Ladies and gentlemen, thank you for standing by, and welcome to the Asetek 2020 Annual General Meeting. At this time, all participants are in a listen-only mode. I must advise you that this conference is being recorded today, and I would now like to hand over the conference to your speaker, Peter Madsen. Please go ahead.
Very good. Thank you, Sarah, for the introduction, and welcome to this Asetek 2020 Annual General Meeting. These are indeed absurd times, and due to the COVID-19 virus, we have requested that everybody stays away physically from the actual general meeting here, and we are grateful that you have lived up to that request. That also means that we have to suffice here with the absolute bare minimum of physical presence. If I just run through the actual participants here in the room, we have the Chairman of the meeting, who is also our attorney, Mr. Ty Rasmussen. Hi, Ty.
Hi.
We have our Auditor, Mr. Henrik Kristensen. Hi, Henrik.
Hi.
We have another Auditor, Mads Melgaard. Hello.
Hello.
Very good. Then we have our CEO, André Eriksen.
Yes, hello.
Is here. Myself, I'm the CFO, I'm here too. We are pleased to have, via phone, the Chairman of our Board, Mr. Jukka Pertola. Hi, Jukka.
Hello, everybody. I'm here.
There you go. Very thank you, sir. Then we have the Chairman of the Nomination Committee, Mr. Ib Sønderby. Hi, Ib.
Hi.
Very good. Board Member, Ms. Maria Hjorth. Hi, Maria.
Hi.
Finally, Board Member Mr. Erik Damsgaard. Hi, Erik.
Hi.
Very good. That was the tally. We are all present. Whoever is listening in, you are in listen-only mode. This is technically not an electronic general meeting, so we are offering this as a service to our shareholders that you can listen in to what's going on. With that, I'd like to hand over the microphone to the chairman of the meeting, who has been appointed by the board, our attorney, Mr. Ty Rasmussen.
Thank you, Peter. Normally, when I start out with a general meeting, I start out announcing where the fire exits and stuff like that is, but it seems irrelevant given the format of this meeting. We'll jump directly into the formal confirmation of formalities in announcing and holding this general meeting. Firstly, I have noted that there has been an announcement of the date and the timeline for forwarding specific items to the agenda. This has been announced more than eight weeks ago. That is informed correctly in accordance with the Articles of Association Section 75 and the Danish Companies Act Section 19.
Further, the general meeting was notified and convened by the agenda. A full text proposal was forwarded and announced on the company's homepage on 30th of March 2020, thereby the Articles Association Section 77 and the Danish Companies Act Section 94 has been fulfilled. Further, it's confirmed that the agenda is in accordance with the Articles Association Clause 82, which is a minimum agenda for the general meeting. That is also in accordance with the law and the articles.
Further, the notice convening the general meeting with accurate number of shares and voting rights have been noticed, documents to be submitted to the general meeting and the agenda and full text proposal has been available on the company's homepage since the 30th of March, and the annual report has been available on the homepage since the 25th of February 2020. This is in accordance with the Articles of Association Point 81 and Danish Companies Act Section 99. Therefore, in conclusion, the formalities necessary for making this a lawful general meeting has been adhered to and met. Therefore, this is a lawfully convened general meeting. At this meeting, no shareholders are present, given the COVID-19 circumstances, and thank you for, as Peter said, for respecting that. There have been, by proxy or postal vote, been given 8,419,094 votes. They are therefore present at this general meeting.
The general meeting has the necessary power to carry out the decisions which are on the agenda today. We can move on to the agenda, and it is as stipulated in the notice of the meeting. The first item is the board of directors' report on the company's activities during the past financial year. For this item, I'll pass on the word to the Chairman, Jukka.
Thank you. On behalf of the Board of Directors, I thank you all for participating in this year's annual general meeting of Asetek. Due to the very unfortunate situation brought by the COVID-19 virus, we have been forced to implement extraordinary measures around this meeting, and we cannot meet in person. I'm glad we are able to meet via phone at least. A warm welcome to all of you who are listening. I hope that you can hear me clearly, because I have to say that I heard the first speech was a little bit broken line. Hopefully you can understand what I'm talking about.
We can hear you, at least.
