Well, the door just closed, so I assume that's a sign that we may start. And ladies and gentlemen, it's a great pleasure for me today to welcome you here to the Annual Meeting of Shareholders, and we're pleased that you turned up to hear a little some news from the company what happened last year. Among other things, of course, we will discuss the annual report from 2018. We will go through the auditors' report, and we will also discuss the final dividend for the year 2018. And I'm here today, and I'm the Chairman of the Board.
My name is Nils Anderson, and I'm here today with my colleagues from the Supervisory Board, Mrs. Peggy Brucellius, Mrs. Sue Clark, Mr. Brian Grothe, Mr. Michael Jasky, Doctor.
Pamela Kirby, Mr. Dick Zweimers and Mr. Patrick Thomas. Absent from the Supervisory Board members are Ben Verwein, who unfortunately had a long standing commitment elsewhere. Also here today on the podium, we have Mr.
Jerry Van Lager, who's the CEO of the company, if anybody should have any doubts and Mr. Martin de Ries, who's our CFO. And also with me today is Mirce B. Bleifeld, who is the Corporate Secretary of the company. We will hold the meeting in English, which is better than for you than if I held it in Danish.
And Dutch doesn't really work for me. But you can ask all the questions you like in Dutch. There will be translation, and we'll try to answer the questions as well as we can. There will be headphones. They're provided outside and I can see that a lot of you have them on already.
So I hope the translation is working well. If you want to use the microphones, please choose Channel 1 for translation into Dutch and Channel 2 for translation into English, and that's the one I will use. Before we start, I would like to recap on the events that took place late last year. AkzoNobel moved on from the events of the previous year or years to build a new future as a focused paints and coatings company. It was all of 2018 a year of delivering on commitments and the implementation of our ongoing transformation.
Key to establishing this new future was the successful sale of the Specialty Chemicals business, which was divested to the Carlyle Group and GIC and was completed the transaction was completed on October 1, 2018. We held very shortly thereafter our extraordinary general meeting where you, the shareholders, approved our plans to use the proceeds or the vast majority of the proceeds from the divestments, mainly by giving them back to you. And you'll be pleased to know that we are making good progress on that program. We already, at the beginning of the year, returned in January, returned 2,000,000,000 euros in the form of a share consolidation scheme as you approved it, and we made a special cash dividend of additional €1,000,000,000 immediately thereafter. We are presently in the process of buying back shares, also thereby returning money to the shareholders, And the buyback program is €2,500,000,000 and we expect to complete the buyback program by the end of this year.
And as it runs at the moment, it looks fine. And when we have taken or when we have done that and when we take into consideration the $1,000,000,000 that was paid out as a dividend prior after the decision but prior to the completion of the divestiture of the Specialty Chemicals business, it takes our total return or proceeds from that divestment up to 6 point 5 €1,000,000,000 which after pension fund filling up and so on and other costs, is the vast majority as we have committed to. During 2018, AkzoNobel, in addition to the divestiture, had to also focus on our Winning together: 15 by 20 strategy, which is gathering pace and made towards and progress is made towards realizing a 15% return on sales by 2020. Thierry will tell you more about this in a few minutes. The Supervisory Board have been intensely involved in discussing and following this program, and we have been impressed by the leadership's commitment and passion for living or for making the dream or the plans into reality.
So a lot of hard work, obviously, and it's something that will take a good period to complete. And it will go on, by the way, after 2020. So commitment and effort and dedication is very important. We've been very, very impressed with this, and we've also been pleased to see that we are seeing the results gradually improve over the last 2 quarters. So all very positive.
And before we proceed, I would like to take you to take, by the way, the mobiles and turn them into silent mode, best turn them off, but at least into silent mode before we go into the real formal parts of the program. The point the item 2 on the agenda after the welcome is the discussion of the financial year 2018. And I would like to hand over to Thierry, who will take us through a short presentation well, not short, but a good presentation on how that went.
Thank you, Niels. Good afternoon and also a very warm welcome from my side to all of you. During the presentation, I will present an overview over the highlights of 2018. And as Nils indicated, the progress we have to our Winning together 15 by 20 strategy and goal. And then hopefully, there is not only an opportunity for questions, but I'm also sincerely hoping for questions.
After 2018, after the divestiture of the chemicals part of the AkzoNobel company, we are now 100% focused on paints and coatings. And yes, we are not only passionate about paint, but we do get an excited feeling every time we see paint dry. And this is also because we have the strongest brands in the market with Dulux, Seconds and International Interpol for our powder coatings. And our geographic exposure is very well balanced across all the regions with about half of our revenue coming from emerging markets. As Nils already indicated, 2018 was a real landmark year, an extremely important year for the company.
We did complete the sale of our Specialty Chemicals business and we have started, as Nils indicated, started to return the vast majority of the proceeds to you, our shareholders. Despite strong headwinds and amongst the most important ones, an extreme escalation of raw material costs, we have made good progress in our Winning together 15 by 20 strategy. We have concluded the 1st phase of a necessary transformation to create a fit for purpose organization And we have taken a second step that means we've announced the intent to deliver an additional €200,000,000 to cost savings by 2020. But besides all that getting internal fitness, we've also have been very much continued to invest in growth, including multiple bolt on acquisitions. But before we go there, maybe some financial key financial highlights on 2018 and they are summarized on this slide.
During 2018, our revenue was up in 1% in constant currencies with a very positive pricemix partly offset by lower volumes. The pricing initiatives were necessary for taking action in response to the higher raw material costs. We took those actions proactively and faster than our competition, we now see has actually started the same path, but probably with about 9 months later than we have. And that has contributed very much to the 6% positive pricemix overall. The year 2018 was really a year of 2 halves.
During the second half of the year, our pricing initiatives and our cost programs, our cost saving programs more than offset the higher raw material costs and the lower volumes. And that resulted in a return on sales of 10.6%, 1.4 percentage points higher than the 9.2% in the same period in 2017. The return on sales excludes the unallocated costs to make them in line with our 15% target for 2020. A final dividend of €1.43 per share post consolidation has been proposed for 2018, which would be equal as a total 2018 dividend of €1.80 per share. In addition, we are also delivering on our commitment to return the vast majority of the net proceeds of the Specialty Chemicals business as we promised.
In addition, we have settled the cash top up payments of our main U. K. Pension plans removing a lingering significant headwind for the company in the past. Our Winning together 15 by 20 strategy delivers great results and is indeed starting to gather momentum despite the significant adverse headwinds as Nils already pointed out. Our robust pricing initiatives achieved a price mix positive price mix of 9% in the 4th quarter and that included 6% higher selling prices.
We also launched our Paint the Future Startup Challenge. This is designed to combine our global scale as one of the world's largest producers of paints and coatings, our know how and our 4 solutions with the energy and the creativity of startups and scale ups all around. Happy to note that we had 160 people 160 start ups participating in this event around the company, which is a great sign for the innovation in the future. We've made continued progress on implementing integrated business planning also known as IBP, a methodology to get our planning of demand and supply to world class level. And we now have the monthly cycles in place for all of our eight business units.
And we're also moving forward with the integration of our ERP systems, our information technology, our IT systems, which was really overdue. These processes and system upgrades will play a key role in our future performance improvement and our delivery of the 15% in 2020 goal. Savings from continuous improvement more than offset the fixed cost inflation and Phase 1 of creating a fit for purpose organization fully delivered on the promised €110,000,000 which was the planned savings for 2018. And we have said and we've taken the next step in our transformation and are on track to deliver a further €200,000,000 savings by 2020. Successfully focusing on our value over volume demonstrates how we are creating a high performance culture.
