AGM 2022

Apr 6, 2022

Summary

FY2021 sales topped EUR 3bn, with EBIT of EUR 401m and a 13% margin; a DKK 35 per-share dividend was proposed. Management maintained Russian operations while halting expansion and forecast 15%–20% local-currency sales growth for 2022.

Dear shareholders, good afternoon, and welcome to the 2022 Annual General Meeting for the Rockwool Group. It has been a couple of years ago since we were able to meet physically, so it is a pleasure to see so many familiar faces here today. Pursuant to Section 7A of the Articles of Association, the Board of Directors has elected Anders Ørjan Jensen as Chairman of the general meeting. Over to you, Anders. Thank you, Chair, and thank you to the Board for asking me to appear as Chairman of the meeting. Just to deal with the formal details first, I need to find out whether the meeting has been duly convened and whether we are quorum with regard to the items on the agenda. According to the Articles of Association, convening notice must go out minimum 3, maximum 5 weeks notice by publication on the company's website, and also by notification to shareholders who have requested to receive such notification. This has happened in accordance with all the applicable rules. It happens on March 10, 2022. It appeared on the company's website and was also issued through Nasdaq Copenhagen, and shareholders having requested a written convening notice, also received one. With regard to the contents of the convening notice and the documentation that must be made available in connection with the AGM, I have checked that all requirements have been met. Also, the complete proposals have been available to shareholders in advance. Then there is a specific item this year, the location of the meeting. We are so pleased to appear in person here. It is on the island of Zealand, and we have been here before in this Congress center. So I find that the meeting has been legally and lawfully convened. With regard to whether we are quorum, here you see the agenda. We have the standard items that apply to an AGM of Rockwool, and there are 3 proposals also from the Board of Directors and 2 proposals from shareholders. All items on the agenda can be adopted by means of a simple majority, apart from the 2 proposals, 9B and 9C, presented by the Board because they relate to amendments to the Articles of Association, so they require two-thirds of the votes cast, as well as two-thirds of the capital represented at the meeting, and minimum 40% of the total number of votes in the company must be represented at the meeting itself. We have received a number of votes in advance, and I can inform you that that requirement has been met. So today, we are quorum with regard to all items on the agenda. I will get up-to-the-minute list of numbers to give you very soon. 180 people have asked for admission cards. But true to tradition, we will deal with the first three items in one go, which means that first, we will hear the Chairman's report, and there will be a presentation of the annual report, and then we will have a debate. So I give the floor now to the Chairman of the Board. Good afternoon, everyone. As you can see on the agenda for today, we have quite a big program to get through. Nevertheless, it's important for me to start with what I think we're all most concerned about, the completely meaningless war in Ukraine. I'm convinced that everyone here today is left with exactly the same feeling of anger and despair at witnessing the horrific, vicious abuses to which the Ukrainians are exposed to every day. So no one should have any doubt that Rockwool condemns the war. We're all affected by the consequences of this heinous war for the people of Ukraine. For us at Rockwool, the safety of our Ukrainian colleagues and their families is top priority. We've taken care of them from the very outset by bringing them to safety, by giving them financial assistance, and by helping them to find a place to live. In addition, we've taken several initiatives, which I should like to mention here today, that's important to me. As a concrete reaction to Russia's invasion, we have previously canceled new investments, including an otherwise planned investment of DKK 1.5 billion. This substantial amount would have been spent on expanding capacity in Russia. But as we have also said to the media, Rockwool has decided to maintain production at our four factories in Russia. Was that an easy decision? No, certainly not. The decision was controversial because many other companies, including many Danish companies, have announced that they will cease or seek to dispose of their Russian activities. Of course, we knew that. But as Jens Birgersson stated to several media last week, this is, for us, the only thing that makes sense for Rockwool in this insane situation. At the same time, it's the only thing that will not yield more money to the Russian regime. So I'd like to explain that in a bit more detail. First and foremost, it's important for me to stress that Rockwool, of course, complies with all applicable sanctions. In addition, we have intensified our attention to both the EU's and the Danish government's announcements and expectations of the business community to ensure that we constantly comply with any requirements that may be imposed. Next, and this is very important to understand, Rockwool in Russia has a completely local business. What does that mean? It means that our factories, our business, have a considerable value for the sole reason that they can continue operating if they were to be nationalized. The technology is there, it's in place. There's no need for other supply chain expertise and knowledge from the outside. Everything is present, so production can continue from day one as if nothing had happened, completely without us. When I highlight this, it's because everything points in the direction that our factories will be nationalized. If we were to withdraw from Russia, we would, in other words, leave a well-run, efficient business worth billions to the Russian regime. We would do that overnight. They would not only get the tax revenue from the business, but all the revenue from it. In fact, that would leave 2 or 3 times more to the Russian government every single year in terms of taxes and ongoing revenue generated by the business. To this, I must add that we would be leaving at least DKK 5 billion to the Russian regime if we allowed them to take over our factories. We're talking about 4 modern factories with an international, very strong brand, with the world's leading stone wool technology, and not least, more than 1,200 highly qualified employees we have in Russia. Everything would fall into the wrong hands and billions of DKK would be left to the Russian regime. As I said, unlike many other companies, Rockwool's business would have significant value because it could immediately continue its activities if it were to be nationalized. Of course, we are not simply going to leave these assets worth billions to the Russian government. We cannot see how such an action would contribute to ending the war sooner. If we do not, if Rockwool does not continue to own the business, then the total value and the total profit will remain in Russia. For the benefit of whom? Unfortunately, this goes without saying, for the benefit of the Russian regime. That is not everything. The Board of Directors and the Executive Management have also considered the fact that if Rockwool were to give the Russian government an excuse to nationalize