Good afternoon. Welcome to the AGM in 2017 for NKT. Both a warm welcome to those of you who are in the room, and those that follow proceedings via the website. I am the Chairman of the Board, I am Jens Due Olsen. We look forward to a good afternoon, good discussions. We have always had a tradition of being able to achieve that in this company. We will conduct the meeting in Danish, and you can put questions in Danish or English. We have interpreters. Make sure that people not understanding Danish can follow proceedings in English, and there are headsets outside if you need them. Once the meeting is over, the recording of the proceedings is available on the website, and there will also be a protocol from the meeting.
We have a chairman of the meeting, and I will now hand over to [Anders Lavesen], who will act as chairman of the meeting.
Thank you very much. Before we embark on the agenda, we have a couple of practical details. If you wish to take the floor once the floor is open for a debate, please raise your hand and then I will ask you to come up here, and you will then kindly show me your name on a slip, and I will then make sure that you are introduced properly. I already have a list of speakers for your information. If you wish to leave the room during the proceedings, please bring along your admission card because you need to be de-registered if you do not want to come back in. If we need a ballot, please remain in the room until the voting has been closed.
My first job is to establish whether the AGM has been legally and lawfully convened, and whether we are quorate. I find the following. The meeting is held in the Copenhagen region. It is held before the end of April. The convening notice has been issued together with the agenda through the business authority's IT system since March 28, and the company has told me that a stock exchange release was sent out, in compliance with the deadline required for convening notices, and the agenda and the complete proposals have been available to shareholders. They have received an email or a letter sent out on 28th of March . The company informs me that the annual report 2016 has been sent via email to all shareholders having requested this.
The complete proposals, agenda, convening notice, annual report 2016, and also information about the voting stock and any forms that are required with regard to voting by proxy or by email, all this has been accessible on the company's website since 28th of March . I also find, although this is not a legal requirement, that a corporate release was sent out in late March with the convening notice for the meeting. So I find that the AGM has been legally and lawfully convened. Concerning whether or not we are quorate, the thing is that in view of the items on the agenda today, we do not have any requirement to the effect that a certain proportion of the voting stock needs to be represented at the meeting in order for us to be quorate.
This is why I find that the meeting has been duly convened in compliance with Danish company law and the articles of association, and we are quorate. Before we proceed, I just wish to hear if there are any comments to my findings or any objections. That appears not to be the case. We will then proceed with the business to be transacted. We have an agenda. The first item is report about the company's activities in 2016. Then we have item two, presentation of the audited annual report. Three, approval of the audited annual report. Four, proposal for distribution of profit. The board proposes that the profit for the year be carried forward to next year, and that no dividend be paid out. Five, discharge to members of board and executive committee. Then we have remuneration to the board. Seven is election of board members.
Eight, appointment of one or more auditors, and nine then contains five different proposals. 9A is a proposal from the board that it be authorized to prepare and carry out a split of the NKT Holding Group. 9B contains a proposal for a change of name. 9C has to do with changing the articles of association. 9D concerns the authority to issue shares. 9E is authority to issue convertible bonds. 9F is a proposal concerning changes to the company's remuneration policy. Then, of course, we have an item 10, which is any other business. I propose that we deal with items one to four in one go as per usual.
First, we will hear Mr. Olsen, the chairman of the board, give his report and introduce the audited annual report and also the proposal concerning what to do with the profit for 2016, that it be carried forward to next year. Then we will have a debate, and then we will have a vote concerning items two to four. So if you do not object to this way of transacting the business under the first four items, I give the floor to the chairman of the board.
Thank you so much. 2016 was a good year for the NKT share. The year as a whole, the share value rose by 40%. If you include the dividend payment of DKK 4 last year, the return actually was 41%. The same period, the C20 Cap Index rose by 2%. Through the period from last year's AGM that was held on 31st of March 2016, up to including yesterday, the increase is 36%, and then 37% if you include last year's dividend payment. For us on the board, this really indicates that you support the journey that NKT has embarked on. In December 2016, the NKT share was admitted to Nasdaq Copenhagen C25 Large Cap Index, which actually sometime in 2017 will replace the current C20 index, the 20 biggest shares in Denmark. 2016 was also a landmark in our history.
We celebrated the 125th anniversary of the NKT brand, founded by Hans Peter Prior in 1891, and the 110th anniversary of the establishment of Nilfisk. It was also the year when we decided to split NKT Holding into two independent listed companies, Nilfisk and NKT, both of them market leaders in their industries. The time of this decision was driven by the acquisition of ABB's high-voltage cable business that we announced last year, and transaction completed on the 1st of March this year. With this acquisition, we do become the market leader in both AC and DC high-voltage cables with a strongly increased market potential. We now have two large companies that are strong enough to stand alone as listed companies. We believe the split of NKT will provide the basis for future exploitation of the company's potential, so we will be able to add value.
Both companies will have a clearly defined investment profile so investors can better decide what they want to divest in. Nilfisk, that is professional cleaning equipment, and then we have power cables and photonics in NKT. The goal to have two independent listed companies is the same, but the model could be either a split of the holding company, this is a bit of a technicality, or an independent listing of Nilfisk. The ultimate goal is the same. We expect to do it in the second half of 2017. Let me try and give you a bit of more insight into the perspectives for the two companies going forward. In September last year, we announced the acquisition of ABB's high voltage business. There have been many speculations over the years about divestment of NKT Cables. We have always said we believe we are the best owners of that business.
We still feel that. With unique opportunity we now have where we are integrating ABB's high-voltage cable business into our existing cable business, we now have created a global leading player for both AC and DC high-voltage cables. This is an important reason for the acquisition, because ABB's high-voltage cables, they have been one of the biggest and best at the DC arena for a number of years. We will now get access to this technology. The market for projects based on DC high-voltage cables has great potential in the growing offshore, our wind industry for wind farms, and also the European grid is expanding. There is the SuedLink project in Germany that will carry electricity from offshore wind farms in the North Sea to Central and Southern Germany, where so far they have used mainly nuclear power and fossil fuels.
This is a transport best suited for DC voltage. In addition now, NKT has some of the market's best production facilities in Karlskrona in Sweden and in Cologne in Germany. We have an order backlog for offshore projects at both factories for the coming two years, which is very good. Organizationally, the two companies fit very well together. They have the same Nordic cultural background, and that will support the integration of the all in all 3,800 employees that we will now have in this area. Nilfisk has been a leading player in professional cleaning equipment for many years. Nilfisk has worked systematically to adapt products and segments to existing customer and market conditions. Nilfisk is active in a global market that has attractive earnings potential. But there are just a few last players in this area and very many small players.
Among the few last players, we see a privately owned German company and a listed U.S. company. Now you will be able to compare Nilfisk more directly with us as an investor. Still, the ambition for Nilfisk to play an active part in the consolidation of the cleaning equipment industry and to create organic growth. To have growth ambitions when we have that, we need the right leader. Therefore, in February, we took on Hans Henrik Lund as the new CEO. He will take over no later than the beginning of August, so he can play an active part in the listing process for Nilfisk. This is under item nine on the agenda.
We are looking for a mandate to continue the work of splitting NKT Holding, and we are also asking the AGM for permission to change the name of the company from NKT Holding just to NKT going forward. Two years ago, we launched new strategies in all three business areas. We have EXCELLENCE 2020 in NKT Cables, focusing on improved profitability and targeted growth. We have Accelerate in Nilfisk, centering on growth. In NKT Photonics, we focus on faster commercialization of our products. in 2016, we have continued the rollout of these strategies with an adjustment in Nilfisk in August. All in all, we have a satisfactory financial result for the year, and we are maintaining our long-term targets for each of these businesses. Let me now present the financial results to you. We have this intention to split NKT and therefore Nilfisk.
