infrastructure. All
of these areas of investment represent opportunities for
Alphawave.
The technology industry is still
in the early stages of AI/ML networking buildouts, and the market
is poised to grow significantly, exceeding US$500 billion globally
by 2027[8], and overtake many other
markets in size and growth rates. The generative AI (GenAI) part of
global AI/ML spending is estimated to reach ~US$151 billion and
account for ~30% of the IT spending on AI/ML
infrastructure8. As new AI focused ASICs and GPUs hit
the market and ramp growth, networking diversity will be key to
keeping pace with demand. The data centre AI networking market is
expected to grow to nearly US$20 billion in 2025 led by Ethernet,
InfiniBand and 800G Optical Transceivers[9].
The Group's pipeline of customer
opportunities reflects these trends. The customer base continues to
seek differentiation and enhanced performance by transitioning
faster to lower design nodes, with the majority of Alphawave's H1
2024 licence and NRE bookings in 7nm and below.
The ongoing constraints on the
semiconductor supply chain and the ubiquitous presence of
semiconductors globally continue to reinforce the importance of
semiconductor technology on a global scale. As the digital
infrastructure continues to grow and the AI/ML component
transitions to leading and more efficient technologies, the Group
remains confident in the long-term outlook in all areas of the
business.
Expanding Technology Leadership and Customer Traction -
Chiplets Coming on Strong
During H1 2024, the Group
recognised revenue from 73 customers, compared to 85 customers in
H1 2023 and 103 customers in FY 2023. H1 2024 revenue continued to
be heavily weighted to the core markets of AI and data centre
compute infrastructure.
In H1 2024, customers' demand for
high-performance IP and silicon products remained robust and the
Group's pipeline is as strong as it has ever been. Since 2017, the
Group has demonstrated connectivity technology leadership in
leading-edge technologies, now including 3nm. In H1 2024, the Group
achieved a 3nm IP license design win coming from a North American
customer specialising in Artificial Intelligence.
As Alphawave Semi technology
allows for faster and faster data rates, the transmission medium
moves from copper to optics. At the Optical Fiber Conference
Alphawave Semi partnered with Innolight, the leader in data centre
optics, to demonstrate the PCIe 6.0 (Controller+PHY) over
Innolight's LPO OSFP optics. This is tailored to meet the demanding
requirements of high-bandwidth and high-density AI
networks.
During the first half of 2024,
Alphawave Semi expanded its ongoing collaboration with the leading
foundries in the industry. The Group announced the availability of
its silicon proven connectivity IP platform on TSMC's most advanced
3nm process and initial investment in 2nm and smaller nodes . These
new platforms are crucial for the development of a new generation
of advanced chips needed to cope with the exponential growth in
AI-generated data, and enables higher performance, enhanced memory
and I/O bandwidth, and reduced power consumption. This flexible and
customisable connectivity IP solution together with Alphawave
Semi's chiplet-enabled custom silicon platform which includes I/O,
memory and compute chiplets, allows end-users to produce
high-performance silicon specifically tailored to their
applications.
Alphawave Semi also announced the
expansion of its ongoing collaboration with Samsung to include the
2nm process node. Samsung Foundry platform customers now benefit
from Alphawave Semi's most advanced high-performance connectivity
IP and chiplet technologies, including PCIe 7.0, 112G and 224G
Ethernet, and UCIe, to build the complex systems-on-a-chip (SoCs)
needed to keep pace with the rapidly growing demands of
data-intensive applications such as GenAI and the associated
infrastructure required by global data centres.
Throughout H1 2024, Alphawave has
continued to demonstrate design win leadership in chiplets for AI
and the data infrastructure markets for hyperscalers and
semiconductor companies. In June, the Group announced an Arm
Neoverse CSS-based CPU chiplet with ultra-high-speed interfaces and
advanced packaging that delivers scalable performance for AI, HPC
and networking infrastructure. As of the end of H1 2024, The
Group has secured a total of three design wins for chiplets - all
from major semiconductor companies in the AI and cloud computing
markets. These chiplets are expected to enter production in
2025 and contribute significant revenue in 2025 and
beyond.
Investing in People
During the first six months of
2024, the Group continued to make opportunistic investments in
talent, albeit at a much lower rate than in H2 2023. As of 30 June
2024, total closing headcount increased to 896, comprising 794 in
R&D/engineering, 33 in sales and
marketing and 69 in general and administrative roles (from 741, 30
and 58, respectively as at 31 December 2023). Turnover
rate[10] remained broadly stable at
approximately 6% and the percentage of female employees as of 30
June 2024 was 19%, broadly in line with the ratio as at the end of
2023.
Significant Post-Interim Events
As previously reported, shortly
after H1 2024 ended, the Company completed a restructuring of its
debt facility to align debt covenants more closely with operational
metrics.
B.
Financial Highlights
Contracted Order Book and Backlog
Total bookings in H1 2024 of
US$225.3m were up 20% over the prior year (H1 2023: US$187.2m) due
to increased design win momentum across the vertically integrated
semiconductor business. North American customers represented 51% of
total bookings.
Licence and NRE bookings in H1
2024 were US$203.5m, up 77% year-on-year. North American customers
represented approximately 50% of these bookings, followed by 38%
from APAC customers (excluding China). China represented 8% of
licence and NRE bookings. Royalties and Silicon orders were
US$21.8m, down 70% over H1 2023 (H1 2023: US$72.2m). The level of
silicon orders in H1 2023 was driven by pre-existing custom silicon
designs for North American and Chinese customers from the
acquisition of OpenFive.
During H1 2024 there were no FSA
drawdowns (H1 2023: US$nil) and China (VeriSilicon) reseller deals
totalled US$nil (H1 2023: US$3.4m). Both FSA and reseller deals are
not new bookings but represent the conversion of prior customer
commitments to design wins.
At the end of H1 2024, backlog
(contracted bookings not yet recognised as revenue) excluding
royalties was US$486.4m.
Revenues
Revenue in H1 2024 was US$91.0m
down 51% year-on-year (H1 2023: US$187.2m), primarily due to the
timing of specific customer programmes, as well as H1 2023
including substantial revenues from the legacy custom silicon
business in China. H1 2024 revenue is heavily weighted to the core
markets of AI, data networking and cloud compute.
·
|
Customers - In H1 2024 the Group recognised revenues from 73
end-customers, compared to 85 end-customers in H1 2023 and 103 in
FY 2023. The top three customers represented 32% of H1 2024
revenues versus 42% in H1 2023. WiseWave was not one of the top
three customers in H1 2024.
|
|
|
·
|
Regions - In H1 2024, revenues were 46% from customers in North
America, 20% from China, 27% from APAC (excluding China) and 7%
from EMEA. The decrease in contribution from China in H1 2023 (66%
of revenue) was due to the reduction in the legacy custom silicon
business from the acquisition of OpenFive and the fulfilment of the
multi-year subscription licence agreement with WiseWave in
2023.
|
Operating Expenses and Profitability
In H1 2024, gross margin was 45%
compared to 44% in H1 2023. This is broadly in line with H1 2023
and continues to reflect the diversification of our business into
custom silicon development and silicon products. Through the
acquisition of OpenFive, the Group inherited a number of contracts
with gross margins below Group targets. While we have completed or
exited some of these low margin contracts, some continued to have
revenue recognised in H1 2024.
Operating expenses in H1 2024
totalled US$89.6m compared with US$85.1m in H1 2023. Operating
expenses in H1 2024 included US$19.6m of other operating expenses
(H1 2023: other operating expenses US$21.7m) including FX gains and
losses, share-based payments and deferred compensation payments
related to acquisitions.
The decrease in share-based
payments, to US$10.7m in H1 2024 from US$18.5m in H1 2023, was
primarily due to the significant investment in headcount relating
to the acquisitions. Monthly graded vesting of share-based payments
resulted in the initial year's charge being more heavily weighted
than the latter years.
Reflecting the continued scaling
of the business, R&D, S&M and G&A expenses in H1 2024
totalled US$70.0m, compared to US$63.4m[11] in H1 2023. This increase was primarily due to
the significantly higher headcount together with software tool
costs which scale with R&D/engineering headcount. In the
first six months of 2024, the closing headcount increased by 67
employees. Of the US$70.0m of operating expenses excluding M&A
costs/professional costs, share-based payment charges and exchange
gains in H1 2024, US$39.4m (43% of revenue) relate to R&D /
engineering, US$23.6m (26% of revenue) to general and
administrative expenses and US$7.0m (8% of revenue) to sales and
marketing expenditure. General and administrative expenses include
an expected credit loss of US$0.7m (H1 2023: US$2.7m) based on an
assessment of potential credit loss on trade receivables and
contract assets. Excluding this, general and administrative
expenses for H1 2024 were US$22.9m (25% of revenue).
In H1 2024, the business generated
an operating loss of US$48.3m compared to a US$2.6m operating loss
in H1 2023. The increase in operating loss is primarily due to the
reduction in revenue.
