AGM 2020

Apr 22, 2020

Ladies and gentlemen, thank you for standing by, and welcome to the Acertek twenty twenty 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 Marksen. Please go ahead. Very good. Thank you, Sarah, for the introduction, and welcome to this Asia Tech twenty twenty Annual General Meeting. These are indeed absurd times. And due to the COVID-nineteen virus, we have requested that everybody stays away physically from the actual board the actual general meeting here. And we are grateful that you have lived up to that request. That also means that we are only and we have to suffice here with the absolute bare minimum of physical presence. And 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. Tai Rasmussen. Hi, Tai. Hi. Then we have our auditor, Mr. Henleich, Tanya Litresensen. Hi, Alan. And we have another auditor, Max Max Melgar. Hello? Hello. Very good. And then we have our CEO, Anders Lars Larsson. Yep. Hello. He's here. And myself, I'm the CFO. I'm here too. And then we are pleased to have via phone the Chairman of our Board, Mr. Juukka Pertula. Hi, Juukka. Everybody. There you go. Thank you, sir. And then we have the chairman of of the nomination committee, mister Yip Sanderby. Hi. Very good. And board member, miss Maria Rod. Hi. I'm here. Hi. And finally, board member, mister Eric Kamskirk. Miss hi, Eric. Aye. Very good. So that was the tally. We are all present. Whoever is listening in, you are in listen only mode. This is not 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. And 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 Wasserstein. 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. So so we'll jump directly into to the formal confirmation of formalities in in announcing and and holding this general meeting. Firstly, I have noticed that that there has been an announcement of the date and and the timeline for forwarding specific items to the agenda, and this has been announced more than eight weeks ago. So that is informed correctly in accordance with the Arctic Association section 75 and the Danish Companies Act, the section 19. Further, the general meeting was convened was was notified and convened by by the the agenda and the full text proposal was forwarded and announced on the company's homepage on 03/30/2020. And and thereby, the Arctic Association six in seven seven and the Danish Companies Act six in 1994 has been been. Further, it's confirmed that the agenda is in accordance with the Article Association clause a two, which is the minimum agenda for the general meeting. So so that is also in accordance with the law on the article set. And and further, it's it's the the notice convening in general meeting with accurate number of shares and voting rights of the notice documents to be submitted to the general meeting and the agenda and full text proposal has been available on the company's homepage since March 30. And the annual report has been available on the homepage since the twenty fifth February twenty twenty, and this is in accordance with the Archer Association point eight one and Danish Companies Act Section 99. Therefore, in conclusion, the formalities necessary for making this a lawful. The meeting has been heard too and met, and and therefore, is a lawfully convened general meeting. At this meeting, no shareholders are present given the COVID nineteen circumstances, and and thank you for, as Peter said, for respecting that. But there have been, by proxy or post the votes, been given 8,419,000 o nine four votes, and and they are therefore present at this general meeting. Thus, the general meeting has the necessary power to carry out the decisions which are on the agenda today. Therefore, we can move on to the agenda, and it is as general as stipulated in the notice of the meeting. And the first item is the Board of Directors' report on the company's activities during the past financial year. And for this item, I'll pass on the word to the chairman, Juukath. Thank you. And on behalf of board of directors, I thank you all for participating this year's Annual General Meeting of ACCETEC. Due to the very unfortunate situation brought by the COVID nineteen virus, We have been forced to implement extraordinary measures around this meeting, and, we cannot meet in person. But I'm glad we are able to meet via phone at least. So a warm welcome to all of you who are listening. I hope that you can hear me clearly because I I have to say that I heard the first speech is a little bit it was a bit bit broken broken line. But, hopefully, you can understand what I'm talking about. We can hear you. Okay. At least Okay. Good. So then 2019 was an exciting, groundbreaking, but also a challenging year for Astadeck. 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 Auckland. The academy enables us to connect with our roots and provide ambitious gamers with the technology, tools, comfort to excel in their craft. We also launched the information.com community forum for gamers as well as technology and tool guests. In our data center business, we entered teams 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 shift 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. But 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 there's a societies would like to see actual actions rather than just talk. Andre Ericsson, our CEO, is spearheading the efforts, and we are impressed with the results so far. Another important milestone in our data center business is that in early two thousand twenty, we landed our most important data center agreement to date. This is Azertec's first ever design win with a true global server OEM and an important significant step in measuring our data center business. For 2,019, our consolidated top line came in at around $54,000,000, a reduction by 20% compared to the record year 2018, not least driven by the trade war between USA and China. This conflict is now, for now, overshadowed by the coronavirus, the impact of which we cannot estimate at this point. So far, we have not seen either negative nor positive impact in our sales forecasts. We have recorded some supply chain issues earlier in the year in China, but China as a whole seems to be back