Welcome. Welcome. I'm very happy to welcome you to this year's annual general meeting in Coloplast. The AGM is webcast and interpreted into English so that shareholders all over the world can keep up. I would like to welcome you following that way as well. I would also like to welcome the board. I have with me our Deputy Chairman, Niels Peter Louis-Hansen, and our CEO, Kristian Villumsen. Our other elected members are Birgitte Nielsen, Carsten Hellmann, Jette Nygaard- Andersen, and Jørgen Tang-Jensen. The three employee elected members are Thomas Barfod, Roland Vendelbo Pedersen, and Nikolaj Kyhe Gundersen. Our remaining three members of executive management is Anders Lonning-Skovgaard, Allan Rasmussen, and Paul Marcun.
According to our articles of association, the board of directors will choose a chairman of the AGM, and we will have a new moderator, Niels Kornerup, after Søren Meisling, who has retired, and I will now pass the floor to him. The floor is yours. Thank you very much. I can see that Mr. Demant has already asked for the floor. That's a bit early. Could we take the formal items first? Well, we've made sure that everything is in accordance with the articles of association. I will get back to that. Perhaps an employee can show Mr. Demant where in the articles of association that is stated, so that we can get off to a good start. Thank you for choosing me as your chairman or moderator of this AGM. I have a few practical items.
The first thing is that I would like to ask you to mute or turn off your cell phones, so we will not be interrupted. Let me inform you that the press does have access to the AGM, and they're allowed to record sound, but not film. As mentioned, the AGM is webcast, and you can also review it tomorrow through the website of Coloplast. My next job is to establish whether the AGM is legally convened and quorate. According to Article 7, the AGM shall be convened through the website of the company or via email to any shareholder who has asked for it, and it shall be convened by giving no more than five weeks and not less than three weeks notice, and that has been done by the 11th of November this year.
The agenda with the annual report for the financial year 2018-2019, and other lawfully required documents have been made available, and the annual report has been available on the website since the 5th of November, and the remaining documents have been available from the 11th of November. That means that we're in compliance with the articles of association, as well as the Danish Companies Act. On the agenda to this year, we have a number of proposals: item 5.3 and 5.4, and in order to be adopted by the AGM, it requires at least 50% of the share capital represented at the general meeting. Before we started, I could establish that we are quorate in this respect.
Unless there are any objections about the state of quorum of this AGM, I will establish that we are quorate and that the AGM has been legally convened. I have now been informed that at the control of presence, we are 208 people present. Of these, 148 are shareholders, the rest are journalists, counselors, advisors, and so on. I was also informed before entering the room that 83% of 374 million votes are represented, deducting treasury shares, and that means that 70% of voting share capital is represented. We have received proxies and powers of attorney according to 97% of the represented share capital. Some people walk back and forth and register and de-register, so the final numbers will appear in the minutes.
We need to report the votes cast for, against, and abstention, item for item in the AGM. No matter if the result are quite clear to me, and that is to solve any disputes that may arise. Therefore, I suggest that we follow the same procedure as previous years, so that we, for each item, will not have to count votes. That means that I establish whether a proposal is adopted or not, and only if any doubts are raised, we cast votes by ballot. If there are no objections, we will do as we usually do, and I thank you for not raising any objections here.
As I said before, we have some quorum requirements here, and therefore, I ask any participants leaving the AGM before it is over to deregister with Computershare at the tables outside, so that we have the correct number of votes present in the room when we reach the votes. You do that by handing in your voting card. Finally, let me ask any shareholders who want to speak to let me know. You can do that by giving me the part of your voting card that is intended for that purpose. Please do that well ahead of time, so that we can make sure the AGM runs smoothly. We have a couple of chairs up here so that you can be ready to take the floor once your turn is up. The agenda is as it has been sent out, and as it appears behind me.
Item 1, a report by the Board of Directors. Item 2, presentation and approval of the annual report. Item 3, a resolution on the distribution of profit in accordance with the annual report. Item 4, presentation and approval of the remuneration report. Item 5, here we have five proposals from the Board of Directors, I will get back to that. Item 6, election of members to the Board of Directors. 7, appointment of auditors. Finally, Item 8, any other business. With those words, we will start our agenda. As usual, in Coloplast, we take the first four items as one, they will be put up for debate as usual. Item 4 is a new item, presentation and approval of the remuneration report. That means we have four items that we are going to take under one heading.
With those words, I am giving the floor to our Chairman of the Board, Lars Rasmussen, who is going to tell you about the annual report and the remuneration report and the financial year 2018/2019. The floor is yours, Mr. Chairman. I've been looking forward to giving my report on Coloplast during the past financial year, this time as Chairman of the company. In 2018/2019, we delivered 8% organic growth in a market growing by 4%-5%, combined with an EBIT margin of 31% before special items. Coloplast has a clearly defined strategy of generating profitable growth. Again, this year, we grew our revenue twice the market rate. We want to outperform the market while delivering strong earnings.
In November 2017, the company revised its long-term targets, introducing the ambition to invest more, accelerate growth towards 2020, and generate growth at the upper end of the 7th-9th range. This growth-oriented approach was, first of all, a reflection of the board and the executive management's confidence that Coloplast is able to move even further ahead of its competition. The aim is to create more value for our shareholders going forward, and considering an EBIT margin of 31% and a ROIC of 48%, both before special items, I believe it is fair to conclude that we have delivered on our target. That leads me to Coloplast's new management team. A year ago, I resigned as CEO after almost 30 years with the company, and today I'm attending the AGM in my capacity as chairman, a position I'm deeply honored to hold.
I look back on my time as CEO with pride and gratitude, it's a privilege for me to follow in Michael Pram Rasmussen's footsteps. Kristian Villumsen has now served as CEO of Coloplast for one year. Previously, he was in charge of our Chronic Care business, as we call it, and he has been a member of the executive management team since 2014. Paul Marcun, who previously headed up Coloplast's Emerging Markets division, succeeded Kristian Villumsen as head of Chronic Care in January 2019. The changes to the executive management follow from long-term planning, I'm confident that the new constellation puts us in a good position to create a Coloplast fit for the future. While the roles are new, the resources are the same, and Kristian Villumsen heads up a strong team with outstanding business acumen and leadership qualities.
Ensuring a smooth process and the necessary continuity in a leadership succession can be a challenge. With Kristian Villumsen as CEO and myself as Chairman, I'm confident that Coloplast has struck the right balance between continuity and renewal. In my role as Chairman, I hope to apply the relevant insights and expertise I have gained during the past 30 years with Coloplast and in my other board positions. I'm excited to meet the challenges that come with this specific chairmanship. The financial year that we started on the 1st of October will be the last with our current LEAD20 strategy.
In early summer 2020, the company will present a new corporate strategy, and I can tell you already that this will also be a strategy of continuity and renewal. The strategy will build on many of the company's current activities, but it will also involve new steps towards a future that will demand more of us. We believe in a cost-efficient future for public health care, in which the right products, services, and digital solutions will enable people to better handle their chronic illnesses. Fortunately, users have become much more involved in their own health care needs, and the various health care systems are put under a great deal of pressure from demographic developments. That raises a question we need to ask ourselves: What kind of company do we want to be going forward? Our answer is, we want to be the consumer healthcare company of the future.
I look forward to engaging both the executive management and the other board members in the process leading up to the announcement of our new strategy next year. As I've indicated previously, we've wanted to look at the future of our Interventional Urology business once the litigations in the U.S. were coming closer to a conclusion. That is where we are now, and as an inherent part of the ongoing strategy process, we have completed a review of this business area. We have firmly concluded that the Interventional Urology business continues to be core to our company's mission, and our value creation agenda. The Interventional Urology business will remain a part of Coloplast for several good reasons. We see large, fast-growing markets and unmet clinical needs in this business area.