Depreciation and amortisation
expenses in H1 2024 were US$16.9m (H1 2023: US$13.3m), of which
US$2.7m related to right-of-use assets (H1 2023: US$2.0m), namely
premises and leased test equipment. The increase was mainly driven
by property and equipment additions in Q1 2023 relating to our new
Bangalore and San Jose offices.
EBITDA in H1 2024 was a loss of
US$31.5m (negative 35% margin) compared to US$10.7m (6% margin) in
H1 2023.
Adjusted EBITDA in H1 2024 was a
loss of US$11.8m (negative 13% margin) compared to US$32.4m (17%
margin) in H1 2023. The expected decrease in adjusted EBITDA margin
reflects the transition to a combined IP licensing and silicon
business model and the scaling of engineering capabilities to
support the pipeline of opportunities.
On an adjusted basis1 loss after tax for the period was US$13.5m, compared
to a profit after tax2 of US$20.0m in H1
2023.
Balance Sheet
The Group ended H1 2024 with cash
and cash equivalents of US$76.3m compared to US$101.3m at the end
of December 2023. The net debt position at the end of H1 2024 was
US$141.6m, compared to US$119.1m at the end of December
2023.
Shortly after H1 2024, Alphawave
amended its existing debt facility to align covenants more closely
to operational metrics. This increased flexibility will allow the
Group to capitalise on its strong pipeline of opportunities. As the
amendment was formalised after the close of the period, the entire
facility is reflected as a current liability at the end of June
2024. Having finalised the amendment with the lenders, starting in
Q3 2024, only the portion of the debt repayable within 12 months
will be classified as current, with the balance classified as
non-current.
In H1 2024, current trade and
other receivables and other assets decreased from US$97.1m at 31
December 2023 to US$70.8m, largely due to a US$9.9m decrease in
prepayments and US10.5m decrease in restricted cash. The deferred
cash balance is reduced as payments are made to employees on a
quarterly basis and is expected to be settled over the period to
August 2026. In addition, there is an increased expected credit
loss provision of US$0.2m to US$5.9m, based on an assessment of
credit risk on trade receivables and contract assets.
Contract assets, i.e. revenue
recognised but not yet billed to the customer, decreased from
US$65.2m at the end of 2023 to US$54.8m at the end June
2024.
In the first six months of 2024,
intangible assets increased from US$203.3m to US$237.4m, largely as
a result of the ongoing capitalisation of development
expenditure.
The carrying value of our
investment in our equity-accounted associate, WiseWave, was US$nil
as at 30 June 2024 and 31 December 2023, as a result of accounting
for losses at WiseWave during prior periods. Our share of
cumulative losses incurred by WiseWave in excess of the cumulative
value of our investment as at 30 June 2024 was US$8.6m, which has
not been reflected in our H1 2024 financial results as the Company
has no obligation to provide additional capital contributions to
WiseWave incremental to investments already completed.
In H1 2024 current trade and other
payables increased from US$69.3m to US$72.2m due to timing of
supplier invoice receipt and timing of payments. Contract
liabilities, including the flexible spending account, where the
Group has invoiced or received money from customers for products or
services where revenue recognition conditions have not yet been
met, increased from US$56.0m at the end of 2023 to US$88.3m at the
end of H1 2024. This increase is partially due to NRE invoicing and
cash received towards the end of Q2 2024 where the revenue is
expected to be recognised in Q3 and Q4 2024. The remainder of the total increase was driven by an increase
in the flexible spending account of US$12.9m of invoices raised in
H1 2024 against two FSA agreements.
Liquidity and Cashflow
In H1 2024 the Group generated a
pre-tax operating cash inflow of US$50.4m, compared to a cash
outflow of US$31.3m in H1 2023. The cash generated in H1 2024 was
largely due to an improvement in working capital of US$74.4m. The
working capital improvement was the result of an increase in
contract liabilities of US$32.2m, an increase in trade and other
payables of US$1.2m, a decrease in contract assets of US$10.4m, a
decrease in inventories of US$7.2m and a decrease of trade and
other receivables of US$23.4m.
Capital expenditure on intangible
assets and property and equipment during H1 2024 totalled US$59.2m
(H1 2023: US$39.3m). The increase in capital expenditure is due to
the ongoing capitalisation of eligible engineering costs relating
to projects that generate intangible assets and increased property
and equipment expenditure on mask sets for future Alphawave
products, upgrades and expansions to our IT infrastructure,
purchases of test equipment and leasehold improvements to our new
offices in Bangalore and San Jose. During the first six months of
2024, the Group capitalised US$33.8m of development expenditure (H1
2023: US$24.7m).
During H1 2024, the Company made
no further equity investment in WiseWave and no other equity
investments.
Condensed consolidated statement of cash
flows
For
the period ended 30 June 2024
|
|
Unaudited six months
ended
30 June
2024
|
|
Restated1
unaudited six months ended 30 June 2023
|
|
Note
|
US$'000
|
|
US$'000
|
Cash flows from operating activities
|
|
|
|
|
Net (loss)
|
|
(39,961)
|
|
(8,894)
|
Non-cash items within operating
profit:
|
|
|
|
|
Amortisation of intangible
assets
|
|
7,150
|
|
6,778
|
Depreciation of property and
equipment - owned
|
|
6,968
|
|
4,532
|
Depreciation of property and
equipment - leased
|
|
2,732
|
|
1,997
|
Share-based compensation
expense
|
|
10,743
|
|
18,502
|
Currency translation loss/(gain) on
Intercompany balances
|
|
(2,257)
|
|
967
|
Deferred cash rights
|
|
3,788
|
|
4,069
|
Finance income
|
|
(1,773)
|
|
(1,719)
|
Finance expense
|
|
3,373
|
|
3,028
|
Loss from joint venture
|
|
-
|
|
2,730
|
Income tax expense
|
|
(14,764)
|
|
775
|
Cash
generated from operations before changes in working
capital
|
|
(24,001)
|
|
32,765
|
Changes in working
capital:
|
|
|
|
|
Decrease / (increase) in trade and
other receivables
|
|
23,401
|
|
(3,707)
|
Decrease in inventories
|
|
7,200
|
|
2,790
|
Decrease / (increase) in contract
assets
|
4
|
10,407
|
|
(8,431)
|
Increase / (decrease) in trade and
other payables
|
|
1,175
|
|
(11,988)
|
Increase / (decrease) in contract
liabilities
|
4
|
32,247
|
|
(42,696)
|
Cash generated from / (used in) operating activities before
tax
|
|
50,429
|
|
(31,267)
|
Income tax paid
|
|
(3,395)
|
|
(5,420)
|
Net
cash generated from / (used in) operating
activities
|
|
47,034
|
|
(36,687)
|
Cash
flows from investing activities
|
|
|
|
|
Purchase of property and
equipment
|
|
(24,346)
|
|
(13,233)
|
Purchase of intangible
asset
|
|
(1,000)
|
|
(1,425)
|
Interest received
|
|
1,773
|
|
1,518
|
Capitalised development
expenditure
|
|
(33,832)
|
|
(24,660)
|
Investments in joint venture and
other investments
|
|
-
|
|
(3,730)
|
Net
cash used in investing activities
|
|
(57,405)
|
|
(41,530)
|
Cash
flows from financing activities
|
|
|
|
|
Issuance of ordinary
shares
|
|
1,351
|
|
617
|
Interest paid
|
|
(9,017)
|
|
(9,727)
|
Lease payments
|
|
(3,016)
|
|
(2,324)
|
Drawdown of loans and
borrowings
|
|
-
|
|
15,000
|
Repayment of loans and
borrowings
|
|
(2,500)
|
|
(2,500)
|
Net
cash generated (used in)/from financing
activities
|
|
(13,182)
|
|
1,066
|
Net
(decrease)/increase in cash and cash equivalents
|
|
(23,553)
|
|
(77,151)
|
Cash and cash equivalents at the
beginning of the year
|
|
101,291
|
|
186,231
|
Currency translation gain on cash and
cash equivalents
|
|
(1,431)
|
|
13,684
|
Cash
and cash equivalents at end of period
|
15
|
76,307
|
|
122,764
|
1. See note
2 'Interim 2023 restatement' paragraph.