our entire Russian business, these new owners, quote-unquote, there would be a great risk that this could harm Rockwool outside Russia. How? Because we would be leaving some of our most valuable assets to the Russians in the form of our core technologies, our Russian production machinery, and all of our skilled, highly trained employees in Russia. Rockwool is by far the global market leader in stone wool. This is not least by virtue of the innovations and technical solutions we have developed over the years, over many years. They enable us to build larger, more energy-efficient production facilities than any other stone wool producer, and we can manufacture a wide range of unique products. If that technology were to be taken over by others, a new competitor or an existing one, that would be a very strong competitor to us. In the longer run, that could become a significant challenge for us also outside Russia. That's also why we do not just want to sell our Russian business and leave the country, even if that were to turn out to be a real possibility. As for the competitors, I was asked if we were not concerned that our customers will leave us and go to one of the competitors if Rockwool stays in Russia. We've looked at it. We looked at the status of other colleagues in the industry and what they've done. The thing is that all the competitors' mineral wool factories are still in operation. That applies to everyone in the insulation industry, so that you know that side of the story, too. Put briefly, if we were to give up our business in Russia, it would, in our best judgment, do more harm than good. By contrast, by staying, we are trying to do what is least good for Russia. The way it looks right now, seen through the eyes of the Board and management, the right thing is to stay, both ethically and commercially. If it was our view that from a business-wise, it was better to stay, but ethically not, we would certainly have pulled out. But as I mentioned, our assessment is that also ethically, it's the right thing to stay. We must bear in mind, we cannot just close down the factories and leave. It's not an option. The factories will continue to run in any case, just with new owners. This is about whether we should stay where we are today with the current tax payments, or whether by leaving Russia, we would have to accept that they will not only receive the same taxes, but they would receive all the ongoing revenue from operations. That would be equivalent to the Russian regime getting two or three times more from our activities than they're getting today. Plus, they will get the assets worth at least DKK 5 billion. That is why we think ethically, we also think our decision is the right one. We are constantly focusing on doing the least good for the Russian regime. We will, of course, at all times respect any legislation, any sanction that requires to act differently. That is clear. That's obvious. These are not easy decisions, but in the view of the Board of Directors and the Executive Management, it's the only thing we can defend doing in this terrible situation. Finally, as it was said to the media in interviews last week, I'd like to emphasize that Rockwool is set to play both an active and visible role when Ukraine, hopefully soon, will begin its reconstruction process. It will be a colossal task, but it's a task where Rockwool certainly has a role to play. Exactly where and how, I can't say today, but it's important for the Board and the Executive Management that you as shareholders know where we stand as far as this is concerned. We are following the situation closely. We evaluate on a daily basis how to best proceed, and we sincerely hope that peace will be restored very soon. I have been looking forward to sharing with you at this general meeting the thoughts we have had and the whole background of the difficult considerations. I hope I've given you a good insight into the options we have and their likely consequences. Should anyone be left with questions you feel I haven't answered, I'll be happy if you would ask them during the questions section. Let me turn to the main purpose of this AGM, which is to review the business results for 2021, at the same time addressing the decisions that you as shareholders must make today. 2021 was in every way a strong year for the Rockwool Group. The global economy had a slowdown, but that was quickly replaced by a recovery, thanks to a combination of government-funded stimulus packages and pent-up demand from consumers. There was a high level of construction activity that was positive for our business, but it also created challenges because there were increasing costs and certain capacity constraints. Our newest factory in West Virginia in the U.S. started operating in July last year. It is already helping us now better serve the demand on the U.S. market. in 2021, we announced a number of investment projects to meet the growing demand for our stone wool products in the rest of the world. Investments that will also help us to continue to decarbonize our operations. These investments include the plans for a new factory in France, which will use electric melting technology and the conversion of our factory in Switzerland, so that will also be using electric melting technology. Before we get to some of the specific results in the sustainability report, it is important to bear in mind what Jens Birgersson, our CEO, said at COP26 in Glasgow. There, Jens spoke about the troubling disconnect between the long-term goals of the Paris Agreement to keep global temperature rise well below 2 degrees Celsius, and then the short-term actions that are required to meet that. Long-term pledges are important, but at the end of the day, they are just words. The world needs action and accountability to live up to these pledges also in the short-term. We know from our own experience that it is difficult but possible to reduce emissions. Like any well-run business, we execute and measure our short-term actions on the road towards reaching our long-term goals, and this is also it should weigh for countries and governments. The renovation of existing buildings is a case in point. It is really an effectful opportunity. In the EU, buildings account for 36% of all emissions. We also know that 75% of those buildings that we have today, and they will be here in 2050. The EU gives priority to financing building renovation as part of its green transition strategy, which is called Fit for 55. We expect these efforts to get even more attention now As a means to reduce the consumption of natural gas in Europe. We are ready to help deliver short-term actions needed for society's critical long-term goals to be reached. The sustainability report for 2021 gives a good overview of the ways in which we increase the positive benefits of our products, the handprint, and at the same time reduce the impact of our operations, the footprint. The sustainability report also tracks our progress toward eight ambitious sustainability goals. We made good progress in 2021 towards these goals. Besides the two 2022 intermediate sustainability goals we met in 2020 on water intensity and waste to landfill, we also met two other intermediate goals in 2021 in relation to CO2 intensity and reclaimed waste. More specifically, we have reduced the carbon intensity of our production by 16% compared to the intermediate goal, which set 10%. The good results are mainly due to the switch to electric melting technology at the Moss factory in Norway, and