REG - Alphawave IP Group - Interim Results for six months ended 30 June 2022
21/09/2022 07:01
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RNS Number : 0611A Alphawave IP Group PLC 21 September 2022
ALPHAWAVE IP GROUP PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2022
· Technology leadership and product portfolio underpin broader customer
base
· Revenue doubled year-on-year to US$57.1m
· H1 2022 operating profit of US$29.9m compared to restated H1 2021
US$1.3m
· Adjusted EBITDA1 up 67% year-on-year to US$23.2m
· Adjusted EBITDA1 margin at 41%, below H1 2021, as we continue to
expand our R&D capability to support a growing pipeline and future revenue
growth
· EBITDA significantly above H1 2021 at US$32.7m
· Significant revenue growth expected in H2 2022, with medium-term
outlook unchanged and continued confidence in growth prospects
LONDON, United Kingdom and TORONTO, Ontario, Canada 21 September 2022 -
Alphawave IP Group plc (LSE: AWE, "Alphawave IP", "Alphawave", the "Company"),
a global leader in high-speed connectivity for the world's technology
infrastructure, has published its interim results for the six months ended 30
June 2022.
Financial Summary and APMs 1 (#_ftn1) - US$m H1 2022 Restated H1 2021 2 (#_ftn2) Change
Revenue 57.1 27.6 107%
EBITDA(2) 32.7 2.6 nm
EBITDA margin 57% 9%
Adjusted EBITDA(1) 23.2 13.9 67%
Adjusted EBITDA margin 41% 50%
Profit after Tax(2) 16.3 0.1 nm
PAT margin 28% nm
Adjusted Profit after Tax(1) 6.7 11.4 (41%)
Adjusted PAT margin 12% 41%
Pre-tax operating cash flow(2) 32.2 4.7 578%
Net cash and cash equivalents (end of period) 451.8 519.1 (13%)
Bookings 3 (#_ftn3) and Design Win Activity - US$m H1 2022 H1 2021 Change
Licence and related 38.5 33.0 17%
Potential future royalties 14.9 15.2 (2%)
New Bookings (excluding VeriSilicon and WiseWave multi-year subscription 53.4 48.3 11%
licences)
Additional design win activity - FSA drawdowns and China re-sale licences 4 14.7 - nm
(#_ftn4)
WiseWave and VeriSilicon multi-year subscription licences - 147.8 nm
Number of end-customers (end of period) 28 16
Due to rounding, numbers presented in the table may not add up to the totals
provided and percentages may not precisely reflect the absolutely figures.
'nm', where referenced, means 'not meaningful'.
Tony Pialis, President and Chief Executive Officer of Alphawave IP said: "We
delivered another set of strong results, doubling our revenue over H1 2021
while continuing to invest both organically, through R&D, as well as
through M&A to support our growing pipeline and future revenue growth. The
strong results are a testament to our technology and the solid execution by
our talented people. Following the closing of the acquisition of OpenFive on 1
September 2022, we welcomed over 330 employees to Alphawave and over 50 new
customers. We expect customer traction to gain momentum in the second half of
the year and we are excited about the long-term prospects for growth."
John Lofton Holt, Executive Chairman of Alphawave IP, added: "Alongside this
strong set of results, the completion of OpenFive represents an important
milestone in the evolution of our business. Through an uncertain economic
environment our customers in digital infrastructure markets continue to invest
in leading connectivity technology, and this is the reason we are excited
about the long-term potential of the business."
Interim Results Highlights
· H1 2022 revenues of US$57.1m, representing 107% growth year-on-year
driven by mix of repeat business and new customers
· WiseWave revenues of US$18.3m (excluding re-seller revenue 5
(#_ftn5) ), of which US$12.9m relate to the multi-year subscription licence
· Adjusted EBITDA1 of US$23.2m and margin of 41% (H1 2021 US$13.9m and
50%), reflecting accelerated investment in R&D
· US$19.3m exchange gain due to the weakening of GBP against USD on USD
cash balances held at Alphawave IP Group plc level denominated in GBP
· Net cash generated from operating activities in H1 2022 was US$18.8m,
US$17.2m higher than in H1 2021 (H1 2021 restated: US$1.6m)
Business and Technology Highlights
· Alphawave IP maintained its technology leadership with a new design
win in 3nm
· The Company added to its product portfolio two new interconnect IPs,
AresCORE16 and OptiCORE100
· During H1 2022, the Company expanded its customer base to 28 (FY
2021: 20 customers; H1 2021: 16 customers), including two top 20 North
American semiconductor companies
· Microchip Technology selected Alphawave's low-power and
high-performance 112Gbps IP, AlphaCore100, for its next-generation META-DX2
1.6Tbps Ethernet retimer family
· Cumulative bookings over the life of the Company since its inception
in 2017, exceeded US$400m, of which over 50% represents customers outside of
China
· Continued to build sales and R&D capabilities with new offices in
San Jose, California and Ottawa, Canada
· In H1 2022, the Company headcount increased by 97 people globally,
bringing the total headcount from 154 (as of 31 December 2021) to 251 (132 as
of 30 June 2021)
· After the end of the reporting period, on 31 August 2022, the Company
completed the acquisition of OpenFive, extending Alphawave's product offerings
and customer base while driving greater scale and revenue growth from an
expanded total addressable market
Outlook
· During the second half of the year, the Company expects customer
traction to gain momentum, including multiple chiplet IP design wins.
· Alphawave IP reiterates its mid-term and long-term outlook including
the financial contribution of OpenFive, communicated on 29 April 2022 in its
2021 full year results.
Capital Markets Day
The Company will host a Capital Markets Day in London, on 13 January 2023.
Alphawave's executives will present the Company's long-term business strategy
and financial targets as it enters its next phase of technology leadership in
connectivity for digital infrastructure markets.
Results Presentation and webcast
A presentation for investors and analysts will be held at 8.30am BST, on 21
September 2022. The webcast will be accessible via:
https://us02web.zoom.us/s/82295344058?pwd=ektteElrdWFwQ2NRd2lETnFIS0RjQT09
(https://us02web.zoom.us/s/82295344058?pwd=ektteElrdWFwQ2NRd2lETnFIS0RjQT09)
Passcode: 397388
Or by phone:
US: +1 669 900 9128 / +1 719 359 4580 / +1 253 215 8782
United Kingdom: +44 203 901 7895 / +44 208 080 6591 / +44 330 088 5830
Webinar ID: 822 9534 4058
Full list of dial-in numbers available https://us02web.zoom.us/u/kD2i0tmO
(https://us02web.zoom.us/u/kD2i0tmO)
The Company's H1 2022 Report is also available to view in the Investor
Relations section of the Company's website (Results, Reports &
Presentations (awaveip.com)
(https://www.awaveip.com/en/investors/results-reports-presentations/) ).
About Alphawave IP Group plc (LSE: AWE)
Faced with the exponential growth of data, Alphawave IP's technology serves a
critical need: enabling data to travel faster, more reliably and with higher
performance at lower power. Alphawave IP is a global leader in high-speed
connectivity for the world's technology infrastructure. Our IP solutions meet
the needs of global tier-one customers in data centres, compute, networking,
AI, 5G, autonomous vehicles and storage. Founded in Toronto, Canada in 2017 by
an expert technical team with a proven track record in licensing semiconductor
IP, our mission is to focus on the hardest-to-solve connectivity challenges.
To find out more about Alphawave IP, visit awaveip.com
(http://www.awaveip.com)
Alphawave IP and the Alphawave IP logo are trademarks or registered trademarks
of Alphawave IP Group plc. All other trademarks or registered trademarks
mentioned herein are held by their respective companies. All rights reserved.
Contact Information
Alphawave IP Group plc John Lofton Holt, Executive Chairman ir@awaveip.com
Jose Cano, Head of IR +44 (0) 20 7717 5877
Brunswick Group Simone Selzer alphawave@brunswickgroup.com
Sarah West +44 (0) 20 7404 5959
Gravitate PR Lisette Paras alphawave@gravitatepr.com
Wynton Yu +1 415 528 0468
Cautionary statement regarding forward-looking statements
This document may contain forward-looking statements which are made in good
faith and are based on current expectations or beliefs, as well as assumptions
about future events. You can sometimes, but not always, identify these
statements by the use of a date in the future or such words as "will",
"anticipate", "estimate", "expect", "project", "intend", "plan", "should",
"may", "assume" and other similar words. By their nature, forward-looking
statements are inherently predictive and speculative and involve risk and
uncertainty because they relate to events and depend on circumstances that
will occur in the future. You should not place undue reliance on these
forward-looking statements, which are not a guarantee of future performance
and are subject to factors that could cause our actual results to differ
materially from those expressed or implied by these statements. The Company
undertakes no obligation to update any forward-looking statements contained in
this document, whether as a result of new information, future events or
otherwise.
A. Operational and Strategic Highlights
Summary
Total bookings in H1 2022 of US$53.4m were below the prior year (H1 2021:
US$196.1m) due to the multi-year agreements signed with VeriSilicon and
WiseWave in H1 2021.
In H1 2022, Alphawave generated licence and related bookings, which include
non-recurring engineering and support, of US$38.5m, an increase of 17% from H1
2021. Our estimates of future royalties from design wins secured during H1
2022 remained roughly flat at US$14.9m (H1 2021: US$15.2m). We also saw
Flexible Spending Accounts4 ("FSA") drawdowns of US$5.6m, and China
(VeriSilicon) reseller deals of US$9.1m. Both FSA and reseller deals are not
new bookings but represent the conversion of prior customer commitments to
design wins.
Cumulative bookings over the life of the Company since its inception in 2017
exceeded $400m.
