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een 24. apnl 2014 BUS
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14 maj. 2014
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" ASETEK
"Asetek A/s |
CYR.NR, 3488 0522
ANNUAL REPORT 2013
Uanuam5jmgyuy Ist - December 3Ist 2OI3)]
1405144EogSN92544
ADSETEK
Asetek A/S
Assensvej 2
DK-9220 Aalborg East
Denmark
Phone +45 9645 0047
Fax +45 9645 0048
Web site www.asetek.com
email nfoQasetek.com
CVR-number 3488 0522
ISIN-Number DK0060477263
Listed on Oslo Børs since March 20, 2013
Samuel! Alexander Bengt Chris Jørgen Knut André Peter
Szteinbaum Wong Thuresson Christopher Smidt Øversjøen Eriksen Madsen
1405144EogSN92545
Board of Directors
Samuel Szteinbaum, Chairman
Chris J, Christopher
Alexander Wong
Jørgen Smidt
Bengt Olof Thuresson
Knut Øversjøen
1405144EogSN92546
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Samuel Szteinbaum
Audit Committee
Alexander Wong
Knut Øversjøen
Compensation Committee
Samuel Szteinbaum
Alexander Wong
Joergen Smidt
Executive Management
André Sloth Eriksen, CEO
Peter Dam Madsen, CFO
Auditor
PwC
Skelagervej 1A,
DK-9000 Aalborg
Phone: +45 9635 4000
AUGETÆEN A/S - AMM REDNPT 2477
(JA
ren P
I think 2013 has been the most exciting year for the
company since I founded it back in 2000. First and
foremost we delivered our best revenues and result ever
- even in a year where we had a lot of focus on going
public and operated in a desktop PC market with fiercer
competition than ever.
We were able to grow revenues 11% year over year
and increased our gross margins, despite growing
manufacturing costs in China and an increasing number of
imitators entering the market.
Most importantly though, we have worked hard on our venture into the data center market and
see a promising response from the market. One thing in particular I am happy about is the test
results from Lawrence Berkeley National Labs that validated our claims and essentially confirmed
our value proposition 100%. I think it is an important and essential milestone.
Tha [PO
Many people doubted our IPO because the market for IPOs was slow, at best. However, we
successfully took the company public and saw the share price increase a healthy 15% since the
listing in March 2013. Personally I am not in doubt we opened the IPO window for other tech
companies.
In March, after some months of deliberations and vetting the financial markets and our own
organization, we took Asetek public in Norway. It is a draining process, but we felt that the
organization was mature enough for life in public view. And we saw a strong need for us to
position ourselves properly for significant future growth.
We based the investment case on our proven track record in our desktop PC liquid cooling
business as well as on the compelling value proposition of our data center plans.
During the roughly nine months period since the IPO we have delivered to all the expectations
from the hectic time around the IPO. You can read more about that in this annual report.
It has been a great personaf satisfaction for me to meet our diverse group of investors over the
recent months, 2013 as a whole makes me proud and it is great to once again see the company
move to a new level.
As a part of the IPO we relocated the corporate headquarters to Denmark where we have better
and larger facilities to establish mass manufacturing for our data center products. We believe it
is important to be in 100% control over research and development, manufacturing and quality in
this critical stage of the data center business unit's life cycle.
As such, after almost seven years in the U.S., I have decided to move to Denmark during 2014 to
be closer to the operation. Beyond the obvious benefit of being close to our operations and R&D,
I will also be closer to the financial markets, where I feel I have been a bit handicapped due to
the nine-hour time difference.
I was expatriated to the US to build up a strong organization as well as a close relationship to
our big OEM customers, I think I have fulfilled that task now and rest assured, dear reader, that
I will not lose focus on our U.S. operations or our U.S. based customers. I will be as much in the
U.S, as required!
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1405144EogSN92547
What's to come?
We sometimes think of Asetek as two companies in one. There is the desktop business which
we have grown from zero in 2000. It is today a profitable and cash generating entity with nice,
albeit mødest, growth prospects. I still believe in growth for 2014, but the environment is getting
tougher so the IP related lawsuits we have filed and staged for Q3/Q4 will somewhat dictate the
future growth opportunities for the desktop business.
Ås we see more PC's disappear from our homes and offices we face even bigger needs for compute
power in data centers, Roughly 2% of all the power in the World is going into datacenters today, and
a substantial share of this energy is wasted because the datacenters are cooled inefficiently by air.
So in many ways the cannibalism of PCs we see to smartphones and tablets are a big part of the
fuel for Asetek's data center business.
We do not believe the World can stand back and continue to use an archaic technology in these
days where focus is on the environment as well as cost to operate data centers. A new, more
efficient approach is needed,
Aseick has thai technology - and Ht 15 ready to roll ouu
As I mentioned many times during our IPO as well as on our earnings calls — introducing and
obtaining a solid market share with a new technology is a long haul. We know because we have
done it before with the desktop business. This is not going to be different since the customers
are the same. As such we still think we are looking at 2-3 year total (from the IPO) until we see
a meaningful business.
We believe we are on the right path as we already landed deals within the High Performance
Computing space as well as military applications. Despite being small deals, they are important
to validate the business. At this point, we do not worry about the deal value. We focus on the
strategic value.
There is no doubt that by targeting and selling to more end users directly, we could have
established higher revenues sooner. However, we fundamentally believe that in order to build
a scalable business we need the buy-in, adoption and support from the big server OEMs. And
we believe we will achieve that - we see all the right signals, they just do not work at the same
speed as we do.
Our focus for 2014 is to establish more design wins and even closer relations to the OEM players.
The way to do that is by stimulating and creating end user demand from customers that the OEMs
listen to and create products for. Hand in hand we approach the OEM's and build business cases
for mass adoption. It sometimes feels like running in water, but as we already saw in 2013, there
is light at the end of the tunnel and we are making progress with the big players. We are confident
we will soon be at a tipping point.
We invite you to join us on the journey!
Thank you for your interest and support.
André Sloth Eriksen
Chief Executive officer
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" 1405144Eog3SN92548
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Asetek's shares have been listed on Oslo Børs since March 20
2013. 4,000,000 new shares were issued and sold during the
initial public offering. A total of 14,881,311 shares are issued,
each with a nominal value of DKK 0.1.
The share is classified in the Minformation Technology” sector by
the stock exchange, and the ticker mark is ASETEK.
The total market capitalization value at the end of 2013 was NOK
584m (approximately USD 96m) which is 15% higher than the
initial market value following the IPO.
816,828 shares are held by the Company as treasury shares,
primarily to support an employee stock option program.
Each share provides one vote. The shares are marketable securities
and no restrictions have been set for the shares” negotiability, The
share register is maintained by DNB Bank ASA - Verdipapirservice,
Postboks 1600 Sentrum, 0021 Oslo, Norway.
Owner ship
At the end of 2013, Asetek A/S had 324 shareholders, some of
whom are nominee accounts covering several individual investors,
290 shareholders were registered by name, together representing
47.7% of the total share capital. Members of Asetek A/S's Board
of Directors and Executive Board owned or represented a total of
31.2% of the share capital at the end of 2013.
At ihe dav of listing 20 March 2013
Issued at NOK 36.00 the Asetek share closed at NOK
34,80 the first day of trading.
3t December 2013
The Asetek share closed at NOK 41.50, an increase of
15% since the IPO. The growth is at par with the Oslo
Stock Exchange Benchmark Index and outperforming
the Technology Index by 2%.
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1405144Fo0ogSN92549
IM LJN ATION
The following shareholders have informed Asetek A/S of
possessions of 5% or above of the share capital:
Number of
Shares %
Sunstone Technology Ventures 1,666,341 11 2%
Fund i, Denmark
D. E. Shaw Composite Side Pocket 1,143,469 7.7%
Series 12, L.L.C,, USA
BD. E. Shaw Composite Side Pocket 1,124,410 7.6%
Series 13, L.L C., USA
Investor Relations
Asetek aims to provide a high and consistent level of information
to its shareholders and other interested parties.
It is Asetek's intention to conduct an active dialogue with shareholders,
analysts, the press and the public as a whole. Communication
with interested parties takes place via the ongoing publication of
notifications, investor presentations and individual meetings.
The website www.asetek.com is the primary source of information for
interested parties. It is updated continuously with information about
Asetek's activities and strategy. Shareholders, analysts, investors,
stockbrokers as well as other interested parties who have questions
regarding Asetek are requested to inquire via the email address
investor relations&asetek.com, which is monitored by the CFO,
Dividends. Asetek is investing its capital in the development and
marketing of its cooling products and values the flexibility to be
able to pursue strategic opportunities if they should arise. Asetek
will therefore retain within the Company any surplus cash that it
generates,
Reporting Calendar for 2014
Q1 2014 Report: April 22, 2014
Annual General Meeting: April 23, 2014
Q2 2014 Report: August 13, 2014
Q3 2014 Report: October 22, 2014 '
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Stock Exchange Hohces Issuedim 2013
Issue Date
December 19, 2013
Decenber 16. 2013
November 29, 2013
November 22, 2013
November 20, 2013
Movennber 13,2013
Navemiber 5, 2013
November 5, 2013
Actober 30, 2015
October 24, 2013
October 23, 2013
Octaher 23, 2013
Dctober 23, 201%
Otober 8, 201 3
fJctober 3, 2013
Seplember 18, 2013
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September 18, 2013
September 17, 2013
2013
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September 1
Auqusi, 15, 2013
August 14, 2013
August 9, 2013
August 9, 20015
July 23, 2013
July 23, 2013
SHAVEMAL DER
Headline
Financial Calendar 2014
Mandatory Notification of Trade
Mandatory Notification of Trade
Asetek Receives Order of RackCDU Liquid
Cooling System for Use in Japanese
University
Q3 2013 Reaching Operational Milestones
and Maintains Growth Target
Invitation to Presentation of Third Quarter
Results 2013
Additional OEM Business Secured Through
2016
Asetek Awarded Continued OEM Business
in Desktop Market
California Energy Commission Study
Validates Energy Savings Claims
Mandatory Notification of Trade
Asetek Executes MOU with Major Defense
Systems Integration Prime Contractor
Asetek Commences Work on Major
Department of Defense Data Center
Asetek Allowed U.S. Patent on ISACT Data
Center Liquid Cooling Technology
Issuance of Warrants
Cray to Install Asetek Liquid-Cooled
Cray CS300 Cluster Supercomputer at
Mississippi State University
Asetek and STG Agreement Expands
Market for Data Center Liquid Cooling
Asetek Named Winner of American
Business Awards for "Best New Product or
Service-Hardware-Computer"
Mandatory Notification of Trade
Asetek Receives First Order of RackCDU
Liquid Cooling System
OQutcome of extraordinary general meeting
Q2 2013 Continued Growth and Record
Level Revenues
Significant Order of Graphics Cooling
Solutions for PCs
Presentation of Financial Results for
Second Quarter and First Half of 2013
Notice of Extraordinary General Meeting
Change in Financial Calendar
BF OP AS TION
1405144EogSN92550
Issue Date
luly 11, 2013
lune 20, 2013
lune 3, 2013
May 24, 2013
May 21, 2113
May 1.4, 2013
April 22,2013
Apri 22,72013
April 5, 2013
mlarch 28, 2013
March 20, 2013
March 19, 2013
March 18, 2013
March 4, 2013
March 4, 2013
February 25, 2013
February 21, 2013
Fabruary 15, 2013
February 14, 2013
january 31, 2013
Headline
Asetek Liquid Cools Lenovo's Foray into
US High End Gaming PC Market
Mandatory Notification of Trade
Mandatory Notification of Trade
Qi 2013 Reaching Major Milestones
Presentation of Financial Results For First
Quarter 2013
HP Expands Liquid Cooling Availability
Inside 2820 Workstations
Entering Into Marketmaking Agreement
End of Stabilization
Asetek to Install Liquid Cooling at World's
Most Energy Efficient Data Center
Financial Calendar 2013
Disclosure of Shareholdings and
Mandatory Notification of Trade
Stabilization and Over-Allotment Option
Notice
Successful Completion of the Initial Public
Offering
Asetek A/S Launches Initial Public Offering
Approved Prospectus
Asetek Pilot Award to Cool Down the
University of Tromsø
Patents for Laptop and Integrated Liquid
Cooling Technologies Issued in US and
China
Annual Report and Fourth Quarter 2012
Extraordinary General Meeting
Asetek A/S Applies for Listing on the Oslo
Stock Exchange
ASEFRS AJ +
tanUust REPOPRE 2
DATA TEDITESR
FOLIE FO ÅJFLIRE-
Energy Savings
With the explosive growth of cloud computing, data center cooling
is one of the world's fastest-growing energy problems. Global
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mn fact, up to 50 percent of the energy consumed by data centers
is just for cooling. Federal and State incentives (and mandates)
[NI
are driving increased data center energy efficiency and renewable
energy deployment. In addition, the European Commission has
announced an initiative to reduce EU greenhouse gas emissions
by 40% by 2030.
Cost Savings
Asetek is changing the paradigm of liquid cooling for data centers
by making it cost-effective for all data centers, not just the small
handful of enormous supercomputers that use it today. No matter
eet besætte coæig how good for the environment a given technology might be, the
busket rs AU (Our tam rr oven
være random sogne even The cost of an Asetek data center liquid cooling system can
rdl Fender Kald arme orde, typically be repaid within a period of less than 12 months through
a combination of energy, equipment and maintenance savings.
730 fact is that most data centers are being asked to reduce costs.
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4 ADETEK A/S - ANNUAL REPORT 2013 LIQUID LOOLING GOMÆ RIGHT
1405144EogSN92551
i
Densily Increases
Increasing the density per rack, and for the data center as a whole,
enables a data center operator to obtain the most compute power
in as little space as possible, Asetek makes deploying high density
racks more practical at a data center scale while simultaneously
reducing data center cooling energy consumption. Density is
particularly important in HPC and supercomputing applications
where large numbers of servers work simultaneously on the same
problem. Maintaining short communication paths between servers
is critical to the overall performance of these supercomputers.
Data centers are frequently being mandated and incentivized to
consolidate their servers within their existing infrastructure, By
increasing the server density within the cluster, floor-space and
rack infrastructure requirements also reduced.
Noise Reductton
It has been well established in the workstation market that
reduced noise leads to increased productivity. What many don't
realize is that noise level should also be a concern for data
center operators. As more and møre servers are added to the
data center, the number of fans to keep them cool also increases,
Unfortunately, with fans comes noise — often at levels creating an
ineffective workpiace.
With Asetek's data center liquid cooling solutions, data centers
that were previously above noise thresholds can now operate
within safe noise levels. This is possibte because Asetek's efficient
liquid cooling enables fans to spin much slower (leading to 8-10%
power savings in the process), Slower fans translate into lower
noise, making data centers quieter, safer and møre productive
places to work.
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1405144EogSN92552
ADSETERN als ARIDEJÅL PEPGØDT 2013
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How Simply td Works
Asetek liquid cooling systems have three basic elements: a highly
efficient integrated pump, reservoir and cold plate unit; a heat
exchanger (radiator); and connecting tubes to transport the
liquid. The integrated pump and cold plate unit is a direct
replacement for the standard CPU air cooled heat
sink. The specialized heat
exchanger is mMounted
behind the rear chassis
fan(s) with the tubes
connecting the pump and
heat exchanger together.
- ANNUAL REPORT p117
1405144EogSN92553
(7)
H invent
SOE IRELE:
The cold plate transfers heat from the CPU into the cooling liguid.
The integrated pump assembly pushes warm liquid to the heat
exchanger and draws cool liquid back to the cold plate. Asetek's
liquid cooling delivers what is equivalent to 3 metric tons of liquid
per minute for every square meter of die area. This flow rate in
conjunction with Asetek's enhanced heat transfer cold plate heat
exchanger can remove heat from the surface of the processor
very effectively.
Finally, the system fan(s) blow air across the heat exchanger
exhausting CPU heat totally outside of the chassis, benefiting all
of the other components on the motherboard.
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1500
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Source: IDC, Global Data Center Cooling Solutions Market Report
Ou Gistnimers
In broad terms, we split our sales equally between two main
groups: The Do It Yourself (DIY) and the Original Equipment
Manufacturers (OEM's) markets. In each of these markets we
work with the top tier players,
Galring market shares m growing market
The mainstream desktop pc market is in decline, It is related to
the rapid sales growth for tablet PCs and smartphones. However,
Asetek's market, high performance desktop computers, is
growing. Furthermore, PC vendors need differentiation in their
high end system to keep/increase their Mmargins - liquid cooling is
such a differentiator.