We've also been recognized as a top employer in places like China, the U. K. And Brazil, all key markets for AkzoNobel. So we are encouraged by what we achieved so far for 15 by 20 as we have continued to deliver against the tide in our industry. But to try to get you also more enthusiastic about what we've done so that you share in some of the encouragement, maybe some highlights and some key examples of the things we did in 2018.
In 2018, we delivered cutting edge innovations and colorful solutions to our customers. One of the pictures here comes of our Let's Color program, transforming lives of hundreds of people in a coastal town in Turkey, thanks to a major community project carried out by our Marshall Paint brand, one of our paint brands, an initiative as one of the many in our activities of AkzoNobel Cares. We also supplied the powder coatings of under the brand name of Interpond in key historic renovations. Here, this is the historic addition, the middle picture of an addition into the Westminster Abbey in London, the U. K.
The new Weston Tower features 500 LED windows and every window frame is protected without coatings. Not on this picture, but also for powder coatings, is the almost 40 tons of powder that is in the new Istanbul Airport, a real showcase what our products can do. The last picture is in China. We painted there 180,000 square meters of the colorful Yunnan Happy World Theme Park with our Dulux Pro brand. Professional artists created colors and textures resembling rock, wood and animal skin, so the paints also needed to be capable of producing a variety of effects but also withstand temperature and weather over many years.
Our color of the year is the next picture. Our color of the year is spiced honey. For those of you who have not repainted their living room yet, please talk to Rudy Joosten. He will gladly escort you to a distributor of ours. But this color more seriously was selected following expert research into global trends, insights and customer and consumer behavior, and it helps consumers make confident color choices.
It's also clear to note that AkzoNobel's choice of the color of the year results in a real uptake of that color across the world in for decorators, etcetera. The warm amber tone of spiced honey is being marketed under well known decorative paint brands such as Dulux, Coral, Levi's and Flexa. The middle picture shows a case from our aircraft customer Embraer in Brazil, who created stunning animal designs with our paints, on our paints, which were already on the machines, on 4 of their latest line of the E190E2 commercial jets using our aerospace coatings. The artwork was applied at Embraer's facilities in Brazil, which houses a dedicated AkzoNobel Color Mixture Center. It's just an example of how AkzoNobel over the last couple of years has really become the key player and the largest player in the whole aerospace industry.
We've also introduced a new way of helping our customers becoming more efficient developed by our industrial coatings business known as IntelliCure. The novel system involves building products, software and machinery into one single solution for manufacturers of glued wooden parts. It's a flexible solution which helps customers to run their lines as efficiently as possible. The next picture is a sign of our Paint the Future activity. As I already indicated, I'm very proud to share our Paint the Future Open Innovation Challenge that generated more than 160 submissions from 30 countries from different startups and scale ups.
In the end, we selected 21 startups that are shortlisted for the finals, which will be held next month. The objective of this open innovation challenge is to solve paint and coatings related challenges and co create sustainable business opportunities in collaboration with early stage tech companies and institutes. This initiative was chosen by the American Coatings Association as being the biggest innovation in our industry worldwide. It's a great example of how we at AkzoNobel, while transforming, are also becoming the reference in the paints and coatings industry worldwide, truly operating at the forefront of innovation. Talking about the acquisitions in 2018.
While all of this was going on, we continue to look at how we can keep growing the company. And so we continue to invest also in growth and have been participating in the industry consolidation with multiple bolt ons during 2018. In total, we did 10 acquisitions in the company and have pulled out some of the most important ones on this chart. We acquired Fabryo in Romania, which made us in one go the leader in the Romanian decorative paints market. We've also acquired Xylazel in Spain and Colorland Paints in Malaysia.
All of these acquisitions were very targeted, very real, delivering the synergies and strengthening our market positions in those segments. We also acquired near the end of the year the minority interest share to obtain the full ownership of our Chinese AkzoNobel Swire Paints joint venture, which will enable us a much more strategic and flexible approach to this key strategic market in the future. Our Deluxe Decorator Center network in the U. K. Has also been significantly enhanced with several store acquisitions to further improve the service and support to our customers.
Going forward for 2019 2020, we will adopt a very disciplined approach to pursue strategically aligned and value generating acquiring opportunities. Let's talk about sustainability. As a focused paints and coatings company, the priorities of our sustainability at Dendja have shifted to reflect the strategic direction of AkzoNobel and focus on those areas where we can have the biggest impact, value selling and resource productivity. We will strengthen our sustainability value selling agenda by creating a sustainable portfolio which accelerates market penetration and market growth based on insights into evolving environmental concerns and societal needs. Our eco premium segment of our product portfolio, which consistently demonstrates higher margins and revenue growth, now represents 22% of our revenue.
A product only gets the title Eco Premium, but it is clearly and objectively, environmentally and sustainability ahead of anything else that's on the market in that category. We've also showed continued progress on our resource productivity agenda. For example, more than half of our sites reduced energy use compared with 2017, and our total share of renewable energy is now over 30%. We also reduced our waste by 12% in 2018 alone. In terms of safety, the number of reportable injuries reduced by 5%.
66%, 2 thirds of our manufacturing locations have been reportable injury free for more than a year. And although safety is only as good as the number 0 in incidents, we have now for many years been far ahead in our safety record from any of our competitors in the market. And although we announced that we will not longer actively participate in the Dow Jones Sustainability Index going forward, we will focus on external benchmarks that help create the most value for us and our stakeholders such as Sustainalytics who have consistently ranked us as the industry leader. We are also included in a number of other key sustainability indices, including the FTSE For Good, Vijayo ESG indexes and the MSCI ACWI ESG Leaders Index. Let's look at some of our numbers.
The transformation plans are in place to get to 15% return on sales before unallocated costs by 2020. We see it as a clear path to deliver on the 2020 guidance we gave earlier. Our plan has been derisked by assuming just a 2 percentage revenue growth for the company year over year. This allows us to focus on things we can control because this number is, in fact, lower than what the proposed industry growth is. We have an excellent track record when it comes to continuous improvement and these initiatives are expected to continue to offset annual fixed cost inflation.
As mentioned, we successfully achieved €110,000,000 structural cost savings from Phase 1 of creating a fit for purpose organization. The next steps in our transformation that has been announced and we are starting to implement as we speak is aimed at delivering a further €200,000,000 cost savings by 2020. In the meantime, the whole paints and coatings industry worldwide experienced significant margin pressure due to raw material price inflation. In 2017 and in 2018, AkzoNobel faced a raw material cost headwind of more than €750,000,000 Therefore, proud of the fact that the team didn't hesitate a second to implement very robust pricing initiatives aimed at offsetting this headwind and therefore achieved a 6% price increase by the Q4 of 2018. We'd like to stress that we were the most proactive and therefore also have come out on top much faster than anybody else in the industry.
So clearly a proof point that we are focusing on returning 15% on our sales by 2020. We've also updated our capital allocation priorities, and that's following the sale of the Specialty Chemicals business and in the context of our 15 by 20 strategy. As mentioned earlier, we're making excellent progress on returning a total of €6,500,000,000 to our shareholders. We continue to invest in profitable organic growth, including around 250 €1,000,000 capital expenditures per year with clear mandate per business segment and geography to grow our revenue by around 2% per year. In addition, as I've outlined, we continue to target strategically aligned and value creating acquisitions in a very disciplined way.