in business again. We hope the burst is behind us and we maintain our guidance, which is five to 10% negative revenue growth based on the facts mentioned before, but with higher gross margins compared with 02/2019. In the end, I'd like to extend my thanks to the Azertec team, to the management, and to around 100 good people working tirelessly on bringing innovative, reliable liquid cooling products to the world. And I would also like to thank my fellow board members. I joined the company last year, I and find that we have an inspiring group of board members with a good mix of both qualifications and experience. So with that, I will hand the floor back to the chairman of the meeting. Thank you. Thank you. Given that no shareholders present, I allow myself to conclude that there are no comments to the report and that the general meeting took note of the report. And 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 Nietro A. And Nietro B is the proposed remuneration to repay to the members of the Board of Directors for committees and the Nomination Committee. For the first, Yves Sunego will shortly give a report, and I'll pass on the word to to Yves. Yeah. Thank you. My name is actually Yves Sunego, but that's okay. Most 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. So 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. And I'm happy to report that I think and the board itself thinks that we have a very well functioning board. So 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. Okay. Thank you, Yves, Sanofi. And that that leads us on to DTRA B, where there is a proposal and a and a and then a note in the notice of the general meeting. And if you take the first part, which is which is a decision point, that is the first part of the notice where it says and the nomination committee proposes that in accordance with Article thirteen-one of the Articles Association and in line with the provisional recommendation made in the general meeting in 2019, the Nomination Committee proposed 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 US40000 and that the Chairman of the Board of Directors receives an additional cash remuneration of US50000 dollars Further, the remuneration committee proposes that the remuneration to the Chairman of the nomination committee will consist of a cash remuneration of US5000 dollars And as to this point and with reference to the proxies and the postal 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 for next year's level of of fee, and that is also mentioned in the notice of the general meeting where it says The comminution 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 US40000 dollars prorated in quarterly installments and that the Chairman of the Board of Directors receives an additional cash remuneration of US15000 dollars 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 by final approval at the general meeting in 2021. Given that this is merely a proposal and given that no shareholders are present, I conclude that the general meeting acknowledged the provisional recommendation. And then we move on to item three of the agenda, and that is adoption of the audited annual report. And before putting the approval for of the annual report to a vote, I kindly ask the CFO, Peter Nessen, to accommodate this item. Very good. So thank you. And my comments are an abstract of the annual report, so no surprises should be expected. If we start out by the profit and loss, our revenues in 2019 came out at $54,300,000 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, and then one significant OEM customers 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, then the China, remember, is lower and hence also the cost of goods is low. Shifting to our total operating expenses, they came in at $22,000,000 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 kroner. The Danish kroner was on average 6% cheaper in 2019 compared to 2018. And since around 80% of our operating expenses were denominated in Danish kroner, then this 6% exchange rate difference is significant. That then comes down to an income before tax, which was positive of $1,400,000 versus $4,900,000 to the positive in 2018. Income tax expense, which primarily was a non cash charge, was $2,100,000 in 2019. And all this leads to an income after tax of a negative $600,000 compared to an income in other positive $3,700,000 And then there are some currency translation adjustments, and that all ends down at a total comprehensive income at a negative $1,100,000 versus a positive $3,500,000 the year before, which corresponds to income per share of negative $02 in 2019 versus plus zero one four dollars in 2018. If we then shift the focus to the balance sheet, the total assets at the 2019 was $54,100,000 compared with $51,400,000 at the year before at the 2018. And in these amounts, this $54,000,000 amount is included cash and cash equivalents, which increased by $5,900,000 to $24,500,000 in the bank at the 2019. Another increasing factor was the fact that we had by mandate, by our authorities had to change our capital accounting policies, it's called IFRS 16, related to capitalized leases, etcetera. So that 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. So that got in decreased and also we were able to reduce our trade receivables and our inventories. Total liabilities, they increased by $2,700,000 in 2019. Again, this has to do with the accounting policy change from the accounting from the capitalized leases and the debts associated with that. Shifting to cash flows. Net cash provided on operating expenses in 2019 was almost $9,000,000 versus just a high $4,000,000 the year before. And this is primarily due to net reductions in trade receivables and inventories compared to the year before. We invested $2,200,000 mainly related to capitalized development projects and fixed assets, and those $2,200,000 compared to $3,700,000 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 $5,900,000 compared with a round zero in the year before. And that ends us up at the cash balance at the $24,500,000 If you need further details, then, of course, the annual report is available online. And there are also further details