For purely accounting purposes, Nilfisk is considered a discontinuing operation. Therefore, this year, Nilfisk, as a supplement, prepared its own separate annual report that also meets all accounting criteria for a listed company. So kind of preparing life for Nilfisk as an independent company. It is not really that interesting to see Nilfisk on one line. It is more interesting for you to see, as investors, what is happening in between all these lines. So overall, I will give you the overall details, and then I will go more into each of the businesses. The financial result for 2016 was satisfactory in all three businesses. Our operational EBITDA margins were slightly better than the outlook we presented in Q3 2016. For NKT Cables, the development was driven by our projects business and the products business. In NKT Photonics, the main contributor was sensing and energy.
The primary effects in Nilfisk were increased revenue and improved gross margin in EMEA and in the Americas. In terms of returns, all three businesses improved. At group level, the return on capital employed increased to 11.7% from 10.1% in 2015. As we presented the annual report for 2015, we also launched a share buyback program up to DKK 550 million, so as to adjust and adapt our capital structure to our long-term targets. We managed to buy back shares for about DKK 310 million, corresponding to just under 3.6% of the share capital, before the program was entered in September in connection with the acquisition of ABB HV Cables. The shares that we had bought, together with the utilization of the mandate from the general meeting to increase the share capital by up to 9.99%.
All in all, these facilities were used partly to purchase, to acquire ABB HV Cables. The capital increase took place on 5th of October, yielded EUR 184.8 million, a bit more than we had thought, actually. That was great. We were oversubscribed both by Danish and international investors, so we can interpret that as a declaration of faith in the journey that we are on. After the capital increase, we had a net deposit of just over EUR 68 million. At that time, we hadn't paid yet for the acquisition of ABB. At NKT, we have a long tradition of paying out dividend to shareholders. Whenever the capital structure permits it, we do intend to distribute about one-third of a year's net profit. However, in September, we said, because of the purchase, the acquisition of ABB, we will not pay out any dividend this year.
Our debt, just for now, is a bit too high, and we would like to reduce that before we start paying dividend again. NKT Cables delivered a satisfactory result in 2016. Our revenue did go down to just over EUR 1 billion. It's a bit lower than expected at the beginning of the year, but as expected after Q3. The operational EBITDA margin increased to 9.7%, somewhat better than we guided at the beginning of the year, and 0.4% better than the expectation we announced in Q3. This positive development was driven both by projects and products. In 2013, we established the DRIVE efficiency improvement program, so as to improve profitability in NKT Cables. This is a journey we are on, and we are continuing in a positive direction. We are on track to reach the targeted return on capital employed of more than 15% by 2020.
NKT Cables consists of three business segments. We have projects. That's where we deal with high voltage on and offshore projects. Secondly, we have products, where we service the market for low and medium voltage cables and building wires. And finally, we have services and accessories. These are accessories also including what we call our railway activities in Europe. In the projects segment, we received three new offshore orders, so we have a full order book well into 2018. This supports our position as a solid, trustworthy partner with innovative solutions. In April this year, we took innovation to a new level by introducing the world's first 640 kV high voltage cables ready for sale. That's a big one. The Danish press called it a monster cable, not because it doesn't work, but I think because of the size, right?
But it's actually more a question of being at the forefront of developments, in light of the expansion of the European infrastructure planned for the coming 10-15 years. In the products segment, we were the first cable provider in Sweden to inform about the new EU regulations concerning fire classification of halogen-free flame retardant building wire. Halogen is an element of PVC, and it's quite harmful if there's a fire in a building. We introduced a new range of these wires. In the medium voltage range, we lived up to framework agreements with power plants in Northern and Central Europe. We've talked before about unsatisfactory development in our Chinese business. In 2016, in line with our EXCELLENCE 2020 strategy, we actually divested all our activities in China to a local supplier of high-tech solutions for electrified railways.
Unfortunately, in recent years, it had become more and more difficult for us to run a profitable business in China. There wasn't much prospect of improvement, and activities were no longer part of our core business, so the divestment was completed in Q4. To further focus on our core business, we also divested two other units, our automotive cable business in the Czech Republic and our cabinets business in Germany. They were divested. In the year under review, we've also executed many other initiatives. We have been working hard to turn the trend in our high voltage onshore segment, which is part of our projects business, because the onshore market has overcapacity. With some small and medium-sized projects and only a few large contracts, it makes it difficult for us to achieve adequate profitability. We will continue the work of turning around the development in this segment.
We have completed a number of initiatives within the four must-win battles across the organization. Firstly, on 1st of January this year, we implemented a new, more agile organizational structure, designed to support increased customer focus and to enable us to better utilize various synergies through increased cross-company collaboration. Secondly, we have strengthened our R&D function. Thirdly, we have taken important steps in digitalization, not only optimizing our internal systems and processes, but also, we want to be at the forefront generally, by saying that more digitalization and utilization of opportunities, they will be an important driver in the cable business in the coming years.
I'd also like, just one last time, to go back to the acquisition of ABB HV Cables, which to a large degree is also an important step in our strategy of developing and growing our offshore products business. Until the acquisition of ABB Cables, our projects business accounted for approximately 1/3 of revenue. With this integration, we expect that going forward, it will account for slightly more than half of the revenue, and this will give greater volatility as well as open up for higher profitability. I've already talked about a number of reasons why NKT and ABB high voltage cables are a strong strategic match when it comes to being a leading industry pair. We have some of the best production facilities in the market, and we share a common Nordic and cultural background. I also like to emphasize another two reasons for this acquisition.
First of all, we can now offer customers a strong and complete product portfolio. We were previously strong on AC solutions, but now we can offer the entire gamut in both AC and DC. Secondly, we have identified a number of synergy effects that will amount to approximately EUR 30 million at the end of 2018. They are found primarily in an improved use of the production facilities in Karlskrona and Cologne. For instance, we've already initiated a process into getting the Cologne plant approved for production of high voltage cables based on the DC technology that we have received together with ABB. To complete our project set up, we have taken delivery of the state-of-the-art cabling vessel, which was included in the acquisition of ABB HV Cables.
You see it on the slide now, if you were up early this weekend, you may have seen it because it passed through the Öresund on its way. Now we are one of a very limited group of power cable providers with our own vessel, it means that we can offer our customers turnkey solutions from design and production to installation and service. This gives customers increased product flexibility and lower execution risk. It also gives us a lower risk because we can control far more elements in the value chain, it also means that sometimes when we need to hire in external vessels, they are more honest in their dealings with us because we have our own vessel already, that's a positive.
The acquisition of ABB HV Cables is a milestone in the development of our company and the start of a new chapter. Not only are we now a leading global cable supplier, but we also have a prospect now of carrying on the stock exchange listing that is now held by NKT Holding, therefore, we've decided that the future name for NKT Cables will be NKT. This creates a direct link with our history of 125 years and a clear profile for the future. With effect from 2nd of May 2017, the entire business will get a new name and logo. As part of this process, we have produced a short video, I'd like to share it with you now.
Got it.
Right. Now I'd like to talk a bit about NKT Photonics, then I'll get back to Nilfisk. NKT Photonics also delivered satisfactory results in 2016. Organic growth came to 7%, driven by the sensing and energy segment, which also drove the positive development in EBITDA margin, which increased to 14.7%. NKT Photonics manufactures and markets products in relation to imaging and metrology, which are lasers that make it possible to have images created out of very small structures such as skin cells. Sensing and energy lasers for application in monitoring and measuring equipment, material processing lasers for ultra-precision cutting of hard materials such as glass and metal. These segments are also the basis of NKT Photonics' strategy of achieving commercial scale, its five elements, the strategy's five elements are shown on the screen behind me.
At last year's AGM, we announced the acquisition of the U.K. company, Fianium, a leading supplier of fiber and supercontinuum lasers. The acquisition was a strategic match for us and an important step towards becoming a leading industrial supplier and achieving the commercial scale that I've just mentioned. The integration of Fianium has gone according to plan, I can tell you as much now, 12 months later, and it's now completed. It means that NKT Photonics now covers a larger geographical area and can offer customers a broader selection of products and better service. Also, we have realized a number of synergies in sales and production, and we've strengthened our competencies in the development of industrial solutions. We've also integrated LIOS technology, the business which primarily constitutes our sensing and energy segment, so that we now have one name, NKT Photonics, in our dealings with customers.