ASHE JØOLING DOME SISHT
1405144EogSN92554
Asetek primarily selis into high end performance markets where
the PC is not likely to be exchanged for a tablet type device,
The typical end user is either a PC enthusiast or a user of an
engineering workstation PC,
Asetek's penetration in the workstations segment is still at
a relatively early stage, but acoustic noise and performance
requirements are increasing.
FB TEK AL srNiy,a, REDNART 2013
NL DIA LG ES ANM TESTN 7
The Year 2013 Outimed
>» Asetek continued its success as the leading supplier of liquid
cooling solutions for high-end computing.
Shipped 426,000 units of its patented sealed liquid cooling units
in 2013.
- Total shipments since Asetek's inception in 2000 have
exceeded 1,6 million units.
Revenues in 2013 totaled $20.7 million, an 11% increase over
2012 ($18.7 million). Product gross margin of 38.8% increased
from 2012 (36.3%) as a result of improved cost management
and a richer mix of sales of high end desktop cooling products.
Operating losses of $7,8 million ($4.9 million) increased due
to continued investment in the datacenter business, and legal
expenses associated with defending intellectual property.
Successful IPO, raising $21.4 million through the issuance of
four million common shares in March 2013
-= Made significant progress with its datacenter business in 2013:
- Began implementation of its first major data center retrofit
with RackCDU, for the U.S. Department of Defense at the
Redstone Arsenal datacenter. The three year contract carries a
total value of over $2 million, including $0.8 million of revenue
recognized in 2013.
- The first commercial orders for RackCDU were received in
second half of 2013, including five systems for a Cray Inc.
supercomputer installation at Mississippi State University and
additional five systems for a high performance computing
installation at a university in Japan.
- Asetek announced that RackCDU Liquid Cooling solutions wili
be available from HP as a Third Party Option kit for certain HP
Proliant Servers,
"An independent study performed by Lawrence Berkeley
National Labs validated Asetek's claims of 50% energy savings
achieved with its RackCDU liquid cooling solution.
» The Company partnered with industry experts — Johnson
Controls (integration, installation) and Signature Technology
Group (warranty, service) - to provide important services to
end customers in the delivery of datacenter cooling solutions.
" Asetek received numerous awards and pubiic recognition in
2013 from prestigious technology industry organizations and
publications.
- AMM yUuAL REPORT 2917
1405144EogsSN92555
» Operating losses in the datacenter segment were $6.7
million due to continued investment in development and
marketing, including increased engineering personnel, business
development resources and equipment/tools. The development
activities ensue into 2014.
: The desktop segment had EBITDA operating profits of $4,1
million in 2013. The desktop business has experienced
increased revenues and improved gross margins in 2013.
» The result for the year, a net loss of $6.3 million ($8.6 million),
is considered satisfactory considering the stage of the product
and marketing development efforts. Total revenue for 2013 is
consistent with the expectations for annual revenue growth
published in the Quarterly Report for the third quarter ended
September 30, 2013.
JP Engineering » Quality. Ole
Madsen stiybt) recerving the
21)13 Datacenter Dynamics awnd
for Fiture Thinking % Design
zencepts on behalf of Asetek mn
London Derember 2013
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1405144EogSN92556
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ANbIUAL REPORT 21932
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NDÆTEKRN BUSINESS
Asetek is the world leading provider of energy efficient liquid
cooling systems for data centers, servers, workstations, gaming
and high performance PCs. Its products are used for reducing
power and green house emissions, lowering acoustic noise, and
achieving maximum performance by leading OEMs and channel
partners around the globe.
Asetek's products are based upon its patented all-in-one liquid
cooling technology with more than 1.6 million liquid cooling units
deployed in the field, Founded in 2000, Asetek is headquartered
in Denmark with offices in USA, China and Taiwan.
FINANCIAL PLISITION AMILO
OPERATING RESULTS FOR UB
Profit and 1055
In 2013, the Company had revenue of $20.7 million compared to
$18,7 million in 2012. Average selling prices and sales volumes
for desktop liquid cooling units each increased about 3% from
2012 due to increased focus on sales to the high end markets.
Gross margin increased to 38.8% in 2013 (36.3%), principally as
a result of improved cost management and a richer mix of sales
of high end desktop cooling products. The increase in desktop
margin was partially offset by lower profit margins on the sale of
third party datacenter equipment supplied on a contract with the
U.S. Department of Defense.
In 2013, operating expenses were $15.8 million, a 35% increase
over 2012 ($11.7 million). At mid-2012 and subsequent to the IPO
in March 2013, Asetek increased investment in development and
marketing of the datacenter business. Operating expenses also
reflect $1.7 million ($0.4 million in 2012) of legal costs associated
with lawsuits filed by the Company against competitors (CoolIT
Systems Inc, and Coolermaster USA inc.) for infringing Asetek's
intellectual property patents. Share based compensation expense
associated with employee option grants represented $0.5 million
of the increase.
Finance income in 2013 included $1.6 million of gains associated
with the valuation of outstanding debt instruments converted to
equity at the time of the IPO. Based on the initial trading price of
the common shares, the Company recognized $0.8 million income
on the convertible option on preferred shares and $0.8 million
income on the convertible loan upon revaluation.
Finance costs in 2013 include foreign exchange loss of $0.5 million
on cash deposits held in NOK in the second quarter, plus $0.3
million of interest charges on debt paid or converted to shares
during 2013. In 2012, the revaluation of preferred shares and
a convertible loan resulted in finance costs of $3.2 million, plus
interest charges on outstanding debt of $0.5 million.
»SRTEK Ad ts AMNLAL PEPGRT 1 4
1405144EogSN92557
Balance sheet
Asetek's total assets at the end of 2013 were $21,0 million,
compared with $8.2 million at the end of 2012. The large increase
is principally the result of the company's IPO, which raised $21.4
million in net proceeds. Cash and cash equivalents on hand at
December 31, 2013 was $11.7 million.
The most significant increases in specific assets for 2013 were
as follows: cash and cash equivalents increased by $10.4 million
associated with the net IPO funds received, partly offset by debt
repayment and funding of operations. Trade receivables and
other assets increased by $1,0 million due to a 50% increase
in revenues in the last month of 2013 versus the same period
of 2012. Property and equipment increased by $0.7 million and
Intangible assets increased by $0.4 million, principally due to
equipment acquired and capitalized costs associated with growth
in the datacenter business.
Current liabilities, which include preferred shares and their
embedded convertible option from 2012, decreased from $41.4
million in 2012 to $5,7 million in 2013. At the time of the IPO, all
of Asetek's outstanding preferred shares, valued at $37.1 million
at 2012, converted to common shares. Trade payables increased
by $1.5 million in 2013, principally due to higher inventory
purchases to support the increase in sales. Accrued compensation
and benefits increased $0.5 million due to incremental incentive
compensation earned in 2013.
Long-term debt decreased by $7.0 million in 2013 due to repayment
of $3.0 million in notes payable and extinguishment of convertible
debt at the IPO. Of the $4.4 million in convertible debt held at
the beginning of 2013, $3.1 million was converted to common
shares and $0,6 million was repaid. The remaining $0.8 million was
recognized as a gain at the IPO date, based on the initial trading
price of the common shares. Included in long-term debt are $0.3
million of finance leases for equipment acquired in 2013.
Statement of cash flows
Net cash used by operating activities was $4.6 million for 2013,
compared with $3,6 million used in 2012. The change was mainly
attributed to the increased operating loss.
Cash used by investing activities was $3,1 million, related
principally to additions in capitalized development costs and
property and equipment.
Cash provided by financing activities was $17.9 million in 2013,
compared with $3,3 million provided in 2012. The change reflects
$21.4 million of net proceeds raised in the company's successful
IPO in the first quarter of 2013, and payments of $4.0 million of
outstanding debt, interest and line of credit, net of draws. The
change also includes $0.2 million received on deposit from a sub-
lessee of the Company's new facilities in Denmark.
Net change in cash and cash equivalents was $10.4 million in
2013, compared with ($1.4) million in 2012,
MPI GEMENT SEPO2T
ligtndity and finanging
Asetek has incurred losses and negative cash flows from
operations since its inception. During this time, Asetek has
financed operations principally through the issuance of convertible
preferred shares and most recently through its initial public
offering (IPO) of common shares on the Oslo Stock Exchange in
March 2013. From the IPO, the Company raised net proceeds of
$21.,4 million and used a portion of it to repay long-term debt. As
of December 31, 2013, the Company has working capital of $12.0
While there is no assurance that the Company will generate
sufficient revenues or operating profits in the future, Asetek's
management estimate that the Company's current capital
resources are sufficient to fund the current of operating activities
through the first half of 2015, based on financial forecasts.
The management wili consider meeting Asetek's future funding
requirements through a combination of debt and equity offerings,
depending on cost of capital and the status of the financial
million and non-current liabilities of $0.5 million. markets at that time.
Historical Anancjal rrevnew
Accounting principles of preparation: IFRS IFRS IFRS IFRS U.S. GAAP
DH mer — ante Adel kt 20 TORE IDST
Financial highlights: ($000's) ' — ” ' i me
Revenue 20,729 18,681 15,574 15,749 4,737
Gross profit 8,049 6,788 5,703 4,823 (966)
Gross margin % 38.8% 36.3% 36.6% 30.6% -20.4%
EBITDA (5,729) (2,820) (1,918) (3,170) (10,452)
Operating loss (7,759) (4,872) (3,707) (4,215) (10,800)
Finance income (expenses) 1,035 (3,693) 1,838 (2,274) 142
Net income (loss) (6,281) (8,558) (1,877) (6,499) (10,653)
Purchases of property and equipment 952 88 386 183 102
"Sealed loop units shipped (000's) 426 414 333 354 103
Year-end values ($000's); ” |
Total assets 20,983 8,162 8,503 8,751 11,266
Total equity 14,808 (40,642) (32,294) (30,613) (29,437)
Total liabilities 6,175 48,804 40,797 39,364 40,703
Employees at end of year ' ' ' 69 ' 60 Si i — 58 52
Key ratio KH De 5 5 ' FE |
Average selling price per desktop unit ($) 46.8 45.1 46,8 44.5 46.0
Revenue per employee ($000's) 300 311 305 272 91
Days sales outstanding 75 65 48 55 250
Inventory turns per year 11.9 12.6 8,1 6.2 4.0
The financial report for 2009 was not prepared under IFRS accounting principles. The following are some of the significant accounting
adjustments that would be required to report 2009 under IFRS:
» Capitalization (and amortization) of intangible assets related to internal development projects;
Revaluation of convertible option on preferred shares;
: Reclassification of foreign currency gains from equity to operating expenses; and
> Accounting for share based payments under IFRS 2
The above adjustments have not been quantified and other additional adjustments may be required.
MAAGEIENT IRPORT ANTIGAL KEPORT 20551 fua
1405144FogSN92558
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Data center: The future performance of Asetek is most
importantly dependent upon the Company's ability to create
profitable revenue from the datacenter markets.
Predicting revenues from the datacenter markets is inherently
difficult, as these markets are new to commercial liquid cooling
solutions. During the later months of 2013, Asetek delivered the
Yew benchmark
The National Renewable Energy Laboratory (NREL) in
Boulder, Colorado, USA, is home of the world's most energy
efficient data center and site of Asetek's first RackCDU
installation, At NREL, data center sustainability requires
a three dimensional optimization:
Usage Effectiveness (PUE), decreasing the overail power
needed to run a data center, 2) increasing computational
1) increasing Power
power efficiency (increasing performance per Watt) and 3)
improving Energy Reuse Effectiveness (ERE), lowering the
percentage of un-used data center waste heat. Asetek's
installation helps substantially improve all three of these
factors.
Now, in 2014, the University of Tromsø (UiT) "the Arctic
University of Norway” is setting out to demonstrate the
practical reuse of data center waste heat by using a district
heating application at their high performance computing
facility. As the world's northernmost university, situated in
Tromsø Norway, the UIT Campus and surrounding city have
a continuous requirement for building heating.
UIT began installing Asetek's RackCDU hot water, data
center liquid cooling in January. Unlike chilled water liquid
cooling systems, cooling with hot water enables effective
reuse of the heat produced by the servers. UIT pumps hot
water returning from cooling the servers into the university
campus" building heating system. Ultimately the plan is to
use the surplus hot water to heat the hospital next door
as well, which is quite convenient given the city of Tromsø
holds an annual average outdoor temperature of only four
degrees Celsius (39 Fahrenheit).
(Dr mm manen nun mr
ASÆTER A/%5 amntubi REPORT 2912
1405144EogSN92559
initial commercial orders in this segment, and continue to work
with customers in various stages of proof-of-concept designs. Our
focus in 2014 is to establish more design wins and build closer
relationships with the leading OEM companies, At the same time,
we plan to continue to drive end-user demand at large customers,
so they will influence their suppliers to provide products using
our liquid cooling solutions. The market response has been very
positive through 2013 and Asetek's management expects to reach
new commercial milestones during 2014,
Reuse of surplus heat with Asetek's liquid cooling isn't
limited to arctic environments where all buildings need
year-round heating. It can also be used to heat household
water. That's needed all over the world, and in warm months
the heat can be used to operate absorption chillers.
Hot water efficiency
All the energy used by a server is returned to the data
center in the form of heat. The inefficiency of air as a
cooling medium makes it impractical to reuse this heat
when removed from servers with air. In contrast, a liter of
water carries 4000 times more heat than a liter of air and
requires ten times less energy to move to distant buildings.
With Asetek RackCDU D2C'" (Direct-to-Chip) liquid cooling,
UIT is able to use in excess of 50% of the heat generated by
servers in their district heating project,
Paving the way
Data center sustainabifity is a critical issue for our customers
and solving painful customer problems is essential to
maintaining our position as the world's leading liquid
cooling company. We strive to be at the forefront of ground
breaking data center projects. Our patented technology
and products give data centers cost and energy savings,
greenhouse gas and noise reduction, and contribute to a
greener technology world. Combined with density increases
enabling data center consolidation, these
performance improvements and cost savings
are the main reasons research institutions
like NREL in the U.S. and UIT in Europe are
switching from air cooling to liquid cooling
and Asetek RackCDU.
David Garcia,
VP & GM, Data Center Business
MAP LAGEMENT REPYDT
Desktop: Asetek is continuously working with new and existing
customers to take new products to market. The Company is
primarily working in the high end segment of the desktop PC
market, and expect to see an overall better performance than the
general PC market. The management therefore foresee modest
revenue growth in this segment.
The Company plans to continue to invest in the data center business
with a focus on long-term growth and scalability. In the short-
term, management expects to incur losses while the Company
focuses on design wins to gain traction with key data center OEMs.
Overall, the Company expects modest revenue growth for 2014,
with comparable levels of spending and continued investment
in the datacenter business. As such, management expects that
the Company will report a loss for 2014 comparable to the loss
incurred in 2013.
Fl'sr EXEMISLIRE ANM
MIA M ALENE T
Asetek's potential to realize the company's strategic and
operational objectives are subject to a number of commercial
and financial risks. Asetek is continuously working on identifying
risks that can negatively impact the company's future growth,
activities, financial position and results, To the largest extent
possible, Asetek tries to accommodate and limit the risks which
the company can affect through its own actions.
Below, some of the risk factors management considers as being
of special importance to the Group are described in no specific
order. Asetek conducts its business with significant focus on
continuous risk monitoring and management. The overall goal of
risk management is to ensure that the company is run with a level
of risk, which is in a sensible ratio to the activity level, the nature
of the business, and the company's expected earnings and equity.
Insurance. It is the company's policy to cover all relevant
risk areas with commercially available insurance products.
This currently includes insurance for product liability, operating
material and inventory as well as compulsory coverage, which
varies from country to country. Management assessments indicate
that the necessary and relevant precautions have been taken to
thoroughly cover insurance issues, Asetek's insurance policies and
overall coverage approach are reviewed at least annually.
Liquidity risk. Reference is made to the Liquidity and Financing
discussion in the Financial Position and Operating Results for 2013.
MANGELEN T DEPOT
'" 1405144EogSN92560
Credit risk. The credit risk is the risk of a counterpart neglecting
to fulfill its contractual obligations and in so doing imposing a
loss on Asetek. The Group's credit risk originates mainiy from
receivables from the sale of products as well as deposits in
financial institutions. Receivables from the sale of products are
split between many customers and geographic areas. A systematic
credit evaluation of all customers is conducted, and the rating
forms the basis for the payment terms offered to the individual
customer. The credit risk is monitored centrally.