that you will find on our website. Back to you, Mr. Chairman. Okay. Thank you. And with reference to the proxies and postal votes, which we have received, this item is considered adopted by the general meeting. Then we can move on to item four, and that is the appropriation of profit or loss as recorded in the adopted annual report. And, it was proposed, that the profit should be appropriated in accordance with the adopted annual report. As recorded in the annual report, the board of directors have proposed that no dividend should be distributed. And with reference to the properties and posted votes forwarded, the item is considered adopted by the general meeting. Having said that and completed item four, we will move on to item five, which is election of the members to the Board of St. Nicholas. And in accordance with the Article Division 101 of the Article Association, the Nomination Committee proposes a reelection to the current Board of Directors. Thus, it suggested that the following persons are reelected: Juukan Atola, Chris Christoffer, Jan Smith, Maria Jorg, Jake Dansholt. And the the board of directors agrees with the nomination committee's proposal and are willing to receive reelections. 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. And in order with regard to the material cost hit by the candidates, other days and foreign owned enterprises, references made to the annual report, page 54, which lists such offices. And given that there are no further persons here in the room, there are no, you can say, persons putting themselves into to the election. So therefore and and the reference to proxies and posting votes ordered, we I hereby consider reelection of the the board as adopted. And so congratulations to the the board of directors on on the reelection. Yes. And then we move on to the item six, which is election of members to the nomination committee. As it appears from the notification of the general meeting, the committee proposes nomination committee proposes reelection of the following members, Yves Senegal and Klaus Danner Muller. And further, it was proposed that UK Patrola is elected to the nomination committee. And with reference to the proxies and post and votes, forwarded reelection of Ethiopian and Klaus. Klaus, been adopted, and further, it's been adopted that that the Yucatan Pattula is is becoming part of the nomination committee. So congratulations on your election. Thank you. Then we can move on to item seven, and that is election of the auditors. And in accordance with the recommendation received from the audit committee, the Board of Directors proposed the reelection of the PWC. And it states that the insurance access is paid. And 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 inference by any third party and no clause contract and an issue with any third party restricting the choice by the general meeting to certain auditors audit firms has been imposed on the audit committee. And the reference to the proxies imposed to votes for reelection of the auditor is hereby considered adopted. This is on to item eight of the agenda, which is proposed by the Board of Directors of shareholders. There haven't been any suggestions by by shareholders, and this is Mitra a b and c as it appears from the notice of the general meeting. Mitra a, it appears that reference to the notice is suggested that the Board 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 of capital. The purchase price paid for such own shares must not deviate by more than 10% from the listed price on auto stocks exchange or reverse at the time of the acquisition. With reference to the proxies and postal votes received, we consider hereby I consider hereby the suggestion adopted. Let me move on to Libre eight b, which is a change to the remuneration policy, and and it's been prepared by the Board of Directors and made available to on the company's homepage. And it's the changes derived some changes in the legislation and the new sections one one three nine and one three nine a of the Danish Companies Act. The reference to the proxies and quotient votes forward that there's not majority for the revised remuneration parts. 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 the next year's annual general meeting, that mean annual general meeting of twenty twenty one. With that, we can move on to item HC of the agenda. And according to the new section 139B, subsection four 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 is proposed to add this vote as a standing item on ginseng at future annual meetings and according to amend the Arctic Association so that there's now is insulin item four saying that presentation adoption of the remuneration report is a standing item. And then the current item form and selection of directors is now the new five and then the new the the current five and the new six and and forward. The proposal on that list, item h c of the agenda can only be adopted by majority, if not less than two thirds of all those cast and of the shared capital represented as this at this meeting. The reference to the proxies and posting votes forwarded. The item is considered object by the general meeting. Having concluded item eight for all, we can move on to item nine, and that is the authorization of the chairman of the general meeting. And the the part of directors have approached 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 amendments to documents filed with the Danish business authority as the Danish business authority may request or find appropriate in connection with the registration of the adopted resolutions. And with reference to the proxies and post awards forwarded, this item is considered adopted by the general meeting. And with the adoption of item nine, it is concluded that there is no further business to transact under the agenda of this general meeting and that all proposals has been adopted except for item 18. And with this formal part of the general meeting being concluded, I will give the word back to the CFO, Peter Darman. Thank you, Thij. 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 the conference for today. Thank you for participating. You may all disconnect.