Finally, on the basis of what I've just mentioned, we have signed several important framework agreements with leading industrial customers and established cooperation with partners who are higher up in the value chain and who therefore can give us access to new markets. All this is important in order to achieve the scale and volume that are critical for NKT Photonics to fulfill its ambition of becoming a significant industrial player. Let me now go to Nilfisk. For Nilfisk, development will be driven primarily through growth, and growth is at the heart of the Accelerate strategy, which was launched in the spring of 2015. We introduced a program of commercial excellence aimed at increasing market share, and we made significant investments in sales and service.
We still believe that this is the right thing to do, but in August last year, we had to accept that growth was not achieved as fast as expected. We introduced a new organizational structure and business model, which is simpler and which builds upon customer orientation, meaning that it reflects the way in which Nilfisk segments its markets and customers. Clear assignation of roles and financial responsibility. Simplification, what we call a lean structure, which is stripped of as much complexity as possible to reduce the distance between the products and the customers, and speed and agility, which has to do with responding rapidly to change demands and make quick decisions. This modified structure was fully implemented at the end of 2016.
At the same time, we saw a potential for additional savings, for instance, in relation to production procurement and a general reduction in complexity, and we expect the cost savings to have an impact on EBITDA of EUR 35 million by 2019. As already mentioned, we have appointed Hans Henrik Lund as new CEO of Nilfisk, and he will join us in early August. For the past 25 years, he has held a number of managerial positions in global companies. He's been 10 years with Danfoss, working with heating automation, and he was, for a 10-year period, in charge of Jabra and Nokia mobile accessory companies. He's currently CEO of a Finnish company called Helvar, and we're convinced that with him, we have the right profile to take Nilfisk forward as a listed company. I'd like to thank Lars Gjødsbøl for having been acting CEO in the interim.
He has many years of experience with Nilfisk, so the company is in safe hands. Nilfisk has the market's broadest product portfolio in floor maintenance equipment, vacuum cleaners, high-pressure washers, and outdoor equipment for sweeping, mowing, snow clearance, et cetera. About 90% of revenue comes from the professional segment, with the remaining 10% coming from domestic users. I'm quite sure you have seen some of our products when you go to the DIY markets. We sell a lot of this in Denmark. Nilfisk spends approximately 3% in developing new products. That's 3% of revenue. In 2016, we launched 34 new products. I'd like to highlight some of them. SC250 is a scrubber that was recently awarded for its design. That's the one on the right-hand side behind me.
It's fairly small, and it's usually used by cafes, restaurants, and shops, and it caters to a brand-new user segment that would otherwise use manual cleaning. Then we have the MH series. That's the one on the left-hand side. Is a new generation. No, I'm sorry. I've said this the wrong way. It's to the left of me. Anyway, these high-pressure washers are intended for the professional segment. They have low energy consumption and use both hot and cold water, which means that you can remove a larger variety of dirt than machines with only one water temperature. But the largest product launch was Horizon, which is a range of smart, technologically-advanced, and automated cleaning solutions. Today, a lot of cleaning equipment is operated manually, but Horizon offers both manual and automatic control facilities, and this is a decisive step into the digital world.
The first machine will be launched in selected markets in the first half of 2017. We actually have a film that we'd like to show you what the first Horizon machine can actually do. Take a look at the screen. What you see initially is that the operator shows the machine which areas to clean, and then it can either do it the way he indicated, or it can do it the way it would like to do it because it is smarter than what he has been planning. It can work during the nighttime. It doesn't need light. This is amazing. Of course, you don't want the machine to hit anybody or anything while it's working. But this is a very important piece of equipment, and our customers are keenly interested in this type of equipment.
I'd like to conclude my report for the year with looking at Nilfisk. It was a strong fourth quarter, so Nilfisk delivered 3% in organic growth in 2016 as expected. But for the first time, we went beyond the EUR 1 billion mark in revenue, reaching EUR 1,059,000,000. This was driven mainly by positive development in Europe and the Middle East and Africa and the Americas, and also impacted the EBITDA margin, which increased to 11% before special items. This was in the upper range of the initial outlook and significantly higher than the adjusted outlook later that year. ROCE also increased to 14.6%, which is on track for the long-term target of 18%-19%. Now, let's have a look at the work done by the board of directors. Our governance model is fairly unique, and we still find that it brings value to our business.
As you see behind me, we hold a great many meetings in the course of a year. These are only the formal meetings. We have a lot of talks on the phone and informal meetings that we handle in between the formal meetings. These are meetings on the board, but also in the companies. We have a close dialogue and cooperation with management and the functions in the holding company. This is also reflected in the self-evaluation exercise that the board carries out every year. This year it was Deputy Chairman René Svendsen-Tune that dealt with it. We act as a team. We trust each other, and it is possible not to always see eye to eye with regard to things. It means that all board members elected by the AGM are up for re-election.
Personally, I appreciate working with my colleagues, and I am also very pleased that you have all decided to remain, at least for the next year, so that together we can carry out our agenda. Again, this year, we asked the general meeting to approve the remuneration system that has been unchanged since 2015 and is a reflection of our governance model. After the split of NKT Holding, we will not see any market change in the remuneration system, but we do intend to revise the system and handle the businesses as two separate listed companies. You see on the screen what we will plan with, but we will come back to this later in the agenda. We have approximately 9,000 employees all over the globe, and this has been another year with a commendable effort on the part of these employees.
The satisfactory financial result is in large measure due to their efforts, and on behalf of all members of the board, I would like to thank the employees and everyone in the company for continued commitment to the success of our business and for helping prepare for the new structure with two listed companies. Although our general structure is undergoing change, we will still maintain ambitious expectations with regard to the financial performance in 2017. As I have already said, we are preparing for a split of the holding company, and that is why our expectations are expressed on an individual company basis. On the 11th of April, we communicated that we expect NKT Cables, including ABB, to realize revenues in the range of EUR 1.4 billion and an operational EBITDA of approximately EUR 140 million.
In the annual report 2016, we also stated that for NKT Photonics, we anticipate organic growth in the range of 10% and an operational EBITDA margin around 15%, and that for Nilfisk, we expect organic growth in the range of 2%-4% and an EBITDA margin before special items of 11%-11.5%, which means that we expect growth all over. 2016 was a busy year, and it was a landmark in our history. I expect the same to be the case for 2017. We must keep Nilfisk on the growth trail and ensure that we go through a successful integration of ABB HV Cables. Last but not least, we must complete the split of NKT Holding into two independent listed companies. A provisional timeline for this appears on the screen behind me now.
If it all pans out, we will meet again this autumn to bring this major step in our 125-year history to make it come true. Thank you very much for your attention.
Yeah. Thank you. Now, before we open up for a discussion, I would like to tell you what the auditors have concluded, as stated on page 47 in the annual report for 2016. I have translated it into Danish. It says that, "It is our view that the financial statement and annual report give a true and fair picture of the assets and liabilities and financial position of the company as at 31st of December 2016, and that the result of the groups and company's activities and cash flows from 1st of January, 2016, to the end of the year, are in accordance with the international financial reporting standards as approved by the European Union, and also are in accordance with the requirements in Denmark concerning listed companies." There is also a statement concerning the management review.
It says, "Based on the work we have carried out, we conclude that the management review is in accordance with the consolidated accounts and financial statements, and that the management review has been prepared in accordance with the Danish requirements concerning listed companies. We have not identified any materially incorrect statements in the management review." So this is what we normally call an unqualified report from the auditors. Right, then. The floor is open for a discussion. There are three people who have already asked for the floor, and the first one will be Claus Wiinblad from ATP, the Danish Labor Market Supplementary Pension Fund. You have the floor.