Our dividend policy of stable to rising remains unchanged. We have also settled the cash top up payments of our main U. K. Pension funds that came to us through The Courtaulds and the ICI acquisition, as mentioned earlier, removing, therefore, a long chronicle and very business adverse cash headwind for the company that was with us for many years. We now target a leverage ratio of net debt to EBITDA of 1 to 2 times by the end of 2020 and remain committed to retain a strong investment grade credit rating.
Achieving our target leverage ratio allows potential for further capital returns to shareholders in 2020. During 2018, our share price outperformed both the Bloomberg Chemicals Index as well as our coatings peers as you see on the chart behind me. So in summary, AkzoNobel is now a very focused paints and coatings company and proud of it with strong global brands, leading positions in large and attractive coating markets and a balanced geographic exposure. We are very well positioned to accelerate our growth and even better so to enhance our profitability, having transformation plans in detail and in place and a clear path to deliver on our 2020 guidance, providing significant returns to our shareholders. So for me, and I guess on the behalf of the whole board and the Executive Committee, a very big thank you for your continued investment in AkzoNobel, and I would be very happy to take your questions.
Thank you, Thierry. I would now like to invite questions. You can direct your questions to me, and then I will pass them on mostly possibly to Thierry, but there may be others who would like to bid in with something. So please ask your questions. We kindly ask you to limit your number of questions per topic today to 2, and please be brief.
Who would like to start? Yes, the gentleman.
Thank you, Chairman. David Tomic on behalf of Dutch Investors Association, VEB. I will ask my questions primarily in Dutch. Should it prove helpful for the order of the meeting when I, for example, address the Supervisory Board and you in your position of Chairman, I will might switch to English.
Thank you very
much. So I am speaking on behalf of Dutch shareholders, the VEB Association also speaking on behalf of others that have given us their proxy for this meeting. Very interesting to hear that you are right in the middle of your ambitious plan, as you have called it yourselves yourself as well. A lot of is being asked of the people in AXA Nobel. You have a lot of headwinds.
Competition is very strong. The raw material price issue is apparent in your figures. And we've seen that you've had quite a rocky road. I'm going to concentrate my question on a number of issues. The revenue to achieve a better understanding of where that came from, price or volume, Then your return on invested capital, one of the target figures.
And you talked about 15% and ROI 20%. Or I also have a question on the basis of the report by the supervisory board. It's quite a list. I'm going to try to be as concise as possible, and I hope that you will offer me the opportunity to ask all questions. Let me start.
With respect to revenue at AXO, in the last quarters, 5 quarters at least continuously supported by higher prices. And those higher prices translate into lower volume and lower sales. So the higher prices are necessitated by the raw material costs, but this is at the detriment of sales. Does AXO actually see opportunities to continue increasing prices? Or do you see certain segments, certain countries being pressurized by this strategy of price increase.
2nd point, good balance between volumes and price mix. This is something that each company looks into because it gives the best guarantee of a good business model. Does AXO think that even though they have a focus on pricing initiatives, as you called it consistently, that the volumes may increase in 2019? And finally, with respect to this cluster of topics, is a volume growth and a revenue growth an absolute necessity to actually reach your goals for 2020 so much so far?
That was quite a lot in one question. Thierry, would you like to start and then Martin might want to go into some of the calculations you say afterwards.
First of all, on the turnover, I mean, you have to look in constant currency and there the turnover did not or the revenue did not go down, just as a qualification there, which in fact most of our competitors do the same thing that they go for constant currencies. If I get to your questions on the pricing strategy, as we outlined, the raw materials went up in double digits since 2017. We have been proactively doing a couple of things. 1, we did a very detailed analysis of our portfolio. In fact, it was 144 segments.
We looked at market and geography segments, looked at what is the volume, what are the margins and what should we do. So there was a lot of calculating behind where should we do something around pricing, where can we do something in pricing and where shouldn't we. So if you look at the volume that has been sacrificed, in fact, the bulk of that has been a very conscious decision to exit the economy part, the low end part of the China market, which was enormous volume with very little margin. So that was a lot of activity, but there was no fun that came out of that activity. So that's a big part of it.
And then basically, we went very methodically business by business around what are the segments where we can, should win and then have our pricing policy there. It is not our intent to shed volume just for the sake of shedding volume, but it was necessary if you look at to do the calculations, it was necessary for the company and also healthy for the company to reset its portfolio. We've also been somewhat abused to see that our big worldwide competitors took 6 to 9 months longer to come to the same conclusion and are now as far as we can see it as activities in the market are basically following exactly the same strategy. And if you follow the Q1 results announcement, it is clear that they are, a, started a little bit later and actually are also sacrificing volume. So in that sense, it's not a notable strategy to lose volume.
It is part of the whole overall strategy that we follow for AkzoNobel. One of the items that I would like to cover is that the necessity of volume or of revenue. I think you've been very clear that the underlying assumption for our company is 2% revenue increase. GDP is about 3%. So we took a bit of a hedge lower than the GDP so that we were able to reset really the processes, the systems and do the things we needed to do for the long term health of the company.
So within that 2% context that for revenue, that is basically the boundaries for our improvement. I'm not sure if I answered all of your questions.
Yes. Just to react to 2 points you mentioned. First one is cutting down the bottom end of the market, so to scrap the volumes. Is that a sustainable strategy? Because I can imagine at one point in time, you have that low hanging fruit been taken away.
So tension might come at a certain point in time. The question basically was, do you already see that tension in
the last quarter?
Well, I think for 2019, yes, well, you have to look also year over year comparison. So I think for 20 19, I think we're going to be more or less at volume levels in the latter part that we were in 2018. So of course not you cannot keep shaving parts of the bottom strategy. But for us, it's an 18 months to reset the portfolio and then actually get it into a steady state. So this is a very
transient situation. So I think maybe we could come to your second question if we
So my second question was related to something the CEO just said. It's about the revenue growth. You mentioned 2%. I read it in the annual report. It was on the slides a couple of minutes ago.
What should be the ideal composition of the revenue growth? Is it driven by pricing primarily? Or should volumes pick up as well?
I think right now we very much looked at what the margins are on the products that comes in. And then the mix is really there is not one answer for that for the company. If you look at us, it's very different if you go for a decorative paint business or an aerospace business or a metal coatings business or a powder coatings business. So for each of these segments, we have decided what is the better volume versus pricing or versus margin strategy. And I think overall, I mean, it almost balances out on where we need to be.
And I think we believe we will be in a steady state at the end of this year. So I'm not sure there's a general rule that would be making any sense for the total company given the very heterogeneous segments that we're operating in.
Thank you.
Can I proceed with my questions? Or would you like to
How many questions do you have? Because you already asked a few.
I would like to get a little bit more into the ROE, the ROE, return on investment.
We will ask Martin to answer that, and I hope that will then be the last question.
For now.
For now.
Not sure. We'll
see. I'm sure.
So with respect to reaching
I'll turn it to Dutch again, switch it to Dutch. Now both goals together, it's clear from your figures and also from the margin and from the ROI, they're going in contradicting directions. Margin slowly increasing, but return not really increasing. They're not synchronous in sync, let's say. And the question that comes up, return on invested capital, not only your production plans, but also the machines and the operating capital there.