We also have market-leading positions in the four subsegments of the business area: women's health, men's health, endourology, and specialty interventions. We see significant opportunities for continued innovation, treatment penetration, and geographical expansion. Similarly to the situation in Chronic Care, we see demand from users and surgeons for less invasive solutions that are easy to use and reduce costs. We see a similar need for physician training and for raising awareness about solutions that can help alleviate patient distress. The Interventional Urology business has matured significantly in recent years from a commercial, financial, organizational, and risk perspective. Today, the business delivers solid growth and profitability, and that is a good position from which to invest and develop the business further, creating even more value for the future.
That said, our result continues to be impacted by the cases in the U.S., alleging injury resulting from the use of transvaginal surgical mesh products designed to treat pelvic organ prolapse and stress urinary incontinence. 95% of known cases have been settled. The judge has issued a court order that plaintiffs no longer direct claims against Coloplast in the ongoing MDL. The remaining cases are taking longer to resolve, resulting in higher costs. As a result, the company has made a further provision of DKK 400 million to cover costs relating to existing cases. It's important to point out that this does not indicate an increase in the inflow of new cases. It involves existing cases that are taking longer to conclude than we had expected.
The total provision now stands at DKK 5.65 billion. To date, the company has paid out DKK 5.1 billion, of which DKK 0.4 billion was paid out in 2019. Our legal strategy in terms of settling these cases is firmly based on our ambition to protect the value of our Interventional Urology business. As a result of the cases alleging injury, we believe that the women's health business should no longer be categorized as high risk. The MDL is a thing of the past. There's a limited inflow of new cases. In addition, there's a very limited inflow of cases in the other subsegments of the Interventional Urology business. Naturally, I regret this long-lasting matter. Fortunately, the litigation is coming to an end. I look forward to Coloplast closing this chapter.
Let me now turn to how the past year has unfolded at Coloplast. Coloplast LEAD20 strategy is about delivering unparalleled innovation, service, leadership, and efficiency. Coloplast is a business, and in order to create the optimal scope for development and profitable growth, the company must manufacture and operate as efficiently as possible. I would like to take a little time to share with you some of the past year's highlights in the four LEAD20 themes. Let me start from the top. Coloplast's superior products and innovation. This is the heart of our business. Our declared goal is to deliver superior products and innovation, and Coloplast met the goal by making several important product launches in the past financial year. We launched SenSura Mio Baby and SenSura Mio Kids for children and premature babies. The portfolio has set a new standard for pediatric ostomy care products.
SenSura Mio Baby and SenSura Mio Kids are designed and were launched to accommodate strong demand for Ostomy Care products for infants. Ostomy Care products for children are not unusual, but SenSura Mio Baby is designed specifically for premature babies to cater to their very special needs. SenSura Mio Baby and SenSura Mio Kids have both received very positive feedback and are now available in 13 countries. The products complete the SenSura Mio portfolio and are essential for our work to win major contracts in the United States. In the spring, Coloplast launched the SpeediCath Navi, a new disposable catheter for men, designed especially for Emerging Markets and lower-priced developed markets. This new member of the SpeediCath family is a hydrophilic coated catheter with a flexible tip and insertion grip.
The product aims to raise the standard of care for catheter users in markets with low reimbursement prices, while further strengthening the SpeediCath product portfolio. SpeediCath Navi has now been launched in four markets. The new products form part of two very strong portfolios, and they will support growth in their respective business areas going forward. Through the SenSura Mio Concave portfolio, we are building a new category designed for people with hernias or curves. SenSura Mio Concave was launched in January 2018 in response to strong demand for Ostomy Care products designed for outward body profiles. Feedback back on the product has been very good, and we expect a lot from this category in the years ahead. SpeediCath Flex is the fastest growing catheter product we have ever launched, and in the past financial year, the product's packaging was improved and redesigned.
The product is now even easier to open and close. We have reduced its aluminum content, making it more eco-friendly. Our growth drivers across markets in 2018-2019 were innovative products like SenSura Mio Concave and SpeediCath Flex, along with SenSura Mio Convex, Titan Penile Implants, and the Biatain Silicone range. Based on our desire to offer products that can solve the difficult and often intimate challenges users face, Coloplast continues to invest in its clinical performance program in Ostomy Care and Continence Care in order to build clinical evidence of the benefits provided by a number of future products. The program aims to document the qualities of the products as well as the value they create, both for users and for healthcare systems. Coloplast is committed to working for higher subsidies for the new products by building stronger clinical evidence.
In 1819, we made progress in our clinical trials and filed several patents within skin-protecting technology and digital health. Mounting healthcare expenses are driving closer collaboration and more innovation between public health authorities and the business community. For Coloplast, the next step will be to document the value of our products and technologies to payers. Digitizing more Chronic Care products is part of the company's ambition to lift the standard of care through clinically differentiated innovation. We plan to launch the first products of these clinical efforts in the upcoming strategy period. That brings us to the part of our strategy involving strong leadership development. Strong leadership development is essential for underpinning Coloplast's growth strategy, and we believe diversity leads to more innovation and better decisions. That is why we are committed to building an inclusive leadership culture that leverages diversity at all levels.
In 1819, we renewed our commitment to inclusion and diversity and broadened our definition of diversity. It is more than gender. It is also about generation and nationality, for example. We intend to raise the level of diversity in our teams and departments across the company, so Coloplast can better reflect the society we are a part of. Our ambition is to raise the level of diversity through natural employee turnover year by year. We also want a leadership culture and organizational culture that support diversity in our top-level management. Our goal is to gradually improve the gender distribution in management year by year. The target is to increase the share of women in senior management positions annually. This year, the share of women in senior management positions increased from 20 to 21%. In addition, Coloplast recognizes that all diversity factors are important.
To increase diversity, we track and monitor the mix of diversity at director level and above. At the general management level, female managers still make up more than 40%. Everyone in the company's top management level have completed training in inclusive leadership. In the 2018-2019 financial year, Coloplast rolled out an updated version of its ethical code of conduct, Coloplast BEST, Business Ethical Standards. It is mandatory for all white-collar employees at Coloplast to train in Coloplast BEST, and a total of 99% of relevant employees have completed the training. Personally, I believe strong leadership is very much about working together, and I place great emphasis on strong collaboration between board and executive management. That is crucial to the way we serve the interest of the company.
We serve the interest of the people using our products and services, of healthcare professionals, and of the shareholders who are invested in our company. We do it together. The third theme of our strategy is about unparalleled efficiency. Coloplast aims to deliver unparalleled efficiency through ambitious global operations plans. We emphasize running an efficient business. As a global company, we must constantly improve to be competitive. We operate facilities all over the world, the most recent addition being the establishment of a new production facility in Costa Rica. Having the production site in Costa Rica is a means of ensuring our company's continued supply capability. The first factory is expected to be operational by the end of 2020. I would also like to mention Coloplast's Shared Services Center, which marks its 10th anniversary this year.
Located in Poland, our Shared Services Center was set up as a financial center in 2009, but today it handles a broad range of services. The service center and its some 400 employees deliver world-class support, contributing to our ambition of being one of the world's leading med tech companies. Our Global Operations Plan 4 is progressing to plan and will deliver EBIT margin improvements of 100 basis points in 2019-2020 and of an additional 50 basis points the following year. Wage inflation and a shortage of manpower in Hungary have driven up cost levels, but we are addressing the situation through automation initiatives in our Global Operations Plan 5. Backed by world-class support and ambitious global operations plans, Coloplast will continue to deliver strong results and unparalleled efficiency going into 2020.
We have gathered many of our initiatives in Mørdrup, and we have therefore closed down our factory in Thisted, and I would like to take this opportunity to thank the many employees we've had there for many years. The fourth and final part of our strategy involves Coloplast's unique user-focused market approach. The goal is to offer not only the most innovative products, but also supporting services to users through Coloplast Care, providing the users with the support and knowledge they need to know about living with incontinence or a stoma. In our five top markets, the U.S., U.K., France, Germany, and China, we give users access to the most innovative products in the market. Coloplast maintains a database of currently around 1.5 million users. Coloplast Care and direct-to-consumer are now present in more than 30 countries.
