Asetek A/S

Investor Presentation • Apr 30, 2019

Q1 2019

30 April 2019

Recent highlights

• Q1 2019 group revenue of USD 11.2 million, down 19% from Q1 2018
• Gaming and Enthusiast Q1 2019 revenue of USD 10.5 million, down from USD 13.2 million in Q1 2018
• Adjusted EBITDA of USD 0.3 million compared to USD 0.9 million in Q1 2018
• Group revenue growth expectation for 2019 maintained at between 0% to 10%
• Improvement seen in the Gaming and Enthusiast market in the second quarter 2019

Asetek will be an end-user centric brand

we continue to innovate and push the envelope of Hardcore gamers what's possible.

Gamers know they can count on us. We're gamers too, who love to squeeze every bit of performance from our systems. AIO coolers powered by Asetek enable GPU or CPU overclocking to ensure you get the most out of your high-end gaming PC.

Enthusiasts

We know that top-shelf performance is a must when building your own monster rig. That's why

The business segment driving revenue and profitability today:	Longer-term opportunity:
Gaming and Enthusiast	Data center
95% of revenue, EBITDA margin of >30%	5% of revenue, investing for long-term growth
Strategic position: Large and long-term growing markets Supplying global brands Market leading solutions
IP platform: Applications Technology Systems Products Patents High-volume manufacturing World wide hub infrastructure Brand

4

Enthusiasts represent largest market

7.679 9.440 11.615 9.414 7.585 12.431 16.322 11.054 10.147 15.614 16.412 13.208 18.287 16.104 15.430 10.472 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Quarterly Gaming and Enthusiast revenue USD thousands

Enthusiast/DIY Gaming/Performance PCs

5

Margin development

Quarterly gross margin development

• Q1 2019 group gross margin grew to 42.7% (35.7%)
  • ‒ Driven by higher average selling prices on new, highperformance Gaming and Enthusiasts products and a stronger USD
• Gaming and Enthusiast gross margin increased to 43.2% (36.7%)
• Data center gross margin increased to 34.5% (15.5%)

Data center earnings development

Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19

Group EBITDA development

Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19

Income statement

		Q1 2019			Q1 2018
USD thousands	Group	Gaming and Enthusiast	Data center	Group	Gaming and Enthusiast	Data center
Revenue	11,179	10,472	707	13,868	13,208	660
Gross margin	42.7%	43.2%	34.5%	35.7%	36.7%	15.5%
Gross profit	4,769	4 525	244	4,955	4 853	102
Total operating expenses*	3,248	1,686	1,562	3,215	827	2,388
EBITDA adjusted	1,521	2,839	-1,318	1,740	4,026	-2,286
Depreciation*	1,023	504	519	848	458	390
Share based compensation	237	116	121	300	74	226
EBIT	261	2,219	-1,958	592	3,494	-2,902
EBIT margin	2.3%	21.2%	N/A	4.3%	26.5%	N/A
HQ, Litigation expenses, net	697			325
HQ, Share based compensation	81			113
HQ, Other	509			536
Headquarters costs	1,287			974
EBIT, total	-1,026			-382
Income per share (in USD)	(0.03)			(0.04)

• Revenue reflected fewer unit shipments in the Gaming and Enthusiast segment due to a softer market for PC's and components
• Improved gross margins on on new, high-performance Gaming and Enthusiasts products and stronger USD
• Increase in resources allocated to Gaming and Enthusiast segment
• Decrease in resources allocated to Data center segment
• Impact from adopting IFRS 16 January 1 and recognition of operating leases on the balance sheet
  • ‒ Lease liabilities and corresponding leased assets increased by USD 3.2 million
  • ‒ Depreciation includes USD 140,000 which previously was considered as operating expense

*Due to lease accounting change effective January 1, 2019, \$140,000 of operating lease costs previously recorded as 'Other operating expenses' was recognized as a depreciation expense