Where can you see potential improvements, specifically in the operating capital? I believe that now with raw materials increasing that there's a huge pressure on that operating capital and you see that in the figures for 2018. Where do you see it? Inventory? Do you see debtors, payables, receivables?
Where do you see improvements? Go ahead.
So maybe just to come back on your question on ROI and then to working cap. First of all, ROI indeed went slightly down in 2018, basically as a component of invested capital, which was flat in 2016 2018, sorry, but the operational profitability went down as an amount, where a main part is also the translation effect of currencies. Now if you look at working cap, working cap went up in 2018. And in fact, in total, it was €200,000,000 up. A few areas, first of all, inventories.
Inventories went up because of the raw material price increases, so that's a direct impact. Secondly, receivables also, we saw an increase. It's partly due to a mix in the different regions. Specifically, China traditionally has much lower receivables. But in that mix, you see different mix of regions growing and going down, but also due to overall So that's an area of focus for us, for the Board and for the Exco to get that back on track again.
Although, overall, the longer overdues went down, and that was very encouraging to see. Payables was more or less flat, so nothing to mention there. So overall, we still have opportunity to improve working cap in terms of improving our underlying processes.
Thank you.
With respect to the
Thank you as well. Either you tell me how many questions you have left or we close off your microphone.
Can I come back in another round then?
In another round, yes, but not now. No.
Thank you.
Thank you. Costa, I'm a private shareholder. I don't speak enough English, unfortunately, but you've talked a few times about raw materials, the fact that you have problems with higher raw material prices. Now you are focusing on paint and coatings, so you knew what raw materials you required. And as an agricultural entrepreneur, I know that you know in advance what you need.
So you have long standing contacts with your suppliers. So you really blame it on high raw material prices. But if you would have contracts, you would have been able to conclude contracts for 5 years, and then the materials were cheap. I know it from another multinational. They had the same story.
They were so much bothered by high raw material prices. And when the raw material prices dropped considerably, then they said, well, currency problems. So the story became quite different. Now as Board members, you can find an excuse anyhow for this. So I would like to know what exactly are your main raw materials.
Another item I wanted to raise, and perhaps I've been a shareholder for 40 to 50 years because it was your business was a merger of other businesses. But in the past, I used to visit Musa sacrum, and it was totally full. And now there are only very few shareholders. Now if they meet all of them together, it would be easy for you because you have many if you have many shareholders, it happens really fast. But I would appreciate it if you could find us a more quiet day to have a meeting.
These are a few items I wanted to raise. Thank you.
Thank you very much. I'll ask you in answer you in English on the first question or comment on it. I'm also on the Board of BP. So of course, when you deal with businesses that are buying raw materials close to commodities, you are in markets that deviate, so they will be fluctuating. And I'm not aware of any companies that have really been able to consistently predict where the raw materials would go.
And when you run a business like AkzoNobel does, then you know that your competitors will be using the same raw materials. So you have to be careful that you don't go too long or too short compared to your competitors if you want to make sure that you can survive in the markets. If you go long and the prices go down, you may sit with a bankrupt company in quite a short time. And if you do the other thing, it may be equal an equal outcome. So irrespective of what raw materials we use, it's very difficult to say you just buy 5 years ahead if you believe that's the way the markets are moving, and then you'll be fine because nobody can say that.
And if you could say that, I'm sure you would have a huge company and be very successful, and I'd love to ask you to invest my money. So as to what raw materials we use, I think, is a little less important. But anyway, Thierry, if you could comment briefly on that.
Yes.
Well, I can do it in Dutch. Four large categories, really. First, of course, pigments, any type you can think of. The second group is the resins, which is the core of the coating itself, the layer indeed that you will attach. We create lots of these ourselves, but it's a large wide range, so we buy a lot.
And there are, of course, a lot of products that are in the solvents category, so they evolve with oil prices and any other solvents you can think of. And the 4th category, which is a very wide group of additives that make sure that the paint attaches better. These are 4 large categories that we buy.
Right. And the last question was a different day for the AGM. We're not deliberately trying to find a day where there's a lot of companies holding AGMs. But of course, most companies would like to report within a relatively dense time, so it's very, very hard to find days where you're alone. So that's a simple explanation.
And of course, it saves you some time traveling to Amsterdam if you come from far away. Any other who would like yes, please?
If you don't mind, I also will ask the questions in Dutch.
My name is Santiago. I represent the Sustainable Investors. I, VBDO, I would like to complement you on risk management in which you incorporate more climate related elements. We believe that they will become more important. And therefore, an international task force was founded, Climate Related Financial Disclosure.
That task force has created a number of guidelines, and you seem to apply part of these. Our question is, when would you apply these guidelines fully? And secondly, will you report next year's on the repos and the financial implications because I believe that many shareholders are interested in the financial implications of the climate risks. And this may not just focus on the climate risks within your company, but also for suppliers. And since you audit your suppliers, that could be part of your audit.
Because I had the impression from your annual report that you did not do that yet. That was my first question. Secondly, a remark when I read your annual report. I know that you create coatings for airplanes. In respect of climates, airplanes are not the best solution to the contrary.
But I had some mixed feelings when I read on an airplane that it was painted with your paint safe colories. I think it seems like a lot of greenwashing. I would not advise you to do so. Another remark with regard to your staff reviews. I understand that the personal targets for your staff members, that sustainability is part of that.
And I would like to compliment
you on that because that will definitely help if everyone in all regions will contribute. My second question is about livable wages, living wages. It's not the same as minimum wages, as you know. In lots of countries, minimum wages are so long that these are not living wages and that people have to have several jobs to make ends meet. Now you have focused on that in developing countries because that's most obvious, But also in the United States, which is not exactly a developing country, the same problem occurs.
If you would like to investigate that further, that's what I read in your annual report, will you incorporate the United States in your assessment? So specifically, what steps will you take in order to achieve living wages in your salary schemes? And what will be your policy with regard to audits, also those with your suppliers?
Was that your questions?
Yes.
Thank you very much. And Sherry, if you would like to comment on them.
Thank you. Every compliment is one that we like. Of course, I think it's a proper remark that as a company, we really try to have an impact. Sometimes it's a lonely exercise when you are in some industries. Your first question was regard to the task force on financial disclosures, climate related financial disclosures.
As you know, we support the questions that you have very strongly. With regard to risk assessment and risk management process, the annual cycles to see what the state of play is, we will incorporate that indeed. And we do that wherever our factories are and wherever our assets are. Now the coatings industry is a bit different because we have a very large number of plants, 123 to be exact, across the world. And it's not like in the chemical industry where you have one plant with lots of production.
So in that way, an intrinsic hedge is possible to decide on where to manufacture, if so required. We will do that also for our own assets. And indeed, in the World Business Council for Sustainable Development, we have pleaded very strongly to extend that. With regards to suppliers, we do indeed incorporate that when we assess them. But I have to be very honest, in many cases, there is only one manufacturer with only one plant.
So then it is rather difficult to say we will discontinue our cooperation unless you tell us that you do things differently. But then the risk is very big. If you have only one supplier, and then your factory would be idle. Yes, for some specific products, there is only one option. As you understand, in our sourcing industry, we will try also for commercial reasons to find as many options as there are available.
And we are taking steps, but it is a specific story per supplier, and we support us indeed. Your remark with regard to the text on an airplane, Save the colors, we deliver the products that airlines want airlines want to put on their machines. We don't we are not involved in the text. Even if they support a football team that we don't support, we have no say in the matter. No, no.