In 2018, we conducted more than 1 million conversations with users. Most of Coloplast's products are sold in markets that are subsidized from local healthcare authorities. Prices of Coloplast products are influenced by economic and political developments in national markets. As I've mentioned, it's our job to persuade payers about the value of our products and try to influence the prices of our products. This value is determined on the basis of clinical trial outcomes, costs, and the positive impact a product has. In June 2019, a new price reform was introduced in France, which has resulted in price reductions across Ostomy Care, Continence Care, and Wound and Skin Care. The reductions had been expected and had not changed our long-term guidance. I would still like to emphasize the enormous amount of work that preceded the final agreement reached with the French authorities.
Our company was able to mitigate about half of the expected impact, something we can be rather pleased with after all. Our dialogue with payers and healthcare authority becomes more and more important. Coloplast gives priority to this dialogue. We invest in creating long-term relations with payers and decision-makers. We also invest in risk management. This includes investing to comply with the new EU requirements for medical equipment, investing in the so-called 522 studies to document efficacy of transvaginal mesh products, and investing in IT security. Those were the LEAD20 highlights of the year. I will now review our financial highlights. Coloplast released the full year financial results for 2018-2019 on the 5th of November, alongside the annual report, the updated corporate responsibility report, and our first remuneration report.
With positive growth in all business areas and regions, Coloplast expanded its position as a global market leader. Based on 8% organic revenue growth, revenue expressed in Danish kroner amounted to DKK 70,939 million. Our EBIT before special item was increased by 9% to DKK 5,556 million. The EBIT margin before special items was 31% and on par with last year. EBIT included restructuring costs of DKK 43 million, against DKK 50 million in 2017-2018, in connection with the reduction of production staff in Denmark and the closure of the factory in Thisted. As I mentioned, EBIT was impacted by a provision of further DKK 400 million to cover potential settlements and costs in connection with the litigations in the U.S.
ROIC after tax and before special items was 48%, compared with 44% last year. Profit for the year after special items amounted to DKK 3.873 million, against DKK 3.845 million last year, for a DKK 28 million increase relative to last year. At 30th September, Coloplast had 12,234 employees, of whom 10,960 worked in international locations. During the financial year, the number of employees increased by 4%. The increase is taking place in sales and production, reflecting that our company is growing and investing for growth. The Ostomy Care business delivered 7% organic growth and 8% reported growth. The SenSura Mio portfolio and the Brava range continued to be the main drivers of revenue growth.
The performance was partly due to developments in Europe, China, and the US. Revenue in Ostomy Care was DKK 7,166 million, which amounted to 40% of our consolidated revenue. We retained our position as market leader, holding 35%-40% of the market, and annual market growth is estimated at 4%-5%. Continence Care business delivered 8% organic growth and 9% reported growth. SpeediCath intermittent catheters and Peristeen continued to be main drivers. Sales growth in the Continence Care business was mainly attributable to the US, UK, and French markets. Revenue in Continence Care was DKK 6,459 million, which amounted to 36% of our consolidated revenue. Our market share is about 40%, and market growth is estimated at 5%-6%.
Interventional Urology delivered 10% organic growth and 13% reported growth. Growth was driven by Titan Penile Implants, the Axis Biologics portfolio, as well as Altis Single-Incision Slings in the U.S. market. Revenue in Interventional Urology was DKK 1,970 million, which amounted to 11% of our consolidated revenue. Market growth is estimated at 3%-5%, and Coloplast holds about 15%. The Wound and Skin Care business delivered 8% organic growth and 10% reported growth. The Biatain Silicone portfolio continued to drive growth, and the Biatain Silicone sizes and shapes portfolio accounted for a significant part of revenue growth. From a country's perspective, France, the U.K., and China were main growth drivers.
Revenue from Wound and Skin Care was DKK 2,344 million, which amounted to 13% of our consolidated revenue. Coloplast holds close to a 5%-10% share of global Wound and Skin Care market. Let me now turn to developments in our geographical markets. In Europe, organic growth was 6%. Revenue was DKK 10,573 million, which amounted to 59% of our consolidated revenue. Our European business continues to generate strong growth, posting solid growth in the U.K. and French markets, despite the negative impact of the French price reform. Other developed markets reported 11% organic growth. Revenue was DKK 4.380 million, amounting to 24% of our consolidated revenue. Performance in the U.S. market was driven by new product launches and the continued upgrade to hydrophilic catheters, that is ready-to-use catheters.
This type of hydrophilic catheters now accounts for about 60% of our total sales of intermittent catheters in the U.S. market. Given our high investment level in the U.S., we expect even more from there. Organic growth in Emerging Markets was 12%. Revenue increased, amounting to 17% of our consolidated revenue. Growth in Emerging Markets was mainly driven by the solid growth of Ostomy Care products in China, Argentina, Brazil, and Russia. Certain markets, such as North Africa and Greece, were negative contributors to growth. Now for the company's costs relating to distribution, administrative services, and R&D. Distribution costs amounted to DKK 5.206 million, a DKK 485 million increase. Distribution costs consist of investment initiatives in sales and marketing activities across several markets in Chronic Care, Wound Care, and Interventional Urology.
Distribution costs amounted to 29% of revenue on par with last year. Administrative expenses amounted to DKK 757 million, a DKK 104 million increase from last year. The increase was mainly due to an increase in costs within IT and legal, as well as DKK 15 million related to the strategic review of Interventional Urology. Administrative expenses amounted to 4% of revenue on par with last year. R&D costs were up DKK 52 million. The 8% increase was due to a general increase in business activity, including in the clinical performance program. R&D costs amounted to 4% of revenue on par with last year. Now for our balance sheet and cash flows.
At DKK 12,732 million, total assets increased by DKK 963 million relative to 30th of September 2018. Equity grew by DKK 495 million. The free cash flows was an inflow of DKK 3,766 million, up 10% from last year. A proportion of the free cash flows was returned to shareholders by way of share buybacks and dividends. In 2017/2018 , Coloplast launched a DKK 1 billion share buyback program running until the end of the 2018-2019 financial year. The first part of the share buyback program of DKK 500 million was completed in May 2018. The second part of the program was completed in August 2019.
The board recommends that the shareholders approve an additional dividend of 12 DKK per share, in addition to the 5 DKK per share, at the release of the first half interim financial report. This brings the total dividend paid for the year to 17 DKK per share, as compared with 16 DKK per share last year. The total dividend payout for 2018-2019 amounts to DKK 3,611 million, and the payout ratio is 93%. On the final business day of last year, Coloplast was quoted on Nasdaq Copenhagen at 657 DKK per share. On the final day of the financial year under review, our shares closed at DKK 825, which corresponds to an increase of 26%.
The return on Coloplast from 1st of October 2018 to 30th of September 2019 was 28% compared to a C25 Index that have yielded a return of 1.9%. Our corporate responsibility is an inherent part of our reporting, and the recent annual report contains an extract of our corporate responsibility report. We assume an even greater responsibility to users, to healthcare, to employees, to society, to the environment, and to our shareholders. I would like to highlight some of the year's results. We have reduced the number of industrial accidents by 30% from 90 in 2017-2018 to 66 in 2018-2019.
We renewed our commitment to inclusion and diversity and broadened our definition of diversity to cover more than gender. Through its global corporate partnership program, Access to Healthcare, Coloplast is also committed to improving conditions for people with intimate healthcare needs. The program contributes to raising the standard of care and developing addressable markets all over the world. Coloplast has been committed to the UN Global Compact since 2002, and we're also committed to contributing to the success of the UN's Sustainable Development Goals. To support SDG 13 of taking urgent action to combat climate change, Coloplast purchases renewable energy certificates, and for the first time this year, we're using 100% renewable electricity at all our production sites. That has helped us reduce our CO2 emissions by more than 30,000 tons.