In the period, we won eight new customers, including two top-tier North
American semiconductor companies, ending the period with 28 customers. Of our
eight new end-customer wins in H1 2022, six of those customers are
headquartered in North America or EMEA. As of 30 June 2022, Alphawave had six
of the top ten semiconductor companies (as ranked by market capitalisation) as
customers.
Revenue increased 107% to US$57.1m year-on-year (H1 2021: US$27.6m), driven by
growth in designs wins from new customers and repeat business from existing
customers. We achieved gross margin of 97% and adjusted EBITDA6 of US$23.2m,
up 67% year-on-year. Adjusted EBITDA margin was 9 percentage points below H1
2021 at 41% 6 (#_ftn6) , prior to non-recurring M&A costs, stock-based
compensation and exchange gains.
We closed the period with a net cash position of US$451.8m, compared to a net
cash position of US$501.0m at the end of December 2021. The year-on-year
decrease was mainly the result of higher net cash generated from operating
activities offset by a US$14.1m outflow related to the acquisition of
Precise-ITC on 1 January 2022, and US$50.1m foreign exchange impact on
reported cash and cash equivalents.
End Market Drivers Remain Strong
Despite an uncertain economic environment, digital infrastructure markets
remain strong. Our core markets of servers, storage and network switches
continue to provide compelling opportunities for growth. In Q1 2022, data
centre capital expenditure grew at the fastest rate year-on-year in three
years and Amazon, Google, Meta and Microsoft are projected to increase 25% in
2022 7 (#_ftn7) . Not surprisingly, the amount of data created, captured,
replicated and consumed each year is expected to more than double in size from
2022 to 2026 8 (#_ftn8) .
Our pipeline of customer opportunities reflects those trends. Our customers
continue to seek differentiation and enhanced performance by transitioning
faster to lower design nodes, with the majority of our design wins in H1 2022
at 7nm and 5nm manufacturing processes and a first design win in 3nm. As we
have noted in previous announcements, we continue to see hyperscale data
centre providers reducing reliance on networking ASIC vendors.
The ongoing constraints on the semiconductor supply chain and the ubiquitous
presence of semiconductors in our lives continue to reinforce the importance
of semiconductor technology on a global scale. As the digital infrastructure
continues to grow and transitions to leading and more efficient technologies,
we remain confident in the long-term outlook of the business.
Expanding Technology Leadership and Customer Traction
During H1 2022, we recognised revenue from 28 customers, compared to 16
customers in H1 2021 and 20 customers at FY 2021. Our H1 2022 revenue
continued to be heavily weighted to our core markets of data networking and
cloud compute. 42% of revenue in the period was generated from North American
customers, 38% from China, 13% from APAC excluding China and 7% from EMEA.
Since 2017, the Company has demonstrated connectivity technology leadership in
7nm, 6nm, 5nm and 4nm technology. In Q2 2022, Alphawave IP extended its
leadership with a new design win in 3nm technology. The Company expects
further design wins in 3nm in the second half of the year and is working with
its foundry partners in 3nm and beyond.
In June 2022, the Company announced the availability of two new Interconnect
IP products to its product portfolio. AresCORE16 is a Die-to-Die parallel
interface that further extends Alphawave's chiplet leadership by enabling a
new generation of chiplet products. OptiCORE100 is a 112Gbps PAM4 optical
Serialiser-Deserialiser ("SerDes") that enables direct drive of optics and
includes advanced DSP techniques for receiving optical waveforms. These two
new products bring exciting new opportunities for Alphawave IP to continue to
help its customers solve increasingly complex connectivity challenges.
Investing in People
During the first six months of the year, we continued to invest heavily in
talent, particularly in R&D. As of 30 June 2022, total headcount increased
to 251, comprising 220 in R&D/engineering, 9 in sales and marketing and 22
in general and administrative roles (from 132, 6 and 16 respectively as at 31
December 2021). In January 2022, Tony Chan Carusone joined as Chief
Technology Officer, bringing over 20 years of experience in both, academic
research and business consulting.
In support of its market expansion, on 10 May 2022, the Company announced the
opening of its new office in San Jose, California - marking the launch of its
presence in the United States in order to better support customers in the
region.
In addition to the significant investment in R&D/engineering, we have
expanded our finance, HR and other administrative functions, including a new
Global Head of Investor Relations, Jose Cano, formerly Head of Investor
Relations at Dialog Semiconductor Plc. In January 2022, we appointed
Michelle Senecal de Fonseca as our Workforce Engagement Non-Executive
Director, ensuring that the views and concerns of our employees are brought to
the Board and taken into account.
Significant Post-Interim Events
On 1 September 2022, the Company announced the closing of the acquisition of
OpenFive. The acquisition accelerates the Company's ambition to become a
pure-play provider of connectivity technology, offering silicon IP as well as
custom silicon. The acquisition nearly doubles the number of
connectivity-focused IPs from 80 to over 155 and significantly increases
Alphawave's customer base globally from 28 to over 80, particularly in North
America. New customers include a top two semiconductor memory supplier, a top
three high performance computing (HPC) server manufacturer, a leading
automated tester equipment manufacturer, and mission critical high-speed
communications and industrial equipment manufacturers. OpenFive's proven
silicon development team enables Alphawave to offer leading-edge data centre
and networking custom silicon as well as enhancing its chiplet design
capabilities. This accelerates Alphawave's strategic goal to scale revenues
by monetising its leading connectivity IP not only through IP licensing but
advanced custom silicon.
Outlook
Despite the uncertain macroeconomic environment, our growing pipeline reflects
positive growth trends in data infrastructure markets and the continued
investment in next generation connectivity solutions. This combined with our
talented team and strong balance sheet give us continued confidence in our
future.
During the second half of the year, the Company expects customer traction to
gain momentum, including multiple chiplet IP design wins.
Alphawave IP reiterates its mid-term and long-term outlook communicated on 29
April 2022 in its 2021 full year results. Including the financial contribution
from OpenFive, the Company expects to reach revenues of between US$325m and
US$360m in 2023. Longer-term, we expect to achieve annual revenue run rates in
excess of US$500m in 2024 and in excess of US$1 bn by 2027.
Near-term margins will be impacted by OpenFive as we integrate and scale that
business, and we anticipate a 2023 adjusted EBITDA margin of 32% to 36% with a
gradual increase thereafter as we focus and integrate the business and realise
the anticipated synergies.
B. Financial Highlights
Contracted Order Book and Backlog
Total bookings in H1 2022 of US$53.4m were below the prior year (H1 2021:
US$196.1m) due to the large multi-year agreements signed with VeriSilicon and
WiseWave in H1 2021. Excluding those transactions, licence and related
bookings (which include non-recurring engineering and support) grew 17%, from
US$33.0m in H1 2021 to US$38.5m in H1 2022.
Our estimates of future royalties from design wins secured during H1 2022
remained roughly flat at US$14.9m (H1 2021: US$15.2m). These royalty estimates
are based on guaranteed royalty commitments and estimates of future
end-customer sales volumes and management believe that actual royalties could
substantially exceed these estimates.
Of the US$53.4m of licence and related and royalty bookings in H1 2022, 44%
were from customers in North America, 36% in EMEA, 13% in China and 7% in APAC
excluding China.
We also saw Flexible spending account4 ("FSA") drawdowns of US$5.6m and China
(VeriSilicon) reseller deals of US$9.1m. Both FSA and reseller deals are not
new bookings but represent the conversion of prior customer commitments to
design wins.
Cumulative bookings over the life of the Group since its inception in 2017
have exceeded US$400m. Our backlog (contracted bookings not yet recognised as
revenue) excluding royalties as at end-H1 2022 was US$150.0m. This is
expected to substantially increase in H2 2022 as we include the backlog
contribution from OpenFive.
In the period, we won eight new customers, including two top-tier North
American semiconductor companies, ending the period with 28 customers. As of
30 June 2022, Alphawave had six of the top ten semiconductor companies (as
ranked by market capitalisation) as customers.
Revenues
Revenues for H1 2022 reached US$57.1m, 107% growth compared to US$27.6m in H1
2021 and reflects execution against existing design wins, as well as revenues
from new design wins with existing and new customers:
· Customers - In H1 2022 we recognised revenues from 28 end-customers,
compared to 16 end-customers in H1 2021. Our top 3 customers represented 52%
of H1 2022 revenues versus 43% in H1 2021 and the top 3 customers in each
period were different. Excluding revenues from WiseWave, which were US$18.3m
in the period (excluding re-seller revenue), our top 3 customers in H1 2022
represented 40% of revenues.
· Regions - In H1 2022, our revenues were 42% from customers in North
America, 38% from China, 13% from APAC excluding China and 7% EMEA. The
increase in contribution from China over H1 2021 (17% of sales) is due to
recognition of WiseWave and VeriSilicon revenues in H1 2022, which did not
contribute to H1 2021 revenues.
Substantially all of our revenues in H1 2022 and H1 2021 were generated from
licence and licence-related (non-recurring engineering and support)
activities. We did not recognise any royalty revenues in H1 2022 and expect to
recognise first royalties in H2 2022, earlier than anticipated, albeit
royalties are not expected to be a material contributor to revenues in the
short term.
Operating Expenses and Profitability
In H1 2022, our gross margin was 97%, with cost of sales primarily reflecting
sales commissions, compared to 95% in H1 2021. Our EBITDA was US$32.7m (57%
margin) compared to a restated EBITDA of US$2.6m (9% margin) in H1 2021. Our
adjusted EBITDA 9 (#_ftn9) was US$23.2m (41% margin) compared to adjusted
EBITDA of US$13.9m (50% margin) in H1 2021. Our EBITDA in the period was
materially impacted by a US$19.3m foreign exchange gain as a result of USD
cash balances held at the Alphawave IP Group plc level which are accounted for
in GBP. Such foreign exchange differences are not included in adjusted EBITDA
and hence adjusted EBITDA in H1 2022 is lower than EBITDA, whereas in H1 2021,
adjusted EBITDA was higher than EBITDA.