But indeed, could you check out what's happening? I would not use that tech. Well, 2 enthusiastic people in our communication team. With regards to living wages, indeed, we follow minimum wages. That's the Olympic minimum, I would like to say.
With regard to living wages, we worked very hard in our own units. And you are indeed right. In the United States, the working poor exists, people that have a full daily job but still cannot make ends meet. I think we try to take our responsibility as a business and that indeed, we look forward to the network in which we operate that we would like to involve them, that we scrutinize them. And indeed, in evolving markets, it's a theme.
In the industry organizations, in chemicals and in coatings, we are an advocate for that. But you have to have peers that think alike to make an impact, of course. I hope it is clear to you that as a company, we are one of the frontrunners in this respect. Okay. Thank you.
Anybody else who would like to take the word under this point? Well, I think we have had you here. No, please. Sorry? You asked your 2 questions already.
No, I just asked when I left the first round, I asked whether it would be possible to back in 2nd round.
Do you have one question you can ask come slightly, and then we can satisfy your thirst for information?
I will try, but I also have some questions on the report of the surprise report. So this question does not include surprise report as well as the remuneration.
I hope you will give an opportunity to ask questions. We said 2 questions per issue here. So please, one question and very concise to this point.
Coming back, Lars, Trujana.
Let's go back to the return on invested capital and the target that you have. What's very important is the speeds that you reinvest the capital. There is pressure on invested capital. You say, I want 2% revenue growth. That's what I want to achieve, 2%, 2%.
The turnover rate is that revenue growth of 2% enough to improve the turnover rate on ROI and to achieve your ROI sooner? Because it seems to be a low figure, if I may be blunt.
Yes, absolutely. I think the key driver to create our ROI ambition is really our ROS. So the improvements of our ROS is the key driver. And in the meantime, we are also implementing measures to further improve specifically our working capital, as I mentioned earlier. But again, the key driver behind the ROI improvements is basically ROS.
Yes. So should the ROS indeed go to 15%, then you do not necessarily need the capital intensity improvement. Is that correct?
The two numbers are indeed linked. So the 15% RAS is linked to the 25% ROI.
So thank you very much. Any new people who would like to speak? I think we've seen you here as well. So one quick question.
I have only one question left. As you know that there are SDGs with all kind of goals. And you have mentioned that in your earlier report that you focus on 3. My question is, if you look to the social components of the different SDGs, How will you implement it in your strategy? And then I have at last one complement.
If you talk about environment, I think one of the problems nowadays is that ships have to use anti fouling with copper release and zinc release and that the innovation that is mentioned in your yearly report, I think that really can help quite a lot to help the environment.
The question that you ask is very has a very wide scope. When you look at the SDGs, there are about 90 yes, I assumed you had scrutinized them before, but when we talk about what we have an impact on, we want to be very specific as a big company, but also as a paints and coating company. So then we look at SDGs that have a bearing on our industry. On the other hand, we spoke about poverty. We can't do much about trade and health and education, gender equality.
These items are incorporated in our business. The reasons that we have them in our annual report is that in so far as they apply to us as a company, that we try to do it internally and that we try to do it in the societies in which we operate or in the supply chains that we want to put pressure on that. I don't want to think that we are very specific per country. It's you have to see it as a contribution to a much bigger problem, of course. But I believe that in our industry, we are much more active and have a much more realistic contribution than many others do.
I think in general, the situation is that there are so many people requesting reporting and contribution in all different kinds of areas. And to run a midsized company like AkzoNobel, doing everything for everybody is simply not possible, but we're trying the best. Thank you. Any other new people who would like to ask any questions or make any comments under this point? No?
If there are no questions, then I'll proceed with the item 2, which is the discussion on the implementation of the remuneration policy. And I would like to hand over to Dick, who is our Chairman of the Remuneration Committee.
Thank you, Niels. Ladies and gentlemen, in my role as Chairman of the Remuneration Committee, I'm very pleased to inform you about our remuneration report of 2018. The slide you see now behind me summarize the main elements of remuneration of Mr. Van Lanka and Mr. De Vries.
Their compensation terms follow the remuneration policy as amended during the AGM of last year and which is noted and explained in our annual report. As the report breaks down the remuneration that Bose executives received last year, I propose to give you an overview of it rather than spend time on the details. However, I'm happy to take any questions. In summary, the Execute annual salaries rose by 3% last year and by 2.75 percent this year. In making these decisions, the remuneration committee considers a range of inputs.
On balance, the committee agreed to match the same level of increase that our Dutch employees receive who are covered by a collective labor agreement. The remainder of the composition packages of Mr. Van Lanke and Mr. De Vries largely comprised performance related components. They these incentivize the achievement of stretching financial and strategic targets, which are assessed over 1 year 3 year period.
The executive STI bonuses, so the short term incentives are based on the company performance alongside their individual contributions, which we measure over a year. The ROSENOCF targets that the board has set at the start of 2018 were stretching. Although the year ended well and we have much to be proud of, financial performance was not strong in the first half of the year and consequently bonuses payouts were below target for executives. The LTI incentivizes company performance over a period of 3 years. The plan promotes the creation of shareholder value as it assesses share price performance via a relatively TSR metric and the profit performance via ROI.
As neither Mr. Van Longer or Mr. De Vries were present in the company during the year 20 15, they did not receive any shares last year arising from the 2015 to 2017 performance cycle and which vested in 2018. The company did, however, grant them shares last year and again this year. These shares will only be released to them in 2021 2022 if the plans per sector's 3 years relatively TSR and ROI targets are achieved.
You will note that the matching share plan has been substandard. This follows your agreement at last year AGM to introduce a one off incentive plan in support of the company's 15 by 20 profit growth ambition. Our target is to deliver 15% ROS for 2020. While this is a stretching target, we are making good progress, as you already heard from the presentation of Thierry van Langer. The remuneration for the executives in 2019 will follow the same composition as noted in the slide, And I will update you again in the next year general meeting.
Thank you.
Thank you, Thank you, Dick. Any questions to Mr. Slijmers on remuneration?
Thank you, Chairman. David Tomic on behalf of the Dutch Investors Association. Several questions with respect to the remuneration. I've read the report extensively, I must say. Sorry, I'll switch to Dutch again.
Yes, please. Excuse me.
Well, from the remuneration report, 2 financial criteria come forward, ROS and operational capital. And if I look at my calculations, I see some non financial targets too. It's quite difficult to read all of this clearly in your annual report because contrary to the previous year, you don't give us a table with the score of financial targets and also not for the non financial ones. So my first question is why did you not include such a table in your annual report this year? Also with respect to the history of this company, where recently there was quite a lot going on and amongst others, the Chamber of Companies at the Dutch Legal Courts had to align quite a lot.
So I don't understand why you did not include it. That was my first question. 2nd, the bonus in this case of the CEO was much lower in percentages than the previous year was that because of a non realization of non financial targets? Did they say under threshold or did they have an under target performance? And that was it for the time being.
To start with your last question, no, that is not the case. As is explained in the report, with respect to the short term incentives, 30% of that is determined by personal factors and 70% by financial factors. So that's a combination of both aspects. And both gentlemen, I can tell you, have scored very well on personal factors. It's not true that they remained under target there.