We base our corporate responsibility on our mission, vision, and values, and as a market leader, taking a greater responsibility comes natural to us. We will make sustainability an integral part of our business model, and corporate responsibility will play a large role in our 2020 strategy. Until then, you can read much more in our Corporate Responsibility report. I would also like to mention that we set up a remuneration and nomination committee in the past financial year. In reference to the corporate governance recommendations, the committee's duties include ensuring appropriate remuneration of the board of directors and the executive management and succession planning. I would also like to mention that the board recommends an update of the company's remuneration policy for approval at today's AGM. The updated policy does not contain any major changes.
The purpose is to make remuneration more transparent and to describe how remuneration contributes to achieving the company strategy. I can also mention that a board evaluation was performed this year with the assistance of an independent external consultancy firm, with a view to ensuring that the board has the right composition. The evaluation concluded that the board is efficient, that there is a good working relationship between the board in its stewardship role and the management in its day-to-day executive role. Now for our financial guidance. We expect organic growth of 7%-8%. We expect an EBIT margin of 31% at constant exchange rates and 31% in DKK. The EBIT margin guidance reflects additional incremental investments for growth of up to 2% of revenue.
The guidance includes the expected impact of the price reform in France, which has resulted in an average reduction in prices of 9% for Ostomy Care and Continence Care, effective from 1st of July 2019, and of 2% in Wound Care from 1st of June. CapEx is expected to be about DKK 850 million, including the production site in Costa Rica. The effective tax rate is expected to be about 23%. That concludes my report on the 2018-2019 financial year. I would like to take this opportunity to thank all Coloplast employees for their great contribution and for the impressive results for the year. Once again, we took market share, and we continue to be among the most profitable companies in our industry. That is something we can be proud of.
We have an exciting year ahead. As already mentioned, we will be launching a new group strategy in early summer 2020. We have a lot to look forward to. We will be delivering products that are based on our clinical performance program. Our products help make life easier for people with intimate healthcare needs. That is what defines our mission. This is what drives our work. Coloplast is a purpose-driven company. Clearly, we live our mission. To illustrate that, I suggest that we round off today's general meeting by meeting some of the people that Coloplast works hard to make a difference for every day.
Thank you very much.
... to the board of directors for their report on the financial year, 2018-2019. Thank you for their annual report and their remuneration report. The proposal for distribution of dividends. Before opening for the debate, I can inform you that the annual report has been signed by the executive management as well as the board of directors, and it has been cleared by the company's auditors. You can see for yourself on page 78-80 in the annual report. As mentioned, the board of directors recommends that the shareholders approve an additional dividend of DKK 12 per share, in addition to the DKK 5 per share paid out at the release of the half-year financial report.
This brings the total dividend paid for the year to 93% in payout ratio. The remaining profits will be transferred to next year. With these remarks, we are ready to open the floor. I have four speakers on the speaking list. I give the floor to the first one, which is from ATP, Claus Berner Møller. You have the floor. Thank you. As mentioned, I am Claus Berner Møller, I represent ATP. Thank you for the report. Again, this year, we are pleased that the growth initiatives, which are extra investments in sales and R&D, have given an organic growth of 8%, which was the expectation from Coloplast from the beginning of the year. As you have also delivered on other KPIs, 2019 was a good and successful year for Coloplast. I congratulate you.
I am pleased to see the increased focus on top line and that it is working. The increased top line focus is the right strategy for Coloplast, not least to ensure high growth in the long term. Coloplast must keep its lead when it comes to innovative products, and not least, documentation of the quality of these products, and ensure a better sales positioning. That will ensure better growth in new markets, and not least in the US, where Coloplast is still struggling with a market share that is too low. In the past year, Coloplast has decided to keep its urology business. I believe that is the right decision. Urology is a high-growth area with a lot of opportunities for new and improved products.
On the other side, of course, there is the litigation risk, but I do believe that Coloplast will be better at minimizing that risk because the steep learning curve you've been through with the litigations. In popular terms, I believe that Coloplast has learned from its mistakes, and you might add that the shareholders have become poorer in the process. I'm happy to see that Coloplast has carried out a thorough analysis, and that you have chosen to keep your urology business. In this AGM, we are going to decide on a new remuneration policy in Coloplast. In the new policy, the fee is established based on a comparison with relevant peers in Denmark and abroad. The question must be: What are relevant Danish and international peers?
Can we agree that the group of companies you compare yourselves to are mainly companies from the U.S., U.K., and Switzerland, where salaries are, as we see it, way too high, and therefore should not be part of benchmarking the fees and salaries in Coloplast. Let me get back to the top-line growth. In highly profitable companies like Coloplast, a focus on growth in revenue is crucial. You want the KPI for organic growth should be the most important one that weighs the heaviest, because what is most difficult to achieve is usually increased revenue, whereas the EBIT targets can be easier to achieve but can be damaging to long-term growth. In companies with a high margin, I see the revenue growth as the most important factor and not the EBIT margin.
In companies like Coloplast, I also believe that shares are a better instrument than options in order to make sure that the executive management's interests are aligned with the shareholders' interests. One of the few things that Coloplast could have focused more on is ESG. Here, I do see an increase of ambitions, and as the CEO, Kristian Villumsen, has said several times, the intention is to make an actual difference, saying that it's not enough, that it just looks good. I can really approve of this approach, and I encourage the Board of Directors to use the remuneration reports to use non-financial KPI to promote the ESG targets. Finally, I would just like to wish you the best of luck with your challenges in the upcoming year.
... Thank you very much, ATP, and I give the floor to the chairman of the board.
Thank you, Claus Berner Møller, for those words of praise. You touched upon many of the things that I talked about in my report. I'll not get into that any further. I will raise some of the concerns you raised here. You asked about how you benchmark or establish the right salary package for the members of the board of directors. Well, let me start off by saying that the people on our board are businesspeople. We don't pay more than we need to. We are all businesspeople here. Of course, we compare to relevant C25 Index companies when we put together our salary packages, but our rivals are in the U.S. and in the U.K., and if we want to attract a certain person who is in that market today, we need to orient ourselves towards that market. That's the way it is.
We have a global company. Less than 2% of our revenue is generated in Denmark. We compete with companies in those countries, and they are all fishing in the same talent pool, and we need to deal with that. You can sleep safely at night. We do not pay more than we need to, but we do pay what we need to pay because we have an ambition to be the best performing medical company in the world. You can't run a tier one company with tier two people. We've done well this year, that's for sure, with the existing crew, and we agree on growth. Growth is a prerequisite for creating a company with long-term perspectives.
The big problem and dilemma is when you invest in growth, is that you get the cost for sure, but you can't be sure that you will get the growth. In a market where prices are reduced year-over-year, you can only get an advantage if you create growth. We need to stay in our market position, therefore, we need to drive growth. I can guarantee you that our 2025 strategy, which hasn't been finalized yet, will be focused on growth above the market level. We also look at Economic Value Added. It's a way of calculating how to really create value. We cannot create the sufficient value if we don't have growth in our company, we are quite on the same page here. I think I will have the chance to get back to the question of shares or options.
I think the program we have, our long-term incentive program, our long-term incentive mechanisms for the board of directors are options, and they will only be worth anything if there has been growth and earnings in the period that they've had these options. That aligns the interest between executive management and the shareholders, and that is the whole idea. ESG is environmental, societal, and governance targets. Can we do more here? You can always do more in that respect. Earlier this week, we had a release from Danske Bank, where they compared the global companies that are natural peers to Coloplast when it comes to ESG targets. If you look at the rank here, these are from Sustainalytics, and they are rating Coloplast here.