Condensed consolidated statement of changes in
equity
Six
months ended 30 June 2024
US$'000
|
Note
|
Ordinary share
capital
|
Share premium
account
|
Merger
reserve
|
Share-based payment
reserve
|
Currency translation
reserve
|
Retained
earnings
|
Total
equity
|
Balance at 1 January 2024
|
|
10,011
|
1,638
|
(793,216)
|
41,875
|
(86,546)
|
1,294,686
|
468,448
|
Loss for the period
|
|
-
|
-
|
-
|
-
|
-
|
(39,961)
|
(39,961)
|
Other comprehensive
expense
|
|
-
|
-
|
-
|
-
|
(1,431)
|
-
|
(1,431)
|
Total comprehensive loss
|
|
-
|
-
|
-
|
-
|
(1,431)
|
(39,961)
|
(41,392)
|
Settlement of share
awards:
|
|
|
|
|
|
|
|
|
- Issue of ordinary
shares
|
|
248
|
1,103
|
-
|
-
|
-
|
-
|
1,351
|
- Transfer of cumulative
compensation expense on settled awards
|
|
-
|
-
|
-
|
(22,808)
|
-
|
22,808
|
-
|
Share-based compensation expense for
the year
|
|
-
|
-
|
-
|
10,743
|
-
|
-
|
10,743
|
Other changes in equity
|
|
248
|
1,103
|
-
|
(12,065)
|
-
|
22,808
|
12,094
|
As
at 30 June 2024
(Unaudited)
|
|
10,259
|
2,741
|
(793,216)
|
29,810
|
(87,977)
|
1,277,533
|
439,150
|
Restated1 six months ended 30 June
2023
US$'000
|
Note
|
Ordinary share
capital
|
Share premium
account
|
Merger
reserve
|
Share-based payment
reserve
|
Currency translation
reserve
|
Retained
earnings
|
Total
equity
|
As at 1 January 2023
|
|
9,751
|
775
|
(793,216)
|
18,189
|
(96,707)
|
1,329,481
|
468,273
|
Loss for the period
(restated)
|
|
-
|
-
|
-
|
-
|
-
|
(8,894)
|
(8,894)
|
Other comprehensive
expense
|
|
-
|
-
|
-
|
-
|
13,457
|
-
|
13,457
|
Total comprehensive loss
|
|
-
|
-
|
-
|
-
|
13,457
|
(8,894)
|
4,563
|
Settlement of share
awards:
|
|
|
|
|
|
|
|
|
- Issue of ordinary
shares
|
|
132
|
575
|
-
|
(90)
|
-
|
-
|
617
|
- Transfer of cumulative
compensation expense on settled awards
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Share-based compensation expense for
the year
|
|
-
|
-
|
-
|
18,502
|
-
|
-
|
18,502
|
Other changes in equity
|
|
132
|
575
|
-
|
18,412
|
-
|
-
|
19,119
|
As
at 30 June 2023
(Unaudited)
|
|
9,883
|
1,350
|
(793,216)
|
36,601
|
(83,250)
|
1,320,587
|
491,955
|
1. See note
2 'Interim 2023 restatement' paragraph.
Notes to the unaudited interim statements
Six
months ended 30 June 2024
1. General
information
These condensed consolidated
interim financial statements represent the consolidated interim
financial statements of Alphawave IP Group plc (the 'Company' or
'Alphawave Semi') and its subsidiaries (together 'the
Group').
The principal activities of the
Company and its subsidiaries are described on pages 1 to
6.
The Company is a public limited
company whose shares are listed on the London Stock Exchange and is
incorporated and domiciled in the United Kingdom. The address of
its registered office changed from 6th Floor, 65 Gresham Street,
London, United Kingdom, EC2V 7NQ to Central Square, 29 Wellington
Street, Leeds, United Kingdom, LS1 4DL on 26 June 2024.
2. Basis of
preparation
The consolidated interim financial
statements of the Group have been prepared in accordance with
UK-adopted international accounting standard (IAS) 34 Interim
Financial Reporting and should be read in conjunction with the
Group's consolidated financial statements as of and for the year
ended 31 December 2023. They do not include all the information
required for a complete set of IFRS financial statements. However,
selected explanatory notes are included to explain events and
transactions that are significant to give an understanding of the
changes in the Group's financial position and performance since the
last annual consolidated financial information as of 31 December
2023 and for the six months ended 30 June 2023.
These consolidated interim
financial statements do not comprise of statutory accounts within
the meaning of Section 435 of the Companies Act 2006. The
comparative figures for the six months ended 30 June 2023 are not
the Group's statutory accounts for that financial period. The
preparation of these consolidated interim financial statements
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgement and complexity, or areas where
assumptions and estimates are significant to the consolidated
interim financial statements are disclosed in note 3.
These consolidated interim
financial statements were authorised for issue by the Company's
Board of Directors on 23 September 2024. The Independent Auditor's
Report on the Annual Report and Accounts of Alphawave IP Group plc
for the year ended 31 December 2023 was unqualified and did not
draw attention to any matters by way of emphasis and did not
contain statements under s498 (2) or (3) of the Companies Act 2006.
The financial information for the periods ended 30 June 2024 and 30
June 2023 is unaudited but has been subject to a review by the
Company's auditor.
Going concern
In preparing the condensed
consolidated financial statements for the six months ended 30 June
2024, the Directors have updated their assessment of the Group's
ability to continue as a going concern. The condensed consolidated
financial statements have been prepared on a going concern basis
which the Directors consider to be appropriate for the reasons
outlined below.
As at 30 June 2024, the Group held
cash and cash equivalents of US$76.3m and had bank borrowings
totalling US$216.3m, comprised of a term loan of US$91.3m and
US$125.0m drawn against a US$125.0m revolving credit facility. Both
the term loan and the revolving credit facility are not scheduled
to mature until the fourth quarter of 2027 but were subject to the
following financial covenants as at 30 June 2024 that are defined
in the related Credit Agreement:
· a
maximum permissible net leverage ratio (ratio of consolidated total
debt to consolidated adjusted EBITDA) of 3.00x; and
· a
minimum liquidity balance of US$45.0m.
Compliance with the net leverage
ratio financial covenant is tested quarterly and compliance with
the minimum liquidity balance financial covenant is tested monthly,
with both the balance of liquidity at the end of the month and the
average daily balance through the month required to be above the
minimum. During the second quarter of 2024, the Group's net
leverage ratio was above 3.00x which technically represented a
breach of the bank covenant as at 30 June 2024 and resulted in the
debt being presented as current as at the balance sheet date. This
was principally due to low adjusted EBITDA in the first half of
2024.
On 19 July 2024, the Group signed an
amendment to the credit agreement with the lenders to increase the
maximum permissible net leverage ratio applicable to Q2 2024 to
4.50x. From Q3 2024, the net leverage ratio covenant has been
amended to measure net secured leverage, with a maximum permissible
ratio of 3.00x for the remainder of the term of the loan. In
addition to the above changes, the amendment also replaced the
fixed charges coverage ratio covenant, that was due to resume in Q3
2024, with a minimum interest coverage ratio covenant, being the
ratio of the last twelve months interest expense to the last twelve
months consolidated adjusted EBITDA. This ratio is set at a minimum
of 2.50x for Q3 2024, then stepping up to 2.75x for Q4 2024 and Q1
2025, with a further step up to 3.00x from Q2 2025 for the
remainder of the term loan. The amendment also gives the Group the
option to draw an additional US$45.0m from the existing lender
consortium.
The Directors have prepared cash flow
forecasts and performed a going concern assessment on a 'base case'
covering the period of at least twelve months from the date on
which they approved the financial statements. This base case
includes assumptions about (i) forecasted revenue based on existing
contracts in place at the date of assessment, along with an
estimate of future orders, and (ii) forecasted gross margins and
operating expenses based on historical trends, ongoing and expected
projects, headcount and commitments.
The Directors also considered a
severe, but plausible, downside scenario ("stress case") over the
forecast period relative to the base case as follows:
· Revenue in Q3 2024 is 10% lower and revenue in Q4 2024 to Q3
2025 is 25% lower. The Directors believe this to be an
appropriate revenue forecast reduction to take into account the
estimation uncertainty related to the timing of performance of
contractual obligations for customer contracts, collections and
payments, as well as the tape-out of products.
· In
the period from Q4 2024 to the end of Q3 2025 mitigating reductions
of 10% in operating expenditure to reflect the lower volume of work
and 50% reduction in laboratory and prototyping
expenditure.
· The
Directors consider further mitigating actions (such as bonus
accruals) could be taken if needed, although not required in the
downside scenario to maintain covenant compliance for the period
from Q3 2024 to the end of Q3 2025.
Under the 'base case' forecast and
the downside scenario described above, the analysis demonstrates
the Group can continue to maintain sufficient liquidity headroom
and expects to comply with the amended debt covenants throughout
the going concern assessment period. Following consideration of the
Group's liquidity position and prospects for the near term, the
Directors are confident that the Group has adequate resources for a
period of at least twelve months from the date of approval of the
consolidated interim financial statements and have therefore
assessed that the going concern basis of accounting is appropriate
in preparing the consolidated interim financial
statements.
Basis of organisation
The Group's management has
performed its evaluation for reporting its reportable segments, if
any, and concluded that the Group's business constitutes only one
operating segment as all its products and services are of similar
nature and focus on customers from the same industry. Its entire
revenues, expenses, assets and liabilities pertain to the one
business as a whole. This has been ratified by the chief operating
decision maker (CODM), Tony Pialis (CEO) who is deemed best placed
to evaluate the entity's operating results to assess performance
and to allocate resources.
Foreign currency translation
Each entity within the Group has a
functional currency, which is normally the currency in which the
entity primarily generates and expends cash.
At entity level, a foreign
currency is a currency other than the entity's functional currency.