Including IPO-related expenses in H1 2021, depreciation, one-time
M&A-related expenses, FX gains and losses and share-based payments,
operating expenses in H1 2022 totalled US$25.5m compared to restated operating
expenses of US$24.9m in H1 2021. Our reported operating expenses were
materially impacted by non-recurring or other items, including FX gains, which
management believes does not reflect the underlying operational performance of
the business. Reflecting the continued scaling of the business, excluding
IPO-related expenses in H1 2021, one-time M&A-related expenses,
share-based payments and FX gains and losses, operating expenses in H1 2022
totalled U$35.0m, compared to US$13.9m in H1 2021. Of the US$35.0m of
operating expenses in the first half, including depreciation, US$25.2m (44.0%
of revenue) relate to R&D / engineering, US$8.4 m (14.7% of revenue) to
general and administrative expenses and US$1.4m (2.5% of revenue) to sales and
marketing expenditure. General and administrative expenses include an
expected credit loss of US$1.8m based on our assessment of our potential
credit loss on overdue invoices. Excluding this, our general and
administrative expenses for H1 2022 were US$6.6m (11.6% of revenue). Of the
US$13.9m expenditure in H1 2021, including depreciation, US$10.7m (39.0% of
revenue) related to R&D / engineering, US$2.5m (9.0% of revenue) related
to general and administrative expenses and US$0.7m (2.4% of revenue) related
to sales and marketing expenditure.
The increase in our operating expenses was primarily due to the significant
growth in our headcount in H1 2022 together with software tool costs which
scale with our R&D / engineering headcount. Our headcount grew from 132
as at H1 2021 and 154 as at FY 2021, to 251 as at H1 2022, with the net
addition of 97 employees in the first six months of 2022. 88 of those
additions were in our R&D / engineering function, 6 within G&A and 3
within S&M, including the team that joined with the acquisition of
Precise-ITC in January 2022. We expect to slow the pace of hiring in H2
2022, as we integrate the new hires and begin the integration of OpenFive.
The increase in share-based payments, from US$2.0m in H1 2021 to US$7.2m in H1
2022, was primarily due to the significant increase in headcount and
restricted stock unit issuance in H1 2022 with relatively high values compared
to previous option issues.
Depreciation and amortisation expenses in H1 2022 were US$2.8m (H1 2021:
US$1.3m), of which US$1.5m related to right-of-use assets (H1 2021: US$1.1m),
namely our premises and leased test equipment.
Our profit after tax for the period, which is stated after share-based
payments, an exchange gain of US$19.3m,one-time costs relating to our IPO and
M&A activities, as well as our share of losses from WiseWave, was
US$16.3m, compared to a restated profit after tax of US$0.1m in H1 2021. On an
adjusted basis 10 (#_ftn10) , our profit after tax for the period was US$6.7m
, compared to a restated profit after tax of US$11.4m in H1 2021, with profit
in H1 2022 significantly impacted by the share of post-tax losses of US$7.9m
in WiseWave (nil in H1 2021) and higher income tax expenses of US$6.0m
(restated US$1.1m in H1 2021).
Balance Sheet, Liquidity and Cashflow
Our gross and net cash decreased by US$49.2m from US$501.0m as at end-December
2021 to US$451.8m as at end-June 2022. Whilst we report in USD, our IPO
proceeds were received in GBP and we continue to hold significant cash
reserves in GBP. During H1 2022, the USD to GBP exchange rate fell from
1.3513 to 1.2159, which accounted for a US$50.1m fall in our USD reported cash
over the same period.
In the first six months of 2022, our intangible assets increased from US$1.2m
to US$9.7m 11 (#_ftn11) , largely as a result of intangibles acquired through
the acquisition of Precise-ITC. Investment in equity-accounted joint venture
WiseWave, decreased to US$1.6m as at 30 June 2022 from US$9.4m as at 31
December 2021, as a result of the Group's share of the loss incurred by
WiseWave during H1 2022.
Our trade and other receivables increased to U$21.0m at end-June 2022 from
US$13.1m at end-December 2021, largely due to an increase in prepayments on
software tools used by our R&D / engineering team. In addition, we
provisioned for an expected credit loss of US$1.8m, based on our assessment of
our credit risk on overdue invoices.
Our accrued revenue, where revenue recognition conditions are met under IFRS
15 but we have not billed or collected any amount increased to US$41.6m at
end-June 2022 from US$31.7m at end-December 2021. This increase was primarily
due to increasing new business and the timing of invoicing milestones on
specific projects.
Between end-December 2021 and end-June 2022 our trade and other payables
decreased from US$5.8m to US$4.0m. Our deferred revenue liability, where we
have invoiced or received money for products or services where revenue
recognition conditions are not met, increased to US$14.4m at end-June 2022
from US$12.7m at end-December 2021, as a result of invoice milestones becoming
due before projects have sufficiently progressed to recognise an equivalent
amount as revenue.
FSAs, which represent current liabilities, 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 can be used as credit against future deliverables. We have
FSAs with some customers with whom we work on multiple projects and who prefer
regular periodic billing rather than milestone-based billing. The revenue
recognition conditions which enable us to recognise these billings as revenue
have not yet been met. The balance sheet liability against FSAs increased
from US$6.8m at end-December 2021 to US$12.9m at end-June 2022.
The balance of accrued revenue less deferred revenue and FSAs increased
slightly to US$14.3m in H1 2022 from US$12.2m at end-December 2021.
Our pre-tax operating cashflow during the period was US$32.2m, an increase of
578% compared to a restated amount of US$4.7m in H1 2021. In H1 2022, we had
an increase in working capital of US$6.0m. Trade receivables increased by
US$7.9m accrued revenues increased by US$9.9m, trade payables increased by
US$3.9m and deferred revenue and FSAs increased by US$7.8m. This compared to a
restated amount of US$0.1m decrease in working capital in H1 2021. Our
income tax paid increased substantially from US$3.1m in H1 2021 to US$13.4m in
H1 2022.
Our capital expenditure on property and equipment during H1 2022 totalled
US$2.4m (H1 2021: US$0.6m) as a result of significant upgrades and expansions
to our IT infrastructure, purchases of test equipment as well as leasehold
improvements to our new office in Silicon Valley.
During H1 2022, we did not make any further equity investment in WiseWave.
Principal Risks and Uncertainties
The Group faces a number of risks and uncertainties that may have an impact on
our operations and performance. These risks and uncertainties are regularly
assessed by the Directors. The principal risks and uncertainties affecting the
Group in respect of the second half of the year have not changed materially
from those set out on pages 51 to 53 of the Annual Report dated 13 May 2021.
In summary, the principal risks and uncertainties are as follows
Risk Description
Managing our growth We have a limited operating history and are growing rapidly, both organically
and through acquisitions. If we do not manage our growth successfully, fail to
execute on our strategy, or fail to implement or maintain governance and
control measures, our business may be adversely impacted. We have rapidly
expanded our headcount and intend to maintain a rapid pace of hiring. We also
intend to continue to grow through acquisitions.
Competition and failure to maintain our technology leadership We seek to maintain our competitive advantage by being first to market with
new IP as data speeds increase and manufacturing sizes decrease. If these
industry transitions do not materialise
or are slower than anticipated, our competitors may be able to introduce
competing IP which may diminish our competitive advantage and selling prices.
Our ability to maintain our technology leadership is further dependent on our
ability to attract R&D and engineering talent.
Customer Dependence The cost and complexity of developing semiconductors targeted by our IP limits
the number of our potential addressable customers. In any reporting period, a
substantial part of our revenues may be attributable to a small number of
customers.
Customer Demand Demand for our IP is dependent on the continued global growth in generation,
storage and consumption of data across our target markets as well as the
increasing cost and complexity
of designing and manufacturing semiconductors. We may be impacted by our
customers' demand sensitivity to broader economic and social conditions. Our
potential customers may seek to develop competitive IP internally or acquire
IP or semiconductors from our competitors.
Risks associated with WiseWave WiseWave is core to our strategy to monetise our IP in China and we are a
significant minority shareholder. We may be limited in our ability to
influence strategy, operational, legal, commercial or financial matters. The
Group and WiseWave may also face regulatory risk in terms of transfer of
technology into China. There is a risk that the bookings from WiseWave do not
translate into revenues and our equity investment diminishes in value.
WiseWave is a new venture and if it does not effectively execute on its
business plan, we may be negatively impacted.
Dependence on Licensing revenue Our financial performance is highly dependent on licensing revenues and we do
not anticipate a material contribution from royalty revenues for some years.
If our customers delay or cancel their development projects, fail to take
their products to production or those products are not successful, our royalty
revenues may be delayed, diminished or not materialise.
Reliance on Key Personnel and ability to attract talent We rely on the senior management team and our business may be negatively
impacted if we cannot retain and motivate our key employees. Our ability to
grow the business is also dependent on attracting talent, particularly in
R&D and engineering, and if we are unable to do so, our business may be
negatively impacted.
External Environment and Events Semiconductors are becoming increasingly important as countries and regions
seek to guarantee supply and build domestic supply chains, as well as restrict
outside access to their domestic technologies. Our business could be impacted
by the actions of governments, political events or instability, or changes in
public policy in the countries in which we operate. The current conflict in
Ukraine potentially has wide-ranging impacts, including global economic
instability, increased geopolitical tensions and disruption to supply chains.