Okay, good. 2019 was an exciting, groundbreaking, but also a challenging year for Asetek. We delivered multiple new products on the gaming and enthusiast side of our business. The products cater to the market's ever-increasing demand for performance and features. We are now on our sixth generation of liquid cooling solution to this market. We are focused more on our own brand and telling the story about innovation, quality, and reliability. Contributing to this is the newly launched Esports Academy in Aalborg. The academy enables us to connect with our roots and provide ambitious gamers with the technology, tools, and comfort to excel in their craft. We also launched the coolnation.com community forum for gamers as well as technology enthusiasts. In our data center business, we entered political streams and connected with European Union politicians in Brussels and national politicians around Europe.
We were a bit hesitant in the beginning, knowing that it can be a big ship to turn around. The aim is to build on the growing climate agenda and get the societies to demand that data centers reuse their enormous amounts of otherwise wasted energy. Is that a big goal? Yes, maybe. It has been done before in other industries. We can take catalytic converters on cars and seat belts in cars as an example. Those two products have probably not existed without politically driven requirements. It is certainly too early to declare victory here, but we have actually been impressed with the interest from our politicians. Not least in Germany, who will soon take over the chairmanship in European Union and bring actual legislation proposals up for vote. All in all, it looks like as societies would like to see actual actions rather than just talk.
André Eriksen, our CEO, is spearheading the efforts. We are impressed with the results so far. Another important milestone in our data center business is that in early 2020, we landed our most important data center agreement to date. This is Asetek's first ever design win with a true global server OEM and an important significant step in maturing our data center business. For 2019, our consolidated top line came in at around $54 million. A reduction by 20% compared to the record year 2018, not least driven by the trade war between the U.S. and China. This conflict is for now overshadowed by the coronavirus, the impact of which we cannot estimate at this point. So far, we have not seen neither negative nor positive impact in our sales forecasts.
We have recorded some supply chain issues early in the year in China, but China as a whole seems to be back in business again. We hope the worst is behind us, and we maintain our guidance, which is 5%-10% negative revenue growth based on the facts mentioned before, but with higher growth margins compared with 2019. In the end, I would like to extend my thanks to the Asetek team, to the management, and to around 100 good people working tirelessly on bringing innovative, reliable liquid cooling products to the world. I would also like to thank my fellow board members. I joined the company last year, and I find that we have an inspiring group of board members with a good mix of both qualifications and experience. With that, I will hand the floor back to the Chairman of the meeting. Thank you.
Thank you. Given that no shareholders are present, I allow myself to conclude that there are no comments to the report, and that the general meeting take note of the report. Then we can move on to the next item on the agenda, and that is the nomination committee's report on its activities. That's letter A. Letter B is the proposed remuneration to be paid to the members of the board of directors, all committees, and the nomination committee. For the first, Ib Sønderby will shortly give a report, and I'll pass on the word to you, Ib.
Yeah. Thank you. My name is actually Ib Sønderby, but that's okay.
Okay.
Most of the activity in the nomination committee in 2019 was in the period leading up to last year's AGM, where we, as you know, elected two new members after having added a third member just months before the AGM. We had quite a lot of contact over the first period of the year, and we had five meetings in 2019 in the nomination committee. After having the board in place at the AGM last year, we've had a smooth ride, and actually, most of our activity has been the yearly board assessment, which we performed recently. I'm happy to report that I think, and the board itself thinks, that we have a very well-functioning board.
Not much to say about the activity apart from the concentration in the first part of the year leading up to the AGM last year, and a smooth ride the rest of the year.
That's about it on the activity in the board.
Thank you, Ib Sønderby. That leads us on to agenda B, where there is a proposal and then a note in the notice of the general meeting. If you take the first part, which is a decision point, that is the first part of the notice where it says, "The nomination committee proposes that in accordance with Article 13.1 of the Articles of Association, and in line with the provisional recommendation made in the general meeting in 2019, the nomination committee proposes that it is finally adopted that the aggregated remuneration paid to each of the members of the Board of Directors for the financial year 2019 will consist of a cash remuneration of $40,000, and that the Chairman of the Board of Directors receives an additional cash remuneration of $15,000.
Further, the remuneration committee proposes that the remuneration to the chairman of the nomination committee will consist of a cash remuneration of $5,000. As to this point, and with reference to the proxies and the posted votes forwarded, the item is considered adopted by the general meeting. Further, it should be mentioned here that the nomination committee made also a recommendation for next year's level of fee, and that is also mentioned in the notice of the general meeting, where it says, "The nomination committee further makes the provisional recommendation that the remuneration to each of the members of the company's Board of Directors in the current financial year 2020 will consist of a cash remuneration of $40,000 prorated in quarterly installments, and that the Chairman of the Board of Directors receives an additional cash remuneration of $15,000 prorated accordingly.