Foreign exchange rates. Substantially all of Asetek's revenue
is billed in USD. However, significant portions of the overhead
expenses are paid in either DKK or CNY. In the area of currency
risk, Asetek strives to match expenses against income and
liabilities against assets. Furthermore, as many expenses and
liabilities as possible are denominated in USD. The actual currency
risk is therefore limited to the cash flow that is not in USD, Despite
this, greater fluctuations in DKK vs, USD will have an influence
on the financial position. An amount equivalent to approximately
20% of the revenue is exposed to a risk on the DKK vs. USD
exchange rate. The Group has not entered into any forward
exchange transactions.
Product innovation and market development. The company's
future success, including the opportunities to ensure growth,
depends on the ability to continue developing new solutions and
products adapted to the latest technology and the clients' needs
as well as improving existing solutions and market position.
Asetek has in recent years increased its focus and investments on
building the market for datacenter liquid cooling products.
Projecis and contracis. It is of significant importance to
Asetek's overall success that development projects are executed
at high quality and at predetermined timeframes and cost prices.
Risks are attached to the sale, analysis and design, development
and initial manufacturing phases. Asetek has carefully defined the
individual phases and the activities contained therein, with a view
to active risk management and efficient implementation. Through
project reviews and ongoing analyses before, during, and after
initiation, Asetek works to ensure that agreements are adhered to
and that revenue and margins are as planned.
Employee relations. Asetek is a knowledge-intensive company
and in order to continuously offer optimal solutions, develop
innovative products, and ensure satisfactory financial results, it
is necessary to attract and develop the right employees. Asetek
has the goal of being an attractive workplace and achieves this
through various programs including an option incentive program,
and attractive working conditions. The company seeks to support
a company culture founded on individual responsibility and
performance as well as team accomplishments.
fx Got TFT ALS 2 AMU SL REPNPT 242
- OLOBNU
With its global reach, Asetek's Sales organization keeps our doors open for
business 24/7.
Since the commercial launch of the first mass adoption desktop product in
2007, we have steadily increased our product portfolio and our customer
list. The sales organization reflects our strategy to sell to a select group
"of high-end Do-It-Yourself/Enthusiast Brands and Original Equipment
Manufacturers.
From individual contributors up through executive management, our sales
team is capable of working closely with our customers at ali levels. The
team identifies opportunities, brings them to market and manages the
customers" requirements on an ongoing basis.
Working in an industry with abundant growth potential means that we often
find ourselves in a role where we are the technology experts. The sales team
plays an integral part coordinating the customers' teams with Asetek's own
internal teams: presenting product roadmaps, defining products, agreeing
schedules and working supply plans.
John Hamill, Vice President of World
Vide Sales, heads the sales teain
from om office Mm Austin, Texas. i
åsetek als0 has Såles pet sonnel m
Munich, Germany, Chicago, USA, San
John Hamill, VP Global Sales Jøse, USA and Taipei. Tanvan
———d
STATUITORY PEFIÆT ON Transparency and credibility. Asetek is committed to show
CC URA TER SOCIAL
PRESSE) TES fla
complete openness towards shareholders, customers, employees,
suppliers and other stakeholders. It is essential that their
understanding of the business and products is accurate, updated
Code of conduct. Asetek's Code of Business Conduct Ethics is
the general ethical guideline for business conduct to ensure that
Asetek on a global level is dedicated to promote ethical business
practices and protect Asetek against corruption and other unethical
business behavior. The business conduct guidelines can be found
at http://asetek.com/investor-relations/corporate-governance/
ethical-guidelines.aspx
ADRTEH Alb ANHUAL REPORT 2012
1405144EogSN92561
and truthful.
Anti-corruption. Asetek will not tolerate corruption, money
laundering, bribery or other illegal or unethical business activity.
The Company's performance and competitiveness are strengthened
solely through lawful conduct. The group's anti-corruption position
has been clearly communicated to all employees. Furthermore,
GEMEMT RI PORT
Asetek has implemented an Ethics Website operated by a third
party company. Via the website, all stakeholders can keep
themselves informed about Asetek's policies as well as report any
concern to the company's leadership,
Internal environment and knowledge resources. Asetek
recognizes that its employees are its key assets and it is committed
to maintaining a stimulating working environment that offers
opportunity for both personal and professional! development. The
Company maintains a team-oriented culture where all employees
have the opportunity to contribute significantly to the success of
the Company. This is also necessary to continue to attract and
retain highly qualified employees within the computer industry.
Asetek welcomes applications for employment from all sectors
of the community and strives to promote equal opportunity
of employment to all. The Group maintains a positive working
environment and sick leave and turnaround is not significant, No
working accidents or injuries occurred in 2013.
Equal Opportunities. The Board of Directors decided in October
2013 that it is Asetek's goal to have at least 15% female
representation at board and management level by 2016. Since the
goal is new, any change in female representation cannot currently
be evaluated. Women are actively encouraged to apply for open
positions in the Company.
External environment. Asetek Group operations” effect on the
environment is minimal and is typical for a supplier of computer
components. The manufacturing operations are outsourced
to a commercial manufacturer in China, which is continuously
monitored on various factors relating to the environment and
other social responsibilities. The principal source of strain on the
environment from the business is related to shipment of inventory,
which is conducted in accordance with normal routine commerce.
Adherence to Human Rights Principles. Asetek supports the
fundamental principles of EICC (Electronic Industry Citizenship
Coalition) on human rights, employees" rights, child labor, health
and safety, environment and anticorruption. Asetek requires that
its suppliers respect and conform to the same principles. Asetek
periodically reviews via its supplier review and evaluation process
that its suppliers conform to the principles. The principles can be
found at http://www.eicc.info/eicc code.shtml
Social responsibility program. While the Company has not at
this point developed a formal program of CSR policies, Asetek
complies with the laws and regulations in each of the countries in
which it operates.
ULVE LIRAT ER LÆJVERSMAPIE CE:
The work of the board of direciors
Asetek's management modet and organization are adapted
continuously to ensure the Company is equipped to manage all
obligations to shareholders, customers, employees, authorities
and other stakeholders to the utmost, In this process, Asetek
MAMAGEMENT DEBIIRT
1405144EogSN92562
uses the corporate governance recommendations from NASDAQ
OMX Copenhagen as an important source of inspiration. The
recommendations can be found at www.corporategovernance.dk.
The Board of Directors is fundamentally in full agreement with
NASDAQ OMX Copenhagen's recommendations about good
company governance. Asetek endeavors to follow the relevant
recommendations for the company, which support the business
and ensure value for the company's stakeholders. The statutory
report on Corporate Governance, cf. section 107b of the Danish
Financial Statements Act, is available on the Company's website:
http://asetek.com/media/8366/cg.pdf
Dialogue between the company and its shareholders. The
communication between Asetek and shareholders primarily takes
place at the company's annual general meeting and via company
announcements. Asetek shareholders are encouraged to subscribe
to the e-mail service to receive company announcements, interim
management statements, interim reports and annual reports as
well as other news via e-mail.
The general meeting. The general meeting has the final authority
over the company. The Board of Directors emphasize that the
shareholders are given detailed information and an adequate
basis for the decisions to be made by the general meeting.
The general meeting elects the Board of Directors, which currently
consists of six members. The board members are elected for one
year at a time with the option for re-election.
Amendment of Arzicles of Association. Unless otherwise
required by the Danish Companies Act, resolutions to amend
the Articles of Association must be approved by at least 2/3 of
the votes cast as well as at least 2/3 of the voting share capital
represented at the General Meeting.
Board responsibilities. The Board of Directors' main tasks
include participating in developing and adopting the Company's
strategy, performing the relevant control functions and serving
as an advisory body for the executive management. The Board
reviews and adopts the Company's plans and budgets. Items of
major strategic or financial importance for the Company are items
processed by the Board. The Board is responsible for hiring the
CEO and defining his or her work instructions as well as setting
of his or her compensation, The Board periodically reviews the
Company's policies and procedures to ensure that the Group
is managed in accordance with good corporate governance
principles, upholding high ethics.
Financial reporting. The Board of Directors receives regular
financial reports on the Company's business and financial status.
Notification of meetings and discussion of items. The Board
schedules regular meetings each year. Ordinarily, the Board
meets 4-6 times a year. The meetings are typically conducted in
either the facility in Aalborg, Denmark or in San Jose, California.
Additional meetings may be convened on an ad hoc basis.
AFTEN JB umMløjar BEPART 2040
LIGLIID COOLING PRESCTISION
fler g harm
2]
kt
Asetek's patented, energy efficient products are designed
by our R&D Center in Denmark and developed in close
collaboration with our customers,
Our main desktop operations are based in China. Its location
has brought us close to our sources of supply, therefore we
could setup an efficient and responsive supply chain with
the added benefit of lower labor costs than in the EU and
the U.S.
The operations function is directly involved in product
qualifications, supplier development, sourcing, quality
control, material planning, and order management activities
while manufacturing itself is outsourced to an experienced
Contract Manufacturer (CM). Outsourcing manufacturing
helps us to focus on our core competencies and leverage the
CM's expertise in large scale, repetitive production,
A critical part of the development process is the transition
from the engineering team to the manufacturing team in
China. Our Chinese team works with our vendors and with
our contract manufacturers to build work instructions. This
team also owns the tooling development tasks, where plastic
molds and manufacturing jigs etc. are being developed.
LeK 24/90 åpllbJal REPOØGT poy2
1405144EogSN92563
DERATIONS
f
At Asetek, we manufacture and ship approximately 40,000
liquid cooling units — ør 15 container loads - each month.
Each of those units go through a series of tests to ensure
supreme quality on every single product we ship.
To ensure no interruption in supply we adhere to a mMulti-
sourcing policy wherever feasible. We also own the critical
production equipment. That provides agility and safeguards
us from significant losses, should one supplier experience
a stoppage.
We employ around 25 fulltime employees in our Chinese
entity, In addition to this, we estimate
that we create the foundation for an
additional 150 full time positions
at our core suppliers.
Csaba Vesei,
Snr. Director, Operations
MANAGEMENT REPORT
All Board members receive regular information about the
Company's operational and financial progress in advance of the
scheduled Board meetings.
The Board members also regularly receive operations reports and
participate in strategy reviews. The Company's business plan,
strategy and risks are regularly reviewed and evaluated by the
Board. The Board Members are free to consult the Company's
senior executives as needed, Ordinarily, the Chairman of the
Board propøses the agenda for each Board meeting. Besides the
Board Members, Board meetings are attended by the Executive
Board. Other participants are summoned as needed. The Board
approves decisions of particular importance to the Company
including the strategies and strategic plans, the approval of
significant investments, and the approval of business acquisitions
and disposals.
Conflicts of interest. In a situation involving a member of the
Board personally, this member will exclude him or herself from the
discussions and voting on the issue.
Use of Committees. Currently, the Company has a Nomination
Committee, an Audit Committee and a Compensation Committee.
» The Nomination Committee is elected directly by the General
Meeting. The Committee consists of three members and must be
independent from the Board of Directors and the management,
however, it is recommended that the chairman of the Board of
Directors is a member, The tasks include proposing candidates
for the Board of Directors, propose remuneration for the Board
of Directors as well as perform the annual assessment of the
Board of Directors. members: Ib Sønderby (chairman) and
Samuel Szteinbaum (one seat is vacant).
» The Audit Committee is elected among the members of the
Board of Directors and has responsibilities related to financial
reporting, the independent auditor, internal reporting and risk
management. The Committee consists of two shareholder-
elected Board Members. The other Board Members are entitled to
attend if they so desire. Members: Alexander Wong (Chairman)
and Knut Øversjøen.
» The Compensation Committee has responsibilities related to
developing proposals for the applicable remuneration policy
and execution of the Management Board. Members: Samuel
Szteinbaum (Chairman), Alexander Wong (Member) and Jørgen
Smidt (Member).
The Board's self-evaluation. The Board's composition,
competencies, working methods and interaction are discussed on
an ongoing basis and evaluated formally on an annual basis. In
this connection, the Board also evaluates its efforts in terms of
corporate governance.
The composition of The Board is considered appropriate in terms
of professional experience and relevant special competences to
perform the tasks of the Board of Directors. The Board of Directors
continuously assesses whether the competences and expertise of
members need to be updated. At least half of the members elected
MAMAGEMENT »gPORT
1405144EogSN92564
by the general meeting are independent persons, and none of The
Board members participates in the day-to-day operation of the
Company.
A comprehensive list of other management positions held by the
Board members can be found in note 24,
Risk management. Refer to the Risk Exposure and Management
section of the Management Report as wel! as Note 3 of the
consolidated financial statements.
fhe board's authortzation tø issue shares
At the general meeting held on August 13, 2013 the Board was
authorized to issue shares with a nominal value of up to DKK
80,000 for the period until August 14, 2018 in connection with
employee warrant programs.
At the Board of Directors meeting on October 8, 2013 warrants
permitting subscription of up to 670,728 shares of a nominal value
of DKK 0,10 and at an exercise price of NOK 36.50 per share
were issued. The exercise price was established as the share
price ("closing price”) for the Company's share as of that day. The
warrants were issued to employees and Board members.
In addition to the above, the Board is authorized to seli treasury
shares, currently held by the company to fulfill emplioyee option
obligations as described in note 7.
Remuneration of the board of direclors
Board members representing their Company's ownership interests
are not compensated for their services. Independent board
members received share option grants in lieu of cash remuneration
in 2013. Please see note 24 for further details.
Remuneration of the executive staff
The Remuneration Committee recommends to the Board, and
the Board sets, the terms of employment of the members of the
Management Board. Each year, the Remuneration Committee
undertakes a review of salary and other remuneration to the CEO
as well as for other members of the Management Board.
A summary of the agreements between the Company and its
management board members pertaining to termination can be
found in note 6.
The option program and the allocation of options to the employees
and Board members are decided upon by the Board of Directors.
ADET EN 2/5 ANMiIAaL DPEPSNRT 2ist
fe fr NT 4 — N/ Ll I» AJ” T en] — y Nå ASS [2 z— N. C
The Executive Board and the Board of Directors have today In our opinion, Management's Report includes a true and fair
considered and adopted the Annual Report of Asetek A/S for the account of the devefopment in the operations and financial
financial year January 1 to December 31, 2013. The annual report circumstances of the Group and the Parent company as well
is prepared in accordance with International Financial Reporting as a description of the most significant risks and elements of
Standards as adopted by the EU and additional Danish disclosure uncertainty facing the Group and the Parent company.
requirements for listed companies.
We recommend that the Annual Report be adopted at the Annual
In our opinion, the Consolidated Financial Statements and Financial General Meeting.
Statements give a true and fair view of the financial position at
December 31, 2013 of the Group and the Parent company and of Aalborg, Denmark .
the results of the Group and Parent company operations and cash February 25, 2014 '
flows for 2013.
Executive Bødid
er Een, c i
André Stoth Eriksen Peter Dam Madsen
Chief Executive Officer Chief Financial Officer
i
Board nf Dnectors !
Sek BY) (And SJ nd get
Samuel Satelnbaum Oy Ch man Chris J. Christopher?
| i
AR eg | E N( . |
Jørgen Smidt Bengt Olof Thuresson '
Årdn RO AF
—d / 7 PA Knut Øversjøen
Alexander Wong —
1405144EogSN92565
BLILUTUR'S
HOS E PEDE PET AALIFJITID ES
PRUT
Tnihe Sharuholders of Asatek A/5
Report on Consolidated Financial Statements and Parent
Company financial Stalaements
We have audited the Consolidated Financial Statements and
the Parent Company Financial Statements of Asetek A/S for the
financial year 1 January to 31 December 2013, which comprise
income statement, statement of comprehensive income, balance
sheet, statement of changes in equity, cash flow statement and
notes, including summary of significant accounting policies, for
the Group as well as for the Parent Company. The Consolidated
Financial Statements and the Parent Company. Financial
Statements are prepared in accordance with International
Financial Reporting Standards as adopted by the EU and Danish
disclosure requirements for listed companies.