Sales, purchases and other transactions denominated in foreign
currencies are recorded in the entity's functional currency at the
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are
translated at the exchange rate ruling at the end of the reporting
period. Currency translation differences arising at entity level
are recognised in profit or loss. Non-monetary assets and
liabilities denominated in foreign currencies are not retranslated
subsequent to initial recognition.
On consolidation, the results of
foreign operations are translated into US dollars at the average
exchange rate for the reporting period and their assets and
liabilities are translated into US dollars at the exchange rate
ruling at the end of the reporting period. Currency translation
differences arising on consolidation are recognised in other
comprehensive income and taken to the currency translation reserve.
In the event that a foreign operation is sold, the related
cumulative currency translation difference recognised in other
comprehensive income is reclassified from equity to profit or loss
and is included in calculating the gain or loss on disposal of the
foreign operation.
Accounting policies
The accounting policies that have
been used in the preparation of these consolidated interim
financial statements are the same as those applied in the last
annual consolidated financial statements as of 31 December 2023.
New standards effective on or after 1 January 2024 have been
reviewed and do not have a material effect on the Group's financial
statements.
Interim 2023 restatement
The Group has restated the 30 June
2023 comparative financial statements to reflect the
following:
- Borrowing costs of US$4.5m should have been capitalised to
intangible assets in the six month period ended 30 June 2023.
This restatement has resulted in a decrease of US$4.5m in finance
expenses and a corresponding increase in intangibles assets at 30
June 2023. Borrowing costs of US$9.5m were correctly capitalised as
at 31 December 2023. There is no impact on the tax charge for
the six month period ended 30 June 2023.
There is no impact on opening
retained earnings as at 1 July 2022 or the cash flow statement for
the six month period ended 30 June 2023.
This restatement has resulted in
an increase in basic and diluted earnings per share from (1.92) to
(1.27) (expressed in cents per ordinary share) for the six month
period ended 30 June 2023.
- In addition, US$4.1m of deferred cash rights expense has been
reclassified from general and administration expenses to other
operating expenses to be presented on the same basis as for the
year ended 31 December 2023. In the cash flow statement at 30 June
2023, this non-cash movement was incorrectly included in the change
in trade and other payables within cash generated from
operations. In the restated cash flow statement, this expense
is now presented within cash generated from operations before
changes in working capital. There is no
impact on opening retained earnings as at 1 July 2022.
3. Critical judgements and key sources of estimation
uncertainty
In the application of the Group's
and Company's accounting policies, the Directors are required to
make judgements (other than those involving estimations) that have
a significant impact on the amounts recognised and to make
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in
the period of the revision and future periods if the revision
affects both current and future periods. There have been no changes
to critical judgements and key sources of estimation uncertainty in
the 6 months to 30 June 2024.
4. Revenue
Revenue in the unaudited condensed
consolidated statement of income and comprehensive income is
analysed as follows:
(US$'000)
|
Six months ended 30 June
2024
|
|
Six months ended 30 June
2023
|
Revenue by type:
|
|
|
|
IP and NRE
|
61,393
|
|
38,736
|
IP and NRE - Reseller
|
318
|
|
-
|
IP and NRE - JV
|
3,021
|
|
34,859
|
Silicon and Royalties
|
26,243
|
|
113,584
|
|
90,975
|
|
187,179
|
'IP and NRE' represents revenues
from IP products licensing, along with related support and NRE
services, in addition to custom silicon NRE (which can include
internal engineering services, our IP and related support, third
party IP, tooling costs and prototypes).
'IP and NRE - Reseller' represents
revenue from IP products licensing, related support and NRE
services provided through VeriSilicon, prior to our arrangements
with VeriSilicon being moved under WiseWave by way of the master
reseller agreement in late 2021. It also represents revenue from
any new contracts signed with VeriSilicon since 1 January 2024,
following the expiration of the master reseller agreement in
December 2023.
'IP and NRE - JV' represents
revenue from our joint venture, WiseWave, and includes revenues
recognised under the five-year subscription licence and revenues
recognised under the VeriSilicon reseller arrangements which were
moved under WiseWave in late 2021. Since 1 January 2024 revenue
from any new contracts signed with VeriSilicon are outside of the
master reseller agreement and are therefore disclosed in 'IP and
NRE - Reseller'.
'Silicon and royalties' represent
revenues recognised once our customers are in production and in the
case of custom silicon are based on shipments of physical silicon
products and, for standalone IP licensing, royalties payable on
usage of our IP within silicon products.
Whilst this part of the note shows
revenue by type, due to materiality in prior periods, we have
separately itemised the revenue from our reseller and joint
venture, both based in China. The revenue in H1 2024 from our joint
venture in China, WiseWave, predominantly relates to an greement
signed at the end of 2023 for technology that was not included in
the five-year subscription licence agreement. Revenue recognised
against the subscription licence agreement was US$0.1m in H1 2024
and consisted solely of support revenue, whereas the revenue
recognised in H1 2023 (US$26.4m) was predominantly based on our
deliveries of IP to WiseWave.
(US$'0000)
|
Six months ended 30 June
2024
|
|
Six months ended 30 June
2023
|
Revenue by region:
|
|
|
|
North America
|
42,044
|
|
55,617
|
China
|
18,130
|
|
124,058
|
APAC (ex-China)
|
24,147
|
|
6,464
|
EMEA
|
6,654
|
|
1,040
|
|
90,975
|
|
187,179
|
Where goods are delivered
electronically, for example IP, the above revenue by region
analysis is determined by classifying customers based on their main
base of operations. Where goods are delivered physically, customers
are classified based on the delivery location.
US$64.8m (71% of total revenues)
(H1 2023: US$46.4m, 25%) represent revenues recognised over time.
Of the US$64.8m revenue recognised over time, US$44.1m is subject
to estimation uncertainty. US$9.4m of contract assets and US$53.8m
of contract liabilities are also subject to estimation uncertainty.
These revenues require management judgements and estimates of
project hours or costs that are used in percentage of completion
calculations. These revenues relate to work done during the design
phase of a customer project and include (with the exception of a
limited amount of revenue relating to our soft IP) IP product
licensing fees, together with related support and NRE, as well as
custom silicon NRE fees. We have applied a sensitivity to revenues
recognised over time in 2024 which are subject to estimates. If our
estimates of total hours or total costs had been 10% higher, these
revenues would be US$39.7m, contract assets would be US$8.5m and
contract liabilities would be US$59.2m. If our estimates of total
hours or total costs had been 10% lower, these revenues would be
US$48.5m, contract assets would be US$10.3m and contract
liabilities would be US$48.4m.
US$26.2m (29% of total revenues)
(H1 2023: US$140.8m, 75%) are recognised at a point in time. These
revenues are based on silicon shipments once our customers are in
production. In the case of custom silicon, this represents revenues
from shipments of physical silicon products, and for standalone IP
licensing, royalties payable on usage of our IP within silicon
products.
WiseWave - subscription licence agreement
Revenue recognition for the
WiseWave subscription licence agreement is determined with
reference to the estimated total number of IP uploads to be
delivered to WiseWave during the term of the agreement and the
number of uploads made to WiseWave each period. There is only
support and maintenance revenue left to be recognised on the
subscription licence agreement as all the revenue related to IP
uploads was recognised before the end of 2023.
Please see the 'Financial
Highlights' section on page 7 for further information on
revenue.
Below is a reconciliation of the
movement in contract assets during the period:
(US$'000)
|
Six months ended 30 June
2024
|
At 1 January 2024
|
65,173
|
Revenue accrued in the
period
|
14,803
|
Accrued revenue invoiced in the
period
|
(26,110)
|
Expected credit loss
|
900
|
|
|
At 30 June 2024
|
54,766
|
Below is a reconciliation of the
movement in contract liabilities, excluding the flexible spending
account, during the period:
(US$'000)
|
Six months ended 30 June
2024
|
At 1 January 2024
|
50,106
|
Revenue recognised in the
period
|
(33,023)
|
Revenue deferred in the
period
|
52,440
|
|
|
At 30 June 2024
|
69,523
|
The contract liabilities balance
is all expected to be satisfied within 12 months of the balance
sheet date. There has been an increase in the contract liabilities
balance since the end of December 2023 due to an increase in NRE
invoicing and cash received towards the end of Q2 2024 where the
revenue is expected to be recognised in Q3 and Q4 2024.
The flexible spending account,
which is included within contract liabilities on the balance sheet,
has increased to US$18.8m at the end of June 2024 from US$5.9m at
the end of December 2023. The increase was
driven by a US$12.9m of invoices raised in H1 2024 against two FSA
agreements. These are contracts with customers who have committed
to regular periodic payments to us over the term of the contract.
These payments are not in respect of specific licences or other
deliverables, but they can be used as credit against future
deliverables.
The balances related to costs to
obtain contracts from customers are as follows:
(US$'000)
|
|
As at 30 June
2024
|
As at 31 December
2023
|
Capitalised contract costs
|
|
2,645
|
1,920
|
The costs to obtain contracts from
customers include commissions. Amortisation of US$1.1m (H1 2023:
US$0.5m) was charged to the consolidated statement of comprehensive
income in the period.
5.