Cash flow statement

USD thousands	Q1 2019	Q4 2018	Q3 2018	Q2 2018	Q1 2018
Income (loss) for the period	-821	867	1,624	2,143	-962
Depreciation, amortization and impairment	1,023	1,070	779	993	848
Finance cost (income) and taxes	-41	211	479	271	10
Share based compensation	317	336	280	247	413
Changes in current assets other than cash	5,244	-2,839	1,445	-5,520	3,412
Changes in payables and accrued liabilities	-2,127	1,293	-1,932	2,379	-4,004
Net cash provided by (used in) operating activities	3,595	938	2,675	513	-283
Additions to intangible assets	-360	-621	-329	-313	-482
Purchase of property and equipment	-420	-349	-352	-464	-749
Net cash used in investing activities	-780	-970	-681	-777	-1,231
Proceeds from debt issuance, other LT liabilities
Cash flows on credit lines/debt/lease	-132	-127	-46	-63	-91
Issuance of capital / conv debt / dividend	25	-2	85	289	410
Net cash provided by (used in) financing activities	-107	-129	39	226	319
Effect of exchange rate changes on cash and cash	-56	-10	-123	-806	529
equivalents
Net changes in cash and cash equivalents	2,652	-171	1,910	-844	-666
Cash and cash equivalents at beginning of period	18,627	18,798	16,888	17,732	18,398
Cash and cash equivalents at end of period	21,279	18,627	18,798	16,888	17,732

Balance sheet

Balance sheet composition USD thousands

60.000

12

• Strong cash position
• Low interest-bearing debt
• Lean balance sheet enabling growth and financial flexibility
• IFRS 16 implementation

Building a gaming and enthusiast brand

13

Building a gaming and enthusiast brand

Asetek's OEM customers' brands are promoted while the Asetek brand have become more anonymous

Currently Going forward

• We will put our brand forward without compromising our customers' brand
• Dual-branding and brand-behind-the-brand strategies available
• Introducing new and high-end products to live the brand and go back to our roots
• In-house PC-enthusiasts and branding experts hired
• Largest ever marketing department
• Establishing eSports Academy…

Recent product launches and events

Asetek Introduces 645LT AIO CPU Liquid Cooler Built Specifically for Small Form Factor Systems

"Hardware-savvy gamers, enthusiasts and Esports athletes all want peak performance and reliability from their hardware to drive an immersive gaming experience. For enthusiasts working with constrained space, excess heat becomes even more of a challenge. We took that challenge to heart and used our research and design prowess to innovate the 645LT AIO, combining our most advanced pump design with unique space saving tube designs ideal for small form factor systems." - John Hamill, COO

Asetek Esport Academy Unveiled

"As part of a new strategy to get back in touch with our roots Asetek will be focusing our efforts on enthusiasts and gamers around the World. In our efforts to stay true to our roots we have dedicated a room at our HQ to gaming and Esports, allowing ambitious young gamers the opportunity to become the Esports stars of tomorrow."

Maintaining position in the data center market

Reaching out to decision makers to promote sustainable data centers

Summary and outlook

• Q1 2019 reflected macro economic uncertainties which impacted PC and component markets
• Gaming and Enthusiast brand strategy implemented to expand leading position in longterm attractive growth market
• Improvement seen in the Gaming and Enthusiast market in the second quarter of 2019
• 2019 group revenue growth expectation of 0% to 10% reiterated

Appendix

For more than 20 years, thermal solutions from Asetek have been cooling processors around the globe…

Our AIO coolers can be found in the latest high-end gaming PCs and are sought-after by enthusiasts for their reliable operation, ease-of-use and pervasive cooling. They are also used in some of the fastest computers in the world to enable advances that drive our everyday lives.

Strong platform for long-term growth

Company facts

31 OEM customers | 6 million units shipped | ~100 employees FY'18 revenue of USD 67m , profitable and strong balance sheet Publicly listed company on Oslo Børs

Management

Founder and CEO André S. Eriksen

• Long-term entrepreneur and founder of Asetek
• Previously employed at Danfoss in their management trainee program
• Holds an engineering degree from Aalborg University
• Several MBA level executive management programs from Right, Stanford, MIT and Wharton

VP Global Sales and

Marketing

Dipak Rao

• 15 years+ experience leading global teams and managing global accounts in the high-tech industry
• Prior to joining Asetek, Dipak held senior sales and product marketing roles at AMD
• B.A. (Honors) in Marketing from De Montfort University, Leicester in the U.K

CFO Peter Dam Madsen

• Previous positions include International Controller (DK) and Chief Financial Officer (US) at Martin Professional, Inc.
• Also served as CFO of Dantax Radioindustri A/S listed on the Copenhagen Stock Exchange
• MBA from Fort Lauderdale Metropolitan University