Thank you. As you heard, I am Claus Wiinblad, and I represent the pension fund, ATP. I would like to start by thanking the chair of the board for his report and his presentation of the financial statements for 2016. This AGM really is historic, because there is going to be this decision to split NKT Holding into two companies, Nilfisk and NKT. So this is the end, really, of the holding company and conglomerate that NKT has represented for more than 100 years. The way I see it is not a big surprise that this is going to be the end goal. There have been various speculations concerning the future of NKT Cables. Are you going to divest it, and then list Nilfisk independently? So you went for a different solution.
The acquisition of ABB HV Cables. That provides the basis for a very strong player in both offshore and onshore cables, and combining, as we heard, AC and DC technologies. This is really an interesting solution that has the potential to create much more value, if this is a successful integration, more than you could have had established just by selling off or divesting NKT Cables. I would also like to praise you for the willingness to actually go for an offensive value-adding strategy, rather than just giving in and pursuing a more defensive strategy as you would have done if you had divested NKT Cables. I think what you did is really positive. One big advantage is that this acquisition creates a company that is big enough to attain critical mass, and therefore, you can have independent listing on the stock exchange. That would not have been the case for NKT Cables in its old version.
Furthermore, I also see it as a big advantage that Nilfisk will now become an independent listed company. The conglomerate is no more there, and you will only be focused on developing Nilfisk here as an independent listed company. Nilfisk is also in a situation of getting a new CEO. There are some clear challenges for the new CEO. You need to strengthen the commercial agenda in the company, so that we can have high organic stable growth where Nilfisk can gain market shares. You also need to execute the cost program that has been launched. Finally, you need to be able to actively participate in the consolidation of the market for industrial cleaning equipment.
All in all, in all three parts of the company with the splits and the operation of the companies, I believe there is no doubt that this is going to be a very busy year for NKT. I look forward to the split that will be carried out this autumn. With these words, I would like to congratulate employees, board, and management, and I wish you all the best for the amount of work you have to carry out in the coming year.
Thank you. The next speaker will be Mr. Karsten Kristiansen from the Danish Shareholders Association.
Thank you very much. I am Karsten Kristiansen, and I represent the Danish Association of Private Shareholders. I would like to thank the chairman for a good report, and I would also like to give you praise both for the split and the acquisition of ABB HV Cables. I have said from time to time that it is better to do acquisitions than to pay back long-term debt. Also, the split of NKT Holding is a good idea. NKT Cables and Nilfisk have been together in the same group since the late 1980s, when Nilfisk was taken over by NKT after Mr. Riskær Pedersen had failed in his attempt at acquiring Nilfisk in a hostile bid. That is why this is a natural consequence, and we look forward to this split now into two well-run listed companies.
The interest rate has been historically low for a long time, and there have been negative interest rates for short-term loans, but I've also been told that perhaps this is about to come to an end. In connection with the acquisition of ABB's cable business, you've had to take up loans. I'd like to hear from you, how about the interest rate risks in raising loans for the part financing of this acquisition initiative so that we don't get major negative implications because of this? We've also seen that your cable business has improved its earnings margins, 7.9% in profit before tax, interest and depreciation, and 9.3 in return on invested capital. On page seven and 13, it says that you expect a return on invested capital to go beyond 15% in 2020.
Now, I would like to know what expectations you have with regard to net result, earnings margin, and earnings per share in 2020. Last year in the accounts, you see the margin decline to 10%. That was in 2015, but it recovered in 2016 to, I think, about 11%. But we've been as high as 12% previously. I'd like to hear from the board whether there is the possibility of coming back to the 12% level. My last question in relation to Nilfisk, I see that, as we were told, that the fourth quarter looked promising, but I see that sales all over the globe have developed very differently from one region to the next. 9% in the Americas, whereas Asia saw a decline. What is the reason for these very different developments in sales based on a geographical angle?
There's a plant in Mexico, and with the new American president who has created some tension in the relationship with Mexico in relation to customs, tariffs, et cetera. I'd like to hear if Nilfisk, who has plants in both areas, both in Mexico and the U.S., might suffer because of this, and whether you have had any thoughts about how to deal with this new situation in order to contain any damage that might occur in relation to customs barriers that might be put up. That's what I wanted to say to you. Thank you for your attention.
Yeah, let me just respond to the first question. Before I do, I'd like to thank you, Claus Wiinblad from ATP. Thank you for your support, and thank you for your nice words. Yeah, it makes more fun to be offensive, to have a value-creating strategy. It's more fun to develop than to divest. Whenever we can, we will. We need the support of shareholders, and we certainly have received that in this process, so thank you very much. As regards to Nilfisk and the agenda of the company, we agree very much. This is a commercial agenda. It's the most important agenda there because growth in that business can create very much growth for us and for you shareholders.
We must deliver on the cost reduction program that we have launched. We need to be able to continue participating in the consolidation of the industry because that also creates value. All three things are important to us. Thank you for your words of praise. Thank you also to Karsten Kristiansen. It is quite true, I am saving your interventions from the different years. You have said it to us before. We should make acquisitions rather than paying off debt. We listened to you, didn't we? We found the right company to acquire, and we have done it, so that was good. You also had a number of questions. Let me just repeat the first question. That was interest rates. Now we will have debt, and interest rates are historically low.
Karsten Kristiansen, of course, couldn't predict where the interest rates are going, but a high debt and low level of interest rates. What do we do? Do we do any hedging, or are we subject to any fluctuations? Our policy is that we try always to have a medium-term and long-term approach. We think we should go for short-term interest rates. That creates most value for shareholders in the long run. Of course, we cannot live with big fluctuations when we have high debt. We do not speculate, but we do actually sort of freeze about 30% of our interest rates, so they have no fluctuation. 70% of our debt does have fluctuations. At the moment, we will freeze more than the 30%, but we are not trying to predict interest rate developments. You also had a question concerning the development of earnings in the cable business.
Could we be more specific about 2020? We often get that question from our shareholders, where we say, no, we do not want to give that long-term guidance. It is not suitable for us, for our shareholders. We do have a goal. We want to have the return on the invested capital to bring that up to 15% in 2020. That is our goal, and I think that is the most important for long-term value creation combined with growth. We do not want to be more specific. We will come back to 2020 when we get a bit closer to it. You talked about possible improvement of margins in Nilfisk. The first question was, we used to have a margin of 12%, can we get back up to that level? The brief answer is yes. We will do that. You had another question, say we are growing more.
There is Europe, there is the U.S., and then there is this decline in Asia. Why is there this big variation geographically in the development in sales? It is a question of the underlying growth in the economy. That is the first sort of driver of our growth. Second element is our market position, and typically, that is why we are growing a bit more than our big American competitor. We always tend to grow more than they do in Europe, with a few exceptions. With a few exceptions, they tend to grow a lot more than us in the U.S. because of the market positions we have. If we can cover a market not only with good salespeople but also with a good service organization, it is easier for us to land big contracts with big customers, and that generates more growth.
It's difficult to enter the market if your competitor has a big service organization. To have a big sort of footprint on the market is important, and that is the driver. I think those are the most important points. It also talks to us about the market potential. We are trying to address that by investing in the U.S. It's a big country. You can't go for all of it all at once, but you can go state by state and give a better offer to other customers we'd like to win there. You also asked about the new U.S. president. We have production in Mexico, and if there were to be a customs wall, what could the impact be and what are we going to do?
I'm not going to give any sort of political views, but it has been kind of difficult for us to understand specifically what the policy of the American president is in this field. We do have production both in the U.S. and in Mexico, so we do have plans for what we will do if we see a high customs wall or a lower one, but one that makes it difficult for us to get products from Mexico into the U.S. With a bit of contingency planning, we can overcome that. But what it will mean for our products in the U.S. is that they will become more expensive. Our products and the same for our competitors, because many of the components we use come from China.