Other operating expense
Other operating expense items were
as follows:
(US$'000)
|
Six months ended 30 June
2024
|
|
Six months ended 30 June
2023
|
Acquisition-related
costs/(credit)
|
6,459
|
|
(263)
|
Compensation element of Banias Labs
deferred cash rights
|
3,788
|
|
4,069
|
Share-based compensation
expense
|
10,743
|
|
18,502
|
Currency translation
gain
|
(1,354)
|
|
(592)
|
Total other operating expenses
|
19,636
|
|
21,716
|
The increase in acquisition
related costs from H1 2023 to H1 2024 was primarily due to the
release of an escrow payment of US$6.2m made per the terms of our
acquisition of Precise-ITC that became due in H1 2024. This payment
is a compensatory expense for financial reporting purposes per the
guidance included in IFRS 3 Business Combinations but is included
in other operating expense due to it being economically connected
to a business acquisition.
6. Employee costs excluding Directors and key
management personnel
(US$'000)
|
Six months ended 30 June
2024
|
|
Six months ended 30 June
2023
|
Wages, salaries and
benefits
|
51,068
|
|
39,508
|
Defined contribution pension
costs
|
2,643
|
|
2,439
|
Social security costs
|
2,553
|
|
1,533
|
Share-based payments (all
employees)
|
8,437
|
|
16,166
|
Investment tax credit
|
(4,811)
|
|
(1,500)
|
Total employee costs
|
59,890
|
|
58,146
|
The average number of employees
during the period, analysed by category, was as follows:
|
Six months ended 30 June
2024
|
|
Six months ended 30 June
2023
|
R&D/engineering
|
770
|
|
651
|
General &
administration
|
63
|
|
59
|
Sales & marketing
|
34
|
|
20
|
Total employees (average)
|
867
|
|
730
|
The number of employees at the end
of each period, analysed by category, was as follows:
|
Six months ended 30 June
2024
|
|
Six months ended 30 June
2023
|
R&D/engineering
|
794
|
|
662
|
General &
administration
|
69
|
|
60
|
Sales & marketing
|
33
|
|
22
|
Total employees (end of period)
|
896
|
|
744
|
7. Directors and key management personnel
compensation
(US$'000)
|
Six months ended 30 June
2024
|
|
Six months ended 30 June
2023
|
Directors and key management
emoluments
|
4,400
|
|
2,844
|
Pension costs
|
89
|
|
67
|
Total Directors and key management
remuneration
|
4,489
|
|
2,911
|
8. Finance income and expense
(US$'000)
|
Six months ended 30 June
2024
|
|
Restated1 six
months ended 30 June 2023
|
Finance income
|
|
|
|
Interest income from contracts
with customers containing significant financing
components
|
136
|
|
149
|
Other Interest
|
35
|
|
52
|
Interest income from
bank
|
1,602
|
|
1,518
|
|
1,773
|
|
1,719
|
Finance expense
|
|
|
|
Bank charges
|
(46)
|
|
(43)
|
Lease interest
|
(605)
|
|
(552)
|
Term loan interest
|
(9,093)
|
|
(6,886)
|
Term loan capitalised to the
balance sheet
|
6,371
|
|
4,537
|
Israel innovation
interest
|
-
|
|
(84)
|
|
(3,373)
|
|
(3,028)
|
Net finance (expense)/income
|
(1,600)
|
|
(1,309)
|
1.
See note 2 'Interim 2023 restatement'
paragraph
9.
Investments
WiseWave joint venture:
As at 30 June 2024, the Group held
a 42.5% ownership interest in WiseWave Technology Co., LTD
('WiseWave'), a supplier of semiconductor devices based in China.
WiseWave's registered office is at Room 105, No. 6, Baohua Road,
Hengqin New District, Zhuhai, China.
(US$'000)
|
Six months ended 30 June
2024
|
Six months ended 30 June
2023
|
Share of loss
|
-
|
8,169
|
Effect of elimination of gains
from sales to the joint venture
|
-
|
(5,439)
|
|
-
|
2,730
|
The value of the investment in
WiseWave was reduced to US$nil in 2022, as a result of equity
accounting for losses at WiseWave during the period. The value of
the cumulative losses incurred by WiseWave exceeds the cumulative
value of our investment in the business, hence there is no
elimination of gains from the sales to WiseWave in the six months
to 30 June 2024 as the value of the investment was already reduced
to US$nil at 31 December 2023 and therefore no provision has
been recognised for the excess of the Group's share of WiseWave's
losses through end of H1 2024 over the carrying amount of the
investment of US$8.6m, on the basis that the Group does not have a
constructive obligation.
10. Income tax expense
During the six months ended 30
June 2024, the Group recorded a consolidated tax credit of US$10.0m
(H1 2023: US$2.3m expense), which represented effective tax rates
of 20% and 20%, respectively.
Income tax expense has been
recognised based on management's estimate of the annual actual
income tax rate for the financial period applied to the reported
profits before tax of the interim reporting period for each entity
in the consolidated Group
11. Earnings per share
Basic earnings per share is
calculated by dividing net income from operations by the weighted
average number of common shares outstanding during the
period.
Diluted earnings per share is
calculated by adjusting the weighted average number of common
shares outstanding during the period to assume conversion of all
potential dilutive share options and restricted share units to
common shares.
(US$'000 except shares)
|
Six months
ended 30 June
2024
|
Restated1 six
months ended 30 June
2023
|
Numerator:
|
|
|
Net (loss)/income from
operations
|
(39,961)
|
(8,894)
|
|
|
|
Denominator:
|
|
|
Weighted average number of common
shares outstanding for basic EPS
|
728,559,101
|
700,766,190
|
Weighted average number of common
shares outstanding for diluted EPS
|
728,559,101
|
700,766,190
|
Basic EPS (US$ cents)
|
(5.48)
|
(1.27)
|
Diluted EPS (US$ cents)
|
(5.48)
|
(1.27)
|
1.
See note 2 'Interim 2023 restatement'
paragraph
Basic loss per share in the six
months to 30 June 2024 and diluted loss per share in the six months
to 30 June 2024 are the same because the share options and RSUs are
anti-dilutive. Therefore, they have been excluded from the
calculation of diluted weighted average number of ordinary
shares.
12. Goodwill
Goodwill is tested for impairment
annually and whenever there is an indication that it may be
impaired, at the level of the cash-generating unit (CGU) or group
of CGUs to which it is allocated. Our business model is such that
our IP is leveraged across the channels through which we provide
our products and services to customers, i.e. IP licensing, custom
silicon and own products. Given this interdependence of the Group's
operations, management considers that the Group 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 cash inflows generated by other assets or groups of assets.
Goodwill was tested for impairment at Group level at the end of
2023 by comparing the Group's recoverable amount, determined from
its fair value less costs of disposal, against its carrying amount.
In 2023, the Group's fair value less costs of disposal was higher
than its carrying amount and therefore no impairment of goodwill
was required. In H1 2024, we assessed whether there were any
indications that goodwill may be impaired and concluded that there
are none. Specifically, we do not expect the Group's consolidated
net loss incurred in H1 2024 to be indicative of a permanent
reduction in the Group's ability to generate cash flows.
13. Other intangible assets
(US$'000)
|
Six months
ended 30 June
2024
|
At 1 January 2024
|
203,314
|
Additions
|
41,203
|
Amortisation
|
(7,150)
|
At 30 June 2024
|
237,367
|
The identifiable intangible asset
from the acquisition of Precise-ITC in 2022 was valued at US$7.8m,
against which amortisation of US$1.0m was recorded in H1 2024 (H1
2023: US$1.0m).
The identifiable intangible assets
from the acquisition of OpenFive in 2022 were valued at US$61.0m,
against which amortisation of US$5.4m was recorded in H1 2024 (H1
2023: US$5.3m).
The identifiable intangible asset
from the acquisition of Banias Labs in 2022 was valued at US$83.9m.
No amortisation is recorded as the intangible asset is not yet
available for use.
The US$41.2m of additions includes
US$1.0m paid to a third-party IP provider and US$6.4m of
capitalised borrowing costs. The remaining US$33.8m is capitalised
development expenditure comprising primarily of staff costs where
staff have worked on projects that are capitalisable under the
Group's research and development capital expenditure
policy.
The Group incurred research and
development costs, net of a SRED credit of US$4.8m, that have been
expensed in the consolidated statement of comprehensive income, due
to not meeting the criteria for capitalisation. The amounts
expensed through salaries, subscriptions, subcontracting,
depreciation of right-of-use assets, equipment rentals, and
prototypes which relate to research and development are as
follows:
(US$'000)
|
Six months ended 30 June
2024
|
|
Six months ended 30 June
2023
|
Research and development
|
39,378
|
|
35,464
|
14. Property and equipment - owned
The value of property and
equipment has increased by US$17.3m from US$20.7m at 31 December
2023 to US$38.0m at the end of June 2024. The increase is mainly
due to a US$14.6m mask set for our own products purchased in
Alphawave IP, Inc., which was not yet available for use as at 30
June 2024.