• 15+ years of experience with Vestas and Grundfos he has an intimate background in sophisticated pumping and cooling systems designed for global

VP Global R&D Thomas Ditlev

• M.Sc.EE degree from Aalborg University as well as an EMBA in Business Psychology from Business

markets

Institute in Aalborg

COO John Hamill

• 30+ years of high tech industry sales, sales management and marketing experience
• Previously held position as VP of Global Sales at nVidia and AMD
• Has managed global sales teams
• BSc in Electronics and Electrical Engineering from the University of Glasgow in Scotland

VP Global Quality Magnus Hakanen

• 20+ years of experience from quality management positions within international organizations like VELUX, Grundfos, Vestas, Nilfisk and automotive companies
• M.Sc. in Mech. Engineering from the KTH Royal Institute of Technology in Stockholm, Sweden. In additional he also has a Six-Sigma Black Belt certification

VP Global Operations Csaba Vesei

• 14+ years with IBM in numerous leadership roles, where he managed fulfillment, logistics, manufacturing planning, procurement, and supply chain functions
• MBA from Buckinghamshire Chilterns University, as well as a BSc in Information Technology from the College of Dunaujvaros

Director Branding and Outbound Marketing

Solveig Malvik

• Extensive international experience within branding, marketing, communication and business development in organizations such as Med24, First4Skills and Survitec
• Holds an M.A. in Modern Middle Eastern Studies, Public Policy and Governance from the American University of Beirut and a Cand.mag. in Political Science and Public Administration from the University of Bergen

Board of Directors

Chairman Jukka Pertola

• 20+ years of management experience in ICT, energy, industry, infrastructure and healthcare sectors
• 10+ years of international experience in board positions at private and public companies and organizations
• Solid technological background in telecommunications, IT, digitalization and electrical engineering.
• Experience in R&D funding and technology transfer projects

Vice Chairman Chris Christopher

• 40+ years of leadership, management and tech industry experience
• Most recent Senior VP and GM at HP for an USD 18bn portfolio consisting of blades based client systems, workstations and desktop PCs
• BSEE and MSEE from Colorado State University and an Executive MBA from Insead School of Business

Director Maria Hjorth

• 20+ years of consulting and financial sector experience covering business development, M&A, investor relations and operational optimization
• Currently Deputy CEO of VP Securities
• MSc and BSc in Economics from University of Copenhagen and a MSc in Business Psychology from University of Westminster in London

Director Jørgen Smidt

• 25 years of international operational and business management experience from the mobile telecoms industry.
• Analysis and implementation of investment and international marketing, market positioning and communication strategies.
• Mr. Smidt is currently a partner in Sunstone Technology Ventures Fund I, prior which his career includes 13 years with Nokia 6 years with Motorola
• Holds an engineering degree in computer science from the Engineering College of Copenhagen.

Director Erik Damsgaard

• Experienced Managing Director from the electrical and electronic manufacturing industry
• 19 years as leader at OJ Industries in the HVAC and Floor heating industry. He is also Chairman of Danish service and distributor company Masentia A/S and Masentia Holding AB
• Holds M.Sc. in Electronics and a diploma in Business Economics, both from Aarhus University. Has graduated an Executive Management Program at INSEAD

Income statement

USD thousands	Q1 2019	Q1 2018	2018
	Unaudited	Unaudited
Revenue	11,179	13,868	67,314
Cost of sales	6,410	8,913	41,142
Gross profit	4,769	4,955	26,172
Research and development	1,255	1,122	4,764
Selling, general and administrative	4,540	4,215	16,989
Total operating expenses	5,795	5,337	21,753
Operating income	-1,026	-382	4,419
Foreign exchange (loss) gain	164	-570	342
Finance income (costs)	48	-10	109
Total financial income (expenses)	212	-580	451
Income before tax	-814	-962	4,870
Income tax (expense) benefit	-7	0	-1,198
Income for the period	-821	-962	3,672
Other comprehensive income items that may be
reclassified to profit or loss in subsequent periods: Foreign currency translation adjustments	-330	917	-169
Total comprehensive income	-1,151	-45	3,503
Earnings per share (in USD):
Basic	-0.03	-0.04	0.14
Diluted	-0.03	-0.04	0.14