Many companies out there are doing these kinds of ratings, here, Coloplast is doing quite all right in our peer group. We're our best among our peers in this respect. Of course, there are companies who are doing even better, therefore, we are only number 281. Boston Scientific, which is our biggest rival in urology, is number 800 and something. This is our point of departure from which we can improve. It has been a part of our agenda, and it will continue to be an increasing part of our agenda. It's also about what we call license to operate, you know, and getting employees to want to work for us. The final question about KPIs, about this kind of target, ESG targets.
Well, we should remember when we set out KPIs as part of our bonus schemes, it is not just about the bonus KPIs. We don't only work on our bonus-triggering KPIs. I have a principle that I would like to see that when we pay out a bonus for our executive management, it's because they have kept their promises for financial results in the past year. I would not like to end up in a situation where we have set up some targets, and we have reached the targets for ESG, but we haven't reached our financial targets. Therefore, we have not included ESG. You can work on these targets as well. We just like to keep it simple. I think this does show that we are working on these aspects, even if it just doesn't appear here.
We know we are part of a society, we need to do good. Thank you to our chairman of the board, answering a variety of questions from ATP. Our next speaker on the list is MP Pension from Anna Schelde. Thank you very much. Thank you for the floor, thank you for this very thorough report on the last year's results. My name is Anna Schelde, I'm an Investment Chief in MP Pension. My team and I are taking care of the pension of our members, 125 million DKK. For a number of years, we've been investing in Coloplast. We own shares of 340 million DKK. Coloplast has a strong and responsible culture with dedicated employees, who want Coloplast's products to make a difference from the final user, the patient.
In many ways, Coloplast is a role model for other companies. We saw that beautiful ranking here on ESG scores. Even in the best company, there is always room for improvement, and I have brought with me three areas that I think you should focus on next year. The first thing is governance, and the next two have to do about transparency when it comes to climate and taxes. Any company consists of physical assets, like the building we're in right now, and some non-concrete assets that are difficult to see, and of course, employees. Employees are the most important assets of any company. Without employees, we just have dead material things. Of course, individually, each employee can be replaced, but it is the collective knowledge that these employees possess that makes up the success of the company, and they constitute the culture of a company.
Where am I going with all these fancy words? Well, where I'm going is that because of this, good management and leadership is crucial to any long-term success, and in our view, we have seen excellent leadership in Coloplast for a number of years, and we have think that it has been crucial for the success of Coloplast. I also think it is good leadership to ensure continuity. You've done well, Lars Rasmussen, you worked in Coloplast for a number of years as CEO, and now with our current CEO, Kristian Villumsen, who has been in the company for a long time as well. This kind of continuity with the CEO position is becoming quite rare in Danish companies.
Leadership is also about good governance, and in MP Pension, we don't find it to be good governance when you have been a CEO for a long time, and then you immediately become the board of directors, and that is against the recommendations of good governance. Why is that? It's a general remark, and we say this because we live in a rapidly changing world, and it's important to be able to be critical towards the strategy of a company. That means that there is a relationship of mutual independence between the CEO and the chairman of the board. You need to be able to think creatively and think outside the box, and that is difficult when you kind of grew up together.
It's the balance between continuity and innovation, and we think the balance is lopsided a bit, and therefore, we voted against the appointment of Lars as the new chairman of the board last year. You mentioned this balance between continuity and renewal in your report. We think that renewal and innovation are two different things. Innovation about rethinking the entire strategy of the company. We have chosen to vote against this year as well, because we have one more reason to vote against Lars as the chairman of the board. Later this month, Lars is expected to be chosen and appointed as the chairman of the board of Ambu, and that makes him the chairman of the board of 3 listed companies in Denmark.
It, of course, testifies to his great abilities as a chairman, but it is also a bit too much, we think. If things are going well, it might be possible to chair three companies, but things can go sideways quite quickly, which we have seen in Ambu. When I mention Ambu, even though this is not the AGM of Ambu, it's because there is a special relation between Ambu and Coloplast, because they have the same major shareholder. Again, this year, we vote against the appointment of Lars as chairman of the board, and we encourage the board of directors to ensure a different kind of setup in the years to come. Again, let me underline that it has nothing to do with the skills and abilities of Lars. We have, of course, read the annual report and the CSR report.
Of course, you very thoroughly describe your efforts to bring down your climate impact. Therefore, I would ask whether you wouldn't join the formal TCFD organization in the coming years. It's a standard used by many companies already, and will probably become a mandatory requirement in the years to come. We think it would be beneficial for you to join TCFD. It would strengthen your climate reporting as a financial risk, and it could also strengthen your risk management unit. As a shareholder, we are very interested to hear your view on physical climate-related risks to your production facilities, for instance, the new production facility in Costa Rica. I would also like to hear whether you see any competitive advantages in the transition to a low-emission economy. Perhaps it's relevant to you, perhaps not, but we would like to know. Why?
Because Coloplast is not an oil company or a logistics company emitting a lot of CO2. Climate change poses a risk to all of us, individuals as well as companies, no matter what kind of line of business you're in or where on the globe you are located. Finally, my third remark has to do with taxes, and here I would like, again, to praise you. You have taken up this societal challenge. Already back in 2015, you published a tax policy, saying that you would not make use of aggressive tax planning. With that policy, you send a clear signal internally as well as externally, of a responsible way of doing business and the consideration for society that is characteristic for Coloplast. Of course, you don't want to pay more taxes than necessary, and that is just as it should be.
We would welcome if you could increase transparency about the taxes you pay in each country. That means country-by-country reporting. We encourage you to seek inspiration in the new standards from Global Reporting Initiative. It was just published today, so I understand you, if you haven't read it yet, or the so-called Future-Fit Business Benchmark. We often hear that companies are fearing that this kind of tax reporting could expose too many details to competitors, but I think it's a bit an overstatement. I think your competitors know you better than you think. Of course, it is up to each company to look at what kind of details you can publish without giving away too much.
When we look at the return of our investment, we see Coloplast as a good example of a company that can pioneer the way. Therefore, we think you should also be a pioneer when it comes to taking reporting on taxes and climate to a higher level. That will attract investors and other stakeholders, and it will serve as an inspiration to other companies. That was also an attention point when it comes to governance, that I think the board of directors should discuss in the coming year. Thank you very much for your attention.
Thank you to Anna Schelde from MP Pension. There were a number of questions and remarks. I give the floor to the chairman of the board.
Thank you, Anna Schelde. Thank you for the praise, the positive remarks, also thank you for your questions. Well, in fact, I don't know how to start off when it comes to the fact that I am now the chairman of the board. That means that I should defend my position and tell you why that was a good idea, that I was appointed chairman of the board. Of course, I was very happy to be appointed the chairman of Coloplast, because the company is close to my heart. It did take a lot of persuasion, I must tell you, because with the results that I brought with me, you can run the risk of being too dominating. That is what you mention here: How do you make sure that innovation takes place when things have been going so well?
I simply don't know. I think you should be very aware that when you change roles, the dynamics change completely. I had been in Coloplast for 20 years when I became the CEO, in a year with 3 profit warnings and where we lost 40% of our value. The board of directors at the time could have said: "Well, you really need to innovate, and the current executive management are completely hopeless, so let's replace the whole membership of..." Luckily, they didn't. They gave me the chance to fill a different role in the company. That also meant that the people surrounding me got to act in a different way. The same thing happens when you move from being the CEO to being the chairman of the board.
I don't run the business anymore, Kristian and his team does. I respect that I am now in a completely different role. I can only say that there are recommendations, but recommendations are not rules. We are not in compliance with any rules. The board of directors has evaluated what they thought was the best for the company, and that was that. You have a point about overboarding. I must say overboarding, compared to what? With any recommendations for good governance says that you need to have a discussion about it. When you say overboarding, I think you are looking at a ISS, Institutional Shareholder Services, which has a rule that you get points. If you are CEO, you get 3 points. If you are chairman of the board, you get 2 points.