Management's Responsibilily for he Consolidated
Financial Statements and (he Parent Company Financral
Statemenis
Management is responsible for the preparation of Consolidated
Financial Statements and Parent Company Financial Statements
that give a true and fair view in accordance with International
Financial Reporting Standards as adopted by the EU and Danish
disclosure requirements for listed companies, and for such
internal control as Management determines is necessary to
enable the preparation of Consolidated Financial Statements and
Parent Company Financial Statements that are free from material
misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on the Consolidated
Financial Statements and the Parent Company Financial Statements
based on our audit. We conducted our audit in accordance with
International Standards on Auditing and additional requirements
under Danish audit regulation. This requires that we comply
with ethical requirements and plan and perform the audit to
obtain reasonable assurance whether the Consolidated Financial
Statements and the Parent Company Financial Statements are
free from material misstatement.
Henrik Trangeled Kristensen
State Authorised Public Accountant
AJDIFAD 3 REPORT
1405144EogSN92566
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the Consolidated Financial
Statements and the Parent Company Financial Statements. The
procedures selected depend on the auditor's judgment, including
the assessment of the risks of material misstatement of the
Consolidated Financial Statements and the Parent Company
Financial Statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control
relevant to the Company's preparation of Consolidated Financial
Statements and Parent Company Financial Statements that give
a true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of
expressing an opinion onthe effectiveness ofthe Company's internal
control, An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting
estimates made by Management, as well as evaluating the overall
presentation of the Consolidated Financial Statements and the
Parent Company Financial Statements.
We befieve that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
The audit has not resulted in any qualification.
Opinion
In our opinion, the Consolidated Financial! Statements and the
Parent Company Financial Statements give a true and fair view
of the Group's and the Parent Company's financial position at 31
December 2013 and of the results of the Group's and the Parent
Company's operations and cash flows for the financial year 1
January to 31 December 2013 in accordance with International
Financial Reporting Standards as adopted by the EU and Danish
disclosure requirements for listed companies.
Statement on ManagemenlUs Report
We have read Management's Report in accordance with the Danish
Financial Statements Act. We have not performed any procedures
additional to the audit of the Consolidated Financial Statements
and the Parent Company Financial Statements. On this basis, in
our opinion, the information provided in Management's Report is
consistent with the Consolidated Financial Statements and the
Parent Company Financial Statements.
Aalborg, February 25, 2014
PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab
ERA
MichaelyStenskrog
State Authoriged Public Accountant
ADETESN A/B - Afåbsp REROPT 2312
Asetek A/S
Consolidated Statement of Comprehensive Income
For the years ended December 31, 2013 and 2012
alles TE ag ae TT gir]
Revenue 20,729 18,681
Cost of sales (12,680) (11,893)
Gross profit 8,049 6,788
Research and development (4,492) (3,717)
Selling, general and administrative (11,236) (7,878)
Foreign exchange (Ioss)/gain (80) (65)
Total operating expenses (15,808) (11,660)
Operating income (7,759) (4,872)
Finance income 1,865 -
Finance costs ' (830) (3,693)
Total financial income (expenses) 1,035 ' (3,693)
Income before tax (6,724) i (8,565)
Income tax 443 7
Income for the year (6,281) (8,558)
Other comprehensive income items that may be reclassified
to profit or loss in subsequent periods:
Foreign currency transtation adjustments 52 67
Total comprehensive income (6,229) (8,491)
Income per share: (in USD)
Basic (0.46) (0.62)
Diluted (0.46) (0.62)
All operations are continuing.
The Notes on the following pages are an integral part of these consolidated financial statements.
sy ASTRK A/G OAbbbaL FPEPOPT 2014 PROFIT & 1935
1405144EogSN92567
Aselek A/S
Consolidated Balance Sheet
As of December 31, 2013 and 2012
be.
ASSE TS
Non-current assets
Intangibie assets
Property and equipment
Other assets
Total non-current assets
Current assets
Inventory
Trade receivables and other
Cash and cash equivalents
Total current assets EH
Total assets
EQUITY AND LIABTI LYTTES
Equity
Share capital
Share premium
Accumulated deficit
Translation and other reserves
Total equity
Non-current liabilities
Long-term debt
Other long-term liabilities
Total non-current liabilities
Current fiabilities
Redeemable preferred shares
Convertible option on preferred shares
Short-term debt
Accrued liabilities
Accrued compensation and employee benefits
Trade payables
Total current liabilities
Total liabilities
Total equity and liabilities
iv
i
Pets: 241
1,823
1,096
330
"3,249
1,074
4,997
11,663
17,734 ——
20,983
264
64,357
(49,490)
(323)
14,808
243
232
5
420
802
995
3,483
5,700
6,175
20,983
The Notes on the following pages are an integral part of these consolidated financial statements.
BALANUF SHEFE
1405144EogSN92568
ASETEN AA, Ø -
UDE
1,448
440
1,888
1,055
3,971
1,248
6,274
8,162
2
3,935
(44,218)
(361)
— (40,642)
7,451
7,451
29,510
7,612
314
1,393
534
1,990
41,353
48,804
8,162
ANfEJAL REDODT 20913
IQLJILD
CO Oct NG) 4/7
Fag ne Yjå t
ULAN Sole FL MOVE
åsetek A/S
Consohwiated Cash Flow Statemani
For the years ended December 31, 2013 and 2012
Ksige: EH FE FASE |
Cash flows from operating acthaties DE HEE —
Income for the year (6,281) (8,558)
Depreciation and amortization 2,030 2,052
Finance costs (Income) (1,035) 3,693
Income tax expense (income) (443) (7)
Impairment of intangible assets 62 74
Cash receipt (payment) for income tax 222 (2)
Share based payments expense 593 140
Changes in trade receivables, inventories, other assets (1,109) (2,070)
Changes in trade payables and accrued liabilities 1,406 1,045
Net cash used in operating activities ” HE (4,555) (3, 633)
Cash Aows from mvesting activities FEE FE
Additions to intangible assets (2,128) (1,165)
Additions to other assets (314) -
Purchase of property and equipment (631) (88)
Net cash used i in investing activities i ' ' (3, 073) i (1,253)
Tash Jows from fnancing activities |
Proceeds from debt issuance ” 3,306
Long-term deposit received from sub-lessee 234 -
Cash payments on long-term debt (3,621) (322)
Funds drawn (paid) against line of credit 57 -
Cash payments for interest on long-term debt (461) -
Proceeds from issuance of share capital 25,099 -
Cash paid for fees related to IPO (3,405) 3
Proceeds from issuance of convertible preferred shares - 366
Principal: and interest Payments on finance leases (42) (35)
' Net cash provided by financing activities ' ' ' 17,861 ” 3, 318
Effect of "exchange rate ”e changes on cash al and cash equivalents — — ' — 182 FE HE 148
Net changes i in cash and cash equivalents TT 10,415 — ' ol, 420)
Cash and & cash equivalents at "beginning of p period FE DT — — 1,248 NH 2,668
Cash and cash equivalents at end of peri | — ' ” 11,663 ' dr 1,248
”Supplemental disclosure - non- cash sh transactions TE rr
Property and equipment acquired on finance leases 321 -
All operations are continuing.
The Notes on the following pages are an integral part of these consolidated financial statements
ta ADETEK 3/9 GMMUA, PEPORT 2912 nn Sk FLOS
1405144EogSN92569
; ELDLIITY
i
i Asetek A7S
; Consolidated Statament of Changes mn Equity
' For the years ended December 31, 2013 and 2012
[ BT RT " Gir FE ørne imekrdan Cut ai: i Fåre me |
; Haff) efte — argon BERNER sagen tange ESS
' Equity at January 1,2012 000 2 3,792 (428) 102 (35,660) — (32,294)
f Fortal comprehensive income for 201 2
Income for the year - - - - (8,558) (8,558)
' Foreign currency translation adjustments - - 67 - 67
i Total comprehensive income for 2012 — - 67 - — (8,558) — (8,491)
( Transactions with owners in 2012 i
' Shares issued - 3 - - - 3
i Reclass of prior years share based payment - (276) - - 276 -
, expense
hi Share based payment expense - - - - 140 140
i Transactions with owners in 2012 De (73) 0 - en ME 143
| Equity at December 32 RT Es 6) - aåoe) (06)
i Total comprehensive income for 2013
i Income for the year - - - - (6,281) (6,281)
| Foreign currency translation adjustments - - 52 - - 52
' Total comprehensive income for 2013 000252 —— (6,281) — (6,229)
[ Transactions with owners in 2013 ' ' E
; Shares issued 75 24,955 - ” - 25,030
| Less: issuance costs - (3,423) - - - (3,423)
( Equity exchange to Asetek A/S 25 (25) - - - -
Issuance of treasury shares 14 - - (14) - -
| Conversion of debt 9 3,110 - - - 3,119
( Conversion of preferred shares 139 36,221 - - - 36,360
, Share based payment expense - ” - - 593 593
Transactions with owners in 2013 262 60,838 - (14) 593 61,679
Of Equity at December 31, 2013 264 64357 (309) (14) (49,490) 14,808
( All operations are continuing.
i
(
The Notes on the following pages are an integral part of these consolidated financial statements.
i
(
Soul: ASETEN A/B - AMihyÅl, PEROPY 2932
1405144EogSN92570
Cc
cu
Or
| CVETNERØAL PIET JPN/MATIEGE I
Asetek A/S ("the Company"), and its subsidiaries (together, "'Asetek
Group", "the Group” or 'Asetek”) designs, develops and markets
thermal management solutions used in computers and datacenter
servers. The Group's core products utilize liquid cooling technology
to provide improved performance, acoustics and energy efficiency.
The Company is based in Aalborg, Denmark with offices in USA,
China and Taiwan. The Company's shares trade on the Oslo Stock
Exchange under the symbol 'ASETEK",
In the first quarter of 2013, Asetek Group reorganized as follows:
Asetek Holdings, Inc. was the parent company of the Asetek
Group from August 2008 until February 2013. Asetek A/S was
Pl AN FABSS DF SINE APIT ATT
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented,
unless otherwise stated.
2. Å. Basis of preparauon
The consolidated financial statements have been prepared on
a historical cost convention, in accordance with International
Reporting Standards (IFRS) as adopted by the
European Union (EU) and the supplementary Danish information
Financial!
requirements for class D publicly listed companies.
22 Consolbdation
The consolidated financial statements comprise the Company and
its consolidated subsidiaries. Subsidiaries are all entities (including
structured entities) over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are deconsolidated from the
date that control ceases. Intercompany transactions, balances,
income and expenses on transactions between Group companies
are eliminated. Profits and losses resulting from the intercompany
transactions that are recognized in assets are also eliminated.
Accounting policies of subsidiaries are consistent with the policies
adopted by the Group.
AGATE, AG ANfIYUAL REPORT 290735
. 1405144EogSN92571
(u
incorporated in December 2012 and acquired by Asetek Holdings,
Inc, in January 2013. Asetek A/S became 100% owner of the
Asetek Group through the purchase of all outstanding shares of
Asetek Holdings, Inc. from the shareholders, in exchange for new
shares in Asetek A/S in February 2013.
This reorganization of Asetek Group did not have a material effect
on the Group's operating results or consolidated equity. The
Group's results for 2012 and 2013 are therefore presented on a
comparative basis in this report.
UN TIP EG UPFOLATIES
The Group uses the acquisition method of accounting to account
for business combinations. The consideration transferred for
the acquisition of a subsidiary is the fair values of the assets
transferred, the liabilities incurred and the equity interests issued
by the Group. The consideration transferred includes the fair value
of any asset or liability resulting from a contingent consideration
arrangement. Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at
their fair values at the acquisition date, The Group recognizes
any non-controlling interest in the acquiree on an acquisition-
by-acquisition basis either at fair value or at the non-controlling
interest's proportionate share of the acquiree's net assets. The
excess of the consideration transferred, the amount of any non-
controlling interest in the acquiree and the acquisition-date fair
value of any previous equity interest in the acquiree over the
fair value of the identifiable net assets acquired is recorded as
goodwill. If the total of consideration transferred, non-controlling
interest recognized and previously held interest measured is less
than the fair value of the net assets of the subsidiary acquired
in the case of a bargain purchase, the difference is recognized
directly in the income statement.
2.3. Foreign surreney
Items included in the financial statements of each of the Group's
entities are measured using the currency of the primary economic
environment in which the entity operates ("the functional
currency"). The functional currency of the Company's operations
in the United States of America, Denmark and China are the U.S.
MØTES
dollar, Danish kroner, and Chinese Yuan Renminbi, respectively.
The consolidated financial statements are presented in U.S.
dollars, which is the Group's presentation currency.
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation
at year-end exchange rates of monetary assets and fiabilities
denominated in foreign currencies are recognized as operating
expense in the income statement in foreign exchange (Ioss)/gain.
Group companies that have a functional currency different from
the presentation currency are translated into the presentation
currency as follows:
>» Assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance sheet;
+ Income and expenses for each income statement are translated
at average exchange rates;
» All resulting exchange differences are recognized in other
comprehensive income
2,4. Property and egurpment
Property and equipment are stated at historical cost less
accumulated depreciation. Subsequent costs are included in the
asset's carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Group and the cost of
the item can be measured retiably. The carrying amount of any
replaced part is derecognized. All other repairs and maintenance
are charged to the income statement during the financial period
in which they are incurred.
Depreciation is provided over the estimated useful lives of the
depreciable assets, generally three to five years, using the straight-
line method. The assets” useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period. Gains and losses
on disposals are determined by comparing the proceeds with the
carrying amount and are recognized as operating expenses in
the consolidated income statement. Property and equipment is
grouped as follows:
Group Estimated Useful Life
Leasehold improvements Lesser of 5 years or lease term
Plant and machinery 5 years
Tools, equipment, fixtures 3 to 5 years
2,3. Research and development
Research costs are expensed as incurred. Costs directly attributable
to the design and testing of new or improved products to be held
for sale by the Group are recognized as intangible assets within
development projects when all of the following criteria are met:
- It is technically feasible to complete the product so that it will
be available for sale;
» management intends to complete the product and use or sell it;
- there is an ability to use or sell the product;
OTES
1405144EogSN92572
it can be demonstrated how the product will generate probable
future economic benefits;
: adequate technical, financial and other resources to complete
the development and to use or sell the product are available;
and
>» the expenditure attributable to the product during its
development can be reliably measured.
Directly attributable costs that are capitalized as part of the
product include the employee costs associated with development
and an appropriate portion of relevant overheads. Other
development expenditures that do not meet these criteria are
recognized as expense when incurred. Development costs
previously recognized as expense are not recognized as an
asset in a subsequent period. Development costs recognized as
assets are amortized on a straight-line basis over their estimated
useful lives, which generally range between three and forty-eight
months. Amortization expense related to capitalized development
costs is included in research and development expense.
2.6. Imparment øf non-Ånancial assels
Assets that are subject to amortization are reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment
loss is recognized for the amount by which the asset's carrying
amount exceeds its recoverable amount. The recoverable amount
is the higher of 1) an asset's fair value less costs to sell or 2) its
value in use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial
assets other than goodwill that previously suffered an impairment
are reviewed for possible reversal of the impairment at each
reporting date.
2.7. Financial assets
Recognition and Measurement. The Group determines the
classification of its financial assets at initial recognition. Financial
assets within the scope of IAS 39 are classified as follows:
: Financial assets at fair value through profit or loss" are financial
assets held for trading, and are classified as current if they are
expected to be settled within twelve months.
» Moans and receivables' are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are classified as current assets except when they
have maturities of twelve months or more from the balance
sheet date. '
: Wvailable-for-sale financial assets' are all others that are
designated in this category or not classified in the other
categories.
Før all years presented, the Group's financial assets include only
Moans and receivables”,
Impairment of financial assets. For financial assets carried at
amortized cost, the Group assesses at the end of each reporting
ASETEN &/% + 2biyje, REPORT ozon?
28
period whether there is objective evidence that a financial asset or
group of financial assets is impaired. A financial asset or a group
of financial assets is impaired and impairment losses are incurred
only if there is objective evidence of impairment as a result of
one or more events that occurred after the initial recognition of
the asset (a "loss event”) and that loss event (or events) has an
impact on the estimated future cash flows of the financial asset or
group of financial assets that can be reliably estimated. Evidence
of impairment may include indications that the debtors or a group
of debtors is experiencing significant financial difficuity, default
or delinquency in interest or principal payments, the probability
that they will enter bankruptcy or other financial reorganization,
and where observable data indicate that there is a measurable
decrease in the estimated future cash flows, such as changes in
arrears or economic conditions that correlate with defaults.