15. Cash and cash equivalents
(US$'000)
|
As at 30 June
2024
|
|
As at 31 December
2023
|
Cash at bank and in hand
|
76,307
|
|
101,291
|
Please see the 'Financial
Highlights' section on page 8 for further information on cash,
including the decrease in cash as at 30 June 2024 compared to 31
December 2023.
16.
Trade and other receivables
(US$'000)
|
As at 30 June
2024
|
As at 31 December
2023
|
Current:
|
|
|
Trade receivables from contracts
with customers
|
51,601
|
49,214
|
Less: Allowance for expected credit
losses
|
(5,858)
|
(5,635)
|
Trade receivables - net
|
45,743
|
43,579
|
Restricted cash
|
7,342
|
17,843
|
Other receivables
|
7,808
|
16,667
|
Total current
|
60,893
|
78,089
|
Non-current:
|
|
|
Restricted cash
|
3,514
|
6,392
|
Other receivables
|
1,581
|
-
|
Trade non-current
|
5,095
|
6,392
|
Total trade and other receivables
|
65,988
|
84,481
|
Current trade and other
receivables have decreased from US$78.1m on 31 December 2023 to
US$60.9m on 30 June 2024. Other receivables have decreased from
US$16.7m on 31 December 2023 to US$7.8m on 30 June 2024
predominantly due to the receipt of US$12.4m relating to the
OpenFive purchase price adjustment. Total restricted cash
reduced by US$13.4m due to deferred compensation payments made to
employees from acquired entities. Of this US$10.5m reduction,
US$7.2m relates to a reduction in amounts held by third-party
paying agents in respect of future compensation amounts payable to
employees of Banias Labs being settled in the first half of 2024.
The remaining US$6.2m was deferred compensation that was paid to
one of the vendors of Precise-ITC. The payments associated with
Precise-ITC and Banias Labs deferred cash are presented within
operating activities in the condensed consolidated statement of
cash flows. The reduction of the deferred cash asset from these
transactions is included in working capital in the condensed
consolidated statement of cash flows.
Non-current trade receivables have
decreased from US$6.4m on 31 December 2023 to US$5.1m on 30 June
2024 due to a decrease in the non-current deferred cash balance in
line with vesting dates.
17.
Other assets
(US$'000)
|
As at 30 June
2024
|
As at 31 December
2023
|
Current:
|
|
|
Prepayments
|
7,215
|
17,094
|
Capitalised contract
costs
|
2,645
|
1,923
|
Total other assets
|
9,860
|
19,017
|
Prepayments have decreased by
US$9.9m due primarily to recognition of prepaid expenses in the
first six months of 2024 in line with the terms of the contracts
relating to prepayments.
18. Trade and other payables
Current trade and other payables
have increased from US$69.3m on 31 December 2023 to US$72.2m on 30
June 2024. Other payables increased by US$6.8m predominantly due to
higher vesting of RSUs in 2024 due to the headcount increase from
2022 and 2023 and the bonus RSUs that were issued in the first half
of 2024 relating to 2023 performance.
19. Loans and borrowings
The Group's sources of borrowing
for liquidity purposes include the Credit Agreement dated 12
October 2022 and the Incremental Facility Amendment dated 3
November 2022. These comprise a US dollar-denominated Delayed Draw
Term Loan B ('Term Loan') of US$100.0m and a multi-currency
revolving credit facility ('RCF') of up to US$125.0m, provided by a
syndicate of banks.
Both the Term Loan and the RCF
have a term of five years. The Term Loan and US$110.0m of the RCF
were drawn in full in October 2022 in connection with the Group's
acquisition of Banias Labs. US$15.0m of the RCF was drawn down on
15 May 2023. Both the Term Loan and RCF bear interest at a floating
rate of interest linked to SOFR (secured overnight financing rate),
with the overall rate dependent on our total net leverage ratio,
defined as the ratio of our consolidated total debt outstanding to
our consolidated adjusted EBITDA.
Our borrowings under the Credit
Agreement and Incremental Facility Amendment are subject to a net
leverage ratio and a fixed charges coverage ratio which are defined
in the Credit Agreement and tested quarterly. The maximum
permissible net leverage ratio was 3.75x up to the period ending 30
June 2023, 3.5x up to the period ending 31 March 2024 and 3.0x
thereafter and is calculated by dividing total consolidated debt
outstanding by total consolidated adjusted EBITDA for the last
twelve months. The minimum fixed charges coverage ratio is 1.25x
over the term of the debt and is calculated by dividing total
consolidated cash flow for the last twelve months by total fixed
charges for the last twelve months.
The Group did not meet the minimum
fixed charges coverage ratio of 1.25x in the second quarter of
2023, which represented a breach of the bank covenant as at 30 June
2023. As such, the Term Loan and the RCF are payable on demand at
30 June 2023 and have been classified as current liabilities in the
consolidated statement of financial position. On 22 September 2023,
the Group signed an amendment to the credit agreement with the
lenders waiving the covenant for the period to 30 June 2024, with a
revised lower fixed charge coverage ratio covenant in effect from
30 September 2024 to 30 September 2025. Additionally, there is a
minimum liquidity requirement that the Group must maintain for the
period to 30 September 2025.
During the second quarter of 2024,
the Group's net leverage ratio (NLR) was above the maximum allowed
ratio of 3.00x, principally as a result of low adjusted EBITDA in
Q3 2023 and H1 2024, combined with a step-down in the ratio from
3.50x to 3.00x. The lower than anticipated adjusted EBITDA in H1
2024 was driven by the time lag in converting new bookings to
recognised revenue, particularly in high-value IP and ASIC NRE
contracts that were signed in the second half of 2023.
Discussions with the Group's
lenders commenced in Q2 2024 to ensure that recording a NLR above
the allowed maximum would not be treated as a breach of the
covenant. These discussions culminated in the Fourth Amendment and
Waiver to the Credit Agreement, which was signed on 19 July 2024.
Under the terms of the Fourth Amendment, the maximum permitted NLR
is increased to 4.50x for the second quarter of 2024. From Q3 2024,
the net leverage ratio covenant is amended to measure net secured
leverage, with a maximum permissible ratio of 3.00x for the
remainder of the term of the loan. In addition to the above
changes, the Fourth Amendment and Waiver also replaced the fixed
charges coverage ratio covenant, that was due to resume in Q3 2024,
with a minimum interest coverage ratio covenant, being the ratio of
the last twelve months interest expense to the last twelve months
consolidated adjusted EBITDA. This ratio is set at a minimum of
2.50x for Q3 2024, then stepping up to 2.75x for Q4 2024 and Q1
2025, with a further step up to 3.00x from Q2 2025 for the
remainder of the term loan. The Fourth Amendment and Waiver also
gives us the option to draw an additional US$45.0m from our
existing lender consortium.
As the Fourth Amendment and Waiver
was signed after the balance sheet date, the Term Loan and the RCF
were technically payable on demand as at 30 June 2024 and were
therefore classified as current liabilities in our H1 2024 balance
sheet. This has had the effect of making our current liabilities
greater than our current assets by US$147.6m.
20. Share capital
|
Number of
shares
|
US$ '000
|
Balance as at 31 December 2022
|
695,068,200
|
9,751
|
Shares issued under employee share
scheme
|
20,446,367
|
260
|
Balance as at 31 December 2023
|
715,514,567
|
10,011
|
Shares issued under employee share
scheme
|
20,098,870
|
248
|
Balance as at 30 June 2024
|
735,613,437
|
10,259
|
21. Share- based payments
|
As at 30 June
2024
|
|
As at 30 June
2023
|
|
Share
awards
|
Weighted average exercise
price (US$)
|
|
Shareawards
|
Weighted average exercise
price (US$)
|
Outstanding at the beginning of the
period
|
86,263,963
|
0.834
|
|
85,692,153
|
0.712
|
Exercised during the
period
|
(20,098,870)
|
1.149
|
|
(10,496,008)
|
0.697
|
Forfeited during the
period
|
(1,510,305)
|
1.189
|
|
(468,557)
|
1.658
|
Granted during the
period
|
21,798,539
|
1.522
|
|
8,453,347
|
1.166
|
Outstanding at the end of the
period
|
86,453,327
|
0.934
|
|
83,180,935
|
0.724
|
Exercisable at the end of the period
|
40,671,675
|
0.228
|
|
42,554,503
|
0.266
|
25% of awards granted vest on the
first anniversary of issuance and the remaining awards vest equally
each month over the following 36 months. Awards expire within ten
years of their issue under the terms of the option agreements. This
has moved to ten years from five years following approval from the
remuneration committee on 21 March 2024.
On 25 June 2024, at the Company
AGM, the shareholders approved the Company granting 1,165,968
shares under the terms of the LTIP to Tony Pialis in respect of the
financial year ending 31 December 2024. The performance
metrics and weightings are:
- Relative TSR vs constituents of the FTSE 250 - 35%
weighting
- Relative TSR vs constituents of the FTSE All-World Technology
- 35% weighting
- Adjusted EPS growth - 30% weighting.
No expense has been recorded in
the financial statements to 30 June 2024 as the amount is not
material.