IP Protection and Infringement We protect our IP through trade secrets, contractual provisions,
confidentiality agreements, licences and other methods. A failure to maintain
and enforce our IP could impair our competitiveness and adversely impact our
business. If other companies assert their IP rights against us, we may incur
significant costs and divert management and technical resources in defending
those claims. If we are unsuccessful in defending those claims, or we are
obliged to indemnify our customers or partners in any such claims, it could
adversely impact our business.
Reliance on third-party manufacturing foundries We rely on third-party semiconductor foundries, both as customers and as
manufacturing partners to our customers. If foundries delay the introduction
of new process nodes or customers choose not to develop silicon on those
process nodes, our ability to license new IP and our selling prices may be
adversely impacted. We are not currently reliant on the foundries' capacity
for high volume manufacturing for our revenues but may become more reliant as
royalty revenues become more material to us and as we seek to develop and sell
chiplet silicon devices.
Reliance on complex IT systems We rely heavily on IT systems to support our business operations. The vast
majority of our design tools, software and IT system components are
off-the-shelf solutions and our business would be disrupted if these
components became unavailable. If our IT systems were subject to disruption,
for example, through malfunction or security breaches, we may be prevented
from developing our IP and fulfilling our contracts with our customers.
Directors Responsibility Statement
The Directors confirm that, to the best of their knowledge:
· This condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting, as adopted for the use in
the UK, and gives a true and fair view of the assets, liabilities, financial
position and profit of the Company; and
· This Half-Year Report includes a fair review of the information
required by:
o DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
o DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months of
the current financial year and that have materially affected the financial
position or performance of the Company during that period.
Details of all current Directors of Alphawave IP Group plc are maintained on
www.awaveip.com (http://www.awaveip.com) .
By order of the Board
Tony Pialis
President and Chief Executive Officer
21 September 2022
Unaudited condensed consolidated statement of comprehensive income
Six months ended 30 June 2022
Six months *Restated six months
ended 30 June 2022 ended 30 June 2021
Note US$'000 US$'000
Revenue 5 57,107 27,589
Cost of sales (1,750) (1,336)
Gross profit 55,357 26,253
R&D/engineering (25,152) (10,749)
Sales & marketing (1,442) (672)
General & administration (8,407) (2,490)
Other items 9,542 (11,034)
Operating profit 29,898 1,308
'Other items' charged in arriving at operating profit:
Non-recurring IPO costs* 10 - (7,935)
Non-recurring M&A-related costs 10 (2,537) -
Share-based payment 18 (7,192) (1,958)
Exchange gain/(loss) 11 19,271 (1,141)
Other items 9,542 (11,034)
Finance income 9 362 102
Finance expense 9 (160) (159)
Share of post-tax loss of equity-accounted joint ventures 12 (7,868) -
Profit before tax 22,232 1,251
Income tax expense 13 (5,980) (1,148)
Profit after tax 16,252 103
Other comprehensive income
Exchange differences on the reorganisation - (11,106)
Exchange (losses) arising on translation of foreign operations (50,518) -
Other comprehensive income for the period, net of tax (50,518) (11,106)
Total comprehensive loss for the period (34,266) (11,003)
* Restated operating expenses to move US2,619k from share premium to
'non-recurring IPO costs' within operating expenses. See note 23 for further
details
Profit per ordinary share attributable to the shareholders (expressed in cents
per ordinary share and restated for H1 2021):
Basic earnings per share 14 2.43 0.02
Diluted earnings per share 14 2.32 0.02
Condensed consolidated statement of financial position
As at 30 June 2022
Unaudited as at Audited year ended
30 June 2022 31 December 2021
Note US$'000 US$'000
Assets
Non-current assets
Goodwill 1,451 -
Property and equipment 3,071 1,626
Intangible assets 15 9,703 1,167
Right-of-use assets 6,913 7,672
Investments in equity-accounted associates 1,553 9,421
Total non-current assets 22,691 19,886
Current assets
Trade and other receivables 20,984 13,103
Accrued revenue 5 41,605 31,719
Taxes receivable 3,414 2,605
Cash and cash equivalents 16 451,833 500,964
Total current assets 517,836 548,391
Total assets 540,527 568,277
Liabilities
Lease liabilities 1,999 2,160
Trade and other payables 4,004 5,805
Income tax payable 96 6,970
Deferred revenue 5 14,378 12,661
Flexible spending account 5 12,908 6,819
Total current liabilities 33,385 34,415
Non-current liabilities
Deferred income taxes 600 422
Lease liabilities 5,195 5,668
Total non-current liabilities 5,795 6,090
Total liabilities 39,180 40,505
Net assets 501,347 527,772
Share capital and reserves
Share capital 17 9,596 9,399
Share premium account 452 -
Share-based payment reserve 18 11,969 4,777
Merger reserve (793,216) (793,216)
Currency translation reserve (72,236) (21,718)
Retained earnings 1,344,782 1,328,530
Total equity 501,347 527,772
Unaudited condensed consolidated statement of changes in equity
Six months ended 30 June 2022
Note Ordinary share capital* Share premium account Share-based payment reserve Merger reserve Total equity
Currency translation reserve
Retained earnings
US$'000
Balance at 1 January 2022 9,399 - - 4,777 (793,216) (21,718) 1,328,530 527,772
Profit for the period - - - - - - 16,252 16,252
Other comprehensive income - - - - - (50,518) - (50,518)
Transactions relating to share issuance
Issue of shares - - - - - - - -
Reorganisation accounting - - - - - - - -
exchange differences - - - - - - - -
Recognition of share-based payments 18 - - - 7,192 - - - 7,192
Exercise of share options 197 - 452 - - - 649
Balance at 30 June 2022 9,596 - 452 11,969 (793,216) (72,236) 1,344,782 501,347
(Unaudited)
*Restated six months ended 30 June 2021
US$'000 Note Ordinary share capital Share premium account Share-based payment reserve Merger reserve Currency translation reserve Retained earnings Total equity
Pref. share capital
Balance at 1 January 2021 474,447* - - 331 (472,566) 15,579 17,791
Adjusted for effect of reorganisation accounting to opening position - - - 472,566 - -
(474,447) (1,881)
Profit for the period (restated**) - - - - - - 103 103
Other comprehensive expense - - - - - - - -
Total comprehensive income/(expense) for the year (restated**) - - - - - - 103 103
Transactions relating to IPO
Issue of shares, primary 17 124,147 71 384,856 - - - - 509,074
Issue of shares, secondary 17 796,958 - - - - - 796,958
Issue of shares, other 17 313 - 969 - - - - 1,282
Exercise of options 17 4,064 - - - - - - 4,064
Reorganisation accounting - - - - (797,279) - - (797,279)
Effect of exercise price below nominal value (restated**) 17 14,381 - (14,381) - - - - -
Net costs on issuance of shares relating to IPO (restated***) - - 1,929 - - - - 1,929
Exchange differences on the reorganisation 17 - - - - - (11,106) - (11,106)
Recognition of share-based payments 18 - - - 1,958 - - - 1,958
Reduction in SBP reserve following exercise - - - (637) - - - (637)
Balance at 30 June 2021 939,863 71 373,373 1,652 (797,279) (11,106) 15,682 522,256
* Share capital adjusted as if the reorganisation happened
1 January 2020 to give comparative figures and in line with the note in "Basis
of Preparation"
** The increase of $14,3181k to ordinary share capital was
previously stated as a reduction to the merger reserve but has been restated
to a reduction in share premium as described in Note 23.
*** Restated operating expenses to move US$2,619k from equity to
'non-recurring IPO costs' within operating expenses. This affects share
premium, retained earnings and currency translation reserve. Please refer to
note 23 for further information on this adjustment
Unaudited condensed consolidated statement of cash flows
For the period ended 30 June 2022
Six months ended *Restated six months ended 30 June 2021
30 June 2022
Note US$'000 US$'000
Cash flows from operating activities
Cash generated from operating activities before tax (a) 32,216 4,749
Income tax paid (13,440) (3,133)
Net cash generated from operating activities 18,776 1,616
Cash flows from investing activities
Purchase of property and equipment (2,448) (557)
Purchase of intangible asset (904) (541)
Payment for Precise ITC acquisition (14,136) -
Net cash used in investing activities (17,488) (1,098)
Cash flows from financing activities
Issuance of common shares 17 509,003
IPO share issuance costs** 17 (16,942)
Exercise of options 17 727 4,064
Proceeds from IPO stabilisation 17 22,238
Decrease in bank indebtedness (38)
Increase in long-term debt -
Interest received 362 -
Interest paid (52) (144)
Collection of notes receivable 428
Repayment of principal under lease liabilities (1,336) (951)
Net cash generated from financing activities (299) 517,658
Net (decrease)/increase in cash and cash equivalents 989 518,176
Cash and cash equivalents at start of year 500,964 14,039
Effects of foreign exchange on cash and cash equivalents (50,120) (13,078)
Cash and cash equivalents at end of period 16 451,833 519,137
* Restated changes in working capital within operating activities at
H1 2021, increasing the increase in trade and other payables by US$1,000k.
Please refer to note 23 for further information on this adjustment
** Restated changes also decreased the IPO share issuance costs within
financing activities by US$3,500k. Please refer to note 23 for further
information on this adjustment
Note to the condensed consolidated statement of cashflows
a) Cash used in operations
Six months ended *Restated six months ended 30 June 2021
30 June 2022
Note US$'000 US$'000
Cash flows from operating activities
Net income 16,252 103
Items not affecting cash:
Income tax expense 5,793 1,148
Deferred income taxes 187 -
Share of loss in joint venture 7,868 -
Amortisation of acquired intangibles 777 -
Depreciation of property and equipment 602 144
Depreciation of right-of-use asset 1,459 1,134
Share-based payment 18 7,192 1,958
Lease interest 108 144
Foreign exchange (gain) (1,999) -
38,239 4,631
Changes in working capital:
(Increase)/decrease in trade and other receivables (7,879) 364
(Increase) in accrued revenue 5 (9,886) (8,656)
(Decrease)/increase in trade and other payables 3,936 3,823
Increase in deferred revenue & flexible spending account 5 7,806 4,587
(6,023) 118
Cash generated from operating activities before tax 32,216 4,749
* Restated changes in working capital at H1 2021, increasing the increase in
trade and other payables by US$1,000k
Notes to the interim statements
Six months ended 30 June 2022
1. General information
These consolidated interim financial statements represent the consolidated
interim financial statements of Alphawave IP Group plc ('the Company' or
'Alphawave IP') and its subsidiaries (together 'the Group').