If there's a customs wall there, the American prices will suffer, American consumers and customers will suffer, and we as an industry might suffer. But in that field, we are not better off or worse off than our competitors. I think that was it from me. Thank you. Thank you for the words of praise also. Thank you.
Thank you.
Says the chairman of the meeting.
The next speaker is Mr. Bjørn Hansen.
Thank you. My name is Bjørn Hansen. I have a background in engineering and I have been dealing with exports. I have owned some businesses, and I have also been an investor, and I still invest. Thank you to the chairman of the board. Good presentation, good report, and I think there are many positive signs here. Perhaps I am a bit too optimistic, but I find that you are well underway in product development, and you are working in another direction than others. You say that you have decided on a name. I have taken the liberty of writing a name which perhaps contains a certain value. Not close to the Coca-Cola brand, but still, you are older than Coca-Cola. I received a four-page Danish set of accounts. Then I received something on my computer, which I found it very difficult to read after I had printed it out.
I tried to increase the type print or the typeface, but it was very difficult. Apparently, you have two different IT systems. I think you need to change that. NKT Holding, which is what you call yourselves now. It says here, founded in 1898, Nordiske Kabel- og Traadfabriker , and then we got the vacuum cleaning business, Nilfisk, and later more was added. Then I suggest that you call yourself NKT-Nilfisk. Short and sweet, because Nilfisk is much better known than NKT. Maybe in professional circles, NKT is a household name, but Nilfisk contains a value, and I do not see any problem in people all of a sudden finding out that there is a connection also to cables and nails and that kind of thing. I do not know if name protection is something that you have been involved in and how much you do to protect your name.
After the introduction of a European patent, there are going to be some problems with the U.K. after Brexit, but names should not consist of 28 different elements. It should be short and sweet. If you do that, you can also include others as we move along. But use Nilfisk. People will say, "Yes, of course, Nilfisk. Once upon a time, they produced some small electric engines, and then a motorcycle at one point, and then the small industrial devices." You have a Swede on your board, a very competent person working with Vestas. Husqvarna has also been a manufacturer of this. Hoover, I remember from my time in the States, Hoover is not Hoover Dam. No, Hoover is a vacuum cleaner.
I thought, "What is that all about?" But women were very much interested in that at the time, but also men who knew about industrial affairs. Now, a bit of history and a bit of politics, too, but it is a question of finding out whether NKT still has some receivables, because at one point, the daughter of the Danish queen marries the person who was later to become a tsar in Russia. In 1869, Store Nordiske opens up a telegraph line between Denmark and Russia. In 1872, this line is opened up, going from Europe to the Far East through Siberia, and this was a major loss to Danish businesses after the Soviet Union came about, and there was a freeze on a lot of things from previously. Then the new cable from Denmark to Russia was opened by Mr. [Yeltsin] at some point.
I just wonder if we received all the money due to us in connection with what I have just outlined from Russia and the Soviet Union. You should be very careful about investing in Russia because you never know what's going to happen. Putin, he's just tsar number four in the line. Every year, I go to Munich to the solar fair, and I see wind turbines there, energy, lots of cables, small specialty cables that I'm quite sure you know all about. It's in late May, three days, and I hope that you will send a couple of employees there to attend the fair. I have a press card, and at least 400 newspaper reporters attend, plus many politicians and decision-makers. I don't know if you have tried to tap into the potential of this fair. How about producing a small leaflet in German?
I'm sure that you can afford to pay that. This is a major language, and it will be a good business card for you to use. Don't forget Nilfisk. I also want to know the following. I see that some of your pictures are in three or four colors. When I get a printout, I find it difficult to tell the difference between the light blue and the dark blue. I'd like to know the market share in the EU, the U.S., Asia, because there's a decline over there, and that's a bit difficult to understand. Is it a question of copying that has caused you to suffer in Asia? You wouldn't be the first. Mr. [Lung Shu], for instance, had a major problem with the Japanese and copying of his company's products.
I remember that he sent a group of people over there to check what the problem was, and they came home and said that copying was widespread. All the control systems from his company's products had been copied down to the last detail. Today, increasingly, you see a lot of copying going on. I hope that you protect your products properly. I'm quite sure that you will achieve your targets if you make sure that your products are well protected. Growth and environment should go hand in hand in a business, in particular metal. I would like to hear which EU programs that you have applied for funding from, in particular, in relation to third countries, and also regional development funding. I see that you have now acquired a vessel. That's good news.
These monster cables, can they be used both on land, below ground and in the air? How about in the oceans? What about when you need to do some repair work? Perhaps you should have the same type of service agreements that Vestas is operating with, because it turns out now that they make more money from their service agreements than they make money on the wind turbines. Congratulations with your results up until now, and I hope that the companies will be allowed to continue with good profit margins going forward, so that when dividend is paid to members of the board and the executive management, it will also go to shareholders. We don't see a repeat of what has been happening in Nets, where it was one person who got everything. Thank you for your attention.
B jørn Hansen is not the only one who likes our Swedish member of the board. We also like him very much.
Thank you, Bjørn Hansen, and thank you for your words of praise. I will try and see if I can address these questions one by one. Your first comment had to do with our name. As I explained in our report, we want Nilfisk to be called Nilfisk. It is brief, it is precise, and it is a good brand. Fully agree with you. We will utilize that going forward. Under Nilfisk, there are local brands that relate to the individual markets, so we can approach consumers with different products. But Nilfisk will be the name of our professional cleaning company. In cables, we will continue with NKT. It is not going to be called NKT Cables, just NKT. This is how we want to continue this old name.
You say be as brief as possible and use the brands, and fully agreed. We will use the brands as best we can. About the financial statements, it is a bit of a shame to hear that it does not look so good when you print it, and the colors are not so good. All I can say is give us the feedback you have here after the meeting. See you print it out. We will take it with us and see if we can correct it. Thank you. There was also a question concerning the old big Nordiske Telegraf company . That is not NKT. NKT has not had these problems with Russia. That is GN Store Nord. But I have worked both places, so I am very fortunate. But I will try to respond on behalf of GN Store Nord. Well, I can say a little bit because I used to work there.
When I worked there at GN some years ago, I went on a visit to China. They have a main street where GN owned two wonderful buildings. You can still see it. Very nice sort of, what is it called? Like a bronze plaque that says, "This building used to be owned by GN Store Nord. It was nationalized by the Chinese authorities, so and so." I came back from my journey, wrote a nice letter to the Chinese authorities, asked for them to return the buildings to us. I actually got a response. They thanked me, but they considered the property now to be Chinese. So that is what came out of that. I think that is all I should say about what is happening in GN Store Nord. René Svendsen-Tune, he is also from GN Store Nord. Maybe he can add something if he wants to.
Anyway, you have this question concerning the translation of the four pages into German. We do have local marketing people that do approach local markets with what they think is required whenever we participate in fairs, so in relation to customers, media, and so on. So lots of things are translated into a lot of different languages. So I am confident we approach the German market in the right way. That is not a decision made in Copenhagen, even how good our colleagues are. I think it is best to leave that kind of decision to Germany. We do have these things available in many languages. So I fully agree with what you said on that point. Your last comment had to do with services, our service business, if you like. Vestas, as you mentioned, services produce high earnings.
This is one of the things that we actually get now that we have acquired ABB. ABB has a very well-functioning service business. Andreas, who is on the front row, he is in charge of a projects business, and he came with the company, if you like. So the service business came to us with the acquisition of ABB, and there is a great potential we have not really utilized, and hopefully we will give you some positive feedback at a subsequent AGM. Thank you for your words of praise, and I hope I have addressed your questions more or less adequately. Thank you.
Thank you. No one else has asked for the floor, but I can see there is one person coming. That is Mr. [Keld Beyer]. You have the floor.
Y es. I want to congratulate you on the result you have achieved and a good report. Still, I think there are things that I want to criticize in the company, things I would like to point out. You spend a lot of time and money on talking to us about who will be members of the board, but you do not have financial statements available for shareholders here who come here to approve the financial statements. That shows lack of respect towards shareholders, that we cannot get a copy of the financial statements, one that you can actually read, because what you send to us and what we get on our own printer is terrible. It is hopeless. It is like you are not looking at your own material.