the switchover to climate neutral biogas at our two Danish factories. As far as circularity is concerned, last year we recycled 650 tons of secondary raw materials, which is the highest level ever. We brought our Rockcycle reclaimed waste service to three new countries. Now a total of 17 countries have this possibility compared to the intermediate goal, which set 15. This is an arrangement that has a major impact. In the last three years, we have increased the amount of stone wool collected and recycled by our Rockcycle service by 56%. This is a fine achievement, and we expect it to grow in future as the cost for landfill increases. We also continue to make progress on our goal to improve the energy efficiency in our own non-renovated offices. In 2021, we renovated an additional five of our office buildings. One of them was the main office in Gladbeck, Germany, where we managed to reduce the building's energy demand by 83%. In this way, we demonstrate with real-world actions that we can actually renovate existing buildings to achieve the same energy efficiency levels as a newly built construction. We experience a negative trend in relation to our SBTI targets concerning reductions of absolute emissions compared to 2020, and this was primarily a result of an increase in our production volume. That said, we took important steps to decarbonize several of our factories, the impact of which will be seen in coming years. Overall, we are on the right track to meet our total emissions at the same time as we significantly increase our production volumes. We also made solid progress last year towards fulfilling our 2030 goal by achieving a 15% reduction of our water consumption intensity compared to the baseline from 2015. This is a way of measuring the amount of water consumed per ton of stone wool produced. We also reduced the amount of waste going to landfill by 51% compared, again, to the baseline from 2015. All in all, three-quarters of our stone wool factories have eliminated all stone wool waste going to landfill. As far as the safety of our employees is concerned, it's important to say that thank God we did not have any fatalities in 2021, and that was also the case in 2020. Our lost time incident rate, however, unfortunately, did increase, and we have initiated several measures to improve the LTI trend, including additional safety audits at factories with the highest LTI rates, together with additional focus on sharing best practices across the group. The construction industry generally experienced high growth in 2021, driven primarily by pandemic-related demand, government-funded economic recovery and stimulus packages, and increased climate action. In Europe in particular, and also in a growing number of U.S. jurisdictions, energy-efficient buildings have achieved greater recognition for their role in reducing greenhouse gas emissions. The rapid pace of recovery also created challenges, and it was industry-wide that these problems existed: supply constraints, rising inflation, soaring energy prices. We expect these challenges, which are exacerbated by the war in Ukraine, will continue to affect market conditions also in 2022. Rockwool achieved fine sales growth in almost all markets across the entire business. It was primarily the residential sector, and here in particular, renovation jobs that drove the growth, while technical insulation and commercial sales recovered later in the year. Sales in China and elsewhere in Asia were subdued. This was because of the continued negative effect from COVID-19 on the markets there. We saw a growing demand for the systems segment products in all businesses. 2021 was another strong year for the Rockwool Group. On behalf of the Board of Directors, I would like to thank our CEO, Jens Birgersson, our group management, and our 12,000 dedicated employees for their hard work and good results during yet another volatile and challenging year. Globally, net sales came to EUR 3 billion and 88 million. It is the first time that we have exceeded the EUR 3 billion mark. Sales price increases at the end of the year were higher than initially planned and added to higher growth. In a few markets, capacity constraints restricted further growth as customer demand came faster than we had expected. Regionally, sales in Western Europe increased by 16% in local currency, with all major markets ending the year with double-digit sales growth. Sales in Eastern Europe were up 28% in local currency, and all markets reported double-digit growth rates. In the rest of the world, including North America and Asia, sales increased by 21% reported in local currencies. In terms of sales by segment, insulation segment sales reached EUR 2 billion 291 million, an increase of 20% in local currencies. All markets and businesses contributed to growth, mainly driven by high construction and renovation activity in the residential sector. Systems segment sales reached just under EUR 800 million, which is an increase of 16% reported in local currencies, and all businesses contributed with double-digit growth. The group's EBIT in 2021 came to EUR 401 million, resulting in a full year EBIT margin of 13%, which was at the same level as in 2020. Despite sales price increase and productivity gains, we could not fully match soaring inflation on raw materials, logistics, and energy. This was especially the case in the fourth quarter, where we experienced a 6% EBIT decline relative to the fourth quarter of the year before. Operational efficiency improved during the year as we continued prioritizing cost savings activities. This entailed focus on driving efficiency while still running at high capacity levels and investing in new competencies, digitization, and growth initiatives. These efforts help deliver stable group profitability for the year. In the insulation segment, EBIT came to EUR 226 million and an EBIT margin of 10.4%, a decrease compared to 2020 of 0.3 percentage points. Despite solid growth from all markets and businesses, sales prices and productivity gains did not fully offset the accelerating inflation towards the end of the year. Startup costs from the new factory in the United States also had a negative impact on the earnings level. The system segment generated an EBIT of EUR 126 million with an EBIT margin of 15.9%, up 1.1 percentage points from the year earlier level. Most of the business areas succeeded in offsetting the increasing costs by means of higher sales prices. At the end of 2021, the group had a net cash positive position of EUR 76 million and unused committed credit facilities of EUR 600 million. Cash flows from operations decreased slightly from EUR 438 million in 2020 to EUR 426 million in 2021. Free cash flows from operating activities decreased slightly. Free cash flows amounted to EUR 116 million, an increase of EUR 40 million, primarily due to lower investments. Cash flows from financing activities ended at a negative EUR 194 million, mainly because of the payment of dividends and the full repayment of drawings on our credit facilities. Investments for the year came to EUR 302 million. This represented a decline of EUR 41 million compared to the year before. Compared to our expectations announced in February 2021, several smaller investment projects were postponed to 2022 due to the high business activity levels. The largest individual investments in 2021 were the new factory projects in the United States, the conversion in Norway to the electric melter system, the new Rockfon line in Poland, and the