For loans and receivables category, the amount of the loss is
measured as the difference between the asset's carrying amount
and the present value of estimated future cash flows (excluding
future credit losses that have not been incurred) discounted at
the financial asset's original effective interest rate. The carrying
amount of the asset is reduced and the amount of the loss is
recognized in the consolidated income statement. If a loan or held-
to-maturity investment has a variable interest rate, the discount
rate for measuring any impairment loss is the current effective
interest rate determined under the contract. As a practical
expedient, the Group may measure impairment on the basis of an
instrument's fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an
event occurring after the impairment was recognized (such as
an improvement in the debtor's credit rating), the reversal of
the previously recognized impairment loss is recognized in the
consolidated income statement. As of December 31, 2013, the
Company has not incurred any impairment losses on financial
assets.
2.8, Financial frabilitreæs
Financial liabilities within the
scope of IAS 39 are classified as financial liabilities at fair value
Recognition and measurement.
through profit or loss, loans and borrowings, or other liabilities.
The Group determines the classification of its financial liabilities
at initial recognition. Financial liabilities are recognized initially at
fair value less, in the case of other liabilities, directly attributable
transaction costs. The measurement of financial liabilities depends
on their classification as follows:
« "Financial liabilities at fair value through profit or loss' are
liabilities entered into that do not meet the hedge accounting
criteria as defined by IAS 39. Gains or losses on liabilities held
for trading are recognized in profit and loss.
- "Other liabilities' — After initial recognition, interest bearing debt
is subseguently measured at amortized cost using the effective
interest rate method. Gains and losses are recognized in the
income statement when the liabilities are derecognized as weil
ASE er
rS
AM DHUAL BEPOR"
1405144EogSN92573
2073
as through the amortization process. The calculation takes into
account any premium or discount on acquisition and includes
transaction costs and fees that are an integral part of the
effective interest rate.
"Trade payables' are obligations to pay for goods or services
that have been acquired in the ordinary course of business
from suppliers. Trade payables are recognized initially at fair
value and subsequently measured at amortized cost using
the effective interest method. Trade payables are classified as
current liabilities if payment is due within one year or less,
Redeemable convertible preferred shares and convertible debt
are accounted for as specified in Note 2,14
Offsetting of financial instruments. Financial assets and financial
liabilities are offset and the net amount reported in the consolidated
balance sheet if, and only if, there is a currently enforceable legal
right to offset the recognized amounts and there is an intention
to settle on a net basis, or to realize the assets and settle the
liabilities simultaneously.
2,9, Inventories
Inventories are stated at the lower of actual cost or net realizable
value. Cost is determined using the first-in, first-out (FIFO)
method. Net realizable value is the estimated selling price in the
ordinary course of business less estimated costs necessary to
make the sale. Adjustments to reduce the cost of inventory to its
net realizable value, if required, are made for estimated excess,
obsolescence, or impaired balances.
2.10 Trade receivables
Trade receivables are amounts due from customers for product
sold in the ordinary course of business. Trade receivables are
recognized initially at fair value and subsequently measured
at amortized cost using the effective interest method, less any
provision for impairment. If collection is expected in one year or
less, trade receivables are classified as current assets.
2.1 fl. Cash and cash eguivalenis
Cash and cash equivalents includes cash on hand, deposits with
banks, overdrafts and other short-term highly fiquid investments
with original maturities of three months or less.
2.12. Share sapital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new ordinary shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
2,13. Share" based payments
The Company issues options (or warrants) that allow management
and key personnel to acquire shares in the Company. Through
equity-settled, share-based compensation plans the Company
receives services from employees as consideration for equity
instruments options to purchase shares in the Company at a fixed
exercise price. The fair value of the employee services received in
exchange for the grant of the options is recognized as an expense.
The total amount to be expensed is determined by reference to
NOTES
the fair value of the options granted, excluding the impact of any
non-market service and performance vesting conditions. The grant
date fair value of options granted is recognized as an employee
expense with a corresponding increase in equity, over the period
that the employees become unconditionally entitled to the options
(vesting period). The fair value of the options granted is measured
using the Black-Scholes model, taking into account the terms and
conditions as set forth in the share option program. Measurement
inputs include share price on measurement date, exercise
price of the instrument, expected volatility (based on historical
volatility of comparable companies with publicly available share
prices), weighted average expected life of the instruments (based
on historical experience and general option holder behavior),
expected dividends, and the risk-free interest rate (based on the
U.S, Treasury yield curve). Service and non-market performance
conditions attached to the transactions are not taken into account
in determining fair value. At each reporting date, the Company
revises its estimates of the number of options that are expected
to vest based on the non-market vesting conditions, The impact
of the revision to original estimates, if any, is recognized in the
Statement of Comprehensive Income, with a corresponding
adjustment to equity.
2,1. Redeemadlie converiible preferred shares and
converhible debt
In 2012 the Company had redeemable convertible preferred
shares and convertible debt outstanding that was converted to
share capital in the Company's initial public offering of common
shares ("IPO") in March 2013. See Note 18.
Redeemable convertible preferred shares. The redeemable
preferred shares were recognized initially upon issuance at the
difference between the net proceeds of the instrument as a whole
and the fair value of the equity conversion option. Because the
holders' ability to redeem these shares upon change in control
generates an unavoidable obligation to deliver cash, the host
instrument and equity conversion option were each classified as
a current liability on the balance sheet prior to their conversion.
Due to the financial protection provided to its holders with regard
to subsequent offerings, the equity conversion component was
accounted for as a derivative liability and carried at fair value prior
to its conversion at the IPO. Changes in the fair value of the equity
conversion component were recorded as finance income or cost.
Convertible debt, The Company's convertible debt included
terms allowing the holders to convert their portion of the loan to
common shares at a discount below the share price in the event of
an initial public offering, therefore making it a financial instrument
with embedded derivative features. As a result, the Company
designated this financial instrument in its entirety to be valued at
fair value through profit or loss as allowed under TAS 39. Changes
in the fair value of the convertible debt were recorded as finance
income or cost.
1405144EogSN92574
2,15. Current and deferred income tax
The tax expense for the period comprises current and deferred tax.
Tax is recognized in the income statement, except to the extent
that it relates to items recognized in other comprehensive income
or directly in equity. In this case, the tax is also recognized in other
comprehensive income or directly in equity, respectively.
The current income tax expense is calcufated on the basis of the
tax laws enacted or substantively enacted at the balance sheet date
in the countries where the company and its subsidiaries operate
and generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. Management
establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is recognized, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial
statements. However, deferred tax liabilities are not recognized if
they arise from the initial recognition of goodwill; deferred income
tax is not accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting nor
taxable profit or loss. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantively enacted
by the balance sheet date and are expected to apply when the
related deferred income tax asset is realized or the deferred income
tax liability is settled.
Deferred income tax assets are recognized only to the extent that it
is probable that future taxable profit will be available against which
the temporary differences can be utilized.
Deferred income tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against current
tax liabilities and when the deferred income tax assets and liabilities
relate to income taxes levied by the same taxation authority on
either the same taxable entity or different taxable entities where
there is an intention to settle the balances on a net basis.
2.16. Revenue recognition
Revenue represents sale of the Group's products to customers
which are resellers and equipment
manufacturers. Revenue is measured at the fair value of the
principally original
consideration received or receivable, and represents amounts
receivable for goods supplied, stated net of discounts, sales tax,
returns and after eliminating sales within the Group.
The Group recognizes revenue when shipment or delivery has
occurred, the amount of revenue can be reliably measured, and
it is probable that future economic benefits will flow to the entity.
Customer purchase orders and/or contracts are used as evidence
of an arrangement, Delivery occurs when products are shipped
to the specified location and the risks of obsolescence and loss
have been transferred to the customer. For certain customers
ADETEK 4/% ANMler REPO0T 2943
with vendor-managed inventory, delivery does not occur until
product is acquired by the customer from the vendor-managed
inventory location. The Company assesses collectability based
primarily on the creditworthiness of the customer as determined
by credit checks and customer payment history. Customers do not
generally have a right of return.
The Company enters into contracts with the United States
government to deliver products and services under time and
materials and costs-plus arrangements. Revenue under such
contracts is recorded as costs are incurred and includes estimated
earned fees in proportion that costs incurred-to-date bear to total
estimated costs. The Company also periodically receives funding
awards from government agencies to assist with the development
and testing of specific technologies. Such awards are recognized
over the period that the costs are incurred and are recorded as an
offset to research and development expense.
2 17. Leases
Leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases are charged to
the income statement on a straight line basis over the period of
the lease.
The Group leases certain property and equipment. Leases of
property and equipment where the Group has substantially all the
risks and rewards of ownership are classified as finance leases and
the asset is accounted for as if it has been purchased outright.
The amount initially recognized as an asset is the lower of the
fair value of the leased property and the present value of the
minimum lease payments over the term of the lease.
Finance lease payments are allocated between the liability and
finance charges. The corresponding rental obligations, net of
finance charges, are included in other long-term payables.
Amounts due within one year are classified as current liabilities,
The interest element of the finance cost is charged to the
statement of comprehensive income over the lease period to
produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The equipment acquired
under finance leases is depreciated over the shorter of the useful
life of the asset and the lease term.
2.18. Provisions
A provision is recognized when the Company has a present
legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle
the obligation, and the amount has been reliably estimated. If
the impact of time value is significant, the provision is calculated
by discounting anticipated future cash flow using a discount rate
before tax that reflects the market's pricing of the present value
of money and, if relevant, risks specifically associated with the
obligation. Provisions are reviewed at each balance sheet date
and adjusted to reflect the current best estimate.
siktynt REDDE 209 3
pm
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am
"7
K
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i
1405144EogSN92575
27,19. Contingent liabilities
Contingent. liabilities are not recognized in the financial
statements. Significant contingent liabilities are disclosed, with
the exception of contingent liabilities where the probability of the
liability occurring is remote.
2.20. Segment reporting
Business segmentation. Beginning in january 2013, the Group
is reporting on two distinct segments: Desktop and Datacenter.
The two segments are identified by their specific sets of products
and specific sets of customers. The splitting of operating
expenses between segments is based on the company's best
judgment, and done by using the company's employee/project
time tracking system and project codes from the accounting
system. Operating expenses that are not divisible by nature (rent,
telecommunication expenses, etc.) have been split according to
actual time spent on the two businesses, and the company's best
estimate for attribution. Costs incurred for intellectual property
defense, foreign exchange and headquarters administration have
been classified separately as headquarters costs and excluded
from segment operating expenses as indicated. The CEO is the
Group's chief operating decision-maker. The CEO assesses the
performance of each segment principally on measures of revenue,
gross margins, and EBITDA.
Geographical segmentation. Each of the Group's offices in its
three principal geographies fulfills a particular function that serves
the Asetek Group as a whole, The majority of costs incurred in
each of the geographies are generally incurred for the benefit of
the entire Group and not to generate revenue in the respective
geography. As a result, the financial results of the Group are not
divided between multiple geographical segments for key operating
decision-making. Revenue and assets by geography is measured
and reported in Note 4, Geographical information.
2.21 Cash flow statement
The cash flow statement is prepared using the indirect method.
2.22. Critical accounting estimates and assumptions
The preparation of financial statements in conformity with IFRS
requires management to make estimates and assumptions
that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those
estimates. Areas where significant judgment has been applied
are:
- Capitalization of development costs: the Group's business
includes a significant element of research and development
activity. Under IAS 38, there is a requirement to capitalize and
amortize development spend to match costs to expected benefits
from projects deemed to be commercially viable. The application
of this policy involves the ongoing consideration by management
of the forecasted economic benefit from such projects compared
to the level of capitalized costs, together with the selection of
amortization periods appropriate to the life of the associated
revenues from the product. If customer demand for products or
NUTES
the useful lives of products vary from management estimates,
impairment charges on intangibles could increase.
= Valuation of deferred tax assets: deferred income tax assets are
recognized to the extent that the realization of the tax benefit
to offset future tax liabilities is considered to be probable, Due
to historical losses and uncertainty regarding future taxable
profits, the group has not recognized deferred income tax assets
since inception. In future periods, management will continue
to assess the probability of realization of the assets' value and
record or adjust the valuation in accordance with IAS 12.
» Provision for excess/obsolete inventory: management's forecast
of revenue by product is a factor in determination of inventory
reserves. If future customer demand or ordering patterns vary
from management estimates, inventory may be overstated.
> Share based compensation: expenditures related to share based
compensation are sensitive to assumptions used in calculation
of fair value. If the volatility, expected life or risk-free interest
rates differ materially from management's assumptions, the
share based compensation expense could fluctuate.
2 23. Defined contribution plan
In 2008, the Company established a defined contribution savings
plan (the ”Plan”) in the U.S. that meets the requirements under
Section 401(k) of the U,S. Internal Revenue Code. This Plan
covers substantially all U.S. employees who meet the minimum
age and service requirements and allows participants to defer a
portion of their annual compensation on a pre-tax basis. Company
contributions to the Plan may be made at the discretion of the
board of directors. Through December 31, 2013, there have been
no contributions made to the Plan by the Company.
NO"E5
—1405144EogSN92576
2,24, Changes im accounting policy and disclosures
Applied new standards and amendments included in Annual
Report for 2013. A number of new standards and amendments
to standards and interpretations are effective for annual periods
beginning after January 1, 2013, and have been applied in
preparing these consolidated financial statements. None of these
have a significant effect on the consolidated financial statements
of the Group.
New standards and amendments not applied in the Annual
Report for 2013. A number of new standards and amendments
to standards and interpretations are effective for annual periods
beginning after January 1, 2013, and have not been applied
in preparing these consolidated financial statements, None of
these is expected to have a significant effect on the consolidated
financial statements of the Group:
ASETEK A/S
iybiu An PERSPT 2013
is
>
2
(EN
EU Endorsed as of December: 31, 2013
olie (tunere itfradduagere |
Amendment to IAS 32, The amendment introduces additional application guidance in respect of when to offset Jan 1 2014
Financial instruments, financial assets and liabilities in the balance sheet.
presentation
Amendment to IAS 36, The amendment rolis back the requirement to disclose value in use for cash generating Jan 1 2014
Impairment of assets units to which a significant amount of goodwill has been allocated. Further, it introduces
additional disclosures if the basis of impairment is fair value less costs to sell.
Amendment to IAS Novation of a derivative as a result of compliance with existing legislation or as a result Jan 12014
39, recognition of new legislation (for instance the EMIR regulation) is not a settlement of the hedging
and measurement: instrument in respect of hedge accounting.
Novation of derivatives
Mot endorsed by EU as of December 31, 2013
e hedder hjerte | !
Senere!
IFRIC 21 Levies IFRIC 21, "Levies', sets out the accounting for an obligation to pay a levy that is not Jan 1 2014
income tax, The interpretation addresses what the obligating event is that gives rise to
pay a levy and when should a liability be recognised.
IFRS 9, Financial Financial assets are classified into two measurement categories: those measured as at Not yet
instruments fair value and those measured at amortised cost. The determination is made at initial decided
recognition. The classification depends on the entity's business model for managing its
financial instruments and the contractual cash flow characteristics of the instrument.
Changes in fair value of non-derivative financial liabilities which are designated at fair
value are recognized in other comprehensive income.
The standard introduces a new hedge accounting model that is designed to be more
closely aligned with risk management activities.
Among other amendments, it introduces the possibility to hedge portions of non-
financial items, the possibility to defer recognition of option premiums in cash flows
hedges and an option to designate commodity contracts at fair value through profit or
loss if this eliminates or significantly reduces and accounting mismatch.
Amendment to IAS 19: The amendment sets out more detailed guidance in respect of measurement of defined July 1 2014
Defined benefit Plans: benefit plans with employee contributions
Employee contributions i
Annual Improvements Introduces minor amendments to IFRS 2 Share-based Payment, IFRS 3, Business July 1 2014
2010-2012 cycle combinations, IFRS 8, Operating segments, IFRS 13 Fair Value Measurement, IAS 16,
Property, plant and equipment, IAS 24, Related party disclosures, IAS 38, Intangible
assets
Annual improvementis Introduces minor amendments to IFRS 1 First-time Adoption of International Financial July 1 2014
2011-2013 cycle Reporting Standards, IFRS 3, Business combination, IFRS 13 Fair Value Measurement,
IAS 40 Investment Property
+) The mandatory effective date for IFRS 10 — 12 on consolidation and joint arrangements and disclosures about interests in other entities per the EU
endorsement is January 1, 2014 with the possibility of early adoption. Per the standard as issued by IASB, the effective date is January 1, 2013.