I think they do it elsewhere, but it seems like you are not looking at your materials. You are not living up to the requirements that we have from NKT. Shareholders are owners, right? Owners are supposed to check that the company lives up to what we expect. We also are kind of auditor. Auditors check that the financial statements are in accordance with legislation, but shareholders need to check all sorts of other things. It is not good enough to talk to us in English, a language we, yeah, we do understand normal English, but we do not understand technical English, financial English. I asked at another AGM, how many people present were able to understand all of the financial statements in English? There were five people who put up a hand and said, "Yes, we can understand."
Five out of so many can really understand everything in the financial statements in English. The rest cannot. That is not a way to treat shareholders. In the Børsen newspaper, about a year ago, in C20 companies, it was Danish shareholders that held more than 50% of the shares, but now it is foreigners that hold more than 50% of the shares in Danish companies. I think that is a dangerous development. Maybe it is a consequence of the fact that we no longer have the financial statements in Danish so that Danish shareholders can understand what is happening. When you cannot understand the financial statements 100%, you are in trouble. So I really encourage you to provide proper material to the Danes, to provide financial statements in Danish, also online. You save some money by not sending out the financial statements to shareholders.
What you can do instead, when you get into the financial statements, you would be able to click on the list of contents, and that should take you automatically, the item you clicked on, it should take you automatically to that particular page. If you are at the income statements, you will be able to click on a note, and that should take you automatically to that particular note so that you can check out things. If you do not send out things to shareholders, at least you can do that, provide that facility. You are not supposed to just save money on your services to us. We are the owners. We are not being treated appropriately. I have decided today that I am going to vote no to your financial statements. I am not putting up with this. You are not respecting us as shareholders and owners.
We cannot check things when we get things in a language we do not understand 100%. Thank you for your attention.
Thank you. This is something that we are discussing every year at the AGM, and I understand the points of view. But there are many different points of view in our group of shareholders. We have tried to reduce to a minimum the costs that go into printed matters. We previously devoted huge amounts, and we have been able to achieve a reduction, but we still find that we are very informative. That is one thing. The other thing I want to say is that there are different ideas to in what way accounts should be available online. Some like the click function, that is what Mr. [Beyer] is talking about, but some want it to be something that looks like an ordinary document that you just go through by use of arrows.
We listen to the input, and we try to take account of what the majority of our shareholders would like. But I know there are different points of view, and we are always willing to listen to criticism and to listen to proposals for improvements. And we have tried to take account of comments made by you on previous occasions. You talked about too many clicks that had to be used in order to get to a given point, and we have tried to do something about it, but we are still very open to criticism and feedback. We do not have any wish expressed by a majority of shareholders with regard to language. It is most efficient for us in the organization to use English. I do not recall. Did you put another question? Have I answered all your questions? I have not. I exhausted the list of questions that I managed to note.
Then there is a comment without a microphone from Mr. Beyer. The Chairman of the meeting says.
"If you wish to comment, you will have to raise your hand and you will be introduced by me. I will give you the floor, and you will come up here."
Well.
Says the Chairman of the Board.
I actually invited Mr. [Beyer] to make a comment here. The question was, I know that you could not all hear this, but he made the comment that it was not acceptable that we are trying to cut down on expenses to matters relating to shareholders. It is very expensive to print accounts, and we have had to scrap printed booklets every single year. If a shareholder would like a printed set of accounts, we will print out a copy and send you a booklet. All you have to do is send us an email and we will make sure that you get a printout.
" Thank you."
Says the Chairman of the meeting.
Mr. [Beyer], do you wish to take the floor again? Mr. Bjørn Hansen.
I have three pages printed out. I did not print out all 157 pages, but I printed out about 20 or 30. But the letters are 1 mm in size. The page, I do not know if you can see all the empty space. Someone talked about waste. 52% of this page is wasted because it is empty. The letters are bigger for NKT, and when I got the convening notice, I could actually read the words because the letters there are 2. 5 mm , but it is as if there are three different systems. I sit there at the receiving end wondering if it is my printer that is breaking down.
I talked to an IT specialist the other day, and he said to me, "I think you need to point this out to them. I think you should do what others have done. Give us a brief summary in Danish." A set of quarterly accounts. I can add four numbers for one year and get the full year figure. That is not a problem. But I remember from my time in the U.S. that there is a major difference between American accounts and Danish accounts. What is the difference? Well, it depends on what the requirements issued by the stock exchange are. But in Sweden, you can actually get accounts in Swedish. Swedish Match, they publish their accounts in Swedish, and you can actually also see the page numbers. You talk about converting into a higher number of shares. Very good idea.
Start the printing press, but I think that we should be allowed to read what you write.
Thank you. Mr. [Keld Beyer].
Yes. The click problem. Yes, it was a problem before. It is still a problem in many companies. It should be just one or two clicks, and you should be in the income statement or the financial statements. What I said this time around was that when you have opened the financial statement, it should be possible to click your way quickly so that you do not have to spend a lot of time scrolling up and down. That is not good enough for shareholders. You would not do that on the board, so do not do it to shareholders. This thing about, yes, you can browse through, that is very irritating because you cannot print it out afterwards. What I often do is I print out the most important points. Please bear that in mind. Ask your own mother to look at the financial statements.
Ask her to find things in the financial statements and print them out. You will see how many problems that she will have. Thank you.
Thank you. I would like to hear if there is anybody else who would like to speak. Yes.
This is [Gert Gülvig] who is getting the floor. Thank you. I would like to thank you very much for all the things that have happened here today. It is a good thing that you are going the way you have. I have spoken here before from the rostrum. It was Nilfisk back then. We had sent something about a vacuum cleaner that you could have like a backpack, and now you have actually started looking at that. I looked at Horizon. I used to be an old employee of NKT and I have been thinking. I have looked at all the instruments. I used to be a cleaner back then.
Buildings with straight corners, but all machines have round corners. So how are you going to do the cleaning in the corners? Well, you showed us that. When you make a new machine, ask your technicians to find a machine that can actually enter the corners, because all architects have these 20, 30, and 90-degree corners. That would be a good thing. Please bear one thing in mind. Be at the forefront all the time. Be ahead of the others, then you will simply beat Hoover and the other guys. That is one point. We are not going to get any dividends today, no, but we did get a cost. It is the first time that I have attended a shareholders meeting where I had to pay DKK 60 to park my car after going 50 km to get here. That is really crazy.
Normally, when you come to a shareholders meeting, say, "Come in and get a voucher, a ticket." Or at a hotel, you get a ticket you put in your front window. So there you are saving money you should not save. You should bear in mind, and it was just said, take a look at the people in the room. We are all gray or white-haired. Practically all of us. Poor eyesight, hearing, terrible. That is one point. The print is so small, we do not stand a chance. Thank you very much.
Thank you, [Gert Gülvig]. This thing about the small print and the tired eyes, I did not wear glasses two years ago, so I know what you are talking about.
"It is going to get worse,"
Says the former speaker.
Okay. Well, thank you for your words of praise. Highly appreciate it. This thing about cleaning in the corners, you are absolutely right, it is a problem. We are trying. The machines we have today have these soft brushes. The brushes can move, Horizon can do it, too. Actually, it can get almost into the corner. We have not found the perfect solution yet. When we get that fixed, if we introduce that prior to the rest of the industry, we will have the lead. We are working on it. It is absurd that in a technologically advanced world that we have that kind of challenge. It really just tells us what is going on in this field. I heard what you said about parking, and I made a note of that. Thank you.