relocation of one of the factories in China. Also, we acquired a stone wool production facility in Japan from BANSYO HOLDINGS, and we acquired the minority stake shares in our China, Thailand, and Malaysia businesses from the Danish Investment Fund for developing countries. In the systems segment, we acquired the assets of Triplex Acoustics, a small Danish producer of acoustic solution, and a minority stake in an acoustic design company called AKUART A/S. We also announced plans of building a new factory in Soissons in France, another plant that will use electric melting technology, which makes the factory low on carbon emissions. In Switzerland, we are converting our factory to electric melting technology based on power. Stock prices, share prices. Both Rockwool share categories increased in 2021. The A share rose by up to 15% and the B share 25%. That compares with a 22% increase in the benchmark index STOXX Europe 600 Construction & Materials. I just need to check my notes. A 22% increase in the European index and a 17% increase in the Nasdaq OMX C25 index. Consistent with our policy to pay out a stable dividend that is at least one third of the net profit after tax for the year, we are pleased to propose a dividend of 35 Danish kroner per share for fiscal 2021. This will be voted on formally later in the program. If we look at the remainder of 2022, we expect the strong demand that developed quickly in the last three quarters of 2021 to continue. Of course, there is some uncertainty in connection with the full year picture. Energy costs and inflation are two key factors that we are closely monitoring. Energy and material prices were already increasing rapidly at the end of last year, and with the war in Ukraine and the resulting sanctions on Russia, this development has continued. These two factors could potentially disrupt the construction sector recovery and put a damper on overall market activity. There is also a risk of supply chain and workforce bottlenecks, and this may cause a slowdown in European construction activity later this year. Much will depend on the market's ability to absorb relatively significant cost increases for a wider range of construction materials all over the world. If inflation continues growing, so too does the risk that some renovation and new build construction projects will be postponed or canceled. In North America, we anticipate that the demand for our products will continue to be strong. The new capacity we brought online in 2021 will help Rockwool meet the demand and grow market share. We foresee the strong demand for systems segment products to continue in 2022. Overall, we anticipate that a combination of higher prices and a strong demand for stone wool products in 2021 will make it possible for us to continue a double-digit growth result, albeit with a higher portion derived from pricing than from volume. We forecast net sales growth in local currencies in the range of 15%-20% for 2021, with higher uncertainty in the second half of the year. The EBIT margin will be influenced in the first part of the year by the high and rapidly increasing input costs, but we do anticipate a gradual improvement as the year progresses. For the full year, we thus forecast an EBIT margin in the vicinity of 13%. As we initiate the large capacity expansion project in France, along with systems segment capital expenditures and various sustainability investments, we forecast an overall capital expenditure of around EUR 500 million in 2022, excluding acquisitions. The investment otherwise intended for Russia will be redirected to other growth opportunities. Earlier this year, we published, in accordance with the relevant legal requirements, our remuneration report for 2021. The report will be presented for an indicative vote later today. It contains an overview of the remuneration allocated to Rockwool's board of directors and registered directors for the financial year 2021. Remuneration for the board of directors last year came to EUR 694,000, and for the registered directors, it came to EUR 3,931,000. This is in accordance with our remuneration policy that was approved at the AGM last year. You see the amounts up here, and the full report is available on our website. In 2021, the board of directors also conducted the annual self-evaluation. This time, we decided to have an external consultant facilitate the process because we intend to do this every third year. Based on the 2021 evaluation, the board concluded that its composition is appropriate and sufficient for it to perform its tasks. It supports the long-term value creation for the company and its shareholders. Andreas Ronken, who was a member of the board up until today, informed us that he was not available for re-election. I'd like to thank him for his dedicated contribution to the board's work since he first joined in 2016. I'm also very pleased to announce that we propose Ilse Henne to be elected as new board member. She comes with extensive experience from the ThyssenKrupp group in Germany. As a response to previous years' proposals from shareholders, the board of directors has looked into various options for introducing a permanent scheme allowing for the voluntary conversion of A shares into B shares on a one-to-one basis. Item 9B on today's agenda contains a proposal from the board to the effect that a right is inserted in the Articles of Association, a right to re-register A shares to B shares on a one-to-one basis, i.e., one A share to one B share. On behalf of the board of directors, I'd like to conclude by once again thanking the management team and all employees for fine effort, hard work, and fine results in a challenging year. I'd also like to thank my colleagues on the Board for good and constructive cooperation in the past year. Also thanks are due to you, our loyal shareholders, for your continued support and investments in the Rockwool Group. Thank you very much to all of you. Thank you to the Chairman. Before I open up for discussion, let me just come back with the information I promised you about appearances today. We have 120 people present, 75% of the company capital is represented, and about 88% of all votes. Of the votes, about 90% are present in the form of proxies and postal votes. Now, you can ask questions or make comments concerning the items presented by Thomas Kähler. There are three shareholders who asked for the floor. Mark Christopher Jessen from ATP, you come first. After that, we will hear Klaus Jørgen Sørensen from the Danish Association of Shareholders, and Bjørn Hansen has also asked for the floor. But first you, Mark from ATP, the Labor Market Supplementary Pension Fund. Thank you. I'm Mark Jessen, and I represent ATP. Thank you to the Chairman for your report. I'd like to start by talking about the war in Ukraine. A war which is, of course, a humanitarian crisis with terrible human costs. All companies with activities in Ukraine and Russia are in a very difficult position. A position that leads to a number of dilemmas and difficult decisions that go beyond operations and regular questions. The situation continues to develop. The right decision today may look different tomorrow. It is ATP's point of view you have to be very careful thinking that as an outsider, you have the reply, you know what actions will benefit and harm the Russian regime. It's obvious that all companies must comply with the sanctions that are being introduced, but we also have an expectation that the individual company is aware of its