The description of IFRS 10-12 is not included above as we would generally expect adoptions per the IASB effective date.
fg BTK Alt enigt NDR: 7077 NOTES
1405144EogSN92577
3 Folk
PAA AGE Nie pi I
ASEME DD FJF-ES I]
The group's activities expose it to a variety of risks: liquidity
risk, market risk (including foreign exchange risk and interest
rate risk) and credit risk. The primary responsibility for Asetek's
risk management and internai controls in relation to the financial
reporting process rests with executive management. Asetek's
internal control procedures are integrated in the accounting
and reporting systems and include procedures with respect to
review, authorization, approval and reconciliation. Management
is in charge of ongoing efficient risk management, including the
identification of material risks, the development of systems for
risk management, and that significant risks are routinely reported
to the board of directors.
Debt Maturities
As of December 31, 2013
, 2. il …
Hu 15k) (oh HEE
Line of credit (364)
Finance leases -
Lease deposit
Trade payables and accrued liabilities -
HEE (364)
As of December 31, 2012
| (dif]o GI) fon uden
"Redeemable preferred shares (1) (29,510)
Convertible option on preferred shares (1) (7,612)
Note payable -
Convertible loan -
Line of credit (306)
Finance leases -
Trade payables and accrued liabilities -
(1) Redeemed on demand, upon change in control! of the Company
MOTES
1405144EogSN92578
(37428)
Liquidity risk. The Group has incurred losses from operations
and negative cash flows from operations since inception. In
2013, the Group secured liquidity through its initial public
offering of common shares. Previously the Group has issued
convertible preferred shares, convertible debt and notes payable
to shareholders, and continues to secure bank lines of credit and
trade receivables financing. The Group's corporate finance team
monitors risk of a shortage of funds through regular updates and
analysis of cash flow projections and maturities of financial assets
and liabilities. The finance teams also review liquidity, balance
sheet ratios (such as days” sales outstanding, inventory turns)
and other debt covenant metrics on a regular basis to ensure
compliance both on a short- and long-term basis.
The following are contractual maturities of financial liabilities,
including estimated interest payments on an undiscounted basis.
3
bas kg i i
(LOKE SSR iris toft |]
- - - (364)
(14) (42) (243) (299)
(232) (232)
(4,880) (399) - (5,280)
(4,894) (441) (475) (6,175)
hemline CIESEDD: |
IIUK, mund — (LSE
' - - - (29,510)
- - - (7,612)
- - (3,001) (3,001)
- - (4,443) (4,443)
- - - (306)
(2) (6) (7) (15)
(3,612) (305) - (3,917)
(38,614) (311) (7,451) (48,804)
ASEFRK At = AM bal REPORT 2013
JIJOUID
EDEN Ly
sone Tid!
Market risk factors. The Group's current principal financial
liabilities consist of short-term debt on revolving lines of credit.
The Group's financial assets mainly comprise trade receivables,
cash and deposits. The Group's operations are exposed to market
risks, principally foreign exchange risk and interest rate risk,
(a) Foreign exchange risk. With few exceptions, the Group's
inventory purchase and sale transactions are denominated in
U.S. dollars. The Group operates internationally and is exposed to
foreign exchange risk arising from currency exposures, principally
with respect to the Danish kroner. Foreign exchange risk arises
from operating results and net assets associated with Denmark-
based operations where the Danish krone is the functional
currency, The Company's Denmark entity has a revolving line of
credit available totaling 2 million Danish kroner ($0.4 million). The
Group does not enter into derivatives or other hedging transactions
to manage foreign exchange risk. Management mitigates this
exposure through timely settlement of intercompany operating
liabilities.
The ending exchange rate at December 31, 2013 was 5.41 Danish
kroner to one U.S. dollar (5.66 to the U.S. dollar at December
31, 2012). The effect of a 10% strengthening (weakening) of
the Danish kroner against the U.S. dollar for the reporting period
would have resulted in an increase (decrease) in post-tax loss for
fiscal year 2013 of $287,000 and comparable increase in 2012 of
$127,000.
(b) Inierest rate risk. As of December 31, 2013, Asetek had
the following debt outstanding that is subject to interest rate risk:
> Line of credit with Sydbank —- 2 million Danish kroner revolving
line of credit available to Asetek A/S (approximately $370
thousand outstanding at December 31, 2013). The line carries
interest at the Danish CIBOR 3 rate plus 4.5 percentage points,
which in total was 4.8% at December 31, 2013. Based on the
line's revolving, short-term nature, interest rate risk is not
significant.
Capital and debt management, Because the Company is in
the relatively early stages of developing its market, its primary
focus has been to support its product development initiatives,
maintain liquidity through use of financing alternatives, and
maximize shareholder value. The Group manages its capital and
debt structure with consideration of economic conditions. In
March 2013, the Company completed an initial public offering on
the Oslo Stock Exchange, raising net $21.4 million, to support
its market strategies and liquidity needs. With regard to future
capital needs, the Company will continue to consider both equity
and debt financing strategies.
Ali jat PEDPOPT 209313
1405144EogSN92579
Credit risk factors. Credit risk refers to the risk that a
counterparty will default on its contractual obligations resulting
in financial loss to the Group. The Group is exposed to credit
risk primarily through trade receivables and cash deposits.
Management mitigates credit risk through standard review of
customer credit-worthiness and maintaining its liquid assets
principally with reputable banks, principally Comerica Bank in
the U.S. and Sydbank in Denmark. The carrying amount of the
financial assets represents the maximum credit exposure. Trade
receivables that are deemed uncollectible are charged to expense
with an offsetting allowance recorded against the trade receivable.
In 2013, three customers accounted for 26%, 22% and 10% of
revenues, respectively. In 2012, two customers accounted for
24% and 19% of revenues, respectively. At December 31, 2013,
one customer represented 24% of outstanding trade receivables.
At December 31, 2012, one customer represented 28% of
outstanding trade receivables. The reserve for uncollectible trade
accounts was $441,000 at December 31, 2013 (2012: $162,000).
The aged trade receivables and bad debt reserve balances for ail
years presented are provided in Note 16.
The maximum exposure to credit risk at the reporting dates was:
KLUS BINDE Ama sys Å
Cash and cash equivalents — 11,663 HE 1,248
Trade receivables and other 4,997 3,971
Other assets 330 -
Maximum credit exposure 16,990 5,219
NOTES
FE EJER APOL TH AL [IHF CJEPR GTA Titan
The Group operates internationally in several geographical areas
mainly in Asia, Europe and the Americas.
The following table presents the Group's revenue and assets in
each of the principal geographical areas:
smaa |
INDHES GELSE
$
i . — BRaded |
Asia HE 15,801 NH 19
Americas 2,464 537
Europe 2,464 12,317 2,693
Total 20,729 17,734 3,249
LOE DND
Asia '
Americas
Europe
Total
Revenue in Denmark (country of domicile) was $0.1 million in '
2013 ($0 in 2012). Non-current assets in Denmark were $2.7
million in 2013 ($1.7 million in 2012).
For the purpose of the above presentation, the information
pertaining to revenue and current assets is calculated based on
the location of the customers, whereas information pertaining to
non-current assets is based on the physical location of the assets.
The information pertaining to current assets is calculated as a
summation of assets such as trade receivables and finished goods
inventories reasonably attributable to the specific geographical
area.
NOTE « SÆRT 2705 NIEL AL REDDPI 2013
1405144EogSN92580
Ta SE LJN E PAT PE ADEER AT Eye
From Company inception to December 2012, all Asetek operations
were considered to be one segment: Desktop. Beginning in
January 2013, the Group added a second segment: Datacenter.
There has been no significant operational activity that would
have been classified as Datacenter prior to January 1, 2013. The
Desktop and Datacenter segments are identified by their specific
Year ended December 31, 2013
i
lys snen) frælidan — rterdaven
Condensed income statement
Revenue
Cost of goods sold
Operating expenses
Financial income (expenses)
Income (loss) before tax
Condensed balance sheet at December 31, 2013
Total investment
Total assets
Total liabilities
Changes in intangible assets in 2013
Beginning balance, intangible assets i
Gross addition
Amortization and other
Ending balance, intangible assets
Seå ODETEK A/D AINdar REPORT IDE
1405144EogSN92581
sets of products and specific sets of customers. The CEO is the
Group's chief operating decision-maker. The CEO assesses the
performance of each segment principally on measures of revenue,
gross margins, and EBITDA. The following table represents the
results by operating segment in 2013.
hætte srritarr rer nitei |
|
ragede — Frstastl |
19,925 804 - 20,729
12,041 639 - 12,680
884 0 165 - 8,049
4056 687 00000 4895 — 15,808
- - 1,035 1,035
3,828 (6,692) 1 (3,860) — (6,724)
3,050 2,022 9,736 14,808
5,585 2,974 12,424 20,983
2,536 952 2,687 6,175
1,360 — 88 mm — - ” 1,448.
580 1,548 en " 2,128
(1,338) (415) - (1,753)
gad 4 823
MIDTE 3
En AL AFDY I TIDEN AMI) BR NL IPJERPA [MOON ES
Henan ders Sl TT. ” 0 pg i ds
Salaries 6.515 4. 95
Retirement fund contributions 93 53
Social cost 247 339
Share based payment 593 140
Other expenses 18 39
Total personnel expenses before 7,465 5,476
capitalization
Capitalized as development cost (1,518) (659)
Total personnel expenses in — 5,947 | 4,817
statement of i Income
Average number of employees GS 51
The staff costs are specified as follows:
da flsj nens 3) Øs
Research and development 2,788 1,873
4,677 3,603
rug
Pais i
i
Selling, general and administrative
Total personnel expenses before
7,465 5,476
capitalization
Compensation to the Board of Directors
and Officers in 2013
lonini y
Board of Directors - 145 145
RUNE AJA 1isteil |
Officers 1,019 99 1,118
1,019 244 1,264
POS ARE BASE PPAYNSMEN I
Asetek's Equity Incentive Plan ("the Plan”) is a share option
program where the employees and other parties that deliver
services to the Group have been granted share options (or
warrants). The options, if vested and executed, will be settled in
common shares of the Company.
The options are granted at the time of employment and, at the
discretion ofthe Board of Directors, under other circumstances. The
options are granted with exercise prices equaling the fair market
value of the underlying security. Prior to initial public offering
(IPO) of the Company's shares on the Oslo Stock Exchange, the
fair market value of the shares was estimated based on valuations
prepared periodically by external valuation experts. Subsequent
MØrs ss
1405144EogSN92582
Compensati
i (ls Hug
to the Board of Directors and Officers i in 2012
K tmuistilen Pyt tiet
Board of Directors - 24 24
Officers 622 32 654
622 56 678
The figures listed above include incentive based compensation for
management and staff. Incentive based compensation is based on a
combination of quarterly cash based rewards and periodic grants of
options to buy the Company's common shares. The bonus plan for
the CEO is approved by the Board of Directors at the beginning of the
year and the bonus payments for the CEO and the upper management
are reviewed by the Board of Directors on an annual basis. All bonus
plans are structured to include an absolute dollar cap.
The Company's CEO has an agreement of eight months'
severance pay in case of termination or termination in connection
with change of control, and paid relocation to Denmark. The
Company's CFO has an agreement of six months' severance pay
in case of termination and paid relocation to Denmark. Except for
the Company's CEO and CFO, no member of the administrative,
management or supervisory bodies has contracts with the
Company or any of its subsidiaries providing for benefits upon
termination of employment.
As of December 31, 2013, The Company's CEO, André Eriksen,
held 386,862 common shares of the Company and 14,688 options
exercisable at $0.96 per share and 96,167 warrants exercisable at
NOK36.50 per share. The Company's CFO, Peter Dam Madsen,
held 64,441 common shares of the Company and 14,221 options
exercisable at $0.96 or $0.94 per share and 37,800 warrants
exercisable at NOK36.50 per share.
to the IPO, the exercise prices of option grants are determined
based on the closing market price of the shares on the day of the
grant. Share based compensation expense was $593,000 for the
year ended December 31, 2013.
The Plan was adopted by the Board of Directors in 2008 and has
the following purpose:
- To attract and retain the best available personnel for positions of
substantial responsibility;
: to provide additional incentive to Employees and Directors and
Consultants, and
- to promote the success of the Company's business.
As of December 31, 2013 there is a total of 1,950,000 common
shares authorized under the Plan.
In October 2013, 670,728 warrants were granted with exercise
prices of NOK 36.50 ($6,11) per share. In January 2013, 20,000
options were granted with exercise prices of $0,96 per share. In
June 2012, 178,267 options were granted with exercise prices
EDT anilduandketiton Uurafaaredregi gs |
March 2013 1,150,000 of $0.96 per share. Movements in the number of share options
August 2013 800,000 outstanding and their related weighted average exercise price are
i i ” ng as follows:
Total number of options authorized 1,950,000 0
Weighted Average Weighted Average
Exercise Exercise
oe ard ik : endte dne ser alen ' Janis ' . fils . FJAbE> ' bitte |
|. Outstanding on January L ' 946,783 0.95 805,422 ' 0.94
Options/warrants granted 20,000 0.96 178,267 0.96
Options/warrant adjustment to granted (33,500) 0.96 - -
Options/warrants exercised (333,172) 0.94 (3,381) 0.94
Options/warrants forfeited (2,650) 0.94 (33,525) 0.96
(Outstanding on December 31 597.461 0.95 946,783 0.95
Exercisable on December 31 | 47,960 0.95 — 655,074 0.94
Weighted Average Weighted Average
Exercise Exercise
gt LAY kærren Go ed at , RE Bld Ane ” ed
' Outstanding on January 1 TT ' — — 7.12 5 — — -
Adjustment for beginning outstanding 39,146 7.12 - -
Options/warrants granted 670,728 6,11 - -
Options/warrants exercised - - - -
Options/warrants forfeited (18,000) 7.12 - -
Outstanding on December 31 691,874 6.14 - -
Exercisable on December 31 88,233 6.37 20
Of the options and warrants outstanding at December 3i, 2013,
373,042 have an exercise price of $0.94 per share, 224,419
options have an exercise price of $0,.96 per share, 670,728
warrants have an exercise price of $6.11 per share and 21,146
have an exercise price of $7.12 per share. The weighted average
remaining contractual term is 5.33 years. The Company calculated
the fair value of each option award on the date of grant using
the Black-Scholes option pricing model. The options and warrants
granted in 2013 have an estimated total value of $1,311,000. The
following weighted average assumptions were used for the period
indicated.
SE SETE SINDEDE ' Asta: mate) |
Risk-free interest rate ' 0.9% - 1.3% ' 0.5% - 0.7%
Dividend yield 0.0% 0.0%
Expected life of options (years) 3.5 - 4.6 3.5 - 4,6
Expected volatility 45% - 57% 50% - 57%
ASSTEK AG Abba, sEPOIRT 2713
1405144EogSN92583
Prior to the Company's IPO in March 2013, the fair value of
common shares underlying the share options and equity awards
has historically been determined by management with input from
independent third-party valuation firms. All options are intended
to be exercisable at a price per share not less than the per share
fair market value of the common shares underlying those options
on the date of grant.
Prior to the issuance of financial statements for the year ended
December 31, 2012, management decided to revise its estimates
of the fair value of the Company's common shares, solely for
reporting purposes, as of the date of the option grants that
occurred in June 2012. Based on analysis of relevant metrics in
2012 such as expected Company performance and the likelihood
of Asetek achieving a liquidity event, management estimated the
fair value of common shares for financial reporting purposes as of
the date of the option grants in June 2012 to be $2.24 per share.