That is not the case. The whole thing is a composition of factors. I believe it does not differ from the previous year of the 2 components, financial and non financial. 1 counts for 30% and the other for 70% of the total results. I believe that we explained that quite well and extensively.
So in this point, I cannot really follow you. And I believe we're doing exactly the same as in the previous year. We've explained it. We've explained the system. The system was okayed by the shareholders' meeting.
And what you see now in the report is the consequence of the policy that was approved last year. Well, I'm referring to the transparency because in this annual report, it was much more concise than the previous year. The EBIT, operational cash flow, etcetera, all of those factors were mentioned. We could see the payout, 21%, 77%, etcetera. We could read all of that.
The only thing we saw this year was the weighting that you gave to the financial and non financial factors, 30, non financial, 70, etcetera. But then you do not indicate any scores on those targets. But that is quite a material difference to the previous year, and it's a pity. No, indeed, it is an adding exercise, and this is exactly the change that has been applied last year, and that was chosen. Again, we are explaining clearly what the policy was that was approved by this shareholders' meeting.
And again, it is some of both factors. In the previous system, we had a number of factors, and the specification was much more extensive. Now have we we have a more restricted number of factors that are in line with the 15 by 20 plan, and that's exactly what we apply. I do not deny that last year, this remuneration policy was approved, but we did not talk or approve this representation of this policy. And you're doing this for the first time in the annual report, and we would like to express our pity that we cannot really lay the link between the financial targets, very important in this phase of the company, halfway through a very ambitious strategic plan with hiccups that did occur and were not there yet.
So in that respect, I'd expected some more differentiation or nuance in your remuneration tables. Can you confirm that on the financial targets, these targets were met?
This last question could be answered by Chairman of Remuneration
Committee.
As we've indicated and I have said it practically literally, but maybe my English is not good enough to follow this. It is as follows. As a consequence of the financial results of last year, the bonus this year is lower than last year. And that means that you will not receive the full bonus. €60,000,000 is less than €100,000,000 That is quite clear.
I believe that you are asking for things that we have already disclosed. You're being very enthusiastic in asking your questions, but you can just, with all respect, do the maths on the basis of what you are offering us. I, as a shareholder, cannot make do the maths. 60% base salary, okay, I can calculate that. But I'm looking at the variables behind it, and it's not really traceable for people external people.
And we would enjoy to see be able to trace it.
We note your point. Thank you. Any anybody else would like to take the word under this point? Thank you very much. That brings me to the next point of the agenda, and this will be a discussion on the financial statement, results and dividends.
And I would like to ask Ruud Dekkers to take the floor to present what PwC have done and possibly take some questions from you. It should be working.
Okay. Then I will turn this around so people can see me and I can see you. Ladies and gentlemen, I'm happy to present our audit report on the 2018 financial statements. You can find our audit report on Pages 141 to 147 of the audit report. And I would like to touch on a number of topics.
First of all, met reality. The met reality determines the scope and depth of our audit work, and the materiality is determined on the basis of what is relevant to the stakeholders of the company. We have set our materiality level at €45,000,000 being approximately 5% of total profit before tax from the continued operations and 9 month period result of the Specialty Chemicals discontinued operations combined, excluding the deal result and excluding separation related identified items. The materiality decreased by €25,000,000 from last year as the Specialty Chemicals business is only included for the 9 months period. If we look at scope, our PwC teams conducted audit work at 37 components in 18 countries.
We included components in scope based upon significance to the group, significant risks or are considered significant for other reasons. Site visits by the group team were performed in 7 countries being the U. S, China, Germany, France, Italy, Sweden and the Netherlands. And the audit coverage amounted to 67% of revenue and 82% of consolidated total assets and 75% of consolidated profit before tax for continued and discontinued operations. Furthermore, we as a group team perform central audit procedures on the areas which are to a large extent monitored centrally by AkzoNobel such as impairment testing of goodwill and other intangibles with indefinite useful lives valuation of postretirement benefit provisions valuation of deferred tax assets and uncertain tax provisions, accounting for the completed sale of the Specialty Chemicals business, environmental, sundry and legal provisions, share based payments, treasury and IT.
For all components, we performed hard close audit procedures on the October financials and year end audit procedures. For the remaining components, not in group scope, we've performed amongst others procedures over the monitoring controls performed by the business units and other central functions. Now I would like to go to the key audit matters. We have 5 key audit matters. Key audit matters are the most important matters we have identified in our audit plan and in our audit work during the year.
I will comment upon those briefly. The first is, of course, the accounting for the completed sale of the Specialty Chemicals business. Per October 1, 2018, AkzoNobel completed the sale of the Specialty Chemicals business to Carlisle. We used our own technical accounting specialist and challenged management on the classification, assessment, valuation and presentation of the sale of the Specialty Chemicals business. The 2nd key audit matter is the transition from the accounting standard, IAS 17 Leases to IFRS 16 Leases.
The new leasing standard IFRS 16 became effective for reporting periods on or after January 1, 2019 and gives rise to a lease liability of approximately EUR 370,000,000 We used our technical accounting specialist to review the updated accounting policy, the implementation process and management disclosure of the expected impact in Note 1 of the financial statements. The following 3 key audit matters were also identified in 2017. The first is impairment testing of goodwill and other intangibles with indefinite useful lives. AkzoNobel has about €2,800,000,000 of goodwill and other intangibles on the balance sheet, which need to be tested annually for impairment. We used our own valuation specialist and challenged management on the models used, the most important assumptions and sensitivity tests.
The next key other matter is evaluation of post retirement benefit provisions. The largest pension plans are the ICI Pension Fund and the AkzoNobel CPS pension scheme in the UK, which account for over 80% of the pension obligations and plan assets. We used our own actuaries to evaluate actuarial assumptions and challenged management and the company's external pension experts on the most important ones. Furthermore, we audited the de risking transactions which took place during the year 2018. And the last key audit matter is the valuation of deferred tax asset and uncertain tax positions.
An international group like Axnebel operates in various tax jurisdictions. We used our own tax experts in the audit of the recoverability of the deferred tax assets and the evaluation of the uncertain tax positions and related provisions. The next topic is the report on other information included in the annual report. We have concluded that the information in the Director's report is consistent with the financial statements and does not contain material misstatements based on audit work on the financial statements and our knowledge of AXA Nobel. Furthermore, on Pages 178179, you will find our unqualified assurance report on the consolidated sustainability information.
And that concludes my report. Thank you very much for your attention.
Thank you, Ruud. Are there any questions to the work of PVC or the accounts here?
Thank you, Chair. Thank you for the auditor for giving us an explanation. I have a few questions. The first one is about one of the key audit matters, a very important one. That is the testing of the goodwill.
Now if you look at the prognosis, given in the annual report about growth of revenue, which determines the eventual achievable value, then the change then there's a change as opposed to last year. For Decorative Paint, it is lower. For Performance Coatings, it's significantly increased. The questions I have is how did PWC assess these changes in view of the recent history of AkzoNobel in which revenue growth proved to be very difficult. What did they discuss in this respect with AkzoNobel in view of the revenue growth historically?
And let me say another matter, not about impairment of the goodwill test, but it's about the ambitious targets that AXO has
created.
It is it may be vulnerable because it puts stress on the organization to meet targets. And there could be a management override of control. Now can the auditor give us more details on that? How this transition of the company, which is far fetching for everyone, how it's consider that in its audit and what audits he has performed in that respect?