If you're a member of the board, you get 1 point, if you have more than 5 points, you're overboarded. If you're a chairman of the board or member of a board in a listed company, well, that's a very square way of putting it, because when I enter the board of Ambu later than this month, I get 2 points. Lars Smilko also gets 2 points for being in the board of Unilever, which is a much, much, much bigger company than Ambu. I could also be the chairman of the board of 4 companies and not be overboarded according to these rules.
It's a, it's judgment call, and I might regret saying this, but I've been a CEO for many years, and the change from being the CEO of a company like this and to be the chairman of the board of three companies cannot be compared at all. Being the CEO is 24/7. You don't even turn off your phone while you're flying. When you're a chairman of the board of three companies, you of course, you don't turn your phone off, but people don't call you nonstop. It's not because of the work burden. I was actually CEO and chairman of the board of Lundbeck previously, and that was a handful, I can tell you that. I think there's a reasonable balance here. I can get a bit of spare time off during the summer break.
Of course, if things go sideways in all three companies at the same time, you would have your hands full. I think there's room for more work. You also ask about TCFD. I must admit that I haven't been paying much attention to this, but you send in your proposal, and of course, we want to look into that. We don't feel that we're very exposed in this matter. We have relatively new production facilities. We have new facilities in Hungary and in China and now in Costa Rica as well. They have all been built according to requirements to withstand flooding for the next 100 years and the new weather conditions. We feel well equipped here, but of course, we would like to look into it. Tax payments.
I can say that it is, in fact, a part of our tax policy to have transparency about our tax payments to, towards authorities and relevant stakeholders. We do submit country-by-country reports to the Danish tax authorities, who will then make it available to other countries to increase transparency. We have chosen not to publish our country-by-country reporting to everybody, because we think that it can be a source of misinterpretation. If you don't have the relevant knowledge to interpret this kind of information, we will end up defending provisions that are actually fair. Of course, we would like to look into these things to see if it could outweigh the disadvantages as we see it by country-by-country reporting.
Thank you to the chairman of the board for the answer to Anna Schelde from MP Pension. We have the Association of Danish Shareholders, Per Juul. The floor is yours.
Thank you very much. My name is Per Juul, and I represent the Association of Danish Shareholders, taking care of the interest of private investors. Thank you to the board for a good report, and also thank you to ATP and MP Pension for giving us their remarks and questions as professional shareholders. Two years ago, you dropped the target of operations growth, and that profitability didn't have to increase, and instead, you focused on organic growth, and it seemed to have been a good decision. We see revenue growth of 8%, and even though the operating margin is a bit lower now, you earn more because the revenue is growing well. At the bottom line, earnings per share.
increased by 0.4%, due to the fact that we have a bit of trouble, which is the litigations in the US. This problem is still there, even though you've been trying to get rid of it for a time now. The provision this year is DKK 400 million, and luckily it is only 10% of the bottom line. Of course, this is much worse for the persons who have experienced injuries. Luckily, we have not seen any similar cases in other divisions of the company. Still, as my first out of three questions, what have you done and what will you do to prevent users from having these very unfortunate experiences in the future, and to make sure that you don't end up in any litigations in the future?
These litigations are in the urology department. You have chosen to keep this business. Some say that it's because nobody wants to buy it. We do believe that this segment is very well in line with the remainder of your product portfolio. Coloplast is a company where you're lucky enough to make a real difference for the people using your products. The chairman of the board, as well as the CEO, are proud of what Coloplast has achieved. Management is working on a new strategy, we hear. Lars Rasmussen writes in the annual report that Coloplast want to contribute to the UN SDGs and want to make sustainability an important part of the coming strategy. Ethics and sustainability is an important part of the debate these years.
That raises the question whether a company should first and foremost serve the shareholders, or should it have other and more broad societal goals that could be in contrast with the or in conflict with the shareholders' interests. Would the company be willing to launch an ethical or sustainable initiative, even though it was in conflict with the interest of the shareholders? Are you entirely aligned with the shareholders' interest? I assume you believe that these two interests will be aligned over time, but what will you choose if you are to choose between sustainability and shareholders' interest? We have chosen a specific focus on IT security in the light of the serious cyberattacks on A.P. Møller-Mærsk last year. You say you have a ISO 27001 certified IT preparedness.
My final question today is whether the board could tell us a bit about what these preparedness plans entail and what Coloplast has done to make sure they're safe when it comes to cyberattacks. Again, this year, I would like to praise you for publishing a full annual report in Danish. Not all shareholders speak English as their mother tongue. Still, we need to look at your website or go to the AGM if we want to see what products you make or who you are making life easier for. Thank you very much, and good luck in the coming year.
Thank you to Per Juul from the Danish Association of Shareholders. He had three questions. I give the floor to the chairman of the board.
Yeah, what can we
Right. What can we do to avoid the kind of experiences we've had with the court cases? Well, I can tell you that's the question we have asked many times internally in the company. First of all, let me say that the products in question... Well, all of these products are still on the market, so the products are still FDA approved. They are still used, and that's because, well, it's very serious illnesses that are treated with these products, and therefore, they're still needed. There are three things where you use this kind of product, and three things come together: the product, the patient's health, and the skills of the doctor using the product. What we've been able to do...
is that we have drawn up a much, much better description of the risks of these implants, and you have to deal with that if you are going to get an implant, particularly in the U.S., you have to sign off on the fact that you understand the inherent risks of an implant. The other thing is that we work with fewer clinicians. Much fewer physicians use our products. They then use a bigger quantity of them, and that makes them better equipped for performing these operations with a much smaller error margin. That is what we've been able to do because we're in this segment, and even though these products are marketed all around the world, we've only seen this kind of court cases in the U.S. It's very unfortunate that we've had these court cases.
The products are still approved, they are still in use, we have done everything we could to ensure that the users are more aware of this and that there is more training on the professional side. You ask if we would be willing to launch an ethical or sustainability initiatives, even if it were in conflict with shareholder interests? I think all companies have two horizons, one of them being that we need to deliver on the next quarter, and then we have the broader horizon, thinking that we need to be here in the long term. We need to do right now, and we need to do right in the long term. I showed you our ESG rating.
We are very aware of sustainability, but we're not going to take any sustainability initiatives which are not logical or promoting our business. We will not do anything that is contrary to our goals. At the same time, nobody wants to work for a company that is polluting or doesn't behave right. On the other hand, nobody want to promote technology that isn't finished or hasn't proven its worth yet. It's a balance, and I can't tell you a clear-cut answer. It's an assessment, but it is very close to our hearts that we behave in ethical and responsible way. Young people who are applying for jobs today, they read the corporate responsibility report first, before they read the annual report.
Of course, we are very aware of this trend, because you cannot run a company with an ambition to be world-leading, without having the very best employees. Finally, our preparedness plans for cyberattacks. We are ISO 27001 certified. That tells us something about the standard of our IT setup. Not many companies have reached that certification by now. I think more will come because we are as exposed as we are. Everyone is subject to attempts of hacking each and every day. What helps us focus on this, is that we have a very simple system set up. We have 1 backbone system, 1 CRM system, taking care of all of our central processes, and then we have 1 ERP system. 1 CRM, 1 ERP, that means that these two systems...
One of them is taking care of all of our vital processes in our sales setup, and the other is taking care of all of our other administrative tasks. The fact that we only have 2 systems in a company as big as ours is quite unique. Most company have a patchwork of systems, of which many are outdated, and that exposes them to attacks, and that is one of the things that makes us better equipped. It shouldn't sound as if I say that we feel completely safe from hacking or cyberattacks, but we have minimized our risk by minimizing the number of systems that we need to be aware of, and this is at the very forefront of the agenda. Everyone has seen what has happened to other companies. It is extremely costly, but nobody can eliminate the risk altogether.