This report for the six months ended 30 June 2022 is the second half-yearly
financial report presented by the Group.
The principal activities of the Company and its subsidiaries are described on
pages 1 to 7.
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 65 Gresham Street, London, EC2V 7NQ.
2. Basis of preparation
The consolidated interim financial statements of the Group have been prepared
in accordance with UK-adopted international accounting standards (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
2021. 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 2021 and for
the six months ended 30 June 2021.
These condensed consolidated interim 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 2021 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.
The Company was incorporated on 9 December 2020 and admitted to listing on the
London Stock Exchange on 18 May 2021. On 14 May 2021, a reorganisation of
Alphawave IP's corporate structure was completed through which the Company
became the sole owner of Alphawave IP Inc. Thereafter, pursuant to an
agreement between the Company, Alphawave IP Inc. and each of the members of
Alphawave IP Inc., the issued and outstanding Alphawave IP Inc. Common Shares
were exchanged for 20 Ordinary shares of the Company with a nominal value of
£1.
This has been accounted for as a common control transaction under IFRS 3.B1
(see note 15). Therefore, the condensed consolidated financial statements for
the period ended 30 June 2021 comprises an aggregation of financial
information of the Company and the consolidated financial information of
Alphawave IP Inc.
These condensed financial statements were authorised for issue by the
Company's Board of Directors on 20 September 2022.
Going concern
As of 30 June 2022, the Group had cash and cash equivalents of US$451.8m.
Considering the Group's financial position as of 30 June 2022 and its
principal risks and opportunities, a going concern analysis has been prepared
for at least the twelve-month period from the date of signing the consolidated
interim financial statements ("the going concern period") utilising realistic
scenarios and applying a severe but plausible downside scenario. Even under
the downside scenario, the analysis demonstrates the Group can continue to
maintain sufficient liquidity headroom and continue to comply with all
financial obligations. Therefore, the Directors believe the Group is
adequately resourced to continue in operational existence for at least the
twelve-month period from the date of signing the consolidated interim
financial statements. Accordingly, the Directors considered it appropriate to
adopt the going concern basis of accounting 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 makers (CODM),
Tony Pialis (CEO) and Daniel Aharoni (CFO), who are deemed best placed to
evaluate the entity's operating results to assess performance and to allocate
resources.
Functional currency
For presentational purposes these consolidated interim financial statements
are presented in US dollars. This is consistent with the last annual
consolidated financial information as of 31 December 2021 and for the six
months ended 30 June 2021. Each of the three trading entities in the Group
have different functional currencies, with Alphawave IP Inc. being accounted
for in CAD, Alphawave IP Corp. in USD and the Company in GBP.
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 information as of 31 December 2021 and for
the six months ended 30 June 2021. New standards effective on or after 1
January 2022 have been reviewed and do not have a material effect on the
Group's financial statements.
Revenue recognition
The accounting policy for revenue recognition that has been used in the
preparation of these consolidated interim financial statements is unchanged
from the policy applied in the last annual consolidated financial statements,
prepared for and as at the year ended 31 December 2021.
Share-based payments
The Group operates an equity-settled, share-based payment compensation plan,
under which the entity receives services from employees as consideration for
equity instruments, options and RSUs, of the Company. The fair value of the
employee service received in exchange for the grant of the options is
recognised as an expense over the vesting period.
Where options are exercised, the Company issues new shares. The proceeds
received net of any directly attributable transaction costs are credited to
share capital and share premium when the options are exercised.
If an option is cancelled this is accounted for as an acceleration of the
vesting period and any amount unrecognised is recognised immediately.
M&A-related costs and other non-recurring items
The Group incurred costs from certain M&A and other non-recurring items,
e.g. acquisition costs. Management has disclosed these separately to enable a
greater understanding of the underlying results of the trading business so
that the underlying run rate of the business can be established and compared
on a like-for-like basis each year.
3. Significant accounting estimates and judgements
The preparation of consolidated interim financial statements in conformity
with IAS 34 requires management to make estimates and assumptions that affect
the reported amount of assets and liabilities, disclosure of contingent assets
and liabilities at the date of the consolidated interim financial statements
and the reported amounts of revenues and expenses during the period. Such
estimates are periodically reviewed and any adjustments necessary are reported
in earnings in the period in which they become known. Actual results could
differ from these estimates.
The areas which require management to make significant estimates in
determining carrying values include, but are not limited to:
(a) Revenue recognition
In the determination of allocation of revenues to work-in-process and deferred
revenues, management must assess the stage of completion of custom IP licence
contracts based on hours completed compared to total estimated hours to
complete. Such estimations are inherently uncertain due to unforeseen delays
in technological research. Refer to note 5 for further information regarding
the sensitivity in the estimation uncertainty.
As disclosed in the annual consolidated financial statements for the year
ended 31 December 2021, an amount of revenue is typically held back for
recognition at the latter stages of project completion. This amount is
typically a fixed percentage dependent on the categorisation of the IP licence
agreement and is typically held back until the earlier of 'customer silicon
acceptance' (customer silicon meets specifications) or a time specified in the
contract. In the period ending 30 June 2022, management has started to review
contracts with revenue held back on a case-by-case basis and reassessed the
amounts held back to confirm they are proportionate to the likelihood or risk
of the customer requiring additional post-delivery work from the Group to
ensure customer silicon acceptance. This resulted in US$2.5m additional
revenue being recognised in H1 2022.
There have been no changes in the estimates and judgements used in relation to
the recognition of revenue from sales to our joint venture WiseWave from those
disclosed in the annual consolidated financial statements for the year ended
31 December 2021.
(b) Share-based payments
Judgement is used in determining the fair value of the share options at the
grant date, including determining comparable listed companies against which
the future volatility of the share price is compared and expected dividend
yield. Such judgements are inherently uncertain and changes in these affect
the fair value determination. See note 16.
(c) Research and development costs
Judgement is exercised in determining whether costs incurred should be
capitalised in line with IAS 38. The judgement includes whether it is
technically feasible to complete the relevant assets on which costs are
incurred so that it will be available for use or sale. See note 8.
4. Alternative Performance Measures (APMs)
The Group uses certain financial measures that are not defined or recognised
under IFRS. The Directors believe that these non-GAAP measures supplement GAAP
measures to help in providing a further understanding of the results of the
Group and are used as key performance indicators within the business to aid in
evaluating its current business performance. The measures can also aid in
comparability with other companies who use similar metrics. However, as the
measures are not defined by IFRS, other companies may calculate them
differently or may use such measures for different purposes to the Group.
Bookings
Bookings excluding royalties comprise licence fees, flexible spending
accounts, non-recurring engineering and support from contracted and typically
non-cancellable orders that will ultimately result in recognised revenue.
Bookings including royalties include Group estimates of potential future
royalties which may result in recognised revenues.
Bookings are a measure of operating performance used by management to assess
order intake in each period, whether we are successfully converting our
pipeline into committed orders and therefore how effective we have been in
executing our strategy. Bookings are a key performance indicator used to
assess the Group's performance for internal reporting purposes.
Earnings before interest, taxation, depreciation and amortisation (EBITDA)
EBITDA provides a supplemental measure of earnings that facilitates review of
operating performance on a period-to-period basis by excluding items that are
not indicative of the Group's underlying operating performance and is a key
profit measure used by the Board to assess the underlying financial
performance of the Group. EBITDA is stated before the following items and for
the following reasons:
· interest is excluded from the calculation of EBITDA because the
expense bears no relation to the Group's underlying operational performance;
· charges for the depreciation and amortisation of property and
equipment, acquired intangibles and right-of-use assets are excluded from the
calculation of EBITDA, as removing these non-monetary items allows management
to better project the Group's long-term profitability; and
· tax is excluded from the calculation of EBITDA because the expense
bears no relation to the Group's underlying operational performance.
Operating profit to EBITDA reconciliation
(US$'000) Six months Restated six months
ended 30 June 2022 ended 30 June 2021
Operating profit 29,898 1,308
Add backs:
Depreciation and amortisation* 2,839 1,278
EBITDA 32,737 2,586
* US$2,839k of depreciation in H1 2022 split by function is US$2,316k
R&D/engineering, US$115k sales & marketing and US$407k general &
administration
Two further measures are adjusted EBITDA and adjusted profit after tax,
defined in the tables below. These further allow for a more accurate
assessment of the underlying business performance by making exclusions of
items which do not form part of the Group's normal underlying operations.
EBITDA to adjusted EBITDA reconciliation
(US$'000) Six months Restated six months
ended 30 June 2022 ended 30 June 2021
EBITDA 32,737 2,586
Add backs:
Non-recurring IPO costs* - 7,935
Non-recurring M&A-related costs 2,537 -
Share-based payment 7,192 1,958
Exchange (gain)/loss (19,271) 1,141
CPP legal costs** - 299
Adjusted EBITDA 23,195 13,919
* Restated operating expenses to move US$2,619k from share premium to
'non-recurring IPO costs' within operating expenses. See note 23 for further
details
** One-off legal costs incurred in H1 2021 from the formation of WiseWave.
Whilst still included in operating expenses and not included in non-recurring
IPO costs, this expense was deemed one-off and added back to adjusted EBITDA.