Options granted in June 2012 have an exercise price of $0,96 per
share. As a result of Management's revision in the fair market
value of common shares, share based compensation expense
increased by $63,000 for the year ended December 31, 2012,
FN EN PEDISES BY NA I JER:
las syg) REE Lu uu. me ke eee eee me ma enn nen … . dit suse ivr!
|. Inventories recognized as cost of sales (Note 17) EE — —… — 12, 532 i 11,748
i Personnel expenses (Note 6) 7,465 5,476
, Depreciation and amortization 2,030 2,052
' Legal, patent, consultants and auditor 4,158 1,956
i Facilities and infrastructure 1,218 933
f Other expenses 3, 213 2, 553
| Total operating expenses before c capitalization HEE E ' 30,616 | 24, ;718
i Less: capitalized costs for "development projects (Note 14) — " (2,128) | (en 165)
f Total expenses . HE | i ' i 28,488 i 23,553
( Depreciation and amortization expense by Classification on the income statement is as follows:
i HED UT te) … — | . 5 FE |. 2035
Depreciation and amortization included in:
i Cost of sales 148 145
Research and development 1,689 1,863
Selling, general and administrative 193 44
i Total 2,030 2,052
SJ FIMAMUE ØS ANID IN TINE
Mena) o HEE " ” FE HE " ” ailet al
Income (loss) on fair value of convertible preferred shares — EE i i ' 848 ' (1,845) |
i Income (loss) on fair value o of convertible loan 821 (1, 1,389)
Non= cash items in included i in finance costs and ir income i ' oe 0 ' 1,670 | &, 234)
f Interest cost on note payable i i —— ' ' (369) | (300)
( Income (loss) on foreign currency translation of cash deposits, net (267) -
| Interest cost on convertible loan - (54)
[ Interest cost on finance lease (3) (3)
| Interest i income, other bank interest and fees, net 4 (102)
( Total finance (costs) 1 income ' | FE | — ' 1,035 ' (3,693)
(
A The income (loss) on fair value of convertible preferred shares and During 2012, the Company developed and expanded the
L the loss on convertible loan are non-cash transactions resulting datacenter cooling strategy and business plan, resulting in an
from recording the instruments at fair value at period end. increase in value of the conversion option liability and recognized
( loss. Income on the conversion of the preferred shares and
convertible loan was recognized as a result of the Company's IPO
in March 2013,
NNATES
nm
ADETEK A/T ANHUet RED eT 21 12 d
1,
1405144EogSN92584
IR IEGE CNN, TAO 53
Tax on profit/loss for the year is specified as follows:
lemon Ng samt yimøl
Current income tax benefit (443) (7)
Deferred income tax - -
Tax benefit
HL EJER ERR ER) MIL ODAE: LAK
Deferred income tax assets are recognized to the extent that
the realization of the related tax benefit is probable. Due to
uncertainty in realizability, the group did not recognize deferred
income tax assets of $14,762 thousand (2012: $13,142
thousand), in respect of losses amounting to $67,124 thousand
(2012: $56,795 thousand) that can be carried forward against
future taxable income. Losses of the U.S. parent company and
the U.S. subsidiary will begin to expire in 2017 and losses of the
Denmark subsidiary do not expire.
The group did not recognize deferred tax liabilities resulting to
temporary differences of $322 thousand (2012: $128 thousand)
in respect of costs deducted in taxation but not in bookkeeping
amounting to $1,717 thousand (2012: $365 thousand).
ADGATEK A/S S3NSGAL PEPORT 2013
1405144EogSN92585
The tax benefit on the group's loss before tax differs from the
theoretical amount that would arise using the weighted average
tax rate applicable to profits of the consolidated entities as follows:
HA dips) ) io.
Loss before tax (6,724) (8,565)
Tax benefit calculated at domestic
rates applicable to profits/losses in (2,154) (3,066)
respective countries
Tax effects of:
Expenses not deductible for tax
107 1,309
purposes
Tax losses for which no asset was
; 2,490 1,750
recognized
Tax benefit (443) (7)
In accordance with IAS 12, because of the history of recent losses,
the Company recognizes deferred tax assets arising from unused
tax losses or tax credits only to the extent that the entity has
sufficient taxable temporary differences or there is convincing
other evidence that sufficient taxable profit will be available
against which the unused tax losses or unused tax credits can be
utilized by the Company. As of December 31, 2013 and 2012, no
deferred tax assets have been recorded by the Company.
led AENINMUS 1.095] PER SHAPE
The Company completed a public offering of its common shares
in March 2013 and its shares have since been trading publicly on
the Oslo Stock Exchange. IAS 33 requires disclosure of basic and
diluted earnings per share for entities whose shares are publicly
traded.
Basic earnings per share is calculated by dividing the profit or loss
attributable to equity holders of the Company by the weighted
average number of common shares outstanding during the period.
Diluted earnings per share is calculated by adjusting the number
of common shares outstanding used in the Basic calculation for
the effect of dilutive equity instruments, which include options,
warrants and debt or preferred shares that are convertible to
common shares, to the extent their inclusion in the calculation
would be ditutive.
> FINANCIAL INSTRUMENTS CX FE
The Company uses the following valuation methods for fair value
estimation of its financial instruments:
» Quoted prices (unadjusted) in active markets (Level 1).
» Inputs other than quoted prices included within level 1 that are
øbservable for the asset or liability, either directly (as prices) or
indirectly (derived from prices) (Level 2).
- Inputs for the asset or liability that are not based on observable
market data (unobservable inputs) (Level 3).
All of the Company's financial assets as of December 31, 2013 are
classified as "cans and receivables' having fixed or determinable
payments that are not quoted in an active market (Level 3). As of
Liabilities as per balance sheet
Long-term debt
Other long-term liabilities
Short-term debt
Trade payables and accrued liabilities
NOTE SD
1405144EogSN92586
Loss attributable to equity holders of (6,281) (8,558)
the Company (USD 000's)
Weighted average number of common 13,795 13,729
shares outstanding (000's)
Basic less per share (9.46) (0.62)
Diluted loss per share (0.46) (0.62)
Potential dilutive instruments are not included in the calculation
of diluted loss per share for the periods presented because the
effect of including them would be anti-dilutive and reduce the loss
per share.
In accordance with IAS 33, weighted average shares outstanding
for 2012 has been adjusted to reflect the issuance and conversion
of shares that occurred in 2013.
CDIBRY AND FAR VAL IJE ESTINMMA THOM
December 31, 2013, all of the Company's financial liabilities are
carried at amortized cost.
HEE
Trade receivables and other
Cash and cash equivalents
11,663
16,660
The Company believes that book value approximates fair value for
all financial instruments as of December 31, 2013. The values of
the Group's assets and liabilities are as follows:
- 243 243
- 232 232
- 420 420
- 5,280 — 5,280
i Soy 6,175. 6,175
ANMDQAL SEPORT 2013
id frå FAMILE kr
sml Te
Deer ff
The Group routinely incurs costs directly attributable to the design
and testing of new or improved products to be held for sale. These
costs are capitalized as intangible assets and amortized over the
estimated useful lives of the products, typically three to forty
eight months. The following table presents a summary of these
development projects.
' ut (211135),
Cost: FE
Balance at January 1
Additions
Deletions - completion of useful life
Impairment loss
Balance at December 31
Accumulated amortization and impairment losses:
Balance at January 1
Amortization for the year
Amortization associated with deletions
Amortization associated with impairment losses
Balance at December 31 '
Carrying amount
1405144EogSN92587
Impairment tests are performed on completed assets whenever
there are indications of a need for write-offs and for assets still in
development regardless of whether there have been indications
for write downs. If the value of expected future free cash flow of
the specific development project is lower than the carrying value,
the asset is written down to the lower value. The booked value
includes capitalized salary expenses and other net assets for the
cash flow producing project. Expected future free cash flow is
based on budgets and anticipations prepared by management.
The main parameters are the development in revenue, EBIT and
working capital.
2ÅNhazy
4,171 3,798
2,128 1,165
(384) (665)
(304) (127)
| 5,631 4171
(2,723) (1,659)
(1,692) (1,782)
384 665
243 53
(3,788) (2,723)
” 1,823 1,448
MOTæR
1 SPRØDE ET 5 ATL ELM HE:
UK artig)
Cost:
Balance at January 1, 2012
Additions
Disposals
Exchange rate difference
Balance at December 31, 2012
Balance at January 1, 2013
Additions
Disposals
Exchange rate difference
Balance at December 34, 2013
Acccumulated depreciations
Balance at January 1, 2012
Disposals
Depreciations for the year
Exchange rate differences
Balance at December 31, 2012
Balance at January 1, 2013
Disposals
Depreciations for the year
Exchange rate differences
Balance at December 31, 2013
Carrying amount at December 31, 2012
Carrying amount at December 31, 2013
133
133
170
(35)
275
d
(59)
74
216
UNE EH UT E US
1,194
11
(10)
10
1,205
1,205
659
(28)
56
1,892
(696)
10
(210)
(9)
(905)
(905)
28
(255)
(26)
(1,158)
300
734
He rhaerree, åde
er, dato
378
25
(48)
4
359
359
125
(34)
16
466
(278)
48
(60)
3)
(293)
(293)
34
(50)
(11)
(320)
66
146
|
ingggl |
1,652
88
(58)
15
1,697
1,697
954
(97)
79
2,633
(1,012)
58
(290)
(13)
(1,257)
(1,257)
97
(339)
(38)
(1,537)
440
1,096
At December 31, 2013, property and equipment includes leased equipment at a gross value of approximately $352,000 which had
accumulated amortization of $31,000. (2012: gross value of $29,000 and accumulated amortization of $15,000).
NOTES
1405144EogSN92588
ASETEK a/% AMNLAL REPORT 2513
Trade receivables are non-interest bearing and are generally on payment terms of Net 30 days.
døe ans ' gs |
” Gross trade receivables 3,467
Provision for uncollectible accounts (441) (162)
Net trade receivables | | — ' 4,280 3,305
Other receivables and assets 717 666
Total trade receivables and other i 7 — 2,997 ' ' 3,971
The aging of trade receivables as of the reporting date is as follows:
(81008905 9) FE ' iel — (Hi HIGEN: — sart kelddkner Hi ål AMU SENE —" bokuen; se ktye i
' December 31, 2013 ' 4,721 | 3,304 — 1,174 ' 193 ' 50
December 31, 2012 3,467 1,877 1,082 179 329
The trade receivables of Asetek Danmark A/S carry a lien of 6
million Danish krone ($1.1 million), representing collateral on
Sydbank's engagement with the Company. The carrying amount
of trade receivables is approximately equal to fair value due to
the short term to maturity. Regarding credit risks, refer to Note 3.
A summary of the activity in the provision for uncollectible
accounts is as follows:
HUR ' 2ditle: ry) |
| Balance at January 1 EE i (162) ' (5) |
Additions (441) (219)
Reversals 162 62
Balance at December 31 0 (441) — (162)
Other receivables, Included in other receivables is an award from
the Danish government of 1.82 million Danish krone ($336,000)
at December 31, 2013. (At December 31, 2012: 1.8 million
Danish krone = $321,000). This receivable represents a subsidy
awarded to fund the development and testing of a prototype
solution for sealed server cooling and is governed by standard
terms which under special circumstances may result in a demand
for repayment. Amounts received under this grant are recorded
as a reduction to research and development expense. The project
concluded on April 30, 2013 and is awaiting final approval.
0 ASETEK A/S + ANNUAL FPEDUR' 2013 IDTES
1405144EogSN92589
2 NWA POTE PT ES E5
iD)
Raw materials
eyardir
Work in process
Finished goods
Total gross inventories
Less: provision for inventory reserves
Total net inventories HE
HØ Sal)
| Inventories recognized as cost of sales during the period '
Write-down of inventories to net realizable value
(12,532) — (11,748)
(95) (98)
A summary of the activity in the provision for inventory reserves is as follows:
(3 ») Grin
Balance at January 1
Additions
Write-offs
Balance at December 31
IB GI LARk CAPITAL, PEIRTIAMIEZA TIPS, TAJ TAN. ØDLJÆB LUC
PJ FRUE. ADHINJEB TT TOMMEE
In February 2013, Asetek Group reorganized when Asetek A/S
became 100% owner of the Asetek Group through the purchase
of all outstanding shares of Asetek Holdings, Inc. from the
shareholders, in exchange for new shares in Asetek A/S. The
reorganization resulted in a $25 thousand increase in par value of
common shares and corresponding decrease in share premium at
the exchange date.
In March 2013, the Company completed an initial public offering
(IPO) of 4.0 million new common shares offered by Asetek A/S on
the Oslo Stock Exchange at an offering price per share of 36.00
Norwegian kroner (approximately $6,.20 USD per share). The
Company raised funds totaling $21.4 million, after deduction of
$3.4 million of offering costs.
Conversion of preferred shares, In March 2013, at the time
of the IPO, all of the Company's preferred shares outstanding,
carried as current liabilities of $37.1 million at December 31,
2012, converted to common shares, The Company recognized
$0.8 million income on the revaluation of the preferred shares
at the time of conversion. After conversion of these shares, the
Company now has one class of shares outstanding.
MOTES
1405144EogSN92590
Conversion of loan. In October 2012, the Company entered into
an unsecured convertible loan agreement with seven investors to
raise $3.0 million to be used for working capital in preparation for
an IPO. Interest accrued from the loan date at a stated annual rate
of 10% and was due to be paid quarterly beginning in September
2014. At the time of the IPO in March 2013, $2.4 million of the
principal value of the loan was converted to common shares at
a discount of 20% below the IPO share price. In the first half of
2013, the remaining $0,6 million of principal was repaid by the
Company, plus interest and a 5% repayment fee. As a result of
these transactions, the Company recognized $0.8 million non-
cash income on conversion of the loan.
As of December 31, 2013, there are 14,064 thousand common
shares outstanding with a nominal value of 0.10 DKK per share.
At the time of the reorganization, the Company reserved 1,150
thousand shares (8% of total shares, nominal value DKK 115
thousand) for future exercises of options. In 2013, a total of
333 thousand options (2% of total shares, nominal value DKK
33 thousand) were exercised resulting in $0.3 million funds
received by the Company. As of December 31, 2013, there were
817 thousand shares (5% of total shares, nominal value DKK 82
thousand) held in treasury.
ASETER AA, =MWvAL REPORT 2113
The following table summarizes common share activity in the years presented:
Hanne;
"Common shares outstanding - January 4 '
Exchange of outstanding Asetek Holdings, Inc. shares
Issuance of Asetek A/S shares
Treasury shares
Conversion of preferred shares
Conversion of debt
Offering of new shares in IPO
Options exercised
Common shares outstanding - December 31 i
Par value per common share for Asetek Holdings, Inc - 2012 in USD
Par value (0.10 DKK) per common share for Asetek A/S - 2013 in USD
Share capital on balance sheet (USD 000's)
Refer to "Shareholder information” in this report for information on the composition of Asetek shareholders.
[HH MU FE PAYAJBBI JE, LINES (JE CORP UIT, MI Ted 2 (0) EB]
The following is a summary of the Company's outstanding and net debt:
i SED DELS
' Redeemable preferred shares
Convertible option on preferred shares
Line of credit
Finance leases - due within one year
Debt included in current liabilities
Long-term convertible loan
Note payable to shareholder
Sublease deposit
Finance leases - due after one year
Total debt ' TT,
Less: cash and equivalents
Net deb
Note payable. In 2010, the Company executed a promissory note
to a preferred shareholder in return for $3.0 million of operating
funds. The promissory note had a stated interest rate of 10%,
with interest payments due annually on December 31, and was
collateralized by the total assets of the Company. At December
31, 2012, the promissory note had a book value of $3.0 million,
which approximated fair value, and a maturity date of February
28, 2014. Accrued interest of $300,000 related to the promissory
note was included in accrued liabilities at December 31, 2012. The
Note, including accrued interest and fees, was paid in full by the
Company in March 2013.
ASETER A/0% - ANNUAL REPORT gel:
1405144EogSN92591
. KOS
1,578 1,574
(1,578) -
2,728 -
(1,150) -
7,660 -
493 -
4,000 -
333 4
14,064 1,578
v $0.001
$0.019 -
"| 264 ' 2
sy big i ' KZ! vr |
1001 (29,510)
- (7,612)
(364) (306)
(56) (8)
(420) (37,436)
me (4,443)
- (3,001)
(232) n
(243) (7)
(895) —— (44,887)
11,663 1,248
TT 10,768 (43,639)
Asetek A/S Danmark line of credit. In September 2012, the
Company entered into a revolving line of credit agreement with
Sydbank. The line is collateralized by the trade receivables of
Asetek Danmark A/S and is payable on demand. At December 3i,
2013, the total line was 2.0 million Danish kroner, which equates
to $370 thousand at December 31, 2013. Interest on the line is
payable monthly at the Danish CIBOR 3 rate plus 4.5 percentage
points, which in total was 4.75% at December 31, 2013. As of
December 31, 2013, the Company had 1,97 million Danish kroner
($364,000) outstanding on the line. (1.8 million Danish kroner
outstanding at December 31, 2012).