Thank you very much to the chairman of the board for answering to these 3 questions from Per Juul, from the Association of Danish Shareholders. Our final speaker is Mr. Bjørn Hansen. My name is Bjørn Hansen, and I represent shareholders. Let me, first of all, congratulate you on the good results again this year, as well as previous years. It seems like Lars Rasmussen has experience from his position as CEO, so I think it's very well and good that he and Villumsen have been in Coloplast for many years, and the Deputy Chairman as well, who is not mentioned a lot. It's important that we have people here who can manage things and stabilize the company, and all 3 of them are doing that.
I understand that they have appointed a good board of directors and a good executive management team, and they deserve praise for that. I think that Coloplast, with their product development and their results year-on-year, are giving us a positive surprise. Of course, for a few years, we've been thinking, "Well, I wonder if they can reach those targets." Still, they have managed to change not only their production, but also their sales around the world, where they are now working and making their money. Unfortunately, I have not received the annual report yet, so I was up here a few days ago to pick it up. I'm not very satisfied with that. I tried to print it out, and let me ask if any one of you have seen it, seen the same, that some of the lines are now not printed out.
I have contacted an IT nerd, he said, "Oh, there's too much margin on these pages." I said, "Well, I need these zeros and these figures because they're actually important." I could see the pictures. They're always very big, but the numbers are very interesting to me. When it comes to the current situation in the U.K., with the whole Brexit situation, I can read in the newspaper, Børsen, and what I can read from the accounts, and please correct me if I'm wrong, but it's 2.5 billion-3 billion DKK. This must be the biggest market that you market your goods on in the EU. We risk that it will not just be one referendum, there could be one more, and the next one could trigger a civil war, which we have seen before.
We do not yet know. Some people think that there will be a transition overnight, but that will not be the case. Your distributors of goods. Because for a while, I thought you did have production facilities in the U.K., but you don't. You deliver from Hungary and from China. China is a third country. They might impose 20% customs, and from Hungary it might be 5.6% or something like that, once it becomes a third country, vis-à-vis the U.K. I don't know what kind of steps you've taken, but you have a production facility that is almost ready in Costa Rica, I read. That's very well. Unfortunately, it's not part of the British dominions, because that would be an advantage.
Would it be a good idea to get production facilities within the UK so that you get rid of this, these customs that might be imposed? That would give more money to the shareholders and perhaps to executive management as well. As I see it in your remuneration policy that has been published this year, I think that is good. It seems that you comply with EU requirements in this respect. It's easy to read. It's in Danish, it's also in American. We can see that even last week, we were at an AGM in Hørsholm, and they stated how many people would be on this globe in just 10 years. What is called billions in English is called milliarder in Danish, and that's a big difference. Now I get to your remuneration.
I don't know if you can see it, but Pam, you know the company, Maersk, has been given a very short time. For a very short time, he got a bonus of DKK 98 million. They have 220,000 employees, and there's also a company like General Electric. If we take the 500 biggest company in the U.S., you must take note that when you calculate the exchange rate, the salary for these big companies is about DKK 1.8 million per month, and add to that their bonus schemes and these warrants and options that they get. Mr. Buffett will not even hear about these two words. It's a big no-go for him. At some time, at some point, that could be a disadvantage for Coloplast.
I've always cared a lot for this company, and that is why we have invested in it, and that is why we recommend it. Your CEO has a lot of experience from the company, and I welcome the fact that you continue to appoint very experienced employees, because just taking someone in from the outside and giving them a lot of rights, and then they leave and go to Nets and get a big bonus, that's no good for the company. This seems more solid. It's perhaps a more old-fashioned and conservative approach. I love it. Please keep it up. I note that Lars, who was on television last week, he was already appointed, and of course, you can count the votes, so he will become the chairman of the board in Ambu. Ambu is a good company.
The share price goes up and down, they have made some mistakes, and I think a trio or a few good people from this company can correct those mistakes. To our deputy chairman, please buy some more companies and put Lars or Willumsen into the management, then you can control the whole pharmaceutical industry, along with Novo Nordisk. You are a bit behind Novo Nordisk, but you're well underway, and when you look at the Association of Danish Shareholders, they say that Coloplast is number 3, I think, when it comes to market value. Let us thank the previous chairman and the current executive management. Give them a big round of applause, and thank you very much for your attention. Thank you very much, Mr. Bjørn Hansen.
There was one question in there, and I give the floor to the chairman of the board. Also on my part, thank you for those words. That was relevant as well as amusing. Brexit. You're quite right that when it comes to the UK, it is the biggest company in our group, and we have been affected by recent events, particularly when it comes to exchange rates since Brexit was decided. I think you should put it quite simply: We have patients that we service each and every day in the UK. They need products, they need services, Brexit or no Brexit, as simple as that. Of course, we have now built a warehouse where we can keep stocks in the UK.
We have done everything humanly possible to make sure that nobody will lack anything from us because we have the customer base that we do in the UK, but also because many of our competitors are based in the UK. Therefore, we need to make sure that we can continue to deliver in the UK, even in the current confusing circumstances. But that's the way it is, and we think that we have a hold on the situation. We have had a lot of time to prepare, but thank you very much for that comment. Those were the answers from the chairman of the board, for Mr. Bjørn Hansen, and our last speaker on the list is Jens Frederik Dimant. The floor is yours, sir.
Yes, my name is Jens Frederik Demant, and I take the floor here, and let me first say that I have a good impression of Coloplast. It is a good company, and I noted that the 3 first speakers from ATP, MP Pension, and the Association of Danish Shareholders have praised Coloplast, and they did not criticize you at all, practically. Let me also say that when I take the floor, I risk being wrong, because let me start by saying that when I arrived, I arrived early with the first bus, and I read the articles of association, and I couldn't find what you noted. I would like to apologize to our chairman of the AGM because I can see that it, in fact, actually does say in the articles that the board of directors appoints the chairman of the AGM.
Talking about criticism and talking about the annual report, the Chairman of the Board mentioned a lot of big figures, and I kind of lost track because I thought they can't be right. I looked into the annual report. The English version has the weakness that the ink is not very visible, but I heard something about DKK 3,000 billion-DKK 7,000 billion, and I heard DKK 3,611 billion, and it wasn't million, it was billion. On the board behind you, it said million. The Chairman of the Board also said this. "DKK 3,611 billion," you said, and that is the overall dividend paid out, so it must be a very, very wealthy company. The 3 speakers we heard before didn't even point it out. Was I wrong or was I right?
I think it should have been millions, that was what it said behind you. Thank you. Thank you very much to Jens Frederik Demant. First of all, the apology is accepted. We appreciate that. Thank you. It is right that it is DKK 3 billion, 611 million. If I said it wrong, I'm sorry, that the other thing would be above and beyond our earnings. Are there anyone else who wants to take the floor? If that is not the case, can I establish that the report is adopted? Have we approved the annual report and that the resolution on the distribution of profit and the remuneration report are all approved? Thank you very much. That is recorded in the minutes.
That means that we have exhausted items 1 to 4, that brings us to item 5, which is proposals by the board of directors. This year we have 5 separate proposals. 5.1, approval of the board of directors remuneration for the financial year 2019. 5.2, remuneration policy. 5.3, amendment of Article 8, agenda. Item 5.4 is the amendment of Article 9 of the Articles of Association, forwarding of admission cards, and finally, 5.5, authorization to the board of directors to acquire treasury shares. Item 5.1 is the proposal by the board of directors to approve the remuneration for the financial year. That is a renew requirement, and that will be a part of the AGM for the coming years. We will get back to that in item 5.3 in a minute.