Balance sheet

USD thousands	31.03.2019	31.12.2018
ASSETS	Unaudited
Non-current assets
Intangible assets	2,258	2,414
Property and equipment	7,238	4,103
Deferred income tax assets	7,346	7,458
Other assets	303	309
Total non-current assets	17,145	14,284
Current assets
Inventory	2,518	2,862
Trade receivables and other	10,473	15,625
Cash and cash equivalents	21,279	18,627
Total current assets	34,270	37,114
Total assets	51,415	51,398
EQUITY AND LIABILITIES
Equity
Share capital	422	422
Retained earnings	37,227	37,704
Translation and other reserves	502	832
Total equity	38,151	38,958
Non-current liabilities
Long-term debt	3,276	641
Total non-current liabilities	3,276	641
Current liabilities
Short-term debt	1,493	980
Accrued liabilities	2,025	2,185
Accrued compensation & employee benefits	1,055	1,512
Trade payables	5,415	7,122
Total current liabilities	9,988	11,799
Total liabilities	13,264	12,440
Total equity and liabilities	51,415	51,398

Cash flow statement

USD thousands	Q1 2019	Q1 2018	2018
Cash flows from operating activities
Income for the period	-821	-962	3,672
Depreciation and amortization	1,023	848	3,690
Finance income	-59	-14	-205
Finance costs	11	24	96
Income tax expense (benefit)	7	0	1,198
Cash receipt (payment) for income tax	0	0	-118
Share based payments expense	317	413	1,276
Changes in trade receivables, inventories, other assets	5,244	3,412	-3,502
Changes in trade payables and accrued liabilities	-2,127	-4,004	-2,264
Net cash provided by (used in) operating activities	3,595	-283	3,843
Cash flows from investing activities
Additions to intangible assets	-360	-482	-1,745
Purchase of property and equipment	-420	-749	-1,914
Net cash used in investing activities	-780	-1,231	-3,659
Cash flows from financing activities
Funds drawn (paid) against line of credit	33	12	-6
Proceeds from issuance of share capital	25	410	782
Principal payments on capitalized leases	-165	-103	-321
Net cash provided by (used in) financing activities	-107	319	455
Effect of exchange rate changes on cash and cash equivalents	-56	529	-410
Net changes in cash and cash equivalents	2,652	-666	229
Cash and cash equivalents at beginning of period	18,627	18,398	18,398
Cash and cash equivalents at end of period	21,279	17,732	18,627
Supplemental disclosures -
Property and equipment acquired under leases	119	0	134

Statement of equity

USD thousands	Share	Translation	Other reserves	Retained earnings	Total
	capital	reserves
Equity at January 1, 2019	422	836	-4	37,704	38,958
Total comprehensive income - quarter ended March 31, 2019
Income for the period	0	0	0	-821	-821
Foreign currency translation adjustments	0	-330	0	0	-330
Total comprehensive income - quarter ended March 31, 2019	0	-330	0	-821	-1,151
Transactions with owners - quarter ended March 31, 2019
Shares issued	0	0	0	26	26
Share based payment expense	0	0	0	318	318
Transactions with owners - quarter ended March 31, 2019	0	0	0	344	344
Equity at March 31, 2019	422	506	-4	37,227	38,151

Equity at January 1, 2018	419	1,005	-6	31,976	33,394
Total comprehensive income - quarter ended March 31, 2018
Income for the period	0	0	0	-962	-962
Foreign currency translation adjustments	0	917	0	0	917
Total comprehensive income - quarter ended March 31, 2018	0	917	0	-962	-45
Transactions with owners - quarter ended March 31, 2018
Shares issued	2	0	1	407	410
Share based payment expense	0	0	0	413	413
Transactions with owners - quarter ended March 31, 2018	2	0	1	820	823
Equity at March 31, 2018	421	1,922	-5	31,834	34,172

Disclaimer

This presentation and its enclosures and appendices (jointly referred to as the "Presentation") has been produced by Asetek A/S (the "Company") and has been furnished to a limited audience (the "Recipient[s]")on a confidential basis in connection with a potential securities issue by the Company. The content of this Presentation is not to be construed as legal, business, investment or tax advice, and has not been reviewed by any regulatory authority. Each Recipient should consult with its own legal, business, investment and tax adviser as to legal, business, investment and tax advice. The information cannot stand alone but must be seen in conjunction with the oral presentation and are expressed only as of the date hereof.

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