Profit after tax to adjusted profit after tax reconciliation
(US$'000) Six months Restated six months
ended 30 June 2022 ended 30 June 2021
Profit after tax 16,252 103
Add backs:
Non-recurring IPO costs - 7,935
Non-recurring M&A-related costs 2,537 -
Share-based payment 7,192 1,958
Exchange (gain)/loss (19,271) 1,141
CPP legal costs - 299
Adjusted profit after tax 6,710 11,436
Adjusted profit per ordinary share attributable to the shareholders (expressed
in cents per ordinary share)
Note Six months Six months ended
ended 30 June 2022 30 June 2021
Adjusted basic earnings per share 14 1.00 1.95
Adjusted diluted earnings per share 14 0.96 1.68
5 Revenue
Revenue in the unaudited condensed consolidated statement of income and
comprehensive income is analysed as follows:
(US$'000) Six months ended 30 June 2022 Six months ended 30 June 2021
Revenue by type:
Products 52,464 25,559
Support 4,643 2,030
57,107 27,589
(US$'0000) Six months ended 30 June 2022 Six months ended 30 June 2021
Revenue by region:
North America 23,768 18,499
China 21,807 4,766
APAC (ex-China) 7,257 4,324
EMEA 4,275 -
57,107 27,589
Sensitivity analysis
Revenue recognition for product revenue is determined using the input method
on a percentage of completion basis. The percentage of completion is
calculated as a function of total hours estimated to fulfil the contract. The
table below illustrates the sensitivity the percentage of completion estimate
has on revenue recognition:
Revenue stream As reported +10% -10%
Products 52,464 57,710 47,218
Please see the 'Financial Highlights' section on page 8 for further
information on revenue, including the significant increase in revenue in H1
2022 compared to H1 2021.
Below is a reconciliation of the movement in accrued revenue during the
period:
(US$'000) Six months ended 30 June 2022
At 1 January 2022 31,719
Revenue accrued in the period 32,744
Accrued revenue invoiced in the period (22,495)
Foreign exchange difference (363)
At 30 June 2022 41,605
Below is a reconciliation of the movement in deferred revenue during the
period:
(US$'000) Six months ended 30 June 2022
At 1 January 2022 12,661
Precise ITC opening deferred revenue as at 1 January 2022 1,120
Revenue recognised in the period (13,854)
Revenue deferred in the period 14,765
Foreign exchange difference (314)
At 30 June 2022 14,378
This deferred revenue balance is all expected to be satisfied within 12 months
of the balance sheet date.
The flexible spending account has increased to US$12.9m at the end of June
2022 from US$6.8m at the end of December 2021. These are contracts with
customers who have committed to regular periodic payments to us over the term
of the contract. These payments are not in respect of specific licences or
other deliverables, but they can be used as credit against future
deliverables.
6 Employee costs excluding Directors and key management personnel
(US$'000) Six months ended 30 June 2022 Restated six months ended 30 June 2021
Wages, salaries and benefits 14,275 6,256
Defined contribution pension costs 483 165
Social security costs 225 78
Share-based payments 7,192 1,560
Investment tax credit - (909)
Government grants - (55)
Total employee costs 22,175 7,095*
*The prior period total is restated as US$7,095k and was previously shown as
US$7,493k
The average number of employees during the period, analysed by category, was
as follows:
Six months ended 30 June 2022 Six months ended 30 June 2021
R&D/engineering 176 91
General & administration 19 6
Sales & marketing 7 4
Total employees (average) 202 101
The number of employees at the end of each period, analysed by category, was
as follows:
Six months ended 30 June 2022 Six months ended 30 June 2021
R&D/engineering 220 117
General & administration 22 10
Sales & marketing 9 5
Total employees (end of period) 251 132
7 Directors and key management personnel compensation
(US$'000) Six months ended 30 June 2022 Six months ended 30 June 2021
Directors and key management emoluments 1,875 712
Share-based payments - 398
Pension costs 3 18
Total Directors and key management remuneration 1,878 1,128
8 Research and development/engineering
The Group incurred research and development costs that have been expensed in
the unaudited condensed consolidated statement of comprehensive income. 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$'000) Six months ended 30 June 2022 Six months ended 30 June 2021
Research and development 25,152 10,749
9 Finance income and expense
(US$'000) Six months ended 30 June 2022 Six months ended 30 June 2021
Finance income
Interest income from customer - 102
Interest income from bank 362 -
362 102
Finance expense
Interest expense
- bank charges - 14
Lease interest 160 145
160 159
Net finance income/(expense) 202 (57)
10 Non-recurring IPO costs and non-recurring M&A-related costs
In accordance with the Group's policy for non-recurring items, the following
charges were included in this category for the period:
One-off costs relating to the Group's acquisition of Precise ITC on 1 January
2022, as well as one-off costs relating to the Group's acquisition of the
OpenFive business, which closed on 31 August 2022. The majority of these costs
relate to legal and financial due diligence expenses for the acquisitions.
For the prior period, one-off costs relating to Project Aurora, the project
name for the Group's Initial Public Offering on the London Stock Exchange,
that were not able to be offset against share premium under IAS 32, totalled
US$7.9m. This is a restated figure as at 30(th) June 2021, which is further
detailed at note 23. Over half of these costs related to LSE admission fees
and legal costs associated with the IPO. Per IAS 32, costs that relate to the
stock market listing or are otherwise not incremental and not directly
attributable to issuing new shares should be recorded in the statement of
comprehensive income (https://annualreporting.info/ifrsdefinitions/income/) .
11 Exchange gain/(loss)
The exchange gain recorded in the H1 2022 condensed consolidated statement of
comprehensive income of US$19.3m (H1 2021: exchange loss of US$1.1m) is due to
the weakening of GBP against USD. The Company's functional currency is GBP and
it has significant cash and cash equivalents balances denominated in USD.
Large exchange gains have resulted from translating USD to GBP each month at
weakening exchange rates.
12 Share of post-tax loss of equity-accounted joint ventures
(US$'000) Six months ended 30 June 2022
Share of loss 1,566
Elimination of gains from sales to the joint venture 6,302
7,868
The joint venture did not exist at 30 June 2021 so there are no comparatives
in the table above.
13 Income tax expense
During the six months ended 30 June 2022 and 2021, the Group recorded a
consolidated tax expense of US$6.0m and US$1.1m, respectively, which
represented effective tax rates of 26.9% and 29.7%, respectively.
Income tax expense has been recognised based on management's estimate of the
effective rate for the financial period, being 26.9%, multiplied by the
reported profit before tax of the interim reporting period. The effective tax
rate used in the period is an approximation of the effective rate expected in
Canada, which is the jurisdiction of the Group's principal operations, as
opposed to applying a separate annual average income tax rate to each tax
jurisdiction and category of income in the respective tax jurisdiction.
14 Earnings per share
Basic earnings per share is calculated by dividing net income from operations
by the weighted average number of common shares outstanding during the period.
Diluted earnings per share is calculated by adjusting the weighted average
number of common shares outstanding during the period to assume conversion of
all potential dilutive share options and restricted share units to common
shares.
(US$'000 except shares) Six months Restated six months ended 30 June 2021
ended 30 June 2022
Numerator:
Net income from operations 16,252 103
Denominator:
Weighted average number of common shares outstanding for basic EPS 668,415,191 585,328,447
Adjustment for share options 32,904,025 93,760,220
Weighted average number of common shares outstanding for diluted EPS 701,319,217 679,088,667
Basic EPS (US$ cents) 2.43 0.02
Diluted EPS (US$ cents) 2.32 0.02
15 Intangible assets
(US$'000) Six months
ended 30 June 2022
At 1 January 2022 1,167
Intangibles from Precise ITC acquisition 7,667
Additions 1,636
Amortisation of Precise ITC intangibles (767)
At 30 June 2022 9,703
The identifiable intangible asset from the acquisition of Precise ITC was
provisionally valued at US$7.8m, against which amortisation of US$0.8m was
recorded in H1 2022. Please refer to note 20 for further information.
The US$1.6m of additions is a licence to use IP. This IP is being developed by
a 3rd party vendor and amounts paid to date represent instalments to initiate
the development which is carried at cost. No amortisation is recorded as the
intangible asset is not yet available for use.
16 Cash and cash equivalents
(US$'000) As at 30 June 2022 As at 31 December 2021
Cash at bank and in hand 451,833 500,964
Please see the 'Financial Highlights' section on page 10 for further
information on cash, including the decrease in cash as at 30 June 2022
compared to 31 December 2021.
17 Share capital
On 14 May 2021, the Company acquired the entire issued share capital of
Alphawave IP Inc. in return for 576,908,920 Ordinary Shares issued by the
Company with a nominal value of £1. This was based on 20 shares in the
Company for each share in Alphawave IP Inc.
In addition, the Company issued 87,835,796 shares with a nominal value of £1
as part of its listing on the London Stock Exchange at a price of US$5.79
(£4.10), resulting in gross proceeds to the Company of US$509.0m (£360.1m)
accounted for as share capital of US$124.1m (£87.8m) and share premium of
US$384.9m (£272.3m).
Net proceeds after bank syndication fees were US$492.1m (£347.1m) with
further costs relating to the issuance of shares resulting in restated total
costs of US$20.3m (£14.4m), of which US$3.5m was unpaid as at 30 June 2021,
chargeable to the share premium account. However, the Company received
US$22.2m (£15.7m) as proceeds of a stock stabilisation programme which were
set off against these IPO costs, resulting in the net proceeds of US$0.8m
being posted to the share premium account.