responsibility and is potentially prepared to take difficult decisions. I'm convinced that Rockwool is aware of its responsibility. In light of the situation in Ukraine, other agendas may seem insignificant. But I'm still going to address another topic, the topic of sustainability. Rockwool is now focusing more on sustainability, has done so in recent years. That's good. You're investing in new solutions that will sort of get you away from a coal produced production. You have enabled quicker transition to electricity than previously expected. Electricity-based production will give lower CO2 emissions than competitors, so it'll be an advantage in competition, so you can really benefit more from the green agenda. But this transformation is also costly, when it comes to developing costs and investments in your more than 50 plants. We expect Rockwool to be looking to further investments in the coming years. But it's difficult to see what the need for investments is. It's difficult to understand the financial dynamics in Rockwool, and that's not new. We have seen increased transparency in sustainability, but your approach to financial reporting has not changed. In the present format, investors are left with many unanswered questions when it comes to what can influence the company's development. Unfortunately, we see that these unanswered questions give unwanted volatility in the share price. For us, as long-term investors, volatility gives difficult conditions in a company which is otherwise stable and well-driven. That was it for me. I wish Rockwool and its employees all the best in a year that really started much more tragically than when the year started. Thank you. Thank you. Jens Birgersson will come up and comment. Klaus Jørgen Sørensen, you can get ready, please. Thank you for your comments, Mark. If we start with sustainability, we are showing now how much we invest. Obviously, we will not be investing less. We focus a lot on developing new technologies, even if internally we have an idea about how quickly we need to switch to better technology, better melting methods, for instance. We haven't finished that. We will explain as we go forward what we do. One of the things that we do is what we've done in Norway. We now know what the cost is, but there are also other technologies that can be used, so the process has not been completely finalized. I can come back to that. We will come back to that, and we will continue to invest in the same direction. As regards to volatility, there are two aspects. About six, seven, eight years ago, it was felt that Rockwool was a cyclical share and that the result was too volatile. We've spent quite many resources in management trying to make sure that we act and respond in such a way that we are adaptable if something happens to the market. For example, in 2020, it was a fantastic year, even if the market was going down. In 2021, we saw at the beginning of the year there was practically no growth, and all of a sudden there was 20% growth. The reason why we can manage situations like that is that we try all the time to be flexible in our company. We really try to remove part of the volatility and the cyclical nature of our result. As regards the information we give to the surrounding world, that is difficult because we are a pure play company. We're the only company in the world that works only with stone wool. We have decided deliberately all the time not to tell too much. We are not saying what's happening in individual countries. We do not explain how many tons of stone wool that we sell in each country. That's the choice we've made, and we are planning to continue that. If you look at the volatility of the share, well, let there be no doubt, we would like to avoid that. I think the share price went down sort of 7%. There's this discussion about Russian coal in Europe. We don't use Russian coal at all. It doesn't influence us, and still it influenced the price of our share. This is a bit of information that you need to handle because you need to find out how things are intertwined. But I've said it, we do not buy any Russian coal. But thank you for your comments. Thank you. Hand over to Klaus from the Danish Association of Shareholders. Thank you. I'm Klaus Jørgen Sørensen, and I represent the Danish Association of Shareholders. We cater for the interests of private shareholders. We are working to develop a healthy share culture in Denmark. Danish Association of Shareholders has about 18,000 members. What's important for us this year is decency and transparency. I'd like to praise board and management for a very comprehensive and transparent annual report. Rockwool is a solid company which has delivered good results over the years, and you focus on climate issues and how you can help solve these problems. Even if 2021 was again a challenging year because of COVID-19, an increase in raw material prices and logistics challenges, still the financial statements you're presenting are very good. Your revenue, your EBIT, goes up 19%. Net profit goes up by EUR 52 million to EUR 303 million from the year before. Although the year before, because of COVID-19, there was a decline in revenue and profit. As a shareholder, it's a pleasure to see that the B share has gone up 25%, and we have the 22% that we heard about from STOXX Europe 600 Construction & Materials, and Nasdaq Copenhagen went up too, and shareholders will receive dividend going up by DKK 3 to DKK 35. That's very satisfactory. Rockwool has been criticized for continuing its activities in Russia. Other foreign companies have decided to stop their cooperation and their trading there to sanction Russia. In the daily press and here at the AGM, Rockwool has explained its decision to maintain its activities in Russia. Question, how do you think that Rockwool's reputation and support by the general population will be affected, and how do you think the business will be affected? Question two, management says in the annual report that you expect increase in sales of 15%-20% in local currencies in 2022. Is that still your expectation in connection with the war in Ukraine? How big a share of revenue and production concerns Russia? Finally, thank you to Rockwool's board and management. I wish Rockwool and the shareholders a successful 2022. Thank you. Thank you to Klaus Jørgen Sørensen from the Danish Association of Shareholders. Thomas Kähler will come and give a comment, and Bjørn Hansen, please stand by. Thank you for your excellent intervention, Klaus Jørgen Sørensen, and your words of praise, particularly about sustainability. As I explained in my report, if we gave up our business in Russia, it would do more harm than good. By staying, we are trying to do what we believe is the least good for Russia. That being said, we have received a lot of negative mention in the media recently. We have not yet seen a negative effect on our sales, but of course, we are sad about the lack of understanding for our point of view. We will continue to restore trust in Rockwool, to say that Rockwool always acts ethically, responsibly, or decently, as you said in your presentation. This is what we have been trying to do in this particular difficult situation. You ask about our expectations concerning growth. Are these expectations unchanged? Well, we still believe we will grow 15%-20%, but as I said in my presentation, there are factors in the world that may be difficult to understand. The way we see it today, we do expect that this forecast will hold water. You