22. Related party transactions
During the period, Group companies
entered into the following transactions with related parties who
are not members of the Group
|
As at and for the period
ended
|
(US$'000)
|
30 June
2024
|
31 December
2023
|
30 June
2023
|
Transactions:
|
|
|
|
Revenue from a company on which a
Director is the chairman of the board1
|
33
|
429
|
242
|
Revenue from
VeriSilicon
|
318
|
-
|
-
|
Revenue from WiseWave, a joint
venture, where there is common directorship
|
3,021
|
66,879
|
34,859
|
Cost of sales from a company on
which a Director is the chief financial
officer2
|
|
-
|
-
|
Cost of sales from a company on
which a Director is the chief financial officer
|
(1,031)
|
-
|
-
|
Operating expenses from a company
on which a Director is a director
|
(100)
|
(133)
|
-
|
Costs capitalised as intangible
assets from a company on which a Director is a director
|
(1,000)
|
(1,000)
|
(600)
|
|
1,241
|
66,175
|
34,501
|
|
|
|
|
Balances:
|
|
|
|
Accounts receivable from a company
on which a Director is the chairman of the
board1
|
200
|
1,650
|
350
|
Accounts receivable from
VeriSilicon
|
893
|
-
|
-
|
Accounts receivable from WiseWave,
a joint venture, where there is common directorship
|
20,569
|
6,364
|
15,060
|
Contract assets for a company on
which a Director is the chairman of the
board1
|
5,300
|
2,567
|
5,217
|
Contract assets from
VeriSilicon
|
-
|
-
|
812
|
Contract assets from WiseWave, a
joint venture, where there is common directorship
|
31,925
|
40,785
|
36,579
|
Accrued liabilities with a company
on which a Director is a director
|
(1,100)
|
(600)
|
-
|
|
57,787
|
50,766
|
58,018
|
|
|
|
|
Contract liabilities from a
company on which a Director is the chairman of the
board1
|
-
|
|
88
|
Contract liabilities from
VeriSilicon
|
575
|
-
|
-
|
Contract liabilities from
WiseWave, a joint venture, where there is common
directorship
|
2,796
|
-
|
342
|
Prepaid expenses with a company on
which a director is a director
|
(167)
|
(67)
|
-
|
|
3,204
|
(67)
|
430
|
- Companies on which a Director is the chairman of the board are
FLC Technology Group and DreamBig Semiconductor Inc.
- Director ceased to be chief financial officer of this company
in February 2024.
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. All revenue and associated balances in respect of
transactions signed with VeriSilicon since the VeriSilicon reseller
agreement moving under WiseWave as master reseller effective
November 2021 are recognised through the WiseWave joint venture
line. Since 1 January 2024 any new deals signed with VeriSilicon
are outside of the master reseller agreement and are therefore
disclosed on a separate VeriSilicon line.
23. Subsidiaries of the Group as at 30 June
2024
All subsidiaries have been
included in the consolidated financial statements using the equity
method. Details of the Group's subsidiaries as at 30 June 2024 are
as follows:
Name
|
Registered address
|
Country
|
Subsidiaries
|
|
|
Alphawave IP Inc.
|
70 University Ave, 10th Floor,
Toronto, Ontario, Canada M5J 2M4
|
Canada
|
Alphawave Semi US Corp.
(formerly Alphawave IP
Corp.)
|
1730 N 1st St, Suite 650, San Jose,
CA, 95112
|
United
States
(Delaware)
|
Alphawave IP (BVI)
Ltd.1
|
Trinity Chambers, PO Box 4301, Road
Town, Tortola
|
British
Virgin
Islands
|
Alphawave Call. Inc. 1,2
|
70 University Ave, 10th Floor,
Toronto, Ontario, Canada M5J 2M4
|
Canada
|
Alphawave Exchange Inc.
|
70 University Ave, 10th Floor,
Toronto, Ontario, Canada M5J 2M4
|
Canada
|
Alphawave IP
Limited1
|
21 Avenida da Praia Grande, No 409,
Edificio China Law, 21 andar, em, Macau
|
China
|
Precise-ITC, Inc.
|
170 University Avenue, 10th Floor,
Toronto, Ontario, M5H 3B3
|
Canada
|
AWIPInsure
Limited1
|
1st Floor, Limegrove Centre,
Holetown, St. James
|
Barbados
|
Alphawave Semi International Corp.
(formerly Alphawave Holdings
Corp.) 1
|
1730 N 1st St, Suite 650, San Jose,
CA, 95112
|
United
States
(Delaware)
|
Alphawave Semi, Inc. (formerly Open-Silicon,
Inc)
|
490 N McCarthy Blvd #220, Milpitas,
CA 9503
|
United
States
(Delaware)
|
Alphawave Semiconductor
Corp.
|
1730 N 1st St, Suite 650, San Jose,
CA, 95112
|
United
States
(Delaware)
|
Alphawave Semi Holding Corp.
(formerly Open-Silicon Holding
Corp.)
|
3rd Floor, Les Cascades, Edith
Cavell Street, Port Louis
|
Mauritius
|
Open-Silicon Development Corp.
2
|
490 N McCarthy Blvd #220, Milpitas,
CA 95035
|
United
States
(Delaware)
|
|
|
|
Open-Silicon International,
Inc. 2
|
490 N McCarthy Blvd #220, Milpitas,
CA 95035
|
United
States
(Delaware)
|
Open-Silicon
Japan2
|
c/o Akia Tax Consultants, Shoei
Kannai Building, 22, Sumiyoshicho 2-chrome, Naka-ku, Yokohama,
Kanagawa
|
Japan
|
Awave Semiconductor India
Pvt Ltd (formerly Open-Silicon
Research Private Ltd)
|
No. 11/1 & 12/1 Maruthi
Infotech Centre, 2nd Floor, B-Block, Indiranagar, Koramangala
Intermediate Ring Road, Bangalore - 560 071.
|
India
|
Alphawave Semi (Nanjing) Co. Ltd
(formerly Yuanfang Silicon
Technology (Nanjing) Co. Ltd)
|
Room 101, Building B, No. 300,
Zhihui Road, Qilin Science and Technology Innovation Park,
Jiangning District, Nanjing
|
China
|
Alphawave Semi Asia Co.
Ltd
|
Room 702-703, Building 8, Lane 777,
Gaoke East Road, Pudong New Area, Shanghai
|
China
|
Solanium Labs
Ltd1
|
24 Hanagar, Hod HaSharon
4527713
|
Israel
|
Joint Venture
|
|
|
WiseWave Technology Co.,
LTD3
|
Room 105, No. 6, Baohua Road,
Hengqin New District, Zhuhai
|
China
|
All subsidiaries are wholly
owned.
1. Owned directly by Alphawave IP
Group plc.
2. Dormant
3. Joint venture in which the Group
has a 42.5% ownership interest and voting rights.
24. Post balance sheet events
The Group and its lenders signed
Fourth Amendment and Waiver to the Credit Agreement on 19 July
2024. Please see note 19 for more details.
On 26 August 2024, Wise Road Huazhi
(Zhuhai) Equity Investment Partnership (Limited Partnership)
("WRC") and certain affiliates of WRC agreed to an amendment to the
shareholders agreement between WiseWave's investors. This
amendment:
· allowed WRC and its
affiliates to make a capital contribution
in WiseWave, which was subsequently completed on 6 September 2024. The Group did
not contribute any incremental investment in this round, which
resulted in the reduction of the Group's equity interest in
WiseWave from 42.5% to 35.2%.
· granted WRC a call option to purchase all of our equity
interest at a pre-determined varying exercise prices on or before
31 December 2027. The exercise prices in
each instance are higher than the per share cost of our original
investment in WiseWave.
Alternative Performance Measures (APMs)
Introduction
Management uses a number of
measures to assess the Group's financial performance. We consider
certain of these measures to be particularly important and identify
them as 'key performance indicators' (KPIs). We have identified the
following financial measures as KPIs: revenue; bookings; backlog
(excluding royalties); adjusted EBITDA; and cash generated from
operations.
Certain of these measures are
non-IFRS measures because they exclude amounts that are included
in, or include amounts that are excluded from, the most-directly
comparable measure calculated and presented in accordance with IFRS
or are calculated using financial measures that are not calculated
in accordance with IFRS. We do not regard non-IFRS measures as a
substitute for, or superior to, the equivalent IFRS measures.
Non-IFRS measures presented by Alphawave may not be directly
comparable with similarly titled measures presented by other
companies.
Bookings and backlog
Management monitors bookings and
backlog as indicators of future revenue from contracts with
customers.
Bookings
Bookings is a non‑IFRS measure and
represents legally binding and largely non-cancellable commitments
by customers. Bookings comprise licence fees, non-recurring
engineering support, orders for silicon products, financing
components and estimated future royalties (based on contractually
committed royalty prepayments or on volume estimates provided by
customers). Bookings are recorded at the point the contract has
been signed by both Alphawave and the customer. These are released
to the market each quarter within our quarterly trading update.