Board members directly representing larger single investments will not receive any remuneration, and any work in various committees, including the nomination committee, will not be separately compensated. The nomination committee's final proposal for remunerations for the financial year 2020 will be presented for final approval at the general meeting in 2021. This is merely a proposal, and given that no shareholders are present, I conclude that the general meeting acknowledge the provisional recommendation. Then we move on to item three of the agenda, and that is adoption of the auditor's annual report. Before putting the approval of the annual report to a vote, I kindly ask the CFO, Peter Madsen, to accommodate this item.
Very good, sir. Thank you. My comments are an abstract of the annual report. No surprises should be expected. If we start out by the profit and loss, our revenues in 2019 came out at $54.3 million, representing a decrease of 19% compared to 2018, which was a record year. The revenue decline was significantly coming from the uncertainties relating to the U.S.-China trade relations, macroeconomic headwinds across all markets, by the way. One significant OEM customer's reduction in purchases. Our gross margins, they increased to 42 points, just about, from 39 the year before. The increase reflects a combination of higher sales prices on average, especially in our gaming enthusiast product lines, as well as a stronger U.S. dollar in 2019. When the U.S. dollar is stronger, the China renminbi is lower. Hence also the cost of goods is low.
Change shifting to our total operating expenses, they came in at $22 million, which was a 0.9% increase from 2018. This was, however, significantly impacted also by the exchange rate, not so much to the Chinese renminbi, but between U.S. dollars and Danish krone. The Danish krone was on average 6% cheaper in 2019 compared to 2018. Since around 80% of our operating expenses were denominated in Danish krone, then this 6% exchange rate difference is significant. That then comes down to an income before tax, which was positive of $1.4 million, versus $4.9 million to the positive in 2018. Income tax expense, which primarily was a non-cash charge, was $2.1 million in 2019. All this leads to an income after tax of a - $600,000 compared to an income in + $3.7 million.
There are some currency translation adjustments, and that all ends down at a total comprehensive income at a - $1.1 million, versus a + $3.5 million the year before, which corresponds to an income per share of - $0.02 in 2019 versus + $0.14 in 2018. If we shift the focus to the balance sheet, the total assets at the end of 2019 was $54.1 million, compared with $51.4 million at the year before, at the end of 2018. In these amounts, this $54 million amount is included cash equivalents, which increased by $5.9 million to $24.5 million in the bank at the end of 2019. Another increasing factor was the fact that we had, by mandate by our authorities, had to change our accounting policies. It's called IFRS 16, related to capitalized leases, et cetera. Those were the increases on the balance sheet.
There were some offsets also. We have a rather large deferred tax asset. As I mentioned before, under the profit loss. That got decreased, and also we were able to reduce our trade receivables and our inventories. Total liabilities, they increased by $2.7 million in 2019. Again, this has to do with the accounting policy change from the capitalized leases and the debts associated with that. Shifting to cash flows. Net cash provided by operating expenses in 2019 was almost $9 million versus just $4 million the year before. This is primarily due to net reductions in trade receivables and inventories when compared to the year before. We invested $2.2 million mainly related to capitalized development projects and fixed assets. Those $2.2 million compared to $3.7 million in 2018, so quite a significant reduction in investment in these assets.
We then spent $600,000 paying off some leases and all that resulted, as I stated before, in a positive cash flow of $5.9 million, compared with around zero in the year before. That ends us up at the cash balance at the $24.5 million. If you need further details, then of course, the annual report is available online and there are also further details that you can find on our website. Back to you, Mr. Chairman.
Okay. Thank you. With reference to the proxies and posted votes, which we have received, this item is considered adopted by the general meeting. We can move on to item four, and that is the appropriation of profit or loss as recorded in the adopted annual report. It was proposed that the profit should be appropriate in accordance with the adopted annual report. As recorded in the annual report, the board of directors have proposed that no dividends should be distributed. With reference to the proxies and posted votes forwarded, the item is considered adopted by the general meeting. Having said that and concluded item four, we will move on to item five, which is election of the members to the board of directors.