are saying, how big a share is Russia? We do not give specific numbers by country, but I can tell you it is less than 10% of our business. Less than 10% of our business is in Russia. Thank you. The next speaker is Bjørn Hansen, and if there are other requests for the floor, you are more than welcome to approach me and sign up. I am Bjørn Hansen. I have attended many Rockwool annual general meetings, and the company is a good Danish business, and I hope that it will remain a Danish company. There is a family called Kähler, and many other people have invested in the company. I hope that it will remain Danish so that in three years from now, we say Rockwool Denmark and Rockwool International. When I look at the financial statements for last year on page 96, I see that Rockwool have started investing in warm climates. It says they now have a company in the Emirates. I discovered last week when I attended the World Exhibition and I visited an urban area, I saw a lot of Rockwool batts lying around. They need a lot of investment there, and they need a lot of construction materials. They both need to insulate for heat and for cold, and they have some very strict requirements to the effect that they cannot all of a sudden accept that fire breaks out on the 14th floor or the 20th floor of a building. I hope that Rockwool will be able to use a lot of its expertise and technology, perhaps transferred from Russia. There are other markets too. I have said this before, I have always been very interested in the U.S. market, and thank you very much for the comments made by the Chairman about the U.S. market. It is extremely positive to hear about it. At some point, there were also some environmental requirements, but it looks as if things are now on track, and I'm pleased to hear it. The question is whether it's possible to expand production there to cover even more of the U.S., because I think there are lots of old houses in, for instance, New York, that are in urgent need of renovation in order to avoid future fire incidents. Slowly, perhaps, you could expand in some places and then wind up in other places. You said that you will now discontinue investments in Russia, and I made a quick calculation. Are we talking between DKK 8 billion and DKK 9 billion? This amount, DKK 8 billion to DKK 9 billion, perhaps you could build a couple of production plants more in the U.S. and then in the Middle East. I must say that at the world exhibition at the stand from Saudi Arabia, I saw Vestas. Vestas had been allowed to operate from the stand there. In the Emirates, they are extremely interested in solar power and wind power. In Dubai, there will also, in the new world exhibition, the one that ended on April 1, a huge city is going to be built. It reminds me of when I lived in the U.S. It took six months, and then you had a city that was a bit larger than Aalborg, and the politicians were very keen, and that's also the way it happens down there. The lines of command are very short. It's as if politicians in Denmark, it's a bit more difficult here. I suggest that Rockwool try to get as many billions as possible from the Horizon program. In that way, you can help out. I hear you are very good at wrapping statues in Ukraine, so your help is urgently needed in many places. I also hear today, and I'm pleased to hear it, that you have started in Norway to using energy. I didn't really know about the sources, but since we are in Norway, in Moss, and perhaps also in Eskilstuna in Sweden, that it will be from Luleå in Sweden, and in Norway, it will be some of the rivers in northern Norway that will deliver the electricity. You have a lot of patents, I know, and the drawings that are so secret, I think you should be quick off the mark and get them out of Russia sooner rather than later. Because after the war, we know that the plants and factories that were located in the eastern part of Germany, all the business secrets and the documents relating to these secrets went to Russia, and it only took, well, it took practically no time. I have also tried to calculate the losses, and you did touch upon that, Mr. Kähler. I can't see why you should allow yourselves to be affected too much by the situation created by Mr. Putin. I told you 10 years ago, "Don't go east, go west," and I still think that is your solution. I hope that Rockwool will be able to get all the relevant tools out of Russia, and there are some very good cutting machines, and they may be your own makes and your own patents. I think you should transfer them perhaps bit by bit to China, perhaps. Or if you cannot take them directly, then use Maersk Shipping with all their empty containers to go. Only 3,000? I do not think you are right there. Anyway, you can ship them via Vladivostok to China. These are difficult times, and I would like to thank you for paying a fine dividend to your shareholders. The executive management, I am sure, has been given a pay increase in the form of warrants and options, and I am only too pleased to hear that our Swedish CEO says that this is a company worth working for. Is it 7 or 10 years you have been with us, right? 7 or 10? Anyway, thank you for your attention. There was also it was written somewhere that the A shares could now be converted into B shares on a one-to-one basis. I hope that the determining shares will still remain in the hands of the family, and that we do not get some sort of hedge fund from Leningrad that will control the whole business. Thank you. Thank you. I know Thomas would just like to comment. Shares can be converted, but that is not automatic. It is a voluntary arrangement. We will get back to that a bit later. Thank you, Bjørn Hansen. I say it by way of introduction that it is nice to be together here at the Roskilde Conference Centre, and you are a part of that tradition, too. Most of your intervention, I heard as suggestions. There was just one question, I believe. How long Jens Birgersson has been our CEO, and he came in early 2015, so he is running in his eighth year, and we are pleased with that. Anyway. Your proposal, if we could pack factories down in containers, ship them off to the Emirates or to China, or elsewhere. But the thing of it is that it is not possible in practice. Our factories are very big and comprehensive. Even if we were to do it, I am sure the Russian authorities would never permit us to dismantle our plants and bring them elsewhere. So you are asking about the U.S. and the new factory in Ranson that started in July last year. It is in the eastern part of West Virginia, so quite close to Washington, D.C. So it can also supply New York. We certainly have that possibility with the setup we have. But I certainly also hope that we will continue growing in the U.S. We have had a wonderful development in recent years, and we certainly expect to continue that. We expect to increase our market share and to get more of a geographical spread with more plants elsewhere on that continent. We have two plants in Canada and two in the U.S. And I agree with many of the things that you say. You talked about fires, you talked about the world exhibition. Yes. They need a lot of insulation in the Emirates or many other countries. Traditionally, we have insulated in countries where it is cold, to keep cold out. Today, more energy is spent cooling down buildings than heating up buildings. Hopefully, we will be able to hold many general meetings where we can rejoice at growth because our products are being used in more and more places and for