The background for this proposal is that you want to create better transparency in line with the recommendations from the Committee for Good Corporate Governance. The board of directors proposes that the following remuneration of the member of the board of directors for the financial year 2019/2020. Members of the board of directors, DKK 450,000, and the chairman of the board, DKK 1,350,000. That is 3 times the base fee, and the deputy chairman will receive DKK 787,500, which is the base fee multiplied by 1.75. The board of directors has established an audit committee and a remuneration and nomination committee, and it proposes that the general meeting approves the following fee to committee members for the additional duties associated with the committee work.
The board of directors proposes that the fee to each member of the Audit Committee increased to DKK 240,000 from DKK 225,000, and that the fee to the chairman of the Audit Committee is increased from DKK 338,000 to DKK 400,000. The board also proposes that the fee to each member of the Remuneration and Nomination Committee is increased from DKK 100,000 to DKK 150,000, and that the fee to the chairman of the Remuneration and Nomination Committee increased from DKK 200,000 to DKK 250,000. The purpose is to align the fee with relevant peers and to ensure that the company continues to be able to attract and retain qualified members to the board of directors.
In addition, the members of the board of directors are entitled to be reimbursed for certain expenses, et cetera, as described in the company's remuneration policy, to be approved under item 5.2 of the agenda. The adoption of this item only requires a simple majority. Does anyone want to take the floor in this respect? That is not the case. I hereby establish that the AGM has approved the proposed remuneration for the board of directors. The next item on the agenda is the update of the remuneration policy. As a part of the implementation of the Shareholder Rights Directive, the Danish Companies Act has been amended. This also includes new provisions about listed companies' remuneration policies. I refer to the report of the chairman of the board, in which he mentioned that the board proposes an update of the remuneration policy.
There are no significant material changes when it comes to the overall guidelines for incentive pay already in place today, which were approved by the AGM in 2016. The new remuneration policy includes a more thorough explanation and perspectives on the remuneration of the board, and that is in line with the new requirements in the Danish Companies Act. With this updated remuneration policy, the company wants to increase transparency when it comes to the description of how the remuneration policy contributes to achieving the company's strategy. The proposal means that Article 15 of the Articles of Association will be deleted from the Articles of Association, and that the subsequent articles of the Articles of Association will be renumbered accordingly. With those words, I would like to ask if anyone wants to take the floor? That is not the case.
This proposal can be adopted by a simple majority, and as there are no objections, I establish that the proposal is adopted. Thank you very much. The next item on the agenda is item 5-3, which is a proposal from the Board of Directors about amendment of Article 8 of the Articles of Association. As to add two new items on the agenda, item 4 and 5, which will be on any future agenda of future AGMs. Item 4 will be the presentation and approval of the remuneration report, just as we have done at this AGM. It's a continuation of what we have done today. In the future, it will be a fixed point on the agenda. This is also a consequence of the implementation of the second Shareholder Rights Directive.
The second item, which is item 5, which be added in Article 8 of the Articles of Association. That is the approval of the Board of Directors remuneration for the current financial year. It is also a continuation of what we have just been through. In the future, it will be part of every AGM agenda in Coloplast. When it comes to the phrasing, I refer to the convening of this AGM, where you can read the full phrasing. As this is an amendment of the Articles of Association, it requires at least 50% of the share capital represented and two-thirds of the votes cast and of the voting share. If no one wants to take the floor, I establish that all votes present adopt this proposal. That leads us to item 5-4, which is also an amendment of the articles.
Here, the board proposes an amendment of Article nine, so that admission cards will no longer be forwarded by regular mail. I can also refer to the new phrasing of Article nine. This is a consequence of the earlier adoption by the agenda of electronic communication with the shareholders. For the shareholders who do not bring with them an iPad or a smartphone or anything of the like, the company will offer printing an access card, an admission card on the premises. You can always contact the friendly staff at Coloplast to ask whether you have been registered, and you will be greeted kindly. Does anyone want to take the floor in this respect? That does not seem to be the case.
Let me mention that this is also an amendment of the Articles of Association. Therefore, it requires at least 50% of the share capital and two-thirds of the votes cast. I establish that that is in fact the case. Our final proposal is item 5-5. Here, the board of directors puts forward a proposal of authorization to the board of directors to acquire treasury shares. This was also the case at the ordinary AGM in 2018. Ongoing purchasing and selling of treasury shares is an instrument that the company can use to adjust the capital structure of the company and strike the right balance between the company's own equity and foreign capital.
The current authorization is valid up until today, therefore, the board proposes that the board of directors is authorized to allow the company to acquire treasury shares for up to 10% of the company's share capital, provided that the company's total holding of treasury shares does not exceed 10% of the share capital at any time. The highest and lowest amount to be paid for the shares is the price applicable at the time of acquisition of the company's B shares, plus or minus 10%. The authorization is valid up to and including 4th of December 2024, we need only a simple majority. Does anyone want to take the floor? Mr. Demant.
Yeah, his name out there, Jens.
Yes, my name is Jens Frederik Demant. I have one question: Is it really necessary that the authorization be valid five years into the future?
There were concrete for it.
There was a concrete question, and I give the floor to the Chairman of the Board.
Well, the reason that we ask for a five-year authorization is that we have an option program.
That is valid for 5 years, and that means we need to have enough shares to cover our option program, so that we can honor our obligations if the share price has risen, which of course, we hope. Therefore, it makes sense to ask for a 5-year authorization. Thank you very much to the chairman of the board. Does anyone else wish to take the floor in this respect? That does not seem to be the case. Can I then establish that the proposal is adopted with all votes present? That is the case. That means we are done with item 5, and we'll move on to item 6 on the agenda, election of members to the board of directors.
In 2019, the board of directors has been evaluated with external assistance, and the results of this evaluation can be read in the annual report. The board of directors proposes re-election of the following members: Lars Rasmussen, Niels Peter Louis-Hansen, Birgitte Nielsen, Carsten Hellmann, Jette Nygaard- Andersen, and Jørgen Tang-Jensen. I can inform you that all the members proposed for re-election and their management positions in other companies, is provided in annex 2 to this notice, and also available on the company's website. Are there any other candidates or anyone who wishes to take the floor in this respect? That is not the case. That means that there are the same amount of vacant positions as there are candidates, and they are all re-elected. Congratulations, and good luck. Item 7 on the agenda is the election of auditors.
Here, the board of directors proposes the re-election of PricewaterhouseCoopers auditors. I can inform you that this is in line with the recommendation from the audit committee. The audit committee has not been influenced by any third party and has not been bound by any agreement with any third party, under which the appointment of certain auditors or audit firms by the shareholders in the AGM would be restricted. Does anyone want to take the floor? That is not the case. That means that PricewaterhouseCoopers auditors have been re-elected as the company's auditors. That exhausts the ordinary agenda. We have reached item 8: any other business. Here, you are allowed anything except putting forward proposals. Does anyone want to take the floor? That is indeed the case, Mr. Bjarne Hansen, the floor is yours. I have just found salaries and exchange rates.
I just found salaries and exchange rates as per the eighth of November. According to the central bank, the average salary in the biggest listed companies in the U.S., I think I said something wrong before, but that amounts to $6 million, 900 and something per month. That is quite a good monthly salary. I hope Coloplast can live with that. The next thing is the bonus. The third biggest bank in the U.S., Citigroup, are working towards only paying out a maximum amount of $100,000 in bonuses. Add to that, options. This was for the Deputy Chairman. You don't have to say a lot about this, but I have some very interesting calculations here for you to see. Thank you for those words. Thank you for those final words, Mr. Bjarne Hansen.
That means that our agenda for today is exhausted, and I have only left to close my job as Chairman of the AGM. With those words, I will pass the floor back to the Chairman of the Board. Thank you very much for navigating us safely through the AGM for this year. For my part, I have only left to thank you for participating. Thank you for your remarks and your questions. Thank you very much, and have a Merry Christmas.