Does anybody else wish to speak? If you would like to speak, come up to the rostrum. That is not the case, so we can move on on our agenda. The next item, that is then, first of all, items one and two. We have now taken note of the reports with the supplementary comments that we have heard today from shareholders and from the board. Item three, that is the adoption of the annual report. On the basis of the postal votes and the proxies, I can see that the annual report has already been duly adopted. I have noted that there is one shareholder who votes against, but it has been duly adopted. In accordance with the Danish Companies Act 101, subsections 5 and 6, a shareholder can ask for a complete explanation of votes, also a complete calculation of the votes in favor or against.
Is there anyone in the room who would like to have that complete vote? If not, we will just say that the annual report has been duly adopted. No comment, so that was item three dealt with. Okay. There was a comment, just a person from the floor asking what this means then. This is a clarifying question.
Says the chairman of the meeting,
What does it actually mean? What the votes of those present actually mean. All I am saying is that when you take account of all the postal votes and the proxies, then I can say that no matter how the votes are in the room here today, the motion has been adopted. I can give you about 99%, a bit more than 99% have voted in favor. It has been verified in advance. If you want, if anybody wishes a complete calculation of the percentages according to the law, you can ask for it and we will carry out a voting procedure.
We cannot, in the nature of things, have a precise figure when we have not actually carried out a vote here in the room, but it is in that region. That brings us to item four on the agenda. This is where the board of directors is proposing to retain the profit and pay no dividend to shareholders.
Does that give rise to any comments or queries in addition to those that we have already heard? I can tell you that the AGM cannot adopt a higher dividend. That is what the Companies Act says, than what has been proposed by the board. There is nothing to vote about. Therefore, I hold the motion from the board to have been adopted. That brings us to item five of the agenda. This is the question of discharge of the executive management and the board of directors.
That is what the board is proposing, to grant discharge to the executive management and to the board of directors. Discharge in regard to matters specified in the annual report for 2016, but only matters specifically specified in the annual report. On the basis of proxies and parcel votes, I can also say that discharge has been granted. Again, I would like to hear if anybody wishes to have a calculation of the precise number of votes. That is not the case, that brings us to item six. This has been the motion from the board of directors concerning remuneration of the board. I will just take you through it quickly. It is proposed that for 2017, the board should have the following remuneration. The chairman, DKK 900,000, vice chairman, DKK 600,000, DKK 300,000 to each of the other members of the board.
It is also proposed that the chair of the audit committee should receive DKK 200,000 and the second committee of the audit committee should receive DKK 100,000. The remuneration committee's chairman and the nomination committee chairman will each receive DKK 100,000. The other member of each of these two committees will receive DKK 50,000. Furthermore, it is proposed that the chairman of each of the working committees that have been established in NKT Cables and Nilfisk, the chairman should receive DKK 200,000 and the other member of each of these working committees will receive DKK 100,000. Furthermore, in NKT Photonics, in that working committee, the chairman should receive DKK 150,000 and the other member of that working committee should receive DKK 75,000. The chairman of the board, briefly in her report, mentioned these motions. Are there any questions or comments concerning these numbers?
There is a comment.
[ Gert Gülvig].
Thank you very much. When I look up there, it says chairman of the Remuneration Committee, DKK 150,000. What are they doing? They are saying, "What should we give the others?" This is money we can save, also the next one. Maybe you can then pay for parking and buy us a drink. Thank you.
Thank you. Anyone else who would like to comment?
Mr. [Keld Beyer] has asked for the floor.
I think you mentioned, did not you? The voting stock represented by both physical presence or through proxies.
Well, perhaps. I cannot really find the numbers in my papers, but perhaps I could get the numbers again, and then we can go over them later. Let us proceed in the agenda first. I would like to hear if there are any questions or comments concerning this proposal. This is still the remuneration item, remuneration to the Board of Directors. Any comments, any contributions that needs to be dealt with up here at the rostrum? That is the easiest way to do, because it means that everyone can hear what you say. Anyway, there are no contributions. So on the basis of proxies and email or mail votes received, I can tell you that the proposal has been adopted. Let us move on. Item seven. This is election of board members, and the proposal is that all board members currently elected by the AGM be reelected.
We are talking about Jens Due Olsen, Anders Runevad, Jens Maaløe, Jutta af Rosenborg, Lars Sandahl Sørensen, and René Svendsen-Tune. According to Danish legislation, you need to provide information about their positions in other Danish businesses. All this information is available in the annexes to the convening notice, but you also see a brief introduction of the candidates on the screen behind me. I will not go over the information, but it is possible to put questions if you have any. The board has also asked me to inform you that all candidates are willing to become reelected. Any requests for the floor in relation to this item? Are there any other nominees? If that is not the case, and that appears not to be the case, I find that the board has been reelected. Congratulations to the board. Item eight has to do with appointing auditors.
There is a proposal from the board to the effect that Deloitte be reelected. So I would like to hear if there are any comments or questions from the audience or any other nominees. That does not appear to be the case. Deloitte has been reelected. Congratulations. Item nine contains a number of proposals. You will see them on the screen behind me now. The first proposal is 9A. The board asks here for approval that a split be prepared of the NKT Holding group before the AGM in 2018. You see the detailed text on the screen behind me, and the report also contained an outline of the reason for the wish to go through with this split. Any requests for the floor? Mr. Bjørn Hansen.
Just to ask you, what is going to be the price per share when you do the splits, and what about the shares? What about looking a bit at the Novo model, which has Novo Nordisk and Novozymes? Because I think that the organization will be better served with that also tax-wise, and the tax consequences are interesting, particularly if you have quite many shares. I can see a couple of the board members have no shares in the company. I am sorry to see that because I think it is a good thing that all members of the board of directors and the executive management hold shares, then we are sort of in the same boat. We heard it on the radio just an hour ago that you are supposed to actually monitor share transactions that are going on when you are a shareholder. Thank you.
It is the Novo model that we are going for to put it sort of popularly. Today, you have a share in NKT. Later on, when we split the company, that share will be replaced by a share in NKT Cables, which will be called NKT going forward, and Nilfisk. Then the market will set the price for these two shares. You have one share today; you will have two shares tomorrow. Was there one more question? Oh, yes. That was a question about the board members and their shareholdings. I think all my colleagues on the board want to hold shares of the company. We are in a situation in which very often, that is really been a permanent feature for years, we have been insiders.
There are always projects we are bidding for, we are working on, so that if we buy and sell shares, we have knowledge that you, as shareholders, do not have. There are open windows once in a while, but still, we have not really been able to buy and sell shares. We have not been able to do it. It is getting more and more difficult for board members, unless you do it as you just enter as a member of the board. Many of us would have liked to buy shares before we announced this split, but it simply has not been possible, because we would have bought them for shares from people who did not have that knowledge. We are not allowed to do that. So once again, I do not think that there is any member here of the board who does not want to have shares, but it has not been possible.
So the rest of us who were able to buy some earlier on can, of course, be happy that we have shares in the company.
Thank you. Maybe there is a supplementary question.
The shareholders that are here today, if you have 300 shares and they become 900, what do you think the tax man is going to say? Just think about the tax man. They are monitoring this. It is quite important. They tend to go five years back, or even, as I have seen it, back to 1965. In January, I received a letter, and I was thinking, "What is that?" Well, I had four shares abroad. Yes, in Sweden. It took me four days with the auditor, state auditor, public accountant, to get out of that. It was EUR 6 and EUR 57 they were asking about. It is important for you to know how to handle this tax-wise. We do not want any noise afterwards. We want to support the company. I am sure the company wants to support the shareholders. Thank you.
I understand your worries, and we will come back to that when we get closer to the split, but we do get prior approvals from the Danish tax authorities. In Denmark, as a private investor, you bought your share at one point at a given price. Then when you sell it, you talk about the difference between the acquisition price and the selling price. There is no gain triggered because we are not selling the company, we are just converting the share. So it does not trigger a payment to the tax authorities in itself. There are many different shareholders representing many different tax regimes in our group of shareholders. Of course, you should retain the services of an expert on your own. But in principle, this should not trigger any kind of tax for shareholders wishing to hold on to their holdings.
Thank you. Mr. [Keld Beyer].