more and more applications. Thank you very much for your proposals and thank you for your intervention. Does anyone else wish to speak? Yes. I am Flemming Elstik. It is a very brief comment. A couple of years ago at the AGM here, there were some problems with the U.S. plant. If you only had 2, you will know which one I am talking about. There were some environmental organizations that were up in arms, and there were people coming over even to talk about this. I have not been around for a couple of years, so I just wanted to hear how things are going in this case. Thank you. We will have an answer from the Chairman of the Board or the CEO. They are just finding out who will deal with this. Jens Birgersson, the CEO. We actually have a couple of proposals on today's agenda from the same people, but let us hear what the CEO has to say here. Thank you for the question. I am sure you are talking about the plant in West Virginia. It was a terrible process. We did everything we were supposed to environmentally, and today we have containers measuring emissions near schools and what have you. I think there are 2 in Washington, D.C. We have 3 at our facility. There is a good atmosphere at the plant. Everything is up and running. But there are 5 or 10 people who will never like our plant. Gradually we are getting new neighbors that welcome us, and we no longer need bodyguards, and we take on people who live in the local community. I am certain over time people will not mind that we are there. What we have learned from this whole case, and this is important for other plants, it does not matter how many new jobs, how much wealth you bring, you have to understand that there are always people objecting when you build something new. Not when you enlarge something that exists, but when you build something new. We just have to accept that. We will have continued growth, we will need more capacity, and there can be problems, but we spend a lot of resources doing decent risk assessments, environmental studies using the best technology available so that we know we have made the right decisions, both ethically and environmentally. And we hope that you as shareholders are prepared to accept that that is the way it is. Sometimes when you build a new big plant, there are protests, but you have to take that. We must take that in our stride. We need these plants in the short term and the long term, also in order to meet the U.N. goals. So, thank you. Thank you. Does anyone else wish to speak? Yes, there is one person down there. If there is anyone else, please put up your hand so that I will know whether we will finish after this intervention or not. It does not seem to be the case. Over to you. I am Heinz Erickson, and I have a brief question, and perhaps a longer one. The profit you expect in Russia, is that sort of locked, or can that be transferred to Denmark? That was my first question. I do not like dictatorships. As I could see from some of your headings, you are very active in China, and Xi is at least as corrupt as Putin. So what are your plans to not be as surprised as you were in Russia? That was it for me. Thank you. We will split it in two. Thomas Kähler will come first, I believe. Yeah. Division of work, yeah. I will say a bit about China, and then Jens Birgersson can talk to you about the technicalities when it comes to getting money out of Russia. We are in China. We have two plants there, two factories. But our presence in China is much smaller than Russia. Russia has been a huge growth market for us ever since the breakdown of the Soviet Union. And for a good reason, because with the economy they had before, they did not pay the market price for heating. So when suddenly they had to pay for heat, there was suddenly a huge need to insulate buildings in Russia, and there still is that need. So that is the story of our Russian business. In China, we are quite small. We have acquired a couple of existing plants. We had to relocate one of them because where it was, all of a sudden there was to be residential. It was to become a residential area. So we had to relocate that and build another small factory there. So the situation like we have seen does give us food for thought, and that will form part of our assessment of risk when the board and management make decisions going forward on new investments in other parts of the world. I will leave it to Jens Birgersson to explain the thing about the rubles, whether they can become kroner or what. The brief reply. The brief reply about the profit is that it works, but we have Russia in kind of a cash pool, and we can draw money out and we will continue doing that, and this is our usual bankers. They handle that. It works okay, just like it always has. Thank you. From what I have seen, there was nobody else who wanted to speak, so we are going to finish the discussion now about the first three items. So if we take a look at the agenda here, the first item, that was the Board of Directors report, a presentation of the annual report. On the basis of the debate we have had, we have taken note of the report. Item 3 is adoption of the annual report, including discharge of liability for the management and Board of Directors. There is an unqualified report from the auditors. You can find that on pages 99 to 101 in the annual report. Are there any comments or queries concerning the annual report of this proposal concerning discharge? If that is not the case, I conclude that these proposals have been duly adopted. That brings us to item 4, the presentation of and advisory vote on the remuneration report. Thomas mentioned it in his presentation. It is a description of the pay given to board and management in 2021. It has been available on the website. I am not going to go through it in any detail. Can we duly approve that in this advisory vote? Duly approved. That brings us to item 5. That is the approval of the remuneration of the board for 2022. We are seeing an adjustment here of the fee. The base fee will be EUR 400,000 for a regular member, the Vice Chair, twice the basic fee, and the Chairman, three times the basic fee, and there are additional fees for committee work. The Chair of the Audit Committee, EUR 330,000, and members of the Audit Committee, EUR 200,000, and a member of the Remuneration Committee will get EUR 100,000 extra. You can see that. This is an adjustment, 11.1% up. You have to bear in mind that the fees have not been changed since 2019. The purpose is to bring the level of the fee to the level of other Danish large cap companies. Are there any questions or comments concerning this proposal? That is not the case. Duly adopted. That brings us to item 6. It is a bit of a formality because we have dealt with the annual report. It is the allocation of profit, according to the adopted accounts, as Thomas described it in his report. The proposal is to pay a dividend of DKK 35 per share. That gives EUR 102 million as the total dividend. You are being paid in Danish kroner, I must say. Any questions or comments concerning that one? It is not the case. That brings us to item 7, is the election of members to the Board of Directors. Members are elected for one year at a time, and the board is proposing re-election of the following members. Here is Thomas Kähler, Carsten Bjerg. We have Jørgen Tang-Jensen, Rebekka Glasser Herlofsen, and also re-election of Carsten Kähler. As Thomas mentioned in his presentation, the board is presenting a new candidate, Ilse Irene Henne. You can read in the convening