As part of the transaction, all options held over Alphawave IP Inc. stock
became, by way of an amendment to option agreements, options in Company
shares, on the basis of 20 options in the Company for 1 option in Alphawave IP
Inc., each with an exercise price of 1/20(th) of the original exercise price
at the grant date.
On the IPO date, 13,049,861 options were exercised into ordinary shares in the
Company. The options exercised all had prices below the £1 nominal value as a
result of them maintaining their original exercise prices when they were
granted as options in the shares of Alphawave IP Inc. This resulted in
exercise proceeds of US$4.1m (£2.8m) with the shortfall in Share Capital of
US$14.4m (£10.2M), being transferred from the merger reserve to the Share
Capital account.
The reorganisation of the Company's corporate structure described above has
been accounted for as a common control transaction and has been given effect
from 1 January 2020. This has resulted in the opening share capital position
being adjusted as if the reorganisation had happened on that date. In
addition, a merger reserve has been established which reflects the difference
between the share capital issued to acquire the shares in Alphawave IP Inc.
and the share capital of Alphawave IP Inc. acquired at the transaction date of
14 May 2021.
The Currency Translation reserve arises out of the difference between the Net
Asset position as at 30 June 2021 being translated into our presentational
currency of USD at that date and the Equity balances being translated into our
presentational currency at the date of the transaction.
Shares US$'000
Balance as at 31 December 2020 in Alphawave IP Inc. 27,927,252
Exercise of options pre-IPO 265,701
Sub-total 28,192,953
20 for 1 share exchange* 563,859,060 796,958
Shares issued to option holders on exercise 13,049,861 18,445
576,908,920 815,403
Primary share issue at IPO 87,835,796 124,147
Further issue of shares 221,217 313
664,965,934 939,863
Capital reduction - (930,464)
Balance as at 31 December 2021 664,965,934 9,399
Further issue of shares 16,456,177 197
Balance as at 30 June 2022 681,422,111 9,596
* Reflects the 20 ordinary shares in the Company issued with a nominal value
of £1 in exchange for 1 share in Alphawave IP Inc., immediately prior to the
IPO on 14 May 2021 and as part of the reorganisation. See prospectus for more
details of the IPO and Reorganisation.
18 Share-based payments
As at 30 June 2022 As at 30 June 2021
Share options Weighted average exercise price (US$) Shares options Weighted average exercise price (US$)
Outstanding at the beginning of the period 95,273,220 0.280 4,557,955 2.514
Exercised during the period (16,456,177) 0.050 (918,194) 7.294
Forfeited during the period (1,237,812) 1.217 - -
Granted during the period 6,906,285 2.149 1,048,250 28.230
Share split during the period* - - 89,072,209 -
Outstanding at the end of the period 84,485,516 0.507 93,760,220 0.371
Exercisable at the end of the period 44,088,144 0.537 48,421,600 0.111
* 30 June 2021 number of shares has been adjusted for the 20 for 1 split that
happened immediately prior to the IPO in May 2021.
Each share option in Alphawave IP Inc. became 20 share options in the Company
by way of an amendment to the option agreements. Conditions largely remained
the same with twenty five per cent of options granted vesting on the first
anniversary date of issuance and the remaining options vesting equally over
the following 36 months. Options expire within five years of their issue under
the terms of the option agreements.
The following assumptions were used in the Black-Scholes-Merton model used to
determine the fair value of the share-based compensation expense relating to
share options issued in the period:
6 months ended 30 June 2022 6 months ended 30 June 2021
Risk-free interest rate 2.82% 0.91%
Expected volatility 29.72% 29.72%
Expected dividend yield - -
Expected life of share option 4 5
The Group has determined the forfeiture rate to be nil and volatility was
determined in reference to listed entities similar to the Group.
Share-based payment split by function
6 months to June 2022
(US$'000) R&D/engineering Sales & marketing General & administration Total
Share-based payment charge 5,869 291 1,032 7,192
6 months to June 2021
(US$'000) R&D/engineering Sales & marketing General & administration Total
Share-based payment charge 1,557 115 286 1,958
19 Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note. Transactions with Directors and key management personnel of the Group
are disclosed in note 7. In addition, the Group entered into the following
transactions and had the following outstanding balances with related parties
who are not consolidated in these interim financial statements:
As at and for the period ended
(US$'000) 30 June 2022 31 December 2021 * Restated 30 June 2021
Transactions:
Revenue from a company on which a Director is the chairman of the 546 9,855 3,403
board(1&2)
Revenue from a company on which a Director is a board observer(3) - - 1,730
Revenue from VeriSilicon(4) 1,653 8,861 737
Revenue from WiseWave, a joint venture, where there is common directorship(4) 20,154 29,846 -
Costs capitalised as intangible assets from a company on which a Director is a (800) - -
director
21,553 48,562 5,870
Balances:
Accounts receivable from a company on which a Director is a board observer - 500 -
Accounts receivable from VeriSilicon(4) - 2,469 1,961
Accrued revenue for a company on which a Director is a board observer(3) - - 1,368
Accrued revenue for a company on which a Director is the chairman of the board 4,710 5,631 261
Accrued revenue from VeriSilicon(4) 2,323 423 941
Accrued revenue from WiseWave, a joint venture, where there is common 11,249 5,803 -
directorship(4)
Accrued liabilities with a company on which a Director is a director (600) - -
17,682 14,826 4,531
Deferred revenue from a company on which a Director is the chairman of the 49 727 356
board(1&2)
Deferred revenue from a company on which a Director is a board observer(3) - - 205
Deferred revenue from VeriSilicon(4) 392 593 38
Deferred revenue from WiseWave, a joint venture, where there is common 479 - -
directorship(4)
920 1,320 599
* Restated 30 June 2021 related party note to align reporting to our
annual report. See the final sentence in footnote 4.
1. US$949,000 of the revenue in the period ended 31 December 2021 and
US$677,000 of the deferred revenue balance as at 31 December 2021 is from
Achronix Semiconductor Corporation, where John Lofton Holt ceased to be
chairman of the board on 8 July 2021. Therefore, revenue and deferred revenue
from this customer has not been included in this note for H1 2022.
2. Companies on which a Director is the chairman of the board are FLC
Technology Group and DreamBig Semiconductor Inc.
3. The H1 2021 revenue of US$1,730,000, the accrued revenue balance of
US$1,368,000 as at 30 June 2021 and the deferred revenue balance of US$205,000
as at 30 June 2021 have been kept in this note for consistency purposes. The
Director who was a board observer ceased their interest in the customer in
March 2021.
4. All revenue from VeriSilicon and related balances are in respect of
transactions signed with VeriSilicon as reseller prior to the VeriSilicon
reseller agreement moving under WiseWave as master reseller effective from
November 2021. All revenue and associated balances in respect of transactions
signed with VeriSilicon since that date are now recognised through the
WiseWave joint venture line. The line item wording has changed to align this
with our 2021 annual report.
Sales to related parties are made at market prices and in the ordinary course
of business. Outstanding balances are unsecured and settlement occurs in cash.
Any estimated credit losses on amounts owed by related parties would not be
material and are therefore not disclosed. This assessment is undertaken at
each key reporting period through examining the financial position of the
related party and the market in which the related party operates.
In the interests of transparency, we have opted to disclose VeriSilicon as a
related party within this note. However, we have received advice that
VeriSilicon is not a related party as defined by IAS 24 or Listing Rule 11.
20 Business combinations
On 1 January 2022, the Group acquired 100% of Precise ITC ("Precise"). Precise
is an emerging leader in the Ethernet and Optical Transport Network (OTN)
communications connectivity IP space. The acquisition results in the addition
of a team of leading engineers focused on delivering a high-performance
Ethernet and OTN communications controller IP portfolio.
The total consideration stated in the share purchase agreement is US$19.5m.
This comprises initial cash consideration of US$8.5m and future key employee
remuneration of US$11.5m, less the estimated closing cash on acquisition of
US$0.7m.
All M&A-related costs relating to the acquisition of Precise were recorded
in the financial year ending 31 December 2021. Of the US$0.5m total amount of
'non-recurring M&A-related costs/professional costs' for the year ended 31
December 2021, US$0.3m related to the Precise acquisition.
The Group has a contingent liability of US$11.5m which represents remuneration
to the single shareholder of Precise, payable on the earlier of achievement of
certain revenue targets or completion of three years continuing employment,
assessed at the second and third anniversaries of closing.
The provisional fair values, assessed as part of the ongoing purchase price
allocation exercise, of the identifiable assets purchased and liabilities
assumed as at the date of acquisition are detailed below. The Black Scholes
Option Pricing Model has been used to determine the provisional fair value of
contingent consideration.
(US$'000)
Purchase consideration
Cash paid on closing 8,470
Fair value of contingent consideration 740
Fair value of purchase consideration 9,210
Net tangible assets
Working capital excluding deferred revenue 269
Fixed assets 52
Cash 803
Non-operating liabilities (70)
Deferred revenue (1,120)
Net tangible assets (66)
Identifiable intangible assets
Technology 7,800
Identifiable intangible assets 7,800
Goodwill
Assembled workforce 326
Purchase price unallocated 1,150
Goodwill 1,476
Total Consideration 9,210
The provisional working capital balance of US$0.3m is made up of US$0.4m
accounts receivable and US$0.1m of accounts payable and accrued liabilities.
There has been no fair value adjustment to working capital, which remains at
its net book value from 31 December 2021.
Provisionally, we don't expect any tax deduction in respect of goodwill.
From the date of acquisition to 30 June 2022, Precise contributed US$1.2m
revenue to the Group.