Ruud, would you be kind enough to answer to your best ability?
Yes, I Which
would be great, of course.
And I will try to do it in Dutch because that's a bit easier.
And I will try to do it in Dutch. Good impairment testing is something that we do on an annual basis. And we don't look just at the models, but also at sensitivity. So what are the assumptions of management? And let's test these, and let's see what the result will be if it's only is if only half is achieved.
Also in the financial statements, you can see the results of the impairment, the sensitivity. It actually shows that there is a large headroom between the value in the accounts of goodwill and the expected results. So we performed these tests on the expected revenue targets, and we also perform sensitivity tests. We also ask questions. We also do backtesting every year.
Of course, it's nice that management said so this year last year, but what was the result? And what impact does it have on the predictive capacities of the business on, let's say, revenue? And we do it at a lower level than what you just mentioned, at business unit level, which is the lowest cash generating unit, and that's where we perform testing. It's not just a key order matter in theory, but also in practice. It leads to discussion, but that is because headroom is large.
The final thing we do is when we compare the expectations of management in goodwill testing and we look at the business as a whole, we also perform an overall test on how does this compare to what the business does and the value on the stock exchange that the business has. So when investors looking from the outside have an opinion about the business, does it link up with what the goodwill test showed us? I don't know whether you have sufficient response. The interpreter can't hear the question, I'm sorry.
No. I think it's the next one.
We have the second question you asked.
Yes. If it's Rach, it's
still open. Well, you asked the question about management override controls. It is also in our report that we indeed paid attention to that, and you can find it on Page 143, for instance. But also on Page 142, we see a standard management override of controls as a higher risk item, which is true in each audit in itself. It means that beforehand, we discuss with the audit committee what our views are and is it a specific point of tension.
And the response was that the transition of the business was a specific item we should address in our report. It is not that we just look at management of right of controls, but also to the total procedure of the business, which is described with regard to fraud measures, etcetera, that the business has implemented, we audit it. We discuss it in detail with people. We also look at non financial letters of representation. We discuss it up to the level of the Audit Committee, and the Audit Committee receives reports on it on a regular basis.
You can see it in their report. And that's how we reach our conclusions. Duncan Dahl?
Would like to ask a question to this point. I will turn back the microphone on. That doesn't seem to be the case. So let me take the opportunity to thank Ruth for 3 years of great service to the company. You're retiring now.
We also have in the audience Mr. Fernand Issebout from PBC, who will take over. We look forward to working with you in the future. And now you have a taste for all the good questions you can meet in this audience. And now we will proceed with the voting with the voting no, we have the discussion on the dividends, right?
The discussion. Pardon?
All right.
Okay. So we'll proceed with the votings. And the first point is the adoption of the 2,000 and sorry, I have to tell you how many you are. And we have €81,600,000 of base capital represented. That's a lot of money.
And that means that 163,000,000 votes may be cast, and the level of attendance is approximately 72.3. You'll get the exact number in the minutes later. And then I will turn now we come to a really difficult part that didn't work too well at the EGM. So I'll turn over to Mirta to explain how the voting goes. And listen carefully because she'll say this only once.
Thank you, Sharon. For the voting process, you've been issued with a voting device, a chip card and a voting card. The voting card also gives you instructions. Should you have any questions, please raise your hand and one of the hosts will explain the device to you. You are kindly requested to return the voting device and ship card at the door when leaving the room at the end of the meeting.
Shareholders have been given the opportunity to vote remotely via the ABN AMRO website. Rene Klumkens, civil law notary, will cast the votes as the proxy and independent third party for the participating shareholders. For this meeting, March 28, 2019, was set as the record date. Anyone owning shares on that date was entitled to register to attend, vote and participate in today's meeting. Explanation of how to register was contained in a notice for the meeting.
The notice and agenda were published on the AkzoNobel and Securities Info websites. A copy of the presentation and a complete agenda and notes have been placed on the information desk. This meeting has been properly convened and is entitled to adopt legally valid resolutions on the agenda items. Thank you.
All right. So thank you, Murti, and we'll move on to the voting. And the first point we will vote on is the adoption of the 2018 financial statements of the company. And I will tell you when it's open or basically, it will open now. And please cast your vote.
And the voting is now closed, and we should have a result on the screen in a minute. So we have 99.35 votes in favor and 0.65 votes percent of the votes against. That means that the financial statements have been adopted. Thank you for that. And then we go to the second.
Please, Mircea, you'll take care of noting the results. And now we will go with the second point, which is the item 3B, the discussion of the dividend policy. The dividend policy is of the company is, as Thierry alluded to in his speech, to pay a stable to rising dividend and we will pay the dividend in cash. A cash dividend of €1.43 per share is proposed, which together with the interim dividend that we have paid out of €0.37 would equal a total dividend from 20 18 of €1.8 per share compared to a €2.5 we paid in 2017 or for 2017. But in that, there was a 0.85 €0.85 dividend for the Specialty Chemicals business.
And Martin will be happy to answer questions to the dividend and the dividend policy, if anybody should have any thing they'd like to ask. Any questions to this point? Doesn't seem to be the case. So the next item on the agenda is profit well, is actually the adoption of the dividend proposal. So we would go to voting.
And I would now declare the voting open. And we would now close the vote. So we have an even better result here. We have 99.56 percent in favor of the proposal, and we have 0.44 against the proposal. That means that the proposal is adapted All is accepted.
Thank you. Peter, you noted that. And that brings us now to the following points, which is a discharge. Could we is anything missing here? So which is a discharge of liability for the member of support or management for the 2018 performance of duties.
And is there anybody who would like to raise questions or comment on this point? There does not seem to be the case. And then we will continue with voting on this point. And we are now voting on the Board of Management, and the vote is open. And the vote is closed.
And the result is in favor of giving a discharge to the Board of Management with 95.81 percent and 4.19 percent against. Mirtu, would you please take note of this? And then we will go to the discharge of liability for the members of the Supervisory Board for the performance of our duties for 2018. Any comments or question to this point? Does not seem to be the case, so we can continue or continue to the voting.
And the vote is now open. And the vote is now closing. And we have a very similar, furiously enough, result to the previous one. 95.81 percent is in favor of this and 4.19% is against. So I conclude that the proposal is adopted.
And I will now continue with the agenda item 5, which is the appointment of Mrs. Yolanda Pott's bill. This will be a voting is a voting point. Yolanda is replacing Peggy Brucellius, who is retiring from our Board after 12 years in line with good company practice. She has been an excellent member of the Board and given a great contribution during all these years.
So it's not been easy to find a successor, but the nomination of Jolanda Pozbeel concludes an extensive research and selection process done by the Supervisory Board in cooperation with an international renowned executive search firm, and we are very, very pleased that Jolanda has accepted to join the Board. And Jolanda is with us today, So I wonder whether you'd like to say a few words about yourself.
Yes, please. Well, first of all, I'm honored to have the opportunity to join the Supervisory Board of AXA and to be the successor of PEGI. I'm also committed to contribute to the next phase of AXA, which is, as we all know, focused on paints and coatings. And with a strategy that combines winning, we're doing it together. And especially the last thing, in my opinion, is very important because I think success nowadays really boils down to having the right team, the right people in place.
What can I bring to the table? At least an extensive experience in executive functions. I've already been a board member for more than 15 years now. A strong financial background, been doing so all my life, I could say, and also quite some experience already as a Non Executive Director. So I truly look forward to working with my new colleagues, providing that creative contribution by possible challenge, but also providing that independent oversight to well, to work on that successful future of this lovely company, AXA Nobel.