notes the information about all the other jobs of these candidates and their competencies. As Thomas mentioned, Andreas Ronken is not rerunning for the board. There are three employee-elected members of the board, Connie Enghus Theisen, Christian Westerberg, as you can see here, and Berit Kjerulf. But those that are elected here by the AGM, I want to ask if there are any questions or comments concerning the proposal. That is not the case. I think a brief applause will congratulate with re-election and one new election. The board expects that Thomas will be the Chairman and Carsten will be the Vice Chair. That brings us to item 8, election of auditor. Proposal is to reelect PricewaterhouseCoopers, state authorized audit partnership. Any questions or comments concerning that? The auditor is sitting right down here. No comments or questions. They have been duly elected. Now we will embark on the list of proposals from the Board and shareholders. First, a standard item, authorization to acquire treasury shares. The proposal is that the company may acquire treasury shares, both A and B, up to 10% of the total equity capital, and with the limitation that the price paid may not deviate by more than 10% from the most recently listed share price. Any comments? That is not the case. It has been adopted. That was 9A. Now 9B, the possibility of reregistering or converting A shares to B shares. This is a voluntary measure. It is up to shareholders themselves to decide if they wish to convert a number of A shares to B shares. We have in the convening notice the complete wording of the proposal, which is fairly technical. Here, I will only deal with some of the more central elements of the proposal. It will be possible for a shareholder to apply for a conversion of shares four times a year in connection with the annual report, the quarterly reports, and the interim report. There will be a window each time, and the first time will be in connection with the interim report 2022. It will be on a one-to-one basis. If you have an A share, it will be converted into a B share. If there is a price difference at the time of the conversion, nothing will be paid out. It is simply a mere changeover from A to B. There are some important conditions. You must be registered as a shareholder, and also, you need to send in a completed form. There will be more details available later if you wish to use this opportunity. It will be available on the website. There will also be a company release in case the company wishes to restrict this possibility or otherwise to do something. Mr. Bjørn Hansen has asked for the floor. It sounds as a very simple process, but I am afraid it is not. We have had both A and B shares for many years in this company. The B share is illiquid, and now we see that the banks are very much annoyed at this. We have NemID and MitID, and the A share is not a liquid share. We have mostly been thinking of the A share for the past five years, and yesterday I made a quick calculation. The B share has also been to our benefit. We have made money on it, although not this year. I hope that you maintain on the stock exchange, and I would like you to confirm this. Will both shares continue to be listed there, or will we all of a sudden wake up one morning and find that there's only one share? Thomas Kähler, you may can confirm, but it says nothing about delisting one share or the other or type. There is nothing in this proposal to indicate that this is going to happen. Mr. Kähler for a comment. I can only confirm. The proposal tries to solve the problem with very little liquidity in the A share, and we've already seen the effect because the A share has grown in price now, so there are no plans of delisting the A share. It is only as explained in the proposal. Any other questions or comments to the proposal? It is an amendment to the Articles of Association, and it requires a two-thirds majority of the votes cast, et cetera. I can inform you that with the postal votes and the proxies received, it has already been approved. Thank you very much. Next, 9C, which is also quite special in the sense that we will change something as fundamental as the company's name. It's just a deletion, however. It's not an entirely new name. We usually just call the company Rockwool, so that is why there's a proposal now to call the company Rockwool A/S going forward. It's also part of the proposal that since Rockwool International is also used in some technical context, that it be maintained as a new secondary name. Any comments or questions? That is not the case. Congratulations with the new name. The two shareholder proposals. I would refer you to the convening notice where you have the full wording and the complete proposals. You have been able to see this on the company's website, and we also have copies available in the room so that you can read the explanations of the reasoning given by the people proposing this. First, there is a proposal from Mr. Ross, and I'm just reading out now the wording contained here in the convening notice. This is going beyond the regulatory requirements and beyond the disclosure requirements as they apply now. The board does not support the proposal, but the board notices that this is practically identical to the proposals made to the AGMs in 2019, 2020, and 2021. The board still finds that the company gives all the necessary information concerning risks in the annual report and now also in the comprehensive and detailed sustainability report. I'd like to hear if there are any questions or comments to this. If that is not the case, I find that the proposal has not been adopted. There's an overwhelming majority against it. Let's proceed now to 9E. This has to do with disclosure of political contributions. Shareholder Catherine Joswick proposes that the company provides a report with an update on policies and procedures for making or directing with corporate funds or assets contributions and expenditures to participate or intervene on behalf of any candidate for public office or influence the general public or any segment thereof. There is a proposal that this report be updated on a biannual basis, and that it state the amount paid out and who is responsible for making the payment. You can see the text on the slide behind me, and it is also available in its complete wording in the convening notice. The two shareholders are not present in the room today. The board does not support this proposal. There is an internal policy for donations and non-commercial sponsorships, which prevents Rockwool from giving money to political parties, trade unions, or candidates, or donations aimed at furthering the personal interests of any person. The proposal was also put forward in 2021 and was also not adopted at the time. The board finds that the present policy is sufficient. Any comments or proposals? If that is not the case, I find that the proposal has not been adopted. We have arrived at any other business, the last item on the agenda. We cannot make any resolutions here, but you can ask for the floor with anything that you might wish to discuss. Right. I will give the floor back now to the Chairman of the Board for some final comments. Thank you. That brought us to the end of today's program. Thank you, Anders, for taking us safely through the agenda and the many proposals. Thank you to all of you for coming back here to the Roskilde Conference Center. I really look forward to meeting you again in the coming years in this way. Thank you for coming.