21 Subsidiaries of the Group as at 30 June 2022
Description and Country of Nature of Registered office address
proportion of share capital held directly or indirectly by Alphawave IP Group incorporation business
plc
or registration
Alphawave IP Inc. Ordinary 100% Canada Developing and licensing high performance connectivity intellectual property 70 University Avenue, Toronto, Ontario, M5J 2M4
for the semiconductor industry
Alphawave IP Corp. Ordinary 100% United States Sales and sale support to license intellectual property for the semiconductor 1730 N. First Street, Suite 650, San Jose, California, 95112, USA
industry
Alphawave IP (BVI) Ltd Ordinary 100% British Virgin Islands To facilitate IP licensing to WiseWave Technology Co., Ltd Trinity Chambers, PO Box 4301, Road Town, Tortola, British Virgin Islands
Alphawave Ordinary 100% Canada Holding company incorporated to facilitate the exchangeable share structure
Call. Inc.
Alphawave Exchange Inc. Ordinary and Exchangeable 100% Canada Holding company incorporated to facilitate the exchangeable share structure
Alphawave IP Limited Ordinary 100% China To facilitate the investment into WiseWave Technology Co., Ltd
Precise ITC Ordinary 100% Canada Developing and licensing high performance connectivity intellectual property 170 University Avenue,
for the semiconductor industry
10(th) Floor,
Toronto,
Ontario, M5H 3B3
AWIPINSURE Limited Ordinary 100% Barbados Captive insurance company 1st Floor, Limegrove Centre, Holetown, St. James, Barbados
22 Post balance sheet events
The Company has evaluated subsequent events after 30 June 2022, the date of
issuance of the condensed consolidated interim financial statements, and has
identified one recordable or disclosable event not otherwise reported in these
condensed consolidated financial statements or notes thereto, which is
disclosed below.
OpenFive acquisition
On 14 March 2022, the Group announced it had entered into a definitive
agreement to acquire the OpenFive business of SiFive. All regulatory
approvals for the transaction were received on 25 August 2022 and the Group
announced completion of the acquisition on 1 September 2022. The initial
cash consideration for the transaction was US$203.6m representing a purchase
price of US$210.0m less adjustments for estimated net working capital and
indebtedness at closing. Closing statements will be finalised in the 90-day
period following completion.
23 Prior year adjustments
The prior period comparative unaudited condensed consolidated statements of
comprehensive income, changes in equity and cash flows have been restated as
explained below.
Unaudited condensed consolidated statement of comprehensive income
As previously reported six months ended 30 June 2021 Adjustment *Restated six months ended 30 June 2021
Note US$'000 US$'000 US$'000
Revenue 5 27,589 - 27,589
Cost of sales (1,336) - (1,336)
Gross profit 26,253 - 26,253
R&D/engineering (10,749) - (10,749)
Sales & marketing (672) - (672)
General & administration (2,490) - (2,490)
Other items (8,415) (2,619) (11,034)
Operating profit 3,927 - 1,308
'Other items' charged in arriving at operating profit:
Non-recurring IPO costs 10 (5,316) (2,619) (7,935)
Non-recurring M&A-related costs 10 - - -
Share-based payment 18 (1,958) - (1,958)
Exchange gain/(loss) 11 (1,141) - (1,141)
Other items (8,415) (2,619) (11,034)
Finance income 9 102 - 102
Finance expense 9 (159) - (159)
Share of post-tax loss of equity-accounted joint ventures 12 - - -
Profit before tax 3,870 (2,619) 1,251
Income tax expense 13 (1,148) - (1,148)
Profit after tax 2,722 (2,619) 103
Other comprehensive income
Exchange differences on the reorganisation (11,035) (71) (11,106)
Exchange (losses) arising on translation of foreign operations - - -
Other comprehensive income for the period, net of tax (11,035) (71) (11,106)
Total comprehensive loss for the period (8,313) (2,690) (11,003)
During the period ended 31 June 2021, the group debited US$23.0m of costs
against share premium. Following a review, it was identified that US$2,619k
of these costs did not relate to the issue of new shares, and therefore should
have been expensed as incurred. The effect of this restatement is to
increase non-recurring IPO costs by US$2,619k, to decrease share premium by
US$2,690k and to decrease the currency translation reserve by US$71k.
Unaudited condensed consolidated statement of changes in equity
As a consequence of the adjustment described above, profit for the period has
been restated by US$2,619k. Exchange differences on the reorganisation has
been restated by US$71k, and the line item 'Net costs on issuance of shares
relating to IPO' has been restated by US$2,690k, both for the same reason.
In addition, the following further restatement has been made to the
consolidated statement of changes in equity. During the IPO process, upon
issuing shares, a resolution was passed to issues shares at lower than the
nominal price and take the difference from a reserves balance. This was taken
from the merger reserve, but should have been deducted from the share premium
account. As a consequence, the line item 'Effect of exercise price below
nominal value' has been restated to move US$14,381k from merger reserve to
share premium.
Unaudited condensed consolidated statement of cash flows
As previously reported six months ended 30 June 2021 Adjustment *Restated six months ended
30 June 2021
Note US$'000 US$'000 US$'000
Cash flows from operating activities
Cash generated from operating activities before tax (a) 6,368 (1,619) 4,749
Income tax paid (3,133) - (3,133)
Net cash generated from operating activities 3,235 (1,619) 1,616
Cash flows from investing activities
Purchase of property and equipment (557) - (557)
Purchase of intangible asset (541) - (541)
Net cash used in investing activities (1,098) - (1,098)
Cash flows from financing activities
Issuance of common shares 17 509,003 - 509,003
IPO share issuance costs 17 (23,061) 6,119 (16,942)
Exercise of options 17 4,064 - 4,064
Proceeds from IPO stabilisation 17 22,238 - 22,238
Decrease in bank indebtedness (38) - (38)
Interest paid (144) - (144)
Collection of notes receivable 428 - 428
Repayment of principal under lease liabilities (951) - (951)
Net cash generated from financing activities 511,539 6,119 517,658
Net increase in cash and cash equivalents 513,676 4,500 518,176
Cash and cash equivalents at start of year 14,039 - 14,039
Effects of foreign exchange on cash and cash equivalents (8,578) (4,500) (13,078)
Cash and cash equivalents at end of period 16 519,137 - 519,137
As previously reported six months ended 30 June 2021 Adjustment *Restated six months ended
30 June 2021
Note US$'000 US$'000 US$'000
Cash flows from operating activities
Net income 2,722 (2,619) 103
Items not affecting cash:
Income tax expense 1,148 - 1,148
Depreciation of property and equipment 144 - 144
Depreciation of right-of-use asset 1,134 - 1,134
Share-based payment 18 1,958 - 1,958
Lease interest 144 - 144
7,250 (2,619) 4,631
Changes in working capital:
Decrease in trade and other receivables 364 - 364
(Increase) in accrued revenue 5 (8,656) - (8,656)
Increase in trade and other payables 2,823 1,000 3,823
Increase in deferred revenue & flexible spending account 5 4,587 - 4,587
(882) 1,000 118
Cash generated from operating activities before tax 6,368 (1,619) 4,749
Cash flows from operating activities has been restated to decrease net income
by US$2,619k, based on the restatement of the consolidated statement of
comprehensive income described above.
In addition, following a review of the prior year cash flow statement, two
further restatements of the cash flow statement have been made.
The increase in trade and other payables within changes in working capital has
been restated by US$1,000k to reflect IPO costs which remained unpaid at 30
June 2021. 'IPO share issuance costs' within cash flows from financing
activities has also been restated by US$3,500k.
The effect of all of the above restatements is to increase the loss on
'effects of foreign exchange on cash and cash equivalents' line by US$4,500k.
1 (#_ftnref1) See note 4 Alternative Performance Measures (APMs) on page 21.
Adjusted EBITDA and Adjusted Profit after Tax exclude IPO-related
non-recurring costs, foreign exchange adjustments, share-based payments,
M&A transaction costs and one-time fees associated with WiseWave.
2 (#_ftnref2) H1 2021 operating expenses have been restated by US$2.6m from
share premium to non-recurring IPO costs. FY 2021 remains unchanged. This
restatement had no impact on H1 2021 APMs. See note 23 for further
information.
3 (#_ftnref3) 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 and, in some instances, our estimates of potential future royalties.
4 (#_ftnref4) 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.
5 (#_ftnref5) For further details see note 19
6 (#_ftnref6) See note 4 (Alternative Performance Measures) on page 20
7 (#_ftnref7) Dell'Oro Group, June 16 2022 Data Center Capex Grew at the
Fastest Rate in Three Years in 1Q 2022, According to Dell'Oro Group - Dell'Oro
Group (delloro.com)
(https://www.delloro.com/news/data-center-capex-grew-at-the-fastest-rate-in-three-years-in-1q-2022/)
8 (#_ftnref8) IDC, May 2022 Worldwide IDC Global DataSphere Forecast,
2022-2026: Enterprise Organizations Driving Most of the Data Growth
(https://www.idc.com/getdoc.jsp?containerId=US49018922#:~:text=%22The%20Global%20DataSphere%20is%20expected,vice%20president%2C%20IDC%27s%20Global%20DataSphere.)
9 (#_ftnref9) See note 4 (Alternative Performance Measures) on page 20 for
reconciliation of EBITDA to adjusted EBITDA
10 (#_ftnref10) See note 4 (Alternative Performance Measures) on page 20 for
reconciliation of profit after tax to adjusted profit after tax
11 (#_ftnref11) Provisional fair value of US$7.8m of identifiable intangible
asset assumed as at the date of acquisition of Precise ITC. See note 15 on
page 26 for details of provisional fair values of identifiable assets
purchased and liabilities assumed from the Precise ITC acquisition.
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. END IR FZGZLLGNGZZMRecent news on Alphawave IP
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