As opposed to Mr. Bjørn Hansen, I am pleased that some of the board members do not hold shares in the company, because it means that some of them are able to be more unbiased. In a company where all board members have shares in the company, they cannot think clearly. I think it is fine that there are some that can look with an unbiased eye on the company.
Thank you. As the chairman of the meeting, any other requests for the floor concerning this item? Before we turn to the vote, I would like to say that out of 10.5 million votes approximately represented today, 17% are represented by physical presence, whereas 83% are not physically present here but have voted in advance by means of proxies or postal votes. Out of the 17% that attend this meeting physically, a large proportion is accounted for by one shareholder, namely ATP, the Danish Labor Market Supplementary Pension Fund. So a considerable number of votes have been cast in advance. That is, of course, important, and if we then add the holding of ATP, then, well, there is no doubt about the outcome of a vote. So if there are no more comments to 9A concerning the split I can tell you that the proposal has been adopted in advance.
No requests for a complete explanation of the votes, so we will now move on. 9B has to do with another proposal, also touched upon by the chairman, a change of name from NKT Holding A/S to NKT A/S, which leads to a number of changes to the articles of association. It is explained in detail, and I would like to hear if there are any requests for the floor on this point. That does not appear to be the case. The proposal requires a two-thirds majority of the votes cast and the voting stock represented at the meeting. But on the basis of proxies and postal votes received, I can tell you that it has been adopted in advance. If you wish a specific explanation of the vote.
Well, nobody is requesting that. Okay, we will move on to 9C, which is a number of different amendments or changes to the articles of association. I will not go over every single change. Very briefly, I can tell you what this is all about. First, there is a group of changes that has to do with Roman 1 to 8 and Roman 20 to 21, which reflect adjustments required by a change in legislation and a deletion of provisions that are no longer relevant. I do not intend to go over these provisions in detail. Then we have Roman 14, a new provision to the effect that the AGM will be held in the Danish or English language without simultaneous interpretation into and out of Danish/English.
All documents prepared for the purpose of the AGM, either at the meeting or after it, will be prepared in Danish or in English. We also have Roman 16, which has to do with an amendment to Article 8. It says proposals at the AGM will, as a general rule, be adopted by means of a simple majority unless otherwise required by Danish company law or the present articles of association. What is new here is that there are some things in the articles of association, according to Danish legislation, that can be changed by means of a simple majority. Otherwise, all changes to articles of association require a two-thirds majority.
Then we have Roman 17, a new Article 12.4, which runs as follows, "The company's language is English." Then we have Roman 14. The speaker says 14 but means 19, which is a new chapter about electronic communication. This means that going forward, the company can communicate with shareholders by means of electronic document exchange and emails, and that it can also use postal services. It is the responsibility of the shareholder to make sure that the company has the correct email address for the shareholder. That was a very quick run-through of the proposals to change the articles of association. I would like to hear if there are any comments. Mr. [Beyer]?
More than 50% of the Danish C20 shares, as I said previously, are now held by foreign owners. It is not just NKT, it is the Danish government that has failed the Danish population. It should be in the law that annual reports should be available in Danish, and also stock exchange announcements. If not, you are favoring foreign shareholders over Danish shareholders. So Danish shareholders are losing money if we are not quick enough at responding to information given, because the information is given in another language where we need to think twice, maybe. Do better than the government and legislation. Make sure your shareholders at least give us things in Danish as soon as you publish them in English. Thank you.
Thank you. Does anyone else wish to comment? Any other queries? This is not the case. Here, too, the proposal has been already adopted. Does anyone wish a specific calculation of votes, not the case, so we can move on. That brings us to 9D on our agenda. This is the authorization to the board of directors to increase the company's share capital on one or several occasions by up to nominally DKK 200 million through the issuance of new shares. Max nominally DKK 100 million without a preemptive right for shareholders. The proposal for authorization is valid for a period of five years until April 20, 2022. Actually, that triggers adjustments of various provisions in the articles of association. Any comments concerning this proposal? Yes, Mr. Bjørn Hansen.
Yes, it says 2022. We are in 2017. I think it should be revisited one year from now when you can assess what it means when you have this change of the company structure. Because it does have a meaning and importance for your future, not only for the shareholders, but actually also the next generation. We do not want this knock-on effect like JP Morgan, Vanderbilt, Rockefeller. We do not want that. It is okay, you are making money, but just think about DKK 693 million. It just started with a quarter of a million. People do not quite understand the technology of it, but I am getting the hang of it now. Thank you.
Thank you. Any other questions or comments? If not, with the support of ATP, I can let you know that the proposal has been duly adopted. 9E, this is the authorization to the board of directors to issue convertible bonds. A maximum nominal amount of DKK 100 million. I am going to make an exception here because I can inform you that on the basis of the proxies and personal votes, this motion has not been adopted. There are too many votes against. This is probably because a number of institutional investors have the basic view that such an authorization, together with the authorization to issue new shares that we just adopted, is too much when it comes to issuance without a preemptive right for shareholders. So because of that, this motion E is hereby withdrawn, and we will not vote on it.
It is likely, however, that the board will subsequently present a modified proposal concerning an authorization to issue convertible bonds, one that will hopefully then live up to the requirements of institutional investors. Before we move on, I would like to hear whether this gives rise to any comments. Bjørn Hansen.
I'd like to hear from the chairman of the board. Convertible bonds. We need to be very careful here. Not many people know this, but as far as I know, they do not have voting rights. The difference between commercial bonds, convertible bonds. I think convertible, does that have something to do with the currency involved? We don't want rubles to be involved here. So the securities, shares, convertible bonds, commercial bonds, it's difficult to keep up. To be quite honest, I don't think an awful lot of people realize what the difference is, but a lot of things could happen with a shift. I don't mind that some people acquire this, but I do mind if in 10 years from now, the ATP says that this is a new OW Bunker situation.
They said, "We are posting a profit." Yes, they were, but it could have been DKK 2 billion higher. I don't want anyone to have permission to do something that expires only after 30 years.
From a technical point of view, a convertible bond is in euro, and it will be something that the company arranges, and it can be converted at a price decided in advance, and it is a model that is used frequently, and it is occurring regularly, and there's nothing controversial about it. Apart from that, the proposal is not relevant any longer because it has been withdrawn.
Any other comments? Apparently not. Let's move on now to 9F. There have been proposals put forward to the effect that the company's remuneration policy be changed. I will not go over the changes one after the other. The shareholders have received a marked-up version where the proposed changes have been highlighted. It's not only the company, it's also Nilfisk and NKT Cables, and NKT Photonics that are covered by this remuneration policy. Some of these changes intend at clarifying the situation on account of the different companies and their internal relationship.
Also there is no longer any specific rule concerning the strike price that will apply for options and the like. There's also a provision to the effect that it is possible to make payment in cash to employees covered by the program, when you deal with incentives that involve shares. So this is the basic idea behind these changes. Are there any requests for the floor? That is not the case. So I find that on the basis of the proxies and postal votes received, that the proposal has been adopted. This leaves us with one more item on the agenda. Number 10, any other business? Are there any requests for the floor? It's not possible to pass any resolutions.
Well, anyway, if that's not the case, if there's nothing under this item, I find that we have exhausted today's agenda. I'd like to thank you for a fair amount of good order and discipline, and hand over to the chairman of the board.
I'd also like to thank you for being here, dear shareholders, dear guests. Thank you for the discussions, and thank you for your comments. I'd also like to thank you for continuing your support to the board of directors and your support for the journey that NKT is on as we head to the split later in the year. I'd like to thank all employees at the executive management for the considerable amount of work that they've put in 2016, and also our business associates, I'd like to thank. Finally, I'd like to thank Mr. [Anders Lavesen], interpreters, technicians, and everybody else who's made sure that we've had a good AGM. It's quite late this Friday afternoon, but it is possible, in the lobby, there is some light refreshments, and you can go and visit the stand that we have there. Thank you for coming.