So I hope you vote in favor. Thank you.
Thank you, Yolanda, and you're too modest. You have an extensive background, of course, in finance and information technology and so And we look forward to working with you. I'm sure you will be elected in a minute. But before we go to the election, we also have the reappointment of Mr. Dick Slowomors on the agenda.
And we are very delighted that Dierks Leymers has indicated that he is available for or accepted to be reappointed for a second term of 4 years. Mr. Slowamus has started with the Board 4 years ago in 2015, and he's been Chairman of the Remuneration Committee and done a fantastic job in many respects during this transition period and the changeover from being a conglomerate to being a focused paints and coatings company. So I don't think we need to let Dick speak. He has spoken already, but I would really strongly recommend you to vote in favor.
Any questions to the appointment and the reappointment?
Thank you, Chair. David Thomasen, the Dutch Shareholders Association. First of all, with regard to the selection and nomination process of Mrs. Baut Bell, did you also contact shareholders in that respect, shareholders of AkzoNobel? Did you consult them?
Were they allowed to give input to you? And a second executed before she said yes to this position. What else has she who else has she engaged? To whom did she peak? What has she assessed?
That type of question.
Well, thank you very much. I think we'll limit ourselves to answering the first question. I think it would be unfair to ask somebody who's not yet joined the Board to answer personal questions. But the process that we go through is, of course, that we are quite open and people can see from our annual report when our board members are ready for reelection. We are often in contact with shareholders, and all proposals from shareholders are given are taken into account, and we pass them on to the research or the search company that we work with, and they do sort of the first screening because we make, of course, a profile first.
What would we like to see here. In this case, it was there was a strong focus on financial background, Jolanda fulfills that with excellence. And then you we get a number of candidates through the nomination committee. We go through them. We interview a number of candidates.
So it's a rather extensive process, and we are quite convinced that we found a very, very suitable candidate. Thank you. Any other questions or comments? Yes, please.
Thank you, Mrs. Scheer. My name is Corsten once again. And this very charming lady, she's a financial expert. I think we should be glad that you've nominated her.
However, yesterday, I was at ABN AMRO, and a lady from the Nordic countries was appointed That came from another bank. Another member was appointed that came from American Bank. This lady is a professional. I don't doubt that, but I would have liked to see a member that it has also links to the manufacturing paint industry. I don't know.
The other people are perhaps only people with financial expertise. Maybe you can get somebody from ICI, I don't know, because I do not visit AkzoNobel every year. But if another member of the Supervisory Board would be appointed, I would like to see expertise on manufacturing in your board. Perhaps my view is not correct, and I will indeed vote in favor of this lady, but this is a remark I wanted to make.
It's, I think, a very constructive remark that we will note. And we try very, very hard when we put together the Board, the Supervisory Board, to get expertise that is wide ranging and covering as many areas that are important to the company as possible. And definitely, production and supply chain is one of them. So thank you. Doesn't seem to be any further questions to this point.
That means that we can continue with voting, and we will vote separately. So we start by voting on the appointment of Jolanda Port Spiel as first point, and the voting is now open. And we're now closing. Good. So and the results is, again, positive.
So with 98% of the votes, Jolanda Porzbyl is now voted to become a member of the Board. Welcome. We will go to the second point on the point 5, which is the voting on the reappointment of Dick Sloemers, and the voting is now open. And we are now closing the vote. So the vote is closed.
And Dick, you have been reappointed with 96% of the votes. Thank you to the shareholders, and thank you to you for being willing to continue on board. And then we go to agenda item 6, which is proposed to the shareholders each year, and that's the issuing of shares and the restriction or exclusion of preemptive rights of shareholders by the Board of Management. And the reason why we put it on is that, obviously, it requires the approval of the meeting of shareholders each year. It's not necessarily it's not even very often used, but it can be very practical in some situations to have this approval.
Any comments or questions to this point? Doesn't seem to be the case. So then we can go on with the voting. So here, you'd see authorization of the Board of Management to issue shares, is first point, and we open now. And we close now.
And we have 97.5 percent in favor, so the proposal is adopted. Please note that result. And then we will go to the second point, which is the same in the same situation or almost, but with the authorization to the Board of Management to restrict or exclude preventive rights for the shareholders in cases and issuance of shares. And we also here would like to ask whether any questions or comments. Does not seem to be the case, so let's go to the voting.
Voting is now open. And the vote is now closed. And also here, we have a clear majority, a little bit less clear than previously, but this is, of course, also a slightly more contentious issue. Thank you for approving it. And that brings us to the agenda item 7, which is a proposal concerning the authorization of the Board of Management for a period of 18 months starting on April 25, 2019 or in a shorter period until the day of the authorization is again extended by the general meeting of shareholders to acquire common shares in the company's share capital at any time during this period.
The number of common shares to be acquired is limited to the maximum number of shares in the company's share capital as permitted by law and articles of the association that the company may hold in its own share capital at any given moment. The maximum number of shares that the company will hold in its own share capital at any time shall not exceed 10% of the issued share capital. Common shares may be acquired through the stock market or otherwise at a price between value and the Euronext NV price at the day of the purchase, plus 10%, on condition that the price is no higher than the opening price on the day of the purchase. The proposal is to allow the management or the company to acquire shares at a price of 10% in excess of the opening price has been inspired by the desire to have more flexibility in case fluctuations occur during the day. The lower limit of the par value has been included in the proposal as the law stipulates that besides an upper limit, also a lower limit is permitted.
Are there any questions in respect to this proposal? Does not seem to be the case, so let's vote on this one. And the vote is now open. And the voting is now closed. And also here, we have a clear majority in favor of the proposal, so it is now adopted.
Mirtuin, would you be kind enough to note that? And then with the final item on the agenda today, which is the item 8, and that concerns a proposal to reduce the issued share capital of the company by canceling common shares held or to be acquired by the company in its own share capital. The cancellation may be executed in 1 or more tranches, and the number of common shares held by the company, which shall be canceled shall be determined by the Board of Management, but shall not exceed the maximum of the number of shares that may be acquired in accordance with the authorization that we just got under Item 7. Cancellations may not be affected earlier than 2 months after a reduction to canceled shares is adopted and publicly announced. This will follow by each tranche.
If you have any question to this point, please feel free. No questions to this final point, and then we will also proceed to voting here. The voting is open. And the voting is now closed. And I can conclude that resolution has been adopted and ask the company secretary to record the result.
And now we are under closing any other business. And I would like to thank you all for your input today, and I hope we've been able to answer all of your questions. I would like to say a few words to thank Peggy for who's retiring now after 12 years, as I said earlier. Peggy has been a very valuable member of the Board, and she's been very active member of the Audit Committee. And she's bought a lot of experience from many other companies where she's been a Board member previously and even during the time she's been with us.
And she's had contributed with a vast expertise in finance and treasury. So thank you very much, Peggy, for having served with us. We've enjoyed it and you will do fantastically in being able to help more people now in other places. Thank you very
much.
And then any other business anybody would like to address today? It doesn't seem to be the case, so I declare the meeting foreclosed. Thank you once again, and hopefully, we'll see you again in a year with super results to report on. At least the management board will do the best, and the supervisory board will do the best to follow all the things that you're starting. Thank you very much.