Infrequently, customers request to cancel bookings. At the time of
cancellation, these are recorded as debookings after taking into
account any pertinent cancellation charges. Bookings during the
year were as follows:
|
Six months
ended
30 June
2024
US$m
|
Six
months ended
30
June
2023
US$m
|
Preliminary bookings (including royalties)
|
225.3
|
187.2
|
Bookings
|
225.3
|
187.2
|
Royalties
|
-
|
-
|
Bookings (excluding royalties)
|
225.3
|
187.2
|
Backlog
Backlog is a non-IFRS measure that
represents cumulative bookings (excluding royalties) that have not
yet been recognised as revenue and which we expect to be recognised
in future periods.
Backlog at the end of the year is
calculated based on our backlog as at the beginning of the year,
plus new bookings during the year and backlog acquired in business
combinations, less revenue recognised during the year.
Movements on backlog during the
year were as follows:
|
Six months
ended
30 June
2024
US$m
|
Year
ended
31
December
2023
US$m
|
Backlog at the beginning of the
year
|
354.9
|
379.7
|
Add: Bookings during the year
(excluding royalties)
|
225.3
|
383.9
|
Less: Net adjustments/debookings
during the year (excluding royalties)
|
(2.9)
|
(87.3)
|
Less: Revenue recognised during the
year (excluding royalties)
|
(90.9)
|
(321.4)
|
Backlog (end of the period)
|
486.4
|
354.9
|
Earnings before interest, taxation, depreciation and
amortisation (EBITDA)
Earnings before interest,
taxation, depreciation and amortisation (EBITDA) is a non-IFRS
measure that we consider is useful to investors and other users of
our financial information in evaluating the sensitivity of the
Group's trading performance to changes in variable operating
expenses.
Joint venture profit or loss
We also exclude the costs of our
joint venture in WiseWave from EBITDA because we consider that, as
a start-up, they hinder the comparison of the Group's trading
performance from one period to another or with other
businesses.
Operating profit to EBITDA reconciliation
(US$'000)
|
Six months
ended 30 June
2024
|
|
Six months
ended 30 June
2023
|
Operating (loss)/profit
|
(48,314)
|
|
(2,580)
|
Add backs:
|
|
|
|
Depreciation and
amortisation
|
16,850
|
|
13,307
|
EBITDA
|
(31,464)
|
|
10,727
|
Adjusted measures of profitability
We report adjusted measures of
profitability because we believe that they provide both management
and investors with useful additional information about the
financial performance of our business. Adjusted measures of
profitability are non-IFRS measures that represent the equivalent
IFRS measures adjusted for specific items that we consider hinder
comparison of the Group's financial performance from one
period to another or with other businesses. Adjusted measures of
profitability exclude items that can have a significant effect on
profit or loss. We compensate for this limitation by monitoring
separately the items that are excluded from the equivalent IFRS
measures in calculating the adjusted measures. We outline below the
specific items of income and expenses that are recognised in profit
or loss in accordance with IFRS but are excluded from the Group's
adjusted results.
EBITDA to adjusted EBITDA reconciliation
(US$'000)
|
Six months
ended 30 June
2024
|
|
Six months
ended
30 June
2023
|
EBITDA
|
(31,464)
|
|
10,727
|
Add backs:
|
|
|
|
Acquisition related
costs/(income)
|
6,459
|
|
(263)
|
Compensation element of Banias Labs
deferred cash rights
|
3,788
|
|
4,069
|
Share-based compensation
expense
|
10,743
|
|
18,502
|
Currency translation
gain
|
(1,354)
|
|
(592)
|
Adjusted EBITDA
|
(11,828)
|
|
32,443
|
Business combinations
We exclude those effects of
applying the acquisition method of accounting under IFRS that we
consider are not indicative of the Group's trading performance,
including the accounting for transaction costs; the recognition of
certain elements of the purchase price as compensation expense; and
the recognition of remeasurements of contingent consideration in
profit or loss.
During the periods under review,
we excluded from our adjusted results the following items arising
from the accounting for business combinations:
> acquisition-related
costs;
> the element of the value of
the deferred cash rights granted to employees of Banias Labs to
replace the unvested employee share awards at the acquisition date
that is accounted for as compensation expense rather than as
consideration;
> the remeasurement of the
contingent consideration payable for Precise-ITC; and
> the purchase price adjustment
receivable from the vendor of Open Silicon that was recognised as
other operating income rather than as an adjustment to the purchase
price because it was agreed after the end of the measurement
period.
We also exclude from our adjusted
measures the amortisation of identifiable intangible assets
acquired in business combinations in order that the performance of
our business may be compared more fairly with that of businesses
that have developed on an organic basis.
We exclude the costs of
integrating acquired businesses because we consider that they
hinder the comparison of the Group's trading performance from one
period to another or with other businesses.
Share-based payments and related expenses
We exclude the compensation
expense recognised in relation to options and RSUs granted under
the Company's share-based payment plans because the awards are
equity-settled and their effect on shareholders' returns is already
reflected in diluted earnings per share measures. We additionally
exclude the expense for payroll taxes payable on the exercise or
vesting of the awards because the expense fluctuates according to
the Company's share price at the exercise or vesting date and the
effect on profit or loss is therefore not necessarily indicative of
the Group's trading performance.
Currency translation differences
We exclude gains and losses that
arise at entity level on the translation of foreign
currency-denominated net cash and borrowings into the entity's
functional currency. Such gains and losses can be significant and
are not representative of the Group's trading
performance.
Income tax effect of adjustments
Where relevant, we calculate the
income tax effect of adjustments by considering the specific tax
treatment of each item and by applying the relevant statutory tax
rate to those items that are taxable or deductible for tax
purposes
Profit after tax to adjusted profit after tax
reconciliation
(US$'000)
|
Six months
ended 30 June
2024
|
|
Restated1 six
months
ended 30 June
2023
|
Profit after tax
|
(39,961)
|
|
(8,894)
|
Add backs:
|
|
|
|
Acquisition-related
costs
|
6,459
|
|
(263)
|
Compensation element of Banias
Labs deferred cash rights
|
3,788
|
|
4,069
|
Amortisation of acquired
intangibles
|
6,328
|
|
6,328
|
Share-based compensation
expense
|
10,743
|
|
18,502
|
Currency translation
gain
|
(1,354)
|
|
(592)
|
Tax effect of above
adjustments
|
533
|
|
823
|
Adjusted profit after tax
|
(13,464)
|
|
19,973
|
Adjusted profit per ordinary share attributable to the
shareholders (expressed in cents
per ordinary share)
|
Note
|
Six months
ended 30 June
2024
|
|
Restated1 six
months ended
30 June
2023
|
Adjusted basic earnings per
share
|
11
|
(1.85)
|
|
2.85
|
Adjusted diluted earnings per
share
|
11
|
(1.85)
|
|
2.85
|
1. See note 2
'Interim 2023 restatement' paragraph
Adjusted basic and diluted
earnings per share have been calculated by taking the adjusted
profit for the year and dividing it by the basic or diluted, as
appropriate, weighted average number of common shares outstanding.
Adjusted basic earnings per share and adjusted diluted earnings per
share are the same for the six months ended 30 June 2024 because
the share options and RSUs are anti-dilutive. Therefore, they have
been excluded from the calculation of diluted weighted average
number of ordinary shares.
Net (debt)/cash
Net (debt)/cash is defined as the
difference between total borrowings and cash and cash equivalents.
It is a measure that provides additional information on the Group's
financial position. Restricted cash, which cannot be accessed by
the Group, has been excluded from the net debt measure.
The net debt of US$141.6m as at 30
June 2024 is made up of the bank loan of US$216.3m, the IIA loan in
Israel of US$1.6m less the cash and cash equivalents balance of
US$76.3m.
[1] See
Alternative Performance Measures (APMs) section on page 30.
Adjusted EBITDA and adjusted profit after tax exclude foreign
exchange adjustments, share-based payments, deferred compensation
payments, and M&A transaction costs.
[2] H1 2023
restated - see note 2 'interim 2023 restatement'
paragraph.
[3] Bookings are a non-IFRS measure representing legally binding
and largely non-cancellable commitments by customers to license our
technology. Bookings comprise licence fees, non-recurring
engineering, support, silicon orders, and, in some instances, our
estimates of potential future royalties.
4
Both FSA
(Flexible Spending Account) drawdowns and China re-sale licences
convert previously announced contractual commitments included
within bookings reported in prior periods to new product design
wins which will be recognised as revenue over time.
[6] Semiconductor device companies ranked on market
capitalisation as of 11.07.23.
[7] Deferred compensation payments related to acquisitions which
are expected to be settled over time until August 2026.
[8] IDC
estimates that $521 billion will be spent on AI/ML enterprise
implementations worldwide in 2027.
IDC, Worldwide Core IT Spending for
GenAI Forecast, 2023-2027: GenAI Is Triggering Hyper-Expansion of
AI Spending, IDC #US51539723, December 2023
[10] Last
twelve months turnover rate
[11] See
note 2 'interim 2023 restatement' paragraph