MIOTES
—
fa bor AN Bye bey
Operating leases. The Company leases some of its facilities
under noncancelable operating leases. In August 2013, the
Company entered into a lease agreement for new office space
in Aalborg, Denmark for occupancy to August 2020 or later. The
Company subleases a portion of this facility to another tenant
and under the sublease agreement receives 0,1 million Danish
kroner per month in rent until December 31, 2014. In November
2013, the Company renewed and extended the lease for its San
Jose, California office through December 2018. Future minimum
Finance leases. The Company has finance leases outstanding
for manufacturing, engineering and test equipment and the
leases generally have terms of 60 months. There are no lease
commitments beyond five years. Future minimum lease payments
under finance leases are as follows as of the respective balance
sheet date:
USD ANDEy ' KE bh ps: HEE arier |
Minimum finance lease
operating lease payments are as follows as of the balance sheet payments as of December 31 334 16
date: Less: Amount representing
interest (35) (1)
gine | igati
EIDE: EE Påbud j fotal obligations under 299 15
Minimum operating lease inance leases
payments due: Obligations under finance leases 56 8
In the following year 556 114 due within one year
In the second year 565 2 Obligations under finance leases 243 7
due after one year
In the third year 570 - … — — k
299 15
In the fourth year 572 - - -
In the fifth year and thereafter 1,273 -
3,535 214
ae?) TRAP STAT TIEJMMESS VVELEA PIL ATEE) FLAJE TIE
The Company's chairman is a member of the board of directors of
a reseller of Company products. During the years ended December
31, 2013 and 2012, the Company had sales of inventory to the
reseller of $5.5 million and $1.2 million, respectively. As of
rim mi JB SIM LA TES
December 31, 2013 and 2012, the Company had outstanding
trade receivables from the reselier of $1.0 million and $0.5
million, respectively.
The following subsidiaries are included in the consolidated accounts:
uden frrv
Asetek Holdings, Inc. USA
forynttdlts
FAE USE
Inactive
Asetek USA, Inc. USA 100% 100% Trading
Asetek Danmark A/S Denmark 100% 100% Trading
Xiamen Asetek Computer Industry Co., Ltd. China 100% 100% Trading
Asetek International ApS Denmark 100% 100% Trading
Åsetek International ApS - Branch Office Taiwan 100% 100% Trading
MØTES BST EK Alto + AM js REPORT 2815
1405144EogSN92592
ne mer be rn -Q
j
c ' | |
; (said |
i i has i
ge telsttilvee ; j o
| FAG IDEEL ETIFET EEG | | delle, USA i
i i im: ]
1
Lg ed]
prale | i
F
| i i ; FLS
' of 3 TE International ApS
+. Taiwan Branch Offce
5. i
må SNUJFOIT Fords
The Group's principal auditors perform audits for all of Asetek's denim) r: 3
entities except for ihe Xiamen, China subsidiary, which is audited Statutory audit 150 222
by a local firm. The Group's principal auditors received a total fee .
. . Other assurance services 31 15
of $354,000 and $463,000 in 2013 and 2012, respectively. |
The fee is distributed between these services: Tax services 9 103
Other services 82 123
Total 354 463
ASETER A/S + ARN UAL FEPØPT 2013 JOTES
1405144EogSN92593
le] BALLADEN I LIE:
LHR I
LID)
The members of the Board of Directors have reported, that they had the below listed other director positions at December 31, 2013.
For the year 2013, the board members have been compensated as listed below,
Hame
Samuel
Szteinbaum
Chris
Christopher
Jørgen
Smidt
Alexander
Wong
Bengt Olof
Thuresson
Knut Øversjøen
MOES
Corsair Inc, - Board member
The Wonder Years Inc. - Chairman and CEO
SmartMove LLC - Board member
Innosphere - Board member
Clean Engines Internationaf, Inc, (CEWI) —- Board member
Board member in the fohowing companies:
CloudMade Ltd., Sunstone TV Management A/S, Sunstone TV General
Partner I ApS, Sunstone TV General Partner II ApS, Sunstone TV
Invest II ApS, Sunstone TV Special Limited Partner II ApS, Sunstone
Capital A/S, Sunstone TV GP I Holding ApS, Sunstone TV Invest II
Holding ApS, Sunstone TV Partners & Co. Holding ApS, Sunstone TV
Partners Holding ApS, Sunstone TV Special LP II Holding ApS. RDYN
17.9.2012 A/S, Microtask OY
Member of executive management mn (he following companies"
Sunstone LSV (TV) Special Limited Partner III ApS, Sunstone TV
General Partner III ApS, Sunstone TV Invest III ApS, Sunstone TV
Special Limited Partner III ApS, Sunstone TV & Co. Invest III Holding
ApS, Sunstone TV & Co. Special Limited Partner III Holding ApS,
Sunstone TV Invest III Holding ApS, Sunstone Special Limited Partner
HI Holding ApS, Sunstone TV Partners & Co. Holding III ApS, Sunstone
TV Partners Holding III ApS, Altamont Holding ApS
Cervel Neurotech Inc. - Board member
Kanjoya Inc. - Board member
Natrix Separation Inc. - Board member
Tapjoy Inc. - Board member
Nevion Europe AS — Chairman
Protan AS — Chairman
ICTEC AS - Chairman
Pearl Consulting AS — Chairman
Pexip AS — Chairman
Aktivhus Gruppen AS - Chairman
Likida Invest AS - Chairman
Cinevation AS — Board member
Nåi Subsea - Chairman
ARD Group - Board member
Kov Invest Holding, Chairman and Owner
Scandec Systems, Chairman
Falcon Seismic, Chairman
Scandec Systems, Chairman
1405144EogSN92594
Compensation for 2013
12,822 warrants to buy shares at a price
of NOK36.50. The warrants are vesting
over 12 months and are exercisable for
7 years. Also holds 1,000 shares, 33,000
options at $0.94 per share and 21,600
options at $0.96 per share from grants in
prior years.
12,822 warrants to buy shares at a price
of NOK36,50. The warrants are vesting
over 12 months and are exercisable for 7
years. Also holds 1,840 shares and 17,760
options at $0.96/share granted in 2012.
No compensation paid.
No compensation paid.
12,822 warrants to buy shares at a price
of NOK36.50. The warrants are vesting
over 12 months and are exercisable for 7
years.
12,822 warrants to buy shares at a price
of NOK36.50. The warrants are vesting
over 12 months and are exercisable for 7
years, Also holds 291 shares.
SETEK A/S - «MPHJAL RE
£
Tr PRISE BIM ANER GET BA EPIT 9
The Company has evaluated the period after December 3i,
2013 up through the date of the Statement by Management and
determined that there were no subsequent events or transactions
that required recognition or disclosure in the Company's financial
statements.
bo MEINDL EIMLLE MEE I IAAF HRG
Letter of credit. As of December 31, 2013, the Company had an
outstanding letter of credit for $0.5 million issued to its principal
manufacturer.
The Danish group enterprises are jointly and severally liable
for tax on group income subject to joint taxation, as well as for
Danish withholding taxes by way of dividend tax, royalty tax, tax
on unearned income and any subsequent adjustments to these.
Other significant commitments of the Company are referenced
within the respective Notes to these consolidated financial
statements.
AQRISK Ala bPibioaL REPORT 2053
1405144EogSN92595
MOTES
i
i
Å
li
CVR-number 3488 0522
i
i Comprehensive Income Statement, Parent Company
' ' bragtes DH aa ne
i [slot lilejger nag eo rn
Revenue -
L
i Cost of sales -
i Gross profit -
(
' Research and development (114)
f Selling, genera! and administrative ' (1,297)
Total operating expenses (1,411)
i Operating Income (1,411)
| .
Finance income 513
i Finance costs (339)
( Total financial income (expenses) 174
( Income before tax (1,237)
Income tax -
(
( Income for the year (1,237)
( Other comprehensive income items that may be reclassified
| to profit or loss in subsequent periods:
( Foreign currency translation adjustments -
Total comprehensive income (1,237)
, All operations are continuing.
É
i
jf
BAPENVT COMP AN. ASER Er AA, ANDEJaL PEPOPT 26172
4
1405144EogSN92596
LIGUID
oa MANN
Balance hot, Parent Company
| Una,
ASS
Non-current assets
Investments in subsidiaries
Receivables from subsidiaries
Total non-current assets
Current assets
Other assets
Cash and cash equivalents
Total current assets
Total assets
EQUTTY AND LIABILIECES
Equity
Share capital
Share premium
Accumulated deficit
Translation and other reserves
Total equity
Current liabilities
Accrued liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
ASETER A/S uilblume PRDORT 147
1405144EogSN92597
BRo ad aoliar si,, e4tik
1,500
8,853
10,353
10,788
10,797
21,151
264
21,445
(644)
(14)
— 21,051
100
100
160
21,151
DARFIT IN Duige
Statument of Cash Flows, Poreni Company
tyre ending, At
Oben bie (TRES DF GIESSEN DES SE ET
Cash flows from operating activities
Income for the year (1,237)
. Share based payments expense 593
' Changes in other current assets (9)
Changes in trade payables and accrued liabilities 100
( Net cash used in operating activities ' |. — . — KEE ' | i |. | i i ' (553)
i Cash flows from investing activities
Investment in subsidiaries (1,500)
Net loans to subsidiaries (8,853)
Net cash used in investing activities (10,353)
Cash flows from financing activities
Proceeds from issuance of share capital 25,100
Cash paid for fees related to IPO (3,406)
Net cash provided by financing activities 21,694
Net changes in cash and cash equivalents 10,788
Cash and cash equivalents at beginning of period i — ' .
Cash and cash equivalents atend of period HE — " ' ' ' 10,788
Statement of Changes m Eqgurty, Parent Coraipany
HEE Sl Flandre ikun ifotgsft
; skød same fddskdd= — Biesn, j
"Equity at December 6, 2012 FRRREEEEER me Rn
Total comprehensive income for the period: ” — ' ' FE ”
Income for the period - - - - (1,237) (1,237)
Total comprehensive income for the period - - " - (1,237) (1,237)
”Transactions with owners in the period TT ' Te
Issuance of shares at inception 88 - - - - 88
Share capital reduction (70) 70 - - - -
Exchange of shares with Asetek Holdings, Inc. 157 (157) - - - -
Issuance of treasury shares 14 - - (14) - -
Shares issued in IPO 75 24,955 - - - 25,030
Less: issuance costs - (3,423) - - - (3,423)
Share based payment expense - - - - 593 593
Transactions with owners in the period 264 21,445 - (14) ' 593 22,288
Equity at December 31,2013 | 264 21,445 - (44) (644) 21,051
BARENT IOMP AN V ASRTEF AN ANNUAL PERORT 2913
1405144EogSN92598
MX taler PEK ANS Fa
NMLITES TO TIHE ADM LJANL. If MRE
” FPAARENT KONE ANY
POE PETPAL, IE LJEERNÆAN [LE oPd
Asetek A/S was incorporated on December 6, 2012 and acquired by Asetek Holdings, Inc, in January 2013. Asetek A/S became the parent i
and 100% owner of the Asetek Group through the purchase of all outstanding shares of Asetek Holdings, Inc. from the sharehoiders, in
exchange for new shares in Asetek A/S in February 2013.
så SLØJD ARAARSPØO LIE SIFOMIEIE ANT AL BOLIG bo OT JE
The 2013 financial statements for Asetek A/S have been prepared 2 Dividends on investmenis un subsidiaries, joint
in accordance with International Financial Reporting Standards venlures and associates.
(IFRS) as issued by IASB and adopted by the EU. Dividends on investments in subsidiaries, joint ventures
and associates are recognized as income in the income
The financial statements are presented in U.S. Dollars (USD), statement of the Parent Company in the financial year in
which is the functional currency. which the dividend is declared.
The accounting policies for the Parent Company are the same as 22. Investmenis uw subsidiartes, joint venturos and
for the Asetek Group, as per Note 2 to the consolidated financial associsies.
statements, with the exception of the items listed. Investments in subsidiaries, joint ventures and associates
are measured at the lower of cost, which equals book value,
or recoverable amount.
DO TED FAAL UVPENRZN TIP JEG PE MSK rs,
; id Bj (ks) frieri (retn fraser
Personnel expenses (Note 4)
Legal, consuitants and auditor
Other expenses
Total expenses
fa ASETEK A/%3 »Hbojni SPOR" 201% BERETTA Baigr
1405144EogSN92599
fl HB JPM ELL er KF PS,
adsdednaney Miki]
Salaries 177
Share based payment 593
Total personnel expenses
770
lam deg) Sannes |
Research and development 114
Selling, general and administrative 656
Total personnel expenses 770
The figures listed above include a portion of the executive management's cash compensation based on an estimate of the actual resources
allocated to the management of the parent company. Also, the figures include incentive based compensation in the form of share options
and warrants granted to employees in the Asetek Group.
Remuneration of the Group Board of Directors is specified in Note 6 to the Consolidated Financial Statements.
The company's share based incentive pay program is described in Note 7 of the Consolidated Financial Statements.
3 AAL JULIE Frk d;
ivr hsy es radar. le (Avid kel Eb, Anuer |
Statutory audit 36
Other assurance services 141
Tax services -
Other services -
Total 177
> FIRNANULAL UMCTIAJE- AMME] CLJSST
)
MULE GUDS)
Fædder, 0 ((dudairnye
EE i . Betetkri lire åg PA |
Interest income on loans to subsidiaries 1 FE ” i 5 429 |
Interest from bank accounts 84
Total finance Income | — ' — ' ' 513
Interest cost on loans from subsidiaries " ' me EN 5 ' ' | 58
Net foreign exchange loss on deposits 264
Interest cost on notes payable 10
Other finance expense 7
Total finance cost ' — — i ' i 339
PAPENT JAPAN: ADERTEN A/%9 + ANNUAL REPOPI 2093
1405144EogSN92600
2 OUNMK CIN dd TA, x
Reference is made to Note 11 to the Consolidated Financial Statements.
MEN TIN SUBSIKHARIESG
É
i g æ . SD . serne ev nm Fm es "« - men w É Ba HA / -
Balance at December 6, 2012 -
Additions 1,500
Balance at December 31, 2013 1,500
Carrying amount at December 6, 2012 -
Carrying amount at December 31, 2013 1,500
Asetek A/S acquired 100% of Asetek Holdings, Inc. through the exchange of shares in February 2013. At the time of acquisition, Asetek
Holdings, Inc. had negative net equity, resulting in the initial investment to be valued at zero. Asetek Holdings, Inc. represents Asetek
A/S's only direct investment in subsidiaries. !
FJ. RELEIVABLES FRONT SLIBSUTAFSIEER
DID) . ' rant |
Asetek Danmark A/S 9,337
Asetek USA, Inc. (2,600)
Asetek Holdings, Inc. (
Net receivables from subsidiaries
Average effective interest rate 5%
The fair value of receivables corresponds in all material respects to the carrying amount.
i
st ASETEK A/S 2NNJAL PEPORIE 2913 PAREMT OMSAN es
1405144EogSN92601
(
Ilt ERIE E
Reference is made to Note 18 to the Consolidated Financial Statements.
HO TIRARESAT TIODDIS VVITE REEL ATET) PAR? JES
Reference is made to Note 21 to the Consolidated Financial Statements.
RR RVEN TS AF rt? THE REP UP TUNLS PRJEIOUD
Reference is made to Note 25 to the Consolidated Financial Statements.
130 KOM TIMEN UJABMHLMIES
The Danish group enterprises are jointly and severally liable for tax on group income subject to joint taxation, as well as for Danish
withholding taxes by way of dividend tax, royalty tax, tax on unearned income and any subsequent adjustments to these.
Asetek A/S has issued a declaration of support to Asetek Danmark A/S confirming its intention and commitment of financial support in the
form of loans or capital contributions to the extent necessary to finance its cash obligations through February 2015.
Reference is made to Note 26 to the Consolidated Financial Statements.
PARENT JOMPAN ?
"1405144EogSN92602
ADET EN
2
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aAMbbLAL REPORT 28112
One company, Åretek, can reduce the
power needed to cool deta centers by
by using a fechnofogy calicd RackCDU.
Ka
million
homes
v.dn fuiline power tavad by RackCDU vach year,
2 MILUON
years”
MORE RESOURCES FOR ALL
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| IN Over SÅ th
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bar SETT centers Inan 52 " bo jr ;
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OD $7.2 billion
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RackCDU
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burning in Ihat
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With Asetek
RackCDU, that heat
could be used for
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of water heating.
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