In accordance with the Article 13.1.1 of the Articles of Association, the nomination committee proposes a re-election to the current board of directors. Thus, it's suggested that the following persons are re-elected: Jukka Pertola, Chris Christopher, Jørgen Smidt, Maria Hjorth, Erik Damsgaard. The board of directors agrees with the nomination committee's proposal and are willing to receive re-elections. Information on the nominated candidates has been available on the homepage of the company and are still available as it appears on the notice of the general meeting. With regard to the managerial posts held by the candidates in other Danish and foreign owned enterprises, reference is made to the annual report page 54, which lists such offices. Given that there are no further persons here in the room, there are no other persons putting themselves into the election.
Therefore, and with reference to proxies and posted votes forwarded, I hereby consider the re-election of the board as adopted. Congratulations to the board of directors on the re-election. Yes. We move on to item six, which is the election of members to the nomination committee. As it appears from the notification of the general meeting, the nomination committee proposes re-election of the following members: Ib Sønderby and Claus Berner Møller, and further it was proposed that Jukka Pertola is elected to the nomination committee. With reference to the proxies and posted votes forwarded, re-election of Ib Sønderby and Claus Berner Møller has been adopted, and further it's been adopted that Jukka Pertola is becoming part of the nomination committee. Congratulations on your election.
Thank you.
We can move on to item seven. That is election of the auditors. In accordance with the recommendation received from the audit committee, the board of directors proposes the re-election of the PwC, PricewaterhouseCoopers. Before putting the suggestion to vote, it should be mentioned that the audit committee has informed us that the committee's recommendation is free from influence by any third party, and no clause of contract entered into with any third party restricting the choice by the general meeting to certain auditors or audit firms has been imposed on the audit committee. With reference to the proxies and posted votes forwarded, re-election of the auditor is hereby considered adopted. This leads on to item eight of the agenda, which is proposals by the board of directors or shareholders.
There have not been any suggestions by shareholders, so this is intra A, B, and C, as it appears from the notices of the general meeting. From intra A, it appears that with reference to the notice, it's suggested that the board of directors for the period until the next annual general meeting should be authorized to allow the company to acquire own shares representing up to 10% of the nominal share capital of the company, provided that the company's total holding of own shares does not at any time exceed 10% of the company's total nominal share capital. The purchase price paid for such own shares must not deviate by more than 10% from the listed price on Oslo Stock Exchange, Oslo Børs, at the time of the acquisition. With reference to the proxies and postal votes received, I consider hereby the suggestion adopted.
We move on to 8B, which is a change to the remuneration policy, and it's been prepared by the board of directors, and they're available on the company's homepage. The changes derives from changes in the legislation and the new Section 139 and Section 139a of the Danish Companies Act. With reference to the proxies and postal votes forward, there's not majority for the revised remuneration policy. Therefore, there is no reason to put this item to a vote. This means that we fall back on the existing policy, and that a new policy is to be suggested on next year's annual general meeting. That means annual general meeting of 2021. With that, we can move on to item 8C of the agenda.
According to the new Section 139b, Subsection 4 of the Danish Companies Act, an advisory vote on the company's remuneration report for the last financial year must be held each year at the annual meeting. This will apply from the general meeting in 2021. As a consequence, it's proposed to add this vote as a standing item on the agenda at future annual general meetings, and accordingly to amend the Association, so that there's now is incident item four, saying that presentation adoption of the remuneration report is a standing item. Then the current item four and selection of directors is now the new five, and then the current five to the new six, and forward.
The proposal on that list, item 8C of the agenda, can only be adopted by a majority of not less than 2/3 of all votes cast and of the share capital represented at this meeting. With reference to the proxies and postal votes forwarded, the item is considered adopted by the general meeting. Having concluded item eight overall, we can move on to item nine. That is authorization of the chairman of the general meeting. The board of directors have proposed that the general authorizes the chairman of the general meeting, with the right of substitution, to file and register the adopted resolution with the Business Authority and to make such amendment to the documents filed with the Danish Business Authority as the Danish Business Authority may request or find appropriate in connection with the registration of that adopted resolutions.
With reference to the proxies and postal votes forwarded, this item is considered adopted by the general meeting. With the adoption of item nine, it is concluded that there is no further business to transact on the agenda of this general meeting, and that all proposals has been adopted except for item 8B. With this formal part of the general meeting being concluded, I will give the word back to the CFO, Peter Madsen.
Thank you, Ty. The meeting is over. Thank you for your understanding of these very special circumstances around this year's meeting. We hope to be able to go back to a more normal setup next year. This meeting is over. You may hang up your phones.
Thank you.
That does conclude our conference for today. Thank you for participating. You may all disconnect.